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EXHIBIT 4.5
TERM LOAN AND SECURITY AGREEMENT
This Term Loan and Security Agreement (the "Agreement") is made and
entered into as of December 30, 1993 by and between Congress Financial
Corporation (Central) ("Lender") and Keystone Consolidated Industries, Inc.
("Borrower").
RECITALS
A. Borrower and Lender are the parties to that certain Accounts
Receivable Financing Agreement {Security Agreement} dated as of December 19,
1986, as amended to date (the "Accounts Financing Agreement") , and Rider No. 1
to Accounts Receivable Financing Agreement (Security Agreement), as amended to
date ("Rider No. 1"). The Accounts Financing Agreement and Rider No. 1 are
hereinafter referred to collectively as the "Revolving Loan Agreement".
Capitalized terms used and not otherwise defined in this Agreement are used as
they are defined in the Revolving Loan Agreement.
B. Lender is a party to that certain Amendment and Restatement of
Subordination Agreement (the "Subordination Agreement") dated as of June 30,
1987 by and among Harold C. Simmons, as trustee under the Keystone Master
Pension Trust (the "Trust") , ITT Commercial Finance Corp. ("ITT") and Lender
concerning various obligations of Borrower to the Trust, ITT and Lender,
including the obligations of Borrower to ITT under the ITT Loan Agreement (as
defined in the Subordination Agreement).
C. Borrower, the trustee of the Trust and Wire Products, Inc. are
the parties to that certain Amendment and Restatement of Security Agreement
(the "Security Agreement") dated as of January 8, 1987 concerning, among other
things, the relative priority of security interests held by the trustee of the
Trust, Lender and the Term Lenders (as defined in the Security Agreement).
D. Borrower has requested and Lender has agreed to make a term
loan to Borrower upon the terms and subject to the conditions set forth in this
Agreement.
E. The term loan to be made under this Agreement will replace and
be a refinancing of the obligations of Borrower under the ITT Loan Agreement.
Lender, upon the making of the term loan contemplated by this Agreement, will
be a Term Lender (as defined in the Security Agreement).
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
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SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural. All
references to Borrower and Lender pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective
successors and assigns. The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of Default
shall continue or be continuing until it is waived in accordance with Section
9.3 hereof. Any accounting term used herein unless otherwise defined in this
Agreement shall have the meanings customarily given to such term in accordance
with GAAP. For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services rendered, which
are not evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment, machinery, computers and computer hardware and
software (whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used
in connection therewith, and substitutions and replacements thereof, wherever
located.
1.3 "Event of Default" shall mean the occurrence or existence of
any event or condition described in Section 8.1 hereof.
1.4 "Financing Agreements" shall mean, collectively, this
Agreement and any other agreement, document or instrument now or at any time
hereafter executed and/or delivered by Borrower or any Obligor in connection
with this Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.5 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which
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are applicable to the circumstances as of the date of determination, except
that, for purposes of Sections 7.13 and 7.14 hereof, GAAP shall be determined
on the basis of such principles in effect on the date hereof and consistent
with those used in the preparation of the audited financial statements
delivered to Lender prior to the date hereof.
1.6 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired raw materials, work in process, finished goods
and all other inventory of whatsoever kind or nature, wherever located.
1.7 "Information Certificate" shall mean the Information
Certificate of Borrower constituting Exhibit A hereto containing material
information with respect to Borrower, its business and assets provided by or on
behalf of Borrower to Lender in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.8 "Obligations" shall mean the Term Loan and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by Borrower to Lender and/or its affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to Borrower under
the United States Bankruptcy Code or any similar statute (including, without
limitation, the payment of interest and other amounts which would accrue and
become due but for the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by
Lender.
1.9 "Obligor" shall mean any guarantor, endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the
owner of any property which is security for the Obligations, other than
Borrower.
1.10 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
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1.11 "Prime Rate" shall mean the rate from time to time publicly
announced by Philadelphia National Bank, incorporated as CoreStates Bank, N.A.,
or its successors and assigns, at its office in Philadelphia, Pennsylvania, as
its prime rate, whether or not such announced rate is the best rate available
at such bank.
1.12 "Records" shall mean all of Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage medium and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of
Borrower with respect to the foregoing maintained with or by any other person).
1.13 "Term Loan" is defined in Section 2.1 hereof.
1.14 "Value" shall mean, as determined by Lender in good faith,
with respect to Inventory, the lower of (a) cost computed on a first-in-
first-out basis in accordance with GAAP or (b) market value.
SECTION 2. CREDIT FACILITIES
2.1 Term Loan. Subject to, and upon the terms and conditions
contained herein, Lender agrees to make a loan (the "Term Loan") to Borrower in
the principal amount of $20,000,000.
2.2 Scheduled Principal Payments. Except as provided in Sections
2.3 and 8.2(b) hereof, the principal amount of the Term Loan shall be due and
payable in 35 equal monthly payments of $277,777 due on February 1, 1994 and on
the first day of each month thereafter and a final payment of the remaining
principal balance due on December 31, 1996.
2.3 Mandatory Prepayment Upon Termination of Revolver. The entire
principal balance of the Term Loan then outstanding shall be due and payable on
the date that the Revolving Loan Agreement is terminated by Borrower pursuant
to Section 16 of Rider No. 1.
2.4 Interest.
(a) Borrower shall pay to Lender interest on the
outstanding principal amount of the Obligations at the rate of one percent (1%)
per annum in excess of the Prime Rate, except that Borrower shall pay to Lender
interest, at Lender's option, without notice, at the Default Rate on the
Obligations for the period on and after (i) the date that is 120 days after the
date
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of termination or non-renewal hereof, or (ii) the date of the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, and for so long as such Event of Default or
other event is continuing as determined by Lender and until such time as all
obligations are indefeasibly paid in full (notwithstanding entry of any
judgment against Borrower). All interest accruing hereunder on and after the
date of any Event of Default or termination or non-renewal hereof shall be
payable on demand.
(b) Accrued interest shall be due and payable on each date
that principal is due and payable under Sections 2.2, 2.3 or 8.2(b) hereof.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate shall increase or decrease by
an amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based
on the Prime Rate in effect on the last day of the month in which any such
change occurs. In no event shall charges constituting interest payable by
Borrower to Lender exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any part or provision of this Agreement is
in contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
2.5 Closing Fee. Borrower shall pay to Lender as a closing fee the
amount of $200,000, which shall be fully earned as of and payable on the date
hereof.
2.6 Loan Account Charges. Lender shall have the right, at its
option, to charge all principal, interest, fees and all other Obligations and
other amounts payable by Borrower hereunder to Borrower's loan account referred
to in Section 2 of the Accounts Financing Agreement
2.7 Payments. Borrower shall make all payments to Lender on the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind. If
after receipt of any payment of, or proceeds applied to the payment of, any of
the Obligations, Lender is required to surrender or return such payment to any
Person for any reason, then the Obligations intended to be satisfied by such
payment shall be reinstated and continue and this Agreement shall continue in
full force as if such payment had not been received by Lender. Borrower shall
be liable to pay to Lender, and does indemnify and hold Lender harmless for the
amount of any payments surrendered or returned. This Section 2.7 shall remain
effective notwithstanding any contrary action which may be taken by Lender in
reliance upon
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such payment. This Section 2.7 shall survive the termination or non-renewal of
this Agreement.
2.8 Authorization to Make Loan. Lender is authorized to make the
Term Loan based upon telephonic or other instructions received from anyone
purporting to be an officer of Borrower or other authorized person. The Term
Loan shall be conclusively presumed to have been made to, and at the request of
and for the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrower or in accordance with the terms and conditions of this Agreement.
2.9 Use of Proceeds. Borrower shall use the proceeds of the Term
Loan only for: (a) payments to each of the persons listed in the disbursement
direction letter furnished by Borrower to Lender on or about the date hereof,
including all payments necessary to replace and refinance the ITT Loan
Agreement (as defined in the Subordination Agreement); (b) costs, expenses and
fees in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements; and (c) working capital
purposes.
SECTION 3. CONDITIONS PRECEDENT. Each of the following is a condition
precedent to Lender making the Term Loan:
3.1 Termination of Existing Loans. Lender shall have received, in
form and substance satisfactory to Lender, all releases, terminations and other
documents as Lender may request to evidence and effectuate the termination by
the existing lender or lenders to Borrower of their respective financing
arrangements with Borrower and the termination and release by it or them, as
the case may be, of any interest in and to any assets and properties of
Borrower or any Obligor, duly authorized, executed and delivered by it or each
of them, including, but not limited to, UCC termination statements for all UCC
financing statements previously filed by it or any of them, as secured party
and Borrower or any Obligor, as debtor.
3.2 Security Interests. Lender shall have received evidence, in
form and substance satisfactory to Lender, that Lender has valid perfected and
first priority security interests in and liens upon the Collateral and any
other property which is intended to be security for the Obligations, subject
only to the security interests and liens permitted under Section 7.8 hereof.
