AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amended AND RESTATED Loan and Security Agreement (this "Agreement") is
made as of May 17, 2001 by and between LaSalle Bank National Association, a
national banking association (the "Bank"), whose address is 135 South LaSalle
Street, Chicago, Illinois 60603 and CFC INTERNATIONAL, INC., a Delaware
corporation ("Borrower"), whose address is 500 State Street, Chicago Heights,
Illinois 60411.
W I T N E S S E T H:
WHEREAS, Borrower and LaSalle Northwest National Bank (as predecessor in
interest to Bank) entered into that certain Amended and Restated Credit
Agreement dated as of March 31, 1992 and Bank and Borrower entered into that
certain Amended and Restated Loan Agreement dated as of April 1, 1998 (each as
amended from time to time, and together forming the "Original Agreement"); and
WHEREAS, Borrower and Bank have agreed to amend and restate the Original
Agreement in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, Borrower and Bank hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth below.
"Accounts" shall have the same meaning assigned to that term in the version
of the Uniform Commercial Code currently in effect in the State of Illinois,
wheresoever located and whether now or hereafter owned, acquired, arising or
existing, including without limitation, contract rights, any and all manner of
accounts receivable and all security agreements, guaranties, letters of credit
and any other collateral security for any or all of the foregoing.
"Account Debtor" shall have the same meaning assigned to that term in the
version of the Uniform Commercial Code currently in effect in the State of
Illinois.
"Accounts Payable" shall mean, with respect to any balance sheet contained
in any of the Financial Statements, the sum of those liabilities which, in
accordance with GAAP, should be shown on such balance sheet as an Account
payable.
"Accounts Payable Aging Reports" shall mean those reports prepared by
Borrower listing Borrower's Accounts Payable balances (and the number of days
each such Accounts Payable balance is outstanding) as of the last day of each
month, which balances Borrower shall represent and warrant as being calculated
in accordance with GAAP and which shall be presented in an aging format
acceptable to Bank.
"Accounts Receivable Aging Reports" shall mean those reports prepared by
Borrower listing Borrower's Accounts Receivable balances (and the number of days
each such Accounts Receivable balance is outstanding) as of the last day of each
month, which balances Borrower shall represent and warrant as being calculated
in accordance with GAAP (including a reasonable provision for uncollectibility)
and which shall be presented in an aging format acceptable to Bank and shall
include the status of all disputes, lawsuits, and delinquent Accounts
Receivable.
"Adjusted LIBOR" shall mean LIBOR plus one and one-half percent (1.5%).
"Affiliate" shall mean (i) any shareholder of Borrower, (ii) any
corporation or any other Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
Borrower or (iii) any officer, director, trustee, partner or shareholder of any
corporation or any other Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is in common control with
Borrower.
"Agreement" shall mean, collectively, this Amended and Restated Loan and
Security Agreement, together with any and all exhibits, attachments and
amendments thereto and modifications, renewals, extensions, restatements and
substitutions thereof and therefor.
"Banking Day" shall mean any day other than a Saturday, Sunday or legal
holiday in the State of Illinois.
"Borrowing Base Certificate" shall mean those reports prepared by Borrower
calculating the Revolving Loan Borrowing Base and submitted to Bank pursuant to
Section 7.8(c), in the form of Exhibit F.
"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed for the conduct
of commercial banking business in Chicago, Illinois.
"Capital Lease" shall mean, as to any person or entity, a lease of any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, by such person or entity as lessee that is, or should
be, in accordance with Financial Accounting Standards Board Statement No. 13, as
amended from time to time, or, if such Statement is not then in effect, such
statement of GAAP as may be applicable, recorded as a "capital lease" on the
balance sheet of Borrower prepared in accordance with GAAP.
"CFC Europe Reimbursement Agreement" means that certain Reimbursement
Agreement dated as of March 19, 1999, and amended as of July 6, 2000 and as of
the date hereof, by and between CFC Europe GmbH, a German corporation and wholly
owned subsidiary of Borrower, and Bank, pursuant to which Bank agreed to issue
an irrevocable standby letter of credit in favor of ABN AMRO Bank (Deutschland)
AG on the terms and conditions provided therein in the amount of EUR 14,230,000.
"Chattel Paper" shall have the same meaning assigned to that term in the
version of the Uniform Commercial Code currently in effect in the State of
Illinois, wheresoever located and whether now or hereafter existing, arising or
acquired, including, without limitation, all installment contracts and leases.
"Code" shall mean the United States Bankruptcy Code, as now existing or
hereafter amended.
"Collateral" shall mean any and all of Borrower's Accounts, Chattel Paper,
Documents, Equipment, Fixtures, Goods, General Intangibles, Inventory,
Investment Property, monies, or Instruments, wheresoever located and whether now
or hereafter owned, acquired, arising or existing, all proceeds of any of the
foregoing (including, without limitation, all proceeds of insurance policies or
letters of credit covering or related to any of the foregoing), and all
writings, correspondence, books, files, invoices, bills of lading, purchase
orders, computer files and program, computer tapes and discs and cards,
accounting records, data, information and other records relating to any of the
foregoing, together with all monies, deposits, accounts, credits or other
property now or hereafter in the possession of Bank for the account of Borrower.
"Compliance Certificate" shall mean those reports prepared by Borrower and
submitted to Bank pursuant to Section 7.8(d), in the form of Exhibit G.
"Default Interest Rate" shall mean the Prime Rate plus three percent (3%)
per annum.
"Depreciation" shall mean the total amounts added to depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected on
Borrower's financial statement and determined in accordance with GAAP.
"Documents" shall have the same meaning assigned to that term in the
version of the Uniform Commercial Code currently in effect in the State of
Illinois, wheresoever located and whether now owned, acquired, arising or
existing.
"Eligible Accounts" shall mean such Accounts arising in the ordinary course
of Borrower's business which are subject to Bank's perfected security interest
and no other Lien, encumbrance or security interest other than Permitted Liens
and which are evidenced by an invoice. In addition, no Account shall be an
Eligible Account, if:
(i) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower; or
(ii) it is due or unpaid more than ninety (90) days after the original
invoice date; or
(iii) twenty-five percent (25%) or more of the Accounts from the
Account Debtor are not deemed Eligible Accounts hereunder; or
(iv) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; or
(v) the Account Debtor is also Borrower's creditor or supplier, or the
Account Debtor has disputed its liability with respect to such Account, or
the Account Debtor has made any claim with respect to any other Account due
from such Account Debtor to Borrower, or the Account otherwise is or may
become subject to any right of setoff by the Account Debtor, or the Account
Debtor has filed a lawsuit against Borrower; or
(vi) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or a decree or order for relief
has been entered by a court having jurisdiction in the premises in respect
of the Account Debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other petition or
other application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for
all or a significant portion of its assets or affairs; or
(vii) the sale is to an Account Debtor outside the continental United
States or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Bank in its sole discretion;
or
(viii) the sale to the Account Debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by Chattel Paper; or
(ix) Bank believes, in its reasonable judgment, that collection of
such Account is insecure or that such Account may not be paid by reason of
the Account Debtor's inability to pay; or
(x) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its
right to payment of such Account to Bank pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 203 et seq.); or
(xi) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a final sale; or
(xii) the Accounts of the Account Debtor exceed a reasonable credit
limit determined by Bank in its sole discretion, to the extent such
Accounts exceed such limit; or
(xiii) the Account is subject to any offset, deduction, defense,
dispute, or counterclaim, or if the Account is contingent in any respect or
for any reason; or
(xiv) Borrower has made any agreement with any Account Debtor for any
deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each
respective invoice related thereto.
"Eligible Inventory" shall mean Borrower's Inventory located in the
United States and maintained either in Borrower's possession or in warehouses
which have issued receipts therefor in the name of Bank, but excluding any
inventory constituting work in process.
"Environmental Laws" shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrower's business or
facilities owned or operated by Borrower, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals or hazardous, toxic or dangerous substances, materials or wastes in
the environment (including, without limitation, ambient air, surface water,
land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Equipment" has the meaning assigned in the Illinois Uniform Commercial
Code, wheresoever located, including, without limitation, all equipment and
fixtures, office machines, tools, dyes, furniture, machinery, vehicles, trade
fixtures and all other tangible personal property (other than Inventory),
together with any and all accessories, parts and appurtenances thereto,
substitutions therefore and replacements thereof, wheresoever located,
whether not or hereafter owned, acquired, arising or existing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" shall mean an event or occurrence described in Section
9 of this Agreement.
"Financial Statements" shall mean the balance sheets, statements of
income and retained earnings and statements of changes in cash flow of
Borrower for each fiscal year, quarter or month end, as the case may be.
"Fixtures" has the same meaning assigned to that term in the version
of the Uniform Commercial Code currently in effect in the State of
Illinois, all accessions, parts and appurtenances thereto and all
substitutions or replacements thereof, wheresoever located and whether now
or hereafter owned, acquired, arising or existing.
"Foreign Exchange Sub-Facility" shall mean the credit facility described as
such in Section 2.1.3.
"Funds" has the meaning set forth in Section 7.15(a).
"FX Limit" shall mean $100,000.
"FX Risk Liability" shall mean 8% of the aggregate of the Notional
Values of all FX Transactions outstanding, net of any Offsetting
Transactions.
"FX Transaction(s)" shall mean any transaction between the Bank and the
Borrower pursuant to which the Bank has agreed to sell to or to purchase from
the Borrower a Foreign Currency of an agreed amount at an agreed price in US
dollars or such other agreed upon Foreign Currency, deliverable and payable on
an agreed date.
"GAAP" shall mean generally accepted accounting principles, using the
accrual basis of accounting and consistently applied.
"General Intangibles" shall have the same meaning assigned to that term in
the version of the Uniform Commercial Code currently in effect in the State of
Illinois, including, without limitation, all choses in action, causes of action,
corporate or other business records, computer programs, customer lists, tax
refund claims, trademarks, service marks, trade names, trade secrets, patents,
patent applications, designs, inventions, formulae for coatings, pigments,
solvents, resins or other applications, proprietary know-how, specifications,
manufacturing processes, licenses, franchise rights, copyrights, registrations,
goodwill and all rights under any real or personal property leases, permits, all
claims under guaranties, security interests or other security held by or granted
to Borrower to secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification and all other intangible personal property of any kind
or nature (other than Accounts), wheresoever located or arising and whether now
or hereafter owned, acquired, arising or existing.
"Goods" shall have the same meaning assigned to that term in the version of
the Uniform Commercial Code currently in effect in the State of Illinois, all
accessions, parts and appurtenances thereto and all substitutions or
replacements thereof, wheresoever located and whether now or hereafter owned,
acquired, arising or existing.
"Guaranty" shall mean all obligations of Borrower guaranteeing any
indebtedness, dividend or other obligation, including without limitation any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time, of any other person or entity (the "primary obligor") in any
manner, whether directly or indirectly, including obligations incurred through
an agreement, contingent or otherwise, by such person or entity:
(a) to purchase such indebtedness or obligation or any property or assets
constituting security therefor;
(b) to advance or supply funds either (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease property or to purchase securities, property or services with
the purpose or intent of assuring the owner of such indebtedness or obligation
of the ability of the primary obligor to make payment of the indebtedness or
obligation;
(d) otherwise to assure the owner of the indebtedness or obligation of the
primary obligor against loss in respect thereof; or
(e) to induce the issuance of, or in connection with the issuance of, any
letter of credit.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials or wastes that are or become regulated under any Environmental Law
(including, without limitation, any that are or become classified as hazardous
or toxic under any Environmental Law).
"Indebtedness" shall mean at any time (a) all Liabilities of Borrower, (b)
all Capital Lease obligations of Borrower, (c) all other debt, secured or
unsecured, created, issued, incurred or assumed by Borrower for money borrowed
or for the deferred purchase price of any fixed or capital asset, (d)
indebtedness secured by any mortgage, pledge, lien or security interest existing
on property owned by Borrower whether or not the Indebtedness secured thereby
has been assumed, and (e) all Guaranty obligations of Borrower whether or not
reflected on its balance sheet.
"Indemnified Party" and "Indemnified Parties" shall mean, respectively,
each of Bank and any parent corporations, affiliated corporations or
subsidiaries of Bank, and each of their respective officers, directors,
employees, attorneys and agents, and all of such parties and entities.
"Instruments" shall have the same meaning assigned to that term in the
version of the Uniform Commercial Code currently in effect in the State of
Illinois, wheresoever located and whether now or hereafter owned, acquired,
arising or existing.
"Interest Charges" shall mean, for any period, the sum of: (a) all
interest, charges and related expenses payable with respect to that fiscal
period to a lender in connection with and related expenses payable with respect
to that fiscal period to a lender in connection with borrowed money or the
deferred purchase price of assets that are treated as interest in accordance
with GAAP, plus (b) the portion of rent payable with respect to that fiscal
period under Capital Leases that should be treated as interest in accordance
with GAAP, plus (c) all charges paid or payable (without duplication) during
that period with respect to any Interest Rate Agreements.
"Interest Period" shall mean, with regard to any LIBOR Loan, successive
one, two or three-month periods as selected from time to time by Borrower by
notice given to Bank not less than two Business Days prior to the first day of
each respective Interest Period; provided, however, that: (i) each such Interest
Period occurring after the initial interest Period of any LIBOR Loan shall
commence on the day on which the preceding Interest Period for such LIBOR Loan
expires (ii) whenever the last day of any Interest Period would be extended to
occur on the next succeeding Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided, that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, then the last day of such Interest Period
shall occur on the immediately preceding Business Day; (iii) whenever the first
day of any Interest Period occurs on a day of an initial calendar month for
which there is not numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months equal to the number
of months in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month; and (iv) the final Interest
Period must be such that its expiration occurs on or before the Maturity Date.
"Interest Rate Agreements" shall mean any interest rate protection
agreement, interest rate swap or other interest rate hedge arrangement (other
than any interest rate cap or other similar agreement or arrangement pursuant to
which Borrower has no credit exposure to Bank) to or under which Borrower or any
subsidiary of Borrower is a party or beneficiary.
"Inventory" shall have the same meaning assigned to that term in the
version of the Uniform Commercial Code currently in effect in the State of
Illinois, all accessions, parts and appurtenances thereto and all substitutions
or replacements thereof, wheresoever located and whether now or hereafter owned,
acquired, arising or existing, including without limitation, goods, raw
materials, supplies, work in process, finished goods, or inventory which has
been returned to or repossessed or stopped in transit.
"Inventory Reports" shall mean those reports prepared by Borrower listing
Borrower's Eligible Inventory balances as of the last day of each month which
balances Borrower shall represent and warrant as being calculated in accordance
with GAAP and which shall be presented in a format acceptable to Bank.
"Investment Property" shall have the same meaning assigned to that term in
the version of the Uniform Commercial Code currently in effect in the State of
Illinois, wheresoever located and whether now or hereafter owned, acquired,
arising or existing.
"IRB Reimbursement Agreement" shall mean that certain Reimbursement
Agreement dated as of June 1, 1996, between Borrower and Bank, pursuant to which
Bank agreed to issue an irrevocable direct pay letter of credit in favor of
LaSalle National Bank, as trustee (the "Trustee") for the bondholders under the
Indenture of Trust dated as of June 1, 1996 between the Illinois Development
Finance Authority and the Trustee in the amount of $4,064,253, as amended from
time to time.
"Letter(s) of Credit" shall mean each and all letters of credit issued by
Bank, in its sole discretion, upon the execution and delivery by Borrower and
the acceptance by Bank of any application for Letter of Credit, as set forth in
Section 2.1.2 of this Agreement, but shall exclude that certain direct pay
letter of credit dated on or about June 6, 1996, the available face amount of
which as of May 1, 2001 was $3,252,416.44, relating to the indebtedness
described in Section 6.1(e).
"Letter of Credit Obligations" shall mean, at any time, an amount equal to
the aggregate of the original face amounts of all Letter of Credit minus the sum
of (i) the amount of any reductions in the original face amounts of all Letters
of Credit which did not result from a draw thereunder, (ii) the amount of any
payments made by Bank with respect to any draws made under a Letter of Credit
for which Borrower has reimbursed Bank, (iii) the amount of any payments made by
Bank with respect to any draws made under a Letter of Credit which have been
converted to a Revolving Loan as set forth in Section 2.1.2, and (iv) the
portion of any issued but expired Letter of Credit which has not been drawn by
the beneficiary thereunder. For purposes of determining the outstanding Letter
of Credit Obligations at any time, Bank's acceptance of a draft drawn on Bank
pursuant to a Letter of Credit shall constitute a draw on the applicable Letter
of Credit at the time of such acceptance.
"Liabilities" shall mean all obligations of the Company under this
Agreement and under the IRB Reimbursement Agreement.
"LIBOR" shall mean a rate of interest equal to the per annum rate of
interest at which U.S. dollar deposits in an amount comparable to the amount of
the relevant LIBOR Loan and for a period equal to the relevant Interest Period
are offered generally to the Lender (rounded upward of necessary, to the nearest
1/16 of 1.00%) in the London Interbank Eurodollar market at 11:00 a.m. (London
time) two Business days prior to the commencement of each Interest Period, or as
LIBOR is other wise determined by Bank in its sole and absolute discretion, such
rate to remain fixed for such Interest Period. Bank's determination of LIBOR as
provided above shall be conclusive, absent manifest error.
"LIBOR Loan(s)" shall mean that portion, and collectively those portions,
of the aggregate outstanding principal balance of the Revolving Loans that bear
interest at Adjusted LIBOR, each of which must be in an amount equal to $100,000
or an integral multiple of $100,000 in excess thereof; provided, however, that
there shall not be in excess of five (5) LIBOR Loans outstanding at any one
time.
"Liens" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include, without limitation,
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictments, leases and other title exceptions and encumbrances
affecting Property which interfere with the use thereof, detract from the value
thereof or impair the operations thereof. For the purpose of this Agreement,
Borrower shall be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
person for security purposes.
"Loans" shall mean, individually and collectively, each and all Revolving
Loans, the Term Loan, and the Second Term Loan made by Bank to Borrower and all
Letters of Credit issued by Bank for the benefit of Borrower and pursuant to
this Agreement.
"Loan Documents" shall have the meaning set forth in Section 4.1.
"Lockbox Account" has the meaning set forth in Section 7.15(a).
"Make Whole Premium Amount" has the meaning set forth in Section 2.5.2
hereof.
"Maximum Letter of Credit Obligation" shall mean the Revolving Loan
Commitment less (i) the aggregate amount of all Revolving Loans outstanding at
any time and (ii) the aggregate Notional Amounts of all FX Transactions
outstanding at any time.
"Monthly Payment Date" has the meaning set forth in Section 2.1.8.
"Mortgage" means (a) that certain that certain Mortgage dated as of June
10, 1987 between Borrower (f/k/a The Coated Film Company) and Bank (as assignee
of LaSalle National Bank), recorded in the office of the Recorder of Deeds of
Cook County, Illinois (the "Recorder's Office) on June 11, 1986 as Document No.
86-236291 concerning the real property commonly known as 500 State Street,
Chicago Heights, Illinois (the "Premises"), as amended by (i) First Amendment
dated May 4, 1987 and recorded in the Recorder's Office on May 6, 1987 as
Document No. 87-244769, (ii) Second Amendment dated December 16, 1988 and
recorded in the Recorder's Office on December 21, 1988 as Document No.
