AMENDMENT No. 7 TO FINANCING AGREEMENTS
July 22, 1996
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Gentlemen:
Congress Financial Corporation ("Congress") and Eastco Industrial
Safety Corp. ("Borrower") have entered into certain financing arrangements
pursuant to the Accounts Financing Agreement [Security Agreement], dated as of
October 1, 1991, between Congress and Borrower, as amended (the "Accounts
Agreement"), and all other agreements, documents and instruments at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Accounts Agreement, as the same have heretofore or
contemporaneously been or may be hereafter amended, modified, supplemented,
extended, renewed, restated or replaced, collectively, the "Financing
Agreements").
Borrower has requested certain amendments to the Financing Agreements,
and Congress is willing to agree to such amendments, subject to the terms and
conditions contained herein. By this Amendment, Congress and Borrower desire and
intend to evidence such amendments.
In consideration of the foregoing, and the respective agreements and
covenants contained herein, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used in this Amendment, the following
terms shall have the respective meanings given to them below and the Accounts
Agreement (including all supplements thereto) shall be deemed and is hereby
amended to include, in addition and not in limitation, the following
definitions:
(i) "Cost of Eligible New Equipment" shall mean the cost of machinery
and equipment constituting Eligible New Equipment hereunder actually paid or to
be paid by Borrower in cash, as shown on the manufacturer's or vendor's invoice
to Borrower therefor, net of all discounts, allowances or credits taken or
available, and excluding all charges for freight, duty, taxes, insurance,
installation, set-up, software, training, engineering, warranty or service fees
or contract expenses, and
other similar charges and other so-called "soft" costs relating thereto, and
excluding the cost of any molds, dies, accessories and spare parts purchased by
Borrower which may relate to the use or operation of such Eligible New
Equipment.
(ii) "Eligible New Equipment" shall mean New Equipment which is in good
order and repair, and in running and marketable condition, is located at
Borrower's premises, is acceptable to Congress for lending purposes and has not
previously been the subject of a New Equipment Term Loan. Except in Congress'
discretion, Eligible New Equipment shall not include (A) New Equipment at the
premises or in the possession of, or under the control of, any third party, (B)
New Equipment subject to a security interest or lien in favor of any third
party, or (C) New Equipment not intended to be used, at the time of purchase, in
the ordinary course of Borrower's manufacturing operations. Any New Equipment
which Congress determines to be ineligible or unacceptable for lending purposes
shall nevertheless be and remain at all times part of the Collateral.
(iii) "New Equipment" shall mean machinery and equipment, whether new
or used, purchased for all cash by Borrower from non-affiliated parties after
July 22, 1996, as to which title has passed to Borrower and which is in the
possession of Borrower.
(iv) "New Equipment Term Loans" shall mean, collectively, the
outstanding Obligations owed to Congress by Borrower consisting of the secured
term loans hereafter made by Congress to Borrower as provided in Section 2 of
this Amendment, evidenced by the New Equipment Term Notes(s) and subject to the
terms and conditions of the Accounts Agreement, this Amendment and the other
Financing Agreements (each such secured term loan being from time to time
referred to herein individually as a "New Equipment Term Loan").
(v) "New Equipment Term Notes" shall mean, collectively, the term
promissory notes in the form annexed hereto as Exhibit I, which shall be
executed and delivered by Borrower to Congress pursuant to Section 2 of this
Amendment to evidence each New Equipment Term Loan made by Congress to Borrower
(each such term promissory note being from time to time referred to herein
individually as a "New Equipment Term Note").
(vi) "QPO Proceeds" shall mean the net proceeds received by Borrower
upon consummation of a Qualified Public offering.
(vii) "Qualified Public Offering" shall mean any bona fide,
underwritten offering to the public by Borrower of its equity securities
pursuant to an effective registration statement under the Securities Act of
1933, as then in effect, or any
comparable statement under any similar federal statute then in force.
(b) Amendments to Definitions. All references to the term "Supplemental
Loan Termination Date" in the Accounts Agreement and in any of the other
Financing Agreements shall be deemed and each such reference is hereby amended
to mean the earlier of (A) December 31, 1996 or (B) the date of consummation of
a Qualified Public Offering.
