CREDIT AND SECURITY AGREEMENT
Dated as of June 28, 1996
AMENDED AND RESTATED
as of April 17, 1998
Between
XXXXXX SLINE, INC.
ICESOLV, INC.
and
BNY FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
I. INTERPRETATION OF THIS AGREEMENT 1
1.1 Restatement and Amendment 1
1.2 Accounting Terms 2
1.3 General Terms 2
1.4 Uniform Commercial Code Terms 22
II. ADVANCES, PAYMENT, INTEREST AND FEES 22
2.1 Loan Advances/Discretionary Rights 22
2.2 Revolving Advances 23
2.3 Procedure for Revolving Advances Borrowing 23
2.4 Disbursement of Advance Proceeds 24
2.5 Term Loan 25
2.6 Acquisition Loan. 27
2.7 Repayment of Advances; Mandatory Prepayments 29
2.8 Repayment of Excess Advances 30
2.9 Statement of Account 30
2.10 Letters of Credit 30
2.11 Issuance of Letters of Credit 31
2.12 Requirements For Issuance of Letters of Credit 31
2.13 Additional Payments 32
III. INTEREST AND FEES 32
3.1 Interest 32
3.2 Letter of Credit Fees 33
3.3 Closing Fee 34
3.4 Collateral Monitoring Fee 34
3.5 Unused Facility 34
3.6 Unauthorized Overadvance Premium 34
3.7 Computation of Interest and Fees 34
3.8 Minimum and Maximum Charges 34
3.9 Increased Costs 35
3.10 Capital Adequacy 35
3.11 Survival 36
IV. COLLATERAL: GENERAL TERMS 36
4.1 Security Interest in the Collateral 36
4.2 Perfection of Security Interest 36
4.3 Disposition of Collateral 37
4.4 Preservation of Collateral 37
4.5 Ownership of Collateral 38
4.6 Defense of Lender's Interests. 38
4.7 Books and Records 39
4.8 Financial Disclosure 39
4.9 Compliance with Laws 39
4.10 Inspection of Premises 40
4.11 Insurance 40
4.12 Failure to Pay Insurance 41
4.13 Payment of Taxes 42
4.14 Payment of Leasehold Obligations 42
4.15 Receivables 42
4.16 Inventory 45
4.17 Maintenance of Equipment 45
4.18 Exculpation of Liability 45
4.19 Environmental Matters 45
4.20 Xxxxx Receivables 48
V. REPRESENTATIONS AND WARRANTIES 48
5.1 Authority 48
5.2 Formation and Qualification 48
5.3 Survival of Representations and Warranties 49
5.4 Tax Returns. 49
5.5 Financial Statements 49
5.6 Corporate Name 50
5.7 O.S.H.A. and Environmental Compliance 50
5.8 Solvency; No Litigation, Violation, Indebtedness or Default 51
5.9 Patents, Trademarks, Copyrights and Licenses 52
5.10 Licenses and Permits 52
5.11 Default of Indebtedness 52
5.12 No Default 52
5.13 No Burdensome Restrictions 52
5.14 No Labor Disputes 53
5.15 Margin Regulations 53
5.16 Investment Company Act 53
5.17 Disclosure 53
5.18 Swaps 53
VI. AFFIRMATIVE COVENANTS 54
6.1 Payment of Fees 54
6.2 Conduct of Business and Maintenance of Existence and Assets 54
6.3 Violations 54
6.4 Government Receivables 54
6.5 Minimum Tangible Net Worth 55
6.6 Minimum Fixed Charge Coverage Ratio 55
6.7 Maximum Leverage Ratio 55
6.8 Minimum EBITDA 55
6.9 Pledge of Credit 56
6.10 Execution of Supplemental Instruments 56
6.11 Payment of Indebtedness 56
6.12 Standards of Financial Statements 56
6.13 Expenses 56
VII. NEGATIVE COVENANTS 57
7.1 Merger, Consolidation, Acquisition and Sale of Assets 57
7.2 Creation of Liens 58
7.3 Guarantees 58
7.4 Investments 58
7.5 Loans 58
7.6 Capital Expenditures 58
7.7 Dividends 58
7.8 Indebtedness 59
7.9 Nature of Business 59
7.10 Transactions with Affiliates 59
7.11 Subsidiaries 59
7.12 Fiscal Year and Accounting Changes 59
7.13 Contingent Obligations 59
VIII. CONDITIONS PRECEDENT 59
8.1 Conditions to Initial Advances 59
8.2 Conditions to Each Advance 63
IX. INFORMATION AS TO BORROWERS. 64
9.1 Disclosure of Material Matters 64
9.2 Schedules 64
9.3 Environmental Reports 65
9.4 Litigation 65
9.5 Occurrence of Defaults, etc 65
9.6 Government Receivables 65
9.7 Annual Financial Statements. 65
9.8 Quarterly Financial Statements 66
9.9 Monthly Financial Statements 66
9.10 Covenant Compliance Certificate 67
9.11 Other Reports 67
9.12 Additional Information 67
9.13 Projected Operating Budget 67
9.14 Variances From Operating Budget 67
9.15 Additional Documents 68
X. EVENTS OF DEFAULT 68
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT 70
11.1 Rights and Remedies 70
11.2 Lender's Discretion 71
11.3 Setoff 71
11.4 Confession of Judgment 71
11.5 Rights and Remedies Not Exclusive 72
XII. WAIVERS AND JUDICIAL PROCEEDINGS 72
12.1 Waiver of Notice 72
12.2 Delay 72
12.3 Jury Waiver 72
XIII. EFFECTIVE DATE AND TERMINATION 73
13.1 Term 73
13.2 Termination 73
XIV. MISCELLANEOUS 74
14.1 Governing Law 74
14.2 Entire Understanding 74
14.3 Successors and Assigns; Participations; New Lenders 74
14.4 Application of Payments 75
14.5 Indemnity 76
14.6 Notice 76
14.7 Survivability 77
14.8 Expenses 77
14.9 Injunctive Relief 77
14.10Captions 77
14.11Counterparts. 77
CREDIT AND SECURITY AGREEMENT
This CREDIT AND SECURITY AGREEMENT (the "Agreement) is dated
as of June 28, 1996 and amended and restated as of April 17,
1998 between XXXXXX SLINE, INC., a Delaware corporation, and
ICESOLV, INC., a Pennsylvania corporation (each a "Borrower"
and collectively, "Borrowers"), and BNY FINANCIAL CORPORATION
("Lender"), a New York corporation. In consideration of the
mutual conditions and agreements set forth in this Agreement,
and for good and valuable consideration, the receipt of which
is hereby acknowledged, the Lender and the Borrowers hereby \
agree as follows:
RECITALS
A.The Borrowers and the Lender are parties to a certain
Credit and Security Agreement dated as of June 28, 1996,
as amended pursuant to certain Amendments dated as of May 21, 1997,
June 26, 1997, September 17, 1997 and January 2, 1998 (such Credit
and Security Agreement, as so amended, being hereinafter referred
to as the "Existing Loan Agreement"), providing for certain loans
and other financial accommodations by the Lender to the Borrowers.
B.The Borrowers and the Lender have agreed to amend the Existing
Loan Agreement in certain respects, and have agreed to execute and
deliver this Agreement as a restatement of the Existing Loan
Agreement, in order to incorporate the new amendments and all
prior amendments into a single document.
X.Xx is the intent of the parties hereto that the execution
and delivery of this Agreement, made for the purpose described
in the immediately preceding Recital, shall not effectuate a
novation of the indebtedness outstanding under the Existing
Loan Agreement, but rather a substitution of certain of the
terms governing the payment and performance of such indebtedness.
I. INTERPRETATION OF THIS AGREEMENT
1.1 Restatement and Amendment.
The Borrowers and the Lender hereby agree that, effective upon the
execution and delivery of this Agreement by each such party:
(a) the terms and provisions of the Existing Loan Agreement
shall be and hereby are amended, superseded and restated in
their entirety by the terms and provisions of this Agreement,
except that any grant of security by any Borrower to the Lender
pursuant to Section 4.1 of the Existing Loan Agreement shall remain
effective as of the date any such grant first became effective, and
(b) the indebtedness evidenced by the Existing Loan Agreement shall
be payable solely in accordance with the terms of this
Agreement and any Other Documents delivered pursuant hereto.
The Borrowers agree that the Lender shall have no obligations
under the Existing Loan Agreement, except to the extent that
any obligations thereunder may be restated in this Agreement
or the Other Documents. The Borrowers and the Lender agree
that the execution and delivery of this Agreement shall
not effectuate a novation of the indebtedness outstanding
under the Existing Loan Agreement, but rather a substitution
of certain of the terms governing the payment and performance
of such indebtedness.
1.2 Accounting Terms.
As used in this Agreement or any certificate, report or
other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.3 or elsewhere in
this Agreement and accounting terms partly defined in Section 1.3
to the extent not defined, shall have the respective meanings
given to them under GAAP.
1.3 General Terms.
For purposes of this Agreement the following terms shall have
the following meanings:
"Acquisition Loan" shall mean Advances made pursuant to
Section 2.6 hereof.
"Acquisition Loan Rate" shall mean an interest rate per
annum equal to the Alternate Base Rate plus one percent (1%).
"Acquisition Note" shall mean the promissory note described
in Section 2.6 hereof.
"Advances" shall mean and include the Revolving Advances and
Letters of Credit, as well as the Term Loan and Acquisition Loan
under Article II hereof.
"Affiliate" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person,
or (b) any Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x)
to vote 5% or more of the securities having ordinary voting
power for the election of directors of such Person, or (y)
to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agreement" shall mean this agreement, together with all
exhibits, amendments, modifications and supplements hereto as
may be in effect from time to time.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Prime Rate in effect on
such day and (ii) the Federal Funds Rate in effect on such day
plus 1/2 of 1%.
"Amended and Restated Closing Date" shall mean April 17, 1998,
or such other date as may be agreed to by the parties hereto
"Applicable Margin" for any period shall be determined by the
ratio of Funded Indebtedness to EBITDA calculated for the most
recent fiscal quarter with respect to the four fiscal quarters
then ended which shall be subject to adjustment from time to time
as set forth in Section 3.1. The Applicable Margin with respect to
Eurodollar Rate Loans and Domestic Rate Loans, as the case may be,
shall be the percentage set forth below as corresponds to the
applicable ratio set forth below:
Funded Indebtedness Domestic Eurodollar
To EBITDA Rate Margin Rate Margin
Greater than 4.5 to 1.0 1.00% 3.50%
Greater than 4.0 to 1.0 0.50% 3.00%
But equal to or less than
4.5 to 1.0
Greater than 3.5 to 1.0 0% 2.50%
But equal to or less than
4.0 to 1.0
Greater than 3.0 to 1.0 0% 2.25%
But equal to or less than
3.5 to 1.0
Greater than 2.5 to 1.0 0% 2.00%
But equal to or less than
3.0 to 1.0
Greater than 2.0 to 1.0 0% 1.75%
But equal to or less than
2.5 to 1.0
Equal to or less than 0% 1.50%
2.0 to 1.0
"Authority" shall have the meaning set forth in Section 4.19(d).
"Average Monthly Eurodollar Rate" shall mean the 30 day
London Interbank Offered Rate ("LIBOR") as published in the
Wall Street Journal averaged monthly.
"Bank" shall mean The Bank of New York.
"Blocked Accounts" shall have the meaning set forth in Section 4.15(h).
"Blocked Account Agreements" shall mean (i) the Blocked
Account Agreement entered into between the Borrowers, the Lender
and Mellon Bank, N.A., and (ii) the Blocked Account Agreement entered
into between the Borrowers, the Lender and Chemical Bank.
"Bonded Jobs" shall mean jobs performed by the Borrowers in the
normal course of the Borrowers' business, for which the Borrowers are
required to post a performance bond.
"Borrowers" shall mean Icesolv and Xxxxxx, and all their
permitted successors and assigns.
"Business Day" shall mean any day other than a day on which
commercial banks in New York are authorized or required by law to close.
"Canisco" shall mean Canisco Resources, Inc., a Delaware
corporation, and all its permitted successors and assigns.
"Canisco Guaranty" shall mean the guaranty of the obligations
of Borrowers executed by Canisco in favor of Lender, dated June 28, 1996,
together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Canisco Security Agreement" shall mean the Security
Agreement dated June 28, 1996, between Canisco and the Lender,
together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Xxxxxx" shall mean Xxxxxx Sline, Inc., a Pennsylvania
corporation, and all its permitted successors and assigns.
"Capital Expenditures" shall mean, for any period, all payments
made by or due (whether or not paid) from the Borrowers, Canisco,
or any of their Subsidiaries during such period in respect of any
asset which would be classified as property, plant or equipment
(including payments in respect of any Capital Lease) or included
in a comparable classification on the Borrowers' and Canisco's
consolidated balance sheet prepared in accordance with GAAP.
"Capital Lease" shall mean any lease of any property
(whether real, personal or mixed) which, in conformity with
GAAP, is or should be accounted for as a capital lease on the
balance sheet of the lessee.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq.
"Change of Ownership" shall mean (a) any transfer (whether
in one or more transactions) of ownership of not less than 50%
of the common stock of either Borrower held by the Original
Owners (including for the purposes of the calculation of percentage
ownership, any shares of common stock into which any capital stock
of either Borrower held by any of the Original Owners is
convertible or for which any such shares of the capital stock
of either Borrower or of any other Person may be exchanged and
any shares of common stock of either Borrower held by any of
the Original Owners is convertible or for which any such share
of the capital stock of either Borrower or of any other Person
may be exchanged and any shares of common stock issuable to such
Original Owners upon exercise of any warrants, options or similar
rights which may at the time of calculation be held by such
Original Owners) to a Person who is neither an Original Owner
nor an Affiliate of an Original Owner or (b) any merger,
consolidation or sale of substantially all of the property or
assets of either Borrower.
"Charges" shall mean all taxes, charges, fees, imposts,
levies or other assessments, including, without limitation,
all net income, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments,
Liens, Claims and charges of any kind whatsoever, together with
any interest and any penalties, additions to tax
or additional amounts, imposed by any taxing or other authority,
domestic or foreign (including, without limitation, the Pension
Benefit Guaranty Corporation or any environmental agency or superfund),
upon the Collateral, the Borrowers or any of their Affiliates.
"Claims" shall mean all security interests, Liens, claims or
encumbrances held or asserted by any Person against any or all of
the Collateral or the Real Property, other than (A) Charges and (B)
Permitted Encumbrances.
"Closing Date" shall mean June 28, 1996.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Real Property;
(f) the Leasehold Interests;
(g) all of the Borrower's right, title and interest in and to
(i) its goods and other property, including but not limited to all
merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of both Borrowers'
rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, set off,
detinue, replevin, reclamation and repurchase; (iii) all additional
amounts due to the Borrowers from any Customer relating to the
receivables; (iv) other property, including warranty claims relating
to any goods securing this Agreement; (v) if and when obtained by
the Borrowers, all real and personal property of third parties in
which Borrowers have been granted a lien or security interest as
security for the payment or enforcement of Receivables; and (vi)
any other goods, personal property or real property now owned or
hereafter acquired in which the Borrowers have expressly granted
a security interest or may in the future grant a security interest to
the Lender hereunder, or in any amendment or supplement hereto,
or under any other agreement between the Lender and the Borrowers;
(h) all of the Borrowers' ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers,
computer software (owned by the Borrowers or in which they
have an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f), or (g) of this Paragraph; and
(i) all proceeds and products of (a), (b), (c), (d), (e),
(f), (g), (h) in whatever form, including but not limited to:
cash, deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including hazard, flood
and credit insurance), negotiable instruments and other instruments
for the payment of money, chattel paper, security agreements or documents.
"Collateral Assignment" shall mean the Collateral Assignment
of Agreements dated June 28, 1996, between Canisco and the Lender,
together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Contingent Obligations" shall mean any guaranty or agreement
to be a surety, or other contingent liability (other than any
endorsement for collection or deposit in the ordinary course of
business), including, without limitation, performance bonds, whether
direct or indirect, with respect to any obligation of another Person.
"Contract Rate" shall mean, as applicable, the Revolving
Advance Rate, the Term Loan Rate, the Overadvance Rate and the
Acquisition Loan Rate; provided, however, that in no event shall
the Contract Rate be less than six percent (6.0%) per annum.
"Controlled Group" shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with any
Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Customer" shall mean and include the account debtor with
respect to any of the Receivables and/or the prospective purchaser
of goods, services or both with respect to any contract or other
arrangement with the Borrowers, pursuant to which the Borrowers
are to deliver any personal property or perform any services.
"Default Rate" shall have the meaning set forth in
Section 3.1 hereof.
"Depository Accounts" shall have the meaning set forth in
Section 4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Domestic Rate Loan" shall mean any Advance that bears
interest based upon the Alternate Base Rate.
"EBITDA" shall mean, for any period, the sum (without duplication)
of (i) net income determined in accordance with GAAP, (ii) provision
for taxes based on income, (iii) Interest Expense, and (iv) to the
extent net income has been reduced thereby, amortization expense,
depreciation expense and other non-cash expenses, all as determined
on a consolidated basis for the Borrowers, Canisco and their
Subsidiaries on a consolidated basis in accordance with GAAP.
"Eligible Billed Receivables" shall mean each Receivable arising
in the ordinary course of Borrowers' business and which Lender, in
its reasonable credit judgment, shall deem to be an Eligible
Receivable, based on such considerations as Lender may from time
to time deem appropriate. In general, a Receivable shall not be
deemed an Eligible Billed Receivable unless such Receivable is
subject to Lender's perfected security interest and no other Lien
other than Permitted Encumbrances, and is evidenced by an invoice
or other documentary evidence satisfactory to Lender. In addition, no
Receivable shall be an Eligible Billed Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate of a Borrower or to a Person controlled by an Affiliate
of a Borrower;
(b) it is due or unpaid more than ninety (90) days after
the original invoice date or is unpaid more than sixty (60) days
after becoming due;
(c) fifty percent (50%) or more of the Receivables from
the account debtor are not deemed Eligible Receivables hereunder.
Such percentage may, in Lender's reasonable discretion, be increased
or decreased from time to time;
(d) any covenant, representation or warranty contained in
this Agreement with respect to such Receivable has been breached;
(e) (A) the account debtor is a creditor or supplier of
the Borrowers, provided that, the portion of the Receivable
which is in excess of the amount due or to become due to the
supplier or creditor shall be deemed to be an Eligible Billed
Receivable, or (B) the account debtor, including, without limitation
any creditor or supplier of any Borrower, has disputed liability,
or made any claim with respect to any Receivable due from such
account debtor to a Borrower, or the Receivable otherwise is or
may become subject to any right of setoff by the account debtor,
provided that, if such account debtor has confirmed its obligation
with respect to any undisputed portion of such Receivable, or has
confirmed its obligation to pay a portion of such Receivable without
setoff, in a writing in form and substance satisfactory to
Lender, such undisputed portion, or portion not subject to
setoff, of such Receivable as confirmed in such writing, shall
be deemed to be an Eligible Billed Receivable;
(f) the account debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of
creditors, or if a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the
account debtor in an involuntary case under any state or federal
bankruptcy laws, as now constituted or hereafter amended, or if
any other petition or other application for relief under any
state or federal bankruptcy law has been filed against the account
debtor, or if the account debtor has failed, suspended business,
ceased to be solvent, called a meeting of its creditors, or
consented to or suffered a receiver trustee, liquidator or
custodian to be appointed for it or for all or a significant
portion of its assets or affairs;
(g) the sale is to an account debtor outside the continental
United States, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Lender in its reasonable
discretion;
(h) the sale to the account debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment
or any other repurchase or return basis or is evidenced by chattel paper;
(i) Lender believes, in its reasonable judgment, that
collection of such Receivable is insecure or that such Receivable
may not be paid by reason of the account debtor's financial
inability to pay;
(j) the account debtor is the United States of America, any
state or any department, agency or instrumentality of any of them,
unless (A) either (i) the appropriate Borrower assigns its right to
payment of such Receivable to Lender pursuant to the Federal
Assignment of Claims Act, as amended, or (ii) ten (10) days shall
have elapsed following delivery by the appropriate Borrower to the
Lender of all documents requested by the Lender pursuant to the
Federal Assignment of Claims Act, as amended, and (B) the applicable
Borrower has otherwise complied with other applicable statutes
or ordinances;
(k) the goods giving rise to such Receivable have not
been shipped and delivered to and accepted by the account
debtor or the services giving rise to such receivable have
not been performed by the appropriate Borrower and accepted
by the account debtor or the Receivable otherwise does not
represent a final sale;
(l) the Receivables of the account debtor exceed a credit
limit determined by Lender, in its reasonable discretion, to
the extent such Receivable exceeds such limit;
(m) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim or if the Receivable is
contingent in any respect or for any reason;
(n) a Borrower has made any agreement with any account
debtor for any deduction therefrom, except for discounts or
allowances made in the ordinary course of business for prompt
payment, all of which discounts or allowances are reflected in
the calculation of the face value of each respective invoice
related thereto;
(o) shipment of the merchandise or the rendition of services
has not been performed;
(p) any return, rejection or repossession of the merchandise
has occurred;
(q) such Receivable is not payable to a Borrower; or
(r) such Receivable is not otherwise satisfactory to
the Lender as determined in good faith by the Lender in the
exercise of its discretion in a reasonable manner.
