Exhibit 10.7
EXECUTION COPY
EAGLE SUPPLY, INC., AS BORROWER
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LOAN AND SECURITY AGREEMENT
Dated as of December 23, 1994
$7,500,000
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BARCLAYS BUSINESS CREDIT, INC., AS LENDER
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TABLE OF CONTENTS Page
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SECTION 1. CREDIT FACILITY ...................................................1
1.1 Revolving Credit Loans 1
SECTION 2. INTEREST, FEES AND CHARGES ........................................2
2.1 Interest ............................................................2
2.2 Closing Fee .........................................................3
2.3 Collateral Monitoring Fee ...........................................3
2.4 Unused Availability Fee .............................................3
2.5 Audit and Appraisal Fees ............................................3
2.6 Capital Adequacy Charge .............................................3
2.7 Reimbursement of Expenses ...........................................4
2.8 Bank Charges ........................................................5
2.9 Collection Charges ..................................................5
SECTION 3. LOAN ADMINISTRATION ...............................................5
3.1 Manner of Borrowing Revolving Credit Loans ..........................5
3.2 Payments ............................................................7
3.3 Mandatory Prepayments ...............................................8
3.4 Application of Payments and Collections .............................8
3.5 All Loans to Constitute One Obligation ..............................8
3.6 Loan Account ........................................................9
3.7 Statements of Account ...............................................9
SECTION 4. TERM AND TERMINATION ..............................................9
4.1 Term of Agreement ...................................................9
4.2 Termination .........................................................9
SECTION 5. SECURITY INTERESTS ...............................................10
5.1 Security Interest in Collateral ....................................10
5.2 Lien Perfection; Further Assurances ................................11
5.3 Lien on Equipment ..................................................11
SECTION 6. COLLATERAL ADMINISTRATION ........................................11
6.1 Location of Collateral .............................................11
6.2 Insurance of Collateral ............................................11
6.3 Protection of Collateral ...........................................12
6.4 Administration of Accounts .........................................12
6.5 Administration of Inventory ........................................14
6.6 Records and Schedules of Equipment .................................14
6.7 Payment of Charges .................................................14
SECTION 7. REPRESENTATIONS AND WARRANTIES ...................................14
7.1 General Representations and Warranties .............................14
7.2 Continuous Nature of Representations and Warranties ................19
7.3 Survival of Representations and Warranties .........................20
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SECTION 8. COVENANTS AND CONTINUING AGREEMENTS ..............................20
8.1 Affirmative Covenants ..............................................20
8.2 Negative Covenants .................................................22
SECTION 9. CONDITIONS PRECEDENT .............................................25
9.1 Documentation ......................................................25
9.2 No Default .........................................................25
9.3 Other Loan Documents ...............................................25
9.4 Adjusted Availability ..............................................25
9.5 No Litigation ......................................................26
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT ...............26
10.1 Events of Default ..................................................26
10.2 Acceleration of the Obligations ....................................28
10.3 Other Remedies .....................................................28
10.4 Remedies Cumulative; No Waiver .....................................29
SECTION 11. MISCELLANEOUS ...................................................30
11.1 Power of Attorney ..................................................30
11.2 Indemnity ..........................................................31
11.3 Modification of Agreement; Sale of Interest ........................31
11.4 Severability .......................................................31
11.5 Successors and Assigns .............................................31
11.6 Cumulative Effect; Conflict of Terms ...............................31
11.7 Execution in Counterparts ..........................................32
11.8 Notice .............................................................32
11.9 Lender's Consent ...................................................33
11.10 Credit Inquiries ...................................................33
11.11 Time of Essence ....................................................33
11.12 Entire Agreement ...................................................33
11.13 Interpretation .....................................................33
11.14 GOVERNING LAW; CONSENT TO FORUM ....................................33
11.15 WAIVERS BY BORROWER ................................................34
11.16 Parties to Act in a Commercially Reasonable Manner .................35
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this 23rd day of December,
1994, by and between BARCLAYS BUSINESS CREDIT, INC. ("Lender"), a Connecticut
corporation with an office at 12 East 49th Street, New York, New York 10017, and
EAGLE SUPPLY, INC. ("Borrower"), a Florida corporation with its executive office
and principal place of business at 1301 N. 13th Street, Tampa, Florida 33605.
Capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to Seven Million
Five Hundred Thousand Dollars ($7,500,000) available upon Borrower's request
therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no Default or
Event of Default exists, to make Revolving Credit Loans to Borrower from time to
time, as requested by Borrower in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding equal to the
Borrowing Base at such time less reserves, if any. Lender shall have the right
to establish reserves in such amounts, and with respect to such matters, as
Lender shall deem necessary or appropriate, against the amount of Revolving
Credit Loans which Borrower may otherwise request under this subsection 1.1.1,
including, without limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which credit
memoranda are issued in the ordinary course of Borrower's business; (ii)
shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory,
(iv) other sums chargeable against Borrower's Loan Account as Revolving Credit
Loans under any section of this Agreement; (v) amounts owing by Borrower to any
Person to the extent secured by a Lien (other than a Permitted Lien) on, or
trust over, any Collateral of Borrower; and (vi) such other matters, events,
conditions or contingencies as to which Lender, in its sole credit judgment,
determines reserves should be established from time to time hereunder.
1.1.2 Overadvances. Lender may in its sole discretion make Revolving
Credit Loans to Borrower as requested by Borrower in accordance with the terms
of subsection 3.1.1 hereof at a time when the unpaid balance of Revolving Credit
Loans exceeds, or would exceed with the making of any such Revolving Credit
Loan, the borrowing Base (any such loan being herein referred to individually as
an "Overadvance" and collectively as "Overadvances"). All Overadvances shall be
repaid on demand, shall be secured by all of the Collateral and shall bear
interest as provided in this Agreement for Base Rate Loans.
1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used
initially for (a) the satisfaction of existing Indebtedness of Borrower to the
Parent and (b) the extension of
a certain loan to the Parent in the approximate principal amount of $1,965,000,
and thereafter for Borrower's general operating capital needs in a manner
consistent with the provisions of this Agreement and all applicable laws.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. At Borrower's election, interest shall accrue
on the principal amount of the Revolving Credit Loans outstanding at the end of
each day (1) in the case of Base Rate Loans, at a fluctuating rate per annum
equal to the Base Rate plus the Applicable Interest Rate Margin with respect to
Base Rate Loans and (b) in the case of LIBOR Rate Loans, at the LIBOR Rate plus
the Applicable Interest Rate Margin with respect to LIBOR Rate Loans. In the
case of Base Rate Loans, the rate of interest shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate, effective as of the
opening of business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to two percent (2%)
above the Base Rate plus the Applicable Interest Rate Margin with respect to
Base Rate Loans.
2.1.3 Computation of Interest and Fees. Interest, fees and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year consisting of three hundred and sixty (360)
days.
2.1.4 Maximum Interest. In no event whatsoever shall the aggregate of
all amounts deemed interest hereunder and charged or collected pursuant to the
terms of this Agreement exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement are in contravention of
any such law, such provisions shall be deemed amended to conform thereto.
2.1.5 Minimum Interest. Subject to the terms of subsection 2.1.4, in
the event that payments of interest on the Loans received by Lender during the
period from the Closing Date through the first anniversary thereof, or during
any annual period thereafter, are less then the sum of $240,000, in the
aggregate, with respect to any such period, without taking into account payments
of additional interest made pursuant to subsection 2.1.2, if any, during such
period, then Borrower shall pay to Lender on the first day of the month
following such period, and, without duplication, on the last day of the Original
Term (or on the last day of the Renewal Term then in effect, if applicable), an
amount equal to the excess of $240,000 over the sum of the aggregate payments of
interest received during such period.
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2.2 Closing Fee. Borrower shall pay to Lender a closing fee of Eighteen
Thousand Seven Hundred and Fifty Dollars ($18,750), which shall be fully earned
and nonrefundable on the Closing Date and shall be paid concurrently with the
initial Loan hereunder.
2.3 Collateral Monitoring Fee. Borrower shall pay to Lender each month, in
arrears, on the first day of the following month, a collateral monitoring fee of
$1,000, which fee shall be pro-rated for any month during which this Agreement
is in effect for less than a full month.
2.4 Unused Availability Fee. Borrower shall pay to Lender an unused
availability fee, which shall be payable in arrears on the last day of each
calendar month hereafter. The unused availability fee shall equal one-quarter of
one percent (1/4 of 1%) per annum on the average daily amount during each month
by which the Borrowing Base in effect on such day exceeds the aggregate amount
of Revolving Credit Loans outstanding as of the close of business on such day;
such fee shall be pro-rated for any month during which this Agreement is in
effect for less than a full month.
2.5 Audit and Appraisal Fees. Borrower shall pay to Lender audit and
appraisal fees from time to time in connection with Lender's periodic audits and
appraisals of Borrower's books and records and such other matters as Lender
shall deem appropriate, plus all out-of-pocket expenses incurred by Lender in
connection with such audits and appraisals. Such audit and appraisal fees shall
be calculated at the rate of $500 for each member of Borrower's field
examination staff engaged in any such audit and appraisal for each day during
which such examination is being conducted and, absent the occurrence and
continuance of an Event of Default, such audits and appraisals shall be
conducted not more than three (3) times during each twelve (12) month period,
commencing from the Closing Date. Audit fees shall be payable on the first day
of the month following the date of issuance by Lender of a request for payment
thereof to Borrower. Upon Borrower's request, Lender shall provide to Borrower
in reasonable detail the back-up in support of any out-of-pocket expenses
referred to herein.
2.6 Capital Adequacy Charge. If Lender shall have determined that the
adoption of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof, or compliance by
Lender with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority (each
such law, rule, regulation, request or directive a "Capital Adequacy Rule"),
does or shall have the effect of reducing the rate of return on Lender's capital
as a consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy) by a material
amount, then from time to time, after submission by Lender to Borrower of a
written demand therefor (a "Capital Adequacy Demand"), the Borrower shall pay to
Lender such additional amount or amounts (each a "Capital Adequacy Amount", it
being understood that Capital Adequacy Amount may include an increase in the
Applicable Interest Rate Margin) as will compensate Lender for such reduction. A
certificate of Lender claiming entitlement to payment as set forth above shall
be conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such reduction, the additional
Capital Adequacy Amount or Amounts to be paid to Lender, and the method by which
such Capital Adequacy Amounts were determined. In determining such Capital
Adequacy Amount, Lender may use any reasonable averaging and attribution method.
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2.6.1 Termination of Agreement following Capital Adequacy Demand. At
its option, borrower may elect to terminate this Agreement following its receipt
of a Capital Adequacy Demand, provided Borrower gives Lender notice of such
election not more than thirty (30) days following its receipt of such Capital
Adequacy Demand, and provided, further, that so long as the effective date of
such termination and the payment and satisfaction in full of all Obligations
occurs within one hundred and eighty (180) days form the date of such notice,
Borrower shall not be obligated to pay any of the charges described in
subsection 4.2.3, it being understood, however, that until such effective date
of termination and the payment and satisfaction in full of all Obligations,
Borrower shall continue to be obligated to pay Lender for each Capital Adequacy
Amount theretofore requested by Lender pursuant to a Capital Adequacy Demand.
