EXHIBIT 4.1
Amended and Restated
Revolving Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (Central)
as Lender
and
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
as Borrower
Dated: December 29, 1995
TABLE OF CONTENTS
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Page
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SECTION 1.............................INTERPRETATION; DEFINITIONS -2-
SECTION 2.......................................CREDIT FACILITIES -8-
2.1 Revolving Loans -8-
2.2 Letter of Credit Accommodations -9-
2.3 Availability Reserves -11-
SECTION 3. INTEREST AND FEES -11-
3.1 Interest -11-
3.2 Closing Fee -12-
3.3 Servicing Fee -12-
SECTION 4. CONDITIONS PRECEDENT -12-
4.1 Conditions Precedent to Effectiveness -12-
4.2 Conditions Precedent to All Revolving Loans and Letter of
Credit Accommodations -13-
SECTION 5. GRANT OF SECURITY INTEREST -13-
SECTION 6. COLLECTION AND ADMINISTRATION -14-
6.1 Borrower's Loan Account -14-
6.2 Statements -14-
6.3 Collection of Accounts -14-
6.4 Payments -15-
6.5 Authorization to Make Revolving Loans -16-
6.6 Use of Proceeds -16-
SECTION 7. COLLATERAL REPORTING AND COVENANTS -16-
7.1 Collateral Reporting -16-
7.2 Accounts Covenants -17-
7.3 Inventory Covenants -18-
7.4 Equipment Covenants -18-
7.5 Power of Attorney -19-
7.6 Right to Cure -19-
7.7 Access to Premises -20-
SECTION 8. REPRESENTATIONS AND WARRANTIES -20-
8.1 Corporate Existence, Power and Authority; Subsidiaries -20-
8.2 Financial Statements; No Material Adverse Change. -20-
8.3 Chief Executive Office; Collateral Locations. -21-
8.4 Priority of Liens; Title to Properties;
Status of Obligations -21-
8.5 Tax Returns -21-
8.6 Litigation -21-
8.7 Compliance with Other Agreements and Applicable Laws -22-
8.8 Intangibles -22-
8.9 Federal Contracts -22-
8.10 Employee Litigation -22-
8.11 Accuracy and Completeness of Information. -22-
8.12 Survival of Warranties; Cumulative -22-
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS -23-
9.1 Maintenance of Existence -23-
9.2 New Collateral Locations -23-
9.3 Compliance with Laws, Regulations, Etc -23-
9.4 Payment of Taxes and Claims -23-
9.5 Insurance -23-
9.6 Financial Statements and Other Information -24-
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc -25-
9.8 Encumbrances -25-
9.9 Indebtedness -25-
9.10 Revolving Loans, Investments, Guarantees, Etc -26-
9.11 Dividends and Redemptions -26-
9.12 Transactions with Affiliates -26-
9.13 Working Capital -27-
9.14 Tangible Net Worth -27-
9.15 Costs and Expenses -27-
9.16 Certain Payments, etc -27-
9.17 Pension Plan -27-
9.18 Environmental Compliance -28-
9.19 Further Assurances -28-
SECTION 10. EVENTS OF DEFAULT AND REMEDIES -29-
10.1 Events of Default -29-
10.2 Remedies -30-
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW -32-
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver -32-
11.2 Waiver of Notices -33-
11.3 Amendments and Waivers -33-
11.4 Waiver of Counterclaims -33-
11.5 Indemnification -33-
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS -34-
12.1 Term -34-
12.2 Notices -34-
12.3 Partial Invalidity -35-
12.4 Indemnifications for Changes in Laws -35-
12.5 Successors -35-
12.6 Entire Agreement -35-
AMENDED AND RESTATED
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REVOLVING LOAN AND SECURITY AGREEMENT
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This Amended and Restated Revolving Loan and Security Agreement dated
December , 1995 (this "Agreement") is entered into by and between Congress
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Financial Corporation (Central) a Delaware corporation ("Lender") and Keystone
Consolidated Industries, Inc., a Delaware corporation ("Borrower"), and amends
and restates in its entirety that certain Accounts Receivable Financing
Agreement (Security Agreement), that certain Rider No. 1 to Accounts Receivable
Financing Agreement (Security Agreement) and that certain Security Agreement
(Inventory Lien) and (Machinery and Equipment Loan), each dated as of December
19, 1986, and each between Lender and Borrower (collectively, as amended or
otherwise modified by that certain Amendment No. 1 to Accounts Receivable
Financing Agreement [Security Agreement] and Rider No. 1 to Accounts Receivable
Financing Agreement [Security Agreement] dated as of January 9, 1987, Amendment
No. 2 to Accounts Receivable Financing Agreement [Security Agreement] and Rider
No. 1 to Accounts Receivable Financing Agreement [Security Agreement] dated as
of March 12, 1987, Amendment No. 3 to Accounts Receivable Financing Agreement
[Security Agreement] and Rider No. 1 to Accounts Receivable Financing Agreement
[Security Agreement] dated as of October 16, 1987, Amendment No. 4 in the form
of a letter to Accounts Receivable Financing Agreement [Security Agreement] and
Rider No. 1 to Accounts Receivable Financing Agreement [Security Agreement]
dated August 27, 1987, Amendment No. 5 to Accounts Receivable Financing
Agreement [Security Agreement] and Rider No. 1 to Accounts Receivable Financing
Agreement [Security Agreement] dated as of August 7, 1989, Amendment No. 6 to
Accounts Receivable Financing Agreement [Security Agreement] and Rider No. 1 to
Accounts Receivable Financing Agreement [Security Agreement] dated as of
November 1, 1991, Amendment No. 7 to Accounts Receivable Financing Agreement
[Security Agreement] and Rider No. 1 to Accounts Receivable Financing Agreement
[Security Agreement] dated as of January 15, 1993, and Amendment No. 8 to
Accounts Receivable Financing Agreement [Security Agreement] and Rider No. 1 to
Accounts Receivable Financing Agreement [Security Agreement] dated as of
December 30, 1993, (the "Original Agreement").
W I T N E S S E T H:
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WHEREAS, in addition to the Original Agreement, Lender and Borrower are
also parties to that certain Term Loan Agreement (as defined in Section 1.31
herein).
WHEREAS, Borrower has requested that Lender amend the Original Agreement to
provide for, among other things, the extension of the term of the Original
Agreement; and
WHEREAS, Lender is willing to amend and restate the Original Agreement on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. INTERPRETATION: DEFINITIONS
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This Agreement is intended to amend and restate the provisions of the
Original Agreement and, as of the Effective Date (as defined in Section 4.1
below), except as expressly modified herein: (a) all of the terms and
provisions of the Original Agreement shall continue to apply for the period
prior to the Effective Date, including any determinations of payment dates,
interest rates, Events of Default or any amount that may be payable to Lender or
any other party, and (b) the Obligations (as defined in the Original Agreement)
under the Original Agreement shall continue to be paid or prepaid in accordance
with the Original Agreement on or prior to the Effective Date, and be secured by
the Collateral, and shall from and after the Effective Date continue to be owing
and be subject to the terms of this Agreement. All references in the Financing
Agreements to the Original Agreement shall be deemed to include references to
this Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, and such Financing Agreements are hereby amended to
reflect such changed reference.