3.3 Corporate Action. All requisite corporate action and
proceedings in connection with the transactions contemplated by this Agreement
shall be satisfactory in form and substance to Lender, and Lender shall have
received all information and copies of all documents, including, without
limitation, records of
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requisite corporate action and proceedings which Lender may have requested in
connection therewith, such documents where requested by Lender or its counsel
to be certified by appropriate corporate officers or governmental authorities.
3.4 Required Consents. Lender shall have received, in form and
substance satisfactory to Lender, all consents, waivers, acknowledgments and
other agreements from third persons which Lender may deem necessary or
desirable in order to permit, protect and perfect its security interests in and
liens upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without limitation,
acknowledgments by lessors, mortgagees and warehousemen of Lender's security
interests in the Collateral, waivers by such persons of any security interests,
liens or other claims by such persons to the Collateral and agreements
permitting Lender access to, and the right to remain on, the premises to
exercise its rights and remedies and otherwise deal with the Collateral.
3.5 Evidence of Insurance. Lender shall have received evidence of
insurance and loss payee endorsements required hereunder and under the other
Financing Agreements, in form and substance satisfactory to Lender, and
certificates of insurance policies and/or endorsements naming Lender as loss
payee.
3.6 Opinions of Counsel. Lender shall have received, in form and
substance satisfactory to Lender, such opinion letters of counsel to Borrower
with respect to the Financing Agreements and such other matters as Lender may
request.
3.7 Execution and Delivery of Documents. The other Financing
Agreements and all instruments and documents hereunder and thereunder shall
have been duly executed and delivered to Lender, in form and substance
satisfactory to Lender.
3.8 Representations and Warranties. All representations and
warranties contained herein and in the other Financing Agreements shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the
making of the Term Loan.
3.9 No Defaults. No Event of Default shall have occurred and no
event shall have occurred or condition be existing which, with notice or
passage of time or both, would constitute an Event of Default.
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SECTION 4. ACKNOWLEDGMENT OF SECURITY INTEREST
Borrower acknowledges that (i) the Obligations are included within the
term "Obligations" as such term is used in the Revolving Loan Agreement and
(ii) the Obligations are therefore secured by the liens and security interests
in the Collateral granted in the Revolving Loan Agreement and the other
collateral documents related thereto.
SECTION 5. COLLATERAL COVENANTS
5.1 Inventory Covenants. (a) Borrower shall not remove any
Inventory from the locations set forth herein, without the prior written
consent of Lender, except for sales of Inventory in the ordinary course of
Borrower's business and except to move Inventory directly from one location set
forth herein to another such location; (b) upon Lender's request, Borrower
shall, at its expense, no more than once in any twelve (12) month period, but
at any time or times as Lender may request on or after an Event of Default,
deliver or cause to be delivered to Lender written reports or appraisals as to
the Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender or upon which Lender is
expressly permitted to rely; (c) Borrower shall produce, use, store and
maintain the Inventory, with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (d) Borrower assumes all responsibility and liability arising from
or relating to the production, use, sale or other disposition of the Inventory;
(e) Borrower shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate Borrower to
repurchase such Inventory; (f) Borrower shall keep the Inventory in good and
marketable condition; and (g) Borrower shall not, without prior written notice
to Lender, acquire or accept any Inventory on consignment or approval.
5.2 Equipment Covenants. Borrower shall, at its expense, at any
time or times as Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals as to the
Equipment in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender; (a) Borrower shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (b) Borrower shall use the Equipment, with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with all applicable laws; (c) the Equipment is and shall be used in
Borrower's business and not for personal, family, household or farming use;
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(d) Borrower shall not remove any Equipment from the locations set forth
herein, except to the extent necessary to have any Equipment repaired or
maintained in the ordinary course of the business of Borrower or to move
Equipment directly from one location set forth herein to another such location
and except for the movement of motor vehicles used by or for the benefit of
Borrower in the ordinary course of business; (e) the Equipment is now and shall
remain personal property and Borrower shall not permit any of the Equipment to
be or become a part of or affixed to real property; and (f) Borrower assumes
all responsibility and liability arising from the use of the Equipment.
5.3 Power of Attorney. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or event which with notice or passage
of time or both would constitute an Event of Default exists (i) demand payment
of Accounts; (ii) enforce payment of Accounts by legal proceedings or
otherwise; (iii) exercise all of Borrower's rights and remedies to collect any
Account or other Collateral; (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Lender deems advisable; (v)
settle, adjust, compromise, extend or renew an Account; (vi) discharge and
release any Account; (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor;
(viii) notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender, and open and dispose of all
mail addressed to Borrower; and (ix) do all acts and things which are
necessary, in Lender's determination, to fulfill Borrower's obligations under
this Agreement and (b) at any time (i) take control in any manner of any item
of payment of proceeds thereof; (ii) have access to any lockbox or postal box
into which Borrower's mail is deposited; (iii) endorse Borrower's name upon any
items of payment or proceeds thereof and deposit the same in Lender's account
for application to the Obligations; (iv) endorse Borrower's name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Account or any goods pertaining thereto or any other
Collateral; and (v) sign Borrower's name on any verification of Accounts and
notices thereof to account debtors and (vi) execute in Borrower's name and file
any UCC financing statements or amendments thereto. Borrower hereby releases
Lender and its officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Lender's own gross
negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
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5.4 Right to Cure. Lender may, at its option, (a) cure any
default by Borrower under any agreement with a third party or pay or bond on
appeal any judgment entered against Borrower, (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure, maintain, enforce and collect the Collateral and the rights of
Lender with respect thereto. All amounts so expended shall constitute
Obligations and shall be repayable by Borrower on demand. Lender shall be under
no obligation to effect such cure, payment or bonding and shall not, by doing
so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section 5.4 shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
5.5 Access to Premises. From time to time as requested by Lender,
at the cost and expense of Borrower, (a) Lender or its designee shall have
complete access to all of Borrower's premises during normal business hours and
after notice to Borrower, or at any time and without notice to Borrower if an
Event of Default exists, for the purposes of inspecting, verifying and auditing
the Collateral and all of Borrower's books and records, including, without
limitation, the Records, and (b) Borrower shall promptly furnish to Lender such
copies of such books and records or extracts therefrom as Lender may request,
and (c) Lender or its designee may use during normal business hours such of
Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists for the
collection of Accounts and realization of other Collateral.
SECTION 6. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a condition to the making of the Term Loan:
6.1 Corporate Existence, Power and Authority; Subsidiaries.
Borrower is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly qualified as a foreign corporation and
in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on Borrower's financial
condition, results of operation or business or the rights of Lender in or to
any of the Collateral.
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The execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within Borrower's corporate powers, have been duly authorized and are not in
contravention of law or the terms of Borrower's certificate of incorporation,
by-laws, or other organizational documentation, or any indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or its property
are bound. This Agreement and the other Financing Agreements constitute legal,
valid and binding obligations of Borrower enforceable in accordance with their
respective terms. Borrower does not have any subsidiaries except as set forth
on the Information Certificate.
6.2 Financial Statements; No Material Adverse Change. All
financial statements relating to Borrower which have been or may hereafter be
delivered by Borrower to Lender are prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Borrower as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Borrower to Lender prior to the date
of this Agreement or in the Information Certificate, there has been no material
adverse change in the assets, liabilities, properties and condition, financial
or otherwise, of Borrower, since the date of the most recent audited financial
statements furnished by Borrower to Lender prior to the date of this Agreement.
6.3 Chief Executive Office; Collateral Locations. The chief
executive office of Borrower and Borrower's Records concerning Accounts are
located only at the address set forth in the Information Certificate and its
only other places of business and the only other locations of Collateral, if
any, are the addresses set forth in the Information Certificate, subject to the
right of Borrower to establish new locations in accordance with Section 7.2
hereof. The Information Certificate correctly identifies any of such locations
which are not owned by Borrower and sets forth the owners and/or operators
thereof, and to the best of Borrower's knowledge, the holders of any mortgages
on such locations.
6.4 Priority of Liens; Title to Properties. The security interests
and liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens permitted under
Section 7.8 hereof. Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or changes of any kind, except those granted to Lender
and such others are specifically permitted under Section 7.8 hereof.
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6.5 Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to
be filed by it (without requests for extension except as previously disclosed
in writing to Lender). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Borrower has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have been set
aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
6.6 Litigation. Except as described in Section 10(f) of Rider No.
1 and the Information Certificate, there are no judgments outstanding against
Borrower, there is no present investigation by any governmental agency pending,
or to the best of Borrower's knowledge threatened, against or affecting
Borrower, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined with
respect to it would result in any material adverse change in the assets,
business or prospects of Borrower or which would impair the ability of Borrower
to perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Lender to enforce the Obligations or
realize upon the Collateral.
