EXHIBIT 10.42
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of this 19th
day of August, 1999, by and between LASALLE BUSINESS CREDIT, INC., a Delaware
corporation ("LaSalle"), with its principal office at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, and BPI PACKAGING TECHNOLOGIES, INC., a Delaware
corporation ("Borrower"), with its principal office at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx Xx. 0, Xxxxx Xxxxxxx, XX 00000.
WITNESSETH:
WHEREAS, from time to time Borrower may request LaSalle to make loans and
advances to and extend certain credit accommodations to Borrower, and the
parties wish to provide for the terms and conditions upon which such loans,
advances and credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made to
Borrower by LaSalle, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Borrower, the parties agree
as follows:
1. DEFINITIONS
(a) General Definitions
"ACCOUNT," "ACCOUNT DEBTOR," "CHATTEL PAPER," "DOCUMENTS," "EQUIPMENT,"
"GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS," and "INVENTORY," shall have the
respective meanings assigned to such terms, as of the date of this Agreement, in
the Illinois Uniform Commercial Code.
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by or under common control with Borrower.
"ANNUAL FEE" shall mean the Annual Fee set forth in paragraph 5(i) of
this Agreement.
"BENEFIT PLAN" shall mean an employee pension benefit plan of the
Borrower or an ERISA Affiliate, as defined in Section 3(2) of ERISA, which is
subject to Title IV of ERISA, each of which is specified on SCHEDULE 13(x)
attached hereto.
"BORROWING BASE" shall have the meaning specified in PARAGRAPH 2(b)(i)
hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or such
other day as banks in Chicago, Illinois are authorized or required to be closed
for business.
"CAPITAL EXPENDITURES" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Borrower during
such period that are required by GAAP to be included in or reflected by the
property, plant or equipment or similar fixed asset accounts (or in intangible
accounts subject to amortization) in the balance sheet of Borrower.
"CHANGE OF CONTROL" shall mean if the current shareholders of Borrower
shall cease to directly or indirectly, of record or beneficially, own or control
in the aggregate at least fifty percent (50%) of the voting shares of Borrower
on a fully diluted basis and free and clear of all liens and security interests.
"CLOSING AGENDA" shall have the meaning specified in PARAGRAPH 15(a)(i)
hereof.
"CLOSING DATE" shall mean the date first stated above.
"COLLATERAL" shall mean all of the personal property of Borrower
described in PARAGRAPH 7 hereof, all of the real property of Borrower described
in the Mortgages and all other real or personal property of any Obligor or any
other Person now or hereafter pledged to LaSalle to secure, either directly or
indirectly, repayment of any of the Liabilities.
"CONTINUATION" [RESERVED]
"CONVERSION" [RESERVED]
"DEBT SERVICE COVERAGE RATIO" shall mean, with respect to any period, the
ratio of (i) net income after taxes for such period (excluding any after-tax
gains or losses on the sale of assets (other than the sale of Inventory in the
ordinary course of business) and excluding other after-tax extraordinary gains
or losses), PLUS deferred taxes, PLUS depreciation and amortization deducted in
determining net income for such period, MINUS Capital Expenditures for such
period not financed, MINUS any cash dividends paid or accrued and cash
withdrawals paid or accrued to shareholders or other Affiliates for such period
which were not calculated in determining net income after taxes, and PLUS the
after-tax increase in LIFO reserves or MINUS the after tax decrease in LIFO
reserves, TO (ii) current principal maturities of long term debt and capitalized
leases paid or scheduled to be paid during such period, PLUS any prepayments on
indebtedness owed to any Person (except trade payables and revolving loans) and
paid during such period.
"DEFAULT" shall mean any event, condition or default which with the
giving of notice, the lapse of time or both would be an Event of Default.
"DGJ" shall mean DGJ, L.L.C., a Delaware limited liability company.
"DGJ DEBT" shall mean the Promissory Note dated August 19, 1999 in the
original principal amount of $4,773,584.88, made by Borrower and payable to DGJ,
which note replaces and/or aggregates (i) Borrower's prior Promissory Note dated
January 27, 1999 in the original principal amount of $3,200,000, (ii) a
Promissory Note dated March 1, 1999 in the original principal amount of
$218,665, and (iii) indebtedness owing to DGJ of $1,354,919.88, including
interest on the foregoing.
"DILUTION" shall mean, with respect to any period, the percentage
obtained by dividing: (a) the sum of non-cash credits against Accounts of
Borrower for such period, plus pending or probable, but not yet applied,
non-cash credits against Accounts of Borrower for such period, as determined by
LaSalle, by (b) gross invoiced sales of Borrower for such period.
"EBITDA" shall mean, with respect to any period, net income after taxes
for such period (excluding any after-tax gains or losses on the sale of assets
and excluding other after-tax extraordinary gains or losses) PLUS interest
expense, income tax expense, depreciation and amortization for such period, LESS
gains and losses attributable to any fixed asset sales made during such period,
PLUS or MINUS any other non-cash charges or gains which have been subtracted or
added in calculating net income after taxes for such period.
"ELIGIBLE ACCOUNT" shall mean an Account owing to Borrower which is
acceptable to LaSalle in its sole discretion for lending purposes. LaSalle
shall, in general, consider an Account to be an Eligible Account if it meets,
and so long as it continues to meet, the following requirements:
(i) it is genuine and in all respects is what it purports to
be;
(ii) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(iii) it arises from (A) the performance of services by Borrower
and such services have been fully performed and acknowledged and accepted by the
Account Debtor thereunder; or (B) the sale of Goods by Borrower, and such Goods
have been completed in accordance with the Account Debtor's specifications (if
any) and delivered to and accepted by the Account Debtor, such Account Debtor
has not refused to accept and has not returned or offered to return any of the
Goods, or has not refused to accept any of the services, which are the subject
of such Account, and Borrower has possession of, or has delivered to LaSalle at
LaSalle's request, shipping and delivery receipts evidencing delivery of such
Goods;
(iv) it is evidenced by an invoice rendered to the Account
Debtor thereunder, is due and payable within thirty (30) days after the
stated invoice date thereof and does not remain unpaid more than ninety (90)
days past the stated invoice date thereof; PROVIDED, HOWEVER, that if more
than twenty-five percent (25%) of the aggregate dollar amount of invoices
owing by a particular Account Debtor remain unpaid for more than ninety (90)
days past the respective invoice dates thereof, then all Accounts owing to
Borrower by that Account Debtor shall be deemed ineligible;
(v) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted Liens;
(vi) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to setoff,
counterclaim, credit, allowance or adjustment by such Account Debtor, or to any
claim by such Account Debtor denying liability thereunder in whole or in part;
(vii) it does not arise out of a contract or order which fails in
any material respect to comply with the requirements of applicable law;
(viii) the Account Debtor thereunder is not a director, officer,
employee or agent of Borrower, or a Subsidiary, Parent or Affiliate of Borrower;
(ix) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of such
Account to LaSalle pursuant to, and in full compliance with, the Assignment of
Claims Act of 1940, as amended;
(x) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a precondition to
commencing or maintaining an action in the courts of that state, either to (A)
receive a certificate of authority to do business and be in good standing in
such state, or (B) file a notice of business activities report or similar report
with such state's taxing authority, unless (x) Borrower has taken one of the
actions described in clauses (A) or (B), (y) the failure to take one of the
actions described in either clause (A) or (B) may be cured retroactively by
Borrower at its election, or (z) Borrower has proven, to LaSalle's satisfaction,
that it is exempt from any such requirements under any such state's laws;
(xi) it is an Account which arises out of a sale made in the
ordinary course of Borrower's business;
(xii) the Account Debtor is a resident or citizen of, and is
located within, the United States of America or Canada;
(xiii) it is not an Account with respect to which the Account
Debtor's obligation to pay is conditional upon the Account Debtor's approval of
the Goods or services or is otherwise subject to any repurchase obligation or
return right, as with sales made on a xxxx-and-hold, guaranteed sale, sale on
approval, sale or return or consignment basis;
(xiv) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue or (B) which
violates any of the covenants of Borrower contained in this Agreement;
(xv) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrower, exceeds the lesser of ten
percent (10%) of the aggregate of Borrower's Accounts or a credit limit
determined by LaSalle in its reasonable credit judgment for that Account Debtor,
PROVIDED, HOWEVER, that the credit limit for a particular Account Debtor so
determined by LaSalle will not be decreased to less than ten percent (10%) if
Borrower has obtained and properly assigned to LaSalle credit insurance with
respect to such Account Debtor's Accounts; PROVIDED FURTHER, that Accounts
excluded from Eligible Accounts solely by reason of this PARAGRAPH 1(a)(xv)
shall be Eligible Accounts to the extent of such credit limit; PROVIDED FURTHER,
that Accounts owed by Sonoco or Duro Bag Manufacturing Co. shall be eligible up
to the lesser of (A) thirty-five percent (35%) of the aggregate of Borrower's
Accounts, in each case individually and not in the aggregate, or (B) the limit
of credit insurance obtained by Borrower and properly assigned to LaSalle with
respect to such Accounts; AND PROVIDED FURTHER, that Accounts owed by Bunzl
shall be eligible to the lesser of (A) twenty-five percent of the aggregate of
Borrower's Accounts, or (B) the limit of credit insurance obtained by Borrower
and properly assigned to LaSalle with respect to such Accounts;
(xvi) it is not an Account with respect to which the prospect of
payment or performance by the Account Debtor is or will be impaired, as
determined by LaSalle in its sole discretion.
"ELIGIBLE FINISHED GOODS INVENTORY" shall mean that portion of Eligible
Inventory consisting of all fully manufactured goods and products which are
ready for sale in the ordinary course of business, including products to be
resold by Borrower, provided that Eligible Finished Goods Inventory shall not
include any items which, in the sole discretion of LaSalle, are obsolete,
unsalable or unmerchantable, based on such criteria as LaSalle in its sole
discretion may from time to time deem appropriate.
"ELIGIBLE INVENTORY" shall mean Inventory of Borrower which is acceptable
to LaSalle in its sole discretion. Without limiting LaSalle's discretion,
LaSalle shall, in general, consider Inventory to be Eligible Inventory if it
meets, and so long as it continues to meet, the following requirements:
(i) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(ii) it is located on the premises listed on EXHIBIT A and is
not in transit;
(iii) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted Liens;
(iv) it is not work in process and is held for sale or
furnishing under contracts of service, it is (except as LaSalle may otherwise
consent in writing) new and unused and free from defects which would, in
LaSalle's sole determination, affect its marketability or market value;
(v) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless LaSalle has given its prior written approval
and Borrower has caused any such bailee, consignee, warehouseman, processor or
similar party to issue and deliver to LaSalle, in form and substance acceptable
to LaSalle, such UCC financing statements, warehouse receipts, waivers and other
documents as LaSalle shall require;
(vi) LaSalle has determined in accordance with LaSalle's
customary business practices that it is not unacceptable due to age, type,
category or quantity;
(vii) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue or (B)
which violates any of the covenants of Borrower contained in this Agreement; and
(viii) does not consist of inks, solvents or packaging.
"ELIGIBLE RAW MATERIALS INVENTORY" shall mean that portion of Eligible
Inventory consisting of any and all goods and materials purchased by Borrower
for use in any further manufacturing and/or processing and not yet transferred
to Borrower's work-in-process inventory or otherwise issued to any production
department or of Borrower, provided that Eligible Raw Materials Inventory shall
not include any raw material which, in the sole discretion of LaSalle, are
obsolete or unusable in Borrower's manufacturing, production or processing
operations based on such criteria as LaSalle in its sole discretion may from
time to time deem appropriate.
"ENVIRONMENTAL LAWS" shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrower's business or
facilities owned or operated by Borrower, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"EQUIPMENT LEASE" shall mean that certain Equipment Lease dated January
27, 1999 between DGJ and Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and all references to sections thereof shall include such sections
and any predecessor and successor provisions thereto.
"ERISA AFFILIATE" shall mean any member of a controlled group of entities
as determined under Section 414(b), (c), (m), or (o) of the IRC, of which the
Borrowers are a member.
"EVENT OF DEFAULT" shall have the meaning specified in PARAGRAPH 16
hereof.
"EXCESS AVAILABILITY" shall mean, as of any date of determination by
LaSalle, the excess, if any, of (i) the Borrowing Base over (ii) the outstanding
Revolving Loans, in each case as of the close of business on such date. For
purposes of calculating Borrower's Excess Availability and the amount of the
Borrowing Base relating thereto, all of Borrower's trade payables and
outstanding debt, other than the Liabilities hereunder, which remain unpaid more
than thirty (30) days after the due dates thereof shall, on the date of the
determination of Excess Availability, be deemed to have been paid by Borrower.
"EXHIBIT A" shall mean the exhibit entitled "Exhibit A - Business and
Collateral Locations" which is attached hereto and made a part hereof.
"EXHIBIT B" shall mean the exhibit entitled Exhibit B - Officer's
Certificate, which is attached hereto and made a part hereof.
"FISCAL YEAR" shall mean with respect to Borrower, the twelve (12) month
accounting period of Borrower commencing January 1 of each calendar year and
ending December 31 of such calendar year.
"GAAP" shall mean generally accepted accounting principles and policies
in the United States as in effect from time to time, consistently applied.
"HAZARDOUS MATERIALS" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation, any that are or become classified as hazardous or toxic under any
Environmental Law).
"INDEMNIFIED PARTY" shall have the meaning specified in PARAGRAPH 18
hereof.
"INITIAL TNW AMOUNT" shall have the meaning prescribed in PARAGRAPH
14(n)(i) hereof.
"LETTERS OF CREDIT" shall mean those documentary or stand-by letters of
credit issued for Borrower's account in accordance with the terms of PARAGRAPH 4
hereof.
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit not already converted to a Loan hereunder.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of Borrower to LaSalle or to any parent, affiliate or subsidiary of
LaSalle of any and every kind and nature, howsoever created, arising or
evidenced and howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without limitation,
obligations of performance), whether several, joint or joint and several, and
whether arising or existing under written or oral agreement or by operation of
law.
"LOAN" or "LOANS" shall mean any and all Revolving Loans made by LaSalle
to Borrower pursuant to PARAGRAPHS 2 AND 3 hereof and all other loans, advances
and financial accommodations made by LaSalle to or on behalf of Borrower
hereunder. If paragraph 3 of this Agreement is reserved, then Loans shall
consist of Revolving Loans only, and any references to Term Loans shall be
deemed surplusage.