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrower and Lender pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors
and assigns. The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. An Event of Default shall exist or
continue or be continuing until such Event of Default is waived in accordance
with Section 11.3. Any accounting term used herein unless otherwise defined in
this Agreement shall have the meanings customarily given to such term in
accordance with GAAP. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Affiliate" shall mean any person or entity (i) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with Borrower, (ii) that directly or beneficially owns
or holds five percent (5%) or more of any class of the voting stock of Borrower
or (iii) five percent (5%) or more of the voting stock (or in the case of an
entity that is not a corporation, five percent (5%) or more of the equity
interest) of which is owned directly or beneficially or held by Borrower.
1.3 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may affect either (i) the Collateral
or any other property which is security for the Obligations or its value, (ii)
the assets, business or prospects of Borrower or any Obligor or (iii) the
security interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Lender's good
faith belief that any collateral report or financial information furnished by or
on behalf of Borrower or any Obligor to Lender is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any state
of facts which Lender determines in good faith constitutes an Event of Default
or may, with notice or passage of time or both, constitute an Event of Default.
1.4 `Blocked Accounts'' shall have the meaning set forth in Section 6.3
hereof.
1.5 `Collateral'' shall have the meaning set forth in Section 5 hereof.
1.6 `Eligible Accounts'' shall mean Accounts created by Borrower which
are and continue to be acceptable to Lender based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:
a) such Accounts arise from the actual and bona fide sale and
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delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
b) such Accounts are not unpaid more than sixty (60) days after the
date of the original invoice for them;
c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
e) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America, or, at Lender's
option, if either: (i) the account debtor has delivered to Borrower an
irrevocable letter of credit issued or confirmed by a bank reasonably
satisfactory to Lender, sufficient to cover such Account, in form and substance
reasonably satisfactory to Lender and, if required by Lender, the original of
such letter of credit has been delivered to Lender or Lender's agent and the
issuer thereof notified of the assignment of the proceeds of such letter of
credit to Lender, or (ii) such Account is subject to credit insurance payable to
Lender issued by an insurer and on terms and in an amount acceptable to Lender,
or (iii) such Account is otherwise acceptable in all respects to Lender (subject
to such lending formula with respect thereto as Lender may determine);
f) such Accounts do not consist of progress xxxxxxxx, xxxx and hold
invoices or retainage invoices, except as to xxxx and hold invoices, if Lender
shall have received an agreement in writing from the account debtor, in form and
substance reasonably satisfactory to Lender, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;
g) the account debtor with respect to such Accounts has not asserted
a counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to, any right of setoff against such Accounts;
h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
j) neither the account debtor nor any director, officer or employee
of the account debtor with respect to such Accounts is an officer, director or
employee of or is affiliated with Borrower directly or indirectly by virtue of
family membership, ownership, control, management or otherwise;
k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner reasonably
satisfactory to Lender;
l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
m) such Accounts of a single account debtor or its affiliates do not
constitute more than fifty (50%) percent of all otherwise Eligible Accounts (but
the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than sixty (60) days after the date of the original invoice for them
which constitute more than fifty (50%) percent of the total Accounts of such
account debtor; and
o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit, if any, with respect
to such account debtors as established by Lender from time to time (but the
portion of the Accounts not in excess of such credit limit may still be deemed
Eligible Accounts);
p) such Accounts are not owed by account debtors which Lender has
advised Borrower in writing are not deemed to be creditworthy by Lender;
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.7 "Eligible Inventory" shall mean that Inventory of Borrower which is
and at all times continues to be acceptable to Lender in all respects.
Standards of eligibility may be fixed and revised from time to time solely by
Lender in its exclusive judgment. In determining eligibility Lender may, but is
not required to, rely on reports and schedules of Inventory furnished by
Borrower, but reliance by Lender thereon from time to time shall not be deemed
to limit Lender's right to revise standards of eligibility at any time as to
both present and future Inventory. In general and without limiting Lender's
discretion, Eligible Inventory shall not include (a) work-in-process (other than
work-in-process of the Keystone Steel and Wire Division of Borrower); (b)
components which are not part of finished goods; (c) spare parts for equipment;
(d) supplies used or consumed in Borrower's business (other than steel used or
consumed by Borrower in the process of manufacturing Inventory); (e) Inventory
at premises other than those owned and controlled by Borrower, except if Lender
shall have received an agreement in writing from the person in possession of
such Inventory and/or the owner or operator of such premises in form and
substance satisfactory to Lender acknowledging Lender's first priority security
interest in the Inventory, waiving security interests and claims by such person
against the Inventory and permitting Lender access to, and the right to remain
on, the premises so as to exercise Lender's rights and remedies and otherwise
deal with the Collateral; (f) Inventory subject to a security interest or lien
in favor of any person other than Lender except those permitted in this
Agreement; (g) xxxx and hold goods; (h) Inventory, which in Lender's discretion
is unserviceable, obsolete or slow moving; (i) Inventory which is not subject to
the first priority, valid and perfected security interest of Lender; (j)
returned, damaged and/or defective Inventory; and (k) Inventory purchased or
sold on consignment. General criteria for Eligible Inventory may be established
and revised from time to time by Lender in good faith. Any Inventory which is
not Eligible Inventory shall nevertheless be part of the Collateral.
1.8 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers, computer hardware, owned and licensed
computer software, vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.
1.9 "ERISA" shall mean the Employee Retirement Security Act of 1974, as
amended or modified from time to time.
1.10 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.11 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, trademark security agreements,
blocked account agreements, mortgages, deeds of trust, pledge agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with this
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.12 "Fixed Asset Equity Factor" at any time shall mean an amount equal to
the difference between $20 million and the sum of (a) the outstanding principal
balance of the loans made under the Term Loan Agreement and (b) the product of
(i) $20 million multiplied by (ii) a fraction, the numerator of which is the
number of months which have elapsed at such time since December 31, 1995 and the
denominator of which is sixty.
1.13 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied.
1.14 "Information Certificate" shall mean the Information Certificate of
Borrower constituting Exhibit A hereto containing material information with
respect to Borrower, its business and assets provided by or on behalf of
Borrower to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.15 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located and all wrapping,
packaging, advertising and shipping materials, and any documents relating
thereto, and all labels and other devices, names and marks affixed or to be
affixed thereto for purposes of selling or of identifying the same or the seller
or manufacturer thereof, and all right, title and interest of Borrower therein
and thereto, wherever located, whether now owned or hereafter acquired by
Borrower.
1.16 "Joint Venture" shall mean Keystone-Ezinex L.L.C. which has been
formed to design, construct and operate a zinc extraction process on steel mill
electric arc furnace dust.
1.17 "Joint Venture Credit Facility" shall mean the credit facility between
Joint Venture and Lender pursuant to which Lender issues, or guarantees Joint
Venture's reimbursement obligations with respect to, one or more letters of
credit issued as credit support for bonds issued by or for the benefit of Joint
Venture and which credit facility is guaranteed by Borrower.
1.18 "Joint Venture Guarantee" shall mean that certain Guarantee by
Borrower of Joint Venture's obligations under the Joint Venture Credit Facility.
1.19 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either (a)
issued or opened by Lender for the account of Borrower or any Obligor or (b)
with respect to which Lender has agreed to indemnify the issuer or guaranteed to
the issuer the performance by Borrower of its obligations to such issuer.
1.20 "Maximum Credit" shall mean the amount of $35,000,000.
1.21 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.22 "Obligations" shall mean any and all Revolving Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether arising under this Agreement, the Term Loan Agreement and/or the Joint
Venture Guarantee or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to Borrower under
the United States Bankruptcy Code or any similar statute (including, without
limitation, the payment of interest and other amounts which would accrue and
become due but for the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by
Lender.
1.23 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person now or hereafter liable on or with respect to the Obligations or
who is the owner of any property which is now or hereafter security for the
Obligations, other than Borrower.
