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FORM 10-QSB
JUNE 30, 1996
GUNTHER INTERNATIONAL, LTD.
EXHIBIT 10.1
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REVOLVING LOAN AND SECURITY AGREEMENT
THIS AGREEMENT made as of the 31st day of May, 1996, between
Gunther International, Ltd. whose principal place of business is 5 Wisconsin
Avenue, Norwich, Connecticut (the "Debtor"), and BANK OF BOSTON CONNECTICUT, a
Connecticut savings bank having an office at 127 Church Street, New Haven,
Connecticut 06510 (the "Secured Party").
WITNESSETH:
In consideration of the mutual covenants and agreements contained
herein and for other good and valuable consideration, receipt of which is hereby
acknowledged, Debtor and Secured Party agree as follows:
1. REVOLVING LOANS. Subject to the terms of this Agreement and
your satisfaction of the conditions precedent referred to in Paragraph 6 hereof,
Secured Party agrees to make Revolving Loans to Debtor upon the terms and
conditions hereinafter set forth:
(a) Loans. (i) Facility A. Subject to the provisions of this
Agreement, Secured Party shall upon request of Debtor or as otherwise provided
herein, from time to time make Revolving Loans under this Facility A to Debtor
the aggregate principal amount of which outstanding at any one time does not
exceed the Maximum Amount of Facility A, as defined below. Debtor may from time
to time borrow, pay and reborrow the Revolving Loans advanced under this
Facility A. The principal amount of the Revolving Loans under this Facility A,
or such part thereof as may be from time to time outstanding, shall be evidenced
by Debtor's revolving loan note, in the form of Exhibit A-1 annexed hereto and
made a part hereof (herein referred to as the "Facility A Note"), with
appropriate insertions of dates and amounts. The Facility A Note shall be in the
amount of $1,750,000;
(ii) Facility B. Subject to the provisions of this
Agreement, Secured Party shall upon request of Debtor or as otherwise provided
herein, from time to time make Revolving Loans under this Facility B to Debtor
the aggregate principal amount of which outstanding at any one time does not
exceed the Maximum Amount of Facility B, as defined below. Debtor may from time
to time borrow, pay and reborrow the Revolving Loans advanced under this
Facility B. The principal amount of the Revolving Loans under this Facility B,
or such part thereof as may be from time to time outstanding, shall be evidenced
by Debtor's revolving loan note, in the form of Exhibit A-2 annexed hereto and
made a part hereof (herein referred to as the "Facility B Note"), with
appropriate insertions of dates and amounts. The Facility B Note shall be in the
amount of $250,000.
For purposes of this Agreement, loans made under Facility A and/or
Facility B are hereinafter referred to individually as a "Revolving Loan" and
collectively as the "Revolving Loans." The Facility A Note and Facility B Note
are hereinafter referred to collectively as the "Notes."
(b) Interest Rate. Revolving Loans advanced under Facility A
shall bear interest at a floating rate per annum equal to the Base Rate.
Revolving Loans advanced under Facility B shall bear interest at a floating rate
per annum equal to one percentage point (1%) above the Base Rate.
Any change in the interest rate because of a change in the Base
Rate shall become effective immediately, without notice or demand, on the date
any change in the Base Rate occurs. Interest shall be computed and payable as
set forth in the Notes. Any payment made by or on account of Debtor, shall be
applied first to the payment of accrued interest and expenses of Secured Party
relating to Facility A and/or Facility B, as Secured Party shall determine, and
the balance on account of the unpaid principal relating to Facility A and/or
Facility B, as Secured Party shall determine. The
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applicable interest rate with respect to Revolving Loans advanced under Facility
B shall increase by four (4%) percentage points per annum over the otherwise
applicable rate if Debtor fails to pay the Revolving Loans advanced under
Facility B upon the occurrence of an Event of Default and the applicable
interest rate with respect to Revolving Loans advanced under Facility A shall
increase by four (4%) percentage points per annum over the otherwise applicable
rate if Debtor fails to pay the Revolving Loans advanced under Facility A as
provided in Section 14 hereof (the rate payable in either such cases, the
"Default Rate"). As used herein, "Base Rate" shall mean the rate of interest
announced from time to time by The First National Bank of Boston at its head
office at 100 Federal Street, Boston, Massachusetts, as its Base Rate, which
rate may not be said bank's best or lowest rate. Interest shall be charged on
the daily principal balance of the Revolving Loans from time to time outstanding
on the basis of the actual number of days elapsed based on a 360 day year;
(c) Procedure. In the event Debtor desires a Revolving Loan
under Facility A or Facility B, it may request the same either by delivering to
Secured Party a Request for Advance and Borrowing Base Certificate (hereinafter
a "Request for Advance"), in the form of Exhibit B annexed hereto, with
appropriate insertions of dates and amounts, or by telephonic notice to Secured
Party, upon which telephonic notice Secured Party shall be entitled to rely,
Debtor agreeing to indemnify Secured Party, if it shall have so relied in good
faith to its detriment, for its losses and expenses, if any, arising from such
reliance. Each such request for a Revolving Loan made by telephonic notice shall
be evidenced by Debtor delivering to Secured Party, not later than two (2)
calendar days after such request, a Request for Advance (which Request for
Advance may be sent by facsimile). If Debtor fails to pay to Secured Party any
amount due hereunder or under any of the other Loan Documents, Secured Party
may, in its sole discretion, advance such amount to Debtor on account of the
Revolving Loans (to the extent of the availability thereof) and with the
proceeds thereof, pay such amount. The Revolving Loans shall be made by Secured
Party depositing the proceeds thereof in Debtor's demand deposit account
maintained by it with Secured Party not later than the business day following
the date on which Debtor requests the same;
(d) Debtor's Account. The Revolving Loans advanced under
Facility A and Facility B by Secured Party to Debtor pursuant to this Paragraph
1 shall be recorded in appropriate accounts on the books of Secured Party
bearing Debtor's name (hereinafter called "Debtor's Accounts"). There shall also
be recorded in Debtor's Accounts all payments made by Debtor on the Revolving
Loans, proceeds of the Collateral received by Secured Party which are applied by
Secured Party to the Revolving Loans, interest and expenses and other
appropriate debits and credits as herein provided. Secured Party shall from time
to time render and send to Debtor a statement of Debtor's Accounts showing the
outstanding aggregate principal balance of the Revolving Loans, together with
interest and other appropriate debits and credits as of the date of the
statement. The statement of Debtor's Accounts shall be considered correct in all
respects and
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accepted by and be conclusively binding upon Debtor unless Debtor
makes specific written objections thereto within fifteen (15) days after the
date the statement of Debtor's Accounts is sent;
(e) Mandatory Payments. In the event that the aggregate
principal amount of the Revolving Loans outstanding under Facility A at any one
time exceeds the Maximum Amount of Facility A, Debtor shall immediately pay to
Secured Party an amount equal to or otherwise eliminate such excess unless
Secured Party waives such payment in writing. In the event that the aggregate
principal amount of the Revolving Loans outstanding under Facility B at any one
time exceeds the Maximum Amount of Facility B, Debtor shall immediately pay to
Secured Party an amount equal to or otherwise eliminate such excess unless
Secured Party waives such payment in writing.
(f) Late Charges. Without prejudice to any other rights of
Secured Party hereunder or under any of the other Loan Documents, Debtor shall
pay to Secured Party a late charge equal to five percent (5%) of any payment of
principal, interest or other payment due on the Revolving Loans which is not
paid within ten (10) days of the due date thereof. Such late charge shall be
made on a monthly basis and for each month such payment is delinquent.
(g) Commitment Fee. In connection with the establishment and
maintenance of Facility A and Facility B, within fifteen (15) days following the
end of each calendar quarter, Debtor shall pay to Secured Party an annual
commitment fee, payable quarterly, equal to three quarters of one percent (.75%)
of the average unused portion of Facility A and Facility B for each such
quarter, determined as of the date of each such calendar quarter end. To the
extent that the initial and final quarter hereunder is less than a full calendar
quarter, the commitment fee payable for such quarter or quarters shall be
prorated. The commitment fee will be charged automatically to the Loan Account.
(h) Termination. Unless sooner terminated by Secured Party
as provided in Section 14, the Revolving Loans under Facility A and Facility B
shall expire on January 10, 1998 (the "Initial Term") or if extended as
hereinafter provided on the last day of the then Renewal Term. Upon Debtor's
written request of Secured Party to extend the Revolving Loans under Facility A
and/or Facility B which request must be received by Secured Party not later than
sixty (60) days prior to the expiration date of the Initial Term or the then
Renewal Term, as the case may be, Secured Party may, in its sole discretion,
extend the Revolving Loans under Facility A and/or Facility B for one or more
successive one (1) year periods on the terms and conditions contained herein
(each, a "Renewal Term") upon giving Debtor written notice of its intention to
so extend not less than thirty (30) days prior to the expiration of the Initial
Term, or any Renewal Term, as the case may be. In the event of expiration of
Facility A and/or B, as provided herein, or any termination pursuant to Section
14, all of the rights, interests and remedies of Secured Party, and obligations
of Debtor, shall survive, but Debtor shall have no right to receive, and Secured
Party shall have no obligation to make, any further advances under
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Facility A or Facility B and the then outstanding principal amount of the
Revolving Loans under Facility A and Facility B shall be due and payable in its
entirety without notice or demand of any kind.
(i) Definitions. As used herein, the following terms shall
have the following meanings: (i) "Maximum Amount of Facility A" shall mean the
lesser of the amount of (A) One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) and (B) 100% of the value of Cash Collateral.
(ii) "Cash Collateral" shall mean the collected funds of
bank account #56062364 specifically pledged by Harold S. Geneen to Secured Party
pursuant to a Pledge Agreement dated as of May 31, 1996 as security for his
Guaranty Agreement. The pledge of Harold S. Geneen shall be evidenced by a
pledge agreement substantially in the form of Exhibit D attached hereto (the
"Pledge Agreement").
(iii) "Maximum Amount of Facility B" shall mean the lesser
of the amount of (A) Two Hundred Fifty Thousand Dollars ($250,000) and (B) 80%
of the from time to time Eligible Accounts.