"LOCK BOX" and "BLOCKED ACCOUNT" shall have the meanings specified in
PARAGRAPH 10 hereof.
"MATERIAL ADVERSE EFFECT" shall mean with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of the
business, property, assets, operations, condition (financial or otherwise) or
prospects of Borrower.
"MORTGAGE" shall mean each mortgage or deed of trust executed by Borrower
in favor of LaSalle to secure the Liabilities.
"MULTIEMPLOYER PLAN" shall mean a plan described in Section 4001(a)(3) of
ERISA which covers employees of any Borrower or any ERISA Affiliate.
"NOTE" shall mean the Revolving Note.
"OBLIGOR" shall mean Borrower and each Person who is or shall become
primarily or secondarily liable for any of the Liabilities; PROVIDED, HOWEVER,
that such term shall not include any Account Debtor.
"ORIGINAL TERM" shall have the meaning specified in PARAGRAPH 12 hereof.
"OTHER AGREEMENTS" shall mean all agreements, instruments and documents
including, without limitation, guaranties, mortgages, trust deeds, pledges,
powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of Borrower or any other
Person and delivered to LaSalle or to any parent, affiliate or subsidiary of
LaSalle in connection with the Liabilities or the transactions contemplated
hereby.
"PARENT" shall mean any Person now or at any time or times hereafter
owning or controlling (alone or with any other Person) at least a majority of
the issued and outstanding stock or other similar ownership interest of Borrower
or any Subsidiary.
"PERMITTED LIENS" shall mean (i) statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen or suppliers incurred in the ordinary
course of business and securing amounts not yet due or declared to be due by the
claimant thereunder, (ii) liens or security interests in favor of LaSalle, (iii)
zoning restrictions and easements, rights of way, licenses, covenants and other
restrictions affecting the use of real property that do not individually or in
the aggregate have a Material Adverse Effect on Borrower's ability to use such
real property for its intended purpose in connection with Borrower's business,
(iv) liens securing the payment of taxes or other governmental charges not yet
delinquent or being contested in good faith and by appropriate proceedings, (v)
liens incurred or deposits made in the ordinary course of Borrower's business in
connection with capitalized leases or purchase money security interests for
purchase of, and applying only to, Equipment included in the permitted
borrowings under PARAGRAPH 13(q) or permitted as Capital Expenditures under
PARAGRAPH 14(n), the documents relating to such liens to be in form and
substance acceptable to LaSalle, (vi) liens securing indebtedness owing by any
Subsidiary to Borrower to the extent such indebtedness is permitted under
PARAGRAPH 14(l), or to any other Subsidiary of Borrower, (vii) deposits to
secure performance of bids, trade contracts, leases and statutory obligations
(to the extent not excepted elsewhere herein); (viii) liens specifically
permitted by LaSalle in writing as set forth on SCHEDULE 1(a) attached hereto
(including the liens relating to the DGJ Debt and the Equipment Lease, as set
forth on SCHEDULE 1(a)); (ix) any lien arising out of the refinancing,
extension, renewal or refunding of any indebtedness secured by an lien permitted
by any of the foregoing SUBPARAGRAPHS (i) THROUGH (viii) inclusive; PROVIDED,
that (a) such indebtedness is not secured by any additional assets, and (b) the
amount of such indebtedness is not increased, (x) pledges or deposits in
connection with worker's compensation, unemployment insurance and other social
security legislation, (xi) securities and other properties held at banks or
financial institutions to secure the payment or reimbursement under overdraft,
acceptance and other facilities, and (xii) rights of setoff, banker's lien and
other similar rights arising solely by operation of law.
"PERSON" shall mean any individual, sole proprietorship, partnership,
limited liability company venture, trust, unincorporated organization,
association, corporation, institution, entity, party or foreign or United States
government (whether federal, state, county, city, municipal or otherwise),
including, without limitation, any instrumentality, division, agency, body or
department thereof.
"PRIME RATE" shall mean the publicly announced prime rate of LaSalle Bank
National Association, Chicago, Illinois, in effect from time to time. The Prime
Rate is not intended to be the lowest or most favorable rate of LaSalle Bank
National Association in effect at any time.
"PRIME RATE LOAN" shall mean a Revolving Loan that bears interest based
on the Prime Rate.
"PRIME RATE REVOLVING LOAN" shall mean a Revolving Loan that bears
interest based on the Prime Rate.
"RENEWAL TERM" shall have the meaning specified in PARAGRAPH 12 hereof.
"REVOLVING LOANS" shall have the meaning specified in PARAGRAPH 2 hereof.
"REVOLVING LOAN COMMITMENT" shall mean the sum of Four Million and no/100
Dollars ($4,000,000.00).
"REVOLVING NOTE" shall mean the promissory note in the original principal
amount of Four Million and no/100 Dollars ($4,000,000.00), executed by Borrower
to the order of LaSalle, dated as of the Closing Date.
"SUBORDINATED DEBT" shall mean indebtedness subordinated to the
Liabilities in writing and on terms satisfactory to LaSalle in its sole
discretion.
"SUBSIDIARY" shall mean any corporation or company of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by Borrower or by
any partnership or joint venture of which more than fifty percent (50%) of the
outstanding equity interests are at the time, directly or indirectly, owned by
Borrower.
"TANGIBLE NET WORTH" shall mean shareholders' equity (including retained
earnings) LESS the book value of all intangible assets, determined by LaSalle on
a consistent basis, PLUS the amount of any debt subordinated to LaSalle on terms
and conditions acceptable to LaSalle in its sole judgment, all as determined in
accordance with GAAP, consistently applied.
"TOTAL CREDIT FACILITY" shall mean the sum of Four Million and no/100
Dollars ($4,000,000.00).
(b) ACCOUNTING TERMS AND DEFINITIONS. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the financial statements delivered by Borrower to LaSalle on or before the
Closing Date. All accounting determinations for purposes of determining
compliance with the financial covenants contained in PARAGRAPH 14(n) shall be
made in accordance with GAAP as in effect on the Closing Date and applied on a
basis consistent in all material respects with the audited financial statements
delivered to LaSalle by Borrower on or before the Closing Date. The financial
statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP. If GAAP
shall change from the basis used in preparing the audited financial statements
delivered to LaSalle by Borrower on or before the Closing Date, the certificates
required to be delivered pursuant to PARAGRAPH 14(b) demonstrating compliance
with the covenants contained herein shall include, at the election of Borrower
or upon the request of LaSalle, calculations setting forth the adjustments
necessary to demonstrate how Borrower is in compliance with the financial
covenants based upon GAAP as in effect on the Closing Date.
2. REVOLVING LOANS. Subject to the terms and conditions of this Agreement
and the Other Agreements, during the Original Term and any Renewal Term, absent
the existence of an Event of Default:
(a) LaSalle shall make such revolving loans and advances (the
"Revolving Loans") to Borrower as Borrower shall from time to time request, in
accordance with the terms of PARAGRAPH 2(b) hereof. The aggregate unpaid
principal amount of all Revolving Loans outstanding at any one time made to
Borrower shall not exceed the lesser of (i) the Borrowing Base or (ii) the
Revolving Loan Commitment, in each case minus the outstanding Letter of Credit
Obligations. All Revolving Loans shall be repaid in full upon the earlier to
occur of (A) the end of the Original Term or any Renewal Term, if either LaSalle
or Borrower elects to terminate this Agreement as of the end of any such term
and (B) the acceleration of the Liabilities pursuant to PARAGRAPH 17 of this
Agreement. If at any time the outstanding principal balance of the Revolving
Loans made to Borrower exceeds (i) the Borrowing Base or (ii) the Revolving Loan
Commitment, in each case minus the outstanding Letter of Credit Obligations,
Borrower shall immediately, and without the necessity of a demand by LaSalle,
pay to LaSalle such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal balance of
the Revolving Loans. In addition, if at any time the sum of (A) the outstanding
principal balance of the Loans and (B) the outstanding Letter of Credit
Obligations exceeds the Total Credit Facility, Borrower shall immediately and
without the necessity of a demand by LaSalle pay to LaSalle such amount as may
be necessary to eliminate such excess, and LaSalle shall apply such payment
against the outstanding principal balance of the Loans in such order as LaSalle
shall determine in its sole discretion. Borrower hereby authorizes LaSalle to
charge any of Borrower's accounts to make any payments of principal or interest
required by this Agreement. All Revolving Loans shall, in LaSalle's sole
discretion, be evidenced by one or more promissory notes in form and substance
satisfactory to LaSalle. However, if such Revolving Loans are not so evidenced,
such Revolving Loans may be evidenced solely by entries upon the books and
records maintained by LaSalle.
(b) LaSalle shall make Revolving Loans to Borrower up to the lesser of
the following amounts, the amount calculated pursuant to SUBPARAGRAPH (i) below
being the "Borrowing Base":
(i) an amount equal to the sum of: (A) up to eighty-five
percent (85%) of the face amount of Eligible Accounts PLUS, (B) the lesser of
(x) the sum of (I) up to fifty percent (50%) of the value of Eligible Finished
Goods Inventory and (II) up to sixty percent (60%) of the value of Eligible Raw
Materials Inventory, in each case calculated on the basis of the lower of cost
or market value on a first-in, first-out basis, and (y) One Million Five Hundred
Thousand and no/100 Dollars ($1,500,000.00); in each case, less such reserves as
LaSalle
elects to establish from time to time in the exercise of its sole
discretion including, without limitation, a Dilution reserve if Dilution exceeds
five percent (5%); OR
(ii) the Revolving Loan Commitment.
3. TERM LOAN [RESERVED]
4. LETTERS OF CREDIT [RESERVED]
5. INTEREST, FEES AND CHARGES
(a) RATES OF INTEREST. Interest accrued on all Loans shall be due on
the earliest of: (i) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month; (ii) the
occurrence of an Event of Default in consequence of which LaSalle elects to
accelerate the maturity and payment of the Liabilities; or (iii) termination of
this Agreement pursuant to PARAGRAPH 12 hereof. Interest shall accrue on the
principal amount of the Revolving Loans made to Borrower outstanding at the end
of each day at a fluctuating rate per annum equal to one and one-half per cent
(1.5%) above the Prime Rate. The rate of interest payable on Prime Rate Loans
shall increase or decrease by an amount equal to any increase or decrease in the
Prime Rate, effective as of the opening of business on the day that any such
change in the Prime Rate occurs. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount of all Loans
shall bear interest on demand at a rate per annum equal to the rate of interest
then in effect with respect to Revolving Loans under this PARAGRAPH 5 (a) plus
two percent (2%).
(b) COMPUTATION OF INTEREST AND FEES. Interest and collection charges
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year consisting of three hundred and sixty (360) days.
For the purpose of computing interest hereunder, all items of payment received
by LaSalle shall be deemed applied by LaSalle on account of the Liabilities
(subject to final payment of such items) on the second Business Day after
receipt by LaSalle of good funds in LaSalle's account located in Chicago,
Illinois.
(c) MAXIMUM INTEREST. It is the intent of the parties that the rate
of interest and the other charges to Borrower under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.
(d) Letter of Credit Fees. [RESERVED]
(e) CLOSING FEE. Borrower shall pay to LaSalle a closing fee of Forty
Thousand and no/100 Dollars ($40,000.00), which shall be fully earned,
nonrefundable and due on the Closing Date.
(f) UNUSED LINE FEE. Borrower shall pay to LaSalle at the end of each
month, in arrears, an Unused Line Fee equal to three-eighths of one percent
(0.375%) per year on the daily average amount by which the Revolving Loan
Commitment exceeds the sum of (i) the outstanding principal balance of the
Revolving Loans and (ii) the outstanding Letter of Credit Obligations. The
Unused Line Fee shall accrue from the Closing Date until the last day of the
Original Term, and if applicable, from the first day to the last day of each
Renewal Term; provided, however, that no Unused Line Fee shall accrue after
payment in full of the Liabilities.
(g) EXAMINATION AND APPRAISAL FEES. In addition to the costs and
expenses described in PARAGRAPH 14(o) hereof, Borrower shall pay to LaSalle an
examination fee of Seven Hundred and no/100 Dollars ($700) per auditor per day
for each examination performed by or at LaSalle's direction of Borrower's books
and records and Collateral and such other matters as LaSalle shall deem
appropriate in its commercially reasonable judgment, each such fee to be paid
upon the completion of each such examination.
(h) CAPITAL ADEQUACY CHARGE. If LaSalle shall have determined that
the adoption of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof, or compliance by
LaSalle with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority enacted
after the Closing Date and having general application to the types of loans made
by LaSalle, does or shall have the effect of reducing the rate of return on
LaSalle's capital as a consequence of its obligations hereunder to a level below
that which LaSalle could have achieved but for such adoption, change or
compliance (taking into consideration LaSalle's policies with respect to capital
adequacy) by a material amount, then from time to time, after submission by
LaSalle to Borrower of a written demand therefor ("Capital Adequacy Demand")
together with the certificate described below, Borrower shall pay to LaSalle
such additional amount or amounts ("Capital Adequacy Charge") as will compensate
LaSalle for such reduction, such Capital Adequacy Demand to be made with
reasonable promptness following such determination. A certificate of LaSalle
claiming entitlement to payment as set forth above shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such reduction, the amount of the Capital Adequacy
Charge to be paid to LaSalle, and the method by which such amount was
determined. In determining such amount, LaSalle may use any reasonable
averaging and attribution method, applied on a non-discriminatory basis.
(i) ANNUAL FEE. Borrower shall pay to LaSalle on each anniversary of
the Closing Date, an Annual Fee equal to one quarter of one percent (0.25%) of
the Total Facility. No annual fee shall be payable on August 19, 2002 unless
this Agreement shall have been renewed.
