EXHIBIT 10(vi)
MASTER
CREDIT AGREEMENT
Dated as of June 21, 1996
by and among
Construction Forms, Inc.,
CF Ultra Tech, Inc. and
CF Gilco, Inc.
and
LaSalle National Bank
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS. . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting and Financial Determinations. . . . . . . . . . . . 13
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS . . . . . . . . . . . . . . 14
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Overadvance Term Loan. . . . . . . . . . . . . . . . . . . . . 16
2.3 LIBOR Rate Restrictions. . . . . . . . . . . . . . . . . . . . 17
2.4 Joint and Several Obligations, Etc.. . . . . . . . . . . . . . 18
2.5 Interest After Default . . . . . . . . . . . . . . . . . . . . 19
2.6 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Lockbox. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 Effect of Regulatory Change. . . . . . . . . . . . . . . . . . 22
2.11 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.12 No Obligation to Extend or Forbear . . . . . . . . . . . . . . 22
SECTION 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 22
3.1 Organization, Qualification and Subsidiaries . . . . . . . . . 22
3.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . 23
3.3 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Absence of Conflicting Obligations . . . . . . . . . . . . . . 23
3.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.6 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . 24
3.7 Accuracy of Information. . . . . . . . . . . . . . . . . . . . 24
3.8 Ownership of Property. . . . . . . . . . . . . . . . . . . . . 24
3.9 Federal Reserve Regulations. . . . . . . . . . . . . . . . . . 25
3.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.11 Security Interests . . . . . . . . . . . . . . . . . . . . . . 25
3.12 Places of Business . . . . . . . . . . . . . . . . . . . . . . 25
3.13 Other Names. . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Not an Investment Company. . . . . . . . . . . . . . . . . . . 26
3.15 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 26
3.18 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 26
3.19 Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS. . . . . . . . . . . . . . 27
4.1 Initial Obligations. . . . . . . . . . . . . . . . . . . . . . 27
4.2 Subsequent Obligations . . . . . . . . . . . . . . . . . . . . 30
SECTION 5 AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 31
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes . . . . . . . . . . . . . . . . 31
5.2 Maintenance of Property; Insurance . . . . . . . . . . . . . . 31
5.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . 32
5.4 Inspection of Property and Records . . . . . . . . . . . . . . 33
5.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 34
5.6 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7 Comply With, Pay and Discharge All Notes,
Mortgages, Deeds of Trust and Leases . . . . . . . . . . . . . 34
5.8 Environmental Compliance . . . . . . . . . . . . . . . . . . . 34
5.9 Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . 35
5.10 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.11 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.12 Post-Closing Delivery . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Sale of Assets, Consolidation, Merger,
Acquisitions, Etc. . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 38
6.6 Loans, Investments . . . . . . . . . . . . . . . . . . . . . . 38
6.7 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 39
6.8 Fixed Asset Expenditures . . . . . . . . . . . . . . . . . . . 39
6.9 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . 39
6.11 Maximum Funded Debt to Tangible Net Worth. . . . . . . . . . . 40
6.12 Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.13 Minimum Fixed Charge Coverage Ratio. . . . . . . . . . . . . . 40
6.14 Modification of the Subordinated Debt
Documentation. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.15 Modification of the Stock Purchase Documentation . . . . . . . 40
SECTION 7 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 41
7.1 Events of Default Defined. . . . . . . . . . . . . . . . . . . 41
7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . . . 42
SECTION 8 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Assignability; Successors. . . . . . . . . . . . . . . . . . . 43
8.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . 44
8.5 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . 44
8.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Conflicts and Ambiguities. . . . . . . . . . . . . . . . . . . 45
8.10 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . 45
8.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 46
EXHIBITS
EXHIBIT A: Schedule of Bank's Collateral
EXHIBIT B-1: Collateral Assignment of Lease (Ultra)
EXHIBIT B-2: Collateral Assignment of Lease (Gilco)
EXHIBIT B-3: Collateral Assignment of Lease (CF)
EXHIBIT C: Guaranty of JABCO, Limited Liability Company
EXHIBIT D: Master Revolving Credit Note
EXHIBIT E-1: Mortgage (Cedarburg)
EXHIBIT E-2: Mortgage (Grafton)
EXHIBIT F: Pledge Agreement
EXHIBIT G-1: Security Agreement (CF)
EXHIBIT G-2: Security Agreement (Ultra)
EXHIBIT G-3: Security Agreement (Gilco)
EXHIBIT H: Subordination Agreement
EXHIBIT I: Master Overadvance Term Note
EXHIBIT J-1: Opinion of Borrower's General Counsel
EXHIBIT J-2: Opinion of Borrower's Local Counsel
EXHIBIT K-1: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (CF)
EXHIBIT K-2: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (JABCO)
EXHIBIT K-3: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (Greenberg)
SCHEDULES
SCHEDULE 1: Company Facilities Locations
SCHEDULE 2: Stock Ownership of Each Company
SCHEDULE 3: Subsidiaries, Options, Warrants, Etc.
SCHEDULE 3.6: Litigation
SCHEDULE 3.16: Environmental Laws
SCHEDULE 4: Permitted Liens
MASTER CREDIT AGREEMENT
THIS MASTER CREDIT AGREEMENT is made and entered into as of
this 21st day of June, 1996, by and among CONSTRUCTION FORMS, INC.,
a Wisconsin corporation ("CF"), CF ULTRA TECH, INC., a Wisconsin
corporation ("Ultra") and CF Gilco, Inc., a Wisconsin corporation
("Gilco") (CF, Ultra and Gilco are collectively, the "Companies"
and individually, a "Company") and LASALLE NATIONAL BANK, a
national banking association (the "Bank").
RECITALS
The Companies have requested that the Bank extend to them, on
a joint and several basis, a credit not to exceed $12,300,000, in
the form of (a) Revolving Loans in an aggregate principal amount
not to exceed $8,000,000, and (b) an Overadvance Term Loan in an
aggregate principal amount of $4,300,000. The Bank has agreed to
extend credit to the Companies, jointly and severally, upon all of
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Affiliate" shall mean any (a) director, officer or
employee of the Person, or (b) Person directly or indirectly
controlling or controlled by, or under direct or indirect common
control with, another Person. A Person shall be deemed to control
another Person if the controlling Person directly or indirectly,
either individually or together with (in the case of an individual)
his spouse, lineal descendants and ascendants and brothers or
sisters by blood or adoption or spouses of such descendants,
ascendants, brothers and sisters, owns five percent or more of any
class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct, or cause the direction
of, the management or policies of the controlled Person, whether
through the ownership of voting securities, through common
directors, trustees or officers, by contract or otherwise.
"Agreement" shall mean this Master Credit Agreement,
as amended, supplemented, modified or extended from time to time.
"Assignment" shall mean the Collateral Assignment of
Stock and Unit Purchase Agreement and Escrow Agreement, of even
date herewith, of Edison Control Corporation, a New Jersey
corporation, and CF in favor of Bank.
"Borrowing Base" shall mean, as of any date, the sum
of (a) 85% of Qualified Accounts, plus (b) 50% of Qualified
Inventory (up to a maximum of $4,500,000), plus (c) 80% of
Marketable Securities (up to a maximum of $1,150,000), plus (d) up
to a maximum of an additional $500,000 through December 31, 1996
(the "Revolving Loan Overadvance").
"Borrowing Base Certificate" shall mean a schedule
of the Bank's collateral in the form of Exhibit A separately
setting forth accounts receivable, Qualified Accounts, inventory,
Qualified Inventory and Marketable Securities.
"Borrowing Date" shall have the meaning assigned in
Section 2.1(c).
"Business Day" shall mean a day other than a
Saturday or Sunday on which banks are open for business in
Milwaukee, Wisconsin; provided, however, that for purposes of LIBOR
Rate Loans, the term "Business Day" shall mean only those days on
which dealings in U.S. dollar deposits are carried out by U.S.
financial institutions in the London Interbank Eurodollar Market.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute, together with the
regulations and published interpretations thereunder, in each case
as in effect from time to time.
"Collateral" shall mean all of each Company's
Property granted to the Bank as collateral under the Related
Documents.
"Collateral Assignments" shall mean the collateral
assignments of lease from Ultra, Gilco and CF to the Bank in the
form of Exhibits B-1, B-2 and B-3, respectively, each as amended,
supplemented, modified or extended from time to time.
"Current Assets" shall mean all assets which would
appear as current assets on the consolidated balance sheet of CF
and its Subsidiaries under GAAP.
"Current Liabilities" shall mean all liabilities
which would appear as current liabilities on the consolidated
balance sheet of CF and its Subsidiaries under GAAP or which
otherwise constitute Indebtedness of CF or its Subsidiaries payable
on demand or payable within one year (excluding Revolving Loans)
including, without limitation, that portion of the principal
balance of the Overadvance Term Loan due within one year and all
outstanding customers' advances and progress billings on contracts.
"Default" shall mean an Event of Default or an event
which with the giving of notice or the passage of time or both
would constitute an Event of Default.
"Employee Plan" shall mean any savings, profit
sharing, or retirement plan or any deferred compensation contract
or other plan maintained for employees of the Companies and covered
by Title IV of ERISA,other than any "multiemployer plan" as defined
in ERISA (a "Multiemployer Plan").
"Environmental Law" shall mean any local, state or
federal law or other statute, law, ordinance, rule, code,
regulation, decree or order, presently in effect or hereafter
enacted, promulgated or implemented governing, regulating or
imposing liability or standards of conduct concerning the use,
treatment, generation, storage, disposal, discharge or other
handling or release of any Hazardous Substance.
"Environmental Liability" shall mean all liability
arising under, resulting from or imposed by any Environmental Law
and all liability imposed under common law with respect to the use,
treatment, generation, storage, disposal, discharge or other
handling or release of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute,
together with the regulations and published interpretations
thereunder, in each case as in effect from time to time.
"Event of Default" shall have the meaning assigned
in Section 7.1.
"Excess Cash Flow" shall mean for any period of
determination (i) Net Income of the Companies, plus (ii), to the
extent deducted in determining Net Income of the Companies, the sum
of each Company's (a) interest expense, (b) depreciation expense,
(c) amortization expense and (d) income tax expense, minus (iii)
the sum of (a) capital expenditures paid by any Company (other than
capital expenditures paid for with proceeds of a new purchase money
loan from the Bank, Funded Debt received from Persons other than
the Bank or any capitalized lease obligations of any Company to
Persons other than the Bank), (b) the Companies' required payments
of principal and interest on Funded Debt (including all amounts
paid on any capitalized lease obligations) other than mandatory
prepayments under Section 2.9(b)(ii), (c) dividends paid by any
Company and (d) actual income taxes paid by any Company.
"Excess Cash Flow Payment" shall mean an amount
equal to 70% of Excess Cash Flow for the relevant period of
determination.
"Fixed Term Loan Period" shall mean with respect to
the Overadvance Term Loan, the period commencing on the Fixed Term
Rate Borrowing Date (as defined in Section 2.2 (b)), provided, that
if the Fixed Term Loan Period would otherwise end on a day which is
not a Business Day it shall be extended to the next succeeding
Business Day.
"Fixed Term Rate" shall mean a rate of interest per
annum equal to (a) the ask yield, one Business Day prior to the
Fixed Term Rate Borrowing Date, on U.S. Treasury Bills, Notes or
Bonds, selected by the Bank, in its sole discretion, having a
maturity comparable to or as close thereto as possible to the Fixed
Term Loan Period, plus (b) 3.25% per annum.
"Funded Debt" shall mean all Indebtedness which by
its terms matures more than one year from the date as of which any
calculation of Funded Debt is made, and any Indebtedness maturing
within one year from such date which is renewable or extendible at
the option of the obligor to a date beyond one year from such date,
including any Indebtedness renewable or extendible (whether or not
theretofore renewed or extended) under, or payable from the
proceeds of other Indebtedness which may be incurred pursuant to
the provisions of any agreement.
"GAAP" shall mean those generally accepted
accounting principles and practices which are recognized as such by
the American Institute of Certified Public Accountants acting
through appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the
financial condition, results of operations and cash flows of the
Companies.
"Government Authority" shall mean any nation or
government, any state or other political subdivision thereof, and
any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" shall mean JABCO, Limited Liability
Company, a Wisconsin limited liability company, and any other
Person who guaranties the obligations of the Companies hereunder.
"Guaranty" shall mean the Guaranty of the Guarantor
in the form of Exhibit C, as amended, supplemented, modified, or
extended from time to time.
"Hazardous Substance" shall mean any pollutant,
contaminant, waste or toxic or hazardous chemicals, wastes or
substances, including, without limitation, asbestos, urea
formaldehyde insulation, petroleum, PCB's, air pollutants, water
pollutants, and other substances defined as hazardous or toxic in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.,
Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. 6901
et seq., the Toxic Substance Control Act of 1976, as amended, 15
U.S.C. 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C.
3251 et seq., the Clean Air Act, 42 U.S.C. 1857 et seq., the
Clean Water Act, 33 U.S.C. 1251 et seq., Emergency Planning and
Community Right to Know Act, 42 U.S.C. 11001, et seq.,
Chapter 144 of the Wisconsin Statutes, or any other statute, rule,
regulation or order of any Government Authority having jurisdiction
over the control of such wastes or substances, including without
limitation the United States Environmental Protection Agency, the
United States Nuclear Regulatory Agency, the State of Wisconsin,
the Wisconsin Department of Natural Resources and the Ozaukee
County Department of Health.