(iv) "Eligible Accounts" shall mean all Accounts of Borrower
which are from time to time determined by Secured Party, in the exercise of its
reasonable judgment, to be eligible in accordance with the following criteria in
computing the Maximum Amount of Facility B. An Account shall be determined to be
an Eligible Account if:
(i) Such Account is not subject to (x)
offsets, contraclaims, counterclaims, deductions, or discounts of any nature
whatsoever or (y) disputes which in each instance are or may be claimed under
the terms of any agreement or otherwise, by the account debtor with respect
thereto;
(ii) Such Account represents bona fide
indebtedness to Borrower of an account debtor (who is not an Affiliate of
Borrower) which is incorporated, qualified to do business or resides in any
state of the United States of America, or the District of Columbia, for
Inventory sold and shipped or leased by Borrower or for services rendered by
Borrower to or for such account debtor in a jurisdiction in which Borrower is
qualified to do business or, if it is not qualified to do business in such
jurisdiction, such sale or lease, rendering of services or other activities of
Borrower therein would not subject Borrower to qualify to do business therein;
(iii) The assignment of such Account will not
violate the purchase orders or contracts which gave rise thereto, and Secured
Party's security interest therein is perfected under applicable law,
(iv) Borrower is the lawful owner and has a
good right to pledge, sell, assign, transfer and to grant a security interest in
such Account;
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(v) Such Account has not been pledged, sold,
assigned, transferred or encumbered to any Person other than Secured Party;
(vi) The Inventory sold or leased to the
account debtor or the services rendered to the account debtor or account debtors
which gave rise to such Account has actually been shipped and/or conforms to the
contract to the extent the same has not been rejected;
(vii) Such Account is owing by an account
debtor who, since the date of billing such Account, has not died, dissolved,
terminated its existence, become insolvent (which term shall include either a
negative tangible net worth or an inability to pay his or its debts as they
mature), suffered a business failure, been subjected either voluntarily or
involuntarily to the appointment of a receiver of any part of his or its
property, made an assignment for the benefit of his or its creditors, requested
creditors to standby, or has not filed or had filed against him or it a petition
in bankruptcy or any other proceeding under any bankruptcy or insolvency laws.
Lender shall be entitled to rely on credit reports issued by recognized
reporting services, financial information available to it and/or other
information generally available to Lender for the purpose of making the
determinations required in this subsection (vii); and
(viii) Such Account has not been outstanding
for a period in excess of Sixty (60) days beyond the invoice date of the
Account.
Notwithstanding the provisions of (i) through (viii) of this
subparagraph (i) to the contrary, if an account debtor owes Accounts to Debtor,
some of which are Eligible Accounts and 25% or more of which are not Eligible
Accounts because of the foregoing provisions of this subparagraph (i), Secured
Party may classify all such Accounts owed by such account debtor as not being
Eligible Accounts.
In the event of any dispute as to whether or not any
Accounts are Eligible Accounts after applying the foregoing criteria, the
reasonable determination of Secured Party shall at all times control. An Account
which at any time is not an Eligible Account but which subsequently meets all of
the foregoing requirements shall forthwith become and Eligible Account.
2. COLLECTION OF ACCOUNTS. At any time after the occurrence of
an Event of Default or a state of facts which would constitute an Event of
Default but for the passage of time, the giving of notice, or both, and during
the continuance of such state of facts or Event of Default Secured Party shall
have the right to require Debtor to and Debtor shall, upon written notice from
Secured Party:
(a) Make collections of proceeds upon its Accounts, hold the
proceeds received from collections in trust for Secured Party and turn over such
proceeds to Secured Party daily in the exact form in which they are received,
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together with a collection report in form satisfactory to Secured Party. Secured
Party shall immediately apply, subject to collection, such proceeds and any
proceeds of Accounts received by it pursuant to the following provisions of this
Paragraph 2 to the payment of the Obligations in such order of application as
Secured Party, in its sole discretion, may determine;
(b) Assign or endorse the Accounts to Secured Party, and
notify account debtors that the Accounts have been assigned and should be paid
directly to Secured Party;
(c) Turn over to Secured Party all Inventory returned in
connection with any of the Accounts;
(d) Mark or stamp each of its individual ledger sheets or
cards pertaining to its Accounts with the legend "Assigned to Bank of Boston
Connecticut" and stamp or otherwise mark and keep its books, records, documents
and instruments relating to the Accounts in such manner as Secured Party may
require; and
(e) Mark or stamp all invoices with a legend satisfactory to
Secured Party so as to indicate that the same should be paid directly to Secured
Party.
Notwithstanding the foregoing, Secured Party shall have the right,
at any time after the occurrence of an Event of Default or a state of facts
which but for the passage of time, the giving of notice, or both, would
constitute an Event of Default, and during the continuance of such state of
facts or Event of Default to itself so notify such account debtors to make such
payments of the Accounts directly to Secured Party and Secured Party shall have
the further right to notify the post office authorities to change the address
for delivery of mail of Debtor to an address designated by Secured Party and to
receive, open and dispose of all mail addressed to Debtor.
For the purpose of this Paragraph 2, Debtor hereby irrevocably
constitutes Secured Party as Debtor's attorney-in-fact to issue in the name and
execute or endorse on behalf of Debtor each and every notice, instrument and
document necessary to carry out the purposes of the provisions of this Paragraph
2, and to take such action in connection with the collection of the Accounts,
including, without limitation, suing thereon, compromising or adjusting the
same, as Secured Party, in its sole discretion, deems necessary. The power of
attorney granted hereby shall be self-executing, but Debtor shall promptly
execute and deliver to Secured Party, upon written request of Secured Party,
such additional separate powers of attorney, as Secured Party may from time to
time reasonably request.
3. SECURITY INTEREST. To secure payment and performance of each
and all of the Obligations, Debtor hereby assigns and grants to Secured Party a
continuing, (i) first priority security interest in all of its tangible and
intangible personal property whether now owned or hereafter acquired, including,
without limitation, Accounts, Chattel Paper, Equipment, General Intangibles
(excluding Patents and Trademarks), Instruments, Fixtures and Inventory and (ii)
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a security interest in Patents and Trademarks subject only to the lien
previously granted in such Patents and Trademarks to Connecticut Innovations,
Inc.; together, in each instance, with the renewals, substitutions,
replacements, additions, rental payments, products and proceeds (including,
without limitation, insurance proceeds) thereof, (hereinafter, all of the
property described in (i) and (ii) above collectively called the "Collateral").
4. GUARANTORS. All of Debtor's Obligations to Secured Party
under Facility A shall be unconditionally guaranteed on a limited basis by
Harold S. Geneen, whose guarantee (the "Guaranty Agreement") shall be evidenced
by a guaranty agreement in the form of Exhibit E attached hereto. The guarantee
of Harold S. Geneen shall be secured by a pledge of the Cash Collateral, as
hereinabove defined, pursuant to the Pledge Agreement.
5. DEFINITIONS.
(a) The term "Accounts" shall mean, any right to payment
held by Debtor, whether in the form of accounts receivable, notes, drafts,
acceptances or other forms of obligations and receivables now or hereafter
received by or belonging to Debtor for Inventory sold or leased by it or for
services rendered by it whether or not earned by performance, together with all
guarantees and security therefor and all proceeds thereof, whether cash proceeds
or otherwise, including, without limitation, all right, title and interest of
Debtor in the Inventory which gave rise to any such Accounts, including, without
limitation, the right of stoppage in transit and all returned, rejected,
rerouted or repossessed Inventory;
(b) The term "Chattel Paper" shall mean a writing or
writings which evidence both a monetary obligation and a security interest in or
a lease of specific goods, whether now or hereafter held by Debtor;
(c) The term "Equipment" shall mean all the machinery,
equipment, furniture, tools, goods and other tangible personal property,
excluding Motor Vehicles and Inventory, now owned or hereafter acquired by
Debtor;
(d) The term "Financing Agreements" shall mean all
agreements, notes, instruments, mortgages, security agreements and documents
evidencing, securing or relating in any way to Facility A and/or Facility B and
any guaranties, pledges and other documents executed by any guarantor of the
Revolving Loans to Secured Party relating to Facility A and/or Facility B;
(e) The term "General Intangibles" shall mean any intangible
personal property (including, without limitation, things in action) now or
hereafter held by Debtor, other than Accounts, Chattel Paper and Instruments;
(f) The term "Instruments" shall mean a negotiable
instrument or a certificated security, as defined in the Uniform Commercial Code
of Connecticut, or any other writing which evidences a right to the payment of
money and
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is not itself a security agreement or lease and is of a type which, in
the ordinary course of business, is transferred by delivery with any necessary
endorsement or assignment, whether now or hereafter held by Debtor;
(g) The term "Inventory" shall mean all goods, merchandise,
raw materials, work in process, finished goods and products and other tangible
personal property now owned or hereafter acquired by Debtor and held for sale or
lease, or furnished or to be furnished under contracts of service or used or
consumed in Debtor's business;
(h) The term "Loan Account" shall mean the account on the
books of Secured Party in which will be recorded loans and advances made by
Secured Party to Debtor pursuant to this Agreement, payments made on such loans
and advances, and other debits and credits as provided by this Agreement.
(i) The term "Motor Vehicles" shall have the same meaning as
that contained in Chapter 246 of the Connecticut General Statutes;
(j) The term "Obligations" shall mean any and all loans,
overdrafts, indebtedness, obligations and liabilities of Debtor to Secured Party
of every kind and description, direct or indirect, absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising,
under this Agreement and either of the Notes and all overdrafts with respect to
this Agreement, and all costs, expenses, fees, charges and attorneys' and other
professional fees incurred by Secured Party in connection with any of the
foregoing, or in any way connected with or related to the preservation,
realization, enforcement, protection or defense of the Collateral, this
Agreement, the Notes, and the other Financing Agreements, and the rights and
remedies hereunder or thereunder.
(k) The term "Patents" shall mean all interests in patents
now owned or hereafter acquired by Debtor.
(l) The term "Trademarks" shall mean all interests in
trademarks now owned or hereafter acquired by Debtor.
6. CONDITIONS PRECEDENT TO ALL BORROWINGS. At the time of each
borrowing hereunder:
(a) The representations and warranties set forth in each of
the Financing Agreements shall be true and correct on and as of such time to the
same effect as though such representations and warranties had been made on and
as of such time;
(b) Debtor shall be in compliance with all the terms and
provisions set forth in the Financing Agreements and no Event of Default or
state of facts which by the passage of time, giving of notice, or both, would
constitute an Event of Default, shall be in existence at such time;
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(c) There shall have been no material adverse change in
Debtor's condition (financial, operating or otherwise) since the date hereof;
and
(d) Debtor shall have actually made a request for such
borrowing by telephonic notice as provided in Paragraph 1 of this Agreement or
shall have actually delivered to Secured Party a Request for Advance. Any such
request for a Revolving Loan shall constitute an affirmation by Debtor as to the
matters set forth in (a), (b) and (c) above.