"Eligible Machinery and Equipment" shall mean machinery
and equipment owned by one or more of the Borrowers, free and
clear of Liens (other than Liens in favor of Lender), located
in warehouses or other properties owned by one or more of the
Borrowers, in which Lender has been granted a first priority
perfected security interest, satisfactory in form and substance
to Lender and such machinery and equipment that is otherwise
satisfactory to Lender in its sole discretion.
"Eligible Real Estate" shall mean real property owned by
one or more of the Borrowers, free and clear of Liens (other
than Liens in favor of Lender), in which Lender has been granted
a first mortgage lien, satisfactory in form and substance to Lender
and such real property that is otherwise satisfactory to Lender in
its sole discretion.
"Eligible Unbilled Receivables" shall mean each unprocessed
billing, earned, but not billed, arising in the ordinary course
of Borrowers' business and which Lender, in its reasonable credit
judgment, shall deem to be an Eligible Unbilled Receivable, based
on such consideration as Lender may from time to time deem appropriate.
In general, a Receivable shall not be deemed an Eligible Unbilled
Receivable unless such Receivable is subject to Lender's perfected
security interest and no other Lien other than Permitted Encumbrances.
In addition, no Receivable shall be an Eligible Unbilled Receivable if:
(a) it arises out of a sale made by a Borrower to an
Affiliate of a Borrower or to a Person controlled by an Affiliate
of a Borrower;
(b) to the extent such Receivable arose on or prior to
the 15th day of any calendar month, such Receivable has not
been billed within such calendar month; or, to the extent such
Receivable arose after the 15th day of any calendar month, such
Receivable has not been billed on or prior to the 15th day of the
following calendar month;
(c) fifty percent (50%) or more of the Receivables from the
account debtor are not deemed Eligible Billed Receivables or
Eligible Unbilled Receivables hereunder. Such percentage may,
in Lender's reasonable discretion, be increased or decreased from
time to time;
(d) any covenant, representation or warranty contained in
this Agreement with respect to such Receivable has been breached;
(e) (A) the account debtor is a creditor or supplier of the
Borrowers, provided that, the portion of the Receivable which is
in excess of the amount due or to become due to the supplier or
creditor shall be deemed to be an Eligible Unbilled Receivable,
or (B) the account debtor, including, without limitation any
creditor or supplier of any Borrower, has disputed liability,
or made any claim with respect to any Receivable due from such
account debtor to a Borrower, or the Receivable otherwise is or
may become subject to any right of setoff by the account debtor,
provided that, if such account debtor has confirmed its
obligation with respect to any undisputed portion of such
Receivable, or has confirmed its obligation to pay a portion
of such Receivable without setoff, in a writing in form and
substance satisfactory to Lender, such undisputed portion,
or portion not subject to setoff, of such Receivable as
confirmed in such writing, shall be deemed to be an
Eligible Unbilled Receivable;
(f) the account debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or if
a decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the account debtor in
an involuntary case under any state or federal bankruptcy laws,
as now constituted or hereafter amended, or if any other petition
or other application for relief under any state or federal bankruptcy
law has been filed against the account debtor, or if the account debtor
has failed, suspended business, ceased to be solvent, called a meeting
of its creditors, or consented to or suffered a receiver trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs;
(g) the sale is to an account debtor outside the continental
United States, unless the sale is on letter of credit, guaranty
or acceptance terms, in each case acceptable to Lender in its
reasonable discretion;
(h) the sale to the account debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment
or any other repurchase or return basis or is evidenced by chattel paper;
(i) Lender believes, in its reasonable judgment, that collection
of such Receivable is insecure or that such Receivable may not be paid
by reason of the account debtor's financial inability to pay;
(j) the account debtor is the United States of America, any
state or any department, agency or instrumentality of any of them,
unless (A) either (i) the appropriate Borrower assigns its right to
payment of such Receivable to Lender pursuant to the Federal Assignment
of Claims Act, as amended, or (ii) ten (10) days shall have elapsed
following delivery by the appropriate Borrower to the Lender of all
documents requested by the Lender pursuant to the Federal Assignment
of Claims Act, as amended, and (B) the applicable Borrower has otherwise
complied with other applicable statutes or ordinances;
(k) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the account debtor or the
services giving rise to such receivable have not been performed by
the appropriate Borrower and accepted by the account debtor or the
Receivable otherwise does not represent a final sale;
(l) the Receivables of the account debtor exceed a credit
limit determined by Lender, in its reasonable discretion, to the
extent such Receivable exceeds such limit;
(m) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim or if the Receivable is
contingent in any respect or for any reason;
(n) a Borrower has made any agreement with any account
debtor for any deduction therefrom, except for discounts or
allowances made in the ordinary course of business for prompt
payment, all of which discounts or allowances are reflected in
the calculation of the face value of each respective invoice
related thereto;
(o) shipment of the merchandise or the rendition of services
has not been completed;
(p) any return, rejection or repossession of the merchandise
has occurred;
(q) such Receivable is not payable to a Borrower; or
(r) such Receivable is not otherwise satisfactory to the Lender
as determined in good faith by the Lender in the exercise of its
discretion in a reasonable manner.
"Environmental Complaint" shall have the meaning set forth
in Section 4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and
local environmental, land use, zoning, health, chemical use,
safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing
the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders
and directives of federal, state and local governmental agencies and
authorities with respect thereto.
"Equipment" shall mean and include all of the Borrowers'
goods (excluding Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation,
all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA" shall mean the federal Employee Retirement Income
Security Act of 1974, as amended.
"Eurodollar Rate Loan" shall mean an Advance at any time
that bears interest based on the Average Monthly Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of
the events set forth in Article X hereof.
"Excess Cash Flow" shall mean, for any period, EBITDA
minus (cash interest plus required debt service plus cash
taxes plus Capital Lease obligations of the Borrowers, Canisco
and their Subsidiaries on a consolidated basis, plus Capital
Expenditures) plus or minus net changes in working capital for
the Borrowers, Canisco and their Subsidiaries on a consolidated basis.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve system arranged by Federal funds
brokers, as published for such day (or if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or if such rate is not so published for any day which
is a Business Day, the average of quotations for such day on such
transactions received by Lender from three Federal funds brokers or
recognized standing selected by Lender.
"Fixed Charge Coverage Ratio" shall mean , for any period,
the ratio of (A) EBITDA less (i) Capital Expenditures not financed
through Capital Leases of the Borrowers, Canisco and their
Subsidiaries on a consolidated basis during any computation
period less (ii) cash taxes of the Borrowers, Canisco and their
Subsidiaries on a consolidated basis during any computation period,
to (B) the sum of (i) the cash Interest Expense (including imputed
interest on Capital Lease obligations) for such computation period
plus (ii) the aggregate amount of all scheduled principal payments
of under this Agreement.
"Florida Mortgage" shall mean the Mortgage, Assignment of
Leases and Security Agreement, dated June 28, 1996, as amended
and restated on the Amended and Restated Closing Date, in form
and substance satisfactory to the Lender, by which Xxxxxx has
granted to the Lender a mortgage lien in certain real property
located in the County of Polk, State of Florida, together with
all amendments, modifications, exhibits, and other schedules thereto
as may be in effect from time to time.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"Funded Indebtedness" means as to any Person and its
Subsidiaries on a consolidated basis, as of any date of
determination, (i) the aggregate of all interest-bearing
Liabilities which are not exclusively subordinated to the
Obligations pursuant to a Subordination Agreement, and all
Capital Leases, of such Person and its Subsidiaries, whether
secured or unsecured (but excluding, without duplication, loans
by such Person to one or more of its Subsidiaries), less (ii) the
aggregate amount of all cash balances and cash equivalents
of such Person and/or any of its Subsidiaries.
"GAAP" shall mean generally accepted accounting principles
in the United States of America in effect from time to time.
"General Intangibles" shall mean and include all of the Borrowers'
general intangibles, whether now owned or hereafter acquired including,
without limitation, all choses in action, causes of action, corporate
or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures,
quality control procedures, trademarks, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists,
tax refunds, tax refund claims, computer programs, all claims
under guaranties, security interests or other security held by or
granted to Borrowers to secure payment of any of the Receivables
by an account debtor, all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Guarantors" shall mean Canisco and Xxxxx, and all their
permitted successors and assigns.
"Guaranty Agreements" shall mean the Canisco Guaranty and the
Xxxxx Guaranty.
"Hazardous Discharge" shall have the meaning set forth in
Section 4.19(d) hereof.
"Hazardous Substance" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801, et seq.), RCRA, or any other applicable
Environmental Law and in the regulations adopted pursuant
"Hazardous Wastes" includes all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any
other applicable Federal and state laws now in force or hereafter
enacted relating to hazardous waste disposal.
"Xxxxx" shall mean Xxxxx Services, Inc., a Georgia corporation,
and all its permitted successors and assigns.
"Xxxxx Guaranty" shall mean the guaranty of the obligations
of Borrowers executed by Xxxxx in favor of Lender, dated June 28,
1996, together with all amendments, modifications, exhibits and
schedules thereto as may be in effect from time to time.
"Xxxxx Security Agreement" shall mean the Security Agreement
dated June 28, 1996, between Xxxxx and the Lender, together with
all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"Xxxxx Sale" shall mean the sale of Xxxxx pursuant to that
certain Letter Agreement dated June 4, 1996 entered into between
Harley Industries, Inc. and Xxxxx.
"Icesolv" shall mean Icesolv, Inc., a Pennsylvania corporation,
and all its permitted successors and assigns.
"Incipient Event of Default" shall mean an event which, with
the giving of notice or passage of time or both, would constitute
an Event of Default.
"Indebtedness" of a Person at a particular date shall mean
all obligations of such Person which in accordance with GAAP
would be classified upon a balance sheet as liabilities (except
capital stock and surplus earned or otherwise) and in any event,
without limitation by reason of enumeration, shall include all
Contingent Obligations, indebtedness, debt and other similar
monetary obligations of such Person whether direct or guaranteed,
and all premiums, if any, due at the required prepayment dates of
such indebtedness, and all indebtedness secured by a Lien on
assets owned by such Person, whether or not such indebtedness
actually shall have been created, assumed or incurred by such Person.
Any indebtedness of such Person resulting from the acquisition
by such Person of any assets subject to any Lien shall be deemed,
for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Interest Expense" shall mean, for any period, interest
expense (including all imputed interest on Capital Lease obligations)
with respect to all outstanding Indebtedness of the Borrowers,
Canisco and their Subsidiaries on a consolidated basis for such
period on a consolidated basis in accordance with GAAP.
"Inventory" shall mean all of Borrowers' now owned or
hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract
of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind,
nature or description which are or might be used or consumed in
Borrowers' businesses or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title
or other documents representing them.
"Leasehold Interests" shall mean all of Borrowers' right,
title and interest in and to the premises described on Schedule
1.2 of the Existing Loan Agreement.
"Lender" shall mean BNY Financial Corporation and any
successor or assign.
"Letter of Credit and Security Agreement" shall have the meaning
set forth in Section 2.10.
"Letter of Credit Fees" shall have the meaning set forth in
Section 3.2(a).
"Letter of Credit Sublimit" shall mean Two Million ($2,000,000).
"Letters of Credit" shall have the meaning set forth in Section 2.9.
"Leverage Ratio" shall mean, for any period, the ratio of
(A) the aggregate amount of all Liabilities minus Subordinated
Indebtedness of the Borrowers, Canisco and their Subsidiaries on
a consolidated basis, to (B) the Tangible Net Worth plus Subordinated
Indebtedness of the Borrowers, Canisco and their Subsidiaries on a
consolidated basis.
"Liabilities" shall mean, at any time, all liabilities which,
in accordance with GAAP, shall be classified as liabilities of the
Borrowers, Canisco and their Subsidiaries on a consolidated basis.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien, charge,
Claim or encumbrance, or preference, priority or other security
agreement or preferential arrangement in respect of any asset of
the Borrowers or any Subsidiary of the Borrowers of any kind or
nature whatsoever including, without limitation, any conditional
sale or other title retention agreement, any lease having substantially
the same economic effect as any of the foregoing, and the filing
e, any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction.
"Louisiana Mortgage" shall mean the Mortgage, Assignment of
Leases and Security Agreement dated June 28, 1996, as amended and
restated on the Amended and Restated Closing Date, in form and
substance satisfactory to the Lender, by which Xxxxxx has granted
to the Lender a mortgage lien in real property located in the Parish
of Calcasieu, State of Louisiana, together with all amendments,
modifications, exhibits, and other schedules thereto as may be in
effect from time to time.
"Maximum Loan Amount" shall mean Twenty-five Million
Dollars ($25,000,000).
"Maximum Revolving Advance Amount" at any time shall mean the
Maximum Loan Amount less the aggregate principal balance of the
Term Loan and the Acquisition Loan then outstanding.
"Monthly Advances" shall have the meaning set forth in Section 3.1 hereof.
"Mortgages" shall mean, collectively, the Florida Mortgage,
the Louisiana Mortgage, the Pennsylvania Mortgage, the Texas Mortgage,
and the Virginia Mortgage.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Sections 3(37) and 4001(a)(3) of ERISA.
"Notes" shall mean collectively, the Term Note(s), the Revolving
Credit Note and the Acquisition Note(s).
"Obligations" shall mean and include any and all of Borrowers'
Indebtedness, including, without limitation, amounts drawn under
Letters of Credit, all Advances made hereunder, Contingent Obligations
and/or liabilities to the Lender or any corporation that directly or
indirectly controls or is controlled by or is under common control
with Lender of every kind, nature and description, direct or indirect,
secured or unsecured, joint, several, joint and several, absolute or
contingent, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated,
regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not
limited to, any and all of the Borrowers' Indebtedness, Contingent
Obligations and/or liabilities under this Agreement or under any
other agreement between the Lender and the Borrowers and all
obligations of the Borrowers to the Lender to perform acts or
refrain
"Original Owners" shall mean Canisco.
"Other Documents" shall mean the Mortgages, the Pledge Agreement,
the Guaranty Agreements, the Notes, the Security Agreements, the
Letter of Credit and Security Agreement, the Questionnaires, the
Subordination Agreement(s), the Blocked Account Agreements, the
Collateral Assignment and any and all other agreements, instruments
and documents, including, without limitation, amendments, certificates,
financing statements, guaranties, pledges, powers of attorney, consents,
reports, notices, schedules, exhibits and all other writings
heretofore, now or hereafter executed by Borrowers and/or
delivered to Lender in respect of the transactions contemplated
by this Agreement, together with all amendments, modifications,
exhibits and schedules thereto as may be in effect from time to time.
"Overadvance" shall have the meaning set forth in Section 2.2(b) hereof.
"Overadvance Rate" shall mean an interest rate per annum
equal to the Alternate Base Rate plus one percent (1%).
"Parent" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares
of stock or other ownership interests having ordinary voting power
to elect a majority of the directors of the Person, or other Persons
performing similar functions for any such Person.
"Payment Office" shall mean the office or location which the
Lender shall designate by notice to Borrowers to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pennsylvania Mortgage" shall mean the Mortgage, Assignment of
Leases and Security Agreement dated June 28, 1996, as amended and
restated on the Amended and Restated Closing Date, in form and
substance satisfactory to the Lender, by which Xxxxxx has granted
to the Lender a mortgage lien in certain real property located in
the City of Philadelphia, Commonwealth of Pennsylvania together with
all amendments, modifications, exhibits, and other schedules thereto
as may be in effect from time to time.
"Permitted Encumbrances" shall mean (a) liens in favor of Lender;
(b) liens for taxes, assessments or other governmental charges not
delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been
taken by Borrowers; (c) liens disclosed in the financial statements
referred to in Section 5.5, the existence of which Lender has consented
to in writing; (d) deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance; (e) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of
Borrowers' business; (f) judgment liens that have been stayed or
bonded and mechanics', workmen's, materialmen's or other like liens
arising in the ordinary course of Borrowers' business with respect
to obligations which are not due or which are being contested in
good faith by Borrowers; (g) liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber
any property of the Boroowers and (y) the aggregate amount of
Indebtedness secured by such liens incurred as a result of such
purchases during any fiscal year shall not exceed the amount
provided for in Section 7.6; (h) other liens incidental to the
conduct of Borrowers' business or the ownership of its property
and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and which do not in
the aggregate materially detract from Lender's rights in and to the
Collateral or the value of Borrowers' property or assets
"Person" shall mean an individual, a partnership, a corporation,
a business trust, a joint stock company, a trust, an unincorporated
association, a joint venture, a governmental authority or any other
entity of whatever nature.
"Pledge Agreement" shall mean the pledge agreement between
Canisco as pledgor and the Lender as pledgee, dated as of the
same date as this Agreement, in form and substance satisfactory
to the Lender, by which the stock of Icesolv and Xxxxxx shall be
pledged to the Lender, together with all amendments, modifications,
exhibits and schedules thereto as may be in effect from time to time.
"Prime Rate" for the purpose of this Agreement means the rate of
interest publicly announced from time to time by the Bank at its
principal office in New York as its prime rate or prime lending rate.
This rate of interest is determined from time to time by the Bank as
a means of pricing some loans to its customers and is neither tied
to any external rate of interest or index nor does it necessarily
reflect the lowest rate of interest actually charged by the Bank
to any particular class or category of customers of the Bank.
"Questionnaires" shall mean the Credit and Security
Agreement Questionnaires executed by Borrowers and Canisco,
and delivered to Lender.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of Borrowers' right, title and
interest in and to the Real Estate (as such term is defined in the
Mortgages).
"Receivables" shall mean and include all of the Borrowers'
accounts, contract rights, instruments, documents, chattel paper,
general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations owing to Borrowers arising out of
or in connection with the sale or lease of Inventory or the rendition
of services, all guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether
or not specifically sold or assigned to the Lender hereunder.
"Receivables Advance Rate" shall have the meaning set forth
in Section 2.1(a) hereof.
"Release" shall have the meaning set forth in Section 5.7(c)(i) hereof.
"Reserves" shall mean the sum of all ineligible receivables,
disputed items, deductions, allowances, credits and any other offsets
asserted or granted, consigned inventory and receivables related to
the sales thereof, letters of credit, and such additional reserves as
are deemed appropriate from time to time in Lender's reasonable discretion.
"Revolving Advances" shall mean Advances made by Lender,
other than Letters of Credit, the Term Loan or the Acquisition Loan.
"Revolving Advance Rate" shall mean an interest rate per
annum equal to (a) the sum of the Alternate Base Rate plus the
Applicable Margin with respect to Domestic Rate Loans, or (b)
the sum of the Average Monthly Eurodollar Rate plus the
Applicable Margin with respect to Eurodollar Rate Loans,
provided that from the Closing Date until adjustment pursuant
to Section 3.1 hereof, the Revolving Advance Rate shall be either
the Alternate Base Rate with respect to Domestic Rate Loans or
the sum of the Average Monthly Eurodollar Rate
plus 2.5 percent with respect to Eurodollar Rate Loans.
