EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made as of December
20, 1993 by and among THE BANK OF NEW YORK COMMERCIAL CORPORATION
("Lender"), having offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, GENERAL BEARING CORPORATION ("General Bearing"), a
Delaware corporation and HYATT RAILWAY PRODUCTS CORP. ("Hyatt"),
a New York corporation, each having its principal place of
business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 (General
Bearing and Hyatt each a "Borrower" and jointly and severally
referred to as "Borrowers").
WHEREAS, Borrowers have requested that Lender make
loans and advances to Borrowers on the terms and conditions set
forth in this Agreement.
WHEREAS, Lender has agreed to make such loans and
advances to Borrower on the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings and the terms and conditions contained
herein, the parties hereto agree as follows:
1. (A) GENERAL DEFINITIONS. When used in this
Agreement, the following terms shall have the following meanings:
"ADVANCE RATES" means the Inventory Advance Rate and
the Receivables Advance Rate.
"AFFILIATE" of any Person shall mean (a) any Person
(other than a Subsidiary) which, directly or indirectly, is in
control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i)
of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or
indirect, (i) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such
Person, or (ii) to direct or cause the direction of the
management and policies of such Person whether by contract or
otherwise.
"ALTERNATE BASE RATE" means, for any day, a rate per
annum equal to the higher of (i) the Prime Rate in effect on such
day and (ii) the Federal Funds Rate in effect on such day plus
1/2 of 1%.
"ANCILLARY AGREEMENTS" means all agreements,
instruments, and documents including, without limitation,
mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, trust agreements whether
heretofore, concurrently, or hereafter executed by or on behalf
of Borrowers or delivered to Lender, relating to this Agreement
or to the transactions contemplated by this Agreement.
"BORROWING AGENT" means General Bearing.
"BUSINESS DAY" means any day other than a day on which
commercial banks in New York are authorized or required by law to
close.
"CHANGE OF OWNERSHIP" means (a) any transfer (whether
in one or more transactions) of ownership of not less than 50% of
the common stock of any Borrower held collectively by the
Original Owners (including for the purposes of the calculation of
percentage ownership, any shares of common stock into which any
capital stock of any Borrower held by any of the Original Owners
is convertible or for which any such shares of the capital stock
of any Borrower or of any other Person may be exchanged and any
shares of common stock issuable to such Original Owners upon
exercise of any warrants, options or similar rights which may at
the time of calculation be held by such Original Owners) to a
Person who is neither an Original Owner nor an Affiliate of an
Original Owner or (b) any merger, consolidation or sale of
substantially all of the property or assets of Borrower.
"CLOSING DATE" shall mean December 20, 1993 or such
other date as may be agreed upon by the parties hereto.
"COLLATERAL" shall mean and include:
(A) all Inventory;
(B) all Equipment;
(C) all General Intangibles;
(D) all Receivables;
(E) all books, records, ledgercards, files,
correspondence, computer programs, tapes, disks and related data
processing software (owned by each Borrower or in which it has an
interest) which at any time evidence or contain information
relating to (A), (B), (C) and (D) above or are otherwise
necessary or helpful in the collection thereof or realization
thereupon;
(F) documents of title, policies and certificates
of insurance, securities, chattel paper, other documents or
instruments evidencing or pertaining to (A), (B), (C), (D) and
(E) above;
(G) all guaranties, liens on real or personal
property, leases, and other agreements and property which in any
way secure or relate to (A), (B), (C), (D), (E) and (F) above, or
are acquired for the purpose of securing and enforcing any item
thereof;
(H) (i) all cash held as cash collateral to the
extent not otherwise constituting Collateral, all other cash or
property at any time on deposit with or held by Lender for the
account of Borrowers (whether for safekeeping, custody, pledge,
transmission or otherwise), (ii) all present or future deposit
accounts (whether time or demand or interest or non-interest
bearing) of Borrowers with Lender or any other Person including
those to which any such cash may at any time and from time to
time be credited, (iii) all investments and reinvestments
(however evidenced) of amounts from time to time credited to such
accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (x) such investments
and reinvestments and (y) such accounts; and
(I) all products and proceeds of (A), (B), (C),
(D), (E), (F), (G) and (H) above (including, but not limited to,
all claims to items referred to in (A), (B), (C), (D), (E), (F),
(G) and (H) above) and all claims of Borrower against third
parties (x) for (i) loss of, damage to, or destruction of, and
(ii) payments due or to become due under leases, rentals and
hires of, any or all of (A), (B), (C), (D), (E), (F), (G) and (H)
above and (y) proceeds payable under, or unearned premiums with
respect to policies of insurance in whatever form.
"CONTRACT RATE" means an interest rate per annum equal
to the (i) Alternate Base Rate PLUS (ii) two percent (2.00%).
"CONTROLLED GROUP" shall mean all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which,
together with Borrower, are treated as a single employer under
Section 414 of the Code.
"CURRENT ASSETS" at a particular date, shall mean all
cash, cash equivalents, accounts and inventory of General Bearing
and its Subsidiaries on a consolidated basis and all other items
which would, in conformity with GAAP, be included under current
assets on a balance sheet of General Bearing and its Subsidiaries
on a consolidated basis as at such date; provided, however, that
such amounts shall not include (a) any amounts for any
indebtedness owing by an Affiliate of any Borrower, unless such
indebtedness arose in connection with the sale of goods or other
property in the ordinary course of business and would otherwise
constitute current assets in conformity with GAAP, (b) any shares
of stock issued by an Affiliate of any Borrower, (c) the cash
surrender value of any life insurance policy (d) any assets which
would be classified as intangible assets under GAAP, or (e) any
prepaid expenses.
"CURRENT LIABILITIES" at a particular date, shall mean
all amounts which would, in conformity with GAAP, be included
under current liabilities on a balance sheet of General Bearing
and its Subsidiaries on a consolidated basis as at such date, but
in any event including, without limitation, the amounts of (a)
all indebtedness payable on demand, or, at the option of the
Person to whom such indebtedness is owed, not more than twelve
(12) months after such date, (b) any payments in respect of any
indebtedness (whether installment, serial maturity, sinking fund
payment or otherwise) required to be made not more than twelve
(12) months after such date, (c) all reserves in respect of
liabilities or indebtedness payable on demand or, at the option
of the Person to whom such indebtedness is owed, not more than
twelve (12) months after such date, the validity of which is
contested at such date and (d) all accruals for federal or other
taxes measured by income payable within a twelve (12) month
period.
"CUSTOMER" means and includes the account debtor with
respect to any Receivable and/or the prospective purchaser of
goods, services or both with respect to any contract or contract
right, and/or any party who enters into or proposes to enter into
any contract or other arrangement with any Borrower, pursuant to
which such Borrower is to deliver any personal property or
perform any services.
"DEBT" of General Bearing and its Subsidiaries on a
consolidated basis at a particular date shall mean all
unsubordinated amounts which would, in conformity with GAAP, be
included under liabilities on a balance sheet of General Bearing
and its Subsidiaries on a consolidated basis at such date.
"DEFAULT RATE" means a rate equal to two (2%) percent
per annum in excess of the Contract Rate.
"ELIGIBLE INVENTORY" means Inventory which the Lender,
in its sole and absolute discretion, determines: (a) is subject
to the security interest of Lender and is subject to no other
liens or encumbrances whatsoever (other than Permitted Liens);
(b) is in good condition and meets all standards imposed by any
governmental agency, or department or division thereof having
regulatory authority over such Inventory, its use or sale
including but not limited to the Federal Fair Labor Standards Act
of 1938 as amended, and all rules, regulations and orders
thereunder; (c) is currently either usable or salable in the
normal course of Borrower's business; and (d) is not determined
by the Lender, in its sole discretion, to be ineligible for any
other reason.
"ELIGIBLE RECEIVABLES" shall mean and include each
Receivable which conforms to the following criteria: (a)
shipment of the merchandise or the rendition of services has been
completed; (b) no return, rejection or repossession of the
merchandise has occurred; (c) merchandise or services shall not
have been rejected or disputed by the Customer and there shall
not have been asserted any offset, defense or counterclaim; (d)
continues to be in full conformity with the representations and
warranties made by Borrowers to the Lender with respect thereto;
(e) Lender is, and continues to be, satisfied with the credit
standing of the Customer in relation to the amount of credit
extended; (f) is documented by an invoice in a form approved by
Lender and shall not be unpaid more than ninety (90) days from
invoice date; (g) less than 25% of the unpaid amount of invoices
due from such Customer remain unpaid more than ninety (90) days
from invoice date; (h) is not evidenced by chattel paper or an
instrument of any kind with respect to or in payment of the
Receivable unless such instrument is duly endorsed to and in
possession of the Lender or represents a check in payment of a
Receivable; (i) if the Customer is located outside of the United
States, the goods which gave rise to such Receivable were shipped
after receipt by Borrower from or on behalf of the Customer of an
irrevocable letter of credit, assigned and delivered to the
Lender and confirmed by a financial institution acceptable to the
Lender and is in form and substance acceptable to the Lender,
payable in the full amount of the Receivable in United States
dollars at a place of payment located within the United States;
(j) such Receivable is not subject to any lien, other than
Permitted liens; (k) does not arise out of transactions with any
employee, officer, agent, director, stockholder or Affiliate of
any Borrower; (l) is payable to any Borrower; (m) does not arise
out of a xxxx and hold sale prior to shipment and, if the
Receivable arises out of a sale to any Person to which any
Borrower is indebted, the amount of such indebtedness, and any
anticipated indebtedness, is deducted in determining the face
amount of such Receivable; (n) is net of any returns, discounts,
claims, credits and allowances; (o) if the Receivable arises out
of contracts between any Borrower and the United States, any
state, or any department, agency or instrumentality of any of
them, such Borrower has so notified Lender, in writing, prior to
the creation of such Receivable, and, if Lender so requests,
there has been compliance with any governmental notice or
approval requirements, including without limitation, compliance
with the Federal Assignment of Claims Act; (p) is a good and
valid account representing an undisputed bona fide indebtedness
incurred by the Customer therein named, for a fixed sum as set
forth in the invoice relating thereto with respect to an
unconditional sale and delivery upon the stated terms of goods
sold by any Borrower, or work, labor and/or services rendered by
any Borrower; and (q) is otherwise satisfactory to the Lender as
determined in good faith by the Lender in the reasonable exercise
of its discretion.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and the rules
and regulations promulgated thereunder.
"EQUIPMENT" means and includes all of Borrowers' now
owned or hereafter acquired equipment, machinery and goods
(excluding Inventory), whether or not constituting fixtures,
including, without limitation: plant and office equipment,
tools, dies, parts, data processing equipment, furniture and
trade fixtures, trucks, trailers, loaders and other vehicles and
all replacements and substitutions therefore and all accessions
thereto.
"EVENT OF DEFAULT" shall mean the occurrence of any of
the events set forth in paragraph 18.
"FEDERAL FUNDS RATE" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or if such day is not a
Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for
such day on such transactions received by The Bank of New York
from three Federal funds brokers of recognized standing selected
by The Bank of New York.
"FIXED CHARGE COVERAGE" means and includes, with
respect to General Bearing and its Subsidiaries on a consolidated
basis for any fiscal period, the ratio of (a) net income before
taxes PLUS interest PLUS depreciation and amortization MINUS
capital expenditures to (b) the sum of interest payments PLUS tax
payments PLUS long term debt amortization plus dividends paid by
General Bearing for such period.
"FORMULA AMOUNT" shall have the meaning set forth in
paragraph 2(a).
"GAAP" means generally accepted accounting principles,
practices and procedures in effect from time to time.
"GENERAL INTANGIBLES" means and includes all of
Borrowers' now owned or hereafter acquired general intangibles as
said term is defined in the Uniform Commercial Code in effect in
the State of New York including, without limitation, trademarks,
tradenames, tradestyles, trade secrets, equipment formulation,
manufacturing procedures, quality control procedures, product
specifications, patents, patent applications, copyrights,
registrations, contract rights, choses in action, causes of
action, corporate or other business records, inventions, designs,
goodwill, claims under guarantees, licenses, franchises, tax
refunds, tax refund claims, computer programs, computer data
bases, computer program flow diagrams, source codes, object codes
and all other intangible property of every kind and nature.
"GUARANTOR" means individually, General Bearing, Hyatt,
Fisco and Xxxxxxx Xxxxxxx and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the
Obligations and "GUARANTORS" means collectively all such Persons.
"GUARANTY AGREEMENTS" means the Guaranty Agreements
dated the Closing Date which are executed by each Guarantor in
favor of Lender.
"HAZARDOUS SUBSTANCE" shall mean, without limitation,
any flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated byphenyls,
petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related
materials as defined in CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, ET
SEQ.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant
thereto.
"IDB BONDS" means those certain Industrial Development
Bonds (General Bearing Corporation Project 1983 Series) issued by
The County of Rockland Industrial Development Agency.
"INCIPIENT EVENT OF DEFAULT" means any act or event
which, with the giving of notice or passage of time or both,
would constitute an Event of Default.
"INTERCREDITOR AGREEMENT" means that certain
Intercreditor Agreement dated the Closing Date and executed by
Lender and World Machinery Corporation which sets forth the
relative priority of their respective liens in the Collateral.
"INVENTORY" means and includes all of Borrowers' now
owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind,
nature or description which are or might be used or consumed in
each Borrower's business or used in selling or furnishing such
goods, merchandise and other personal property, and all documents
of title or other documents representing them.
"INVENTORY ADVANCE RATE" means (i) 40% of the amount of
Eligible Inventory consisting of raw materials; PLUS (ii) (a)
from the Closing Date through and including February 28, 1994,
45% of the amount of Eligible Inventory consisting of finished
goods (b) from March 1, 1994 until the expiration of the Term,
40% of the amount of Eligible Inventory consisting of finished
goods; PLUS (iii) (a) from the Closing Date through and including
February 28, 1994, 45% of the amount of Eligible Inventory in
transit under Letters of Credit and (b) from March 1, 1994 until
the expiration of the Term, 40% of the amount of Eligible
Inventory in transit under Letters of Credit.
"INVENTORY AVAILABILITY" means the amount of Revolving
Credit Advances against Eligible Inventory Lender may from time
to time during the Term make available to Borrowers based upon
the Inventory Advance Rate (calculated on the basis of the lower
of cost or market, on a first-in first-out basis) but which shall
not, in any event, exceed $3,400,000 at any time outstanding.
"LETTERS OF CREDIT" shall have the meaning set forth in
paragraph 2(h).
"LETTER OF CREDIT FEES" shall have the meaning set
forth in paragraph 5(b)(iv).
"LOANS" means the Revolving Credit Advances and all
other extensions of credit hereunder (including Letters of
Credit).
"MAXIMUM LOAN AMOUNT" means $7,000,000.
"MAXIMUM REVOLVING AMOUNT" means $7,000,000.