6. LOAN ADMINISTRATION
(a) LOAN REQUESTS. A request for a Revolving Loan shall be made or
shall be deemed to be made, each in the following manner: (i) Borrower shall
give LaSalle same day notice, no later than 10:30 A.M. (Chicago time) of such
day, of its intention to borrow a Prime Rate Revolving Loan, in which notice
Borrower shall specify the amount of the proposed borrowing and the proposed
borrowing date; PROVIDED, HOWEVER, that no such request may be made at a time
when there exists a Default or an Event of Default; and (ii) the coming due of
any amount required to be paid under this Agreement or any Note, whether on
account of interest or for any other Liability, shall be deemed irrevocably to
be a request for a Prime Rate Revolving Loan on the due date thereof in the
amount required to pay such interest or other Liability. As an accommodation to
Borrower, LaSalle may permit telephone requests for Revolving Loans and
electronic transmittal of instructions, authorizations, agreements or reports to
LaSalle by Borrower. Unless Borrower specifically directs LaSalle in writing
not to accept or act upon telephonic or electronic communications from Borrower,
LaSalle shall have no liability to Borrower for any loss or damage suffered by
Borrower as a result of LaSalle's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to LaSalle by Borrower and LaSalle shall have no duty to verify the origin
of any such communication or the authority of the Person sending it. Each
notice of borrowing shall be irrevocable by and binding on Borrower.
(b) DISBURSEMENT. Borrower hereby irrevocably authorizes LaSalle to
disburse the proceeds of each Revolving Loan requested by Borrower, or deemed to
be requested by Borrower, as follows: (i) the proceeds of each Revolving Loan
requested under PARAGRAPH 6(a)(i) shall be disbursed by LaSalle in lawful money
of the United States of America in immediately available funds, in the case of
the initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and LaSalle from
time to time, or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolving Loan requested under PARAGRAPH 6(a)(ii)
shall be disbursed by LaSalle by way of direct payment of the relevant interest
or other Liability.
7. GRANT OF SECURITY INTEREST TO LASALLE. As security for the payment of
all Loans now or in the future made by LaSalle to Borrower hereunder and for the
payment or other satisfaction of all other Liabilities, Borrower hereby assigns
to LaSalle and grants to LaSalle a continuing security interest in the following
property of Borrower, whether now or hereafter owned, existing, acquired or
arising and wherever now or hereafter located: (a) all Accounts (whether or not
Eligible Accounts) and all Goods whose sale, lease or other disposition by
Borrower has given rise to Accounts and have been returned to or repossessed or
stopped in transit by Borrower; (b)
all Chattel Paper, Instruments, investment property, Documents and General
Intangibles (including, without limitation, all patents, patent applications,
trademarks, trademark applications, tradenames, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax refund
claims, claims against carriers and shippers, guarantee claims, contracts
rights, security interests, security deposits and any rights to
indemnification); (c) all Inventory; (d) all Goods (other than Inventory)
including, without limitation, Equipment, vehicles and fixtures; (e) all
deposits and cash and any other property of Borrower now or hereafter in the
possession, custody or control of LaSalle or any agent or any parent,
affiliate or subsidiary of LaSalle or any participant with LaSalle in the
Loans for any purpose (whether for safekeeping, deposit, collection, custody,
pledge, transmission or otherwise); and (f) all additions and accessions to,
substitutions for, and replacements, products and proceeds of the foregoing
property, including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of Borrower's books and records
relating to any of the foregoing and to Borrower's business.
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.
Borrower shall, at LaSalle's request, at any time and from time to time, execute
and deliver to LaSalle such financing statements, documents and other agreements
and instruments (and pay the cost of filing or recording the same in all public
offices deemed reasonably necessary or desirable by LaSalle) and do such other
acts and things as LaSalle may deem necessary or desirable in order to establish
and maintain a valid, attached and perfected security interest in the Collateral
in favor of LaSalle (free and clear of all other liens, claims and rights of
third parties whatsoever, whether voluntarily or involuntarily created, except
Permitted Liens) to secure payment of the Liabilities, and in order to
facilitate the collection of the Collateral. Borrower irrevocably hereby makes,
constitutes and appoints LaSalle (and all Persons designated by LaSalle for that
purpose) as Borrower's true and lawful attorney and agent-in-fact to execute
such financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect LaSalle's
security interest in the Collateral. Borrower further agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement shall be sufficient as a financing statement.
9. POSSESSION OF COLLATERAL AND RELATED MATTERS. Until an Event of Default
has occurred, Borrower shall have the right, except as otherwise provided in
this Agreement, in the ordinary course of Borrower's business, to (a) sell,
lease or furnish under contracts of service any of Borrower's Inventory normally
held by Borrower for any such purpose, and (b) use and consume any raw
materials, work in process or other materials normally held by Borrower for such
purpose; PROVIDED, HOWEVER, that a sale in the ordinary course of business shall
not include any transfer or sale in satisfaction, partial or complete, of a debt
owed by Borrower.
10. COLLECTIONS.
(a) Borrower shall direct all of its Account Debtors to make all
payments on the Accounts directly to a post office box ("LOCK BOX") with a
financial institution acceptable to, and in the name and under exclusive control
of, LaSalle. Borrower shall establish an account ("BLOCKED ACCOUNT") in
LaSalle's name for the benefit of Borrower with a financial institution
acceptable to LaSalle, into which all payments received in the Lock Box shall be
deposited, and into which Borrower will immediately deposit all payments made
for Inventory or services sold or rendered by Borrower and received by Borrower
in the identical form in which such payments were made, whether by cash or
check. If Borrower, any Affiliate or Subsidiary of Borrower, or any
shareholder, officer, director, employee or agent of Borrower or any Affiliate
or Subsidiary, or any other Person acting for or in concert with Borrower shall
receive any monies, checks, notes, drafts or other payments relating to or as
proceeds of Accounts or other Collateral, Borrower and each such Person shall
receive all such items in trust for, and as the sole and exclusive property of,
LaSalle and, immediately upon receipt thereof, shall remit the same (or cause
the same to be remitted) in kind to the Blocked Account. Each financial
institution with which a Lock Box and Blocked Account are established shall
acknowledge and agree, in a manner satisfactory to LaSalle, that the amounts on
deposit in such Lock Box and Blocked Account are the sole and exclusive property
of LaSalle, that such financial institution has no right to set off against such
Lock Box or Blocked Account or against any other account maintained by such
financial institution into which the contents of such Blocked Account are
transferred, and that such financial institution shall wire, or otherwise
transfer in immediately available funds in a manner satisfactory to LaSalle,
funds deposited in the Blocked Account on a daily basis as such funds are
collected. Borrower agrees that all payments made to the Blocked Account
established by Borrower or otherwise received by LaSalle, whether in respect of
the Accounts of
Borrower or as proceeds of other Collateral of Borrower or otherwise, will be
applied on account of the Liabilities of Borrower in accordance with the
terms of this Agreement. Borower agrees to pay all fees, costs and expenses
which Borrower incurs in connection with opening and maintaining a Lock Box
and Blocked Account. All of such fees, costs and expenses which remain
unpaid by Borrower pursuant to any Lock Box or Blocked Account Agreement with
Borrower, to the extent same shall have been paid by LaSalle hereunder, shall
constitute Revolving Loans hereunder, shall be payable to LaSalle by Borrower
upon demand, and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder. All checks, drafts, instruments and
other items of payment or proceeds of Collateral delivered to LaSalle in kind
shall be indorsed by Borrower to LaSalle, and, if that indorsement of any
such item shall not be made for any reason, LaSalle is hereby irrevocably
authorized to indorse the same on Borrower's behalf. For the purpose of this
paragraph, Borrower irrevocably hereby makes, constitutes and appoints
LaSalle (and all Persons designated by LaSalle for that purpose) as
Borrower's true and lawful attorney and agent-in-fact (i) to indorse
Borrower's name upon said items of payment and/or proceeds of Collateral of
Borrower and upon any Chattel Paper, document, instrument, invoice or similar
document or agreement relating to any Account of Borrower or goods pertaining
thereto; (ii) to take control in any manner of any item of payment or
proceeds thereof; (iii) to have access to any lock box or postal box into
which any of Borrower's mail is deposited; and (iv) open and process all mail
addressed to Borrower and deposited therein; PROVIDED, HOWEVER, that LaSalle
shall not exercise any such powers described in subparagraphs (i),
(ii) (except for routine lock box payments/proceeds) and (iv) unless and until
an Event of Default has occurred.
(b) LaSalle may, at any time and from time to time after the
occurrence of an Event of Default, whether before or after notification to any
Account Debtor and whether before or after the maturity of any of the
Liabilities, (i) enforce collection of any of Borrower's Accounts or contract
rights by suit or otherwise; (ii) exercise all of Borrower's rights and remedies
with respect to proceedings brought to collect any Accounts; (iii) surrender,
release or exchange all or any part of any Accounts of Borrower, or compromise
or extend or renew for any period (whether or not longer than the original
period) any indebtedness thereunder; (iv) sell or assign any Account of Borrower
upon such terms, for such amount and at such time or times as LaSalle deems
advisable; (v) prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or other similar document against any Account Debtor indebted on an
Account of Borrower; and (vi) do all other acts and things which are necessary,
in LaSalle's sole discretion, to fulfill Borrower's obligations under this
Agreement and to allow LaSalle to collect the Accounts. In addition to any
other provision hereof, LaSalle may at any time on or after the occurrence of an
Event of Default, at Borrower's expense, notify any parties obligated on any of
the Accounts of Borrower to make payment directly to LaSalle of any amounts due
or to become due thereunder.
(c) For the purpose of determining Borrower's Borrowing Base
hereunder, LaSalle shall, upon receipt by LaSalle at its office in Chicago,
Illinois, of cash or other immediately available funds from collections of items
of payment and proceeds of any Collateral, apply the whole or any part of such
collections or proceeds against the Liabilities in such order as LaSalle shall
determine in its sole discretion.
(d) In its sole credit judgment, without waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the Other
Agreements or any Event of Default, at any time or times hereafter, LaSalle may
(but shall not be obligated to) pay, acquire or accept an assignment of any
security interest, lien, encumbrance or claim asserted by any Person in, upon or
against the Collateral. All sums paid by LaSalle in respect thereof and all
costs, fees and expenses (including, without limitation, reasonable attorneys'
fees for both inside and outside counsel, all court costs and all other charges
relating thereto) incurred by LaSalle shall constitute Revolving Loans, payable
by Borrower to LaSalle on demand and, until paid, shall bear interest at the
highest rate then applicable to Revolving Loans hereunder.
(e) Immediately upon Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document including, without
limitation, any Chattel Paper, Borrower shall deliver the original thereof to
LaSalle together with an appropriate indorsement or other specific evidence of
assignment thereof to LaSalle (in form and substance acceptable to LaSalle). If
an indorsement or assignment of any such items shall not be made for any reason,
LaSalle is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to indorse or assign the same on Borrower's behalf.
(f) LaSalle shall render to Borrower each month a statement of
Borrower's account or accounts, as the case may be, which shall constitute an
account stated and shall be deemed to be correct and accepted by and be binding
upon Borrower unless LaSalle receives a written statement of Borrower's
exceptions thereto within thirty (30) days after such statement was rendered to
Borrower.
11. SCHEDULES AND REPORTS. Borrower shall furnish or cause to be furnished
to LaSalle the following:
(a) DAILY REPORTS. Borrower shall provide LaSalle with an executed
daily loan report and certificate in LaSalle's then current form on each day on
which Borrower requests a Revolving Loan, and in any event at least one each
week, which shall be accompanied by copies of Borrower's sales journal, cash
receipts journal and credit memo journal for the relevant period. Such report
shall reflect the activity of Borrower with respect to Accounts for the
immediately preceding week, and shall be in a form and with such specificity as
is satisfactory to LaSalle and shall contain such additional information as
LaSalle may reasonably require concerning Accounts and Inventory included,
described or referred to in such report and any other documents in connection
therewith requested by LaSalle including, without limitation, but only if
specifically requested by LaSalle, copies of all invoices prepared in connection
with such Amounts.
(b) MONTHLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within twenty (20) days following the end of each calendar month: (1)
statements of income and statements of cash flow of Borrower for each such month
and for the period from beginning of the then current Fiscal Year of Borrower to
the end of such month, (2) balance sheets of Borrower as of the end of such
month, and (3) with respect to such statements of income and balance sheets, in
comparative form, figures for the corresponding periods in the preceding Fiscal
Year of Borrower, all in reasonable detail and certified by the chief financial
officer of Borrower that such statements fairly present the financial condition
of Borrower in accordance with GAAP, subject to changes resulting from normal
year-end computations of Borrower's compliance with the covenants set forth in
this Agreement.
(c) MONTHLY REPORTS. In addition to any other reports, as soon as
practicable and in any event: (i) within ten (10) days after the end of each
month, (a) a detailed trial balance of Borrower's Accounts aged per invoice
date, in form and substance reasonably satisfactory to LaSalle including,
without limitation, the names and addresses of all Account Debtors of Borrower,
and (b) a summary and detail of accounts payable (such Accounts and accounts
payable divided into such time intervals as LaSalle may require in its sole
discretion), including a listing of any held checks; and (2) within ten (10)
days after the end of each month, the general ledger inventory account balance,
a perpetual inventory report and LaSalle's standard form of Inventory report
then in effect or the form most recently requested from Borrower by LaSalle, for
Borrower by each category of Inventory, together with a description of the
monthly change in each category of Inventory.
(d) ANNUAL FINANCIAL STATEMENTS. As soon as practicable and in any
event within ninety (90) days after the end of each Fiscal Year of Borrower: (a)
statements of income of Borrower for such Fiscal Year, and a balance sheet of
Borrower as of the end of such Fiscal Year, and (2) statements of cash flow of
Borrower for such Fiscal Year, such statements to be presented in accordance
with GAAP and certified by independent certified public accountants of
recognized national standing selected by Borrower and satisfactory to LaSalle,
whose opinion shall be unqualified, in form and substance reasonably
satisfactory to LaSalle. Commencing with the Fiscal Year ending on or about
December 31, 1999, such financial statements shall set forth in comparative
form, corresponding figures for the period covered by the preceding annual audit
and as of the end of the preceding Fiscal Year of Borrower.
(e) ANNUAL PROJECTIONS. As soon as practicable and in any event prior
to the beginning of each Fiscal Year of Borrower, projected balance sheets,
statements of income and cash flow for Borrower, for each of the twelve (12)
months during such Fiscal Year, which shall include the assumptions used
therein, together with appropriate supporting details as reasonably requested by
LaSalle.
(f) ACCOUNTANT'S REPORTS. As soon as practicable and in any event
within ten (10) days of delivery to Borrower, a copy of any letter issued by
Borrower's independent public accountants or other management
consultants with respect to Borrower's financial or accounting systems or
controls, including all so-called "management letters."