1.24 "Payment Account" shall have the meaning set forth in Section 6.3 (a)
hereof.
1.25 "Pension Trustee" shall mean the trustee under that certain Keystone
Master Pension Trust.
1.26 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.
1.27 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.28 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.29 "Revolving Loans" shall mean the loans now or hereafter made by Lender
to or for the benefit of Borrower on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.30 "Tangible Net Worth" shall mean, as of any date of determination, the
excess of total assets over total liabilities of the Borrower in conformity with
generally accepted accounting principles (GAAP), but excluding from the
determination of total assets any items which are treated as intangibles in
conformity with GAAP, and excluding from total assets and liabilities any
pension or post-retirement benefit assets or liabilities.
1.31 "Term Loan Agreement" shall mean that certain Term Loan and Security
Agreement entered into as of December 30, 1993 by and between Lender and
Borrower.
1.32 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value.
1.33 "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
subsidiaries (as determined in accordance with GAAP), calculating the book value
of inventory for this purpose on a first-in-first-out basis, and (b) all current
liabilities of such Person and its subsidiaries (as determined in accordance
with GAAP), provided, that, as to Borrower, for purposes of Section 9.13, the
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liabilities of Borrower and its subsidiaries to Lender under this Agreement
shall not be considered current liabilities (whether or not classified as
current liabilities in accordance with GAAP) and excluding from current
liabilities and current assets any pension or post-retirement benefit assets or
liabilities.
SECTION 2. CREDIT FACILITIES
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2.1 Revolving Loans.
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a) Subject to, and upon the terms and conditions contained herein,
Lender may, in its sole discretion, agree to make Revolving Loans to Borrower
from time to time in amounts requested by Borrower up to the amount which, when
added to the maximum amount owing under the Joint Venture Guarantee, is equal to
the sum of:
(i) eighty-five percent (85%) of the Net Amount of Eligible
Accounts, plus
(ii) the lesser of (A) fifty percent (50%) of the value of
Eligible Inventory or (B) an amount equal to $15,000,000, plus
(iii) after the effective date of the Joint Venture Credit
Facility and only so long as the Joint Venture Guarantee remains
outstanding, the Fixed Asset Equity Factor; less
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(iv) any Availability Reserves.
b) Lender may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrower, (i) reduce the lending formula with
respect to Eligible Accounts to the extent that Lender determines in good faith
that: (A) the dilution with respect to the Accounts for any period (based on the
ratio of (1) the aggregate amount of reductions in Accounts other than as a
result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Lender
determines that: (A) the number of days of the turnover of the Inventory for any
period has changed in any material respect or (B) the liquidation value of the
Eligible Inventory, or any category thereof, has decreased, or (C) the nature
and quality of the Inventory has deteriorated. In determining whether to reduce
the lending formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Availability Reserves.
c) Except in Lender's discretion, the aggregate amount of the
Revolving Loans and the Letter of Credit Accommodations outstanding at any time
shall not exceed the Maximum Credit. In the event that the outstanding amount
of any component of the Revolving Loans, or the aggregate amount of the
outstanding Revolving Loans and Letter of Credit Accommodations, exceed the
amounts available under the lending formulas, the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(c) or the Maximum Credit, as applicable,
such event shall not limit, waive or otherwise affect any rights of Lender in
that circumstance or on any future occasions and Borrower shall, upon demand by
Lender, which may be made at any time or from time to time, immediately repay to
Lender the entire amount of any such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
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a) Subject to, and upon the terms and conditions contained herein,
at the request of Borrower, Lender agrees to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Lender and the issuer thereof. Any payments made by
Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Revolving Loans to
Borrower pursuant to this Section 2.
b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, Borrower shall
pay to Lender a letter of credit fee at a rate equal to one-quarter of one
percent (.25%) per month on the outstanding balance of the Letter of Credit
Accommodations as of the first day of each month, payable in advance (and with
respect to a Letter of Credit Accommodation issued during any month, payable on
the date of such issuance for the remainder of such month and thereafter on the
first day of each succeeding month). Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to Borrower (subject to the Maximum Credit and any
Availability Reserves) are equal to or greater than: an amount equal to one
hundred (100%) percent of the face amount thereof and all other commitments and
obligations made or incurred by Lender with respect thereto. Effective on the
issuance of each Letter of Credit Accommodation, the amount of Revolving Loans
which might otherwise be available to Borrower shall be reduced by the face
amount of each such Letter of Credit Accommodation.
d) Except in Lender's discretion, (i) the amount of all outstanding
Letter of Credit Accommodations (other than any obligations owing by Borrower
with respect to the Joint Venture Credit Agreement or Joint Venture Guarantee)
and all other commitments and obligations made or incurred by Lender in
connection therewith, shall not at any time exceed $5 million. At any time an
Event of Default exists or has occurred and is continuing, upon Lender's
request, Borrower will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Lender for the Letter of Credit
Accommodations, and in either case, the Revolving Loans otherwise available to
Borrower shall not be reduced as provided in Section 2.2(c) to the extent of
such cash collateral.
e) Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation; provided, however, that Borrower shall
-------- -------
not be required to indemnify Lender for any claims, damages, losses,
liabilities, costs or expenses to the extent caused by (i) the willful
misconduct or gross negligence of Lender in determining whether a request
presented under any Letter of Credit Accommodation complied with the terms of
such Letter of Credit Accommodation or (ii) Lender's failure to pay under any
Letter of Credit Accommodation after the timely presentation to it of a request
for payment strictly complying with the terms and conditions of such Letter of
Credit Accommodation. Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower's agent. Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Borrower hereby releases and holds Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or non-
renewal of this Agreement.
f) Nothing contained herein shall be deemed or construed to grant
Borrower any right or authority to pledge the credit of Lender in any manner.
Lender shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lender unless Lender has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has occurred and is continuing, (A) approve or resolve any questions of non-
compliance of documents, (B) give any instructions as to acceptance or rejection
of any documents or goods, or (C) execute any and all applications for steamship
or airway guaranties, indemnities or delivery orders, and (ii) at all times,
(A) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in Borrower's name.
g) Any rights, remedies, duties or obligations granted or undertaken
by Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or
obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrower to Lender and
to apply in all respects to Borrower.
h) Borrower shall promptly examine (i) the copy of any Letter of
Credit Accommodations, including any amendments thereof, sent to it by or on
behalf of Lender and (ii) all documents and instruments delivered to it by or on
behalf of Lender in connection with such Letters of Credit Accommodations. In
the event of any claim of noncompliance with Borrower's instructions or other
irregularity, Borrower will immediately notify Lender thereof in writing.
Borrower will be conclusively deemed to have waived any such claim against
Lender, its correspondents, agents, and any banks or other financial
institutions used in connection with the issuance of Letters of Credit
Accommodations, unless such notice is given as aforesaid.
2.3 Availability Reserves. All Revolving Loans otherwise available to
---------------------
Borrower pursuant to the lending formulas and subject to the Maximum Credit and
other applicable limits hereunder shall be subject to Lender's continuing right
to establish and revise Availability Reserves.