(c) Interpretation. For purposes of this Amendment, unless otherwise
defined herein, all terms used herein, shall have the respective meanings
assigned to such terms in the Financing Agreements.
2. New Equipment Term Loans.
(a) Subject to and upon the terms and conditions contained herein and
in the other Financing Agreements, including the sublimit set forth below in
Section 2(b), Congress shall, in its discretion, make New Equipment Term Loans
to Borrower, from time to time, at Borrower's request, of up to an amount equal
to the lesser of (i) seventy percent (70%) of the Cost of Eligible New
Equipment, or (ii) eighty percent (80%) of the orderly liquidation value of such
Eligible New Equipment (but excluding the value of any goods or services
excluded from the Cost of Eligible New Equipment), as set forth in an appraisal
report prepared for Congress, at Borrower's expense, by an appraiser
satisfactory to Congress.
(b) Except in Congress' discretion, the aggregate original principal
amount of all New Equipment Term Loans made to Borrower shall not exceed
$1,000,000.
(c) Each New Equipment Term Loan shall be (i) evidenced by a New
Equipment Term Note executed and delivered by Borrower to Congress concurrently
with the disbursement of each New Equipment Term Loan, and (ii) repaid, together
with interest and other amounts payable thereunder, in accordance with the
provisions of such New Equipment Term Note, the Accounts Agreement, this
Amendment and the other Financing Agreements, and (iii) secured by all of the
Collateral.
(d) Without limiting the foregoing, the making of each New Equipment
Term Loan shall be subject to the satisfaction of each of the following
additional conditions precedent;
(i) Congress shall have received from Borrower prior written notice
within a reasonable period of time of a requested New Equipment Term Loan, which
notice shall specify the following: (A) the proposed date and amount of the
requested New
Equipment Term Loan; (B) a list and description of proposed Eligible New
Equipment (by model, make, manufacturer, vendor, serial no. and/or such other
identifying information as may be appropriate, as determined by Congress); (C)
the itemized Cost of Eligible New Equipment paid or to be paid for such proposed
Eligible New Equipment and any additional goods and services, charges, expenses
or fees not included in the Cost of Eligible New Equipment, and the terms of
payment thereof; and (D) such other information and documents as Congress may
from time to time reasonably request related thereto;
(ii) Borrower shall have acquired, or shall acquire,
contemporaneously with the disbursement of such New Equipment Term Loan, good
and marketable title to the Eligible New Equipment, free and clear of all liens,
security interests, claims or other encumbrances, except for a perfected first
priority and only security interest in and lien upon the Eligible New Equipment
in favor of Congress, and Borrower shall have delivered to Congress such
evidence thereof as Congress shall reasonably require;
(iii) Congress shall have received a copy of the invoice(s)
covering the Cost of Eligible New Equipment with respect to the Eligible New
Equipment and all other amounts required to be paid in connection therewith, and
a copy of the appraisal report required under Section 2(a)(ii) above setting
forth the orderly liquidation value of the Eligible New Equipment as provided in
Section 2(a)(ii);
(iv) Congress shall have received copies, or upon Congress'
request, the originals, of all agreements, documents and instruments relating to
the purchase by Borrower of the Eligible New Equipment, including, without
limitation, all purchase orders, bills of sale, contracts and other related
documents;
(v) Congress shall have received an original executed New Equipment
Term Note, as completed inter alia to set forth the date and principal amount of
such New Equipment Term Loan and to set forth the amount of each monthly
principal installment such that the principal amount of each New Equipment Term
Loan is amortized in equal, consecutive monthly installments of principal
commencing on the first day of the month following the date of each such advance
and ending on October 1, 1999, and to set forth the dates of the first monthly
payments of principal and interest as determined by Congress, such New Equipment
Term Note to be duly authorized, executed and delivered by Borrower to Congress,
which note shall thereupon evidence Indebtedness of Borrower unconditionally
owed to Congress, without offset, defense or counterclaim of any kind, nature or
description whatsoever; and
(vi) no Event of Default, or event, act or condition which with
notice or passage of time or both would constitute an Event of Default, shall
exist or have occurred and be continuing, and, if required by Congress, Borrower
shall deliver a certificate signed on behalf of Borrower by a senior officer of
Borrower certifying to the absence of any such Event of Default, event, act or
condition.