"Revolving Credit Note" shall mean the promissory note
referred to in Section 2.2 hereof.
"Security Agreements" shall mean the Canisco Security
Agreement and the Xxxxx Security Agreement.
"Subordinated Indebtedness" shall mean all Indebtedness of
the Borrowers, Canisco and their Subsidiaries which is subordinated
exclusively to the Obligations pursuant to a Subordination Agreement.
"Subordination Agreement(s)" shall mean the subordination
agreement(s) now existing or hereinafter entered into between
the Bank and other parties, in form and substance satisfactory
to the Bank, as required pursuant to the terms of this Agreement,
together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Subsidiary" of any Person shall mean a corporation or other
entity of whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests
having such power only by reason of the happening of a contingency)
to elect a majority of the directors of such corporation, or other
Persons performing similar functions for such entity, are owned,
directly or indirectly, by such Person.
"Tangible Net Worth" shall mean, as of any date, stockholders
equity, less the aggregate book value of all intangible assets,
all as determined on a consolidated basis for the Borrowers,
Canisco and their Subsidiaries in accordance with GAAP.
"Term" shall mean the Closing Date through May 1, 2001, as
same may be extended in accordance with the provisions of Section 13.1.
"Termination Date" shall mean May 1, 2001, or such later
date to which the Term of this Agreement may be extended in
accordance with the provisions of Section 13.1.
"Term Loan(s)" shall mean the Advances made pursuant to
Section 2.5 hereof.
"Term Loan Rate" shall mean an interest rate per annum equal
to (a) the sum of the Alternate Base Rate plus the Applicable
Margin with respect to Domestic Rate Loans, provided that from
the Closing Date until adjustment pursuant to Section 3.1 hereof,
the Term Loan rate shall be the Alternate Base Rate, or (b) such
fixed rate, if any, as may be offered by the Lender and accepted
in writing by the Borrowers on the Closing Date.
"Term Note(s)" shall mean the promissory note or notes
described in Section 2.5 hereof.
"Texas Mortgage" shall mean the Deed of Trust, Assignment
of Leases and Security Agreement, dated June 28, 1996, as amended
and restated on the Amended and Restated Closing Date, in form and
substance satisfactory to the Lender, by which Xxxxxx has granted
to the Lender a lien in certain real property located in Xxxxxx
County, Texas, together with all amendments, modifications,
exhibits, and other schedules thereto as may be in effect from
time to time.
"Toxic Substance" shall mean and include any material present
on the Real Property or the Leasehold Interests which has been
shown to have significant adverse effect on human health or which
is subject to regulation under the Toxic Substances Control Act
(TSCA), 15 U.S.C. Section 2601 et seq., applicable state law, or any
other applicable Federal or state laws now in force or hereafter
enacted, relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and
lead-based paints.
"Transactions" shall have the meaning set forth in
Section 5.5(a) hereof.
"Undrawn Availability" at a particular date shall mean an
amount equal to (a) the lesser of (i) the Formula Amount or
(ii) the Maximum Revolving Advance Amount, minus (b) the sum
of (i) the outstanding amount of Revolving Advances plus (ii)
all amounts due and owing to Borrowers' trade creditors which
are outstanding more than sixty (60) days past the due date therefor.
"Virginia Mortgage" shall mean the Deed of Trust, Assignment
of Leases, and Security Agreement, dated June 28, 1996, as amended
and restated on the Amended and Restated Closing Date, in form and
substance satisfactory to the Lender, by which Xxxxxx has granted
to the Lender a lien in certain real property located in Chesterfield
County, Virginia, together with all amendments, modifications,
exhibits, and other schedules thereto as may be in effect from
time to time.
1.4 Uniform Commercial Code Terms. All terms used herein and
defined in the Uniform Commercial Code as adopted in the State
of New York shall have the meaning given therein unless otherwise
defined herein.
II. ADVANCES, PAYMENT, INTEREST AND FEES.
2.1 (a) Loan Advances.
Subject to the terms and conditions set forth in this Agreement,
Lender will make Advances to the Borrowers in aggregate amounts
outstanding at any time equal to the lesser of x) the Maximum Loan
Amount or y) an amount equal to the sum of:
(i) up to 85% of Eligible Billed Receivables not under
Bonded Jobs plus up to 75% of Eligible Billed Receivables under
Bonded Jobs, plus up to 60% of Eligible Unbilled Receivables,
subject to the provisions of Section 2.1(b) hereof (the "Receivables
Advance Rate") less such Reserves as Lender may reasonably deem
proper and necessary in its sole discretion, plus
(ii) the aggregate amount at any time outstanding of the
Term Loan and the Acquisition Loan made pursuant to Sections 2.5
and 2.6 hereof, as reduced in accordance with the provisions of
Sections 2.5 and 2.6 hereof.
The sum of the amounts derived from Sections 2.1(a)(i) and (ii)
at any time and from time to time shall be referred to as the
"Formula Amount."
(b) Discretionary Rights. The Receivables Advance Rate may
be increased or decreased by Lender at any time and from time to
time in the exercise of its reasonable discretion. Borrowers
consent to any such increases or decreases and acknowledge that
decreasing the Receivables Advance Rate may limit or restrict
Advances requested by Borrowers.
2.2 Revolving Advances.
(a) Subject to the terms and conditions set forth in this
Agreement, Lender will make Revolving Advances to the Borrowers
in an aggregate amount outstanding at any time equal to the
lesser of x) the Maximum Revolving Advance Amount, less the
outstanding face amount of all Letters of Credit, or y) an
amount equal to (I) the Formula Amount minus (II) the aggregate
amount of outstanding Letters of Credit, and the outstanding
principal balance of the Term Loan and the Acquisition Loan.
The Revolving Advances shall otherwise be evidenced by the secured
promissory note ("Revolving Credit Note") attached hereto as
Exhibit 2.2. Revolving Advances outstanding under the Existing
Loan Agreement on the Amended and Restated Closing Date shall be
deemed to be Revolving Advances under this Agreement and shall be
evidenced by the Revolving Credit Note.
(b) For purposes of Section 2.2(a) above, the Formula Amount
shall be increased by the sum of $1,000,000 (the "Overadvance")
for 120 days each year commencing no earlier than January 1 and
ending no later than April 30, in order to accommodate the seasonal
cash flow needs of the Borrowers. The Overadvance may be extended
at the option of the Borrowers to a maximum of 24 months and
increased up to a sum not exceeding $2,200,000 to enable the
Borrowers to prepay certain unsecured trade payables provided that
drawdowns for this purpose are pursuant to a payment plan approved
by the Lender (the "Trade Payables Overadvance"). The Trade Payable
Overadvance shall be amortized by the Borrowers in twenty-four (24)
equal monthly principal installments plus interest, commencing on
the last Business Day of the month following the initial drawdown
of the Trade Payabales Overadvance. The Overadvance and the Trade
Payables Overadvance shall be evidenced by the Revolving Credit
Note and shall bear interest at the Overadvance Rate.
2.3 Procedure for Revolving Advances Borrowing.
(a) The Borrowers may notify the Lender prior to 11:00 a.m.
on a Business Day of their request to incur, on that day, a
Revolving Advance hereunder. Should any amount required to be
paid as interest hereunder, or as fees or other charges under
this Agreement or any other agreement with Lender, or with respect
to any other Obligation, become due, same shall be deemed a request
for a Revolving Advance as of the date such payment is due, in the
amount required to pay in full such interest, fee, charge or Obligation
under this Agreement or any other agreement with Lender, and such
request shall be irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event
Borrowers desire to obtain a Eurodollar Rate Loan, Borrowers shall
give Lender at least three (3) Business Days' prior written notice;
specifying (i) the date of the proposed borrowing (which shall be a
Business Day) and (ii) the amount on the date of such Advance to be
borrowed.
(c) Provided that no Event of Default shall have occurred
and be continuing, Borrowers may convert any Eurodollar Rate
Loan or Domestic Rate Loan into a loan of another type in the
same aggregate principal amount. If Borrowers desire to convert
a loan from a Domestic Rate Loan to a Eurodollar Rate Loan,
Borrowers shall give the Lender not less than three (3) Business
Days' prior written notice, specifying the date of such conversion
and the loans to be converted.
(d) Subject to the provisions of Section 13.1 hereof, the
Borrowers may prepay the Advances in whole at any time or in
part from time to time, without premium or penalty but with
accrued interest on the principal being prepaid to the date of
such repayment, provided however, that each partial prepayment
shall be in the amount of $100,000 or in integral multiples thereof,
provided that all amounts received by the Lender from any Blocked
Account referred to in Section 4.15(h) hereof, or pursuant to any
Blocked Account Agreement shall be applied to reduce the amount
of outstanding Advances made to the Borrowers pursuant to the
Revolving Credit in accordance with the provisions of
Sections 2.7(c) and 4.15(h) hereof. All repayments, including
mandatory prepayments made pursuant to Section 2.7(b), shall
be applied to installments in the inverse order of their maturity.
(e) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change
therein or in the interpretation or application thereof, shall
make it unlawful for Lender (for purposes of this subsection (g),
the term "Lender" shall include Lender and the office or branch
where Lender or any corporation or bank controlling Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its
Eurodollar Rate Loans, the obligation of Lender to make Eurodollar
Rate Loans, the obligation of Lender to make Eurodollar Rate Loans
hereunder shall forthwith be canceled and Borrowers shall, if any affected
Eurodollar Rate Loans are then outstanding, promptly upon request
from Lender, either pay all such affected Eurodollar Rate Loans or
convert such affected Eurodollar Rate Loans into loans of another
type. A certificate as to any additional amounts payable pursuant
to the foregoing sentence submitted by Lender to Borrowers shall be
conclusive absent manifest error; provided, each Lender shall use
its best efforts to minimize or avoid any such additional payment.
2.4 Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place the Lender may designate
from time to time and, together with any and all other Obligations
of Borrowers to Lender, shall be charged to the Borrowers' account
on the Lender's books. During the Term, Borrowers may use the
Revolving Advances by borrowing, prepaying and reborrowing, all
in accordance with the terms and conditions hereof. The proceeds
of each Revolving Advance requested by the Borrowers or deemed
to have been requested by the Borrowers under Section 2.3(a)
hereof shall, with respect to requested Revolving Advances
to the extent the Lender makes such Revolving Advances, be made
available to the Borrowers on the day so requested by way of credit to the
Borrowers' operating account at such bank as Borrowers may
designate following notification to Lender, in immediately
available federal or other immediately available funds or,
with respect to Revolving Advances deemed, to have been
requested, be disbursed to the Lender in payment of outstanding
Obligations giving rise to such deemed request.
2.5 Term Loan.
(a) Lender made a Term Loan (the "Existing Term Loan")
to Borrowers in the amount of $3,900,000 under the Existing
Loan Agreement, of which $2,470,000 is outstanding on the
Amended and Restated Closing Date and shall be deemed to
continue to be outstanding under the Term Loan and shall be
evidenced by a Term Note, satisfactory in form and substance
to the Lender, executed and delivered to the Lender on the
Amended and Restated Closing Date, in substitution for the
Term Note issued by the Borrowers to the Lender at the Closing.
(b) Subject to the terms and conditions of this Agreement,
and provided that no Event of Default and no Incipient Event
of Default has occurred and is continuing, the Borrowers shall
have the option to borrow additional sums under the Term Loan
in order to finance fixed assets acquired by the Borrowers (or
by another Person which joins in this Agreement as a Borrower
on terms and conditions satisfactory to the Lender), provided
that on the date of any borrowing under the Term Loan, the
outstanding principal balance of all Term Loans (including
such additional borrowing) shall not exceed an amount
equal to the lesser of (a) the sum of the outstanding
principal balance of Revolving Advances, minus the outstanding
principal of the Acquisition Loan, or (b) the sum of 80% of
the appraised forced liquidation value of Eligible Machinery
and Equipment plus 75% of the appraised fair market value of
Eligible Real Estate. Appraisals shall be prepared by
appraisers and be in form and substance satisfactory to
Lender in its sole discretion.
(c) At the end of each six month period following
the Amended and Restated Closing Date, provided no Event
of Default and no Incipient Event of Default has occurred
and is continuing, the Borrowers shall have the option to
borrow additional sums under the Term Loan in order to
finance fixed assets acquired by the Borrowers since the
Amended and Restated Closing Date with cash flow of the
Borrowers or with proceeds of Revolving Advances, provided
that on the date of any borrowing under the Term Loan, the
outstanding principal balance of all Term Loans (including
any such additional borrowing) shall not exceed an amount
equal to the lesser of (a) the sum of the outstanding
principal balance of Revolving Advances, minus the
outstanding principal of the Acquisition Loan, or
(b) the sum of 80% of the appraised forced liquidation
value of Eligible Machinery and Equipment plus 75% of the
appraised fair market value of Eligible Real Estate.
Appraisals shall be prepared by appraisers and be in form
and substance acceptable to Lender in its sole discretion.
(d) At the end of 18 months following the Amended and
Restated Closing Date, provided no Event of Default and no
Incipient Event of Default has occurred and is continuing,
the Borrowers shall have the option to borrow additional
sums under the Term Loan in order to finance (i) principal
amounts previously repaid under the Term Loan since the Closing
Date and (ii) fixed assets acquired by the Borrowers since the
Closing Date with cash flow of the Borrowers or with proceeds of
Revolving Advances (and not previously financed with
proceeds of the Term Loan), provided that on the date of
any borrowing under the Term Loan, the outstanding principal
balance of the all Term Loans (including any such additional
borrowing) shall not exceed an amount equal to the lesser of
(a) the sum of the outstanding principal balance of Revolving
Advances, minus the outstanding principal of the Acquisition
Loan, or (b) the sum of 80% of the appraised forced liquidation
value of Eligible Machinery and Equipment plus 75% of the appraised
fair market value of Eligible Real Estate. Appraisals shall be
prepared by appraisers and be in form and substance acceptable to
Lender in its sole discretion.
(e) Each Term Loan shall be subject to acceleration upon
the occurrence of an Event of Default under this Agreement or
termination of this Agreement and shall be evidenced by and
subject to the terms and conditions set forth in a secured
promissory note ("Term Note") appropriately completed by the
Lender and executed and delivered by the Borrowers to the Lender
substantially in the form attached hereto as Exhibit 2.5. The
Borrowers shall repay the outstanding principal balance of each
Term Loan in approximately equal consecutive monthly installments
of principal, commencing on the last day of the first calendar
month following the advance of such Term Loan, based on a seven
(7) year amortization schedule, and continuing throughout the
entire term thereof in accordance with the provisions of the
Term Note, and a final installment, consisting of the entire
remaining principal balance payable on the Termination Date,
provided that upon any advance of additional sums under a
Term Note, (i) the installment payments shall be appropriately
in order to amortize the entire remaining principal balance in
approximately equal consecutive monthly installments of principal
commencing on the last day of the first calendar month following
the date of such additional advance of additional sums under the Term Loan,
and continuing throughout the entire term thereof in accordance
with the provisions of the Term Note, and (ii) the Borrowers
shall execute and deliver to Lender a new Term Note with the
same maturity date but revised to reflect such remaining
principal balance of the Term Loan and such revised installment
payments, satisfactory in form and substance to the Lender.
(f) Interest shall accrue on the outstanding principal of
each Term Loan at an annual rate equal to the Term Loan Rate
and be payable monthly, commencing on the last day of the first
calendar month following the Amended and Restated Closing Date,
and continuing throughout the entire term thereof in accordance
with the provisions of the Term Note, and a final installment
consisting of all accrued but unpaid interest payable on the
Termination Date.
2.6 Acquisition Loan.
(a) Subject to the terms and conditions of this Agreement,
including without limitation Section 2.6(b), the Lender shall
make loans not exceeding $5,000,000 in the aggregate to the
Borrowers (collectively, the "Acquisition Loan") for the
purpose of financing acquisitions by the Borrowers approved
by the Lender to the extent there is a shortfall between
availability of Revolving Advances and Advances under the
Term Loan (as such availability may be augmented by appraisals
of the assets to be acquired, satisfactory in for and
substance to the Lender). The making of any one or more
Acquisition Loans shall not be considered a commitment by
the Lender to make any additional Acquisition Loans except
as provided in this Agreement.
(b) Conditions precedent to each Advance of an Acquisition
Loan shall be determined by the Lender in its sole discretion,
but shall include the following:
(i) immediately following each Acquisition Loan, the
Borrowers shall have Undrawn Availability of not less than
$1,000,000;
(ii) any corporation or other entity acquired by the
Borrower in connection with such acquisition shall join in
and become a Borrower under this Agreement and the Notes and
shall execute a joinder agreement satisfactory in form and
substance to the Lender;
(iii) the Lender shall receive a first perfected lien or
security interest in all acquired assets and in the assets of
any acquired corporation or other entity, and the Borrower and
any acquired corporation or other entity shall execute and
deliver to the Lender such mortgages, security agreements,
financing statements and other agreements and documents as
may be required by the Lender to perfect such liens and security
interests;
(iv) environmental assessments of any real estate to be
acquired, satisfactory in form and substance to the Lender; and
(v) appraisals of assets to be acquired and financial
statements and financial projections on the business to be
acquired, satisfactory in form and substance to the Lender.
(c) Each Acquisition Loan shall be subject to acceleration
upon the occurrence of an Event of Default under this Agreement
or termination of this Agreement, and shall otherwise be evidenced
by and subject to the terms and conditions set forth in a secured
promissory note ("Acquisition Note") to be appropriately completed
by the Lender and executed and delivered to the Lender by the
Borrowers substantially in the form attached hereto as Exhibit 2.6.
(d) The Borrowers shall repay the outstanding principal
balance of the each Acquisition Loan in approximately equal
consecutive monthly installments of principal commencing on the
last day of the first calendar month following the advance of such
Acquisition Loan, based on a five (5) year amortization schedule,
and continuing throughout the entire term thereof in accordance
with the provisions of the Acquisition Note, and a final
installment, consisting of the entire remaining principal
balance payable on the Termination Date,
provided that upon any Acquisition Loan being made after the
initial Acquisition Loan, (i) the installment payments shall be
appropriately adjusted in order to amortize the entire remaining
principal balance in approximately equal consecutive monthly
installments of principal commencing on the last day of the
first calendar month following the date of such additional
Acquisition Loan, and continuing throughout the entire term
thereof in accordance with the provisions of the Acquisition
Loan, and (ii) the Borrowers shall execute and deliver to Lender a
new Acquisition Note with the same maturity date but revised to reflect
such new remaining prinipal balance of all outstanding Acquisition
Loans and such revised installment payments, satisfactory in form and
substance to Lender.
(e) Interest shall accrue on the outstanding principal
of each Acquisition Loan at an annual rate equal to the
Acquisition Loan Rate and shall be payable monthly, commencing
on the last day of the first calendar month following the date
of such Acquisition Loan, and continuing throughout the entire
term thereof in accordance with the provisions of the Acquisition
Note and a final installment consisting of all accrued but unpaid
interest payable on the Termination Date.
(f) At the Borrower's request, at any time after the Amended
and Restated Closing Date when no Event of Default and no Incipient
Event of Default has occurred and is continuing, and subject to the
terms set forth in Section 2.6 of this Agreement, the Borrowers shall
have the option to borrow additional sums under the Acquisition Loan,
provided that on the date of any borrowing under the Acquisition Loan,
(A) the outstanding principal balance of the Acquisition Loan shall
not exceed the lesser of (a) $5,000,000, or (b) the outstananding
principal balance of Revolving Advances minus the
outstanding principal of the Term Loan and (B) the sum of
the outstanding principal balances of the Term Loan, the
Acquisition Loan and the Revolving Advances, together with
the aggregate amount available to be drawn under all undrawn
Letters of Credit, shall not exceed the Maximum Loan Amount.
2.7 Repayment of Advances; Mandatory Prepayments.
(a) The Revolving Advances shall be due and payable in
full on the last day of the Term subject to earlier prepayment
as herein provided. The Term Loan shall be due and payable as
provided in Section 2.5 hereof and in the Term Note.