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
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a) Borrower shall pay to lender interest on the daily average
outstanding principal amount of the Revolving Loans and, to the extent permitted
by applicable law, the other non-contingent Obligations, at the rate of one
percent (1%) per annum in excess of the Prime Rate, except that Borrower shall
pay to Lender interest on the foregoing, at Lender's option, without notice, at
the rate of three percent (3%) per annum in excess of the Prime Rate: (i) for
the period from and after the date of termination or non-renewal hereof, or the
date of the occurrence of an Event of Default, and for so long as such event of
Default is continuing as determined by Lender in good faith and until such time
as Lender has received full and final payment of all such Obligations
(notwithstanding entry of any judgment against Borrower) and (ii) on the
Revolving Loans at any time outstanding in excess of the amounts available to
Borrower under Section 2 (whether or not such excess(es) arise or are made with
or without Lender's knowledge or consent and whether made before or after an
Event of Default). All interest accruing hereunder on and after the occurrence
of any of the events referred to in Sections 3.1(a)(i) or 3.1(a)(ii) above shall
be payable on demand.
(b) Interest shall be payable by Borrower to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed (including the date of borrowing or incurrence but excluding the date of
payment, if made in accordance with Section 6.3(b)). The interest rate shall
increase or decrease by an amount equal to each increase or decrease in the
Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
month in which any such change occurs. In no event shall charges constituting
interest payable by Borrower to Lender exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any part or provision
of this Agreement is in contravention of any such law or regulation, such part
or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. In connection with the Original Agreement, Borrower paid
-----------
to Lender a closing fee and no closing fee is required for the closing hereof.
3.3 Servicing Fee. Borrower shall pay to Lender monthly a servicing fee
-------------
in an amount equal to $5,000 in respect of Lender's services for each month (or
part thereof) while this Agreement remains in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be fully earned as of
and be payable in advance on the first day of each month.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions Precedent to Effectiveness. This Agreement shall become
-------------------------------------
effective on the Business Day on which each of the following conditions
precedent has been satisfied (such date, the "Effective Date"):
a) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
b) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
c) no material adverse change shall have occurred in the assets,
business or prospects of Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor to perform its obligations hereunder or under
any of the other Financing Agreements to which it is a party or of Lender to
enforce the Obligations or realize upon the Collateral;
d) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgements by lessors,
mortgagees and warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Lender access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;
e) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
f) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsel to Borrower with respect to the
Financing Agreements and such other matters as Lender may request; and
g) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender.
h) Lender shall have received, in form and substance satisfactory to
Lender, confirmation from the Pension Trustee that all of the Obligations
constitute "Senior Debt" under and as defined in that certain Amendment and
Restatement of Subordination Agreement dated June 30, 1987 among the Pension
Trustee, ITT Commercial Finance Corp. and Lender.
4.2 Conditions Precedent to All Revolving Loans and Letter of Credit
----------------------------------------------------------------
Accommodations. Each of the following is an additional condition precedent to
--------------
Lender making Revolving Loans and/or providing Letter of Credit Accommodations
to Borrower, including the initial Revolving Loans and Letter of Credit
Accommodations and any future Revolving Loans and Letter of Credit
Accommodations:
a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Revolving Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto; and
b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such
Revolving Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower has
previously granted, and hereby grants, to Lender a continuing security interest
in, a lien upon, and a right of set off against, and hereby assigns to Lender as
security, the following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses in
action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties;
5.3 all present and future monies, certificated and uncertificated
securities, credit balances, deposits, investment property, deposit accounts and
other property of Borrower now or hereafter held or received by or in transit to
Lender or its affiliates or at any other depository or other institution from or
for the account of Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Accounts and other Collateral, including, without limitation, (a) rights and
remedies under or relating to guaranties, contracts of suretyship, letters of
credit and credit and other insurance related to the Collateral, (b) rights of
stoppage in transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, (c) goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Accounts or other Collateral, including, without
limitation, returned, repossessed and reclaimed goods, and (d) deposits by and
property of account debtors or other persons securing the obligations of account
debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Records;
5.7 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
5.8 any and all of Borrower's real and personal property in which a
security interest or on which a lien has been or is concurrently herewith or
hereafter granted in favor of Lender.
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 Borrower's Loan Account. Lender shall maintain one or more loan
-----------------------
account(s) on its books in which shall be recorded (a) all Revolving Loans,
Letter of Credit Accommodations and other Obligations and the Collateral, (b)
all payments made by or on behalf of Borrower and (c) all other appropriate
debits and credits as provided in this Agreement, including, without limitation,
fees, charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Lender's customary practices as in effect from
time to time.
6.2 Statements. Lender shall render to Borrower each month a statement
----------
setting forth the balance in the Borrower's loan account(s) maintained by Lender
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Lender receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement
as provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrower.
6.3 Collection of Accounts.
----------------------
a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to Lender
into which Borrower shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or deposited
in the Blocked Accounts are the property of Lender, that the depository bank has
no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account"). Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of Inventory or other Collateral
or otherwise, shall be the property of Lender.
b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) business day following the date of
receipt of immediately available funds by Lender in the Payment Account. For
purposes of calculating the amount of the Revolving Loans available to Borrower,
such payments will be applied (conditional upon final collection) to the
Obligations on the business day of receipt by Lender in the Payment Account, if
such payments are received within sufficient time (in accordance with Lender's
usual and customary practices as in effect from time to time) to credit
Borrower's loan account on such day, and if not, then on the next business day.
c) Borrower and all of its affiliates, subsidiaries, shareholders,
directors, employees or agents shall, acting as trustee for Lender, receive, as
the property of Lender, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt thereof,
shall deposit or cause the same to be deposited in the Blocked Accounts, or
remit the same or cause the same to be remitted, in kind, to Lender. In no
event shall the same be commingled with Borrower's own funds. Borrower agrees
to reimburse Lender on demand for any amounts owed or paid to any bank at which
a Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of
Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall
survive the termination or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
--------
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender may apply payments received or collected from Borrower or for the
account of Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines. At
Lender's option, all principal, interest, fees, costs, expenses and other
charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan account(s) of Borrower. Borrower shall make all
payments to Lender on the Obligations free and clear of, and without deduction
or withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Lender is required
to surrender or return such payment or proceeds to any Person for any reason,
then the Obligations intended to be satisfied by such payment or proceeds shall
be reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Lender. Borrower
shall be liable to pay to Lender, and does hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or returned.
This Section 6.4 shall remain effective notwithstanding any contrary action
which may be taken by Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
6.5 Authorization to Make Revolving Loans. Lender is authorized to make
-------------------------------------
the Revolving Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of Borrower or other authorized person or, at the discretion of Lender,
if such Revolving Loans are necessary to satisfy any Obligations. All requests
for Revolving Loans or Letter of Credit Accommodations hereunder shall specify
the date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of
the requested Revolving Loan. Requests received after 11:00 a.m. Chicago time
on any day shall be deemed to have been made as of the opening of business on
the immediately following business day. All Revolving Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrower when
deposited to the credit of Borrower or otherwise disbursed or established in
accordance with the instructions of Borrower or in accordance with the terms and
conditions of this Agreement.