88-587863, (iii) Third Amendment dated March 31, 1992 and recorded in the
Recorder's Office on May 5, 1992 as Document No. 92-305060, (iv) Fourth
Amendment dated June 1, 1996 and recorded in the Recorder's Office on June 21,
1996 as Document No. 96-479606, (v) Fifth Amendment dated April 1, 1998 and
recorded in the Recorder's Office on November 9, 1998 as Document No. 08010241,
and (vi) Sixth Amendment dated November 13, 1998 and recorded in the Recorder's
Office on July 20, 2000, as Document No. 00543598 (together, the "Amendments")
and (b) that certain Assignment of Rents and Leases dated as of June 10, 1986
between the Borrower (f/k/a The Coated Film Company) and the Bank (as assignee
of LaSalle National Bank) recorded in the Recorder's Office on June 11, 1986 as
Document No. 86-236292, as amended by the Amendments.
"Note(s)" shall mean the Revolving Note, the Term Note, and the Second Term
Note, and each one of them.
"Notional Value" shall mean the US Dollar equivalent of the price at which
the Bank agreed to purchase or sell to the Borrower a Foreign Currency.
"Obligations" shall mean (i) the obligations of Borrower to Bank under the
Loans, as evidenced by the Notes and the Mortgage, (ii) the obligations of
Borrower to Bank under the IRB Reimbursement Agreement, (iii) all interest
accrued on the Loans, (iv) any fees due to Bank hereunder or under the IRB
Reimbursement Agreement, (v) any expenses incurred by Bank hereunder or under
the IRB Reimbursement Agreement and (vi) any and all other liabilities and
obligations of Borrower (and of any partnership in which Borrower is or may be a
partner) to Bank, howsoever created, arising or evidenced, and howsoever owned,
held or acquired, whether now or hereafter existing, whether now due or to
become due, direct or indirect, absolute or contingent, and whether several,
joint or joint and several, including, but not limited to, any Interest Rate
Agreements or FX Transactions.
"Offsetting Transaction" shall mean an FX Transaction to purchase a Foreign
Currency and an FX Transaction to sell the same Foreign Currency, each with the
same Settlement Date and designated as an Offsetting Transaction at the time of
entering into the FX Transaction.
"Permitted Liens" shall mean Liens on the Collateral (i) provided for under
this Agreement or the Loan Documents in favor of Bank; (ii) arising out of
judgments or awards in respect of which Borrower shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which Borrower
shall have secured a subsisting stay of execution pending such appeal or
proceedings for review, provided Borrower shall have set aside reserves which
Bank reasonably deems adequate with respect to such judgment or award; (iii)
purchase money security interests in any Equipment acquired by Borrower to the
maximum amount of $100,000; and (iv) securing Borrower's obligations under the
IRB Reimbursement Agreement.
"Person" shall mean any individual, sole proprietorship, joint venture,
partnership, limited partnership, association, unincorporated organization,
joint-stock company or association, trust, corporation, entity, institution or
government body.
"Prime Loan(s)" shall mean that portion, and collectively, those portions
of the aggregate outstanding principal balance of the Revolving Loans that will
bear interest at the Prime Rate.
"Prime Rate" shall mean the rate per annum in effect from time to time as
set by Bank and called its Prime Rate. The effective date of any change in the
Prime Rate shall for purposes hereof be the date the rate is changed by Bank.
Bank shall not be obligated to give notice of any change in the Prime Rate.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Regulatory Change" shall mean the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over Bank or its
lending office.
"Revolving Loan(s)" shall mean each and all direct advances made by Bank to
Borrower under and pursuant to this Agreement, as set forth in Section 2.1.1.
"Revolving Loan Borrowing Base" shall mean, at any time, the sum of: (a)
80% of the Eligible Accounts Receivable of Borrower; and (b) 50% of the Eligible
Inventory of Borrower, less (i) the face amount of any outstanding Letters of
Credit and (ii) the Notional Value of any outstanding FX Transactions; provided,
however, provided, however that at no time shall more than $3,000,000 of the
Revolving Loan Borrowing Base be attributable to Eligible Inventory.
"Revolving Loan Commitment" shall mean $5,500,000.
"Revolving Loan Maturity Date" shall mean April 1, 2003.
"Revolving Note" shall mean a promissory note in the form of Exhibit A duly
executed by Borrower.
"Second Term Loan" shall mean that certain second term loan made by Bank to
Borrower as more particularly described in Section 2.3.
"Second Term Loan Maturity Date" shall mean May ___, 2006, unless extended
by Bank pursuant to any modification, extension or renewal by Borrower and
accepted by Bank in its sole and absolute discretion in substitution for the
Second Term Note.
"Second Term Note" shall mean a promissory note in the form of Exhibit C
duly executed by Borrower.
"Settlement Date" shall mean the Business Day on which the Borrower has
agreed to (a) deliver the required amount of Foreign Currency, or (b) pay in US
dollars the agreed upon purchase price of the Foreign Currency.
"Subsidiary" shall mean any corporation of which twenty-five percent (25%)
or more of the outstanding shares of capital stock having ordinary voting power
for the selection of directors is owned, directly or indirectly by Borrower and
any Affiliates or Subsidiaries of Borrower.
"Swap Rate" shall mean the rate of interest equal to the per annum rate of
interest at which Bank determines its cost of funds equal to the yield on the
five-year United States Treasury Notes or Securities plus a corresponding swap
spread as published in Bloomberg's Financial Markets Commodities News, in effect
from time to time, and in the absence of such publication, as determined by Bank
in its sole discretion.
"Tangible Assets" shall mean the total of all assets appearing Borrower's
Financial Statements after deducting all proper reserves (including reserves for
Depreciation, obsolescence and amortization) less the sum of (i) goodwill,
patents, trademarks, prepaid expenses, deposits, deferred charges and other
personal property (including, without limitation, the worldwide rights to
manufacture and market certain holographic products acquired from Applied
Holographics PLC) which is classified as intangible property in accordance with
GAAP, (ii) deferred income tax credits and (iii) any amounts due from
shareholders, Affiliates, officers or employees of Borrower.
"Tangible Net Worth" shall mean at any time the total of Tangible Assets
less Liabilities.
"Term Loan" shall mean that certain term loan heretofore made by Bank to
Borrower pursuant to the Original Agreement as more particularly described in
Section 2.2.
"Term Loan Maturity Date" shall mean November 1, 2003, unless extended by
Bank pursuant to any modification, extension or renewal note executed by
Borrower and accepted by Bank in its sole and absolute discretion in
substitution for the Term Note.
"Term Note" shall mean that certain Term Note dated as of November 13, 1998
in the original principal amount of $2,625,000, a copy of which is attached as
Exhibit B.
1.2 Accounting Terms.
Any accounting terms used but not otherwise defined herein shall have their
customary meanings as defined in, pursuant to, or in accordance with GAAP. All
other terms used but not otherwise defined herein shall have the meanings
provided by the version of the Uniform Commercial Code enacted in Illinois to
the extent such terms are used or defined therein.
2. COMMITMENT OF BANK.
2.1 Revolving Loan Commitment.
2.1.1 Revolving Loans. Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations
and warranties of Borrower set forth herein and in the other Loan Documents,
Bank agrees to make such Revolving Loans at such times as Borrower may from time
to time request until, but not including, the Revolving Loan Maturity Date, and
in such amounts as Borrower may from time to time request, provided, however,
that the aggregate principal balance of all Revolving Loans outstanding at any
time shall not exceed the lesser of (i) the Revolving Loan Borrowing Base and
(ii) the Revolving Loan Commitment, in either case minus the Letter of Credit
Obligations and the Notional Value of all FX Transactions outstanding, and
provided further, that each Revolving Loan shall equal at least $10,000 or
multiples of $1,000 in excess thereof. Revolving Loans are otherwise terminated
or extended as provided in this Agreement. The Revolving Loans shall support the
working capital requirements of Borrower. Borrower may borrow, repay and
reborrow hereunder, from the date hereof until the Revolving Loan Maturity Date,
either the full amount of the Revolving Loan Commitment (less the Letter of
Credit Obligations and the Notional Value of all FX Transactions outstanding )
or any lesser sum in the minimum amounts referred to above. If, at any time, the
Revolving Loans exceed the Revolving Loan Commitment (less the Letter of Credit
Obligations and the Notional Value of all FX Transactions outstanding), Borrower
shall immediately notify Bank of the existence of and pay to Bank the amount of
such excess.
2.1.2 Letters of Credit. Subject to the terms and conditions of this
Agreement and upon the execution and delivery by Borrower and the acceptance by
Bank, in its sole and absolute discretion, of an application for Letter of
Credit, Bank agrees to issue for the account of Borrower, such Letters of Credit
on the standard from of Bank and otherwise in form and substance acceptable to
Bank, from time to time during the term of this Agreement, provided that (i) the
Letter of Credit Obligations may not at any time exceed the Maximum Letter of
Credit Obligation, (ii) no Letter of Credit shall have an expiration date later
than 120 days after the Revolving Loan Maturity Date and (iii) an Event of
Default does not then exist or would not then be created thereby or any event
which with the giving of notice or lapse of time or both would constitute an
Event of Default does not then exist. If any Letters of Credit remain
outstanding on the Revolving Loan Maturity Date, Borrower shall deposit into a
deposit account with Bank cash equal to the aggregate outstanding Letter of
Credit Obligations on the Revolving Loan Maturity Date.
(a) The amount of any payments made by Bank with respect to draws made
by a beneficiary under a Letter of Credit for which Borrower has failed to
reimburse Bank upon the earlier of (i) Bank's demand for repayment, or (ii)
five (5) days from the date of such payment by Bank, shall be deemed to
have been converted to a Revolving Loan as of the date such payment was
made by Bank to such beneficiary. Upon the occurrence of an Event of
Default and at the option of Bank, all Letter of Credit Obligations shall
be converted to Revolving Loans, all without demand, presentment, protest
or notice of any kind, all of which are hereby waived by Borrower. If there
does not exist sufficient availability, Borrower hereby agrees to reimburse
Bank, immediately upon demand, for each payment or disbursement made by
Bank under or on account of any Letter of Credit, honoring any demand for
payment made by the beneficiary thereunder by Bank or any issuing bank,
with interest on the amount so paid or disbursed by Bank or any issuing
bank, from the date a demand for payment is made by Bank to, but not
including the date Bank is reimbursed therefor, at a rate per annum equal
to the interest rate payable hereunder with respect to Prime Loans at the
time of demand for payment. The obligation of Borrower to reimburse Bank
for payments and disbursements made by Bank under or on account of any
Letter of Credit honoring a demand for payment made by the beneficiary
thereunder shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which Borrower may have or have had against Bank or such
beneficiary, including, without limitation, any defense based on the
failure of such demand for payment to conform to the terms of such Letter
of Credit or any nonapplication or misapplication by such beneficiary of
the proceeds of such demand for payment or the legality, validity,
regularity or enforceability of such Letter of Credit or any document or
contract related to or required to be presented under the terms of such
Letter of Credit; provided, however, that Borrower shall not be obligated
to reimburse Bank for any wrongful payment or disbursement made by Bank
under or on account of such Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on the part
of Bank or any of its officers, employees or agents.
(b) Borrower agrees that, upon the earlier of (i) an occurrence of an
Event of Default or (ii) 120 days after the Revolving Loan Maturity Date,
it will immediately, upon written demand by Bank, pay to Bank an amount
equal to the amount of the then aggregate stated amount of all Letters of
Credit issued and outstanding hereunder. Any amounts so received by Bank
pursuant to the provisions of the foregoing sentence shall be retained by
Bank as collateral security for Borrower's Obligations including, without
limitation, all Obligations of Borrower to Bank under or in connection with
this Agreement, any Letter of Credit or any of the Loans.
(c) Bank shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment by the beneficiary
under any Letter Of Credit issued by Bank to ascertain that the same appear
on their face to be in conformity with the terms and conditions of such
Letter of Credit. If, after examination, Bank shall have determined that a
demand for payment under such Letter of Credit does not conform to the
terms and conditions of such Letter of Credit, Bank shall, as soon as
reasonably practicable, give notice to the beneficiary to the effect that
negotiation was not in accordance with the terms and conditions of such
Letter of Credit, stating the reasons therefor and that the relevant
document is being held at the disposal of such beneficiary or is being
returned to such beneficiary, as Bank may elect. The beneficiary may
attempt to correct any such nonconforming demand for payment under such
Letter of Credit if, and to the extent that, such beneficiary is entitled
and able to do so. If Bank determines that a demand for payment under such
Letter of Credit conforms to the terms and conditions of such Letter of
Credit, then Bank shall make payment to the beneficiary in accordance with
the terms of such Letter of Credit. Bank shall have the right, provided it
is not then in default under such Letter of Credit by reason of its having
wrongfully failed to honor a demand for payment previously made by the
beneficiary under such Letter of Credit, to require the beneficiary to
surrender such Letter of Credit to Bank on the stated expiration date of
such Letter of Credit. Borrower agrees, if necessary, and to the extent
reasonably feasible, to cause the beneficiary to so surrender such Letter
of Credit.
(d) If reserve requirements, capital adequacy requirements or any
similar requirements or restrictions, or any other requirements of law not
presently applicable to Bank or any issuing bank are hereafter imposed upon
or determined or held to be applicable to Bank or any issuing bank at any
time and from time to time, which would materially increase the costs to
Bank of continuing letter of credit financing hereunder or materially
affect the profitability (on an after-tax basis) to Bank of the letter of
credit transactions contemplated for Bank hereby, then Bank will give
written notice to Borrower of such requirement or restriction and of the
additional costs, or loss or prospective loss of profitability, resulting
from the imposition or application of such requirement or restriction to
Bank, and Borrower shall, promptly after request therefor by Bank,
compensate Bank for additional costs, or for any loss of profitability,
accruing to Bank from the date such restriction or requirement is imposed
upon or determined or held to be applicable to Bank to the expiration or
final surrender of all Letters of Credit issued hereunder.
2.1.3 Foreign Exchange Sub-Facility. Bank agrees to enter into FX
Transactions with Borrower, at Borrower's request therefor made prior to the
Revolving Loan Maturity Date, provided however, that (i) at no time shall the
aggregate FX Risk Liability of Borrower exceed the FX Limit, (ii) the Notional
Values of all FX Transactions having the same Settlement Date shall not exceed
$300,000, and (iii) at no time shall the aggregate FX Risk Liability combined
with the total face amount of all Letters of Credit outstanding, less any
partial draws paid by Bank, together with the total principal amount of all
outstanding Revolving Loans, exceed the Revolving Loan Commitment. Each FX
Transaction shall be used only to hedge Borrower's foreign exchange exposure.
(a) Requests. Each request for a FX Transaction shall be made by
telephone to Bank's Foreign Exchange Department ("Request"), shall specify
the Foreign Currency to be purchased or sold, the amount of such Foreign
Currency and the Settlement Date. Each Request shall be communicated to
Bank no later than 4:00 p.m. Chicago, Illinois time on the Business Day on
which the FX Transaction is requested.
(b) Tenor. No FX Transaction shall have a Settlement Date which is
more than 365 days after the date of entry into such FX Transaction, and
provided further, no FX Transaction shall expire on a date which is more
than 365 days after the Revolving Loan Maturity Date.
(c) Availability. Bank may refuse to enter into a FX Transaction with
Borrower where Bank, in its sole discretion, determines that (1) the
requested Foreign Currency is unavailable, (2) Bank is not then dealing in
the requested Foreign Currency, or (3) Bank would be prohibited by any
applicable law, rule, regulation or order from purchasing such Foreign
Currency, (4) a Default or Event of Default has occurred or would result
from such FX Transaction, or (5) such FX Transaction would cause any one of
the conditions set forth in (i), (ii) or (iii) in Subsection 2.1.3.
(d) Payment. Payment is due on the Settlement Date of the relevant FX
Transaction. Bank is hereby authorized by Borrower to charge the full
settlement price of any FX Transaction against the depository account or
accounts maintained by Borrower with Bank on the Settlement Date. In the
event that Borrower fails to pay the settlement price of any FX Transaction
on the Settlement Date or the balances in the depository account or
accounts maintained with Bank are insufficient to pay the settlement price,
without limiting the rights of Bank hereunder or waiving any Event of
Default caused thereby, Bank may, and Borrower hereby authorizes Bank to,
convert such amount to a Revolving Loan bearing interest at the Prime Rate
to pay the settlement price on the Settlement Date.
(e) Increased Costs. Borrower shall promptly pay to and reimburse Bank
for all costs incurred and payments made by Bank by reason of any
assessment, reserve, deposit, capital maintenance or similar requirement or
any surcharge, tax or fee imposed upon Bank or as a result of Bank's
compliance with any directive or requirement of any regulatory authority
pertaining or relating to any FX Transaction.
(f) Impossibility of Performance or Default. In the event that (1)
Bank cannot perform under an FX Transaction due to force majeure or an act
of State (2) it becomes unlawful or impossible to perform, all in the good
faith judgement of Bank, or (3) an Event of Default occurs hereunder, then
upon notice to Borrower, Bank may require the close-out and liquidation of
the affected FX Transaction in accordance with the provisions of this
Agreement.
(g) Other Agreements. The provisions of this Subsection 2.1.3 shall be
subject to any additional terms, conditions, charges or fees provided for
in Bank's standard foreign currency exchange transactions agreement.
2.1.4 Revolving Note. The Revolving Loans shall be evidenced by the
Revolving Note. At the time of the initial disbursement of a Revolving Loan and
at each time an additional Revolving Loan shall be requested hereunder or a
repayment made in whole or in part thereon, an appropriate notation thereof
shall be made on the books and records of Bank. All amounts recorded shall be,
absent demonstrable error, conclusive and binding evidence of (i) the principal
amount of the Revolving Loans advanced hereunder and the amount of all Letter of
Credit Obligations, (ii) any unpaid interest owing on the Revolving Loans, and
(iii) all amounts repaid on the Revolving Loans or the Letter of Credit
Obligations. The failure to record any such amount or any error in recording
such amounts shall not, however, limit or otherwise affect the obligations of
Borrower under the Note to repay the principal amount of the Revolving Loans,
together with all interest accruing thereon.
2.1.5 Manner of Borrowing - Revolving Loans. Each Revolving Loan shall be
made available to Borrower upon its written request, from any person whose
authority to so act has not been revoked by Borrower in writing previously
received by Bank. A request for a Prime Loan must be received by no later than
11:00 a.m. Chicago, Illinois time, two days before the day it is to be funded. A
request for a LIBOR Loan must be received by no later than 11:00 a.m. Chicago,
Illinois time, two days before the day it is to be funded. Notwithstanding
anything contained in this Agreement to the contrary, Borrower may not have more
than five (5) LIBOR Loans outstanding at any one time. If for any reason
Borrower shall fail to select timely an Interest Period for an existing LIBOR
Loan, then such LIBOR Loan shall be immediately converted to a Prime Loan on the
last Business Day of the then-existing Interest Period, all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
Borrower. The proceeds of each Prime Loan or LIBOR Loan shall be made available
at the office of Bank by credit to the account of Borrower or by other means
requested by Borrower and acceptable to Bank. Bank is authorized to rely on each
loan request which Bank believes is its good faith judgment to emanate from a
properly authorized representative of Borrower, whether or not that is in fact
the case. Borrower does hereby irrevocably confirm, ratify and approve all such
advances by Bank and does hereby indemnify Bank against losses and expenses
(including court costs, attorneys' and paralegals' fees) and shall hold Bank
harmless with respect thereto. Each and every request for a Revolving Loan shall
constitute Borrower's representation and warranty that (i) as of the date of
said request, no Event of Default (or event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default) has occurred and is
continuing, (ii) no material adverse change has occurred in the operations or
financial condition of Borrower since the date of the most recent fiscal year
for which Borrower's Financial Statements have been delivered to Bank and
received thereby, subject to Bank's reasonable discretion to determine whether
such a material adverse change has occurred, (iii) the representations and
warranties of Borrower set forth within Section 5 are true and correct as of the
date of the request for a Revolving Loan, (iv) the affirmative and negative
covenants set forth in Sections 6 and 7 are not currently being breached and are
inviolate as of the date of such request for a Revolving Loan, and (v) the
aggregate Revolving Loans, including the Revolving Loan requested, do not exceed
the Revolving Loan Commitment.