"OBLIGATIONS" means and includes all Loans, all
advances, debts, liabilities, obligations, covenants and duties
owing by Borrowers to Lender (or any corporation that directly or
indirectly controls or is controlled by or is under common
control with Lender) of every kind and description (whether or
not evidenced by any note or other instrument and whether or not
for the payment of money or the performance or non-performance of
any act), direct or indirect, absolute or contingent, due or to
become due, contractual or tortious, liquidated or unliquidated,
whether existing by operation of law or otherwise now existing or
hereafter arising including, without limitation, any debt,
liability or obligation owing from Borrowers to others which
Lender may have obtained by assignment or otherwise and further
including, without limitation, all interest, charges or any other
payments Borrowers are required to make by law or otherwise
arising under or as a result of this Agreement and the Ancillary
Agreements, together with all reasonable expenses and reasonable
attorneys' fees chargeable to Borrowers' account or incurred by
Lender in connection with Borrowers' account whether provided for
herein or in any Ancillary Agreement.
"ORIGINAL OWNERS" means World Machinery Corporation
with respect to General Bearing, and General Bearing with respect
to Hyatt and Fisco.
"PERMITTED LIENS" means (i) liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary
course of business securing sums not overdue; (ii) liens incurred
in the ordinary course of business in connection with workmen's
compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees,
securing sums (a) not overdue or (b) being diligently contested
in good faith provided that adequate reserves with respect
thereto are maintained on the books of Borrowers in conformity
with GAAP, (iii) liens in favor of Lender, (iv) liens for taxes
(a) not yet due or (b) being diligently contested in good faith,
provided that adequate reserves with respect thereto are
maintained on the books of Borrowers in conformity with GAAP and
(v) liens specified on SCHEDULE 1(A) hereto.
"PERSON" means an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency
or political subdivision thereof.
"PLAN" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA, maintained for employees of
Borrower or any member of the Controlled Group or any such Plan
to which Borrower or any member of the Controlled Group is
required to contribute on behalf of any of its employees.
"PRIME RATE" means the prime commercial lending rate of
The Bank of New York as publicly announced in New York, New York
to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any
change in such rate. This rate of interest is determined from
time to time and is neither tied to any external rate of interest
or index nor does it necessarily reflect the lowest rate of
interest actually charged to any particular class or category of
customers.
"RECEIVABLES" means and includes all of Borrowers' now
owned or hereafter acquired accounts and contract rights,
instruments, insurance proceeds, documents, chattel paper,
letters of credit and Borrowers' rights to receive payment
thereunder, any and all rights to the payment or receipt of money
or other forms of consideration of any kind at any time now or
hereafter owing or to be owing to Borrowers, all proceeds thereof
and all files in which Borrower has any interest whatsoever
containing information identifying or pertaining to any of
Borrowers' Receivables, together with all of Borrowers' rights to
any merchandise which is represented thereby, and all Borrowers'
right, title, security and guaranties with respect to each
Receivable, including, without limitation, all rights of stoppage
in transit, replevin and reclamation and all rights as an unpaid
vendor.
"RECEIVABLES ADVANCE RATE" shall have the meaning set
forth in the definition of Receivables Availability.
"RECEIVABLES AVAILABILITY" means the amount of
Revolving Credit Advances against Eligible Receivables Lender may
from time to time during the term of this Agreement make
available to Borrowers up to 80% ("Receivables Advance Rate") of
the net face amount of Borrower's Eligible Receivables.
"REVOLVING CREDIT ADVANCES" shall have the meaning set
forth in paragraph 2(a).
"SUBORDINATION AGREEMENT" means that certain
Subordination Agreement dated the Closing Date and executed by
Lender and World Machinery Corporation.
"SUBSIDIARY" of any Person shall mean a corporation or
other entity of whose shares of stock or other ownership
interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar
functions for such entity, are owned, directly or indirectly, by
such Person.
"TANGIBLE NET WORTH" at a particular date means (a) the
aggregate amount of all assets of General Bearing and its
Subsidiaries on a consolidated basis as may be properly
classified as such in accordance with GAAP consistently applied
excluding such other assets as are properly classified as
intangible assets under GAAP, less (b) the aggregate amount of
all liabilities of General Bearing and its Subsidiaries on a
consolidated basis PLUS (c) the Subordinated Indebtedness as
defined in the Subordination Agreement.
"TERM" means the Closing Date through December 19, 1994
subject to acceleration upon the occurrence of an Event of
Default hereunder or other termination hereunder.
"UNDRAWN AVAILABILITY" means the amount which is (i)
the aggregate Receivable Availability and Inventory Availability
MINUS (ii) all Loans which are outstanding MINUS (iii)
indebtedness more than thirty (30) days past due.
(B) ACCOUNTING TERMS. Any accounting terms used in
this Agreement which are not specifically defined shall have the
meanings customarily given them in accordance with GAAP.
(C) OTHER TERMS. All other terms used in this
Agreement and defined in the Uniform Commercial Code as adopted
in the State of New York, shall have the meaning given therein
unless otherwise defined herein.
2. LOANS.
(a) Subject to the terms and conditions set forth
herein and in the Ancillary Agreements, Lender may, in its sole
discretion, make revolving credit advances (the "Revolving Credit
Advances") to Borrowers from time to time during the term of this
Agreement which, in the aggregate at any time outstanding, will
not exceed the lesser of (x) the Maximum Revolving Amount less
the aggregate amount of outstanding Letters of Credit or (y) an
amount equal to the sum of:
(i) Receivables Availability, PLUS
(ii) 40% of the amount of Eligible Inventory
consisting of raw materials; PLUS
(iii) (a) from the Closing Date through and including
February 28, 1994, 45% of the amount of Eligible
Inventory consisting of finished goods and (b) from
March 1, 1994 until the expiration of the Term, 40% of
the amount of Eligible Inventory consisting of finished
goods; PLUS
(iv) (a) from the Closing Date through and including
February 28, 1994, 45% of the amount of Eligible
Inventory in transit under Letters of Credit and (b)
from March 1, 1994 until the expiration of the Term,
40% of the amount of Eligible Inventory in transit
under Letters of Credit; MINUS
(v) the aggregate amount of outstanding Letters of
Credit; MINUS
(vi) such reserves as Lender may reasonably deem proper
and necessary from time to time.
The sum of 2(a)(i), plus (ii), plus (iii), plus (iv) shall
be referred to as the "Formula Amount".
(b) Notwithstanding the limitations set forth above,
Lender retains the right to lend Borrowers from time to time such
amounts in excess of such limitations as Lender may determine in
its sole discretion.
(c) Each Borrower acknowledges that the exercise of
Lender's discretionary rights hereunder may result during the
term of this Agreement in one or more increases or decreases in
the Advance Rates and each Borrower hereby consents to any such
increases or decreases which may limit or restrict advances
requested by Borrowers.
(d) If Borrowers do not pay any interest, fees, costs
or charges to Lender when due, Borrowers shall thereby be deemed
to have requested, and Lender is hereby authorized, at its
discretion, to make and charge to Borrowers' account a Revolving
Credit Advance to Borrowers as of such date in an amount equal to
such unpaid interest, fees, costs or charges.
(e) Any sums expended by Lender due to any Borrower's
failure to perform or comply with its obligations under this
Agreement, including but not limited to the payment of taxes,
insurance premiums or leasehold obligations, shall be charged to
Borrowers' account as a Revolving Credit Advance and added to the
Obligations.
(f) Lender will account to Borrowers monthly with a
statement of all Loans and other advances, charges and payments
made pursuant to this Agreement, and such account rendered by
Lender shall be deemed final, binding and conclusive unless
Lender is notified by any Borrower in writing to the contrary
within thirty (30) days of the date each account was rendered
specifying the item or items to which objection is made.
(g) During the Term, Borrowers may borrow, prepay and
reborrow Revolving Credit Advances, all in accordance with the
terms and conditions hereof.
(h) Subject to the terms and conditions hereof, Lender
shall (a) issue or cause the issuance of Letters of Credit
("Letters of Credit"); PROVIDED, HOWEVER, that Lender will not be
required to issue or cause to be issued any Letters of Credit to
the extent that the face amount of such Letters of Credit would
then cause the sum of (i) the outstanding Revolving Credit
Advances PLUS (ii) outstanding Letters of Credit (with the
requested Letter of Credit being deemed to be outstanding for
purposes of this calculation) to exceed the lesser of (x) the
Maximum Revolving Advance Amount or (y) the Formula Amount (which
is calculated as if the requested Letter of Credit has been
issued). The maximum amount of outstanding Letters of Credit
shall not exceed $1,000,000 in the aggregate at any time. All
disbursements or payments related to Letters of Credit shall be
deemed to be Revolving Credit Advances and shall bear interest at
the applicable Contract Rate; Letters of Credit that have not
been drawn upon shall not bear interest. Letters of Credit shall
be subject to the terms and conditions set forth in the Letter of
Credit and Security Agreement attached hereto as EXHIBIT 2(H).
(i) Borrowers may request Lender to issue or cause the
issuance of a Letter of Credit by delivering to Lender at the
Payment Office, Lender's standard form of Letter of Credit and
Security Agreement together with Bank's standard form of Letter
of Credit Application (collectively, the "Letter of Credit
Application") completed to the satisfaction of Lender and, such
other certificates, documents and other papers and information as
Lender may reasonably request.
(j) Each Letter of Credit shall, among other things,
(i) provide for the payment of sight drafts when presented for
honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an
expiry date not later than six months after such Letter of
Credit's date of issuance and in no event later than the last day
of the Term. Each Letter of Credit Application and each Letter
of Credit shall be subject to the Uniform Customs and Practice
for Documentary Credits (1983 Revision), International Chamber of
Commerce Publication No. 400, and any amendments or revision
thereof and, to the extent not inconsistent therewith, the laws
of the State of New York.
(k) In connection with the issuance of any Letter of
Credit, Borrowers shall indemnify, save and hold Lender harmless
from any loss, cost, expense or liability, including, without
limitation, payments made by Lender, and expenses and reasonable
attorneys' fees incurred by Lender arising out of, or in
connection with, any Letter of Credit to be issued or created for
Borrowers. Each Borrower shall be bound by Lender's or any
issuing or accepting Bank's regulations and good faith
interpretations of any Letter of Credit issued or created for
Borrowers' account, although this interpretation may be different
from Borrowers' own, and, neither Lender, the Bank which opened
the Letter of Credit, nor any of its correspondents shall be
liable for any error, negligence, or mistakes, whether of
omission or commission, in following Borrowing Agent's
instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or
paying any Letter of Credit, except for Lender's or such
correspondents' willful misconduct.
(l) Borrowers shall authorize and direct any Bank
which issues a Letter of Credit to name the applicable Borrower
as the "Account Party" therein and to deliver to Lender all
instruments, documents, and other writings and property received
by the Bank pursuant to the Letter of Credit and to accept and
rely upon Lender's instructions and agreements with respect to
all matters arising in connection with the Letter of Credit or
the application therefor.
(m) In connection with all Letters of Credit issued or
caused to be issued by Lender under this Agreement, each Borrower
hereby appoints Lender, or its designee, as its attorney, with
full power and authority upon the occurrence and during the
continuation of an Event of Default (i) to sign and/or endorse
any Borrower's name upon any warehouse or other receipts, letter
of credit applications and acceptances; (ii) to sign any
Borrower's name on bills of lading; (iii) to clear Inventory
through the United States of America Customs Department
("Customs") in the name of any Borrower or Lender or Lender's
designee, and to sign and delivery to Customs officials powers of
attorney in the name of any Borrower for such purpose; and (iv)
to complete in any Borrower's name or Lender's, or in the name of
Lender's designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the
proceeds thereof. Neither Lender nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or
mistakes of fact or law, except for Lender's or its attorney's
willful misconduct. This power, being coupled with an interest,
is irrevocable as long as any Letters of Credit remain
outstanding.
(n) The aggregate balance of Loans outstanding at any
time shall not exceed the lesser of (x) the Maximum Loan Amount
or (y) the Formula Amount.
3. REPAYMENT OF LOANS.
Borrowers shall be required to (i) make a
mandatory prepayment hereunder at any time that the aggregate
outstanding principal balance of the Loans made by Lender to
Borrowers hereunder is in excess of the lesser of (x) the Maximum
Loan Amount or (y) the Formula Amount, in an amount equal to such
excess, and (ii) repay on the expiration of the Term (x) the then
aggregate outstanding principal balance of Revolving Credit
Advances made by Lender to Borrowers hereunder together with
accrued and unpaid interest, fees and charges and (y) all other
amounts owed Lender under this Agreement and the Ancillary
Agreements, including the aggregate outstanding amount of Letters
of Credit.
4. PROCEDURE FOR REVOLVING CREDIT ADVANCES.
Borrowing Agent may by written notice request a borrowing of
Revolving Credit Advances prior to 1:00 P.M. New York time on the
Business Day of its request to incur, on that day, a Revolving
Credit Advance. All Revolving Credit Advances shall be disbursed
from whichever office or other place Lender may designate from
time to time and, together with any and all other Obligations of
Borrowers to Lender, shall be charged to Borrowers' account on
Lender's books. The proceeds of each Revolving Credit Advance
made by the Lender shall be made available to Borrowing Agent on
the day so requested by way of credit to Borrowers' operating
account maintained with such bank as Borrowers designate to
Lender. Any and all Obligations due and owing hereunder may be
charged to Borrowers' account and shall constitute Revolving
Credit Advances.
5. INTEREST AND FEES.
(a) Interest.
(i) Except as modified by paragraph 5(a)(iii) below,
Borrowers shall pay interest on the unpaid principal balance of
the (x) Revolving Credit Advances for each day they are
outstanding at the Contract Rate.
(ii) Interest shall be computed on the basis of actual
days elapsed over a 360-day year. Interest shall be computed by
Lender and billed to Borrowers monthly, and shall be payable in
arrears on the last day of each month, or, at Lender's option,
Lender may charge Borrowers' account for said interest.
(iii) Upon the occurrence and during the continuance of
an Event of Default, interest shall be payable at the Default
Rate.
(iv) Notwithstanding the foregoing, in no event shall
interest exceed the maximum rate permitted under any applicable
law or regulation, and if any provision of this Agreement or an
Ancillary Agreement is in contravention of any such law or
regulation, such provision shall be deemed amended to provide for
interest at said maximum rate and any excess amount shall either
be applied, at Lender's option, to the outstanding Loans in such
order as Lender shall determine or refunded by Lender to
Borrowers.
(v) Borrowers shall pay principal, interest and all
other amounts payable hereunder, or under any Ancillary
Agreement, without any deduction whatsoever, including, but not
limited to, any deduction for any set-off or counterclaim.
(b) Fees.
(i) AMENDMENT FEE. Upon execution of this Agreement,
Borrowers shall pay to Lender a fee in an amount equal to $70,000
payable in four (4) equal installments of $17,500 each commencing
on the Closing Date and continuing on the first Business Day of
each month thereafter, for a period of three consecutive (3)
months.
(ii) COLLATERAL MONITORING FEE. Upon Lender's
performance of any collateral monitoring namely any field
examination, collateral analysis or other business analysis, the
need for which is to be determined by Lender and which monitoring
is undertaken by Lender or for Lender's benefit, an amount equal
to $600.00 per day, per person, for each person employed to
perform such monitoring together with all costs, disbursements
and expenses incurred by the Lender and the person performing
such collateral monitoring shall be charged to Borrowers'
account.
