FINANCING AGREEMENT
-------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
AND
3D SYSTEMS, INC.
(AS BORROWER)
DATED: AUGUST 8, 2000
TABLE OF CONTENTS
Page
SECTION 1. Definitions......................................................1
SECTION 2. Conditions Precedent............................................15
SECTION 3. Revolving Loans.................................................18
SECTION 4. Intentionally Omitted...........................................21
SECTION 5. Letters of Credit...............................................21
SECTION 6. Collateral......................................................23
SECTION 7. Representations, Warranties and Covenants.......................27
SECTION 8. Interest, Fees and Expenses.....................................33
SECTION 9. Powers .........................................................40
SECTION 10. Events of Default and Remedies.................................41
SECTION 11. Termination....................................................44
SECTION 11. Miscellaneous..................................................45
SCHEDULES
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Schedule 1 - Collateral Information
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, with
offices located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000 (hereinafter "CIT"), is pleased to confirm the terms and conditions under
which CIT shall make revolving loans and other financial accommodations to, 3D
SYSTEMS, INC., a California corporation with a principal place of business at
00000 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (herein the "Company").
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of the Company's now existing and future: (a) accounts,
and any and all other receivables (whether or not specifically listed on
schedules furnished to CIT), including, without limitation, all accounts created
by, or arising from, all of the Company's sales, leases, rentals of goods or
renditions of services to its customers, including but not limited to, those
accounts arising under any of the Company's trade names or styles, or through
any of the Company's divisions; (b) any and all instruments, documents, chattel
paper (including electronic chattel paper); (c) unpaid seller's or lessor's
rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom; (d) rights to any
goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (e) reserves and credit balances arising in
connection with or pursuant hereto; (f) guarantees, supporting obligations,
payment intangibles and letter of credit rights; (g) insurance policies or
rights relating to any of the foregoing (h) general intangibles pertaining to
any and all of the foregoing (including all rights to payment, including those
arising in connection with bank and non-bank credit cards), and including books
and records and any electronic media and software thereto ; (i) notes, deposits
or property of account debtors securing the obligations of any such account
debtors to the Company, and (j) cash and non-cash proceeds of any and all of the
foregoing.
ACCOUNTS RECEIVABLE SUBLIMITS shall mean (a) $2,000,000.00 -- for loans against
U.S. billed Eligible Accounts Receivable owed by foreign account debtors
(exclusive of Eligible Accounts Receivable owed by foreign account debtors
covered by letters of credit, which are not subject to this sub-limit), and (b)
the least of (i) $2,500,000.00, (ii) 1.5 multiplied by the trailing three month
Free Cash Flow, (iii) 1.5 multiplied by the trailing six month Free Cash Flow,
or (iv) 30% of total gross availability generated by the Borrowing Base
(calculated without regard to this sublimit) -- for loans against Contract
Receivables. Any Accounts considered eligible under this paragraph must comply
with all applicable eligibility criteria.
ACQUISITION shall mean the merger or consolidation by the Company with any
Person or the acquisition by the Company of all or any substantial part of the
assets of any Person.
ADMINISTRATIVE MANAGEMENT FEE shall mean the sum of $2,000.00, which shall be
paid to CIT in accordance with Section 8, Paragraph 8.8 hereof to offset the
expenses and costs (excluding Out-of-Pocket Expenses and auditor fees) of CIT in
connection with administration, record keeping, analyzing and evaluating the
Collateral.
AFFILIATE shall mean, as applied to any Person, any other Person who, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, in any event: (a) any Person
which owns directly or indirectly 10% or more of the securities having ordinary
voting power for the election of directors or other members of the governing
body of a Person or 10% or more of the partnership or other ownership interest
of a Person (other than as a limited partner of such Person) shall be deemed to
control such person, (b) each director (or comparable manager) of a person shall
be deemed to be an Affiliate of such person, and (c) each partnership or joint
venture in which a person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.
ANNIVERSARY DATE shall mean the date occurring three (3) years from the Closing
Date and the same date in every year thereafter.
AVAILABILITY shall mean at any time the amount by which: (a) the Borrowing Base
exceeds (b) the sum of (i) the outstanding aggregate amount of all Obligations,
including without limitation, all Obligations with respect to Revolving Loans,
but excluding the Letters of Credit, and (ii) the Availability Reserve.
AVAILABILITY RESERVE shall mean the sum of: (a) (i) three (3) months rental
payments or similar charges for any of the Company's leased premises or other
Collateral locations where Eligible Inventory is located for which the Company
has not delivered to CIT a landlord's waiver in form and substance reasonably
satisfactory to CIT, plus (ii) three (3) months estimated payments plus any
other fees or charges owing by the Company to any applicable warehousemen or
third party processor at Eligible Inventory locations (as determined by CIT in
its reasonable business judgement), provided that any of the foregoing amounts
shall be adjusted from time to time hereafter upon (x) delivery to CIT of any
such acceptable waiver, (y) the opening or closing of a Collateral location
and/or (z) any change in the amount of rental, storage or processor payments or
similar charges; (b)any reserve that CIT in its Permitted Discretion may
reasonably require from time to time pursuant to this Financing Agreement,
including without limitation, for Letters of Credit pursuant to Paragraph 5.1 of
Section 5 hereof and, solely so long as the Company fails to maintain the
Availability Threshold, the amount of the UVP Payment Accrual discussed in
Paragraph 3.2 hereof. To the extent the Company requests an advance to satisfy
its payment obligations to UVP ("UVP Advance"), such reserve imposed by CIT
shall be reduced by an amount equal to the requested UVP Advance; and (c) such
other reserves as CIT (in its Permitted Discretion) deems necessary to protect
CIT's interests as a result of (x) negative forecasts and/or trends in the
Company's business, profits, operations or financial condition or (y) other
issues, circumstances or facts that could otherwise materially and negatively
impact the Company, its business, profits, operations, financial condition or
assets.
AVAILABILITY THRESHOLD shall mean that the sum of the Company's Availability
plus the amount of the Cash on Hand is equal to or greater than $5,000,000.00 on
average for a consecutive 30-day period, measured monthly, or is equal to or
greater than $2,500,000.00 on any date of determination.
BORROWING BASE shall mean the sum of (a) eighty-five percent (85%) of the
Company's aggregate outstanding Eligible Accounts Receivable (subject to the
applicable Accounts Receivable Sublimits), plus (b) the least of (i) fifty
percent (50%) of the aggregate value of the Company's Eligible Inventory, valued
at the lower of cost or market, on a first in, first out basis,
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(ii) 85% of the orderly liquidation value of the Company's raw materials and
finished goods Inventory (as discussed in Section 2(s) hereof), or (iii) the
Inventory Loan Cap. The Borrowing Base shall be limited to the Revolving Loan
Cap when CIT has dominion and control over Company's collections pursuant to
Section 3.4 hereof.
BUSINESS DAY shall mean any day on which CIT and The Chase Manhattan Bank are
open for business.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate expenditures of
the Grandparent and its consolidated subsidiaries during such period on account
of, property, plant, equipment or similar fixed assets that, in conformity with
GAAP, are required to be reflected as such in the Consolidated Balance Sheet of
the Grandparent.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure in the Consolidated Balance Sheet of the Grandparent.
CASH ON HAND shall mean Company's and its subsidiaries' cash and cash
equivalents (limited to $2.5 million of cash in the Company's foreign
subsidiaries and excluding any cash and cash equivalents subject to liens and
encumbrances other than those of CIT)
CHASE BANK RATE shall mean the rate of interest per annum announced by The Chase
Manhattan Bank from time to time as its prime rate in effect at its principal
office in New York City. (The prime rate is not intended to be the lowest rate
of interest charged by The Chase Manhattan Bank to its borrowers).
CHASE BANK RATE LOANS shall mean any loans or advances pursuant to this
Financing Agreement made or maintained at a rate of interest based upon the
Chase Bank Rate.
CLOSING DATE shall mean the date that this Financing Agreement has been duly
executed and delivered by the parties hereto and all Conditions Precedent have
been satisfied or waived.
COLLATERAL shall mean all present and future Accounts, Equipment, Inventory,
Documents of Title, General Intangibles, stock of the Company's subsidiaries
(other than controlled foreign corporations) and Other Collateral.
COLLECTION DAYS shall mean one (1) Business Day to provide for the deposit,
clearance and collection of checks or other instruments representing the
proceeds of Collateral, the amount of which has been credited to the Company's
Revolving Loan Account.
COMMITMENT LETTER shall mean the Commitment Letter, dated July 11, 2000, issued
by CIT to, and accepted by, the Company.
CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet for the
Grandparent and its consolidated subsidiaries, eliminating all inter-company
transactions and prepared in accordance with GAAP.
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CONSOLIDATING BALANCE SHEET shall mean a balance sheet for the Company (without
reflecting the results of operations of its subsidiaries that are controlled
foreign corporation), showing all eliminations of inter-company transactions,
including a balance sheet for the Company exclusively, all prepared in
accordance with GAAP.
CONTRACT RECEIVABLES shall mean the Company's service and maintenance contract
receivables; the amount of Contract Receivables will be calculated, from time to
time, as twenty percent (20%) of the Company's deferred revenue liability as
shown on the Company's most recent balance sheet. CIT reserves the right to
recalculate the foregoing percentage based upon information provided by the
Company following the completion of each audit of the Company by CIT.
COPYRIGHTS shall mean all present and hereafter acquired copyrights, copyright
registrations, recordings, applications, designs, styles, licenses, marks,
prints and labels bearing any of the foregoing, goodwill, any and all general
intangibles, intellectual property and rights pertaining thereto, and all cash
and non-cash proceeds thereof.
DEFAULT shall mean any event specified in Section 10.1 hereof, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.
DEFAULT RATE of Interest shall mean a rate of interest per annum, equal to the
sum of: (a) two percent (2%) and (b) the applicable increment over the Chase
Bank Rate (as set forth in Paragraph 8.1(a) hereof) plus the Chase Bank Rate, or
the applicable increment over the LIBOR Rate (as set forth in Paragraph 8.14(a)
hereof) plus the LIBOR Rate, as applicable.
DEPOSITORY ACCOUNTS shall mean the collection accounts, which are subject to
CIT's instructions, as specified in Paragraph 3.4 of Section 3 of this Financing
Agreement.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Company terminates this
Financing Agreement or the Revolving Line of Credit prior to the initial
Anniversary Date.
EARLY TERMINATION FEE shall: (a) mean the fee CIT is entitled to charge the
Company in the event the Company terminates the Revolving Line of Credit or this
Financing Agreement on a date prior to the initial Anniversary Date; and (b) be
determined by multiplying the amount of the Revolving Line of Credit by two
percent (2%) if the Early Termination Date occurs on or before one (1) year from
the Closing Date, and one percent (1%) if the Early Termination Date occurs
after one (1) year from the Closing Date but prior to the initial Anniversary
Date. Notwithstanding the foregoing, the Early Termination Fee shall be reduced
to the lowest of the following as applicable:
(i) zero, if the Financing Agreement is terminated by the Company on
or after the third anniversary of the Closing Date;
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(ii) 0.25%, if, at any time following the first anniversary of the
Closing Date, the Company repays its Obligations to CIT with the
proceeds of a debt or equity financing (other than a secured
financing obtained from a commercial lender), or
(iii) 0.50%, if (x) at any time prior to the first anniversary of the
Closing Date, the Company enters into an acquisition agreement
to acquire stock or assets of a non-Affiliated third party, (y)
CIT is unable or unwilling to provide the financing necessary to
enable the Company to complete the subject acquisition and/or to
provide for the ongoing working capital requirements of the
acquired business, and (z) the Company repays its Obligations
owing to CIT with the proceeds of a debt or equity financing and
such financing also is used to enable the Company to consummate
the subject acquisition and provide for the ongoing working
capital requirements of the acquired business; it being
expressly understood that if, in connection with such an
acquisition, the financing that the Company obtains to repay its
Obligations owing to CIT is a debt or equity financing (other
than a secured financing from a commercial lender) and if such
financing is obtained after the first anniversary of the Closing
Date, then clause "(ii)" and not this clause "(iii)", shall
determine the applicable Early Termination Fee.
EBITDA shall mean, in any period, all earnings of the Grandparent and its
consolidated subsidiaries for said period (excluding non-recurring earnings and
restructuring charges as determined in accordance with GAAP) before all
interest, taxes, depreciation and amortization calculated on a consolidated
basis in accordance with GAAP.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the Company's Trade
Accounts Receivable that are subject to a valid, exclusive, first priority and
fully perfected security interest in favor of CIT, which conform to the
warranties contained herein, LESS, without duplication, the sum of: (a) any
returns, discounts, claims, credits and allowances of any nature (whether
issued, owing, granted, claimed or outstanding), to the extent not already
included in item (x) below and (b) reserves for any such Trade Accounts
Receivable that arise from or are subject to or include: (i) sales to the United
States of America, any state or other governmental entity or to any agency,
department or division thereof, except for any such sales as to which the
Company has complied with the Assignment of Claims Act of 1940 or any other
applicable statute, rules or regulation, to CIT's satisfaction in the exercise
of its reasonable business judgment; (ii) except to the extent permitted by
clause (a) of the definition of Accounts Receivable Sublimits, sales to account
debtors that are located outside of the United States or Canada and that are not
supported by letters of credit (in form and substance satisfactory to CIT in its
Permitted Discretion) issued by or confirmed by, and payable at, banks having a
place of business in the United States; (iii) Accounts that remain unpaid more
than sixty (60) days past due date and are not outstanding for more than ninety
(90) days from invoice date; (iv) contra accounts (other than Contract
Receivables that are otherwise eligible); (v) sales to Parent or Grandparent,
any subsidiary, or to any company that is an Affiliate of the Company, Parent or
Grandparent in any way; (vi) xxxx and hold (deferred shipment) or consignment
sales; (vii) sales to any customer which: (A) is insolvent, (B) is or
subsequently becomes the debtor in any bankruptcy (except with CIT's prior
consent), insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, (C) is negotiating, or has called a
meeting of its creditors for purposes of negotiating, a compromise of its debts,
or (D) is financially
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unacceptable to CIT or has a credit rating unacceptable to CIT in its reasonable
credit judgment; (viii) all sales to any customer if fifty percent (50%) or more
of the aggregate dollar amount of all outstanding invoices to such customer are
unpaid more than ninety (90) days from invoice date; (ix) pre-billed receivables
(other than Contract Receivables) and receivables arising from progress billing
(other than Contract Receivables); (x) an amount representing, historically,
returns, discounts, claims, credits, allowances and applicable terms; (xi) sales
not payable in United States currency; (xii) sales to any customer and/or its
affiliates to the extent such sales exceed at any one time ten percent (10%) or
more of all Eligible Accounts Receivable; and (xiii) any other reasons deemed
necessary by CIT in its Permitted Discretion, including without limitation,
those reasons which are customary either in the commercial finance industry or
in the lending practices of CIT.