(g) EXPLANATION OF BUDGETS AND PROJECTIONS. In conjunction with the
delivery of the annual presentation of projections or budgets referred to in
PARAGRAPH 11(e) above, a letter signed by the President or a Vice President of
Borrower and by the Treasurer or Chief Financial Officer of Borrower,
describing, comparing and analyzing, in detail, all changes and developments
between the anticipated financial results included in such projections or
budgets and the historical financial statements of Borrower.
(h) OTHER INFORMATION. With reasonable promptness, such other
business or financial data, reports, appraisals and projections as LaSalle may
reasonably request.
(i) ACCOMPANYING CERTIFICATES. All financial statements delivered to
LaSalle pursuant to the requirements of this paragraph (except where otherwise
expressly indicated) shall be prepared in accordance with GAAP as provided in
this Agreement. Together with each delivery of financial statements required by
PARAGRAPH 11 (b) and (d) above, Borrower shall deliver to LaSalle an officer's
certificate in the form attached hereto as EXHIBIT B, which shall include a
calculation of financial covenants in the schedule attached to such officer's
certificate in form satisfactory to LaSalle.
12. TERMINATION.
(a) This Agreement shall be in effect from the date hereof until
August 19, 2002 ("ORIGINAL TERM") and shall automatically renew itself from year
to year thereafter (each such one year renewal being referred to herein as a
"RENEWAL TERM") unless (i) the due date of the Liabilities is accelerated
pursuant to PARAGRAPH 17 hereof; or (ii) Borrower elects or LaSalle elects to
terminate this Agreement at the end of the Original Term or at the end of any
Renewal Term by giving the other party written notice of such election.
Borrower shall pay all of the Liabilities in full on the effective date of such
termination. If one or more of the events specified in SUBPARAGRAPHS (i) or
(ii) occurs, this Agreement shall terminate on the date thereafter that the
Liabilities are paid in full; PROVIDED, HOWEVER, that the security interests and
liens created under this Agreement and the Other Agreements shall survive such
termination until the date upon which payment and satisfaction in full of the
Liabilities shall have occurred. At such time as Borrower has repaid all of the
Liabilities and this Agreement has terminated, (A) Borrower shall deliver to
LaSalle a release, in form and substance reasonably satisfactory to LaSalle, of
all obligations and liabilities of LaSalle and its officers, directors,
employees, agents, parents, subsidiaries and affiliates to Borrower, and if
Borrower is obtaining new financing from another lender, Borrower shall deliver
such lender's indemnification of LaSalle, in form and substance satisfactory to
LaSalle, for checks which LaSalle has credited to Borrower's account, but which
subsequently are dishonored for any reason and (B) upon Borrower's request,
LaSalle shall deliver to Borrower a release in form and substance reasonably
satisfactory to Borrower.
(b) If, for any reason, this Agreement is terminated prior to the end
of the Original Term or any Renewal Term including, in the sole discretion of
LaSalle, if an effective termination results from Borrower prepaying all or
substantially all of the Liabilities, Borrower agrees to pay to LaSalle, as a
prepayment fee, in addition to the payment of all other Liabilities owing by
Borrower, and in lieu of any further annual fee, an amount equal to: (i) one
percent (1.0%) of the Total Credit Facility if this Agreement is terminated
during the first year of the Original Term; and (ii) no prepayment fee if this
Agreement is terminated after the first year of the Original Term. In light of
the extreme difficulty of accurately calculating actual damages arising out of
any early termination, LaSalle and Borrower have agreed that the prepayment fee
provided for above is a reasonable estimate of actual damages that would be
incurred.
13. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the following
representations, warranties and covenants:
(a) the financial statements delivered or to be delivered by Borrower
to LaSalle at or prior to the date of this Agreement and at all times subsequent
thereto accurately reflect the financial condition of Borrower, and since the
date of the Borrower's financial statements delivered to LaSalle most recently
prior to the date of this
Agreement, no event or condition has occurred which has had, or is reasonably
likely to have, a Material Adverse Effect;
(b) the office where Borrower keeps its books, records and accounts
(or copies thereof) concerning the Collateral, Borrower's principal place of
business and all of Borrower's other places of business, locations of Collateral
and post office boxes are as set forth in EXHIBIT A; Borrower shall promptly
(but in no event less than ten (10) days prior thereto) advise LaSalle in
writing of the proposed opening of any new place of business, the closing of any
existing place of business, any change in the location of Borrower's books,
records and accounts (or copies thereof) or the opening or closing of any post
office box of Borrower;
(c) the Collateral, including without limitation the Equipment (except
any part thereof which prior to the date of this Agreement Borrower shall have
advised LaSalle in writing consists of Collateral normally used in more than one
state) is and shall be kept, or, in the case of vehicles, based, only at the
addresses set forth on the first page of this Agreement or on EXHIBIT A, and at
other locations within the continental United States of which LaSalle has been
advised by Borrower in writing;
(d) Borrower shall immediately give written notice to LaSalle of any
use of any such Goods in any state other than a state in which Borrower has
previously advised LaSalle such Goods shall be used, and such Goods shall not,
unless LaSalle shall otherwise consent in writing, be used outside of the
continental United States;
(e) no security agreement, financing statement or analogous instrument
exists or shall exist with respect to any of the Collateral other than any
security agreement, financing statement or analogous instrument evidencing
Permitted Liens;
(f) each Account or item of Inventory which Borrower shall, expressly
or by implication, request LaSalle to classify as an Eligible Account or as
Eligible Inventory, respectively, shall, as of the time when such request is
made, conform in all respects to the requirements of such classification as set
forth in the respective definitions of Eligible Account and Eligible Inventory
and as otherwise established by LaSalle from time to time, and Borrower shall
promptly notify LaSalle in writing if any such Eligible Account or Eligible
Inventory shall subsequently become ineligible;
(g) Borrower is and shall at all times during the Original Term or any
Renewal Term be the lawful owner of all Collateral now purportedly owned or
hereafter purportedly acquired by Borrower, free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens;
(h) Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not and shall not conflict with the provisions of any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on Borrower, and Borrower's execution, delivery and
performance of this Agreement and the Other Agreements shall not result in the
imposition of any lien or other encumbrance upon any of Borrower's property
under any existing indenture, mortgage, deed of trust, loan or credit agreement
or other agreement or instrument by which Borrower or any of its property may be
bound or affected;
(i) except as otherwise disclosed on SCHEDULE 13 (i), there are no
actions or proceedings which are pending or, to the best of Borrower's
knowledge, threatened against Borrower which are reasonably likely to have a
Material Adverse Effect and Borrower shall, promptly upon becoming aware of any
such pending or threatened action or proceeding, give written notice thereof to
LaSalle;
(j) Borrower has obtained all licenses, authorizations, approvals and
permits, the lack of which would have a Material Adverse Effect on the operation
of its business, and Borrower is and shall remain in compliance in all material
respects with all applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances (including, without limitation, Environmental
Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety), the failure to
comply with which would have a Material Adverse Effect on its business,
property, assets, operations or condition, financial or otherwise;
(k) all written information now, heretofore or hereafter furnished by
Borrower to LaSalle is and shall be true and correct in all material respects as
of the date with respect to which such information was or is furnished (except
for financial projections, which have been prepared in good faith based upon
reasonable assumptions);
(l) Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the Collateral is now,
or will (while any Liabilities remain outstanding) be owned by any Affiliate;
(m) Borrower's name, for not less than five (5) years has been as set
forth on the first page of this Agreement and Borrower uses no tradenames or
division names in the operation of its business, except as otherwise disclosed
in writing to LaSalle; Borrower shall notify LaSalle in writing within ten (10)
days of the change of its name or the use of any tradenames or division names
not previously disclosed to LaSalle in writing;
(n) with respect to Borrower's Equipment (except for that portion
of the Equipment which is subject to the Equipment Lease and title to which
is retained by DGJ): (i) Borrower has good and indefeasible and merchantable
title to and ownership of all Equipment, including, without limitation, the
Equipment described or listed on the appraisal schedule of Equipment prepared
by Xxxxx-Xxxxxx Appraisal Corporation and dated September, 1998, delivered to
LaSalle prior to the date of this Agreement; (ii) Borrower shall keep and
maintain the Equipment in good operating condition and repair and shall make
all necessary replacements thereof and renewals thereto so that the value and
operating efficiency thereof shall at all times be preserved and maintained,
ordinary wear and tear excepted; (iii) Borrower shall not permit any such
items to become a fixture to real estate or an accession to other personal
property; (iv) from time to time Borrower may sell, exchange or otherwise
dispose of obsolete, unused or worn out Equipment; and (v) Borrower,
immediately on demand by LaSalle, shall deliver to LaSalle any and all
evidence of ownership of, including, without limitation, certificates of
title and applications of title to, any of the Equipment;
(o) this Agreement and the Other Agreements to which Borrower is a
party are the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms, except
to the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the rights of
creditors generally;
(p) Borrower is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business, now owns property having a
value both at fair valuation and at present fair saleable value greater than the
amount required to pay its debts, and will not be rendered insolvent by the
execution and delivery of this Agreement or any of the Other Agreements or by
completion of the transactions contemplated hereunder or thereunder;
(q) Borrower is not now obligated, whether directly or indirectly, for
any loans or other indebtedness for borrowed money other than (i) the
Liabilities; (ii) indebtedness disclosed to LaSalle on SCHEDULE 13 (q); (iii)
unsecured indebtedness to trade creditors arising in the ordinary course of
Borrower's business and (iv) unsecured indebtedness arising from the indorsement
of drafts and other instruments for collection, in the ordinary course of
Borrower's business;
(r) Borrower does not own any margin securities, and none of the
proceeds of the Loans hereunder shall be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation G or Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time;
(s) except as otherwise disclosed on SCHEDULE 13(s), Borrower has no
Parents, Subsidiaries or divisions, nor is Borrower engaged in any joint venture
or partnership with any other Person;
(t) Borrower is duly organized and in good standing in its state of
organization and Borrower is duly qualified and in good standing in all states
where the nature and extent of the business transacted by it or the ownership of
its assets makes such qualification necessary, except for such other states in
which the failure to so qualify would not have a Material Adverse Effect;
(u) Except as set forth in SCHEDULE 13(u) Borrower is not in default
under any material contract, lease or commitment to which it is a party or by
which it is bound, nor does Borrower know of any dispute regarding any contract,
lease or commitment which is material to the continued financial success and
well-being of Borrower;
(v) there are no controversies pending or threatened between Borrower
and any of its employees, other than employee grievances arising in the ordinary
course of business which are not, in the aggregate, material to the continued
financial success and well-being of Borrower, and Borrower is in compliance in
all material respects with all federal and state laws respecting employment and
employment terms, conditions and practices, except where the failure to so
comply would not have a Material Adverse Effect;
(w) Borrower possesses, and shall continue to possess, adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and tradenames to continue to conduct its
business as heretofore conducted by it;
(x) except as set forth on SCHEDULE 13(x), no Benefit Plan is in
violation in any material respect of any of the provisions of ERISA or any of
the qualification requirements of Section 401(a) of the IRC within the
immediately preceding five (5) year period; no Prohibited Transaction or
Reportable Event has occurred with respect to any Benefit Plan has been the
subject of a waiver of the minimum funding standard under Section 412 of the
IRC; no Benefit Plan has experienced an accumulated funding deficiency under
Section 412 of the IRC; no lien has been imposed upon such Borrower or any
ERISA Affiliate of such Borrower under Section 412(n) of the IRC, no Benefit
Plan has been amended in such a way that the security requirements of Section
401(a)(29) of the IRC apply; no notice of intent to terminate a Benefit Plan has
been distributed to affected parties or filed with the PBGC under Section 4041
of ERISA; the PBGC has not instituted proceedings to terminate, or appoint a
trustee to administer, a Benefit Plan and no event has occurred or condition
exists which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit plan;
neither Borrower nor any ERISA Affiliate of Borrower would be liable for any
amount in the aggregate in excess of $5,000 pursuant to Sections 4062, 4063 or
4064 of ERISA if all Benefit Plans terminated as of the most recent valuation
dates of such Benefit Plans; neither Borrower nor any ERISA Affiliate of
borrower maintains any employee welfare benefit plan, as defined in Section 3(1)
of ERISA, which provides any benefits to an employee or the employee's
dependents with respect to claims incurred after the employee separates from
service other than is required by applicable law; and neither Borrower or any
ERISA Affiliate of Borrower has incurred or expects to incur any withdrawal
liability to any Multiemployer Plan;
(y) (i) Borrower has not generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
the Borrower comply in all material respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations
thereunder; (ii) there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
Person, nor is any pending or to the best of the Borrower's knowledge
threatened, and Borrower shall immediately notify LaSalle upon becoming aware of
any such investigation, proceeding, complaint, order, directive, claim, citation
or notice and take prompt and appropriate actions to respond thereto, with
respect to any non-compliance with or violation of the requirements of any
Environmental Law by the Borrower or the release, spill or discharge, threatened
or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which
affects the Borrower or its business, operations or assets or any
properties at which the Borrower has transported, stored, disposed of any
Hazardous Materials; (iii) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of
any Hazardous Materials; and (iv) without limiting the generality of the
foregoing, Borrower shall, following the determination by LaSalle that there
is non-compliance, or any condition which requires any action by or on behalf
of Borrower in order to avoid any non-compliance, with any Environmental Law,
at Borrower's expense, cause an independent environmental engineer acceptable
to LaSalle to conduct such tests of the relevant site(s) as are appropriate
and prepare and deliver a report setting forth the result of such tests, a
proposed plan for remediation and an estimate of the costs thereof; and
(z) Borrower and its Subsidiaries have reviewed the areas within their
business and operations which could be adversely affected by, and have developed
or are developing a program to address on a timely basis, the "Year 2000
Problem" (that is, the risk that computer applications used by Borrower and its
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date on or after December 31,
1999), and have made related appropriate inquiry of material suppliers and
vendors. Based on such review and program, Borrower believes that the "Year
2000 Problem" will not have a Material Adverse Effect on Borrower. From time to
time, at the request of LaSalle, Borrower and its Subsidiaries shall provide to
LaSalle such updated information or documentation as is requested regarding the
status of their efforts to address the Year 2000 problem.