(e) For purposes of Section 2.3 of the Accounts Agreement, the New
Equipment Term Loans made to Borrower shall be considered made pursuant to a
supplement to the Accounts Agreement.
3. Supplemental Loans.
(a) In addition to the loans which may be made by Congress to Borrower
pursuant to the Financing Agreements, at the request of Borrower made at any
time and from time to time prior to the Supplemental Loan Termination Date,
Congress shall, subject to the terms and conditions contained in the Financing
Agreements, make supplemental revolving loans to Borrower in such amounts as
Borrower may request of up to $125,000 in excess of the amounts otherwise
available to Borrower under the Financing Agreements (the "Supplemental Loans").
(b) Except in Congress' discretion, Borrower shall not have any right
to request, and Congress shall not make, any Supplemental Loans at any time on
or after the Supplemental Loan Termination Date. The Supplemental Loans shall be
secured by all Collateral.
(c) Prior to an Event of Default or the termination of the Financing
Agreements, all outstanding and unpaid obligations arising pursuant to the
Supplemental Loans (including, but not limited to, principal, interest, fees,
costs, expenses and other charges with respect thereof payable by Borrower to
Congress) shall automatically, without notice or demand, be absolutely and
unconditionally due and payable and Borrower shall pay to Lender in cash or
other immediately available funds all such Supplemental Loans on the
Supplemental Loan Termination Date.
(d) Borrower hereby acknowledges and agrees that the failure of
Borrower to pay such Supplemental Loans on the Supplemental Loan Termination
Date shall constitute an Event of Default for all purposes in connection with
the Accounts Agreement, and the other Financing Agreements.
4. Maximum Credit. Section 1.7 of the Accounts Agreement is hereby
deleted in its entirety and the following substituted therefor:
"1.7 "Maximum Credit" shall mean the amount of
$9,000,000."
5. Lending Formulas.
(a) Section 2. 1 of the Accounts Agreement is hereby deleted in its
entirety and the following substituted therefor:
"2. 1 You shall, in your discretion, make loans to us from
time to time, at our request, of up to eighty-five percent (85%) of the
Net Amount of Eligible Accounts (or such greater or lesser percentage
thereof as you shall in your sole discretion determine from time to
time)."
(b) Paragraph 2 of a certain Letter re: Inventory Loans, dated as of
October 1, 1991, as amended, by Borrower in favor of Congress, is hereby deleted
in its entirety and the following substituted therefor:
"2. In addition to loans which may be made by you to us,
pursuant to Section 2 of the Accounts Agreement, you shall, in your
sole discretion, make loans to us from time to time, at our request, of
up to the following percentages of Value of the following categories of
Eligible Inventory (or such greater or lesser percentage thereof as you
shall, in your sole discretion, determine from time to time):
fifty-five (55%) percent of Eligible Inventory consisting of raw
materials, including but not limited to trim (excluding packaging and
labels), and finished goods."
6. Interest. Effective as of July 1, 1996, Section 3.1 of the Accounts
Agreement is hereby deleted in its entirety and replaced by the following:
"3. 1 (a) Interest shall be payable by us to you on the first
day of each month upon the closing daily balances in our loan account
for each day during the immediately proceeding month, at a rate equal
to one and one-quarter percent (1.25%) per annum in excess of the prime
commercial interest rate from time to time publicly announced by
CoreStates Bank, N.A., Philadelphia, Pennsylvania, whether or not such
rate is the best rate available at such bank. The interest rate charged
hereunder shall increase or decrease by an amount equal to each
increase or decrease, respectively, in said prime loan rate, effective
on the first day of the month after any such change in said prime loan
rate based on the prime loan rate in effect on the last day of the
month in which any such change occurs.
(b) If Borrower receives QPO Proceeds in an amount equal to or
greater than $2,500,000, then interest payable by us to you shall
decrease automatically and without further action to a rate equal to
one percent (1%) per annum in excess of the prime commercial interest
rate from time to time publicly announced by CoreStates Bank N.A.,
Philadelphia, Pennsylvania, whether or not such announced rate is the
best rate available at such bank, any such change to be effective as of
the first day of the month after consummation of the Qualified Public
Offering; provided, that, (i) no Event of Default exists or has
occurred and is continuing, (ii) the rate provided for in Section 3.2
hereof does not otherwise apply, and (iii) such rate shall not apply to
any amounts as to which the rate set forth in Section 3.1(c) shall
apply.