2.6.2 Subsequent Change in Capital Adequacy Rules. In the event that
any Capital Adequacy Rule, the adoption or change in or compliance by Lender
with which shall have resulted in a Capital Adequacy Demand, shall be revised
subsequent to the date of such Capital Adequacy Demand, such that, in Lender's
determination, its rate of return on capital shall be improved to a level more
favorable than the rate of return which, as a result of the initial change in
such Capital Adequacy Rule, precipitated such Capital Adequacy Demand, then, in
such event, effective promptly following such determination, provided Borrower
shall not have theretofore given to Lender a notice of election to terminate in
accordance with subsection 2.6.1: (i) in the case of a Capital Adequacy Demand
to increase the Applicable Interest Rate Margin, Lender shall reduce the
Applicable Interest Rate Margin by a percentage; and (ii) in the case of a
Capital Adequacy Demand for payment of a fee or other charge, Lender shall
rebate to Borrower a portion of such payment, in each case which Lender shall
determine to be reasonably commensurate with the improvement in Lender's rate of
return on capital caused by the subsequent revision to the Capital Adequacy
Rule. Notwithstanding anything herein above to the contrary, Lender shall have
no obligation whatsoever to make any such adjustment to the Borrower, at any
time on or after: (i) the occurrence and continuance of an Event of Default;
(ii) the date of Borrower's notice of election to terminate in accordance with
subsection 2.6.1; or (iii) the effective date of termination of this Agreement.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participating
Lender incurs reasonable legal or reasonable accounting expenses or any other
reasonable costs or reasonable out-of-pocket expenses in connection with (i) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suite, proceeding or action (whether
instituted by Lender, Borrower or any other Person ) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrower's
affairs; (iv) any attempt to enforce any rights of Lender or any Participating
Lender against Borrower or any other Person which may be obligated to Lender by
virtue of this Agreement or any of the other Loan Documents, including, without
limitation, the Account Debtors; or (v) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such reasonable legal and reasonable accounting
expenses and other reasonable costs and reasonable out of pocket expenses of
Lender shall be charged to Borrower. All amounts chargeable to Borrower under
this Section 2.7 shall be Obligations secured by all of the Collateral, shall be
payable on demand to Lender or to such
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Participating Lender, as the case may be, and shall bear interest from the date
such demand is made until paid in full at the rate applicable to Base Rate Loans
from time to time. Borrower shall also reimburse Lender for reasonable expenses
incurred by the Lender in its administration of the Collateral to the extent and
in the manner provided in Section 6 hereof.
2.8 Bank Charges. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender or any Participating Lender pays to a bank
or other similar institution (including, without limitation, any fees paid by
the Lender to any Participating Lender) arising out of or in connection with (i)
the forwarding to Borrower or any other Person on behalf of Borrower, by Lender
or any Participating Lender, proceeds of Loans and (ii) the depositing for
collection, by Lender or any Participating Lender, of any check or item of
payment received or delivered to Lender or any Participating Lender on account
of the Obligations.
2.9 collection Charges. If items of payment are received by Lender at a
time when there are no Loans outstanding, such items of payment shall be subject
to a collection charge equal to two (2) days' interest on the amount thereof at
the rate then applicable to Base Rate Loans, which collection charges shall be
payable on the first Business Day of each month.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the Credit
Facility established pursuant to Section 1.1 hereof shall be as follows:
3.1.1 Loans Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower shall
give Lender same day notice, no later than 11:00 A.M. (New York City time) of
such day, of its intention to borrow a Base Rate Loan, and at least five (5)
Business Days' prior notice of its intention to borrow a LIBOR Rate Loan, in
which notice Borrower shall specify the amount of the proposed borrowing and the
proposed borrowing date; provided, however, that no such request may be made at
a time when there exists a Default or an Event of Default and (ii) the becoming
due of any amount required to be paid under this Agreement, whether as interest
or for any other Obligation, shall be deemed irrevocably to be a request for a
Revolving Credit Loan on the due date in the amount required to pay such
interest or other Obligation. As an accommodation to Borrower, Lender may permit
telephone requests for Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring any requests, executions of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower, and
Lender shall have no duty to verify the origin of any such communication or the
authority of the person sending it. Each notice of borrowing shall be
irrevocable by and binding on Borrower, and if such notice requests the
borrowing of a LIBOR Rate Loan, such notice shall state the Interest Period with
respect thereto. Borrower, at its option, may choose Base Rate Loans or LIBOR
Rate Loans, provided that any LIBOR Rate Loan shall be in a minimum amount of
$1,000,000, and
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provided, further, that the right of Borrower to choose any LIBOR Rate Loan is
subject to the provisions of subsection 3.1.4.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Lender, in
Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.
3.1.4 Notice of Continuation and Notice of Conversion.
(a) Subject to the provisions of subsection 3.1.4(c), Borrower may
elect to maintain any borrowing consisting of LIBOR Rate Loans, or any portion
thereof, as a LIBOR Rate Loan by selecting a new Interest Period for such
borrowing, which new Interest Period shall commence on the last day of the then
existing Interest Period. Each selection of a new Interest Period (a
"Continuation") shall be made on five (5) Business Days' prior notice, given by
Borrower to Lender not later than 10:30 A.M. (New York City time) on the fifth
Business Day preceding the date of any proposed Continuation. If the Borrower
elects to maintain more than one borrowing consisting of LIBOR Rate Loans by
combining such borrowings into one borrowing and selecting a new Interest Period
pursuant to this subsection, each of the borrowings so combined shall consist of
Loans having Interest Periods ending on the same date. If the Borrower shall
fail to select anew Interest Period for any borrowing consisting of LIBOR Rate
Loans in accordance with this subsection, such LIBOR Rate Loans will
automatically convert into Base Rate Loans.
(b) Subject to the provisions of subsection 3.1.4(c), Borrower may, on
five (5) Business Days' prior notice given to Lender, convert the entire amount
of or a portion of all Loans of the same Type into Loans of another Type (a
"Conversion"), provided, that no Default or Event of Default shall have occurred
and be continuing, and provided, further, that any Conversion of any LIBOR Rate
Loans into Base Rate Loans may only be made on the last day of the Interest
Period for such LIBOR Rate Loans, and upon Conversion of any Base Rate Loans
into LIBOR Rate Loans, Borrower shall pay accrued interest to the date of
Conversion on the principal amount converted on the first day of the following
month. Each such notice shall be given not later than 10:30 A.M. (new York City
time) on the fifth Business day preceding the date of any proposed Conversion.
Each Conversion shall be in an aggregate
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amount of not less than $1,000,000. Borrower may elect to convert the entire
amount of or a portion of all Loans of the same Type comprising more than one
borrowing into Loans of another Type by combining such borrowings into one
borrowing consisting of Loans of such other Type; provided, however, that if the
borrowings so combined consist of LIBOR Rate Loans, such LIBOR Rate Loans
shall have Interest Periods ending on the same date.
(c) Notwithstanding anything contained in clauses (a) and (b) above to
the contrary:
(i) if Lender is unable to determine the LIBOR Rate for LIBOR
Rate Loans comprising any requested borrowing, Continuation of Conversion, the
right of Borrower to select or maintain LIBOR Rate Loans for such borrowing or
any subsequent borrowing shall be suspended until Lender shall notify Borrower
that the circumstances causing such suspension no longer exist, and each Loans
comprising such requested borrowing, Continuation or Conversion shall be
automatically converted into a Base Rate Loan; and
(ii) there shall not be outstanding at any one time more than an
aggregate of five (5) LIBOR Rate Loans.
(d) Each notice of Continuation or Conversion shall be irrevocable and
binding on Borrower. In the case of (i) any borrowing of a Loan, Continuation or
Conversion that the related notice of borrowing, notice of Continuation or
notice of Conversion specifies is to be comprised of LIBOR Rate Loans, or (ii)
any payment of principal of, or Conversion or Continuation of, any LIBOR Rate
Loan made other then on the last day of the Interest Period for such Loan as a
result of a payment, prepayment, Conversion or Continuation of such Loan or
acceleration of the maturity of any of the Obligations pursuant to Section 10
hereof, or for any other reason, then in any such case, upon Lender's demand,
Borrower shall pay to Lender and indemnify Lender from and against (i) any loss,
cost or expense incurred by Lender as a result of any failure to fulfill, on or
before the date for such borrowing, Continuation or Conversion, the applicable
conditions set forth in Section 9 hereof, and (ii) any additional losses, costs
or expenses which Lender may reasonably incur as a result of such payment,
including, without limitation in each such case, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by Lender to fund the LIBOR
Rate Loans to be made as part of such borrowing, Continuation or Conversion.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrower to Lender specifically containing payment provisions which
are in conflict with this Section 3.2 (in which event the conflicting provisions
of said notes or other instruments shall govern and control), the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral,
to the extent of said proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to
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Section 4 hereof; provided, however, that if an Overadvance shall exist at any
time, Borrower shall, on demand, repay the Overadvance.
3.2.2 Interest. Interest accrued on all Loans shall be due on the
earliest of (i) the first calendar day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding month,
(ii) the occurrence of an Event of Default in consequence of which Lender elects
to accelerate the maturity and payment of the Obligations, or (iii) termination
of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of month, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.
3.3 Mandatory Prepayments. If Borrower sells any of the Collateral or if
any of the Collateral is lost or destroyed, Borrower shall pay to Lender, unless
otherwise agreed to by Lender, or as otherwise expressly authorized by this
Agreement, as and when received by the Borrower and as a mandatory prepayment of
the outstanding Revolving Credit Loans, until paid and satisfied in full, a sum
equal to the proceeds (including insurance proceeds) received by Borrower from
such sale, loss or destruction.
3.4 Application of Payments and Collections. All items of payment received
by Lender by 12:00 noon, New York City time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
New York City time, on any Business Day shall be deemed received on the
following Business Day. For the purpose of computing interest hereunder, all
items of payments received by Lender shall be deemed applied by Lender on
account of the Obligations (subject to final payment of such items) on the
second Business Day after receipt by Lender of good funds in Lender's account
located in Chicago, Illinois, or such other account as to which Lender may
advise Borrower in writing. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lender shall have the continuing exclusive right
to apply and reapply any and all such payments and collections received at any
time or times hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by Borrower upon
any of its books and records. If as the result of collections of Accounts as
authorized by subsection 6.4.6 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists.
3.5 All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Lender's Lien upon all
of the Collateral.
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3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within thirty (30) Days of the date such accounting is mailed to Borrower. Such
notice shall only be deemed an objection to those items specifically objected to
therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making Loans to
Borrower upon or after the occurrence of any Default or Event of Default, this
Agreement shall be in effect for a period of four (4) years from the date
hereof, through and including December 23, 1998 (the "Original Term"), and this
Agreement shall automatically renew itself for one (1) year periods thereafter
(the "Renewal Terms"), unless (a) the party which elects not to renew this
Agreement gives at least one hundred and eighty (180) Days written notice
thereof to the other party prior to the expiration of the Original Term (or the
then current Renewal Term, as the case may be) or (b) this Agreement shall be
sooner terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lender. Lender may terminate this Agreement
without notice at any time on or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon at least ninety (90) Days prior
written notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds. Any notice of
termination given by Borrower shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans on or
after the termination date stated in such notice. Borrower may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
Type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of any termination of
this Agreement by Borrower pursuant to subsection 4.2.2 hereof, Borrower shall
pay to Lender (in addition to the then outstanding principal, accrued interest
and other charges owing under the terms of this Agreement and any of the other
Loan Documents) as liquidated damages for the loss of the bargain and not as a
penalty, an amount equal to three percent (3%) of the Total Credit Facility if
termination occurs during the period from December 23, 1994 through and
including December 22, 1995, one percent (1%) of the Total Credit Facility if
termination
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occurs during the period from December 23, 1995 through and including December
22, 1996, and one-half of one percent (1/2 of 1%) of the Total Credit Facility
if termination occurs during the period from December 23, 1996 through
and including December 22, 1998 or during any subsequent Renewal Term.
Notwithstanding anything herein above to the contrary, no termination charge
shall be payable under any of the following circumstances: (a) if termination of
this Agreement occurs pursuant to and in accordance with the terms of subsection
2.6.1; (b) if termination of this Agreement occurs on the last day of the
Original Term or on the last day of any Renewal Term; or (c) if (1) termination
of this Agreement occurs pursuant to and in accordance with the terms of
subsection 4.2.2 hereof, (2) Borrower has obtained and delivered to Lender a
copy of a signed, written commitment for alternative financing, the proceeds of
which will be used to pay all of the Obligations in immediately available funds
and (3) the payment of the Obligations occurs no later than five (5) Days after
the date specified in the notice Borrower is required to give pursuant to such
subsection.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date sated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination, and Lender shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Document
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
termination charge, if any. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its security interests in
the Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrower or any Account Debtor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the Collateral
for such period of time as Lender, in its reasonable discretion, may deem
necessary to protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of the following Property and interests in such
Property of Borrower, whether nor owned or existing or hereafter created,
acquired or arising and wheresoever located, provided, however, that Collateral
shall not include, and Lender shall not have a Lien on, accounts receivable,
intercompany receivables or notes receivable owing to Borrower by any of its
Affiliates, except to the extent that any such account receivable, intercompany
receivable or note receivable constitutes proceeds of Inventory or General
Intangibles:
(i) Accounts;
(ii) Inventory;
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(iii) General Intangibles;
(iv) All monies, checks, notes and instruments of any kind, now or at
any time or times hereafter, in the possession or under the control of
Lender or a bailee or Affiliate of Lender;
(v) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (iv) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(vi) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through
(v) above.