7. REPRESENTATIONS AND WARRANTIES. Debtor represents and
warrants to Secured Party that:
(a) Financial Statements. The unaudited financial statements
of Debtor, as of December 31, 1995, and as of March 31, 1996, previously
furnished to Secured Party, present fairly in all material respects the
financial position at such date and the results of operations of Debtor as of
and for the periods then ending, in conformity with generally accepted
accounting principles, there has been no material adverse change in the
financial condition of Debtor since the date thereof, and there are no
liabilities, fixed or contingent, not disclosed in such statements, except as
incurred in the ordinary course of business since the date thereof.
(b) Ownership of Assets. Debtor has good and marketable
title to its assets, free from any liens, mortgages, security interests, pledges
or encumbrances, except: (i) as permitted in Section 11(a) hereof, and (ii) as
shown on Exhibit C attached hereto. Except as shown on Exhibit C, no financing
statements covering all or any part of Debtor's assets are on file in the office
of the Secretary of the State of Connecticut or in any other federal, state or
local governmental office, whether or not properly filed under applicable law.
(c) Corporate Organization. Debtor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut, and is duly qualified as a foreign corporation in good standing in
every jurisdiction in which such qualification is necessary. Debtor has
corporate power to enter into the Financing Agreements to which it is a party
and to borrow hereunder, and has all requisite authorizations and permits to own
and operate Debtor's properties and assets and to carry on Debtor's business as
now being conducted.
(d) Litigation; Taxes. There are no actions, suits,
proceedings, or investigations pending, or judgments or orders outstanding, or,
to the knowledge of Debtor, threatened against Debtor, which if adversely
decided against Debtor, could have a material adverse effect on the condition,
operations or prospects (financial or otherwise) of Debtor, and Debtor has filed
all required federal, state and local tax returns, and has paid all taxes as
shown on such returns, and has provided adequate reserves for payment of any tax
which is being contested.
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(e) Authority. The execution, delivery and performance of
this Agreement, the Notes, and each and every other agreement, instrument and
document required to be executed or delivered to Secured Party by Debtor in
connection with the Revolving Loans have been duly authorized by all necessary
corporate action; the execution, delivery and performance of said agreements,
instruments and documents, the consummation of the transactions therein
contemplated, and the fulfillment of or compliance with the terms and provisions
therein, are within Debtor's powers and are not in contravention of any
provisions of Debtor's Certificate of Incorporation or By-Laws. The execution,
delivery and performance of said agreements, instruments and documents will not
result in a violation of any laws, or a breach of, or constitute a default
under, or result in the creation of any lien, charge or encumbrance upon any of
Debtor's assets (other than the security interest granted to Secured Party
hereunder) pursuant to any of the terms, conditions or provisions of any
agreement, instrument or other undertaking to which Debtor is a party or by
which Debtor is bound. No consent, approval, authorization or other order of, or
registration or filing with any governmental body is required in connection with
the execution, delivery and performance of said agreements, instruments and
documents.
(f) Defaults. Debtor is not in default under any agreement,
indenture, mortgage, deed of trust, or any other agreement or any court order or
other order issued by any governmental body to which Debtor is a party or by
which Debtor may be bound.
(g) Environmental, Health, Safety Laws. Debtor has not
received any notice, order, petition or similar document in connection with or
arising out of any violation of any environmental, health or safety law,
regulation, rule or order, and Debtor knows of no basis for any claim of such a
violation or of any threat thereof.
(h) Other Laws. Debtor is not in violation of any law,
regulation, rule or order including, but not limited to, the laws, regulations,
rules and orders described in subparagraph (g) above, which violation materially
and adversely affects the financial condition of Debtor or the ability of Debtor
to perform hereunder.
(i) Business Location. The Collateral, the books and records
relating thereto, and the principal place of business of Debtor are all at the
address of Debtor first written above.
(j) Business Name. The name of Debtor has not changed for at
least the past ten (10) years and during such period, Debtor has conducted, and
currently conducts, its business solely in its own name without the use of a
tradename or the intervention of or through any entity of any kind, except as
shown on Exhibit C.
10. AFFIRMATIVE COVENANTS. Debtor covenants and agrees that,
from the date hereof until the termination of Secured Party's obligation to make
and payment in full of the Revolving Loans, and payment and performance of all
the Obligations, unless Secured Party otherwise agrees in writing, Debtor shall:
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(a) Financial Reports. Furnish to Secured Party:
(i) Within thirty (30) days after the end of each
month which does not constitute the end of a fiscal quarter of Debtor, and
within forty-five (45) days after the end of each month which does constitute
the end of a fiscal quarter of Debtor its unaudited balance sheet as of the end
of such month and statements of income and changes in equity for that month and
the portion of the fiscal year to date then ended, which shall be prepared in
conformity with generally accepted accounting principles, and certified by the
Chief Financial Officer of Debtor, as presenting fairly in all material respects
the financial position of Debtor as at the date of the period then ended and the
results of operations of Debtor as of and for the periods then ending, together
with a statement that no Event of Default then exists under this Agreement or
either of the Notes.
(ii) Within ninety (90) days after the end of each
fiscal year of Debtor, its financial statements, including Debtor's balance
sheet as of the end of such fiscal year, statement of income, statements of
changes in equity, and statement of cash flows for the year then ended, which
shall be prepared in accordance with generally accepted accounting principles.
Each such financial statement shall be reviewed by an independent certified
public accountant satisfactory to Secured Party. Such financial statements shall
be accompanied by a report in accordance with the Statement on Standards for
Accounting and Review Services, issued by the Accounting and Review Services
Committee, as the same may be from time to time amended or supplemented.
(iii) Promptly upon Secured Party's written request,
such other information about the financial condition, operations, and business
of Debtor, or any guarantor of any of the Obligations, as Secured Party may,
from time to time, request.
(b) Taxes and Other Liens. File all required federal, state
and local tax returns and pay when due all taxes, assessments and other charges
of every nature which may be levied or assessed against Debtor or its assets,
including without limitation, claims for labor, supplies and rent, except those
liabilities being contested in good faith and for which Debtor maintains
reserves in amount and form satisfactory to Secured Party.
(c) Casualty Insurance. Keep its properties insured against
fire and other hazards (so-called "All Risk" coverage) in amounts and with
insurers satisfactory to Secured Party, which insurance shall by the terms of
the policy be payable to Secured Party as its interest may appear pursuant to a
loss payee/mortgagee clause satisfactory to Secured Party. Secured Party shall
have the right to apply the proceeds of any such insurance in reduction of the
Obligations, whether or not then due and payable, in such manner as Secured
Party in its sole discretion may determine. Without limiting the generality of
the foregoing, such insurance must provide that it may not be canceled without
30 days
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prior written notice to Secured Party. If Debtor fails to maintain the
foregoing insurance, Secured Party may, at its option, obtain such policies as
it deems necessary and charge the amount thereof, together with interest at the
Default Rate, to the Loan Account. Debtor hereby appoints Secured Party its
attorney-in-fact, coupled with an interest, to settle, adjust and compromise any
insurance losses, to collect and receive payments of insurance, and to endorse
Debtor's name on all documents, checks and drafts in connection therewith.
(d) Maintain Collateral. Maintain and preserve the
Collateral in good repair, working order and condition, and make all needed and
proper repairs, renewals, replacements, additions or improvements thereto, and
immediately notify Secured Party of any event causing material loss or
depreciation in the value of the Collateral and the amount of such loss or
depreciation.
(e) Inspection. Allow Secured Party by or through any of its
officers, agents, attorneys, or accountants designated by it, to enter the
offices and plants of Debtor to examine, inspect and make copies of the books
and records of Debtor and to inspect the Collateral, all at such times and as
often as Secured Party may reasonably request.
(f) Liability Insurance. Maintain general public liability
insurance against claims for personal injury, death or property damage in forms,
amounts, and with companies satisfactory to Secured Party, and workmen's
compensation insurance, employment or similar insurance, as required by
applicable law.
(g) Defend Collateral. Defend the Collateral against all
liens, claims and demands of all persons, and allow Secured Party, at the
expense of Debtor, to contest or defend any such liens, claims and demands in
Debtor's name. Cause the security interest of Secured Party to be properly noted
on all certificates of title issued or outstanding with respect to any of the
Collateral and deposit same with Secured Party.
(h) Financing Statements. From time to time, at the request
of Secured Party, (i) execute, deliver and file one or more financing
statements, assignments, and other agreements, instruments or documents, and
amendments and renewals thereof, and do all other acts as Secured Party deems
necessary or desirable (x) to create and maintain a valid and enforceable first
priority security interest in the Collateral other than Patents and Trademarks
and (y) to create and maintain a valid and enforceable security interest in
Patents and Trademarks subject only to the lien currently granted to Connecticut
Innovations, Inc., and (ii) pay, upon demand, Secured Party's costs, charges and
expenses, including without limitation, attorneys' fees incurred by Secured
Party in connection therewith.
(i) Books and Records. Maintain complete and accurate books
and records relating to its financial affairs at all times in accordance with
generally accepted accounting principles, the Collateral, the Obligations, and
Debtor's covenants hereunder.
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(j) Compliance with Laws. Comply in all material respects
with all laws, orders, rules and regulations applicable to Debtor of any
governmental body or agency, including without limitation, environmental and
health and safety laws, orders, rules and regulations.
(k) Notification of Default. Give prompt written notice to
Secured Party upon the occurrence of an Event of Default, or of any state of
facts which would constitute an Event of Default hereunder or, which, but for
the giving of notice or passage of time, or both, would constitute an Event of
Default.
(l) Notification of Litigation. Give prompt written notice
to Secured Party of the commencement or threat of litigation, including
arbitration proceedings, and any proceedings before any governmental agency, or
the occurrence of any other event, which, if decided adversely to Debtor, could
have an adverse effect upon the condition, operations or prospects (financial or
otherwise) of Debtor.
(m) ERISA; Labor Disputes. Give prompt written notice to
Secured Party of: (i) any event which causes Debtor to become subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") and, upon becoming
subject thereto, comply in all respects with ERISA; and (ii) any labor dispute
or controversy resulting or likely to result in a strike or work stoppage
against Debtor.
(n) Use of Proceeds. Use the proceeds of the Revolving Loans
solely for the working capital needs of Debtor.
(o) Operating Account. Establish and maintain a demand
deposit account with Secured Party, into which Secured Party will deposit the
advances made by it on account of the Revolving Loans and which account Secured
Party may debit for amounts of principal, interest, fees, costs, and expenses
due and payable hereunder or under the Notes on each date any such amount is due
and payable.
(p) Receivables and Inventory Reports. Within ten (10)
business days after the close of every calendar month, submit to Secured Party
(i) an aged report of its accounts receivable and accounts payable, which
reports shall include the names and addresses of the account debtors and
vendors, respectively, and (ii) an inventory designation listing Debtor's
respective amounts of raw materials, work-in-progress and finished goods, all in
form and content satisfactory to Secured Party. Together with such reports,
Debtor shall submit to Secured Party a completed "Borrowing Base Certificate" in
the form of Exhibit B attached hereto.