ELIGIBLE INVENTORY shall mean the gross amount of the Company's Inventory that
is subject to a valid, exclusive, first priority and fully perfected security
interest in favor of CIT and which conforms to the warranties contained herein
LESS, without duplication, any (a) work-in-process, (b) supplies (other than raw
materials), (c) Inventory not present in the United States of America, (d)
Inventory returned or rejected by the Company's customers (other than goods that
are undamaged and resalable in the normal course of business) and goods to be
returned to the Company's suppliers, (e) Inventory in transit to third parties
(other than the Company's agents or warehouses), or in the possession of a
warehouseman, bailee, third party processor, or other third party, unless such
warehouseman, bailee or third party has executed a notice of security interest
agreement (in form and substance satisfactory to CIT), and (f) less any reserves
required by CIT in its Permitted Discretion, for special order goods,
discontinued, slow-moving and obsolete Inventory, market value declines, xxxx
and hold (deferred shipments), inventory subject to consignment sales, shrinkage
and any applicable customs, freight, duties and Taxes.
EQUIPMENT shall mean all present and hereafter acquired equipment (as defined in
the UCC) including, without limitation, all machinery, equipment, furnishings
and fixtures, and all additions, substitutions and replacements thereof,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR Loan, shall
mean the aggregate (without duplication) of the maximum rates of reserve
requirements (expressed as a decimal) in effect with respect to CIT and/or any
present or future lender or participant on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under
Regulation D or any other applicable regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having jurisdiction
with respect thereto, as now and from time to time in effect, dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by CIT
and/or any such lenders or participants (such rate to be adjusted to the nearest
one sixteenth of one percent (1/16 of 1%) or, if there is not a nearest one
sixteenth of one percent (1/16 of 1%), to the next higher one sixteenth of one
percent (1/16 of 1%)).
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EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10.1 of this
Financing Agreement.
FINANCING AGREEMENT shall mean this agreement between CIT and the Company, as it
may be amended and modified from time to time.
FISCAL QUARTER shall mean (a) the 13 week period commencing on January 1st, (b)
the 13 week period commencing with the end of the period in clause (a) above,
(c) the 13 week period commencing with the end of the period in clause (b)
above, and (d) the period commencing with the end of the period in clause (c)
and ending on December 31st of each Fiscal Year.
FISCAL YEAR shall mean each twelve (12) month period commencing on January 1st
of each year and ending on the following December 31st.
FREE CASH FLOW shall mean EBITDA less Capital Expenditures (net of the
disposition of fixed assets which are sold in the ordinary course of business),
taxes paid, interest on all Indebtedness, amortization, repurchase of treasury
stock, and dividends paid (other than those paid in stock).
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply, provided that in the event the Company
modifies its accounting principles and procedures as applied as of the Closing
Date, the Company shall provide such statements of reconciliation as shall be in
form and substance acceptable to CIT.
GENERAL INTANGIBLES shall mean all present and hereafter acquired general
intangibles, and shall include, without limitation, all present and future
right, title and interest in and to: (a) all Trademarks, tradenames, corporate
names, business names, logos and any other designs or sources of business
identities, (b) Patents, together with any improvements on said Patents, utility
models, industrial models, and designs, (c) Copyrights, (d) trade secrets, (e)
licenses, permits and franchises, (f) all applications with respect to the
foregoing, (g) all right, title and interest in and to any and all extensions
and renewals, (h) goodwill with respect to any of the foregoing, (i) any other
forms of similar intellectual property, (j) all customer lists, distribution
agreements, supply agreements, blue prints, indemnification rights and tax
refunds, together with all monies and claims for monies now or hereafter due and
payable in connection with any of the foregoing or otherwise, and all cash and
non-cash proceeds thereof, including, without limitation, the proceeds or
royalties of any licensing agreements between the Company and any licensee of
any of the Company's General Intangibles.
GRANDPARENT shall mean 3D Systems Corporation, a Delaware corporation.
GUARANTIES shall mean the guaranty documents executed and delivered by the
Guarantors guaranteeing the Obligations.
GUARANTORS shall mean 3D Systems Corporation, a Delaware corporation, 3D
Holdings LLC, a Delaware Limited Liability Company, and 3D Capital Corp., a
California corporation.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money or for the deferred purchase
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price of property, services or assets, other than Inventory, or (b) lease
obligations which, in accordance with GAAP, have been, or which should be
capitalized.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTEREST PERIOD shall mean:
(a) with respect to any initial request by the Company for a LIBOR
Loan, a one month, two month or three month period commencing on the borrowing
or conversion date with respect to a LIBOR Loan and ending one, two or three
months thereafter, as applicable; and
(b) thereafter with respect to any continuation of, or conversion
to, a LIBOR Loan, at the option of the Company, any one month, two month or
three month period commencing on the last day of the immediately preceding
Interest Period applicable to such LIBOR Loan and ending one, two or three
months thereafter, as applicable;
PROVIDED THAT, the foregoing provisions relating to Interest Periods are subject
to the following:
(i) if any Interest Period would otherwise end on a day which is not a
Working Day, that Interest Period shall be extended to the next
succeeding Working Day, unless the result of such extension would extend
such payment into another calendar month in which event such Interest
Period shall end on the immediately preceding Working Day;
(ii) any Interest Period that begins on the last Working Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month, at the end of such Interest
Period) shall end on the last Working Day of a calendar month; and
(iii) for purposes of determining the availability of Interest Periods,
such Interest Periods shall be deemed available if (x) Chase Manhattan
Bank quotes an applicable rate or CIT determines LIBOR, as provided in
the definition of LIBOR, (y) the LIBOR determined by Chase Manhattan
Bank or CIT will adequately and fairly reflect the cost of maintaining
or funding its loans bearing interest at LIBOR, for such Interest
Period, and (z) such Interest Period will end on or before the last day
of the then current term of this Financing Agreement. If a requested
Interest Period shall be unavailable in accordance with the foregoing
sentence, the Company shall continue to pay interest on the Obligations
at the applicable per annum rate based upon the Chase Bank Rate.
INVENTORY shall mean all of the Company's present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
INVENTORY LOAN CAP shall mean the amount of $5,000,000.00.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Company.
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LETTERS OF CREDIT shall mean all letters of credit issued by or with the
assistance of CIT in accordance with Section 5 hereof for or on behalf of the
Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by CIT to the
Issuing Bank of the Company's reimbursement obligations under the Issuing Bank's
reimbursement agreement, application for Letter of Credit or other like
document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee CIT may charge the Company
under Paragraph 8.3 of Section 8 of this Financing Agreement for: (a) issuing a
Letter of Credit or a Letter of Credit Guaranty, and/or (b) otherwise aiding the
Company in obtaining Letters of Credit, all pursuant to Section 5 hereof.
LETTER OF CREDIT SUB-LINE shall mean the commitment of CIT to assist the Company
in obtaining Letters of Credit, pursuant to Section 5 hereof, in an aggregate
amount of $3,000,000.00.
LIBOR shall mean, at any time of determination, and subject to availability, for
each applicable Interest Period, a variable rate of interest equal to: (a) at
CIT's election (i) the applicable LIBOR quoted to CIT by The Chase Manhattan
Bank (or any successor thereof), or (ii) the rate of interest determined by CIT
at which deposits in U.S. dollars are offered for the relevant Interest Period
based on information presented on Telerate Systems at Page 3750 as of 11:00 A.M.
(London time) on the day which is two (2) Business Days prior to the first day
of such Interest Period, PROVIDED THAT, if at least two such offered rates
appear on the Telerate System at Page 3750 in respect of such Interest Period,
the arithmetic mean of all such rates will be the rate used; divided by (b) a
number equal to 1.0 minus the Eurocurrency Reserve Requirements in effect on the
day which is two (2) Business Days prior to the beginning of such Interest
Period.
LIBOR LENDING OFFICE with respect to CIT, shall mean the office of The Chase
Manhattan Bank, or any successor thereof, maintained at 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000.
LIBOR LOAN shall mean any loans made pursuant to this Financing Agreement which
are made or maintained at a rate of interest based upon LIBOR.
LINE OF CREDIT shall mean the aggregate commitment of CIT to (a) make Revolving
Loans pursuant to Section 3 of this Financing Agreement and (b) assist the
Company in opening Letters of Credit pursuant to Section 5 of this Financing
Agreement, in the aggregate amount equal to $10,000,000.00.
LINE OF CREDIT FEE shall: (a) mean the fee due CIT at the end of each month for
the Line of Credit, and (b) be determined by multiplying the difference between
(i) the Revolving Line of Credit, and (ii) the sum, for said month, of (x) the
average daily balance of Revolving Loans plus (y) the average daily balance of
Letters of Credit outstanding for said month, by one quarter of one percent
(0.25%) per annum for the number of days in said month.
LOAN DOCUMENTS shall mean this Financing Agreement the other closing documents
and any other ancillary agreements executed from time to time in connection with
this Financing
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Agreement, all as may be renewed, amended, extended, increased or supplemented
from time to time.
LOAN FACILITY FEE shall mean the fee payable to CIT in accordance with, and
pursuant to, the provisions of Paragraph 8.7 of Section 8 of this Financing
Agreement.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by CIT to the Company or to others for the Company's account (including,
without limitation, all Revolving Loans and Letter of Credit Guaranties); any
and all indebtedness and obligations which may at any time be owing by the
Company to CIT howsoever arising, whether now in existence or incurred by the
Company from time to time hereafter; whether principal, interest, fees, costs,
expenses or otherwise; whether secured by pledge, lien upon or security interest
in any of the Company's Collateral, assets or property or the assets or property
of any other person, firm, entity or corporation; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Company is liable to CIT for such indebtedness as
principal, surety, endorser, guarantor or otherwise, in each case; if and to the
extent evidenced by or created under the Loan Documents. Obligations shall also
include indebtedness owing to CIT by the Company under any Loan Document;
indebtedness or obligations incurred by, or imposed on, CIT as a result of
environmental claims arising out of the Company's operations, premises or waste
disposal practices or sites in accordance with Paragraph 7.7 hereof; the
Company's liability to CIT as maker or endorser of any promissory note or other
instrument for the payment of money issued in connection with the Loan
Documents, the Company's liability to CIT under any guaranty, endorsement or
undertaking which CIT may make or issue to others for the Company's account,
including any Letter of Credit Guaranty or other accommodation extended by CIT
with respect to applications for Letters of Credit, CIT's acceptance of drafts
or CIT's endorsement of notes or other instruments for the Company's account and
benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
blocked account and any other deposit accounts maintained with any bank or
financial institutions into which the proceeds of Collateral are or may be
deposited; all cash, monies, and other property in the possession or control of
CIT; all books (other than stock or minute books), records, ledger cards, disks
and related data processing software at any time evidencing or containing
information relating to any of the Collateral described herein or otherwise
necessary or helpful in the collection thereof or realization thereon; and all
cash and non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of CIT's present and future reasonable
expenses incurred relative to this Financing Agreement or any other Loan
Documents, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to: the cost of record searches, all costs and
expenses incurred by CIT in opening bank accounts, depositing checks, receiving
and transferring funds, and wire transfer charges and CIT's standard fees
relating thereto, any charges imposed on CIT due to returned items and
"insufficient funds" of deposited checks, any amounts paid by, incurred by or
charged to, CIT by the Issuing Bank under a Letter of Credit Guaranty or the
Company's reimbursement agreement, application for Letters of Credit
10
or other like document which pertain either directly or indirectly to such
Letters of Credit, CIT's standard fees relating to the Letters of Credit and any
drafts thereunder, conducting credit reports, travel, lodging and similar
expenses of CIT's personnel in connection with inspecting and monitoring the
Collateral from time to time hereunder, any applicable reasonable counsel fees
and disbursements, fees and taxes relative to the filing of financing
statements, all expenses, costs and fees set forth in Paragraph 10.3 of Section
10 of this Financing Agreement. Anything contained herein to the contrary,
without the prior written consent of the Company, in no event shall the Company
be obligated to CIT on account of such fees and expenses incurred on or prior to
or related to the Closing Date for an amount in excess of $25,000.
OVERADVANCES shall mean the amount by which (a) the sum of all outstanding
Revolving Loans, Letters of Credit and advances made hereunder exceed (b) the
Borrowing Base.
PARENT shall mean 3D Holdings LLC, a Delaware Limited Liability Company.
PATENTS shall mean all of the Company's present and hereafter acquired patents,
patent applications, registrations, any reissues or renewals thereof, licenses,
any inventions and improvements claimed thereunder, and all general intangibles,
intellectual property and patent rights with respect thereto of the Company, and
all income, royalties, cash and non-cash proceeds thereof.
PERMITTED ACQUISITION shall mean (a) any Permitted Asset Acquisition , and (b)
any other Acquisition by the Company consummated with the consent of CIT (such
consent not to be unreasonably withheld or delayed).
PERMITTED ASSET ACQUISITION shall mean an Acquisition of all or any substantial
part of the assets of any Person made by the Company so long as (a) no Default
or Event of Default shall have occurred and be continuing or would result from
the consummation of the proposed Acquisition, (b) the assets being acquired are
useful in the business of (or a business ancillary to the business of) the
Company as such business exists on the date of such Acquisition, (c) the
aggregate consideration (other than stock of Grandparent) payable in respect of
the proposed Acquisition shall not exceed $500,000, (d) after giving effect to
the proposed Acquisition, the Company shall have met the Availability Threshold,
and (e) if such Acquisition shall be an asset acquisition of assets located in
the United States, all such assets shall be subject only to the liens of CIT
granted herein, and the Company shall execute such appropriate UCC-1 financing
statements and any other documents, instruments, or agreements that CIT may
reasonably request. CIT's consent shall be required to include these assets in
the Borrowing Base.
PERMITTED DISCRETION shall mean a determination made in good faith and in the
exercise of reasonable business judgment.
PERMITTED DISPOSITIONS shall mean (a) sales or other dispositions by the Company
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of the Company's business, (b) sales by the Company of Inventory to
buyers in the ordinary course of business, (c) transfers by the Company of
Inventory to customers in rental or evaluation transactions in the ordinary
course of business, (d) the use or transfer of money or cash equivalents by the
Company in a manner that is not prohibited by the terms of this Financing
Agreement or the other Loan
11
Documents, and (e) the licensing by the Company of patents, trademarks,
copyrights, and other intellectual property rights so long as such license
agreements are not materially adverse to the interests of CIT, and unless such
licensing is issued in connection with the sale of inventory in the ordinary
course of business, CIT is provided with prior written notice of such licensing.
PERMITTED DISTRIBUTIONS shall mean (a) distributions by the Company for the
purpose of paying the reasonable company overhead, public filing costs,
accounting costs, and like expenses of Grandparent, and (b) so long as no Event
of Default has occurred and is continuing, and so long as the Company has cash
and cash equivalents (in accordance with GAAP) of at least $20,000,000 after
giving effect thereto, distributions paid by the Company on account of its
common stock.