(b) Within ninety (90) days after the end of each fiscal
year, the Borrowers shall prepay Advances made hereunder in
an amount equal to the aggregate of (i) fifty percent (50%) of
the proceeds of any public equity offering by either or both of
the Borrowers, except to the extent such proceeds are used to
execute an acquisition approved by Lender in its sole discretion
and (ii) fifty percent (50%) of the Excess Cash Flow of the
Borrowers for such fiscal year, after allowances for payments
to unsecured creditors made in accordance with the provisions
of the Reorganization. Such prepayments shall be applied first,
to repay installments due under the
Acquisition Loan, in the inverse order of their maturity,
second, to repay installments due under the Term Loan, in
the inverse order of their maturity, third, to repay Revolving
Advances, and then to repay all other Obligations in such order
as the Lender shall determine.
(c) The Borrowers recognize that the amounts evidenced
by checks, notes, drafts or any other items of payment relating
to and/or proceeds of Collateral may not be collectible by the
Lender on the date received. The Borrowers agree that, in
computing the charges under this Agreement, all items of payment
shall be deemed applied by Lender on account of the Obligations
two (2) Business Days after receipt of funds by Lender from the
Blocked Account bank or the Depository Account bank as provided
for in Section 4.15(h), or pursuant to any Blocked Account
Agreement. The Lender is not, however, required to credit the
Borrowers' account for the amount of any item of payment which
is unsatisfactory to the Lender and the Lender may charge the
Borrowers' account for the amount of any item of payment which
is returned to the Lender unpaid.
(d) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall
be made to the Lender at the Payment Office not later than
1:00 P.M. (New York Time) on the due date therefor in lawful
money of the United States of America in Federal or other funds
immediately available to the Lender. Lender shall have the right
to effectuate payment on any and all Obligations due and owing
hereunder by charging the Borrowers' account or by making
Advances as provided in Sections 2.3(a) and 2.4 hereof.
(e) The Borrowers shall pay principal, interest, and all
other amounts payable hereunder, or under any related agreement,
without any deduction whatsoever, including, but not limited to,
any deduction for any setoff or counterclaim.
2.8 Repayment of Excess Advances. The aggregate balance of
Advances outstanding at any time in excess of the maximum amount of
Advances permitted under Sections 2.1 and 2.2 hereof shall be immediately
due and payable without the necessity of any demand, at the place
designated by Lender, whether or not an Incipient Event of
Default or Event of Default has occurred.
2.9 Statement of Account. Lender shall maintain, in accordance with its
customary procedures, a loan account in the name of the Borrowers in which
shall be recorded the date and amount of each Advance made by Lender and
the date and amount of each payment in respect thereof; provided,
however, the failure by Lender to record the date and amount of
any Advance shall not adversely affect Lender. For each month,
Lender shall send to the Borrowers a statement showing the
accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Lender and the
Borrowers, during such month. The monthly statements shall be
deemed correct and binding upon the Borrowers in the absence of
manifest error and shall constitute an account stated between
Lender and the Borrowers unless Lender receives a written statement of the
Borrowers' specific exceptions thereto within thirty (30) days
after such statement is received by the Borrowers. The records
of Lender with respect to the loan account
shall be prima facie evidence of the amounts of Advances
and other changes thereto and of payments applicable thereto.
2.10 Letters of Credit.Subject to the terms and conditions hereof,
Lender shall issue or cause the issuance of standby Letters
of Credit ("Letters of Credit") with an expiration date not
longer than three hundred sixty (360) days from the date of
issuance thereof, for the account of the Borrowers; provided,
however, that Lender will not be required to issue or cause
to be issued any Letters of Credit to the extent that the face
amount of such Letters of Credit would then cause (i) the aggregate
face amount of all outstanding Letters of Credit to
exceed the lesser of (x) the Maximum Revolving Advance
Amount less the outstanding face amount of all Revolving
Advances, or (y) the Formula Amount minus the aggregate
amount of all outstanding Revolving Advances and the
outstanding principal balance of the Term Loan, or (ii)
the aggregate face value of the outstanding Letters of
Credit to exceed the Letter of Credit Sublimit. All
drawings under any Letters of Credit shall be deemed
to be Revolving Advances and shall bear interest at
the Revolving Advance Rate; Letters of Credit that
have not been drawn upon shall not bear interest. Letters
of Credit shall be subject to the terms and conditions set
forth in the Letter of Credit and Security Agreement attached
hereto as Exhibit 2.9.
2.11 Issuance of Letters of Credit.
(a) Borrowers may request Lender to issue or cause the
issuance of a Letter of Credit by delivering to Lender at
the Payment Office, Lender's standard form of Letter of
Credit and Security Agreement together with Lender's standard
form of Letter of Credit Application (collectively, the "Letter
of Credit Application") completed to the satisfaction of Lender;
and, such other certificates, documents and other papers and
information as Lender may reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts when presented for honor thereunder
in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) have an expiry date not later
than the last day of the Term. Each Letter of Credit Application
and each Letter of Credit shall be subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, and any amendments or
revisions thereof and, to the extent not inconsistent therewith,
the laws of the State of New York.
2.12 Requirements For Issuance of Letters of Credit
(a) In connection with the issuance or creation of any
Letter of Credit, Borrowers shall indemnify, save and hold
Lender harmless from any loss, cost, expense or liability,
including, without limitation, payments made by Lender, and
expenses and reasonable attorneys' fees incurred by Lender
arising out of, or in connection with, any Letter of Credit
to be issued or created for Borrowers. Borrowers shall be
bound by Lender's or any issuing or accepting bank's regulations
and good faith interpretations of any Letter of Credit
issued or created for Borrowers' account, although this
interpretation may be different from Borrowers' own;, and,
neither Lender nor any of its correspondents shall be liable
for any error, negligence, or mistake, whether by omission or
commission, in following Borrowers' instructions or those
contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in creating or paying
any Letter of Credit except for Lender's or such correspondents'
willful misconduct.
(b) Borrowers shall authorize and direct any bank
which issues a Letter of Credit to name Borrowers as the
"Account Party" therein and to deliver to Lender all
instruments, documents, and other writings and property
received by the bank pursuant to the Letter of Credit and
to accept and rely upon Lender's instructions and agreements
with respect to all matters arising in connection with the Letter
of Credit or the application therefor.
(c) In connection with all Letters of Credit issued or
created by Lender under this Agreement, Borrowers hereby appoint
Lender, or its designee, as their attorney, with full power and
authority if an Event of Default or Incipient Event of Default
shall have occurred, (a) to sign and/or endorse Borrowers' names
upon any warehouse or other receipts, letter of credit applications
and acceptances; (b) to sign Borrowers' names on bills of lading;
(c) to clear Inventory through Customs in the names of Borrowers
or Lender or Lender's designee, and to sign and deliver
to Customs Officials powers of attorney in the name of
Borrowers for such purpose; and (d) to complete in Borrowers'
names or Lender's name, or in the name of Lender's designee,
any order, sale or transaction, obtain the necessary documents
in connection therewith, and collect the proceeds thereof.
Neither Lender nor its attorneys will be liable for any acts
or omissions nor for any error of judgment or mistake of fact
or law, except for Lender's or its attorney's willful misconduct.
This power, being coupled with an interest, is irrevocable as long as
any Letters of Credit remain outstanding.
2.13 Additional Payments.
Any sums expended by Lender due to the Borrowers' failure to
perform or comply with their obligations under this Agreement
including, without limitation, Borrowers' obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to the Borrowers' account as a Revolving Advance and
added to the Obligations.
III. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall be payable in
arrears on the last day of each month. Interest charges
shall be computed on the actual average of
such daily Advances outstanding during the month (the "Monthly
Advances") at a rate per annum equal to (i) with respect to
Revolving Advances, the Revolving Advance Rate, (ii) with
respect to the Term Loan, the Term Loan Rate (iii) with respect
to the Acquisition Loan, the Acquisition Loan Rate, and (iv) with
respect to the Overadvance and the Trade Payables Overadvance
at the Overadvance Rate (as applicable, the "Contract Rate").
Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the
applicable Contract Rate shall be similarly
changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate
during the time such change or changes remain in effect. Upon
and after the occurrence of an Event of Default, and during the
continuation thereof, all outstanding Obligations shall bear
interest at the applicable Contract Rate plus two (2%) percent
per annum (the "Default Rate"). So long as no Incipient Event of
Default or Event of Default shall have occurred and be continuing,
the Applicable Margin shall be increased or decreased, as the case
may be, as of the first day of each month following the fiscal
quarter reported upon in the financial statements delivered
pursuant to Sections 9.8 and 9.9 hereof, commencing with fiscal
quarter ending June 30, 1998, based upon the ratio of Funded
Indebtedness to EBITDA with respect to the four (4) fiscal quarters
then ended as reported upon in the applicable financial statements.
If Lender so elects, Borrowers may purchase an interest
rate cap from Lender at such charge and under such conditions
as Lender shall offer from time to time in its sole discretion.
By way of example only, if Lender elected to quote charges for an
interest rate cap as of the Amended and Restated Closing Date,
surcharges would be as follows: (i) for one (1) year, 0.10% per
million dollars; (ii) for three (3) years, 0.35% per million
dollars; and (iii) for five (5) years, 0.92% per million dollars.
3.2 Letter of Credit Fees.
(a) Borrowers shall pay Lender (i) for issuing or causing
the issuance of a standby Letter of Credit, a fee computed at
a rate of one fourth of one percent (0.25%) per month on the
outstanding amount thereof, and (ii) the Bank's other customary
charges payable in connection with Letters of Credit as in effect
from time to time (which charges shall be furnished to Borrowers
by Lender upon request) (collectively, the "Letter of Credit Fees").
Such Letter of Credit Fees shall be payable upon the opening of
any Letter of Credit and monthly thereafter in advance. Any
such charge in effect at the time of a particular transaction
shall be the charge for that transaction, notwithstanding any
subsequent change in Bank's prevailing charges for that type
of transaction. All Letter of Credit Fees payable hereunder
shall be deemed earned in full on the date when the same are
due and payable hereunder and shall not be subject to rebate
or proration upon the termination of this Agreement for any reason.
Upon the earlier of (i) demand by the Lender after the
occurrence of an Event of Default, or (ii) the expiration of
the Term, Borrowers shall cause cash to be deposited and maintained
in an account with, or designated by, Lender, as cash collateral,
in an amount equal to face amount of all outstanding Letters of
Credit, and Borrowers hereby irrevocably authorize Lender, in its
discretion, on Borrowers' behalf and in Borrowers' names, to open
such an account and to make and maintain deposits therein, or in
an account opened by Borrowers, in the amounts required to be made
by Borrowers, out of the proceeds of Receivables or other Collateral
or out of any other funds of Borrowers coming into Lender's possession
at any time. Lender will invest such cash collateral (less applicable
reserves) in such short-term money market items as to which Lender and
Borrowers mutually agree and the net return on such investments
shall be credited to such account and constitute additional cash
collateral. Borrowers may not withdraw amounts credited to any such
account except upon payment and performance in full of all Obligations
and termination of this Agreement.
3.3 Closing Fee. Upon the execution of this Agreement, Borrowers
shall pay to Lender a closing fee of $50,000 of which $25,000 is
payable upon acceptance by the Borrowers of a commitment letter,
if issued, and the balance (or $50,000 if there is no commitment
letter) is payable on the Amended and Restated Closing Date.
3.4 Collateral Monitoring Fee. Borrowers shall pay to Lender on the
first day of each month a collateral monitoring fee in an amount
equal to $2,500.00 per month.
3.5 Unused Facility. On the first day of each fiscal quarter during
the Term, Borrowers shall pay to Lender an Unused Facility Fee computed
at a rate of one-fourth of one percent (0.25%) per annum on the difference
between the Maximum Loan Amount and the average daily amount of Revolving
Advances, Letters of Credit, Term Loan and Acquisition Loan outstanding
during such quarter.
3.6 Unauthorized Overadvance Premium. If the Lender, in its sole
discretion, shall permit overadvances other than overadvances provided
for under Section 2.2(b) of this Agreement (such additional overadvances, if
permitted by Lender, to be referred to as "Additional Overadvances"),
which causes the total amount of outstanding Advances in any month to
exceed the lesser of (i) the Maximum Loan Amount, or (ii) the Formula
Amount for a period of three consecutive Business Days during
such month, then the Borrowers shall pay to the Lender on the
last day of such month, and thereafter, on the last day of any
subsequent month in which such Additional Overadvances continue
to exist, an overadvance premium equal to the sum of (A) one
percent (1%) of the average outstanding Additional Overadvances,
plus (B) one sixth of one percent (1/6%) of the average face amount
of all outstanding Letters of Credit for such month.
3.7 Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days and for the actual
number of days elapsed. If any payment to be made hereunder becomes
due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the applicable Contract Rate
during such extension.
3.8 Minimum and Maximum Charges. The Contract Rate shall not in any
event be less than six percent (6.0%) per annum. However, in no event
whatsoever shall interest and other charges charged hereunder
exceed the highest rate permissible under law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Lender has received
interest and other charges hereunder in excess of the highest rate
applicable hereto, such excess interest shall be first applied to any unpaid
principal balance owed by Borrowers, and if the then remaining
excess interest is greater than the previously unpaid principal
balance, the Lender shall promptly refund such excess amount to
Borrowers and the provisions hereof shall be deemed amended to
provide for such permissible rate.
3.9 Increased Costs. In the event that the Lender (for purposes of this
Section 3.9, the term "Lender" shall include Lender or any corporation or bank
controlling Lender and the office or branch where Lender (as so
defined) makes or maintains any Advances, or from which Lender
obtains funds to make Advances) determines that any applicable
law, rule, treaty, regulation or guideline, or any change therein,
or any change in the interpretation or administration thereof by
any governmental authority, central bank or other financial, monetary or
other authority charged with the interpretation or administration thereof, or
compliance by the Lender with any request or directive (whether
or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject the Lender to any tax of any kind whatsoever
with respect to this Agreement the Advances made hereunder or
change the basis of taxation of payments to the Lender of principal,
fees, interest or any other amount payable hereunder or under any
Other Documents (except for changes in the rate of tax on the
overall net income of the Lender by the jurisdiction in which
it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by,
or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of the Lender, including
(without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on the Lender any other condition with respect
to this Agreement, any Other Documents or the Advanced made
hereunder; and the result of any of the foregoing is to increase
the cost to the Lender of making, renewing or maintaining Advances
hereunder by an amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Advances by an
amount that the Lender deems to be material, then, in any case
the Borrowers shall promptly pay the Lender, upon its demand,
such addional amount as will compensate the Lender for such additional
cost or such reduction, as the case may be. The Lender shall certify
the amount of such additional cost or reduced amount to the Borrowers,
and such certification shall be conclusive absent manifest error.
3.10 Capital Adequacy.
(a) In the event that the Lender shall have determined that
any applicable law, treaty, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or other financial, monetary or other
authority charged with the interpretation or administration thereof,
or compliance by the Lender (for purposes of this Section 3.10, the
term "Lender" shall include Lender or any corporation or bank
controlling Lender and the office or branch where Lender (as so
defined) makes or maintains any Advances, or from which Lender obtains
funds to make Advances) with any request or directive regarding
captial adequacy (whetheror not having the force of law) of any such
central bank or other financial, monetary or other authority,
has or would have the effect of reducing the rate of return on
the Lender's capital as a consequence of its obligations hereunder
to a level below that which the Lender could have achieved but for
such adoption, change or compliance (taking into consideration the
Lender's policies with respect to capital adequacy) by an amount
deemed by the Lender to be material, then, from time to time, the
Borrowers shall pay upon demand to the Lender such additional
amount or amounts as will compensate the Lender for such reduction.
In determining such amount or amounts, the Lender may use
any reasonable averaging attribution methods. The protection
of this Section 3.10 shall be available to the Lender regardless
of any possible contention of invalidity or inapplicability of the
law, regulation or condition which shall have been imposed.
(b) A certificate of the Lender setting forth such amounts
as shall be necessary to compensate the Lender as specified in
Section 3.10 hereof shall be delivered to the Borrowers and shall
be conclusive absent manifest error.
3.11 Survival. The obligations of the Borrowers under 3.9 and 3.10
shall survive termination of this Agreement and the Other Documents and
payment in full of the Obligations.
IV. COLLATERAL: GENERAL TERMS.
4.1 Security Interest in the Collateral. To secure the prompt payment
and performance to Lender of the Obligations, each Borrower hereby
sells, assigns, pledges and grants to Lender a continuing first
priority security interest in and to all of the Collateral owned
by such Borrower, whether now owned or existing or hereafter
acquired or arising and wheresoever located. Each Borrower
shall xxxx its books and records as may be necessary or appropriate
to evidence, protect and perfect Lender's security interest and shall
cause its financial statements to reflect such security interest.
4.2 Perfection of Security Interest. Borrowers shall take all action that
may be necessary or desirable, or that Lender may request, so as
at all time to maintain the validity, perfection, enforceability
and priority of Lender's security interest in the Collateral or to
enable Lender to protect, exercise or enforce its rights hereunder
and in the Collateral, including, but not limited to (i) immediately
discharging all Liens other than Permitted Encumbrances, (ii) obtaining
landlords' or mortgagees' lien waivers, (iii) delivering to Lender,
endorsed or accompanied by such instruments of assignment as
Lender may specify, and stamping or marking, in such manner as
Lender may specify, any and all chattel paper, instruments, letters
of credits and advices thereof and documents evidencing or forming
a part of the Collateral, (iv) entering into warehousing, lockbox
and other custodial arrangements satisfactory to Lender, and
(v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Lender, relating to the creation, validity,
perfection, maintenance or continuation of Lender's security
interest under the Uniform Commercial Code or other applicable
law. All charges, expenses and fees the Lender may incur in doing
any of the foregoing, and any local taxes relating thereto, shall
be charged to the Borrowers' account and added to the Obligations,
or at the Lender's option, shall be paid to the Lender immediately
upon demand.
4.3 Disposition of Collateral. Borrowers will safeguard and protect all
Collateral for the Lender's
general account and make no disposition thereof whether by sale, lease
or otherwise except (a) the sale of Inventory in the ordinary course
of business and (b) the disposition or transfer of obsolete and
worn-out Equipment in the ordinary course of business during any
fiscal year having an aggregate fair market value of not more than
$100,000 and only to the extent that (i) the proceeds for
any such disposition are used to acquire replacement Equipment
which is subject to Lender's first priority security interest or
(ii) the proceeds of which are remitted to Lender as a prepayment
on the Term Loan.
4.4 Preservation of Collateral.
Following the occurrence of an Event of Default in addition to the
rights and remedies set forth in Section 11.1 hereof, the Lender:
(a) may at any time take such steps as the Lender deems necessary
to protect the Lender's interest in and to preserve the Collateral,
including the hiring of such security guards for the placing of such
security protection measures as the Lender may deem appropriate; (b)
may employ and maintain at any of the Borrowers' premises
a custodian who shall have full authority to do all acts
necessary to protect the Lender's interests in the Collateral;
(c) may lease warehouse facilities to which the Lender may move
all or part of the Collateral; (d) may use any of the Borrowers'
owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the
places where the Collateral is located, and may proceed over and
through any of the Borrowers'owned or leased property. The Borrowers
shall cooperate fully with all of the Lender's efforts to preserve the
Collateral and will take such actions to preserve the Collateral as the Lender
may direct. All of the Lender's expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be
charged to the Borrowers' account and added to the Obligations.
4.5 Ownership of Collateral.
With respect to the Collateral, at the time the Collateral becomes
subject to the Lender's security interest: (a) the Borrowers shall
be the sole owners of and fully authorized and able to sell, transfer,
pledge and/or grant a first security interest in each and every item
of the Collateral to the Lender; and, except for Permitted Encumbrances
the Collateral shall be free and clear of all Liens, Claims, Charges and
encumbrances whatsoever; (b) each document and
agreement executed by Borrowers or delivered to Lender in
connection with this Agreement shall be true and correct in
all respects; (c) all signatures and endorsements of Borrowers
that appear on such documents and agreements shall be genuine and
Borrowers shall have full capacity to execute same; and (d) Borrowers'
Equipment and Inventory is located as set forth on Exhibit 4.5 of the
Existing Loan Agreement and shall not be removed from such location(s)
without the prior written consent of the Lender except with respect to
(i) the sale of Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof, or
(ii) equipment not covered by a certificate of title with an
aggregate value not in excess of $50,000. The Borrowers agree
to provide Lender with landlord's waivers, in form and substance
satisfactory to the Lender by each landlord of real property leased
to either Borrower where any Collateral is, or may be located. The
Borrowers further agree to give the Lender or its designated
representatives access to any such locations and to permit, during
normal business hours, representatives of the Lender's audit department
to make such periodic inspections of the Collateral as such
representatives deem necessary and proper.