2.1.6 Issuance of Letters of Credit. Each Letter of Credit shall be issued
by Bank upon the execution by Borrower and acceptance by Bank, in its sole
discretion, of Bank's standard application therefor and the payment by Borrower
of Bank's usual and customary fees in connection therewith. All standby Letters
of Credit issued under and pursuant to this Agreement shall bear an annual fee
equal to 1% of the face amount of such standby Letter of Credit which fee, along
with any other applicable fees or interest, shall be payable in accordance with
Bank's standard letter of credit fee schedule. All Letters of Credit other than
standby Letters of Credit shall bear such fees and interest and contain such
other terms and set forth in Bank's standard letter of credit fee schedule.
2.1.7 Interest Rate - Revolving Loans. The unpaid principal balance of the
Revolving Loans outstanding from time to time shall bear interest at a rate
selected by Borrower and equal to the Prime Rate or Adjusted LIBOR. Interest
shall be calculated on the basis of a year consisting of 360 days and shall be
paid for the actual number of days elapsed. Any amount of principal or interest
on the Revolving Loans which is not paid when due, whether at stated maturity,
by acceleration or otherwise, shall bear interest payable on demand at the
Default Rate.
2.1.8 Interest Payments - Revolving Loans. Accrued and unpaid interest on
the unpaid principal balance of all Prime Loans outstanding from time to time,
shall be due and payable monthly, in arrears, commencing on June 1, 2001 and
continuing on the first day of each calendar month thereafter (each, a "Monthly
Payment Date"), and on the Revolving Loan Maturity Date. Accrued and unpaid
interest on the unpaid principal balance of the LIBOR Loans shall be payable on
the last Business Day of each Interest Period, commencing on the first such date
to occur after the date hereof, on the date of any principal repayment of a
LIBOR Loan and on the Revolving Loan Maturity Date. After maturity (whether by
acceleration or otherwise) accrued and unpaid interest on the Prime Loans and
the LIBOR Loans shall be payable on demand.
2.1.9 Optional Prepayments of Revolving Loans. The principal balance of the
Prime Loans may be prepaid in whole or in part at any time without premium or
penalty, provided that any prepayment of a Prime Loan shall include accrued
interest on such Prime Loans to the date of such prepayment. The principal
balance of the LIBOR Loans may not be prepaid in whole or in part at any time.
If, for any reason, a LIBOR Loan is paid prior to the last Business Day of any
Interest Period, Borrower agrees to indemnify Bank against any loss (including
any loss on redeployment of the funds repaid), cost or expense incurred by Bank
as a result of such prepayment.
2.1.10 Mandatory Prepayments of Revolving Loans. All Revolving Loans shall
be repaid by Borrower on the Revolving Loan Maturity Date, unless payable sooner
pursuant to the provisions of this Agreement. In addition, if Borrower chooses
not to convert any LIBOR Loan to a Prime Loan at the end of the then-applicable
Interest Period, such LIBOR Loan shall be immediately due and payable on the
last Business Day of such Interest Period or on any kind, all of which are
hereby waived by Borrower.
2.1.11 Provisions Applicable to LIBOR Loans.
(a) If Bank determines in good faith (which determination shall be
conclusive, absent manifest error) prior to the commencement of any
Interest Period that (i) U.S. dollar deposits of sufficient amount and
maturity for funding any LIBOR Loan are not available to Bank in the London
Interbank Eurodollar market in the ordinary course of business, or (ii) by
reason of circumstances affecting the London Interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the rate of interest
to be applicable to the relevant LIBOR Loan, Bank shall promptly notify
Borrower thereof and, so long as the foregoing conditions continue,
Revolving Loans may not be advanced as a LIBOR Loan thereafter. In
addition, at Borrower's option, each existing LIBOR Loan shall be
immediately (y) converted to a Prime Loan on the last Business Day of the
then-existing Interest Period, or (z) due and payable on the last Business
Day of the then existing Interest Period, without further demand,
presentment, protest or notice of any kind, all of which are hereby waived
by Borrower.
(b) If, after the date hereof, a Regulatory Change shall, in the
reasonable determination of Bank, make it unlawful for Bank to make or
maintain the LIBOR Loans, then Bank shall promptly notify Borrower and
Revolving Loans may not be advanced as a LIBOR Loan thereafter. In
addition, at Borrower's option, each existing LIBOR Loan shall be
immediately (i) converted to a Prime Loan on the last Business Day of the
then existing Interest Period or on such earlier date as required by law,
or (ii) due and payable on the last Business Day of the then-existing
Interest Period or on such earlier date as required by law, all without
further demand, presentment, protest or notice of any kind, all of which
are hereby waived by Borrower.
(c) If any Regulatory Change (whether or not having the force of law)
shall (i) impose, modify or deem applicable any assessment, reserve,
special deposit or similar requirement against assets held by, or deposits
in or for the account of or loans by, or any other acquisition of funds or
disbursements by, Bank; (ii) subject Bank or any LIBOR Loan to any tax,
duty, charge, stamp tax or fee or change the basis of taxation of payments
to Bank of principal or interest due from Borrower to Bank hereunder (other
than a change in the taxation of the overall net income of Bank); or (iii)
impose on Bank any other condition regarding such LIBOR Loan or Bank's
funding thereof, and Bank shall determine (which determination shall be
conclusive, absent manifest error) that the result of the foregoing is to
increase the cost to Bank of making or maintaining such LIBOR Loan or to
reduce the amount of principal or interest received by Bank hereunder, then
Borrower shall pay to Bank, on demand, such additional amounts as Bank
shall, from time to time, determine are sufficient to compensate and
indemnify Bank for such increased cost or reduced amount.
2.2 Term Loan.
2.2.1 Existing Term Loan. The parties acknowledge that Bank heretofore has
made a term loan pursuant to the Original Agreement to Borrower (the "Term
Loan"), the principal amount of which as of May 1, 2001 is $2,463,986.94. From
and after the date hereof, the Term Loan shall be subject to the terms and
conditions of this Agreement and the other Loan Documents.
2.2.2 Term Note. The Term Loan is evidenced by the Term Note, a copy of
which is attached as Exhibit B hereto. At the time of each repayment under the
Term Loan, an appropriate notation thereof shall be made on the books and
records of Bank. All amounts recorded shall be, absent demonstrable error,
conclusive and binding evidence of (i) the principal amount of the Term Loan
advanced hereunder, (ii) any unpaid interest owing on the Term Loan and (iii)
all amounts repaid on the Term Loan. The failure to record any such amount or
any error in recording such amounts shall not, however, limit or otherwise
affect the obligations of Borrower under the Term Note to repay the principal
amount of the Term Loan, together with all interest accruing thereon.
2.2.3 Term Loan Interest. The principal amount from time to time
outstanding under the Term Loan shall bear interest calculated at a fixed rate
equal to seven and 5/100ths of one percent (7.05%) (the "Term Interest Rate").
Interest shall be calculated on the basis of a year consisting of 360 days and
shall be paid for the actual number of days elapsed. Interest shall be payable
as set forth in the following Section 2.2.4. Any amount of principal or interest
on the Term Loan which is not paid when due, whether at stated maturity, by
acceleration or otherwise shall bear interest payable on demand at the Default
Rate.
2.2.4 Principal and Interest Payments. The outstanding principal balance of
the Term Loan, including interest thereon, shall continue to be repaid in equal
monthly principal and interest installments of $20,431.00 on the first day of
each month, with a final payment of all outstanding principal and accrued
interest due on the Term Loan Maturity Date. Principal amounts repaid on the
Term Note may not be borrowed again.
2.3 Second Term Loan.
2.3.1 Refinance of Second Term Loan. The parties acknowledge that Bank has
heretofore made a term loan to Borrower under the Original Agreement, the
outstanding principal amount of which as of May 1, 2001 was approximately
$2,773,336. Bank has agreed to increase the outstanding principal amount of the
Second Term Loan, the principal amount of which, as of May ___, 2001, shall be
$5,773,336 (the "Second Term Loan"). The increase of the Second Term Loan shall
constitute a refinancing and extension of the "Second Term Loan" under the
Original Agreement, and all Collateral securing the Obligations thereunder
continue to secure the Obligations hereunder with the same priority and
effective dates of recording or filing for the Original Agreement. The Second
Term Loan shall be subject to the terms and conditions of this Agreement and the
other Loan Documents.
2.3.2 Second Term Note; Repayment of Principal. In order to evidence the
Second Term Loan on the date hereof, Borrower will execute and deliver a
promissory note, in the form of Exhibit C (together with any and all amendments,
modifications, supplements, substitutions, renewals, extensions, and
restatements, thereof and therefor, the "Second Term Note"), repayable and
maturing in accordance with and bearing interest as set forth in this Agreement
and as set forth in the Second Term Note. Payments of principal amounts due
under the Second Term Note shall be made in fifty-nine (59) equal monthly
installments of principal, each in the amount of Sixty One Thousand Two Hundred
Fifty Dollars ($61,250), plus interest, commencing on June 1, 2001 and
continuing on the first day of each month thereafter, unless such day is not a
Business Day, then on the next succeeding Business Day, with a final installment
of the then outstanding principal balance together with all interest accrued
thereon on the Second Term Loan Maturity Date. Principal amounts repaid on the
Second Term Note may not be borrowed again.
2.3.3 Second Term Loan Interest Rate. The Second Term Loan shall bear
interest on the unpaid principal balance thereof at a rate per annum equal to
the Swap Rate, plus two and one tenth percent (2.10%). Interest shall be payable
monthly in arrears, commencing on June 1, 2001 and continuing on the first day
of each month thereafter, unless such day is not a Business Day, then on the
next succeeding Business Day.
2.4 Borrower's Loan Account. Bank shall maintain a loan account ("Loan
Account") on its books in which shall be recorded (i) the Loans made by Bank to
Borrower pursuant to this Agreement, (ii) all payments made by Borrower on the
Loans, and (iii) all other appropriate debits and credits as provided in this
Agreement, the Loan Documents or the Notes, including, without limitation, all
fees, charges, expenses and interest provided for hereunder or thereunder. All
advances to Borrower and all other debits and credits provided for in this
Agreement or the Notes, shall be evidenced by entries made by Bank in its
internal data control systems, in accordance with Bank's customary accounting
practices as in effect from time to time, showing the date, amount and reason
for each such debit or credit. Bank may send Borrower statements of all amounts
due hereunder as reflected in the Loan Account, which statements shall be
considered presumptively correct as to the indebtedness due and owing by
Borrower to Bank unless Borrower notifies Bank within sixty (60) days of receipt
of any such statement that Borrower considers such statement to be incorrect and
Borrower specifically identifies the items on such statement which it considers
to be incorrect and attaches any evidence in its possession supporting its
position.
2.5 Prepayments; Application of Payments and Prepayments.
2.5.1 Prepayment of Term Loan. The principal balance of the Term Loan may
be prepaid in whole or in part at any time without premium or penalty, provided
that any prepayment of the Term Loan (i) shall include accrued interest on the
amount of such prepayment to the date of such prepayment and (ii) shall be in a
minimum amount $10,000 or a multiple of $1,000 in excess thereof.
2.5.2 Prepayment of Second Term Loan. The principal balance of the Second
Term Loan may be prepaid in whole or in part at any time without premium or
penalty, provided that any prepayment of the Second Term Loan (i) shall include
accrued interest on the amount of such prepayment to the date of such prepayment
and (ii) shall be in a minimum amount $10,000 or a multiple of $1,000 in excess
thereof. In connection with any prepayment, in whole or in part, of the Second
Term Loan, Borrower shall pay to Bank as provided hereunder, a "Make Whole
Premium Amount" if the "Reinvestment Yield" (as hereinafter defined) is less
than Bank's matched cost for the Loan being prepaid. The "Make Whole Premium
Amount" shall equal the positive difference between two sums determined by
subtracting the second sum from the first sum, each sum representing the total
cumulative present value of each payment of principal being prepaid. The first
sum shall be calculated by discounting each such prepaid amount utilizing an
interest factor equal to Bank's matched cost for the Loan being prepaid. The
"Reinvestment Yield" shall be defined as the sum of 210 basis points plus the
U.S. Treasury Rate for an issue with comparable average life to that portion of
the Second Term Loan being prepaid plus the corresponding swap spread as
published in Bloomberg's Financial Markets Commodities News. In the absence of
material error, a certificate from Bank specifying such losses, costs or
expenses shall be conclusive and binding on all parties. The Second Term Loan
shall be conclusively deemed to have been funded on behalf of Bank in the manner
specified by it in such calculations by the purchase of a matched fund deposit
corresponding in amount and maturity to such Second Term Loan.
2.5.3 Application of Payments and Prepayments. Any payments made by
Borrower under this Agreement, the Notes or any of the other Loan Documents
shall be applied to Obligations owing as of the date of payment in the following
order: (i) to any expenses of Bank incurred in connection with this Agreement;
(ii) to interest accrued pursuant to the terms of the Notes; (iii) to the
principal balance of the Revolving Loans; and (iv) to the principal balances of
the Term Loan and Second Term Loan in inverse order of maturity.
2.6 Fees and Expenses.
2.6.1 Unused Line Fee. Borrower agrees to pay to Bank a non-use fee in the
amount of one-eighth of one percent (1/8%) per annum times the average daily
amount of the available portion of the Revolving Loan Commitment, payable
quarterly in arrears on the first day of each June, September, December and
March. The non-use fee shall be calculated on the basis of a year consisting of
360 days for actual days elapsed.
2.6.2 Second Term Loan Prepayment Penalty. Borrower shall pay to Bank on
the date hereof $75,000 as a Make Whole Premium Amount.
2.6.3 Other Expenses. Borrower shall reimburse Bank for all its reasonable
expenses incurred in connection with the preparation (including due diligence),
negotiation, documentation, amendment, modification, administration or
enforcement of this Agreement, the Notes or any Loan Documents, including
reasonable attorney, paralegal and other professional fees.
2.7 Default Interest. In the event any amount of principal or interest due
hereunder or any other payment due under this Agreement or any of the other Loan
Documents becomes overdue, such overdue amount shall accrue interest at the
Default Interest Rate from the due date through the date of payment.
2.8 Compensating Balances. Borrower shall maintain average daily available
demand deposit balances sufficient to cover all service costs at Bank plus "Free
Balances" equal to $250,000, calculated for each month at the end of each such
month. "Free Balances" are defined as available demand deposit balances over and
above those sufficient to cover the service costs on all of Borrower's accounts
at Bank and are set forth in the monthly Analysis Statement provided to Borrower
by Bank and listed as "Current Period Analyzed Charges" therein. The monthly
balance deficiencies with respect to this compensating balance requirement will
be totaled and charged on a quarterly basis at the rate of interest charged to
Borrower on the Prime Loans.
2.9 Payment to Bank. All sums payable to Bank hereunder shall be paid
directly to Bank, at the address set forth in Section 11.8, in immediately
available funds. Principal payments submitted in funds not immediately available
shall continue to bear interest until collected. If any payment to be made by
the Borrower hereunder or under any Note shall become due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing any interest in respect of
such payment. Alternatively, Bank may charge against or debit any deposit
account of Borrower all or any part of any amount due hereunder or under the
Notes. Bank's right from time to time after the occurrence or happening of an
Event of Default hereunder (which has not been waived in a writing signed by
Bank) to setoff Indebtedness against Borrower's monies, deposits, credits,
accounts or other property now or at any time in the possession or control of
Bank, is hereby acknowledged and agreed to by Borrower. For purposes of this
Agreement and the other Loan Documents, payments to Bank with checks or other
similar drafts which shall be returned to Bank due to insufficient funds shall
be deemed not to have been paid to Bank in the first instance.
2.10 Loans Constitute One Financing Transaction. Notwithstanding anything
to the contrary contained in this Agreement or in any of the Loan Documents, the
Loans shall be deemed to constitute one loan transaction. In addition, the
Collateral supporting each of the Revolving Loans the Term Loan and the Second
Term Loan shall be deemed Collateral for all Loans made under this Agreement or
any Loan Documents and any Event of Default or event with which the passage of
time or giving of notice or both would constitute an Event of Default with
respect to any of the Revolving Loans, the Term Loan or the Second Term Loan
shall be deemed a default or Event of Default, as applicable, with respect to
all Loans and shall give rise to all remedies therefor.
3. SECURITY FOR THE TERM LOAN. The parties acknowledge that Borrower
heretofore has pledged to Bank for the Term Loan:
3.1 Grant of Security Interest. As continuing security for the prompt
payment and performance of the Obligations and Indebtedness of Borrower to Bank,
including all refinancings, renewals, extensions, modifications and
substitutions thereof or therefor, to be retained by Bank, until the Obligations
and Indebtedness of Borrower are fully satisfied, Borrower hereby pledges,
assigns, transfers, delivers and sets over to Bank all of Borrower's right,
title and interest in and to, and grants Bank a Lien on and security interest
in, all of the Collateral and any and all amounts which may be owing from time
to time by Bank or any other financial institution to Borrower in any capacity,
including without limitation, any balance or share belonging to Borrower, or any
monies, deposits, credits, accounts (including, without limitation, the Lockbox
Account) or other Property in the possession of Bank. Except for the Permitted
Liens, the Liens and security interests under this subsection shall be first and
prior to any other Liens and security interests in and on the Collateral, and
Borrower shall permit no Liens, except for Permitted Liens, to attach to the
Collateral.
3.2 Perfection of Security Interests. Borrower hereby agrees to, and shall,
complete, execute and deliver to Bank, in form and substance satisfactory to
Bank, the Amendment to Mortgage, all financing statements, including, without
limitation, the financing statements described in Section 4.1(f) hereof, all
amendments to and continuation statements for the foregoing, any schedules to be
attached to the foregoing and forms or other documents to be completed in
connection with the foregoing, and hereby agrees to and shall take all such
other action, including noting Bank's security interest and lien directly onto
the Collateral, which Bank may request from time to time and which Bank, in its
sole and complete discretion, deems necessary for the perfection or continued
perfection of the security interests granted under Section 3.1 above. Borrower
hereby agrees with Bank that a carbon, photographic or other reproduction of
this Agreement may be filed in lieu of, and shall be sufficient as, a financing
statement. Borrower hereby authorizes, without requiring, Bank to execute and
file any such financing statements, amendments, continuation statements,
schedules, forms or other documents on behalf of and as the attorneys-in-fact
for Borrower in order to perfect the security interests granted under Section
3.1 above. Borrower hereby agrees to, and shall, pay upon demand, all costs,
taxes and expenses of filing or recording the same in all public offices,
including those offices described in Section 4.1(f) hereof, which Bank, in its
reasonable discretion, deems necessary in order to perfect the security
interests granted under Section 3.1 above.