PERMITTED ENCUMBRANCES shall mean: (a) liens existing on the date hereof on
specific items of Equipment and other liens expressly permitted, or consented to
in writing by CIT; (b) Purchase Money Liens; (c) liens created post Closing Date
of local or California state authorities for franchise or other like Taxes,
provided that the aggregate amounts of such liens shall not exceed $250,000.00
in the aggregate at any one time; (d) statutory liens of landlords and liens of
carriers, warehousemen, bailees, mechanics, materialmen and other like liens
imposed by law for amounts not yet due (or which are being contested in good
faith, by appropriate proceedings or other appropriate actions which are
sufficient to prevent imminent foreclosure of such liens) and with respect to
which adequate reserves or other appropriate provisions are being maintained by
the Company in accordance with GAAP; (e) deposits made (and the liens thereon)
in the ordinary course of business of the Company (including, without
limitation, security deposits for leases, indemnity bonds, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other similar
obligations arising as a result of progress payments under government contracts;
(f) easements (including, without limitation, reciprocal easement agreements and
utility agreements), encroachments, minor defects or irregularities in title,
variation and other restrictions, charges or encumbrances (whether or not
recorded) affecting the Real Estate, if applicable, and which in the aggregate
(A) do not materially interfere with the occupation, use or enjoyment by the
Company of its business or property so encumbered and (B) in the reasonable
business judgment of CIT do not materially and adversely affect the value of
such Real Estate; and (g) liens granted CIT by the Company; (h) liens of
judgment creditors provided such liens do not exceed, in the aggregate, at any
time, $250,000.00 (other than liens bonded or insured to the reasonable
satisfaction of CIT); (i) tax liens which are not yet due and payable or which
are being diligently contested in good faith by the Company by appropriate
proceedings, and which liens are not (x) filed on any public records, (y) other
than with respect to Real Estate, senior to the liens of CIT or (z) for Taxes
due the United States of America or any state thereof having similar priority
statutes, as further set forth in Paragraph 7.6 hereof, (j) liens in and to
money and property in an amount not to exceed $750,000 delivered to a financial
institution or which is under the control of such financial institution in order
to secure the Company's obligations with respect to foreign exchange contracts,
any type of currency or interest rate hedging agreement or any other type of
contract or extensions of credit with such financial institution, (k) the
security interest (having priority over the security interest granted to CIT) in
and to the UVP Patent granted by the
12
Company in favor of UVP, Inc. in order to secure the Company's obligations under
the UVP Purchase Agreement, and (l) the interests of lessors under Capital
Leases so long as such lien attaches only to the asset purchased or acquired and
the proceeds thereof.
PERMITTED INDEBTEDNESS shall mean: (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, Taxes or labor; (b) the Indebtedness secured by
Purchase Money Liens; (c) Subordinated Debt; (d) Indebtedness arising under the
Letters of Credit and this Financing Agreement; (e) deferred Taxes and other
expenses incurred in the ordinary course of business; (f) interest rate or
currency hedging arrangements; (g) Indebtedness existing on the date of
execution of this Financing Agreement and listed in the most recent financial
statement delivered to CIT or otherwise disclosed to CIT in writing prior to the
Closing Date, (h) an unsecured guaranty by the Company of the obligations of
Grandparent with respect to its IRB financing relative to its facility located
in Grand Junction, Colorado, (i) an unsecured guaranty by the Company of
Indebtedness incurred by its subsidiaries that are controlled foreign
corporations, and (j) Indebtedness in an aggregate amount outstanding at any one
time not exceeding $250,000.
PERMITTED INVESTMENTS shall mean (a) Permitted Acquisitions, and (b) loans or
advances to officers, directors, or employees in an aggregate amount outstanding
at any one time not exceeding $1,500,000.00.
PERSON shall mean any individual, partnership, and corporation.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired, (b) a description of the Equipment
so acquired is furnished to CIT, and (c) the Indebtedness incurred in connection
with such acquisitions shall not exceed, in the aggregate, $500,000.00 in any
Fiscal Year.
REAL ESTATE shall mean the Company's fee and/or leasehold interests in real
property.
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of CIT to make
loans and advances pursuant to Section 3 of this Financing Agreement and issue
Letters of Credit Guaranties pursuant to Section 5 hereof to the Company, in the
aggregate amount of $10,000,000.00.
REVOLVING LOAN ACCOUNT shall mean the account on CIT's books, in the Company's
name, in which the Company will be charged with all Obligations under this
Financing Agreement.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of the Company by CIT pursuant to Section 3 of this Financing
Agreement.
REVOLVING LOAN CAP shall mean the amount of the Company's and its subsidiaries'
collections for the prior 90 days on a worldwide basis (which shall exclude
collections against assets pledged to any party other than CIT).
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SUBORDINATED DEBT shall mean the Indebtedness due a Subordinating Creditor (and
the note(s) evidencing such) which has been subordinated, by a Subordination
Agreement, to the prior payment and satisfaction of the Obligations of the
Company to CIT.
SUBORDINATING CREDITOR shall mean any party hereafter executing a Subordination
Agreement.
SUBORDINATION AGREEMENT shall mean the agreement (in form and substance
satisfactory to CIT) among the Company, a Subordinating Creditor and CIT
pursuant to which Subordinated Debt is subordinated to the prior payment and
satisfaction of the Company's Obligations to CIT.
TANGIBLE NET WORTH shall mean, at any date of determination, an amount equal to
(a) Total Tangible Assets minus (b) Total Liabilities, and shall be determined
in accordance with GAAP, on a consistent basis with the latest audited financial
statements of the Grandparent.
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due by the Company
with respect to its business, operations, Collateral or otherwise.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP, on a
basis consistent with the latest audited financial statements of the
Grandparent.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, on a basis consistent with the latest audited financial statements of the
Grandparent.
TOTAL TANGIBLE ASSETS shall mean (a) total assets, minus (b) the net book value
of licenses, patents and all other intangible assets, in each case, determined
in accordance with GAAP, on a basis consistent with the latest audited financial
statements of the Grandparent.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of the Company's Accounts
which arises from the sale of Inventory (including rental or model inventory) or
the rendition of services in the ordinary course of the Company's business.
TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications, tradenames, trade styles, service
marks, prints and labels (on which any of the foregoing may appear), licenses,
reissues, renewals, and any other intellectual property and trademark rights
pertaining to any of the foregoing, together with the goodwill associated
therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the state of California.
UVP PATENT shall mean (a) U.S. Patent No. 4,575,330, (b) U.S. Serial No.
07/340,894, (c) U.S. Serial No. 85/09896.6, (d) U.S. Serial No. 1713347/85 and
(e) all patent applications and corresponding foreign patent applications in
respect of any of the foregoing.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
14
SECTION 2. CONDITIONS PRECEDENT
The obligation of CIT to make the initial loans hereunder is subject to
the satisfaction of, extension of or waiver of in writing, on or prior to, the
Closing Date, the following conditions precedent:
(a) LIEN SEARCHES - CIT shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to CIT for all locations presently
occupied or used by the Company.
(b) CASUALTY INSURANCE - The Company shall have delivered to CIT
evidence satisfactory to CIT that casualty insurance policies listing CIT as
additional insured, loss payee or mortgagee, as the case may be, are in full
force and effect, all as set forth in Paragraph 7.5 of Section 7 of this
Financing Agreement.
(c) UCC FILINGS - With the exception of the financing statement to
be filed in Michigan which will be filed promptly after Closing Date, any
financing statements required to be filed in order to create, in favor of CIT, a
first perfected security interest in the Collateral, subject only to the
Permitted Encumbrances, shall have been properly filed in each office in each
jurisdiction required in order to create in favor of CIT a perfected lien on the
Collateral. CIT shall have received acknowledgment copies of all such filings
(or, in lieu thereof, CIT shall have received other evidence satisfactory to CIT
that all such filings have been made) and CIT shall have received evidence that
all necessary filing fees and all taxes or other expenses related to such
filings have been paid in full.
(d) BOARD RESOLUTION - CIT shall have received a copy of the
resolutions of the Board of Directors of each of the Company and the Guarantors
(as the case may be) authorizing the execution, delivery and performance of (i)
this Financing Agreement, (ii) the Guaranties, and (iii) any related agreements,
in each case certified by the Secretary or Assistant Secretary of the Company
and the Guarantors (as the case may be) as of the date hereof, together with a
certificate of the Secretary or Assistant Secretary of the Company and the
Guarantors (as the case may be) as to the incumbency and signature of the
officers of the Company and/or the Guarantors executing such Loan Documents and
any certificate or other documents to be delivered by them pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(e) CORPORATE ORGANIZATION - CIT shall have received (i) a copy of
the Articles or Certificate of Incorporation of each of the Company and the
Guarantors certified by the Secretary of State of the state of its
incorporation, and (ii) a copy of the By-Laws of the Company certified by the
Secretary or Assistant Secretary thereof, all as amended through the date
hereof.
(f) OFFICER'S CERTIFICATE - CIT shall have received an executed
Officer's Certificate of the Company, satisfactory in form and substance to CIT,
certifying (but without personal liability), that (i) the representations and
warranties contained herein are true and correct in all material respects on and
as of the Closing Date; (ii) the Company is in compliance, in all material
respects, with all of the terms and provisions set forth herein; and (iii) no
Default or Event of Default has occurred
15
(g) OPINIONS - On or before August 21, 2000, in-house counsel for
the Company and the Guarantors shall have delivered to CIT opinions satisfactory
to CIT opining, INTER ALIA, that, subject to the (i) filing, priority and
remedies provisions of the Uniform Commercial Code, (ii) the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, (iii) the equity powers
of a court of law and (iv) such other matters as may be agreed upon with CIT:
(x) this Financing Agreement, the Guaranty and all other Loan Documents of the
Company and the Guarantors are (A) valid, binding and enforceable according to
their terms, (B) are duly authorized, executed and delivered, and (C) do not
violate any terms, provisions, representations or covenants in the charter or
by-laws of the Company or the Guarantors or , to the best knowledge of such
counsel, of any loan agreement, mortgage, deed of trust, note, security or
pledge agreement, indenture or other contract to which the Company or the
Guarantors are signatories or by which the Company or the Guarantors or their
assets are bound.
(h) ABSENCE OF DEFAULT - No Default or Event of Default shall have
occurred and no material adverse change shall have occurred in the financial
condition, business, profits, operations or assets of the Company or the
Guarantors taken as a whole.
(i) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there
shall be no: (x) litigation, investigation or proceeding (judicial or
administrative) pending or overtly threatened in writing against the Company or
the Guarantors or their assets, by any agency, division or department of any
county, city, state or federal government arising out of this Financing
Agreement; (y) injunction, writ or restraining order restraining or prohibiting
the financing arrangements contemplated under this Financing Agreement; or (z)
suit, action, investigation or proceeding (judicial or administrative) pending
against the Company or the Guarantors or their assets, which, in the opinion of
CIT, if adversely determined, could have a material adverse effect on the
business, operation, assets, financial condition or Collateral of the Company
and/or the Guarantors taken as a whole.
(j) GUARANTIES - The Guarantors shall have executed and delivered to
CIT guaranties, in form acceptable to CIT, guaranteeing all present and future
Obligations of the Company.
(k) INTENTIONALLY OMITTED.
(l) INTENTIONALLY OMITTED.
(m) PLEDGE AGREEMENT - The Company shall (i) execute and deliver to
CIT a pledge and security agreement pledging to CIT as additional collateral for
the Obligations of the Company not less than 100% of the issued and outstanding
stock of Company's subsidiary, 3D Capital Corp. and, (ii) deliver to CIT the
stock certificates evidencing such stock together with duly executed stock
powers (undated and in-blank) with respect thereto, all in form and substance
satisfactory to CIT.
(n) ADDITIONAL DOCUMENTS - The Company shall have executed and
delivered to CIT all Loan Documents reasonably necessary to consummate the
lending arrangement contemplated between the Company and CIT.
16
(o) DISBURSEMENT AUTHORIZATION - The Company shall have delivered to
CIT all information necessary for CIT to issue wire transfer instructions on
behalf of the Company for the initial and subsequent loans and/or advances to be
made under this Financing Agreement including, but not limited to, disbursement
authorizations in form acceptable to CIT.
(p) EXAMINATION & VERIFICATION - CIT shall have completed, to its
satisfaction, an examination and verification of the Accounts, Inventory,
domestic and European cash on hand, financial statements, books and records of
the Company which examination shall indicate that, after giving effect to all
Revolving Loans, advances, letters of credit and other extensions of credit to
be made at closing, the sum of the Company's opening Availability plus the
amount of the Cash on Hand, shall be at least $5,000,000.00, as evidenced by a
certificate delivered by the Company to CIT as of the Closing Date. It is
understood that such requirement contemplates that all debts and obligations are
current in accordance with the Company's usual business practice.
(q) DEPOSITORY ACCOUNTS - The Company shall have established or
continue to maintain a system of lockbox and bank accounts at Bank of America
with respect to the collection of Accounts and the deposit of proceeds of
Collateral as shall be acceptable to CIT in all respects. Such accounts shall be
subject to three party agreements (between CIT, Company and Bank of America),
which shall be in form and substance satisfactory to CIT and shall include,
without limitation, provisions permitting CIT to redirect collections into its
own account or a CIT controlled Depository Account upon the Company's failure to
meet the criteria set forth in Section 3.4 herein.
(r) APPRAISALS - At Company's option, CIT shall have received
satisfactory appraisals on the Company's Inventory, which appraisals: (i) shall
be by an appraiser acceptable to CIT, and (ii) shall indicate an orderly
liquidation value supporting the Revolving Loans. If Company does not elect to
provide CIT with an inventory appraisal, CIT, in its Permitted Discretion, may
adjust its advance percentage against Inventory.
(s) SCHEDULES - The Company or its counsel shall provide CIT with
schedules of: (a) any of the Company's (i) Trademarks, (ii) Patents, and (iii)
Copyrights, as applicable and all in such detail as to provide appropriate
recording information with respect thereto, (b) any tradenames, (c) monthly
rental payments for any leased premises or any other premises where any
Collateral may be stored or processed, and (d) Permitted Liens, all of the
foregoing in form and substance satisfactory to CIT.
(t) CIT COMMITMENT LETTER - The Company shall have fully complied,
to the reasonable satisfaction of CIT, with all of the terms and conditions of
the CIT Commitment Letter.
Upon the execution of this Financing Agreement and the initial
disbursement of loans hereunder, all of the above Conditions Precedent shall
have been deemed satisfied except as the Company and CIT shall otherwise agree
in writing.
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2.2 CONDITIONS TO EACH EXTENSION OF CREDIT
Except to the extent expressly set forth in this Financing Agreement,
the agreement of CIT to make any extension of credit requested to be made by it
to the Company on any date (including without limitation, the initial extension
of credit) is subject to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by the Company in or pursuant to this Financing Agreement shall
be true and correct in all material respects on and as of such date as if made
on and as of such date.
(b) NO DEFAULT - No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(c) BORROWING BASE - Except as may be otherwise agreed to from time
to time by CIT and the Company in writing, after giving effect to the extension
of credit requested to be made by the Company on such date, the aggregate
outstanding balance of the Revolving Loans and outstanding Letters of Credit
owing by the Company will not exceed the lesser of (i) the Revolving Line of
Credit or (ii) the Borrowing Base.
Each borrowing by the Company hereunder shall constitute a
representation and warranty by the Company as of the date of such loan or
advance that each of the representations, warranties and covenants contained in
the Financing Agreement have been satisfied and that the representations and
warranties are true and correct, except as the Company and CIT shall otherwise
agree herein or in a separate writing.
SECTION 3. REVOLVING LOANS
3.1 CIT agrees, subject to the terms and conditions of this
Financing Agreement, from time to time (but subject to CIT's right to make
"Overadvances"), to make loans and advances to the Company on a revolving basis
(i.e. subject to the limitations set forth herein, the Company may borrow, repay
and re-borrow Revolving Loans). Such requests for loans and advances shall be in
amounts not to exceed the lesser of (a) the Availability or (b) the Revolving
Line of Credit. All requests for loans and advances must be received by an
officer of CIT no later than (i) 10:00 A.M., PST, of the Business Day on which
any such Chase Bank Rate Loans and advances are required or (ii) three Business
Days prior to any requested LIBOR Loan. Should CIT for any reason honor requests
for Overadvances, any such Overadvances shall be made in CIT's sole discretion
and subject to any additional terms CIT deems necessary.