(iii) COLLATERAL EVALUATION FEE. Borrowers shall pay a
monthly fee to Lender for the evaluation of the collateral in an
amount equal to $2,000 per month payable in arrears on the first
day of each month after the Closing Date.
(iv) LETTER OF CREDIT FEES. Borrowers shall pay
Lender (i) (A) for issuing or causing the issuance of a standby
Letter of Credit, a fee computed at a rate per annum of two and
one-half (2.50%) percent on the outstanding amount thereof from
time to time, (B) for issuing or causing the issuance of a Letter
of Credit that is not a standby Letter of Credit, a fee computed
at a rate per annum equal to one half of one (.50%) percent of
the original and each increase in the face amount thereof for
each 90 days or part thereof of its term (the fees set forth in
(A) and (B) referred to as "Letter of Credit Fees"). Such fees
and charges shall be payable (i) in the case of any Letter of
Credit, on its opening (ii) in the case of a standby Letter of
Credit, (A) monthly thereafter in advance and (B) upon each
increase in the outstanding amount thereof, (iii) in the case of
any Letter of Credit that is not a standby Letter of Credit, at
the time of each increase in face amount thereof. Any such
charge in effect at the time of a particular transaction shall be
the charge for that transaction, notwithstanding any subsequent
change in Bank's prevailing charges for that type of transaction.
All Letter of Credit Fees payable hereunder shall be deemed
earned in full on the date when the same are due and payable
hereunder and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason.
Following the declaration of an Event of Default or
upon expiration of the Term, on demand, Borrowers will cause cash
collateral, in an amount equal to outstanding Letters of Credit,
to be deposited and maintained in an account with Lender.
Borrowers may not receive any such cash except upon payment and
performance in full of all Obligations and termination of this
Agreement.
(c) INCREASED COSTS. 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
Lender (for purposes of this Section 5(c), the term "Lender"
shall include Lender and any corporation or bank controlling
Lender) 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:
(i) subject Lender to any tax of any kind whatsoever
with respect to this Agreement or change the basis of taxation of
payments to Lender of principal, fees, interest or any other
amount payable hereunder or under any Ancillary Agreements
(except for changes in the rate of tax on the overall net income
of Lender by the jurisdiction in which it maintains its principal
office);
(ii) 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, any office of Lender, including
(without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(iii) impose on Lender any other condition with
respect to this Agreement or any Ancillary Agreements;
and the result of any of the foregoing is to increase the cost to
Lender of making, renewing or maintaining its Loans hereunder by
an amount that Lender deems to be material 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
Lender deems to be material, then, in any case Borrower shall
promptly pay Lender, upon its demand, such additional amount as
will compensate Lender for such additional cost or such
reduction, as the case may be. Lender shall certify the amount of
such additional cost or reduced amount to Borrowing Agent, and
such certification shall be conclusive absent manifest error.
(d) CAPITAL ADEQUACY.
(i) In the event that Lender shall have determined
that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender
(for purposes of this Section 5(d), the term "Lender" shall
include Lender and any corporation or bank controlling Lender)
with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance
(taking into consideration Lender's policies with respect to
capital adequacy) by an amount deemed by Lender to be material,
then, from time to time, Borrowers shall pay upon demand to
Lender such additional amount or amounts as will compensate
Lender for such reduction. In determining such amount or
amounts, Lender may use any reasonable averaging or attribution
methods. The protection of this Section shall be available to
Lender regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or
condition.
(ii) A certificate of Lender setting forth such amount
or amounts as shall be necessary to compensate Lender with
respect to Section 5(d) hereof when delivered to Borrowing Agent
shall be conclusive absent manifest error.
6. SECURITY INTEREST.
(a) To secure the prompt payment to Lender of the
Obligations, each Borrower hereby acknowledges and confirms that
Lender has and shall continue to have a lien in all Collateral
heretofore granted by Borrowers pursuant to the Original Loan
Agreement and to the extent not otherwise granted thereunder each
Borrower hereby assigns, pledges and grants to Lender a
continuing security interest in and to the Collateral, whether
now owned or existing or hereafter acquired or arising and
wheresoever located (whether or not the same is subject to
Article 9 of the Uniform Commercial Code). All of Borrowers'
ledger sheets, files, records, books of account, business papers
and documents relating to the Collateral shall, until delivered
to or removed by Lender, be kept by Borrowers in trust for Lender
until all Obligations have been paid in full. Each confirmatory
assignment schedule or other form of assignment hereafter
executed by Borrowers shall be deemed to include the foregoing
grant, whether or not the same appears therein.
(b) Lender may file one or more financing statements
disclosing Lender's security interest in the Collateral without
any of Borrower's signature appearing thereon or Lender may sign
on Borrowers' behalf as provided in paragraph 13 hereof. The
parties agree that a carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement.
If any Receivable becomes evidenced by a promissory note or any
other instrument for the payment of money, Borrowers will
immediately deliver such instrument to Lender appropriately
endorsed.
7. REPRESENTATIONS CONCERNING THE COLLATERAL. Each
Borrower represents and warrants (each of which such
representations and warranties shall be deemed repeated upon the
making of each request for a Revolving Credit Advance and made as
of the time of each and every Revolving Credit Advance
hereunder):
(a) all the Collateral (i) is owned by Borrowers free
and clear of all claims, liens, security interests and
encumbrances (including without limitation any claims of
infringement) except (A) those in Lender's favor and (B)
Permitted Liens and (ii) is not subject to any agreement
prohibiting the granting of a security interest or requiring
notice of or consent to the granting of a security interest;
(b) all Receivables (i) represent complete bona fide
transactions which require no further act under any circumstances
on Borrowers' part to make such Receivables payable by the
account debtors, (ii) to the best of each Borrower's knowledge,
are not subject to any present, future or contingent offsets or
counterclaims, and (iii) do not represent xxxx and hold sales,
consignment sales, guaranteed sales, sale or return or other
similar understandings or obligations of any Affiliate or
Subsidiary of Borrowers.
8. COVENANTS CONCERNING THE COLLATERAL. During the
Term, each Borrower covenants that it shall:
(a) not dispose of any of the Collateral whether by
sale, lease or otherwise except for (i) the sale of Inventory in
the ordinary course of business, and (ii) the disposition or
transfer of Equipment in the ordinary course of business during
the Term aving an aggregate fair market value of not more than
$200,000 so long as such disposition does not adversely affect
the business, prospects, profits or condition (financial or
otherwise) of Borrowers and only to the extent that (x) the
proceeds of any such disposition are used to acquire replacement
Equipment which is subject to Lender's first priority security
interest, subject to the Intercreditor Agreement or (y) the
proceeds of which are remitted to Lender in reduction of the
Obligations, subject to the Intercreditor Agreement;
(b) not encumber, mortgage, pledge, assign or grant
any security interest in any Collateral or any of Borrowers'
other assets to anyone other than Lender except as set forth on
SCHEDULE 1(A) attached hereto and made a part hereof;
(c) place notations upon Borrowers' books of account
and any financial statement prepared by Borrowers to disclose
Lender's security interest in the Collateral;
(d) defend the Collateral against the claims and
demands of all parties;
(e) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear, and shall make all
necessary repairs and replacements thereof so that the value and
operating efficiency shall at all times be maintained and
preserved. Borrowers shall not permit any such items to become a
fixture to real estate or accessions to other personal property;
(f) not extend the payment terms of any Receivable
without prompt notice thereof to Lender; and
(g) perform all other steps requested by Lender to
create and maintain in Lender's favor a valid perfected first
security interest in all Collateral.
9. COLLECTION AND MAINTENANCE OF COLLATERAL AND
RECORDS.
Lender may at any time verify Borrowers' Receivables
utilizing an audit control company or any other agent of Lender.
Lender or Lender's designee may, upon the occurrence and during
the continuation of an Event of Default, notify customers or
account debtors of Lender's security interest in Receivables,
collect them directly and charge the collection costs and
expenses to Borrowers' account, but, until Lender gives Borrowing
Agent other instructions, Borrowers shall collect all Receivables
for Lender, receive all payments thereon for Lender's benefit in
trust as Lender's trustee and immediately deliver them to Lender
in their original form with all necessary endorsements or, as
directed by Lender, deposit such payments as directed by Lender
pursuant to paragraphs 23 or 24 hereof. Lender will credit
(conditional upon final collection) all such payments to
Borrowers' account two (2) Business Days after receipt. Promptly
after the creation of any Receivables, Borrowers shall provide
Lender with schedules describing all Receivables created or
acquired by Borrowers and shall execute and deliver confirmatory
written assignments of such Receivables to Lender, but Borrowers'
failure to execute and deliver such schedules or written
confirmatory assignments of such Receivables shall not affect or
limit Lender's security interest or other rights in and to the
Receivables. Borrowers shall furnish, at Lender's request,
copies of contracts, invoices or the equivalent, and any original
shipping and delivery receipts for all merchandise sold or
services rendered and such other documents and information as
Lender may require. Borrowers shall also provide Lender on a
monthly (within ten (10) days after the end of each month) or
more frequent basis, as requested by Lender, a detailed or aged
trial balance of all of Borrowers' existing Receivables
specifying the names and balances due for each account debtor and
such other information pertaining to the Receivables as Lender
may request. Borrowers shall provide Lender on a monthly (within
ten (10) days after the end of each month), or more frequent
basis, as requested by Lender, a summary report of Borrowers'
current Inventory, certified as true and accurate by Borrowing
Agent's President or Chief Financial Officer, as well as an aged
trial balance of Borrower's existing accounts payable. Borrowers
shall provide Lender, as requested by Lender, such other
schedules, documents and/or information regarding the Collateral
as Lender may require.
10. INSPECTIONS. At all times during normal business
hours, Lender shall have the right to (a) visit and inspect
Borrowers' properties and the Collateral, (b) inspect, audit and
make extracts from Borrowers' relevant books and records,
including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with Borrowers'
principal officers, and independent accountants, Borrowers'
business, assets, liabilities, financial condition, results of
operations and business prospects. Borrowers will deliver to
Lender any instrument necessary for Lender to obtain records from
any service bureau maintaining records for Borrowers.
11. FINANCIAL INFORMATION. Borrowers shall provide
Lender (a) as soon as available, but in any event within ninety
(90) days after the end of each fiscal year of Borrowers, the
balance sheet of General Bearing and its Subsidiaries on a
consolidated basis as at the end of such fiscal year and the
related statements of income, retained earnings and changes in
cash flow for such fiscal year, setting forth in comparative form
the figures as at the end of and for the previous fiscal year,
which shall have been reported on by independent certified public
accountants who shall be satisfactory to Lender and shall be
accompanied by an unqualified audit report issued by such
independent certified public accountants; (b) as soon as
available, drafts of the balance sheet of General Bearing and its
Subsidiaries on a consolidated basis as at the end of each fiscal
year of Borrowers and the related statements of income, retained
earnings and changes in cash flow for such fiscal year, which
have been internally prepared by Borrowers; (c) as soon as
available, but in any event within thirty (30) days after the
close of each month and quarter, the balance sheet of General
Bearing and its Subsidiaries on a consolidated basis as at the
end of such month and quarter and the related statements of
income, retained earnings and changes in cash flow for such month
and quarter, which have been internally prepared by Borrowers.
All financial statements required under (a), (b) and (c) above
shall be prepared in accordance with GAAP, subject to year-end
adjustments in the case of monthly and quarterly statements.
Together with the financial statements furnished pursuant to (a)
above, Borrowers shall deliver a certificate of Borrowers'
certified public accountants addressed to Lender stating that (i)
they have caused this Agreement and the Ancillary Agreements to
be reviewed and (ii) in making the examination necessary for the
issuance of such financial statements, nothing has come to their
attention to lead them to believe that any Event of Default or
Incipient Event of Default exists and, in particular, they have
no knowledge of any Event of Default or Incipient Event of
Default or, if such is not the case, specifying such Event of
Default or Incipient Event of Default and its nature, when it
occurred and whether it is continuing. At the times the
financial statements are furnished pursuant to (a), (b) and (c)
above, a certificate of Borrowing Agent's President or Chief
Financial Officer shall be delivered to Lender stating that,
based on an examination sufficient to enable him to make an
informed statement, no Event of Default or Incipient Event of
Default exists, or, if such is not the case, specifying such
Event of Default or Incipient Event of Default and its nature,
when it occurred, whether it is continuing and the steps being
taken by Borrower with respect to such event. If any internally
prepared financial information, including that required under
this paragraph, is unsatisfactory in any manner to Lender, Lender
may request that Borrowers' independent certified public
accountants review same.
In addition to the foregoing financial statements,
Borrowers shall furnish Lender no less than thirty (30) days
prior to the beginning of each fiscal year commencing with fiscal
year 1994, a month by month projected operating budget and cash
flow of General Bearing and its Subsidiaries on a consolidated
basis for such fiscal year (including an income statement for
each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a
certificate signed by Borrowing Agent's President or Chief
Financial Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice
consistent with past budgets and financial statements and that
such officer has no reason to question the reasonableness of any
material assumptions on which such projections were prepared.
12. ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS. Each Borrower represents and warrants (each of which
such representations and warranties shall be deemed repeated upon
the making of a request for a Revolving Credit Advance and made
as of the time of each Revolving Credit Advance made hereunder),
and covenants that:
(a) Each Borrower is a corporation duly organized and
validly existing under the laws of the State of its incorporation
and duly qualified and in good standing in every other state or
jurisdiction in which the nature of such Borrower's business
requires such qualification;
(b) the execution, delivery and performance of this
Agreement and the Ancillary Agreements (i) have been duly
authorized, (ii) are not in contravention of any of Borrower's
certificates of incorporation, by-laws or of any indenture,
agreement or undertaking to which any Borrower is a party or by
which any Borrower is bound and (iii) are within each Borrower's
corporate powers;
(c) this Agreement and the Ancillary Agreements
executed and delivered by each Borrower are each Borrower's
legal, valid and binding obligations, enforceable in accordance
with their terms;
(d) it keeps and will continue to keep all of its
books and records concerning the Collateral at Borrowers'
executive offices located at the address set forth in the
introductory paragraph of this Agreement and will not move such
books and records without giving Lender at least thirty (30) days
prior written notice;
(e) (i) the operation of each Borrower's business is
and will continue to be in compliance in all material respects
with all applicable federal, state and local laws, including but
not limited to all applicable environmental laws and regulations;
(ii) Borrowers will establish and maintain a
system to assure and monitor continued compliance with all
applicable environmental laws, which system shall include
periodic reviews of such compliance.
(iii) In the event any Borrower obtains, gives or
receives notice of any release or threat of release of a
reportable quantity of any Hazardous Substances on its property
(any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible
for investigation or cleanup of environmental conditions on its
property, demand letter or complaint, order, citation, or other
written notice with regard to any Hazardous Discharge or
violation of any environmental laws affecting its property or any
Borrower's interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person or
entity, including any state agency responsible in whole or in
part for environmental matters in the state in which such
property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"),
then such Borrower shall, within five (5) Business Days, give
written notice of same to the Lender detailing facts and
circumstances of which such Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint and periodically
inform Lender of the status of the matter. Such information is
to be provided to allow the Lender to protect its security
interest in the Collateral and is not intended to create nor
shall it create any obligation upon the Lender with respect
thereto.