"Indebtedness" shall mean all (a) indebtedness for
borrowed money; (b) indebtedness for the deferred purchase price of
property or services for which any Company is liable, contingently
or otherwise, as obligor, guarantor or otherwise; (c) commitments
by which any Company assures a creditor against loss, including,
without limitation, contingent reimbursement obligations with
respect to letters of credit; (d) obligations which are evidenced
by notes, acceptances or other instruments; (e) indebtedness
guaranteed in any manner by any Company including, without
limitation, guaranties in the form of an agreement to repurchase or
reimburse; (f) obligations under leases which are or should be, in
accordance with GAAP, recorded as capital leases for which
obligations any Company is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations
any Company assures a creditor against loss; (g) unfunded
obligations of any Company to any Employee Plan; (h) liabilities
secured by any Lien, other than a Permitted Lien, on any Property
owned by any Company even though it has not assumed or otherwise
become liable for the payment thereof; and (i) other liabilities or
obligations of any Company which would, in accordance with GAAP, be
included on the liability portion of a balance sheet.
"IRB Documentation" shall mean that certain
Irrevocable Direct Pay Letter of Credit, dated the date hereof,
issued by the Bank in favor of Firstar Trust Company ("Firstar")
(the "Letter of Credit"); the Loan Agreement, dated as of February
1, 1995, between the City of Port Washington, Wisconsin ("Port
Washington") and Guarantor; the Indenture of Trust, dated as of
February 1, 1995, between Port Washington and Firstar; the
Promissory Note of Guarantor in favor of Port Washington, dated
February 15, 1995, in the original principal amount of $3,000,000;
the Bond Purchase Agreement, dated as of February 1, 1995, among
Port Washington, Guarantor, Firstar and Robert W. Baird & Co.
Incorporated ("Baird"); the Remarketing Agreement, dated as of
February 1, 1995, between Guarantor and Baird; the Reimbursement
Agreement, dated the date hereof, between Guarantor and the Bank
(the "Reimbursement Agreement"); the IRB Mortgage; any UCC
financing statement evidencing a Lien relating to any of the
foregoing; and all exhibits, schedules, certificates, resolutions,
or other documents delivered, required or contemplated pursuant to
any of the foregoing.
"IRB Mortgage" shall mean the Mortgage granted by
Guarantor, to the Bank, dated the date hereof, as amended,
supplemented, modified or extended from time to time, encumbering
certain real estate located in Port Washington, Wisconsin.
"LIBOR Index Rate" shall mean with respect to a
LIBOR Rate Loan for any Loan Period, the rate of interest per annum
determined by the Bank to be the average offered rate for deposits
in U.S. dollars for the applicable Loan Period (rounded up to the
next whole multiple of 1/100 of 1%) which appear on the Reuters
Screen LIBO Page (or such other page on which the appropriate
information may be displayed), on the electronic communications
terminals in the Bank's money center as of 10:00 a.m. (London time)
for the day two Business Days prior to the first day of the
applicable Loan Period. If fewer than two offered rates appear for
a Loan Period, then the applicable LIBOR Rate shall be the average
of the rates per annum (rounded up to the next whole multiple of
1/100 of 1%) at which deposits for a period of time equal or
comparable to the applicable Loan Period in immediately available
funds in United States dollars are offered to the Bank two Business
Days prior to the beginning of such Loan Period by at least four
major banks in the London Interbank Eurodollar Market at or about
10:00 a.m. London time for delivery on the first day of such Loan
Period.
"LIBOR Rate" for any Loan Period shall mean a rate
per annum equal to the sum of the quotient of the LIBOR Index Rate
divided by the difference (expressed as a decimal) computed by
subtracting the LIBOR Reserve Requirement from one, plus the
applicable LIBOR Spread.
"LIBOR Rate Loans" shall mean Revolving Loans and
Overadvance Term Loans for which the Company has selected the LIBOR
Rate as the base rate of interest under Sections 2.1 and 2.2.
"LIBOR Reserve Requirement" shall mean, with respect
to each Loan Period, the stated rate of all reserve requirements
(including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments or other scheduled
changes in reserve requirements during such Loan Period) that is
specified on the first day of such Loan Period by the Board of
Governors of the Federal Reserve System for determining the reserve
requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D)
applicable to the Bank.
"LIBOR Spread" shall mean an amount equal to (i)
1.25% per annum with respect to all outstanding Revolving Loans up
to $1,000,000, (ii) 2.0% per annum with respect to all outstanding
Revolving Loans in excess of $1,000,000, and (iii) 3.10% per annum
with respect to all Overadvance Term Loans.
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), deed of trust, charge, preference, priority,
security interest or other security agreement or preferential
arrangement of any kind or nature whatsoever including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the UCC or comparable law of any
jurisdiction.
"Loan Account" shall mean an account on the books of
the Bank in which the Bank will record, pursuant to Section 2.6,
Obligations of the Companies to the Bank, payments made upon such
Obligations and other advances, debits and credits pertaining to
the Obligations or the Collateral.
"Loan Period" shall mean with respect to each LIBOR
Rate Loan, the period commencing on the date of such LIBOR Rate
Loan and ending one, two or three months thereafter, as the Company
may elect in the notice of borrowing under Sections 2.1(c) and
2.2(c), as the case may be, provided that (a) any Loan Period which
would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless the Loan Period
would thereby be extended into the next calendar month, in which
case the Loan Period shall end on the preceding Business Day, and
(b) no Loan Period shall extend beyond the Termination Date.
"Make Whole Payment" shall mean an amount equal to
the present value of (i) the interest that would have accrued on
the amount prepaid at the Fixed Term Rate, minus (ii) the interest
that would have accrued on the amount prepaid at the Treasury Rate,
discounted at the Treasury Rate. In both cases, interest will be
calculated from the prepayment date to the maturity date of the
Overadvance Term Loan. In no event shall the prepayment
indemnification payment be less than zero.
"Marketable Securities" shall mean the securities
owned by Edison Control Corporation which are pledged to the Bank
pursuant to the Pledge Agreement.
"Master Overadvance Term Note" shall mean the
promissory note of the Companies to the Bank in the form of Exhibit
I, evidencing the Term Loan, as amended, supplemented, modified or
extended from time to time.
"Master Revolving Credit Note" shall mean the
promissory note from the Companies to the Bank in the form of
Exhibit D, evidencing the Revolving Loans, as amended,
supplemented, modified or extended from time to time.
"Material Adverse Effect" shall mean (a) a Default,
(b) a material adverse change in the business, prospects or
condition (financial or otherwise) of any Company or in any
Property, (c) the termination of any material agreement to which
any Company is a party, or (d) any material impairment of the
ability of any Company to perform its obligations under this
Agreement or the Related Documents.
"Maximum Available Commitment" shall mean an amount
equal to the excess (if any) of (a) the lesser of the Revolving
Loan Commitment and the Borrowing Base, minus (b) the aggregate
unpaid principal amount outstanding of all Revolving Loans made by
the Bank.
"Mortgages" shall mean the mortgages in the form of
Exhibits E-1 and E-2 granted by CF to the Bank and encumbering
certain real property in Cedarburg, Wisconsin and Grafton,
Wisconsin, respectively, each as amended, supplemented, modified or
extended, from time to time.
"Net Income" or "Net Loss" shall mean, for any
period, the net after-tax income (or net loss) of a Person on a
consolidated basis determined in accordance with GAAP, excluding
the after-tax effect of the sum of (a) any net earnings of any
Subsidiary which are unavailable for the payment of dividends, (b)
interest in any net earnings of Persons in which a Person has an
ownership interest, other than Subsidiaries, not actually received,
(c) gains arising from a write-up of assets, (d) gains arising from
the acquisition of any securities of the Person or any Subsidiary,
(e) gains resulting from the sale of any investments or capital
assets, (f) amortization of any deferred credit arising from the
acquisition of any Person or in the property or assets of any
Person, (g) earnings of any Subsidiary prior to the date it became
a Subsidiary, (h) earnings acquired by the Person or any Subsidiary
through purchase, merger or consolidation or otherwise for any
period prior to the date of acquisition, and (i) proceeds of any
life insurance policies payable to the Person or any Subsidiary.
"Notes" shall mean the Master Revolving Credit Note
and the Master Overadvance Term Note and any note(s) or
obligation(s) issued in substitution, replacement or renewal
thereof.
"Obligations" shall mean the Revolving Loans, the
Overadvance Term Loan, all mandatory prepayments, all costs and
expenses and all other Indebtedness of any Company to the Bank,
including, without limitation, all liabilities under interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements, and all other agreements designed to protect
against fluctuations in interest rates or currency exchange rates.
"Overadvance Term Loan" shall mean the loans to the
Companies pursuant to Section 2.2 evidenced by the Overadvance Term
Note.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA.
"Permitted Liens" shall have the meaning assigned in
Section 6.3.
"Person" shall mean an individual, partnership,
corporation, firm, enterprise, business trust, joint stock company,
trust, unincorporated association, joint venture, Government
Authority or other entity of whatever nature.
"Pledge Agreement" shall mean the pledge agreement
in the form of Exhibit F by and between Edison Control Corporation
and the Bank, as amended, supplemented, modified or extended, from
time to time.
"Prime Rate" shall mean the interest rate publicly
announced by the Bank from time to time in Chicago, Illinois as its
prime rate for interest rate determinations, which is solely a
reference rate and may be at, above or below the rate or rates at
which the Bank lends to other Persons. Any change in the Prime
Rate shall become effective as of the opening of business on the
day on which such change is publicly announced by the Bank.
"Property" shall mean any interest of any Company of
any kind in property or assets, whether real, personal, mixed,
tangible or intangible, wherever located, and whether now owned or
subsequently acquired or arising and in the products, proceeds,
additions and accessions thereof or thereto.
"Qualified Account" shall mean an account (as that
term is defined in the UCC) owing solely to any Company which meets
the following requirements at the time it comes into existence and
continues to meet the same until collected in full: (a) it arose
from the performance of services by any Company, or from a bona
fide sale or lease of goods, which have been delivered or shipped
to an account debtor in the United States or a foreign debtor which
has issued a transferable letter of credit, or is appropriately
insured, acceptable to the Bank to secure payment, and for which
any Company has genuine invoices, shipping documents or receipts;
(b) it is payable not more than 30 days from the earlier of
performance of the services, delivery of goods or date(s) of
invoice; (c) it has not been unpaid more than 90 days past the
earlier of performance of the services, delivery of goods or
date(s) of invoice and it is not owed by an account debtor which
has 10% or more of its aggregate dollar amount of accounts owed to
any Company unpaid more than 90 days past the earlier of
performance of the services, delivery of goods or date(s) of
invoice (provided that, and notwithstanding anything herein to the
contrary, all Qualified Accounts of any Company shall forthwith
cease to be deemed Qualified Accounts at such time that 25% or more
of such Company's Qualified Accounts have been unpaid more than 90
days past the earlier of performance of the services, delivery of
goods or date(s) of invoice); (d) it is owned by any Company and
not subject to any assignment, claim, lien, encumbrance or security
interest whatsoever other than those securing any such Company's
obligations to the Bank; (e) it is a valid and legally enforceable
obligation of an account debtor which is (i) satisfactory to the
Bank, (ii) not an Affiliate of any Company and (iii) not the United
States of America or any department, agency or instrumentality
thereof unless the Company has complied with the Assignment of
Claims Act of 1940, to the satisfaction of the Bank; (f) it is not
subject to setoff, counterclaim, credit allowance, or adjustment by
the account debtor thereunder, except for discount for prompt
payment, or to any claim by such account debtor denying liability
thereunder in whole or in part, and such account debtor has not
refused to accept and has not returned or offered to return any of
the goods which are subject to such account; (g) it arose in the
ordinary course of any Company's business and in compliance with
all Requirements of Law; (h) each Company has no notice or
knowledge of the bankruptcy, insolvency, or similar proceeding of
the account debtor thereunder, or of the inability of the account
debtor thereunder to pay its debts as they become due, or of
anything which might impair the credit standing of the account
debtor; (i) it is assignable to the Bank and it does not arise out
of a contract or order which by its terms forbids or makes void or
unenforceable the assignment by any Company to the Bank of the
account arising with respect thereto; (j) it is not evidenced by
instruments or chattel paper unless the same has been endorsed and
delivered to the Bank; (k) it does not arise from a sale on
consignment, sale on return, bill and hold sale or any other type
of conditional sale except as permitted in writing by the Bank; and
(l) it is certified by the applicable Company within fifteen days
after the end of each month (or at such more frequent intervals as
the Bank shall request) as to the amount thereof and all other
matters set forth herein or reasonably required by the Bank;
provided, however, that with respect to CF Europe, the
certification within said fifteen-day period shall contain
reasonable estimates of the items described above, which estimates
shall, in each instance, be confirmed and recertified within an
additional fifteen day period. A Qualified Account which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be a Qualified Account.