5.2 Lien Perfection; Further Assurances. Borrower shall execute such UCC-1
financing statements as are required by the Code and such other instruments,
assignments or documents as are necessary to perfect Lender's Lien upon any of
the Collateral and shall take such other action as may be required to perfect or
to continue the perfection of Lender's Lien upon the Collateral. Unless
prohibited by applicable law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof. At Lender's request, Borrower shall also promptly execute or cause to
be executed and shall deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry out the terms
or intent of the Loan Documents.
5.3 Lien on Equipment. At no time prior to the date upon which this
Agreement shall have been terminated and all Obligations shall have been paid
and satisfied in full shall Borrower pledge, grant or assign, or suffer or
otherwise permit to exist any Lien, other than Permitted Liens, on its Equipment
(including without limitation any motor vehicles, trucks, trailers, tractors,
fork lifts and other types and kinds of Equipment which constitute rolling
stock), other than Equipment acquired with proceeds of loans, advances or other
extensions of credit, the indebtedness in respect of which constitutes Permitted
Purchase Money Indebtedness.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 Location of Collateral. All Collateral, other than Inventory in
transit, will at all times be kept by Borrower and its Subsidiaries at one or
more of the business locations set forth in Exhibit B hereto and shall not,
without the prior written approval of Lender, be moved therefrom except, prior
to an Event of Default and Lender's acceleration of the maturity of the
Obligations in consequence thereof, for sales of Inventory in the ordinary
course of business.
6.2 Insurance of Collateral. Borrower shall maintain and pay for insurance
upon all Collateral wherever located and with respect to Borrower's business,
covering casualty, hazard,
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public liability and such other risks in such amounts and with such insurance
companies as are reasonably satisfactory to Lender. Borrower shall deliver the
originals or copies of such policies to Lender with lender's loss payable
endorsements, in form satisfactory to Lender, naming Lender as sole loss payee,
assignee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
(30) days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever and a clause specifying that the interest of
Lender shall not be impaired or invalidated by any act or neglect of Borrower
or the owner of the Property or by the occupation of the premises for purposes
more hazardous than are permitted by said policy. If Borrower fails to provide
and pay for such insurance, Lender may, at its option, but shall not be required
to, procure the same and charge the Borrower therefor. Borrower agrees to
deliver to Lender, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies.
6.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due, Lender may, at its option, but shall not be required to, pay
the same and charge Borrower therefor. Lender shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any
Collateral is in Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency or other person whomsoever, but the same shall be at Borrower's sole
risk.
6.4 Administration of Accounts.
6.4.1 Records, Schedules and Assignments of Accounts. Borrower shall
keep accurate and complete records of its Accounts and all payments and
collections thereof and shall submit to Lender on such period basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth day of each month from and
after the date hereof, Borrower shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) become ineligible because they fall within one of
the specified categories of ineligibility set forth in the definition of
Eligible Accounts or otherwise established by Lender, Borrower shall notify
Lender of such occurrence on the first Business Day following such occurrence
and the Borrowing Base shall thereupon be adjusted to reflect such occurrence.
If requested by Lender, Borrower shall execute and deliver to Lender formal
written assignments of all of its Accounts weekly or daily, which shall include
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all Accounts that have been created since the date of the last assignment,
together with copies of invoices or invoice registers related thereto.
6.4.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of One Hundred Thousand Dollars
($100,000) are in dispute between Borrower and any Account Debtor, Borrower
shall provide Lender with written notice thereof at the time of submission of
the next Schedule of Accounts, explaining in detail the reason for the dispute,
all claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default which continues without cure for a period of
fifteen (15) Days, Lender shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Lender may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorney's fees, to Borrower.
6.4.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing Authority for the account of
Borrower and to charge Borrower therefor; provided, however, that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.
6.4.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise. Borrower
shall cooperate fully with Lender in an effort to facilitate and promptly
conclude any such verification process.
6.4.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a tripartite arrangement among Borrower, Lender and
a bank or banks as may be selected by Borrower and acceptable to Lender. Such
arrangement shall include such terms and conditions as are acceptable to Lender.
All funds deposited in the Dominion Account shall immediately become the
property of Lender, and Borrower shall obtain the agreement by such banks in
favor of Lender to waive any offset rights against the funds so deposited.
Lender assumes no responsibility for such arrangement, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
6.4.6 Collection of Account; Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit, and Borrower shall immediately deposit same in kind in the Dominion
Account, except as otherwise permitted in this Agreement. Lender retains the
right at all times after the occurrence of a Default or an Event of Default to
notify account Debtors that Accounts
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have been assigned to Lender and to collect Accounts directly in its own name
and to charge the collection costs and expenses, including reasonable attorneys'
fees to Borrower.
6.5 Administration of Inventory.
6.5.1 Records and Reports of Inventory. Borrower shall keep accurate
and complete records of its Inventory. Borrower shall furnish to Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each month, not later than the twentieth
day of such month. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Lender a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Lender shall request.
6.5.2 Returns of Inventory. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower, the shipment of which
generated an Account on which such Account Debtor is obligated in excess of
Fifty Thousand Dollars ($50,000), Borrower shall immediately notify Lender of
the same, specifying the reason for such return and the location, condition and
intended disposition of the returned Inventory.
6.6 Records and Schedules of Equipment. Borrower shall keep accurate
records, itemizing and describing the kind, type, quality, quantity and value of
its Equipment, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrower shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
6.7 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Base Rate Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter into
this Agreement and to make advances hereunder, Borrower warrants, represents and
covenants to Lender that:
7.1.1 Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit C hereto and in all other states and jurisdictions where the
character of its business or the nature of its activities make such
qualification necessary.
7.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement
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and each of the other Loan Documents to which it is a party. The execution,
delivery and performance of this agreement and each of the other Loan Documents
have been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders of Borrower or any
of its Subsidiaries; (ii) contravene Borrower's or any of its Subsidiaries'
charter, articles or certificate of incorporation or bylaws; (iii) violate, or
cause Borrower or any of its Subsidiaries to be in default under, any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award in effect having applicability to Borrower or any of its
Subsidiaries; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which borrower or any of its Subsidiaries is a party or by which
it or its Properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by Borrower or
any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit D hereto states (i) the correct name
of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by Borrower, (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary of Borrower and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower. Borrower
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
There are no outstanding agreements or instruments binding upon any of
Borrower's shareholders relating to the ownership of its shares of capital
stock.
7.1.5 Corporate Names. Neither Borrower nor any of its Subsidiaries
has been known as or used any corporate, fictitious or trade names except those
listed on Exhibit E hereto. Except as set forth on Exhibit E, neither Borrower
nor any of its Subsidiaries has been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each of Borrower's and
its Subsidiaries' executive office and other places of business are as listed on
Exhibit B hereto. During the preceding one (1) year period, neither Borrower nor
any of its Subsidiaries has had an office, place of business or agent for
service of process other than as listed on Exhibit B. Except as shown on Exhibit
B, no Inventory is stored with a bailee, warehouseman or similar party, nor is
any Inventory consigned to any Person.
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7.1.7 Title to Properties; Priority of Liens. Each of Borrower and its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Borrower has
paid or discharged all lawful claims which, if unpaid, might become a Lien
against any of Borrower's Properties that is not a Permitted Lien. The Liens
granted to Lender under Section 5 hereof are first priority Liens, subject only
to Permitted Liens.
7.18 Accounts. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to be, and it
is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and
forming a part of the contract between Borrower and the Account
Debtor;
(iii) It is for a liquidated amount maturing as stated in duplicate
invoice covering such sale or rendition of services, a copy of which
has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is not, and
will not (by voluntary act or omission of the Borrower) be in the
future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition known to Borrower (or with
respect to which Borrower should reasonably have had such knowledge),
except for a dispute resulting in returned goods where such dispute is
deemed by Lender to be immaterial, and each such Account is absolutely
owing to Borrower and is not contingent in any respect or for any
reason;
(v) Borrower has made no agreement with any Account Debtor thereunder
for any extension, compromise, settlement or modification of any such
Account or any deduction therefrom, except discounts or allowances
which are granted by Borrower in the ordinary course of its business
for prompt payment and which are reflected in the calculation of the
net amount of each respective invoice related thereto and are
reflected in Schedules of Accounts submitted to Lender pursuant to
Section 6.4 hereof;
(iv) There are no facts, events or occurrences which in any way impair
the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and
statements delivered to Lender with respect thereto;
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(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (i) had the capacity to contract at the time any contract
or other document giving rise to the Account was executed and (ii)
such Account Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there are no proceedings
or actions which are threatened or pending against any Account Debtor
thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such
account.
7.1.9 Equipment. The equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted.
7.1.10 Financial Statements; Fiscal Year. The balance sheet of
Borrower as of June 30, 1994, and the related statements of operations and
retained earnings and of cash flows for the fiscal year ended on such date have
been prepared in accordance with GAAP, and present fairly the financial position
of Borrower at such date for such period and the results of Borrower's
operations for such periods. Since June 30, 1994, through the Closing Date,
there has been no material change in the condition, financial or otherwise, of
Borrower and no change in the aggregate value of Equipment of Borrower, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of Borrower and each of
its Subsidiaries ends of June 30th of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially affects adversely or, so far as Borrower can
now foresee, will materially affect adversely the Property, business, prospects,
profits or condition (financial or otherwise) of Borrower or any of its
Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each of the Borrower and its
Subsidiaries is now, and, after giving effect to the Loans to be made, at all
times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract nor has Borrower or any of its Subsidiaries issued or
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any other Person.
7.1.14 Taxes. Borrower's federal tax identification number is
59-022800. The federal tax identification number of each of Borrower's
Subsidiaries is shown on Exhibit F hereto. Borrower and each of its Subsidiaries
has filed all federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and
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Property as and when such taxes, assessment, fees, levies and charges are due
and payable, unless and to the extent any thereof are being actively contested
in good faith and by appropriate proceeding, and Borrower maintains reasonable
reserves on its books therefor. The provision for taxes on the books of Borrower
and its Subsidiaries is adequate for all years not closed by applicable
statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of Borrower
and its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit G hereto.
7.1.17 Governmental Consents. Each of Borrower and its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Property as
now owned or leased and operated by it.
7.1.18 Compliance with Laws. Each of Borrower and its Subsidiaries has
duly complied with, and its Property, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to Borrower or such Subsidiary,
as applicable, its Property or the conduct of its business, and there have been
no citations, notices or orders of noncompliance issued to Borrower or any of
its Subsidiaries under any such law, rule or regulation. Each of Borrower and
its Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance with all federal, state and local laws,
rules and regulations applicable to it. No Inventory has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. ss.ss. 201 et seq.), as
amended.
7.1.19 Restrictions. Neither Borrower nor any of its Subsidiaries is a
party or subject to any contract, agreement or charter or other corporate
restriction which materially and adversely affects its business or the use or
ownership of any of its property. Neither Borrower nor any of its Subsidiaries
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit H hereto, none
of which prohibit the execution of or compliance with this agreement or the
other Loan Documents by Borrower or any of its Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit I hereto, and in the
notes to Borrower's June 30, 1994 financial statements, there are no actions
suits, proceedings or investigations pending, or, to the knowledge of Borrower,
threatened, against or affecting Borrower or any of its Subsidiaries, or the
business, operations, Property, prospects, profits or condition of Borrower or
any of its Subsidiaries. Neither Borrower nor any of its Subsidiaries
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is in default with respect to any order, writ, injunction, judgment, decree or
rule of any court, governmental authority or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit J hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries, and Exhibit K hereto is a
complete listing of all operating leases of Borrower and its Subsidiaries. Each
of Borrower and its Subsidiaries is in full compliance with all of the terms of
each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit L hereto, neither
Borrower nor any of its Subsidiaries has any Plan. Borrower and each of its
Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or any of its Subsidiaries exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchase individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely Borrower or any
of its Subsidiaries or prevent Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
7.1.25 Labor Relations. Except as described on Exhibit M hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and in the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Lender has consented to such
changes or such changes are expressly permitted by this Agreement.