3.3 Notice to Account Debtors and Instrument Obligors. At any time and from
time to time, after the occurrence of an Event of Default, Bank shall have the
right to and may, in its sole and complete discretion, (i) contact any Account
Debtor of Borrower or obligor under any of Borrower's Instruments in order to
verify the validity or amount or any other matter relating to any Account or any
Instrument; and (ii) notify all Account Debtors of Borrower and all obligors
under any of Borrower's Instruments that all Accounts and all Instruments of
Borrower have been assigned to Bank and Bank has a security interest therein.
3.4 Appointment as Attorney-in-Fact. Borrower hereby irrevocably
designates, makes, constitutes and appoints Bank as Borrower's true and lawful
attorney-in-fact, which appointment is coupled with an interest, and authorizes
and empowers Bank, in either Borrower's or Bank's name, upon the happening or
occurrence and during the continuation of an Event of Default hereunder, at such
time or times thereafter as Bank may in its sole and complete discretion
determine: (i) to demand payment of the Accounts and overdue Instruments of
Borrower and direct all applicable Account Debtors and Instrument obligors to
make payment thereon directly to Bank; (ii) to enforce payment and collection of
Borrower's Accounts and overdue Instruments by legal proceedings or otherwise;
(iii) to exercise all of Borrower's rights and remedies with respect to the
collection or any proceedings to collect the Accounts and overdue Instruments of
Borrower; (iv) to sell or assign any Account or Instrument of Borrower upon such
terms, for such amount, and at such time or times as Bank deems advisable in its
sole and complete discretion, reasonably exercised; (v) to settle, adjust or
compromise any Account or Instrument of Borrower or any legal proceedings
brought to collect such an Account or Instrument; (vi) to discharge or release
any Account or Instrument of Borrower; (vii) to prepare, file and sign
Borrower's name on and to any bankruptcy proof of claim form or other similar
document against an Account Debtor or Instrument obligor of Borrower; (viii) to
prepare, file and sign Borrower's name on any notice of lien, claim or
mechanic's lien, assignment or satisfaction or lien, or mechanic's lien or
similar document in connection with an Account or any Instrument of Borrower;
(ix) to take control in any manner of any cash or non-cash item of payment or
proceeds of any Account or Instrument of Borrower, including without limitation
any rejected, returned, stopped-in-transit or repossessed goods relating to such
Accounts or Instruments, and endorse Borrower's name upon any of Borrower's
Chattel Paper, Documents, Instruments, invoice or similar document or agreement
relating to any such Account or Instrument or any goods pertaining thereto; and
(x) to notify the Post Office authorities to change the address for delivery of
Borrower's mail to an address designated by Bank, access any lock box or postal
box into which any of Borrower's mail is deposited, and open and dispose of all
mail addressed to Borrower.
4. CONDITIONS OF BORROWING. Notwithstanding any other provision of this
Agreement, Bank shall not be required to disburse or make all or any portion of
the Loans unless all of the following conditions shall have occurred.
4.1 Loan Documents. Borrower shall have executed and delivered to Bank the
following documents (collectively, together with any modifications or
replacements therefor and any other documents from time to time delivered to
Bank to effectuate the transactions contemplated herein, the "Loan Documents"),
all of which must be satisfactory to Bank and Bank's counsel in form, substance
and execution:
(a) this Agreement duly executed by Borrower;
(b) Replacement Revolving Note in the form of Exhibit A, duly executed
by Borrower;
(c) Replacement Second Term Note in the form of Exhibit C duly
executed by Borrower;
(d) Seventh Amendment to Mortgage in the form of Exhibit D duly
executed by Borrower;
(e) Resolutions of the board of directors of Borrower authorizing the
execution of this Agreement and the Loan Documents;
(f) UCC-1 financing statements executed by Borrower for filing with
the Office of the Illinois Secretary of State, the Office of the California
Secretary of State, the Office of the North Carolina Secretary of State,
and such other financing statements or fixture filings as Bank, in its sole
and complete discretion may request from Borrower, in form and substance
satisfactory to Bank in its sole and complete discretion;
(g) Reaffirmation of Stock Pledge Agreement in the form of Exhibit E;
(h) a Borrowing Base Certificate in the form of Exhibit F;
(i) a Compliance Certificate in the form of Exhibit G; and
(j) Reaffirmation of Guaranty in the form of Exhibit H;
(k) a Security Interest and Mortgage-Trademarks and Patents in the
form of Exhibit I;
(l) a Master Letter of Credit Agreement in the form of Exhibit J; and
(l) such other documents as Bank reasonably shall require.
4.2 No Event of Default. No Event of Default or event or condition which,
with notice or lapse of time, or both would constitute an Event of Default, has
occurred and is continuing.
4.3 No Adverse Change. Since the date of this Agreement, there has been, in
Bank's sole and complete discretion, no material adverse change in the financial
condition or affairs of Borrower.
4.4 No Litigation. No litigation or governmental proceeding has been
instituted against Borrower or any of its officers or shareholders which, in the
discretion of Bank reasonably exercised, shall materially adversely affect the
financial condition or continued operation of Borrower.
4.5 Representations and Warranties True. All representations and warranties
of Borrower contained herein or in any Loan Document are true and correct as of
the date of any advance as though made on such date, except to the extent such
representation or warranty expressly relates to an earlier date.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Organization. Borrower is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware, with full and adequate
corporate power to carry on and conduct its business as presently conducted, and
is duly licensed or qualified in all foreign jurisdictions wherein the nature of
its activities require such qualification or licensing.
5.2 Authorization; Validity. Borrower has full right, power and authority
to enter into this Agreement, to make the borrowings and execute and deliver the
Loan Documents as provided herein and to perform all of its duties and
obligations under this Agreement and the Loan Documents. The execution and
delivery of this Agreement and the Loan Documents will not, nor will the
observance or performance of any of the matters and things herein or therein set
forth, violate or contravene any provision of law or of the articles of
incorporation or bylaws of Borrower. All necessary and appropriate corporate
action has been taken on the part of Borrower to authorize the execution and
delivery of this Agreement and the Loan Documents. This Agreement and the Loan
Documents are valid and binding agreements and contracts of Borrower,
enforceable in accordance with their respective terms.
5.3 Compliance With Laws. The nature and transaction of Borrower's business
and operations and the use of its properties and assets, including, but not
limited to any of the Collateral or any real estate owned or occupied by
Borrower, do not and during the term of the Loans shall not, violate or conflict
with any applicable law, statute, ordinance, rule, regulation or order of any
kind or nature, including, without limitation, the provisions of the Fair Labor
Standards Act or any zoning, land use, building, noise abatement, occupational
health and safety or other laws, any building permit or any condition, grant,
easement, covenant, condition or restriction, whether recorded or not.
5.4 Environmental Laws and Hazardous Materials. Borrower represents,
warrants and agrees with Bank that (i) Borrower has not generated, used, stored,
treated, transported, manufactured. handled, produced or disposed of any
Hazardous Materials on or off any of the premises of Borrower (whether or not
owned by it) in any manner which at any time violates any Environmental Law or
any license, permit, certificate, approval or similar authorization thereunder,
(ii) the operations of Borrower comply in all material respects with all
Environmental Laws and all licenses, permits certificates, approvals and similar
authorizations thereunder, (iii) there has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other person or entity, nor is any pending or, to the best of
Borrower's knowledge, threatened, and Borrower shall immediately notify Bank
upon becoming aware of any such investigation, proceeding, complaint, order,
directive, claim, citation or notice, and shall take prompt and appropriate
actions to respond thereto, with respect to any noncompliance with, or violation
of the requirements of any Environmental Law by Borrower or the release, spill
or discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material or any other environmental, health or safety
matter, which affects Borrower or its business, operations or assets or any
properties at which Borrower has transported, stored or disposed of any
Hazardous Materials, (iv) Borrower has no material liability, contingent or
otherwise, in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Material, and (v) without limiting the generality of the foregoing, Borrower
shall, following determination by Bank that there is noncompliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any noncompliance, with any Environmental Law, at Borrower's sole expense,
cause an independent environmental engineer acceptable to Bank to conduct such
test of the relevant site as are appropriate, and prepare and deliver a report
setting forth the result of such tests, a proposed plan for remediation and an
estimate of the costs thereof.
5.5 Absence of Breach. The execution, delivery and performance of this
Agreement, the Loan Documents and any other documents or instruments to be
executed and delivered by Borrower in connection with the Loans shall not: (i)
violate any provisions of law or any applicable regulation, order, writ,
injunction or decree of any court or governmental authority, or (ii) conflict
with, be inconsistent with, or result in any breach or default of any of the
terms, covenants, conditions, or provisions of any indenture, mortgage, deed of
trust, instrument, document, agreement or contract of any kind to which Borrower
is a party or by which Borrower or any of its property or assets may be bound.
5.6 Financial Statements. All Financial Statements submitted to Bank have
been prepared in accordance with GAAP on a basis, except as otherwise noted
therein, consistent with the previous fiscal year and truly and accurately
reflect the financial condition of Borrower and its consolidated subsidiaries
and the results of the operations for Borrower and its consolidated subsidiaries
as of such date and for the periods indicated. Since the date of the most recent
financial statement submitted by Borrower to Bank, there has been no material
adverse change in the financial condition or in the assets or liabilities of
Borrower or its consolidated subsidiaries, or any changes except those occurring
in the ordinary course of business.
5.7 Litigation and Taxes. There is no litigation or governmental proceeding
pending or, to the knowledge of Borrower after due inquiry, threatened against
Borrower, which, if adversely determined, would result in any material adverse
change in the financial condition or properties, business or operations of
Borrower. Borrower has duly filed all applicable income or other tax returns and
has paid all income or other taxes when due. There is no controversy or
objection pending or, to the knowledge of Borrower after due inquiry, threatened
in respect of any tax returns of Borrower.
5.8 Title and Liens. Except for the Permitted Liens, Borrower, has good and
marketable title to all of its respective Property, assets and the Collateral,
and the Collateral is not subject to any liens, claims, security interests,
mortgages, pledges, charges or other encumbrance of any Person, except, with
respect to the Collateral, Bank and holders of the Permitted Liens.
5.9 Account Warranties. With respect to the Accounts of Borrower scheduled,
listed or referred to from time to time on any Accounts Receivable Aging Reports
or Financial Statement, Borrower warrants and represents to Bank that: (a) such
Accounts are genuine, are in all respects what they purport to be, and are not
evidenced by a judgment; (b) such Accounts are assignable and a security
interest may be granted therein and such Accounts are subject to the first and
prior perfected Lien and security interest of Bank (except for any Permitted
Liens); (c) such Accounts represent undisputed, bona fide transactions completed
in accordance with the terms and provisions of the documents related thereto as
delivered to Bank if so requested; (d) the Equipment, Goods or Inventory sold or
leased, or the services rendered, which resulted in the creation of such
Accounts have been delivered or rendered to and accepted by the applicable
Account Debtor; (e) the amounts shown on Borrower's books and records and all
invoices and statements delivered to Bank, when and if so requested, with
respect to such Accounts are actually and absolutely owing to the applicable
Borrower and are not in any way contingent; (f) no payments have been made upon
such Accounts; (g) there are no set-offs, counterclaims or disputes existing or,
to Borrower's best knowledge, asserted with respect to such Accounts and
Borrower has not made any agreement with any applicable Account Debtor for any
deduction or discount from any such Account, except discounts allowed by
Borrower in the ordinary course of its business for prompt payment; (h) to the
best knowledge of Borrower, there are no facts, events or occurrences which in
any way impair the validity or the enforceability of such Accounts or tend to
reduce the amounts payable under such Accounts as shown on the books and records
of Borrower and the invoices and statements delivered to Bank, when and if so
requested, with respect thereto; (i) to the best knowledge of Borrower, all of
the applicable Account Debtors with respect to such Accounts have the capacity
to contract and are solvent; (j) such Accounts and the Equipment, Goods,
Inventory sold or leased or the services rendered giving rise to said Accounts
are not subject to any lien, security interest, claim, charge or any other
encumbrance, except for the first and prior perfected security interest of Bank
and except those of holders of the Permitted Liens; and (k) to the best
knowledge of Borrower, there are no proceedings or actions which are threatened
or pending against any of the applicable Account Debtors which might result in
any material adverse change in such Account Debtor's financial condition.
5.10 Inventory and Equipment Warranties. (a) The current address for the
chief executive offices of Borrower is set forth on Schedule 11.8 hereof ("Chief
Executive Office Locations") and the Inventory and Equipment used in Borrower's
business is located at its Chief Executive Office Location and at the locations
set forth on Schedule 7.11 hereof (the "Additional Inventory Locations"); (b)
all Inventory and Equipment is presently owned and will continue to be owned by
Borrower, except as otherwise permitted pursuant to the terms of this Agreement,
free and clear of all liens and encumbrances, other than Bank's security
interest hereunder and any Permitted Liens; (c) no Inventory has been consigned
to any Person; and (d) no Inventory or Equipment is presently or at any time or
times hereafter, will be stored with a bailee, warehouseman or similar party
without Bank's prior written consent, and, if Bank gives such consent, Borrower
will concurrently therewith cause any such bailee or warehouseman to issue and
deliver to Bank, warehouse receipts therefor in Bank's name, in form acceptable
to Bank.
5.11 Patents and Trademarks. Borrower possesses those patents and
trademarks listed on Schedule 5.11 hereto which are all of the necessary
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights and copyrights to conduct the business of Borrower as now operated.
Borrower's patents, patent rights, trademarks, trademark rights, trade names,
trade name rights and copyrights do not, to the best of Borrower's knowledge,
infringe on the property rights of any other Person.
5.12 Occupational Safety and Health. Borrower has not received any notice,
citation, claim, assessment or proposed assessment as to or alleging any
material violation by Borrower from any division of any Federal or state
occupational safety and health administrations or agencies and no such violation
presently exists. Borrower is not a party to any pending dispute with respect to
Borrower's or any Affiliate's compliance with any Federal or state occupational
safety and health laws.
5.13 ERISA Obligations. Borrower has promptly paid and discharged all
obligations and liabilities, if any, arising under of a character which if
unpaid or unperformed might result in the imposition of a lien against any of
its properties or assets.
5.14 Lending Relationship. Borrower acknowledges and agrees that the
relationship hereby created with Bank is and has been conducted on an open and
arm's length basis in which no fiduciary relationship exists and that Borrower
has not relied and is not relying on any such fiduciary relationship in
executing this Agreement and in consummating the Loans. Bank represents that it
will receive the Note payable to its order as evidence of a bank loan.
5.15 Business Loan. The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are business loans within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) are an exempted transaction
under the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended from time to
time, and (iii) do not, and when disbursed shall not, violate the provisions of
the Illinois usury laws, any consumer credit laws or the usury laws of any state
which may have jurisdiction over this transaction, Borrower or any property
securing the Loans.
5.16 Compliance with Regulation U. No portion of the proceeds of the Loans
nor any Letter of Credit shall be used by Borrower, or any affiliates of
Borrower, either directly or indirectly, for the purpose of purchasing or
carrying any margin stock, within the meaning of Regulation U as adopted by the
Board of Governors of the Federal Reserve System.
5.17 Complete Information. This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials submitted to Bank in connection with or in furtherance of this
Agreement by or on behalf of Borrower fully and fairly state the matters with
which they purport to deal, and neither misstate any material fact nor,
separately or in the aggregate, fail to state any material fact necessary to
make the statements made not misleading.
5.18 Places of Business. The principal place of business of Borrower is 500
State Street, Chicago Heights, Illinois. Borrower promptly shall notify Bank of
any change in any such location.
5.19 Subsidiaries. Set forth on Schedule 5.19 attached hereto is a complete
list of the subsidiaries of Borrower.
5.20 Event of Default. No Event of Default and no event which, with the
lapse of time, the giving of notice or both, would constitute an Event of
Default under this Agreement or any of the Loan Documents has occurred and is
continuing. Borrower is not in default (without regard to grace or cure periods)
under any contract or agreement to which it is a party, the effect of which
default shall materially adversely affect the performance by Borrower of its
obligations pursuant to and as contemplated by the terms and provisions of this
Agreement.
5.21 Adverse Circumstances. No condition, circumstance, event, agreement,
document, instrument, restriction, litigation or proceeding (or threatened
litigation or proceeding or basis therefor) exists which could adversely affect
the validity or priority of the liens and security interests granted to Bank
under the Loan Documents, which could materially adversely affect the ability of
Borrower to perform its obligations under the Loan Documents, which would
constitute a default under any of the Loan Documents or which would constitute
such a default with the giving of notice or lapse of time or both.
5.22 Disclosure. No representation or warranty by Borrower in this
Agreement or any of the other Loan Documents, nor any statement furnished to
Bank by Borrower pursuant hereto or thereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact,
necessary when made or while the representation or warranty is continuing, to
make the statements contained herein or therein not misleading.
6. NEGATIVE COVENANTS.
6.1 Indebtedness. Borrower shall not, either directly or indirectly,
create, assume, incur or have outstanding any Indebtedness (including purchase
money indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of any other person, firm or corporation,
except:
(a) the Obligations;
(b) endorsement for collection or deposit of any commercial paper
secured in the ordinary course of business;
(c) obligations of Borrower for taxes, assessments, municipal or other
governmental charges;
(d) obligations of Borrower for accounts payable, other than for money
borrowed, incurred in the ordinary course of business;
(e) indebtedness to the Illinois Development Finance Authority
("IDFA") in connection with the bonds issued by IDFA secured by a Loan
Agreement dated as of June 1, 1996 between Borrower and IDFA;
(f) obligations of Borrower under that certain Guaranty dated as of
March 19, 2001 and reaffirmed as of the date hereof, made by Borrower in
favor of ABN AMRO Bank (Deutchland) AG guaranteeing a EUR 14,230,000
obligation by CFC Europe, GmbH, a wholly owned subsidiary of Borrower, to
ABN AMRO Bank (Deutchland) AG;
(g) indebtedness to Applied Holographics PLC evidenced by that certain
Promissory Note dated as of October 1, 1998 in the original principal
amount of $1,500,000 and maturing on September 1, 2002, with an outstanding
principal balance as of May 1, 2001 of _____________;
(h) indebtedness to Northern Bank Note Company, a wholly owned
subsidiary of Borrower, evidenced by that certain Convertible Note dated as
of ____________ in the original principal amount of $___________ and
maturing on September 30, 2006, with a current outstanding principal
balance of $2,000,000; and
(i) obligations existing on the date hereof which are disclosed on the
financial statements referred to in Section 7.8. -----------
6.2 Encumbrances. Borrower shall not, either directly or indirectly,
create, assume, incur or suffer or permit to exist any mortgage, pledge,
encumbrance, security interest, assignment, lien or charge of any kind or
character upon any asset of Borrower, whether owned at the date hereof or
hereafter acquired except:
(a) liens for taxes, assessments or other governmental charges not yet
due or which are being contested in good faith by appropriate proceedings
in such a manner as not to make the property forfeitable;
(b) liens, charges and encumbrances incidental to the conduct of its
business or the ownership of its property and assets which were not
incurred in connection with the borrowing of money or the obtaining of an
advance or credit, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use
thereof in the operation of its business;
(c) liens arising out of judgments or awards against Borrower with
respect to which it shall concurrently therewith be prosecuting a timely
appeal or proceeding for review and with respect to which it shall have
secured a stay of execution pending such appeal or proceedings for review;
(d) pledges or deposits to secure obligations under worker's
compensation laws or similar legislation;
(e) good faith deposits in connection with lending contracts or leases
to which Borrower is a party;
(f) deposits to secure public or statutory obligations of Borrower;
(g) liens existing on the date hereof and disclosed on the Financial
Statements referred to in Section 7.8;
(h) liens securing indebtedness permitted under Section 6.1(e);
(i) liens and security interests granted to Bank.