"Qualified Inventory" shall mean inventory (as that
term is defined in the UCC) solely owned by any Company which meets
the following requirements and continues to meet the same until
sold or otherwise disposed of as permitted by this Agreement: (a)
it is not subject to any assignment, claim, lien, or security
interest whatsoever other than those securing the Obligations; (b)
it is located at one of the Companies' facilities set forth on
Schedule 1, none of which is a public warehouse or leased facility,
except for the Gardena, California warehouse and as permitted in
writing by the Bank; (c) it is not obsolete, is in good condition
and is either currently usable or saleable; (d) it is raw materials
or finished goods satisfactory to the Bank; (e) it is valued at the
lower of cost (on a FIFO basis) or wholesale market value
(exclusive of any transportation, processing or handling charges);
and (f) its existence, location, amount, and lower of cost (on a
FIFO basis) or wholesale market value (exclusive of any
transportation, processing or handling charges) have been certified
by the applicable Company within fifteen days after the end of each
month (or at such more frequent intervals as the Bank shall
request) as to the amount thereof and all other matters set forth
herein or reasonably required by the Bank; provided, however, that
with respect to CF Europe, the certification within said fifteen-
day period shall contain reasonable estimates of the items
described above, which estimates shall be confirmed, in each
instance, and recertified within an additional fifteen day period.
Qualified Inventory which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be Qualified
Inventory.
"Regulatory Change" shall mean the adoption or
amendment, after the date of this Agreement, of any federal or
state law, regulation, interpretation, direction, policy, guideline
or court decision applicable to the Bank or the London Interbank
Eurodollar Market which increases the cost to the Bank of making or
maintaining the Obligations or reduces the rate of return to the
Bank (by reduction of principal, interest or otherwise) on the
Obligations by subjecting the Bank to any tax, duty or other charge
with respect to the Obligations, imposing any reserve requirement
(except any reserve requirement reflected in the LIBOR Rate or the
LIBOR Reserve Requirement), affecting the treatment of any
Obligation for purposes of calculating the appropriate amount of
capital to be maintained by the Bank or any Person controlling the
Bank, or imposing on the Bank any other condition affecting the
Obligations.
"Related Documents" shall mean the Master Revolving
Credit Note, the Master Overadvance Term Note, the Security
Agreements, the Guaranty, the Collateral Assignments, the
Mortgages, the Pledge Agreement, the Assignment, the IRB
Documentation, the Subordination Agreement and all other
certificates, resolutions, or other documents required or
contemplated hereunder.
"Requirements of Law" shall mean as to any matter or
Person, the Certificate or Articles of Incorporation and Bylaws or
other organizational or governing documents of such Person, and any
law (including, without limitation, any Environmental Law),
ordinance, treaty, rule, regulation, order, decree, determination
or other requirement having the force of law relating to such
matter or Person and, where applicable, any interpretation thereof
by any Government Authority.
"Restricted Payments" shall mean (a) dividends or
other distributions by any Company based upon the stock of any
Company (except dividends payable solely in stock of the Company
and dividends payable by Ultra and Gilco to CF), (b) purchases,
redemptions or other acquisitions, direct or indirect, by any
Company, of stock of the Company, whether now or hereafter
outstanding, (c) any other distribution by any Company in respect
of stock of any such Company, whether now or hereafter outstanding,
either directly or indirectly, whether in cash or property or
otherwise, and (d) payment of management fees by any Company to any
Affiliate, either directly or indirectly, whether in cash or
property or otherwise.
"Revolving Loan Commitment" shall mean an aggregate
principal amount not to exceed $8,000,000, or such lesser amount to
which the Revolving Loan Commitment is reduced under Section
2.1(f).
"Revolving Loans" shall mean the loans to the
Companies pursuant to Section 2.1 evidenced by the Master Revolving
Credit Note.
"Security Agreements" shall mean each of the
Security Agreements in the form of Exhibits G-1, G-2 and G-3,
between CF and the Bank, Ultra and the Bank and Gilco and the Bank,
respectively, each as amended, supplemented, modified or extended
from time to time.
"Stock Purchase Documentation" shall mean that
certain Stock and Unit Purchase Agreement, of even date herewith
(the "Stock Purchase Agreement"), among Edison Control Corporation,
Construction Forms Acquisition Corp., a Delaware Corporation (n/k/a
Construction Forms, Inc., a Wisconsin corporation), Allen W. Duhr,
Joseph F. Bennett, Alan J. Kastelic, Robert E. Klemm and Jay R.
Hanamann, together with all documents, certificates and agreements
delivered in connection therewith or contemplated thereunder,
including, without limitation, the Notes, the Escrow Agreement, the
Employment Agreements, the Amendment of JABCO Lease and the
Ancillary Agreements (each as defined in the Stock Purchase
Agreement).
"Stock Purchase Transaction" shall mean
collectively, (A) the purchase by Construction Forms Acquisition,
Inc. of (i) all of the issued and outstanding shares of $.01 par
value common stock of CF, (ii) all of the issued and outstanding
common stock of Gilco not owned by CF, and (iii) 99% of the
membership interests of Guarantor; and (B) the purchase by Edison
Control Corporation of 1% of the membership interest of Guarantor,
each as evidenced by the Stock Purchase Documentation.
"Subordinated Loan Transaction" shall mean the
extension of a credit to CF, Gilco and Ultra, jointly and
severally, by Bank Audi (USA), a New York State Chartered Bank
Association, in the amount of $6,800,000, as evidenced by a
Subordinated Promissory Note, of even date herewith, of CF, Gilco
and Ultra in favor of Bank Audi (USA); the Loan Agreement, of even
date herewith, among Bank Audi (USA), CF, Gilco and Ultra; the
Pledge and Security Agreement, of even date herewith, of William B.
Finneran in favor of Bank Audi (USA); the Letter Agreement, of even
date herewith, among William B. Finneran, Bank Audi (USA) and
Global Opportunity Partners -- Lazard Freres Asset Management; the
Letter Agreement, of even date herewith, among William B. Finneran,
Bank Audi (USA) and Odyssey Partners; the Guaranty, of even date
herewith, of Guarantor in favor of Bank Audi (USA); together with
all documents, certificates and agreements delivered in connection
with or contemplated under any of the foregoing.
"Subordination Agreement" shall mean the
subordination agreement by and between the Bank and Bank Audi (USA)
in the form of Exhibit H, as amended, supplemented, modified or
extended from time to time.
"Subsidiary" shall mean as to any Person, a
corporation of which shares of stock having voting power (other
than stock having such power only by reason of the happening of a
contingency that has not occurred) sufficient to elect a majority
of the board of directors or other managers of such corporation are
at the time owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Tangible Net Worth" shall be determined on a
consolidated basis in accordance with GAAP and mean the excess, if
any, of all assets of CF over all liabilities of CF, excluding (a)
any goodwill, patents, trademarks, trade names, copyrights,
operating rights, organizational or developmental expenses,
unamortized debt discount or expense, unamortized deferred charges,
and other assets properly classified as intangible assets, (b) any
write-ups of assets subsequent to the date of this Agreement, (c)
any treasury stock, and (d) all investments in foreign Affiliates
and unconsolidated domestic Affiliates other than South Houston
Hose Company, Inc., a Texas corporation.
"Termination Date" shall mean, as to the Revolving
Loans June 21, 1999, and as to the Overadvance Term Loan June 21,
1999, or such earlier date on which the Obligations shall terminate
as provided in Section 7.2.
"Treasury Rate" shall mean the Ask Yield, one
Business Day prior to the date of prepayment, on U.S. Treasury
Bills, Notes, or Bonds, selected by the Bank, in its sole
discretion, having a maturity comparable to or as close thereto as
possible to the Fixed Term Loan Period.
"UCC" shall mean the Uniform Commercial Code of the
State of Wisconsin, as amended from time to time.
1.2 Accounting and Financial Determinations. Where the
character or amount of any asset or liability or item of income or
expense is required to be determined, or any accounting computation
is required to be made, for the purpose of this Agreement, such
determination or calculation shall be made on a consolidated basis
so as to include CF and its Subsidiaries, in each such calculation
and, to the extent applicable and except as otherwise specified in
this Agreement, shall be made in accordance with GAAP; provided,
however, that if any change in GAAP from those applied in the
preparation of the financial statements referred to in Section 5.3
is occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the American
Institute of Certified Public Accountants (or its boards or
committees or successors thereto or agencies with similar
functions), the initial announcement of which change is made after
the date hereof, results in a change in the method of calculation
of financial covenants, standards or terms found in Section 6, the
parties hereto agree to enter into good faith negotiations in order
to amend such provisions so as to reflect such changes with the
desired result that the criteria for evaluating each Company's
financial condition shall be the same after such changes as if such
changes had not been made; and provided, further, that until such
time as the parties hereto agree upon such amendments, such
financial covenants, standards and terms shall be construed and
calculated as though no change had taken place. When used herein,
the term "financial statement" shall include balance sheets,
statements of earnings, statements of stockholders' equity,
statements of cash flows and the notes and schedules thereto, and
each reference herein to a balance sheet or other financial
statement of CF shall be to a statement prepared on a consolidated
and consolidating basis, unless otherwise specified.
1.3 Interpretation. The words "hereof," "herein" and
"hereunder" and words of a similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, Schedule and
Exhibit references contained in this Agreement are references to
sections, schedules and exhibits in or to this Agreement unless
otherwise specified. Any reference in any Section or definition to
any clause is, unless otherwise specified, to such clause of such
Section or definition.
1.4 Other Terms. Except as otherwise specifically
provided, each accounting term used herein shall have the meaning
given to it under GAAP, and all other terms contained in this
Agreement (and which are not otherwise specifically defined herein)
shall have the meanings provided in the UCC to the extent the same
are used or defined therein unless the context otherwise requires.
Terms defined in other Sections of this Agreement shall have the
meanings set forth therein.
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Revolving Loans.
(a) Prior to the Termination Date and so long as no
Default has occurred and is continuing, the Bank agrees on the
terms and conditions set forth in this Agreement to extend to
the Companies, jointly and severally, Revolving Loans from
time to time in amounts not to exceed in the aggregate at any
one time outstanding the lesser of (i) the Revolving Loan
Commitment, and (ii) the Borrowing Base. Subject to the terms
of this Agreement, each Company may borrow, repay (in whole or
in part) and reborrow the Revolving Loans prior to the
Termination Date for Revolving Loans. The Revolving Loans
made by the Bank to each Company shall be evidenced by the
Master Revolving Credit Note. Notwithstanding anything
contained herein to the contrary, the aggregate principal
amount of Revolving Loans outstanding to each Company at any
time hereunder shall not exceed the applicable amount set
forth below:
Company Borrowing Sublimit
CF $5,750,000
Ultra $1,500,000
Gilco $ 750,000
(b) From the date of the first Revolving Loan and
until all Revolving Loans are paid in full, the Companies
shall pay all accrued and unpaid interest on the Revolving
Loans on the first day of each month. Prior to an Event of
Default, interest shall accrue on the aggregate unpaid
principal amount from time to time outstanding under the
Master Revolving Credit Note at a rate per annum equal to (i)
the applicable LIBOR Rate on each LIBOR Rate Loan, and (ii)
the applicable Prime Rate on Revolving Loans which are not
LIBOR Rate Loans. Notwithstanding the foregoing, all
Revolving Loans outstanding at any time which are part of the
Revolving Loan Overadvance shall, prior to an Event of
Default, accrue interest at a rate per annum equal to the
applicable Prime Rate plus 0.50%. Interest shall be computed
and adjusted daily based on the actual number of days elapsed
in a year of 360 days. All outstanding unpaid principal and
accrued interest on the Revolving Loans shall be due and
payable on the Termination Date for the Revolving Loans.
(c) Each Company may obtain Revolving Loans by
making a request therefor to the Bank, orally or in writing.
Such request shall specify a Business Day prior to the
Termination Date on which such Revolving Loans are to be made
(the "Borrowing Date"), shall be received by the Bank by 12:00
Noon (Milwaukee time) three Business Days before the Borrowing
Date in the case of LIBOR Rate Loans or otherwise by 12:00
Noon (Milwaukee time) of the Borrowing Date, and shall specify
the amount of the Revolving Loans requested, whether the
Revolving Loans are to be LIBOR Rate Loans and, if so, the
requested Loan Period; provided, however, that within three
days after any oral request for a Revolving Loan, the Bank
shall receive from the Company making such request a written
confirmation in form acceptable to the Bank confirming such
Company's Revolving Loan request, and the Bank's obligation to
make further Revolving Loans hereunder to any Company shall be
suspended until such confirmation has been received by the
Bank. In the event of any inconsistency between the
telephonic notice and the written confirmation thereof, the
telephonic notice shall control. The Companies shall be
obligated, jointly and severally, to repay all Revolving Loans
notwithstanding the failure of the Bank to receive written
confirmation, and notwithstanding the fact that the person
requesting the Revolving Loan was not in fact authorized to do
so. No Revolving Loan request shall be modified, altered or
amended without the prior written consent of the Bank. Each
Revolving Loan shall be in the principal amount of the lesser
of (i) $25,000 or a multiple thereof, (ii) the Maximum
Available Commitment or (iii) the remaining amount available
under the applicable Company's Borrowing Sublimit; provided,
however, that the Companies may not request LIBOR Rate Loans
in an amount less than $250,000 per request (and additional
increments of $100,000). Upon fulfillment of the conditions
specified in Section 4.2, the Bank shall promptly deposit the
amount of such Revolving Loan in the general deposit account
of the Companies maintained at the Bank.
