Exhibit 10.1
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of
November 5, 1997, is entered into by and between THE GSI GROUP, INC., a Delaware
corporation (the "Borrower"), and LASALLE NATIONAL BANK (the "Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank are party to a Loan and Security
Agreement dated April 26, 1995 (as amended and restated as of June 6, 1996, and
as further amended prior to the date hereof, the "Original Loan Agreement"); and
WHEREAS, the Borrower and the Bank desire to amend and restate the Original
Loan Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby amend and
restate the Original Loan Agreement to provide as follows:
ARTICLE I. DEFINITIONS.
1.01 The following words and phrases, as used herein, shall have the
following respective meanings:
"Accounts" shall mean any and all accounts, contract rights, notes, drafts,
chattel paper, instruments, documents and general intangibles consisting of
rights to payment (all as defined in the UCC).
"Account Debtor" shall mean any party who is obligated on any Account.
"Acquisition" shall mean any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other business combination with another Person (other than
a Person that is a Subsidiary).
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant to
the following formula:
Adjusted LIBOR Rate = LIBOR
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100% - Reserve Percentage
"Affiliate" shall mean any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, Stock having
ordinary voting power to elect a majority of the board of directors
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation have or might have voting power by reason of the happening of
any contingency) of the Borrower, or which controls, is controlled by or is
under common control with the Borrower or any stockholders of the Borrower. For
purposes hereof, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"Applicable Margin" shall mean with respect to Euro-Dollar Loans and the
Facility Fee, the rate per annum determined as set forth below:
Applicable Margin Applicable Margin
Funded Debt to EBITDA Ratio for Euro-Dollar Loans for Facility Fee
--------------------------- --------------------- -------------------
Greater than And Less
or equal to than
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4.00 to 1 1.45% .30%
3.50 to 1 3.99 to 1 1.25% .25%
3.00 to 1 3.49 to 1 1.00% .25%
2.50 to 1 2.99 to 1 0.75% .25%
2.49 to 1 0.55% .20%
provided that for the period from November 5, 1997 through the date the Bank
receives the Borrower's compliance certificate for the fiscal quarter ending
December 31, 1997, the Applicable Margin for Euro-Dollar Loans shall be 1.25%
and the Applicable Margin for the Facility Fee shall be .25%. Any change in the
Applicable Margin for Euro-Dollar Loans and the Facility Fee due to a change in
the Borrower's Debt to EBITDA Ratio shall take place upon receipt by the Bank of
the compliance certificate indicating such change in the Debt to EBITDA Ratio.
For purposes of this definition (a) Debt shall be measured as at the end of the
most recent fiscal quarter of the Borrower and (b) EBITDA shall be measured as
at the end of the most recent fiscal quarter of the Borrower for the four-
fiscal-quarter period then ended.
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"Authorized Borrower Representative" shall mean any officer of Borrower
designated as such by resolution of the Board of Directors of the Borrower from
time to time, a certified copy of which resolution shall be delivered to the
Bank.
"Bank" shall mean LaSalle National Bank, a national banking association.
"Borrower" shall mean The GSI Group, Inc., a Delaware corporation.
"Business Day" shall mean any day, other than a Saturday or Sunday, on
which commercial banks are open for domestic business in Chicago, Illinois.
"Capital Expenditures" shall mean, for the period of four (4) consecutive
fiscal quarters most recently ended on or prior to the date of determination,
Borrower's capital expenditures (including capital lease expense), determined in
accordance with GAAP.
"Closing" shall have the meaning specified in Section 3.01.
"Collateral" shall have the meaning specified in Section 4.01.
"Debt" shall mean, with respect to the subject Person, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or indirect, or joint or several, including:
(A) All Obligations of such Person;
(B) All indebtedness in effect guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(C) All indebtedness in effect guaranteed, directly or indirectly through
agreements, contingent or otherwise: (1) to purchase such indebtedness, or (2)
to purchase, sell or lease (as lessee or lessor) property, products, materials
or supplies or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to assure the owner
of the indebtedness against loss, or (3) to supply funds to or in any other
manner invest in any Person;
(D) All indebtedness secured (or for which the holder of such indebtedness
has a right, contingent or otherwise, to be secured) by any mortgage, trust
deed, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(E) All indebtedness incurred as the lessee of goods or services under
leases that, in accordance with GAAP, are or should be reflected on the lessee's
balance sheet as a capital lease.
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"DMC" shall mean Xxxxx Manufacturing Co., an Iowa corporation whose
headquarters is located in Mason City, Iowa.
"DMC Acquisition Agreement" shall mean the Stock Purchase Agreement between
Borrower and Sellers named therein dated as of October 10, 1997 regarding DMC
and DSC.
"DMC Revolving Credit Loans" shall mean Revolving Credit Loans advanced to
DMC and DSC pursuant to section 2.01 below.
"DMC Revolving Credit Note" shall mean the note of DMC and DSC delivered in
accordance with Section 2.01 below.
"DMC Seller" shall mean selling shareholders executing the DMC Acquisition
Agreement.
"Documents" shall mean this Agreement, the Notes and any other documents,
instruments or certificates to be executed and delivered hereunder or in
connection herewith by or on behalf of the Borrower or any of its Affiliates.
"DSC" shall mean Xxxxx Service Company, an Iowa corporation whose
headquarters is located in Mason City, Iowa.
"EBITDA" shall mean, for the period of four (4) consecutive fiscal quarters
most recently ended on or prior to the date of determination, Borrower's
earnings before interest, taxes, depreciation and amortization, and
notwithstanding any non-cash charge for increase in value of stock appreciation
rights (or similar rights), but accounting for same as a charge against earnings
when paid, determined in accordance with GAAP. Prior to the first anniversary
of the consummation of an Acquisition, the historical financial results of the
acquired Person or assets for the relevant period will be included for purposes
of calculating EBITDA (but without any adjustment to such historical results for
cost savings or other synergies).
"Environmental Laws" shall mean any federal, state or local law, statute,
ordinance, order, decree, rule or regulation relating to releases, discharges,
emissions or disposals to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use, handling or disposal of polychlorinated
biphenyls, asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of Hazardous Substances, to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances and to the transportation,
storage, disposal, management or release of gaseous or other liquid substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 USC (S)9601 et seq., the Resource, Conservation and Recovery Act of
1976, as amended by the Hazardous Solid Waste Amendments of 1984, 42 USC (S)6901
et seq., the Toxic Substances Control Act, 15 USC (S)2601 et seq., the
Occupational Safety and Health Act of 1970, 29 USC (S)651 et seq., the Clean Air
Act of 1966, as amended, 42 USC (S)7401 et seq., and the Federal Water Pollution
Control Act, as amended by the Clean Water Act
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of 1977, 33 USC (S)1251 et seq., and all rules, regulations and guidance
documents promulgated pursuant thereto or published thereunder.
"Equipment" shall mean all equipment, machinery, fixtures and supplies and
any and all parts, accessories, attachments, fittings, special tools, additions
and accessories thereto and any renewals, substitutions or replacements thereof,
including licensed vehicles, plant trucks, furniture, office equipment and minor
plant equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean (i) any corporation which is now, or was at
any time, a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as the Borrower or any
predecessor thereof; (ii) any partnership, trade or business (whether or not
incorporated) which is now, or was at any time, under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower or any
predecessor thereof; and (iii) any entity, which is now, or was at any time, a
member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as either the Borrower or any predecessor
thereof, or any corporation described in clause (i) or any partnership, trade or
business described in clause (ii).
"Euro-Dollar Business Day" shall mean any day on which commercial banks are
open for domestic and international business (including dealing in dollar
deposits) in London and Chicago.
"Euro-Dollar Lending Office" shall mean as to the Bank such branch or
affiliate of the Bank as it may designate from time to time as its Euro-Dollar
Lending Office.
"Euro-Dollar Loans" shall mean Loans which bear interest at a Euro-Dollar
Rate.
"Euro-Dollar Rate" shall mean, at the time of determination, the Adjusted
LIBOR Rate then in effect plus the Applicable Margin.
"Event of Default" shall have the meaning specified in Section 9.01.
"Facility Fee" shall have the meaning given to it in Section 2.06(B) below.
"Financial Statements" shall mean, at any time, the audited financial
statements of the Borrower for its most recently ended fiscal year, the
unaudited financial statements for the most recently ended accounting period of
the Borrower, and the unaudited pro forma condensed combined balance sheet dated
as of September 30, 1997 contained in the Offering Memorandum, copies of which
have been furnished to the Bank.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of (A)
EBITDA minus Capital Expenditures (to the extent not financed by sources other
than the Bank), in respect
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of such period, to (B) Borrower's interest expense plus scheduled debt
amortization including without limitation under the Subordinated Notes (both
determined in accordance with GAAP), in respect of such period.
"Floating Rate" shall mean, at the time of determination, a floating per-
annum rate equal to the Prime Rate then in effect.
"Funded Debt" of any Person shall mean (i) all Debt of such Person for
borrowed money or which has been incurred in connection with the acquisition of
assets in each case having a final maturity or more than one year from the date
of origin thereof (or which is renewable or extendible at the option of the
obligor for a period or periods of more than one year from the date of origin),
including all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, whether or not the
obligation to make such payments shall constitute a current liability of the
obligor under GAAP, but in any event including the Debt outstanding hereunder
from time to time and under the Subordinated Notes, (ii) all capitalized rentals
of such Person, and (iii) all guaranties by such Person of Funded Debt of
others.
"Funded Debt to EBITDA Ratio" shall mean the ratio of (A) Borrower's total
Funded Debt determined in accordance with GAAP to (B) EBITDA for the period of
four (4) consecutive fiscal quarters most recently ended on or prior to such
date.
"GAAP" shall mean generally accepted accounting principles consistently
applied throughout the period involved; provided, however, that the FIFO method
(rather than LIFO, which is the method applied with respect to Borrower's
audited financial statements) shall be applied with respect to (i) interim
financial statements, and (ii) the calculation of all financial covenants and
compliance with other monetary restrictions in this Agreement; and provided,
further, that so long as Borrower is not legally responsible for obligations to
Xxxxx Xxxxx in respect of his non-competition agreement, such obligations shall
be disregarded in the calculation of all financial covenants.
"General Intangibles" shall mean all general intangibles, including choses
in action, designs, patents, trademarks, service marks, trade names, good will,
applications for registration, registrations, licenses, franchises, customer
lists, and all other intangible property of every nature (other than Accounts).
"Governmental Authority" shall mean the United States of America, any
state, territory or district thereof, and any other political subdivision or
body politic created pursuant to any applicable Law, and any court, agency,
department, commission, board, bureau or instrumentality of any of the
foregoing.
"Hazardous Substances" shall mean (i) any hazardous or toxic substance,
chemical or waste, or any pollutant or contaminant defined as such in any now or
hereafter existing
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Environmental Law, (ii) asbestos, (iii) radon, (iv) petroleum, its derivative
by-products and other hydrocarbons, (v) polychlorinated biphenyls, (vi)
explosives, (vii) radioactive materials and (viii) any additional substances or
materials which at any time are classified or considered to be hazardous or
toxic under any Environmental Laws.
"Indenture" shall mean the Indenture dated as of November 5, 1997 between
the Borrower and LaSalle National Trust, N.A., as trustee, relating to the
Subordinated Notes.
"Interest Period" shall mean with respect to each Euro-Dollar Loan:
(i) initially, the period commencing on the date of such Euro-Dollar Loan
and ending 30, 60 or 90 days thereafter, as the Borrower may elect, or
at any other maturity mutually agreed upon by the Bank and Borrower;
and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period for such Euro-Dollar Loan and ending 30, 60
or 90 days thereafter, as the Borrower may elect or as otherwise
mutually agreed by the Bank and Borrower;
provided that:
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(A) any Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day, unless such Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Euro-
Dollar Business Day;
(B) any Interest Period which begins on the last Euro-Dollar Business Day,
of the calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (C) below, end on the last Euro-Dollar Business Day of
a calendar month;
(C) any Interest Period in respect of a Revolving Credit Loan which begins
prior to the Revolving Credit Loan Termination Date and would otherwise end
after the Revolving Credit Loan Termination Date shall end on such date; and
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Inventory" shall mean all inventory, goods, merchandise and other personal
property held for sale or lease, or furnished or to be furnished under any
contract of service, or held as raw materials, work in process or material used
or consumed, or to be used or consumed, in business.
"Laws" shall mean any federal, state or local law, statute, ordinance,
order, decree, rule or regulation.
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"Letter of Credit" shall mean a commercial letter of credit issued pursuant
to the Revolving Credit Loan Commitment.
"Letter of Credit Obligations" shall have the meaning specified in Section
2.01(C).
"Loans" shall mean the Revolving Credit Loans.
"London Interbank Offered Rate" or "LIBOR Rate" applicable to any Interest
Period shall mean the rate per annum (rounded upward, if necessary, to the
nearest 1/16 of 1%) at which deposits in dollars are offered by the Euro-Dollar
Lending Office of the Bank to other prime banks in the London interbank market
at approximately 11:00 A.M. two (2) Euro-Dollar Business Days prior to the first
day of such Interest Period in an amount approximately equal to the aggregate
principal amount of the Euro-Dollar Loan to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
"Multiemployer Plan" shall have the meaning ascribed to it in Section
4001(a)(3) of ERISA.