(q) Notification of Accounts Receivable. Give prompt written
notice to Secured Party of each of the following events: (i) rejection, return,
repossession or material loss of, or damage to, any goods giving rise to any
account receivable of Debtor, (ii) any request by an obligor on accounts
receivable of Debtor for credit or adjustment of any such
26.
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receivable, (iii) any adjustment by Debtor of the amount owing on any such
receivable, (iv) any dispute in connection with any such receivable, and (v) any
other event affecting any such receivable or the value or amount thereof.
11. NEGATIVE COVENANTS. Debtor covenants and agrees that, from
the date hereof until the termination of Secured Party's obligation to make and
the payment in full of the Revolving Loans and payment and performance of all
the Obligations, unless Secured Party otherwise agrees in writing, Debtor shall
not:
(a) Encumbrances. Create or permit to exist any lien,
mortgage, encumbrance or security interest against any of its assets, whether
now owned or hereafter acquired, except for (i) security interests in favor of
Secured Party, (ii) liens for taxes not yet due and payable, (iii) pledges or
deposits in connection with or to secure worker's compensation, unemployment or
liability insurance, and (iv) liens listed in Exhibit C hereto.
(b) Dividends; Acquisition of Stock. Declare or pay any
dividends or authorize or make any other distribution on any shares of its
capital stock (other than dividends payable solely in Debtor's capital stock),
or purchase, acquire, redeem, or retire, or make any commitment to purchase,
acquire, redeem or retire, directly or indirectly, any of the capital stock of
Debtor, whether now or hereafter outstanding.
(c) Limitation on Indebtedness. Create or assume any
liability for borrowed money from any person or entity other than Secured Party.
(d) Contingent Liabilities. Endorse, guaranty, assume or
become liable, directly or indirectly, contingently or otherwise for the
obligations, indebtedness, or liabilities of others, except for the endorsement
of negotiable instruments in the ordinary course of business.
(e) Loans; Investments. Make any loans or advances to, or
investments in, or purchase or otherwise acquire any securities of, any
individual, firm, entity or corporation, except obligations of the United States
of America.
(f) Mergers; Disposal of Assets. Become a party to any
merger or consolidation, or acquire all or any material part of the assets or
stock of any corporation, partnership, person, or other entity, or sell, lease,
transfer, factor, finance or otherwise dispose of any of its assets, whether now
owned or hereafter acquired, except for inventory in the ordinary course of
business, or liquidate, dissolve or otherwise terminate or alter Debtor's
existence, form or method of conducting Debtor's business.
(g) Name; Collateral. Change Debtor's name, adopt any trade
names or conduct Debtor's business under any trade name or style other than as
shown on Exhibit C, or change Debtor's place of business or the present location
of the Collateral, or any records relating to the Collateral.
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(h) Margin Stock. Use any part of the proceeds of the
Revolving Loan, directly or indirectly, for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, or to extend credit to any entity or
person for the purpose of purchasing or carrying any such margin stock.
(i) Leases and Rentals. Make any expenditures for any leases
of real or personal property, including, without limitation, capitalized or
operating leases, in excess of the sum of (A) amounts now expended for such
leases and (B) $100,000;
(j) Operating Losses; Profits. Incur Operating Losses in
excess of (or Operating Profits less than, as the case may be) the following:
For the
Three Month
Period Ending Operating Losses/Profits
------------- ------------------------
12/31/95 $450,000 Operating Loss
3/31/96 $250,000 Operating Loss
6/30/96 $125,000 Operating Loss
9/30/96 $ 0 Break Even
12/31/96 $100,000 Operating Profit
3/31/97 $150,000 Operating Profit
6/30/97 $250,000 Operating Profit
9/30/97 $350,000 Operating Profit
Debtor shall, within forty-five (45) days after the end of each
such three month period, submit a written demonstration of compliance with this
subparagraph (j) to Secured Party, which written demonstration shall be in form
and substance similar to Exhibit F attached hereto and made a part hereof.
The determination of Debtor's Operating Losses and/or Operating
Profits shall be made in accordance with generally accepted accounting
principles.
12. CAPITAL ADEQUACY. If Secured Party shall have determined that
the adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having force of law) regarding capital requirements, or
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Secured Party with any of the foregoing
imposes or increases a requirement by Secured Party to allocate capital
resources to Secured Party's commitment to make loans hereunder which has or
would have the effect of reducing the return on Secured Party's capital to a
level below that which Secured Party could have achieved (taking into
consideration Secured Party's then existing policies with respect to capital
28.
17
adequacy and assuming full utilization of Secured Party's capital) but for such
adoption or compliance by any amount deemed by Secured Party to be material: (i)
Secured Party shall promptly after its determination of such occurrence give
notice thereof to Debtor; and (ii) Debtor shall pay to Secured Party as an
additional fee from time-to-time on demand such amount as Secured Party
certifies to be the amount that will compensate it for such reduction. A
certificate of Secured Party claiming compensation under this Section shall be
conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such compensation, the additional
amount or amounts to be paid to it hereunder and the method by which such
amounts were determined. In determining such amounts, Secured Party may use any
reasonable averaging and attribution methods.
13. PAYMENTS BY SECURED PARTY. At its option, but without any
liability for failing to do so, Secured Party may pay for insurance on the
Collateral and taxes, assessments or other charges which Debtor fails to pay in
accordance with the provisions hereof, or of the other Financing Agreements, and
may discharge any security interest in or lien upon the Collateral. No such
payment or discharge of any such security interest or lien shall be deemed to
constitute a waiver by Secured Party of the violation of any covenant hereunder
by Debtor as a result of Debtor's failure to make any such payment or Debtor's
suffering of any such security interest or lien. Any payment made, or expense
incurred by Secured Party, pursuant to this or any other Section of this
Agreement shall be added to and become a part of the Obligations, shall bear
interest at the Default Rate under Facility B, and shall be charged to the Loan
Account.
14. EVENTS OF DEFAULT. Secured Party shall have the right at its
option to terminate the Revolving Loans and/or to declare any or all of the
Obligations to be immediately due and payable without demand or notice (except
as otherwise required by this Section 14) upon the occurrence of any one of the
following events (each being an "Event of Default"):
(a) The failure by Debtor to pay any of the Obligations when
due;
(b) The failure by Debtor or any such guarantor to observe,
perform or comply with any condition or covenant in this Agreement or any of the
other Financing Agreements; provided, however, that Debtor shall have an
opportunity to cure any such failure for a period of fifteen (15) days after
such failure provided such failure (i) does not constitute a failure of payment
pursuant to Paragraph 14(a) above, (ii) does not constitute a failure to comply
with Paragraph 11(j) above, and (iii) does not, in Secured Party's sole
judgment, impair Debtor's ability to pay any of the Obligations when due or
impair the value of any collateral securing any of the Obligations.
(c) The existence of an event of default under any of the
other Financing Agreements which continues beyond any applicable grace period;
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(d) If any representation or warranty made by Debtor or any
such guarantor in this Agreement or in any of the other Financing Agreements, or
any statement, certificate or other data furnished by Debtor or such guarantor
in connection with any of the Obligations proves to be incorrect or untrue in
any material respect when made;
(e) The entry of a judgment for the payment of money against
Debtor, which remains unsatisfied and in effect for any period of thirty (30)
consecutive days without a stay of execution, or appeal;
(f) The insolvency of Debtor or any such guarantor (the term
"insolvency" shall mean either a negative tangible net worth or an inability to
pay Debtor's or such guarantor's debts as they mature);
(g) The filing by or against Debtor or Harold S. Geneen of
any petition seeking an arrangement, reorganization or the like, the
commencement of any proceedings under any bankruptcy or insolvency law by or
against either of them, the adjudication of any of them as a bankrupt, the
appointment of a receiver for all or any part of their respective assets, or the
making of an assignment for the benefit of creditors, or the calling of a
meeting of creditors, or the appointment of a committee of creditors or
liquidating agents, by, for, or of either of them, and in the case of any of the
foregoing actions which are involuntary, if such actions are not withdrawn,
dismissed, discharged or removed, as the case may be, within thirty (30) days
after the commencement thereof;
(h) The death, dissolution, liquidation, insolvency, or
termination of legal existence of Debtor or Harold S. Geneen or merger or
consolidation of Debtor with or into any other person or entity;
(i) The failure by Debtor or Harold S. Geneen to pay when
due any other indebtedness or obligations owed to others for borrowed money, or
if any such other indebtedness or obligation shall be accelerated; or
(j) The failure of Harold S. Geneen to maintain Cash
Collateral pledged to the Secured Party in an amount equal to the outstanding
balance of the Facility A Note.
Notwithstanding the foregoing, despite the Secured Party's right to
declare the Revolving Loans under Facility A to be immediately due and payable
upon and during the continuance of an Event of Default hereunder and to exercise
its remedies against the Collateral as defined in Section 3 hereof to reduce the
amount outstanding under Facility A, the Secured Party acknowledges and agrees
that until January 9, 1998 it shall not be entitled to take any action against
the Cash Collateral or to impose a Default Rate with respect to the Obligations
of the Debtor under Facility A unless the Debtor shall fail to pay any
installment of interest when due under Facility A which failure to pay shall
continue for a period of five (5) days after written notice to Debtor and Harold
S. Geneen that the same has not been paid and is owing. The Secured Party agrees
that (i) unless the Secured Party shall become entitled to take action against
the Cash Collateral as provided above, interest on the outstanding balance of
Revolving Loans under Facility A shall continue to be due on a
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19
monthly basis as otherwise provided herein and (ii) any payment of such interest
by Harold S. Geneen or any other party at his direction shall be accepted and
applied by Secured Party as if paid by the Debtor.
15. REMEDIES OF SECURED PARTY; NOTICES. When the Obligations, or
any of them, become immediately due and payable, whether by reason of passage of
time, acceleration or otherwise, Secured Party may, in addition to and not in
limitation of Secured Party's rights set forth in Paragraph 2 of this Agreement,
pursue any legal remedy available to it to collect the Obligations outstanding
at said time, to enforce its rights under the Financing Agreements, and to
enforce any and all other rights or remedies available to it both under the
Uniform Commercial Code of Connecticut (the "Code") and otherwise, including,
without limitation, the right to take possession of the Collateral and dispose
of the same on Debtor's premises, all without judicial process, Debtor hereby
waiving any right Debtor might otherwise have to require Secured Party to resort
to judicial process and further waiving Debtor's right to notice and hearing
under the Constitution of the United States or any state or under any Federal or
state law, and no such action shall operate as a waiver of any other right or
remedy of Secured Party under the terms of any of the Financing Agreements, or
the law, all rights and remedies of Secured Party being cumulative and not
alternative. In addition, Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties.