(d) Except for Revolving Loans which are part of
the Revolving Loan Overadvance, Revolving Loans which are not
LIBOR Rate Loans may be converted (in increments of $250,000
(and additional increments of $100,000)) into LIBOR Rate Loans
by notice from the applicable Company to the Bank meeting the
requirements of, Section 2.1(c). At the end of each
respective Loan Period, LIBOR Rate Loans shall become
Revolving Loans which are not LIBOR Rate Loans unless and
until the Company converts such Revolving Loans to LIBOR Rate
Loans.
(f) On the final day of each fiscal quarter, the
Company may, upon five Business Days' prior written notice to
the Bank, permanently reduce the aggregate amount of the
Revolving Loan Commitment; provided that no such reduction
shall reduce the aggregate amount of the Revolving Loan
Commitment to an amount less than the aggregate unpaid
principal balance of the Master Revolving Credit Note on the
effective date of such reduction. Each reduction in the
Revolving Loan Commitment shall be in a minimum amount of
$250,000 and in integral multiples of $250,000 above such
minimum.
2.2 Overadvance Term Loan.
(a) On the date hereof, the Bank agrees to extend
to the Companies, jointly and severally, the Overadvance Term
Loan in an aggregate principal amount of $4,300,000 and such
Overadvance Term Loan shall be subject to all of the terms and
conditions set forth in this Agreement. The Overadvance Term
Loan made by the Bank to each Company pursuant hereto shall be
evidenced by the Master Overadvance Term Note.
Notwithstanding anything contained herein to the contrary, the
aggregate principal amount of the Overadvance Term Loan
outstanding to each Company at any time hereunder shall not
exceed the applicable amount set forth below:
Company Borrowing Sublimit
CF $3,300,000
Ultra $ 500,000
Gilco $ 500,000
(b) The Companies shall pay all accrued and unpaid
interest on the Overadvance Term Loan on the first day of each
month commencing on the first day of August, 1996, and
continuing until the Overadvance Term Loan is paid in full.
Prior to an Event of Default, interest shall accrue on the
aggregate unpaid principal amount outstanding under the
Overadvance Term Note at a rate per annum equal to (i) the
applicable LIBOR Rate or (ii) the applicable Prime Rate plus
0.375% per annum. Notwithstanding the foregoing, and so long
as no Default has occurred and is continuing, the Companies
may elect to fix the interest rate on all, but not less than
all, of the outstanding Overadvance Term Loan (provided that
no such portion of the Loan at the time of such conversion may
be LIBOR Rate Loans) at the Fixed Term Rate by delivering an
irrevocable written notice to the Bank at least three Business
Days prior to the effective date of such election as specified
therein (the "Fixed Term Rate Borrowing Date"); and,
thereafter, interest shall accrue on the aggregate unpaid
principal amount of the Overadvance Term Loan at a rate per
annum equal to the Fixed Term Rate. Interest shall be
computed and adjusted daily based on the actual number of days
elapsed in a year of 360 days. The Companies shall pay
principal outstanding under such Overadvance Term Note in
thirty-five (35) equal monthly installments of $59,722.22 each
payable commencing on the first day of July, 1996 and on the
first day of each month thereafter, and a final payment of the
balance of all unpaid principal and accrued interest on the
Termination Date for such Overadvance Term Loan. Amounts paid
or prepaid on the Overadvance Term Loan may not be reborrowed.
(c) So long as no Default has occurred and is
continuing and provided that the Companies have not elected to
convert the Overadvance Term Loan to the Fixed Term Rate
pursuant to Section 2.2(b), the portion of the Overadvance
Term Loan which is not a LIBOR Rate Loan may be converted into
a LIBOR Rate Loan of at least $250,000 (and additional
increments of $100,000) by written notice from the requesting
Company to the Bank and received by Bank by 12:00 p.m.
(Milwaukee time) three Business Days before the requested
borrowing date (such date which shall be prior to the
Termination Date for the Overadvance Term Loan); such notice
which shall specify the amount of the Overadvance Term Loan to
be converted and the requested Loan Period. No Overadvance
Term Loan conversion request shall be modified, altered or
amended without the prior written consent of the Bank. At the
end of each respective Loan Period, each LIBOR Rate Loan shall
become an Overadvance Term Loan which is not a LIBOR Rate Loan
unless and until a Company converts such Overadvance Term Loan
to a LIBOR Rate Loan.
2.3 LIBOR Rate Restrictions.
(a) The Companies may request LIBOR Rate Loans only
so long as the outstanding LIBOR Rate Loans bear no more than
ten different LIBOR Rates. The Bank may require any LIBOR
Rate Loans to be repaid prior to the applicable Termination
Date for Revolving Loans and may refuse to make LIBOR Rate
Loans in the event the Bank determines that (i) maintenance of
the LIBOR Rate Loans would violate any applicable Requirements
of Law, (ii) the interest rates on LIBOR Rate Loans do not
accurately reflect the cost of making such Revolving Loans, or
(iii) deposits in the amount of any LIBOR Rate Loan are not
available to the Bank in the London interbank market.
(b) In the event the Bank shall incur any loss,
cost, expense or premium (including, without limitation, any
loss of profit or loss, cost, expense or premium incurred by
reason of the liquidation or reemployment of deposits or other
funds acquired or contracted to be acquired by the Bank to
fund or maintain LIBOR Rate Loans or the relending or
reinvesting of such deposits or other funds or amounts paid or
prepaid to the Bank), as a result of:
(i) any payment of any LIBOR Rate Loans on a
date other than the last day of the then applicable Loan
Period for any reason, whether before or after Default,
and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by any Company to create,
borrow, continue or effect by conversion any LIBOR Rate
Loans on the date specified in a notice given pursuant to
this Agreement;
then upon the demand of the Bank, the Companies shall pay to
the Bank such amount as will reimburse the Bank for such loss,
cost, expense or premium. If the Bank requests such a
reimbursement it shall provide the applicable Company with a
certificate setting forth the computation of the loss, cost,
expense or premium giving rise to the request for
reimbursement in reasonable detail and such certificate shall
be deemed prima facie correct.
2.4 Joint and Several Obligations, Etc.
(a) The Obligations shall be joint and several;
provided, however, that notwithstanding any other provisions
hereof to the contrary, the maximum liability of each Company
hereunder and under the Notes shall be limited to the greater
of (i) the proceeds of loans made by the Bank hereunder to the
extent such proceeds are advanced, transferred or applied to
or for the benefit of such Company, and (ii) ninety-five
percent (95%) of the difference between (A) the present fair
saleable value of the Company's assets as of the date of this
Agreement or any subsequent date (if greater, and to the
extent permitted by law) and (B) the amount of all liabilities
of the Company, including liabilities under this Agreement and
the Notes and probable exposure under contingent liabilities,
as of such date.
(b) The Obligations shall be absolute and
unconditional unto each Company; each Company unconditionally
and irrevocably waives each and every defense which, under
principles of guarantee or suretyship law or otherwise, would
operate to impair or diminish such liability; and nothing
whatsoever except actual full payment and performance to the
Bank of such Obligations shall operate to discharge the
liability of the Companies hereunder. Without limitation of
the foregoing, the Obligations shall not be affected by the
invalidity or unenforceability of all or part of the
Obligations with respect to any Company.
(c) The Bank shall not be obligated to: (a) take
any steps whatsoever to collect from, or to file any claim of
any kind against, any Company or any other person or entity
liable for payment or performance of any of the Obligations;
or (b) take any steps whatsoever to protect, accept, obtain,
enforce, take possession of, perfect its interest in,
foreclose or realize on collateral or security, if any, for
the payment or performance of any of the Obligations; or (c)
in any other respect exercise any diligence whatsoever in
collecting or attempting to collect any of the Obligations by
any means.
(d) Without limiting the generality of the
foregoing, there shall be no diminution or impairment of the
liability of any Company in any respect, if the Bank exercises
any of the following rights without notice of any kind to the
Companies: (a) extends any additional credit to any Company;
(b) accepts any Collateral, security or guarantee for any
obligations or any other credit; (c) determines how, when and
what application of payments, credits and collections, if any,
shall be made on the Obligations and any other credit and
accepts partial payments; (d) determines what, if anything,
shall at any time be done with respect to any collateral or
security; subordinates, sells, transfers, surrenders, releases
or otherwise disposes of all or any of such collateral or
security; and purchases or otherwise acquires any such
collateral or security at foreclosure or otherwise; and (e)
with or without consideration grants, permits or enters into
any waiver, amendment, extension, modification, refinancing,
indulgence, compromise,settlement, subordination, discharge or
release of (i) any of the Obligations, (ii) any obligations of
any other Person liable for payment or performance of any of
the Obligations, and any agreement relating to such
obligations and (iii) any collateral or security or agreement
relating to collateral or security for any of the foregoing.
(e) Each Company hereby unconditionally waives (i)
presentment, notice of dishonor, protest, demand for payment
and all notices of any kind, including, without limitation:
notice of acceptance hereof; notice of the creation of any of
the Obligations; notice of nonpayment, nonperformance or other
default on any of the Obligations; and notice of any action
taken to collect upon or enforce any of the Obligations; (ii)
any subrogation to the rights of the Bank against any other
Company, any other claim against any other Company which
arises as a result of payments made by a Company pursuant to
this Agreement, and any claim for contribution against any
other Company whether or not the Obligations have been paid or
performed in full; and (iii) any setoffs or counterclaims
against the Bank which would otherwise impair the Bank's
rights against any Company hereunder.
2.5 Interest After Default. After an Event of Default,
each of the Obligations shall bear interest at the rate of 3% per
annum in excess of the applicable rates set forth herein; provided,
that in the case of a LIBOR Rate Loan the maturity of which is
accelerated, such LIBOR Rate Loan shall bear interest for the
remainder of the applicable Loan Period at a rate equal to 3% plus
the higher of the rate on the LIBOR Rate Loan or the rate on
Revolving Loans or the portion of the Term Loan, as the case may
be, which are not LIBOR Rate Loans. In no event shall the interest
rates under the Notes exceed the highest rate permitted by law.
2.6 Loan Account. The Bank will enter as a debit to the
Loan Account the aggregate principal amount of each Obligation as
disbursed or issued from time to time by the Bank. The Bank shall
also record in the Loan Account, in accordance with the Bank's
customary accounting practices: accrued interest and all other
charges, expenses and other items properly chargeable to any
Company hereunder or under the Related Documents; all payments made
by any Company with respect to the Obligations, if any; and all
other appropriate debits and credits. The debit balance of the
Loan Account shall reflect the amount of the Obligations and other
appropriate charges hereunder. Not more frequently than once each
month, the Bank shall render a statement of account of the Loan
Account including, with respect to Revolving Loans and the
Overadvance Term Loan, a statement of the outstanding principal
balance, Loan Period and applicable LIBOR Rate for each LIBOR Rate
Loan, which statement shall be considered correct and accepted by
the Companies and conclusively binding upon the Companies unless
any Company notifies the Bank to the contrary within 30 days of the
mailing of such statement by the Bank to the Companies; provided,
however, that the failure of the Bank to record any of the
foregoing items in the Loan Account shall not limit or otherwise
affect the Companies' joint and several obligation to repay the
Obligations.
2.7 Lockbox.
(a) The Companies agree that following a Default,
and upon the request of the Bank, they shall immediately
direct each of their respective account debtors and other
obligors to make payments due under their accounts,
instruments and/or chattel paper directly to a special lockbox
to be under the exclusive control of the Bank.
(b) Upon the establishment of the special lockbox
referred to in Section 2.7(a), the Companies authorize and
direct the Bank to deposit into a special collateral account
to be established and maintained by the Bank all drafts,
checks and cash payments received in said lockbox or otherwise
received by the Bank. All deposits in said collateral account
shall constitute proceeds of Collateral. The Bank shall apply
finally collected funds on deposit in said collateral account
immediately to the Loan Account as payment of the Obligations,
in such order of application as the Bank may determine;
provided, however, that the Bank shall not apply such
collected funds to prepay the Overadvance Term Loan except
upon any Company's request or unless an Event of Default has
occurred. The Companies agree that they shall promptly
deliver to the Bank for deposit in said collateral account all
payments received by them, including, without limitation, all
payments on accounts, instruments and chattel paper, all cash
received by each Company and all other proceeds of Collateral.
All payments shall immediately be delivered to the Bank in the
form received (except for the applicable Company's endorsement
where necessary) and, until so deposited, shall be held in
trust by such Company for and as the exclusive property of the
Bank and shall not be commingled with any funds or property of
such Company.
2.8 Payments. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest on the Notes. The Bank may
debit to the depository accounts maintained by the Companies with
the Bank all payments on the Obligations when due without prior
notice to or consent of any Company.
2.9 Prepayments.
(a) Optional Prepayments. The Companies may at
their option, at any time upon three (3) days' prior written
notice to the Bank, prepay the Obligations, in whole or in
part. Partial prepayments shall be in the principal amount of
$100,000 or a multiple thereof, together with accrued interest
to the date of prepayment on the amount prepaid. There shall
be no prepayment premium or penalty except: (i) as provided in
Section 2.3(a); and (ii) that, if the Companies have converted
the Overadvance Term Loan to the Fixed Term Rate, the Company
shall upon prepayment or partial prepayment of such
Overadvance Term Loan (whether upon mandatory or optional
redemption, acceleration or maturity) pay the Bank the Make
Whole Payment on the date of prepayment. The Companies agree
that the Make Whole Payment constitutes a reasonable method of
measuring the Bank's estimated loss in the event of a
prepayment, that it is not a penalty, and that the Bank's
determination of the Make Whole Payment, in the absence of
manifest error, shall be conclusive, final, and binding on the
Companies.