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7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 Visit and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Property of Borrower and each of its
Subsidiaries, inspect, audit and make extracts from its books and records, and
discuss with its officers, its employees and its independent accountants,
Borrower's and each of its Subsidiaries' business, assets, liabilities,
financial condition, business prospects and results of operations.
8.1.2 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with sound financial and business
practices, in a manner consistent with the information previously provided to
Lender, reflecting all its financial transactions and cause to be prepared and
furnished to Lender the following:
(i) not later than one hundred and twenty (120) Days after the close
of each fiscal year of Borrower, unqualified audited financial statements of
Borrower and its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to Lender
(except for a qualification with respect to (A) the reasonableness of fees,
charges or credits between or among Borrower, parent or any Affiliates or (B)
changes in accounting principles with which the accountants concur);
(ii) not later than forty-five (45) Days after the end of each fiscal
month hereafter (other than the first and last fiscal month of each fiscal year,
as to which Borrower shall have no obligation to deliver to Lender financial
statements as at and for the end of such fiscal months), unaudited interim
financial statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's fiscal year then elapsed, on a
Consolidated and consolidating basis, certified by the chief financial officer
of Borrower as fairly presenting the Consolidated financial position and results
of operations of Borrower and its Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that such
statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which
Borrower has made available to its public shareholders and copies of any
regular, periodic and special reports or registration
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statements which Borrower files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies of any annual report to
be filed with ERISA in connection with each Plan;
(v) such other data and information (financial and otherwise) as Lender,
from time to time, may reasonably request, bearing upon or related to the
Collateral or Borrower's and each of its Subsidiaries' financial condition or
results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this subjection 8.1.2, Borrower shall forward to Lender a copy
of the accountants' letter, if any, to Borrower's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall furnish to Lender a certificate of the aforesaid certified public
accountants certifying to Lender that, based upon their examination of the
financial statements of Borrower and its Subsidiaries performed in connection
with their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof, and acknowledging, in a manner
satisfactory to Lender, that they are aware that Lender is relying on such
financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection 8.1.2, or more frequently if requested by
Lender, Borrower shall cause to be prepared and furnished to Lender a compliance
certificate in the form of Exhibit N hereto executed by the chief financial
officer of Borrower.
8.1.3 Landlord and Storage Agreements. Provide Lender with copies of
all agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
8.1.4 Subordinations. Provide Lender with a debtor subordination
agreement or other instrument, in form and substance satisfactory to Lender
executed by Borrower and in the case of such agreement executed by any Person
who is an officer, director or Affiliate of the Person to whom Borrower is or
hereafter becomes indebted for Subordinated Debt, subordinating in right of
payment and performance of the Obligations.
8.1.5 Guarantor Financial Statements. Deliver or cause to be delivered
to Lender financial statements for each Guarantor in form and substance
satisfactory to Lender at such intervals and covering such time periods as
Lender may request. Without limiting the generality of the foregoing, Borrower
shall deliver to Lender, or cause the Parent to deliver to Lender:
(i) no later than one hundred and twenty (120) days after the close of
each fiscal year of the Parent, unqualified audited financial statement of the
Parent and its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis; and
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(ii) not later than forty-five (45) days after the end of each fiscal
quarter hereafter, unaudited interim financial statement of the Parent and its
Subsidiaries as of the end of such quarter and of the portion of the Parent's
fiscal year then elapsed, on a Consolidated and consolidating basis, certified
by the chief financial officer of the Parent as fairly presenting the
Consolidated financial position and results of operations of the Parent and its
Subsidiaries for such quarter and period subject only to changes from audit and
year-end adjustments and except that such statements need not contain notes;
8.1.6 Projections. No later than ten (10) days prior to the end of
each fiscal year of Borrower, deliver to Lender Projections of the financial
conditions and results of operation of Borrower for the next succeeding fiscal
year, such Projections to be prepared on a month-to-month basis.
8.1.7 Notices. Promptly notify Lender in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or in any of the other Loan Documents inaccurate,
incomplete or misleading.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Lender has first consented thereto in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Property of any Person, unless Borrower has given Lender at least
thirty (30) days prior notice of any such acquisition.
8.2.2 Loans. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person in excess of $1,000,000, in the aggregate outstanding
at any one time during any fiscal year of the Borrower, other than loans and
advances made by Borrower or by any Subsidiary of Borrower to the Parent or to
any other Affiliate.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Indebtedness of any Subsidiary of Borrower to Borrower;
(iii) accounts payable to trade creditors and obligations and
accruals for current operating expenses (other than for Money Borrowed) which
are not aged more than one hundred twenty (120) days from billing date or more
than thirty (30) days from due date, in each case incurred in the ordinary
course of business and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful proceedings; and
Borrower or such Subsidiary shall have set aside such reserves, if any, with
respect thereto
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as are required by GAAP and deemed adequate by Borrower or such Subsidiary and
its independent accountants;
(iv) Obligations to pay Rentals permitted by subsection 8.2.9;
(v) Permitted Purchase Money Indebtedness;
(vi) contingent liabilities arising out of (A) guarantees
permitted under subsection 8.2.6 or as otherwise permitted in this Agreement,
(B) endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business and (C) payments under lease
agreements, employment agreements and other agreements entered into in the
ordinary course of business upon fair and reasonable terms;
(vii) Indebtedness owing by Borrower or any Subsidiary of
Borrower to the Parent or to any other Affiliate in respect of intercompany
advances or charges, provided such advances or charges are made and incurred in
the ordinary course of business pursuant to and consistent with prior practices;
(viii) Indebtedness which is secured exclusively by real
Property; and
(ix) Indebtedness not included in paragraphs (i) through (viii)
above, or not otherwise specifically permitted under this Agreement, which does
not exceed at any time, in the aggregate, the sum of Two Million Dollars
($2,000,000).
8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of Borrower to enter into or be a party to, any transaction with
any Affiliate of Borrower, except: (i) in the ordinary course of Borrower's or
such Subsidiary's business and on terms no less favorable to Borrower or such
Subsidiary than Borrower or such Subsidiary could obtain in a comparable arm's
length transaction with a Person not an Affiliate of Borrower or such
Subsidiary; (ii) as otherwise specifically permitted in this Agreement, in the
other Loan Documents or in any waiver of the terms of this Covenant agreed to in
writing by Lender (which waiver will not be unreasonably withheld or delayed)
and (iii) for charges, credits, advances, distributions, allocations, accruals
and/or payments of intercompany management fees, rent, interest and other
intercompany transactions by and between Borrower or any Subsidiary of Borrower,
on the one hand, and an Affiliate of Borrower, on the other hand, in fact or in
substance not inconsistent with past practices of Borrower or such Subsidiary
and such Affiliate.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property (exclusive of real Property) income or profits, whether now owned or
hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to any
of the provisions of ERISA) not yet due, or being contested in the manner
described in
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subsection 7.1.14 hereto, but only if in Lender's judgment such Lien does not
adversely affect Lender's rights or the priority of Lender's Lien in the
Collateral;
(iii) Liens arising in the ordinary course of Borrower's business
by operation of law or regulation, but only if payment in respect of any such
Lien is not at the time required and such Liens do not, in the aggregate,
materially detract from the value of the Property (exclusive of real Property)
of Borrower or materially impair the use thereof in the operation of Borrower's
business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's Subsidiaries
to Borrower or to another such Subsidiary;
(vi) such other Liens as appear on Exhibit O hereto; and
(vii) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Guarantees. Guaranty, indemnify, or otherwise agree to become
liable for the payment or performance by any other Person of any Indebtedness or
other liabilities or obligations of such Person, except:
(i) as otherwise described under subsection 8.2.3 (vi)(B); and
(ii) for the guaranty by Borrower of an Affiliate's payment or
performance obligations arising under any instrument or agreement in respect of
Indebtedness for which such Affiliate is liable and which Indebtedness is
secured by a mortgage or deed of trust in favor of the holder of such
Indebtedness against real Property the title to or ownership of which is in such
Affiliate, provided, that, (A) Borrower is the tenant-in-possession of such real
Property and (B) the maximum liability of Borrower under all such guarantees
does not exceed $2,500,000 in the aggregate at any one time outstanding.
8.2.7 Disposition of Assets. Sell or otherwise dispose of any of, or
permit any Subsidiary of Borrower to sell or otherwise dispose of any of, its
Property (exclusive of real Property), including any disposition of Property
(exclusive of real property), as part of a sale and leaseback transaction, to or
in favor of any Person, except, in each case, for so long as no Event of Default
exists hereunder: (i) sales of Inventory and sales of other Property which does
not constitute Collateral, in each case in the ordinary course of business; (ii)
a transfer of Property to Borrower by a Subsidiary of Borrower; (iii) transfers
of Property (other than Collateral) by Borrower to (A) any Affiliate, including
the Parent, in satisfaction of indebtedness and (B) the Parent as a dividend, so
long as, in each case, such transfer is made in the ordinary course of business
or pursuant to and consistent with prior practices or (iv) other dispositions
expressly authorized by this Agreement.
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8.2.8 Bill-and-Hold Sales, Etc. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.9 Leases. Become, or permit any of its Subsidiaries to become, a
lessee under any operating lease (other than a lease under which Borrower or any
of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of twelve (12) consecutive months under the
lease in question and all other leases under which Borrower or any of its
Subsidiaries is then lessee would exceed One Million Five Hundred Thousand
Dollars ($1,500,000); provided, however, that not more than an additional
aggregate sum of Five Hundred Thousand Dollars ($500,000) may be payable during
any current or future period of twelve (12) consecutive months for Rentals
payable (a) under operating leases and (b) pursuant to Capitalized Lease
Obligations, in each case entered into or incurred, as the case may be, on or
after the Closing Date with respect to Property consisting of Equipment. The
term "Rentals" means, as of the date of determination, all payments which
the lessee is required to make by the terms of any lease, exclusive of occupancy
costs.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make any
Loan under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
9.1 Documentation. Lender shall have received, inform and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments, opinions and certificates as Lender and its counsel shall require
in connection therewith from time to time, all in form and substance
satisfactory to Lender and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents and in the commitment letter dated December 8, 1994 to
Borrower from Lender, under Section D thereof, captioned "Conditions of Funding"
(the terms of which Section being incorporated herein by reference thereto),
shall have been satisfied or waived by Lender in writing.
9.4 Adjusted Availability. Lender shall have determined that immediately
after giving effect to(i) the making of the initial Loans requested to be made
on the Closing Date and (ii) the payment or reimbursement by Borrower of Lender
for all fees and costs incurred or payable in connection with the transactions
contemplated hereby and due on the Closing Date, Adjusted Availability shall not
be less than Eight Hundred Thousand Dollars ($800,000), where Adjusted
Availability shall mean the excess, if any, of Availability over that portion,
if any, of Borrower's
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trade accounts payable outstanding on the Closing Date which remains unpaid
beyond the due date of the relevant account payable.
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of , this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrower shall: (i) fail to make any
payment of interest, fees, expenses or other Obligations (except those described
in clause (ii) hereof) payable under this Agreement on the due date thereof (in
each case whether due at stated maturity, on demand, upon acceleration or
otherwise) and such failure shall continue without cure for three (3) days; or
(ii) fail to make any payment of principal under this Agreement on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.
10.1.3 Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1, 6.4,
8.1.1, 8.1.2 or 8.2 hereof (other than subsection 8.2.5, but only to the extent
set forth in subsection 10.1.4), on the date that Borrower is required to
perform, keep or observe such covenant.