6.6 Use of Proceeds. Borrower shall use the proceeds of all Revolving
---------------
Loans made or Letter of Credit Accommodations provided by Lender to Borrower
pursuant to the provisions hereof only for general operating, working capital
and other proper corporate purposes of Borrower not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Revolving Loans to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 Collateral Reporting. Borrower shall provide Lender with the
--------------------
following documents in a form satisfactory to Lender: (a) on a regular basis as
required by Lender, a schedule of Accounts; (b) on a monthly basis or more
frequently as Lender may request, (i) summary inventory reports, (ii) inventory
reports by category and (iii) agings of accounts payable, (c) upon Lender's
request, (i) copies of customer statements and credit memos, remittance advices
and reports, and copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and (iii) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by Borrower; (d)
agings of accounts receivable on a monthly basis or more frequently as Lender
may request; and (e) such other reports as to the Collateral as Lender shall
request from time to time. If any of Borrower's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, Borrower hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Lender and to follow Lender's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
7.2 Accounts Covenants.
------------------
a) Borrower shall notify Lender promptly of: (i) any material delay
in Borrower's performance of any of its obligations to any account debtor or the
assertion of any material claims, offsets, defenses or counterclaims by any
account debtor, or any material disputes with account debtors, or any
settlement, adjustment or compromise thereof, (ii) all material adverse
information relating to the financial condition of any account debtor and (iii)
any event or circumstance which, to Borrower's knowledge would reasonably cause
Lender to consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without Lender's consent,
except in the ordinary course of Borrower's business in accordance with
practices and policies previously disclosed in writing to Lender. So long as no
Event of Default exists or has occurred and is continuing, Borrower shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
b) Borrower shall promptly report to Lender any return of Inventory
by an account debtor having a sales price in excess of $500,000. At any time
that such Inventory is returned, reclaimed or repossessed, the related Account
shall not be deemed an Eligible Account. In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrower shall, upon Lender's request, (i) hold the returned
Inventory in trust for Lender, (ii) segregate all returned Inventory from all of
its other property, (iii) dispose of the returned Inventory solely according to
Lender's instructions, and (iv) not issue any credits, discounts or allowances
with respect thereto without Lender's prior written consent.
c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no material credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of Borrower's business in
accordance with practices and policies previously disclosed to Lender, (iv)
there shall be no material setoffs, deductions, contracts, defenses,
counterclaims or disputes existing or asserted with respect thereto except as
reported to Lender in accordance with the terms of this Agreement, (v) none of
the transactions giving rise thereto will violate any applicable State or
Federal laws or regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation will be
legally enforceable in accordance with its terms.
d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
e) Borrower shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments which Borrower now owns or may at any time acquire
immediately upon Borrower's receipt thereof, except as Lender may otherwise
agree.
f) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Lender and are payable directly
and only to Lender and Borrower shall deliver to Lender such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
-------------------
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the form
and with such specificity as may be reasonably satisfactory to Lender concerning
such physical count; (c) Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Lender, except for sales of Inventory in the ordinary course of Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Lender's request, Borrower
shall, at its expense, no more than once in any twelve (12) month period, but at
any time or times as Lender may request on or after an Event of Default, deliver
or cause to be delivered to Lender written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender or upon which Lender is
expressly permitted to rely; (e) Borrower shall produce, use, store and maintain
the Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (f) Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (g)
Borrower shall not sell Inventory to any customer on approval, xxxx-and-hold,
guaranteed sale, sale-and-return, or consignment basis or any other basis which
entitles the customer to return or may obligate Borrower to repurchase such
Inventory; (h) Borrower shall keep the Inventory in good and marketable
condition; and (i) Borrower shall not, without prior written notice to Lender,
acquire or accept any Inventory on consignment or approval.
7.4 Equipment Covenants. With respect to the Equipment: (a) upon Lender's
-------------------
request, Borrower shall, at its expense, at any time or times as Lender may
request on or after an Event of Default, deliver or cause to be delivered to
Lender written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender; (b)
Borrower shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in Borrower's business and not for personal,
family, household or farming use; (e) Borrower shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Borrower or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of Borrower in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and
Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) Borrower assumes all responsibility and
liability arising from the use of the Equipment.
7.5 Power of Attorney. Borrower hereby irrevocably designates and
-----------------
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Lender deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender, and open and dispose of all
mail addressed to Borrower, and (ix) do all acts and things which are necessary,
in Lender's determination, to fulfill Borrower's obligations under this
Agreement and the other Financing Agreements and (b) at any time to (i) take
control in any manner of any item of payment or proceeds thereof, (ii) have
access to any lockbox or postal box into which Borrower's mail is deposited,
(iii) endorse Borrower's name upon any items of payment or proceeds thereof and
deposit the same in the Lender's account for application to the Obligations,
(iv) endorse Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi) execute
in Borrower's name and file any UCC financing statements or amendments thereto.
Borrower hereby releases Lender and its officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure. Lender may, at its option, (a) cure any default by
-------------
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral (except those permitted by the terms of this Agreement) and
(c) pay any amount, incur any expense or perform any act which, in Lender's
judgment, is necessary or appropriate to preserve, protect, insure or maintain
the Collateral and the rights of Lender with respect thereto. Lender may add
any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower.
Any payment made or other action taken by Lender under this Section 7.6 shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 Access to Premises. From time to time as requested by Lender, at the
------------------
cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, including, without limitation, the Records, and (b) Borrower shall
promptly furnish to Lender such copies of such books and records or extracts
therefrom as Lender may request, and (c) use during normal business hours such
of Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Revolving Loans
and providing Letter of Credit Accommodations by Lender to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower is a
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corporation duly organized and in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation and in good standing in
Illinois, Arkansas and Texas and in all other states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within Borrower's
corporate powers, have been duly authorized and are not in contravention of law
or the terms of Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower or its property are bound. The
performance of Borrower's obligations do not, as of the execution hereof,
require any governmental consent, registration or approval, do not contravene
any contractual or governmental restriction binding upon Borrowers and will not,
except as contemplated herein, result in the imposition of any lien, charge,
security interest or encumbrance upon any property of the Borrower under any
existing indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Borrower is a party or by which it
or any of its property may be bound or affected. The execution and delivery by
Borrower of the Agreement and all other documents and instruments executed and
delivered in connection herewith and the performance of Borrower's obligations
hereunder and thereunder are not in contravention of any law or laws. This
Agreement and the other Financing Agreements constitute legal, valid and binding
obligations of Borrower enforceable in accordance with their respective terms.
Borrower does not have any subsidiaries except as set forth on the Information
Certificate. Except as disclosed on the Information Certificate, Borrower has
not used and has no current plans to use, any corporate or fictitious name other
than the corporate name shown on the Borrower's Articles of Incorporation.
8.2 Financial Statements; No Material Adverse Change. All financial
------------------------------------------------
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Lender have been prepared in accordance with GAAP and fairly present
the financial condition and the results of operation of Borrower as at the dates
and for the periods set forth therein (provided that monthly or quarterly
--------
statements are subject to normal year-end adjustments and may not contain all
footnote and disclosure information required by GAAP). Except as disclosed in
any interim financial statements furnished by Borrower to Lender prior to the
date of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Borrower,
since the date of the most recent audited financial statements furnished by
Borrower to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
--------------------------------------------
office of Borrower and Borrower's Records concerning Accounts are located only
at the address set forth below and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Borrower to establish new
locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrower and
sets forth the owners and/or operators thereof and to the best of Borrower's
knowledge, the holders of any mortgages on such locations.
8.4 Priority of Liens; Title to Properties; Status of Obligations. The
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security interests and liens granted to Lender under this Agreement and the
other Financing Agreements constitute valid and perfected first priority liens
and security interests in and upon the Collateral subject only to existing liens
indicated on Schedule 8.4 hereto and, with respect to Collateral other than
Accounts and Inventory, the other liens permitted under Section 9.8 hereof.
Borrower has good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof. Any and all security interests granted to the Pension Trustee in any
or all of the assets of the Borrower are subordinated and secondary to any and
all security interests granted to Lender in any and all assets of the Borrower.
All of the Obligations constitute "Senior Debt" under and as defined in that
certain Amendment and Restatement of Subordination Agreement dated June 30, 1987
among the Pension Trustee, ITT Commercial Finance Corp. and Lender.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
-----------
manner all tax returns, reports, declarations and extensions which are required
to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Borrower has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable.