(iv) Borrowers shall respond promptly to any
Hazardous Discharge or Environmental Complaint and take all
necessary action in order to safeguard the health of any Person
and to avoid subjecting the Collateral to any lien, charge, claim
or encumbrance. If any Borrower shall fail to respond promptly
to any Hazardous Discharge or Environmental Complaint or any
Borrower shall fail to comply with any of the requirements of any
environmental laws, the Lender may, but without the obligation to
do so, for the sole purpose of protecting the Lender's interest
in Collateral: (A) give such notices or (B) enter onto
Borrowers' property (or authorize third parties to enter onto
such property) and take such actions as the Lender (or such third
parties as directed by the Lender) deem reasonably necessary or
advisable, to clean up, remove, mitigate or otherwise deal with
any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by the Lender (or such
third parties) in the exercise of any such rights, including any
sums paid in connection with any judicial or administrative
investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for
Revolving Credit Advances shall be paid upon demand by Borrowers,
and until paid shall be added to and become a part of the
Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Lender and Borrower.
(v) Borrowers shall defend and indemnify the
Lender and hold the Lender harmless from and against all loss,
liability, damage and expense, claims, costs, fines and
penalties, including attorney's fees, suffered or incurred by the
Lender under or on account of any environmental laws, including,
without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any hazardous
substances affecting Borrowers' property, whether or not the same
originates or emerges from Borrowers' property or any contiguous
real estate, including any loss of value of the Collateral as a
result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of the Lender.
Borrowers' obligations under this paragraph 12(e) shall arise
upon the discovery of the presence of any Hazardous Substances on
Borrowers' property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in
connection with the presence of any hazardous substances.
Borrowers' obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(vi) For purposes of paragraph 12(e) all
references to Borrowers' property shall be deemed to include all
of Borrowers' right, title and interest in and to all owned
and/or leased premises.
(f) (x) based upon the Employee Retirement Income
Security Act of 1974 ("ERISA"), and the regulations and published
interpretations thereunder: (i) no Borrower has engaged in any
Prohibited Transactions as defined in paragraph 406 of ERISA and
paragraph 4975 of the Internal Revenue Code, as amended; (ii)
each Borrower has met all applicable minimum funding requirements
under paragraph 302 of ERISA in respect of its plans; (iii) no
Borrower has knowledge of any event or occurrence which would
cause the Pension Benefit Guaranty Corporation to institute
proceedings under Title IV of ERISA to terminate any Plan; (iv)
no Borrower has fiduciary responsibility for investments with
respect to any Plan existing for the benefit of persons other
than Borrower's employees; and (v) no Borrower has withdrawn,
completely or partially, from any multi-employer pension plan so
as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980; and (y) Borrower does not maintain or
contribute to any Plan other than those listed on SCHEDULE 12(F);
(g) it is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all
businesses in which it is about to engage and the fair saleable
value of its assets (calculated on a going concern basis) is in
excess of the amount of its liabilities;
(h) there is no pending or threatened litigation,
actions or proceeding which involve the possibility of materially
and adversely affecting Borrowers' business, assets, operations,
condition or prospects, financial or otherwise, or the Collateral
or the ability of Borrowers to perform this Agreement;
(i) all balance sheets and income statements which
have been delivered to Lender fairly, accurately and properly
state the financial condition of Borrowers on a basis consistent
with that of previous financial statements and there has been no
material adverse change in the financial condition of Borrowers
as reflected in such statements since the date thereof and such
statements do not fail to disclose any fact or facts which might
materially and adversely affect Borrowers' financial condition;
(j) (x) it possesses all of the licenses, patents,
copyrights, trademarks, tradenames and permits necessary to
conduct its business, (y) there has been no assertion or claim of
violation or infringement with respect thereof and (z) all such
licenses, patents, copyrights, trademarks, tradenames and permits
are listed on SCHEDULE 12(J);
(k) it will pay or discharge when due all taxes,
assessments and governmental charges or levies imposed upon it;
(l) it will promptly inform Lender in writing of: (i)
the commencement of all proceedings and investigations by or
before and/or the receipt of any notices from, any governmental
or nongovernmental body and all actions and proceedings in any
court or before any arbitrator against or in any way concerning
any of Borrowers' properties, assets or business, which might
singly or in the aggregate, have a materially adverse effect on
Borrowers; (ii) any amendment of any of Borrower's certificates
of incorporation or by-laws; (iii) any change in Borrowers'
business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects which has
had or might have a materially adverse effect on Borrowers; (iv)
any Event of Default or Incipient Event of Default; (v) any
default or any event which with the passage of time or giving of
notice or both would constitute a default under any agreement for
the payment of money to which Borrowers are a party or by which
Borrowers or any of Borrowers' properties may be bound which
would have a material adverse effect on Borrowers' business,
operations, property or condition (financial or otherwise) or the
Collateral; (vi) any change in the location of Borrowers'
executive offices; (vii) any change in the location of any
Borrower's Inventory or Equipment from the locations listed on
SCHEDULE 12(L) attached hereto, (viii) any change in any
Borrower's corporate name; (ix) any material delay in any
Borrower's performance of any of its obligations to any account
debtor and of any assertion of any material claims, offsets or
counterclaims by any account debtor and of any allowances,
credits and/or other monies granted by it to any account debtor;
(x) furnish to and inform Lender of all material adverse
information relating to the financial condition of any account
debtor; and (xi) any material return of goods;
(m) it will not (i) create, incur, assume or suffer to
exist any indebtedness (exclusive of trade debt) whether secured
or unsecured other than Borrowers' indebtedness to Lender and as
set forth on SCHEDULE 12(M) attached hereto and made a part
hereof; (ii) declare, pay or make any dividend or distribution on
any shares of the common stock or preferred stock of Borrowers or
apply any of its funds, property or assets to the purchase,
redemption or other retirement of any common or preferred stock
of Borrowers; (iii) directly or indirectly, prepay any
indebtedness (other than to Lender), or repurchase, redeem,
retire or otherwise acquire any indebtedness of Borrowers; (iv)
makes advances, loans or extensions of credit to any Person; (v)
become either directly or contingently liable upon the
obligations of any Person by assumption, endorsement or guaranty
thereof or otherwise; (vi) enter into any merger, consolidation
or other reorganization with or into any ther Person or acquire
all or a portion of the assets or stock of any Person or permit
any other Person to consolidate with or merge with it; (vii) form
any Subsidiary or enter into any partnership, joint venture or
similar arrangement; (viii) materially change the nature of the
business in which it is presently engaged; (ix) change its fiscal
year or make any changes in accounting treatment and reporting
practices without prior written notice to Lender except as
required by GAAP or in the tax reporting treatment or except as
required by law; (x) enter into any transaction with any
Affiliate, except in ordinary course on arms-length terms; or
(xi) xxxx Receivables under any name except the present names of
Borrowers;
(n) it shall not permit Tangible Net Worth at the end
of each fiscal quarter set forth below to be less than the amount
set opposite such date:
DATE TANGIBLE NET WORTH
December 31, 1993 5,735,000
March 31, 1994 5,775,000
June 30, 1994 5,800,000
September 30, 1994 5,850,000
(o) all financial projections of Borrowers'
performance prepared by Borrowers or at Borrowers' direction and
delivered to Lender will represent, at the time of delivery to
Lender, Borrowers' best estimate of Borrowers' future financial
performance and will be based upon assumptions which are
reasonable in light of Borrowers' past performance and then
current business conditions;
(p) it will not make capital expenditures in any
fiscal year which, when aggregated with capital expenditures for
all other Borrowers, would exceed $200,000;
(q) it shall not permit the Fixed Charge Coverage at
the end of each fiscal quarter set forth below to be less than
the amount set opposite such date:
DATE FIXED CHARGE COVERAGE
December 31, 1993 1.75 to 1.00
March 31, 1994 1.75 to 1.00
June 30, 1994 1.90 to 1.00
September 30, 1994 1.90 to 1.00
(r) it shall not permit the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter set forth
below to be less than the amount set opposite such date:
DATE RATIO
December 31, 1993 1.10 to 1.00
March 31, 1994 1.10 to 1.00
June 30, 1994 1.15 to 1.00
September 30, 1994 1.15 to 1.00
(s) none of the proceeds of the Loans hereunder will
be used directly or indirectly to "purchase" or "carry" "margin
stock" or to repay indebtedness incurred to "purchase" or "carry"
"margin stock" within the respective meanings of each of the
quoted terms under Regulation G of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in
effect; and
(t) it will bear the full risk of loss from any loss
of any nature whatsoever with respect to the Collateral. At it's
own cost and expense in amounts and with carriers acceptable to
Lender, it shall (i) keep all its insurable properties and
properties in which it has an interest insured against the
hazards of fire, flood, sprinkler leakage, those hazards covered
by extended coverage insurance and such other hazards, and for
such amounts, as is customary in the case of companies engaged in
businesses similar to Borrowers' including, without limitation,
business interruption insurance; (ii) maintain a bond in such
amounts as is customary in the case of companies engaged in
businesses similar to Borrowers' insuring against larceny,
embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with
others at any time have access to the assets or funds of
Borrowers either directly or through authority to draw upon such
funds or to direct generally the disposition of such assets;
(iii) maintain public and product liability insurance against
claims for personal injury, death or property damage suffered by
others; (iv) maintain all such workmen's compensation or similar
insurance as may be required under the laws of any state or
jurisdiction in which Borrowers are engaged in business; (v)
furnish Lender with (x) copies of all policies and evidence of
the maintenance of such policies at least thirty (30) days before
any expiration date, and (y) appropriate loss payable
endorsements in form and substance satisfactory to Lender, naming
Lender as loss payee and providing that as to Lender the
insurance coverage shall not be impaired or invalidated by any
act or neglect of any Borrower and the insurer will provide
Lender with at least thirty (30) days notice prior to
cancellation. Borrowers shall instruct the insurance carriers
that in the event of any loss thereunder, the carriers shall make
payment for such loss to lender and not to Borrowers and Lender
jointly. If any insurance losses are paid by check, draft or
other instrument payable to any Borrower and Lender jointly,
Lender may endorse such Borrower's name thereon and do such other
things as Lender may deem advisable to reduce the same to cash.
Lender is hereby authorized to adjust and compromise claims. All
loss recoveries received by Lender upon any such insurance may be
applied to the Obligations, in such order as Lender in its sole
discretion shall determine. Any surplus shall be paid by Lender
to Borrowers or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Lender, on
demand.
13. POWER OF ATTORNEY. Each Borrower hereby appoints
Lender or any other Person whom Lender may designate as each
Borrower's attorney, with power to verify the validity, amount or
any other matter relating to any Receivable by mail, telephone,
telegraph or otherwise with account debtors and, upon the
occurrence and during the continuation of an Event of Default,
with power to (i) endorse any Borrower's name on any checks,
notes, acceptances, money orders, drafts or other forms of
payment or security that may come into Lender's possession; (ii)
sign any Borrower's name on any invoice or xxxx of lading
relating to any Receivables, drafts against customers, schedules
and assignments of Receivables, notices of assignment, financing
statements and other public records, verifications of account and
notices to or from customers; (iii) execute customs declarations
and such other documents as may be required to clear Inventory
through Customs; (iv) do all things necessary to carry out this
Agreement, any Ancillary Agreement and all related documents; and
(v) notify the post office authorities to change the address for
delivery of Borrowers' mail to an address designated by Lender,
and to receive, open and dispose of all mail addressed to any
Borrower. Each Borrower hereby ratifies and approves all acts of
the attorney. Neither Lender nor the attorney will be liable for
any acts or omissions or for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is
irrevocable so long as any Receivable which is assigned to Lender
or in which Lender has a security interest remains unpaid and
until the Obligations have been fully satisfied.
14. EXPENSES. Borrowers shall pay all of Lender's
out-of-pocket costs and expenses, including without limitation
reasonable fees and disbursements of counsel and appraisers, in
connection with the preparation, execution and delivery of this
Agreement and the Ancillary Agreements, and in connection with
the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of,
related to or connected with this Agreement or any Ancillary
Agreement. Borrowers shall also pay all of Lender's out-of-
pocket costs and expenses, including without limitation
reasonable fees and disbursements of counsel, in connection with
(a) the preparation, execution and delivery of any waiver, any
amendment thereto or consent proposed or executed in connection
with the transactions contemplated by this Agreement or the
Ancillary Agreements, (b) Lender's obtaining performance of the
Obligations under this Agreement and any Ancillary Agreements,
including, but not limited to, the enforcement or defense of
Lender's security interests, assignments of rights and liens
hereunder as valid perfected security interests, (c) any attempt
to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of any Collateral, and (d) any consultations in
connection with any of the foregoing. Borrowers shall also pay
Lender's customary bank charges for all bank services performed
or caused to be performed by Lender for Borrowers at Borrowers'
request. All such costs and expenses together with all filing,
recording and search fees, taxes and interest payable by
Borrowers to Lender shall be payable on demand and shall be
secured by the Collateral. If any tax by any governmental
authority is or may be imposed on or as a result of any
transaction between Borrowers and Lender which Lender is or may
be required to withhold or pay, Borrowers agree to indemnify and
hold Lender harmless in respect of such taxes, and Borrowers will
repay to Lender the amount of any such taxes which shall be
charged to Borrowers' account; and until Borrower shall furnish
Lender with indemnity therefor (or supply Lender with evidence
satisfactory to it that due provision for the payment thereof has
been made), Lender may hold without interest any balance standing
to Borrowers' credit and Lender shall retain its security
interests in any and all Collateral.
15. ASSIGNMENT BY LENDER. Lender may assign any or
all of the Obligations together with any or all of the security
therefor and any transferee shall succeed to all of Lender's
rights with respect thereto. Upon such transfer, Lender shall be
released from all responsibility for the Collateral to the extent
same is assigned to any transferee. Lender may from time to time
sell or otherwise grant participations in any of the Obligations
and the holder of any such participation shall, subject to the
terms of any agreement between Lender and such holder, be
entitled to the same benefits as Lender with respect to any
security for the Obligations in which such holder is a
participant. Each such holder may exercise any and all rights of
banker's lien, set-off and counterclaim with respect to its
participation in the Obligations as fully as though Borrowers
were directly indebted to such holder in the amount of such
participation.
16. WAIVERS. Each Borrower waives presentment and
protest of any instrument and notice thereof, notice of default
and all other notices to which each Borrower might otherwise be
entitled.
17. TERM OF AGREEMENT. This Agreement shall continue
in full force and effect until the expiration of the Term.
Borrowing Agent may terminate this Agreement at any time upon
ninety (90) days' prior written notice ("Termination Date") upon
payment in full of the Obligations; PROVIDED, that Borrowers pay
an early termination fee in an amount equal to $70,000.