3.2 In furtherance of the continuing assignment and security
interest in the Company's Accounts and Inventory, the Company will, upon the
creation of Accounts and purchase or acquisition of Inventory, execute and
deliver to CIT in such form and manner as CIT may reasonably require, solely for
CIT's convenience in maintaining records of Collateral, such confirmatory
schedules of Accounts and Inventory as CIT may reasonably request, including,
without limitation, weekly schedules of Accounts and monthly schedules of
Inventory, quarterly and with each UVP Advance request, reporting of the
Company's accrual of the annual payment due UVP, Inc. (as determined in
accordance with GAAP and in a manner consistent with the
18
Company's current practices) ("UVP Payment Accrual") under the purchase
agreement between UVP, Inc. and Company dated January 5, 1990 ("UVP Purchase
Agreement"), all in form and substance satisfactory to CIT, and such other
appropriate reports designating, identifying and describing the Accounts and
Inventory as CIT may reasonably request, and provided further that CIT may
request any such information more frequently, from time to time, upon its
reasonable prior request. In addition, upon CIT's reasonable request, the
Company shall provide CIT with copies of agreements with, or purchase orders
from, the Company's customers, and copies of invoices to customers, proof of
shipment or delivery, access to its computers, electronic media and software
programs associated therewith (including any electronic records, contracts and
signatures) and such other documentation and information relating to said
Accounts and other Collateral as CIT may reasonably require. Failure to provide
CIT with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. The Company hereby
authorizes CIT to regard the Company's printed name or rubber stamp signature on
assignment schedules or invoices as the equivalent of a manual signature by one
of the Company's authorized officers or agents.
3.3 The Company hereby represents and warrants that: with the
exception of Contract Receivables which are billed prior to the complete
rendition of services, each Trade Account Receivable is based on an actual and
bona fide sale and delivery of Inventory or rendition of services to its
customers, by the Company in the ordinary course of its business; the Inventory
being sold, and the Trade Accounts Receivable created, are the exclusive
property of the Company and are not and shall not be subject to any lien,
consignment arrangement, encumbrance, security interest or financing statement
whatsoever, other than the Permitted Encumbrances; the invoices evidencing such
Trade Accounts Receivable are in the name of the Company; and the customers of
the Company have accepted the Inventory or services, owe and are obligated to
pay the full amounts stated in the invoices according to their terms, without
dispute, offset, defense, counterclaim or contra, except for disputes and other
matters arising in the ordinary course of business with respect to which the
Company has complied with the notification requirements of Paragraph 3.5 of this
Section 3. The Company confirms to CIT that any and all Taxes or fees relating
to its business, its sales, the Accounts or Inventory relating thereto, are its
sole responsibility and that same will be paid by the Company when due, subject
to Paragraph 7.6 of Section 7 of this Financing Agreement, and that none of said
Taxes or fees represent a lien on or claim against the Accounts. The Company
hereby further represents and warrants that it shall not acquire any Inventory
on a consignment basis, nor (except pursuant to Permitted Dispositions)
commingle its Inventory with any of its customers or any other person, including
pursuant to any xxxx and hold sale or otherwise, and that its finished goods
Inventory held for sale is marketable to its customers in the ordinary course of
business of the Company, except as it may otherwise report in writing to CIT
pursuant to Paragraph 3.5 hereof from time to time. The Company also warrants
and represents that it is a duly and validly existing corporation and is
qualified in all states where the failure to so qualify would have an material
adverse effect on the business of the Company or the ability of the Company to
enforce collection of Accounts due from customers residing in that state. The
Company agrees to maintain such books and records regarding Accounts and
Inventory as CIT may reasonably require. All of the books and records of the
Company will be available to CIT at normal business hours, including any records
handled or maintained for the Company by any other company or entity.
19
3.4 Until CIT has advised the Company to the contrary after the
occurrence of an Event of Default or upon the Company's failure to meet the
Availability Threshold, the Company, at its expense, will enforce, collect and
receive all amounts owing on the Accounts in the ordinary course of its business
and any proceeds it so receives shall be subject to the terms hereof. The
Company shall continue to use its existing lockbox and operating deposit account
at Bank of America for all collections and proceeds of Collateral. Such
privilege shall terminate at the election of CIT, upon the occurrence of an
Event of Default or upon the Company's failure to meet the Availability
Threshold. At such time, CIT shall have the option to obtain dominion and
control over the collections and have all collections and proceeds of collateral
redirected into CIT's account or a CIT controlled Depository Account at Bank of
America or such other bank as it may deem appropriate. If such election has been
made, any checks, cash, credit card sales and receipts, notes or other
instruments or property thereafter received by the Company with respect to any
Collateral, including Accounts, shall be held by the Company in trust for CIT,
separate from the Company's own property and funds, and promptly turned over to
CIT with proper assignments or endorsements by deposit to the Depository
Accounts. The Company shall: (i) indicate on all of its invoices that funds
should be delivered to and deposited in a Depository Account; (ii) direct all of
its account debtors to deposit any and all proceeds of Collateral into the
Depository Accounts; (iii) irrevocably authorize and direct any banks which
maintain the Company's initial receipt of cash, checks and other items to
promptly wire transfer all available funds to a Depository Account; and (iv) at
CIT's request, advise all such banks of CIT's security interest in such funds.
The Company shall provide CIT with prior written notice of any and all deposit
accounts opened or to be opened subsequent to the Closing Date. Upon CIT's
exercise of dominion and control over the collections, all amounts received by
CIT in payment of Accounts will be credited to the Revolving Loan Account (for
Availability purposes) when CIT is advised by its bank of its receipt of
"collected funds" at CIT's bank account in Los Angeles, California on the
Business Day of such advice if advised no later than 10:00 A.M. PST or on the
next succeeding Business Day if so advised after 10:00 A.M. PST, and thereafter,
will be credited to the Revolving Loan Account (for interest purposes) after the
Collection Days. In no event shall CIT be entitled to impose interest on the
Collection Days if there are no Revolving Loans outstanding or if the
Availability Threshold is met. No checks, drafts or other instrument received by
CIT shall constitute final payment to CIT unless and until such instruments have
actually been collected.
3.5 The Company agrees to notify CIT: (a) of any material matters
affecting the value, enforceability or collectibility of any Account and of all
customer disputes, offsets, defenses, counterclaims, returns, rejections and all
reclaimed or repossessed merchandise or goods, and of any material adverse
effect in the value of its Inventory, in its collateral reports provided to CIT
hereunder, in such detail and format as CIT may reasonably require from time to
time and (b) promptly of any such matters which are material, as a whole, to the
Accounts and/or the Inventory. The Company agrees to issue credit memoranda
promptly (with duplicates to CIT upon request after the occurrence of an Event
of Default) upon accepting returns or granting allowances. Upon the occurrence
and during the continuation of an Event of Default (which is not waived in
writing by CIT) and on notice from CIT, the Company agrees that all returned,
reclaimed or repossessed merchandise or goods shall be set aside by the Company,
marked with CIT's name (as secured party) and held by the Company for CIT's
account.
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3.6 CIT shall maintain a Revolving Loan Account on its books in
which the Company will be charged with all loans and advances made by CIT to it
or for its account, and with any other Obligations, including (to the extent the
Company is obligated therefor hereunder) any and all costs, expenses and
reasonable attorney's fees which CIT may incur in connection with the exercise
by or for CIT of any of the rights or powers herein conferred upon CIT, or in
the prosecution or defense of any action or proceeding to enforce or protect any
rights of CIT in connection with this Financing Agreement, the other Loan
Documents or the Collateral assigned hereunder, or any Obligations owing by the
Company. The Company will be credited with all amounts received by CIT from the
Company or from others for the Company's account, including, as above set forth,
all amounts received by CIT in payment of Accounts, and such amounts will be
applied to payment of the Obligations as set forth herein. In no event shall
prior recourse to any Accounts or other security granted to or by the Company be
a prerequisite to CIT's right to demand payment of any Obligation. Further, it
is understood that CIT shall have no obligation whatsoever to perform in any
respect any of the Company's contracts or obligations relating to the Accounts.
3.7 After the end of each month, CIT shall promptly send the Company
a statement showing the accounting for the charges, loans, advances and other
transactions occurring between CIT and the Company during that month. In the
absence of manifest error, the monthly statements shall be deemed correct and
binding upon the Company and shall constitute an account stated between the
Company and CIT unless CIT receives a written statement of the exceptions within
sixty (60) days of the date of the monthly statement.
3.8 In the event that any requested advance exceeds the Availability
or that (a) the sum of (i) the outstanding balance of Revolving Loans and (ii)
the undrawn amount of outstanding Letters of Credit exceeds (b) (x) the
Borrowing Base or (y) the Revolving Line of Credit, any such nonconsensual
Overadvance shall be due and payable to CIT immediately upon CIT's demand
therefor.
SECTION 4. INTENTIONALLY OMITTED
SECTION 5. LETTERS OF CREDIT
In order to assist the Company in establishing or opening Letters of
Credit with an Issuing Bank, the Company has requested CIT to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or acceptances thereunder through the
issuance of the Letters of Credit Guaranty, thereby lending CIT's credit to the
Company and CIT has agreed to do so. Notwithstanding any language herein to the
contrary however, in the case of the Company's obligations to Xxxxx Fargo Bank
West, NA (fka Norwest Bank Colorado) with respect to the Reimbursement Agreement
dated August 1, 1996, if Xxxxx Fargo Bank West, NA is willing to accept a Letter
of Credit issued by CIT as the Issuing Bank, CIT agrees to issue such Letter of
Credit directly. These arrangements shall be handled by CIT subject to the terms
and conditions set forth below.
5.1 Within the Revolving Line of Credit and Availability, CIT shall
assist the Company in obtaining Letter(s) of Credit in an amount not to exceed
the outstanding amount of the Letter of Credit Sub-Line. CIT's assistance for
amounts in excess of the limitation set forth
21
herein shall at all times and in all respects be in CIT's sole discretion. It is
understood that the term, form and purpose of each Letter of Credit and all
documentation in connection therewith, and any amendments, modifications or
extensions thereof, must be mutually acceptable to CIT, the Issuing Bank and the
Company, provided that Letters of Credit shall not be used to secure antecedent
debt owed to domestic Inventory suppliers. Any and all outstanding Letters of
Credit shall be reserved dollar for dollar from Availability as an Availability
Reserve.
5.2 CIT shall have the right, without notice to the Company, to
charge the Company's Revolving Loan Account with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CIT under the
Letters of Credit Guaranty at the earlier of (a) payment by CIT under the
Letters of Credit Guaranty; or (b) the occurrence of an Event of Default. Any
amount charged to Company's Revolving Loan Account shall be deemed a Revolving
Loan hereunder and shall incur interest at the rate provided in Paragraph 8.1 of
Section 8 of this Financing Agreement.
5.3 The Company unconditionally indemnifies CIT and holds CIT
harmless from any and all loss, claim or liability incurred by CIT arising from
any transactions or occurrences relating to Letters of Credit established or
opened for the Company's account, the collateral relating thereto and any drafts
or acceptances thereunder, and all Obligations thereunder, including any such
loss or claim due to any errors, omissions, negligence, misconduct or action
taken by any Issuing Bank, other than for any such loss, claim or liability
arising out of the gross negligence or willful misconduct by CIT under the
Letters of Credit Guaranty. This indemnity shall survive termination of this
Financing Agreement. The Company agrees that any charges incurred by CIT for the
Company's account with the Issuing Bank shall be conclusive on CIT and may be
charged to the Company's Revolving Loan Account.
5.4 CIT shall not be responsible for: (a) the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be represented by any documents; (b) any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from that expressed in the documents; (c) the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; partial or incomplete shipment, or failure or omission
to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (g) any breach of contract between the shipper or vendors and the
Company.
5.5 The Company agrees that any action taken by CIT, if taken in
good faith, or any action taken by any Issuing Bank, under or in connection with
the Letters of Credit, the Letter of Credit Guarantees, the drafts or
acceptances, or the Collateral, shall be binding on the Company and shall not
result in any liability whatsoever of CIT to the Company. In furtherance
thereof, if an Event of Default has occurred and is continuing, CIT shall have
the full right and authority to: (a) clear and resolve any questions of
non-compliance of documents; (b) give any instructions as to acceptance or
rejection of any documents or goods; (c) execute any and all steamship or
airways guaranties (and applications therefore), indemnities or delivery orders;
(d) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts,
22
acceptances, or documents; and (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances;
all in CIT's sole name. The Issuing Bank shall be entitled to comply with and
honor any and all such documents or instruments executed by or received solely
from CIT, all without any notice to or any consent from the Company.
Notwithstanding any prior course of conduct or dealing with respect to the
foregoing including amendments and non-compliance with documents and/or the
Company's instructions with respect thereto, CIT may exercise its rights
hereunder in its Permitted Discretion. In addition, without CIT's express
consent and endorsement in writing, the Company agrees: (a) not to execute any
and all applications for steamship or airway guaranties, indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances or documents; or to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; and (b) after the occurrence of an Event of Default which is not
cured within any applicable grace period, if any, or waived by CIT, not to (i)
clear and resolve any questions of non-compliance of documents, or (ii) give any
instructions as to acceptances or rejection of any documents or goods.
5.6 The Company agrees that: (a) any necessary import, export or
other licenses or certificates for the import or handling of the Collateral will
have been promptly procured; (b) all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or the
financing thereof will have been promptly and fully complied with; and (c) any
certificates in that regard that CIT may at any time request will be promptly
furnished. In connection herewith, the Company warrants and represents that, to
its knowledge, all shipments made under any such Letters of Credit are in
accordance with the laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such laws and
regulations. The Company assumes all risk, liability and responsibility for, and
agrees to pay and discharge, all present and future local, state, federal or
foreign Taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city, or other political subdivision, where
the Collateral is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely the
Company's risk, liability and responsibility.
5.7 Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, CIT shall acquire by subrogation, any rights, remedies, duties
or obligations granted or undertaken by the Company to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to CIT
and apply in all respects to CIT and shall be in addition to any rights,
remedies, duties or obligations contained herein.
SECTION 6. COLLATERAL
6.1 As security for the prompt payment in full of all Obligations,
the Company hereby pledges and grants to CIT a continuing general lien upon, and
security interest in, all of its:
(a) Accounts;
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(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Other Collateral;
(f) Equipment.
6.2 The security interests granted hereunder shall extend and attach
to:
(a) All Collateral which is owned by the Company or in which the
Company has any interest, whether held by the Company or others for its account,
and, if any Collateral is Equipment, whether the Company's interest in such
Equipment is as owner, finance lessee or conditional vendee;
(b) All Equipment, whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either CIT or the Company from the
Company's customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by the Company, or to the sale, promotion or
shipment thereof.