8.6 Litigation. Except as set forth on the Information Certificate, there
----------
is no present investigation by any governmental agency pending, or to the best
of Borrower's knowledge, after due inquiry, threatened, against or affecting
Borrower, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against Borrower would result in any material adverse change in the assets,
business or prospects of Borrower or would impair the ability of Borrower to
perform its obligations hereunder or under any of the other Financing Agreements
to which it is a party or of Lender to enforce any Obligations or realize upon
any Collateral. With the exception of the matters described in the Information
Certificate, none of the operations of Borrowers or of any of its subsidiaries
is the subject of federal, state or local litigation or investigation involving
or evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any hazardous or toxic substance, waste or
constituent, or other substance into the environment. Except as described in
the Information Certificate, neither Borrower nor any of its subsidiaries has
any material contingent liability in connection with any release of any
hazardous or toxic substance, waste, or constituent, or other substance into the
environment.
8.7 Compliance with Other Agreements and Applicable Laws. Borrower is not
----------------------------------------------------
in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and Borrower is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, State or local governmental authority, including,
without limitation, environmental protection laws.
8.8 Intangibles. Borrower possesses adequate licenses, patents, patent
-----------
applications, copyrights, service marks, trademarks and tradenames to continue
to conduct its business as heretofore conducted and all such items are described
in the Information Certificate, attached hereto and made a part hereof.
8.9 Federal Contracts. Borrower is not a party to any material contracts
-----------------
with the United States of America or any agency or department thereof pursuant
to which goods are delivered, or services are performed, by Borrower in exchange
for payment by the United States of America or such agency or department.
8.10 Employee Litigation. Except as disclosed in the Information
-------------------
Certificate attached hereto and made a part hereof, there are no controversies
pending or, to the best of Borrower's knowledge and after diligent inquiry,
threatened between the 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.
8.11 Accuracy and Completeness of Information. All information furnished
----------------------------------------
by or on behalf of Borrower in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
expected to have a material adverse affect on the business, assets or prospects
of Borrower, which has not been fully and accurately disclosed to Lender in
writing.
8.12 Survival of Warranties; Cumulative. All representations and
----------------------------------
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 Maintenance of Existence. Borrower shall at all times preserve, renew
------------------------
and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower shall not amend its Articles of Incorporation, except that
Borrower may amend its Articles of Incorporation to effect a change in its
corporate name, provided that Borrower shall give Lender thirty (30) days prior
written notice of any proposed change in its corporate name, which notice shall
set forth the new name and Borrower shall deliver to Lender a copy of the
amendment to the Certificate of Incorporation of Borrower providing for the name
change certified by the Secretary of State of the jurisdiction of incorporation
of Borrower as soon as it is available.
9.2 New Collateral Locations. Borrower may open any new location within
------------------------
the continental United States provided Borrower (a) gives Lender thirty (30)
days prior written notice of the intended opening of any such new location and
(b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc. Borrower shall, at all times,
---------------------------------------
comply in all material respects with all laws, rules, regulations, licenses,
permits, approvals and orders of any Federal, State or local governmental
authority applicable to it.
9.4 Payment of Taxes and Claims. Borrower shall duly pay and discharge
---------------------------
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have been set
aside on its books. Borrower shall be liable for any tax or penalty imposed on
Lender as a result of the financing arrangements provided for herein and
Borrower agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrower such amount shall be added and deemed part of the Revolving Loans,
provided, that, nothing contained herein shall be construed to require Borrower
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to pay any income or franchise taxes attributable to the income of Lender from
any amounts charged or paid hereunder to Lender. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain, with financially
---------
sound and reputable insurers, insurance with respect to the Collateral against
loss or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated and acceptable
to Lender, including, but not limited to, public liability and third party
property damage insurance. Said policies of insurance shall be satisfactory to
Lender as to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Lender as Lender shall require as proof of such
insurance, and, if Borrower fails to do so, Lender is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days prior written notice to Lender of
any cancellation or reduction of coverage and that Lender may act as attorney
for Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrower shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender as its interests
may appear and further specify that Lender shall be paid regardless of any act
or omission by Borrower or any of its affiliates. At its option, Lender may
apply any insurance proceeds received by Lender at any time to the cost of
repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Lender may determine
or hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
------------------------------------------
a) Borrower shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Borrower and its subsidiaries (if any) in
accordance with GAAP and Borrower shall furnish or cause to be furnished to
Lender: (i) within thirty (30) days after the end of each fiscal month, monthly
unaudited consolidated financial statements (including, in each case, balance
sheets, statements of income and loss and statements of shareholders' equity),
all in reasonable detail, fairly presenting the financial position and the
results of the operations of Borrower and its subsidiaries as of the end of and
through such fiscal month, subject to normal year-end adjustments, and (ii)
within ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Borrower and its subsidiaries (including, in each case,
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrower and its subsidiaries as of the end of and for such
fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower and its subsidiaries as of the
end of and for the fiscal year then ended.
b) Borrower shall within five (5) business days notify Lender in
writing of the details of (i) any material loss, damage, investigation, action,
suit, proceeding or claim relating to the Collateral or any other property which
is security for the Obligations or which would result in any material adverse
change in Borrower's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) the occurrence of any Event of Default or event
which, with the passage of time or giving of notice or both, would constitute an
Event of Default and (iii) any other material adverse change in the business,
assets or condition, financial or otherwise, of the Borrower.
c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which Borrower
sends to its stockholders generally and copies of all reports and registration
statements which Borrower files with the Securities and Exchange Commission, any
national securities exchange or the National Association of Securities Dealers,
Inc.
d) Borrower shall furnish or cause to be furnished to Lender such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrower, as Lender may, from time to time, reasonably
request. Lender is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business of Borrower to any
court or other government agency or to any participant or assignee or
prospective participant or assignee. Borrower hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Lender, at Borrower's expense,
copies of the financial statements of Borrower and any reports or management
letters prepared by such accountants or auditors on behalf of Borrower and to
disclose to Lender such information as they may have regarding the business of
Borrower. Any documents, schedules, invoices or other papers delivered to
Lender may be destroyed or otherwise disposed of by Lender one (1) year after
the same are delivered to Lender, except as otherwise designated by Borrower to
Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
--------------------------------------------------------
shall not, directly or indirectly, (a) recapitalize, merge into or with or
consolidate with any other Person or permit any other Person to merge into or
with or consolidate with it, or (b) sell, assign, lease or transfer to any other
Person, abandon or otherwise dispose of any stock or indebtedness or any of its
assets to any other Person (except for (i) sales of Inventory in the ordinary
course of business, (ii) the disposition of worn-out or obsolete Equipment or
Equipment no longer used in the business of Borrower so long as (A) if an Event
of Default exists or has occurred and is continuing, any proceeds are paid to
Lender and (B) such sales do not involve Equipment having an aggregate fair
market value in excess of $50,000 for all such Equipment disposed of in any
fiscal year of Borrower and (iii) the sale or lease of machinery, equipment or
real property upon terms reasonably acceptable to Lender), or (c) form or
acquire any subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree to
do any of the foregoing.
9.8 Encumbrances. Borrower shall not create, incur, assume or suffer to
------------
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a) liens and security interests of Lender;
------
(b) liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower and with respect to which adequate reserves
have been set aside on its books; (c) non-consensual statutory liens (other than
liens securing the payment of taxes) arising in the ordinary course of
Borrower's business to the extent: (i) such liens secure indebtedness which is
not overdue or (ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower, in each
case prior to the commencement of foreclosure or other similar proceedings and
with respect to which adequate reserves have been set aside on its books; (d)
zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the business
of Borrower as presently conducted thereon or materially impair the value of the
real property which may be subject thereto; and (e) the security interests and
liens set forth on Schedule 8.4 hereto.