10.1.4 Breach of other Covenants. Borrower shall fail or neglect to
perform, keep or observe (i) any covenant contained in subsection 8.2.5 (ii) or
(iii), to the extent any Lien referred to therein and which Borrower has
suffered to exist has been created or arises without Borrower's knowledge or
consent or (ii) any other covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
in either case the breach of such covenant is not cured to Lender's satisfaction
within twenty (20) days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.
10.1.5 Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
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10.1.6 Other Defaults. Thee shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if
the payment or maturity of such Indebtedness is accelerated in consequence of
such event of default or demand for payment of such Indebtedness is made.
10.1.7 Uninsured Losses. Any loss, theft, damage or destruction of any
of the Collateral not fully covered (subject to such deductibles as Lender shall
have permitted) by insurance shall have occurred, and such loss, theft, damage
or destruction shall have a material adverse effect on Borrower's financial
condition, Property or business prospects.
10.1.8 Adverse Changes. There shall occur any material adverse change
in the financial condition, Property or business prospects of Borrower.
10.1.9 Insolvency and Related Proceedings. Borrower or any Guarantor
shall cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for the
benefit of creditors, or any petition for an order for relief shall be filed by
or against Borrower, any Subsidiary of Borrower or any Guarantor under the
Bankruptcy Code (if against Borrower, any Subsidiary of Borrower or any
Guarantor under the Bankruptcy Code (if against Borrower, any Subsidiary of
Borrower or any Guarantor, the continuation of such proceeding for more than
sixty (60) days), or Borrower or any Guarantor shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
10.1.10 Business Disruption. There shall occur a cessation of a
substantial part of the business of Borrower or any Subsidiary of Borrower for a
period which significantly affects Borrower's or such Subsidiary's capacity to
continue its business, on a profitable basis; or Borrower or any Subsidiary of
Borrower shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower or such Subsidiary which is necessary to the
continued or lawful operation of its business; or Borrower or any Subsidiary
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs.
10.1.11 Change of Ownership; etc. The Parent or the shareholders of
Parent as of the Closing Date shall cease to own or control, beneficially and of
record, all of the issued and outstanding capital stock of Borrower, or Douglas
P. Fields shall cease to own or control beneficially, at least fifteen percent
(15%) of the issued and outstanding capital stock of the Parent or Borrower, or
Frederick M. Friedman shall cease to own or control beneficially, at least
fifteen percent (15%) of the issued and outstanding capital stock of the Parent
or Borrower, or both Douglas P. Fields and Frederick M. Friedman shall cease to
be actively engaged in the senior management of Borrower's business affairs or
upon any sale or transfer permitted hereunder by the Parent of the issued and
outstanding capital stock of Borrower, the Parent shall fail to then deliver to
Lender writing executed by the Parent confirming the continuing effectiveness of
the Guaranty Agreement executed by it in favor of the Lender, which writing
shall contain a reaffirmation by the Parent of its continuing liability under
the Guaranty Agreement in accordance with its terms.
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10.1.12 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower, any Subsidiary of Borrower or any Guarantor is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from Borrower's, such Subsidiary's or such
Guarantor's complete or partial withdrawal from such Plan.
10.1.13 Challenge to Agreement. Borrower, any Subsidiary of Borrower
or any Guarantor, or any Affiliate of any of them, shall challenge or contest in
any action, suit or proceeding the validity or enforceability of this Agreement,
or any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Lender.
10.1.14 Repudiation of or Default Under Guaranty Agreement. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.15 Criminal Forfeiture. Borrower, an Subsidiary of Borrower or
any Guarantor shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any Property of Borrower, any Subsidiary of Borrower or
any Guarantor.
10.1.16 Judgments. Any money judgment, writ of attachment or similar
process, singly, or in the aggregate, in each case in excess of $150,000, is
filed against Borrower, any Subsidiary of Borrower or any Guarantor, or any of
their respective Property and such judgment, writ of attachment or similar
process is not satisfied, bonded to the satisfaction of Lender or stayed, in
each case within 45 days of such filing.
10.2 Acceleration of the Obligations. Without in any way limiting the right
of Lender to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.2 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Lender and without presentment, demand protest or further notice by
Lender, become at once due and payable, and Borrower shall forthwith pay to
Lender the full amount of such Obligations, provided, that upon the occurrence
of an Event of Default specified in subsection 10.1.9 hereof, all of the
Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.
10.3. Other Remedies. Upon and after the occurrence of an Event of Default.
Lender shall have and may exercise from time to time the following rights and
remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any
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others rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge for the storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Borrower agrees that ten (10) days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
two (2) Business Days for collection, first to the costs, expenses and
attorneys' fees incurred by Lender in collecting the Obligations, in enforcing
the rights of Lender under the Loan Documents and in collecting, retaking,
completing, protecting, removing, storing, advertising for sale, selling and
delivering any Collateral; second to the interest due upon any of the
Obligations; and third, to the principal of the Obligations. If any deficiency
shall arise, Borrower shall remain liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to Lender or contained in any other
agreement between Lender and Borrower, heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral
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shall not operate as a waiver of such performance, Liens, rights, powers and
remedies, but all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and all other Obligations
owing or to become owing from Borrower to Lender shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in the Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by Lender,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact), solely for the purposes
set forth below, and Lender, or Lender's agent, may, without notice to Borrower
and in either Borrower's or Lender's name, but at the cost and expense of
Borrower:
11.1.1 At such time or times upon or after the occurrence of a Default
or an Event of Default as Lender or said agent, in its sole discretion, may
determine, endorse Borrower's name on any checks, notes, acceptances, drafts,
money orders or any other evidence of payment or proceeds of the Collateral
which come into the possession of Lender or under Lender's control.
11.1.2 At such time or times upon or after the occurrence of an Event
of Default as Lender or its agent in its sole discretion may determine: (i)
demand payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationary and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, and any
other Collateral;
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(xi) make and adjust claims under policies of insurance, and (xii) do all other
acts and things necessary, in Lender's determination, to fulfill Borrower's
obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold Lender
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
Lender against and save it harmless from all claims of any Person with respect
to the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Notwithstanding any contrary
provision in this Agreement, the obligation of Borrower under this Section 11.2
shall survive the payments in full of the Obligations and the termination of
this Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not be
modified, altered or amended except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder, and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participation in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential participant or assignee.
11.4 Severability. 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 or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender, permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of terms. The provisions of the Other
Agreements and the Security Documents are hereby made coextensive with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of
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the other Loan Documents by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in direct
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.7 Execution in Counterparts. The 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 counterparts taken together shall constitute but one and the same
instrument.
11.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, five (5)
days after deposit in the mail, postage prepaid, or one (1) Business Day after
deposit with an overnight courier or in the case of facsimile notice, when sent,
addressed as follows:
If to Lender: Barclays Business Credit, Inc.
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033
Attention: Mr. Howard Handman, SVP
Facsimile No.: 203-657-7759
With a copy to: Lowenthal, Landau, Fischer & Bring, P.C.
250 Park Avenue
New York, New York 10177
Attention: Robert Stein, Esq.
Facsimile No.: 212-986-0604
If to Borrower: Eagle Supply, Inc.
1301 N. 13th Street
Tampa, Florida 33605
Attention: Lewis G. Marshall
Facsimile No.: 813-248-3195
With a copy to: TDA Industries, Inc.
122 East 42nd Street
New York, New York 10168
Attention: Mr. Frederick M. Friedman
Facsimile No.: 212-972-0326
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and a copy to: Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.
One Harbour Place
777 South Harbour Island Drive
Tampa, Florida 33602
Attention: Thomas Snow, Esq.
Facsimile No.: 813-229-4133
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8, provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to be obtained
under this Agreement, any of the other Agreements or any of the Security
Documents as a condition to any action, inaction condition or event, Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional collateral
security for the Obligations, the payment of money or any other matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries.
11.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW
YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS
PART
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OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER
HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF THE STATE OF NEW YORK,
SITTING IN NEW YORK COUNTY, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR FIVE (5) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR
TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH
FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY
OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT
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LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
11.16 Parties to Act in a Commercially Reasonable Manner. Each party hereto
agrees to act at all times in its dealings with the other party hereto in a
commercially reasonable manner.
IN WITNESS WHEREOF, this Agreement has been duly executed in New York, New
York on the day and year specified at the beginning of this Agreement.
ATTEST EAGLE SUPPLY, INC.
("Borrower")
/s/ By /s/ Douglas P. Fields
- --------------- --------------------------
Secretary Title Chief Executive Officer
-----------------------
[CORPORATE SEAL]
Accepted in New York, New York
BARCLAYS BUSINESS CREDIT, INC.
("Lender")
By /s/ Peter Provenzale
-----------------------------
Title SVP
-----------------------------
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of December 23, 1994,
by and between Barclays Business Credit, Inc. and Eagle Supply, Inc., the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments and
documents, whether now owned or hereafter created or acquired by Borrower or in
which Borrower now has or hereafter acquires any interest, other than accounts
receivable, intercompany receivables or notes receivable owing to Borrower by
any of its Affiliates, except to the extent that any such account receivable,
intercompany receivable or note receivable constitutes proceeds of Inventory or
General Intangibles.
Adjusted Availability - as defined in Section 9.4 of the Agreement.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; or (ii) which beneficially owns or holds
5% or more of any class of the Voting Stock of a Person; or (iii) 5% or more of
the Voting Stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) of which is beneficially owned or held by a Person
or a Subsidiary of a Person.
Agreement - The Loan and Security Agreement referred to in the first
sentence or this Appendix A, all Exhibits thereto and this Appendix A.
Applicable Interest Rate Margin - one percent (1%) with respect to Base
Rate Loans and three and one-quarter percent (3 1/4 %) with respect to LIBOR
Rate Loans, in each case at all times other than (i) during the period (a)
commencing fifteen (15) days after Lender's receipt of the financial statements
Borrower is required to deliver pursuant to subsection 8.1.2 (i) of the
Agreement with respect to its fiscal year ended June 30, 1995 and (b) ending
June 30, 1996, provided that the Applicable Interest Rate Reduction Conditions
shall have been met, in which case the Applicable Interest Rate Margin during
such period shall be three-quarters of one percent (3/4 of 1%) with respect to
Base Rate Loans and three percent (3%) with respect to LIBOR Rate Loans and (ii)
during the period (a) commencing fifteen (15) days after Lender's
receipt of the financial statements Borrower is required to deliver pursuant to
such subsection 8.1.2 (i) with respect to its fiscal year ended June 30, 1996
and (b) ending on the last day of the Original Term (or the last day of the
Renewal Term then in effect, if applicable), provided that the Applicable
Interest Rate Reduction Conditions shall have been met both for the fiscal year
ending June 30, 1995, and for the fiscal year ending June 30, 1996, in which
case the Applicable Interest Rate Margin during such period shall be
three-quarters of one percent (3/4 of 1%) with respect to Base Rate Loans and
three percent (3%) with respect to LIBOR Rate Loans.
Applicable Interest Rate Reduction Conditions - (i) on the date upon which
Lender shall have received the financial statements Borrower is required to
deliver pursuant to subsection 8.1.2 (i) of the Agreement with respect to its
fiscal year ended June 30, 1995 or June 30, 1996, as the case may by, no Default
or Event of Default shall have occurred and then be continuing, (ii) such
financial statements shall indicate that, as at and for the fiscal year ended
June 30, 1995, Borrower shall have maintained a Tangible Net Worth of not less
than $1,000,000 and shall have achieved a Cash Flow of not less than $300,000,
(iii) such financial statements shall indicate that, as at and for the fiscal
year ended June 30, 1996, Borrower shall have maintained a Tangible Net Worth of
not less than $1,000,000 and shall have achieved a Cash Flow of not less than
$300,000 and (iv) such financial statements or a reconciling schedule shall
reflect in reasonable detail the calculations made in determining the net worth
and cash flow levels set forth in clause (ii) and clause (iii) hereof, as
applicable.