18. EVENTS OF DEFAULT. The occurrence of any of the
following shall constitute an Event of Default:
(a) failure to make payment of any of the Obligations
when required hereunder;
(b) failure to pay any taxes when due unless such
taxes are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been
provided on Borrowers' books;
(c) failure to perform under and/or committing any
breach of this Agreement or any Ancillary Agreement or any other
agreement between Borrowers and Lender;
(d) occurrence of a default under any agreement to
which any Borrower is a party with third parties which has a
material adverse affect upon such Borrower's business,
operations, property or condition (financial or otherwise)
including all leases for any premises where Inventory or
Equipment is located;
(e) any representation, warranty or statement made by
any Borrower hereunder, in any Ancillary Agreement, any
certificate, statement or document delivered pursuant to the
terms hereof, or in connection with the transactions contemplated
by this Agreement should at any time be false or misleading in
any material respect;
(f) an attachment or levy is made upon any of any
Borrower's assets having an aggregate value in excess of $10,000,
or a judgment is rendered against any Borrower or any of any
Borrower's property involving a liability of more than $10,000,
which shall not have been vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof;
(g) any change in any Borrower's condition or affairs
(financial or otherwise) which in Lender's opinion impairs the
Collateral or the ability of Borrowers to perform its
Obligations;
(h) any lien created hereunder or under any Ancillary
Agreement for any reason ceases to be or is not a valid and
perfected lien having a first priority interest except for
Permitted Liens;
(i) if any Borrower shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment
for the benefit of creditors, (iii) commence a voluntary case
under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law providing for
the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it
in any involuntary case under such bankruptcy laws, or (vii) take
any action for the purpose of effecting any of the foregoing;
(j) any Borrower shall admit in writing its inability,
or be generally unable, to pay its debts as they become due or
cease operations of its present business;
(k) any Affiliate or any Subsidiary or any Guarantor
shall (i) apply for or consent to the appointment of, or the
taking possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its
property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking
to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, within
thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, (viii) take any
action for the purpose of effecting any of the foregoing;
(l) any Borrower directly or indirectly sells,
assigns, transfers, conveys, or suffers or permits to occur any
sale, assignment, transfer or conveyance of any assets of such
Borrower or any interest therein, except as permitted herein;
(m) any Borrower fails to operate in the ordinary
course of business;
(n) Lender shall in good xxxxx xxxx itself insecure or
unsafe or shall fear diminution in value, removal or waste of the
Collateral;
(o) a default by Borrowers in the payment, when due,
of any principal of or interest on any indebtedness for money
borrowed;
(p) if any Guarantor attempts to terminate, challenges
the validity of, or its liability under any Guaranty Agreement;
(q) should any Guarantor default in its obligations
under any Guaranty Agreement or if any proceeding shall be
brought to challenge the validity, binding effect of any Guaranty
Agreement, or should any Guarantor breach any representation,
warranty or covenant contained in any Guaranty Agreement or
should any Guaranty Agreement cease to be a valid, binding and
enforceable obligation; or
(r) any Change of Ownership.
19. REMEDIES. (a) Upon the occurrence of an Event of
Default pursuant to paragraph 18(i) herein, all Obligations shall
be immediately due and payable and this Agreement shall be deemed
terminated; upon the occurrence and continuation of any other of
the Events of Default, Lender shall have the right to demand
repayment in full of all Obligations, whether or not otherwise
due. Until all Obligations have been fully satisfied, Lender
shall retain its security interest in all Collateral. Lender
shall have, in addition to all other rights provided herein, the
rights and remedies of a secured party under the Uniform
Commercial Code, and under other applicable law, all other legal
and equitable rights to which Lender may be entitled, including
without limitation, the right to take immediate possession of the
Collateral, to require Borrowers to assemble the Collateral, at
Borrowers' expense, and to make it available to Lender at a place
designated by Lender which is reasonably convenient to both
parties and to enter any of the premises of Borrowers or wherever
the Collateral shall be located, with or without force or process
of law, and to keep and store the same on said premises until
sold (and if said premises be the property of any Borrower, such
Borrower agrees not to charge Lender for storage thereof for a
period up to at least sixty (60) days after sale or disposition
of said Collateral). Further, Lender may, at any time or times
after default by Borrowers, sell and deliver all Collateral held
by or for Lender at public or private sale for cash, upon credit
or otherwise, at such prices and upon such terms as Lender, in
Lender's sole discretion, deems advisable or Lender may otherwise
recover upon the Collateral in any commercially reasonable manner
as Lender, in its sole discretion, deems advisable. Except as to
that part of the Collateral which is perishable or threatens to
decline speedily in nature or is of a type customarily sold on a
recognized market, the requirement of reasonable notice shall be
met if such notice is mailed postage prepaid to Borrowing Agent
at Borrowing Agent's address as shown in Lender's records, at
least ten (10) days before the time of the event of which notice
is being given. Lender may be the purchaser at any sale, if it
is public. In connection with the exercise of the foregoing
remedies, Lender is granted permission to use all of Borrowers'
trademarks, tradenames, tradestyles, patents, patent
applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose
of disposing of such Inventory and (b) Equipment for the purpose
of completing the manufacture of unfinished goods. The proceeds
of sale shall be applied first to all costs and expenses of sale,
including attorneys' fees, and second to the payment (in whatever
order Lender elects) of all Obligations. Lender will return any
excess to Borrowing Agent and Borrowers shall remain liable to
Lender for any deficiency.
20. WAIVER; CUMULATIVE REMEDIES. Failure by Lender to
exercise any right, remedy or option under this Agreement or any
supplement hereto or any other agreement between Borrowers and
Lender or delay by Lender in exercising the same, will not
operate as a waiver; no waiver by Lender will be effective unless
it is in writing and then only to the extent specifically stated.
Lender's rights and remedies under this Agreement will be
cumulative and not exclusive of any other right or remedy which
Lender may have.
21. CONDITIONS TO INITIAL ADVANCES. The agreement of
Lender to make the initial Loans requested to be made on the
Closing Date is subject to the satisfaction, or waiver by Lender,
immediately prior to or concurrently with the making of such
Loans, of the following conditions precedent:
(a) Lender shall have received executed Guaranty
Agreements from each Guarantor in form and substance satisfactory
to Lender in its sole discretion.
(b) Lender shall have received the Intercreditor
Agreement and the Subordination Agreement, both in form and
substance satisfactory to Lender in its sole discretion.
(c) Lender shall have received a certificate from
Borrowing Agent's chief financial officer or president certifying
that Borrowers have received not less than $500,000 in cash as a
capital contribution from a third party.
(d) Lender shall have received the executed legal
opinion of Kurtzman, Haspel & Xxxxx in form and substance
satisfactory to Lender which shall cover such matters incident to
the transactions contemplated by this Agreement and related
agreements as Lender may reasonably require.
(e) On the Closing Date, after giving effect to all
Loans which are outstanding, Undrawn Availability shall be in
excess of $500,000.
(f) Lender shall have received appraisals, the results
of which shall be in form and substance satisfactory to Lender,
of Borrowers' assets and all books and records in connection
therewith.
(g) The Plan shall (a) provide that Borrowers assume
and/or adopt all executory contracts and unexpired leases arising
from or relating to (i) the improved real property located at
Blauvelt, New York and (ii) the IDB Bonds and (b) ratify and
reaffirm all of Borrowers' obligations arising from or relating
to the IDB Bonds.
22. APPLICATION OF PAYMENTS. Each Borrower
irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received by Lender
from or on any Borrower's behalf and each Borrower hereby
irrevocably agrees that Lender shall have the continuing
exclusive right to apply and reapply any and all payments
received at any time or times hereafter against Borrowers'
Obligations hereunder in such manner as Lender may deem advisable
notwithstanding any entry by Lender upon any of Lender's books
and records.
23. DEPOSITORY ACCOUNTS. Any payment received by
Borrowers on account of any Collateral shall be held by Borrowers
in trust for Lender and Borrowers shall promptly deliver same in
kind to Lender or deposit all such payments into a cash
collateral account at such bank as Lender may designate for
application to payment of the Obligations. Each Borrower shall
also execute such further documents as Lender may deem necessary
to establish such an account and all funds deposited in such
account shall immediately be deemed Lender's property.
24. LOCK BOX ACCOUNTS. Each Borrower shall, at
Lender's request, instruct all of its customers and account
debtors to make such payments on account of Receivables to an
account under Lender's dominion and control at such bank as
Lender may designate. Each Borrower shall also execute such
further documents as Lender may deem necessary to establish such
an account and all funds deposited in such account shall
immediately be deemed Lender's property.
25. REVIVAL. Borrowers further agree that to the
extent Borrower makes a payment or payments to Lender, which
payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy act, state or federal law, common law
or equitable cause, then, to the extent of such payment or
repayment, the obligation or part thereof intended to be
satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
26. APPOINTMENT. (a) Each Borrower hereby irrevocably
designates Borrowing Agent as its attorney and agent to borrow,
sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter
required hereunder, on behalf of each Borrower, and does hereby
authorize Lender to pay over or credit all loan proceeds
hereunder in accordance with the advance request made by
Borrowing Agent.
(b) It is understood and agreed by each Borrower
that the handling of this credit facility in the manner set forth
in this Agreement is solely as an accommodation to Borrowers and
at their request. Lender shall not incur any liability to
Borrowers as a result thereof. To induce Lender to do so and in
consideration thereof, each Borrower hereby agrees to indemnify
Lender and to hold Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or
injury asserted against Lender by any Person arising from or
incurred by reason of Lender's handling of the financing
arrangements of the Borrowers as provided herein, reliance by
Lender on any request or instruction from Borrowing Agent or any
other action taken by Lender with respect to this Paragraph 26
except due to the gross (not mere) negligence or willful
misconduct by the indemnified party.
(c) Each Borrower represents and warrants to
Lender that (i) the Borrowers have one or more common
shareholders, directors and officers, (ii) the businesses and
corporate activities of the other Borrowers are closely related
to, and substantially benefit, the business and corporate
activities of such Borrower, (iii) the financial and other
operations of the Borrowers are performed on a combined basis as
if the Borrowers constituted a consolidated corporate group, (iv)
such Borrower has received substantial economic benefit from
entering into this Agreement and shall receive substantial
economic benefit from the application of each Loan hereunder, in
each case whether or not such amount is used directly by such
Borrower, and (v) all extensions of credit hereunder by the
Borrowing Agent are for the exclusive and indivisible benefit of
all Borrowers as though, for purposes of this Agreement and the
Ancillary Agreements and the allocation of any Collateral
thereunder, the Borrowers constituted a single entity.
27. JOINT AND SEVERAL OBLIGATIONS. Each Borrower
further agrees that all Obligations shall be joint and several,
and that each Borrower shall make payment upon any of the
Obligations upon their maturity by acceleration or otherwise, and
that such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and
forbearances granted by Lender to any Borrower, failure of Lender
to give any Borrower notice of borrowing or any other notice, any
failure of Lender to pursue or preserve its rights against the
other Borrower, the release by Lender of any Collateral now or
hereafter acquired from any Borrower, failure of Lender to
realize upon such Collateral in a commercially reasonably manner,
and that such agreement by each Borrower to pay upon any notice
issued pursuant hereto is unconditional and unaffected by prior
recourse by Lender to the other Borrower or any Collateral or the
lack thereof.
28. WAIVER OF SUBROGATION. Each Borrower expressly
waives any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution or any other claim which
such Borrower may now or hereafter have against any Borrower or
other Person directly or contingently liable for the obligations
hereunder, or against or with respect to any Borrower's property
(including, without limitation, any property which is
Collateral), arising from the existence or performance of this
Agreement.
29. NOTICES. Any notice or request hereunder may be
given to Borrowing Agent or Lender at the respective addresses
set forth below or as may hereafter be specified in a notice
designated as a change of address under this paragraph. Any
notice or request hereunder shall be given by registered or
certified mail, return receipt requested, or by overnight mail or
by telecopy (confirmed by mail). Notices and requests shall be,
in the case of those by mail or overnight mail, deemed to have
been given when deposited in the mail or with the overnight mail
carrier, and, in the case of a telecopy, when confirmed.
Notices shall be provided as follows:
If to the Lender: The Bank of New York Commercial Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxx & Hessen
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Borrowing General Bearing Corporation
Agent: 00 Xxxx Xxxxxx
Xxxx Xxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Kurtzman, Haspel & Xxxxx
0 Xxxxxxx Xxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
30. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. LENDER SHALL
HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER APPLICABLE
LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE OF
NEW YORK. EACH BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS
RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY
ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE LITIGATED
IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK OR, AT LENDER'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW
YORK STATE OR ELSEWHERE AS LENDER MAY SELECT AND THAT SUCH COURTS
ARE CONVENIENT FORUMS AND EACH BORROWER SUBMITS TO THE PERSONAL
JURISDICTION OF SUCH COURTS. EACH BORROWER WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON
BORROWER MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO EACH BORROWER AT SUCH BORROWER'S
ADDRESS APPEA ING ON LENDER'S RECORDS, AND SERVICE SO MADE SHALL
BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN
SO MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BETWEEN BORROWERS AND LENDER AND
EACH BORROWER WAIVES THE RIGHT TO ASSERT IN ANY ACTION OR
PROCEEDING INSTITUTED BY LENDER WITH REGARD TO THIS AGREEMENT OR
ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY
HAVE.
31. LIMITATION OF LIABILITY. Each Borrower
acknowledges and understands that in order to assure repayment of
the Obligations hereunder Lender may be required to exercise any
and all of Lender's rights and remedies hereunder and agrees that
neither Lender nor any of Lender's agents shall be liable for
acts taken or omissions made in connection herewith or therewith
except for actual bad faith.
32. ENTIRE UNDERSTANDING. This Agreement and the
Ancillary Agreements contain the entire understanding between
Borrowers and Lender and any promises, representations,
warranties or guarantees not herein contained shall have no force
and effect unless in writing, signed by Borrowers' and Lender's
respective officers. Neither this Agreement, the Ancillary
Agreements, nor any portion or provisions thereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be
charged.
33. MODIFICATION. This Agreement and the Ancillary
Agreements constitute the complete agreement between the parties
with respect to the subject matter hereof and thereof and may not
be modified, altered or amended except by an agreement in writing
signed by the parties hereto and thereto.
34. SEVERABILITY. Wherever possible each provision of
this Agreement or the Ancillary Agreements shall be interpreted
in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement or the Ancillary
Agreements shall be prohibited by or invalid under applicable law
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions thereof.
35. CAPTIONS. All captions are and shall be without
substantive meaning or content of any kind whatsoever.
36. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which taken together shall
constitute one and the same instrument.
37. CONSTRUCTION. The parties acknowledge that each
party and its counsel have reviewed this Agreement and that the
normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year first above written.
GENERAL BEARING CORPORATION
By:_________________________
Name:_______________________
Title:______________________
HYATT RAILWAY PRODUCTS CORP.