(b) Mandatory Prepayment.
(i) At any time that the aggregate principal
amount of Revolving Loans outstanding exceeds the lesser of
the Revolving Loan Commitment or the Borrowing Base, the
Companies shall immediately pay the amount of such excess in
immediately available funds, together with interest accrued on
the amount of the payment.
(ii) So long as any amounts remain outstanding
under the Overadvance Term Loan, the Companies jointly and
severally agree to make an Excess Cash Flow Payment on April
30 of each year, commencing on April 30, 1997 through and
including April 30, 1999, based on year-end audited financial
statements. All Excess Cash Flow Payments shall be applied to
reduce the regularly scheduled principal installments on the
Overadvance Term Loan in the inverse order of their maturity.
2.10 Effect of Regulatory Change. In the event of a
Regulatory Change deemed by the Bank in good faith to be material,
the Companies shall pay to the Bank (within ten days after notice
by the Bank to the Companies of such Regulatory Change) such
amounts as the Bank deems reasonably necessary to compensate the
Bank for the increase in the cost of making or maintaining the
Obligations or the reduction in the rate of return to the Bank on
the Obligations resulting from the Regulatory Change.
2.11 Security. Payment of all Obligations shall be
secured, subject only to Permitted Liens, by a first lien on all of
the Property in accordance with this Agreement and the Related
Documents.
2.12 No Obligation to Extend or Forbear. The Companies
acknowledge and agree that the Bank (a) upon execution hereof, has
no duty or obligation of any kind to, and has made no
representations of any kind or nature that the Bank will, extend
credit or any other kind of financial accommodations to any Company
after the Termination Date, or forbear at any time from the
exercise of any of its rights or remedies under this Agreement, the
Related Documents and applicable law, and (b) may at any time, in
its sole and absolute discretion, exercise whatever rights and
remedies the Bank may have under this Agreement, the Related
Documents and applicable law. All Obligations shall be due in full
on the Termination Date without further demand.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement
and make and incur the Obligations as herein provided, each Company
hereby severally represents and warrants to the Bank as follows:
3.1 Organization, Qualification and Subsidiaries. The
Company and each of its Subsidiaries is a corporation duly
organized and validly existing and in good standing under the laws
of the state of its incorporation. The Company and each of its
Subsidiaries has the corporate power and authority and all
necessary licenses, permits and franchises to borrow hereunder and
to grant the liens and security interests provided for in the
Related Documents and to own its assets and conduct its business as
presently conducted. The Company and each of its Subsidiaries is
duly licensed or qualified to do business and is in good standing
in all jurisdictions where it is required to be qualified. All of
the issued and outstanding capital stock of the Company and each of
its Subsidiaries has been validly issued and is fully paid and
non-assessable, except as provided in Section 180.0622(2)(b) of the
Wisconsin Statutes. The name and the number of shares of capital
stock owned by each shareholder of the Company is set forth on
Schedule 2. Except as set forth on Schedule 3, (a) the Company has
no Subsidiaries, (b) the Company does not own, directly or
indirectly, more than 1% of the total outstanding shares of any
class of capital stock of any other Person, (c) there are no
outstanding options, warrants or other rights to subscribe for or
purchase from the Company any capital stock of the Company or
securities convertible into or exchangeable for capital stock of
the Company.
3.2 Financial Statements.
(a) The Company's year-end audited financial
statements for its fiscal years ended January 31, 1996 and
January 31, 1995, audited by Deloitte & Touche, and the
financial statements prepared by the Company for the three-
month period ended April 30, 1996 are accurate and complete
and were prepared in accordance with GAAP (except that the
interim financial statements are subject to normal year-end
audit adjustments) consistently applied throughout the
applicable periods, and present fairly the financial condition
of the Company as of such dates and the results of its
operations and cash flows for the periods then ended. The
balance sheets and footnotes thereto show all known
liabilities, direct or contingent, of the Company and its
Subsidiaries as of the respective dates thereof in accordance
with GAAP. There has been no Material Adverse Effect since
the date of the latest of such statements. The Company's
fiscal year begins on February 1.
(b) The financial forecasts dated March 11, 1996
and furnished to the Bank by the Company are based on
information and assumptions that are accurate and reasonable
as of the date hereof.
3.3 Authorization. The making, execution, delivery and
performance of this Agreement and the Related Documents by the
Company have each been duly authorized by all necessary corporate
action. The valid execution, delivery and performance of this
Agreement, the Related Documents and the transactions contemplated
hereby and thereby, are not and will not be subject to any
approval, consent or authorization of any Government Authority.
This Agreement and the Related Documents are the valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms.
3.4 Absence of Conflicting Obligations. The making,
execution, delivery and performance of this Agreement and the
Related Documents and compliance with their respective terms do not
violate or constitute a default, breach or violation under any
Requirements of Law or any covenant, indenture, deed, lease,
contract, agreement, mortgage, deed of trust, note or instrument to
which the Company is a party or by which it is bound.
3.5 Taxes. The Company has filed all federal, state,
foreign and local tax returns which were required to be filed,
except those returns for which the due date has been validly
extended. The Company has paid or made provisions for the payment
of all taxes, assessments, fees and other governmental charges
owed, and no tax deficiencies have been proposed, threatened or
assessed against the Company. The federal income tax liability of
the Company has been finally determined by the Internal Revenue
Service and satisfied for all taxable years up to and including the
taxable year ended January 31, 1993 and there is no pending or, to
the best of the Company's knowledge, threatened tax controversy or
dispute as of the date hereof.
3.6 Absence of Litigation. Except as set forth on
Schedule 3.6, there is no pending or, to the knowledge of the
Company, threatened litigation or administrative proceeding at law
or in equity which would, if adversely determined, result in a
Material Adverse Effect, and, to the best of the Company's
knowledge after diligent inquiry, there are no presently existing
facts or circumstances likely to give rise to any such litigation
or administrative proceeding.
3.7 Accuracy of Information. All information,
certificates or statements given by the Company to the Bank under
this Agreement and the Related Documents were accurate, true and
complete in all material respects when given, continue to be
accurate, true and complete in all material respects as of the date
hereof, and do not contain any untrue statement or omission of a
material fact necessary to make the statements herein or therein
not misleading. There is no fact known to the Company which is not
set forth in this Agreement, the Related Documents or other
documents, certificates or statements furnished to the Bank by or
on behalf of the Company in connection with the transactions
contemplated hereby and which will, or which in the future may (so
far as the Company can reasonably foresee), cause a Material
Adverse Effect.
3.8 Ownership of Property. The Company has good and
marketable title to all of its Property, including, without
limitation, the Property reflected in the balance sheets referred
to in Section 3.2 and CF has fee simple title to the Property
subject to the Mortgages. There are no Liens of any nature on any
of the Property except Permitted Liens. All Property useful or
necessary in the Company's business, whether leased or owned, is in
good condition, repair (ordinary wear and tear excepted) and
working order and, to the best of the Company's knowledge after
diligent inquiry, conforms to all applicable Requirements of Law.
The Company owns (or is licensed to use) and possesses all such
patents, trademarks, trade names, service marks, copyrights and
rights with respect to the foregoing as are reasonably necessary
for the conduct of the business(es) of the Company as now conducted
and proposed to be conducted without, individually or in the
aggregate, any infringement upon rights of other Persons. Schedule
1 contains a true, correct and complete list of all real estate
used by the Company.
3.9 Federal Reserve Regulations. The Company will not,
directly or indirectly use any proceeds of the Obligations to: (a)
purchase or carry any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System (12 C.F.R. 221, as amended); (b) extend credit to other
Persons for any such purpose or refund indebtedness originally
incurred for any such purpose; or (c) otherwise take or permit any
action which would involve a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation of
the Board of Governors of the Federal Reserve System.
3.10 ERISA. The Company and anyone under common control
with the Company under Section 4001(b) of ERISA (an "ERISA
Affiliate") is in compliance in all material respects with the
applicable provisions of ERISA and, with respect to each Employee
Plan: (a) no "prohibited transaction" as defined in Section 406 of
ERISA or Section 4975 of the Code has occurred which will subject
the Company to any tax or penalty imposed under Section 4975 of the
Code; (b) no "reportable event" as defined in Section 4043 of ERISA
has occurred (other than reportable events for which the notice
requirement has been waived); (c) no "accumulated funding
deficiency" as defined in Section 302 of ERISA (whether or not
waived) has occurred; (d) the assets are at least as great as the
liabilities on a terminated basis based on the reasonable
assumptions used in the most recent actuarial valuation; and (e)
the Company or the plan sponsor has timely filed all returns and
reports required to be. Neither the Company nor any ERISA
Affiliate has any obligation to contribute to any Multiemployer
Plan.
3.11 Security Interests. The Bank has a legal, valid,
perfected and, except for Permitted Liens, first priority security
interest in the Collateral and the Collateral is and at all times
shall be free and clear of all Liens, except Permitted Liens,
whatsoever.
3.12 Places of Business. The principal place of business
of CF and the chief executive office of CF, Ultra and Gilco is
located at the address specified in Section 8.6, and the books and
records of CF, Ultra and Gilco and all records of account are
located and hereafter shall continue to be located at such
principal place of business and chief executive office. The
principal place of business for Ultra is located at 1325 Park
Street, Port Washington, Wisconsin. The principal place of
business for Gilco is located at 1040 N. 9th Street, Grafton,
Wisconsin.
3.13 Other Names. The business conducted by the Company
has not been conducted under any corporate, trade or fictitious
name, and following the date hereof the Company will not conduct
its business under any corporate, trade or fictitious name unless
the Company shall have delivered at least 30 days' prior written
notice to the Bank of such name change.
3.14 Not an Investment Company. The Company is not (a)
an "investment company" or a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940,
as amended, or (b) a "holding company" or a "subsidiary" of a
"holding company" or an "affiliate of a "holding company" or a
"subsidiary" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
3.15 No Defaults. The Company is not in default under or
in violation of (a) any Requirements of Law, (b) any covenant,
indenture, deed, lease, agreement, mortgage, deed of trust, note or
other instrument to which the Company is a party or by which the
Company is bound, or to which any Property is subject, or (c) any
Indebtedness; or if any default or violation under Sections
3.15(a), (b) or (c) exists, it is an immaterial default or
violation and the failure to cure such default or violation would
not result in a Material Adverse Effect.
3.16 Environmental Laws. Except as disclosed on Schedule
3.16 attached hereto and incorporated herein, the business of the
Company has been operated in full compliance with all Environmental
Laws and the Company is not subject to any Environmental Liability
relating to the conduct of its business or the ownership of its
Property and no facts or circumstances exist which could give rise
to such Environmental Liabilities. No notice has been served on
the Company claiming any violation of Environmental Laws, asserting
Environmental Liability or demanding payment or contribution for
Environmental Liability or violation of Environmental Laws.
3.17 Labor Matters. There are no labor disputes between
the Company and any of its employees which individually or in the
aggregate, if resolved in a manner adverse to the Company, would
result in a Material Adverse Effect.
3.18 Restricted Payments. The Company has not, since the
date of the most recent financial statements referred to in Section
3.2, made any Restricted Payments.
3.19 Solvency. Each Company is not "insolvent," nor will
each Company's incurrence of loans, direct or contingent, to repay
the Obligations render any Company "insolvent." For purposes of
this subsection 3.19, a corporation is "insolvent" if (i) the
"present fair salable value" (as defined below) of its assets is
less than the amount that will be required to pay its probable
liability on its existing debts and other liabilities (including
contingent liabilities) as they become absolute and matured; (ii)
its property constitutes unreasonably small capital for it to carry
out its business as now conducted and as proposed to be conducted
including its capital needs; (iii) it intends to, or believes that
it will, incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be
received by it and amounts to be payable on or in respect of debt
of it), or the cash available to it after taking into account all
of its other anticipated uses of the cash is anticipated to be
insufficient to pay all such amounts on or in respect of its debt
when such amounts are required to be paid; or (iv) it believes that
final judgments against it in actions for money damages will be
rendered at a time when, or in an amount such that, it will be
unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of
such judgments in any such actions and the earliest reasonable time
at which such judgments might be rendered), or the cash available
to it after taking into account all other anticipated uses of its
cash, is anticipated to be insufficient to pay all such judgments
promptly in accordance with their terms. For purposes of this
subsection 3.19, the following terms have the following meanings:
(x) the term "debts" includes any legal liability, whether matured
or unmatured, liquidated, absolute, fixed or contingent, (y) the
term "present fair salable value" of assets means the amount which
may be realized, within a reasonable time, either through
collection or sale of such assets at their regular market value and
(z) the term "regular market value" means the amount which a
capable and diligent businessman could obtain for the property in
question within a reasonable time from an interested buyer who is
willing to purchase under ordinary conditions.