4.6 Defense of Lender's Interests.
Until (a) payment and performance in full of all of Obligations and
(b) termination of this Agreement, the Lender's interests in the
Collateral hereby granted to the Lender shall continue
in full force and effect. During such period the Borrowers shall not,
without the Lender's prior written consent, pledge, sell (except
Inventory in the ordinary course of business and Equipment to the
extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a security interest in, Lien, Claim or
Charge upon or encumber or allow or suffer to be encumbered in
any way except for Permitted Encumbrances, any part of the Collateral.
The Borrowers shall defend the Lender's interests in the Collateral
against any and all persons whatsoever. At any time following demand
by Lender for payment of all Obligations, Lender shall have the right
to take possession of the indicia of the Collateral and the Collateral
in whatever physical form contained, including without lmitation:
labels, stationery, documents, instruments and
advertising materials. If Lender exercises this right to
take possession of the Collateral, Borrowers shall, upon demand,
assemble it in the best manner possible and make it available to
Lender at a place reasonably convenient to Lender. In addition,
with respect to all Collateral, Lender shall be entitled to all of
the rights and remedies set forth herein and further provided by the
Uniform Commercial Code or other applicable law. Borrowers shall, a
tion, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding cash, checks, Inventory, documents or
instruments in which Lender holds a security interest to deliver
same to Lender and/or subject to Lender's order and if they shall
come into Borrowers' possession, they, and each of them, shall be
held by Borrowers in trust as Lender's trustee, and Borrowers will
immediately deliver them to Lender in their original form together
with any necessary endorsement.
4.7 Books and Records.
The Borrowers (a) shall keep proper books of record and account
in which full, true and correct entries will be made of all dealings
or transactions of or in relation to their businesses and affairs;
(b) set up on their books accruals with respect to all taxes,
assessments, charges, levies and claims; and (c) on a reasonably
current basis set up on their books, from their earnings, allowances
against doubtful Receivables, advances and investments and all other
proper accruals (including without limitation by reason of enumeration,
accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of
properties), which should be set aside from such earnings in
connection with its business. All determinations pursuant to
this subsection shall be made in accordance with, or as required
by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers.
4.8 Financial Disclosure.
The Borrowers hereby irrevocably authorize and direct all accountants
and auditors employed by the Borrowers at any time during the term of
this Agreement to exhibit and deliver to Lender copies of any of the
Borrowers' financial statements, trial balances or other accounting
records of any sort in the accountant's or auditor's possession, and
to disclose to Lender any information such accountants may have
concerning the Borrowers' financial status and business
operations. The Borrowers hereby authorize all federal, state and
municipal authorities to furnish to Lender copies of reports or
examinations relating to the Borrowers, whether made by the
Borrowers or otherwise; however, Lender will attempt to obtain
such information or materials directly from the Borrowers prior
to obtaining such information or materials from such accountants.
4.9 Compliance with Laws.
The Borrowers shall comply with all acts, rules, regulations and
orders of any legislative, administrative or judicial body or official
applicable to the Collateral or any part thereof or to the operation of
the Borrowers' business the non-compliance with which would have a
material adverse effect on the Collateral, or the operations, business
or condition (financial or otherwise) of the Borrowers.
4.10 Inspection of Premises.
At all reasonable times Lender shall have full access to and the right
to audit, check, inspect and make abstracts and copies from the Borrowers'
books, records, audits, correspondence and all other papers relating to
the Collateral and the operation of Borrowers' business, provided that
the Lender shall comply with the terms of any confidentiality provision
set forth in any government contract by which the Borrowers are bound
reviewed by Lender in the course of any such inspection. Lender and
its agents may enter upon any of the Borrowers' premises at any time
during business hours and at any other reasonable time, and from time
to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrowers' business.
4.11 Insurance. Borrowers shall bear the full risk of loss from
any loss of any nature whatsoever with respect to the Collateral.
At the Borrowers' own cost and expense in amounts and with carriers
acceptable to Lender, the Borrowers shall (a) keep all their
insurable properties and properties in which the Borrowers have
an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts,
as is customary in the case of companies engaged in businesses similar
to Borrowers' including, without limitation, business interruption
insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in business similar to Borrowers'
insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may
either singly or jointly with others at any time have access
to the assets or funds of Borrowers either directly or through
authority to draw upon such funds or to direct generally the
disposition of such assets; (c) maintain public and product
liability insurance against claims for personal
injury, death or property damage suffered by others; (d) maintain all
such workmen's compensation or similar insurance as may be required
under the laws of any state or jurisdiction in which Borrowers are
engaged in business; and (e) maintain environmental insurance on
each parcel of Real Property in form and substance satisfactory to
the Lender. With respect to the insurance coverage referred to in
clauses (a), (b), (c), and (e), furnish Lender with (i) copies of all
policies and evidence of the maintenance of such policies by the
renewal thereof at least thirty (30) days before any expiration date,
and (ii) appropriate loss payable endorsements in form and
substance satisfactory to the Lender, naming the Lender as additional
insured and loss payee as its interests may appear with respect to
all such insurance coverages, and providing that (A) all proceeds
thereunder shall be payable to the Lender, (B) no such insurance
shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) such policy
and loss payable clauses may not be canceled, amended or
terminated unless at least thirty (30) days' prior written
notice is given to the Lender. In the event of any loss
thereunder, the carriers named therein hereby are directed
by the Lender and Borrowers to make payment for such loss to
the Lender and not to the Borrowers and the Lender jointly.
If any insurance losses are paid by check, draft or other instrument
payable to the Borrowers and the Lender jointly, the Lender may
endorse the Borrowers' names thereon and do such other things as
the Lender may deem advisable to reduce the same to cash. The
Lender is hereby authorized to adjust and compromise claims under
insurance coverage referred to in clauses (a), (b), (c) and (e)
above. All loss recoveries received by Lender upon any
such insurance may be applied to the Obligations, in such order as
Lender in its sole discretion shall determine. Any surplus shall
be paid by the Lender to the Borrowers or applied as
may be otherwise required by law. Any
deficiency thereon shall be paid by the Borrowers to the Lender,
on demand. Anything hereinabove to the contrary notwithstanding,
and suject to the fullfillment of the conditions set forth below,
Lender shall remit to Borrowers insurance proceeds
received by Lender during any calendar year under
insurance policies procured and maintained
by Borrowers which insure Borrowers' insurable properties to the
extent such insurance proceeds do not exceed $50,000 in the aggregate
during such calendar year or $25,000 per occurrence. In the event the
amount of insurance proceeds received by the Lender for any occurrence
exceeds $50,000, then the Lender shall not be obligated to remit the
insurance proceeds to Borrowers unless Borrowers shall provide Lender with
evidence reasonably satisfactory to Lender that the insurance
proceeds will be used by Borrowers to repair, replace or restore
the insured property which was the subject of the insurable loss.
In the event Borrowers have previously received (or, after giving
effect to any proposed remittance by Lender to Borrowers would receive)
insurance proceeds which equal or exceed $25,000 in the aggregate during
any calendar year, then Lender may, in its sole discretion, either
remit the insurance proceeds to Borrowers upon Borrowers providing
Lender with evidence reasonably satisfactory to Lender that the
insurance proceeds will be used by Borrowers to repair, replace
or restore the insured property which was the subject of
the insurable loss, or apply the proceeds to the
Obligations, as aforesaid. The agreement of Lender to remit
insurance proceeds in the manner above provided shall be subject
in each instance to satisfaction of each of the following conditions:
(x) No Event of Default or Incipient Event of Default shall then have
occurred, and (y) Borrowers shall use such insurance proceeds to repair,
replace or restore the insurable property which was the subject of the
insurable loss and for no other purpose.
4.12 Failure to Pay Insurance.
If the Borrowers fail to obtain insurance as hereinabove provided, or
to keep the same in force, the Lender, if the Lender so elects, may
obtain such insurance and pay the premium therefor for the Borrowers'
account, and charge the Borrowers' account therefore and such expenses
so paid shall be part of the Obligations.
4.13 Payment of Taxes.
The Borrowers will pay, when due, all taxes, assessments
and other Charges or Claims lawfully levied or assessed upon Borrowers or
any of the Collateral including, without limitation, real and personal
property taxes, assessments and charges and all franchise, income,
employment, old age benefits, withholding, and sales taxes. If any
tax by any governmental authority is or may be imposed on or as a
result of any transaction between Borrowers and Lender which Lender may
be required to withhold or pay or if any taxes, assessments, or
other Charges remain unpaid after the date fixed for their payment,
or if any Claim shall be made which, in the Lender's opinion, may
possibly create a valid Lien, Charge or Claim on the Collateral, the
Lender may without notice to Borrowers pay the taxes, assessments,
Liens, Charges or Claims and Borrowers hereby indemnify and hold Lender
harmless in respect thereof. The amount of any payment by Lender under
this Section 4.13 shall be charged to the Borrowers' account as a
Revolving Advance and added to the Obligations and, until
Borrowers shall furnish Lender with an indemnity therefore (or
supply Lender with evidence satisfactory to Lender that due provision
for the payment thereof has been made), Lender may hold without interest
any balance standing to Borrowers' credit and Lender shall retain its
security interest in any and all Collateral held by Lender.
4.14 Payment of Leasehold Obligations. The Borrowers shall at all times
pay, when and as due, its rental obligations under all leases
under which it is a tenant, and shall otherwise comply, in all
material respects, with all other terms of such leases and keep
them in full force and effect and, at the Lender's request will
provide evidence of having done so.
4.15 Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness
incurred by the Customer therein named, for a fixed sum as set
forth in the invoice relating thereto (provided immaterial or
unintentional invoice errors shall not be deemed to be a breach
hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of the Borrowers, or work, labor or services
theretofore rendered by the Borrowers and as of the date each Receivable
is created, same shall be due and owing in accordance with Borrowers'
standard terms of sale without dispute, setoff or counterclaim
except as may be stated on the accounts receivable schedules
delivered by the Borrowers to the Lender.
(b) Solvency of Customers. Each Customer, to the best of
the Borrowers' knowledge, as of the date each Receivable is
created, is and will be solvent and able to pay all Receivables
on which the Customer is obligated in full when due, and with
respect to such Customers of Borrowers who are not solvent, the
Borrowers have set up on their books and in their financial records
bad debt reserves adequate to cover such Receivables.
(c) Location of Borrowers. The Borrowers' chief executive
offices are located at the locations set forth on Schedule 4.15(c)
of the Existing Loan Agreement. Until written notice is given to
the Lender by either Borrower of any other office at which it keeps
its records pertaining to Receivables, all such records shall be kept
at such executive office.
(d) Collection of Receivables. Notwithstanding the provisions
of Section 4.15(h) hereof, if either Borrower receives any checks,
drafts, notes, money orders, acceptances, cash and/or other evidences
of Indebtedness as payment for any Receivable, such Borrower shall
deliver same to the Lender in original form and on the date of receipt
thereof.
(e) Notification of Assignment of Receivables. At any time,
the Lender shall, in its reasonable discretion, have the right to
send notice of the assignment of, and the Lender's security interest
in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. Thereafter, the Lender
shall have the sole right to collect the Receivables in the Lender's name,
take possession of the Collateral, or both, and any stationery and
postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel
used for collection, may be charged to the Borrowers' account and
added to the Obligations.
(f) Power of Lender to Act on Borrowers' Behalf. The
Lender shall, in its reasonable discretion, have the right to
receive, endorse, assign and/or deliver in the name of the Lender
or the Borrowers any and all checks, drafts and other instruments
for the payment of money relating to the Receivables, and the
Borrowers hereby waive notice of presentment, protest and non-payment
of any instrument so endorsed. The Borrowers hereby constitute the
Lender or the Lender's designee as the Borrowers' attorney with power
(i) to endorse the Borrowers' names upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral;
(ii) to sign the Borrower's name on any invoice or xxxx of lading
relating to any of the Receivables; (iii) to send verifications of
Receivables, drafts against Customers, assignments and verifications
of Receivables; (iv) to send verifications of Receivables to any
Customer; (v) to sign the Borrowers' names on all financing statements
or any other documents or instruments deemed necessary or appropriate by
the Lender to preserve, protect, or perfect the Lender's
interest in the Collateral and to file same; (vi) to demand
payment of the Receivables; (vii) to enforce payment of the
Receivables by legal proceedings or otherwise; (viii) to exercise
all of Borrowers' rights and remedies with respect to the collection
of the Receivables and any other Collateral; (ix) to settle, adjust,
compromise, extend or renew the Receivables; (x) to settle, adjust or
compromise any legal proceedings brought to collect Receivables; (xi)
to prepare, file and sign Borrowers' names on a proof of claim in
bankruptcy or similar document against any account debtor; (xii) to prepare,
file and sign Borrowers' names on any notice of Lien, assignment
or satisfaction of Lien or similar document in connection with
the Receivables; and (xiii) to do all other acts and things
necessary to carry out this Agreement. All acts of said
attorney or designee are hereby ratified and approved, and
said attorney or designee shall not be liable for any acts
of omission or commission nor for any error of judgment
or mistake of fact or law, unless done maliciously or with
gross negligence; this power being coupled with an interest
is irrevocable while any of the Obligations remain unpaid. The
Lender shall have the right at any time to change the address for
delivery of mail addressed to either Borrowers to such address
as the Lender may designate.
(g) No Liability. The Lender shall not, under any
circumstances or in any event whatsoever, have any liability
for any error or omission or delay of any kind occurring in
the settlement, collection or payment of any of the Receivables
or any instrument received in payment thereof, or for any damage
resulting therefrom. The Lender may, without notice or consent
from the Borrowers, xxx upon or otherwise collect, extend the
time of payment of, compromise or settle for cash, credit or
upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto
and/or release any obligor thereof. The Lender is authorized
and empowered to accept the return of the goods represented by
any of the Receivables, without notice to or consent by the
Borrowers, all without discharging or in any way affecting the
Borrowers' liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account.
The Borrowers shall direct their Customers to deposit the
proceeds of all Receivables into a lockbox account, dominion
account or such other "blocked account" ("Blocked Accounts")
maintained in the name of each Borrower pursuant to an
arrangement with such bank as may be selected by Borrowers
and be acceptable to Lender. The Borrowers shall issue to
any such bank, an irrevocable letter of instruction directing
said bank to transfer such funds so deposited to the Lender,
either to any account maintained by the Lender at said
bank or by wire transfer to appropriate account(s) of the
Lender. All funds deposited in such "blocked account" shall
become the property of the Lender, and upon receipt by the
Lender, shall be applied to reduce the amount of the outstanding
Advances made to the Borrowers pursuant to the Revolving Credit
in accordance with the provisions of Section 2.6(c) hereof. The
Borrowers shall obtain the agreement by any such bank to waive
any offset rights against the fund so deposited. Lender assumes
no responsibility for such "blocked account" arrangement, including
without limitation, any claim of accord and satisfaction or
release with respect to deposits accepted by any bank thereunder.
Alternatively, Lender may establish depository accounts
("Depository Accounts") in the name of Lender at a bank or banks
for the deposit for such funds and Borrowers shall deposit all
proceeds of Receivables or cause same to be deposited, in kind,
in such Depository Accounts of Lender in lieu of depositing same
to the Blocked Accounts.
4.16 Inventory.
All Inventory has been, and will be produced by Borrowers in
accordance with the Federal Fair Labor Standards Act of 1938,
as amended, and all rules, regulations and orders thereunder.
4.17 Maintenance of Equipment.
The Equipment shall be maintained in good operating condition and
repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment shall be maintained
and preserved. Borrowers shall have the right to sell Equipment to
the extent set forth in Section 4.3 hereof.
4.18 Exculpation of Liability.
Nothing herein contained shall be construed to constitute the Lender
as either Borrower's agent for any purpose whatsoever, nor shall the
Lender be responsible or liable for any shortage, discrepancy, damage,
loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof. The Lender does not,
whether by anything herein or in any assignment or otherwise, assume
any of the Borrowers' obligations under any contract or agreement
assigned to the Lender, and the Lender shall not be responsible
in any way for the performance by the Borrowers of any of the
terms and conditions thereof.
4.19 Environmental Matters.
(a) Borrowers will ensure that the Real Property remains in
substantial compliance with all Environmental Laws and it will
not place or permit to be placed any Hazardous Substances on any
Real Property except as not prohibited by applicable law and
appropriate governmental authorities.
(b) Borrowers will establish and maintain a system to
assure and monitor continued compliance with all applicable
Environmental Laws which system shall include periodic review
of such compliance.
(c) Borrowers will (i) employ in connection with their use
of the Real Property appropriate technology necessary to maintain
compliance with any applicable Environmental Laws and (ii) dispose
of any and all Hazardous Waste generated at the Real Property only
at facilities and with carriers that maintain valid permits under
RCRA and any other applicable Environmental Laws. Borrowers shall
use their best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport,
storage or disposal facilities or operators employed by the Borrowers
in connection with the transport or disposal of any Hazardous
Waste generated at the Real Property.
(d) In the event the Borrowers obtain, give or receive
notice of any Release of Release of a reportable quantity of
any Hazardous Substances at the Real Property (any such even
being hereinafter referred to as a "Hazardous Discharge") or
receive any notice of violation, request for information or
notification that they, or either of them, are potentially
responsible for investigation or cleanup of environmental
conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to
any Hazardous Discharge or violation of Environmental Laws
affecting the Real Property or either Borrower's interest
therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person or entity, including
any state agency responsible in whole or in part for environmental
matters in the state in which the Real Property is located or the
United States Environmental Protection Agency (any such person or
entity hereinafter the "Authority"), then the Borrowers shall,
within five (5) Business Days, give written notice of same to
the Lender detailing non-privileged and non-confidential facts
and circumstances of which the Borrowers are aware giving rise
to the Hazardous Discharge or Environmental Complaint. Such information is
to be provided to allow the Lender to protect its security
interest in the Real Property and is not intended to create
nor shall it create any obligation upon the Lender with respect thereto.
(e) Borrowers shall promptly forward to the Lender copies of
any request for information, notification of potential liability,
demand letter relating to potential responsibility with respect to
the investigation or cleanup of Hazardous Substances at any other
site owned, operated or used by either Borrower to dispose of
Hazardous Substances and shall continue to forward copies of
correspondence between the Borrowers and the Authority regarding
such claims to the Lender until the claim is settled. The Borrowers shall
promptly forward to the Lender copies of all documents and reports
concerning a hazardous Discharge at the Real Property that
either Borrower is required to file under any Environmental
Laws. Such information is to be provided solely to allow the
Lender to protect Lender's security interest in the Real Property
and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action
in order to safeguard to health of any Person and to avoid subjecting
the Collateral or Real Property to any Lien. If either Borrower
shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or shall fail to comply with any of the
requirements of any Environmental Laws, the Lender may, but without
the obligation to do so, for the sole purpose of protecting
n Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property)
and take such actions as the Lender (or such third parties as directed
by the Lender) deem reasonably necessary or advisable, to clean up,
remove, mitigate or otherwise deal with any such Hazardous Discharge
or Environmental Complaint. All reasonable costs and expenses
incurred by the Lender (or such third parties) in the exercise
of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended
at the Default Rate for Revolving Advances shall be paid upon
demand by the Borrowers, and until paid shall be added to and
become a part of the Obligations secured by the Liens created
by the terms of this Agreement or any other agreement between
Lender and Borrowers.