6.7 Compliance with Other Agreements and Applicable Laws. Borrower
is not in default under, or in violation of any of the terms of, any agreement,
contract, instrument, lease or other commitment to which it is a party or by
which it or any of its assets are bound. Borrower is in compliance in all
material respects with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
6.8 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is and will be true and correct in all material
respects on the date as of which such information is dated or certified and
does not omit and will not omit any material fact necessary in order to make
such information not misleading. No event or circumstance has occurred which
has had
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or could reasonably be expected to have a material adverse affect on the
business, assets or prospects of Borrower, which has not been fully and
accurately disclosed to Lender in writing.
6.9 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The representations and
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which Borrower shall now or hereafter give, or
cause to be given, to Lender.
6.10 Revolving Loan Agreement Representations. Except as disclosed
in the Information Certificate, each of the representations and warranties in
Sections 10(i) , 10(k) and 10(m) of Rider No. 1 are true and correct as of
the date hereof.
SECTION 7. AFFIRMATIVE AND NEGATIVE COVENANTS
7.1 Maintenance of Existence. Borrower shall at all times
preserve, renew and keep in full, force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and
effect all permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Borrower shall give Lender thirty (30)
days prior written notice of any proposed change in its corporate name, which
notice shall set forth the new name and Borrower shall deliver to Lender a copy
of the amendment to the Certificate of Incorporation of Borrower providing for
the name change certified by the Secretary of State of the jurisdiction of
incorporation of Borrower as soon as it is available.
7.2 New Collateral Locations. Borrower may open any new location
within the continental United States provided Borrower (a) gives Lender thirty
(30) days prior written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and delivered, to
Lender such agreements, documents, and instruments as Lender may deem
reasonably necessary or desirable to protect its interests in the Collateral at
such location, including, without limitation, UCC financing statements.
7.3 Compliance with Laws, Regulations, Etc. Borrower shall, at all
times, comply in all material respects with all laws rules, regulations,
licenses, permits, approvals and orders applicable to it and duly observe all
requirements, of any Federal, State or local governmental authority.
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7.4 Payment of Taxes and Claims. Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon
or against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Borrower and with respect to which adequate reserves
have been set aside on its books.
7.5 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to
form, amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance, and,
if Borrower fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrower. All policies shall provide for at
least thirty (30) days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for Borrower in
obtaining, and at any time an Event of Default exists, adjusting, settling,
amending and canceling such insurance. Borrower shall cause Lender to be named
as a loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies
in form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Borrower or any of its affiliates. At
its option, Lender may apply any insurance proceeds received by Lender at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
7.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which
full and true entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower in accordance with GAAP
and Borrower shall furnish or cause to be furnished to Lender: (i) within
forty-five (45) days after the end of each fiscal month, monthly unaudited
financial statements (including balance sheets, statements of income and loss
and statements of shareholders' equity) , all in reasonable detail, fairly
presenting the financial position and the results of Borrower's operations as
of the end of such fiscal month; (ii)
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within ninety (90) days after the end of each fiscal year, audited financial
statements of Borrower (including balance sheets, statements of income and
loss, statements of cash flow and statements of shareholders' equity) , and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of Borrower's operations as of the end of
such fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for
the Obligations or which would result in any material adverse change in
Borrower's business, properties, assets, goodwill or condition, financial or
otherwise, and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrower, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Borrower's expense, copies of the financial statements of Borrower and any
reports or management letters prepared by such accountants or auditors on
behalf of Borrower and to disclose to Lender such information as they may have
regarding the business of Borrower. Any documents, schedules, invoices or other
papers delivered to Lender may be destroyed or otherwise disposed of by Lender
one (1) year after the same are delivered to Lender, except as otherwise
designated by Borrower to Lender in writing.
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7.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall comply with the provisions of Sections 11(b) and 11(c) of Rider
No. 1.
7.8 Encumbrances. Borrower shall not create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except as permitted under
Section 11(b) of Rider No. 1 and disclosed in the Information Certificate.
7.9 Indebtedness. Borrower shall not incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any obligations
or indebtedness, except (a) the Obligations; (b) trade obligations and normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which Borrower is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to
Borrower, and with respect to which adequate reserves have been set aside on
its books; (c) purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement; and (d) obligations or indebtedness
set forth on the Information Certificate.
7.10 Loans, Investments, Guarantees, Etc. Borrower shall not,
directly or indirectly, make any loans or advance money or property to any
person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the stock or indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of the
foregoing, except: (a) the endorsement of instruments for collection or deposit
in the ordinary course of business; (b) investments in short-term direct
obligations of the United States Government; (c) investments in negotiable
certificates of deposit issued by any bank satisfactory to Lender, payable to
the order of Borrower or to bearer and delivered to Lender; and (d) investments
in commercial paper rated A1 by Standard & Poor's Rating Group or P1 by Moody's
Investors Service, Inc.; provided, that, as to any of the foregoing, unless
waived in writing by Lender, Borrower shall take such actions as are deemed
necessary by Lender to perfect the security interest of Lender in such
investments.
7.11 Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of any class
of capital stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease,
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purchase or otherwise acquire any shares of any class of capital stock (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, except as permitted under the
Revolving Loan Agreement, as amended.
7.12 Transactions with Affiliates. Borrower shall not enter into
any transaction for the purchase, sale or exchange of property or the rendering
of any service to or by any affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair
and reasonable terms no less favorable to Borrower than Borrower would obtain
in a comparable arm's length transaction with an unaffiliated person.
7.13 Working Capital. Borrower shall, at all times, maintain
Working Capital as required by the Revolving Loan Agreement.
7.14 Tangible Net Worth. Borrower shall, at all times, maintain
Tangible Net Worth as required by the Revolving Loan Agreement.
7.15 Costs and Expenses. Borrower shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the collateral, this Agreement, the other Financing Agreements and
all other documents related hereto or thereto, including any amendments,
supplements or consents which may hereafter be contemplated (whether or not
executed) or entered into in respect hereof and thereof, including, but not
limited to: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) all title insurance and other insurance premiums, appraisal fees and
search fees; (c) costs and expenses of preserving and protecting the
Collateral; (d) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender arising
out of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters);
and (e) the fees and disbursements of counsel (including legal assistants) to
Lender in connection with any of the foregoing.
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7.16 Further Assurances. At the request of Lender at any time and
from time to time, Borrower shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary
or proper to evidence, perfect, maintain and enforce the security interests and
the priority thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time request a certificate
from an officer of Borrower remaking, as of the date of such certificate, the
representations and warranties set forth in this Agreement. Where permitted by
law, Borrower hereby authorizes Lender to execute and file one or more UCC
financing statements signed only by Lender.
7.17 Benefit Plans. The covenant of Borrower set forth in Section
11(a) of Rider No. 1 incorporated herein by this reference as if set forth
herein in full.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES
8.1 Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an "Event
of Default", and collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations
or fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact
made by Borrower to Lender in this Agreement, the other Financing Agreements or
any other agreement, schedule, confirmatory assignment or otherwise shall when
made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform
any of the terms, covenants, conditions or provisions of any guarantee,
endorsement or other agreement of such party in favor of Lender; or
(d) a Default (as defined in the Revolving Loan
Agreement).
8.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and remedies provided
in this Agreement, the other Financing Agreements, the Uniform Commercial Code
and other applicable law,
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all of which rights and remedies may be exercised without notice to or consent
by Borrower, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements, the
Uniform Commercial Code or other applicable law, are cumulative, not exclusive
and enforceable, in Lender's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Financing Agreements. Lender may, at any time or times, proceed
directly against Borrower to collect the Obligations without prior recourse to
the Collateral.
(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation (i) accelerate the payment of all Obligations
and demand immediate payment thereof to Lender (provided, that, upon the
occurrence of any Event of Default described in Sections 8.1(g) and 8.1(h), all
Obligations shall automatically become immediately due and payable), (ii) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take
possession of the Collateral or complete processing, manufacturing and repair
of all or any portion of the Collateral, (iii) require Borrower, at Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral (including,
without limitation, entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of Lender or
elsewhere) at such prices or terms as Lender may deem reasonable, for cash,
upon credit or for future delivery, with Lender having the right to purchase
the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower, which
right or equity of redemption is hereby expressly waived and released by
Borrower. If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Lender. If notice of
disposition of Collateral is required by law, five (5) days prior notice by
Lender to Borrower designating the time and place of any public sale or the
time after which any private sale or other intended disposition of Collateral
is to be made, shall be deemed to be reasonable notice
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thereof and Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower waives the posting of any bond which might
otherwise be required.
(c) Lender may apply the cash proceeds of Collateral
actually received by Lender from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in
part and in such order as Lender may elect, whether or not then due. Borrower
shall remain liable to Lender for the payment of any deficiency with interest
at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses.
SECTION 9. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
9.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws (as opposed to the conflicts
of law provisions) of the State of Illinois.