"Note" or "Notes" shall mean the Revolving Credit Note and the DMC
Revolving Credit Note.
"Obligations" shall mean, with respect to any Person, all of such Person's
liabilities, obligations and indebtedness to the Bank of any and every kind and
nature, including the Loans, such Person's other liabilities and obligations to
the Bank under this Agreement, such Person's reimbursement obligations in
respect of letters of credit issued for the account of such Person, and such
Person's liabilities and obligations to the Bank under any other agreement,
document or instrument, (including any guaranty of another Person's
Obligations), whether heretofore, now or hereafter owing, arising, due or
payable by or from such Person to the Bank, howsoever evidenced, created,
incurred, acquired or owing, and whether joint, several, primary, secondary,
direct, contingent, fixed or otherwise.
"Offering Memorandum" shall mean that certain Offering Memorandum of
Borrower dated November 5, 1997 regarding the Subordinated Notes.
"Payment Date" means the last day of an Interest Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Liens" shall mean:
(A) liens for taxes, assessments or other governmental charges for the
then current year which are not yet due or delinquent;
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(B) liens for taxes, assessments or other governmental charges already
due, but the validity of which is being contested at the time in good faith by
appropriate proceedings and for which adequate reserve is maintained in
accordance with GAAP, and as to which no notice or claim of lien has been filed;
(C) statutory liens in favor of landlords, carriers, warehousemen and
other suppliers of services or materials for sums incurred in the ordinary
course of business, provided such sums are not delinquent and do not exceed the
sum of $250,000.00 in the aggregate at any time, and other liens of such type
which have been improperly asserted and which the Borrower is contesting in good
faith;
(D) liens for worker's compensation awards not due or delinquent, and
other liens of such type which have been improperly asserted and which the
Borrower is contesting in good faith;
(E) pledges or deposits to secure obligations under worker's compensation
laws or similar legislation;
(F) deposits to secure public, statutory or insurance-related obligations
of the Person whose assets are subject to such liens;
(G) liens securing purchase money financing for Equipment acquired by
Borrower after the date hereof, provided that (i) each such lien secures only
the purchase price of the Equipment so encumbered thereby, (ii) the aggregate
amount of new financing secured thereby and incurred after the date of this
Agreement does not exceed $500,000.00 in any calendar year, and (iii) neither
the aggregate amount secured by all such liens nor the aggregate value of the
Equipment so encumbered exceeds $2,500,000.00 at any time.
(H) mortgages, pledges, encumbrances, security interests, assignments and
liens listed on Schedule 1, or approved in writing by the Bank subsequent to the
date hereof, mortgages securing only refinancings of the real estate comprising
Borrower's existing facilities in Assumption, Illinois and Paris, Illinois
(provided that the aggregate amount secured does not exceed 75% of the appraised
fair market value of such real estate); and
(I) mortgages, pledges, encumbrances, security interests, assignments or
liens in favor of the Bank.
"Permitted Holders" means J. Xxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxx X. Xxxx and
Xxxxxx X. Xxxxxxx or their successors and assigns who are Affiliates of the
Permitted Holders, members of their families and their heirs or executors.
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"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association, joint venture, court,
Governmental Authority, or any other similar entity.
"Plan" shall mean any employee benefit plan or other plan for any employees
of the Borrower or any employees of any Subsidiary of the Borrower or any ERISA
Affiliate.
"Prime Rate" shall mean the rate of interest referred to by the Bank from
time to time as its prime rate, as fixed by the management of the Bank for the
guidance of its loan officers, whether or not such rate is otherwise published,
with each change in such prime rate to take effect on the same day as the
determination of each change by the Bank. Such rate is not necessarily the most
favorable rate offered by the Bank to its borrowers.
"Prime Rate Loan" means a Loan which is not a Euro-Dollar Loan.
"Reportable Event" shall mean any of the events described in Section 4043
of ERISA, excluding subsections 4043(b)(2) and (b)(3) thereof.
"Reserve Percentage" shall mean, for the purpose of computing the Adjusted
LIBOR Rate the reserve requirement imposed by the Board of Governors of the
Federal Reserve System (or any successor) under Regulation D on Eurocurrency
liabilities (as such term is defined in Regulation D) for the applicable
Interest Period as of the first day of such Interest Period, but subject to any
amendments of such reserve requirement by such Board or its successor, and
taking into account any transitional adjustments thereto becoming effective
during such Interest Period. For purposes of this definition, Euro-Dollar Loans
shall be deemed to be Eurocurrency liabilities as defined in Regulation D
without benefit of or credit for prorations, exemptions or offsets under
Regulation D.
"Revolving Credit Loan" shall have the meaning specified in Section
2.01(A).
"Revolving Credit Loan Commitment" shall have the meaning specified in
Section 2.01(A).
"Revolving Credit Loan Termination Date" shall have the meaning specified
in Section 2.01(A).
"Revolving Credit Note" shall have the meaning specified in Section
2.01(E).
"Side Letter" shall have the meaning specified in Section 4.08(I)(ii).
"Special Collateral" shall have the meaning specified in Section 4.06.
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"Stock" shall mean all shares, options, interests, participations or other
equivalents, howsoever designated, of or in a corporation, partnership or
similar entity, whether voting or nonvoting, including common stock, warrants,
preferred stock, convertible debentures, partnership interests and all
agreements, instruments and documents convertible, in whole or in part, into any
one or more of the foregoing.
"Stockholder Agreements" means each of the Stock Restriction and Buy-Sell
Agreements, made as of June 6, 1996 by and between each of the Permitted Holders
of the Borrower with respect to the Borrower's voting Stock, as amended, and the
Stock Restriction and Buy-Sell Agreement made as of January 1, 1997 among the
Borrower, the Permitted Holders and other persons named therein with respect to
the Borrower's non-voting Stock, as amended.
"Stockholders" shall mean those parties named as the stockholders of the
Borrower on Schedule 5 hereto.
"Stock Redemption Agreement" shall mean, collectively, the three Stock
Redemption Agreements, each dated as of May 21, 1996, each between a Seller and
the Borrower, providing for the redemption of certain of the outstanding Stock
of the Borrower.
"Subordinated Debt" shall mean any Debt of the Borrower which is expressly
subordinated to the Obligations of the Borrower pursuant to the terms of a
written agreement among the Borrower, the Person to whom such Debt is owed and
the Bank, the terms of which are satisfactory to the Bank in all respects;
including without limitation, the Debt evidenced by the Subordinated Notes.
"Subordinated Notes" shall mean the $100,000,000 aggregate principal amount
of 10.25% Senior Subordinated Notes due 2007 issued under the Indenture.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership or similar entity of which fifty percent (50%) or more of the
outstanding Stock having ordinary voting power is at the time, directly or
indirectly, owned by such Person and/or one or more of such Person's
Subsidiaries (irrespective of whether, at the time, Stock of any other class or
classes of such entity shall have or might have voting power by reason of the
happening of any contingency).
"Subsidiary Borrowers" shall mean DMC and DSC.
"Supplemental Documentation" means all agreements, instruments, documents,
financing statements, warehouse receipts, schedules of accounts assigned,
mortgages, certificates of title and other written matter necessary or requested
by the Bank to create, evidence, enforce, perfect or maintain perfected the
Bank's security interest in the Collateral and to consummate the transactions
contemplated in or by this Agreement and the other Documents.
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"UCC" shall mean the Uniform Commercial Code as in effect in Illinois.
1.02 Except as otherwise specifically indicated herein, all references to
Article, Section and Sub-Section numbers and letters shall refer to Articles,
Sections and Sub-Sections of this Agreement; all references to Exhibits and
Schedules shall refer to the Exhibits and Schedules attached to this Agreement.
The words "hereby", "hereof", "hereto", "herein" and "hereunder" and any similar
terms shall refer to this Agreement as a whole and not to any particular
Article, Section or Sub-Section. The word "hereafter" shall mean after the date
this Agreement is executed and delivered by the parties hereto, and the word
"heretofore" shall mean before such date. Words of the masculine, feminine or
neuter gender shall mean and include the correlative words of other genders, and
words importing the singular number shall mean and include the plural number and
vice versa. The Article headings are inserted in this Agreement for convenience
only and are not intended to, and shall not be construed to limit, enlarge or
affect the scope or intent of this Agreement or the meaning of any provision
hereof.
1.03 Any accounting terms used in this Agreement which are not
specifically defined shall have the meaning customarily given them in accordance
with GAAP; provided, however, that, in the event that changes in generally
accepted accounting principles shall be mandated by the Financial Accounting
Standards Board, or any similar accounting body of comparable standing, or shall
be recommended by the Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation or
computation thereof, such changes shall be followed in defining such accounting
terms only from and after such date as the Borrower and the Bank shall have
amended this Agreement to the extent necessary to reflect any such changes in
the financial covenants and other terms and conditions of this Agreement.
1.04 All other terms contained in this Agreement shall, when the context
so indicates, have the meanings provided for by the UCC to the extent the same
are used or defined therein.
ARTICLE II. THE LOANS.
2.01(A) Subject to the terms and conditions of this Agreement, the Bank
will make a revolving credit facility (the "Revolving Credit Loan Commitment")
in an aggregate amount not to exceed $40,000,000 available to the Borrower,
pursuant to which the Bank may from time to time: (i) make revolving credit
advances, (ii) issue Letters of Credit to the Borrower or, (iii) make revolving
credit advances (a "DMC Revolving Credit Loan") to the Subsidiary Borrowers
(each a "Revolving Credit Loan"). The amount otherwise available for borrowing
under the Revolving Credit Loan Commitment shall be reduced by: (i) the
aggregate face amounts of all Letters of Credit issued by Bank for the account
of Borrower and outstanding or drawn but unreimbursed from time to time, which
shall in no event exceed $20,000,000 at any time, (ii) the amount of DMC
Revolving Credit Loans outstanding which in no event shall exceed $5,000,000 at
any time, (iii) the amount of Debt of FarmPro, Inc. guaranteed by Borrower and
(iv) the amount of
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Revolving Credit Loans outstanding. All borrowings outstanding on the date
hereof, under the revolving credit facility made available pursuant to the
Original Loan Agreement, shall remain outstanding as Revolving Credit Loans
hereunder. The Revolving Credit Loan Commitment shall terminate on October 31,
2000 (the "Revolving Credit Loan Termination Date").
(B) The Borrower may, from time to time, request whether for its own
account or for the Subsidiary Borrowers, by giving notice to the Bank prior to
11:00 a.m., that Revolving Credit Loans be made in an aggregate amount
specified, in a form specified (cash disbursement or continuation of outstanding
Loan) and on the Business Day specified in such request (which as to Euro-Dollar
Loans must also be a Euro-Dollar Business Day). Prime Rate Loans may be
disbursed on the date requested. If the Borrower elects whether for its own
account or for the Subsidiary Borrowers to pay interest on any Revolving Credit
Loan based on a Euro-Dollar Rate, notice must be given to the Bank at least
three Euro-Dollar Business days prior to the requested disbursement date. Any
such notice must also specify the Interest Period selected by the Borrower for
each Loan based on a Euro-Dollar Rate and each request for a Euro-Dollar Loan
and Interest Period with respect thereto shall be irrevocable once given. Not
later than 1:00 p.m., Chicago time, on the date specified in such request, the
Bank shall make the Revolving Credit Loan(s) to the Borrower or to the
Subsidiary Borrowers in the aggregate amount specified in such request, or
convert or continue the outstanding Loan, as the case may be.
(C) The proceeds of Revolving Credit Loans shall be disbursed by deposit to
the Borrower's account maintained at the Bank or otherwise in accordance with
the written instructions of the Borrower or the other provisions of this
Agreement. Revolving Credit Loans shall be used by the Borrower solely for its
working capital purposes, Letters of Credit for the Borrower or for the
Subsidiary Borrowers working capital purposes. Bank may from time to time issue
one or more Letters of Credit at the request and for the account of the
Borrower, provided: (i) the aggregate amount of Letters of Credit outstanding
including those being requested plus amounts drawn under Letters of Credit but
not repaid to the Bank plus the principal sum of advances of Revolving Credit
Loans outstanding does not exceed $40,000,000; (ii) Borrower pays to Bank its
then internally published Letter of Credit issuance fee; (iii) the Borrower
executes and delivers to the Bank the Bank's then current form of Letter of
Credit Application or Agreement, in form and content satisfactory to the Bank,
including without limitation a LaSalle L/C Connection Agreement; (iv) the Bank
is not restricted or prohibited from issuing such Letter of Credit by any Law,
regulation or policy of any Governmental Authority or by Bank policy, and (v)
the aggregate amount of Letters of Credit outstanding including those being
requested plus amounts drawn under Letter of Credit but not repaid to the Bank
does not exceed $20,000,000. Borrower's Obligations under this Agreement shall
include reimbursement obligations regarding Letters of Credit ("Letter of Credit
Obligations") and shall be secured by the Collateral in accordance with Article
IV below and any other collateral pledged to secure such Obligations pursuant to
any of the Documents.