6.3 Investments. Borrower shall not, either directly or indirectly, make or
have outstanding any new investments (whether through purchase of stocks,
obligations or otherwise) in, or loans or advances to, any other person, firm or
corporation, or acquire all or any substantial part of the assets or business of
any other person, firm or corporation except (a) investments in direct
obligations of the United States; (b) investments in certificates of deposit
issued by Bank or any bank with assets greater than $100,000,000; or (c)
investments in "prime commercial paper." For purposes hereof, "prime commercial
paper means short-term unsecured promissory notes sold by large corporations and
rated Al/PI by Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.,
and Moody's Investment Service, Inc.
6.4 Transfer; Merger. Borrower shall not, either directly or indirectly,
merge, consolidate, sell. transfer, lease, encumber or otherwise dispose of all
or any part of its property or business or all or any substantial part of its
assets, or sell or discount (with or without recourse) any of its notes or
Accounts.
6.5 Distributions. Borrower shall not, either directly or indirectly,
purchase or redeem any shares of its stock, declare or pay any dividends (other
than stock dividends), whether in cash or otherwise, or set aside any funds for
any such purpose or make any distribution to its shareholders, unless previously
approved by Bank, which approval shall not be unreasonably withheld.
6.6 Use of Proceeds. Neither Borrower nor any affiliate of Borrower shall
use any portion of the proceeds of the Loans nor have any Letter of Credit
issued, either directly or indirectly, for the purpose of purchasing any
securities underwritten or privately placed by ABN AMRO Inc., an affiliate of
Bank.
6.7 CFC Oeserwerk GmbH Machinery and Equipment. Borrower shall not allow
any Lien to encumber any equipment or machinery which is the Property of CFC
Oeserwerk GmbH.
6.8 CFC Oeserwerk GmbH Stock. Borrower shall not allow any Lien to encumber
the stock of CFC Oeserwerk GmbH, which has been pledged to Bank by Borrower's
wholly owned subsidiary, CFC Europe GmbH, a German corporation, pursuant to that
certain Stock Pledge Agreement dated as of March 19, 1999, as amended or
reaffirmed from time to time.
7. AFFIRMATIVE COVENANTS.
7.1 Payments. The Borrower shall pay, or cause to be paid, when due all
principal and interest under the Notes and all other Obligations in respect of
this Agreement, the Notes and the Loan Documents.
7.2 Compliance with Bank Regulatory Requirements. Upon demand by Bank,
Borrower shall reimburse Bank for Bank's additional costs and/or reductions in
the amount of principal or interest received or receivable by Bank if at any
time after the date of this Agreement any law, treaty or regulation or any
change in any law, treaty or regulation or the interpretation thereof by any
governmental authority charged with the administration thereof or any central
bank or other fiscal, monetary or other authority having jurisdiction over Bank
or the Loans, whether or not having the force of law, shall impose, modify or
deem applicable any reserve (except reserve requirements taken into account in
calculating the Interest Rate) and/or special deposit requirement against or in
respect of assets held by or deposits in or for the account of the Loans by Bank
or impose on Bank any other condition with respect to this Agreement or the
Loans, the result of which is to either increase the cost to Bank of making or
maintaining the Loans or to reduce the amount of principal or interest received
or receivable by Bank with respect to such Loans. Said additional costs and/or
reductions will be those which directly result from the imposition of such
requirement or condition on the making or maintaining of such Loans. All Loans
shall be deemed to be match funded for the purposes of Bank's determination in
the previous sentence. Notwithstanding the foregoing, Borrower shall not be
required to pay any such additional costs which could be avoided by Bank with
the exercise of reasonable conduct and diligence.
7.3 Corporate Existence. Borrower shall at all times preserve and maintain
its corporate existence, rights. franchises and privileges, and shall at all
times continue as a going concern in the business which Borrower is presently
conducting.
7.4 Maintain Property and Equipment. Borrower shall at all times maintain.
preserve and keep its plant, Property and Equipment in good repair, working
order and condition, normal wear and tear excepted, and shall from time to time
make all needful and proper repairs, renewals, replacements. and additions
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained. Borrower shall permit Bank to examine and inspect such plant,
properties and equipment at all reasonable times. In the event Borrower fails in
the foregoing, Borrower hereby authorizes, without requiring, Bank to perform
the same and to incur such costs, fees and expenses in connection therewith
which shall be payable on demand by Borrower.
7.5 Maintain Insurance. Borrower shall at all times insure and keep insured
in insurance companies acceptable to Bank, all insurable property owned by it
which is of a character usually insured by companies similarly situated and
operating like properties, against loss or damage from fire and such other
hazards or risks as are customarily insured against by companies similarly
situated and operating like properties; and shall similarly insure employers',
public and professional liability risks.
7.6 Tax Liabilities. Borrower shall at all times pay and discharge all
property and other taxes, assessments and governmental charges upon, and all
claims (including claims for labor, materials and supplies) against Borrower or
any of its properties, Equipment or Inventory, before the same shall become
delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings and are
insured against or bonded over to the satisfaction of Bank.
7.7 ERISA Liabilities. Borrower shall at all times promptly pay and
discharge all ERISA obligations and liabilities, if any, of a character which if
unpaid or unperformed might result in the imposition of a lien against any of
its properties or assets and will promptly notify Bank of (i) the occurrence of
any reportable event (as defined in ERISA) which might result in the termination
by the Pension Benefit Guaranty Corporation ("PBGC ") of any employee benefit
plan (the "Plan") covering any officers or employees of Borrower, any benefits
of which are, or are required to be, guaranteed by PBGC, (ii) receipt of any
notice from PBGC of its intention to seek termination of the Plan or appointment
of a trustee therefor, and (iii) its intention to terminate or withdraw from the
Plan. Borrower shall not terminate any such Plan or withdraw therefrom unless it
shall be in compliance with all of the terms and conditions of this Agreement
after giving effect to any liability to PBGC resulting from such termination or
withdrawal.
7.8 Financial Statements. Borrower shall at all times maintain a standard
and modern system of accounting. on the accrual basis of accounting and in all
respects in accordance with GAAP, and shall furnish to Bank or its authorized
representatives such information regarding the business affairs, operations and
financial condition of Borrower, including, but not limited to:
(a) as soon as available, and in any event within one hundred twenty
(120) days following the end of each fiscal year, a copy of the annual
audited Financial Statements of Borrower and its consolidated subsidiaries,
for the fiscal year then ended and such other information (including
nonfinancial information) as Bank reasonably may request, in reasonable
detail, prepared and certified by an independent certified public
accountant acceptable to Bank, containing an unqualified opinion;
(b) as soon as available, and in any event within forty-five (45) days
following the end of each month, a copy of the Financial Statements of
Borrower and its consolidated subsidiaries regarding such month, and such
other information (including nonfinancial information) as Bank reasonably
may request, in reasonable detail, prepared and certified as accurate by
Borrower;
(c) as soon as practicable, and in any event within thirty (30) days
following the end of each month, (i) a Borrowing Base Certificate in the
form of Exhibit F, (ii) an Accounts Receivable Aging Report; and (iii) an
Inventory Report.
(d) As soon as practicable, and in any event within forty-five (45)
days following the end of each fiscal quarter, a Compliance Certificate in
the form of Exhibit G reflecting Borrowers' compliance with the financial
covenants set forth in Section 8 of this Agreement.
(e) immediately upon receipt thereof copies of interim and
supplemental reports if any, submitted to Borrower by independent
accountants in connection with any interim audit or review of the books of
Borrower; and
(f) copies of all reports to the U.S. Securities and Exchange
Commission.
No change with respect to such accounting principles shall be made by Borrower
without giving prior notification to Bank. Borrower represents and warrants to
Bank that the financial statements delivered to Bank at or prior to the
execution and delivery of this Agreement and to be delivered at all times
thereafter accurately reflect and will accurately reflect the financial
condition of Borrower. Bank shall have the right at all times during business
hours to inspect the books and records of Borrower and make extracts therefrom.
Borrower agrees to advise Bank immediately of any adverse change in the
financial condition, the operations or any other status of Borrower.
7.9 Notice of Proceedings. Borrower shall, immediately after knowledge
thereof shall have come to the attention of any officer of Borrower, give
written notice to Bank of all threatened or pending actions, suits, and
proceedings before any court or governmental department, commission. board or
other administrative agency which may have a material effect on the business,
property or operations of Borrower.
7.10 Notice of Default. Borrower shall. immediately after the commencement
thereof, give notice to Bank in writing of the occurrence of an Event of Default
or of any event which, with the lapse of time, the giving of notice or both,
would constitute an Event of Default.
7.11 Collateral Covenants. Borrower shall maintain the Collateral at the
location set forth in Section 11.8 hereof, at the locations set forth on
Schedule 7.11 or at such other addresses as Bank shall be informed of by 30 days
prior written notice. Borrower agrees to maintain books and records as to the
location of any Collateral that is in transit or otherwise is not located at the
location set forth in Section 11.8 hereof or on Schedule 7.11 and make such
books and records available to Bank upon request of Bank.
7.12 Account Covenants. Borrower agrees to promptly: (i) inform Bank in
writing, of any material delay in Borrower's performance of any of its
obligations to its Account Debtors or any assertion of any material claims,
offsets or counterclaims by any of its Account Debtors; (ii) monitor on a
commercially reasonable basis, the financial condition of its Account Debtors
and furnish to or inform Bank of all material adverse information relating to
the financial condition of any of its Account Debtors upon obtaining actual or
constructive knowledge of such information; and (iii) provide Bank, upon the
reasonable request of Bank, with any invoices, statements or other documents or
records with respect to its Accounts.
7.13 Inventory and Equipment Covenants. Borrower shall maintain its
Inventory and Equipment on the premises at the locations described in Section
7.11 hereof or at such other addresses as Bank shall be informed pursuant to
Section 11.8 hereof. Borrower shall at all times hereafter maintain a perpetual
inventory, keeping correct and accurate records itemizing and describing the
cost, kind, type, quality, and quantity of the Inventory and Equipment which
records shall be available during Borrower's usual business hours for the review
of Bank or its officers, employees or agents at their request. Borrower shall
conduct a physical count of its Inventory and Equipment at least once each
fiscal year and, promptly following such physical count of its Inventory and
Equipment, shall supply Bank with a report concerning such physical count in a
form satisfactory to Bank with such specificity as may be requested by Bank.
7.14 Instruments and Chattel Paper. Borrower will stamp or otherwise mark
all Chattel Paper and Instruments now owned or hereafter acquired by it, in
which Bank has a first and prior perfected security interest, to reflect that
the same are subject to Bank's security interest and will immediately thereafter
deliver or cause such Chattel Paper and Instruments to be delivered to Bank,
with appropriate endorsement, assignment or stock power transfer or assignment,
with full recourse to Borrower, to vest title and possession in Bank.
7.15 Bank Deposits.
(a) Borrower shall maintain a lockbox account in Borrower's name with
Bank, into which all monies, checks, notes, drafts and all other payments
for and/or proceeds of the Collateral (the "Funds") shall be deposited (the
"Lockbox Account"). All Funds in the Lockbox Account shall be under the
exclusive possession and control of Bank and Borrower hereby grants to Bank
a Lien on and security interest in all Funds in the Lockbox Account with
such Funds becoming part of the Collateral. All cash Funds deposited in the
Lockbox Account will be applied to Borrower's Obligations on Banking Days
on which the cash Funds became available for deposit. All non-cash Funds
deposited in the Lockbox Account shall be applied on the next Banking Day
after which such Funds become available for deposit. Borrower agrees to
cooperate fully with Bank in taking all steps which Bank deems appropriate
to insure that all of Borrower's Funds are applied to Borrower's
Obligations on the appropriate Banking Day and that Borrower's Account
Debtors properly direct payments on the Accounts to the Lockbox Account.
Borrower agrees to pay all fees, costs and expenses which Bank incurs in
connection with opening and maintaining the Lockbox Account and depositing
for collection by Bank any check or other item of payment received by Bank
on account of Borrower's Obligations. All of such fees, costs and expenses
shall be payable to Bank by Borrower upon demand, and, until paid, shall
bear interest at the rate then applicable hereunder.
(b) Borrower will also transfer or establish all its primary operating
accounts, including depository and disbursement banking accounts, at Bank
and shall be responsible for all costs associated with such accounts as are
customarily charged by Bank.
7.16 Defense of Collateral. Borrower shall pay, or cause to be paid, when
due, all Indebtedness, claims or demands with respect to the Collateral which,
if unpaid, might result in, or permit the creation of, any Lien or encumbrance
on the Collateral, including, without limitation, all claims for labor,
materials and supplies, and, in general, do and cause to be done, everything
reasonably necessary to fully preserve the rights and interests of Bank under
this Agreement and the other Loan Documents. In addition, Borrower shall at all
times defend Bank's rights and interests in and to the Collateral, and the first
priority position of said rights and interests against any and all claims of any
person adverse to Bank (except Permitted Liens) and take all necessary or
appropriate actions to give effect to Bank's priority of rights and interests
contemplated by this Agreement and the other Loan Documents.
8. FINANCIAL COVENANTS.
8.1 Tangible Net Worth. At all times, Borrower shall maintain Tangible Net
Worth for Borrower and its consolidated subsidiaries in an amount not less than
$15,000,000.
8.2 Liabilities to Tangible Net Worth. At all times, Borrower shall
maintain a ratio of Liabilities to Tangible Net Worth for Borrower and its
consolidated subsidiaries of not greater than 2.5 to 1.0.
8.3 Profitability. Borrower and its consolidated subsidiaries shall have at
each fiscal year end, a Net Income (before taxes) of greater than $1,000.
9. EVENTS OF DEFAULT. Borrower, without notice or demand of any kind except
as otherwise specifically provided herein, shall be in default under this
Agreement upon the occurrence of any of the following events (each an "Event of
Default").
9.1 Nonpayment of Obligations. Any amount due and owing on the Notes or any
of the Obligations, whether by its terms or as otherwise provided herein, is not
paid within five (5) days of the due date thereof.
9.2 Misrepresentation. Any warranty, representation, certificate or
statement in this Agreement, the Loan Documents or any other agreement between
Borrower and Bank shall be false in any material respect.
9.3 Nonperformance. Borrower fails to perform or defaults in the
performance of any covenant, condition or agreement contained in this Agreement,
the other Loan Documents, or any other agreement between Borrower and Bank, and,
only if such failure or default is capable of cure, such failure or default
continues for a period of thirty (30) days beyond any applicable grace or cure
period after Borrower receives notice or knowledge thereof from any source,
including, without limitation, Bank.
9.4 Default under Loan Documents. A default occurs under any of the other
Loan Documents, the covenants, conditions and agreements of which are hereby
incorporated herein by express reference.
9.5 Default under Other Agreements. (i) Borrower defaults in the payment of
principal or interest for any other obligation, including, without limitation,
any obligations arising under the IRB Reimbursement Agreement, beyond any period
of grace provided with respect thereto, or in the performance of any term,
condition or covenant contained in any agreement (including, but not limited to
an agreement in connection with the deferred purchase price of property) under
which any such obligation is created, the effect of which default is to cause or
permit the holder of such obligation to cause such obligation to become due
prior to its stated maturity or (ii) Borrower's wholly owned subsidiary, CFC
Europe GmbH, defaults in the payment of any obligation to Bank arising under the
CFC Europe Reimbursement Agreement, beyond any period of grace provided with
respect thereto, or in the performance of any term, condition or covenant
contained.
9.6 Assignment for Creditors. Borrower, any guarantor, accommodation
endorser, third party pledgor. or any other party liable with respect to the
Obligations (each, an "Obligor"), makes an assignment for the benefit of
creditors. fails to pay, or admits in writing its inability to pay its debts as
they mature, or a trustee of any substantial part of the assets of any Obligor
is applied for or appointed, and in the case of such trustee being appointed in
a proceeding brought against such Obligor, the Obligor, by any action or failure
to act indicates its approval of, consent to, or acquiescence in such
appointment and such appointment is not vacated, stayed on appeal or otherwise
shall not have ceased to continue in effect within sixty (60) days after the
date of such appointment.
9.7 Bankruptcy. Any proceeding involving any Obligor is commenced by or
against such Obligor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute of
the federal government or any state government, and in the case of any such
proceeding being instituted against such Obligor, (i) such Obligor, by any
action or failure to act indicates its approval of, consent to or acquiescence
therein, or (ii) an order shall be entered approving the petition in such
proceedings and such order is not vacated, stayed on appeal or otherwise shall
not have ceased to continue in effect within sixty (60) days after the entry
thereof.
9.8 Judgments. Any judgment, decree, levy, attachment, garnishment or other
process is entered or any lien is filed against any Obligor which is (i) in
excess of $100,000, and (ii) not fully covered by insurance, and such judgment
or other process shall not have been, within sixty (60) days from the entry
thereof, appealed, vacated, or discharged.
9.9 Change in Control. Roger Hruby ceases to own, both legally and
beneficially, at least 51% of the issued and outstanding voting stock of
Borrower.
10. REMEDIES.
10.1 Bank's Rights. Upon the occurrence of an Event of Default, Bank shall
have all rights, powers and remedies set forth in the Loan Documents, in any
written agreement or instrument (other than this Agreement or the Loan
Documents) relating to any of the Obligations or any security therefor, or as
otherwise provided at law or in equity. Without limiting the generality of the
foregoing, Bank may, at its option upon the occurrence of an Event of Default.
declare its commitments to Borrower to be terminated and all Obligations to be
immediately due and payable, provided, however, that upon the occurrence of an
Event of Default under Section 9.6, "Assignment for Creditors", or Section 9.7,
"Bankruptcy", all commitments of Bank to Borrower shall be immediately
terminated and all Obligations shall be automatically due and payable, all
without demand, notice or further action of any kind required on the part of
Bank. Borrower hereby waives any and all presentment, demand. notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of Bank's rights under the Loan Documents.
10.2 UCC and Offset Rights. Bank may exercise, from time to time, any and
all rights and remedies available to it under the UCC or under any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any other agreements between any
Obligor and Bank, and may, without demand or notice of any kind. appropriate and
apply toward the payment of such of the Obligations, whether matured or
unmatured, including costs of collection and attorneys' and paralegals' fees,
and in such order of application as Bank may, from time to time, elect. any
indebtedness of Bank to any Obligor, however created or arising, including, but
not limited to, balances, credits, deposits, accounts or moneys of such Obligor
in the possession, control or custody of, or in transit to Bank. Borrower, on
behalf of itself and each Obligor, hereby waives the benefit of any law that
would otherwise restrict or limit Bank in the exercise of its right, which is
hereby acknowledged, to appropriate at any time hereafter any such indebtedness
owing from Bank to any Obligor.
10.3 No Waiver; Election of Remedies. No Event of Default shall be waived
by Bank except in writing. No failure or delay on the part of Bank in exercising
any right, power or remedy hereunder shall operate as a waiver of the exercise
of the same or any other right at any other time; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. There shall be no obligation on the part of Bank to exercise any
remedy available to Bank in any order. The remedies provided for herein are
cumulative and not exclusive of any remedies provided at law or in equity.