(d) Anything contained in this Financing Agreement to the contrary
notwithstanding, the "Collateral" shall not include (i) the stock of any
subsidiary of the Company that is a controlled foreign corporation, and (ii) any
Equipment or General Intangibles that are now or hereafter held by the Company
as lessee, licensee or otherwise, in the event that: (a) as a result of the
grant, assignment, transfer, or conveyance of a security interest, the Company's
rights in or with respect to such asset would be forfeited or would become void,
voidable, terminable, or revocable, or if the Company would be deemed to have
breached, violated, or defaulted the underlying lease, license or other
agreement that governs such asset pursuant to the restrictions in the underlying
lease, license or other agreement that governs such asset; and (b) any such
restriction shall be effective and enforceable under applicable law; provided,
however, that the grant, assignment, transfer, and conveyance of security
interest hereunder shall extend to, and the term "Collateral" shall include, (1)
any and all proceeds of such assets described in clause (ii) to the extent that
the assignment or encumbering of such proceeds is not so restricted, and (2)
upon any such lessor, licensor or other applicable party's consent with respect
to any such otherwise excluded asset being obtained, thereafter such asset as
well as any proceeds thereof that might theretofore have been excluded from such
grant, assignment, transfer, and conveyance of a security interest and the term
"Collateral."
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6.3 The Company agrees to safeguard, protect and hold all Inventory
for CIT's account and make no disposition thereof except in the ordinary course
of its business of the Company, as herein provided. The Company represents and
warrants that Inventory will be sold and shipped by the Company to its customers
only in Permitted Dispositions and then only on terms currently being extended
by the Company to its customers, provided that, absent prior written notice to
CIT and so long as there is Availability after giving effect thereto, the
Company shall not sell Inventory on a consignment basis nor retain any lien or
security interest in any sold Inventory. Upon the sale, exchange, or other
disposition of Inventory, as herein provided, the security interest in the
Inventory provided for herein shall, without break in continuity and without
further formality or act, continue in, and attach to, all proceeds, including
any instruments for the payment of money, Trade Accounts Receivable, documents
of title, shipping documents, chattel paper and all other cash and non-cash
proceeds of such sale, exchange or disposition. As to any such sale, exchange or
other disposition, after the occurrence and during the continuance of an Event
of Default, CIT shall have all of the rights of an unpaid seller, including
stoppage in transit, replevin, rescission and reclamation. The Company hereby
agrees to immediately forward any and all proceeds of Collateral to the
Depository Account. After the occurrence and during the continuance of an Event
of Default or upon the Company's failure to meet the Availability Threshold, all
proceeds of Collateral in the possession of Company shall be held in trust for
CIT pending delivery to CIT as CIT may direct. Irrespective of CIT's perfection
status in any and all of the General Intangibles, including, without
limitations, any Patents (including without limitation the UVP Patent),
Trademarks, Copyrights or licenses with respect thereto, the Company hereby
irrevocably grants CIT a non-exclusive, non-transferable royalty- free license
solely for the purpose of disposing of the Company's Inventory, in accordance
with Paragraph 10.3 of Section 10 of this Financing Agreement, the applicable
terms hereof, and Article 9 of the UCC.
6.4 The Company agrees at its own cost and expense to keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where reasonably necessary. The Company also agrees to safeguard,
protect and hold all Equipment in accordance with the terms hereof and subject
to CIT's security interest. Absent CIT's prior written consent, any sale,
exchange or other disposition of any Equipment shall be made by the Company only
in a Permitted Disposition. The Company may, in one or more Permitted
Dispositions, sell, exchange or otherwise dispose of Equipment provided,
however, that: (a) the book value of the Equipment so disposed of in any Fiscal
Year does not exceed $500,000.00 in the aggregate; and (b) the proceeds of any
such sales or dispositions shall be deposited into the Depository Account,
except that the Company may retain and use such proceeds to purchase forthwith
replacement Equipment which the Company determines in its reasonable judgment to
have a value at least equal to the value of the Equipment so sold, exchanged, or
disposed of; provided, however, that the aforesaid right to re-invest the
proceeds shall automatically cease upon the occurrence and during the
continuation of an Event of Default which is not waived in writing by CIT. Upon
the sale, exchange, or other disposition of the Equipment, as herein provided,
the security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, Accounts, documents of
title, shipping documents, chattel paper and all other cash and non-cash
proceeds of such sales, exchange or disposition. As to any such sale, exchange
or other disposition, from and after the
25
occurrence and during the continuance of an Event of Default, CIT shall have all
of the rights of an unpaid seller, including stoppage in transit, replevin,
rescission and reclamation.
6.5 The rights and security interests granted to CIT hereunder are
to continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Revolving Loan Account may from time to
time be temporarily in a credit position, until the final payment in full to CIT
of all Obligations and the termination of this Financing Agreement. Any delay,
or omission by CIT to exercise any right hereunder shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver shall be
in writing and signed by CIT. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.
6.6 Notwithstanding CIT's security interest in the Collateral and to
the extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral or by the guarantee, endorsement, assets or
property of any other person, CIT shall have the right in its sole discretion to
determine which rights, liens, security interests or remedies CIT shall at any
time pursue, foreclose upon, relinquish, subordinate, modify or take any other
action with respect to, without in any way modifying or affecting any of them,
or any of CIT's rights hereunder.
6.7 Any balances to the credit of the Company shall, unless an Event
of Default shall have occurred and be continuing, be remitted to the Company and
any other property or assets of the Company in the possession or control of CIT
may be held by CIT as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due. The liens and security
interests granted herein, and any other lien or security interest CIT may have
in any other assets of the Company, shall secure payment and performance of all
now existing and future Obligations. CIT may in its discretion charge any or all
of the Obligations to the Revolving Loan Account when due.
6.8 The Company possesses all General Intangibles and rights thereto
necessary to conduct its business as conducted as of the Closing Date and the
Company shall maintain its rights in, and the value of, the foregoing in the
ordinary course of its business, including, without limitation, by making timely
payment with respect to any applicable licensed rights. Subject to the other
provisions hereof, the Company shall deliver to CIT, and/or shall cause the
appropriate party to deliver to CIT, from time to time such pledge or security
agreements with respect to General Intangibles (now or hereafter acquired) of
the Company as CIT shall require to obtain valid first liens thereon. In
furtherance of the foregoing, the Company shall provide timely notice to CIT of
any additional Patents (if material), Trademarks, tradenames, service marks,
Copyrights, brand names, trade names, logos and other trade designations
acquired or applied for subsequent to the Closing Date and the Company shall
execute such documentation as CIT may reasonably require to obtain and perfect
its lien thereon. The Company hereby confirms that it shall deliver, or cause to
be delivered, any stock issued by 3D Capital Corp. subsequent to the Closing
Date to CIT in accordance with the applicable terms of the Pledge Agreement and
prior to such delivery, shall hold any such stock in trust for CIT. The Company
hereby irrevocably grants to CIT a royalty-free, non-exclusive license in the
General Intangibles, including tradenames, Trademarks, Copyrights, Patents,
licenses, and any other proprietary and intellectual property rights and any and
all right, title and interest in any of the foregoing, for the sole purpose,
upon the occurrence and during the continuation of an Event of Default, of the
right to:
26
(i) advertise for sale and sell or transfer any Inventory bearing any of the
General Intangibles, and (ii) make, assemble, prepare for sale or complete, or
cause others to do so, any applicable raw materials or Inventory bearing any of
the General Intangibles, including use of the Equipment and Real Estate for the
purpose of completing the manufacture of unfinished goods, raw materials or
work-in-process comprising Inventory, and apply the proceeds thereof to the
Obligations hereunder, all as further set forth in this Financing Agreement and
irrespective of CIT's lien and perfection in any General Intangibles.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 The Company hereby warrants and represents that: (a) the book
value of the Total Assets exceeds the book value of the Total Liabilities; (b)
the Company is generally able to pay its debts as they become due and payable;
and (c) the Company does not have unreasonably small capital to carry on its
business as it is currently conducted absent extraordinary and unforeseen
circumstances. The Company further warrants and represents that: (i) Schedule 1
hereto correctly and completely sets forth the Company's (A) chief executive
office, (B) Collateral locations, (C) tradenames, and (D) all the other
information listed on said Schedule; (ii) except for the Permitted Encumbrances,
after filing of financing statements in the applicable filing clerk's office at
the locations set forth in Schedule 1, this Financing Agreement creates a valid,
perfected and first priority security interest in the Collateral and the
security interests granted herein constitute and shall at all times constitute
the first and only liens on the Collateral except for Permitted Encumbrances;
(iii) except for the Permitted Encumbrances, the Company is, or will be, at the
time additional Collateral is acquired by it, the absolute owner of the
Collateral with full right to pledge, sell, consign, transfer and create a
security interest therein, free and clear of any and all claims or liens in
favor of others; (iv) the Company will, at its expense, at CIT's request, defend
the same from any and all claims and demands of any other person other than a
holder of a Permitted Encumbrance; (v) the Company will not grant, create or
permit to exist, any lien upon, or security interest in, the Collateral, or any
proceeds thereof, in favor of any other person other than the holders of the
Permitted Encumbrances; and that the Equipment does not comprise a part of the
Inventory of the Company; and (vi) the Equipment is and will only be used by the
Company in its business and will not be held for sale or lease, or removed from
its premises, or otherwise disposed of by the Company except as otherwise
permitted in this Financing Agreement.
7.2 The Company agrees to maintain books and records pertaining to
the Collateral in accordance with GAAP and in such additional detail, form and
scope as CIT shall reasonably require. The Company agrees that CIT or its agents
may enter upon the Company's premises at any time during normal business hours
upon reasonable prior notice, and from time to time in its Permitted Discretion,
for the purpose of inspecting the Collateral and any and all records pertaining
thereto. Prior notice shall not be necessary if a Default or Event of Default
has occurred and is continuing or CIT, in its Permitted Discretion, believes
that exigent circumstances exist. The Company agrees to afford CIT thirty (30)
days prior written notice of any change in the location of any Collateral (other
than Collateral that is the subject of a Permitted Disposition), other than to
locations, that as of the Closing Date, are known to CIT and at which CIT has
filed financing statements and otherwise fully perfected its liens thereon. The
Company is also to advise CIT promptly, in sufficient detail, of any material
adverse change
27
relating to the type, quantity or quality of the Collateral or on the security
interests granted to CIT therein.
7.3 The Company agrees to (a) execute and deliver to CIT, from time
to time, solely for CIT's convenience in maintaining a record of the Collateral,
such written statements, and schedules as CIT may reasonably require,
designating, identifying or describing the Collateral; and (b) upon the
occurrence and during the continuance of an Event of Default, to provide CIT, on
request, with an appraisal of the Inventory which appraisal shall be at the
Company's expense and otherwise acceptable to CIT. The Company's failure,
however, to promptly give CIT such statements, or schedules shall not affect,
diminish, modify or otherwise limit CIT's security interests in the Collateral.
7.4 The Company agrees to comply, in all material respect, with the
requirements of all state and federal laws in order to grant to CIT valid and
perfected first security interests in the Collateral, subject only to the
Permitted Encumbrances. CIT is hereby authorized by the Company to file
(including pursuant to the applicable terms of the UCC) from time to time any
financing statements, continuations or amendments covering the Collateral
whether or not the Company's signature appears thereon. The Company hereby
consents to and ratifies any and all execution and/or filing of financing
statements on or prior to the Closing Date by CIT. The Company agrees to do
whatever CIT may reasonably request, from time to time, by way of: (a) filing
notices of liens, financing statements, amendments, renewals and continuations
thereof in respect of the Collateral; (b) keeping Collateral records; (c)
subject to the terms hereof, transferring proceeds of Collateral to CIT's
possession; and (d) performing such further acts as CIT may reasonably require
in order to effect the purposes of this Financing Agreement.
7.5(a) The Company agrees to maintain insurance on the Equipment and
Inventory under such policies of insurance, with such insurance companies, in
such reasonable amounts and covering such insurable risks as are at all times
reasonably satisfactory to CIT; CIT agrees that the insurance policies (and
insurance companies) that the Company has as of the Closing Date are
satisfactory to CIT. All policies covering the Equipment and Inventory are,
subject to the rights of any holders of Permitted Encumbrances holding claims
senior to CIT, to be made payable to CIT, in case of loss, under a standard
non-contributory "lender" or "secured party" clause and are to contain such
other consistent provisions as CIT may reasonably require to fully protect CIT's
interest in the Inventory and Equipment and to any payments to be made under
such policies. All original policies or true copies thereof are to be delivered
to CIT, premium prepaid, with the aforementioned loss payable endorsement and
shall provide for not less than thirty (30) days prior written notice to CIT of
the exercise of any right of cancellation. At the Company's request, or if the
Company fails to maintain such insurance, CIT may arrange for such insurance,
but at the Company's expense and without any responsibility on CIT's part for:
(i) obtaining the insurance; (ii) the solvency of the insurance companies; (iii)
the adequacy of the coverage; or (iv) the collection of claims. Upon the
occurrence of an Event of Default which is not waived in writing by CIT, CIT
shall, subject to the rights of any holders of Permitted Encumbrances holding
claims senior to CIT, have the sole right, in the name of CIT or the Company, to
file claims under any insurance policies, to receive, receipt and give
acquittance for any payments that may be payable thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
28
(b)(i) In the event of any loss or damage of Inventory by fire or other
casualty, if no Event of Default or Overadvance has occurred and is continuing
or if CIT does not have dominion and control over the collections and proceeds
of Collateral, and if the insurance proceeds are less than or equal to $200,000,
the insurance proceeds relating to Inventory shall be promptly paid over to the
Company.
(ii) In all other cases, the insurance proceeds relating to Inventory
shall be promptly paid over to CIT and CIT may apply such insurance proceeds to
the Obligations in such manner as it may deem advisable in its Permitted
Discretion;
(iii) In the event of any loss or damage of Equipment by fire or other
casualty, if no Event of Default has occurred and is continuing, and if the
Insurance Proceeds for such damage or other casualty are less than or equal to
$250,000.00, the insurance proceeds relating to Equipment shall be promptly paid
over to the Company.
(iv) In the event of any loss or damage of Equipment by fire or other
casualty, if no Event of Default has occurred and is continuing, and if the
insurance proceeds are greater than $250,000, the Company may elect (by
delivering written notice to CIT) to replace, repair or restore such Equipment
and such insurance proceeds shall be promptly remitted to the Company. If the
Company does not, or cannot, elect to use the Insurance Proceeds as set forth
above, CIT may, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to CIT, apply the Insurance Proceeds to the payment of the
Obligations in the same manner as set forth in clause (ii) above.