9.9 Indebtedness. Borrower shall not incur, create, assume, become or be
------------
liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except (a) the Obligations; (b) trade obligations and normal
------
accruals in the ordinary course of business not yet due and payable, or with
respect to which the Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to Borrower,
and with respect to which adequate reserves have been set aside on its books;
(c) purchase money indebtedness (including capital leases) to the extent not
incurred or secured by liens (including capital leases) in violation of any
other provision of this Agreement; and (d) obligations or indebtedness set forth
on the Information Certificate; provided, that, (i) Borrower may only make
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regularly scheduled payments of principal and interest in respect of such
indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness as in effect on the date hereof,
(ii) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, or (B) redeem, retire, defease,
purchase or otherwise acquire such indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose, and (iii) Borrower shall furnish to
Lender all notices or demands in connection with such indebtedness either
received by Borrower or on its behalf, promptly after the receipt thereof, or
sent by Borrower or on its behalf, concurrently with the sending thereof, as the
case may be.
9.10 Revolving Loans, Investments, Guarantees, Etc. Borrower shall not,
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directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the stock or indebtedness or all or a substantial part of
the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of the
foregoing, except: (a) the endorsement of instruments for collection or deposit
------
in the ordinary course of business; (b) loans or investments which result from
the conversion of past due accounts receivable into notes or stock, which notes
or stock are delivered and pledged to Lender; (c) investments in: (i) short-
term direct obligations of the United States Government, (ii) negotiable
certificates of deposit issued by any bank satisfactory to Lender, payable to
the order of the Borrower or to bearer and delivered to Lender, (iii) commercial
paper rated A1 or P1, and (iv) the advances and investments as of December 31,
1995 in Engineered Wire Products, Inc., an Ohio corporation, and (v) advances to
the Joint Venture which are approved from time to time by Lender; provided,
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that, as to any of the foregoing, unless waived in writing by Lender, Borrower
----
shall take such actions as are deemed necessary by Lender to perfect the
security interest of Lender in such investments and (d) the guarantee by
Borrower of the obligations owing to Lender by Joint Venture and the guarantees
set forth in the Information Certificate.
9.11 Dividends and Redemptions. Borrower shall not, directly or
-------------------------
indirectly, declare or pay any dividends on account of any shares of class of
capital stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of capital stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing.
9.12 Transactions with Affiliates. Borrower shall not enter into any
----------------------------
transaction for the purchase, sale or exchange of property or the rendering of
any service to or by any Affiliate, except as provided in Section 9.16 and in
the ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower
than Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person.
9.13 Working Capital. Borrower shall, at all times, maintain Working
---------------
Capital of not less than $15,000,000.
9.14 Tangible Net Worth. Borrower shall, at all times, maintain Tangible
------------------
Net Worth of not less than $10,000,000.
9.15 Costs and Expenses. Borrower shall pay to Lender on demand all costs,
------------------
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, appraisal fees and search fees; (c) costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Lender's customary charges and fees with respect thereto; (d) charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including, without limitation,
preparations for and consultations concerning any such matters); (g) from and
after an Event of Default, all out-of-pocket expenses and costs heretofore and
from time to time hereafter incurred by Lender during the course of periodic
field examinations of the Collateral and Borrower's operations, and (h) the fees
and disbursements of counsel (including legal assistants) to Lender in
connection with any of the foregoing.
9.16 Certain Payments, etc. Borrower shall not make any loans to, or pay
---------------------
any bonuses, management or other fees or other amounts to any officers,
directors, employees or stockholders of Borrower or any affiliate, except for
(i) advances for travel and expenses to Borrower's officers, directors or
employees in the ordinary course of business, (ii) reasonable salaries and
bonuses for all salaried personnel other than Borrower's officers and directors,
(iii) reasonable salaries and bonuses to Borrower's officers and directors, and
(iv) management fees payable in the absence of an Event of Default to any
affiliate or other entity, or its officers or directors, in an amount not
exceeding, in the aggregate, $750,000 in any fiscal year.
9.17 Pension Plans. Borrower shall (i) keep in full force and effect any
-------------
and all pension plans which are presently in existence or may, from time to
time, come into existence under ERISA, unless such pension plans can be
terminated without material liability to Borrower in connection with such
termination; (ii) make contributions to all of Borrower's pension plans in a
timely manner and in a sufficient amount to comply with the requirements of
ERISA; (iii) comply with all material requirements of ERISA which relate to such
plans and shall not, without the prior consent of Lender, seek waivers of the
minimum funding standards under ERISA with respect to such plans for any plan
year ending after December 31, 1994; (iv) make all required amortization
payments necessary to satisfy, and otherwise comply with the conditions of the
waivers granted by the IRS with respect to minimum funding for the plan years
ended June 30, 1985, June 30, 1984 and June 30, 1980, and otherwise make all
required amortization payments necessary to satisfy Borrower's unfunded pension
liability; provided however, Borrower shall not use funds acquired from Lender
or proceeds of Collateral for the purpose of making any such amortization
payments without giving Lender at least five (5) days notice of its intent to
make such payment; and (v) notify Lender immediately upon receipt by Borrower of
any notice of the institution of any proceeding or other action which may result
in the termination of any pension plans or the imposition of any lien on
Borrower's assets by the Pension Benefit Guaranty Corporation, including the
failure by Borrower to make required payments or the occurrence of a default
under the Security Agreement executed by Borrower in favor of the Keystone
Master Pension Trust dated March 17, 1986, as amended and restated by agreement
dated January 8, 1986.
9.18 Environmental Compliance. Borrower shall, and shall cause its
------------------------
subsidiaries to, conduct their respective businesses so as to comply in all
material respects with all applicable environmental health and safety statutes
and regulations in all jurisdictions in which they, respectively, are or may at
any time be doing business; provided, however, that nothing contained in this
-------- -------
subsection shall prevent the Borrower or any subsidiary from contesting, in good
faith by appropriate legal proceedings, any such law, regulation, interpretation
thereof or application thereof, provided, further, that the Borrower shall
-------- -------
comply with the order of any court or governmental body of applicable
jurisdiction relating to such laws unless the Borrower or such subsidiary shall
currently be prosecuting an appeal or proceedings for review and shall have
secured a stay of enforcement or execution or other arrangement postponing
enforcement or execution pending such appeal or proceedings for review. If the
Borrower or any of its subsidiaries shall (a) receive notice that any violation
of any federal, state or local environmental law or regulation may have been
committed or is about to be committed by Borrower or any of its subsidiaries,
(b) receive notice that any administrative or judicial complaint or order has
been filed or is about to be filed against the Borrower or any of its
subsidiaries alleging violations of any federal, state or local environmental
law or regulation or requiring the Borrower or any of its subsidiaries to take
action in connection with the release of toxic or hazardous substances into the
environment or (c) receive any notice from a federal, state, or local
governmental agency or private party alleging that the Borrower or any
subsidiary may be liable or responsible for costs associated with a response to
or cleanup of a release of a toxic or hazardous substance into the environment
or any damages caused thereby, the Borrower shall provide Lender with a copy of
such notice within five (5) days of Borrower's receipt thereof. Within ten (10)
days of the Borrower or any of its subsidiaries having learned of the enactment
or promulgation of any federal, state or local environmental law or regulation
which may result in any material adverse change in the condition, financial or
otherwise, of the Borrower or any of its subsidiaries, the Borrower shall
provide Lender with notice thereof.