(b) Borrower and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Circuit Court of Cook County, Illinois
and the United States District Court for the Northern District of Illinois,
Eastern Division and waive any objection based on venue or forum non conveniens
with respect to any action instituted therein, and agree that any dispute
arising out of the relationship between any such persons or the conduct of any
such persons in connection with this Agreement or otherwise shall be heard only
in the courts described above (except that Lender shall have the right to bring
any action or proceeding against Borrower or its property in the courts of any
other jurisdiction which Lender deems necessary or appropriate in order to
realize on the Collateral).
(c) Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made
by registered mail (return receipt requested) directed to its address set forth
on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option, by service upon CT Corporation, whom Borrower
irrevocably appoints as its agent for the purpose of accepting service of
process within the State of Illinois. In
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addition, Lender agrees promptly to forward by registered mail any process so
served upon such agent to Borrower at its address set forth on the signature
pages hereof. Borrower hereby consents to service of process as aforesaid.
Within thirty (30) days after such service, Borrower shall appear in answer to
such process, failing which Borrower shall be deemed in default and judgment
may be entered by Lender against Borrower for the amount of the claim and other
relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
OR EITHER OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWER AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Nothing in this Section 9.1 shall affect the rights
of Lender to serve legal process in any other manner permitted by law or affect
the rights of Lender to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction.
(f) Lender shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and nonappealable judgment or court order binding on Lender, that the
losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.
9.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on Borrower which
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Lender may elect to give shall entitle Borrower to any other or further notice
or demand in the same, similar or other circumstances.
9.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally or by
course of conduct, but only by a written agreement signed by an authorized
officer of Lender. Lender shall not, by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its rights, powers
and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
9.4 Waiver of Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
9.5 Indemnification. Borrower shall indemnify, defend and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, deficiencies,
judgments, penalties or expenses imposed on, incurred by or asserted against
any of them in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission to
act, event or transaction related or attendant thereto, including, without
limitation, amounts paid in settlement, court costs, and the fees and expenses
of counsel. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrower shall pay the maximum portion which it is
permitted to pay under applicable law to Lender in satisfaction of indemnified
matters under this Section 9.5. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement. All of the
foregoing costs and expenses shall be part of the Obligations and secured by
the Collateral.
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SECTION 10. GENERAL PROVISIONS
10.1 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Lender at its address set forth below and to
Borrower at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
10.2 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
10.3 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and
inure to the benefit of and be enforceable by Lender, Borrower and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender. Lender may, after notice to Borrower, assign its rights and delegate
its obligations under this Agreement and the other Financing Agreements and
further may assign, or sell participations in, all or any part of the Term Loan
or any other interest herein to another financial institution or other person,
in which event, the assignee or participant shall have, to the extent of such
assignment or participation, the same rights and benefits as it would have if
it were the Lender hereunder, except as otherwise provided by the terms of such
assignment or participation.
10.4 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and
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contracts concerning the subject matter hereof, whether oral or written.
IN WITNESS WHEREOF, Borrower has caused these presents to be duly
executed and delivered as of the day and year first above written.
BORROWER
KEYSTONE CONSOLIDATED
INDUSTRIES, INC.
By: /s/ HAROLD M. CURDY
Title: VICE PRESIDENT - FINANCE
AND TREASURER
CHIEF EXECUTIVE OFFICE:
5430 LBJ FREEWAY, SUITE 1740
DALLAS, TEXAS 75240
Accepted and Agreed:
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By: /s/ GEORGE KALESNIK
Title: Senior Vice President
Address:
100 South Wacker Drive, Suite 1940
Chicago, Illinois 60606
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EXHIBIT A
INFORMATION CERTIFICATE
TO
TERM LOAN AND SECURITY AGREEMENT
BETWEEN
CONGRESS FINANCIAL CORPORATION (CENTRAL)
AND
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
1. Subsidiaries (Section 6.1 of the Agreement):
Wire Products Company
Sherman Wire of Caldwell, Inc.
2. Material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrower, since the date of the
most recent audited financial statements furnished by Borrower to
Lender (Section 6.2 of the Agreement):
The Company is changing the discount rate, effective the end
of fiscal 1993, used to value its pension and other post
retirement benefit obligations from 9.5% to 7.5%. These
changes will result in increases of approximately $28 million
in accrued non-current pension costs, $11 million in
non-current deferred taxes, and $17 million in stockholders'
deficit.
3. Locations of Borrowers businesses and Collateral (Section 6.3
of the Agreement):
Keystone Consolidated Industries, Inc.
5430 LBJ Freeway, Suite 1740
Dallas, Texas 75240
Keystone Steel & Wire
7000 SW Adams Street
Peoria, Illinois 61641
Sherman Wire
Hwy 56W and Gibbons Road
Sherman, Texas 75090
Sherman Wire of Caldwell, Inc.
Nagel Drive
P 0 Box 879
Caldwell, Texas 77836
Wire Products Company
111 N. Douglas Street
Hortonville, Wisconsin 54944
Page 1 of 3
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EXHIBIT A
Keystone Fasteners
1407 South Powell
Springdale, Arkansas 72764
KeyWest Wire
250 E. Virginia Street
San Jose, California 95112
4. Pending actions, suits, proceedings or claims against Borrower
(Section 6.6 of the Agreement):
See Schedule A attached.
5. Licenses, patents, and trademarks currently owned and used in the
conduct of Borrowers business (Section 6.10 of the Agreement):
Licenses: None
Patents: None
Trademarks: See Schedule B attached.
6. Contingent liabilities in connection with a release of any hazardous
or toxic substance into the atmosphere (Section 6.10 of the
Agreement):
651 Walsh Avenue, Santa Clara, California (formerly owned by
Keystone Consolidated Industries, Inc.)
Keystone Steel & Wire, Peoria, Illinois (ditch cleanup)
Byron, Illinois, superfund site
American Chemical Services, Griffith, Indiana, superfund site
Rosen Superfund, Cortland, New York, superfund site
Conservation Chemical, Gary, Indiana, superfund site
Interstate Pollution/Roto Rooter, Rockford, Illinois,
superfund site
Brockman No. I Landfill
Pagel's Pit, Rockford, Illinois
USS Lead Refinery, Inc., East Chicago, Illinois
Page 2 of 3
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EXHIBIT A
7. Pending or threatened controversies with employees other than employee
grievances arising in the ordinary course of business which are not in
the aggregate, material to the continued financial success and well
being of Borrower (Section 6.10 of the Agreement):
Donna Anderson vs. KCI - Case #C-93-20440 JW
Roy Griffith vs. KCI - Case #93-1504
8. Encumbrances and indebtedness (Sections 7.8 and 7.9 of the Agreement):
None except:
Security in Wire Products assets
Urban Development $1,759,000
Series 1976 Pollution Control Revenue Bonds 1,500,000
Community Development Assistance Program 324,000
Misc. debt on equipment leases 208,000
State of Illinois 67,000
North Atlantic Realty Co. 67,000
----------
$3,925,000
==========
Amounts represent indebtedness as of September 30, 1993.
Page 3 of 3
28
SCHEDULE A - INFORMATION CERTIFICATE
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
CURRENT LITIGATION
DECEMBER 30, 1993
29
CORPORATE LITIGATION
PAGE
1 Keystone Consolidated Industries, Inc. vs. Commissioner of Internal
Revenue
2 William Murphy and ISWA etal v Keystone Steel & Wire
3 Appeal of NLRB Decision on Union 30 and Out Pension Option, Court of
Appeals for the D.C. District No. 93-1357
ENVIRONMENTAL LITIGATION AND CLAIMS
4 Case No. VW85-R-36 - US-EPA v. Keystone
5 Brockman No. 1 Landfill, EPA No. 7412. National Lock Hardware Division
6 Byron Salvage Yard, Byron, Illinois
7-8 Rosen Site, Cortland, New York
9 Pagel's Pit, Rockford, Illinois
10 Interstate Pollution Control/Roto Rooter Site, Rockford, Illinois
11 American Chemical Services, Inc., Griffin, Indiana
12 USS Lead Refinery, Inc., East Chicago, Illinois
INSURED MATTERS
13 Robert Showalter vs. United Engineering, Inc. vs. KCI, Circuit
Court, State of Illinois #90 L 553
14 Donna Anderson vs KeyWest Wire
15 Jack Frost vs Keystone Consolidated Industries, Inc., Case
No. 93 L 00176, Peoria County Circuit Court
16 Roy Griffith vs Keystone Steel & Wire., Case No. 93 1504, District
Court, Central District of Illinois
30
Case No. 4657-89 - Keystone Consolidated Industries, Inc. vs. Commissioner
of Internal Revenue
A. Nature of Case: On March 8, 1983, the Company satisfied a portion of
its funding obligation to the Keystone Master Pension Trust ("KMPT")
through the contribution of certain income producing property with an
appraised value of $9.7 million. On March 13, 1984, the Company
contributed additional property to the KMPT valued at $5.3 million.