Borrower agrees to reimburse Bank on demand for each payment made by Bank
under or pursuant to any Letter of Credit or any draft drawn on Bank pursuant to
a Letter of Credit. Bank
13
may, in its sole discretion, provide for such reimbursement by advancing the
amount thereof to Borrower as a Revolving Credit Loan. In the event Bank does
not, in accordance with the terms and conditions hereof, make a Revolving Credit
Loan, for reimbursement, Borrower agrees to reimburse Bank in the amount of such
payment and shall also pay to Bank, on demand, interest at the rate provided in
Section 2.02(B) hereof on any amount paid by Bank under or pursuant to any
Letter of Credit or any draft drawn on Bank pursuant to a Letter of Credit from
the date of payment until the date of reimbursement to the Bank.
Notwithstanding anything to the contrary herein or in any Letter of Credit
application of Borrower or other Document, upon the occurrence of an Event of
Default, an amount equal to the aggregate amount of the outstanding Letters of
Credit and all drawn but unreimbursed Letters of Credit shall, at Bank's option
and without demand upon or further notice to Borrower, be deemed (as between
Bank and Borrower) to have been paid or disbursed by Bank under the Letters of
Credit (notwithstanding that such amounts may not in fact have been so paid or
disbursed), and a Revolving Credit Loan to Borrower in the amount of such Letter
of Credit Obligations to have been made and accepted, which Revolving Credit
Loan shall be immediately due and payable. In lieu of the foregoing, at the
election of Bank at any time after an Event of Default, Borrow shall, upon
Bank's demand, deliver to Bank cash, or other collateral of a type satisfactory
to Bank, having a value, as determined by Bank in its reasonable judgment, equal
to the aggregate Letter of Credit Obligations. Any such collateral and/or any
amounts received by Bank in payment of the Revolving Credit Loan made pursuant
to this subparagraph shall be held by Bank in a separate account appropriately
designated as a cash collateral account in relation to this Agreement and the
Letters of Credit and retained by Bank as collateral security for Borrower's
Obligations in respect of this Agreement and each of the Letters of Credit.
Such amounts shall not be used by Bank to pay any amounts drawn or paid under or
pursuant to any Letter of Credit, but may be applied to reimburse Bank for
drawings or payments under or pursuant to any Letter of Credit which Bank has
paid, or if no such reimbursement is required, any cash collateral account
established pursuant to this subparagraph following payment in full of all of
the Obligations, which are not (as determined by Bank) to be applied to
reimburse Bank for amounts actually paid by Bank in respect of Letter of Credit,
shall be returned to Borrower (after deduction of Bank's reasonable expenses).
This Agreement and any Letter of Credit application or other Document
regarding Letters of Credit shall be interpreted as supplemental to each other.
However, in the event of an express conflict in terms, the terms of this
Agreement shall govern.
No Letter of Credit shall (i) be issued after the Revolving Credit Loan
Termination Date and (ii) have an expiration date later than the Revolving
Credit Loan Termination Date.
Notwithstanding the above, the parties acknowledge that (i) Bank will, upon
the Borrower's request, issue for the account of Borrower Letters of Credit
having terms which expire after the expiration of the Revolving Credit Loan
Termination Date ("Post-Term L/Cs"), (ii) all security interests granted by
Borrower to Bank under this Agreement secure (inter alia) Letter of Credit
Obligations in respect of all Post-Term L/Cs, Bank agrees that upon payment and
14
satisfaction in full of all Obligations of Borrower in respect of the Revolving
Credit Loans, at a time when (1) no Event of Default and no event which, with
the giving of notice, the lapse of time, or both, would constitute an Event of
Default, exists, (2) all funding obligations of Bank to Borrower have been
terminated, and (3) Borrower has no Obligations to Bank other than those in
respect of Post-Term L/Cs, Bank will upon request of Borrower release the
security interests granted by Borrower in this Agreement, provided that Bank
receives replacement cash collateral in an amount, covering such Letter of
Credit Obligations, and pursuant to such documents, as Bank shall deem necessary
in its sole discretion, (iii) no Post-Term L/Cs shall have a term which expires
more than three years after the expiration of the Revolving Credit Loan
Termination Date, and (iv) the aggregate face amounts of the Post-Term L/Cs
shall not exceed $6,000,000.00.
(D) All outstanding Revolving Credit Loans together with any accrued but
unpaid interest thereon shall be repaid in full on the Revolving Credit Loan
Termination Date. In addition, outstanding Revolving Credit Loans shall be
repaid immediately, without the necessity of any demand or notice from Bank, if
and to the extent that they exceed the limitations imposed by Section 2.02(A)
above. Borrower may repay and reborrow under the Revolving Credit Loan
Commitment subject to the terms and conditions of this Agreement.
(E) The Revolving Credit Loans shall be evidenced by a note in the form of
Exhibit A hereto (the "Revolving Credit Note") and DMC Revolving Credit Loans
shall be evidenced by a note in the form of Exhibit B hereto (the "DMC Revolving
Credit Note").
2.02(A) Except as provided in Section 2.02(B) below, while any Revolving
Credit Loan is a Euro-Dollar Loan, it shall bear interest at a per-annum rate
equal to the applicable Euro-Dollar Rate, and at other times it shall bear
interest at the applicable Floating Rate. Interest shall be calculated on the
basis of a 360-day year, counting the actual number of days elapsed. Interest
on the Prime Rate Loans shall be paid monthly in arrears commencing on November
1, 1997 and continuing on the first day of each month thereafter. Interest on
each Euro-Dollar Loan shall be paid on the applicable Payment Date; provided,
however, that if an Interest Period has a term of greater than 90 days, accrued
interest shall be payable on each 90-day anniversary of the first day of such
Interest Period, as well as on the Payment Date.
(B) Any Obligation of the Borrower or the Subsidiary Borrowers which is not
paid when due, whether at stated maturity, by acceleration or otherwise, shall
bear interest payable on demand at the interest rate then in effect with respect
thereto plus two percent. In addition, after the occurrence of any Event of
Default and delivery to the Borrower of the Bank's notice to charge post-default
interest, all Obligations of the Borrower and the Subsidiary Borrowers shall
bear interest at the highest rate provided for in the immediately preceding
sentence.
(C) In the event the Borrower or the Subsidiary Borrowers elect to pay
interest on any Revolving Credit Loan based on a Euro-Dollar Rate, upon the
expiry of the applicable Interest Period, such Revolving Credit Loan shall bear
interest at the applicable rate determined by reference to the Prime Rate unless
the Borrower or the Subsidiary Borrowers repays such
15
Revolving Credit Loan on the Payment Date or the Borrower or the
Subsidiary Borrower timely elects, in the manner provided herein, to pay
interest based on a Euro-Dollar Rate prior to such expiry.
(D) Notwithstanding any other provisions of this Agreement, if at any time
the Bank shall determine in good faith that any change in applicable law or
regulation or in the interpretation thereof makes it unlawful or unduly
burdensome for the Bank to make or continue to maintain any Euro-Dollar Loan,
then the Bank shall promptly give notice thereof to the Borrower, and the Bank's
obligation to make, continue or effect by conversion such Euro-Dollar Loan under
this Agreement shall terminate until it is no longer unlawful or unduly
burdensome for the Bank to make such Euro-Dollar Loan. In such event, the
Borrower and the Subsidiary Borrowers shall prepay on demand the outstanding
principal amount of the affected Euro-Dollar Loans, together with all interest
accrued thereon and all other amounts payable to the Bank under this Agreement;
provided, however, the Borrower and the Subsidiary Borrowers may then elect to
borrow the principal amount of such Euro-Dollar Loans by means of a Prime Rate
Loan subject to the terms and conditions of this Agreement.
(E) Notwithstanding any other provision of this Agreement to the contrary,
if prior to the commencement of any Interest Period the Bank shall determine (i)
that deposits in the amount of any Euro-Dollar Loan scheduled to be outstanding
are not available to the Bank in the relevant market or (ii) by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Adjusted LIBOR Rate, then the Bank shall promptly
give notice thereof to the Borrower and the obligation of the Bank to make or
effect by conversion any such Euro-Dollar Loan in such amount and for such
Interest Period shall terminate until deposits in such amount and for the
Interest Period selected by the Borrower shall again be readily available in the
relevant market and adequate and reasonable means exist for ascertaining the
Adjusted LIBOR Rate. Upon the giving of such notice, the Borrower and the
Subsidiary Borrowers may elect to either (i) pay or prepay, as the case may be,
such affected Loan together with all accrued interest thereon and all other
amounts payable to the Bank under Paragraph 2.02(H) of this Agreement or (ii)
convert such affected Revolving Credit Loan to a Prime Rate Loan, subject to all
the terms and conditions of this Agreement.
(F) With respect to the Euro-Dollar Loans, if the Bank shall determine in
good faith that any change in any applicable law, treaty, regulation or
guideline (including, without limitation, Regulation D of the Board of Governors
of the Federal Reserve System) or any new law, treaty, regulation or guideline,
or any interpretation of any of the foregoing by any governmental authority
charged with the administration thereof or any central bank or other fiscal,
monetary or other authority having jurisdiction over the Bank or its Euro-Dollar
Lending Office or the Euro-Dollar Loans contemplated by this Agreement (whether
or not having the force of law) shall:
(i) impose, modify or deem applicable any reserve (but excluding with
respect to any Euro-Dollar Loan any reserve percentage included in
determining the applicable
16
Adjusted LIBOR Rate), capital, special deposit, compulsory loan,
assessment or similar requirements against assets held by, or deposits
in or for the account of, or loans by, or any other acquisition of
funds or disbursements by, the Bank or an office thereof;
(ii) subject the Bank, any Euro-Dollar Loan or the Note evidencing such
Euro-Dollar Loans to any tax (including, without limitation, any
United States interest equalization tax or similar tax however named
applicable to the acquisition or holding of debt obligations and any
interest or penalties with respect thereto), duty, charge, stamp tax,
fee, deduction or withholding in respect of this Agreement, any Euro-
Dollar Loan or any Note evidencing a Euro-Dollar Loan, except such
taxes as may be measured by the overall net income of the Bank or its
Euro-Dollar Lending Office and imposed by the jurisdiction, or any
political subdivision or taxing authority thereof, in which the Bank's
principal executive office or its Euro-Dollar Lending Office is
located;
(iii) change the basis of taxation of payments of principal and interest
due from the Borrower to the Bank hereunder or under any Note
evidencing a Euro-Dollar Loan (other than by a change in taxation of
the overall net income of the Bank); or
(iv) impose on the Bank any penalty with respect to the foregoing or any
other condition regarding this Agreement, its disbursement, any Euro-
Dollar Loan or any Note evidencing a Euro-Dollar Loan except for any
penalty which results directly from the negligence or misconduct of
the Bank in requesting such reimbursement;
and the Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to the Bank
of making or maintaining any Euro-Dollar Loan hereunder or to reduce the amount
of principal or interest received by the Bank (without benefit of, or credit
for, any prorations, exemptions, credits or other offsets available under any
such laws, treaties, regulations, guidelines or interpretations thereof), then
the Borrower and the Subsidiary Borrowers shall pay to the Bank on demand, from
time to time as specified by the Bank, such additional amounts as the Bank shall
determine are sufficient to compensate and indemnify the Bank for such increased
cost or reduced amount; provided that the Bank shall give prior notice of such
increased cost or reduced amount and the Borrower and the Subsidiary Borrowers
may at their option, prepay such affected Euro-Dollar Loans together with the
amount payable pursuant to Paragraph 2.03(H) hereof. If Bank makes such a claim
for compensation, it shall provide to the Borrower a certificate setting forth
such increased cost or reduced amount and the basis for such determination as a
result of any event mentioned herein and such certificate shall in the absence
of manifest error, constitute prima facie evidence as to the amount thereof.
(G) If prior to any Interest Period the Bank shall have determined (which
determination shall be conclusive and binding upon the Borrower and the
Subsidiary Borrowers) that the method of computing the rate of interest
applicable to any Euro-Dollar Loan does not accurately reflect
17
the cost to the Bank of making or effecting by conversion any such Euro-Dollar
Loan, then the Bank shall give prompt telephonic, telex or telegraphic notice of
such determination to the Borrower. After such notice and in the event the
Borrower or the Subsidiary Borrowers desire to make or effect by conversion such
Euro-Dollar Loan, during the 30 calendar days next succeeding the giving of such
notice, the Borrower and the Bank shall negotiate in good faith in order to
arrive at a mutually satisfactory method of computing the interest rate
applicable to the Euro-Dollar Loans hereunder, as the case may be, to be
substituted for the interest rate specified in this Agreement. If within such 30
day period the Borrower and the Bank shall agree in writing upon a substituted
interest rate, then such substituted interest rate shall be effective from the
first day of the relevant Interest Period for such Euro-Dollar Loan. If the
Borrower and the Bank are unable to agree in writing upon a substituted rate
within the above thirty (30) day period, then the Borrower and the Subsidiary
Borrowers shall on demand either (i) prepay, without penalty or charge, the
relevant Euro-Dollar Loans, in full, or (ii) convert such Euro-Dollar Loans into
Prime Rate Loans subject to all the terms and conditions of this Agreement, and,
in either case, shall pay interest thereon from the date such Euro-Dollar Loan
was made or effected by conversion until such Euro-Dollar Loan is prepaid or
converted, as the case may be, at the rate per annum (rounded upward, if
necessary, to the nearest whole multiple of 1/16 of 1%) which is equal to the
sum of (i) 3.5% and (ii) the effective cost as computed by the Bank of
maintaining such Revolving Credit Loan from deposits obtained in the secondary
market, together with all other amounts then due and payable to the Bank under
this Agreement. A certificate as to such effective cost and the manner of the
computation of such cost shall, in the absence of manifest error, constitute
prima facie evidence as to the amount thereof.