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS
4.1 Initial Obligations. In addition to the terms and
conditions otherwise contained herein, the obligation of the Bank
to make or incur any Obligation is conditioned on the Bank
receiving, prior to or on the date of the Bank's first extension of
credit, each of the following items in form, detail and content
satisfactory to the Bank:
(a) the executed Master Revolving Credit Note;
(b) the executed Master Overadvance Term Note;
(c) the executed Security Agreements;
(d) the Guaranty executed by the Guarantor;
(e) the executed Mortgages;
(f) executed financing statements in each
jurisdiction where such filing is necessary to perfect the
security interests of the Bank created by the Security
Agreements, and the Mortgages;
(g) a certificate of the secretary or an assistant
secretary of each Company and the Guarantor certifying (i) an
attached complete and correct copy of its bylaws; (ii) an
attached complete and correct copy of resolutions duly adopted
by its board of directors which have not been amended since
their adoption and remain in full force and effect,
authorizing the execution, delivery and performance of this
Agreement and the Related Documents to which it is a party;
(iii) that its articles of incorporation have not been amended
since the date of the last date of amendment thereto indicated
on the certificate of the secretary of state; and (iv) as to
the incumbency and specimen signature of each officer
executing this Agreement and all other Related Documents to
which it is a party, and including a certification by another
officer as to the incumbency and signature of the secretary or
assistant secretary executing the certificate;
(h) the opinions of counsel for the Companies, the
Guarantor and Edison Control Corporation in the form of
Exhibits J-1 and J-2;
(i) certificates of status or good standing for the
Companies, and the Guarantor and certified copies of the
Articles of Incorporation for the Companies and the Guarantor,
all issued by the Office of the Secretary of State of
incorporation within 30 days of the date hereof;
(j) evidence that there are no Liens of record on
the Property other than Permitted Liens including UCC
information searches in the names of the Companies, and the
Guarantor of the filing records in the offices of each
Secretary of State and each county Register of Deeds office
required by the Bank;
(k) a commitment for mortgage title insurance
issued by a title insurance company acceptable to the Bank
with respect to each Mortgage on ALTA Form 1970 (i) insuring
that CF has a fee simple estate in the property subject to
such Mortgage, (ii) insuring that such Mortgage is a valid
paramount lien on the property in an amount of $1,630,000 (as
to the Mortgage attached as Exhibit E-1) and $510,000 (as to
the Mortgage attached as Exhibit E-2), respectively, subject
only to Permitted Liens, (iii) insuring against loss or damage
incurred by reason of construction liens which are or may be
prior to the lien of such Mortgage, (iv) excluding any
exceptions for rights of parties in possession or matters
which would be disclosed by a survey of the property except
for Permitted Liens, and (v) containing ALTA revolving credit,
access, contiguity, zoning, usury and comprehensive
endorsements;
(l) a commitment for mortgage title insurance
issued by a title insurance company acceptable to the Bank on
ALTA Form 1970 (i) insuring that Guarantor has a fee simple
estate in the property subject to the IRB Mortgage, (ii)
insuring that the IRB Mortgage is a valid paramount lien on
the property in an amount of $1,020,000, subject only to
Permitted Liens, (iii) insuring against loss or damage
incurred by reason of construction liens which are or may be
prior to the lien of the IRB Mortgage, (iv) excluding any
exceptions for rights of parties in possession or matters
which would be disclosed by a survey of the property except
for Permitted Liens, and (v) containing ALTA revolving credit,
access, contiguity, zoning, usury and comprehensive
endorsements;
(m) evidence that all real estate taxes, special
assessments, and any other charges against the property
subject to the Mortgages and the IRB Mortgage have been paid
in full for 1995 and prior years and have been paid to the
extent of any installments due for 1996;
(n) surveys of the property subject to the
Mortgages and the IRB Mortgage;
(o) the facility fee under Section 5.9(a);
(p) an executed Borrowing Base Certificate;
(q) Phase I environmental assessment reports for
the property subject to the Mortgages and the IRB Mortgage;
(r) the executed Pledge Agreement, together with
such consents to the collateral pledge as the Bank shall
require;
(s) the Lessor's Consent, Estoppel Certificate,
Waiver and Agreement in the form of Exhibits K-1 and K-2,
executed by CF and Guarantor, respectively;
(t) the collateral assignment to the Bank of the
life insurance policy maintained by the Company on the life of
Alan Kastelic in the amount of $500,000;
(u) certificates of title for all goods subject to
the security interest created by the Security Agreements which
are represented by certificates of title, together with a
notation of the Bank's security interest on each such
certificate;
(v) the executed Subordination Agreement;
(w) certificates of insurance evidencing that the
Bank has been named as a loss payee and/or mortgagee under the
insurance policies required to be carried under this
Agreement;
(x) the executed Collateral Assignments, documents
underlying the Collateral Assignments and such consents to the
Collateral Assignments as the Bank shall require;
(y) assignment documents complying with the
Assignment of Claims Act of 1940 for each Qualified Account of
the United States of America or any department, agency or
instrumentality thereof, if any;
(z) the executed Letter of Credit, Reimbursement
Agreement and IRB Mortgage, and all other documents,
instruments, certificates and legal opinions which are
required by the Bank to effectuate the substitution of the
Bank for Firstar as the letter of credit issuer under the IRB
Documentation;
(aa) copies of all executed documents evidencing the
consummation of the Stock Purchase Transaction;
(bb) copies of all executed documents evidencing the
Subordinated Loan Transaction;
(cc) Form U-1 executed by the Companies; and
(dd) such additional supporting documents and
materials as the Bank may request.
4.2 Subsequent Obligations. In addition to the terms
and conditions otherwise contained herein, the obligation of the
Bank to make or incur subsequent Obligations is subject to the
satisfaction, on the date of making or incurring each such
Obligation, of the following conditions:
(a) All of the representations, warranties and
acknowledgments of each Company contained in this Agreement
and the Related Documents shall be true and accurate as if
made on such date, and each request by the Companies for
credit shall constitute an affirmation by each Company,
severally, that such representations, warranties and
acknowledgements are then true and accurate;
(b) There shall not exist on such date any Default
and no Default shall occur as the result of the making or
incurring of such Obligation;
(c) The aggregate principal amount of all Revolving
Loans outstanding, together with the amount of any Revolving
Loan requested shall not exceed the lesser of the Revolving
Loan Commitment or the Borrowing Base;
(d) The Bank shall have received executed loan
requests for all Revolving Loans previously requested by the
Companies and the matters certified therein and herein shall
have been true, correct and complete on the date thereof and
shall continue to be true and correct on the date of the
requested Revolving Loans or other Obligations; and
(e) Each of the Related Documents shall remain in
full force and effect and continue to secure the Obligations.
SECTION 5 AFFIRMATIVE COVENANTS
Each Company severally covenants and agrees that, from
and after the date of this Agreement and until the Termination Date
and until the entire amount of all Obligations to the Bank are paid
in full, it shall:
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes. (a) Maintain its corporate
existence, licenses, permits, rights and franchises; (b) comply in
all material respects with all Requirements of Law; (c) conduct its
business substantially as now conducted; (d) pay before the same
become delinquent and before penalties accrue thereon, all taxes,
assessments and other government charges against it and its
Property, and all other liabilities except to the extent and so
long as the same are being contested in good faith by appropriate
proceedings, with adequate reserves having been provided.
5.2 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its
business, whether leased or owned, in good condition, repair
and working order (ordinary wear and tear excepted) and from
time to time make or cause to be made all needed and proper
repairs, renewals, replacements, additions and improvements so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
(b) Maintain with good, reputable and financially
sound insurance underwriters insurance of such nature and in
such amounts as is customarily maintained by companies engaged
in the same or similar business and such other insurance as
may be required by law or as may be reasonably required in
writing by the Bank. Each policy providing liability coverage
to any Company shall name the Bank as an additional insured,
and each policy insuring the Property shall name the Bank as
loss payee and/or mortgagee, as its interest appears, and all
policies shall require the insurer to give the Bank 30 days
prior written notice of the modification, cancellation or
nonrenewal of the policy; the Companies shall furnish copies
of all such insurance policies or a certificate evidencing
that each Company has complied with the requirements of this
paragraph on the date hereof and on each renewal date of such
policies; and within 90 days after the end of each fiscal
year, the Companies shall deliver to the Bank a schedule
showing all insurance policies in force as of the end of such
year, signed by an authorized officer of the Companies.
5.3 Financial Statements. Maintain a standard system of
accounting in accordance with sound accounting practice, and
furnish to the Bank such information respecting the business,
assets and financial condition of each Company as the Bank may
reasonably request and, without request furnish to the Bank:
(a) as soon as available, and in any event within
30 days after the end of each month of CF's fiscal year (or 50
days after the end of the first and last months of CF's fiscal
year), financial statements including the balance sheet for CF
and its Subsidiaries as of the end of each such month and
statements of income and year-to-date cash flows of CF and its
Subsidiaries for each such month and for that part of the
fiscal year ending with such month, setting forth in each
case, in comparative form, figures for the corresponding
periods in the preceding fiscal year and a comparison of
actual cash flow, income and capital expenditures with amounts
budgeted for such period, all in reasonable detail and
certified as true, correct and complete, subject to review and
normal year-end adjustments, by the chief financial officer of
CF;
(b) as soon as available, and in any event within
90 days after the close of each fiscal year, a copy of the
detailed annual audit report for such year and accompanying
financial statements for CF and its Subsidiaries as of the end
of such year, containing balance sheets and statements of
income, retained earnings and cash flows for such year and for
the previous fiscal year, as audited by independent certified
public accountants of recognized standing selected by CF and
satisfactory to the Bank, which report shall be accompanied by
(i) the unqualified opinion of such accountants to the effect
that the statements present fairly, in all material respects,
the financial position of CF and its Subsidiaries as of the
end of such year and the results of its operations and its
cash flows for the year then ended in conformity with GAAP;
(ii) a certificate of such accountants showing their
calculation of the financial covenants contained herein and
stating that their review disclosed no Default or that their
review disclosed a Default and specifying the same and the
action taken or proposed to be taken with respect thereto; and
(iii) any supplementary comments and reports submitted by such
accountants to CF including the management letter, if any;
(c) with the financial statements described in
Section 5.3(a), the certificate of the president or chief
financial officer of CF to the effect that (i) a review of the
activities of the Companies during such period has been made
under his supervision to determine whether the Companies have
observed, performed and fulfilled each and every covenant and
condition in this Agreement and the Related Documents, and
(ii) no Default has occurred (or if such Default has occurred,
specifying the nature thereof and the period of existence
thereof and the steps, if any, being undertaken to correct the
same);
(d) within 15 days after the end of each month or
more frequently as the Bank may from time to time request, a
Borrowing Base Certificate; and
(e) promptly upon learning of the occurrence of any
of the following, written notice thereof, describing the same
and the steps being taken with respect thereto: (i) the
occurrence of any Default, (ii) the institution of, or any
materially adverse determination or development in, any
litigation, arbitration proceeding or governmental proceeding,
(iii) the occurrence of a "reportable event" under, or the
institution of steps by any Company to withdraw from, or the
institution of any steps to terminate, any Employee Plan as to
which any Company may have liability, (iv) the commencement of
any dispute which might lead to the modification, transfer,
revocation, suspension or termination of this Agreement or any
Related Document, or (v) any event which would have a Material
Adverse Effect.
All financial statements referred to herein shall be complete and
correct in all material respects and shall be prepared in
reasonable detail and on a consolidated and consolidating basis in
accordance with GAAP, applied consistently throughout all
accounting periods.
5.4 Inspection of Property and Records. At any
reasonable time following reasonable notice, as often as may be
reasonably desired and at each Company's expense, permit
representatives of the Bank to visit their Property, examine their
books and records and discuss their affairs, finances and accounts
with their officers and independent certified public accountants
(who shall be instructed by the Company to make available to the
Bank or its agents the work papers of such accountants) and the
applicable Company shall facilitate such inspection and
examination.
5.5 Use of Proceeds. Use the entire proceeds of the
Obligations as follows:
(a) the proceeds of the Revolving Loans shall be
used to provide working capital to the Companies and to
finance, in part, payments required by the Companies with
respect to the Stock Purchase Transaction; and
(b) the proceeds of the Overadvance Term Loan shall
be used to finance, in part, payments required by the
Companies with respect to the Stock Purchase Transaction.
5.6 Bank Accounts. Maintain all of its primary deposit
and operating accounts of any kind with the Bank.
5.7 Comply With, Pay and Discharge All Notes, Mortgages,
Deeds of Trust and Leases. Comply with, pay and discharge all
existing notes, mortgages, deeds of trust, leases, indentures and
any other contractual arrangements to which any Company is a party
(including, without limitation, all Indebtedness) in accordance
with the respective terms of such instruments so as to prevent any
default thereunder.
5.8 Environmental Compliance.
(a) Maintain at all times all permits, licenses and
other authorizations required under Environmental Laws, and
comply in all respects with all terms and conditions of the
required permits, licenses and authorizations and all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws.
(b) Notify the Bank promptly upon obtaining
knowledge that (i) any Property previously or presently owned
or operated is the subject of an environmental investigation
by any Government Authority having jurisdiction over the
enforcement of Environmental Laws, (ii) any Company has been
or may be named as a responsible party subject to
Environmental Liability, or (iii) any Company obtains
knowledge of any Hazardous Substance located on any Property
except in compliance with all Requirements of Law.