By:_________________________
Name:_______________________
Title:______________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:__________________________
Name:________________________
Title:_______________________
[PAGE BREAK]
LIST OF SCHEDULES
Schedule 1(A) Permitted Liens
Schedule 12(f) Plans
Schedule 12(j) Licenses, Patents, Trademarks and Copyrights
Schedule 12(l) Inventory Locations
Schedule 12(m) Permitted Indebtedness
[PAGE BREAK]
Schedule 12(f)
Plans
General Bearing Corporation and Hyatt Railway Products Corp.
maintain the General Bearing Corporation Profit Sharing Trust
which covers certain eligible salaried and nonunion employees.
[PAGE BREAK]
Schedule 12(j)
Licenses, Patents, Trademarks and Copyrights
[PAGE BREAK]
Schedule 12(m)
Permitted Indebtedness
Indebtedness owed by Borrowers to World Machinery Company in
the principal amount of $2,500,000.00
[PAGE BREAK]
AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") is entered into as of
April __, 1994, by and among GENERAL BEARING CORPORATION
("General Bearing"), a Delaware corporation, HYATT RAILWAY
PRODUCTS CORP. ("Hyatt"), a New York corporation, each having its
principal place of business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx
(General Bearing and Hyatt each a "Borrower" and jointly and
severally referred to as "Borrowers") and THE BANK OF NEW YORK
COMMERCIAL CORPORATION having its principal place of business at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993 (as amended, supplemented
or otherwise modified from time to time, the "Loan Agreement")
pursuant to which Lender provided Borrowers with certain
financial accommodations.
Borrowers have requested that Lender amend the Loan
Agreement to (i) temporarily increase the Maximum Loan Amount and
the Inventory Advance Rate (ii) amend the definition of Inventory
Availability and (iii) increase the maximum amount of outstanding
Letters of Credit, and Lender is willing to do so on the terms
and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. The following defined terms in Section 1.2 are hereby
amended in their entirety to provide as follows:
"INVENTORY ADVANCE RATE" means (i) 40% of the amount of
Eligible Inventory consisting of raw materials; PLUS (ii)(a) from
the Closing Date through and including June 30, 1994, 45% of the
amount of Eligible Inventory consisting of finished goods
(b) from July 1, 1994 until the expiration of the Term, 40% of
the amount of Eligible Inventory consisting of finished goods;
PLUS (iii)(a) from the Closing Date through and including
June 30, 1994, 45% of the amount of Eligible Inventory in transit
under Letters of Credit and (b) from July 1, 1994 until the
expiration of the Term, 40% of the amount Eligible Inventory in
transit under Letters of Credit.
"INVENTORY AVAILABILITY" means the amount of Revolving
Credit Advances against Eligible Inventory Lender may from time
to time during the Term make available to Borrowers based upon
the Inventory Advance Rate (calculated on the basis of the lower
of cost or market, on a first-in first-out basis) but which shall
not, in any event exceed at any time outstanding the lesser of
(i) $4,000,000, and (ii) 50% of the then outstanding Loans.
"MAXIMUM LOAN AMOUNT" means (i) from April 14, 1994 through
and including June 30, 1994, $8,000,000 and (ii) at all other
times during the Term, $7,000,000.
"MAXIMUM REVOLVING AMOUNT" means (i) from April 14, 1994
through and including June 30, 1994, $8,000,000 and (ii) at all
other times during the Term, $7,000,000.
2.2. The second full sentence of Section 2(h) of the Loan
Agreement is hereby amended by deleting "$1,000,000" and
inserting "$1,600,000" in its place and stead.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., Xxxxxxx Xxxxxxx,
General Bearing and Hyatt as guarantors and (ii) an amendment fee
in the amount of $10,000 which fee shall be charged to Borrowers'
account.
4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment No. 1.
(d) No Borrower has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
[PAGE BREAK]
8. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which taken
together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, this Amendment No. 1 has been duly
executed as of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
_____________________________
XXXXXXX XXXXXXX
XXXXX INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
AMENDMENT NO. 2
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 2 ("Amendment") is entered into as of
May __, 1994, by and among GENERAL BEARING CORPORATION ("General
Bearing"), a Delaware corporation, HYATT RAILWAY PRODUCTS CORP.
("Hyatt"), a New York corporation, each having its principal
place of business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx (General
Bearing and Hyatt each a "Borrower" and jointly and severally
referred to as "Borrowers") and THE BANK OF NEW YORK COMMERCIAL
CORPORATION having its principal place of business at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by an
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994 (as further amended, supplemented or otherwise modified
from time to time, the "Loan Agreement") pursuant to which Lender
provided Borrowers with certain financial accommodations.
Borrowers have requested that Lender amend the Loan
Agreement to (i) increase the Maximum Loan Amount, (ii) amend the
definition of Inventory Availability, (iii) increase the maximum
amount of outstanding Letters of Credit and (iv) amend certain
financial covenants, and Lender is willing to do so on the terms
and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. The following defined terms in Section 1.2 are hereby
amended in their entirety to provide as follows:
"INVENTORY AVAILABILITY" means the amount of Revolving
Credit Advances against Eligible Inventory Lender may from time
to time during the Term make available to Borrowers based upon
the Inventory Advance Rate (calculated on the basis of the lower
of cost or market, on a first-in first-out basis) but which shall
not, in any event exceed at any time outstanding the lesser of
(i) $5,000,000, and (ii) 50% of the then outstanding Loans.
"MAXIMUM LOAN AMOUNT" means $10,000,000.
"MAXIMUM REVOLVING AMOUNT" means $10,000,000.
2.2. The second full sentence of Section 2(h) of the Loan
Agreement is hereby amended by deleting "$1,600,000" and
inserting "$1,800,000" in its place and stead.
2.3. Subsections (n), (p), (q) and (r) of Section 12 of the
Loan Agreement are hereby amended in their entirety to provide as
follows:
(n) it shall not permit Tangible Net Worth at the end of
each fiscal quarter set forth below to be less than the
amount set opposite such date:
Tangible Net
DATE WORTH
December 31, 1993 $4,165,000
March 31, 1994 4,565,000
June 30, 1994 4,550,000
September 30, 1994 5,125,000
December 31, 1994 6,115,000
(p) it will not make capital expenditures in any fiscal
year which, when aggregated with capital expenditures
for all other Borrowers, would exceed $1,200,000 of
which up to $750,000 may be externally financed on
terms and acceptable to Lender;
(q) it shall not permit the Fixed Charge Coverage at the
end of each fiscal quarter set forth below to be less
than the amount set opposite such date:
DATE FIXED CHARGE COVERAGE
December 31, 1993 1.75:1.00
March 31, 1994 1.75:1.00
June 30, 1994 3.00:1.00
September 30, 1994 1.40:1.00
December 31, 1994 2.50:1.00
(r) it shall not permit the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter
set forth below to be less than the amount set opposite
such date:
DATE RATIO
December 31, 1993 1.10:1.00
March 31, 1994 1.10:1.00
June 30, 1994 1.05:1.00
September 30, 1994 1.00:1.00
December 31, 1994 1.05:1.00
2.4. A new subsection 12(r-1) is hereby inserted after
subsection 12(r) which provides as follows:
(r-1) it shall not permit the ratio of (x) the sum of
cash PLUS cash equivalents PLUS accounts receivable, to
(y) Current Liabilities, at the end of each fiscal
quarter set forth below to be less than the amount set
opposite such date:
DATE QUICK RATIO
June 30, 1994 .35 to 1.0
September 30, 1994 .35 to 1.0
December 31, 1994 .35 to 1.0
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., Xxxxxxx Xxxxxxx,
General Bearing and Hyatt as guarantors and (ii) the first
$10,000 installment of a total amendment fee in the amount of
$30,000 which installment shall be charged to Borrowers' account.
The second and third installments of the amendment fee, each in
the sum of $10,000, shall be due and payable on July 1, 1994 and
August 1, 1994, respectively, and shall be charged to Borrowers'
account.
4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrower has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which taken
together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
_____________________________
XXXXXXX XXXXXXX
XXXXX INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
AMENDMENT NO. 3
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 ("Amendment") is entered into as
of November__, 1994, by and among GENERAL BEARING CORPORATION
("General Bearing"), a Delaware corporation, HYATT RAILWAY
PRODUCTS CORP. ("Hyatt"), a New York corporation, each having its
principal place of business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx
(General Bearing and Hyatt each a "Borrower" and jointly and
severally referred to as "Borrowers") and THE BANK OF NEW YORK
COMMERCIAL CORPORATION having its principal place of business at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994 and (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994 (as further amended, supplemented or
otherwise modified from time to time, the "Loan Agreement")
pursuant to which Lender provided Borrowers with certain
financial accommodations.
Borrowers have requested that Lender amend the Loan
Agreement to (i) increase the Maximum Loan Amount and the
Inventory Advance Rate, (ii) amend the definition of Inventory
Availability, and (iii) amend the definition of Term, and Lender
is willing to do so on the terms and conditions hereafter set
forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. The following defined terms in Section 1.2 are hereby
amended in their entirety to provide as follows:
"INVENTORY ADVANCE RATE" means (i) 50% of the amount of
Eligible Inventory consisting of raw materials; PLUS (ii) 50% of
the amount of Eligible Inventory consisting of finished goods;
PLUS (iii) 50% of the amount of Eligible Inventory in transit
under Letters of Credit.
"INVENTORY AVAILABILITY" means the amount of Revolving
Credit Advances against Eligible Inventory Lender may from time
to time during the Term make available to Borrowers based upon
the Inventory Advance Rate (calculated on the basis of the lower
of cost or market, on a first-in first-out basis) but which shall
not, in any event exceed $8,000,000 at any time outstanding.
"MAXIMUM LOAN AMOUNT" means $15,000,000.
"MAXIMUM REVOLVING AMOUNT" means $15,000,000.
"RECEIVABLES AVAILABILITY" means the amount of Revolving
Credit Advances against Eligible Receivables Lender may from time
to time during the term of this Agreement make available to
Borrowers up to 85% ("Receivables Advance Rate") of the net face
amount of Borrower's Eligible Receivables.
"TERM" means the Closing Date through December 20, 1996
subject to acceleration upon the occurrence of an Event of
Default hereunder or other termination hereunder.
2.2. Section 1.2 is hereby further amended by adding the
following defined term in the appropriate alphabetical order:
"EFFECTIVE DATE" shall mean the date Amendment No. 3 to Loan
and Security Agreement becomes effective.
2.3. Section 2(a)(y) is hereby amended in its entirety to
provide as follows:
(y) an amount equal to the sum of:
(i) Receivables Availability; PLUS
(ii) Inventory Availability; MINUS
(iii) the aggregate amount of outstanding Letters of
Credit; MINUS
(iv) such reserves as Lender may reasonably deem proper
and necessary from time to time.
The sum of 2(a)(y)(i) plus (ii) shall be referred
to as the "Formula Amount".
2.4. Section 2(b) is hereby amended in its entirety to
provide as follows:
(i) Notwithstanding the limitations set forth above,
Lender retains the right to lend Borrowers from
time to time such amounts in excess of such
limitations as Lender may determine in its sole
discretion; and
(ii) Notwithstanding the Inventory Advance Rate set
forth in Section 1.2, Borrowers may elect to have
the Inventory Advance Rate permanently reduced to
45% of the Eligible Inventory consisting of raw
materials, 45% of the Eligible Inventory
consisting of finished goods, and 45% of the
Eligible Inventory in transit under Letters of
Credit at any time during the life of the Loan
Agreement. If Borrowers so elect, the Contract
Rate will be reduced by one quarter of one percent
(0.25%) per annum.
2.5. Section 5(a)(i) is hereby amended in its entirety to
provide as follows:
(i) Except as modified by paragraphs 5 (a) (iii), (vi)
and (viii) below, Borrowers shall pay interest on
the unpaid principal balance of the Revolving
Credit Advances for each day they are outstanding
at the Contract Rate.
2.6. Section 5(a) is hereby amended by inserting the
following provisions at the end thereof:
(vi) Notwithstanding the foregoing, if the Borrowers
elect under Section 2(b)(ii) to have the Inventory
Advance Rate permanently reduced, then the
Contract Rate will be reduced by one quarter of
one percent (0.25%) per annum.
(vii) Notwithstanding the foregoing, if the sales and
net income of Borrowers on a consolidated basis
for any rolling three (3) month period is at least
ninety five percent (95%) of the amounts projected
to be achieved by Borrowers for such rolling three
(3) month period as set forth on the October 1994
projections delivered by Borrowers to Lender and
annexed hereto as SCHEDULE 5(A)(VII) (the "October
Projections") and if the amount of Borrowers'
inventory for any rolling three (3) month period
does not vary from the amount projected by
Borrowers in the October Projections by more than
five percent (5%), then the Contract Rate will be
reduced by one quarter of one percent (0.25%) per
annum.
2.7. Section 5(b) is hereby amended by inserting the
following provision at the end thereof:
(v) RESTRUCTURING FEE. Borrowers shall pay to Lender a fee
in an amount equal to $50,000, of which $20,000 is
payable on the Effective Date, and $30,000 is payable
in two (2) consecutive equal monthly installments of
$15,000 each the first of which shall be paid thirty
(30) days after the Effective Date. Payments of this
fee may be charged to Borrowers' account.
2.8. The proviso appearing at the end of Section 17 is
hereby amended in its entirety to provide as follows:
PROVIDED, that if Borrowers voluntarily prepay the
Loans in full prior to the expiration of the Term, Borrowers at
the time of prepayment shall pay to Lender an early termination
fee in an amount equal to $300,000 if the Loans are prepaid in
full prior to December 20, 1995, or $150,000 if the Loans are
prepaid in full on or after December 21, 1995 and prior to the
end of the Term.
2.9. Subsections (n), (q) and (r) of Section 12 are hereby
amended in their entirety to provide as follows:
(n) it shall not permit Tangible Net Worth at the end of
each fiscal quarter set forth below to be less than the amount
set forth opposite such date:
DATE TANGIBLE NET WORTH
December 31, 1994 $5,315,000
March 31, 1995 5,695,000
June 30, 1995 5,745,000
September 30, 1995 6,275,000
December 31, 1995 6,840,000
and thereafter
(q) it shall not permit the Fixed Charge Coverage at the
end of each fiscal quarter set forth below to be less than the
amount set opposite such date:
DATE FIXED CHARGE COVERAGE
December 31, 1994 1.80 to 1.00
March 31, 1995 0.90 to 1.00
June 30, 1995 1.00 to 1.00
September 30, 1995 2.80 to 1.00
December 31, 1995 3.90 to 1.00
and thereafter
(r) it shall not permit the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter set forth
below to be less than the amount set forth opposite such date:
DATE RATIO
December 31, 1994 1.10 to 1.00
March 31, 1995 1.10 to 1.00
June 30, 1995 1.10 to 1.00
September 30, 1995 1.10 to 1.00
December 31, 1995 1.10 to 1.00
and thereafter
Lender agrees to consider adjusting the covenants set forth above
for each of Tangible Net Worth, Fixed Charge Coverage and ratio
of Current Assets to Current Liabilities for the fiscal quarters
ending March 31, 1996, June 30, 1996 and September 30, 1996.