The KMPT subsequently sold all of the real property contributed for
approximately $15.5 million. On December 14, 1988, the IRS issued a
Notice of Deficiency (the "Notice") proposing the imposition of excise
taxes plus accrued interest against the Company under the "prohibited
transaction" provisions of the Internal Revenue Code (the "Code")
allegedly due with respect to these contributions. It is the position
of the IRS that these contributions were prohibited sales transactions
between the Company and the KMPT.
B. Amount Involved: The Notice proposes to assess (i) first tier excise
taxes in the amount of $482,773 with respect to each of the Company's
taxable years ended June 30, 1983, 1985, 1986, 1987, 1988 and each
fiscal year thereafter until the deficiency is corrected, and $749,600
with respect to the Company's taxable year ended June 30, 1984 (ii)
second tier excise taxes in the amount of $9.7 million, and (iii)
interest on the first tier excise taxes.
C. Status: March 3, 1989, the Company filed a petition in the United
States Tax Court contesting all of the excise taxes proposed in the
Notice, taking the position that the IRS theory is without basis under
the Code and that no prohibited transactions occurred. Keystone's
Motion for Summary Judgment was granted on December 17, 1990. On
January 17, 1992 the Fifth Circuit Court of Appeals affirmed the Tax
Court decision in this matter. On August 25, 1993 the Supreme Court
of the United States held that the contribution of property, other
than cash, is a prohibited transaction and remanded the case to the
Tax Court to determine the tax due.
D. Fees to Date: $644,493
E. Handling Attorney: Ray Wexler 312/861-2018
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois
F. Company Contact: Ralph P. End
G. Decision Maker: Glenn R. Simmons
H. File Number: 503-AO23
- 1 -
31
Case No. 93-1247 - William Murphy and ISWA etal v Keystone Steel & Wire
A. Nature of Case: Plaintiffs filed this action on July 2, 1993 in U.S.
District Court seeking an injunction directing Keystone to comply with
the Collective Bargaining Agreement and continue to provide lifetime
health insurance benefits required by the medical benefits plan and
applicable collective bargaining agreements and prohibiting Keystone
Steel & Wire from terminating the medical benefits plan or decreasing
benefits provided to retirees of Keystone Steel & Wire.
B. Amount Involved: Unknown
C. Status: Motion for Summary Judgment was filed on September 28, 1993
based on the legends in each plan document and summary plan document
that the Company reserves the right to amend or terminate the plan(s)
at any time.
D. Fees to Date: None
E. Handling Attorney: Steve Gay
Husch & Eppenberger
101 S.W. Adams
Peoria, Illinois 61602
F. Company Contact: Ralph End
G. Decision Maker: Bob Singer
H. File Number: 500 1003
- 2 -
32
Appeal of NLRB Decision on Union 30 and Out Pension Option, Court of Appeals
for the D.C. District No. 93-1357
A. Nature of case: Beginning in 1982, Keystone Steel & Wire erroneously
permitted those who retired from a union position under the 30-
and-out provision to receive pension benefits immediately from both
the Union Pension Plan and the Management Pension Plan when they did
not satisfy the conditions of the Management Pension Plan. The NLRB
maintains that KSW violated the NLRA by unilaterally implementing
changes to the Management Pension Plan adversely affecting bargaining
unit employees.
B. Status: On February 18, 1992, an Administrative Law Judge determined
that KSW had no obligation to bargain with the union before making
unilateral changes in the Management Pension Plan. On appeal, the
NLRB reversed the Administrative Law Judge. On May 25, 1993, KSW
filed an appeal to the US Court of Appeals for the District of
Columbia Circuit.
C. Fees to date:
D. Handling Attorney: Mark G. Arnold 314-421-4800
Stuart Cohen 309-637-4900
Husch & Eppenberger
100 North Broadway, Suite 1000
St. Louis, Mo 63102-2706
E. Company Contact: Ralph End
F. Decision Maker: Glenn Simmons
G. File Number: 502-1000
- 3 -
33
Case No. VW85-R-36 US-EPA v. Keystone Consolidated Industries, Inc.
A. Nature of Case: In July 1986, the United States filed suit in the
federal court in Peoria, Illinois seeking injunctive relief and
damages for alleged violation of the Resource Conservation and
Recovery Act ("RCRA") occurring at the Company's Bartonville
facilities. An evidentiary hearing was held during July 1986 on the
government's motion for a preliminary injunction seeking, in part,
immediate cessation of discharges of treated spent pickle liquor into
on-site surface impoundments. In an oral ruling from the bench on
July 28, 1986, the court found the government had made a sufficient
showing of RCRA violations requiring the cessation of discharges into
the impoundments by October 1, 1986.
B. Amount Involved: Unknown.
C. Status: Keystone stopped the discharge of waste pickle liquor prior to
October 1986 and under a consent order paid a fine of $280,000 and
agreed to the closure of the ditches receiving the waste pickle
liquor. During testing necessary to develop the closure plan,
Keystone discovered the ground water contaminated with TCE.
Additional testing was conducted to develop a closure plan to
eliminate the waste pickle liquor sludge which was filed on June 15,
1992 and approved by the IEPA on June 30, 1992 subject to certain
conditions and modifications. On July 2, 1993, the parties entered a
Consent Order requiring Keystone to take certain remedial action
specified in the approved Closure Plan and deposit in a trust certain
funds to assure compliance with the Closure Plan. The trust was
initially funded with a deposit of $500,000 on July 1, 1992 and the
Consent Order requires Keystone to make 10 additional quarterly
deposits of $175,000 each, then 10 additional quarterly deposits of
$75,000 beginning January 1, 1995 through April 1, 1997. Future
additional contributions will depend on the then estimated cost of
remedial action and the accumulated balance in the trust fund.
D. Fees to Date: $297,850
E. Handling Attorney: Andrew Running, 312-861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
F. Company Contact: Les Phillips, Ralph End
G. Company Decision Maker: Glenn R. Simmons
H. File Number: 503 A009
- 4 -
34
Brockman No. 1 Landfill. Pending before Illinois Environmental Protection
Agency, EPA. No. 7412
A. Nature of claim: On April 21, 1987, Keystone was notified by the
Illinois EPA (IEPA) that it is a potentially responsible party for the
clean up of Brockman No. 1 Landfill. IEPA records show that Brockman
No. 1 Landfill was issued IEPA permit 77-8 on January 12, 1978 to
accept 4,500 gallons per year of miscellaneous metal finishing waste
generated by the National Lock Hardware Division. IEPA claims
leachate from the landfill is polluting the Illinois River. IEPA has
designated National Lock Hardware division a potentially responsible.
B. Amount Involved: The IEPA estimates the Brockman No. 1 Landfill
contains 20,000 drums containing metal stripping and plating sludges;
cyanides; organic solvents/sludges; and 1,400,000 gallons of bulk
wastes. No estimates of the cost of cleanup are available. To date
the IEPA has incurred $749,598 in remedial action. Our permit limited
us to dispose of up to 4,500 gallons per year to the site.
C. Status: Because the low percent of waste that may have been
contributed by National Lock is negligible, Keystone has taken no
action in this matter.
D. Fees to Date: $4000
E. Handling Attorney: Andy Running (312) 861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
F. Company Contact: Ralph P. End
G. Decision Maker: Glenn R. Simmons
H. File No.: 501 A079
- 5 -
35
Byron Salvage Yard, Region IV, United States Environmental Protection Agency
("USEPA")
A. Nature of Case: On July 17, 1991, the United States filed a lawsuit
under CERCLA against National Lock and four other companies (Nalco
Chemical Company, General Motors Corporation, Interstate Pollution
Control, Co. and Commonwealth Edison Corporation) seeking recovery of
at least $3,773,881.34 in response costs incurred by the USEPA at the
Byron Salvage Yard site near Byron, Illinois.
B. Amount Involved: Unknown
C. Status: Keystone answered the complaint on September 3, 1991. On
April 23, 1992, Keystone filed a third party contribution action
against 15 companies that generated wastes sent to the Byron Site.
(Amrock Corporation, Atwood Industries, Inc., Coltec Industries, Inc.,
Ecolab, Inc., Elco Industries, Inc., Frantz Manufacturing Company,
Lawrence Brothers, Inc., Quality Metal Finishing Company, Quebecor
Printing Mount Morris, Inc., Raco Inc., RB&W Corporation, Sundstrand
Corporation, The Valspar Corporation, and Woodward Governor Company,
Inc.) Initial discovery is underway in the third party action. Wausau
has orally agreed to pay 75% of Keystone's defense costs incurred in
this matter. Wausau has not accepted nor rejected our claim for any
costs incurred in the cleanup. On July 26, 1993, the EPA produced
documents evidencing $10 million of incurred costs.