(v) In all other cases, the insurance proceeds relating to Equipment
shall be promptly paid over to CIT and CIT may apply such insurance proceeds
to the obligations in such manner a it may deem advisable in its Permitted
Discretion;
(c) In the event the Company fails to provide CIT with timely
evidence, acceptable to CIT, of its maintenance of insurance coverage required
pursuant to Paragraph 7.5(a) above, CIT may purchase, at the Company's expense,
insurance to protect CIT's interests in the Collateral. The insurance acquired
by CIT may, but need not, protect the Company's interest in the Collateral, and
therefore such insurance may not pay claims which the Company may have with
respect to the Collateral or pay any claim which may be made against the Company
in connection with the Collateral. In the event CIT purchases, obtains or
acquires insurance covering all or any portion of the Collateral, the Company
shall be responsible for all of the applicable costs of such insurance,
including premiums, interest (at the applicable Chase Bank Rate for Revolving
Loans set forth in Paragraph 8.1 of Section 8 hereof), fees and any other
charges with respect thereto, until the effective date of the cancellation or
the expiration of such insurance. CIT may charge all of such premiums, fees,
costs, interest and other charges to the Company's Revolving Loan Account. The
Company hereby acknowledges that the costs of the premiums of any insurance
acquired by CIT may exceed the costs of insurance which the Company may be able
to purchase on its own. In the event that CIT purchases such insurance, CIT will
notify the Company of said purchase within thirty (30) days of the date of such
purchase. If, within thirty (30) days of the date of such notice, the Company
provides CIT with proof that the Company had the insurance coverage required
pursuant to 7.5(a) above (in form and substance satisfactory to CIT) as of the
date on which CIT purchased insurance and the
29
Company continued at all times to have such insurance, then CIT agrees to cancel
the insurance purchased by CIT and credit the Company's Revolving Loan Account
with the amount of all costs, interest and other charges associated with any
insurance purchased by CIT, including with any amounts previously charged to the
Revolving Loan Account.
7.6 The Company agrees to pay before delinquency, all Taxes,
including sales taxes, assessments, claims and other charges lawfully levied or
assessed upon the Company or the Collateral unless such Taxes are being
diligently contested in good faith by the Company by appropriate proceedings and
adequate reserves are established in accordance with GAAP. Notwithstanding the
foregoing, if any lien shall be filed (a) for Taxes due the United States of
America, or (b) which in CIT's reasonable opinion might create a valid
obligation having priority over the rights granted to CIT herein (exclusive of
Real Estate), such lien shall not be deemed to be a Permitted Encumbrance
hereunder and the Company shall immediately pay such tax and remove the lien of
record. If the Company fails to do so promptly, then at CIT's election, CIT may
(i) create an Availability Reserve in such amount as it may deem appropriate in
its Permitted Discretion, or (ii) upon the occurrence and during the
continuation of an Event of Default, imminent risk of seizure, filing of any
priority lien, forfeiture, or sale of the Collateral, pay Taxes on the Company's
behalf, and the amount thereof shall be an Obligation secured hereby and due on
demand.
7.7 The Company: (a) agrees to comply, in all material respects,
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official, which the failure to comply with would have a
material and adverse impact on the Collateral, or any material part thereof, or
on the business or operations of the Company, provided that the Company may
contest any acts, rules, regulations, orders and directions of such bodies or
officials in any reasonable manner which will not, in CIT's reasonable opinion,
materially and adversely effect CIT's rights or priority in the Collateral; (b)
agrees to comply, in all material respects, with all environmental statutes,
acts, rules, regulations or orders as presently existing or as adopted or
amended in the future, applicable to the Collateral, the ownership and/or use of
its real property and operation of its business, which the failure to comply
with would have a material and adverse impact on the Collateral, or any material
part thereof, or on the operation of the business of the Company; and (c) shall
not be deemed to have breached any provision of this Paragraph 7.7 if (i) the
failure to comply with the requirements of this Paragraph 7.7 resulted from good
faith error or innocent omission, (ii) the Company promptly commences and
diligently pursues a cure of such breach, and (iii) such failure is cured within
(30) days following the Company's receipt of notice of such failure, or if such
cannot in good faith be cured within thirty (30) days, then such breach is cured
within a reasonable time frame based upon the extent and nature of the breach
and the necessary remediation, and in conformity with any applicable consent
order, consensual agreement and applicable law.
7.8 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Company agrees that, unless
CIT shall have otherwise consented in writing, the Company will furnish to CIT:
(a) on the earlier of (i) 120 days after the end of each Fiscal Year of the
Company, or (ii) 3 Business Days after the date when filed with the Securities
and Exchange Commission ("SEC"), a copy of the Grandparent's Form 10K as filed
with the SEC with a Consolidating Balance Sheet and consolidating income
statement for the period covered in the Form 10K in a form consistent with that
previously provided to CIT; (b) on
30
the earlier of (i) sixty (60) days after the end of each Fiscal Quarter, or (ii)
3 Business Days after the date when filed with the SEC, a copy of the
Grandparent's Form 10Q as filed with the SEC with a Consolidating Balance Sheet
and consolidating income statement for the period covered in the Form 10Q in a
form consistent with that previously provided to CIT, certified (but without
personal liability) by an authorized financial or acocunting office of the
Company; (c) within thirty (30) days after the end of each month, a Consolidated
Balance Sheet, a Consolidating Balance Sheet and a consolidating income
statement for the period in a form consistent with that previously provided to
CIT, certified (but without personal liability) by an authorized financial or
accounting officer of the Company; (d) from time to time, such further
information regarding the business affairs and financial condition of the
Parent, Grandparent, and the Company and/or any domestic subsidiaries of the
Company as CIT may reasonably request, including without limitation (i) the
accountant's management letter, if any and (ii) annual cash flow projections in
form satisfactory to CIT. Each financial statement which the Company is required
to submit hereunder must be accompanied by an officer's certificate, signed by
the President or Chief Financial Officer (but without personal liability),
pursuant to which any one such officer must certify that: (x) the financial
statement(s) fairly present, in all material respects, the Grandparent's or
Company's (as applicable) financial condition at the end of the particular
accounting period, as well as the Grandparent's or the Company's (as applicable)
operating results during such accounting period, subject to year-end audit
adjustments; and (y) during the particular accounting period: (A) there has been
no Default or Event of Default under this Financing Agreement, PROVIDED,
HOWEVER, that if any such officer has knowledge that any such Default or Event
of Default, has occurred during such period, the existence of and a detailed
description of same shall be set forth in such officer's certificate; (B) the
Company has not received any notice of cancellation with respect to its property
insurance policies; (C) the Company has not received any notice that could
result in a material adverse effect on the value of the Collateral taken as a
whole; and (D) the exhibits attached to such financial statement(s) constitute
detailed calculations showing compliance with all financial covenants contained
in this Financing Agreement.
7.9 Until termination of the Financing Agreement and payment and
satisfaction of all Obligations hereunder, the Company agrees that, without the
prior written consent of CIT, except as otherwise herein provided, the Company
will not:
(a) Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment, (whether as
a result of a purchase money or title retention transaction, or
other security interest, or otherwise) to exist on any of the
Company's Collateral or any other assets, whether now owned or
hereafter acquired, except for the Permitted Encumbrances;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Sell, lease, assign, transfer or otherwise dispose of (i)
Collateral, except as otherwise specifically permitted by this
Financing Agreement, or (ii) either all or substantially all of
the Company's assets, which do not constitute Collateral;
(d) Other than Permitted Acquisitions, merge, consolidate or
otherwise alter or modify its corporate name, principal place of
business, structure, or existence, re-incorporate or
re-organize, or enter into or engage in any operation or
activity materially different from that presently being
conducted by the Company, except that the Company may change its
corporate name or address; provided that:
31
(i) the Company shall give CIT thirty (30) days prior written
notice thereof and (ii) the Company shall execute and deliver,
prior to or simultaneously with any such action, any and all
documents and agreements requested by CIT to confirm the
continuation and preservation of all security interests and
liens granted to CIT hereunder;
(e) Other than Permitted Indebtedness, assume, guarantee, endorse,
or otherwise become liable upon the obligations of any person,
firm, entity or corporation, except by the endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
(f) Other than Permitted Distributions, declare or pay any dividend
or distributions of any kind on, or purchase, acquire, redeem or
retire, any of the capital stock or equity interest, of any
class whatsoever, whether now or hereafter outstanding; or
(g) Other than Permitted Investments, make any advance or loan of
money or property to, or any investment in, any firm, entity,
person or corporation (including without limitation, to any
officer, director, employee, shareholder or Affiliate of
Borrower), or purchase or acquire all or substantially all of
the stock or assets of any entity, person or corporation.
7.10 Until termination of the Financing Agreement and payment and
satisfaction in full of all Obligations hereunder, Grandparent shall:
(a) maintain Tangible Net Worth of not less than $45,000,000.00 as
at each Fiscal Quarter end; and
(b) during any period in which Company is not meeting its
Availability Threshold, have at the end of each Fiscal Quarter, a
twelve-month trailing EBITDA of not less than $5,000,000.00.
7.11 The Company agrees to advise CIT in writing of: (a) all
expenditures (actual or anticipated) in excess of $250,000.00 from the budgeted
amount therefor in any Fiscal Year for (i) environmental clean-up, (ii)
environmental compliance or (iii) environmental testing and the impact of said
expenses on the Company's working capital; and (b) any notices the Company
receives from any local, state or federal authority advising the Company of any
material environmental liability (real or potential) stemming from the Company's
operations, its premises, its waste disposal practices, or waste disposal sites
used by the Company and to provide CIT with copies of all such notices if so
required.
7.12 The Company hereby agrees to indemnify and hold harmless CIT and
its officers, directors, employees, attorneys and agents (each an "Indemnified
Party") from, and holds each of them harmless against, any and all losses,
liabilities, obligations, claims, actions, damages, costs and expenses
(including reasonable attorney's fees) and any payments made by CIT pursuant to
any indemnity provided by CIT on behalf of or for the benefit of the Company
with respect to or to which any Indemnified Party could be subject insofar as
such losses, liabilities, obligations, claims, actions, damages, costs, fees or
expenses relate to the Loan Documents, including without limitation those which
may arise from or relate to: (a) the Depository Account, any Blocked Accounts,
the lockbox and/or any other depository account and/or the agreements executed
in connection therewith; and (b) any and all claims or expenses asserted against
CIT as a result of any environmental pollution, hazardous material or
environmental clean-up relating to
32
the Real Estate; or any claim or expense which results from the Company's
operations (including, but not limited to, the Company's off-site disposal
practices) and use of the Real Estate, which CIT may sustain or incur (other
than solely as a result of the physical actions of CIT on the Company's premises
which are determined to constitute gross negligence or willful misconduct by a
court of competent jurisdiction), all whether through the alleged or actual
negligence of such person or otherwise, except and to the extent that the same
results solely and directly from the gross negligence or willful misconduct of
such Indemnified Party as finally determined by a court of competent
jurisdiction. The Company hereby agrees that this indemnity shall survive
termination of this Financing Agreement, as well as payments of Obligations
which may be due hereunder. Notwithstanding any language to the contrary herein,
CIT may in its sole business judgment, establish such Availability Reserves with
respect thereto as it may deem advisable under the circumstances and, upon any
termination hereof, hold such reserves as cash reserves for any such contingent
liabilities. This indemnity shall not be a basis upon which CIT may refuse to
release its liens in the Collateral if this Financing Agreement has been
terminated and all of the non-contingent monetary Obligations have been paid in
full, so long as Availability Reserves (cash reserves) have been implemented for
known, existing contingent liabilities, and no other contingent liabilities are
threatened at such time.
7.13 Without the prior written consent of CIT, the Company agrees
that it will not enter into any transaction, including, without limitation, any
purchase, sale, lease, loan or exchange of property with the Parent or any
subsidiary or affiliate of either the Company or Parent, provided that, the
Company may enter into sale and service transactions with Grandparent or any of
its subsidiaries or affiliates in the ordinary course of its business and
pursuant to the reasonable requirements of the Company, and upon standard terms
and conditions and fair and reasonable terms, no less favorable to the Company
than the Company could obtain in a comparable arms length transaction with an
unrelated third party, provided further that no Event of Default exists or will
occur hereunder after giving effect to any such transaction..
SECTION 8. INTEREST, FEES AND EXPENSES
8.1 (a) Interest on the Revolving Loans, whether bearing interest
based on the Chase Bank Rate or LIBOR, shall be payable monthly in arrears as of
the end of each month. The rate hereunder for the Chase Bank Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in the Chase Bank Rate, effective as of the date of each such
change. The rate hereunder for Chase Bank Rate Loans shall be calculated based
on a 360-day year. CIT shall be entitled to charge the Company's Revolving Loan
Account for such interest when due at the rate provided for herein until all
Obligations have been paid in full. The rate hereunder for Chase Bank Rate Loans
shall be an amount equal to the Chase Bank Rate plus a "Chase Bank Rate Margin"
of one quarter of one percent (0.25%) per annum on the average of the net
balances owing by the Company to CIT in the Revolving Loan Account at the close
of each day during such month. Upon receipt of the quarterly financial statement
following the end of the Company's fourth fiscal quarter ending December 31,
2000, the rate for Chase Bank Rate Loans shall be based upon the following and
shall be adjusted quarterly on a trailing four-quarter basis thereafter based
upon the following:
33
CHASE
BANK RATE
EBITDA MARGIN
Less than $0 0.50%
Between $0 and $10 million 0.25%
$10 million or greater, up to, but not including $15
million 0.00%
$15 million or greater 0.00%
Notwithstanding any provision herein to the contrary, the rate hereunder
for Chase Bank Rate Loans against Contract Receivables shall be an amount equal
to the Chase Bank Rate plus one percent (1%) and will not be subject to the
adjustment set forth above nor subject to LIBOR election. For purposes of
interest rate calculation, all Revolving Loans shall first be attributed to the
non-Contract Receivable portion of the Borrowing Base and Revolving Loans only
shall be attributed to the Contract Receivable portion of the Borrowing Base
when no further non-Contract Receivable portion of the Borrowing Base remains.
All repayments of Revolving Loans first shall be applied to Revolving Loans
attributed to the Contract Receivables.
(b) Notwithstanding any provision to the contrary contained in this
Section 8, in the event that the sum of the outstanding Revolving Loans and the
outstanding Letters of Credit exceeds the Revolving Line of Credit, or that the
outstanding Revolving Loans exceeds the maximum aggregate amount available under
Section 3 of this Financing Agreement, or that the outstanding Letters of Credit
exceeds the maximum aggregate amount available under Section 5 of this Financing
Agreement: (A) as a result of Revolving Loans advanced by CIT at the request of
the Company (herein "Requested Overadvances"), for any one (1) or more days in
any month or (B) for any other reason whatsoever (herein "Other Overadvances")
and such Other Overadvances continue for five (5) or more days in any month, the
average net balance of all Revolving Loans for such month shall bear interest at
a rate to be determined by CIT in its reasonable judgment. Upon and after the
occurrence and during the continuation of an Event of Default and the giving of
any required notice by CIT in accordance with the provisions of Section 10,
Paragraph 10.2 hereof, all Obligations shall bear interest at the Default Rate
of Interest.
8.2 Intentionally Omitted
8.3 In consideration of the Letter of Credit Guaranty of CIT, the
Company shall pay CIT the Letter of Credit Guaranty Fee which shall be an amount
equal to one and one-half percent (1.5%) per annum, payable on the first day of
each month, in arrears on the undrawn amount of each outstanding documentary
Letter of Credit and on the undrawn amount of each outstanding standby Letter of
Credit.
8.4 Any and all charges, fees, commissions, costs and expenses
charged to CIT for the Company's account by any Issuing Bank in connection with,
or arising out of, Letters of Credit or out of transactions relating thereto
will be charged to the Revolving Loan Account in full when charged to, or paid
by CIT, or as may be due upon any termination of this Financing Agreement
hereof, and when made by any such Issuing Bank shall be conclusive on CIT.
34
8.5 The Company shall reimburse or pay CIT, as the case may be, for
all Out-of-Pocket Expenses as and when processed and /or paid.