(c) In the event that the outstanding aggregate principal
amount of loans by you to us exceeds the Maximum Credit or the formula
set forth in any supplement hereto (other than with respect to
Supplemental Loans), interest on the entire amount of such excess(es)
shall be payable at the rate set forth in Section 3.2 hereof (whether
or not such excess(es) arise or are made with or without your knowledge
or consent)."
7. Termination.
(a) Section 9.1 of the Accounts Agreement is, hereby deleted in its
entirety and the following substituted therefor:
"9.1 This Agreement shall become effective upon acceptance by
you and shall continue in full force and effect for a term ending
October 1, 1999 (the "Renewal Date") and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof; provided, that,
we hereby agree that you may, at your option, extend the Renewal Date
to October 1, 2000 by giving to us notice by August 1, 1999. Either
party may terminate this Agreement on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving the other party
at least sixty (60) days prior written notice by registered or
certified mail, return receipt requested, and, in addition, you shall
have the right to terminate this Agreement immediately at any time upon
the occurrence of an Event of Default. No termination of this
Agreement, however, shall relieve or discharge us of our duties,
obligations and covenants hereunder until all Obligations have been
paid in full, and your continuing security interest in the Collateral
shall remain in effect until such Obligations have been fully
discharged."
(b) Section 9.2 of the Accounts Agreement is hereby deleted in its
entirety and the following substituted therefor:
"9.2 If you terminate this Agreement upon the occurrence of an
Event of Default or at our request, in view of the impracticability and
extreme difficulty of ascertaining actual damages and by mutual
agreement of the parties as to a reasonable calculation of your lost
profits as a result thereof, we hereby agree that we shall pay to you,
upon the effective date of such termination, an early termination fee
in an amount equal to: (a) two (2%) percent of the Maximum Credit if
such termination occurs on or prior to October 1, 1997 or (b) one (1%)
percent of the Maximum Credit if such termination occurs after October
1, 1997 but prior to October 1, 1999. Such termination fee shall be
presumed to be the amount of damages sustained by said early
termination and we agree that it is reasonable under the circumstances
currently existing. The early termination fee provided for in this
paragraph 9.2 shall be deemed included in the obligations."
8. Letter of Credit Accommodation Fee. Section 1.8 of the Trade
Financing Agreement Supplement to Accounts Financing Agreement (Security
Agreement), dated December 14, 1992, as amended, is hereby deleted in its
entirety and the following substituted therefor:
"1.8 In addition to all other fees, charges and expenses
payable under the Agreement, this Supplement, and to any bank or other
issuer or correspondent in connection with any Credit, we agree to pay
to you the following commissions for your services hereunder, which
shall be due and payable on the opening or issuance of each Credit or,
if the original term is extended, on the extension thereof: (a) a
charge of .3333 percent (1/3%) of the face amount of any Credit (other
than drafts or acceptances) for up to the initial sixty (60) days of
the term thereof and an additional charge of .1667 percent (1/6%) of
such face amount for each additional thirty (30) days, or any portion
thereof, of the original term or any extension thereof and (b) in
addition to any bank charges, a charge for each thirty (30) day period,
or any portion thereof, of the original or any extended term of any
outstanding drafts or acceptances equal to .1667 percent (1/6%) of the
face amount thereof."
9. Net Worth Covenant. Section 2.7 of the Covenants Supplement to
Accounts Financing Agreement [Security Agreement], dated as of October 1, 1991,
between Borrower and Congress, as amended (the "Covenants Supplement"), is
hereby deleted in its entirety and the following substituted therefor:
"2.7 Consolidated Tangible Net Worth. Borrower and its
Subsidiaries, shall, at all times, until all Obligations have been
indefeasibly paid in full, maintain a Consolidated Tangible Net worth
of not less than the amount set forth below during the periods set
forth below:
(a) $2,100,000 from July 31, 1996 to the day
immediately prior to the consummation of the
Qualified Public Offering;
(b) the sum of (i) $2,100,000 plus (ii) any QPO
Proceeds received by Borrower, from the date of
consummation of the Qualified Public Offering and at all
times thereafter."