D. Fees to date: $167,550
E. Handling Attorney: Andy Running and Lisa Esayian (312) 861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois
F. Company Contact: Ralph P. End
G. Decision Maker: Glenn R. Simmons
H. File Number: 800 1002
- 6 -
36
Rosen Site, Cortland, New York, United States Environmental Protection Agency
("USEPA")
A. Nature of Case: By letter of August 21, 1987, the USEPA notified
Keystone that it is one of the entities that owned and/or operated the
Rosen Site at the time of the disposal of hazardous substances there
and, accordingly, a responsible party under CERCLA. Six other
entities were originally named potentially responsible parties "PRP",
including the two Rosen brothers who have filed bankruptcy.
B. Amount Involved: Wausau agreed to pay 55% of Keystone's legal defense
costs in this matter but has not accepted liability for the actual
cost of cleanup of this site.
C. Status: The USEPA advised Keystone that the waste sources at the
site include approximately 1,200 drums and contains, 90 tanks, 22
cylinders of compressed gases, 4 capacitors and numerous piles of
municipal and industrial debris. The site also contains PCB
contaminated soils, organic volatiles, flammable liquids and solids
and significant amounts of heavy metals. During September 1988 the
EPA issued a 106 ruling requiring the PRP'S, including Keystone, to
undertake the surface clean-up of the site. On April 4, 1989 the
US-EPA issued an order requiring Niagara Mohawk Power Corporation to
join Dallas Corporation, Monarch Machine Tool Company and Keystone in
the surface cleanup. The PRP's signed a contract with Industrial Oil
Tank Service Corp. for the surface cleanup work. Keystone's share of
the removal of the surface debris was approximately $100,000. On July
14, 1989 the USEPA issued a notice of its intent to commence a
Remedial Investigation and Feasibility Study (RI/FS) of the Rosen Site
to determine the nature and extent of hazardous substances at the site
and recover the costs of remediation from the PRP'S. This notice
identified Agway, Inc; BMC Industries, Inc.; Cooper Industries, Inc.;
Pall Trinity Micro Corp.; Pennwelt Corp.; Potter Paint Co and Smith
Corona Corp. as additional PRP's. To avoid a unilateral order to
perform an RI/FS dictated by the EPA, the four original PRP's
attempted to negotiate an acceptable consent order. On December 14,
1989, Keystone withdrew from the negotiations, but Dallas Corp.,
Monarch Machine Tool Co., and Niagara Mohawk Power Co. subsequently
signed the consent order proposed by the EPA. On February 7, 1990,
the EPA issued an Administrative Order under Section 106 requiring
Agway, Inc., Cooper Industries, Inc., Keystone Consolidated
Industries, Inc., Potter Paint Company, Inc. Harvey M. Rosen, and
Smith Corona Corporation to participate in the Remedial
Investigation/Feasibility Study covered by the Consent Orders proposed
by the EPA. Subsequently Agway, Inc. and Smith Corona persuaded the
EPA to be removed from the PRP list. The PRP's entered an agreement
with Blasland & Bouck Engineers, P.C. to conduct a Remedial
Investigation of the site at an estimated cost of $550,000.
Five participating PRP'S, including Keystone, have retained counsel to
prosecute a third party action for contribution. A complaint was
filed on June 11, 1992 against Agway, BMC, Borg-Warner, Elf Atochem
North America, Inc., Mack Trucks, Inc., Motor Transportation
Services, Inc., Pall Trinity Micro Corporation, Redding-Hunter, Inc.,
Rotelcom, Inc., Smith Corona Corporation, Sola Basic Industries,
Inc., Wilson Sporting Goods Co., Philip A. Rosen and Harvey M. Rosen.
- 7 -
37
D. Fees to Date: $768,720
E. Handling Attorney: Andy Running
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
F. Company Contact: Ralph End
G. Decision Maker: Glenn Simmons
H. File Number: 800 1013
- 8 -
38
Pagel's Pit Landfill Enforcement action by the U.S. EPA under CERCLA.
A. Nature of Case: During July 1985 the U.S. EPA notified approximately
50 firms, including National MetalCrafters, of the threatened release
or potential release of hazardous chemicals from the Pagel's Pit Site
and requested the PRP's to undertake remedial action.
B. Amount Involved: Illinois EPA estimates clean up costs between
$7,500,000 and $14,000,000.
C. Status: During March 1986, MetalCrafters and 17 other PRP's agreed to
undertake a Remedial Investigation and Feasibility Study without
admitting liability. Based on records available at the site, the
wastes contributed by MetalCrafters was minor and Keystone has paid
$14,000 to date as it's contribution to the RI/FS. Keystone
(successor to MetalCrafters) has signed a buy-out agreement between
EPA, the operator and deminimis generators. Under the buy-out
agreement, Keystone paid an additional $35,000. A consent decree has
been signed by all PRP's and was filed November 25, 1992. We are
waiting now for approval from the Justice Department.
D. Fees to Date: $36,048
E. Handling Attorney: Andy Running (312)861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
F. Company contact: Ralph P. End
G. Decision maker: Glenn R. Simmons
H. File Number: 800-1001
- 9 -
39
Interstate Pollution Control/Roto Rooter Site United States EPA enforcement
action under Super Fund Statute(CERCLA)
A. Nature of case: During 1989, the IPC site was added to the superfund
list. On June 13, 1990 MetalCrafters received a Request for
Information under Section 104(e) of CERCLA. IPC operated the site
from 1971 through 1984 as a hauler, recycler, storage facility of
industrial wastes. IPC installed an incinerator in 1971 capable of
burning 3,500 gallons of liquid wastes per week.
B. Amount involved: Unknown
C. Status: During 1991 the USEPA directed a group of 67 PRP's to take
immediate action to reduce possible immediate hazards at the site
(surface removal). Records available at the site indicate very little
waste contributed by National MetalCrafters. Subsequent information
received in January 1992 indicates National Lock is responsible for
generating up to 2.14% of the volume of wastes at the site.
D. Estimated cost of defense: On August 6, 1990, Keystone filed a claim
with Wausau Insurance Company for reimbursement of defense costs.
Wausau has orally agreed to reimburse 75% of Keystone's defense costs
incurred in this matter. Wausau has not accepted nor rejected our
claim for any costs incurred in the cleanup.
E. Fees to date: $92,337
Cleanup costs to date: $22,752
F. Handling attorney: Andy Running (312) 861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
G. Company contact: Ralph P. End
H. Decision Maker: Glenn R. Simmons
I. File Number: 800-1022
- 10 -
40
American Chemical Services, Inc. United States EPA enforcement action under
Super Fund Statute (CERCLA)
A. Nature of Case: American Chemical Services, Inc. disposed of a
variety of hazardous wastes on this site from 1955 through 1975.
MetalCrafters received a Request for Information on April 29, 1987.
Information produced to date indicates MetalCrafters contributed
approximately 0.01% of total volume of waste.
B. Amount involved: Unknown
C. Status: Because of the low contribution percentage, Keystone has
consistently rejected the invitation to participate in a consent
decree to fund a Remedial Investigation and Feasibility Study. The
efforts to negotiate a buy-out agreement among about 100 deminimis
generators and the USEPA continue.
D. Fees to date: $2,110
E. Handling attorney: Andy Running (312) 861-2412
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
F. Company contact: Ralph P. End
G. Decision Maker: Glenn R. Simmons
H. File Number: 800-1008
-11-
41
USS Lead Refinery, Inc. Site, East Chicago, Indiana - United States EPA action
under Super Fund Statute (CERCLA)
A. Nature of Case: On September 6, 1991, Keystone received a Request for
Information regarding the generation, storage, treatment or disposal
of hazardous wastes at the site from 1906 to 1985.
B. Amount Involved: Unknown
C. Status: After diligent record search, no records have been located
that indicate Keystone shipped any wastes to the site. The USEPA
forwarded a copy of a 1968 document from USS Lead Refinery whereby USS
Lead agreed to purchase from Keystone up to 50 tons of lead ashes for
recovery. The document does not indicate whether any lead ashes were
shipped to USS Lead.
D. Estimated Cost of defense: Wausau Insurance Company was notified on
October 8, 1991 of a potential claim for defense of this matter.
E. Fees to Date:
F. Handling attorney:
G. Company contact: Ralph P. End
H. Decision Maker: Glenn R. Simmons
I. File Number: 800 1039
-12-
42
Robert Showalter vs. United Engineering, Inc. vs Keystone Consolidated
Industries, Inc. Circuit Court, State of Illinois #90 L 553
A. Nature of Case: Robert Showalter died as a result of a furnace
explosion on October 26, 1989. Because Showalter was an employee and
entitled to workers compensation which precludes a direct action
against an employer, he sued United Engineering, the manufacturer of
the water cooled roof panels covering the furnace. In March 1991,
United Engineering filed a third party action against Keystone.
B. Amount Involved: Keystone is self insured for first $1 million with
excess employers' liability coverage with third party insurers
covering the next $14 million.
C. Status: A similar case, decided by the Illinois supreme court on
April 18, 1991, limits Keystone's liability to the amount that would
be provided by workers compensation. Although Keystone has incurred
the maximum expense under worker compensation, Keystone remains a
party to this litigation.