Borrower represents, warrants and covenants to LaSalle that all representations,
warranties and covenants of Borrower contained in this Agreement (whether
appearing in PARAGRAPHS 13 or 14 hereof or elsewhere) shall be true at the time
of Borrower's execution of this Agreement, shall survive the execution, delivery
and acceptance hereof by the parties hereto and the closing of the transactions
described herein or related hereto, shall remain true until the repayment in
full of all of the Liabilities and termination of this Agreement, and shall be
remade by Borrower at the time each Revolving Loan is made pursuant to this
Agreement.
14. COVENANTS. Until payment or satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains LaSalle's prior written
consent waiving or modifying any of Borrower's covenants hereunder in any
specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete books,
records and accounts with respect to all of Borrower's business activities, in
accordance with sound accounting practices and generally accepted accounting
principles consistently applied, and shall keep such books, records and
accounts, and any copies thereof, only at the addresses indicated for such
purpose on EXHIBIT A;
(b) Borrower agrees to deliver to LaSalle the following financial
information, all of which shall be prepared in accordance with generally
accepted accounting principles consistently applied: (i) no later than thirty
(30) days after each calendar month, copies of internally prepared financial
statements of Borrower and its Subsidiaries, on a consolidated and
consolidating, monthly and year-to-date basis including, without limitation,
balance sheets and statements of income, retained earnings and cash flow of
Borrower and its Subsidiaries, certified by the chief financial officer of
Borrower and accompanied by an officer's certificate certifying that no Event of
Default exists hereunder and (ii) no later than ninety (90) days after the end
of the Borrower's Fiscal Years, annual financial statements of Borrower and its
Subsidiaries on a consolidated and consolidating basis certified by independent
certified public accountants selected by Borrower and reasonably satisfactory to
LaSalle, together with such accountants' "management letter";
(c) LaSalle, or any Persons designated by it, shall have the right,
at any time, in the exercise of its commercially reasonable credit judgment,
to call at Borrower's places of business at any reasonable times, and,
without hindrance or delay, to inspect the Collateral and to inspect, audit,
check and make extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to Borrower's
business, the Collateral or any transactions between the parties hereto, and
shall have the right to make such verification concerning Borrower's business
as LaSalle may consider reasonable under the circumstances. Borrower shall
furnish to LaSalle such information relevant to LaSalle's rights under this
Agreement as LaSalle shall at any time
and from time to time reasonably request. Borrower authorizes LaSalle to
discuss the affairs, finances and business of Borrower with any officers or
directors of Borrower or any Affiliate, or with those employees of Borrower
with whom LaSalle has determined in its commercially reasonable judgment to
be necessary or desirable to converse, and to discuss the financial condition
of Borrower with Borrower's independent public accountants. Any such
discussions shall be without liability to LaSalle or to such accountants.
Borrower shall pay to or reimburse LaSalle for all reasonable fees, costs,
and out-of-pocket expenses incurred by LaSalle in the exercise of its rights
hereunder (in addition to the fees payable by Borrower pursuant to PARAGRAPH
5(g) hereof in connection with LaSalle's examination of Borrower's books and
records and Collateral) and all of such costs, fees and expenses shall
constitute Revolving Loans hereunder, shall be payable on demand and, until
paid, shall bear interest at the highest rate then applicable to Loans
hereunder;
(d) (i) Borrower shall: keep the Collateral properly housed and
shall keep the Collateral insured against such risks and in such amounts as are
customarily insured against by Persons engaged in businesses similar to that of
Borrower with such companies, in such amounts and under policies in such form as
shall be reasonably satisfactory to LaSalle. Originals or certified copies of
such policies of insurance have been, or within fifteen (15) days after the
Closing Date, shall be, delivered to LaSalle together with evidence of payment
of all premiums therefor, and shall contain an endorsement, in form and
substance acceptable to LaSalle, showing loss under such insurance policies
payable to LaSalle. Such endorsement, or an independent instrument furnished to
LaSalle, shall provide that the insurance company shall give LaSalle at least
thirty (30) days written notice before any such policy of insurance is altered
or cancelled and that no act, whether willful or negligent, or default of
Borrower or any other Person shall affect the right of LaSalle to recover under
such policy of insurance in case of loss or damage. Borrower hereby directs all
insurers under such policies of insurance to pay all proceeds payable thereunder
directly to LaSalle. Borrower irrevocably, makes, constitutes and appoints
LaSalle (and all officers, employees or agents designated by LaSalle) as
Borrower's true and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing the name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and making all
determinations and decisions with respect to such policies of insurance;
PROVIDED, HOWEVER, that LaSalle shall exercise such rights only upon the
occurrence of an Event of Default;
(ii) Borrower shall maintain, at its expense, such public
liability and third party property damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower with such companies and in
such amounts, with such deductibles and under policies in such form as shall be
reasonably satisfactory to LaSalle and originals or certified copies of such
policies have been, or within fifteen (15) days after the Closing Date, shall
be, delivered to LaSalle together with evidence of payment of all premiums
therefor; each such policy shall contain an endorsement showing LaSalle as
additional insured thereunder and providing that the insurance company shall
give LaSalle at least thirty (30) days written notice before any such policy
shall be altered or cancelled; and
(iii) If Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then LaSalle, without waiving or
releasing any obligation or default by Borrower hereunder, may (but shall be
under no obligation to) obtain and maintain such policies of insurance and pay
such premiums and take such other actions with respect thereto as LaSalle deems
advisable. All sums disbursed by LaSalle in connection with any such actions,
including, without limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute Revolving Loans
hereunder and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(e) Borrower shall not use the Collateral, or any part thereof, in any
unlawful business or for any unlawful purpose or use or maintain any of the
Collateral in any manner that does or could result in material damage to the
environment or a violation of any applicable Environmental Laws, rules or
regulations; Borrower shall keep the Collateral in good condition, repair and
order, ordinary wear and tear excepted; Borrower shall not permit the
Collateral, or any part thereof, to be levied upon under execution, attachment,
distraint or other legal process; Borrower shall not sell, lease, grant a
security interest in or otherwise dispose of any of the Collateral except as
expressly permitted by this Agreement; and Borrower shall not secrete or abandon
any of the Collateral, or remove
or permit removal of any of the Collateral from any of the locations listed
on EXHIBIT A or in any written notice to LaSalle pursuant to PARAGRAPH 13(c)
hereof, except for the removal of Inventory sold in the ordinary course of
Borrower's business as permitted herein;
(f) all monies and other property obtained by Borrower from LaSalle
pursuant to this Agreement will be used solely for business purposes of
Borrower;
(g) Borrower shall, at the request of LaSalle, indicate on its records
concerning the Collateral a notation, in form satisfactory to LaSalle, of the
security interest of LaSalle hereunder, and Borrower shall not maintain
duplicates or copies of such records at any address other than Borrower's
principal place of business set forth on the first page of this Agreement;
PROVIDED, HOWEVER, that Borrower, in the ordinary course of its business, may
furnish copies of such records to its accountants, attorneys and other agents or
advisors as it may determine to be necessary or desirable, in the exercise of
its commercially reasonable judgment;
(h) Borrower shall file all required tax returns and pay all of its
taxes when due, including, without limitation, taxes imposed by federal, state
or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that Borrower shall have the right to contest the payment of
such taxes in good faith by appropriate proceedings so long as (i) the amount so
contested is shown on Borrower's financial statements, (ii) the contesting of
any such payment does not give rise to a lien for taxes, (iii) upon the
occurrence of an Event of Default, Borrower keeps on deposit with LaSalle (such
deposit to be held without interest) an amount of money which, in the sole
judgment of LaSalle, is sufficient to pay such taxes and any interest or
penalties that may accrue thereon, and (iv) if Borrower fails to prosecute such
contest with reasonable diligence, LaSalle may apply the money so deposited in
payment of such taxes. If Borrower fails to pay any such taxes and in the
absence of any such contest by Borrower, LaSalle may (but shall be under no
obligation to) advance and pay any sums required to pay any such taxes and/or to
secure the release of any lien therefor, and any sums so advanced by LaSalle
shall constitute Revolving Loans hereunder, shall be payable by Borrower to
LaSalle on demand, and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(i) Borrower shall not (i) incur, create, assume or suffer to exist
any indebtedness other than (A) indebtedness arising under this Agreement, (B)
unsecured indebtedness owing in the ordinary course of business to trade
suppliers, and (C) any other indebtedness described in PARAGRAPH 13(q)(ii)
hereof; or (ii) assume, guarantee or indorse, or otherwise become liable in
connection with, the obligations of any Person, except by indorsement of
instruments for deposit or collection or similar transactions in the ordinary
course of business;
(j) Borrower shall not enter into any merger or consolidation, or
sell, lease or otherwise dispose of all or substantially all of its assets;
Borrower shall not create any new Subsidiary or Affiliate or issue any shares
of, or warrants or other rights to receive or purchase any shares of, any class
of its stock; Borrower shall not enter into any transaction outside the ordinary
course of Borrower's business;
(k) Borrower shall not (i) declare or pay any dividend or other
distribution (whether in cash or in kind) on, purchase, redeem or retire any
shares of any class of its stock, or make any payment on account of, or set
apart assets for the repurchase, redemption, defeasance or retirement of, any
class of its stock; or (ii) make any optional payment or prepayment on or
redemption (including without limitation by making payments to a sinking fund or
analogous fund) or repurchase of any indebtedness for borrowed money other than
indebtedness pursuant to this Agreement; PROVIDED, that Borrower may make
payments and prepayments on Subordinated Debt if Borrower has satisfied the
conditions set forth in PARAGRAPH 14(n)(v);
(l) Borrower shall not make any loans to, or investment in, any
Person, whether in cash, securities or other property of any kind, other than
investments that are direct obligations of the United States;
(m) Borrower shall not amend its organizational documents or change
its Fiscal Year;
(n) Borrower shall maintain and keep in full force and effect each of
the financial covenants set forth below. The calculation and determination of
each such financial covenant, and all accounting terms contained
therein, shall be so calculated and construed in accordance with GAAP,
applied on a basis consistent with the financial statements of Borrower
delivered on or before the Closing Date:
(i) CONSOLIDATED TANGIBLE NET WORTH. Borrower and its
Subsidiaries, on a consolidated basis, shall maintain at all times during the
following fiscal periods, Tangible Net Worth in an amount not less than the
amount set forth for such fiscal period: (A) for the six-month period ending
December 31, 1999 a Tangible Net Worth of not less than the greater of (x) Five
Million Two Hundred Thousand and no/100 Dollars ($5,200,000.00) or (y) ninety
percent (90%) of Borrower's Tangible Net Worth as of June 30, 1999 (the "Initial
TNW Amount"); and (B) for each fiscal year thereafter Tangible Net Worth shall
increase, cumulatively, by the amount of Two Hundred Fifty Thousand and no/100
Dollars ($250,000.00);
(ii) CONSOLIDATED INTEREST COVERAGE RATIO. Borrower and its
Subsidiaries, on a consolidated basis, shall maintain for the periods set
forth below a ratio of (A) EBITDA for such period to (B) interest expense for
such period, of not less than 1.50 to 1.00: (1) as of December 31, 1999 for
the semi-annual period then ended; (2) as of March 31, 2000, for the
nine-month period then ended; (3) as of June 30, 2000, for the twelve-month
period then ended; and (4) thereafter, as of the last day of each fiscal
quarter thereafter for the twelve-month period then ended.
(iii) Consolidated Debt Service Coverage Ratio. [RESERVED]
(iv) CONSOLIDATED CAPITAL EXPENDITURES. Borrower and its
Subsidiaries, on a consolidated basis, shall not make Capital Expenditures of an
aggregate amount of more than One Million and no/100 Dollars ($1,000,000.00)
during any fiscal year with not more than Seven Hundred Fifty Thousand and
no/100 Dollars ($750,000.00) of such Capital Expenditures in the form of capital
lease obligations or similar financing obligations;
(v) SUBORDINATED DEBT PAYMENTS. Except to the extent set forth
below, Borrower shall not make payments on any Subordinated Debt, including,
without limitation, the DGJ Debt or the Equipment Lease unless: (A) no Default
or Event of Default shall have occurred or be continuing, (B) Borrower shall
have Excess Availability in an amount not less than Three Hundred Thousand and
no/100 Dollars ($300,000.00) after taking into account the payment then proposed
to be made on the Subordinated Debt, and (C) the Borrower's required
Consolidated Tangible Net Worth, as determined under the preceding subparagraph
(i), shall be not less than the amount then required both as of the date of, and
after giving effect to, the proposed payment; PROVIDED, HOWEVER, that Borrower
may make regularly scheduled, current payments under the Equipment Lease without
satisfying the Excess Availability requirement under clause (B) above, but
Borrower may not pay any amount under the Equipment Lease which was past due or
delinquent as of the date of the initial funding of the Revolving Loan unless
all of the foregoing conditions are satisfied. Subject to the terms and
provisions of the Intercreditor Agreement dated August __, 1999 (the
"Intercreditor Agreement"), the prohibitions on payment of Subordinated Debt
shall not apply to DGJ's recovery of proceeds of the sale or disposition of the
Creditor Equipment (as defined in the Intercreditor Agreement) as a result of
the an Enforcement Action (as defined in the Intercreditor Agreement) by the
holder(s) of the Subordinated Debt permitted under the Intercreditor Agreement.