The net cash proceeds resulting from the collection, liquidation,
sale, lease or other disposition of the Collateral shall be applied first to the
expenses (including, without limitation, all reasonable attorneys' fees) of
retaking, holding, storing, processing and preparing for sale, selling,
collecting, liquidating and the like, and then to the satisfaction of all
Obligations, application as to particular Obligations or against principal or
interest to be in Secured Party's sole discretion. Any notice which Secured
Party is required to give Debtor under the Code shall be deemed to constitute
reasonable notice if such notice is mailed, postage prepaid, return receipt
requested, at least seven (7) days prior to such action. Debtor shall be liable
to Secured Party and shall pay to Secured Party on demand any deficiency which
may remain after such sale, lease, disposition, collection or liquidation of the
Collateral. Debtor agrees that the powers granted hereunder, being coupled with
an interest, shall be irrevocable so long as any of the Obligations remain
outstanding.
16. SET-OFF. Debtor hereby grants to Secured Party a lien and
right of set-off for all Obligations upon or against all moneys, deposits,
property, collateral and securities and the proceeds thereof, now or hereafter
held or received by, or in transit to, Secured Party from or for Debtor, whether
for safekeeping, pledge, custody, transmission, collection or otherwise. Secured
Party may at any time apply the same, or any part thereof, to the Obligations,
or any part thereof, whether or not matured or demanded at the time of such
application.
31.
20
17. RIGHTS OF SECURED PARTY. With respect both to the
Obligations and the Collateral, Debtor hereby consents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of the Collateral, to the addition or release
of any party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting of any
claims thereof, all in such manner and at such time or times as Secured Party
may deem advisable. Secured Party shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of any rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof. Secured Party may exercise
its rights with respect to the Collateral without resorting or regard to other
collateral or sources of reimbursement for the Obligations. Secured Party shall
not be deemed to have waived any of its rights under the Financing Agreements or
upon or under the Obligations or the Collateral unless such waiver is in writing
and signed by Secured Party. No delay or omission on the part of Secured Party
in exercising any right shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not be construed as a bar to or waiver
of any right on any future occasion. Secured Party may revoke any permission or
waiver previously granted to Debtor, and such revocation shall be effective
whether given orally or in writing. All rights and remedies of Secured Party
with respect to the Obligations or the Collateral, whether evidenced hereby or
by any other document, shall be cumulative and may be exercised singularly or
concurrently.
18. GENERAL PROVISIONS.
(a) Expenses. Debtor will pay on demand all expenses of
Secured Party arising out of this transaction or in connection with the
negotiation, preparation, administration, collection, defense, protection,
preservation or enforcement of, or realization on, this Agreement, the other
Financing Agreements, the Obligations, or any of the Collateral, or any waiver,
modification or amendment of any provision of any of the foregoing, including,
without limitation, reasonable attorneys' fees of outside counsel, and other
professionals' reasonable fees, and the reasonable allocation costs of in-house
legal counsel, and including, without limitation, any fees or expenses
associated with any travel or other costs relating to any appraisals,
examinations, administration of this Agreement, the other Financing Agreements
or any of the Collateral, and the amounts of all such expenses shall, until
paid, be Obligations secured by the Collateral.
(b) Survival. This Agreement and the security interest
granted to Secured Party by Debtor and every representation, warranty, covenant
and other term contained herein shall survive until the termination of Secured
Party's obligations to make the Revolving Loans and the Obligations have been
paid in full.
32.
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(c) Notices. Any notice required to be given hereunder shall
be effective when delivered in person, or one (1) day after delivery to an
overnight mail or messenger service or three (3) days after being deposited in
the mails, first class, postage prepaid, registered or certified mail, return
receipt requested, to Debtor or Secured Party, as the case may be, at its
address set forth above and to Harold S. Geneen at 301 Park Avenue, Suite 1919,
New York, New York 10022 and at 2 East 67th Street, New York, New York 10021.
Any such notice to Debtor shall be sent to the attention of Fred W. Kolling,
Vice President of Debtor at Debtor's address set forth above and to the
attention of Elizabeth Cahill of Secured Party at Secured Party's address set
forth above. Either of the parties hereto or Harold S. Geneen may notify the
other that any such notice shall be given to such other address as such party
may so instruct by written notice similarly given.
(d) Entire Agreement. This Agreement is the entire agreement
between the parties hereto and cannot be amended or modified except by a writing
signed by Debtor and Secured Party.
(e) Governing Law. This Agreement and the other Financing
Agreements shall be construed in accordance with and governed by the laws of the
State of Connecticut. Debtor hereby consents to service of process, and to be
sued, in the State of Connecticut and consents to the jurisdiction of the courts
of the State of Connecticut and the United States District Court for the
District of Connecticut, for the purpose of any suit, action, or other
proceeding arising hereunder, and expressly waives any and all objections it may
have to venue in any such courts.
(f) Headings. Sections and subsection headings have been
inserted herein for convenience only and form no part of this Agreement and
shall not be deemed to affect the meaning or construction of any of the
covenants, agreements, conditions or terms hereof.
(g) Severability. If any term or provision of this Agreement
shall be invalid, illegal or unenforceable for any reason whatsoever, such term
or provision shall be severable from the remainder of this Agreement and the
validity, legality and enforceability of the remaining terms and provisions
shall not in any way be affected or impaired thereby.
(h) Binding. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
provided, however, that Debtor may not assign its rights hereunder without prior
written consent of Secured Party in its sole discretion, and any such attempted
assignment without such consent shall be null and void.
(i) Interpretation. As used herein, plural or singular
include each other, and pronouns of any gender are to be construed as masculine,
feminine or neuter, as context requires.
19. PREJUDGMENT REMEDY WAIVER; WAIVERS. DEBTOR ACKNOWLEDGES THAT
THE REVOLVING LOAN EVIDENCED AND SECURED BY THIS AGREEMENT IS A COMMERCIAL
TRANSACTION AND
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WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT
GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH
RESPECT TO ANY PREJUDGMENT REMEDY WHICH SECURED PARTY MAY DESIRE TO USE, and
further waives diligence, demand, presentment for payment, notice of nonpayment,
protest and notice of protest, and notice of any renewals or extensions of the
Notes, or either of them, and all rights under any statute of limitations.
20. WAIVER OF JURY TRIAL. DEBTOR HEREBY WAIVES TRIAL BY JURY IN
ANY COURT AND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH
THIS AGREEMENT IS A PART AND/OR THE ENFORCEMENT OF ANY OF SECURED PARTY'S RIGHTS
AND REMEDIES. DEBTOR ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY,
VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS
WAIVER WITH ITS ATTORNEYS. NO PARTY TO THIS AGREEMENT HAS AGREED WITH OR
REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION WILL
NOT BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GUNTHER INTERNATIONAL, LTD.
By /s/ Frederick W. Kolling, III
----------------------------------------
Its: Vice President and
Chief Financial Officer
BANK OF BOSTON CONNECTICUT
By /s/ Dean T. Morgan
----------------------------------------
Its: Senior Vice President
GUARANTOR: (as defined)
Read and accepted as of the 31st day of May, 1996.
/s/ Harold S. Geneen
----------------------------------------
HAROLD S. GENEEN
34.
Bergman, Horowitz & Reynolds, P.C.
23
EXHIBIT A-1
REVOLVING LOAN NOTE
$1,750,000 May 31, 1996
New Haven, Connecticut
For value received, the undersigned, Gunther International, Ltd. (the
"Borrower") promises to pay to the order of BANK OF BOSTON CONNECTICUT (the
"Bank") at its office at 127 Church Street, New Haven, Connecticut 06510, or at
such other place as Bank may designate, the principal amount advanced hereunder,
and remaining unpaid, up to a maximum sum of ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS ($1,750,000), together with interest on the unpaid balance of
this Note at a per annum rate equal to the Base Rate on a floating basis,
beginning on the date hereof, before or after maturity or judgment, which
interest shall be computed monthly in arrears on the basis of a 360-day year and
actual days elapsed, together with all taxes levied or assessed on this Note or
the debt evidenced hereby against Bank, and together with all costs, expenses
and reasonable attorneys' fees incurred in the collection of this Note, or to
enforce or foreclose any mortgage, security agreement or other document
including, without limitation, the Agreement (as hereinafter defined), securing
or relating to this Note, or in protecting or defending the lien of said
mortgage, security agreement or other document, or in any litigation or matter
arising from or connected with said mortgage, security agreement, other
document, or this Note. The term "Base Rate" as used herein shall mean the rate
of interest announced from time to time by The First National Bank of Boston at
its head office at 100 Federal Street, Boston, Massachusetts, as its Base Rate,
which rate may not be said bank's best or lowest rate. Any change in the
interest rate because of a change in the Base Rate shall become effective
immediately, without notice or demand, on the date any change in the Base Rate
occurs.
The principal amount of this Note shall be advanced, upon the request of
Borrower, pursuant to a certain Revolving Loan and Security Agreement between
Borrower and Bank of this date (the "Agreement"). This Note is the Facility A
Note issued pursuant to the Agreement. The Agreement and all other instruments
either relating to or securing the indebtedness evidenced hereby are made a part
of this Note and deemed incorporated in full. Bank may, at its option, debit
principal, interest, fees, costs and expenses due and payable hereunder or under
the Agreement to any of Borrower's accounts maintained with Bank on each date
any such amount is due and payable.
35.
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Interest shall be paid on the first day of each month beginning July 1,
1996, and continuing on the first day of each month thereafter, until the
principal balance with accrued interest thereon is paid in full. Principal shall
be paid in full on January 10, 1998, subject to extension at the option of the
Bank pursuant to the Agreement. Bank may, at its option, debit principal,
interest, fees, costs and expenses due and payable hereunder or under the
Agreement to any of Borrower's accounts maintained with Bank on each date any
such amount is due and payable.
Upon the occurrence of an Event of Default under and as defined in the
Agreement, the entire indebtedness, with accrued interest thereon, due under
this Note, shall, at the option of Bank, become immediately due and payable
without demand or notice of any kind. Borrower agrees that the interest rate
shall increase to the Default Rate, as defined in the Agreement under certain
conditions specified in Section 1(b) of the Agreement.
If any amount due hereunder is not paid within the later of (i) ten (10)
days after the date it is due, or (ii) five (5) days after notice of such
failure to pay has been provided by Bank to Borrower and Harold S. Geneen,
without in any way affecting Bank's right to accelerate this Note, a late charge
equal to five percent (5%) of said amount shall be assessed against Borrower for
each month that said amount is late, and shall be immediately due and payable
without demand or further notice of any kind.