Borrower shall provide Lender with fiscal projections for such
fiscal periods no later than November 15, 1995 to enable Lender
to make such determination. However, nothing contained herein
shall obligate Lender to amend any of the foregoing covenants.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., General Bearing
and Hyatt as guarantors, (ii) four (4) copies of a guaranty
executed by Xxxxx Xxxxxxx in form and substance satisfactory to
Lender, and (iii) the first $20,000 installment of a
total Restructuring Fee in the amount of $50,000 (which
installment shall be charged to Borrowers' account).
4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrowers has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which taken
together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
AMENDMENT NO. 4
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 ("Amendment") is entered into as
of June __, 1995, by and among GENERAL BEARING CORPORATION
("General Bearing"), a Delaware corporation, HYATT RAILWAY
PRODUCTS CORP. ("Hyatt"), a New York corporation, each having its
principal place of business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx
(General Bearing and Hyatt each a "Borrower" and jointly and
severally referred to as "Borrowers") and THE BANK OF NEW YORK
COMMERCIAL CORPORATION having its principal place of business at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994, (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994 and (iii) Amendment No. 3 to Loan and
Security Agreement dated as of November 14, 1994 (as further
amended, supplemented or otherwise modified from time to time,
the "Loan Agreement") pursuant to which Lender provided Borrowers
with certain financial accommodations.
Borrowers have requested that Lender make a Term Loan to
them in the principal amount of $1,560,000, and Lender is willing
to do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. The following defined terms in Section 1.2 are hereby
amended in their entirety to provide as follows:
"EFFECTIVE DATE" shall mean the date Amendment No. 4 to the
Loan and Security Agreement becomes effective.
"LOANS" means the Revolving Credit Advances, the Term
Loan and all other extensions of credit hereunder (including
Letters of Credit).
"MAXIMUM REVOLVING AMOUNT" means $15,000,000 less the
outstanding principal amount of the Term Loan.
"TERM" means the Closing Date through the later of
(x) December 20, 1996, or (y) the third anniversary of the
advancing of the Term Loan.
2.2. Section 1.2 is hereby further amended by adding the
following defined term in the appropriate alphabetical order:
"TERM LOAN" shall mean the Loans made pursuant to Section
2(o) hereof.
"TERM LOAN RATE" shall mean an interest rate per annum equal
to the (i) Alternate Base Rate PLUS (ii) two percent (2.00%).
"TERM NOTE" shall mean the promissory note described in
Section 2(o).
2.3. A new Section 2(o) is hereby inserted in the Loan
Agreement to provide as follows:
(o) TERM LOAN. Subject to the terms and conditions of
this Agreement, Lender will make a Term Loan to Borrowers in
the sum of $1,560,000. The Term Loan shall be advanced on
the Effective Date and shall be, with respect to principal,
payable as follows, subject to acceleration upon the
occurrence of an Event of Default under this Agreement or
termination of this Agreement: thirty-six consecutive
monthly installments, the first thirty-five (35) of which
each shall be in the amount of $18,570.00 commencing on July
1, 1995 and payable on the first day of each month
thereafter with the thirty-sixth (36th) and final payment in
an amount equal to the unpaid principal amount of the Term
Loan plus all accrued interest payable on the last day of
the Term. The Term Loan shall be evidenced by and subject
to the terms and conditions set forth in the secured
promissory note ("Term Note") in substantially the form
attached hereto as EXHIBIT 2(O). The Term Loan may be
prepaid, in whole or in part, at the option of Borrowers but
only (i) with the proceeds of Equipment and of General
Intangibles relating to Equipment and/or (ii) except as
specifically provided in the foregoing subsection (ii), from
a source other than the proceeds of Collateral. All
prepayments shall be applied to installments of the Term
Loan in the inverse order of the maturities thereof.
2.4. Section 5(a)(i) is hereby amended in its entirety to
provide as follows:
(i) Except as modified by paragraphs 5 (a) (iii), (vi) and
(vii) below, Borrowers shall pay interest on the (X)
unpaid principal balance of the Revolving Credit
Advances for each day they are outstanding at the
Contract Rate and (Y) outstanding principal amount of
the Term Loan at the Term Loan Rate.
2.5. Section 5(a)(vii) is hereby amended by adding the
following sentence at the end thereof:
"Only one reduction to the Contract Rate pursuant to this
subsection (vii) shall occur while this Agreement is in
effect."
2.6. Section 5(b)(v) is hereby amended in its entirety to
provide as follows:
(v) RESTRUCTURING FEE. Borrowers shall pay to Lender on the
Effective Date a fee in an amount equal to $18,000
which fee may be charged to Borrowers' account.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., General Bearing
and Hyatt as guarantors, (ii) four (4) copies of a limited
guaranty executed by Xxxxx Xxxxxxx in form and substance
satisfactory to Lender and (iii) the Restructuring Fee in an
amount equal to $18,000 (which fee shall be charged to Borrowers'
account).
4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrowers has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. NOTICE OF MOVE. Borrowers shall give Lender not less
than thirty (30) days' prior written notice of the date they will
move out of the premises in Blauvelt, New York to West Nyack, New
York, and Borrowers shall execute and deliver such UCC-3
financing statements amending Borrowers' mailing address as
Lender and its counsel deem necessary.
6. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
7. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
8. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
9. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall
constitute one and the same agreement.
[PAGE BREAK]
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
AMENDMENT NO. 5
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 ("Amendment") is entered into as
of March 1, 1996, by and among GENERAL BEARING CORPORATION
("General Bearing"), a Delaware corporation, HYATT RAILWAY
PRODUCTS CORP. ("Hyatt"), a New York corporation, each having its
principal place of business at 000 Xxxxx 000, Xxxxxxxx, Xxx Xxxx
(General Bearing and Hyatt each a "Borrower" and jointly and
severally referred to as "Borrowers") and THE BANK OF NEW YORK
COMMERCIAL CORPORATION having its principal place of business at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994, (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994, (iii) Amendment No. 3 to Loan and
Security Agreement dated as of November 14, 1994 and (iv)
Amendment No. 4 to Loan and Security Agreement dated as of June
19, 1995 (as may be further amended, supplemented or otherwise
modified from time to time, the "Loan Agreement") pursuant to
which Lender provided Borrowers with certain financial
accommodations.
Borrowers have requested that Lender provide an overadvance
facility for a ten (10) day period commencing on the Effective
Date (as defined below), and Lender is willing to do so on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. Paragraph 1.2 of the Loan Agreement is hereby amended
as follows:
(a) the following defined terms are hereby inserted in
appropriate alphabetical order:
"OVERADVANCE GUARANTY" shall mean the guaranty executed by
Xxxxx Xxxxxxx guaranteeing to Lender the amount of $300,000.
"OVERADVANCE AMOUNT" shall mean for the period commencing on
the Effective Date through March 14, 1996, $300,000 and
thereafter, $0.
(b) the following defined terms are hereby amended in their
entirety:
"EFFECTIVE DATE" shall mean the date on which Amendment No.
5 to the Loan and Security Agreement becomes effective.
"LOANS" means the Revolving Credit Advances, the Term
Loan and all other extensions of credit hereunder (including
Letters of Credit and the Overadvance Amount).
2.2. Section 2(a)(y) is hereby amended in its entirety to
provide as follows:
(y) an amount equal to the sum of:
(i) Receivables Availability; PLUS
(ii) Inventory Availability; PLUS
(iii) the Overadvance Amount; MINUS"
(iv) the aggregate amount of outstanding Letters of
Credit; MINUS
(v) such reserves as Lender may reasonably deem proper
and necessary from time to time.
The sum of 2(a)(y)(i) plus (ii) plus (iii) plus
(v) shall be referred to as the "Formula Amount".
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., General Bearing
and Hyatt as guarantors, (ii) four (4) copies of the Overadvance
Guaranty executed by Xxxxx Xxxxxxx in form and substance
satisfactory to Lender and (iii) an overadvance fee in an amount
equal to $3,000 (which fee shall be charged to Borrowers'
account).
4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrowers has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall
constitute one and the same agreement. Any signature delivered
by a party by facsimile transmission shall be deemed to be an
original signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
WAIVER AND AMENDMENT NO. 6
TO
LOAN AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 6 ("Amendment") is
entered into as of March __, 1996, by and among GENERAL BEARING
CORPORATION ("General Bearing"), a Delaware corporation, HYATT
RAILWAY PRODUCTS CORP. ("Hyatt"), a New York corporation, each
having its principal place of business at 00 Xxxx Xxxxxx, Xxxx
Xxxxx, Xxx Xxxx (General Bearing and Hyatt each a "Borrower" and
jointly and severally referred to as "Borrowers") and THE BANK OF
NEW YORK COMMERCIAL CORPORATION having its principal place of
business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Lender").
BACKGROUND
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994, (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994, (iii) Amendment No. 3 to Loan and
Security Agreement dated as of November 14, 1994, (iv) Amendment
No. 4 to Loan and Security Agreement dated as of June 19, 1995
and (v) Amendment No. 5 to Loan and Security Agreement dated as
of March 1, 1996 (as may be further amended, supplemented or
otherwise modified from time to time, the "Loan Agreement")
pursuant to which Lender provided Borrowers with certain
financial accommodations.
Borrowers have requested that Lender provide an overadvance
facility for a certain period of time commencing on the Effective
Date (as defined below), and Lender is willing to do so on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. All capitalized terms not otherwise
defined herein shall have the meanings given to them in the Loan
Agreement.
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction
of the conditions precedent set forth in Section 4 below, the
Loan Agreement is hereby amended as follows:
2.1. Paragraph 1.2 of the Loan Agreement is hereby amended
as follows:
(a) the following defined terms are hereby inserted in
appropriate alphabetical order:
"AMENDMENT TO OVERADVANCE GUARANTY" shall mean the Amendment
to the Overadvance Guaranty executed by Xxxxx Xxxxxxx increasing
the amount guaranteed under the Overadvance Guaranty to
$1,700,000.
"CD PLEDGE" shall mean the Collateral Deposit Letter
executed by World pledging to Lender certificate of deposit
number ____ issued by The Bank of New York in the amount of
$250,000.00.
"MORTGAGE" shall mean the Mortgage and Security Agreement
executed by Realty granting Lender a first priority lien on the
Real Property in form and substance satisfactory to Lender.
"REAL PROPERTY" shall mean all of the right, title and
interest of Realty in and to the premises located at 000 Xxxxx
00, Xxxx Xxxxx, Xxx Xxxx.
"REALTY" shall mean Gussack Realty Company, a ____
corporation.
"WORLD" shall mean World Machinery Company, a _______
corporation.
(b) the following defined terms are hereby amended in their
entirety:
"CONTRACT RATE" means an interest rate per annum equal to
the (i) Alternate Base Rate PLUS (ii) two and one-half percent
(2.50%), subject to adjustment pursuant to Section 5(a) hereof.
"EFFECTIVE DATE" shall mean the date on which Waiver and
Amendment No. 6 to the Loan and Security Agreement becomes
effective.
"OVERADVANCE AMOUNT" shall mean for the period commencing on
(i) the Effective Date through April 30, 1996, $1,700,000, (ii)
May 1, 1996 through May 31, 1996, $1,150,000, (iii) June 1, 1996
through June 30, 1996, $1,050,000, (iv) July 1, 1996 through
August 31, 1996, $700,000, (v) September 1, 1996 through
September 30, 1996, $650,000, (vi) October 1, 1996 through
October 31, 1996, $450,000, (vii) November 1, 1996 through
November 30, 1996, $300,000, (viii) December 1, 1996 through
December 31, 1996, $150,000 and (ix) at all times thereafter, $0.
2.2. Section 5(a) is hereby amended by inserting the
following provision at the end thereof:
"(viii) Notwithstanding the foregoing, at such time
that the Overadvance Amount is equal to the (i) dollar-for-
dollar amount of the certificate of deposit referenced in
the CD Pledge PLUS (ii) seventy percent (70%) of the fair
market value of the Real Property (the events set forth in
(i) and (ii) hereof shall be referred to as the "Reduction
Events"), then, so long as the Reduction Events are
continuous for the balance of the month in which the
Reduction Events occur, the Contract Rate will be reduced by
three-quarters of one percent (.75%) effective as of the
first day of the month following the month in which the
Reduction Events occur; PROVIDED, HOWEVER, if at any time
following a reduction in the Contract Rate the Reduction
Events are not satisfied, the Contract Rate will increase by
three-quarters of one percent (.75%) effective immediately."
2.3. Section 12 of the Loan Agreement is hereby amended as
follows:
(i) Subsections (n), (q) and (r) of Section 12 are hereby
amended in their entirety to provide as follows:
"(n) it shall not permit Tangible Net Worth at the end
of each fiscal quarter set forth below to be less than the
amount set forth opposite such date:
DATE TANGIBLE NET WORTH
March 31, 1996 $2,365,000
June 30, 1996 $2,576,000
September 30, 1996 $2,835,000
December 31, 1996 $3,096,000
and thereafter
(q) it shall not permit the Fixed Charge Coverage at
the end of each fiscal quarter set forth below to be less
than the amount set opposite such date:
DATE FIXED CHARGE COVERAGE
March 31, 1996 1.20 to 1.00
June 30, 1996 1.20 to 1.00
September 30, 1996 1.30 to 1.00
December 31, 1996 1.30 to 1.00
and thereafter
(r) it shall not permit the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter set
forth below to be less than the amount set forth opposite
such date:
DATE RATIO
March 31, 1996 1.00 to 1.00
June 30, 1996 1.00 to 1.00
September 30, 1996 .90 to 1.00
December 31, 1996 .90 to 1.00
and thereafter
Lender agrees to consider adjusting the covenants set forth
above for each of Tangible Net Worth, Fixed Charge Coverage
and ratio of Current assets to Current Liabilities for the
fiscal quarters ending March 31, 1997, June 30, 1997,
September 30, 1997, December 31, 1997 (collectively, the
"'97 Periods"), March 31, 1998 and June 30, 1998
(collectively, the "'98 Periods"). Borrower shall provide
Lender with fiscal projections for the (i) '97 Periods no
later than November 15, 1996 and (ii) '98 Periods no later
than November 15, 1997, to enable Lender to make such
determinations. However, nothing contained herein shall
obligate Lender to amend any of the foregoing covenants."
(ii) the "and" at the end of subsection (s) is hereby
deleted in its entirety;
(iii) the period at the end of subsection (t) is deleted and
"; and" inserted in its place and stead; and
(iv) a new subsection (u) is hereby added which provides as
follows:
"(u) it will, within forty-five (45) days of the
Effective Date, deliver to Lender (i) four (4) copies of the
fully-executed Mortgage, (ii) a survey for the Real
Property, (iii) an appraisal on the Real Property in form
and substance satisfactory to Lender and (iv) a fully paid
mortgagee title insurance policy (or binding commitment to
issue a title insurance policy, marked to Lender's
satisfaction to evidence the form of such policy to be
delivered with respect to the Mortgage), in standard ALTA
form, issued by a title insurance company satisfactory to
Lender, in an amount equal to not less than the fair market
value of the Real Property subject to the Mortgage, insuring
the Mortgage to create a valid lien on the Real Property
with no exceptions which Lender shall not have approved in
writing and no survey exceptions and it will pay all filing
fees and recording taxes related to the Mortgage; and"
3. WAIVER. Subject to satisfaction of the conditions
precedent set forth in Section 4 below, Lender hereby waives the
Events of Default which have occurred as a result of Borrower's
non-compliance with the following provisions of the Loan
Agreement:
(a) Section 12(n), to the extent such Event of Default arose
solely as a result of Borrower's failure to comply with the
Tangible Net Worth requirement as of December 31, 1995.