(H) In the event the Bank shall incur any loss, cost or expense
(including, without limitation, any loss of profit and any loss, cost or expense
incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by the Bank to fund or maintain any Euro-Dollar Loan or the
relending or reinvesting of such deposits or amounts paid or prepaid to the
Bank) as a result of:
(i) any payment (including, without limitation, any prepayment) of a
Euro-Dollar Loan on a date other than the last day of the then
applicable Interest Period;
(ii) any failure by the Borrower or the Subsidiary Borrowers to borrow a
Euro-Dollar Loan on the date specified in its notice given pursuant
to this Agreement;
(iii) any failure by the Borrower or the Subsidiary Borrowers to make any
payment of principal or interest when due on any Euro-Dollar Loan,
whether at stated maturity, by acceleration or otherwise; or
(iv) the occurrence of any Event of Default;
then, upon the demand of the Bank, the Borrower and the Subsidiary Borrowers
shall pay to the Bank such amount as will reimburse the Bank for such loss, cost
or expense to the extent such
18
loss, cost or expense is not otherwise reimbursed by the after-maturity interest
rate specified in this Agreement or reimbursed pursuant to Section 9.03 hereof.
If Bank makes such a claim for compensation, it shall provide to the Borrower a
certificate setting forth the amount of such loss, cost or expense in reasonable
detail and the manner of computation of the same and such certificate shall
constitute, in the absence of manifest error, prima facie evidence as to the
amount thereof.
(I) The Bank may, at its option, elect to make, fund or maintain its Loans
hereunder at the branch or office specified on the signature page hereto or such
other of its branches or offices as the Bank may from time to time elect.
(J) Notwithstanding any provision of this Agreement to the contrary, the
Bank shall be entitled to fund and maintain its funding of all or any part of
the Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder as to Euro-Dollar Loans
shall be made as if the Bank had actually funded and maintained each Euro-Dollar
Loan during each Interest Period for such Euro-Dollar Loan through the purchase
of deposits in the relevant market having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Euro-Dollar Rate for
such Interest Period.
(K) The provisions of Section 2.02(H) hereof shall survive for a period of
six months following the later of the termination of this Agreement and the
payment in full of the Revolving Credit Loans.
(L) The Bank agrees that in making calculations and determinations under
Sections 2.02(F), (G) and (H) above, it will do so in good faith and will make
allocations, on an equitable basis, of amounts to be charged to Borrower and to
other customers of the Bank which have arrangements for LIBOR borrowings similar
to those hereunder.
2.04 If, at any time, the interest rate and other charges imposed
hereunder shall be deemed by any competent Governmental Authority to exceed the
maximum rate of interest permitted by any applicable Laws, for such time as the
interest and such charges would be deemed excessive, its application shall be
suspended and there shall be charged instead the maximum rate of interest and
charges permissible under such Laws.
2.05 All payments, which are not prepayments, received from the Borrower
or the Subsidiary Borrowers for payment on the Revolving Credit Loans shall be
applied by the Bank first to unpaid interest due and payable on the Revolving
Credit Loan, then to the reduction of the principal outstanding on the Revolving
Credit Loans.
2.06 (A) At Closing, the Borrower shall pay to Bank a non-refundable
closing fee in the amount of $100,000.00, which fee shall be fully earned at the
time of Closing.
19
(B) The Borrower shall pay to Bank a fee (the "Facility Fee") equal to
the Applicable Margin per annum times $40,000,000.00. Such fee shall be payable
quarterly in arrears on the first day of each September, December, March and
June hereafter.
2.07 All payments received from the Borrower hereunder shall be paid
directly to the Bank without setoff or counterclaim in immediately available
funds. The Bank shall send the Borrower statements of all amounts due hereunder,
which statements shall be considered correct and conclusively binding on the
Borrower absent manifest error.
ARTICLE III. CONDITIONS PRECEDENT
--------------------
The obligation of the Bank to make the Loans is subject to the following
conditions precedent:
3.01 The Borrower shall have delivered or caused to be delivered to the
Bank on or before the date of, but prior to, any disbursement of Revolving
Credit Loans (hereinafter called the "Closing"), the following, each to be
satisfactory to the Bank in all respects:
(A) The Revolving Credit Note, duly executed by the Borrower and the DMC
Revolving Credit Note duly executed by DMC and DSC.
(B) Evidence of issuance of the Subordinated Notes, receipt of the
proceeds thereof and repayment of the Term Loan under the Original Loan
Agreement.
(C) Such other documents, certificates and evidence as the Bank may
request to consummate the transactions contemplated hereby.
3.02 At the time of the Closing, at the time of each subsequent
disbursement under the Revolving Credit Loan Commitment, each of the following
statements shall be true; and (i) at the Closing, the Borrower shall deliver to
the Bank a certificate dated the date of the Closing, signed by an Authorized
Borrower Representative, to such effect, and (ii) with respect to each
subsequent Revolving Credit Loan, Borrower's or Subsidiary Borrower's request
for same shall be deemed to be Borrower's representation to such effect at and
as of the time such Revolving Credit Loan is made.
(A) The representations and warranties set forth in this Agreement are
true and correct as of such date.
(B) No Event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage of time or both, would be an Event of Default.
20
(C) No material adverse change shall have occurred in the financial
condition of the Borrower since the date of this Agreement.
(D) All liens on Collateral granted to Bank are and remain valid first
priority liens (subject only to Permitted Liens) in full force and effect.
ARTICLE IV. COLLATERAL SECURITY
-------------------
4.01 The property in which a security interest is granted pursuant to the
provisions of Sections 4.02 and 4.03 is herein collectively called the
"Collateral." The Collateral, together with all of the Borrower's other
property of any kind held by the Bank, shall stand as one general, continuing
collateral security for all Obligations of the Borrower and may be retained by
the Bank until all such Obligations have been satisfied in full, and this
Agreement shall have been terminated.
4.02 As security for the prompt satisfaction of all Obligations of the
Borrower, the Borrower hereby assigns, transfers and sets over to the Bank all
of its right, title and interest in and to, and grants the Bank a lien on and a
security interest in, all amounts that may be owing from time to time by the
Bank to the Borrower in any capacity, including, but without limitation, any
balance or share belonging to the Borrower of any deposit or other account with
the Bank, which lien and security interest shall be independent of any right of
set-off which the Bank may have.
4.03 As further security for the prompt satisfaction of all Obligations of
the Borrower, the Borrower hereby assigns, transfers and sets over to the Bank
all of its right, title and interest in and to, and grants to the Bank a lien on
and security interest in, all of its right, title and interest in and to the
following, wherever located, whether now owned or hereafter acquired or arising,
together with all replacements therefor, proceeds, including insurance proceeds,
thereof and products thereof:
(A) Accounts;
(B) Inventory;
(C) Equipment;
(D) rights as seller of goods and rights to returned, rejected or
repossessed goods;
(E) General Intangibles, including without limitation those described on
Schedule 4 hereto; and
(F) all books and records pertaining to any of the foregoing.
21
In addition and as further security, the Borrower will execute and deliver to
the Bank security agreements and such other documents, including financing
statements, in connection herewith as shall be required by the Bank.
4.04 The liens created in Sections 4.02 and 4.03 shall be first and prior
liens, subject only to Permitted Liens.
4.05 The Borrower represents and warrants to the Bank as follows:
(A) The Borrower is the owner of the Collateral and grants the security
interest made in Sections 4.02 and 4.03 in consideration of value given by the
Bank, the sufficiency of which the Borrower hereby acknowledges.
(B) Other than the security interests granted in Sections 4.02 and 4.03,
the Collateral is free from any lien, security interest, encumbrance or other
right, title or interest of any other Person except for Permitted Liens.
(C) All Collateral is kept solely at the location or locations identified
in Schedule 2. Except as specified on Schedule 2, no Collateral is or shall be
kept, stored or maintained with a bailee, warehouseman, carrier or similar party
without the Bank's prior written consent.
(D) With respect to Accounts, except as otherwise disclosed by the Borrower
to the Bank in writing:
(i) the Accounts are genuine, in all respects what they purport to
be and are not evidenced by a judgment;
(ii) the Accounts represent bona fide transactions completed in
accordance with the terms and provisions contained in the
invoices and other documents evidencing same;
(iii) the amounts thereof, which are shown on all such invoices and
statements evidencing same, are actually and absolutely owing
to the Borrower and are not contingent for any reason;
(iv) to the best of the Borrower's knowledge, there are no setoffs,
counterclaims or disputes existing or asserted with respect to
the Accounts and the Borrower has not made any agreement with
any Account Debtor thereof for any deduction therefrom;
(v) to the best of the Borrower's knowledge, there are no facts,
events or occurrences which in any way impair the validity or
enforceability of the
22
Accounts or tend to reduce the amount payable thereunder from
the amount thereof;
(vi) to the best of the Borrower's knowledge, all of the Account
Debtors have the capacity to contract and are solvent;
(vii) the services and/or goods sold giving rise to the Accounts are
not subject to any lien, claim, encumbrance or security
interest except that of the Bank and except for Permitted
Liens;
(viii) the Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectability of the
Accounts;
(ix) to the best of the Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against
any Account Debtor which might result in a material adverse
change in such Account Debtor's financial condition; and
(x) none of the Accounts is pursuant to an invoice requiring
payment in more than 30 days, except for Accounts representing
in the aggregate not more than 5% of all Accounts.
(E) With respect to Inventory, the Borrower has correct and accurate
records itemizing and describing the type and quantity of Inventory, and the
Borrower's cost therefor and selling price thereof; provided, however, that it
is acknowledged that Borrower does not maintain a perpetual inventory at its
manufacturing facility, but rather performs an annual physical inventory
thereat.
4.06 Immediately upon the Borrower's receipt of that portion of the
Collateral, if any, which is evidenced by an instrument and/or document,
including promissory notes, documents of title, certificated securities and
warehouse receipts (collectively the "Special Collateral") for the purpose of
perfecting the Bank's security interest in such Special Collateral, the Borrower
shall deliver the original thereof to the Bank, together with appropriate
endorsements and/or specific evidence of the assignment thereof to the Bank, in
form and substance acceptable to the Bank; provided, however, that unless there
shall exist an Event of Default or Bank shall have specifically requested same,
Borrower need not deliver to Bank Special Collateral representing advances to
employees.
4.07 If and to the extent that any of the Collateral is evidenced by, or
arises under, any contract with the United States of America or any agency or
instrumentality thereof, the Borrower will immediately notify the Bank of same.
4.08 The Borrower covenants and agrees with the Bank as follows:
23
(A) The Borrower will not hereafter grant a security interest in the
Collateral, or transfer the Collateral to any other Person, except as
specifically permitted by this Agreement.
(B) The Borrower will at all times defend the Collateral against any and
all claims of any Person adverse to the claims of the Bank.
(C) All of the Borrower's places of business, including the Borrower's
principal office, are described on Schedule 2. All Collateral covered by this
Agreement is and will be kept only at location(s) specified on Schedule 2.
Collateral shall not be removed to, or kept at, and Borrower shall not establish
a place of business at, any other place without the prior written consent of the
Bank, other than new locations within the 48 contiguous states, provided that
(i) at least 60 days prior to the establishment of such new location, the
Borrower shall have given Bank written notice thereof, and (ii) prior to the
establishment of such new location, the Borrower shall have delivered to Bank
such financing statements, third-party lien waivers and other documentation as
Bank shall require in connection therewith. If Collateral is at any time kept
or located at locations other than those listed, the Bank's security interest
therein shall continue.
(D) During the preceding five years, neither the Borrower nor any
predecessor of the Borrower has been known as or used any corporate, fictitious
or trade names or trade styles, other than those disclosed on Schedule 3.
(E) All patents, trademarks, service marks and copyrights, and all
licenses, registrations and applications for registration thereof, owned, used
or to be used by the Borrower in the operation of its business, are listed on
Schedule 4. The Borrower will promptly notify the Bank in writing of the
Borrower's acquisition of any such assets hereafter occurring.
(F) The Equipment in which Bank is granted a security interest will not at
any time be affixed or attached to any real estate in such a manner that it will
become a fixture, unless the Bank shall have a first priority, perfected lien on
such real estate as security for the Obligations of the Borrower. The Equipment
will be used or bought for use solely for business purposes.
(G) The Borrower shall permit the Bank to inspect and evaluate the
Collateral and any books and records of the Borrower relating thereto at all
reasonable times and to verify any Accounts by any reasonable method
satisfactory to the Bank, all at the expense and risk of the Borrower.
(H) By identifying Accounts on any schedule or other document delivered to
Bank the Borrower shall be deemed to be making the representations and
warranties contained in Section 4.05(D) with respect to such Accounts.