Borrower hereby grants to Bank a lien and right of setoff for all of
Borrower's liabilities to Bank upon and against all the deposits, credits,
collateral and property of Borrower, now or hereafter in the possession or
control of Bank or in transit to it. Bank may, at any time, apply or set off the
same, or any part thereof, to any liability of Borrower, whether or not matured
or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Bank under this Note shall not exceed the
highest or the maximum rate of interest permitted to be charged by Bank under
applicable laws. Any amounts paid by Borrower to Bank in excess of such rate
shall be deemed to be partial prepayments of principal hereunder.
No delay or omission by Bank in exercising any right hereunder, nor
failure by Bank to insist upon the strict performance of any terms herein, shall
operate as a waiver of such right, any other right hereunder, or any terms
herein. No waiver of any right shall be effective unless in writing and signed
by Bank, nor shall a waiver on one occasion be constituted as a bar to, or
waiver of, any such right on any future occasion.
36.
25
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE
ENFORCEMENT OF ANY OF BANK'S RIGHTS AND REMEDIES. BORROWER ACKNOWLEDGES THAT IT
MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION
OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. NO PARTY TO THIS NOTE
HAS AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH BANK MAY DESIRE TO
USE, and further waives diligence, demand, presentment for payment, notice of
nonpayment, protest and notice of protest, and notice of any renewals or
extensions of this Note, and all rights under any statute of limitations.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
GUNTHER INTERNATIONAL, LTD.
By______________________________
Bergman, Horowitz & Reynolds, P.C.
37.
26
EXHIBIT A-2
REVOLVING LOAN NOTE
$250,000 May 31, 1996
New Haven, Connecticut
For value received, the undersigned, Gunther International, Ltd. (the
"Borrower") promises to pay to the order of Bank of Boston Connecticut (the
"Bank") at its office at 127 Church Street, New Haven, Connecticut 06510, or at
such other place as Bank may designate, the principal amount advanced hereunder,
and remaining unpaid, up to a maximum sum of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000), together with interest on the unpaid balance of this Note at a per
annum rate of one (1%) percentage point above the Base Rate, on a floating
basis, beginning on the date hereof, before or after maturity or judgment, which
interest shall be computed monthly in arrears on the basis of a 360-day year and
actual days elapsed, together with all taxes levied or assessed on this Note or
the debt evidenced hereby against Bank, and together with all costs, expenses
and reasonable attorneys' fees incurred in the collection of this Note, or to
enforce or foreclose any mortgage, security agreement or other document
including, without limitation, the Agreement (as hereinafter defined), securing
or relating to this Note, or in protecting or defending the lien of said
mortgage, security agreement or other document, or in any litigation or matter
arising from or connected with said mortgage, security agreement, other
document, or this Note. The term "Base Rate" as used herein shall mean the rate
of interest announced from time to time by The First National Bank of Boston at
its head office at 100 Federal Street, Boston, Massachusetts, as its Base Rate,
which rate may not be said bank's best or lowest rate. Any change in the
interest rate because of a change in the Base Rate shall become effective
immediately, without notice or demand, on the date any change in the Base Rate
occurs.
38.
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The principal amount of this Note shall be advanced, upon the request of
Borrower, pursuant to a certain Revolving Loan and Security Agreement between
Borrower and Bank of this date (the "Agreement"). This Note is the Facility B
Note issued pursuant to the Agreement. The Agreement and all other instruments
either relating to or securing the indebtedness evidenced hereby are made a part
of this Note and deemed incorporated in full. Bank may, at its option, debit
principal, interest, fees, costs and expenses due and payable hereunder or under
the Agreement to any of Borrower's accounts maintained with Bank on each date
any such amount is due and payable.
Interest shall be paid on the first day of each month beginning July 1,
1996, and continuing on the first day of each month thereafter, until the
principal balance with accrued interest thereon is paid in full. Principal shall
be paid in full on January 10, 1998, subject to extension at the option of the
Bank pursuant to the Agreement. Bank may, at its option, debit principal,
interest, fees, costs and expenses due and payable hereunder or under the
Agreement to any of Borrower's accounts maintained with Bank on each date any
such amount is due and payable.
Upon the occurrence of an Event of Default under and as defined in the
Agreement, the entire indebtedness, with accrued interest thereon, due under
this Note, shall, at the option of Bank, become immediately due and payable
without demand or notice of any kind. Borrower agrees that the interest rate
shall increase by four (4%) percentage points per annum over the otherwise
applicable rate upon the occurrence of such Event of Default.
If any amount due hereunder is not paid within ten (10) days after the
date it is due, without in any way affecting Bank's right to accelerate this
Note, a late charge equal to five percent (5%) of said amount shall be assessed
against Borrower for each month that said amount is late, and shall be
immediately due and payable without demand or notice of any kind.
Borrower hereby grants to Bank a lien and right of setoff for all of
Borrower's liabilities to Bank upon and against all the deposits, credits,
collateral and property of Borrower, now or hereafter in the possession or
control of Bank or in
39.
28
transit to it. Bank may, at any time, apply or set off the same, or any part
thereof, to any liability of Borrower, whether or not matured or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Bank under this Note shall not exceed the
highest or the maximum rate of interest permitted to be charged by Bank under
applicable laws. Any amounts paid by Borrower to Bank in excess of such rate
shall be deemed to be partial prepayments of principal hereunder.
No delay or omission by Bank in exercising any right hereunder, nor
failure by Bank to insist upon the strict performance of any terms herein, shall
operate as a waiver of such right, any other right hereunder, or any terms
herein. No waiver of any right shall be effective unless in writing and signed
by Bank, nor shall a waiver on one occasion be constituted as a bar to, or
waiver of, any such right on any future occasion.
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE
ENFORCEMENT OF ANY OF BANK'S RIGHTS AND REMEDIES. BORROWER ACKNOWLEDGES THAT IT
MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION
OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. NO PARTY TO THIS NOTE
HAS AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
BORROWER ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW
40.
29
WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH BANK MAY DESIRE TO USE, and further
waives diligence, demand, presentment for payment, notice of nonpayment, protest
and notice of protest, and notice of any renewals or extensions of this Note,
and all rights under any statute of limitations.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut.
GUNTHER INTERNATIONAL, LTD.
By_________________________________
Bergman, Horowitz & Reynolds, P.C.
41.
30
EXHIBIT B
Request for Advance
and
Borrowing Base Certificate
The Borrower requests an advance in the amount of $
in connection with a certain Revolving Loan and Security Agreement dated June ,
1996. The Undersigned hereby certifies that: (i) the information provided in the
Borrowing Base Certificate is true and accurate, and (ii) the Borrower is in
compliance with each of the terms, conditions and provisions set forth in the
Revolving Loan and Security Agreement.
Borrower Name: Gunther International, Ltd.
Date:
Borrower Number:
1) Gross A/R (Coll.# ) as of $
----------------- ----------------
2) Less Ineligible as of (see attached) $
------------------
3) Net Eligible Accounts Receivable $
4) Advance Rate of 80%, Accounts Receivable availability $
42.
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5) Other Availability $
6) Total Availability $
7) Less Total Revolving Loan as of $
------------------
8) Net Availability $
If Month End -Please Complete This Section
Total Purchases $
Total Accounts Payable $
Past Due Accounts Payable $
Cash Total (Book Balance) $
We hereby affirm our assignment and granting to Bank of Boston
Connecticut ("Secured Party"), of a continuing, first priority security interest
in and to all of the accounts receivable described herein. This Certificate is
executed and delivered pursuant to the Revolving Loan and Security Agreement
dated May 31, 1996, between us and Secured Party ("Agreement") and is made
subject to and is governed by each and all of the representations, warranties
and covenants in the Agreement, in the same manner, and with the same force as
if they were all set forth herein in full, all of which representations,
warranties and covenants are hereby remade.
Regarding accounts previously assigned to you, we hereby certify that
all returns, allowances, credits and claims of our customers -whether or not we
dispute them -which we have received or are aware of, have been reported to you
on this or prior reports.
43.
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The schedules attached hereto are true, accurate and not misleading and
subject to all of the representations, warranties and covenants contained in the
Agreement.
Gunther International Ltd.
Dated_______________________, 19
By_____________________________________Title
[Attach Applicable Schedules]
44.
33
EXHIBIT C
Description of Financial Statements, Liens, Mortgages and other Encumbrances
(See Section 9(b):
Tradenames (See Sections 9(j) and 11(h)):
Description of Financing Statements, Liens, Mortgages and other Encumbrances
[See Section 9(b)]:
1. UCC-1 Financing Statement No. ST-10847 dated April 14, 1987, listing
Gunther International as Debtor and Connecticut Product Development
Corp. as Secured Party.
2. UCC-1 Financing Statement No. 939118 dated September 20, 1991 listing
Gunther International, Ltd. as Debtor and Standard Duplicating Machines
Corp. as Secured Party.
3. UCC-1 Financing Statement No. 968722 dated June 5, 1992 listing Gunther
International, Ltd. as Debtor and Connecticut Innovations, Inc. as
Secured Party.
45.
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4.** UCC-1 Financing Statement No. 981470 dated September 18, 1992 listing
Gunther International, Ltd. as Debtor and Carl G. Sontheimer and Shirley
M. Sontheimer as Secured Party.
5. UCC-1 Financing Statement No. 1657670 dated November 13, 1995 listing
Gunther International Ltd as Debtor and Textron Financial Corporation as
Secured Party and amended by UCC-3 No. 1684461 dated February 22, 1996.
** TERMINATION STATEMENT FILED WITH THE SECRETARY OF THE STATE OF
CONNECTICUT ON MARCH 29, 1996. AS OF THIS DATE, THE SECRETARY OF THE
STATE HAS PROCESSED TERMINATION STATEMENTS THROUGH 2/27/96.
Tradenames [See Sections 9(j) and 11(b)]:
None.
46.
35
EXHIBIT D
PLEDGE AGREEMENT
THIS AGREEMENT made as of this 31st day of May, 1996, between Harold S.
Geneen whose address is 2 East 67th Street, Apartment 1W, New York, New York
10021 (the "Pledgor") and Bank of Boston Connecticut having an office at 127
Church Street, New Haven, Connecticut 06510 (the "Pledgee").