(g) Promptly upon the written request of the Lender from
time to time, Borrowers shall provide Lender, at the Borrowers'
expense, with an Environmental site assessment or environmental
audit report prepared by an environmental engineering firm acceptable
in the reasonable opinion of the Lender, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal
of any Hazardous Substances found on, under, at or with the Real
Property. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is
charged to oversee the clean-up of such Hazardous Discharge
shall be acceptable to the Lender. If such estimates, individually
or in the aggregate, exceed $100,000, the Lender shall have the
right to require the Borrowers to post a bond, letter of credit
or other security reasonably satisfactory to the Lender to secure
payment of these costs and expenses.
(h) Borrowers shall defend and indemnify the Lender and
hold the Lender harmless from and against all loss, liability,
damage and expense, claims, costs, fines and penalties, including
attorney's fees, suffered or incurred by the Lender under or on
account of any Environmental Laws, including without limitation,
the assertion of any lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real
Property, whether or not the same originates or engages from the Real
Property or any contiguous real estate, including any loss of value
of the Real Property as a result of the foregoing except to the
extent such loss, liability, damage and expenses is attributable to
any Hazardous Discharge resulting from actions on the part of the
Lender. The Borrowers' obligations under this Section 4.19 shall
arise upon the discovery of the presence of any Hazardous Substances
at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection
with the presence of any Hazardous Substances. The Borrowers' obligations
and the indemnifications hereunder shall survive the termination of
this agreement.
(i) For purposes of this section 4.19, all references to
Real Property shall be deemed to include all of Borrowers' right,
title and interest in and to leased premises.
4.20 Xxxxx Receivables.
Pursuant to the Existing Loan Agreement, after the payment in
full of all obligations of Xxxxx due to Chemical Bank and/or
First Union National Bank, the Borrowers were required to cause
all amounts collected in connection with the accounts receivable
of Xxxxx to be delivered to the Lender to be used to reduce the
outstanding balance of the Revolving Credit in accordance with the
applicable provisions of the Existing Loan Agreement, including, wit
2.6(c) thereof. As all of Xxxxx'x obligations to Chemical Bank and
First Union National Bank have been paid in full, all accounts
receivable of Xxxxx shall be subject to the terms of this Agreement,
including without limitation Section 4.15 hereof.
V. REPRESENTATIONS AND WARRANTIES.
The Borrowers and the Guarantors represent and warrant as follows:
5.1 Authority. The Borrowers and the
Guarantors have full power, authority and legal right to enter
into this Agreement and the Other Documents to which they are
parties, and perform all obligations hereunder. The execution,
delivery and performance hereof and of the Other Documents to which
they are parties are within the Borrowers' and the Guarantors'
corporate powers, have been duly authorized, are not in contravention
of law or the terms of the Borrowers' or the Guarantors' by-laws,
certificattes of incorporation or other applicable documents relating to the
Borrowers' or the Guarantors' formation or to the conduct of the
Borrowers' or the Guarantors' business or of any material agreement
or undertaking to which either Borrower or either Guarantor is a party
or by which either Borrower or either Guarantor is bound, and will not
conflict with nor result in any breach in any of the provisions of or
constituting a default under or result in the creation of any Lien,
except Permitted Encumbrances, upon any asset of either Borrower or either
Guarantor under the provisions of any agreement, charter, instrument,
by-law of other instrument to which either Borrower or either Guarantor is
a party or by which it may be bound.
5.2 Formation and Qualification. The Borrowers are duly incorporated
and in good standing under the laws of the Commonwealth of Pennsylvania.
Canisco is duly incorporated and in good standing under the laws of the
State of Delaware. Each Borrower and each Guarantor is qualified to do
business and is in good standing in the states listed on Exhibit 5.2 of
the Existing Loan Agreement, which constitute all states in which
qualification and good standing are necessary for the Borrowers or the
Guarantors, as applicable, to conduct their business and own their
property and where the failure to so qualify would have a material adverse
effect on Borrowers or the Guarantors or their business. Borrowers
and Guarantors have delivered to Lender true and complete copies of
their certificates or articles of incorporation and by-laws and will
promptly notify Lender of any amendment or changes thereto.
5.3 Survival of Representations and Warranties. All representations
and warranties of Borrowers and the Guarantors contained in this
Agreement and the Other Documents to which they are parties shall be
true at the time of the execution of this Agreement and such Other
Documents, and shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto. Borrowers, Guarantors
and Lender expressly agree that any misrepresentation or breach of any
representation or warranty whatsoever contained in this Agreement or
the Other Documents shall be deemed material.
5.4 Tax Returns. Xxxxxx'x federal tax identification number is
00-0000000. Icesolv's federal tax identification number is 00-0000000.
The Borrowers and Canisco have filed all federal, state and local tax
returns and other reports they are required by law to file and have
paid all taxes, assessments, fees and other governmental charges that
are due and payable. The provisions for taxes on the books of Borrowers
and Canisco are adequate for all years not closed by applicable statutes,
and for their current fiscal year, and neither Borrowers nor Canisco
has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on their books.
5.5 Financial Statements.
(a) The pro forma balance sheets of Borrowers and Canisco (the
"Pro Forma Balance Sheets") furnished to Lender on the Closing Date
reflect the consummation of the transactions contemplated under this
Agreement (the "Transactions") and are accurate, complete and correct
and fairly reflects the financial condition of Borrowers and Canisco as
of the Closing Date after giving effect to the Transactions, and have
been prepared in accordance with GAAP, consistently applied. The Pro
Forma Balance Sheets of Borrowers and Guarantors have been certified
as accurate, complete and correct in all material respects by the
President and Cheif financial Officer of each respective Borrower and
Canisco. All financial statements referred to in this subsection 5.5(a),
including the related schedules and notes thereto, have been prepared,
in accordance with GAAP, except as may be disclosed in such financial
statements.
(b) The twelve-month cash flow projections of the Borrowers and
their projected balance sheets as of the Closing Date, copies of which
are annexed hereto as Exhibit 5.5(b) of the Existing Loan Agreement
were prepared by the Chief Financial Officers of the Borrowers, are
based on underlying assumptions which provide a reasonable basis for
the projections contained therein and reflect Borrowers' judgment based
on present circumstances of the most likely set of conditions and course
of action for the project period. The cash flow projections and the
projected balance sheets referred to in this subsection 5.5(b), together
with the Pro Forma Balance Sheet, are referred to as the "Pro Forma
Financial Statements".
5.6 Corporate Name. Except as set forth on Exhibit 5.6 of the
Existing Loan Agreement, neither the Borrowers nor the Guarantors
have been known by any other corporate name in the past five years
and do not sell Inventory under any other name, nor has any Borrower
or Guarantor been the surviving corporation of a merger or consolidation
or acquired all or substantially all of the assets of any person during
the preceding five (5) years.
5.7 O.S.H.A. and Environmental Compliance.
(a) Borrowers and Guarantors have duly complied with, and their
facilities, business assets, property, leaseholds and equipment are
in compliance in all material respects with, the provisions of the
Federal Occupational Safety and Health Act, the Environmental Protection
Act, RCRA and all other Environmental Laws; there have been not
outstanding citations, notices or orders of non-compliance issued
to any Borrower or Guarantor or relating to its business, assets,
property, leaseholds or equipment under any such laws, rules or
regulations.
(b) Borrowers and Guarantors have been issued all required
federal, state and local licenses, certificates or permits relating to,
and Borrowers and Guarantors and their facilities, businesses, assets,
property, leaseholds and equipment are in compliance in all material
respects with, all applicable Environmental Laws.
(c) (i) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any Real Property or any premises
leased by Borrowers or Guarantors; (ii) except as set forth on Exhibit
5.7 of the Existing Loan Agreement, there are no underground storage
tanks or polychlorinated biphenyls on the Real Property or any premises
leased by Borrowers or Guarantors; (iii) neither the Real Property nor
any premises leased by Borrowers or Guarantors has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) except
as set forth on Exhibit 5.7 of the Existing Loan Agreement, no Hazardous
Substances are present on the Real Property or any premises leased by
Borrowers or Guarantors, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operations of the commercial business of the Borrowers, the Guarantors or
of their tenants.
(d) Borrowers and Guarantors hereby indemnify and hold Lender
harmless from and against any liability, loss, damage, suit, action
or proceeding pertaining to Hazardous Wastes or Toxic Substances,
including, but not limited to, claims of any federal, state or
municipal government or quasi-governmental agency or any third
person, whether arising under CERCLA, RCRA, or any other federal,
state or municipal law or regulation, or tort, contract or common law.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
(a) The Borrowers and Canisco are solvent, able to pay their debts
as they mature, have capital sufficient to carry on their business and
all businesses in which they are about to engage, and (i) as of the
Amended and Restated Closing Date, the fair present saleable value of
their assets, calculated on a going concern basis, is in excess of the
amount of their liabilities and (ii) subsequent to the Amended and
Restated Closing Date, the fair saleable value of their assets
(calculated on a going concern basis) will be in excess of the amount
of their liabilities.
(b) Except as disclosed in Exhibit 5.8(b) of the Existing
Loan Agreement, neither the Borrowers nor the Guarantors have
(i) any pending or threatened litigation, actions or proceedings
which involve the possibility of materially and adversely affecting
their business, assets, operations, condition or prospects, financial
or otherwise, or the Collateral, or the ability of Borrowers or the
Guarantors to perform this Agreement and the Other Documents, and (ii)
no liabilities nor indebtedness other than the Obligations.
(c) Neither the Borrowers nor Canisco is in violation of
any applicable statute, regulation or ordinance in any respect
materially and adversely affecting the Collateral or their business,
assets, operations or condition or prospects, financial or otherwise,
nor is any Borrower or Canisco in violation of any order of any court,
governmental authority or arbitration board or tribunal.
(d) No Borrower or Canisco has received notice that it is not
in full compliance with any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and
its regulations, and both Borrowers and Canisco have (i) not engaged
in any Prohibited Transactions as defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code as amended, (ii) met all
applicable minimum funding requirements under Section 302 of ERISA
in respect of their plans and no funding requirements have been postponed or
delayed, (iii) no knowledge of any event or occurrence which would cause the
Pension Benefit Guaranty Corporation to institute proceedings under
Title IV or ERISA to terminate any of the employee benefit plans,
(iv) no fiduciary responsibility for investments with respect to any plan
existing for the benefit of persons other than their employees or former
employees, (v) withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the Mult-Employer
Pension Plan Amendments of 1980. There exists no event described in Section
4043 of ERISA, excluding subsections 4043 (b) (2) and 4043 (b) (3) thereof,
for which the thirty (30) day notice period contained in 12 CFM Section
2615.3 has not been waived.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents,
patent applications, trademarks, trademark applications, copyrights,
copyright applications, tradenames, trade secrets and licenses owned
or utilized by Borrowers or Canisco are set forth on Exhibit 5.9 of
the Existing Loan Agreement, and are valid and have been duly
registered or filed with all appropriate governmental authorities.
There is no objection or pending challenge to the validity of any such
material patent, trademark, copyright, tradename, trade secrete or license,
and neither Borrowers nor Canisco is aware of any grounds for any
challenge, except as set forth in Exhibit 5.9 of the Existing Loan
Agreement thereto.
5.10 Licenses and Permits. Except as set forth in Exhibit 5.10
of the Existing Loan Agreement, Borrowers and Canisco (a) are in
compliance with and (b) have procured and are now in possession of,
all material licenses or permits required by any applicable federal,
state or local law or regulation for the operation of their business
in each jurisdiction wherein they are now conducting or propose to
conduct business and where the failure to procure such licenses or permits
would have a material adverse effect on the business, properties, condition
(financial or otherwise) or operations, present or prospective of the
Borrowers or Canisco.
5.11 Default of Indebtedness. Neither Borrowers nor Canisco
are in default in the payment of the principal of or interest on
any Indebtedness or under any instrument or agreement under or subject
to which any Indebtedness has been issued and no event has occurred
under the provisions of any such instrument or agreement which with
or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. Neither Borrowers nor Guarantors are in
default in the payment or performance of any of their contractual
obligations and no Incipient Event of Default has occurred.
5.13 No Burdensome Restrictions. Neither Borrowers nor
Canisco are party to any contract or agreement the performance
of which would materially adversely affect the business, assets,
operations, condition or prospects (financial or otherwise) of the
Borrowers or Canisco. Neither Borrowers nor Canisco have agreed or
consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of their Property, whether now owned or
hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance.
5.14 No Labor Disputes. Neither Borrowers nor Canisco are involved
in any labor disputes; there are no strikes or walkouts or union
organization of any of Borrowers' or Canisco's employees threatened
or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Exhibit 5.14 of the Existing Loan
Agreement thereto.
5.15 Margin Regulations. Neither the Borrowers nor Canisco are
engaged, nor will they engage, principally or as one of their
important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect. No part of the
proceeds of any Loan will be used for "purchasing" or "carrying"
"margin stock" as defined in Regulation U of such Board of Governors.
5.16 Investment Company Act. No Borrower or Canisco is an
"investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, nor is
any Borrower or Canisco controlled by such a company.
5.17 Disclosure. No representation or warranty made by the
Borrowers or Guarantors in this Agreement or in any financial
statement, report, certificate or any other document furnished
in connection herewith contains any untrue statement of a material
fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact
known to the Borrowers or Guarantors or which reasonably should
be known to the Borrowers or Guarantors which the Borrowers
or Guarantors, as applicable have not disclosed to Lender in writing
with respect to the transactions contemplated by this Agreement
which materially and adversely affects the condition (financial
or otherwise), results of operations, business, or assets of the
Borrowers or Guarantors.
5.18 Swaps. Neither Borrowers nor Canisco are party to,
nor will they be party to, any swap agreement whereby any Borrower
or Canisco has agreed or will agree to swap interest rates or
currencies unless same provides that damages upon termination
following an event of default thereunder are payable on an unlimited
"two-way basis" without regard to fault on the part of either party.
5.19 ERISA. The provisions of each employee benefit plan as defined
in Section 3(3) of ERISA ("Plan") maintained by the Borrowers complies
with all applicable requirements of ERISA and of the Internal Revenue
Code, and with all applicable rulings and regulations issued under the
provisions of ERISA and the Internal Revenue Code setting forth those
requirements. No reportable event, as defined in Section 4043 of
ERISA, has occurred with respect to any Plan; no Plan to which
Section 4021 of ERISA applies has been terminated; no Plan has incurred
any liability to PBGC as provided in Section 4062, 4063 and 4064 of
ERISA; no Plan has been involved in any prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code; and there are no unfunded liabilities with respect to
any Plan which are not disclosed in the Borrowers' financial statements
provided to Lender pursuant to the terms of this Agreement.
VI. AFFIRMATIVE COVENANTS.
Each Borrower and Canisco covenant and agree that it shall,
until payment in full of the Obligations and termination of this
Agreement:
6.1 Payment of Fees. Pay to Lender on demand all usual and
customary fees and expenses of Lender. Lender may, without making
demand, charge the account of Borrowers for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets.
(a) Conduct continuously and operate actively its business according
to good business practices and maintain all of its properties useful
or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed
of in accordance with the terms of this Agreement), including, without
limitation, all licenses, patents, copyrights, tradenames, trade secrets
and trademarks; (b) keep in full force and effect its existence and comply
in all material respects with the laws and regulations governing the
conduct of its business; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts
and things as may be lawfully required to maintain its rights, licenses,
leases, powers and franchises under the laws of the United States or any
political subdivision thereof.
6.3 Violations. Promptly notify the Lender in writing of any
violation of any law, statute, regulation or ordinance of any
governmental entity, or of any agency thereof, applicable to the
Borrowers or Guarantors' which may materially and adversely affect
the Collateral or the Borrowers' or Guarantors' business, assets,
operations, condition or prospects (financial or otherwise).
6.4 Government Receivables. Take all steps requested by Lender
to protect Lender's interest in the Collateral under the Federal
Assignment of Claims Act or other applicable state or local statutes
or ordinances and deliver to the Lender appropriately endorsed, any
instrument or chattel paper connected with any Receivable arising out
of contracts between Borrowers and the United States, any state or any
department, agency or instrumentality of any of them.
6.5 Minimum Tangible Net Worth. Cause to be maintained by the
Borrowers, Canisco and their Subsidiaries on a consolidated basis,
at all times during each fiscal quarter set forth below Tangible
Net Worth plus Subordination Indebtedness in an amount not less
than the amount set forth opposite such fiscal quarter:
Fiscal Quarter Ending Minimum Tangible Net Worth
June 30, 1998 $6,250,000
September 30, 1998 $6,600,000
December 31, 1998 $11,900,000
and each fiscal
quarter thereafter $11,800,000
6.6 Minimum Fixed Charge Coverage Ratio. The Borrowers,
Canisco and their Subsidiaries on a consolidated basis shall
not permit the Fixed Charge Coverage Ratio to be less than the
ratio set forth below for each test period referenced below:
Test Period Ratio
1 quarter ending June 30, 1998 0.6:1.0
2 quarters ending September 30, 1998 0.8:1.0
3 quarters ending December 31, 1998 0.9:1.0
4 quarters ending March 31, 1999 0.8:1.0
and each quarter thereafter 0.8:1.0
6.7 Maximum Leverage Ratio. The Borrowers, Canisco and their
Subsidiaries, on a consolidated basis shall not permit the Leverage
Ratio for any fiscal quarter to exceed the amount set forth opposite
such fiscal quarter set forth below:
Fiscal Quarter Ending Maximum Leverage Ratio
June 30, 1998 4.50:1.0
September 30, 1998 4.50:1.0
December 31, 1998 2.00:1.0
March 31, 1999 1.50:1.0
and for each fiscal 1.50:1.0
quarter thereafter
6.8 Minimum EBITDA. The Borrowers, Canisco and their Subsidiaries,
on a consolidated basis, shall cause to be maintained EBITDA of not
less than the amount set forth below for each test period referenced
below:
Test Period Minimum EBITDA
1 quarter ending June 30, 1998 $ 700,000
2 quarters ending September 30, 1998 $2,300,000
3 quarters ending December 31, 1998 $3,750,000
4 quarters ending March 31, 1999 $4,250,000
and each fiscal quarter thereafter $1,000,000
6.9 Pledge of Credit. Not now or hereafter pledge the Lender's
credit on any purchases or for any purpose whatsoever or use any
portion of any Advance in or for any business other than the
Borrowers' business as conducted on the date of this Agreement,
or in accordance with the provisions of the Reorganization.
6.10 Execution of Supplemental Instruments. Execute and deliver
to the Lender from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions
or documents relating to the Collateral, and such other instruments
as the Lender may request, in order that the full intent of this
Agreement may be carried into effect.
6.11 Payment of Indebtedness. Pay, discharge or otherwise satisfy
at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal payment
practices) all its obligations and liabilities of whatsoever nature,
except when the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and Borrowers
or Guarantors, as applicable shall have provided for such reserves
as Lender may reasonably deem proper and necessary, subject at all
times to any applicable subordination arrangement in favor of Lender.
6.12 Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8 and 9.9 to be complete
and correct in all material respects (subject, in the case of interim
statements, to normal year-end audit adjustments) and to be prepared
in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as concurred in by
such reporting accountants or officer, as the case may be, and disclosed
therein).
6.13 Expenses. Promptly pay (or reimburse, as the Lender may
elect) all costs and expenses which the Lender has incurred or may
hereafter incur in connection with this Agreement and the Other
Documents, including, without limitation, costs incurred in connection
with the collection of all amounts due hereunder and thereunder, and
any amendment, modification, consent or waiver which may be hereafter
requested by the Borrowers or Guarantors or otherwise required, audit
fees incurred by the Lender, the fees and disbursements of counsel to
the Lender, the costs of appraisal fees, searches of public records,
costs of filing and recording documents with public offices, and other
similar costs and expenses incurred by the Lender.
6.14 HAT Agreement. The Borrowers and Canisco shall, at the
request of the Lender, exercise all rights and remedies available
to them under the Stock Purchase Agreement, dated November 19, 1993
("HAT Agreement"), including, without limitation, any rights to
indemnification under Section 11.5 of the HAT Agreement, and shall
use the proceeds of any claims made against HAT Holdings, Inc. or
its Affiliates to repay the outstanding Advances under this Agreement
and the Other Documents, in such order as the Lender shall elect.