(I) With respect to Accounts, the Borrower shall:
24
(i) promptly upon the Borrower's learning thereof, inform the Bank in
writing of any material delay in the Borrower's performance of
any of its obligations to any Account Debtor whose outstanding
Accounts aggregate $500,000.00 or more and of any assertion of
any claims, offsets or counterclaims by any such Account Debtor
and of any extraordinary allowances, credits and/or other monies
granted by the Borrower to any such Account Debtor;
(ii) not permit or agree to any material extension, compromise or
settlement or make any change or modification of any kind or
nature with respect to any material Accounts, including any of
the terms relating thereto; provided, however, Borrower may
convert the Accounts of an Account Debtor identified to it in a
side letter of even date herewith (the "Side Letter") to a note
in an aggregate principal amount not to exceed $6,000,000.00 in
accordance with terms described in the Side Letter;
(iii) promptly upon the Borrower's receipt or learning thereof,
inform the Bank of the commencement of bankruptcy proceedings
involving any Account Debtor whose outstanding Accounts aggregate
$500,000.00 or more; and
(iv) other than goods returned in the ordinary course of business and
having an aggregate invoice price not exceeding $500,000.00 per
year, keep all goods returned by any Account Debtor and all goods
repossessed or stopped in transit by the Borrower from any
Account Debtor segregated from the other property of the
Borrower, and hold the same as trustee for the Bank until resold
or otherwise directed in writing by the Bank.
(J) With respect to Inventory, the Borrower shall from and after the date
hereof keep correct and accurate records reflecting the Borrower's cost therefor
and the selling price thereof, all of which records shall be available at all
reasonable times, upon demand, to any of the Bank's officers, employees or agent
for inspection and copying thereof.
(K) The Borrower shall keep and maintain the Equipment in good operating
condition and repair and shall make all necessary replacements thereof and
renewals thereto so that the value and operating efficiency thereof shall at all
times be maintained and preserved; provided, however, that the Borrower may sell
obsolete Equipment for a price which reasonably approximates its fair market
value if the proceeds thereof are paid directly to the Bank for application to
the Borrower's Obligations.
4.09 The Borrower shall, at its sole cost and expense, keep and maintain
the Collateral insured for the greater of the full insurable value or the full
replacement value thereof against loss or damage by fire, theft, explosions,
sprinklers and all other hazards and risks (i) covered by extended coverage
and/or (ii) ordinarily insured against by other owners or users of properties in
25
similar businesses. All such policies of insurance shall be in form, with
insurers and in such amounts as may be satisfactory to the Bank. The Borrower
shall deliver to the Bank a certificate of insurance with respect to each policy
of insurance and evidence of payment of all premiums for each such policy. Such
policies of insurance shall contain a lender's loss payable endorsement, in form
and substance acceptable to the Bank, showing loss payable to the Bank. Such
endorsement or an independent instrument furnished to the Bank shall provide
that all insurance companies shall give the Bank at least thirty (30) days prior
written notice before any such policy or policies of insurance shall be altered
or cancelled and that no act or default of the Borrower or any other Person
shall affect the right of the Bank to recover under such policy or policies of
insurance in case of loss or damage. The Borrower hereby directs all insurers
under such policies of insurance to pay all proceeds payable thereunder directly
to the Bank. With respect to all claims in excess of $100,000.00, and with
respect to all claims of any size at any time during the existence of an Event
of Default, the Borrower irrevocably appoints the Bank and all officers,
employees or agents designated by the Bank as the Borrower's true and lawful
attorney and agent in fact for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of the Borrower on
any check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance. If Borrower at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above, or to pay any premium in whole or in part relating thereto, the
Bank, without waiving or releasing any of the Obligations of the Borrower or any
Event of Default, may at any time or times thereafter, but shall be under no
obligation to do so, obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the Bank deems
necessary or advisable. All sums so disbursed by the Bank, including attorney's
fees, court costs, expenses and other charges relating thereto, shall be part of
the Obligations, payable by the Borrower to the Bank on demand.
4.10 The Bank may, at any time or times hereafter, in its sole discretion,
without waiving or releasing any obligation, liability or duty of the Borrower
under this Agreement or the other Documents, or any Event of Default, pay,
acquire and/or accept an assignment of any security interest, lien, claim or
encumbrance asserted by any Person against the Collateral. All sums paid by the
Bank in respect thereof and all costs, fees and expenses, including, without
limitation, attorneys' fees, court costs, expenses and other charges relating
thereto, which are incurred by the Bank on account thereof, shall be payable,
upon demand, by the Borrower to the Bank and shall be additional Obligations of
the Borrower hereunder secured by the Collateral.
4.11 Simultaneous herewith, the Subsidiary Borrowers are delivering the
following: (a) the DMC Revolving Credit Note, (b) a guaranty of the Obligations
of Borrower, and (c) security agreements pledging certain assets.
4.12 Each of the representations, warranties and agreements set forth in
this Article IV shall survive the execution and delivery of this Agreement and
shall remain effective until this Agreement shall have been terminated and all
Obligations of the Borrower shall have been paid and satisfied in full.
26
ARTICLE V. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Bank to consummate the transactions contemplated hereby, the
Borrower represents and warrants to the Bank as follows:
5.01 The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the lawful power and
authority to own its properties and to carry on its business as now conducted,
and is qualified to do business and is in good standing as a foreign corporation
in the State of Illinois and in each other jurisdiction wherein the nature of
the business transacted or to be transacted by it or property owned or to be
owned by it makes such qualification necessary and where the failure to be so
qualified would have a material adverse effect on its business, properties or
condition, financial or otherwise and possesses all material permits necessary
to operate the business it conducts.
5.02 The Borrower is empowered to perform all acts and things undertaken
and done pursuant to this Agreement and has taken all corporate or other action
necessary to authorize the execution, delivery and performance of the Documents.
The officers of Borrower executing the Documents have been duly elected or
appointed and have been fully authorized to execute such Documents at the time
executed. The Documents, when executed and delivered, will be the legal, valid
and binding obligations of the Borrower, enforceable against it in accordance
with their respective terms.
5.03 The Financial Statements are complete and accurate, fairly present
the financial condition of the Borrower at the respective dates thereof and the
results of operations for the respective periods covered thereby, and (subject
to normal year-end adjustments with respect to interim Financial Statements)
were prepared in accordance with GAAP. The Borrower does not have any material
liabilities or obligations (contingent or otherwise), liability for taxes or
unusual forward or long-term commitments, except as disclosed in the Financial
Statements, and except for obligations under Stockholder Agreements.
5.04 Since the date of Borrower's most recent audited Financial
Statements, there has been no material change (except as described in the
Offering Memorandum) in the assets, liabilities or financial condition of
Borrower, other than changes arising from transactions in the ordinary course of
business and the financing transactions contemplated by this Agreement, and none
of such changes has been materially adverse.
5.05 Other than as set forth in the Financial Statements, there are no
actions, suits or proceedings pending, or, to the best of the knowledge of the
Borrower, threatened against or affecting the Borrower at law or in equity or
before or by any Governmental Authority or any foreign equivalent thereof, which
involve the possibility of any material judgment or liability, or which are, in
the aggregate, material in light of the financial condition and assets of the
Borrower. There are no actions, suits, investigations or proceedings pending,
or to the best of the knowledge
27
of the Borrower, threatened against the Borrower or its properties regarding
Environmental Laws, the manufacture, storage or treatment of Hazardous
Substances or products liability.
5.06 The Borrower is not in violation of, and the execution and delivery
of the Documents and the performance by the Borrower of its obligations under
the Documents, do not and will not result in the Borrower being in violation of
or in conflict with, or constitute a default under any of, the Borrower's
organizational documents, any term or provision of any note, mortgage,
indenture, contract, agreement, instrument, judgment or Law applicable to the
Borrower, or result in the creation or imposition of any mortgage, lien, charge
or encumbrance of any nature whatsoever (other than those in favor of Bank) upon
any of the assets of the Borrower pursuant to any such term or provision. The
Borrower is not in default, after the expiration of any applicable grace or cure
periods, in any respect in the performance or fulfillment of any of its
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party or by which any of its properties may be bound, and the
Borrower does not know of any dispute regarding any such agreement or
instrument.
5.07 The Borrower's uses of the proceeds of the Loans are, and will
continue to be, legal and proper corporate uses which are consistent with all
applicable Laws, with Borrower's Certificate of Incorporation, its By-Laws, the
resolutions of its Board of Directors, and the terms of this Agreement.
5.08 The Borrower does not have outstanding any Debt (except to Bank and
the Subordinated Notes,) or other obligation for borrowed money, or for the
deferred purchase price of property or services and the Borrower is not
obligated as guarantor, co-signer or otherwise on any Debt or other obligation
of any kind of any other Person, except and to the extent shown on the Financial
Statements at the date of this Agreement, incurred in the ordinary course of
business or pursuant to the Stockholder Agreements. No Person is in default
under any of said obligations.
5.09 All tax returns and reports of the Borrower required by law to be
filed, have been duly filed, and all taxes, assessments, fees and other
governmental charges (other than those presently payable without penalty or
interest) upon the Borrower or upon any of its properties or assets, which are
due and payable, have been paid. The charges, accruals and reserves on the
books of the Borrower in respect of taxes are considered adequate by the
Borrower, and the Borrower does not know of any assessment of a material nature
against it.
5.10 Except to the extent that failure to comply would not materially
interfere with the conduct of the business of the Borrower, or affect in any way
the Borrower's obligations (or Bank's rights) under the Documents, the Borrower
has complied with all applicable laws with respect to: (i) any restrictions,
specifications or other requirements pertaining to products that the Borrower
manufactures and sells or the services it performs, including without limitation
all Environmental Laws, (ii) the conduct of its business and (iii) the use,
maintenance, and operation of the real and personal properties owned or leased
by it in the conduct of its business.
28
5.11 No authorization, consent, license or approval of, or filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution, delivery or performance of the Documents by the
Borrower.
5.12 The Borrower has good and marketable title to all of its assets, all
subject to no security interest, encumbrance, lien or claim of any Person
excepting only Permitted Liens, and there are no financing statements or other
evidence of any such security interest, encumbrance or lien or any claim of any
Person on file in any public office other than those evidencing Permitted Liens.
5.13 Except as set forth on Schedule 5 hereto, the Borrower does not own,
directly or indirectly, any Stock. As of the date of this Agreement, the
ownership of all of the issued and outstanding shares of Stock of the Borrower
is as set forth on Schedule 5 hereto. All outstanding shares of the Borrower
have been duly authorized, validly issued, fully paid and are nonassessable.
5.14 The Borrower is in full compliance with the requirements of ERISA; no
fact, including, but not limited to, any Reportable Event, exists in connection
with any Plan which might constitute grounds for the termination of any such
Plan by the PBGC or for the appointment by the appropriate United States
district court of a trustee to administer any such Plan; none of the Borrower,
its Subsidiaries and the ERISA Affiliates maintains any Plan which has an
"accumulated funding deficiency" (as defined in Section 412 of the Internal
Revenue Code) whether or not waived; none of the Borrower, its Subsidiaries and
the ERISA Affiliates has incurred or is expected to incur, directly or
indirectly, any actual or contingent liabilities arising from plan termination
or withdrawal, under Title IV of ERISA; none of the Borrower, its Subsidiaries
and the ERISA Affiliates has any Plan with an actuarial present value of accrued
plan benefits which exceeds the net assets available for such benefits
determined as of said Plan's most recent actuarial valuation within the last
twelve (12) months; except as disclosed in writing to the Bank prior to the date
hereof, none of the Borrower, its Subsidiaries and the ERISA Affiliates has any
employees who participate in a Multiemployer Plan, and no such Multiemployer
Plan is in reorganization under Section 4241 of ERISA or is "insolvent" (as
described in Section 4245 of ERISA); and none of the Borrower, its Subsidiaries
and the ERISA Affiliates nor any fiduciary designated by any of them has engaged
in a "prohibited transaction" within the meaning of Section 4975 of the Internal
Revenue Code or Section 406 of ERISA with respect to any "employee benefit
plan," as defined in Section 3(3) of ERISA.
5.15 The Borrower retains sufficient capital for the business and
transactions in which it engages or intends to engage, no obligation incurred
hereby is beyond the ability of the Borrower to pay as such obligation matures,
the Borrower is not contemplating either the filing of a petition under any
state or federal bankruptcy or insolvency laws or the liquidating of all or a
major portion of any of its property, and Borrower has no knowledge of any
person contemplating the filing of any such petition against it.
29
5.16 No brokerage commissions, finder's fees or investment banking fees
will be payable to any Person engaged by or on behalf of Borrower or any of its
Affiliates in connection with the transactions contemplated by this Agreement
other than as contemplated by Offering Memorandum.
5.17 The Subordinated Notes have been validly issued in accordance with the
terms of the Indenture. The Borrower has received the proceeds of the
Subordinated Notes. No event of default or event which with the passage of
time, the giving of notice or otherwise could constitute an event of default
under the Subordinated Notes or the Indenture has occurred. The Obligations of
the Borrower constitute Senior Indebtedness and Designated Senior Indebtedness
under the Indenture. The Offering Memorandum is true, complete and correct in
all material respects.
5.18 The DMC Acquisition Agreement is in full force and effect as of the
date hereof, has not been terminated, rescinded or withdrawn, and no material
portion thereof has been amended or waived by any party. All representations
and warranties of Borrower contained in the DMC Acquisition Agreement and, to
the best of Borrower's knowledge following diligent inquiry, all representations
and warranties of the DMC Seller contained in the DMC Acquisition Agreement, are
true and correct as of the date hereof with the same effect as though made on
and as of the date hereof.