In consideration of the mutual agreements made herein and for other good
and valuable consideration, receipt of which is hereby acknowledged, it is
hereby agreed as follows:
1. Pledgor hereby pledges and grants to Pledgee a security interest in
bank account #56062364 on deposit with Pledgee which (i) as of June 4, 1996 will
contain a balance of One Million Seven Hundred Forty-One Thousand Five Hundred
Thirty-Two Dollars and Ninety-One Cents ($1,741,532.91) and (ii) shall be a
blocked account from which Pledgor shall be able to withdraw funds only with the
consent of the Pledgee, as herein provided, from and after the date hereof until
the Obligations have been paid in full; together with all dividends, interest,
earnings, proceeds and any other sums due or to become due thereon, all renewals
thereof and all replacements and substitutes therefor and all other property
acquired with the proceeds thereof, (collectively, the "Collateral") as security
for the due payment and performance of all indebtedness, obligations and
liabilities of Pledgor to Pledgee of every kind and description, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising under this Agreement and
47.
36
Pledgor's Limited Guaranty Agreement dated as of May 31, 1996 guaranteeing
certain obligations of Gunther International, Ltd. ("Borrower"), and further
including, all costs, expenses and reasonable attorneys' fees incurred in the
enforcement of the Limited Guaranty Agreement or in the defense or enforcement
of this Agreement (collectively, the "Obligations").
2. (This Paragraph 2 is Intentionally Omitted)
3. Pledgor represents, warrants and covenants to Pledgee that: (a) he
has good title to all the Collateral, free and clear of all claims, mortgages,
pledges, liens, security interests and other encumbrances of every nature
whatsoever, except the pledge evidenced hereby, (b) the Collateral is duly and
validly pledged with Pledgee in accordance with law, (c) he has the unrestricted
right to make this pledge, and (d) he will defend Pledgee's right and security
interest in and to the Collateral against the claims and demands of all persons
whomsoever.
4. Unless Pledgee otherwise agrees in writing, if Pledgor receives any
dividend, or other distribution in connection with the Collateral, whether in
cash, or otherwise, the same shall constitute Collateral, and Pledgor agrees to
accept the same in trust for Pledgee and to forthwith deliver the same to
Pledgee, or its designee, in the exact form received, with Pledgor's endorsement
and/or assignment when necessary, to be held by Pledgee, or its designee, as
Collateral security for the Obligations.
5. Pledgor covenants that he will not create, incur or permit to exist
any pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever with respect to any of the Collateral or the proceeds thereof other
than the lien and security interest granted in the Pledgee hereunder.
6. In the event of failure of payment or performance of the Obligations
(an "Event of Default"), Pledgee shall have the right to withdraw the Collateral
and apply the Collateral to the Obligation and, in addition, shall have all of
the
48.
37
rights and remedies of a secured party under the Uniform Commercial Code of
Connecticut ("Code") or other applicable law, and Pledgee may cause any of the
Collateral to be transferred into Pledgee's name or the name of its nominee and
shall receive the income thereon and hold the same as Collateral security for
the Obligations, or apply it to any Obligations in such proportions as Pledgee
shall determine in its sole discretion, and shall have the right, for and in the
name and place of Pledgor, to execute endorsements, assignments, or other
instruments of conveyance or transfer with respect to any of the Collateral.
7. So long as no Event of Default shall exist, Pledgor shall be entitled
to request from time to time that the Pledgee release to Pledgor within three
(3) business days following such request, so much of the Collateral such that
the balance of the Collateral remaining pledged hereunder shall be equal to the
amount outstanding under a certain $1,750,000 Revolving Promissory Note of even
date from Borrower to Pledgee. Until written notification from Pledgor is
received by Pledgee, Pledgee shall act only upon the written request of Fred
Kolling, Chief Financial Officer of Borrower, and Pledgee hereby agrees to
comply with such request.
If an Event of Default has occurred and is continuing or if an Event of
Default would exist but for the serving of notice, the passage of time, or both,
Pledgor shall not be entitled to the release of Collateral as aforesaid.
8. In the event of a sale or assignment by Pledgee of all or any of the
Obligations held by it, Pledgee may assign or transfer its rights and interest
under this Agreement in whole or in part to the purchaser or purchasers of such
Obligations, whereupon such purchaser or purchasers shall become vested with all
of the powers and rights given to Pledgee hereunder, and Pledgee shall
thereafter be forever released and fully discharged from any liability or
responsibility hereunder with respect to the rights and interest so assigned.
49.
38
9. Beyond the exercise of reasonable care to assure the safe custody of
the Collateral while held hereunder, Pledgee shall have no duty or liability to
collect any sums due in respect thereof or to protect or preserve rights
pertaining thereto, and shall be relieved of all responsibility for the
Collateral upon surrendering the same to Pledgor.
10. No course of dealing between Pledgor and Pledgee, nor any failure to
exercise, nor any delay in exercising, on the part of Pledgee, any right, power
or privilege hereunder or under any of the Obligations, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies
provided herein and under any of the Obligations are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law,
including without limitation, the rights and remedies of a secured party under
the Code.
11. Notice to or demand upon Pledgor or Pledgee hereunder shall be
deemed sufficient and commercially reasonable notice and shall be effective when
delivered in hand, or one (1) day after delivery to an overnight mail or
messenger service or three (3) days after being deposited in the mails, first
class, postage prepaid, registered or certified mail, return receipt requested,
to the address stated in the first paragraph of this Agreement and to Pledgor at
Suite 1919, 301 Park Avenue, New York, New York 10022, or to such other address
as the party to whom such notice is directed may have designated by written
notice similarly given to the other party hereto.
12. Pledgor hereby waives notice of acceptance of this Agreement as well
as presentment, demand, payment, notice of dishonor or protest and all other
notices of any kind in connection with any of the Obligations. Pledgee may
amend, modify, alter, extend, renew or otherwise change any terms of the
revolving loans ("Revolving Loans") extended by Pledgee to Borrower pursuant to
a certain Revolving Loan and Security Agreement dated as of May 31, 1996 between
Pledgee and Borrower, or any agreements and documents evidencing, securing or in
any way relating to the Revolving Loans, without giving Pledgor notice, and
Pledgor hereby consents to the same. In addition, Pledgee may release,
50.
39
substitute, supersede, exchange or modify any other collateral security it may
from time to time hold, and release, substitute, surrender or modify the
liability of any third party, without giving Pledgor notice, and Pledgor hereby
consents to the same. Pledgee shall be under no duty to first exhaust its rights
against any such collateral security or any such third party before realizing on
the Collateral. Such modifications, extensions, changes, renewals, releases,
substitutions or other actions shall in no way affect Pledgor's obligations
hereunder. PLEDGOR FURTHER WAIVES ANY RIGHT TO NOTICE AND HEARING UNDER CHAPTER
903A OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH PLEDGEE MAY DESIRE
TO USE. PLEDGOR HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANT SUIT ACTION
OR PRECEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE ENFORCEMENT OF ANY OF PLEDGEE'S RIGHT AND REMEDIES.
PLEDGOR'S WAIVER UNDER THIS SECTION HAS BEEN MADE VOLUNTARILY AND KNOWINGLY AND
AFTER CONSIDERATION OF THE RAMIFICATIONS THEREOF WITH HIS ATTORNEYS.
13. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and assigns, and the term "Pledgee" shall be deemed to include any other holder
or holders of any of the Obligations. As used herein, plural or singular include
each other, and pronouns of any gender are to be construed as masculine,
feminine or neuter, as context requires.
14. This agreement shall be construed in accordance with and governed by
the internal laws of the State of Connecticut. Pledgor hereby consents to
service of process, and to be sued, in the State of Connecticut and consents to
the exclusive jurisdiction of the courts of the State of Connecticut and the
United States District Court for the District of Connecticut, for the purpose of
any suit, action or other proceeding arising hereunder, and expressly waives any
and all objections it may have to venue in any such courts. Pledgee may, in
writing specifically referring to this paragraph of this Agreement, waive the
exclusive jurisdiction provision of this paragraph 14.
51.
40
15. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. This Agreement shall be effective as of May 31, 1996,
notwithstanding the actual date of execution.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
------------------------------------
HAROLD S. GENEEN
WITNESSES:
- -------------------------
BANK OF BOSTON CONNECTICUT
- -------------------------
By
----------------------------------
Its:
WITNESSES:
- -------------------------
- -------------------------
STATE OF )
) ss
COUNTY OF ) , 1996
Personally appeared HAROLD S. GENEEN, signer and sealer of the foregoing
instrument, and acknowledged the same to be his free act and deed, before me.
------------------------------------------
NOTARY PUBLIC
STATE OF )
) ss
COUNTY OF) , 1996
52.
41
Personally appeared,____________________ , of BANK OF BOSTON
CONNECTICUT, signer and sealer of the foregoing instrument, and acknowledged the
same to be his/her free act and deed as such officer and the free act and deed
of said Corporation, before me.
---------------------------------------------------
COMMISSIONER OF THE SUPERIOR COURT
NOTARY PUBLIC
53.
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EXHIBIT E
LIMITED GUARANTY AGREEMENT
This Guaranty dated as of May 31, 1996 from Harold S. Geneen, whose
address is 2 East 67th Street, Apartment 1W, New York, New York 10021 (the
"Guarantor") to BANK OF BOSTON CONNECTICUT having an office at 127 Church
Street, New Haven, Connecticut 06510 (the "Bank").
In consideration of and as a material inducement for Bank making, now or
in the future, revolving credit loans to Gunther International, Ltd. (the
"Borrower") pursuant to Facility A, as defined in that certain Revolving Loan
and Security Agreement (the "Agreement"), and a Revolving Loan Note in the
principal amount of $1,750,000 (the "Note"), each dated May 31, 1996 and
executed by Borrower (the loans and advances now or hereafter made by Bank to
Borrower under Facility A pursuant to the Agreement and the Note herein called
the "Loans"), and acknowledging that Guarantor has received and will receive
direct and material financial benefit by reason of said Loans, Guarantor does
hereby absolutely and unconditionally guarantee to Bank the full and prompt
payment and performance of all Liabilities, whenever and however arising
provided, however, the Bank acknowledges and agrees that notwithstanding the
occurrence of an Event of Default under the Agreement and the Bank's
acceleration of the Liabilities and/or other obligations of the borrower under
the Agreement, until January 9, 1998 the Bank shall not be entitled to take any
action against the Guarantor hereunder or under the Pledge Agreement, as herein
defined, unless the Borrower shall fail to pay any installment of interest with
respect to Revolving Loans under Facility A when due and such failure continues
for a period of five (5) days after written notice to Borrower and Guarantor
that the same has not been paid and is owing (such event an "Interest Default").
From and after an Interest Default, the Bank shall have all rights and remedies
hereunder and under the Pledge Agreement for collection of the Liabilities.
As used herein, "Liabilities" means the Loans all costs, expenses,
attorneys' and other professional fees incurred in the defense, protection,
preservation or enforcement of this Guaranty and a Pledge Agreement (defined
below). It is expressly understood that Liabilities shall not include any
obligations of the Borrower with respect to Revolving Loans made under Facility
B, as defined in the Agreement or any obligation of the Borrower under the
Agreement or any
54.