(o) Borrower shall reimburse LaSalle for all costs and expenses
including, without limitation, legal expenses and reasonable attorneys' fees
(both in-house and outside counsel), incurred by LaSalle in connection with the
documentation and consummation of this transaction and any amendments or
modifications of this Agreement or the Other Agreements or other transactions
between Borrower and LaSalle, including, without limitation, Uniform Commercial
Code and other public record searches, lien filings, Federal Express or similar
express or messenger delivery, appraisal costs, surveys, title insurance and
environmental audit or review costs, and in seeking to collect, protect or
enforce any rights in or to the Collateral or incurred by LaSalle in seeking to
collect any Liabilities and to administer and enforce any of LaSalle's rights
under this Agreement. Borrower shall also pay all normal service charges with
respect to accounts maintained by LaSalle for the benefit of Borrower. All such
costs, expenses and charges shall constitute Revolving Loans hereunder, shall be
payable by Borrower to LaSalle on demand, and, until paid, shall bear interest
at the highest rate then applicable to Revolving Loans hereunder;
(p) Except for (I) management and consulting fees that are fair and
reasonable to the Company and payable to Persons who are not Affiliates of
Borrower, (II) fees payable to any or all directors of Borrower in an annual
aggregate amount not to exceed Thirty-Six Thousand and no/100 Dollars
($36,000.00), and (III) salary, compensation, fees and other payments to Xxxx
Xxxxxx in annual aggregate amount not to exceed Fifty-Two Thousand and no/100
Dollars ($52,000.00); Borrower shall not: (i) pay management or consulting fees
to any Affiliate unless (x) no Event of Default shall have occurred and be
continuing, or would be caused thereby, (y) Borrower has, both before and after
the payment of such management and consulting fees, Excess Availability of not
less than Three Hundred Thousand and no/100 Dollars ($300,000.00), and (z) the
sum of the management or consulting fee proposed to be paid, together with all
other management and consulting fees paid to Affiliates during the then-current
Fiscal Year, does not in aggregate exceed fifteen percent (15%) of Borrower's
net income before tax for the preceding Fiscal Year as determined in accordance
with GAAP; (ii) make any loan to any Person except travel advances made to
employees in the ordinary course of business and loans to employees not
exceeding Ten Thousand and no/100 Dollars ($10,000.00) to any single Person and
Twenty-Five Thousand and no/100 Dollars ($25,000.00) in the aggregate
outstanding for all Persons at any one time; (ii) pay annual aggregate
compensation, whether as salary, bonus or otherwise, to all officers of Borrower
in excess of one hundred ten percent (110%) of the aggregate compensation in
effect on the date of this Agreement for the first year and one hundred ten
percent (110%) of the prior year's aggregate compensation amount for subsequent
years. The aggregate annual compensation amount(s) shall be adjusted each year
for the net addition or loss of officers;
(q) Except with respect to the arrangements in effect as of the
initial funding of the Revolving Loan under the Equipment Lease and the DGJ
Debt, Borrower shall not enter into or be a party to, or permit any Subsidiary
to enter into or be a party to, any transaction with any Affiliate of Borrower
except in the ordinary course of business in a manner and to an extent
consistent with past practices of Borrower and necessary or desirable for the
prudent operation of its business, for fair consideration and on terms no less
favorable to Borrower or such Subsidiary as are available from unaffiliated
third parties;
(r) Borrower shall promptly advise LaSalle in writing of any Material
Adverse Effect or the occurrence of any Default or Event of Default; and
(s) Borrower shall not pay fees owed to DGJ, L.L.C. unless no Default
or Event of Default shall have occurred and been continuing, and Borrower shall
have Excess Availability in an amount not less than Three Hundred Thousand and
no/100 Dollars ($300,000.00) after taking into account the payment then proposed
to be made; this PARAGRAPH 14(s) shall not be construed to limit payments under
the Equipment Lease or the DGJ Debt otherwise permitted under paragraph 14(n)(v)
above.
15. CONDITIONS PRECEDENT.
(a) The obligation of LaSalle to fund the initial Revolving Loan is
subject to the satisfaction or waiver on or before the Closing Date of the
following conditions precedent:
(i) LaSalle shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other documents set
forth on the closing document list attached hereto as SCHEDULE 15(a)(i) (the
"Closing Agenda");
(ii) Since June 30, 1999, no event shall have occurred which has
had or could reasonably be expected to have a Material Adverse Effect, as
determined by LaSalle in its sole discretion;
(iii) LaSalle shall have received payment in full of all fees and
expenses payable to it by Borrower on or before the Closing Date;
(iv) LaSalle shall have determined that immediately after giving
effect to (A) the making of the initial Loans, including without limitation the
Revolving Loans, if any, requested to be made on the Closing Date, and (B) the
payment or reimbursement by Borrower of LaSalle for all closing costs and
expenses incurred in
connection with the transactions contemplated hereby, on a PRO FORMA basis
the Excess Availability of Borrower shall not be less than Three Hundred
Thousand and no/100 Dollars ($300,000.00);
(v) LaSalle shall have received a certificate from Borrower's
chief executive officer or chief financial officer, pursuant to which such
officer shall certify that in calculating the Excess Availability described in
clause (iv) above, Borrower's outstanding trade payables were (and are) current
and not past due in any material respect; and
(vi) The Obligors shall have executed and delivered to LaSalle
all documents which LaSalle determines are reasonably necessary to consummate
the transactions contemplated hereby.
After the Closing Date, the obligation of LaSalle to make any requested
Revolving Loan is subject to the satisfaction of the conditions precedent set
forth below. Each such request shall constitute a representation and warranty
that such conditions are satisfied:
(vii) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct on and as of the
date of such request, as if then made, other than representations and
warranties that relate solely to an earlier date;
(viii) No Default or Event of Default shall have occurred, or
would result from the making of the requested Revolving Loan or the issuance of
the requested Letter of Credit, which has not been waived; and
(ix) Since June 30, 1999, no event has occurred which has had or
could reasonably be expected to have a Material Adverse Effect.
16. DEFAULT. The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" hereunder:
(a) the failure of any Obligor to pay when due, declared due, or
demanded by LaSalle in accordance with the terms hereof, any of the Liabilities;
(b) the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements; provided, that with respect to
any breach of the reporting requirements under PARAGRAPH 11 of this Agreement,
Borrower shall have a grace period of five (5) days from the due date of any
such report to cure such Event of Default;
(c) the making or furnishing by any Obligor to LaSalle of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and LaSalle, which is
untrue or misleading in any respect, or the failure of any Obligor to perform,
keep or observe any of the covenants, conditions, promises, agreement of such
Obligor under any other agreement with any Person if such failure has or is
reasonably likely to have a Material Adverse Effect;
(d) the creation (whether voluntary or involuntary) of, or any attempt
to create, any lien or other encumbrance upon any of the Collateral, other than
the Permitted Liens, or the making or any attempt to make any levy, seizure or
attachment thereof;
(e) the commencement of any proceedings (i) in bankruptcy by or
against any Obligor, (ii) for the liquidation or reorganization of any Obligor,
(iii) alleging that such Obligor is insolvent or unable to pay its debts as they
mature, or (iv) for the readjustment or arrangement of any Obligor's debts,
whether under the United States Bankruptcy Code or under any other law, whether
state or federal, now or hereafter existing for the relief of debtors, or the
commencement of any analogous statutory or non-statutory proceedings involving
any Obligor; PROVIDED, HOWEVER, that if such commencement of proceedings against
such Obligor is involuntary, such action shall not
constitute an Event of Default unless such proceedings are not dismissed
within sixty (60) days after the commencement of such proceedings;
(f) the appointment of a receiver or trustee for any Obligor, for any
of the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation or a partnership; PROVIDED, HOWEVER, that if such appointment or
commencement of proceedings against such Obligor is involuntary, such action
shall not constitute an Event of Default unless such appointment is not revoked
or such proceedings are not dismissed within sixty (60) days after the
commencement of such proceedings;
(g) the entry of any judgment or order in excess of $50,000.00 against
any Obligor which remains unsatisfied or undischarged and in effect for sixty
(60) days after such entry without a stay of enforcement or execution;
(h) the occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to LaSalle pursuant to which such Person has guaranteed to LaSalle
the payment of all or any of the Liabilities or has granted LaSalle a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities;
(i) the occurrence of an event of default under any other agreement or
instrument evidencing indebtedness for borrowed money in excess of $50,000.00
executed or delivered by Borrower or pursuant to which agreement or instrument
Borrower or its properties is or may be bound;
(j) a Change of Control shall have occurred; or
(k) if any Reportable Event shall have occurred or any Benefit Plan
shall be terminated within the meaning of title IV of ERISA, or a trustee shall
be appointed by the appropriate United States District Court to administer any
Benefit Plan, the PBGC shall institute proceedings to terminate any Benefit
Plan, or there shall be a withdrawal from any Multiemployer Plan, and there
shall be a Material Adverse Effect in the case of any event described in this
PARAGRAPH 16(k); or
(l) the occurrence of any event or condition which has or is
reasonably likely to have a Material Adverse Effect.
Notwithstanding anything contained in this PARAGRAPH 16 or contained in any
other provision of this Agreement or Other Agreements to the contrary, in the
event of the institution of any proceedings described in PARAGRAPH 16(e) hereof
against Borrower, LaSalle shall not be obligated to make advances to Borrower
during the sixty (60) day grace period provided in PARAGRAPH 16(e).
17. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in PARAGRAPH
16(e) hereof, all of the Liabilities shall immediately and automatically become
due and payable, without notice of any kind. Upon the occurrence of any other
Event of Default, all of the Liabilities may, at the option of LaSalle, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
(b) Upon the occurrence of an Event of Default, LaSalle may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code and any other applicable law in addition to, and not in lieu of,
any rights and remedies expressly granted in this Agreement or in any of the
Other Agreements and all of LaSalle's rights and remedies shall be cumulative
and non-exclusive to the extent permitted by law. In particular, but not by way
of limitation of the foregoing, LaSalle may, without notice, demand or legal
process of any kind, take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession), wherever it may be
found, and for that purpose may pursue the same wherever it may be found, and
may enter into any of Borrower's premises where any of the Collateral may be,
and search for, take possession of, remove, keep and store
any of the Collateral until the same shall be sold or otherwise disposed of,
and LaSalle shall have the right to store the same at any of Borrower's
premises without cost to LaSalle. At LaSalle's request, Borrower shall, at
Borrower's expense, assemble the Collateral and make it available to LaSalle
at one or more places to be designated by LaSalle and reasonably convenient
to LaSalle and Borrower. Borrower recognizes that if Borrower fails to
perform, observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to
LaSalle, and Borrower agrees that LaSalle shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed reasonably and properly given if
given at least ten (10) calendar days before such disposition. Any proceeds
of any disposition by LaSalle of any of the Collateral may be applied by
LaSalle to the payment of expenses in connection with the Collateral
including, without limitatin, legal expenses and reasonable attorneys' fees
(both in-house and outside counsel) and any balance of such proceeds may be
applied by LaSalle toward the payment of such of the Liabilities, and in such
order of application, as LaSalle may from time to time elect.
18. INDEMNIFICATION. Borrower agrees to defend (with counsel reasonably
satisfactory to LaSalle), protect, indemnify and hold harmless LaSalle, each
affiliate or subsidiary of LaSalle, and each of their respective officers,
directors, employees, attorneys and agents (each an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or the use or
intended use of the proceeds of the Loans; PROVIDED, HOWEVER, that Borrower
shall not have any obligation hereunder to any Indemnified Party with respect to
matters caused by or resulting from the willful misconduct or gross negligence
of such Indemnified Party. To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Borrower shall satisfy such undertaking to the maximum
extent permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Revolving Loans
hereunder from the date incurred by each Indemnified Party until paid by
Borrower, be added to the Liabilities of Borrower and be secured by the
Collateral. The provisions of this paragraph 18 shall survive the satisfaction
and payment of the other Liabilities and the termination of this Agreement.
19. NOTICES. All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered in person, and in the case of LaSalle shall be
sent to it at LaSalle Business Credit, Inc., 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, XX 00000, Attention: District Credit Manager (if by telecopy to
(000) 000-0000), and in the case of Borrower shall be sent to (1) Borrower at
its principal place of business as set forth on the first page of this Agreement
(if by telecopy to (000) 000-0000), (2) DGJ, L.L.C., 000 Xxxxxxx Xxxxxx, Xxxxx
000, XX 00000, Attention: Xxxx Xxxxxx (if by telecopy to (000) 000-0000) and
(3) Xxxxxx & Coff, 00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
Attention: Xxxx Xxxxxxx (if by telecopy to (000) 000-0000).
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION. This Agreement and the Other
Agreements are submitted by Borrower to LaSalle for LaSalle's acceptance or
rejection at LaSalle's principal place of business as an offer by Borrower to
borrow monies from LaSalle now and from time to time hereafter, and shall not be
binding upon LaSalle or become effective until accepted by LaSalle, in writing,
at said place of business. If so accepted by LaSalle, this Agreement and the
Other Agreements shall be deemed to have been made at said place of business.
THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING, WITHOUT
LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING
PERFECTION OF THE SECURITY INTERESTS IN THE
COLLATERAL, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
RELEVANT JURISDICTION. If any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or remaining provisions of this
Agreement.
21. FORUM SELECTION AND SERVICE OF PROCESS. To induce LaSalle to accept this
Agreement, Borrower irrevocably agrees that, subject to LaSalle's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE
COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. Borrower
hereby irrevocably appoints and designates the law firm of Xxxxxx & Coff, whose
address is set forth in Section 19 of this Agreement (or any other person having
and maintaining a place of business in such state whom Borrower may from time to
time hereafter designate upon ten (10) days written notice to LaSalle and who
LaSalle has agreed in its sole discretion in writing is satisfactory and who has
executed an agreement in form and substance satisfactory to LaSalle agreeing to
act as such attorney and agent), as Borrower's true and lawful attorney and duly
authorized agent for acceptance of service of legal process. Borrower agrees
that service of such process upon such person shall constitute personal service
of such process upon Borrower. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY
LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
22. MODIFICATION AND BENEFIT OF AGREEMENT. This Agreement and the Other
Agreements may not be modified, altered or amended except by an agreement in
writing signed by Borrower and LaSalle. Borrower may not sell, assign or
transfer this Agreement, or the Other Agreements or any portion thereof
including, without limitation, Borrower's rights, titles, interest, remedies,
powers or duties thereunder. Borrower hereby consents to LaSalle's sale,
assignment, transfer or other disposition, at any time and from time to time
hereafter, of this Agreement, or the Other Agreements, or of any portion
thereof, or participations therein including, without limitation, LaSalle's
rights, titles, interest, remedies, powers and/or duties thereunder. Borrower
agrees that it shall execute and deliver such documents as LaSalle may request
in connection with any such sale, assignment, transfer or other disposition.
23. HEADINGS OF SUBDIVISIONS. The headings of subdivisions in this Agreement
are for convenience of reference only, and shall not govern the interpretation
of any of the provisions of this Agreement.