D. Fees to Date: $43,870
E. Handling Attorney: Larry Chilton (312) 454-5133
Stevenson Rusin & Friedman
10 South Riverside Plaza, Suite 1530
Chicago, Illinois 60606
F. Company Contact: Ralph P. End
C. Decision Maker: Robert W. Singer
H. File Number: 501 1007
-13-
43
Case No. C-93-20440 JW - Donna S. Anderson v. KeyWest Wire, et al. United
States District Court Northern district of California
A. Nature of Case: Donna Anderson was first hired in November 1967. In 1982
she was promoted to Inside Sales Manager and relocated from Peoria,
Illinois to Santa Clara, California. Her employment with Keystone
terminated in 1983 when KeyWest Wire was sold to PPA Industries. Keystone
acquired KeyWest Wire from PPA in May 1991 and hired Ms. Anderson in her
then current position of Manager of Marketing and Sales. Ms. Anderson was
terminated for failure to follow specific directions. Ms. Anderson claims
her termination was a result of sex discrimination.
B. Amount Involved:
C. Status: Discovery continues.
D. Fees to Date:
E. Handling Attorney: Richard S. Falcone
and Lori Farber
Littler, Mendelson, Fastiff, Tichy & Mathiason
Sixty South Market, Suite 1100
San Jose, California 95113
Phone: 408-998-4150
F. Company Contact: Ralph End
G. Decision Maker: Bob Singer
H. File Number: 501 1011
-14-
44
Jack Frost vs Keystone Consolidated Industries, Inc., Case No. 93 L 00176,
Peoria County Circuit Court
A. Nature of Case: Jack Frost, an employee of ITEX Enterprises, Inc. ,
was injured while working at the Keystone Steel & Wire facility. ITEX
Enterprises was hired to perform certain repairs on a structure owned
by Keystone. The accident occurred on December 23, 1993 - Jack Frost
fell on plastic sheeting and hurt his right knee.
B. Amount Involved:
C. Status:
D. Estimated Cost of Defense: Covered by insurance.
E. Fees to Dated:
F. Handling attorney: James L. Hafele and Associates
416 Main Street, Suite 1100
Peoria, Illinois 61602
Phone: 309-673-3513
Fax: 309-673-3526
G. Company Contact: Ralph P. End
H. Decision Maker: Robert W. Singer
I. File Number: 503 1008
-15-
45
Roy Griffith vs Keystone Steel & Wire., Case No. 93 1504, District Court,
Central District of Illinois
A. Nature of Case: Roy Griffith, former employee of Keystone Steel &
Wire, has filed a six count sexual harassment complaint against KSW
and several employees, requesting $300,000 damage for each count
B. Amount Involved: Three counts requesting $15,000 each.
C. Status: Because of the potential conflict of interest among the
defendants, Keystone is providing separate counsel for the employee
defendants. An answer will be timely filed along with a motion to
dismiss because the plaintiff has not exhausted his remedies under the
collective bargaining agreement.
D. Estimated Cost of Defense:
E. Fees to Dated:
F. Handling attorney: Mike Lied
Husch & Eppenberger
101 SW Adams
Peoria, Illinois 61602
G. Company Contact: Ralph P. End
H. Decision Maker: Robert W. Singer
I. File Number:
-16-
46
SCHEDULE B - INFORMATION CERTIFICATE
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
UNITED STATES ISSUED TRADEMARKS
CASE. REGISTRATION ISSUE
NO. TRADEMARK NUMBER DATE GOODS
--- --------- ------------ ---------- -----
644 Fence Post with Red Stripe 308,004 11/14/33 Metallic Fence Posts
663 ARROW 94,911 1/14/14 Barbed Wire
687 Red Line Around Spooled Barbed Wire 182,257 4/8/24 Reeled or spooled barbed wire
688 White Line Around Spooled Barbed Wire 182,259 4/8/24 Reeled or spooled barbed wire
689 Black Line Around Spooled Barbed Wire 182,261 4/8/24 Reeled or spooled barbed wire
690 Orange Line Around Spooled Barbed Wire 182,263 4/8/24 Reeled or spooled barbed wire
691 Blue Strand in Body of Wire 184,948 6/3/24 Wire fence, including farm and
poultry fences
692 Yellow Strand in Body of Wire 184,950 6/3/24 Poultry fences
700 Blue Line Around Spooled Barbed Wire 182,258 4/8/24 Reeled or spooled barbed wire
701 Yellow Line Around Spooled Barbed Wire 182,260 4/8/24 Reeled or spooled barbed wire
702 Green Line Around Barbed Wire 182,262 4/8/24 Reeled or spooled barbed wire
703 Red Strand in Body of Wire 184,947 6/3/24 Wire fence, including farm &
poultry fences
704 White Strand in Body of Wire 184,949 6/3/24 Wire fence, including farm &
poultry fences
705 Black Strand in Body of Wire 184,951 6/3/24 Wire fence, including farm &
poultry fences
706 Orange Strand in Body of Wire 184,953 6/3/24 Wire fence, including farm &
poultry fences
736 Red colored barb 622,004 2/28/56 Barbed Wire
809 KEYLINE 617,363 12/13/55 Metal mesh fencing
818 APACHE 618,081 12/27/55 Barbed wire
1002 RED BRAND 555,298 2/26/52 Wire fence
1113 KEYWELD 569,489 1/20/53 Welded metal mesh fabric
1153 DEFENDER 122,493 8/20/18 Barbed wire, fence wire, and wire
fence
1154 RUTHLESS 122,496 8/20/18 Barbed wire, fence wire, and wire
fence
1339 KEYFRAME 719,855 8/15/61 Prepunched structural members for
connection of bolts in framing
(NOT TO BE RENEWED)
1395 KEYCORNER 717,733 7/4/61 Corner lathing strips (NOT TO BE
RENEWED)
1396 KEYWALL 717,734 7/4/61 Masonry reinforcing strips
1397 KEYDECK 717,732 7/4/61 Wire fabric reinforcement for
roof decks
1398 KEYSTRIP 717,731 7/4/61 Lathering reinforcing strips (NOT
TO BE RENEWED)
1401 Fence with red Top Portion 141,481 4/26/21 Wire fencing
1408 KEY-Z-BEAD 722,964 10/24/61 Corner reinforcing beads for
plaster walls (NOT TO BE RENEWED)
1618 Twisted Wire Fence Stays with Ret Top 297,991 10/11/32 Twisted wire fence stays
1741 FLEXOMATIC 754,460 8/13/63 Upholster Spring wire
1831 GALVANNEALED 176,327 11/20/23 Wire fence and barbed wire
1832 GALVANNEALED 176,329 11/20/23 Plain galvanized wire and
galvanized telephone wire
2054 Fence w/Black Upper Portion 193,925 3/31/25 Wire fence, including farm &
poultry fences
2055 Fence w/Yellow Upper Portion 196,925 3/31/25 Wire fence, including farm &
poultry fences
47
SCHEDULE B - INFORMATION CERTIFICATE
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
UNITED STATES ISSUED TRADEMARKS
CASE. REGISTRATION ISSUE
NO. TRADEMARK NUMBER DATE GOODS
--- --------- ------------ ---------- -----
2056 Drawing of Wire Fence (orange) 196,928 3/31/25 Wire fence, including farm &
poultry fences
2057 Fence w/Blue Band 196,9929 3/31/25 Wire fence, including farm &
poultry fences
2058 Fence w/White Upper Portion 198,437 5/19/25 Wire fence, including farm &
poultry fences
2175 Mesh Design 815,695 9/27/66 Self-furring plastic mesh
2298 SQUARE DEAL 58,221 12/11/06 Wire fence
2324 KEYSTONE 62,025 4/16/07 Wire fence
2325 MONARCH 62,313 4/30/07 Wire fence
2738 Red Top Fence Post 125,561 5/27/39 Metallic Fence Post
2747 HI-BOND 407,707 6/20/44 Reinforcing steel bars for using
in concrete constructions
2766 KEYMESH 523,557 4/4/50 Stucco netting
2768 BLUE RIBBON 76,791 2/15/10 Wire fence only (barbed wire
deleted)
2772 SQUARE DEAL 86,714 5/28/12 Metal gates
2805 K Symbol 903,358 12/1/70 Nails
2901 KEYMESH 928,544 2/8/72 Reinforcing wire and paperbacked
reinforcing wire
3001 K Symbol 951,688 1/30/73 Wire fabrics, namely hardware
cloth, utility fabric and netting
75,663 KEYLINK 1,057,380 2/1/77 Wire mesh attachment clip
77,140 SAVAGE 1,080,778 1/3/78 Barbed Wire
77,141 WRANGLER 1,080,777 1/3/78 Barbed Wire
77,925 KEY-LITE 1,113,152 2/13/79 Plastic coated wire fabric
79,153 IMPERIAL AND DESIGN 1,157,847 6/23/81 Welding wire
80,435 THE MOST RESPECTED NAME IN FARM FENCE 1,197,052 5/1/82 Wire mesh fence
82,569 VERTICAL GARDEN 1,268,879 3/6/84 Galvanized mesh wire for use in
fencing, trellises and cages
83,089 RED BRAND 1,285,810 7/17/84 Nails
84,243 KING RANCH 1,321,770 2/26/85 Wire fencing
84,421 HI-BOND 1,327,996 4/2/85 Nails
84,443 HI-BOND VCC 1,332,847 4/30/85 Nails
85,202 THE MOST RESPECTED NAME IN FARM FENCE 544,614 6/24/85 Wire mesh fence
(Principle Register)
87,417 TEX-BALE 411,885 2/1/83 Baling Wire
87,418 TEX-BALE (State of Texas) 34,094 8/18/77 Hardware, plumbing and steam-
fitting supplies
48
KEYSTONE B - INFORMATION CERTIFICATE
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
FOREIGN TRADEMARK APPLICATION AND REGISTRATIONS
SERIAL NO./ REG. NO./
COUNTRY CASE NO. TRADEMARK FILING DATE ISSUE DATE
------- -------- --------- ----------- ----------
ARGENTINA RED BRAND Design 251,518
Oct 9, 1947
84,382 RED BRAND 1,451,201 1,139,089
Aug 28,1984 June 3, 1985
84,395 Red Brand on Barbed Wire 1,464,955 1,171,304
Nov 14, 1984 Sept 2, 1985
BRAZIL 71,002 RED BRAND Design 114,185
Aug 8, 1949
84,383 RED BRAND 811,727,050
Oct 3, 1984
CANADA 63,174 GAVANNEALED 180,935 15,434,749
05/21/23 Dec 29, 1923
63,175 RED BRAND Design 16,436,654
Nov 13, 1924
70,015 Red-Topped Fence Post 330,735 178,166