5.19 There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the proposed business
relationship of Borrower with any customer or group of customers whose purchases
individually or in the aggregate are material to the current business of
Borrower, or in the proposed business relationship of Borrower with any material
supplier, and Borrower reasonably anticipates that all such customers and
suppliers will continue a business relationship with Borrower on a basis no less
favorable to the Borrower than that heretofore conducted; and there exists no
other condition or state of facts or circumstances which would materially
adversely affect the current operation of the business of Borrower, DMC or DSC
after the consummation of the transactions contemplated by this Agreement and
the DMC Acquisition Agreement on a basis no less favorable to the Borrower than
that on which it has heretofore been conducted by Borrower.
5.20 No brokerage commissions, finder's fees or investment banking fees
will be payable to any Person engaged by or on behalf of Borrower or any of its
Affiliates in connection with the transactions contemplated by this Agreement or
the DMC Acquisition Agreement.
5.21 No consent, authorization or approval of, or declaration,
notification, filing or registration with, any governmental or regulatory
authority or any other Person (including, without limitation, the filing of any
"Premerger Notification Report" with the Federal Trade Commission and the
Antitrust Division of the Department of Justice pursuant to Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
regulations issued pursuant thereto), is necessary in connection with the
consummation of the transactions contemplated by the DMC Acquisition Agreement,
which has not been obtained or made on or
30
prior to the date hereof. No such consents, authorizations or approvals impose
any conditions to the consummation of the transactions contemplated by the DMC
Acquisition Agreement or to the conduct by Borrower of its business or otherwise
other than conditions which have been disclosed to Bank in writing and are not
adverse to Borrower or its current business in any material respect.
5.22 Simultaneously with the Closing, the Acquisition of DMC and DSC by the
Borrower shall have occurred pursuant to and in accordance with the terms of the
DMC Acquisition Agreement.
5.23 No representation or warranty by the Borrower contained herein or in
any certificate or other document furnished by or on behalf of the Borrower in
connection with the transactions hereunder contains any untrue statement of
material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made.
5.24 All of the representations and warranties set forth in this Article V
shall survive and continue to be true, complete and correct until all
Obligations of the Borrower hereunder are paid and satisfied in full and this
Agreement shall have been terminated.
ARTICLE VI. NEGATIVE COVENANTS
------------------
The Borrower covenants that until all Obligations of Borrower are paid and
satisfied in full, and the Bank's obligations hereunder have terminated, the
Borrower will not, nor will it permit any of its Subsidiaries to, directly or
indirectly, without the prior consent in writing of the Bank:
6.01 [Intentionally Omitted]
6.02 Make any loans, or advances, whether secured or unsecured, to, or
make any guaranty of, or otherwise become obligated on behalf of any other
Person for, any such loans or advances to, any Person, except for guaranties in
favor of the Bank, and advances for business expenses made to employees in the
ordinary course of business (not to exceed $5,000 per employee at any time
outstanding), and the conversion of an Account to Debt in accordance with the
Side Letter.
6.03 Dispose by sale, assignment, lease, sale and leaseback or otherwise
any of the Collateral, whether now owned or hereafter acquired and including,
without limitation, any notes, accounts receivable, equipment or machinery,
except that, unless an Event of Default shall exist and Bank shall have required
the cessation of inventory sales, such Person may sell its inventory in the
ordinary course of business as conducted by it on the date of this Agreement,
for a reasonably equivalent value.
31
6.04 [Intentionally Omitted.]
6.05 Own, hold, purchase or acquire Stock, bonds, debentures or other
securities of, or make any capital contribution to, any Person or otherwise
engage in an Acquisition, or form any Subsidiary; provided, however, (i)
Borrower may make an Acquisition or Acquisitions in addition to the Acquisition
of DMC and DSC whose total aggregate gross purchase price do not exceed
$5,000,000, and (ii) Borrower may hold or form other Subsidiaries (domestic or
foreign) if (a) prior to forming a new Subsidiary after the date hereof,
Borrower gives 30 days prior written notice thereof to Bank and (b) the total
aggregate amount of assets of all such Subsidiaries other than DMC and DSC does
not exceed 10% of the total assets of Borrower.
6.06 Make any material change in its financial structure, make any
material change in its management (except on prior notice to the Bank), change
its name (except on 90 days' prior notice to the Bank), enter into any merger,
consolidation, dissolution, liquidation, reorganization or recapitalization, or
reclassification of its Stock, or issue any Stock or issue any warrant, right or
option pertaining thereto or other security convertible into any of the
foregoing.
6.07 Engage in business activities or operations substantially different
from and unrelated to its business activities on the date of this Agreement.
6.08 Declare or pay any dividends, or redeem or repurchase any of, or make
any other payment or distribution on account of, any Stock, except as permitted
under the terms of the Indenture.
6.09 Enter into any sale-leaseback transaction.
6.10 [Intentionally omitted]
6.11 Directly or indirectly apply any part of the proceeds of the Loans
for any purpose other than as set forth herein.
6.12 Directly or indirectly apply any part of the proceeds of the Loans to
the purchasing or carrying of any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder.
6.13 Engage in any "prohibited transaction" within the meaning of Section
4975 of the Internal Revenue Code or Section 406 of ERISA with respect to any
"employee benefit plan," as defined in Section 3(3) of ERISA; or effect any
termination of any Plan which would result in a liability to Borrower.
6.14 Create, incur or assume any Debt other than (i) the Loans, (ii) the
Subordinated Notes, (iii) Debt disclosed in Financial Statements provided to the
Bank on or before the date hereof, (iv) Debt (other than Debt for money
borrowed) incurred in the ordinary course of
32
business and which is not prohibited by the other provisions of this Agreement,
(v) new mortgage and Equipment financing Debt permitted pursuant to clause (H)
of the definition of "Permitted Liens", and (vi) Debt in the form of the
guarantee of Debt of FarmPro, Inc., a Pennsylvania corporation in an aggregate
amount not in excess of $6,000,000 at any time outstanding; and (vii) Debt under
the Stockholder Agreements; and Debt of Subsidiaries permitted under Section
6.05 not to exceed $5,000,000 at any time outstanding.
6.15 Enter into, or be a party to, any transaction with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms which are fully disclosed in
writing to the Bank and are no less favorable to such Person than would be
obtained in a comparable arm's length transaction with a person not an
Affiliate.
6.16 Maintain deposit accounts jointly with any Affiliate or commingle any
funds with funds of any Affiliate.
6.17 Change its fiscal year.
6.18 Amend or modify the terms of the Subordinated Notes or the Indenture.
ARTICLE VII. AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants that until all Obligations of the Borrower are paid
and satisfied in full, and the Bank's obligations hereunder have terminated, the
Borrower will, and will cause each of its Subsidiaries to:
7.01 Furnish and deliver to the Bank:
(i) as soon as practicable, and in any event within 90 days after the end
of each fiscal year, (a) a statement of cash flows of the Borrower for
such year, (b) an income statement of the Borrower for such year and
(c) a balance sheet of the Borrower as of the end of such year; all in
reasonable detail, including all footnotes, and audited by certified
public accountants selected by the Borrower and reasonably acceptable
to the Bank and certified by such accountants to have been prepared in
accordance with GAAP, except for any inconsistencies explained in such
certificate;
(ii) as soon as practicable, and in any event within 30 days after the end
of each month commencing with the month ending November 30, 1997, (a)
a statement of cash flows of the Borrower for such month and the
portion of the fiscal year then ended, (b) an income statement of the
Borrower for such month and the portion of the fiscal year then ended
and (c) a balance sheet of the Borrower as of the end of such month;
all in reasonable detail and certified by an Authorized Borrower
33
Representative as complete and accurate in all material respects,
fairly presenting the financial condition of the Borrower and
prepared in accordance with GAAP;
(iii) not later than 45 days after the end of each fiscal year, a
detailed budget for the 3 fiscal years next following, containing
monthly detail for the first of such 3 years, and annual detail for
the following years, and otherwise in form reasonably satisfactory
to Bank;
(iv) at the Closing, thereafter no later than 15 days after the end of
each month, and at such other times as Bank shall request, an
accounts receivable aging in form satisfactory to Bank;
(v) with each set of calendar quarterly Financial Statements delivered
hereunder, a certificate of an Authorized Borrower Representative
(a) calculating Borrower's compliance (or lack thereof) with the
financial covenants in Article VIII hereof, in reasonable detail,
and (b) stating that no Event of Default has occurred and is
continuing or if an Event of Default has occurred and is continuing
setting forth a description of such event and the steps being taken
to remedy such event;
(vi) immediately upon receipt thereof, copies of any management letters,
interim and supplemental reports submitted to the Borrower by
independent accountants in connection with any review of the books
of the Borrower made by such accountants;
(vii) at the time any independent accounting firm is engaged to perform
an audit or other services for Borrower, a letter reasonably
acceptable to Bank to the effect that Bank may rely on such firm's
work product;
(viii) upon request by the Bank, evidence satisfactory to the Bank of the
insurance coverages required under this Agreement; and
(ix) with reasonable promptness, such other information materially
concerning the business, properties, conditions or operations,
financial or otherwise, of the Borrower, or compliance by the
Borrower with any of the covenants in the Documents, as the Bank
may from time to time reasonably request.
7.02 Furnish and deliver to Bank:
(i) immediately after the occurrence thereof, notice of any Event of
Default or of any fact, condition or event that with the giving of
notice or passage of time or both, would reasonably be expected to
become an Event of Default, or of the failure by the Borrower to
observe any of its respective undertakings hereunder;
34
(ii) immediately after the occurrence thereof, notice of any default under
any Debt, or under any indenture, mortgage or other agreement
relating thereto for which the Borrower or any of its Subsidiaries is
liable;
(iii) immediately after obtaining knowledge thereof, notice of any
litigation or proceeding in which the Borrower or any of its
Subsidiaries is a party if the Borrower reasonably estimates that an
adverse decision therein would require the Borrower or any of its
Subsidiaries to pay over more than $500,000.00 or deliver assets the
value of which exceeds such sum (whether or not the claim is
considered to be covered by insurance);
(iv) immediately after receipt of notice thereof, notice of the
institution of any other suit or proceeding involving the Borrower or
any of its Subsidiaries that the Borrower reasonably determines could
materially and adversely affect the Borrower's business, properties
or financial condition; and
(v) immediately after the occurrence thereof, notice of any other matter
which has resulted in, or might result in, a materially adverse
change in the business, properties, or the financial condition of the
Borrower or any of its Subsidiaries.
7.03 Promptly pay and discharge when due all taxes, assessments and other
governmental charges imposed upon it, or upon its income, profits or property,
and all claims for labor, material or supplies which, if unpaid, might by law
become a lien or charge upon its property; provided, however, that it shall not
be required to pay any tax, assessment, charge or claim if so permitted by law,
so long as the validity thereof shall be contested in good faith by appropriate
proceedings and adequate reserves therefor in accordance with GAAP shall be
maintained on its books.
7.04 Maintain its inventory, equipment, real estate and other properties
in good condition and repair (normal wear and tear excepted), pay and discharge
or cause to be paid and discharged when due, the costs of repairs to or
maintenance of the same, and pay or cause to be paid all rental or mortgage
payments due on the same except if it is in good faith contesting by appropriate
proceedings such amounts due and is maintaining adequate reserves for such
liability in accordance with GAAP.
7.05 Maintain and comply with leases covering real property, if any, used
by it in accordance with the respective terms thereof so as to prevent any
default thereunder which may result in the exercise or enforcement of any
landlord's or other lien against it or its property; provided, however, that it
may contest any matters in connection with such leases in good faith and by
appropriate proceedings if it makes such payments as are required by law and
maintains adequate reserves on its books in accordance with GAAP in connection
therewith.
35
7.06 Maintain its corporate existence, maintain all rights, privileges,
franchises, permits and approvals necessary or desirable for the continuation of
its business, and comply with the requirements of all material agreements to
which it is a party or by which any of its assets is bound, and all applicable
Laws, including Environmental Laws, and orders of any Governmental Authority,
noncompliance with which would materially adversely affect its business,
properties or financial condition, or ability to repay its Obligations.
7.07 Keep adequate records and books of account and inventory, in which
complete entries will be made in accordance with its past practices and
consistent with sound business practice, reflecting all of its financial
transactions, and collect its accounts only in the ordinary course of business.
7.08 Permit any of the Bank's representatives to examine and inspect the
Collateral, its business premises, all other of its properties and operations,
and all books of account, records, reports and other papers and to make copies
and extracts therefrom, and to discuss its affairs, finances and accounts with
its officers and employees or its independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss the finances and
affairs of the Borrower and its Subsidiaries), all at such reasonable times and
as often as may be reasonably requested. The Borrower shall pay all of Bank's
reasonable expenses incurred in connection with such examinations and
inspections.
7.09 Pay when due all of its Debt except if (with respect to Debt other
than the Obligations) it is in good faith contesting by appropriate proceedings
such amounts due and has maintained adequate reserves for such liability in
accordance with GAAP.