10. Working Capital Covenant. Section 2.8 of the Covenants Supplement
is hereby deleted in its entirety and the following substituted therefor:
"2.7 Consolidated Working Capital. Borrower and its
subsidiaries, shall, at all times, until all Obligations have been
indefeasibly paid in full, maintain a Consolidated Working Capital of
not less than the amount set forth below during the periods set forth
below:
(a) $6,100,000 from July 31, 1996 to the day
immediately prior to the consummation of the
Qualified Public Offering;
(b) the sum of (i) $6,100,000 plus (ii) forty percent
(40%) of any QPO Proceeds received by Borrower, from the
date of consummation of the Qualified Public Offering and
at all times thereafter."
11. Inventory Appraisal. In addition to any rights Congress may
currently have pursuant to the Financing Agreements to obtain written reports or
appraisals as to the Inventory or any other Collateral, Borrower shall, at
Borrower's expense and within thirty (30) days from the date hereof, deliver or
cause to be delivered to Congress a written appraisal as to the Inventory in
form, scope and methodology acceptable to Congress and by an appraiser
acceptable to Congress, addressed to Congress or upon which Congress is
expressly permitted to rely.
12. Release of Certain Life Insurance as Collateral. Upon the
effectiveness hereof, Congress shall automatically terminate any and all
security interests in and liens upon, and hereby reassigns to Borrower, all
rights of Borrower in any life insurance policies owned by Borrower upon the
life of Alan Densen and previously assigned by Borrower to Congress.
Notwithstanding the foregoing release of certain Collateral, nothing contained
herein shall be deemed to be an acknowledgement that the indebtedness previously
secured by the life insurance policies has been paid or satisfied in full.
13. Extension Fee. In consideration of the amendments set forth herein,
Borrower shall, on the date hereof, pay to Lender, or Lender at its option shall
charge the account of Borrower maintained by Lender, an extension fee in the
amount of $20,000.00, which fee is fully earned as of the date hereof.
14. Conditions Precedent. The effectiveness of the other terms and
provisions contained herein shall be subject to the receipt by Congress of an
original of this Amendment, duly authorized, executed and delivered by Borrower,
Puerto Rico Safety Equipment Corporation, Puerto Rico Safety Corporation,
Disposable Safety Wear Inc. and Safety Wear Corp.
15. Effect of this Amendment. Except as specifically modified pursuant
hereto, no other changes or modifications to the Financing Agreements are
intended or implied and in all other respects the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of
the effective date hereof. To the extent of any conflict between the terms of
this Amendment and the other Financing Agreements, the terms of this Amendment
shall control.
16. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be requested by
such parties to effectuate the provisions and purposes of this Amendment.
17. Governing Law. The validity, construction and effect of this
Agreement shall be governed by the laws of the State of New York.
18. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
19. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Very truly yours,
EASTCO INDUSTRIAL SAFETY CORP.
By: /s/ Anthony P. Towell
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Title: Vice President
-------------------------------
ACKNOWLEDGED AND AGREED:
CONGRESS FINANCIAL CORPORATION
By: /s/ Martin J. Machory
-------------------------------
Title: Assistant Vice President
-------------------------------
CONSENT
The undersigned guarantors hereby consent to the foregoing Amendment
and ratify and confirm the terms of their respective Guarantee and Waivers as
applicable to all present and future indebtedness, liabilities and obligations
of EASTCO INDUSTRIAL SAFETY CORP. to CONGRESS FINANCIAL CORPORATION including,
without limitation, all indebtedness, liabilities and obligations under the
amended financing agreements.
PUERTO RICO SAFETY EQUIPMENT
CORPORATION
By: /s/ Anthony P. Towell
-------------------------------
Title: Vice President
----------------------------
PUERTO RICO SAFETY CORPORATION
By: /s/ Anthony P. Towell
-------------------------------
Title: Vice President
----------------------------
DISPOSABLE SAFETY WEAR INC.
By: /s/ Anthony P. Towell
-------------------------------
Title: Vice President
----------------------------
SAFETY WEAR CORP.