8.6 On the last day of each month, commencing on August 31, 2000,
the Company shall pay to CIT (i) the Line of Credit Fee, and (ii) interest on
the Collection Days, if applicable. Interest will be computed at the rate, and
in the manner, set forth in Paragraph 8.1 of this Financing Agreement.
8.7 To induce CIT to enter into this Financing Agreement and to
extend to the Company the Revolving Loan and Letters of Credit Guaranties, the
Company shall pay to CIT a Loan Facility Fee in the amount of $50,000.00 payable
on the Closing Date. The commitment fee of $15,000 paid by the Company to CIT
pursuant to the Commitment Letter shall be credited toward the Loan Facility Fee
upon consummation of this financing transaction on the Closing Date.
8.8 If the Company has had outstanding loans against the Contract
Receivables for at least three (3) consecutive months during any Fiscal Year,
and if, thereafter during such Fiscal Year, the Company has outstanding loans
against the Contract Receivables, the Company shall pay to CIT the
Administrative Management Fee for each such succeeding month during such Fiscal
Year in which such loans against Contract Receivables are outstanding, which
Administrative Management Fee shall be deemed fully earned when paid and due and
payable on the first day of the next month. Anything to the contrary herein
notwithstanding, no such Administrative Management Fee shall be due in any
individual Fiscal Year unless and until there have been three (3) consecutive
months during such Fiscal Year during which there are loans against the Contract
Receivables.
8.9 The Company shall pay CIT's standard charges and fees for CIT's
personnel used by CIT for reviewing the books and records of the Company and for
verifying, testing, protecting, safeguarding or disposing of all or any part of
the Collateral (which fees shall be in addition to the Administrative Management
Fee and any Out-of-Pocket Expenses). Provided (a) a Default or an Event of
Default has not occurred and is continuing, (b) provided the Company and its
employees cooperate with CIT (including without limitation, providing
information necessary for CIT to conduct its field examination), and (c)
provided the Company's books and records are in good condition, CIT's per diem
fees for its field examiners (currently $750 per person per day) shall not
exceed $20,000 in the aggregate per contract year.
8.10 The Company hereby authorizes and CIT hereby agrees to charge
the Revolving Loan Account with the amount of all payments due hereunder as such
payments become due.
8.11 In the event that CIT shall have determined in the exercise of
its Permitted Discretion, that subsequent to the Closing Date, any change in
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration thereof, or compliance by CIT
with any new 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 CIT's
capital as a consequence of its obligations hereunder to a level below that
which CIT could have achieved but for such adoption, change or compliance
(taking into consideration CIT policies with respect
35
to capital adequacy) by an amount reasonably deemed by CIT to be material, then,
from time to time, the Company shall pay no later than five (5) days following
demand to CIT such additional amount or amounts as will compensate CIT for such
reduction. In determining such amount or amounts, CIT may use any reasonable
averaging or attribution methods. The protection of this Paragraph 8.11 shall be
available to CIT regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or condition. A
certificate of CIT setting forth such amount or amounts as shall be necessary to
compensate CIT with respect to this Section 8 and the calculation thereof when
delivered to the Company shall be conclusive on the Company absent manifest
error. Notwithstanding anything in this paragraph to the contrary, in the event
CIT has exercised its rights pursuant to this paragraph, and subsequent thereto
determines that the additional amounts paid by the Company in whole or in part
exceed the amount which CIT actually required to be made whole, the excess, if
any, shall be returned to the Company by CIT. If CIT requests payment under this
section, the Company shall have the right to elect either to make such payment
or to prepay the Obligations (exclusive of amounts that would have been due
under this section) and terminate this Financing Agreement without penalty or
premium of any sort whatsoever.
8.12 In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by CIT with any request or directive (whether or not
having the force of law) from any central bank or other financial, monetary or
other authority, shall:
(a) subject CIT to any tax of any kind whatsoever with respect to
this Financing Agreement or change the basis of taxation of payments to CIT of
principal, fees, interest or any other amount payable hereunder or under any
other documents (except for changes in the rate of tax on the overall net income
of CIT by the federal government or the jurisdiction in which it maintains its
principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by CIT by reason
of or in respect to this Financing Agreement and the Loan Documents, including
(without limitation) pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose on CIT any other condition with respect to this Financing
Agreement or any other document, and the result of any of the foregoing is to
increase the cost to CIT of making, renewing or maintaining its loans hereunder
by an amount that CIT deems to be material in the exercise of its Permitted
Discretion or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the loans by an amount that CIT
deems to be material in the exercise of its Permitted Discretion, then, in any
case the Company shall pay CIT, within five (5) days following its demand, such
additional cost or such reduction, as the case may be. CIT shall certify the
amount of such additional cost or reduced amount to the Company and the
calculation thereof and such certification shall be conclusive upon the Company
absent manifest error. Notwithstanding anything in this paragraph to the
contrary, in the event CIT has exercised its rights pursuant to this paragraph,
and subsequent thereto determine that the additional amounts paid by the Company
in whole or in part exceed the amount which CIT actually required pursuant
hereto, the excess, if any, shall be returned to the Company by CIT. If
36
CIT requests payment under this section, the Company shall have the right to
elect either to make such payment or to prepay the Obligations (exclusive of
amounts that would have been due under this section) and terminate this
Financing Agreement without penalty or premium of any sort whatsoever.
8.13 The Company may request LIBOR Loans on the following terms and
conditions:
(a) The Company may elect, subsequent to three business days from
the Closing Date and from time to time thereafter (i) to request any loan made
hereunder to be a LIBOR Loan as of the date of such loan or (ii) to convert
Chase Bank Rate Loans to LIBOR Loans, and may elect from time to time to convert
LIBOR Loans to Chase Bank Rate Loans by giving CIT at least three (3) Business
Days' prior irrevocable notice of such election, PROVIDED that any such
conversion of LIBOR Loans to Chase Bank Rate Loans shall only be made, subject
to the second following sentence, on the last day of an Interest Period with
respect thereto. Should the Company elect to convert Chase Bank Rate Loans to
LIBOR Loans, it shall give CIT at least three Business Days' prior irrevocable
notice of such election. If the last day of an Interest Period with respect to a
loan that is to be converted is not a Business Day or Working Day, then such
conversion shall be made on the next succeeding Business Day or Working Day, as
the case may be, and during the period from such last day of an Interest Period
to such succeeding Business Day, as the case may be, such loan shall bear
interest as if it were an Chase Bank Rate Loan. All or any part of outstanding
Chase Bank Rate Loans then outstanding with respect to Revolving Loans may be
converted to LIBOR Loans as provided herein.
(b) Any LIBOR Loans may be continued as such upon the expiration of
an Interest Period, PROVIDED the Company so notifies CIT, at least three (3)
Business Days' prior to the expiration of said Interest Period, and PROVIDED
FURTHER that no LIBOR Loan may be continued as such upon an occurrence and
continuance of a material Default or an Event of Default under this Financing
Agreement, but shall be automatically converted to a Chase Bank Rate Loan on the
last day of the Interest Period during which occurred such material Default or
Event of Default. Absent such notification, LIBOR Rate Loans shall convert to
Chase Bank Rate Loans on the last day of the applicable Interest Period. Each
notice of election, conversion or continuation furnished by the Company pursuant
hereto shall specify whether such election, conversion or continuation is for a
one, two, or three month period. Notwithstanding anything to the contrary
contained herein, CIT (or any participant, if applicable) shall not be required
to purchase United States Dollar deposits in the London interbank market or from
any other applicable LIBOR Rate market or source or otherwise "match fund" to
fund LIBOR Rate Loans, but any and all provisions hereof relating to LIBOR Rate
Loans shall be deemed to apply as if CIT (and any participant, if applicable)
had purchased such deposits to fund any LIBOR Rate Loans.
(c) The Company may request a LIBOR Loan, convert any Chase Bank
Rate Loan or continue any LIBOR Loan provided there is then no Default or Event
of Default in effect.
8.14 (a) The LIBOR Loans shall bear interest for each Interest Period
with respect thereto on the unpaid principal amount thereof at a rate per annum
equal to the LIBOR determined for each Interest Period in accordance with the
terms hereof plus a "Libor Margin" of two and one-quarter percent (2.25%) per
annum with respect to Revolving Loans. Upon receipt of the quarterly financial
statement following the end of the Company's fourth fiscal quarter
37
ending December 31, 2000, the rate for LIBOR Loans obtained thereafter shall be
based upon the following and shall be adjusted quarterly on a trailing
four-quarter basis thereafter based upon the following:
LIBOR
EBITDA MARGIN
Less than $0 2.50%
Between $0 and $10 million 2.25%
$10 million or greater, up to, but not including $15
million 2.00%
$15 million or greater 1.75%
(b) If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Chase Bank Rate Loan at the end of the last
Interest Period therefor.
(c) The Company may not have more than three (3) LIBOR Loans
outstanding at any given time.
8.15 (a) Interest in respect of the LIBOR Loans shall be calculated
on the basis of a 360-day year and shall be payable in arrears as of the end of
each month.
(b) CIT shall, at the request of the Company, deliver to the Company
a statement showing the quotations given by The Chase Manhattan Bank and the
computations used in determining any interest rate pursuant to Paragraph 8.14 of
Section 8 hereof.
8.16 As further set forth in Paragraph 8.12 above, in the event that
CIT (or any financial institution which may become a participant hereunder)
shall have determined in the exercise of its Permitted Discretion (which
determination shall be conclusive and binding upon the Company) that by reason
of circumstances affecting the interbank LIBOR market, adequate and reasonable
means do not exist for ascertaining LIBOR applicable for any Interest Period
with respect to: (a) a proposed loan that the Company has requested be made as a
LIBOR Loan; (b) a LIBOR Loan that will result from the requested conversion of a
Chase Bank Rate Loan into a LIBOR Loan; or (c) the continuation of LIBOR Loans
beyond the expiration of the then current Interest Period with respect thereto,
CIT shall forthwith give written notice of such determination to the Company at
least one day prior to, as the case may be, the requested borrowing date for
such LIBOR Loan, the conversion date of such Chase Bank Rate Loan or the last
day of such Interest Period. If such notice is given (i) any requested LIBOR
Loan shall be made as a Chase Bank Rate Loan, (ii) any Chase Bank Rate Loan that
was to have been converted to a LIBOR Loan shall be continued as a Chase Bank
Rate Loan, and (iii) any outstanding LIBOR Loan shall be converted, on the last
day of then current Interest Period with respect thereto, to a Chase Bank Rate
Loan. Until such notice has been withdrawn by CIT, no further LIBOR Loan shall
be made nor shall the Company have the right to convert a Chase Bank Rate Loan
to a LIBOR Loan.
38
8.17 If any payment on a LIBOR Loan becomes due and payable on a day
other than a Business Day or Working Day, the maturity thereof shall be extended
to the next succeeding Business Day or Working Day unless the result of such
extension would be to extend such payment into another calendar month in which
event such payment shall be made on the immediately preceding Business Day or
Working Day.
8.18 Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive or any change therein or in the interpretation
or application thereof, shall make it unlawful for CIT to make or maintain LIBOR
Loans as contemplated herein, the then outstanding LIBOR Loans, if any, shall be
converted automatically to Chase Bank Rate Loans as of the end of such month, or
within such earlier period as required by law. The Company hereby agrees
promptly to pay CIT, upon demand, any additional amounts necessary to compensate
CIT for any costs incurred by CIT in making any conversion in accordance with
this Section 8 including, but not limited to, any interest or fees payable by
CIT to lenders of funds obtained by CIT in order to make or maintain LIBOR Loans
hereunder.
8.19 The Company agrees to indemnify and to hold CIT (including any
participant ) harmless from any loss or expense which CIT or such participant
may sustain or incur as a consequence of: (a) default by the Company in payment
of the principal amount of or interest on any LIBOR Loans, as and when the same
shall be due and payable in accordance with the terms of this Financing
Agreement, including, but not limited to, any such loss or expense arising from
interest or fees payable by CIT or such participant to lenders of funds obtained
by either of them in order to maintain the LIBOR Loans hereunder; (b) default by
the Company in making a borrowing or conversion after the Company has given a
notice in accordance with Paragraph 8.13 of Section 8 hereof; (c) any prepayment
of LIBOR Loans on a day which is not the last day of the Interest Period
applicable thereto, including, without limitation, prepayments arising as a
result of the application of the proceeds of Collateral to the Revolving Loans;
and (d) default by the Company in making any prepayment after the Company had
given notice to CIT thereof. The determination by CIT of the amount of any such
loss or expense, when set forth in a written notice to the Company, containing
CIT's calculations thereof in reasonable detail, shall be conclusive on the
Company in the absence of manifest error. Calculation of all amounts payable
under this paragraph with regard to LIBOR Loans shall be made as though CIT had
actually funded the LIBOR Loans through the purchase of deposits in the relevant
market and currency, as the case may be, bearing interest at the rate applicable
to such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and
having a maturity comparable to the relevant interest period; PROVIDED, HOWEVER,
that CIT may fund each of the LIBOR Loans in any manner CIT sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this paragraph; provided that CIT shall only be entitled to recover actual
damages, losses, or expenses. In addition, notwithstanding anything to the
contrary contained herein, CIT shall apply all proceeds of Collateral and all
other amounts received by it from or on behalf of the Company (i) initially to
the Chase Bank Rate Loans and (ii) subsequently to LIBOR Loans; PROVIDED,
HOWEVER, (x) upon the occurrence of an Event of Default or (y) in the event the
aggregate amount of outstanding LIBOR Rate Loans exceeds Availability or the
applicable maximum levels set forth therefor, CIT may apply all such amounts
received by it to the payment of Obligations in such manner and in such order as
CIT may elect in its reasonable business judgment. In the event that any such
amounts are applied to Revolving Loans which are LIBOR Loans, such application
shall be treated as a prepayment of such loans and CIT shall
39
be entitled to indemnification hereunder. This covenant shall survive
termination of this Financing Agreement and payment of the outstanding
Obligations.
8.20 Notwithstanding anything to the contrary in this Financing
Agreement, in the event that, by reason of any Regulatory Change (for purposes
hereof "Regulatory Change" shall mean, with respect to CIT, any change after the
date of this Financing Agreement in United States federal, state or foreign law
or regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including CIT of or under any United States federal, state or
foreign law or regulations (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful), CIT either (a) incurs any
material additional costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such bank
which includes deposits by reference to which the interest rate on LIBOR Loans
is determined as provided in this Financing Agreement or a category of
extensions of credit or other assets of CIT which includes LIBOR Loans, or (b)
becomes subject to any material restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if CIT so elects by notice to the
Company, the obligation of CIT to make or continue, or to convert Chase Bank
Rate Loans into LIBOR Loans hereunder shall be suspended until such Regulatory
Change ceases to be in effect.