24. POWER OF ATTORNEY. Borrower acknowledges and agrees that its appointment
of LaSalle as its attorney and agent-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be irrevocable
until all of the Liabilities are paid in full and this Agreement is terminated.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY
(a) LASALLE AND BORROWER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT OF BORROWER OR LASALLE OR WHICH, IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND
LASALLE. IN NO EVENT SHALL LASALLE BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES.
(b) BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY LASALLE OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
OF BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
(c) Borrower hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.
(d) LaSalle's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of this Agreement or any of the
Other Agreements shall not waive, affect or diminish any right of LaSalle
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by LaSalle of an Event of Default under this Agreement or any default
under any of the Other Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default under any of the
Other Agreements, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. No delay on the part of LaSalle
in the exercise of any right or remedy under this Agreement or any Other
Agreement shall preclude other or further exercise thereof or the exercise of
any right or remedy. None of the undertakings, agreements, warranties, covenants
and representations of Borrower contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by LaSalle
unless such suspension or waiver is in writing, signed by a duly authorized
officer of LaSalle and directed to Borrower specifying such suspension or
waiver.
(e) Borrower has furnished and will furnish to LaSalle certain
information concerning Borrower which Borrower has advised is non-public,
proprietary or confidential in nature ("CONFIDENTIAL INFORMATION"). LaSalle
confirms to the Borrower that it is LaSalle's policy and practice to maintain in
confidence all Confidential Information which is provided to it under agreements
providing for the extension of credit and which is identified to it as such, and
that it will protect the confidentiality of Confidential Information submitted
to it with respect to Borrower under this Agreement, commensurate with its
efforts to maintain the confidentiality of its own Confidential Information,
PROVIDED, HOWEVER, that (i) nothing contained herein shall prevent LaSalle from
disclosing Confidential Information (A) to its Affiliates and their respective
directors, officers, and employees and to any legal counsel, auditors,
appraisers, consultants or other persons retained by it or its Affiliates as
professional advisors, on the condition that such information not be further
disclosed except in compliance with this PARAGRAPH 25(e); (B) under color of
legal authority, including, without limitation, to any regulatory authority
having jurisdiction over it or its operations or to, or under the authority of,
any court deemed by it to be of competent jurisdiction; (C) to any actual or
potential assignee of or participant in LaSalle's rights and obligations under
this Agreement to the extent such actual potential assignee or participant has
agreed to maintain such information in confidence on the basis set forth in this
PARAGRAPH 25(e); and (D) as necessary in connection with the exercise of its
remedies under this Agreement or any of the Other Agreements; (ii) the terms of
this PARAGRAPH 25(e) shall be inapplicable to any information furnished to it
which is in possession prior to the delivery to it of such information by
Borrower or any other authorized Person, or otherwise has been obtained by it on
a non-confidential basis, or which was or becomes available to the public or
otherwise part of the public domain (other than as a result of LaSalle's failure
or any prospective participant's or assignee's failure to abide hereby), or
which was not non-public, proprietary or confidential when Borrower or any other
authorized Person delivered it to LaSalle; and (iii) the determination by
LaSalle as to the application of any of the circumstances described in the
foregoing clauses (i) and (ii) will be conclusive and binding if made in good
faith.
(f) Notwithstanding SUBPARAGRAPH (e) above, Borrower consents to
LaSalle publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have duly executed this LOAN AND
SECURITY AGREEMENT as of the 19th day of August, 1999.
LASALLE BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Title: F.V.P.
------------------------------------
ATTEST: BPI PACKAGING TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------- -------------------------------
Title: President Title: Chief Financial Officer
--------------- ----------------------------
EXHIBIT A - BUSINESS AND COLLATERAL LOCATIONS
Attached to and made a part of that certain Loan and Security Agreement of even
date herewith between BORROWER and LASALLE BUSINESS CREDIT, INC.
a. Borrower's business locations (please indicate which location is the
principal place of business and at which locations originals and all copies of
Borrower's books, records and accounts are kept):
000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xx. 0
Xxxxx Xxxxxxx, XX 00000
b. Other locations of Collateral owned by Borrower (including, without
limitation, warehouse locations, processing locations, consignment locations)
and all post office boxes of Borrower. Please indicate the relationship of such
location to Borrower (i.e. public warehouse, processor, etc.).
None.
SCHEDULE 1(A) - PERMITTED LIENS
Securities Purchase Agreement dated January 27, 1999 between Borrower and DGJ,
L.L.C. providing for a loan by DGJ, L.L.C. to Borrower of $3,200,000 secured by
all assets of Borrower, to be amended to include additional amounts currently
being determined.
Lease dated January 27, 1999 from DGJ, L.L.C. to the Borrower covering certain
equipment described in the Lease.
See attached chart.
[NOTE: THIS SCHEDULE 1(A) MAY BE AMENDED BASED ON FURTHER SEARCH RESULTS]
UCC AND TAX LIEN SERACH RESULTS OF BPI TECHNOLOGIES, INC.
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 188437 9/28/93 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to P.C. Leasing, a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 539155 3/31/98 P.C. Leasing , a division of Continuation of #188437
the Commonwealth Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607683 2/2/99 DGJ, L.L.C. Assignment of #188437 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 200388 11/29/93 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to P.C. Leasing, a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 558833 6/22/98 P.C. Leasing, a division of Continuation of #200388
the Commonwealth Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607682 2/2/99 DGJ, L.L.C. Assignment of #200388 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 218022 2/24/94 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to P.C. Leasing, a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 575369 9/2/98 P.C. Leasing, a division of Continuation of #218022
the Commonwealth Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607681 2/2/99 DGJ, L.L.C. Assignment of #218022 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 238886 6/1/94 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to P.C. Leasing, a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 603111 1/11/99 P.C. Leasing, a division of Continuation of #238886
the Commonwealth Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607680 2/2/99 DGJ, L.L.C. Assignment of #238886 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 258146 9/1/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 276679 11/29/94 The CIT Group/Equipment Amendment of #258146
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607674 2/2/99 DGJ, L.L.C. Assignment of #258146 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 258147 9/1/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 277893 12/5/94 The CIT Group/Equipment Amendment of #258147
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607669 2/2/99 DGJ, L.L.C. Assignment of #258147 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 258148 9/1/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 276680 11/29/94 The CIT Group/Equipment Amendment of #258148
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607670 2/2/99 DGJ, L.L.C. Assignment of #258148 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 258149 9/1/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 276681 11/29/94 The CIT Group/Equipment Amendment of #258149
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607671 2/2/99 DGJ, L.L.C. Assignment of #258149 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 262063 9/20/94 Textron Financial Corporation, Equipment lease
the Commonwealth Textron Capital Corporation, &
affiliates "TEXTRON"
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607685 2/2/99 DGJ, L.L.C. Assignment of #262063 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 262863 9/23/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 540327 4/3/98 The CIT Group/Equipment Partial release of
the Commonwealth Financing, Inc. #262863
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607672 2/2/99 DGJ, L.L.C. Assignment of #262863 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 268288 10/19/94 The CIT Group/Equipment Specific equipment
the Commonwealth Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607673 2/2/99 DGJ, L.L.C. Assignment of #268288 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 276883 11/30/94 Phoenixcor, Inc. Equipment lease
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 282581 12/27/94 Phoenixcor, Inc. Amendment of #276883
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607679 2/2/99 DGJ, L.L.C. Assignment of #276883 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 295116 2/27/95 USL Capital Corporation Equipment owned or
the Commonwealth hereafter acquired
consisting of plastics
manufacturing equipment
subject to Proposal
Letter dtd 1/25/95
--------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 300428 3/23/95 USL Capital Corporation Amendment of #295116
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 312353 5/15/95 USL Capital Corporation Amendment of #295116
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 331796 8/14/95 USL Capital Corporation Amendment of #295116
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 369861 2/15/96 Mellon U.S. Leasing, a Amendment of #295116
the Commonwealth division of Mellon Leasing
Corp., successor to USL
Capital Corporation
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607686 2/2/99 DGJ, L.L.C. Assignment of #295116 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 298769 3/13/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
the Commonwealth assigned to Citicorp Dealer
--------------------------------------------------------------------------------------------------------------------------------
Finance
Massachusetts Secretary of X 308803 4/27/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
the Commonwealth assigned to Citicorp Dealer
--------------------------------------------------------------------------------------------------------------------------------
Finance
Massachusetts Secretary of X 311670 5/10/95 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607678 2/2/99 DGJ, L.L.C. Assignment of #311670 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 324579 7/10/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
the Commonwealth assigned to Citicorp Dealer
--------------------------------------------------------------------------------------------------------------------------------
Finance
Massachusetts Secretary of X 328112 7/26/95 Wentworth Capital Corporation Equipment lease
the Commonwealth assigned to Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607677 2/2/99 DGJ, L.L.C. Assignment of #328112 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 357684 12/15/95 Phoenixcor, Inc. Equipment lease
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 368512 2/8/96 Phoenixcor, Inc. Continuation of #357684
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607676 2/2/99 DGJ, L.L.C. Assignment of #357684 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 367999 2/7/96 Charter Financial, Inc. Specific equipment
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 384841 4/24/96 Charter Financial, Inc. Amendment of #367999
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607965 2/3/99 DGJ, L.L.C. Assignment of #367999 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 404022 7/17/96 FINOVA Capital Corporation Equipment lease
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607675 2/2/99 DGJ, L.L.C. Assignment of #404022 to
the Commonwealth DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 430711 11/20/96 Foothill Capital Corporation Equipment lease
the Commonwealth
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 574309 8/28/98 United Credit Patriot Funding Assignment of #430711
the Commonwealth United Credit Corporation
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 617643 3/18/99 Franklin Capital Corporation Assignment of #430711
the Commonwealth and DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 430712 11/20/96 Foothill Capital Corporation Accounts, contract
the Commonwealth rights, general
intangibles, instruments,
documents, leases,
chattel paper, inventory
and all the proceeds
thereof.
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 574310 8/28/98 United Credit Patriot Funding Assignment of #430712
the Commonwealth United Credit Corporation
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 638204 6/10/99 DGJ, L.L.C. Assignment of #430712 to
the Commonwealth DGJ, L.L.C.
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 443442 1/21/97 Caterpillar Financial Services Equipment lease
the Commonwealth Corporation
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 456078 3/21/97 Caterpillar Financial Services Specific equipment
the Commonwealth Corporation
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 463979 4/25/97 Caterpillar Financial Services Specific equipment
the Commonwealth Corporation
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 573279 8/24/98 Patriot Funding, division of Accounts, contract
the Commonwealth United Credit Corporation rights, chattel paper,
general intangibles and
merchandise returns,
inventory and proceeds
and books and records
relating to the
foregoing.
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 617642 3/18/99 Franklin Capital Corporation Assignment of #573279
the Commonwealth and DGJ, L.L.C.
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 538442 3/26/98 Phoenixcor, Inc. Specific equipment
the Commonwealth
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 607684 2/2/99 DGJ, L.L.C. Assignment of #538442 to
the Commonwealth DGJ, L.L.C.
---------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 604995 1/21/99 DGJ, L.L.C./Franklin Capital Accounts, chattel paper,
the Commonwealth Corporation documents, equipment,
general intangibles,
instruments, investment
property and proceeds,
profits or products
relating to the
foregoing.
--------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 606348 1/27/99 Franklin Capital Corporation Accounts, chattel paper,
the Commonwealth documents, equipment,
general intangibles,
instruments, investment
property and proceeds,
profits or products
relating to the
foregoing.
---------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 606349 1/27/99 DGJ, L.L.C. Accounts, chattel paper,
the Commonwealth documents, equipment,
general intangibles,
instruments, investment
property and proceeds,
profits or products
relating to the
foregoing.
----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 615018 3/8/99 Fina Oil and Chemical Company Secured Party's security
the Commonwealth interest is subordinate
to DGJ, L.L.C. and
Franklin Capital
Corporation pursuant to
the Subordination
Agreement dtd 1/27/99
----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Secretary of X 049145 11/12/96 Massachusetts Secretary of State tax lien in the
the Commonwealth State amount of $154,989.80
----------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-331 9/29/93 Wentworth Capital Corporation Equipment lease
Massachusetts assigned to P.C. Leasing, a
division of Phoenixcor, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-8 4/7/98 P.C. Leasing, a division of Continuation of #14-331
Massachusetts Phoenixcor, Inc.
----------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-25 3/1/99 DGJ, L.L.C. Assignment of #14-331 to
Massachusetts DGJ, L.L.C.
----------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-345 11/30/93 Wentworth Capital Corporation Equipment lease
Massachusetts assigned to P.C.Leasing, a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-23 6/25/98 P.C.Leasing, ad division of Continuation of #14-345
Massachusetts Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-24 3/1/99 DGJ, L.L.C. Assignment of #14-345 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-358 3/4/94 Wentworth Capital Corporation Equipment lease
Massachusetts assigned to P.C. Leasing , a
division of Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-54 10/13/98 P.C. Leasing, a division of Continuation of #14-358
Massachusetts Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-23 3/1/99 DGJ, L.L.C. Assignment of #14-358 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-393 6/3/94 Wentworth Capital Corporation Specific equipment
Massachusetts assigned to P.C. Leasing, a
division of Phoenxicor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-1 1/13/99 P.C. Leasing, a division of Continuation of #14-393
Massachusetts Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-22 3/1/99 DGJ, L.L.C. Assignment of #14-393 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-430 9/9/94 The CIT Group/Equipment Specific equipment
Massachusetts Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-15 2/22/99 DGJ, L.L.C. Assignment of #14-430 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-431 9/20/94 Textron Financial Corporation, Specific equipment
Massachusetts Textron Capital Corporation &
affiliates "TEXTRON"
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-58 6/8/99 Textron Financial Corporation, Continuation of #14-431
Massachusetts Textron Capital Corporation &
affiliates "TEXTRON"
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-60 6/8/99 DGJ, L.L.C. Assignment of #14-431 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-437 10/19/94 The CIT Group/Equipment Specific equipment
Massachusetts Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-13 2/22/99 DGJ, L.L.C. Assignment of #14-437 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-440 11/29/94 The CIT Group/Equipment Specific equipment
Massachusetts Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-16 2/22/99 DGJ, L.L.C. Assignment of #14-440 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-441 11/30/94 Phoenixcor, Inc. Property set forth in
Massachusetts Lease dtd 11/10/94. See
attached.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-458 12/28/94 Phoenixcor, Inc. Amendment of #14-441
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-21 3/1/99 DGJ, L.L.C. Assignment of #14-458 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-447 12/14/94 Citizens Savings Bank Accounts, inventory, and
Massachusetts general intangibles.