7.10 At all times make prompt payment of contributions required to meet
the minimum funding standards set forth in ERISA with respect to each of its
Plans; promptly after the filing thereof, furnish to the Bank copies of any
annual report required to be filed pursuant to ERISA in connection with each
Plan; notify the Bank as soon as practicable of any Reportable Event and of any
additional act or condition arising in connection with any Plan which might
constitute grounds for the termination thereof by PBGC or for the appointment by
the appropriate United States district court of a trustee to administer any
Plan; and furnish to the Bank, promptly upon the Bank's request therefor, such
additional information concerning any "employee benefit plan," as defined in
Section 3(3) of ERISA, as may be reasonably requested by the Bank.
7.11 At the Bank's request, execute and/or deliver to the Bank, at any
time or times hereafter, all Supplemental Documentation that the Bank may
request, in form and substance acceptable to the Bank, and pay the costs of any
recording or filing of the same. The Borrower hereby irrevocably makes,
constitutes and appoints the Bank (and all Persons designated by the Bank for
that purpose) as Borrower's true and lawful attorney, effective immediately upon
the failure or refusal of the Borrower to execute and/or deliver to the Bank any
Supplemental Documentation required hereby, to sign the name of the Borrower on
any of the Supplemental Documentation and to deliver any of the Supplemental
Documentation to such Persons as the
36
Bank, in its sole discretion, may elect. The Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement and may be filed by
the Bank in any filing office.
7.12 Maintain, in addition to the insurance on Collateral required
pursuant to Section 4.09 above, (i) liability insurance in form, with insurers
and in amounts as may be satisfactory to the Bank, showing the Bank as an
additional insured, and (ii) fidelity bonds and such other insurance in form,
with insurers and in amounts as may be satisfactory to the Bank.
7.13 Maintain its principal banking accounts with the Bank.
ARTICLE VIII. FINANCIAL COVENANTS
-------------------
The Borrower covenants that until all Obligations of Borrower have been
paid and satisfied in full, and the Bank's obligations hereunder have
terminated, the Borrower on a consolidated basis with its subsidiaries will:
8.01 Have and maintain at all times in respect of any period of four
consecutive calendar quarters ending with a calendar quarter in each year listed
below a Funded Debt to EBITDA Ratio of not greater than 5 to 1 in 1997 and 1998,
4.75 to 1 in 1999 and 4.50 to 1 in 2000.
8.02 Have and maintain at all times a Fixed Charge Coverage Ratio of not
less than 1.50 to 1.
8.03 Have in respect of any period of four consecutive calendar quarters
EBITDA of not less than $18,000,000.
ARTICLE IX. EVENTS OF DEFAULT
-----------------
9.01 The occurrence of any of the following events or acts shall
constitute an Event of Default ("Event of Default"):
(A) The Borrower defaults in the payment of any of its Obligations or any
part thereof when the same shall become due and payable, either by their terms
or as otherwise herein provided, and such default continues uncured for a period
of two days.
(B) Any Financial Statement, representation or warranty made by the
Borrower herein or delivered by the Borrower pursuant hereto or otherwise made
in writing by the Borrower in connection with this Agreement proves to have been
false in any material respect as of the date on which it was made or deemed
made; the Borrower shall default in performance of any of the covenants set
forth in Article VII of this Agreement (other than those set forth in Sections
7.01 and 7.02), and such default shall continue uncured for a period of 30 days
following the earlier
37
of (i) notice from Bank to Borrower, or (ii) the day on which Borrower otherwise
becomes aware of same; or the Borrower defaults in the performance of any of the
other covenants, conditions or agreements contained in this Agreement.
(C) The Borrower or any of its Subsidiaries suffers to exist any event of
default (other than an event of default which is wrongly asserted by the other
party and which the Borrower is contesting in good faith) under any agreement
binding the Borrower or any of its Subsidiaries and involving an obligation in
excess of $500,000.00, and such event of default continues beyond any applicable
grace period.
(D) The Borrower or any of its Subsidiaries files a petition under any
section or chapter of the United States Bankruptcy Code or any similar federal
or state law or regulation, the Borrower or any of its Subsidiaries admits its
inability to pay debts as they mature, the Borrower or any of its Subsidiaries
makes an assignment for the benefit of one or more of its creditors, the
Borrower or any of its Subsidiaries makes an application for the appointment of
a receiver, trustee or custodian for any of its assets, or the Borrower or any
of its Subsidiaries files any case or proceeding for its reorganization,
dissolution or liquidation or for relief from creditors.
(E) The Borrower or any of its Subsidiaries is enjoined, restrained or in
any way prevented by court order from conducting all or any material part of its
business affairs, a petition under any section or chapter of the United States
Bankruptcy Code or any similar federal or state law or regulation is filed
against the Borrower or any of its Subsidiaries, any case or proceeding is filed
against the Borrower or any of its Subsidiaries for its reorganization,
dissolution or liquidation or for creditor relief, or an application is made by
any Person other than the Borrower or any of its Subsidiaries for the
appointment of a receiver, trustee, or custodian for any of the Borrower's or
any of its Subsidiaries' assets, and such injunction, restraint, petition or
application is not dismissed or stayed within thirty (30) days after the entry
or filing thereof.
(F) The Borrower or any of its Subsidiaries conceals or removes or permits
to be concealed or removed any part of its property with intent to hinder, delay
or defraud its creditors or any of them, or makes or suffers to be made a
transfer of any of its property that may be fraudulent under any federal or
state bankruptcy, fraudulent conveyance or similar law.
(G) The Borrower or any of its Subsidiaries permits any of its assets to
be attached, seized, subjected to a writ or distress warrant, or levied upon, or
to come within the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors and does not cause the same to be terminated within
thirty (30) days thereafter.
(H) Other than Permitted Liens, a notice of any charge is filed of record
with respect to all or any of the Borrower's or any of its Subsidiaries' assets
or any charge becomes a lien or encumbrance upon any such assets and the same is
not released within thirty (30) days after the same becomes a lien or
encumbrance.
38
(I) The occurrence of any of the following events: (i) the happening of a
Reportable Event with respect to any Plan which the Bank determines in good
faith might constitute grounds for the termination by the PBGC of such Plan or
for the appointment by the appropriate United States district court of a trustee
to administer such Plan; (ii) any Plan which is not "sufficient for benefit
liabilities" (as determined under Section 4041(d)(1) of ERISA) shall be
terminated; (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate
shall effect a complete or partial withdrawal from any Multiemployer Plan
without the prior written consent of the Bank and shall have a withdrawal
liability (as determined under the Multiemployer Pension Plan Amendments Act of
1980); (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall,
without the prior written consent of the Bank, withdraw from a Plan under which
liability may be imposed pursuant to Section 4063 of ERISA; (v) the appointment
of a trustee by an appropriate United States district court to administer any
Plan; or (vi) the institution of any proceedings by the PBGC to terminate any
Plan or to appoint a trustee to administer any Plan.
(J) The Borrower or any of its Subsidiaries suffers a final judgment for
payment of money which shall not be on appeal and does not discharge the same
within a period of thirty (30) days.
(K) A judgment creditor of the Borrower obtains possession of any
Collateral by any means, including without limitation, levy, distraint, replevin
or self-help.
(L) The occurrence of a default or an Event of Default under any of the
other Documents which is not cured within the time, if any, specified therefor
in such other Document; or the actual or attempted unilateral termination,
modification or abrogation by any Person other than the Bank of any obligation
under, or of any right or remedy of Bank under, any of the Documents.
(M) Xxxx X. Xxxxx fails to own directly, beneficially and of record
greater than 50% of each class of the issued and outstanding voting Stock of the
Borrower.
(N) The occurrence of an "Event of Default" under the Subordinated Notes,
the Indenture, or the DMC Revolving Credit Note.
9.02 Upon the occurrence of any Event of Default, and at any and all times
while any Event of Default shall be continuing, the Bank shall have all rights
and remedies provided by this Agreement or any other Document and by applicable
law and, without limiting the generality of the foregoing, may, at its option,
declare the Revolving Credit Loan Commitment to be terminated by giving written
notice thereof to the Borrower, and upon such declaration, all Obligations of
the Borrower shall thereupon be and become forthwith, due and payable, without
any presentment, demands, protest or other notice of any kind, all of which are
hereby expressly waived. Further, in addition to all the rights and remedies
provided in Article 9 of the UCC and any other applicable law, the Bank may (but
is under no obligation to do so): take physical possession of any of the
Collateral and sell, lease or otherwise dispose of the Collateral in whole or in
part;
39
require the Borrower to assemble the Collateral to which the Borrower has or is
entitled to possession at a place designated by the Bank, which is reasonably
convenient to both parties; collect any money due or to become due and enforce
in the Borrower's name all rights with respect to the Collateral; receive and
open mail addressed to the Borrower; and/or notify any Account Debtors (whether
or not such Account Debtors are in default) to make payments directly to the
Bank. The Borrower agrees to deliver to the Bank promptly upon receipt thereof,
in the form in which received (together with all necessary endorsements), all
payments received by the Borrower in respect of any Account. The Bank may apply
all such payments against the Borrower's Obligations or at the Bank's option to
any of the Borrower's accounts maintained at the Bank.
9.03 In exercising its right to sell, lease or otherwise dispose of the
Collateral, the Bank may sell, lease or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, all as the Bank, in its sole discretion,
may deem advisable; such sales may be adjourned from time to time with or
without notice. The Bank shall have the right to conduct such sales on the
Borrower's premises or elsewhere and shall have the right to use the Borrower's
premises without charge for such sales for such time or times as the Bank may
see fit. The Bank is hereby granted a license or other right to use, without
charge, the Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, tradenames, trademarks, service marks and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and the Borrower's rights under
all licenses and all franchise agreements shall inure to the Bank's benefit.
The Bank shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and the Bank may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Borrower's Obligations.
The proceeds realized from the sale of any Collateral shall be applied first to
the costs, expenses and attorneys' fees and expenses incurred by the Bank for
collection and for acquisition, completion, protection, removal, storage, sale
and delivery of the Collateral; second to interest due upon any of the
Borrower's Obligations; and third to the principal of the Borrower's
Obligations. If any deficiency shall arise, the Borrower shall remain liable to
the Bank therefor.
9.04 Any notice of any sale, lease, other disposition, or other intended
action by the Bank shall be reasonable if it is given to the Borrower at least
ten (10) days in advance of the intended disposition or other intended action.
9.05 Upon and after the occurrence of an Event of Default, the Borrower
irrevocably designates, makes, constitutes and appoints the Bank (and all
persons designated by the Bank) as the Borrower's true and lawful attorney, and
the Bank or its agent, may, without notice to the Borrower, and at such time or
times thereafter as the Bank or said agent, in its sole discretion, may
determine, in the Borrower's or the Bank's name: (i) demand payment of the
Accounts; (ii) enforce payment of the Accounts, by legal proceedings or
otherwise; (iii) exercise all of the
40
Borrower's rights and remedies with respect to the collection of the Accounts
and Special Collateral; (iv) settle, adjust, compromise, extend or renew the
Accounts; (v) settle, adjust or compromise any legal proceedings brought to
collect the Accounts or any other dispute with respect thereto; (vi) if
permitted by applicable law, sell or assign the Accounts and Special Collateral
upon such terms, for such amounts and at such time or times as the Bank deems
advisable; (vii) discharge and release the Accounts and Special Collateral;
(viii) prepare, file and sign the Borrower's name on a Proof of Claim in
Bankruptcy or similar document against any Account Debtor; (ix) prepare, file
and sign the Borrower's name on any notice of lien, assignment or satisfaction
of lien or similar document in connection with the Accounts and Special
Collateral; (x) do all acts and things necessary, in the Bank's sole discretion,
to fulfill the Borrower's obligations under this Agreement; (xi) endorse the
name of the Borrower upon any item of payment or proceeds and deposit the same
to the account of the Bank on account of the Borrower's Obligations; (xii)
endorse the name of the Borrower upon any chattel paper, document, instrument,
invoice, freight xxxx, xxxx of lading or similar document or agreement relating
to the Accounts, Inventory and Special Collateral; (xiii) use the Borrower's
stationery and sign the name of the Borrower to verifications of the Accounts
and notices thereof to Account Debtors; and (xiv) use the information recorded
on or contained in any data processing equipment and computer hardware and
software relating to the Accounts, Inventory and Special Collateral to which the
Borrower has access.
9.06 The Borrower agrees that in any sale of Collateral consisting of
securities, the Bank is hereby authorized to comply with any limitation or
restriction in connection with such sale as Bank may be advised by counsel is
necessary or advisable in order to avoid any violation of applicable Law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict such
prospective bidders and purchasers to Persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of that portion of the Collateral consisting of
securities), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and the Borrower
further agrees that such compliance shall not result in such sale being
considered commercially unreasonable, nor shall the Bank be liable or
accountable to the Borrower for any discount allowed by reason of the fact that
Collateral was sold in compliance with any such limitation or restriction.
ARTICLE X. MISCELLANEOUS
-------------
10.01 No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder or under any other Documents shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder or under any other Document. The
remedies herein provided and under any other Document are cumulative and not
exclusive of any remedies provided by law.