SECTION 9. POWERS
The Company hereby constitutes CIT, or any person or agent CIT may
designate, as its attorney-in-fact, at the Company's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations to CIT have been paid in full:
(a) If the Availability threshold is not met or an Event of Default
has occurred and is continuing, to receive, take, endorse, sign, assign and
deliver, all in the name of CIT or the Company, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) If an Event of Default has occurred and is continuing, to
receive, open and dispose of all mail addressed to the Company and to notify
postal authorities to change the address for delivery thereof to such address as
CIT may designate;
(c) If an Event of Default has occurred and is continuing, to
receive, to request from customers indebted on Accounts at any time, in the name
of CIT information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time, in
the name of the Company, in the name of certified public accountant designated
by the Company and acceptable to CIT or in the name of CIT's designee,
information concerning the amounts owing on the Accounts;
(e) If an Event of Default has occurred and is continuing, to
receive, to transmit to customers indebted on Accounts notice of CIT's interest
therein and to notify customers indebted on Accounts to make payment directly to
CIT for the Company's account; and
40
(f) If an Event of Default has occurred and is continuing, to
receive, to take or bring, in the name of CIT or the Company, all steps,
actions, suits or proceedings deemed by CIT necessary or desirable to enforce or
effect collection of the Accounts.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Notwithstanding anything hereinabove to the contrary, CIT may
terminate this Financing Agreement immediately upon the occurrence of any of the
following (herein "Events of Default"):
(a) cessation of the business of the Company or the calling of a
meeting of the creditors of the Company for purposes of
compromising the debts and obligations of the Company;
(b) the failure of the Company to generally meet its debts as they
mature;
(c) (i) the commencement by the Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law; (ii) the
commencement against the Company, of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeding
under any federal or state law by creditors of the Company,
provided that such Default shall not be deemed an Event of
Default if such proceeding is controverted within ten (10) days
and dismissed and vacated within sixty (60) days of
commencement, except in the event that any of the actions sought
in any such proceeding shall occur or the Company shall take
action to authorize or effect any of the actions in any such
proceeding; or (iii) the commencement (x) by one of the
Guarantors of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceeding under any
applicable state law, or (y) against one of the Guarantors, of
any involuntary bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceeding under
applicable law, provided that such Default shall not be deemed
an Event of Default if such proceeding is controverted within
ten (10) days and dismissed or vacated within sixty (60) days of
commencement, except in the event that any of the actions sought
in any such proceeding shall occur or the Guarantor shall take
action to authorize or effect any of the actions in any such
proceeding;
(d) breach by the Company of any warranty, representation or
covenant contained herein (other than those referred to in
Paragraph 7.7 and those referred to in sub-paragraph (e) below)
or in any other written agreement between the Company or CIT,
provided that such Default by the Company of any of the
warranties, representations or covenants referred in this clause
(d) shall not be deemed to be an Event of Default unless and
until such Default shall remain unremedied to CIT's satisfaction
for a period of ten (10) days from the date of such breach with
respect to Paragraphs 3.2, 3.5, 3.8, 6.8, 7.2, 7.3 and 7.4 and
twenty (20) days from the date of the earlier of actual
knowledge by the Company or notice from CIT of such breach for
all others referred in this Paragraph 10.1(d);
(e) breach by the Company of any warranty, representation or
covenant of Paragraphs 3.3 (other than the fourth sentence of
Paragraph 3.3) and 3.4 of Section 3 hereof; Paragraphs 6.3 and
6.4 (other than the first sentence of
41
Paragraph 6.4) of Section 6 hereof; Paragraphs 7.1, 7.5, 7.6,
and 7.8 through 7.13 hereof;
(f) failure of the Company to pay any of the Obligations within five
(5) Business Days of the due date thereof, provided that nothing
contained herein shall prohibit CIT from charging such amounts
to the Revolving Loan Account on the due date thereof;
(g) the Company shall (i) engage in any "prohibited transaction" as
defined in ERISA, (ii) have any "accumulated funding deficiency"
as defined in ERISA, (iii) have any "reportable event" as
defined in ERISA, (iv) terminate any "plan", as defined in ERISA
or (v) be engaged in any proceeding in which the Pension Benefit
Guaranty Corporation shall seek appointment, or is appointed, as
trustee or administrator of any "plan", as defined in ERISA, and
with respect to this sub-paragraph (h) such event or condition
(x) remains uncured for a period of thirty (30) days from date
of occurrence and (y) could, in the reasonable opinion of CIT,
subject the Company to any tax, penalty or other liability
material to the business, operations or financial condition of
the Company;
(h) without the prior written consent of CIT and, except as
permitted in the Subordination Agreement, the Company shall (x)
amend or modify the Subordinated Debt, or (y) make any payment
on account of the Subordinated Debt;
(i) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure periods) under any
instrument or agreement evidencing (x) Subordinated Debt or (y)
any other Indebtedness of the Company having a principal amount
in excess of $250,000; or
(j) the stock of (x) the Company presently held (directly or
indirectly) by 3D Holdings LLC is transferred to a Person other
than 3D Systems Corporation or (y) 3D Holdings LLC presently
held (directly or indirectly) by 3D Systems Corporation is
transferred.
10.2 Upon the occurrence of an Event of Default, at the option of
CIT, all loans, advances and extensions of credit provided for in Sections 3 and
5 of this Financing Agreement shall be thereafter in CIT's sole discretion and
the obligation of CIT to make Revolving Loans, open Letters of Credit and
provide Letters of Credit Guaranties, shall cease unless such Default is cured
to CIT's satisfaction or Event of Default is waived in writing by CIT, and at
the option of CIT upon the occurrence of an Event of Default: (a) all
Obligations shall become immediately due and payable provided that, with respect
to this clause "(a)" CIT has given the Company written notice of the Event of
Default and acceleration of the Obligations; provided, however, that no notice
is required if the Event of Default is the Event listed in Paragraph 10.1(c) of
this Section 10; (b) CIT may charge the Company the Default Rate of Interest on
all then outstanding or thereafter incurred Obligations in lieu of the interest
provided for in Section 8 of this Financing Agreement, provided that, with
respect to this clause "(b)" CIT has given the Company written notice of the
Event of Default; provided, however, that no notice is required if the Event of
Default is the Event listed in Paragraph 10.1(c) of this Section 10, and (c) CIT
may immediately terminate this Financing Agreement upon written notice to the
Company; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default
listed in Paragraph 10.1(c) of this Section 10, this Financing Agreement shall
automatically terminate and all Obligations shall
42
become due and payable, without any action, declaration, notice or demand by
CIT. The exercise of any option is not exclusive of any other option, which may
be exercised at any time by CIT.
10.3 Immediately upon the occurrence of any Event of Default, CIT
may, to the extent permitted by law: (a) remove from any premises where same may
be located any and all books and records, computers, electronic media and
software programs associated with any Collateral (including any electronic
records, contracts and signatures pertaining thereto), documents, instruments,
files and records, and any receptacles or cabinets containing same, relating to
the Accounts, or CIT may use, at the Company's expense, such of the Company's
personnel, supplies or space at the Company's places of business or otherwise,
as may be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the name of
the Company or CIT, and generally shall have all other rights respecting said
Accounts, including without limitation the right to: accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any Accounts and issue credits in the name of the Company or CIT; (c)
to the extent permitted by law, sell, assign and deliver the Collateral and any
returned, reclaimed or repossessed Inventory, with or without advertisement, at
public or private sale, for cash, on credit or otherwise, at CIT's sole option
and discretion, and CIT may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by the
Company; (d) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any Inventory and Equipment and/or Other Collateral may be located for the
purpose of taking possession of or removing the same and (e) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise to the
extent permitted by law. CIT shall have the right, without notice or
advertisement, to sell, lease, or otherwise dispose of all or any part of the
Collateral, whether in its then condition or after further preparation or
processing, in the name of the Company or CIT, or in the name of such other
party as CIT may designate, either at public or private sale or at any broker's
board, in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as CIT in its sole
discretion may deem advisable, and CIT shall have the right to purchase at any
such sale. If any Inventory and Equipment shall require rebuilding, repairing,
maintenance or preparation, CIT shall have the right, at its option, to do such
of the aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment in such saleable form as CIT shall deem appropriate and any such costs
shall be deemed an Obligation hereunder. The Company agrees, at the request of
CIT, to assemble the Inventory and Equipment and to make it available to CIT at
premises of the Company or elsewhere and to make available to CIT the premises
and facilities of the Company for the purpose of CIT's taking possession of,
removing or putting the Inventory and Equipment in saleable form. If notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) days prior written notice shall constitute reasonable notification and full
compliance with the law. The net cash proceeds resulting from CIT's exercise of
any of the foregoing rights, (after deducting all reasonable charges, costs and
expenses, including reasonable attorneys' fees) shall be applied by CIT to the
payment of the Obligations, whether due or to become due, in such order as CIT
may elect, and the Company shall remain liable to CIT for any deficiencies, and
CIT in turn agrees to remit to the Company or its successors or assigns, any
surplus resulting therefrom. The enumeration of the foregoing rights is not
intended
43
to be exhaustive and the exercise of any right shall not preclude the exercise
of any other rights, all of which shall be cumulative. The Company hereby
indemnifies CIT and holds CIT harmless from any and all costs, expenses, claims,
liabilities, Out-of-Pocket Expenses or otherwise, incurred or imposed on CIT by
reason of the exercise of any of its rights, remedies and interests hereunder,
including, without limitation, from any sale or transfer of Collateral,
preserving, maintaining or securing the Collateral, defending its interests in
Collateral (including pursuant to any claims brought by the Company, the Company
as debtor-in-possession, any secured or unsecured creditors of the Company, any
trustee or receiver in bankruptcy, or otherwise), and the Company hereby agrees
to so indemnify and hold CIT harmless, absent CIT's breach of the mandatory
provisions of the UCC or its gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. The foregoing indemnification
shall survive termination of this Financing Agreement until such time as all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof CIT, may establish such reserves for Obligations
hereunder (including any contingent Obligations) as it may deem advisable in its
Permitted Discretion. Any applicable mortgage(s), deed(s) of trust or
assignment(s) issued to CIT on the Real Estate shall govern the rights and
remedies of CIT thereto.
SECTION 11. TERMINATION
Except as otherwise permitted herein, CIT may terminate this Financing
Agreement only as of the initial or any subsequent Anniversary Date and then
only by giving the Company at least sixty (60) days prior written notice of
termination. Notwithstanding the foregoing CIT may terminate the Financing
Agreement immediately upon the occurrence and during the continuation of an
Event of Default, provided, however, that if the Event of Default is an event
listed in Paragraph 10.1(c) of Section 10 of this Financing Agreement, this
Financing Agreement shall terminate in accordance with Paragraph 10.2 of Section
10. This Financing Agreement, unless terminated as herein provided, shall
automatically continue from Anniversary Date to Anniversary Date. The Company
may terminate this Financing Agreement at any time upon thirty (30) days prior
written notice to CIT, provided that the Company pays to CIT immediately on
demand an Early Termination Fee, if applicable. All Obligations shall become due
and payable as of any termination hereunder or under Section 10 hereof and,
pending a final accounting, CIT may withhold any balances in the Company's
account (unless supplied with an indemnity satisfactory to CIT) to cover all of
the Obligations, whether absolute or contingent, including, but not limited to,
cash reserves for any contingent Obligations, including an amount of 110% of the
undrawn amount of any outstanding Letters of Credit with an expiry date on, or
within thirty (30) days of the effective date of termination of this Financing
Agreement. All of CIT's rights, liens and security interests shall continue
after any termination until all Obligations have been paid and satisfied in
full. Notwithstanding anything to the contrary herein, CIT shall release its
liens and security interests so long as all of the non-contingent monetary
Obligations have been paid in full, cash reserves as CIT may deem advisable in
its sole discretion under the circumstances have been implemented for known
existing contingent liabilities, and no other contingent liabilities are
threatened at such time.
44
SECTION 12. MISCELLANEOUS
12.1 Except as required hereby, the Company hereby waives diligence,
notice of intent to accelerate, notice of acceleration, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay or
omission of CIT or the Company to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by CIT of any right or remedy
precludes any other or further exercise thereof, or precludes any other right or
remedy.
12.2 This Financing Agreement and the Loan Documents executed and
delivered in connection therewith constitute the entire agreement between the
Company and CIT; supersede any prior agreements; can be changed only by a
writing signed by both the Company and CIT; and shall bind and benefit the
Company and CIT and their respective successors and assigns. All terms used
herein which are defined in the UCC shall have the meanings given therein unless
otherwise defined in this Financing Agreement.
12.3 In no event shall the Company, upon demand by CIT for payment of
any Indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CIT shall never be entitled to receive, charge or apply, as
interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If CIT ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to the Company. This paragraph shall
control every other provision hereof, the Loan Documents and of any other
agreement made in connection herewith.
12.4 If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision shall
be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there shall
be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
12.5 THE COMPANY AND CIT EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREUNDER. THE COMPANY AND CIT EACH HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT
WILL CIT BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
12.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (provided that, any
electronic communications from the Company with respect to any request,
transmission, document, electronic signature, electronic mail or
45
facsimile transmission shall be deemed binding on the Company for purposes of
this Financing Agreement, provided further that any such transmission shall not
relieve the Company from any other obligation hereunder to communicate further
in writing), and shall be deemed to have been validly served, given or delivered
when hand delivered or sent by facsimile, or three days after deposit in the
United State mails, with proper first class postage prepaid and addressed to the
party to be notified or to such other address as any party hereto may designate
for itself by like notice, as follows:
(A) if to CIT, at:
The CIT Group/Business Credit, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Regional Credit Manager
Fax No.: (000)000-0000
(B) if to the Company at:
3D Systems, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Fax No.: (000)000-0000
With a courtesy copy of any material notice to the Company's counsel at:
Xxxx Xxxxxxx Hilson, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax No. (000)000-0000
PROVIDED, HOWEVER, that the failure of CIT to provide the Company's counsel with
a copy of such notice shall not invalidate any notice given to the Company and
shall not give the Company any rights, claims or defenses due to the failure of
CIT to provide such additional notice.
12.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF CALIFORNIA, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES
AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
12.8 CIT agrees that material, non-public information regarding the
Company and its affiliates and subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by CIT in a
confidential manner, and shall not be disclosed by it to persons who are not
parties to this Financing Agreement, except that CIT may disclose such
information (a) to counsel for and other advisors, accountants, and auditors to
CIT, (b) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (c) as may be agreed to in advance in writing by the
Company, (d) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by CIT), (e) in
connection with any assignment, prospective assignment, sale, prospective sale,
participation or prospective
46
participation, or pledge or prospective pledge of CIT's interests under this
Financing Agreement; provided that any such counsel, advisors, accountants,
auditors and any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to take its interest hereunder subject to the terms
hereof.
47
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be effective, executed, accepted and delivered at Los Angeles,
California, by their proper and duly authorized officers as of the date set
forth above.
3D SYSTEMS, INC. THE CIT GROUP/
BUSINESS CREDIT, INC.
By: /s/ H. Xxxxxxx Xxxxx III By: /s/ Xxxxx Xxxxxxx
------------------------------- -------------------------------
Title: CFO Title: Vice President
----------------------------
48
SCHEDULE 1 - COLLATERAL INFORMATION
EXACT COMPANY NAME IN STATE OF ORGANIZATION:
3D Systems, Inc.
STATE OF INCORPORATION OR FORMATION:
California
FEDERAL TAX I.D. NO.
00-0000000
CHIEF EXECUTIVE OFFICE:
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
COLLATERAL LOCATIONS:
00000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
000 Xxxxxx Xxx
Xxxxx Xxxxxxxx, XX 00000
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxxxx X-0
Xxxxxxxxxx Xxxxx, XX 00000