Applicable Inventory Sublimit - an amount equal to $3,000,000 or, during
any consecutive twelve (12) month period, for not more than two periods
consisting of three consecutive calendar months each (which periods may be
consecutive), as may be designated by Borrower upon notice to Lender, given at
least five (5) days prior to the commencement of any such period, an amount
equal to $4,000,000.
Availability - the amount of money which Borrower is entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Lender may have paid for the account of
Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by Borrower) is subtracted from the Borrowing Base. If the amount
outstanding is equal to or greater than the Borrowing Base, Availability is zero
(0).
Bank - Shawmut Bank.
Base Rate - the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.
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Base Rate Loans - those Revolving Credit Loans which bear interest based on
the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount equal
to the lesser of:
(i) Seven Million Five Hundred Thousand Dollars ($7,500,000), or
(ii) an amount equal to:
(a) up to eighty percent (80%) of the net amount of Eligible Accounts
outstanding at such date;
PLUS
(b) the lesser of (1) the Applicable Inventory Sublimit or (2) up to
sixty percent (60%) of the value of Eligible Inventory calculated
on the basis of the lower of cost or market, with cost or
Eligible Inventory calculated on a first-in, first-out basis;
MINUS
(c) an amount equal to the sum of (1) One Million Dollars
($1,000,000) and (2) any amounts which Lender shall have paid
pursuant to any of the Loan Documents for the account of Borrower
and which have not been reimbursed by Borrower.
For purposes hereof, the net amount of Eligible Accounts at any time shall
be the face amount of such Eligible Accounts less any and all returns, rebates,
discounts (which may, at Lender's option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are closed.
Capital Adequacy Amount, Capital Adequacy Demand and Capital Adequacy Rules
- - each as defined in Section 2.6 of the Agreement.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
-3-
Cash Flow - with respect to any fiscal year, an amount equal to income (or
loss) before federal income tax provision (or benefit), inclusive of
intercompany charges (or credits) between Borrower and any Affiliate, as shown
on the financial statements of Borrower required to be delivered pursuant to
subsection 8.1.2 (i) of the Agreement, plus (i) depreciation and amortization
expenses which were deducted in determining such income (or loss) for such
fiscal year and (ii) loss arising from the sale of Property which was deducted
in determining such income (or loss) for such fiscal year, minus (a) gain
arising from the sale of Property which was included in determining such income
(or loss) for such fiscal year, (b) capital expenditures (net of Indebtedness
incurred to finance such expenditures) for such fiscal year, (c) dividends paid
in cash during such fiscal year and (d) scheduled principal payments made during
such fiscal year in respect of Indebtedness, all as determined in accordance
with GAAP.
Closing Date - the date on which all of the conditions precedent in Section
9 of the Agreement are satisfied and the initial Loan is made under the
Agreement.
Code - the Uniform Commercial Code as adopted and in force in the State of
New York as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
Continuation - as defined in subsection 3.1.4 of the Agreement.
Conversion - as defined in subsection 3.1.4 of the Agreement.
Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Dominion Account - a special blocked account owned and established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which Lender shall
have sole and exclusive access and control for withdrawal purposes.
-4-
Eligible Account - an Account arising in the ordinary course of Borrower's
business from the sale of goods or rendition of services which Lender, in its
sole credit judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of
Borrower; or
(ii) it is unpaid for more than sixty (60) days after the original due date
calculated pursuant to the payment terms reflected on the invoice; or
(iii) fifty percent (50%) or more of the Accounts from the Account Debtor
are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor exceed twelve and
one-half percent (12 1/2%) of the net amount of all Eligible Accounts,
to the extent of such excess; or
(v) any covenant, representation or warranty contained in the Agreement
with respect to such Account has been breached; or
(vi) the Account Debtor is also Borrower's creditor or supplier, or the
Account Debtor has disputed 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
(vii) 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
(viii) it arises from a sale to an Account Debtor outside the United
States, unless the sale is on letter of credit, guaranty or acceptance
terms, in each case acceptable to Lender in its sole discretion; or
-5-
(ix) it arises from a sale to the Account Debtor on a bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any
other repurchase or return basis; or
(x) Lender believes, in its reasonable judgment, that collection of such
Account is insecure or that payment thereof is doubtful or will be
delayed by reason of the Account Debtor's financial condition; or
(xi) 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 Lender, in a manner satisfactory to
Lender, so as to comply with the Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss.203 et seq., as amended); or
(xii) the Account is subject to a Lien other than a Permitted Lien; or
(xiii) the goods giving rise to such Account have not been 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
(xiv) the total unpaid Accounts of the Account Debtor exceed a credit limit
determined by Lender, in its reasonable discretion, to the extent such
Account exceeds such limit; or
(xv) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; or
(xvi) Borrower has made any agreement with the Account Debtor for any
deduction therefrom, except for discounts or allowances which are made
in the ordinary course of business for prompt payment and which
discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; or
(xvii) Borrower has made an agreement with the Account Debtor to extend the
time of payment thereof.
Eligible Inventory - such Inventory of Borrower (other than packaging
materials and supplies) which Lender, in its sole credit judgment, deems to be
Eligible Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:
(i) it does not consist of finished goods that are, in Lender's opinion,
readily marketable in their current form; or
-6-
(ii) it is not in good, new and saleable condition; or
(iii) it is obsolete or unmerchantable, or remains unsold and on the
Borrower's books and records for more than one year; or
(iv) it does not meet all standards imposed by any governmental agency or
authority; or
(v) it does not conform in all respects to the warranties and
representations set forth in the Agreement; or
(vi) it is not at all times subject to Lender's duly perfected, first
priority Lien and no other Lien except a Permitted Lien; or
(vii) it is not situated at a location in compliance with the Agreement or
is in transit.
Environmental Laws - all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidances, orders and consent decrees relating to
health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description owned or used in Borrower's operations
or in which Borrower has an interest, whether now owned or hereafter acquired by
Borrower and wherever located, and all parts, accessories, and special tools and
all increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employment Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Intangibles - all personal Property of Borrower other than goods,
Accounts, chattel paper, documents, instruments and money, whether now owned or
hereafter created or acquired by Borrower.
Guarantor - any Person who may hereafter guarantee payment or performance
of the whole or any part of the Obligations pursuant to a Guaranty Agreement.
-7-
Guaranty Agreement - a Guaranty Agreement executed by a Guarantor in form
and substance satisfactory to Lender.
Indebtedness - as applied to a Person means, without duplication:
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness
is to be determined,
(ii) all obligations of other Persons which such Person has guaranteed,
(iii) all reimbursement obligations in connection with letters of credit or
letter of credit guaranties issued for the account of such Person, and
(iv) in the case of Borrower (without duplication), the Obligations.
Interest Period - for any LIBOR Rate Loan the period commencing on the date
of the borrowing thereof and ending on the last day of the period selected by
Borrower pursuant to the provisions contained herein. The duration of each such
Interest Period shall be for 30, 60 or 90 days, in each case as Borrower may
select, pursuant to an appropriate notice of borrowing, notice of Continuation
or notice of Conversion; provided, however, that Borrower may not select any
Interest Period that ends after the last day of the Original Term, or if the
Agreement is renewed in accordance with the terms of Section 4.1, the last day
of the Renewal Term then in effect. Whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended so as to occur on the next succeeding Business
Day; provided, however, if such extension would cause the last day of such
Interest Period to occur during the next following calendar month, the last day
of such Interest Period shall occur on the next preceding Business Day.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired, including, but not limited to, all goods intended for sale or lease by
Borrower, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrower's business; and all documents evidencing, and
General Intangibles relating to, any of the foregoing, whether now owned or
hereafter acquired by Borrower.
LIBOR Rate - shall mean, with respect to the Interest Period applicable to
the borrowing of a LIBOR Rate Loan, the rate obtained (rounded upwards to the
nearest 1/100 of 1%) by dividing (i) the rate of interest per annum offered to
the Bank in the London interbank foreign currency deposits market as of
approximately 9:00 A.M. (New York City time) two (2) Business Days prior to the
commencement of such Interest Period for U.S. dollar deposits of amounts in
-8-
immediately available funds comparable to the principal amount of the LIBOR Rate
Loan for which the LIBOR Rate is being determined with maturities comparable to
the Interest Period for which such LIBOR Rate will apply, by (ii) a percentage
equal to 1 minus the stated reserve (expressed as a decimal), if any, required
to be maintained against "Eurocurrency liabilities" as specified in Regulation D
of the Board of Governors of the Federal Reserve System as from time to time
shall be in effect (or against any other category of liabilities, which includes
deposits, by reference to which the interest rate on LIBOR Rate Loans is
determined or any category of extensions of credit on other assets, which
includes loans by a non-U.S. office of Bank or Lender to U.S. residents). In the
absence of manifest error, each determination by Lender of the applicable LIBOR
Rate shall be deemed conclusive.
LIBOR Rate Loans - those Revolving Credit Loans which bear interest based
on the LIBOR Rate.
Lien - 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 common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose(s) of the 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.
Loan Account - the loan account established on the books of Lender pursuant
to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - the Revolving Credit Loans and all other loans and advances of any
kind made by Lender pursuant to the Agreement.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) reimbursement obligations with respect to letters of
credit or guaranties of letters of credit and (iv) Indebtedness of Borrower
under any guaranty of obligations that would constitute Indebtedness for Money
Borrowed under clauses (i) and (ii) hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
-9-
Obligations - all Loans and all other advances, liabilities, obligations,
covenants and duties, together with all interest, fees, costs, expenses and
other charges thereon, owing, arising, due or payable from Borrower to Lender of
any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter
executed or delivered by Borrower, any Subsidiary of Borrower or any other third
party to Lender in respect of the transactions contemplated by the Agreement.
Overadvance - The amount, if any, by which the outstanding principal amount
of the Loans exceeds the Borrowing Base.
Parent - TDA Industries, Inc., a New York corporation and the owner,
beneficially and of record, of one hundred percent (100%) of the issued and
outstanding shares of capital stock of Borrower.
Participating Lender - each Person who shall be granted the right by Lender
to participate in any of the Loans described in the Agreement and who shall have
entered into a participation agreement in form and substance satisfactory to
Lender.
Permitted Liens - any Lien of a kind specified in clauses (i) through
(viii) of subsection 8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Purchase Money Indebtedness of Borrower at the time outstanding, does not exceed
One Million Dollars ($1,000,000).
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Projections - Borrower's forecasted Consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements, and
(d) capitalization statements, all prepared on a
-10-
consistent basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any real Property or Equipment, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within ten (10) days prior to or after
the acquisition of any real Property or Equipment for the purpose of financing
all or any part of the purchase price thereof, and (iii) any renewals,
extensions or refinancings thereof, but not any increases in the principal
amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
fixed assets the purchase price of which was financed through the incurrence of
the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in subsection 8.2.9 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
Revolving Credit Loan - a Loan made by Lender as provided in Section 1.1 of
the Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
Security Documents - each Guaranty Agreement and all other instruments and
agreements now or at any time hereafter securing the whole or any part of the
Obligations.
Solvent - as to any Person, if such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower which by its terms, or by the
terms of the agreement pursuant to which such Indebtedness is issued, is
subordinated to the Obligations in a manner satisfactory to Lender.
-11-
Subsidiary - any corporation of which a Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the
time of determination.
Tangible Net Worth - at the end of a fiscal year, an amount equal to (i)
shareholder's equity of Borrower as shown on the financial statements of
Borrower required to be delivered pursuant to subsection of 8.1.2 (i) of the
Agreement plus (i) Subordinated debt and (ii) minus (a) all intangible assets,
(b) prepaid assets and (c) intercompany amounts due to Borrower from Affiliates,
all as determined in accordance with GAAP.
Total Credit Facility - Seven Million Five Hundred Thousand Dollars
($7,500,000).