Borrower agrees that in the event that Borrower fails to perform, observe or
discharge any of its Obligations or liabilities under this Agreement or any
other agreements with Bank, no remedy of law will provide adequate relief to
Bank, and further agrees that Bank shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
10.4 Sale of Collateral. Upon an Event of Default and the declaration that
the Second Term Note is due and payable, Bank may immediately, with only such
demand or notice to Borrower as may be required by the version of the Uniform
Commercial Code currently enacted in Illinois, all of such other or further
demand or notice hereby expressly waived by Borrower to the extent permitted by
law, and without advertisement except as may be required by the version of the
Uniform Commercial Code currently enacted in Illinois (or other applicable
jurisdiction), lease, sell or otherwise dispose of or realize upon, at public or
private auction or sale in Chicago, Illinois or elsewhere, the whole or, from
time to time, any part of the Collateral of Borrower or any interest which
Borrower may have therein. Borrower agrees to assemble, or cause to be
assembled, at its own expense, the Collateral at such place or places as Bank
shall reasonably designate and Bank may, in its sole and complete discretion,
reasonably exercised, cause the Collateral of Borrower to remain on Borrower's
premises at Borrower's expense, pending sale, lease or other disposition of said
Collateral. Bank shall have the right to conduct such sales on Borrower's
premises at Borrower's expense or elsewhere. Any sale, lease or other
disposition of the Collateral of Borrower may be for cash, credit or any
combination thereof and Bank may purchase all or any part of the Collateral and
in lieu of actual payment of such purchase price, may set off the amount of such
purchase price against the Obligations of Borrower, free from any right of
redemption on the part of Borrower, which right is hereby waived and released.
After deducting from the proceeds of the sale, lease or other disposition of
said Collateral all expenses incurred by Bank in connection therewith (including
reasonable attorneys fees), Bank shall apply such proceeds towards the
satisfaction of the Obligations of Borrower, and shall account to Borrower for
any surplus of such proceeds. Borrower shall remain jointly and severally liable
for any deficiencies. Any notice required to be given by Bank of a sale, lease
or other disposition or other intended action by Bank with respect to any of the
Collateral of Borrower shall be mailed by Bank, ten (10) days prior to such
sale, lease or other disposition or other intended action by depositing such
notice in the United States mail, postage prepaid and duly addressed to Borrower
at the addresses specified in Section 11.8 hereof and such notice shall
constitute, and Borrower agrees that such notice constitutes reasonable and
seasonable notice of such sale, lease or other disposition or other intended
action.
11. MISCELLANEOUS.
11.1 Entire Agreement. This Agreement (i) is valid, binding and enforceable
against Borrower and Bank in accordance with its provisions and no conditions
exist as to its legal effectiveness; (ii) constitutes the entire agreement
between the parties; and (iii) is the final expression of the intentions of
Borrower and Bank. No promises, either expressed or implied, exist between
Borrower and Bank. unless contained herein. This Agreement supersedes all
negotiations, representations, warranties, commitments, offers, contracts (of
any kind or nature, whether oral or written) prior to or contemporaneous with
the execution hereof.
11.2 Amendments; Waivers. No amendment, modification, termination,
discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Bank, and then such
waiver or consent shall be effective only for the specific purpose for which
given.
11.3 WAIVER OF DEFENSES. BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH BORROWER MAY NOW HAVE OR HEREAFTER
MAY HAVE TO ANY ACTION BY BANK IN ENFORCING THIS AGREEMENT. BORROWER WAIVES ANY
IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS WHATEVER BANK MAY DO
PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR BANK GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.
11.4 WAIVER OF JURY TRIAL. BANK AND BORROWER. AFTER CONSULTING OR HAVING
HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE IRREVOCABLY. THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER OBLIGATIONS, OR ANY OTHER AGREEMENT
EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR
ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH BANK AND BORROWER ARE
ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK GRANTING ANY
FINANCIAL ACCOMMODATION TO BORROWER.
11.5 LITIGATION. TO INDUCE BANK TO MAKE THE LOANS, BORROWER IRREVOCABLY
AGREES THAT ALL ACTIONS ARISING, DIRECTLY OR INDIRECTLY, AS A RESULT OR
CONSEQUENCE OF THIS AGREEMENT, THE NOTE, ANY OTHER AGREEMENT WITH BANK SHALL BE
INSTITUTED AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE CITY OF CHICAGO,
ILLINOIS. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF
ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID CITY, AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS. BORROWER HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AS SET FORTH
HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR
OTHERWISE.
11.6 Assignability. Bank may at any time assign Bank's rights in this
Agreement, the Note, the Obligations, or any part thereof. In addition, Bank may
at any time sell one or more participations in the Loans. Borrower may not sell
or assign this Agreement, or any other agreement with Bank or any portion
thereof, either voluntarily or by operation of law, without the prior written
consent of Bank. This Agreement shall be binding upon Bank and Borrower and
their respective legal representatives and successors. A11 references herein to
Borrower shall be deemed to include any successors, whether immediate or remote.
In the case of a joint venture or partnership, the term "Borrower" shall be
deemed to include all joint venturers or partners thereof who shall be jointly
and severally liable hereunder.
11.7 Confidentiality. Borrower and Bank hereby agree and acknowledge that
any and all information relating to Borrower which is (i) furnished by Borrower
to Bank (or to any affiliate of Bank), and (ii) nonpublic, confidential or
proprietary in nature, shall be kept confidential by Bank or such affiliate in
accordance with applicable law, provided, however. that such information and
other credit information relating to Borrower may be distributed by Bank or such
affiliate to Bank's or such affiliate's directors, officers. employees,
attorneys, affiliates, auditors and regulators, and upon the order of a court or
other governmental agency having jurisdiction over Bank or such affiliate, to
any other party. Borrower and Bank further agree that this provision shall
survive the termination of this Agreement.
11.8 Notices. Except as otherwise provided herein, Borrower waives all
notices and demands in connection with the enforcement of Bank's rights
hereunder. All notices, requests, demands and other communications provided for
hereunder shall be in writing, sent by certified or registered mail, postage
prepaid, by facsimile, telegram or delivered in person, and addressed as
follows:
If to Borrower: CFC International, Inc.
500 State Street
Chicago Heights, Illinois 60441
Attention: Dennis Lakomy
If to Bank: LaSalle Bank N.A.
4747 West Irving Park Road
Chicago, Illinois 60641
Attention: Deborah Grudzien
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this Section. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other
circumstances.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
11.10 Facsimile Signatures. Bank is hereby authorized to rely upon and
accept as an original any Loan Documents or other communication which is sent to
Bank by facsimile, telegraphic or other electronic transmission (each, a
"Communication") which Bank in good faith believes has been signed by Borrower
and has been delivered to Bank by a properly authorized representative of
Borrower, whether or not that is in fact the case. Notwithstanding the
foregoing, Bank shall not be obligated to accept any such Communication as an
original and may in any instance require that an original document be submitted
to Bank in lieu of, or in addition to, any such Communication.
11.11 Governing Law. This Agreement. the Loan Documents and the Note shall
be delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Illinois (but giving effect to
federal laws applicable to national banks), and for all purposes shall be
construed in accordance with the laws of such State. without giving effect to
the choice of law provisions of such State.
11.12 Enforceability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
11.13 Survival of Borrower Representations. All covenants, agreements,
representations and warranties made by Borrower herein shall, notwithstanding
any investigation by Bank, be deemed material and relied upon by Bank and shall
survive the making and execution of this Agreement and the Loan Documents and
the issuance of the Notes, and shall be deemed to be continuing representations
and warranties until such time as Borrower has fulfilled all of its Obligations
to Bank, and Bank has been paid in full. Bank, in extending financial
accommodations to Borrower, is expressly acting and relying on the aforesaid
representations and warranties.
11.14 Indemnification. Borrower agrees to defend (with counsel satisfactory
to Bank), protect, indemnify and hold harmless each Indemnified Party from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and distributions of any kind
or nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party thereto, which shall also include,
without limitation, attorneys' fees and time charges of attorneys who may be
employees of Bank, any parent corporation or affiliated corporation of Bank),
which may be imposed on, incurred by, or asserted against, any Indemnified Party
(whether direct, indirect or consequential and whether based on any federal,
state or local laws or regulations, including, without limitation, securities,
Environmental Laws and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any of the Loan Documents, or any act, event or
transaction related or attendant thereto, the preparation, execution and
delivery of this Agreement and the Loan Documents, including, but not limited
to, the making or issuance and management of the Loans or any Letters of Credit,
the use or intended use of the proceeds of the Loans or any Letters of Credit,
the enforcement of Bank's rights and remedies under this Agreement, the Loan
Documents, the Note, any other instruments and documents delivered hereunder, or
under any other agreement between Borrower and Bank including, without
limitation, Bank's possession, use, operation, control, sale, disposition, or
collection of any of the Collateral; provided, however, that Borrower shall not
have any obligations hereunder to any Indemnified Party with respect to matters
caused by or resulting from the willful misconduct or gross negligence of such
Indemnified Party. To the extent that the undertaking to indemnify set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall together with interest
thereon at the Default Rate from the date incurred by each Indemnified Party
until paid by Borrower, be added to the Obligations of Borrower. Borrower hereby
releases Bank from any and all claims or causes of action which Borrower may
have, now or hereafter, relating to the foregoing, except those arising from
Bank's gross negligence or reckless or intentional misconduct. The provisions of
this Section shall survive the satisfaction and payment of the other Obligations
and the termination of this Agreement.
11.15 Construction. As used herein, all provisions shall include the
masculine, feminine, neuter, singular and plural thereof, wherever the context
and facts require such construction and in particular the word "Borrower" shall
be so construed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Borrower and Bank have executed this Amended and
Restated Loan Agreement as of the date first above written.
CFC INTERNATIONAL, INC. LASALLE BANK NATIONAL ASSOCIATION
By: ___________________________ By:___________________________
Its:____________________________ Its:___________________________
SCHEDULES AND EXHIBITS
Schedules:
- ---------
Schedule 5.11 Patents and Trademarks
Schedule 5.19 Subsidiaries
Schedule 7.11 Locations of Collateral
Exhibits:
- --------
Exhibit A Form of Revolving Note
Exhibit B Copy of Term Note
Exhibit C Form of Second Term Note
Exhibit D Form of Amendment to Mortgage
Exhibit E Form of Reaffirmation of Stock Pledge
Exhibit F Form of Borrowing Base Certificate
Exhibit G Form of Compliance Certificate
Exhibit H Form of Reaffirmation of Guaranty
Exhibit I Form of Security Agreement and Mortgage
- Patents and Trademarks
Exhibit J Form of Master Letter of Credit Agreement
SCHEDULE 5.11
Patents and Trademarks
----------------------
SCHEDULE 5.19
Subsidiaries
------------
Subsidiary % Owned
- ---------- -------
CFC International, Ltd. (UK) 100%
CFC Management, Inc. * 100%
CFC Northern Bank Note Company, LLC* 100%
CFC Europe GmbH 100%
CFC Oeserwerk GmbH 100%
CFC Oeser France SARL 100%
* Consolidated
SCHEDULE 7.11
Locations of Collateral
-----------------------
CFC Holographics
2001 Palma Drive
Ventura, CA 93003
CFC International
1030 Industrial Drive
Matthews, NC 28105
CFC International
1655 Union Street
Unit 109
Chicago Heights, IL 60411
EXHIBIT A (FORM OF REVOLVING NOTE)
REVOLVING NOTE
$5,500,000 May __, 2001
CFC International, Inc., a Delaware corporation (the "Borrower"), for value
received, hereby promises to pay to the order of LaSalle Bank National
Association, a national banking association (the "Bank"), on April 1, 2003, the
principal sum of Five Million Five Hundred Thousand Dollars ($5,500,000), or
such lesser amount of all of the then outstanding advances made by the Bank to
the Borrower pursuant to Section 2.1 of the "Loan Agreement" (as hereinafter
defined), together with interest on any and all principal amounts remaining
unpaid hereunder from time to time from the date hereof until paid at the rates
and payable as provided in the Loan Agreement.
Any amount of interest or principal hereof which is not paid when due,
whether on a Monthly Payment Date (as defined in the Loan Agreement), at stated
maturity, by acceleration or otherwise, shall bear interest payable on demand at
the "Default Rate" (as defined in the Loan Agreement).
All payments of principal and interest on this Note shall be payable in
lawful money of the United States of America. In no event shall the interest
payable exceed the highest rate permitted by law. Principal and interest shall
be paid to the Bank at its office at 135 South LaSalle Street, Chicago, Illinois
60603 or at such other place as the holder of this Note may designate in writing
to the Borrower. The Bank may charge any deposit or other account maintained by
the Borrower with the Bank or any of the Bank's affiliates amounts equal to all
payments of principal, accrued interest and fees from time to time as they come
due and payable hereunder or under any agreement pursuant to which this Note was
issued. All payments hereunder shall be applied as provided in the Loan
Agreement. In determining the Borrower's liability to the Bank hereunder, the
books and records of the Bank shall be controlling absent manifest error.
This Note evidences certain indebtedness incurred under the Amended and
Restated Loan Agreement, dated as of the date hereof, between the Borrower and
the Bank (the "Loan Agreement"), to which reference is hereby made for a
statement of the terms and conditions under which the due date of this Note or
any payment thereon may be accelerated or is automatically accelerated, or under
which this Note may be prepaid or is required to be prepaid. All capitalized
terms used herein shall, unless otherwise defined herein, have the meanings set
forth in the Loan Agreement. The holder of this Note is entitled to all of the
benefits provided in said Loan Agreement and the Loan Documents referred to
therein. The Borrower agrees to pay all reasonable costs of collection and all
reasonable attorneys' fees paid or incurred in enforcing any of the Bank's
rights hereunder promptly on demand of the Bank and as more fully set forth in
the Loan Agreement.
This Note is secured by, among other things, a security interest in the
Collateral granted to Bank pursuant to the Loan Agreement.
Upon the occurrence of an Event of Default under the Loan Agreement, the
outstanding indebtedness evidenced by this Note, together with all accrued
interest, shall be due and payable in accordance with the terms of the Loan
Agreement, without notice to or demand upon the Borrower, and the Bank may
exercise all of its rights and remedies reserved to it under the Loan Agreement
or applicable law.
The Borrower, endorsers and all other parties to this Note waive
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Loan Agreement. In any action on this Note, the Bank or its
assignee need not file the original of this Note, but need only file a photocopy
of this Note certified by the Bank or such assignee to be a true and correct
copy of this Note.
No delay on the part of the Bank in exercising any right under this Note,
any security agreement, guaranty or other undertaking affecting this Note, shall
operate as a waiver of such right or any other right under this Note, nor shall
any omission in exercising any right on the part of the Bank under this Note
operate as a waiver of any other rights.
If any provision of this Note or the application thereof to any party or
circumstance is held invalid or unenforceable, the remainder of this Note and
the application of such provision to other parties or circumstances will not be
affected thereby and the provisions of this Note shall be severable in any such
instance. All references to the singular shall be deemed to include the plural,
and vice versa, where the context so requires.
THE BORROWER HEREBY WAIVES ANY RIGHT THE BORROWER MAY NOW OR HEREAFTER HAVE
TO SUBMIT ANY CLAIM, ISSUE OR DEFENSE ARISING HEREUNDER OR UNDER THE OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.
This Note constitutes a renewal and restatement of, and replacement and
substitution for, the Revolving Note dated September 5, 2000 of the Borrower
made payable to the order of Bank in the principal amount of Four Million Five
Hundred Thousand Dollars ($4,500,000.00) (the "Original Note"). The indebtedness
evidenced by the Original Note is continuing indebtedness, and nothing herein
shall be deemed to constitute a payment, settlement or novation of the Original
Note, or to release or otherwise adversely affect any lien, mortgage or security
interest securing such indebtedness or any rights of the Bank against any
guarantor, surety or other party primarily or secondarily liable for such
indebtedness.
This Note shall be deemed to have been made under and shall be governed in
accordance with the internal laws and not the conflict of law rules of the State
of Illinois.
CFC INTERNATIONAL, INC.
By:
Title:
EXHIBIT B (TERM NOTE COPY)
EXHIBIT C (FORM OF SECOND TERM NOTE)
SECOND TERM NOTE
$5,773,336.00 May __, 2001
CFC International, Inc., a Delaware corporation (the "Borrower"), for value
received, hereby promises to pay to the order of LaSalle Bank National
Association, a national banking association (the "Bank"), the principal sum of
Five Million Seven Hundred Seventy Three Thousand Three Hundred Thirty Six
Dollars ($5,773,336), in fifty-nine (59) equal monthly installments of
principal, each in the amount of Sixty One Thousand Two Hundred Fifty Dollars
($60,138.92), plus interest accrued thereof, commencing on June 1, 2001 and
continuing on the first day of each month thereafter, unless such day is not a
Business Day (as defined in the Loan Agreement (defined hereunder)), then on the
next succeeding Business Day, with a final installment of the then outstanding
principal balance together with all interest accrued thereon on May __, 2006.
Any and all principal amounts remaining unpaid hereunder from time to time
shall bear interest from the date hereof until paid, computed on the basis of
actual number of days elapsed over a 360-day year, payable on the first day of
each month commencing June 1, 2001, at a fixed rate per annum equal to the Swap
Rate (as defined in the Loan Agreement), plus two and one tenth percent (2.10%),
calculated on the basis of actual days elapsed over a 360-day year.
This Note may be prepaid in whole or in part in accordance with the terms
of the Loan Agreement.
Any amount of interest or principal hereof which is not paid when due,
whether on the first day of the month, at stated maturity, by acceleration or
otherwise, shall bear interest payable on demand at the "Default Rate" (as such
term is defined in the Loan Agreement).
All payments of principal and interest on this Note shall be payable in
lawful money of the United States of America. In no event shall the interest
payable exceed the highest rate permitted by law. Principal and interest shall
be paid to Bank at 135 South LaSalle Street, Chicago, Illinois 60603, or at such
other place as the holder of this Note may designate in writing to Borrower.
Borrower authorizes Bank to charge its account maintained with Bank in amounts
equal to all payments of principal, accrued interest, and fees from time to time
as they come due and payable hereunder or under any agreement pursuant to which
this Note was issued. All payments hereunder shall be applied as provided in the
Loan Agreement. In determining Borrower's liability to the Bank hereunder, the
books and records of the Bank shall be controlling absent arithmetic or manifest
error.
This Note evidences certain indebtedness incurred under that certain
Amended and Restated Loan Agreement, dated as of the date hereof between
Borrower and Bank (as heretofore or hereafter amended, the "Loan Agreement), to
which reference is hereby made for a statement of the terms and conditions under
which the due date of this Note or any payment thereon may be accelerated or is
automatically accelerated, or under which this Note may be prepaid or is
required to be prepaid. All capitalized terms used herein shall, unless
otherwise defined herein, have the meanings set forth in the Loan Agreement. The
holder of this Note is entitled to all of the benefits provided in said Loan
Agreement and the Loan Documents referred to herein. Borrower agrees to pay all
costs of collection and all reasonable attorneys' fees paid or incurred in
enforcing any of the Bank's rights hereunder promptly on demand of the Bank and
as more fully set forth in the Loan Agreement.
Except as set forth in the Loan Agreement, Borrower, endorsers and all
other parties to this Note waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Loan Agreement. In any
action on this Note, the Bank or its assignee need not file the original of this
Note, but need only file a photocopy of this Note certified by the Bank or such
assignee to be a true and correct copy of this Note.