(c) At any reasonable time following reasonable
notice and as often as may be reasonably desired, permit the
Bank or an independent consultant selected by the Bank to
conduct an environmental investigation satisfactory to the
Bank for the purpose of determining whether any Company, and
its Property comply with Environmental Laws and whether there
exists any condition or circumstance which may require a
cleanup, removal or other remedial action by the Company with
respect to any Hazardous Substance. The applicable Company
shall facilitate such environmental audit. The Bank shall
provide the applicable Company, at such Company's request,
with all reports and findings but such Company may not rely on
such environmental investigation for any purpose. Any such
environmental investigation of Property shall be at each
Company's expense at any time following an Event of Default or
at any time the Property is the subject of an environmental
investigation by a Government Authority having jurisdiction
over the enforcement of Environmental Laws; provided, however,
that the Bank's environmental investigation shall not be at
such Company's expense if (i) a Government Authority or a firm
or firms of geotechnical engineers and/or environmental
consultants hired by such Company and reasonably acceptable to
the Bank shall undertake to make an environmental audit, and
(ii) such Company shall provide the Bank at such Company's
expense with, and the Bank shall be entitled to rely on, all
reports and findings of such Government Authority or
geotechnical engineers as soon as such reports and findings
are made available to the Company.
Notwithstanding the foregoing, nothing contained in this Agreement,
or in the Related Documents, or in the enforcement of this
Agreement or the Related Documents, shall constitute or be
construed as granting or providing the right, power or capacity to
the Bank to exercise (a) decision making control of any Company's
compliance with any environmental law, or (b) day to day decision
making of any Company with respect to (i) compliance with
environmental laws or (ii) all or substantially all of the
operational aspects of any Company.
5.9 Fees and Costs.
(a) Pay the Bank a facility fee in consideration
for the Overadvance Term Loan made hereunder in an amount
equal to $25,000 payable on the date hereof.
(b) Pay the Bank on the first day of each month the
accrued and unpaid commitment fee for the Revolving Loan
Commitment. The commitment fee shall accrue at a rate per
annum equal to 0.375% of the difference between (i) the
Revolving Loan Commitment and (ii) the outstanding principal
balance of the Revolving Loans. The commitment fee shall be
computed and adjusted daily based on the actual number of days
elapsed in a year of 360 days. All unpaid commitment fees
shall be due and payable on the Termination Date. The Bank
may debit to the Companies' Loan Account all commitment fees
when due without prior notice to or consent of any Company.
(c) Pay the Bank all additional costs including,
without limitation, wire transfer or other charges pertaining
to the transfer of funds, lockbox fees and charges arising
from returned or dishonored checks of any account debtor.
(d) Pay immediately upon receipt of an invoice the
reasonable fees and expenses incurred by the Bank in
connection with any inspection pursuant to Section 5.4,
including, without limitation, travel and administration
expenses incurred by representatives of the Bank.
(e) Pay immediately upon receipt of an invoice all
reasonable fees and expenses incurred by the Bank with respect
to this Agreement, the Related Documents and the Obligations,
and any amendments thereof and supplements thereto, including,
without limitation, appraisal fees, environmental inspection
fees (including fees and expenses as provided in Section
5.8(c)) and the reasonable fees of in-house and outside
counsel in connection with the preparation and negotiation of
this Agreement, the Related Documents and all amendments
thereto and any waivers of the terms and provisions thereof
and the consummation of the transactions contemplated herein.
(f) Pay immediately upon receipt of an invoice all
fees and expenses incurred by the Bank with respect to
protection or enforcement (including collection and
disposition of Collateral) of the Bank's rights under this
Agreement and the Related Documents and with respect to the
Obligations and all costs and expenses which may be incurred
by the Bank with respect to a Default as provided in Section
7.2(d).
5.10 Indemnity. Indemnify the Bank and its employees,
officers, directors, shareholders, agents, attorneys, successors
and assigns against any and all losses, claims, damages,
liabilities, obligations, penalties, actions, judgments, suits,
costs and expenses of any kind or nature whatsoever, including
without limitation attorneys' fees and expenses, incurred by them
arising out of, in any way connected with, or as a result of (a)
this Agreement or the Related Documents or the transactions
contemplated hereby or protection or enforcement (including
collection or disposition of Collateral) of the Bank's rights under
this Agreement or the Related Documents, (b) the execution and
delivery of this Agreement by the parties hereto and the
performance of their respective obligations hereunder, (c) any
violation of Environmental Laws by any Company, or any of its
Property as well as any cost or expense incurred in remedying such
condition, and (d) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not the
Bank is a party thereto; provided, however, that such indemnity
shall not apply to any such losses, claims, damages, liabilities or
related expenses to the extent caused by any gross negligence or
willful misconduct of the Bank. The foregoing indemnities shall
survive the Termination Date, the consummation of the transactions
contemplated by this Agreement, the repayment of the Obligations
and the invalidity or unenforceability of any term or provision of
this Agreement or of the Related Documents and shall remain in
effect regardless of any investigation made by or on behalf of the
Bank or any Company and the content or accuracy of any
representation or warranty made under this Agreement.
5.11 Appraisals. If and to the extent required at any
time of the Bank by any Government Authority or Requirements of
Law, permit an independent appraiser selected by the Bank to
conduct appraisals at any reasonable time following reasonable
notice, at each Company's expense, of the Property. Each Company
shall facilitate such appraisals and may obtain copies of, but may
not rely, on such appraisals for any purpose.
5.12 Post-Closing Delivery. Deliver to the Bank, in
form, detail and content satisfactory to the Bank, a collateral
assignment to the Bank of a life insurance policy maintained by the
Company on the life of Alan Kastelic in an amount not less than
$5,000,000, within thirty days after the date hereof.
SECTION 6 NEGATIVE COVENANTS
Each Company covenants and agrees that, from and after
the date of this Agreement and until the Termination Date and until
all Obligations to the Bank are paid in full, no Company shall
directly or indirectly:
6.1 Sale of Assets, Consolidation, Merger, Acquisitions,
Etc. (a) Except for sales of inventory in the ordinary course of
business, in any fiscal year of the Company sell, lease, transfer
or otherwise dispose of Property having an aggregate net book value
in excess of $50,000, whether in one or in a series of
transactions; (b) consolidate or merge with or into any other
Person; (c) directly or indirectly, sell or transfer any Property,
real or personal, used or useful in its business, and thereafter
lease such property or other property which it intends to use for
substantially the same purposes; (d) sell, issue or otherwise
distribute any security, including any shares of the capital stock
of the Company; (e) create or permit any Subsidiary to create a new
Subsidiary; or (f) purchase or otherwise acquire all or
substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person.
6.2 Indebtedness. Issue, create, incur, assume or
otherwise become liable with respect to (or agree to issue, create,
incur, assume or otherwise become liable with respect to), or
permit to remain outstanding, any Indebtedness except (a) the
Obligations; (b) Indebtedness which has been subordinated to the
Bank in form and substance satisfactory to the Bank, including the
Indebtedness evidenced by the Subordinated Loan Transaction; (c)
current liabilities (other than for borrowed money) of any Company
incurred in the ordinary course of business which are not more than
90 days overdue, unless being contested in good faith and with due
diligence; (d) Indebtedness secured by Permitted Liens; (e)
Indebtedness disclosed on CF's most recent financial statements
described in Section 3.2(a) other than Indebtedness owed to Firstar
Bank Milwaukee, N.A., provided that such Indebtedness shall not be
renewed, extended or increased; and (f) Indebtedness in an
aggregate amount of not more than $100,000 in excess of the amounts
permitted by Sections 6.2(a), (b), (c), (d) and (e).
6.3 Liens. Create or permit to be created or allow to
exist any Lien upon or interest in any Property except Permitted
Liens. For purposes herein, Permitted Liens shall mean: (a) Liens
for taxes, assessments, or governmental charges, carriers',
warehousemen's, repairmen's, mechanics', materialmen's and other
like Liens, which are either not delinquent or are being contested
in good faith by appropriate proceedings which will prevent
foreclosure of such Liens, and against which adequate cash reserves
have been provided; (b) easements, restrictions, minor title
irregularities and similar matters which have no material adverse
effect upon the ownership and use of the affected Property; (c)
Liens or deposits in connection with worker's compensation,
unemployment insurance, social security or other insurance or to
secure customs duties, public or statutory obligations in lieu of
surety, stay or appeal bonds, or to secure performance of contracts
or bids, other than contracts for the payment of money borrowed, or
deposits required by law as a condition to the transaction of
business or other Liens or deposits of a like nature made in the
ordinary course of business; (d) Liens in favor of the Bank
pursuant to the Related Documents; (e) Liens evidenced by
conditional sales, purchase money mortgages or other title
retention agreements on machinery and equipment (acquired in the
ordinary course of business and otherwise permitted to be acquired
hereunder) which are created at the time of the acquisition of such
property solely for the purposes of securing the Indebtedness
incurred to finance the cost of such property, provided no such
Lien shall extend to any property other than the property so
acquired and identifiable proceeds; and (f) Liens described in
Schedule 4, provided that the Indebtedness secured thereby shall
not be renewed, extended or increased.
6.4 Guaranty. Guaranty or otherwise in any way become
or be responsible for obligations of any other Person, whether by
an agreement to purchase the indebtedness of any other Person, or
agreement for the furnishing of funds to any other Person through
the purchase of goods, supplies or services (or by way of stock
purchase, capital contribution advanced or loaned) for the purpose
of paying or discharging the indebtedness of any Person, or
otherwise, except for the endorsement of negotiable instruments by
any Company for deposit or collection or similar transactions in
the ordinary course of business.
6.5 Restricted Payments. Make any Restricted Payments.
6.6 Loans, Investments. Make or commit to make
advances, loans, extensions of credit or capital contributions to,
or purchases of any stock, bonds, notes, debentures or other
securities of, or make any other investment in, any Person except:
(a) accounts, chattel paper, and notes receivable created by any
Company in the ordinary course of business and loans or advances
made by one Company to any other Company provided that the Company
receiving any loan or advance under this Agreement has reached the
applicable Borrowing Sublimit set forth in Sections 2.1(a) or
2.2(a), as the case may be; (b) advances in the ordinary course of
business to suppliers, employees and officers of any Company
consistent with past practices in an aggregate amount at any time
outstanding of not more than $50,000; (c) investments in bank
certificates of deposit (but only with FDIC-insured commercial
banks having a combined capital and surplus in excess of
$20,000,000), open market commercial paper maturing within one year
having the highest rating of either Standard & Poors Corporation or
Moody's Investors Services, Inc., U.S. Treasury Bills subject to
repurchase agreements and short-term obligations issued or
guaranteed by the U.S. Government or any agency thereof; and (d)
investments in open-end diversified investment companies of
recognized financial standing investing solely in short-term money
market instruments consisting of securities issued or guaranteed by
the United States government, its agencies or instrumentalities,
time deposits and certificates of deposit issued by domestic banks
or London branches of domestic banks, bankers acceptances,
repurchase agreements, high grade commercial paper and the like;
provided, that for Sections 6.6(a) through (d), each such
investment has a maturity date not later than 180 days after the
date of purchase or making thereof and, except for advances under
Section 6.6(b), is pledged and delivered to the Bank as additional
security for the Obligations.
6.7 Compliance with ERISA. (a) Terminate any Employee
Plan so as to result in any material liability to PBGC; (b) engage
in any "prohibited transaction" (as defined in Section 4975 of the
Code) involving any Employee Plan which would result in a material
liability for an excise tax or civil penalty to the Company in
connection therewith; or (c) incur or suffer to exist any material
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived.
6.8 Fixed Asset Expenditures. Purchase, become
obligated for, invest in, acquire or otherwise expend for the
acquisition of real estate, machinery, equipment or other fixed
assets (including capitalized lease obligations) during any fiscal
year an amount exceeding $720,000; provided, that such amount shall
be $920,000 during the fiscal year ended January 31, 1998.
6.9 Affiliates. Permit any transaction with any
Affiliate, except on terms not less favorable to the Company than
would be usual and customary in similar transactions with Persons
who are not Affiliates; provided, however, that the Company may
engage in transactions with South Houston Hose Company, Inc. which
are consistent with past practices and are conducted on terms not
less favorable to the Company than were customary in similar
transactions prior to the date hereof.
6.10 Tangible Net Worth. Permit Tangible Net Worth, plus
the Indebtedness evidenced by the Subordinated Loan Transaction, at
the end of any fiscal quarter of the Companies to be less than (a)
$2,000,000 from the date hereof through January 31, 1997, (b)
$2,200,000 from February 1, 1997 through January 31, 1998, (c)
$3,250,000 from February 1, 1998 through January 31, 1999 and (d)
$4,750,000 from February 1, 1999 through the Termination Date.
6.11 Maximum Funded Debt to Tangible Net Worth. Permit
the ratio of Funded Debt to Tangible Net Worth, plus the
Indebtedness evidenced by the Subordinated Loan Transaction, to
exceed (a) 9 to 1 at the end of any fiscal quarter of the Companies
from the date hereof through January 31, 1997, (b) 7.50 to 1 at the
end of any fiscal quarter of the Companies from February 1, 1997
through January 31, 1998, (c) 4.75 to 1 at the end of any fiscal
quarter of the Companies from February 1, 1998 through January 31,
1999 and (d) 3 to 1 for any fiscal quarters of the Companies from
February 1, 1999 through the Termination Date.