Type - with respect to any Revolving Credit Loan, whether such Revolving
Credit Loan is a Base Rate Loan or a LIBOR Rate Loan.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Other Terms - All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Certain Matters of Construction - The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subsection. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
-12-
LIST OF EXHIBITS
Exhibit A Intentionally Omitted
Exhibit B Borrower's and each Subsidiaries' Business Locations
Exhibit C Jurisdictions in which Borrower and each Subsidiary is Authorized
to do Business
Exhibit D Capital Structure of Borrower
Exhibit E Corporate Names
Exhibit F Tax Identification Numbers of Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting Borrower's Right to Incur Debts
Exhibit I Litigation
Exhibit J Capitalized Leases
Exhibit K Operating Leases
Exhibit L Pension Plans
Exhibit M Labor Contracts
Exhibit N Compliance Certificate
Exhibit O Permitted Liens
EXHIBIT A
There is no Exhibit A. It has been intentionally omitted.
EXHIBIT B
BUSINESS LOCATIONS
1. Borrower currently has the following business locations, and no others:
Chief executive Office: 1301 N. 13th Street
Tampa, Florida 33605
Other Locations: See Attached Schedule
2. Borrower maintains its books and records relating to Accounts and General
Intangibles at:
1301 N. 13th Street
Tampa, Florida 33605
3. Borrower has had no office, place of business or agent for process located
in any country other than as set forth above, except:
None
4. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office: N/A
Other Locations: N/A
5. Each Subsidiary maintains its books and records relating to Accounts and
General Intangibles at:
N/A
6. Each Subsidiary has had no office, place of business or agent for process
located in any country other than set forth above, except:
N/A
7. The following bailees, warehouseman, similar parties and consignees hold
inventory of Borrower or one of its Subsidiaries:
================================================================================
Name and Address Nature of Amount of Owner of
Of Party Relationship Inventory Inventory
- --------------------------------------------------------------------------------
None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Business Locations
Tampa Birmingham
1301 N. 13th Street 289 Snow Drive
Tampa, FL 33605 Birmingham, AL 35209
Mailing address: P.O. Box 75305,Tampa,FL
33675 Mobile
1250-C Armour Avenue
Mobile, AL 36617
St Petersburg Panama City
3201 39th Avenue North 733 Mulberry Avenue
St. Petersburg, FL 33714 Panama City, FL 32401
Jacksonville Montgomery (Opened May, 1994)
5034 Phillips Highway 321 Northeast Bypass
Jacksonville, FL 32207 Building 12 Bay 5
Montgomery, AL 36117
Holiday
3151 Grand Blvd. Gulfport (Opened August, 1994)
Holiday, FL 34690 3737 25th Avenue (Hway 49 South)
Gulfport, MS 39501
Ft. Myers
3065 Cranford Avenue South Dade(Sold March, 1994)
Ft. Myers, FL 33916 13060 SW 85th Avenue Road
Miami, FL 33156
Pensacola
535 Massachusetts Avenue Pompano (Sold March, 1994)
Pensacola, FL 32505 1951 Hammondville Road
Pompano, Beach, FL 33069
Agents for process Service
Florida Alabama
- ------- -------
Mr. Nat Doliner, Esq. Ms. Joan C. Ragsdale
Carlton, Fields, Ward, Sirote & Permutt
Emmanuel, Smith & Cutler, P.A. 2222 Arlington Avenue, S.
One Harbour Place P.O. Box 55727
P.O. Box 3239 Birmingham, AL 35255-5727
Tampa, FL 33601
Mississippi
-----------
CT Corporation System
118 N. Congress Street
Jackson, MS 39201
EXHIBIT C
JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity Jurisdictions
-------------- -------------
Eagle Supply, Inc. State of Florida
State of Alabama
State of Mississippi
EXHIBIT D
CAPITAL STRUCTURE
1. The classes and number of authorized shares of Borrower and each Subsidiary
and the record owner of such shares are as follows:
Borrower:
- ---------
================================================================================
Class Number of Shares Number of Shares
of Issued and Record Authorized But
Stock Outstanding Owners Unissued
- --------------------------------------------------------------------------------
Common 593 Shares TDA Industries, Inc. 907 Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Subsidiaries:
- -------------
================================================================================
Class Number of Shares Number of Shares
of Issued and Record Authorized But
Stock Outstanding Owners Unissued
- --------------------------------------------------------------------------------
None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. The number, nature and holder of all other outstanding Securities of
Borrower and each Subsidiary are as follows:
N/A
3. The correct name and jurisdiction of incorporation of each Subsidiary of
Borrower and the percentage of its issued and outstanding shares owned by
Borrower are as follows:
================================================================================
Jurisdiction of Percentage of Shares
Name Incorporation Owned by Borrower
- --------------------------------------------------------------------------------
None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
4. The name of each of Borrower's corporate or joint venture Affiliates and
the nature of the affiliation are as follows:
a. TDA Industries, Inc. (Parent)
b. Wholly-owned Subsidiaries of TDA Industries, Inc.:
Cooper Distributors, Inc.
Northeastern Plastics, Inc.
Pemberton Services Corp.
TDA Data Services, Inc.
39 Acre Corp.
Eagle Holding, Inc.
Cooper Holding, Inc.
NPI Electric (Asia), Inc.
NPI Electric (China), Inc.
Midtown Tennis Club, Inc.
c. Joint Ventures:
N.W. 74th Avenue Associates
(50% owned by Cooper Holding, Inc.)
Shanghai Super Electronic Component Co., Ltd.
(40% owned by NPI Electric (Asia), Inc.)
d. Shareholders of TDA Industries, Inc.:
Douglas P. Fields
Frederick M. Friedman
DARST Associates Limited Partnership
Pemberton Services Corp. Profit Sharing Trust
Pemberton Services Corp. Profit Sharing Trust II
Note:
TDA Industries, Inc. has a total of 729,930 Common Shares, $.20 par value per
share, outstanding. Gerald Gelles is the owner of 10,678 of such Common Shares,
and he is the General Partner of DARST Associates Limited Partnership.
EXHIBIT E
CORPORATE NAMES
1. Borrower's correct corporate name, as registered with the Secretary of the
State of Florida, is:
Eagle Supply, Inc.
2. In the conduct of its business, Borrower has used the following names:
Eagle Supply, Inc.
3. Each Subsidiaries' correct corporate name, as registered with the Secretary
of State of the State of its incorporation, is:
N/A
4. In the conduct of its business, each Subsidiary has used the following
names:
N/A
EXHIBIT F
TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES
Subsidiary Number
---------- ------
None
EXHIBIT G
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Borrower's and its Subsidiaries' patents:
================================================================================
Federal
Status in Registration Registration
Patent Owner Patent Office Number Date
- --------------------------------------------------------------------------------
None None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Borrower's and its Subsidiaries' trademarks:
================================================================================
Status in Federal
Trademark Registration Registration
Trademark Owner Office Number Date
- --------------------------------------------------------------------------------
None None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
3. Borrower's and its Subsidiaries' copyrights:
================================================================================
Status in Federal
Copyright Registration Registration
Copyrights Owner Office Number Date
- --------------------------------------------------------------------------------
None None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
4. Borrower's and it Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local jurisdictions):
================================================================================
Name of License Nature of License Licensor Term of License
- --------------------------------------------------------------------------------
None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
EXHIBIT H
RESTRICTIONS
Loan Agreement dated as of August 22, 1989 between TDA Industries, Inc. and
Barnett Bank of Tampa, N. A.(successor to First Florida Bank, N.A.), as amended
November 13, 1992.
Note:
The outstanding principal amount of indebtedness under this Loan Agreement, as
amended, will be paid in full from the proceeds of the Revolving Credit Loan.
EXHIBIT I
LITIGATION
1. Actions, suits, proceedings and investigations pending against Borrower or
any Subsidiary:
================================================================================
Title of Nature of Complaining Jurisdiction or
Action Action Parties Tribunal
- --------------------------------------------------------------------------------
Federal Roofing Co. Vs Defective Federal Roofing Co. Etowah County, AL
Eagle Supply, Inc Product
- --------------------------------------------------------------------------------
Jeff Granoff Vs Defective Jeff Granoff Dade County, FL
Eagle Supply, Inc. Product
- --------------------------------------------------------------------------------
D&J Industries, Inc. Vs Defective D&J Industries, Inc. Monroe County, FL
Eagle Supply, Inc. Product
- --------------------------------------------------------------------------------
2. The only threatened actions, suits, proceedings or investigations of which
Borrower or any Subsidiary is aware are as follows:
None
EXHIBIT J
CAPITALIZED LEASES
Borrower and its Subsidiaries have the following capitalized leases:
================================================================================
Lessee Lessor Term of Lease Property Covered
- --------------------------------------------------------------------------------
None None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
EXHIBIT K
OPERATING LEASES
Borrower and its Subsidiaries have the following operating leases:
================================================================================
Lessee Lessor Term of Lease Property Covered
- --------------------------------------------------------------------------------
Eagle Supply, Inc. Branton Enterprises, Inc. Expires 1250-C Armour Ave
4/15/95 Mobile, AL
- --------------------------------------------------------------------------------
Eagle Supply, Inc. J.D. Realty Expires 733 Mulberry Ave.
3/31/96 Panama City, FL
- --------------------------------------------------------------------------------
Eagle Supply, Inc. Aronov Realty Expires 321 Northeast Bypass
Management, Inc. 3/31/96 Building 12 Bay 5
Montgomery, AL
- --------------------------------------------------------------------------------
Eagle Supply, Inc. Coca Cola Bottling Co. Expires 3737 25th Avenue
5/31/96 Gulfport, MS
================================================================================
EXHIBIT L
PENSION PLANS
Borrower and its Subsidiaries have the following Plans:
================================================================================
Party Type of Plan
- --------------------------------------------------------------------------------
Borrower
- --------------------------------------------------------------------------------
Eagle Supply, Inc. Sec. 401K
- --------------------------------------------------------------------------------
(Subsidiaries)
- --------------------------------------------------------------------------------
None
================================================================================
EXHIBIT M
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Borrower and its Subsidiaries are parties to the following collective
bargaining agreements:
================================================================================
Type of Agreement Parties Terms of Agreement
- --------------------------------------------------------------------------------
None None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
2. Material grievances, disputes of controversies with employees are as
follows:
================================================================================
Parties Involved Nature of Grievance, Dispute
or Controversy
- --------------------------------------------------------------------------------
None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining are as follows:
================================================================================
Parties Involved Nature of Matter
- --------------------------------------------------------------------------------
None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
EXHIBIT N
COMPLIANCE CERTIFICATE
[Letterhead of Borrower]
___________________, 19__
___________________
___________________
___________________
___________________
The undersigned, the chief financial officer of Eagle Supply, Inc. a
Florida corporation ("Borrower"), gives this certificate to Barclays Business
Credit, Inc. ("Lender") in accordance with the requirements of Section 8.1.2 of
that certain Loan and Security Agreement dated December __, 1994, between
Borrower and Lender ("Loan Agreement"). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.
1. No Default exists on the date hereof, other than:_______________________
_____[if none, so state]; and
2. No Event of Default exists on the date hereof, other than ______________
_______[if none, so state].
Very truly yours,
________________________
Chief Financial Officer
EXHIBIT O
PERMITTED LIENS
================================================================================
Secured Party Nature of Lien
- --------------------------------------------------------------------------------
None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
EXECUTION COPY
THIS GUARANTY AGREEMENT, dated as of December 23, 1994 (this "Guaranty"),
made by TDA INDUSTRIES, INC., a New York Corporation having an address at 122
East 42nd Street, New York, New York 10168 (the "Guarantor"), in favor of
BARCLAYS BUSINESS CREDIT, INC., as Lender, pursuant to the Loan and Security
Agreement described below. Terms which are capitalized herein and not otherwise
defined shall have the meanings given to such terms in such Loan and Security
Agreement.