This is the Second Term Note referred to in the Loan Agreement. This Note
is secured by, among other things a security interest in the Collateral granted
to the Bank pursuant to the Loan Agreement and the other Loan Documents.
No delay on the part of the Bank in exercising any right under this Note,
any security agreement, guaranty or other undertaking affecting this Note, shall
operate as a waiver of such right or any other right under this Note, nor shall
any omission in exercising any right on the part of the Bank under this Note
operate as a waiver of any other rights.
Upon the occurrence and during the continuation of an Event of Default
under the Loan Agreement and the expiration of any applicable grace or cure
periods under the Loan Agreement, the outstanding indebtedness evidenced by this
Note, together with all accrued interest, shall be due and payable in accordance
with the terms of the Loan Agreement, without notice to or demand upon any
Borrower except as otherwise set forth in the Loan Agreement, and the Bank may
exercise all of its rights and remedies reserved to it under the Loan Agreement
or applicable law.
If any provision of this Note or the application thereof to any party of
circumstance is held invalid or unenforceable, the remainder of this Note and
the application of such provision to other parties or circumstances will not be
affected thereby and the provisions of this Note shall be severable in any such
instance.
This Note shall be in replacement of and in substitution for that certain
Second Term Note dated September 5, 2000, in the original principal amount of
$3,200,000.00, made by Borrower and payable to the order of Bank (the "Original
Note"). The indebtedness evidenced by the Original Note is continuing
indebtedness, and nothing herein shall be deemed to constitute a payment,
settlement or novation of the Original Note, or to release or otherwise
adversely affect any lien, mortgage or security interest securing such
indebtedness or any rights of the Bank against any guarantor, surety or other
party primarily or secondarily liable for such indebtedness.
BORROWER HEREBY WAIVES ANY RIGHT SUCH BORROWER MAY NOW OR HEREAFTER HAVE TO
SUBMIT ANY CLAIM, ISSUE OR DEFENSE ARISING HEREUNDER OR UNDER THE OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.
This Note shall be deemed to have been made under and shall be governed in
accordance with the internal laws and not the conflict of law rules of the State
of Illinois.
CFC INTERNATIONAL, INC.
By:
Title:
EXHIBIT D (FORM OF SEVENTH AMENDMENT TO MORTGAGE)
AFTER RECORDING RETURN TO:
Donald A. Ensing, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611
PERMANENT INDEX NUMBER:
3216203013
3216203014
PROPERTY ADDRESS:
500 State Street
Chicago Heights, Illinois 60411
-------------------------------------------------
SEVENTH AMENDMENT TO MORTGAGE AND
ASSIGNMENT OF RENTS AND LEASES
THIS SEVENTH AMENDMENT TO MORTGAGE AND ASSIGNMENT OF RENTS AND LEASES dated
as of May __, 2001 is between CFC INTERNATIONAL, INC. (the "Mortgagor"), and
LASALLE BANK NATIONAL ASSOCIATION (f/k/a LaSalle Northwest National Bank), a
national banking association (the "Mortgagee").
R E C I T A L S:
A. The Mortgagor executed a Mortgage (the "Mortgage") dated June 10, 1986
and recorded on June 11, 1986 as Document No. 86236291 in the Office of the
Recorder of Deeds of Cook County, Illinois (the "Recorder's Office"),
encumbering certain property commonly known as 500 State Street, Chicago
Heights, Illinois and as more particularly described in Exhibit A attached
hereto (the "Premises").
B. The Mortgagor executed an Assignment of Rents and Leases (the
"Assignment" and, together with the Mortgage, the "Collateral Documents") dated
as of June 10, 1986 and recorded on June 11, 1986 as Document No. 86236292 in
the Recorder's Office and relating to the Premises.
C. The Collateral Documents were amended pursuant to:
(i) First Amendment dated May 4, 1987 and recorded in the Recorder's
Office on May 6, 1987 as Document No. 87244769;
(ii) Second Amendment dated December 16, 1988 and recorded in the
Recorder's Office on December 21, 1988 as Document No. 88587863;
(iii) Third Amendment dated March 31, 1992 and recorded in the
Recorder's Office on May 5, 1992 as Document No. 92305060;
(iv) Fourth Amendment dated June 1, 1996 and recorded in the
Recorder's Office on June 21, 1996 as Document No. 96479606;
(v) Fifth Amendment dated April 1, 1998 and recorded in the Recorder's
Office on November 9, 1998 as Document No. 08010241; and
(vi) Sixth Amendment dated November 13, 1998 and recorded in the
Recorder's Office on July 20, 2000, 1998 as Document No. 00543598.
D. Mortgagee has previously extended to the Mortgagor a term loan (the
"Term Loan"), pursuant to that certain Amended and Restated Loan and Security
Agreement dated as of April 1, 1998, as amended, the outstanding principal
amount of which was $2,463,966.94 as of May 1, 2001. The Term Loan bears
interest at a fixed rate per annum equal to seven and 5/100ths of one percent
(7.05%). The Term Loan is evidenced by that certain Replacement Term Note dated
November 13, 1998 (the "Term Note").
E. Contemporaneously herewith, the Mortgagor and the Mortgagee have entered
into that certain Amended and Restated Loan Agreement (the "Loan Agreement"),
pursuant to which the Mortgagee has extended to the Mortgagor, among other
things, (i) a revolving loan (the "Revolving Loan"), the outstanding principal
amount of which is not to exceed $5,500,000, bearing interest as provided in the
Loan Agreement and evidenced by that certain Revolving Note dated as of the date
hereof (the "Revolving Note"); and (ii) a second term loan (the "Second Term
Loan") in the original principal amount of $5,773,336 bearing interest at a rate
per annum equal to the Swap Rate (as defined in the Loan Agreement) plus two and
one tenth percent (2.10%) and evidenced by that certain Second Term Note dated
as of the date hereof (the "Second Term Note," together with the Term Note and
the Revolving Note, the "Notes").
F. The Mortgagor and the Mortgagee have agreed to amend the Collateral
Documents as more particularly set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows:
1. "Indebtedness Hereby Secured". Whenever in the Collateral Documents the
term "Indebtedness Hereby Secured" is used, it shall be deemed to mean the
indebtedness evidenced by the Notes, including the principal of each of the
foregoing and interest and premium, if any, thereon, and any extensions and
renewals thereof, in whole or in part, and any and all other sums which may be
at any time due or owing or required to be paid as herein or in any of the Notes
provided.
2. "Note". All references in the Collateral Documents to the "Note" or
"Notes" shall be deemed to be a reference to the Term Note, the Revolving Note
and the Second Term Note as defined herein and any extensions and renewals
thereof in whole or in part.
3. "Agreement". All references in the Collateral Documents to the
"Agreement" shall be deemed to be a reference to the Loan Agreement as defined
herein.
4. Continuing Effect. The Collateral Documents are hereby amended in all
other respects to include and give effect to the foregoing amendments. All the
terms of the Collateral Documents are hereby incorporated by reference herein,
and the Collateral Documents, except as hereby modified, shall remain in full
force and effect in all respects. The Mortgagor, by execution of this Amendment,
hereby reaffirms, assumes and binds itself to all of the obligations, duties,
rights, covenants, terms and conditions that are contained in the Collateral
Documents.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
LASALLE BANK N.A. CFC INTERNATIONAL, INC.
By:___________________________ By:___________________________
Its:___________________________ Its:___________________________
This Document Prepared by:
Donald A. Ensing, Esq.
Jenner & Block, LLC
One IBM Plaza
Chicago, Illinois 60611
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in the State
aforesaid do hereby certify that ______________ of CFC INTERNATIONAL, INC., who
is personally known to me to be the same person whose name is subscribed to the
foregoing instrument as such , appeared before me this day in person and
acknowledged that he/she signed and delivered the said instrument as his/her own
free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this ___________day of ____________,
2001.
--------------------
Notary Public
SEAL:
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in the State
aforesaid, do hereby certify that ___________________ of LASALLE BANK NATIONAL
ASSOCIATION, who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument as such _____________________, appeared
before me this day in person and acknowledged that he/she signed and delivered
the said instrument as his/her own free and voluntary act and as the free and
voluntary act of said Bank, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _________________ day of
_____________, 2001.
------------------------
Notary Public
SEAL:
EXHIBIT A TO SEVENTH AMENDMENT TO MORTGAGE
(Legal Description)
THOSE PARTS OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 35
NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE EAST AND WEST CENTER LINE OF SECTION 16, TOWNSHIP 35
NORTH, RANGE 14, EST OF THE THIRD PRINCIPAL MERIDIAN, 50 FEET WESTWARDLY
MEASURED ALONG SAID CENTER LINE FROM THE SOUTHEAST CORNER OF THE NORTHEAST 1/4
OF SECTION 16; THENCE CONTINUING WESTWARDLY ALONG SAID EAST AND WEST CENTER
LINE, 557.73 FEET; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE OF SAID
SECTION 16, A DISTANCE OF 162.00 FEET; THENCE EASTWARDLY PARALLEL WITH SAID EAST
AND WEST CENTER LINE, 92.00 FEET; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 161.00 FEET; THENCE EASTWARDLY PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 48.50 FEET; THENCE NORTHWARDLY PARALLEL WITH THE
EAST LINE OF SAID SECTION 16, A DISTANCE OF 230.30 FEET; THENCE EASTWARDLY,
PARALLEL WITH SAID EAST AND WEST CENTER LINE, 417.23 FEET; THENCE SOUTHWARDLY
PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 553.30 FEET TO THE
POINT OF BEGINNING, IN COOK COUNTY, ILLINOIS.
P.I.N. #: 3216-203013
COMMENCING AT A POINT 1N THE EAST AND WEST CENTER LINE OF SECTION 16, TOWNSHIP
35 NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, 607.73 FEET WESTWARDLY
MEASURED ALONG SAID EAST AND WEST CENTER LINE FROM THE SOUTHEAST CORNER OF THE
NORTHEAST 1/4 OF SAID SECTION 16; THENCE NORTHWARDLY PARALLEL WITH THE EAST LINE
OF SAID SECTION 16, A DISTANCE OF 162.00 FEET; THENCE EASTWARDLY PARALLEL WITH
SAID EAST AND WEST CENTER LINE, 92.00 FEET; THENCE NORTHWARDLY, PARALLEL WITH
THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 161.00 FEET TO THE POINT OF
BEGINNING OF THE HEREINAFTER DESCRIBED PARCEL OF LAND; THENCE EASTWARDLY
PARALLEL WITH SAID EAST AND WEST CENTER LINE, A DISTANCE OF 48.50 FEET; THENCE
NORTHWARDLY PARALLEL WITH THE EAST LINE OF SAID SECTION 16, A DISTANCE OF 230.30
FEET; THENCE WESTWARDLY PARALLEL WITH THE EAST AND WEST CENTER LINE, A DISTANCE
OF 48.50 FEET; THENCE SOUTHWARDLY PARALLEL WITH THE EAST LINE OF SAID SECTION
16, A DISTANCE OF 230.30 FEET TO THE POINT OF BEGINNING, IN COOK COUNTY,
ILLINOIS.
P.I.N. #:3216203-014
EXHIBIT E (FORM OF REAFFIRMATION OF STOCK PLEDGE AGREEMENT)
REAFFIRMATION OF STOCK PLEDGE AGREEMENT
This Reaffirmation of Stock Pledge Agreement (this "Reaffirmation"), dated
as of May ___, 2001, is executed by CFC Europe GmbH, a German corporation
("Pledgor"), in favor of LaSalle Bank National Association ("Bank"), and has
reference to the following facts and circumstances:
A. Pledgor and ABN AMRO Bank (Deutschland) AG ("ABN AMRO") are party to
that certain Letter Agreement dated as of March 15, 1999, as amended, (the "ABN
Loan Agreement") pursuant to which ABN AMRO made available to Pledgor among
other loans, a DM 7,500,000 line of credit (the "Line of Credit") and a DM
11,000,000 term loan (the "Term Loan", together with the Line of Credit, the
"Loans").
B. In order to secure the obligations of Pledgor to ABN AMRO under the ABN
Loan Agreement, Pledgor and Bank entered into that certain Reimbursement
Agreement dated as of March 19, 2001 by and between Bank and Pledgor f/k/a
Sesvenna 20. Vermogensverwaltungs GmbH, as amended from time to time (the
"Reimbursement Agreement"), pursuant to which Bank agreed to issue in favor of
ABN AMRO on the terms and conditions provided therein an irrevocable standby
letter of credit (such letter of credit, as amended, modified or otherwise
supplemented from time to time, is referred to herein as the "Letter of Credit")
in an amount not exceeding DM 19,425,000 (the "Stated Amount").
C. As a condition to Bank's agreement to issue the Letter of Credit,
Pledgor granted Bank a security interest in its shares of CFC Oeserwerk GmbH
pursuant to that certain Share Pledge Agreement dated as of March 26, 1999, as
amended or reaffirmed from time to time (the "Pledge Assignment").
D. Pledgor intends to enter into an amendment to the ABN Loan Agreement
with ABN AMRO to increase the amount available under the Line of Credit and
increase the outstanding principal balance of the Term Loan, and as a condition
of such amendment, ABN AMRO has required Pledgor to enter into amendment to the
Reimbursement Agreement to increase the Stated Amount of the Letter of Credit to
EUR 14,230,000 (the "Amendment").
E. Bank is willing to enter into the Amendment only upon the condition that
Pledgor execute and deliver this Reaffirmation in favor of Bank.
NOW, THEREFORE, in consideration of the foregoing, Pledgor hereby agrees as
follows:
1. The preambles to this Reaffirmation are hereby incorporated herein by
this reference thereto.
2. Pledgor does hereby expressly ratify, confirm and affirm without
condition, all liens and security interests granted to the Bank pursuant to the
Pledge Assignment, and such liens and security interests shall continue to
secure the obligations and liabilities of Pledgor to Bank, including but not
limited to, all advances made on behalf of Pledgor by Bank to ABN AMRO under the
Letter of Credit.
3. This Reaffirmation constitutes the valid and legally binding obligation
of Pledgor, fully enforceable against Pledgor, in accordance with its terms.
4. This Reaffirmation shall inure to the benefit of Bank, its successors
and assigns and be binding upon Pledgor, his representatives and heirs.
IN WITNESS WHEREOF, the Pledgor has executed this Reaffirmation on the date
above set forth.
CFC International, Inc.
By: _______________________________
Print Name:
Its:
EXHIBIT F (FORM OF BORROWING BASE CERTIFICATE)
EXHIBIT G (FORM OF COMPLIANCE CERTIFICATE)
EXHIBIT H (FORM OF REAFFIRMATION OF GUARANTY)
REAFFIRMATION OF GUARANTY
This Reaffirmation of Guaranty (this "Reaffirmation"), dated as of the ___
day of May, 2001, is executed by CFC International, Inc. ("Guarantor"), in favor
of LaSalle Bank National Association ("Bank"), and has reference to the
following facts and circumstances:
A. CFC Europe GmbH f/k/a Sesvenna 20. Vermogensverwaltungs GmbH, a German
corporation and wholly owned subsidiary of Guarantor ("Borrower") and ABN AMRO
Bank (Deutschland) AG ("ABN AMRO") are party to that certain Agreement dated as
of March 15, 1999, as amended, (the "ABN Loan Agreement") pursuant to which ABN
AMRO made available to Borrower, among other loans, a DM 7,500,000 line of
credit (the "Line of Credit") and a DM 11,000,000 term loan (the "Term Loan",
together with the Line of Credit, the "Loans").
B. In order to secure the obligations of Borrower to ABN AMRO under the ABN
Loan Agreement, Borrower and Bank entered into that certain Reimbursement
Agreement dated as of March 19, 2001 by and between Bank and Borrower (as
amended from time to time, the "Reimbursement Agreement"), pursuant to which
Bank agreed to issue in favor of ABN AMRO on the terms and conditions provided
therein an irrevocable standby letter of credit (such letter of credit, as
amended, modified or otherwise supplemented from time to time, is referred to
herein as the "Letter of Credit") in an amount not exceeding DM 19,425,000 (the
"Stated Amount").
C. As a condition to Bank's agreement to issue the Letter of Credit,
Guarantor executed that certain Guaranty in favor of Bank dated as of March ___
1999 (the "Guaranty") pursuant to which Guarantor guaranteed the obligations of
Borrower to Bank under the Reimbursement Agreement.
D. Borrower intends to enter into an amendment to the ABN Loan Agreement
with ABN AMRO to increase the amount available under the Line of Credit and
increase the outstanding principal balance of the Term Loan, and as a condition
of such amendment, ABN AMRO has required Borrower to enter into amendment to the
Reimbursement Agreement to increase the Stated Amount of the Letter of Credit
(the "Amendment").
E. Guarantor is a subsidiary of and is financially interested in Borrower.
F. Guarantor desires that Bank enter into the Amendment.
G. Bank is willing to enter into the Amendment only upon the condition that
Guarantor execute and deliver this Reaffirmation in favor of Bank.
NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees
as follows:
1. The preambles to this Reaffirmation are hereby incorporated herein by
this reference thereto.
2. Guarantor hereby expressly reaffirms and assumes (on the same basis as
set forth in the Guaranty as amended hereby) all of Guarantor's obligations and
liabilities to Bank as set forth in the Guaranty, and all reaffirmations
thereof, and agrees to be bound by and abide by and operate and perform under
and pursuant to and comply fully with all of the terms, conditions, provisions,
agreements, representations, undertakings, warranties, guarantees, indemnities
and covenants contained in the Guaranty, in so far as such obligations and
liabilities may be increased or amended by the Amendment.
3. This Reaffirmation shall inure to the benefit of Bank, its successors
and assigns and be binding upon Guarantor, its successors and assigns.
CFC INTERNATIONAL, INC.
By: _____________________________
Title: ____________________________
EXHIBIT I (FORM OF SECURITY AGREEMENT AND MORTGAGE - PATENTS AND TRADEMARKS)
SECURITY AGREEMENT AND MORTGAGE -
TRADEMARKS AND PATENTS
THIS AGREEMENT is made this ____ day of May, 2001, between CFC
INTERNATIONAL, INC., a Delaware corporation ("Debtor") having an office at 500
State Street, Chicago Heights, Illinois, and LASALLE BANK NATIONAL ASSOCIATION,
a national banking association (the "Secured Party"), having an office at 135
South LaSalle Street, Chicago, Illinois 60603.
WHEREAS, Debtor has adopted the terms and designs described in Schedule A
annexed hereto and made a part hereof;
WHEREAS, Debtor is the owner and holder of the patents listed on Schedule B
hereto and made a part hereof;
WHEREAS, Debtor and Secured Party are parties to an Amended and Restated
Loan and Security Agreement dated as of May ___, 2001, as such may be hereafter
amended (the "Amended and Restated Loan and Security Agreement") pursuant to
which Secured Party intends to make loans and advances to Debtor;
WHEREAS, as a condition to the Secured Party making any loans or advances
to Debtor pursuant to the Amended and Restated Loan and Security Agreement, the
Secured Party has required that Debtor execute and deliver this Security
Agreement and Mortgage (this "Agreement");
NOW, THEREFORE, IT IS AGREED that, for and in consideration of the loans
and advances to be made in the discretion of Secured Party under the Amended and
Restated Loan and Security Agreement, and other good and valuable consideration,
the receipt of which is hereby acknowledged, and as collateral security for the
full and prompt payment and performance of all Obligations, as hereinafter
defined, Debtor does hereby mortgage to and pledge with the Secured Party, and
grant to the Secured Party a security interest in, and all of its right, title
and interest in and to (i) each of the Trademarks (as hereinafter defined), the
goodwill of the business symbolized by each of the Trademarks, and all customer
lists and other records of Debtor relating to the distribution of products
bearing the Trademarks and each of the registrations described in Schedule A;
(ii) each of the Patents, as hereinafter defined, on Schedule B hereto; and
(iii) any and all proceeds of the foregoing, including, without limitation, any
claims by Debtor against third parties for past, present and future infringement
of the Trademarks or the Patents (collectively, the "Collateral").