By: /s/ Anthony P. Towell
-------------------------------
Title: Vice President
----------------------------
EXHIBIT I
NEW EQUIPMENT TERM NOTE
$______________ _______________, 19__
FOR VALUE RECEIVED, EASTCO INDUSTRIAL SAFETY CORP., a_________________
____________________ corporation (the "Debtor"), hereby unconditionally promises
to pay to the order of CONGRESS FINANCIAL CORPORATION, a California corporation
(the "Payee"), at the offices of Payee at 1133 Avenue of the Americas, New York,
New York 10036, or at such other place as the Payee or any holder hereof may
from time to time designate, the principal sum of ______________________ DOLLARS
($______________) in lawful money of the United States of America and in
immediately available funds, in _________________ (__) consecutive monthly
installments (or earlier as hereinafter referred to) on the first day of each
month commencing ___________________, 19___, of which the first
_____________________ (__) installments shall each be in the amount of
________________________________ DOLLARS ($______________), and the last
installment shall be in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee in
like money at said office or place from the date hereof, payable commencing
_____________________, 19___ and on the first day of each month thereafter, on
the unpaid principal balance hereof at the applicable rate, prior to an Event of
Default (as hereinafter defined) or termination or non-renewal of the Financing
Agreements (as hereinafter defined), set forth in Section 3.1 of the Accounts
Agreement (as defined below) and at the applicable rate, upon and after an Event
of Default or termination or non-renewal of the Financing Agreements, set forth
in Section 3.2 of the Accounts Agreement.
This Note is issued pursuant to the terms and provisions of Amendment
No. 7 to Financing Agreements, dated as of July _, 1996 (the "Amendment") to
evidence a "New Equipment Term Loan" (as defined in the Amendment) made by Payee
to Debtor. This Note is secured by the "Collateral" described in the Accounts
Financing Agreement [Security Agreement], dated as of October 1, 1991, by and
between Payee and Debtor, as amended (the "Accounts Agreement") and any
agreement, document or instrument now or at any time hereafter executed and/or
delivered in connection therewith or related thereto (the foregoing, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, are hereinafter collectively referred to as the
"Financing Agreements") and is entitled to all of the benefits and rights
thereof and of the Financing Agreements. At the time any payment is due
hereunder,
at its option, Payee may charge the amount thereof to any account of Debtor
maintained by Payee.
If any principal or interest payment is not made when due hereunder, or
if any other Event of Default (as defined in the Accounts Agreement) shall occur
for any reason, or if the Financing Agreements shall be terminated or not
renewed for any reason whatsoever, then and in any such event, in addition to
all rights and remedies of Payee under the Financing Agreements, applicable law
or otherwise, all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively and concurrently, Payee may, at its
option, declare any or all of Debtor's obligations, liabilities and indebtedness
owing to Payee under the Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof together with all interest accrued
thereon, shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice of
any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii) consents
to any one or more extensions or postponements of time of payment, release,
surrender or substitution of collateral security, or forbearance or other
indulgence, without notice or consent. Upon the occurrence of any Event of
Default and at any time thereafter, Payee shall have the right, but not the
obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a permanent
waiver. Debtor hereby irrevocably consents to the non-exclusive jurisdiction of
the Supreme Court of the State of New York and of the United States District
Court for the Southern District of New York for all purposes in connection with
any action or proceeding arising out of or relating to this Note, the Accounts
Agreement, the other Financing Agreements, the
Obligations or the Collateral and further consents that any process or notice of
motion or other application to said Courts or judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside the
State of New York by registered or certified mail, return receipt requested, and
service or notice so served shall be deemed complete five (5) days after the
same shall have been posted or (ii) in such other manner as may be permissible
under the rules of said Courts. Within thirty (30) days after such mailing,
Debtor shall appear in answer to such process or notice of motion or other
application to said Courts, failing which Debtor shall be deemed in default and
judgment may be entered by Payee against Debtor for the amount of the claim and
other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors and by any necessary vote or consent of the stockholders of
Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit of
Payee and its successors, endorsees and assigns. If any term or provision of
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed to
include their respective successors and assigns.
EASTCO INDUSTRIAL SAFETY CORP.
ATTEST:
By:
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Secretary Title:
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