WHEREAS, concurrently herewith, EAGLE SUPPLY, INC. (the "Borrower") is
entering into that certain Loan and Security Agreement dated as of December 23,
1994 (as such agreement may be hereafter amended, modified, supplemented or
restated from time to time, the "Loan and Security Agreement") with BARCLAYS
BUSINESS CREDIT, INC. (the "Lender"), pursuant to which the Lender has agreed to
make certain credit accommodations to the Borrower, subject to the terms and
conditions of the Loan and Security Agreement; and
WHEREAS, the Guarantor is the owner, beneficially and of record, of all of
the issued and outstanding shares of capital stock of the Borrower and has
received and will continue to receive certain benefits from the credit
accommodations hereinabove described and is therefore willing to guaranty the
prompt payment and performance of the Obligations, on the terms set forth in
this Guaranty; and
WHEREAS, it is a condition precedent to the making of such credit
accommodations that the Guarantor shall have executed this Guaranty in favor of
the Lender;
NOW, THEREFORE, in consideration of the premises and to induce the Lender
to enter into the Loan and Security Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees with the Lender as follows:
SECTION 1. Guaranty. The Guarantor hereby unconditionally guarantees the
punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations and agrees to pay all costs and
expenses (including reasonable attorneys' fees and related expenses) incurred by
the Lender in enforcing its rights under this Guaranty. Notwithstanding anything
to the contrary in this Guaranty, the amount of the Guarantor's liability for
the Obligations guaranteed hereunder shall in no event exceed the highest amount
which may be guaranteed hereunder without this Guaranty or the Guarantor's
obligations hereunder being deemed a fraudulent conveyance under any applicable
statute providing for the avoidance of conveyances or obligations as
constructively fraudulent transfers. The maximum amount of the Guarantor's
contingent liability for the Obligations guaranteed hereunder shall be presumed
to be the aggregate amount of all obligations, absent proof that if the amount
of such liability were equal to the amount of such Obligations, this Guaranty or
the Guarantor' obligations hereunder would constitute such a fraudulent
conveyance.
SECTION 2. Guaranty Absolute. The Guarantor guarantees that the Obligations
will be paid and performed strictly in accordance with the terms of the Loan and
Security Agreement or any other agreement evidencing or governing the
Obligations regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Lender with respect thereto. The liability of the Guarantor under this Guaranty
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Loan and Security
Agreement, any other Loan Document, or any other agreement or instrument
relating to the Obligations;
(b) any change in the time, manner or place or payment of, or in any other
term of, all or any of the Obligations, or any amendment or waiver of any term
of or any consent to departure from the Loan and Security Agreement, any other
Loan Document, or any other agreement or instrument related to the Obligations;
(c) any exchange, release, non-perfection or impairment of any collateral,
or any release, amendment or waiver of any term of, or consent to departure
from, any other guaranty for all or any of the Obligations;
(d) any failure on the part of the Lender or any other Person to exercise,
or any delay in exercising, any right under the Loan and Security Agreement or
any other agreement or instrument relating to the Obligations; or,
(e) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor with respect to the
Obligations (including, without limitation, all defenses based on suretyship or
impairment of collateral, and all defenses which the Borrower may assert on the
underlying debt, including failure of consideration, breach of warranty fraud,
payment, statute of frauds, bankruptcy, lack of legal capacity, statute of
limitations, lender liability, accord and satisfaction, and usury) or which
might otherwise constitute a defense to this Guaranty and the obligations of the
Guarantor under this Guaranty.
The Guarantor hereby agrees that if the Borrower or any other guarantor of the
Obligations is the subject of a bankruptcy proceeding under Title 11 of the
United States Code, it will not assert the pendency of such proceeding or any
order entered therein as a defense to (i) the timely payment of the Obligations
or the Guarantor's obligations hereunder, or (ii) its guaranty of any interest
on any portion of the Obligations which accrues after the commencement of any
such proceeding (or, if interest on any portion of the Obligations ceases to
accrue by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on such portion of the Obligations if said
proceedings had not been commenced). This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the obligations is rescinded or must otherwise be returned by the Lender
upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though such payment had not been made.
SECTION 3. Waiver. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty (including, without limitation, any notice required under
Section 9-504 of the Uniform Commercial Code) and any requirement that the
Lender protect, secure, perfect or insure any
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security interest or lien or any property subject thereto or exhaust any right
to take any action against the Borrower or any other Person or any Collateral.
The Guarantor further waives any and all right to assert any defense, set-off,
counterclaim or cross-claim of any nature whatsoever with respect to this
Guaranty or the obligations of the Guarantor under this Guaranty or otherwise
with respect to the Obligations, or the obligations of other Person or party
(including, without limitation, the Borrower) relating to the Obligations or
this Guaranty, in any action or proceeding brought by the Lender to collect the
Obligations or any portion thereof, or to enforce the obligations of the
Guarantor under this Guaranty. The Guarantor acknowledges that no oral or other
agreements, understandings, representations or warranties exist with respect to
this Guaranty or with respect to the obligations of the Guarantor under this
Guaranty, except as specifically set forth in this Guaranty.
SECTION 4. Subrogation. So long as any Obligations remain outstanding and
unpaid, the Guarantor hereby irrevocably waives, to the fullest extent permitted
by law, any and all claims, rights or remedies which it may now have or
hereafter acquire against the Borrower that arise hereunder or from the
performance by it hereunder including, without limitation, any claims, rights or
remedies of subrogation, reimbursement, exoneration, contribution,
indemnification or participation in any claims, rights or remedies of the Lender
against the Borrower or in any security which the Lender now has or hereafter
acquires, whether or not such claims, rights or remedies arise in equity, under
contract, by statute, under common law or otherwise.
SECTION 5. Subordination of Other Obligations. Any indebtedness, liability
or obligation of the Borrower now or hereafter held by or owing to the
Guarantor, howsoever created, arising or acquired (collectively, the
"Subordinated Obligations") is hereby subordinated in right of payment to the
prior payment and satisfaction in full of the Obligations, and any payment on
such Subordinated Obligations collected or received by the Guarantor after an
Event of Default has occurred and is continuing shall be held in trust for the
Lender and shall forthwith be paid over to the Lender, to be credited and
applied against the Obligations, but without affecting, impairing or limiting in
any manner the liability of the Guarantor under any other provision of this
Guaranty. Any notes now or hereafter evidencing any Subordinated Obligations
shall be marked with a legend that the same are subject to this provision and,
if the Lender so requests, a copy of each such note shall be delivered to the
Lender.
SECTION 6. Representatives and Warranties. The Guarantor hereby represents
and warrants as follows:
(a) Due Organization, Etc. The Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has all requisite power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. The Guarantor is duly qualified or licensed to do business as a
foreign corporation or other entity in good standing in all jurisdictions in
which it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed.
(b) Due Authorization and Execution, Etc. The execution, delivery and
performance by the Guarantor of this Guaranty are within the Guarantor's
corporate powers, have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the stockholders
or any creditors of the Guarantor, (ii) contravene
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(A) the Guarantor's charter or by-laws, or (B) any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any contractual
restriction binding on or affecting the Guarantor or any of its properties,
(iii) result in or require the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature (other than pursuant hereto) upon or with respect to any of the
Guarantor's properties, and (iv) result in a breach or violation of any
agreement, instrument or document to which the Guarantor is a party or by which
it or its property may be bound. The Guarantor is not in default under any such
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or any such contractual restriction, which default would have a
material adverse effect on the business, condition (financial or otherwise),
operations, properties, performance or prospects of the Guarantor.
(c) Government Consents. No authorization, consent, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery or performance by
the Guarantor of this Guaranty.
(d) Legal, Valid and Binding Nature. This Guaranty is the legal, valid and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms.
(e) Guarantor's Relationship to the Borrower. The Lender's agreement to
make loans to the Borrower is of substantial and material benefit to the
Guarantor, and the Guarantor has reviewed and approved copies of the Loan and
Security Agreement, the other Loan Documents and the other documents executed or
delivered in connection with the Loan and Security Agreement. The Guarantor is
fully informed of the remedies the Lender may pursue upon the occurrence of a
Default under the Loan and Security Agreement or such other documents.
(f) Solvency. The fair value of the property of the Guarantor exceeds the
total amount of liabilities (including, without limitation, contingent
liabilities) of the Guarantor; the present fair saleable value of the assets of
the Guarantor exceeds the amount that will be required to pay the probable
liability of the Guarantor on its existing debts as they become absolute and
matured; the Guarantor is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business; the Guarantor does not intend to, and does not
believe that it will, incur debts or liabilities beyond the Guarantor's ability
to pay as such debts and liabilities mature; and the Guarantor is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which the property remaining with the Guarantor would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Guarantor is engaged. In
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will computed at the amount which, in light of all facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
(g) Absence of Litigation. There are no actions, suits, investigations,
litigation or proceedings pending or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor or any of its subsidiaries or the
properties of the Guarantor or any such subsidiary before any court, arbitrator
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or which purports to affect any part of
the transactions
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contemplated hereby or by the Loan and Security Agreement or the legality,
validity or enforceability of this Guaranty.
(h) Absence of Liens. There are no Liens of any nature whatsoever on any
properties or assets of the Guarantor, except Liens incurred in the ordinary
course of its business.
(i) No Burdensome Agreements. The Guarantor is not a party to any
indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that would have a
material adverse effect on the business, condition (financial or otherwise),
operations, properties, performance or prospects of the Guarantor or on the
ability of the Guarantor to carry out its obligations under this Guaranty.
(j) Payment of Taxes. The Guarantor has filed all tax returns (federal,
state, local and foreign) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, except for such taxes as are being
contested in good faith and by proper proceedings and with respect to which
appropriate reserves are being maintained by the Guarantor.
SECTION 7. Amendments, Etc. No amendment or waiver of any provision of this
Guaranty or consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 8. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including by telecopier) and, if to
the Guarantor, mailed or delivered to it at its address specified on the first
page of this Guaranty, if to the Lender, mailed or delivered to it at the
address specified in the Loan and Security Agreement, or as to each party at
such other address as shall be designated by such party in a written notice to
the other party, in each case, together with a copy of each such notice to the
attorney for each of the Guarantor and the Lender, respectively, as set forth in
Section 11.8 of the Loan and Security Agreement (and delivered in the manner
described therein). All such notices and other communications shall, if mailed,
be effective when deposited in the mail addressed as aforesaid.
SECTION 9. No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof. No single or partial exercise of any right hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive or any
remedies provided by law.
SECTION 10. Right to Setoff. The Lender is hereby authorized at any time
and from time-to-time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not the Lender shall have made any demand under this
Guaranty. The Lender agrees promptly to notify the Guarantor after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such
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setoff and application. The rights of the Lender
under this Section are in addition to the other rights and remedies (including,
without limitation, other rights of setoff) which the Lender may have.
SECTION 11. Continuing Guaranty; Assignments. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the indefeasible
payment in full of the Obligations and all other amounts payable under this
Guaranty, (b) be binding upon the Guarantor and its successors and assigns, and
(c) inure to the benefit of and be enforceable by the Lender and its successors,
transfers and assigns. Without limiting the generality of the foregoing clause
(c), the Lender may assign or otherwise transfer any of the Obligations to any
other Person, and such other Person shall thereupon become vested with all the
rights in respect thereof granted to the Lender herein or otherwise.
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF.
SECTION 13. CONSENT TO JURISDICTION.
(a) THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY, AND THE GUARANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
OBJECTION TO THE LAYING OF VENUE OR ANY DEFENSE OF AN INCONVENIENT FORUM WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF SUCH ACTION OR PROCEEDING. THE
GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE GUARANTOR
AT ITS ADDRESS SPECIFIED ON THE FIRST PAGE OF THIS GUARANTY. THE GUARANTOR
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGEMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTIONS.
SECTION 14. JURY TRIAL WAIVER. THE GUARANTOR AND THE LENDER HEREBY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN ANY COURT RELATING TO,
IN CONNECTION WITH OR ARISING UNDER THIS GUARANTY OR THE LOAN AND SECURITY
AGREEMENT.
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SECTION 15. Entire Agreement. This Guaranty represents the entire
understanding and agreement between the Guarantor, on the one hand, and the
Lender, on the other hand, with respect to the subject matter contained herein,
and there are no other existing agreements or understandings, whether oral or
written, between or among such parties as to such subject matter.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
by its duly authorized officer as of the date first above written.
TDA INDUSTRIES, INC.
By:/s/ Douglas P. Fields
------------------------
Name: Douglas P. Fields
Title: President
Accepted:
BARCLAYS BUSINESS CREDIT, INC.
By:/s/ Peter Provenzale
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Name:
Title: SVP