1. Terms used in this Agreement and not otherwise defined herein shall have
the meaning set forth in the Amended and Restated Loan and Security Agreement.
As used in this Agreement, unless the context otherwise requires:
"Trademarks" shall mean (i) all trademarks, trade names, trade styles,
service marks, prints and labels on which said trademarks, trade names, trade
styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto acquired under common law or
statute, and whether by use or registration, and all registrations and
recordings thereof, and applications therefor, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by Debtor, including, but not limited
to, those described in Schedule A annexed hereto and made a part hereof, but
expressly excluding any Intent-to-Use applications and (ii) all renewals thereof
and all licenses thereof.
"Patents" shall mean (i) all letters patent of the United States or any
other country, all right, title and interest therein and thereto, and all
registrations and recordings thereof, and applications therefor, including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule B annexed hereto and
made a part hereof, and (ii) all reissues, divisions, continuations,
continuations-in-part or extensions thereof and all licenses thereof.
"Obligations" shall mean all indebtedness, obligations, liabilities and
agreements of any kind of Debtor to Secured Party, including without limitation
the Amended and Restated Loan and Security Agreement, now existing or hereafter
arising, direct or indirect (including participations or any interest of Secured
Party in obligations of Debtor to others), acquired outright, conditionally, or
as collateral security from another, absolute or contingent, joint or several,
secured or unsecured, due or not, contractual or tortious, liquidated or
unliquidated, arising by operation of law or otherwise, and all loan agreements,
documents and instruments evidencing any of the foregoing obligations or under
which any of the foregoing obligations may have been issued, created, assumed or
guaranteed, and all extensions, renewals, refundings, replacements and
modifications of the foregoing.
2. Debtor hereby represents, warrants, covenants and agrees as follows:
(a) Debtor has the sole, full and clear title to the Trademark
registrations in the United States, and to the best of Debtor's knowledge,
Debtor has sole, full and clear title to the Trademarks in the United
States for the goods and services on which they are used by Debtor, and the
registrations thereof are valid and subsisting and in full force and
effect.
(b) Debtor will perform all acts and execute all documents, including,
without limitation, assignments for security in form suitable for filing
with the United States Patent and Trademark Office and state and local
governments in the United States and in other countries, substantially in
the forms of Exhibits 1 and 2 hereof, respectively, requested by the
Secured Party at any time to evidence, perfect, maintain, record and
enforce the Secured Party's interest in the Collateral or otherwise in
furtherance of the provisions of this Agreement, and Debtor hereby
authorizes the Secured Party to execute and file one or more financing
statements (and similar documents) or copies thereof or of this Agreement
with respect to the Collateral signed only by the Secured Party.
(c) Nothing contained herein shall prohibit Debtor from failing to
renew or otherwise abandoning any Trademark or Patent if, in Debtor's good
faith judgment, the retention of such Trademark or Patent is not material
to the proper conduct of Debtor's business, except that Debtor shall not
permit the expiration of registrations of Trademarks or Patents in the U.S.
Patent and Trademark Office, listed in Schedule A or Schedule B hereto,
without the prior written consent of Secured Party, which consent shall not
be unreasonably withheld.
(d) Debtor has the sole, full and clear title to each of the
registered Patents shown on Schedule B hereto, subject to the security
interest granted hereunder, and the same are subsisting and in full force
and effect, and, to the best of Debtor's knowledge, are valid. None of the
Patents has been abandoned, disclaimed or dedicated in whole or in part,
and, except (i) as set forth in paragraph 2(c) and (ii) to the extent that
the Secured Party, upon prior written notice by Debtor, shall consent
(which consent shall not be unreasonably withheld), Debtor will not do any
act, or omit to do any act, whereby the Patents may become so abandoned,
disclaimed or dedicated and shall notify the Secured Party immediately if
it knows of any reason or has reason to know that any such Patent or
application may become so abandoned, disclaimed or dedicated.
(e) Debtor will promptly pay the Secured Party for any and all sums,
costs, and expenses which the Secured Party may pay or incur pursuant to
the provisions of this Agreement or in enforcing the Obligations, the
Collateral or the security interest granted hereunder, including, but not
limited to, all filing or recording fees, court costs, collection charges,
travel, and reasonable attorneys' fees, all of which together with interest
at the highest rate then payable on the Obligations shall be part of the
Obligations and be payable on demand.
(f) Debtor shall provide Secured Party quarterly with a listing of all
new Patents and Trademarks together with a listing of the issuance of
registrations on any previous application. Upon request of the Secured
Party, Debtor shall execute and deliver any and all assignments,
agreements, instruments, documents and papers as the Secured Party may
request to evidence the Secured Party's interest in such Patent or
Trademark and the goodwill and general intangibles of Debtor relating
thereto or represented thereby and Debtor hereby constitutes the Secured
Party its attorney-in-fact to execute and file all such writings for the
such purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until
the Obligations are paid in full.
(g) Debtor has the right and power to grant the security interest
herein granted; and the Collateral is not now, and at all times will not
be, subject to any liens, mortgages, assignments, security interests or
encumbrances of any nature whatsoever, except for those granted under this
Agreement, and except in favor of the Secured Party and to the best
knowledge of Debtor none of the Collateral is subject to any claim.
(h) Except to the extent that the Secured Party, upon prior written
notice of Debtor, shall consent, Debtor will not assign, sell, mortgage,
lease, transfer, pledge, hypothecate, grant a security interest in or lien
upon, encumber, grant an exclusive or non-exclusive license, or otherwise
dispose of any of the Collateral, and nothing in this Agreement shall be
deemed a consent by the Secured Party to any such action except as
expressly permitted herein.
(i) As of the date hereof Debtor has no Patent or Trademark
registrations in, or the subject of pending applications in, the United
States Patent and Trademark Office or any similar office or agency in any
state of the United States, or in any other country or any political
subdivision thereof other than those described in Schedules A and B hereto.
It is expressly understood that applications based on Intent to Use are not
listed on Schedule A and Secured Party takes no security interest in such
applications until they are registered.
(j) Debtor will take all necessary steps in any proceeding before the
United States Patent and Trademark Office or any similar office or agency
in any other country or any political subdivision thereof, to maintain each
Patent and each application and registration of the Trademarks and Patents,
including, without limitation, if applicable, paying of maintenance fees,
applications for reissues or extensions, filing of renewals, affidavits of
use, and affidavits of incontestability, interference and cancellation
proceedings (except as otherwise permitted under paragraphs 2(c) and 2(d)
hereof).
3. Upon the occurrence of an Event of Default (as defined in the Amended
and Restated Loan and Security Agreement) (whenever used herein, the term "Event
of Default" having such meaning), in addition to all other rights and remedies
of the Secured Party, whether under law, the Amended and Restated Loan and
Security Agreement or otherwise, all such rights and remedies being cumulative,
not exclusive and enforceable alternatively, successively or concurrently,
without (except as provided herein) notice to, or consent by, Debtor, the
Secured Party shall have the following rights and remedies: (a) Debtor shall not
make any use of the Patents or the inventions to which they pertain or the
Trademarks or any mark similar thereto for any purpose; (b) to the extent
permitted by law, the Secured Party may, at any time and from time to time, upon
ten (10) days' prior notice to Debtor, license, whether on an exclusive or
nonexclusive basis, any of the Patents or Trademarks, anywhere in the world for
such term or terms, on such conditions, and in such manner, as the Secured Party
shall in its sole discretion determine; (c) to the extent permitted by law, the
Secured Party may (without assuming any obligations or liability thereunder), at
any time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of Debtor in, to and under any
one or more license agreements with respect to the Collateral, and take or
refrain from taking any action under any thereof, and Debtor hereby releases the
Secured Party from, and agrees to hold the Secured Party free and harmless from
and against any claims arising out of, any action taken or omitted to be taken
with respect to any such license agreement; (d) the Secured Party may, at any
time and from time to time, upon ten (10) days' prior notice to Debtor, assign,
sell, buy, or otherwise dispose of, the Collateral or any of it, either with or
without special or other conditions or stipulations, and with power also to
execute assurances, and do all other acts and things for completing the
assignment, sale or disposition which the Secured Party shall, in its sole
discretion, deem appropriate or proper; and (e) in addition to the foregoing, in
order to implement the assignment, sale or other disposal of any of the
Collateral pursuant to subparagraph 3(d) hereof, the Secured Party may, at any
time, pursuant to the authority granted in the Power(s) of Attorney described in
paragraph 4 hereof (such authority becoming effective on the occurrence or
continuation as hereinabove provided of an Event of Default), execute and
deliver on behalf of Debtor, one or more instruments of assignment of the
Patents or Trademarks, in form suitable for filing, recording or registration in
any country. Debtor agrees to pay when due all reasonable costs incurred in any
such transfer of the Patents or Trademarks, including any taxes, fees and
reasonable attorneys' fees, and all such costs shall be added to the
Obligations. The Secured Party may apply the proceeds actually received from any
such license, assignment, sale or other disposition to the reasonable costs and
expenses thereof, including, without limitation, reasonable attorneys' fees and
all legal, travel and other expenses which may be incurred by the Secured Party,
and then to the Obligations, in such order as to principal or interest as the
Secured Party may desire; and Debtor shall remain liable and will pay the
Secured Party on demand any deficiency remaining, together with interest thereon
at a rate equal to the highest rate then payable on the Obligations and the
balance of any expenses unpaid. Nothing herein contained shall be construed as
requiring the Secured Party to take any such action at any time. In the event of
any such license, assignment, sale or other disposition of the Collateral, or
any of it, after the occurrence or continuation as hereinabove provided of an
Event of Default, Debtor shall supply its tooling and know-how relating to the
manufacture and sale of the products covered by the Trademarks or Patents, and
its customer lists and other records relating to the Trademarks or Patents and
to the distribution of said products, to the Secured Party or its designee.
4. Concurrently with the execution and delivery hereof, Debtor is executing
and delivering to the Secured Party, in the form of Exhibit 3 hereto, three (3)
originals of a Power of Attorney, coupled with an interest, for the
implementation of the assignment, sale or other disposal of the Trademarks and
Patents pursuant to paragraphs 3(d) and (e) hereof and Debtor hereby releases
the Secured Party from any claims, causes of action and demands at any time
arising out of or with respect to any actions taken or omitted to be taken by
the Secured Party, under the powers of attorney granted herein other than
actions taken or omitted to be taken through the gross negligence or willful
misconduct of the Secured Party.
5. No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Agreement and executed by the
party to be charged. The execution and delivery of this Agreement has been
authorized by the Board of Directors of Debtor and by any necessary vote or
consent of stockholders thereof. This Agreement shall be binding upon the
successors, assigns or other legal representatives of Debtor, and shall,
together with the rights and remedies of the Secured Party hereunder, inure to
the benefit of the Secured Party, its successors, assigns or other legal
representatives. This Agreement, the Obligations and the Collateral shall be
governed in all respects by the laws of the United States and the laws of the
State of Illinois. Debtor hereby submits to the nonexclusive jurisdiction of the
state courts of the State of Illinois and the federal courts of the United
States of America located in such State in any action or proceeding arising
under this Agreement. If any term of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby.
6. Secured Party shall release its security interest in all of the
Collateral upon the repayment of the Obligations and the termination of the
Amended and Restated Loan and Security Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Debtor and the Secured Party have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CFC INTERNATIONAL, INC.
By:_______________________
Name:
Title:______________________
LASALLE BANK NATIONAL ASSOCIATION
By:_______________________
Name:_____________________
Title:______________________
SCHEDULE A TO
SECURITY AGREEMENT
TRADEMARKS
CFC INTERNATIONAL, INC.
Registered Trademarks
- ------------------ --------------------- ---------------------- ----------------
Registration No. Description of Mark Date of Registration State or Country
- ------------------ --------------------- ---------------------- ----------------
TRADEMARK APPLICATIONS
- ----------------- ----------------------- ---------------------- ---------------
Application No. Description of Mark Date of Application State or Country
- ----------------- ----------------------- ---------------------- ---------------
SCHEDULE B TO
SECURITY AGREEMENT
PATENTS
- --------------- ----------------- ---------------------- ---------------
Patent Number Title of Patent Date Patent Issued Country
- --------------- ----------------- ---------------------- ---------------
PATENT APPLICATIONS
- ----------------- --------------------- --------------- ----------- -----------
Serial Number Title of Patent Filing Date Country Inventor
- ----------------- --------------------- --------------- ----------- -----------
Exhibit 1 to
Security Agreement
SECURITY INTEREST AGREEMENT
(PATENTS)
WHEREAS, CFC INTERNATIONAL, INC., a Delaware corporation (herein referred
to as "Grantor"), owns the letters patent, and/or applications for letters
patent, of the United States, more particularly described on Schedule 1-A
annexed hereto as part hereof (the "Patents");
WHEREAS, Grantor is obligated to LaSalle Bank National Association, (herein
referred to as "Secured Party"), and has entered into a Security Agreement and
Mortgage-Trademarks and Patents (the "Agreement") in favor of Secured Party;
WHEREAS, pursuant to the Agreement, Grantor has granted to Secured Party a
security interest in, and mortgage on, all right, title and interest of Grantor
in and to the Patents, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
for the full term of the Patents, to secure the prompt payment, performance and
observance of the Obligations, as defined in the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Grantor does hereby further grant to Secured Party a
security interest in, and mortgage on, the Patents to secure the prompt payment,
performance and observance of the Obligations.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in and mortgage
on the Patents made and granted hereby are more fully set forth in the
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
by its officer thereunto duly authorized as of the ___ day of May, 2001.
CFC INTERNATIONAL, INC.
By:_______________________
Name:
Title:
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
On this ___ day of May, 2001, before me personally appeared
_________________, to me known, who, being by me duly sworn, did depose and say
that he is the _________________ of CFC INTERNATIONAL, INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
-------------------------------
Notary Public
My commission expires:
-------------------------------
SCHEDULE 1-A TO SECURITY INTEREST AGREEMENT
PATENTS
- ----------------- ------------------- ---------------------- ----------------
Patent Number Title of Patent Date Patent Issued Country
- ----------------- ------------------- ---------------------- ----------------
PATENT APPLICATIONS
- ----------------- ------------------- --------------- ----------- -------------
Serial Number Title of Patent Filing Date Country Inventor
- ----------------- ------------------- --------------- ----------- -------------
Exhibit 2 to
Security Agreement
SECURITY INTEREST AGREEMENT
(TRADEMARKS)
WHEREAS, CFC INTERNATIONAL, INC., a Delaware corporation (herein referred
to as "Grantor"), has adopted, used and is using the trademarks listed on the
annexed Schedule 2-A, which trademarks are registered or applied for in the
United States Patent and Trademark Office (the "Trademarks");
WHEREAS, Grantor is obligated to LaSalle Bank National Association (herein
referred to as "Secured Party"), and has entered into a Security Agreement and
Mortgage-Trademarks and Patents (the "Agreement") in favor of Secured Party;
WHEREAS, pursuant to the Agreement, Grantor has granted to Secured Party a
security interest in, and mortgage on, all right, title and interest of Grantor
in and to the Trademarks, together with the goodwill of the business symbolized
by the Trademarks and all proceeds thereof, including, without limitation, any
and all causes of action which may exist by reason of infringement thereof, to
secure the payment, performance and observance of the Obligations, as defined in
the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Grantor does hereby further grant to Secured Party a
security interest in, and mortgage on, the Trademarks to secure the prompt
payment, performance and observance of the Obligations.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in and mortgage
on the Trademarks made and granted hereby are more fully set forth in the
Agreement, the terms and provisions of which are hereby incorporated herein by
reference as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
by its officer thereunto duly authorized as of the ___ day of May, 2001.
CFC INTERNATIONAL, INC.
By:______________________
Name:
Title:
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
On this ___ day of May, 2001, before me personally appeared
_______________, to me known, who, being by me duly sworn, did depose and say
that he is the ________________ of CFC INTERNATIONAL, INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
-------------------------------
Notary Public
My commission expires:
-------------------------------
SCHEDULE 2-A TO SECURITY INTEREST AGREEMENT
TRADEMARKS
CFC INTERNATIONAL, INC.
Registered Trademarks
- ------------------ --------------------- ---------------------- ----------------
Registration No. Description of Mark Date of Registration State or County
- ------------------ --------------------- ---------------------- ----------------
TRADEMARK APPLICATIONS
- ----------------- ----------------------- ---------------------- ---------------
Application No. Description of Mark Date of Application State or County
- ----------------- ----------------------- ---------------------- ---------------
Exhibit 3 to
Security Agreement
SPECIAL POWER OF ATTORNEY COUPLED WITH AN INTEREST
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
KNOW ALL MEN BY THESE PRESENTS, THAT CFC INTERNATIONAL, INC., a Delaware
corporation with its principal office at 500 State Street, Chicago Heights,
Illinois 60411 (hereinafter called "Grantor") hereby appoints and constitutes
LaSalle Bank National Association (hereinafter called "Secured Party"), its true
and lawful attorney, with full power of substitution, and with full power and
authority to perform the following acts on behalf of Grantor:
1. For the purpose of assigning, selling or otherwise disposing of all
right, title and interest of Grantor in and to any letters patent of the United
States or any other country, and all pending applications therefor, and all
reissues, divisions, continuations, continuations-in-part and extensions
thereof, and for the purpose of the filing and prosecution of, or accomplishing
any other formality with respect to, the foregoing, to execute and deliver any
and all agreements, documents, instruments of assignment or other papers
necessary or advisable to effect such purpose;
2. For the purpose of assigning, selling or otherwise disposing of all
right, title and interest of Grantor in and to any trademarks, trade names,
trade styles and service marks, and all registrations, recordings and renewals
thereof, and all pending applications therefor, and for the purpose of the
recording, registering, filing and prosecution of, or accomplishing any other
formality with respect to, the foregoing, to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary or
advisable to effect such purpose; and
3. To execute any and all documents, statements, certificates or other
papers necessary or advisable in order to obtain the purposes described above as
Secured Party may in its sole discretion determine.
This power of attorney is made pursuant to a Security Agreement and
Mortgage - Trademarks and Patents, dated the date hereof, between Grantor and
Secured Party and takes effect solely for the purposes of paragraphs 3(d) and
(e) thereof and is subject to the conditions set forth in the Loan Agreement and
may not be revoked until the payment in full of all "Obligations" as defined in
such Security Agreement and Mortgage.
Dated: May ___, 2001
CFC INTERNATIONAL, INC.
By:_______________________
Name:
Title:
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
On this ___ day of May, 2001, before me personally appeared
_________________, to me known, who, being by me duly sworn, did depose and say
that he is the ___________________ of CFC INTERNATIONAL, INC., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said corporation.
-------------------------------
Notary Public
My commission expires:
--------------------------------
EXHIBIT J (FORM OF MASTER LETTER OF CREDIT AGREEMENT)
Insert LaSalle's Master form here.