Debtor listed as RC
America, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-467 2/27/95 USL Capital Corporation Equipment lease
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-473 3/24/95 USL Capital Corporation Amendment of #14-467
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-495 5/18/95 USL Capital Corporation Amendment of #14-467
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-507 8/16/95 USL Capital Corporation Amendment of #14-467
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-537 2/8/96 USL Capital Corporation Amendment of #14-467
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-12 2/22/99 DGJ, L.L.C. Assignment of #14-467 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-471 3/14/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
Massachusetts assigned to Citicorp Dealer
Finance
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Digthon, X 14-485 4/27/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
Massachusetts assigned to Citicorp Dealer
Finance
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-494 5/10/95 Wentworth Capital Corporation Property set forth in
Massachusetts assigned to Phoenixcor, Inc. Lease dtd 4/20/95. See
attached.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-20 3/1/99 DGJ, L.L.C. Assignment of #14-494 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-502 7/11/95 Xxxxxx Industrial Trucks, Inc. Specific equipment
Massachusetts assigned to Citicorp Dealer
Finance
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-506 7/31/95 Wentworth Capital Corporation Equipment lease
Massachusetts assigned to Phoenixcor, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-19 3/1/99 DGJ, L.L.C. Assignment of #14-506 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-527 12/18/95 Phoenixcor, Inc. Property set forth in
Massachusetts Lease dtd 12/7/95. See
attached.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-536 2/8/96 Phoenixcor, Inc. Amendment of #14-527
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-18 3/1/99 DGJ, L.L.C. Assignment of #14-527 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-535 2/7/96 Charter Financial, Inc. Various equipment
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-544 4/25/96 Charter Financial, Inc. Amendment of #14-535
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-29 3/9/99 DGJ, L.L.C. Assignment of #14-535 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-563 7/19/96 FINOVA Capital Corporation Specific equipment
Massachusetts
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-26 3/1/99 DGJ, L.L.C. Assignment of #14-563 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-576 11/21/96 Foothill Capital Corporation Accounts, contract
Massachusetts rights, general
intangibles, instruments,
documents, chattel paper,
inventory and the
proceeds thereof. Debtor
name listed as RC
America, Inc.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-45 8/28/98 United Credit Patriot Assignment of #14-576
Massachusetts Funding/United Credit
Corporation
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-39 3/26/99 Franklin Capital Corporation Assignment of #14-576
Massachusetts and DGJ, L.L.C.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-578 11/21/96 Foothill Capital Corporation Accounts, inventory,
Massachusetts chattel paper, general
intangibles, instruments
and documents and the
proceeds thereof.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-44 8/28/98 United Credit Patriot Assignment of #14-578
Massachusetts Funding/United Credit
Corporation
---------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-38 3/26/99 Franklin Capital Corporation Assignment of #14-578
Massachusetts and DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 97-8 1/2/97 Caterpillar Financial Services Specific equipment
Massachusetts Corporation
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 97-18 3/24/97 Caterpillar Financial Services Specific equipment
Massachusetts Corporation
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 97-24 4/28/97 Caterpillar Financial Services Specific equipment
Massachusetts Corporation
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 14-432 9/26/94 The CIT Group/Equipment Specific equipment
Massachusetts Financing, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-7 4/3/98 The CIT Group/Equipment Partial Release of #14-
Massachusetts Financing, Inc. 432
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-14 2/22/99 DGJ, L.L.C. Assignment of #14-432 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-17 2/22/99 DGJ, L.L.C. Assignment of #14-432 to
Massachusetts DGJ, L.L.C.
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 98-47 8/31/98 Patriot Funding, division of Accounts, contract
Massachusetts United Credit Corporation rights, chattel paper,
general intangibles,
inventory and proceeds
and books and records
related to the foregoing.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-40 3/26/99 Franklin Capital Corporation Assignment of #98-47
Massachusetts and DGJ, L.L.C.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-5 1/22/99 DGJ, L.L.C. and Franklin Accounts, chattel paper,
Massachusetts Capital Corporation documents, equipment,
general intangibles,
instruments, investment
property and all
proceeds, profits or
products of any or all of
the foregoing.
----------------------------------------------------------------------------------------------------------------------------------
Jurisdiction UCC TL Filing No. Filing Secured Party Collateral
Date
--------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-7 1/27/99 Franklin Capital Corporation Accounts, chattel paper,
Massachusetts documents, equipment,
general intangibles,
instruments, investment
property and all
proceeds, profits or
products of any or all of
the foregoing.
---------------------------------------------------------------------------------------------------------------------------------
Town Clerk - North Dighton, X 99-8 1/27/99 DGJ, L.L.C. Accounts, chattel paper,
Massachusetts documents, equipment,
general intangibles,
instruments, investment
property and all
proceeds, profits or
products of any or all of
the foregoing.
---------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 13(I) - LITIGATION
Xxxxxx X. Xxxxxxxxx, through his attorney, has sent correspondence to the
Borrower suggesting that he may file a lawsuit against the Borrower for past due
severance pay equal to two years' base salary allegedly owed him by the Borrower
upon his resignation. As of the date hereof, no claim has been filed by Xx.
Xxxxxxxxx against the Borrower.
On July 9, 1998, the Borrower sent written notice to Xxxxxx Xxxxxxxxx proposing
to terminate his employment with the Borrower for "cause." Xx. Xxxxxxxxx sent a
letter the subsequent day disputing the termination but resigning as President
and Chairman of the Borrower. Xx. Xxxxxxxxx'x employment agreement provides for
the payment of five (5) years' base salary if his employment is terminated
without "cause" as defined in the employment agreement.
Xxxxxxx X. Xxxx, Administratix of the Estate of Xxxx X. Xxxx, filed a complaint
against the Borrower on or about December 1997. The plaintiff, the
administratix of a former temporary employee of the Borrower, has alleged counts
of wrongful death, conscious pain and suffering, gross negligence and willful,
wanton and reckless conduct relating to an accident which occurred during Xx.
Xxxx'x employment. The plaintiff alleges damages of up to $3,000,000. The
Borrower has a Commercial General Liability Policy with the United States Fire
Insurance Company with a per occurrence limit of $1,000,000. United States Fire
Insurance Company has retained counsel for the Borrower to defend against the
plaintiff's claims.
The Borrower's subsidiary, Market Media, Inc., has received a letter from an
attorney representing Xxxxxx Xxxxxxx stating that Xx. Xxxxxxx suffered injuries
when she tripped and fell on a raised advertisement tile which Market Media,
Inc. may have installed at a Xxxx Xxxxx store in Georgia. Although Market
Media, Inc. believes that it is not responsible for the injuries incurred by Xx.
Xxxxxxx, it has insurance in place which covers approximately $6,000,000 per
personal injury claim.
The Borrower has received correspondence from Lehmacher, a German-based
manufacturing entity, stating that the Borrower owes Lehmacher approximately
300,000 deutsche marks, the balance due from the sale of machinery to the
Borrower. The Borrower is currently inquiring into the substance of such a
claim but believes that it owes, at the most, 166,000 deutsche marks, which has
been recognized under accrued expenses in the Borrower's financial statements.
The balance represents the amount allegedly due for purchase commitment for
machinery and parts.
The Borrower has received a Notice of Assessment from the Massachusetts
Department of Revenue of a tax liability in the amount of approximately $150,000
resulting from sales tax assessed on the Borrower's purchase of manufacturing
equipment from 1992 to 1994. The Borrower believes that it does not owe such
tax and intends to dispute this notice. Payment of $19,500 has been sent to the
Massachusetts Department of Revenue and the Borrower has hired a sales tax
specialist to dispute the claim and an appeal has been filed. A hearing before
the tax appeal court is scheduled for June, 2000.
The Borrower has not yet filed its federal and state income tax reports for its
Fiscal Year 1998. The Borrower did not realize income for its Fiscal Year 1998
and, therefore, believes that it will not incur any fines for its late filing.
A notice of potential claim has been sent by a group of investors to both the
Borrower and its insurance carrier alleging that the Borrower's former
management made misrepresentations concerning registration rights attendant to
the securities purchased by them pursuant to Regulation D of the Securities Act
of 1933, as amended. The Borrower believes that any settlement in connection
with this potential claim will not have a material effect on its operations.
On or about March 17, 1998, Eastern Freightways filed suit against the Borrower
in the Bristol County Court, New Bedford District, Case No. 9833 CV 0280 for
services provided in the amount of $5,712.00. The Borrower answered the suit on
April 15, 1998. Judgment, including costs and attorneys' fees, was entered on
August 12, 1998 in the amount of $7,833.89. On October 8, 1998, Eastern
Freightways filed
motions to compel production of documents and answers to interrogatories. A
hearing was scheduled on such motions for October 29, 1998. On October 27,
1998, an offer of settlement was proposed. On November 9, 1998, the
settlement offer of $2,284.80 was accepted. A check in that amount was sent
on January 29, 1999 to counsel for Eastern Freightways. On May 26, 1999,
Eastern Freightways forwarded its release to the Borrower. The Borrower is
waiting for the stipulation of dismissal of the case and the stipulation to
vacate judgment.
On or about September 17, 1998, Maxaldan Realty, L.P. filed a complaint in
Bristol District Court, Fall River Division alleging the Borrower's failure to
pay rent in the amount of $227,951.06. An answer was filed on October 13, 1998
and trial of this eviction matter was continued to October 29, 1998. As of
December 31, 1998, the trial date was rescheduled to January 14, 1999. As of
this date, the matter has been settled and counsel is awaiting the filed
stipulation of dismissal.
On or about March 20, 1998, New England Motor Freight, Inc. filed a complaint in
the Bristol County, New Bedford District Court, Case No. 9833 CV 0301 alleging
that the Borrower refused to pay approximately $53,012.67 for services provided
to the Borrower. The Borrower filed an answer to the suit on April 14, 1998.
Judgment, including interest, costs and attorneys' fees, was entered on August
12, 1998 in the amount of $71,662.43. On October 8, 1998, New England Motor
Freight, Inc. filed motions to compel production of documents and answers to
interrogatories. On October 27, 1998, a proposed settlement was offered to New
England Motor Freight, Inc. On November 9, 1998, settlement was accepted in the
amount of $5,616.25. On January 29, 1999, a check in the amount of $5,616.25
was paid to New England Motor Freight, Inc. through its attorney. On February
5, 1999, the Borrower forwarded its executed release. On May 26, 1999, New
England Motor Freight, Inc. forwarded its release to the Borrower. The Borrower
is awaiting the stipulation of dismissal of the case and stipulation to vacated
judgment.
On or about June 24, 1999, Textron Financial Corporation filed a complaint in
the Bristol County Superior Court, Case No. B99-824 naming Citizens Bank of
Rhode Island as defendant. Textron Financial Corporation seeks to collect
$317,000 under a letter of credit issued by Citizens Bank of Rhode Island to
Textron Financial Corporation in order to partially secure certain equipment
lease payments due to Textron Financial Corporation from the Borrower. Citizens
Bank of Rhode Island has filed an answer alleging the letter of credit has been
terminated prior to Textron Financial Corporation's attempt to draw on it.
Citizens Bank of Rhode Island has given the Borrower notice that it intends to
file a third party complaint in which it shall seek a judgment that the Borrower
must indemnify it for any judgment entered on Textron Financial Corporation's
behalf. The Borrower intends to defend any such indemnification claim
vigorously. It is impossible for special counsel to the firm, Xxxxxx & Xxxxxx,
to assess the likelihood of an unfavorable outcome.
On or about March 19, 1998, Xxxxxxxx X. Yeltin, Chapter 7 Trustee for Rich's
Department Stores, Inc., filed an adversary proceeding in the United States
Bankruptcy Court, District of Massachusetts, Case No. 98-1402, against RC
America, Inc., a wholly owned subsidiary of the Borrower, in which he sought to
recover $10,241 paid by Rich's Department Stores, Inc. to RC America, Inc.,
allegedly as a preferential payment. Counsel for the Chapter 7 Trustee has
indicated a potential claim in that amount against the Borrower based upon an
allegation that the Borrower benefited from the payment. The parties are in the
midst of exchanging factual information and documents in an effort to seek to
reach agreement as to whether the Borrower has any liability. To date, no such
agreement has been reached. Should the Chapter 7 Trustee add the Borrower as a
defendant, it is impossible for us to assess the likelihood of an unfavorable
outcome.
On August 13, 1998, the Borrower received notice from counsel for Xxxxxxx Xxxxxx
Publishing demanding that the outstanding balance of $16,511.88 be paid. On
October 27, 1998, the Borrower offered a settlement to Xxxxxxx Xxxxxx
Publishing. On January 29, 1999, a check in the amount of $5,520, representing
settlement of this matter, was sent to Xxxxxxx Xxxxxx Publishing's counsel. The
Borrower is awaiting a release in this matter.
On May 2, 1998, the Borrower received notice from counsel for Reliance Electric
Co. demanding that an outstanding balance of $1,701.27 be paid. On October 27,
1998, the Borrower made an offer of settlement. On November 9, 1998, the offer
of settlement was accepted. On January 29, 1999, a check in the amount of
$334.90 was forwarded to Reliance.
SCHEDULE 13(Q) - INDEBTEDNESS
See Schedule 1(A) - Permitted Liens.
Agreements with most of the Borrower's unsecured creditors that provide a
non-interest bearing agreement to pay the balances over a three-year period
in monthly installments.
Other indebtedness being discharged at closing.
SCHEDULE 13(S) - PARENTS, SUBS, JOINT VENTURES AND PARTNERSHIPS
Borrower had two (2) wholly-owned subsidiaries:
Market Media, Inc.
RC America, Inc.
Borrower suspended operations of each of the subsidiaries on or about June 29,
1998.
SCHEDULE 13(U)
The company is in violation of the terms of certain of its previous private
placements to file within a specified term a registration statement with the
Securities and Exchange Commission relating to the registration of the shares of
Common Stock (the "Shares") and shares of Common Stock underlying warrants (the
"Warrant Shares") issued in such private placements. The Shares and the Warrant
Shares issued in such private placements totaled 6,641,125 and 1,767,000,
respectively.
SCHEDULE 13(X) - BENEFIT PLAN NON-COMPLIANCE
None.