9.19 Further Assurances. At the request of Lender at any time and from
------------------
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Revolving
Loans and providing Letter of Credit Accommodations contained herein are
satisfied. In the event of such request by Lender, Lender may, at its option,
cease to make any further Revolving Loans or provide any further Letter of
Credit Accommodations until Lender has received such certificate and, in
addition, Lender has determined that such conditions are satisfied. Where
permitted by law, Borrower hereby authorizes Lender to execute and file one or
more UCC financing statements signed only by Lender.
SECTION 10 EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 Events of Default. The occurrence or existence of any one or more of
-----------------
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
a) Borrower fails to pay when due any of the Obligations or fails to
perform any of the terms, covenants, conditions or provisions contained in this
Agreement or any of the other Financing Agreements;
b) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
d) any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $100,000 in any one case or in excess of
$500,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Obligor or any of their assets;
e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or Borrower or any Obligor, which is a
partnership or corporation, dissolves or suspends or discontinues doing
business;
f) Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property; or
i) any default by Borrower or any Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing to
any person other than Lender, or any capitalized lease obligations, contingent
indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, which
default continues for more than the applicable cure period, if any, with respect
thereto, or any default by Borrower or any Obligor under any material contract,
lease, license or other obligation to any person other than Lender, which
default continues for more than the applicable cure period, if any, with respect
thereto;
j) any change in the controlling ownership of Borrower;
k) the indictment or threatened indictment of Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower or any Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of Borrower or such Obligor;
l) there shall be a material adverse change in the business, assets
or prospects of Borrower or any Obligor after the date hereof;
m) there shall be an event of default under any of the other
Financing Agreements.
n) a Default under and as defined in that certain Security Agreement
executed by Borrower in favor of the Keystone Master Pension Trust dated March
17, 1986, as amended and restated by agreement dated January 8, 1986 shall
occur; or
o) there shall occur a termination of that certain Amendment and
Restatement of Subordination Agreement executed by the Trustee of the Keystone
Master Pension Trust in favor of Lender dated January 8, 1986 or the Trustee or
any party succeeding in interest thereto shall assert the termination of such
Subordination Agreement or contest the binding effect or validity thereof.
10.2 Remedies.
--------
a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
-------- ----
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Lender. If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Lender to Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Borrower waives the posting of any bond which might otherwise be required.
c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Revolving Loans or arranging for Letter of Credit Accommodations or
reduce the lending formulas or amounts of Revolving Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any provision of this
Agreement providing for any future Revolving Loans or Letter of Credit
Accommodations to be made by Lender to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
-------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
---------------------------------------------------------------------
a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Illinois
(without giving effect to principles of conflicts of law).
b) Borrower and Lender irrevocably consent and submit to the non-
exclusive jurisdiction of the Courts of the State of Illinois located in Chicago
and the United States District Court for the Northern District of Illinois and
waive any objection based on venue or forum non conveniens with respect to any
----- --- ----------
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or its property).
c) Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Borrower in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, Borrower
shall appear in answer to such process, failing which Borrower shall be deemed
in default and judgment may be entered by Lender against Borrower for the amount
of the claim and other relief requested.
d) AT THE OPTION OF LENDER, BORROWER HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. AT THE
OPTION OF LENDER, BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER HERETO TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.
e) Lender shall not have any liability to Borrower (whether in tort,
contract, equity or otherwise) for losses suffered by Borrower in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender, that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
-----------------
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
----------------------
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically
set forth therein. A waiver by Lender of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to interpose any
-----------------------
claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and hold Lender, and its
---------------
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section 11.5 may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion which it is permitted to pay under applicable law to Lender in
satisfaction of indemnified matters under this Section. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
12.1 Term.
----
a) This Agreement and the other Financing Agreements shall continue
in full force and effect for a term ending on the date December 31, 1999 (the
"Renewal Date"), with the Renewal Date being extended on each Renewal Date to
the date which is the year after the then current Renewal Date unless sooner
terminated pursuant to the terms hereof. The maturity of the Term Loan
Agreement is hereby also extended to December 31, 1999. Lender or Borrower
(subject to Lender's right to extend the Renewal Date as provided above) may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least sixty (60) days prior written notice; provided, that,
-------- ----
this Agreement all other Financing Agreements and the Term Loan Agreement must
be terminated simultaneously. Upon the effective date of termination or non-
renewal of the Financing Agreements, Borrower shall pay to Lender, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to Lender
in such amounts as Lender determines are reasonably necessary to secure Lender
from loss, cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any contingent Obligations, including issued and
outstanding Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Lender has not yet
received final and indefeasible payment. Such cash collateral shall be remitted
by wire transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Chicago time.
b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
c) If for any reason this Agreement and the Term Loan Agreement are
terminated by the Borrower prior to the end of the then current term or renewal
term of this Agreement, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrower
agrees to pay to Lender, upon the effective date of such termination, an early
termination fee equal to one percent (1%) of the outstanding balance of the Term
Loan at such time. In addition, the Borrower agrees to pay Lender, upon each
prepayment of the loan made under the Term Loan Agreement, an early termination
fee equal to one percent (1.0%) of the amount of each such prepayment. Such
early termination fee shall be presumed to be the amount of damages sustained by
Lender as a result of such early termination and Borrower agrees that it is
reasonable under the circumstances currently existing. The early termination
fee provided for in this Section 12.1 shall be deemed included in the
Obligations.
12.2 Notices. All notices, requests and demands hereunder shall be in
-------
writing and (a) made to Lender at its address set forth below and to Borrower at
its chief executive office set forth below, or to such other address as either
party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
------------------
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 Indemnifications for Changes in Laws. If, at any time or times after
------------------------------------
December 19, 1986 there shall become effective any amendment to, deletion from
or revision, modification or other change in any provision of any statute, or
any rule, regulation or interpretation thereunder or any similar law or
regulation, affecting Lender's extensions of credit provided for in the
Agreement and/or the selling of participations therein, Borrower shall indemnify
and hold Lender harmless from and against any and all obligations, fees,
liabilities, losses, penalties, costs, expenses and damages, of every kind and
nature, imposed upon or incurred by Lender by reason of any such amendment,
deletion, revision, modification or other change, whether or not the
transactions contemplated by the Agreement are consummated. Without limiting
the foregoing, if after December 31, 1986 Lender shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Lender with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on Lender's capital as a
consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
account Lender's policies with respect to capital adequacy) by an amount deemed
by Lender to be material, then from time to time, Borrower shall pay to Lender
such additional amount or amounts as will compensate Lender for such reduction.
12.5 Successors. This Agreement, the other Financing Agreements and any
----------
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrower, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans, the Letter of Credit
Accommodations or any other interest herein to another financial institution or
other person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits as it
would have if it were the Lender hereunder, except as otherwise provided by the
terms of such assignment or participation.
12.6 Entire Agreement. This Agreement, the other Financing Agreements, any
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supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be
duly executed as of the day and year first above written.
LENDER BORROWER
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CONGRESS FINANCIAL CORPORATION KEYSTONE CONSOLIDATED
(Central) INDUSTRIES, INC.
By: By:
----------------------------- -----------------------------
Title: Title:
--------------------------- ---------------------------
Address: Chief Executive Office:
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000 Xxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 0000 XXX Xxxxxxx #0000
Xxxxxx, Xxxxx 00000