(b) Section 12(q), to the extent such Event of Default arose
solely as a result of Borrower's failure to comply with the Fixed
Charge Coverage requirement as of December 31, 1995.
4. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Fisco Industries, Ltd., General Bearing
and Hyatt as guarantors, (ii) four (4) copies of the Amendment to
Overadvance Guaranty executed by Xxxxx Xxxxxxx in form and
substance satisfactory to Lender, (iii) four (4) copies of the
executed CD Pledge and all related documents including, without
limitation, a Notice of Assignment from World to The Bank of New
York and a Confirmation of Assignment from The Bank of New York
to Lender, all in form and substance satisfactory to Lender,
(iv) an overadvance fee in an amount equal to $8,500 (which fee
shall be charged to Borrowers' account), and (v) a waiver fee in
the amount of $5,000 (which fee shall be charged to Borrower's
account).
5. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrowers has any defense, counterclaim or
offset with respect to the Loan Agreement.
6. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of SECTION 2 hereof, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided in SECTION 3
hereof, operate as a waiver of any right, power or remedy of
Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
7. GOVERNING LAW. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
8. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
9. COUNTERPARTS. This Amendment may be executed by the
parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall
constitute one and the same agreement. Any signature delivered
by a party by facsimile transmission shall be deemed to be an
original signature hereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
[PAGE BREAK]
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
[PAGE BREAK]
WAIVER AND AMENDMENT NO. 7
TO
LOAN AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 7 ("Amendment") is
entered into as of September 25, 1996, by and among GENERAL
BEARING CORPORATION ("General Bearing"), a Delaware corporation,
HYATT RAILWAY PRODUCTS CORP. ("Hyatt"), a New York corporation,
each having its principal place of business at 00 Xxxx Xxxxxx,
Xxxx Xxxxx, Xxx Xxxx (General Bearing and Hyatt each a "Borrower"
and jointly and severally referred to as "Borrowers") and THE
BANK OF NEW YORK COMMERCIAL CORPORATION having its principal
place of business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Lender").
BACKGROUND
----------
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994, (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994, (iii) Amendment No. 3 to Loan and
Security Agreement dated as of November 14, 1994, (iv) Amendment
No. 4 to Loan and Security Agreement dated as of June 19, 1995,
(v) Amendment No. 5 to Loan and Security Agreement dated as of
March 1, 1996 and (vi) Waiver and Amendment No. 6 to Loan and
Security Agreement dated as of March 22, 1996 (as may be further
amended, supplemented or otherwise modified from time to time,
the "Loan Agreement") pursuant to which Lender provided Borrowers
with certain financial accommodations.
Based upon an inventory audit, Lender has increased the slow
moving inventory reserve by $979,000 resulting in a loss of
availability of $480,000. Borrowers have requested that Lender
forbear from a scheduled reduction in the Overadvance Amount and
to increase the Overadvance Amount to $1,130,000 for a certain
period of time commencing on the Effective Date (as defined
below), and Lender is willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not otherwise
-----------
defined herein shall have the meanings given to them in the Loan
Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction
---------------------------
of the conditions precedent set forth in Section 3 below, the
Loan Agreement is hereby amended as follows:
2.1. Paragraph 1.2 of the Loan Agreement is hereby amended
by amending certain defined terms in their entirety as follows:
"Effective Date" shall mean the date on which Waiver and
--------------
Amendment No. 7 to the Loan and Security Agreement becomes
effective.
"Overadvance Amount" shall mean for the period commencing on
------------------
(i) March 22, 1996 through April 30, 1996, $1,700,000, (ii) May
1, 1996 through May 31, 1996, $1,150,000, (iii) June 1, 1996
through June 30, 1996, $1,050,000, (iv) July 1, 1996 through
August 31, 1996, $700,000, (v) September 1, 1996 through
September 24, 1996, $650,000, (vi) September 25, 1996 through
October 31, 1996, $1,130,000, (vii) November 1, 1996 through
November 30, 1996, $847,500, (viii) December 1, 1996 through
December 31, 1996, $565,000, (ix) January 1, 1997 through January
31, 1997, $282,500 and (x) at all times thereafter, $0.
2.2. Paragraph 2(a) is hereby amended by deleting "plus (v)"
in the last line thereof.
3. Conditions of Effectiveness. This Amendment shall
---------------------------
become effective when Lender shall have received (i) four (4)
copies of this Amendment executed by each Borrower and consented
and agreed to by each of Xxxxx Xxxxxxx, Xxxxx Industries, Ltd.,
General Bearing and Hyatt as guarantors and by World Machinery
Company, as pledgor, and (ii) an amendment to Collateral Deposit
Letter executed by World Machinery Company in the form of Exhibit
A annexed hereto and made a part hereof.
4. Representations and Warranties. Each Borrower hereby
------------------------------
represents and warrants as follows:
(a) This Amendment and the Loan Agreement, as amended
hereby, constitute legal, valid and binding obligations of
each Borrower and are enforceable against each Borrower in
accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each
Borrower hereby reaffirms all covenants, representations and
warranties made in the Loan Agreement to the extent the same
are not amended hereby and agree that all such covenants,
representations and warranties shall be deemed to have been
remade as of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this
Amendment.
(d) No Borrower has any defense, counterclaim or
offset with respect to the Loan Agreement.
5. Effect on the Loan Agreement.
----------------------------
(a) Upon the effectiveness of Section 2 hereof, each
---------
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided in Section 3
---------
hereof, operate as a waiver of any right, power or remedy of
Lender, nor constitute a waiver of any provision of the Loan
Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
6. Governing Law. This Amendment shall be binding upon
-------------
and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
7. Headings. Section headings in this Amendment are
--------
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by the
------------
parties hereto in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall
constitute one and the same agreement. Any signature delivered
by a party by facsimile transmission shall be deemed to be an
original signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first written above.
GENERAL BEARING CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
SIGNATURES CONTINUED ON NEXT PAGE
[PAGE BREAK]
HYATT RAILWAY PRODUCTS CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
________________________________
Xxxxx Xxxxxxx, Limited Guarantor
WORLD MACHINERY COMPANY, as Pledgor
By:______________________________
Its______________________________
[PAGE BREAK]
EXHIBIT A
September __, 1996
The Bank of New York Commercial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
Reference is made to the Collateral Deposit Letter dated
March 22, 1996 from the undersigned to you (the "Agreement").
Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Agreement.
The last sentence of the Agreement is hereby amended in its
entirety to provide as follows:
"This Agreement shall remain in full force and effect until
(x) the value attributed to the Overadvance Amount (as such
term is defined in the Loan Agreement) is $0, and (y) the
amount of Revolving Credit Advances does not exceed the
amount permitted to be outstanding pursuant to paragraph
2(a) of the Loan Agreement, but in no event shall this
Agreement be terminated prior to January 31, 1997.
In all other respects, the Agreement is unamended and
remains in full force and effect and is hereby ratified and
confirmed.
Very truly yours,
WORLD MACHINERY COMPANY
By:___________________________
Its:__________________________
ACCEPTED:
THE BANK OF NEW YORK
COMMERCIAL CORPORATION
By:___________________________
Its:__________________________
[PAGE BREAK]
AMENDMENT NO. 8
TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 8 ("Amendment") is entered into as
of October 31, 1996, by and among GENERAL BEARING CORPORATION
("General Bearing"), a Delaware corporation, HYATT RAILWAY
PRODUCTS CORP. ("Hyatt"), a New York corporation, each having its
principal place of business at 00 Xxxx Xxxxxx, Xxxx Xxxxx, Xxx
Xxxx (General Bearing and Hyatt each a "Borrower" and jointly and
severally referred to as "Borrowers") and THE BANK OF NEW YORK
COMMERCIAL CORPORATION having its principal place of business at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Lender").
BACKGROUND
----------
Borrowers and Lender are parties to a Loan and Security
Agreement dated as of December 20, 1993, as amended by (i)
Amendment No. 1 to Loan and Security Agreement dated as of April
__, 1994, (ii) Amendment No. 2 to Loan and Security Agreement
dated as of May 31, 1994, (iii) Amendment No. 3 to Loan and
Security Agreement dated as of November 14, 1994, (iv) Amendment
No. 4 to Loan and Security Agreement dated as of June 19, 1995,
(v) Amendment No. 5 to Loan and Security Agreement dated as of
March 1, 1996, (vi) Waiver and Amendment No. 6 to Loan and
Security Agreement dated as of March 22, 1996 and (vii) Waiver
and Amendment No. 7 to Loan and Security Agreement dated as of
September 25, 1996 (as may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender provided Borrowers with
certain financial accommodations.
Borrowers have requested that Lender forbear from a
scheduled reduction in the Overadvance Amount and to increase the
Overadvance Amount to $1,500,000 for a certain period of time
commencing on the Effective Date (as defined below), and Lender
is willing to do so on the terms and conditions hereafter set
forth.
NOW, THEREFORE, in consideration of any loan or advance
or grant of credit heretofore or hereafter made to or for the
account of Borrowers by Lender, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
-----------
All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement.
---------------------------
Subject to satisfaction of the conditions
precedent set forth in Section 4 below, the Loan Agreement is
hereby amended as follows:
2.1. Paragraph 1.2 of the Loan Agreement is hereby
amended as follows:
(a) the following defined term is hereby inserted in
appropriate alphabetical order:
"Amendment No. 8 Effective Date" shall mean the date on
------------------------------
which Amendment No. 8 to the Loan and Security Agreement becomes
effective.
(b) the following defined term is hereby amended in
its entirety:
"Overadvance Amount" shall mean for the period
------------------
commencing on (i) the Amendment No. 8 Effective Date through
November 30, 1996, $1,500,000 (ii) December 1, 1996 through
December 31, 1996, $1,350,000, (iii) January 1, 1997 through
January 31, 1997, $1,200,000, (iv) February 1, 1997 through
February 28, 1997, $1,050,000 (v) March 1, 1997 through March 31,
1997, $1,000,000, (vi) April 1, 1997 through April 30, 1997,
$850,000, (vii) May 1, 1997 through May 31, 1997, $500,000,
(viii) June 1, 1997 through June 30, 1997, $200,000 and (ix) at
all times thereafter, $0 provided, that, the "Overadvance Amount"
-------- ----
shall be $0 at all times after the CD Pledge, as amended, has
been terminated.
2.2. The last line of Paragraph 2(a) is hereby amended
in its entirety as follows:
The sum of 2(a)(y)(i) plus (ii) plus (iii) minus (v)
shall be referred to as the "Formula Amount".
3. Section 5(b)(v) is hereby amended in its entirety
to provide as follows:
(v) Restructuring Fee. Borrowers shall pay to Lender
-----------------
on the Amendment No. 8 Effective Date a fee in an
amount equal to $7,500 (the "Restructuring Fee")
which may be charged to Borrowers' account.
4. Conditions of Effectiveness.
---------------------------
This Amendment shall become effective when Lender
shall have received (i) four (4) copies of this Amendment
executed by each Borrower and consented and agreed to by each of
Xxxxx Xxxxxxx, Xxxxx Industries, Ltd., General Bearing and Hyatt
as guarantors and by World Machinery Company, as pledgor, (ii)
the Restructuring Fee and (iii) an amendment to Collateral
Deposit Letter executed by World Machinery Company in the form of
Exhibit A annexed hereto and made a part hereof.
5. Representations and Warranties.
------------------------------
Each Borrower hereby represents and warrants as
follows:
(a) This Amendment and the Loan Agreement, as
amended hereby, constitute legal, valid and binding
obligations of each Borrower and are enforceable
against each Borrower in accordance with their
respective terms.
(b) Upon the effectiveness of this Amendment,
each Borrower hereby reaffirms all covenants,
representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby
and agree that all such covenants, representations and
warranties shall be deemed to have been remade as of
the effective date of this Amendment.
(c) No Event of Default or Default has occurred
and is continuing or would exist after giving effect to
this Amendment.
(d) No Borrower has any defense, counterclaim or
offset with respect to the Loan Agreement.
6. Effect on the Loan Agreement.
----------------------------
(a) Upon the effectiveness of Section 2 hereof, each
---------
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a
reference to the Loan Agreement as amended hereby.
(b) Except as specifically amended herein, the Loan
Agreement, and all other documents, instruments and agreements
executed and/or delivered in connection therewith, shall remain
in full force and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of Lender, nor constitute a waiver of any provision of the
Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.
7. Governing Law. This Amendment shall be binding
-------------
upon and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
8. Headings. Section headings in this Amendment are
--------
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
9. Counterparts. This Amendment may be executed by
------------
the parties hereto in one or more counterparts, each of which
shall be deemed an original and all of which taken together shall
constitute one and the same agreement. Any signature delivered by
a party by facsimile transmission shall be deemed to be an
original signature hereto.
IN WITNESS WHEREOF, this Amendment has been duly
executed as of the day and year first written above.
GENERAL BEARING CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
HYATT RAILWAY PRODUCTS CORP.
By: __________________________
Name: ________________________
Title: _______________________
THE BANK OF NEW YORK
COMMERCIAL CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
CONSENTED AND AGREED TO:
FISCO INDUSTRIES, LTD.
By:___________________________
Name:_________________________
Title:________________________
GENERAL BEARING CORPORATION
By:___________________________
Name:_________________________
Title:________________________
HYATT RAILWAY PRODUCTS CORP.
By:___________________________
Name:_________________________
Title:________________________
________________________________
Xxxxx Xxxxxxx, Limited Guarantor
SIGNATURES CONTINUED ON NEXT PAGE
[PAGE BREAK]
WORLD MACHINERY COMPANY, as Pledgor
By:___________________________
Its___________________________
[PAGE BREAK]
EXHIBIT A
October 31, 0000
Xxx Xxxx xx Xxx Xxxx Commercial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
Reference is made to the Collateral Deposit Letter
dated March 22, 1996 as amended by the Letter Agreement dated
September 25, 1996 from the undersigned to you (the "Agreement").
Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Agreement.
The last sentence of the Agreement is hereby amended in
its entirety to provide as follows:
"This Agreement shall remain in full force and effect
until (x) the value attributed to the Overadvance
Amount (as such term is defined in the Loan Agreement)
is $0 and the Borrowers notify Lender in writing that
the Overadvance Amount shall remain at $0 at all times
thereafter, and (y) the amount of Revolving Credit
Advances does not exceed the amount permitted to be
outstanding pursuant to paragraph 2(a) of the Loan
Agreement.
In all other respects, the Agreement is unamended and
remains in full force and effect and is hereby ratified and
confirmed.
Very truly yours,
WORLD MACHINERY COMPANY
By:___________________________
Its:__________________________
ACCEPTED:
THE BANK OF NEW YORK
COMMERCIAL CORPORATION
By:___________________________
Its:__________________________