6.15 ERISA. Maintain each Plan in compliance with all applicable
requirements of ERISA and of the Internal Revenue Code and with all
applicable rulings and regulations issued under the provisions of
ERISA and of the Internal Revenue Code. As promptly as practicable
(but in any event not later than ten days) after either of the
Borrowers receives from the PBGC a notice of intent to terminate
any Plan or to appoint a trustee to administer any Plan, after
either of the Borrowers has notified the PBGC that any reportable event,
as defined in Section 4043 of ERISA, with respect to any Plan has occurred,
or after either of the Borrowers has provided a notice of intent to
terminate to each affected party, as defined for purposes of Section
4041(a) (2) of ERISA, with respect to any Plan, a certificate of the
cheif executive officer of such Borrower shall be furnished to Lender
setting forth the details with respect to the events resulting in
such reportable event, as the case may be, and the action which such
Borrower proposes to take with respect thereto, together with a copy of
the notice of intent to terminate or to appoint a trustee from the PBGC,
of the notice of such reportable event or of such Borrower's notice of
intent to terminate, as the case may be.
6.16 Review Audits. Make available during normal business
hours for inspection by Lender or its designated representatives
any of its books and records when reasonably requested by Lender
to do so, and furnish Lender any information reasonably requested
regarding its operations, business affairs and financial condition
within a reasonable time after Lender gives notice of its request
therefor. In particular, and without limiting the foregoing, each
Borrower shall permit, during normal business hours, representatives
of Lender's Audit Department to make such periodic inspections of such
Borrower's books, records and assets as such representatives deem
necessaary and proper and shall pay to Lender all such fees and costs
incurred as customarily charged by Lender in connection with such
inspections.
VII. NEGATIVE COVENANTS.
Each Borrower and Canisco covenant and agree that it shall not,
until satisfaction in full of the Obligations and termination of
this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion
of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it without Lender's consent.
(b) Sell, lease, transfer or otherwise dispose of any of
its properties or assets, except in the ordinary course of its
business without Lender's consent.
7.2 Creation of Liens. Create or suffer to exist any Lien,
Charge, Claim or transfer upon or against any of its property or
assets now owned or hereafter acquired, except Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations (not including
performance bonds) of any person, firm or corporation by assumption,
endorsement or guaranty thereof or otherwise (other than to Lender)
except the endorsement of checks in the ordinary course of business,
except as contemplated by the Subordination Agreement.
7.4 Investments. Purchase or acquire obligations or stock of,
or any other interest in, any Person without Lender's consent,
except (a) obligations issued or guaranteed by the United States
of America or any agency thereof, (b) commercial paper with maturities
of not more than 180 days and a published rating of not less than
A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers' acceptances having maturities of not more
than 180 days and repurchase agreements backed by United States
government securities of a commercial bank if (i) such bank has
a combined capital and surplus of at least $500,000,000, or (ii)
its debt obligations, or those of a holding company of which it is
a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency and (d) U.S. money
marketfunds that invest solely in obligations issued or guaranteed by
the United States of America or an agency thereof.
7.5 Loans. Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, Subsidiary or
Affiliate, other than loans to Canisco in accordance with the
financial projections previously delivered to the Lender and
not exceeding $1,200,000 in the aggregate during each fiscal year.
7.6 Capital Expenditures. Make or incur Capital Expenditures,
on a non-cumulative consolidated basis for the Borrowers, Canisco
and their consolidated Subsidiaries in excess of $600,000 for the
fiscal year ending March 31, 1998, and $1,000,000 for each fiscal
year thereafter.
7.7 Dividends. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred
stock of either Borrower (other than dividends or distributions
payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any common or
preferred stock, or of any options to purchase or acquire
any such shares of common or preferred stock of either Borrower.
7.8 Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness (exclusive of trade debt of Borrowers), except
in respect of Indebtedness to Lender, except as contemplated by
the Subordination Agreement.
7.9 Nature of Business. Substantially change the nature of
the business in which it is presently engaged nor, except as
specifically permitted hereby, purchase or invest, directly or
indirectly, in any assets or property other than in the ordinary
course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10 Transactions with Affiliates. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, any Affiliate,
except disclosed transactions in the ordinary course of business,
on an arm's-length basis on terms no less favorable than terms
which would have been obtainable from a Person other than an Affiliate.
7.11 Subsidiaries. Form any Subsidiary or enter into any
partnership, joint venture or similar arrangement.
7.12 Fiscal Year and Accounting Changes. Change its fiscal year
from a fiscal year ending March 31 of each year or make any significant
change (i) in accounting treatment and reporting practices except as
required by GAAP or (ii) in tax reporting treatment except as required
by law.
7.13 Contingent Obligations. Have Contingent Obligations
outstanding at any time in excess of $200,000, provided that
the Borrowers and Canisco may have Contingent Obligations in
connection with Bonded Jobs of up to $10,000,000 in the aggregate.
7.14 Loss. Have net income determined in accordance with
GAAP for the Borrowers, Canisco and their Subsidiaries on a
consolidated basis which is less than zero for two consecutive
fiscal quarters.
VIII. CONDITIONS PRECEDENT.
8.1 Conditions to Initial Advances. The agreement of Lender
to make the initial Advances requested to be made on the Closing
Date is subject to the satisfaction, or waiver by Lender,
immediately prior to or concurrently with the making of such
Advances, of the following conditions precedent:
(a) Agreement, Notes and Other Documents. The Lender shall
have received this Agreement, the Notes and all Other Documents,
duly executed and delivered by an authorized officer of each
party thereto;
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code
financing statement) required by this Agreement, any related
agreement or under law or reasonably requested by the Lender
to be filed, registered or recorded in order to create, in
favor of the Lender, a perfected security interest in or lien
upon the Collateral shall have been properly filed, registered
or recorded in each jurisdiction in which the filing, registration
or recordation thereof is so required or requested, and the Lender
shall have received an acknowledgement copy, or other evidence
satisfactory to it, or each such filing, registration or
recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of the Borrowers And Guarantors.
The Lender shall have received a copy of (A) the resolutions,
in form and substance reasonably satisfactory to Lender, of
the Board of Directors of each Borrower and each Guarantor
authorizing (i) the execution, delivery and performance of
this Agreement, the Notes, and any of the Mortgages, Other
Documents and any related agreements to which it is a party
(collectively, the "Documents") and (ii) the granting by
Borrowers and the Guarantors of the security interests in and
liens upon the Collateral.
(d) Incumbency Certificates of the Borrowers and Guarantors.
The Lender shall have received a certificate of the Secretary or
any Assistant Secretary of each Borrower and each Guarantor,
dated the Closing Date, as to the incumbency and signature of
the officers of such Borrower and such Guarantor executing this
Agreement, any certificate or other documents to be delivered by
it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or governmental authority
shall be continuing or threatened against either Borrower or
against the officers or directors of either Borrower (A) in
connection with the Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion
of the Lender, is deemed material or (B) which if adversely
determined, would, in the reasonable opinion of the Lender,
have a material adverse effect on the business, assets,
operations or condition (financial or otherwise) of the
Borrowers; and (iii) no injunction, writ, restraining order or
other order of any nature materially adverse to either Borrower
or the conduct of its business or inconsistent with the due consummation
of the Transactions shall have been issued by any governmental authority;
(f) Financial Condition Opinions. The Lender shall have
received executed Officers Certificates of each Borrower
satisfactory in form and substance to it, certifying the
solvency of such Borrower after giving effect to the
Transactions and the Indebtedness contemplated hereby
and as to each Borrower's financial resources and its
ability to meet its obligations and liabilities as they
become due; to the effect that as of the Closing Date and
after giving effect to the Transactions:
(i) the assets of each Borrower, at a fair valuation,
exceed the total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Borrower;
(ii) current projections, which are based on underlying
assumptions which provide a reasonable basis for the projections,
and which reflect each Borrower's judgment based on present
circumstances, the most likely set of conditions and each
Borrower's most likely course of action for the period
projected, demonstrate that each Borrower will have
sufficient cash flow to enable it to pay its debts as
they mature; and
(iii) no Borrower has an unreasonably small capital base
with which to engage in its anticipated business.
For purposes of this subsection, the "fair valuation" of the
assets of Borrowers shall be determined on the basis of the
amount which may be realized within a reasonable time,
whether through collection or sale of such assets at
market value, conceiving the latter as the amount which
could be obtained for the property in question within
such period by a capable and diligent businessman from
an interested buyer who is willing to purchase under
ordinary selling conditions.
(g) Collateral Examination. The Lender shall have
completed Collateral examinations and received appraisals,
the results of which shall be satisfactory in form and
substance to the Lender, of the Receivables, Inventory,
General Intangibles, Real Property, Leasehold Interests
and Equipment of the Borrowers and all books and records
in connection therewith;
(h) Fees. The Lender shall have received all fees payable
to the Lender on or prior to the Amended and Restated Closing
Date pursuant to Article III hereof;
(i) Pro Forma Financial Statements. Lender shall have
received a copy of the Pro Forma Financial Statements,
which shall be satisfactory in all respects to Lender;
(j) Financial Condition and Projections Letter. Lender
shall have received an executed original of a letter or
letters from Borrowers' accountants with respect to the
projections delivered by Borrowers and annexed as Exhibit
8.1 of the Existing Loan Agreement.
(k) Additional Agreements. Lender shall have received
the executed ratifications of the Guaranty Agreements, Pledge
Agreement, Security Agreements, the Blocked Account Agreements
and the Collateral Assignment each in form and substance
satisfactory to Lender;
(l) Mortgages. Lender shall have received the executed
Mortgages, in form and substance satisfactory to Lender, in
form suitable for recording;
(m) Title. Lender shall have received endorsements
satisfactory to Lender with respect to policies of title
insurance insuring the liens of the Mortgages (as amended)
as first liens on the Real Property, subject only to Permitted
Encumbrances (as defined in the Mortgages) and without exception
for (a) any liens for labor or materials, actual or
inchoate; or discrepancies in boundary lines, unrecorded easements,
encroachments or area content, and shall include a survey endorsement,
open-end mortgage endorsement, variable rate endorsement, and such
other endorsements as Lender may require.
(n) No Material Adverse Change. Since December 31, 1997,
no change in the business, assets, liabilities, financial
condition, results of operations or business prospects of either
Borrower, Canisco or of a Subsidiary of either Borrower or Canisco
shall have occurred, and no event shall have occurred or failed to
occur, that has had or could reasonably be expected to have, either
alone or in conjunction with all other such changes, events and
failures, a material adverse effect on (a) either Borrower or Canisco
or (b) the Documents.
(o) No Undisclosed Liabilities. There shall exist no
undisclosed liabilities of either Borrower, contingent or
otherwise, including without limitation pension liabilities,
environmental litigation and post-retirement healthcare benefits.
(p) Review of Appraisals and Audits. Review, to the
satisfaction of Lender, of all appraisals and audits,
including but not limited to appraisals of real estate,
inventory, machinery and equipment, accounts receivable
audits, environmental audits, inventory audits and a
collections audit, each of which must be satisfactory
in form and substance to Lender, and each of which must
be conducted by auditors and consultants satisfactory to Lender.
(q) Contingent Obligations. Evidence satisfactory to the
Lender that the Borrowers' Contingent Obligations do not exceed
$100,000, provided that the Borrowers and Canisco may have
Contingent Obligations in connection with Bonded Jobs of up
to $4,000,000 in the aggregate on the Closing Date.
(r) Borrowing Base Certificate. Receipt by Lender of a
Borrowing Base Certificate reflecting the availability under
the Notes on the Amended and Restated Closing Date, in a form
acceptable to Lender in its sole discretion.
(s) Insurance Coverage. Receipt by Lender of all insurance
certificates and other documents required to be delivered
pursuant to Section 4.11 hereof, together with evidence that
the environmental insurance coverage referred to in clause
(e) of Section 4.11 hereof has been extended until December 31, 1998.
(t) Third Party Consents. Receipt by Lender of all such
consents and waivers of third parties as Lender and its counsel
deem appropriate in their sole discretion, including but not
limited to that of landlords, lessees, mortgagees and others
that might assert rights or claims against the Collateral.
(u) Corporate Structure. The corporate and capital
structure of each Borrower and Canisco shall be acceptable
to Lender in its sole discretion.
(v) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection
with the Transactions shall be satisfactory in form and
substance to the Lender and its counsel.
(w) Subordination Agreement(s). Receipt by Lender of the
Subordination Agreement(s), duly executed by the parties
thereto, to the extent such agreements are deemed necessary
in the sole discretion of Lender.
8.2 Conditions to Each Advance. The agreement of Lender to
make any Advance requested to be made on any date (including,
without limitation, its initial Advance), is subject to the
satisfaction of the following conditions precedent as of the
date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by each Borrower
and each Guarantor in or pursuant to this Agreement,
and any of the Other Documents or related agreements
to which it is a party, and each of the representations
and warranties contained in any certificate, document or
financial or other statement furnished at any time under
or in connection with this Agreement, the Other Documents
or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and
as of such date;
(b) No Default. No Event of Default or Incipient
Event of Default shall have occurred and be continuing
on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided,
however that Lender in its sole discretion, may continue
to make Advances notwithstanding the existence of an Event
of Default or Incipient Event of Default; and
(c) Maximum Advances. In the case of any Advances
requested to be made, after giving effect thereto, the
aggregate Advances shall not exceed the maximum Advances
permitted under Section 2.1 hereof.
Each request for an Advance by the Borrowers hereunder
shall constitute a representation and warranty by the
Borrowers as of the date of such Advance that the
conditions contained in this subsection shall have
been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower and Canisco covenants and agrees that it shall,
until satisfaction in full of the Obligations and the termination
of this Agreement;
9.1 Disclosure of Material Matters. Immediately upon
learning thereof, report to the Lender all matters materially
affecting the value, enforceability or collectibility of any
portion of the Collateral including, without limitation, either
Borrower's reclamation of repossession of, or the return to such
Borrower of a material amount of goods or claims or disputes
asserted by any Customer or other obligor. The Borrowers will
not, without the Lender's consent, compromise or adjust any
material amount of the Receivables (or extend the time for
payment thereof) or accept any material returns of merchandise
or grant any additional discounts, allowances or credits thereon
except for those compromises, adjustments, returns, discounts,
credits and allowances as have been heretofore customary in the
business of the Borrowers.
9.2 Schedules. Deliver to the Lender on or before the
fifteenth (15th) day of each month as and for the prior month
(a) accounts receivable agings, (b) accounts payable schedules
and (c) Inventory reports from time to time upon the request
of the Lender. In addition, Borrowers will deliver to Lender
at such intervals as the Lender may require: (i) confirmatory
assignment schedules, (ii) copies of Customer invoices,
(iii) evidence of shipment or delivery, and (iv) such further schedules,
documents and/or information regarding the Collateral as the Lender may
require including without limitation, trial balances and test verifications.
The Lender shall have the right to confirm and verify all Receivables by
any manner and through any medium it considers advisable and to do
whatever it may deem reasonably necessary to protect its interests
hereunder. The items to be provided under this Section are to be in form
satisfactory to the Lender and executed by the Borrowers and delivered
to the Lender from time to time solely for the Lender's convenience in
maintaining records of the Collateral, and the Borrowers' failure to
deliver any of such items to the Lender shall not affect, terminate,
modify or otherwise limit the Lender's lien on or security interest
in the Collateral.
9.3 Environmental Reports. Furnish Lender, concurrently
with the delivery of the financial statements referred to
in Sections 9.7 and 9.8, accompanied by a certificate of
each Borrower signed by the President of such Borrower
stating, to the best of his knowledge, that such Borrower
is in compliance in all material respects with all federal,
state and local laws relating to environmental protection and
control and occupational safety and health. To the extent
any Borrower is not in compliance with the foregoing laws,
the certificates shall set forth with specificity all areas of
non-compliance and the proposed action such Borrower will implement
in order to achieve full compliance.
9.4 Litigation. Promptly notify the Lender in writing of
any litigation affecting the Borrowers, whether or not the
claim is covered by insurance, and of any suit or administrative
proceeding, which may materially and adversely affect the
Collateral or the Borrowers' business, assets, operations,
condition or prospects (financial or otherwise).
9.5 Occurrence of Defaults. Promptly notify the Lender in
writing upon the occurrence of (a) any Event of Default or
Incipient Event of Default; (b) any event, development or
circumstance whereby the financial statements most recently
furnished to the Lender fail in any material respect to present
fairly, in accordance with GAAP consistently applied, the
financial condition and operating results of the Borrowers
as of the date of such financial statements;
rement plan funding deficiency which, if such deficiency
continued for two plan years and was not corrected as
provided in Section 4971 of the Internal Revenue Code;
(d) each and every default by any Borrowers which might
result in the acceleration of the maturity of any Indebtedness
with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated,
and the amount of such Indebtedness; and (e) any other
development in the business or affairs of Borrower
be expected to be materially adverse; in each case describing
the nature thereof and in the case of notification under clause
(a), (b), (c) or (d) the action Borrowers propose to take with
respect thereto.
9.6 Government Receivables. Notify the Lender immediately
if any of its Receivables arise out of contracts between the
Borrowers and the United States, any state, or any department,
agency or instrumentally of any of them.
9.7 Annual Financial Statements. Furnish the Lender within
ninety (90) days after the end of each fiscal year of Borrowers
or Canisco, as the case may be, consolidated financial statements
(including all consolidating schedules provided by an accountant
to Borrowers in connection with the financial statements) of
Borrowers and Canisco including, but not limited to, statements
of income and stockholders' equity and changes in financial
position from the beginning of the current fiscal year
to the end of such fiscal year and the balance sheet as
at the end of such fiscal year, all prepared in accordance
with GAAP applied on a basis consistent with prior practices,
and in reasonable detail, and certified by the Chief Financial
Officer of each Borrower and Canisco, as the case may be, and
reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to
Lender (the "Accountants"), together with the Borrowers' management
letter for such year. The report of
such accounting firm shall be accompanied by a statement
of such accounting firm certifying that in making the examination
upon which such report was based either no information came to
their attention which to their knowledge constituted an Event of
Default or an Incipient Event of Default under this Agreement or
any related agreement or, if such information came to their
attention, specifying any such default, and such report shall
contain or have appended thereto calculations which set forth
the Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.7 and 6.8.
9.8 Quarterly Financial Statements. Furnish the Lender
within forty five (45) days after the end of each fiscal
quarter, an unaudited balance sheet of each Borrower and
Canisco and an unaudited statement of income and stockholders'
equity and changes in financial position of each Borrower and
Canisco reflecting results of operations from the beginning of
the fiscal year to the end of such quarter and for such quarter,
which statements shall have been prepared on a basis consistent
with prior practices and complete and correct in all material
respects and shall have been reviewed by a certified accountant,
subject to normal year end adjustments, together with a
certification as to the existing Contingent Obligations of
the Borrowers as of the end of such fiscal quarter. The
reports shall be accompanied by a certificate of each Borrower
and Canisco, signed by the Chief Financial Officer of such
Borrower and Canisco, which shall state whether an Event of
Default or an Incipient Event of Default has occurred.
9.9 Monthly Financial Statements. Furnish the Lender within
fifteen (15) days after the end of each month, an unaudited
balance sheet of each Borrower and Canisco and an unaudited
statement of income and stockholders' equity and changes in
financial position of each Borrower and Canisco reflecting
results of operations from the beginning of the fiscal year
to the end of such month and for such month, which statements
shall have been prepared on a basis consistent with prior practices
and complete and correct in all material respects, subject
to normal year end adjustments, provided that such financial
statements shall be due within forty five (45) days after the
last month of the Borrowers' fiscal year. The reports shall
be accompanied by a certificate of each Borrower and Canisco,
signed by the Chief Financial Officer of such Borrower and
Canisco, which shall state whether an Event of Default or an
Incipient Event of Default has occurred.
9.10 Covenant Compliance Certificate. Furnish to the
Lender within a reasonable time after Lender's request or
within forty five (45) days after the end of each fiscal
quarter a covenant compliance certificate in the form of
Exhibit 9.10 of the Existing Loan Agreement.
9.11 Other Reports. Furnish the Lender as soon as available,
but in any event within ten (10) days after the issuance
thereof, with copies of such financial statements, reports
and returns as Borrowers and Guarantors shall send to its
stockholders.