41
10.02 This Agreement and the other Documents constitute the entire
agreement between the parties and there are no promises expressed or implied
unless contained herein and therein. No amendment, modification, termination or
waiver of any provision of the Documents nor consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent shall be
effective only for the specific purpose for which given, and shall not be deemed
a waiver of or consent to any other matter or to the same matter in a different
instance. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
10.03 The Borrower will pay any documentary, stamp or similar taxes
payable in respect of the Documents or the Collateral granted hereby or in
connection herewith. The Borrower will, on demand, reimburse the Bank for the
fees and expenses of legal counsel for the Bank incurred by the Bank in
connection with the preparation of the Documents, and the negotiation and
closing of the transactions contemplated hereby. The Borrower will further, on
demand, reimburse the Bank for all expenses, including the fees and expenses of
legal counsel for the Bank, incurred by the Bank in connection with any
amendment or modification of the Documents, the administration of the Loans and
the enforcement of the Documents and the collection or attempted collection of
the Obligations of the Borrower.
10.04 (A) For the purposes of any action or proceeding involving the
Documents or any other agreement or document referred to therein, the Borrower
hereby expressly submits to the jurisdiction of all federal and state courts
located in the State of Illinois and consents that any order, process, notice of
motion or other application to or by any of said courts or a judge thereof may
be served within or without such court's jurisdiction by registered mail or by
personal service, provided a reasonable time for appearance is allowed. The
Borrower hereby irrevocably waives any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Document brought in any federal or state
court sitting in Xxxx County, State of Illinois, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
(B) THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
(TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, THE NOTES, ANY
OTHER OF THE DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT REFERRED TO HEREIN OR
THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY.
10.05 The Borrower agrees to indemnify the Bank from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including, without limitation, fees and disbursements of
42
counsel) which may be imposed on, incurred by, or asserted against the Bank in
any litigation, proceeding or investigation instituted or conducted by any
governmental agency or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the Stock Redemption Agreement, whether or not the
Bank is a party thereto, except to the extent that any of the foregoing arises
out of the gross negligence or wilful misconduct of the Bank.
10.06 The Borrower acknowledges and agrees that this Agreement constitutes
a commitment on the part of the Bank to make advances, incur obligations and
otherwise to give value to the Borrower and that all financing statements filed
hereunder shall remain in full force and effect until this Agreement shall have
been terminated even if, at any time or times prior to such termination, no
Loans or other Obligations shall be outstanding hereunder. Accordingly, the
Borrower waives any rights which it may have under Section 9-404(1) of the UCC
to demand the filing of termination statements with respect to the Collateral,
and agrees that the Bank shall not be required to send such termination
statements to the Borrower, or to file them with any filing office, unless and
until this Agreement shall have been terminated and all Obligations of the
Borrower shall have been paid in full in immediately available funds.
10.07 Any notices or consents required or permitted by this Agreement
shall be in writing and shall be delivered in person or sent by certified mail,
postage prepaid, return receipt requested, or delivered by facsimile, or
delivered by a nationally recognized overnight express delivery service, in any
case addressed as follows, unless such address is changed by written notice
hereunder:
(i) If to the Borrower:
The GSI Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
FAX: (000) 000-0000
With a copy to:
43
The GSI Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
FAX: (000) 000-0000
(ii) If to the Bank:
LaSalle National Bank
Metropolitan Division
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
FAX: (000) 000-0000
With a copy to:
Xxxxx, Xxxxx and Xxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
FAX: (000) 000-0000
Any such notice or communication shall be deemed to have been given either at
the time of personal delivery, or in the case of overnight express delivery, as
of the date delivery was first attempted, or in the case of facsimile, upon
receipt or in the case of certified mail, five (5) days after delivery to the
United States Postal Service.
10.08 This Agreement may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
10.09 This Agreement shall become effective when it shall have been
executed by the Borrower and the Bank, and thereafter shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
44
10.10 This Agreement has been, and any other Documents will be, delivered
and accepted in and shall be deemed to be, contracts made under and governed by
the laws of the State of Illinois, and for all purposes shall be construed in
accordance with the laws of said State.
10.11 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction; wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable Law.
10.12 All covenants, agreements, representations and warranties made by
the Borrower herein and any and all certificates and instruments delivered by
the Borrower in connection herewith shall, notwithstanding any investigation by
the Bank, be deemed material and relied on by the Bank and shall survive the
execution and delivery to the Bank of this Agreement, the Notes, the other
Documents, and any extension or renewal thereof.
10.13 This Agreement shall secure and govern the terms of any amendments,
extensions or renewals to either or both of the Notes.
10.14 From time to time, the Borrower will execute and deliver to Bank
such additional documents and will provide such additional information as the
Bank may reasonably require to carry out the terms of this Agreement and be
informed of the Borrower's status and affairs.
10.15 All Exhibits and Schedules attached to this Agreement shall be
deemed incorporated herein by this reference.
10.16 Whenever under the terms of this Agreement, the time for performance
of a covenant or condition falls upon a day which is not a Business Day, such
time for performance shall be extended to the next Business Day. Unless
otherwise stated, all references herein to "days" shall mean calendar days.
10.17 This Agreement and the other Documents supersede all prior
negotiations, understandings and agreements of the parties hereto and thereto in
respect of the transactions contemplated hereby, including without limitation
those expressed in any commitment or proposal letter.
10.18 Borrower hereby unconditionally and irrevocably guarantees the full
and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on the DMC Revolving Credit Note
issued by the Subsidiary Borrowers pursuant to this Agreement, and the full and
punctual payment of all other amounts payable by each of the Subsidiary
Borrowers under this Agreement. Upon failure by any Subsidiary Borrower to pay
punctually any such amount, Borrower shall forthwith on demand pay the amount
not so paid at the place and in the manner specified in this Agreement. In
addition (and without limiting the foregoing), upon the DMC
45
Revolving Credit Loan of the Subsidiary Borrowers being declared or otherwise
becoming immediately due and payable, Borrower shall forthwith on demand pay all
amounts payable under such DMC Revolving Credit Loan at the place and in the
manner specified in this Agreement.
10.19 The obligations of Borrower under Section 10.18 shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of any Subsidiary Borrower under this Agreement or the
DMC Revolving Credit Note, by operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement or
the DMC Revolving Credit Note;
(c) any release, impairment, non-perfection or invalidity of any direct or
indirect security for any obligation of any Subsidiary Borrower under this
Agreement or any Document or the DMC Revolving Credit Note;
(d) any change in the corporate existence, structure or ownership of any
Subsidiary Borrower or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Subsidiary Borrower or such Subsidiary
Borrower's assets or any resulting release or discharge of any obligation of any
Subsidiary Borrower contained in this Agreement or the DMC Revolving Credit
Note;
(e) the existence of any claim, set-off or other right which Borrower may
have at any time against any Subsidiary Borrower, or any other Person, whether
in connection herewith or any unrelated transaction, provided that nothing
herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
Subsidiary Borrower for any reason of this Agreement or the DMC Revolving Credit
Note, or any provision of applicable law or regulation purporting to prohibit
the payment by any Subsidiary Borrower of the principal of or interest on the
DMC Revolving Credit Note or any other amount payable by any Subsidiary Borrower
under this Agreement or the DMC Revolving Credit Note; or
(g) any other act or omission to act or delay of any kind by any
Subsidiary Borrower or any other person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal or
equitable discharge of Borrower's obligations as guarantor hereunder.
10.20 Borrower's obligations as guarantor hereunder shall remain in full
force and effect until the Revolving Credit Loan Commitment shall have
terminated and all Obligations of the Subsidiary Borrowers under this Agreement
and the DMC Revolving Credit Note shall have been paid in full. If any time any
payment of principal, interest or any other amount payable by any
46
Subsidiary Borrower under this Agreement or the DMC Revolving Credit Note is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Subsidiary Borrower or otherwise,
Borrower's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
10.21 Borrower irrevocably waives acceptance hereof, presentment, demand,
protest and any notice not provided for herein, as well as any requirement that
at any time any action be taken by any Person against any Subsidiary Borrower or
any other Person.
10.22 Notwithstanding any payment made by or for the account of any
Subsidiary Borrower pursuant to this Agreement, Borrower shall not be subrogated
to any right of the Bank until such time as the Bank shall have received final
payment in cash of the full amount of all Obligations.
10.23 If acceleration of the time for payment of any amount payable by any
Subsidiary Borrower under this Agreement or the DMC Revolving Credit Note is
stayed upon the insolvency, bankruptcy or reorganization of such Subsidiary
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by Borrower hereunder forthwith on
demand by the Bank.
[SIGNATURES ON NEXT PAGE]
47
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE GSI GROUP, INC.
By: /s/ Xxxxx Xxxxx
-------------------------
Title: CEO
----------------------
LASALLE NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------
Title: 1st Vice President
----------------------
48
Exhibit and Schedule Index
--------------------------
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of DMC Revolving Credit Note
Schedule 1 - Certain Permitted Liens
Schedule 2 - Collateral Locations and Places of Business
Schedule 3 - Trade Names, etc.
Schedule 4 - Intellectual Property
Schedule 5 - Stock Ownership
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SUBSTITUTE REVOLVING CREDIT NOTE
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$40,000,000.00 Chicago, Illinois
November 5, 1997
FOR VALUE RECEIVED, The GSI Group, Inc., a Delaware corporation ("Maker"),
promises to pay to the order of LaSalle National Bank, a national banking
association ("Bank"), at its offices at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 or at such other place as the holder of this Note may designate
in writing to the Maker, on or before October 31, 2000, the principal sum of
Forty Million Dollars ($40,000,000.00), or, if less, the aggregate amount of the
Revolving Credit Loans advanced and unpaid pursuant to a certain Second Amended
and Restated Loan and Security Agreement made by and between the Maker and the
Bank dated as of even date herewith, as the same may be amended from time to
time (the "Loan Agreement"), the terms of which are incorporated by reference
and made a part of this Note as though fully set out herein. Capitalized terms
used and not otherwise defined herein shall have the meanings ascribed to such
terms in the Loan Agreement. The amount advanced and outstanding under the Loan
Agreement as shown on the books and records of the Bank shall be considered
correct and conclusively binding on the Maker absent manifest error.
The Maker further promises to pay interest on the Revolving Credit Loans as
provided in the Loan Agreement.
All payments received from the Maker hereunder shall be applied by the Bank
in accordance with the terms of the Loan Agreement.
This Note and any renewals and extensions hereof, and any other Obligations
of the undersigned to the Holder hereof (the term "Holder" shall include the
Bank and any subsequent holder hereof) due or to become due, now existing or
hereafter contracted, and howsoever acquired by the Holder, are secured in the
manner described in the Loan Agreement.
This Note is issued under the Loan Agreement and this Note and the Holder
are entitled to all of the benefits provided for by the Loan Agreement or
referred to therein, to which Loan Agreement reference is made for a statement
thereof. Pre-payments may be made hereon only at the times, in the events and
in the manner provided in the Loan Agreement.
All unpaid amounts owing on this Note or on any other Obligations
immediately shall become due and payable at the option of the Holder, without
notice or demand, upon the occurrence of any Event of Default.
In the event of default in the payment of any sums due under this Note, the
Maker hereby agrees that the Bank may offset all money, bank or other deposits
or credits now or hereafter held by the Bank or owed by the Bank to Maker
against all amounts due under this Note or against any other amounts which may
be due the Bank from the Maker.
No clause or provision contained in this Note or any documents related
hereto shall be construed or shall so operate (a) to raise the interest rate set
forth in this Note above the lawful maximum, if any, in effect from time to time
in the applicable jurisdiction for loans to borrowers of the type, in the
amount, for the purposes, and otherwise of the kind contemplated, or (b) to
require the payment or the doing of any act contrary to law, but if any clause
or provision contained shall otherwise so operate to invalidate this Note, in
whole or in part, then (i) such clauses or provisions shall be deemed modified
to the extent necessary to be in compliance with the law, or (ii) to the extent
not possible, shall be deemed void as though not contained and the remainder of
this Note and such document shall remain operative and in full force and effect.
All makers and any endorsers, guarantors, sureties, accommodation parties
and all other persons liable or to become liable for all or any part of this
indebtedness, jointly and severally waive diligence, presentment, protest and
demand, and also notice of protest, of demand, of nonpayment, of dishonor and of
maturity and also recourse or suretyship defenses generally; and they also
jointly and severally hereby consent to any and all renewals, extensions or
modifications of the terms of this Note, including time for payment, and further
agree that any such renewals, extension or modification of the terms of this
Note or the release or substitution of any security for the indebtedness under
this Note or any other indulgences shall not affect the liability of any of the
parties for the indebtedness evidenced by this Note. Any such renewals,
extensions or modifications may be made without notice to any of said parties.
The Maker shall be liable to the Holder for all costs and expenses incurred
in connection with collection, whether by suit or otherwise, of any amount due
under this Note, including, without limitation, reasonable attorneys' fees, as
more fully set forth in the Loan Agreement.
This Note shall be governed by and construed in accordance with the laws of
the State of Illinois.
This Note evidences Senior Indebtedness and Designated Senior Indebtedness
under the terms of that certain Indenture dated November 5, 1997 between Maker
and LaSalle National Trust, N.A., as trustee regarding Maker's $100,000,000
aggregate principal amount of 10.25% Senior Subordinated Notes due 2007.
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This Note is delivered in substitution for, but not in payment of, that
certain Revolving Credit Note made by Maker in the original principal amount of
$50,000,000 and dated April 14, 1997 (the "Old Note"). All amounts outstanding
under the Old Note are deemed outstanding hereunder.
THE GSI GROUP, INC.
By: /s/ Xxxxx Xxxxx
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Title: CEO
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