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expense related thereto other than with respect to the Loans made pursuant to
Facility A. All payments by Guarantor shall be paid in lawful money of the
United States of America. Each and every Liability shall give rise to a separate
cause of action, and separate suits, may, but need not be, brought hereunder as
each cause of action arises.
The obligations of Guarantor hereunder shall be absolute and
unconditional and shall remain in full force and effect until every Liability
shall have been fully and finally paid and performed. Guarantor further
guarantees that all payments made by Borrower or Guarantor to Bank with respect
to any Liabilities will, when made, be final, and agrees that if any such
payment is recovered from or repaid by Bank, in whole or in part, in any
bankruptcy, insolvency or similar proceeding instituted by or against Borrower
or Guarantor, this Guaranty shall continue to be fully applicable to such
Liabilities to the same extent as though the payment so recovered or repaid had
never been originally made on such Liabilities.
The obligations of Guarantor hereunder shall not be affected, modified,
impaired, released or discharged, in whole or in part, upon the happening from
time to time of any event, including without limitation, any of the following,
whether or not with notice to, or consent of Guarantor: (i) the compromise,
settlement, release, change, modification or termination of any of the
Liabilities; (ii) the failure to give notice to Guarantor of demand or the
occurrence of an event of default under the Agreement, the Note or any other
agreement evidencing, securing or otherwise executed in connection with any
Liabilities; (iii) the modification, amendment, rescission or waiver by Bank of
the payment, performance or observance of any of the obligations, conditions,
covenants or agreements contained in the Agreement, the Note, this Guaranty or
any other agreement evidencing, securing or otherwise executed in connection
with any Liabilities (collectively, the "Financing Agreements"); (iv) the
extension of time for payment of any principal, interest or any other amount due
and owing under the Financing Agreements, or of the time for performance of any
other obligations, covenants or agreements under or arising out of the Financing
Agreements, or the renewal of any thereof; (v) the taking of any action, or any
failure, omission or delay by Bank to enforce, assert or exercise any right,
power or remedy conferred on Bank in the Financing Agreements; (vi) the full or
partial discharge of the Borrower or any other guarantor in bankruptcy or
similar proceedings or otherwise; (vii) the failure of Guarantor to fully
perform any of its obligations set forth in this Guaranty or any other agreement
with Bank; (viii) the substitution, addition, release or discharge, in whole or
55.
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in part, of any party primarily or secondarily liable for any Liabilities,
including without limitation, any other guarantor; (ix) the death, liquidation
or dissolution, as applicable, of the Borrower or any other guarantor; or (x)
the impairment, substitution, exchange, release, loss or destruction of any
collateral securing any Liabilities.
No delay, act of commission or omission of any kind or at any time upon
the part of Bank with respect to any matter whatsoever shall in any way impair
the rights of Bank under this Guaranty or be construed to be a waiver thereof.
Any such right may be exercised from time to time and as often as may be deemed
expedient. No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which Guarantor has or may have against
Bank, or any assignee or successor thereof, shall be available hereunder to
Guarantor against Bank.
Upon any failure in the payment or performance of any Liability, which
failure continues beyond any applicable grace period, the obligations of
Guarantor hereunder shall be effective immediately without notice and shall be
payable to Bank on demand without any suit or action against Borrower. No
failure by Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Bank, in its sole discretion, shall have the right to proceed first and
directly against Guarantor under this Guaranty without proceeding against or
exhausting any other remedies which it may have and without resorting to any
collateral, or any other guaranty or security held by Bank.
If, for any reason, Borrower has no legal existence or is under no legal
obligation to discharge any Liabilities or if any Liabilities have become
irrecoverable from Borrower by operation of law or for any other reason, this
Guaranty shall nevertheless be binding on Guarantor to the same extent as if
Guarantor at all times had been the principal obligor on all such Liabilities.
In the event that acceleration of the time for payment of any Liabilities is
stayed upon the insolvency, bankruptcy or reorganization of Borrower, or for any
other reason, all such amounts otherwise subject to acceleration under the terms
of the Financing Agreements, shall be immediately due and payable by Guarantor
subject to the terms hereof.
56.
45
Guarantor hereby waives any right of indemnity, reimbursement,
contribution, or subrogation arising as a result of payment by Guarantor
hereunder, and will not prove any claim in competition with Bank in respect of
any payment hereunder in bankruptcy or insolvency proceedings of any nature.
Guarantor will not claim any set-off or counterclaim against Borrower in respect
of any liability of Guarantor to Borrower. Guarantor waives any benefit of and
any right to participate in any collateral which may be held by Bank.
Guarantor agrees to provide Bank with such financial and other
information as Bank may from time to time require.
Guarantor hereby agrees to pay to the Bank on demand all costs and
expenses, including without limitation, reasonable attorneys' and other
professional fees, incurred by the Bank in any way with respect to the defense,
protection, enforcement or preservation by the Bank of its rights hereunder and
under the PLEDGE AGREEMENT, as hereinafter defined.
GUARANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS GUARANTY IS A
PART IS A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY WAIVES HIS RIGHTS TO
NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS
OTHERWISE ALLOWED UNDER ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH BANK MAY DESIRE TO USE. GUARANTOR HEREBY EXPRESSLY WAIVES DEMAND,
PRESENTMENT, PROTEST, AND NOTICE OF THE ACCEPTANCE OF THIS GUARANTY AND OF ANY
LOANS MADE, EXTENSIONS GRANTED OR OTHER ACTION TAKEN IN RELIANCE HEREON AND ALL
OTHER DEMANDS AND NOTICES OF ANY DESCRIPTION IN CONNECTION WITH THE FINANCING
AGREEMENTS, EXCEPT NOTICES SPECIFICALLY REQUIRED TO BE GIVEN TO GUARANTOR
PURSUANT TO SAID FINANCING AGREEMENTS.
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS GUARANTY IS A PART AND/OR
THE ENFORCEMENT OF ANY
57.
46
OF BANK'S RIGHTS AND REMEDIES. GUARANTOR ACKNOWLEDGES THAT HE MAKES THIS WAIVER
KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THIS WAIVER WITH HIS ATTORNEYS. GUARANTOR ALSO ACKNOWLEDGES
THAT BANK HAS NOT AGREED WITH OR REPRESENTED TO GUARANTOR THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
No remedy herein conferred upon or reserved to Bank is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guaranty or now or hereafter existing at law or in equity. In order
to entitle Bank to exercise any remedy reserved to it in this Guaranty, it shall
not be necessary to give any notice to Guarantor. No waiver, amendment, release
or modification of, or supplement to this Guaranty shall be established by parol
evidence, conduct, custom or course of dealing, but solely by an instrument in
writing signed by Bank. Guarantor acknowledges that this Guaranty is intended as
a complete, exclusive, and final expression and statement of the terms set forth
herein.
Guarantor hereby grants to Bank and Bank shall have a lien thereon and
right to set off without notice to Guarantor against, any deposits, securities
or other property of Guarantor which at any time are within Bank's possession or
control and which are pledged to Bank pursuant to the PLEDGE AGREEMENT, as
defined below, at any time after the earliest of (i) January 9, 1998, (ii) the
occurrence of an Interest Default or (iii) any attempt by any third party to
attach, garnish, seize or in any way control or direct the disposition of such
deposits, securities or other property of Guarantor, against the obligations of
Guarantor hereunder, whether or not Bank shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
Notice to Guarantor or Bank hereunder shall be deemed sufficient and
commercially reasonable notice and shall be effective when delivered in hand, or
one (1) day after delivery to an overnight mail or messenger service or three
(3) days after being deposited in the mails, first class, postage prepaid,
registered or certified mail, return receipt requested, to the address stated in
the first paragraph of this Guaranty and to Guarantor at Suite 1919, 301 Park
Avenue, New York, New York 10022, or to such other address as the party to whom
such notice is directed may have designated by written notice similarly given to
the other party hereto.
58.
47
This Guaranty shall be governed by and construed in accordance with the
laws of the State of Connecticut. Guarantor represents and covenants that he is
subject to service of process in such state and will remain so as long as any
Liabilities are outstanding. If, for any reason, Guarantor shall not be so
subject, Guarantor hereby designates and appoints, without power of revocation,
the Secretary of the State of the State of Connecticut, as his agent upon whom
may be served all process, pleadings, notices or other papers which may be
served upon him as a result of any of his obligations hereunder. Guarantor
irrevocably agrees that any suit or other legal proceeding arising out of this
Guaranty may be brought in the courts of the State of Connecticut or the courts
of the United States located in such state, consents to the jurisdiction of each
such court in any such suit or proceeding, and waives any objection to the venue
of any such suit or proceeding or any such court. Guarantor consents that any
such service of process upon such agent and upon Guarantor by registered mail at
the address first written above shall be valid personal service.
This Guaranty shall inure to the benefit of and be enforceable by Bank,
its successors, transferees and assigns, and it shall be binding upon Guarantor
and the executors, administrators, heirs, successors and assigns of Guarantor.
As used herein, plural or singular include each other, and pronouns of any
gender are to be construed as masculine, feminine or neuter, as context
requires.
The invalidity or unenforceability of any one or more phrases,
sentences, clauses or sections contained in this Guaranty shall not affect the
validity or enforceability of the remaining portions of this Guaranty, or any
part thereof.
NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, GUARANTOR'S
OBLIGATIONS UNDER THIS GUARANTY SHALL BE SATISFIED SOLELY FROM THE ASSETS
SUBJECT TO A PLEDGE AGREEMENT ("PLEDGE AGREEMENT") OF EVEN DATE BETWEEN
GUARANTOR AND BANK, AND BANK SHALL LOOK SOLELY TO SAID ASSETS IN ENFORCING ITS
RIGHTS AND REMEDIES HEREUNDER. THE FOREGOING SHALL NOT OPERATE TO RELEASE,
IMPAIR, PREJUDICE OR WAIVE ANY OTHER RIGHTS BANK MAY HAVE AS TO BORROWER, OR ANY
OTHER GUARANTOR OF THE LIABILITIES.
59.
48
This Guaranty shall be effective as of May 31, 1996, notwithstanding the
actual date of execution. IN WITNESS WHEREOF, Guarantor has executed this
Guaranty as of the date first written above.
By
---------------------------
HAROLD S. GENEEN
WITNESSES:
- ------------------------
- ------------------------
STATE OF )
) ss
COUNTY OF ) , 1996
Personally appeared HAROLD S. GENEEN, signer and sealer of the foregoing
instrument, and acknowledged the same to be his free act and deed, before me.
----------------------------------
NOTARY PUBLIC
60.