9.12 Additional Information. Furnish the Lender with
additional information as the Lender shall reasonably request
in order to enable Lender to determine whether the terms,
covenants, provisions and conditions of this Agreement and
the Notes have been complied with by Borrowers including,
without limitation and without the necessity of any request
by Lender, (a) copies of all environmental audits and reviews,
(b) at least thirty (30) days prior thereto, of Borrowers
ice or place of business or Borrowers' closing of any existing
office or place of business, and (c) promptly upon Borrowers'
learning thereof, of any labor dispute to which either Borrower
may become a party, any strikes or walkouts relating to any of
its plants or other facilities, and the expiration of any labor
contract to which either Borrower is a party or by which either
Borrower is bound.
9.13 Projected Operating Budget. Furnish Lender, no less
than thirty (30) days prior to the beginning of each of the
Borrowers' and Canisco fiscal years beginning 1997, a month
by month projected operating budget and cash flow of the Borrowers
and Canisco for such fiscal year (including an income statement
for each month and a balance sheet as at the end of the last
month in each fiscal quarter), such projections to be accompanied
by a certificate signed by each Borrower's and Canisco's
President or Chief Financial Officer to the effect that such
projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial
statements and that such officers have no reason to question
the reasonableness of any material assumptions on which such
projections were prepared.
9.14 Variances From Operating Budget. Furnish Lender,
concurrently with the delivery of the financial statements
referred to in Section 9.7 through Section 9.9 and each monthly
report, a written report summarizing all material variances
from budgets submitted by the Borrowers pursuant to
Section 9.13 and a discussion and analysis by management
with respect to such variances.
9.15 Additional Documents. Execute and deliver to Lender,
upon request, such documents and agreements as Lender may,
from time to time, reasonably request to carry out the purposes,
terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) failure by either Borrower to pay any principal or
interest on the Obligations when due, whether at maturity or
by reason of acceleration pursuant to the terms of this
agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities
or make any other payment, fee or charge provided for herein
when due;
(b) any representation or warranty made or deemed made
by either Borrower or either Guarantor in this Agreement, any
Other Document, or any related agreement or in any certificate,
document of financial or other statement furnished at any time
in connection herewith or therewith shall prove to have been
misleading in any material respect on the date when made or
deemed to have been made;
(c) failure by either Borrower or Canisco to (i) furnish
financial information when due, or, if no due date is specified
therein, within ten (10) Business Days after the request therefor
by the Lender, or (ii) permit the inspection of its books or records;
(d) issuance of a notice of Lien, Charge, Claim, levy,
assessment, injunction or attachment (except Permitted
Encumbrances) against a material portion of either Borrower's
or either Guarantor's property, provided that, the issuance of
any such Lien, Charge, Claim, levy, assessment, injunction or
attachment shall not constitute an Event of Default hereunder
for a period of thirty (30) days if (i) the issuance thereof
is reasonably susceptible to cure or discharge, (ii) either
Borrower or either Guarantor, as applicable, is contesting
the issuance thereof in good faith and with continuity
by appropriate legal proceedings, and (iii) the contest operates
to stay enforcement thereof, and, provided further, that during
such thirty (30) day period the Lender shall have no obligation
to make further Advances to either Borrower hereunder;
(e) any judgment is rendered or judgment liens filed
against either Borrower or either Guarantor for an amount
in excess of $50,000 which within thirty (30) days of such
rendering or filing is not either satisfied, stayed or
discharged of record;
(f) Either Borrower or Canisco or any Affiliate or any
Subsidiary of either Borrower or Canisco shall (i) apply
for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of
its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in
effect), (v) be adjudicated a bankrupt or insolvent,
(vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within
thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the
foregoing;
(g) any change in the Borrowers' or Canisco's condition
or affairs (financial or otherwise) which in Lender's
reasonable opinion impairs the Collateral or the ability
of either Borrower or Canisco to perform its Obligations
under this Agreement or any of the Other Documents;
(h) any Lien created hereunder or provided for hereby or
under any related agreement for any reason ceases to be or
is not a valid and perfected Lien having a first priority
interest, other than as the result of the Lenders negligence,
or as contemplated by the Subordination Agreement;
(i) a default of the obligations of either Borrower or
Canisco under any other agreement to which it is a party
shall occur which adversely affects its condition, affairs
or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
(j) termination or breach of any Guaranty or similar
agreement executed and delivered to Lender in connection
with the Obligations of Borrowers, or if either Guarantor
attempts to terminate, challenges the validity of, or its
liability under, any such Guaranty or similar agreement;
(k) any Change of Ownership;
(l) any material provision of this Agreement shall,
for any reason, cease to be valid and binding on either
Borrower or Guarantor, or either Borrower or Guarantor
shall so claim in writing to Lender;
(m) failure or neglect of either Borrower or either
Guarantor to perform, keep or observe any term, provision,
condition, covenant (other than those referred to in
subsections (a) through (l) above) herein contained, or
contained in any Other Document, or other agreement or
arrangement, now or hereafter entered into between either
Borrower or either Guarantor and the Lender, and failure to
remedy and fully cure such non-performance, non-observance,
violation of or non-compliance within ten (10) Business
Days after the earlier of (i) the date either Borrower or
either Guarantor has knowledge of such non-performance,
non-observance, violation of or non-compliance, or
(ii) the date the Lender has given written notice thereof
to the Borrowers, or the Guarantors, as applicable;
(n) termination of any Plan maintained by any Borrower
or Guarantor to which Section 4021 of ERISA applies;
(o) any Borrower or Guarantor allowing the value of the
benefits guaranteed under Title IV of ERISA to exceed the
value of assets allocable to such benefits; or
(p) any Borrower or Guarantor incurring a withdrawal
liability within the meaning of Section 4201 of ERISA.
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 Rights and Remedies. Upon the occurrence of an Event
of Default pursuant to Article X(f) all Obligations shall
be immediately due and payable and this Agreement shall be
deemed terminated; and, upon the occurrence of any of the
other Events of Default and at any time thereafter (such
default not having previously been cured), at the option
of Lender all Obligations shall be immediately due and
payable and the Lender shall have the right to terminate
this Agreement. In any such event, the
Lender shall have the right to exercise any and all
other rights and remedies provided for herein and/or
in the Other Documents, under the Uniform Commercial
Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of
and sell any or all of the Collateral with or without
judicial process. The Lender may enter any of the
Borrowers' premises or other premises without
legal process and without incurring liability to the
Borrowers therefore, and the Lender may thereupon, or at
any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such
place as the Lender may deem advisable and the Lender may
require the Borrowers to make the Collateral available to
the Lender at a convenient place. With or without having
the Collateral at the time or place of sale, the Lender
may sell the Collateral, or any part thereof, at public
time or place, in one or more sales, at such price or
prices, and upon such terms, either for cash, credit or
future delivery, as the Lender may elect. Except as to
that part of the Collateral which is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Lender
shall give the Borrowers reasonable notification of
such sale or sales, it being agreed that in all events
written notice mailed to the Borrowers at least five
(5) days prior to such sale or sales is reasonable
notification. At any public sale the Lender may bid
for and become the purchaser, and Lender or any other
purchaser at any such sale thereafter shall hold the
Collateral sold absolutely free from any claim or right
of whatsoever kind, including any equity of redemption
and such right and equity are hereby expressly waived
and released by the Borrowers. In connection with the
exercise of the foregoing remedies, the Lender is
granted permission to use all the Borrowers' trademarks,
trade styles, trade names, patents, patent applications,
licenses, franchises and other proprietary
rights which are used in connection with (a) Inventory
for the purpose of disposing of such Inventory and
(b) Equipment for the purpose of completing the
manufacture of unfinished goods. The proceeds realized
from the sale of any Collateral shall be applied first
to the reasonable costs, expenses and attorneys' fees
and expenses incurred by Lender for collection and for
acquisition, completion, protection, removal, storage,
sale and delivery of the Collateral; secondly to interest
due upon any of the Obligations; and thirdly to the
principal of the Obligations. If any deficiency shall
arise, Borrowers shall remain liable to Lender therefor.
11.2 Lender's Discretion. The Lender shall have the right
in its sole discretion to determine which rights, Liens,
security interests or remedies the Lender may at any time
pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination
will not in any way modify or affect any of the Lender's
rights hereunder.
11.3 Setoff. In addition to any other rights which the
Lender may have under applicable law, upon the occurrence
of any Event of Default hereunder, the Lender shall have a
right to apply any of the Borrowers' property held by the
Lender or by the Bank to reduce the Obligations.
11.4 Confession of Judgment. EACH BORROWER HEREBY IRREVOCABLY
AUTHORIZES AND EMPOWERS THE LENDER, BY ITS ATTORNEY, OR BY THE
PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE STATE OF
NEW YORK OR IN ANY JURISDICTION WHERE PERMITTED BY LAW, UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME
THEREAFTER, TO APPEAR FOR SUCH BORROWER AND CONFESS AND
ENTER JUDGMENT AGAINST IT IN FAVOR OF THE LENDER IN ANY
JURISDICTION IN WHICH SUCH BORROWER OR ANY OF ITS PROPERTY
IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH
COSTS OF SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING
REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT DECLARATION,
WITHOUT STAY OF EXECUTION AND WITH RELEASE OF ALL ERRORS
AND THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING
SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A
SUFFICIENT WARRANT. EACH BORROWER HEREBY WAIVES AND
RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT,
STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED. THIS AUTHORITY AND POWER SHALL NOT
BE EXHAUSTED BY THE EXERCISE THEREOF, AND SHALL
CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID,
PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND
HEARING ON THE VALIDITY OF ANY CLAIMS THAT MAY BE
ASSERTED AGAINST IT BY THE LENDER UNDER THIS AGREEMENT
BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF EITHER
BORROWER CAN BE GARNISHED AND ATTACHED, SUCH BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THESE RIGHTS
AND EXPRESSLY AGREES AND CONSENTS TO THE LENDER, UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER,
ENTERING JUDGMENT AGAINST SUCH BORROWER BY CONFESSION AND
ATTACHING AND GARNISHING THE BANK ACCOUNTS AND OTHER ASSETS OF SUCH
BORROWER, WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING.
EACH BORROWER ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF
LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT
AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE
FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE
BEEN FULLY EXPLAINED TO SUCH BORROWER BY SUCH COUNSEL.
11.5 Rights and Remedies Not Exclusive. The enumeration of
the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall
not preclude the exercise of any other right or remedies,
all of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 Waiver of Notice. The Borrowers hereby waive notice
of non-payment of any of the Receivables, demand, presentment,
protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except
such as are expressly provided for herein.
12.2 Delay. No delay or omission on the Lender's part
in exercising any right, remedy or option shall operate as
a waiver of such or any other right, remedy or option or of
any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRAIL WITHOUT A JURY, AND THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRAIL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 Term. This Agreement, which shall inure to the
benefit of and shall be binding upon the respective successors
and permitted assigns of each of the Borrowers and the Lender,
shall become effective on the date hereof and shall continue in
full force and effect until May 1, 2001 (the "Term") unless
sooner terminated as herein provided. The Term shall be
automatically extended for successive periods of one (1)
year each unless terminated by either party at the end of
such initial Term or any successive Term by givinig the other
party ninety (90) days prior written notice. The Borrowers
maay terminate the Revolving Credit at any time upon ninety (90)
days' prior written notice (such date of termination designated
in such notice being referred to herein as the "Early Termination
Date") upon payment in full of the Obligations; provided
however that, in the event the Early Termination Date
occurs prior to the last day of the
Term, Borrowers shall pay an early termination fee in an
amount equal to the Required Percentage of the Maximum Loan
Amount. For the purposes of this paragraph, Required Percentage
shall mean (a) three percent (3%) from the Amended and Restated
Closing Date through Xxxxx 00, 0000, (x) two percent (2%) from
May 1, 1999 through April 30, 2000, and one percent
(1%) from May 1, 2000 through April 30, 2001. If within 90
days prior to the end of the Term or any extension thereof,
by mutual agreement of the Borrowers and the Lender, this
Agreement is extended for an additional one year period, the
Borrowers shall pay an early termination fee equal to one
percent (1%) of the Maximum Loan Amount in the event that
Borrowers terminate the Revolving Credit prior to the end
of such extended term.
13.2 Termination. The termination of the Agreement shall
not affect any of the Borrowers' or the Lender's rights, or
any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof
shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have
been full disposed of, concluded or liquidated. The security
interests, Liens and rights granted to the Lender hereunder
and the financing statements filed hereunder shall continue
in fully force and effect, notwithstanding the
termination of this Agreement or the fact that the
Borrowers' account may from time to time be temporarily
in a zero or credit position, until all of the Obligations of the
Borrowers have been paid or performed in full after the termination
of this Agreement or the Borrowers have furnished the Lender with an
indemnification satisfactory to the Lender with respect thereto.
Accordingly, Borrowers waive any rights which they may have under
Section 9-404(1) of the Uniform Commercial Code to demand the filing of
termination statement with respect to the Collateral, and
Lender shall not be required to send such termination
statements to Borrowers, or to file them with any filing
office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations
paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations
are repaid or performed in full unless otherwise provided.
XIV. MISCELLANEOUS.
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
(without giving effect to its conflict of laws rules). Any
judicial proceeding brought by or against the Borrowers with
respect to any of the Obligations, this Agreement or any
related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America,
and, by execution and delivery of this Agreement, the Borrowers accept
for themselves and in connection with their properties, generally
and unconditionally the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agree to be bound by any
judgment rendered thereby in connection with this Agreement.
Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of the Lender
to bring proceedings against the Borrowers in the courts of any
other jurisdiction. Borrowers waive any objection to
jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens.
Any judicial proceedings by the Borrowers against the Lender
involving, directly or indirectly, any matter or claim in any
way arising out of, related to or connected with this Agreement
or any related agreement, shall be brought only in a federal or
state court located in the City of New York, State of New York.
14.2 Entire Understanding. This Agreement and the documents
executed concurrently herewith contain the entire understanding
between the Borrowers and the Lender and supersedes all prior
agreements and understandings, if any, relating to the subject
matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall
have no force and effect unless in writing, signed by the
Borrowers' and Lender's respective officers. Neither this Agreement
nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing, or in any manner other than
by an agreement in writing, signed by the party to be charged.
Borrowers acknowledge that they have been advised by counsel in
connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.
14.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lender, all future holders of the
Notes and their respective successors and assigns, except that
the Borrowers may not assign or transfer any of their rights or
obligations under this Agreement without the prior written consent
of Lender.
(b) Lender may sell, assign or transfer or sell
participating interests in, all or any part of its rights
under this Agreement and the Notes and all related agreements,
instruments and documents, provided that with respect to any
such sale, assignment, transfer or participation to a Person
other than an Affiliate or Subsidiary of Lender, the Borrowers
consent to such sale, assignment, transfer or participation,
which consent shall not be unreasonably withheld or delayed,
and the transferee agrees to perform the obligations of the
transferor. Notwithstanding the foregoing, the Borrowers
acknowledge that in the regular course of commercial banking
business the Lender may at any time and from time to time sell
participating interests in the Advances without the Borrowers'
consent, to other financial institutions if the Borrowers
remain entitled to deal solely with BNY Financial Corporation
in connection with the administration of the transactions
contemplated by this Agreement (each such transferee or
purchaser of a participating interest, a "Transferee").
Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with
respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that
the Borrowers shall not be required to pay to any Transferee
more than the amount which they would have been required to pay
to the Lender which granted an interest in their Advances or
other Obligations payable hereunder to such Transferee had such
Lender retained such interest in the Advances hereunder or other
Obligations payable hereunder, and in no event shall the
Borrowers be required to pay any such amount arising from
the same circumstances and with respect to the same Advances
or other Obligations payable hereunder to both Lender and such
Transferee. The Borrowers hereby grant to any Transferee a
continuing security interest in any deposits, Moneys or other
property actually or constructively held by such Transferee as
security for the Transferee's interest in the Advances.
14.4 Application of Payments. Lender shall have the continuing
and exclusive right to apply or reverse and reapply any and all
proceeds of Collateral to any portion of the Obligations. To the
extend that Borrowers make a payment or Lender receives any payment
or proceeds of the Collateral for Borrowers' benefit, which are
subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any
other party under any bankruptcy law, common law or equitable
cause, then, to such extent, the Obligations or part thereof
intended to be satisfied shall be revived and continue as if
such payment or proceeds had not been received by Lender.
14.5 Indemnity. Borrowers shall indemnify Lender from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which
may be imposed on, incurred by, or asserted against Lender 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, whether or not the
Lender is a party thereto, except to the extent that
any of the foregoing arises out of the willful misconduct of Lender.
14.6 Notice. Any notice or request hereunder may be given
to Borrowers and Lender at their respective addresses set forth
below or at such other address as may hereafter be specified in
a notice designated as a notice of change of address under this
Section. Any notice or request hereunder shall be given by
(a) hand delivery, (b) registered or certified mail, return
receipt requested, (c) telex or telegram, subsequently
confirmed by registered or certified mail, or (d) telefax
to the number set out below (or such other number as may
hereafter be specified in a notice designated
as a notice of change of address) with
telephone communication to a duly authorized officer of the
recipient confirming its receipt as subsequently confirmed
by registered or certified mail. Notices and requests shall,
in the case of those by mail or telegram, be deemed to have
been given when deposited in the mail, or delivered to the
telegraph office addresses as provided in this Section.
(A) If to Lender, at: BNY Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
FAX: (000) 000-0000
with a copy to: Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esquire
Telephone: (000) 000-0000
FAX: (000) 000-0000
(B) If to Borrowers, at:
C/X Xxxxxx Sline, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx, President
Telephone: (000) 000-0000
FAX: (000) 000-0000
with a copy to:
Canisco Resources, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, Esquire, General Counsel
Telephone: (000) 000-0000
FAX: (000) 000-0000
14.7 Survivability. If any or part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable
laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid,
but the remainder hereof shall not be invalidated thereby and
shall be given effect so far as possible.
14.8 Expenses. All costs and expenses including, without
limitation, reasonable attorneys' fees incurred (a) by the
Lender in all efforts made to enforce payment of any Obligation
or effect collection of any Collateral, or (b) incurred in
connection with the entering into, modification, amendment,
administration and enforcement of this Agreement or any
consents or waivers hereunder and all related agreements,
documents and instruments, or (c) the instituting, maintaining,
preserving, enforcing and foreclosing of or on the Lender's
security interest or Lien in any of the Collateral, whether
through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising
out of or relating to the Lender's transactions with the
Borrowers, or (e) any advice given to Lender with respect to
its rights and obligations under this Agreement
and all related agreements, may be charged to the
Borrowers' account and shall be part of the Obligations.
14.9 Injunctive Relief. Borrowers recognize that, in the
event Borrowers fail to perform, observe or discharge any of
their obligations or liabilities under this Agreement, any
remedy at law may prove to be inadequate relief to Lender;
therefore, Lender if Lender so requests, shall be entitled
to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
14.10 Captions. The captions at various places in this
Agreement are intended for convenience only and do not constitute
and shall not be interpreted as part of this Agreement.
14.11 Counterparts. This Agreement may be executed in one
or more counterparts, each of which taken together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, each of the parties has signed this
Agreement as of the day and year first above written.
XXXXXX SLINE, INC.
By: /s/ Xxxxx X. Xxxxxx
[SEAL] Its: President
ICESOLV, INC.
By: /s/ Xxxxxxx X. Xxxxx
[SEAL] Its: Vice President
BNY FINANCIAL CORPORATION
By: _________________________
Its: _________________________
CONSENT AND ACKNOWLEDGMENT
Canisco, intending to be legally bound, hereby consents to
the foregoing Amended and Restated Credit and Security Agreement
between the Lender and the Borrowers and is executing this Consent
and Acknowledgment to acknowledge such Amended and Restated Credit
and Security Agreement and to join in and be bound by the provisions
of Articles V, VI and VII of the Amended and Restated Credit and
Security Agreement.
CANISCO RESOURCES, INC.
By: _________________________
[SEAL] Its: _________________________