6.12 Current Ratio. Permit the ratio of Current Assets
to Current Liabilities to be less than 1.50 to 1 at any time.
6.13 Minimum Fixed Charge Coverage Ratio. Permit the
ratio of (a) Net Income of the Companies for the applicable period,
plus all amounts deducted in the computation of such Net Income on
account of payment or provision for income and other taxes, plus
all interest expense paid or accrued by any Company during such
period on Indebtedness, to (b) all principal payments and interest
expense paid or accrued by any Company during the applicable period
on Indebtedness, plus all dividends paid by any Company during the
applicable period, plus all rental payments made by any Company
during the applicable period in respect of operating leases, to be
less than (i) 1 to 1 for any fiscal quarter of the Companies from
the date hereof through January 31, 1997, (ii) 1.20 to 1 for any
fiscal quarter of the Companies from February 1, 1997 through
January 31, 1998 and (iii) 1.45 to 1 for any fiscal quarter of the
Companies from February 1, 1998 through the Termination Date.
6.14 Modification of the Subordinated Debt Documentation.
The Companies shall not amend, waive or otherwise modify any of the
terms or provisions of any of the documentation evidencing the
Subordinated Loan Transaction, except as otherwise permitted under
the Subordination Agreement.
6.15 Modification of the Stock Purchase Documentation.
The Companies shall not amend, waive or otherwise modify any of the
terms or provisions of any of the Stock Purchase Documentation, or
any related agreements, instruments or documents, without the prior
written consent of the Bank, which consent shall not be
unreasonably withheld.
SECTION 7 DEFAULT AND REMEDIES
7.1 Events of Default Defined. Any one or more of the
following shall constitute an "Event of Default":
(a) the Companies shall fail to pay any Obligation
(including, without limitation, the Notes and the payments
required by Sections 2.9(b) and 5.9) when and as the same
shall become due and payable, whether upon demand, at
maturity, by acceleration or otherwise;
(b) any Company shall fail to observe or perform
any of the covenants, agreements or conditions contained in
Sections 2.7, 4.1, 4.2, 5.1(a), 5.2(b), 5.4, 5.6, 5.8(a), or
any provision of Section 6;
(c) (i) Guarantor shall default in the payment of
any indebtedness evidenced by the IRB Documentation, or (ii)
any Company shall default (as principal or guarantor or
otherwise) in the payment of any other Indebtedness
aggregating $50,000 or more, or with respect to any of the
provisions of any agreement evidencing such Indebtedness, and
such default shall continue beyond any period of grace, if
any, specified in such agreement, unless such Company is
contesting such default in good faith and the Bank agrees, in
its sole discretion, that Company is so contesting such
default;
(d) any Company shall fail to observe or perform
any of the other covenants, agreements or conditions contained
in this Agreement or the Related Documents and such failure
shall continue for thirty days after written notice thereof is
given by the Bank to the Company;
(e) any representation or warranty made by any
Company herein or in any of the Related Documents or in any
certificate, document or financial statement delivered to the
Bank shall prove to have been incorrect in any material
adverse respect as of the time when made or given;
(f) a final judgment (or judgments) for the payment
of amounts aggregating in excess of $75,000 shall be entered
against any Company, and such judgment (or judgments) shall
remain outstanding and unsatisfied, unbonded or unstayed after
thirty days from the date of entry thereof;
(g) any Company shall (i) become insolvent or take
or fail to take any action which constitutes an admission of
inability to pay its debts as they mature; (ii) make an
assignment for the benefit of creditors; (iii) petition or
apply to any tribunal for the appointment of a custodian,
receiver or any trustee for the Company or a substantial part
of its respective assets; (vi) suffer any such custodianship,
receivership or trusteeship to continue undischarged for a
period of thirty days or more; (iv) commence any proceeding
under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; (v) by any act or omission indicate its consent to,
approval of or acquiescence in any such petition, application
or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial
part of any of its properties; or adopts a plan of liquidation
of its assets;
(h) if any Person shall: (i) petition or apply to
any tribunal for the appointment of a custodian, receiver or
any trustee for any Company or a substantial part of its
respective assets which continues undischarged for a period of
thirty days or more; (ii) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, in which an order for
relief is entered or which remains undismissed for a period of
thirty days or more;
(i) any Government Authority, STS Consultants or
any other geotechnical engineer or environmental consultant
hired by any Company, any former equity holder of any Borrower
or Guarantor, the Bank or any Government Authority determines
that the costs to investigate, test, cleanup and remediate any
Hazardous Substance (collectively, "Remediation Costs") in any
way related to or associated with the real property secured by
the Mortgage 2, may exceed $1,500,000 in the aggregate
(provided that such Remediation Costs are disclosed in a
remedial action plan, feasibility study or other similar
report)and the Company is unable to provide for payment of
such Remediation Costs in a manner reasonably acceptable to
the Bank;
(j) except as provided in Section 7.1(i), any Government
Authority shall determine that the potential uninsured
liability of the Company for damages caused by the presence or
discharge of any Hazardous Substance, including liability for
claims for diminution in value of any real property of a third
party or liability for personal injury claims, exceeds
$50,000, and the Company is unable to provide for such
liability in a manner reasonably acceptable to the Bank;;
(k) Alan Kastelic shall cease to be president of
each Company; or
(l) this Agreement or any of the Related Documents
shall at any time cease to be in full force and effect, or the
Company or the Guarantor shall contest or deny any liability
or obligation under, or attempt to revoke or terminate, this
Agreement or any Related Document.
7.2 Remedies Upon Event of Default. Upon the occurrence
of an Event of Default:
(a) specified in clauses (g) or (h) of Section 7.1,
then, without presentment, notice, demand or action of any
kind by the Bank, all of which are hereby waived: (i) the
Revolving Loan Commitment and the obligations of the Bank to
make or incur any Obligations shall automatically and
immediately terminate; and (ii) the entire amount of the
Obligations shall be automatically accelerated and immediately
due and payable.
(b) specified in clauses (a), (b), (c), (d), (e),
(f), (i), (j), (k) or (l) of Section 7.1, the Bank may,
without presentment, notice, demand or action of any kind, all
of which are hereby waived: (i) immediately terminate the
Bank's obligation to make or incur any Obligations, and the
same shall immediately terminate; and (ii) declare the entire
amount of the Obligations immediately accelerated, due and
payable.
(c) the Bank may at any time without prior notice
or demand set off against any credit balance or other money
now or hereafter owed it by the Bank all or any part of the
Obligations. Each Company hereby grants to the Bank a
security interest in and lien on any such credit balance or
other money.
(d) the Bank shall have all of the rights and
remedies provided to the Bank by the Related Documents, at law
and in equity, by statute or otherwise, and no remedy herein
conferred upon the Bank is intended to be exclusive of any
other remedy and each remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or
hereafter existing at law, in equity, by statute or otherwise.
In addition to and not in lieu of any other right or remedy
the Bank might have, the Bank at any time and from time to
time at its election may (but shall not be required to) do or
perform or comply with or cause to be done or performed or
complied with anything which any Company may be required to
do, perform or comply with and the Companies shall reimburse
the Bank upon demand for any cost or expense which the Bank
may incur in such respect, together with interest thereon at
the rate equal to the rate payable under the Master
Overadvance Term Note following an Event of Default from the
date of such demand until paid. No failure or delay on the
part of the Bank in exercising any right or remedy hereunder
shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude any further
exercise thereof or the exercise of any other right or remedy.
SECTION 8 MISCELLANEOUS
8.1 Assignability; Successors. The provisions of this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of the parties hereto. Each of
the Companies' rights and liabilities under this Agreement and the
Related Documents are not assignable in whole or in part without
the prior written consent of the Bank. The Bank may at any time
sell, assign or transfer to one or more banks or other entities
other than any competitor of the Companies ("Participants")
interests in any Note held by the Bank or any other interest of the
Bank in the Obligations. Each Company authorizes the Bank to
disclose to any Participant or prospective Participant any and all
financial information in the Bank's possession concerning each such
Company and its Affiliates which has been delivered to the Bank by
or on behalf of such Company. Each Company agrees that upon the
occurrence of any Event of Default each Participant shall be deemed
to have the right of setoff in respect of its participating
interest in the Obligations to the same extent as if the amount of
its participating interest were owing directly to it as a Bank
under this Agreement.
8.2 Survival. All agreements, covenants,
representations and warranties made herein and in the Related
Documents shall survive the execution and delivery of this
Agreement and the Related Documents, the making of the Obligations
and the termination of this Agreement.
8.3 Governing Law. This Agreement and the Related
Documents shall be governed by the internal laws of the State of
Wisconsin.
8.4 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
and the same agreement. The descriptive headings in this Agreement
are inserted for convenience of reference only and shall not affect
the construction of this Agreement.
8.5 Entire Agreement; Amendments. This Agreement, the
Exhibits and Schedules attached hereto, and the Related Documents
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all other understandings, oral
or written, with respect to the subject matter hereof. No
amendment, modification, alteration, or waiver of the terms of this
Agreement or consent required under the terms of this Agreement
shall be effective unless made in a writing, which makes specific
reference to this Agreement and which has been signed by the party
against which enforcement thereof is sought. Any such amendment,
modification, alteration, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
8.6 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed
to have been given or made when delivered in hand, deposited in the
mail, or sent by facsimile. Communications or notices shall be
delivered personally or by certified or registered mail, postage
prepaid, or by facsimile and addressed as follows, unless and until
either of such parties notifies the other in accordance with this
section of a change of address:
if to the Companies: Construction Forms, Inc.
W60 N151 Cardinal Avenue
Cedarburg, WI 53012-0326
Attn: Mr. Alan Kastelic,
President
FAX: (414) 377-4049
with copies to: Edison Control Corporation
360 Lexington Avenue
New York, NY 10017
Attn: Ms. Mary E. McCormack
President and CEO
FAX (212) 972-6109
if to the Bank: LaSalle National Bank
411 East Wisconsin Avenue
Suite 1150
Milwaukee, WI 53202
Attn: Mr. Michael H. Gandrud,
Assistant Vice President
FAX (414) 224-0071
with copies to: Michael, Best & Friedrich
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Jonathan D. Kron, Esq.
FAX (414) 277-0656
8.7 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.8 Further Assurances. Each Company severally agrees
to do such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments, as
the Bank may at any time request in connection with the
administration or enforcement of this Agreement or the Related
Documents or in order better to assure and confirm unto the Bank
its rights, powers and remedies hereunder.
8.9 Conflicts and Ambiguities. In the event of any
ambiguity or conflict as between the terms of this Agreement, the
Related Documents or any other document executed and delivered
pursuant to this Agreement, the terms of this Agreement shall
control.
8.10 Submission to Jurisdiction. The Bank may enforce
any claim arising out of this Agreement or the Related Documents in
any state or federal court having subject matter jurisdiction and
located in Milwaukee, Wisconsin. For the purpose of any action or
proceeding instituted with respect to any such claim, each Company
hereby irrevocably submits to the jurisdiction of such courts.
Each Company irrevocably consents to the service of process out of
said courts by mailing a copy thereof, by registered mail, postage
prepaid, to each Company at the address specified in Section 8.6
and agrees that such service, to the fullest extent permitted by
law (a) shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding, and (b)
shall be taken and held to be valid personal service upon personal
delivery to it. Nothing herein contained shall affect the right of
the Bank to serve process in any other manner permitted by law or
preclude the Bank from bringing an action or proceeding in respect
hereof in any other country, state or place having jurisdiction
over such action. Each Company hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any court located in Milwaukee, Wisconsin
and any claim that any such suit, action or proceeding brought in
such a court has been brought in an inconvenient forum.
8.11 Waiver of Jury Trial. Each party hereto knowingly,
voluntarily and without coercion, waives all rights to a trial by
jury of all disputes arising out of or in relation to this
Agreement or any Related Document to which it is a party, or under
any amendment, instrument, document or agreement delivered or which
may in the future be delivered in connection therewith or arising
from any relationship existing in connection with this Agreement or
and any Related Document, and agrees that any such action or
proceeding shall be tried before a court and not before a jury.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
CONSTRUCTION FORMS, INC.
By:
_______________, _____________
CF ULTRA TECH, INC.
By:
_______________,______________
CF GILCO, INC.
By:
_______________,____________
LASALLE NATIONAL BANK
By:
Michael H. Gandrud,
Assistant Vice President
CONSENT AND ACKNOWLEDGMENT
IN WITNESS WHEREOF, the Guarantor has executed this Agreement
as of the date first above written and hereby (i) agrees and
consents to all of the terms and conditions of the foregoing
Agreement; and (ii) ratifies and confirms its representations,
warranties, covenants and agreements contained in, and obligations
and liabilities under, the Guaranty, the Agreement and each of the
other Related Documents to which it is a party or by which it may
be bound. The Guarantor hereby affirms and agrees that it has
received sufficient value (as described in Section 9-203(1)(b) of
the Uniform Commercial Code) and benefit (whether direct or
indirect) in exchange for its execution of or ratification of, as
the case may be, and obligations under the Guaranty, the Agreement,
and other Related Documents.
JABCO, LIMITED LIABILITY COMPANY
By:________________________________
_______________,________________
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