Mar 5, 1970 Sept 3, 1971
75,448 RED STRAND 17,238,344
Aug 18,1925
86,260 Red Top (not yet filed)
86,261 Red Barbs (not yet filed)
SOUTH AFRICA 75,108 KEYSTONE 1853/47
July 2, 1947
75,109 RED BRAND 1855/47
July 2,1947
75,110 SQUARE DEAL 1856/47
July 2, 1947
49
KEYSTONE B - INFORMATION CERTIFICATE
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
FOREIGN TRADEMARK APPLICATION AND REGISTRATIONS
SERIAL NO./ REG. NO./
CASE NO. INVENTOR INVENTION FILING DATE ISSUE DATE
-------- -------- --------- ----------- ----------
67,182 Byarl, et al Improved Keydeck Sub-Purlin 681,986 3,456,415
11/13/67 7/22/69
81,099 Badtke Box and Lid 243,058 4,342,403
Lehman Construction 03/12/81 08/03/82
81,219 Heaslip Method and apparatus For 278,719 4,391,319
Introducing Elements Into 06/29/81 07/05/83
Molten Metal Streams And
Casting In Inert Atmosphere
85,381 Reysen Carrying Device for Coiled 755,415 4,607,807
Wire 7/15/85 8/26/86
50
A CORESTATES COMPANY
GUARANTEE AND WAIVER
Chicago, Illinois
December 30, 1993
In order to induce Congress Financial Corporation {(Central)} (herein
called "Congress") to extend from time to time, in its sole discretion in each
instance, one or more loans, advances or other financial accommodations to, or
for the account or benefit of, Keystone Consolidated Industries, Inc.
("Obligor") and for other good and valuable consideration received, the
undersigned, irrevocably and unconditionally guarantees and agrees to be liable
for the prompt indefeasible and full payment, performance and observance of all
indebtedness, liabilities, obligations and agreements of any kind of Obligor to
Congress, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether now existing or hereafter arising, whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, original, renewed
or extended, whether arising under any guarantee, endorsement or undertaking
which Congress may make or issue to others for Obligor's account, including,
without limitation, any accommodation extended to Obligor with respect to
Congress' making or joining in applications for letters of credit, acceptance
of drafts or endorsement of notes or other instruments by Congress for
Obligor's account and benefit, and whether arising directly or acquired from
others (whether acquired outright or by assignment as collateral security from
another and including, without limitation, Congress' participations or
interests in Obligor's obligations to others), and of all agreements, documents
and instruments evidencing any of the foregoing or under which any of the
foregoing may have been issued, created, assumed or guaranteed, including,
without limitation, Congress' charges, commissions, interests, expenses, fees,
costs and reasonable attorneys' fees chargeable to Obligor in connection with
any or all of the foregoing (all of the foregoing being herein referred to,
jointly and severally, as the "Obligations").
The undersigned waives notice of acceptance of this guarantee, the
making of loans and extensions of credit to Obligor, the purchase or
acquisition of receivables from Obligor, notice of any Obligations, and waives
presentment, demand for payment, protest, notice of protest, notice of dishonor
or nonpayment of any Obligations, suit or taking other action by Congress
against, and any other notice to, any party liable thereon (including the
undersigned) and waives any defense, offset or counterclaim to any liability
hereunder. Congress may at any time and from time to time without the consent
of, or notice to, the undersigned, without incurring responsibility to the
undersigned, without impairing or releasing the obligations of the undersigned
hereunder, upon or without any terms or conditions and in whole or in part: (1)
change the manner, place or terms of payment, and/or change or extend the time
of payment of, renew or alter, any Obligations, any security therefor, or any
liability incurred directly or indirectly in respect thereof, and the guarantee
herein made shall apply to the Obligations as so changed, extended, renewed or
altered: (2) sell, exchange, release, surrender, offset, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, the
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof; (3) exercise or refrain
from exercising any rights against the Obligor or others (including the
undersigned) or otherwise act or refrain from acting; (4) settle or compromise
any Obligations, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and
may subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Obligor to creditors of the Obligor other
than Congress and the undersigned; and (5) apply any sums by whomsoever paid or
howsoever realized to any Obligations regardless of what Obligations remain
unpaid. The undersigned also agrees than Congress need not attempt to collect
any Obligations from the Obligor or others or to realize upon any collateral,
but may require the undersigned to make immediate payment of the Obligations to
Congress when due or at any time thereafter.
No invalidity, irregularity or unenforceability of all or any part of
the Obligations, or of any security therefor, shall affect, impair or be a
defense to this guarantee nor shall any other circumstance which might
otherwise constitute a defense available to, or legal or equitable discharge
of, the Obligor in respect of any of the Obligations, or of any security
therefor, or the undersigned in respect of this guarantee, affect, impair or be
a defense to this guarantee. Without limitation of the foregoing, the
liability of the undersigned hereunder shall not be discharged or impaired in
any respect by reason of any failure by Congress to perfect or continue
perfection of any lien or security interest in any security for the Obligations
or any delay by Congress in perfecting any such lien or security interest.
The liability of the undersigned hereunder is absolute, primary and
unconditional and shall not be subject to any offset, defense or counterclaim
of the Obligor. This guarantee is a continuing one and all obligations shall
be conclusively presumed to have been created in reliance hereon. The books
and records of Congress, showing the account between the Obligor and Congress,
shall be admissible in evidence in any action or proceeding as prima facie
proof of the items therein set forth, and the monthly statement rendered to the
Obligor, to the extent no written objection is made within thirty (30) days
after the date thereof, shall constitute an account stated between Congress and
the Obligor and be binding on the undersigned.
Payment by the undersigned shall be made to Congress at Congress'
office from time to time on demand as the Obligations become due. One or more
successive or concurrent actions may be brought hereon against the undersigned
either in the same action in which Obligor is sued or in separate actions. In
the event any claim or action, or action on any judgment, based on this
guarantee is brought against the undersigned, the undersigned agrees not to
deduct, set-off, or seek to counterclaim for or recoup any amounts which are or
may be owed by Congress to the undersigned.
51
No revocation or termination hereof shall affect in any manner rights
arising under this guarantee with respect to (a) Obligations which shall have
been created, contracted, assumed or incurred prior to receipt by Congress of
written notice of such revocation or termination or (b) Obligations which shall
have been created, contracted, assumed or incurred after receipt of such
written notice pursuant to any contract entered into by Congress prior to
receipt of such notice; and the sole effect of revocation or termination hereof
shall be to exclude from this guarantee Obligations thereafter arising which
are unconnected with Obligations theretofore arising or transactions
theretofore entered into.
Upon the happening of any of the following events: default by the
Obligor under any of the Obligations, or insolvency of the Obligor or the
undersigned, or suspension of business of the Obligor or the undersigned, or
the issuance of any warrant of attachment against any of the property of the
Obligor or the undersigned, or the making by the Obligor or the undersigned of
any assignment for the benefit of creditors, or a trustee or receiver being
appointed for the Obligor or the undersigned or for any property of either of
them, or any proceeding being commenced by or against the Obligor or the
undersigned under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt, receivership, liquidation or dissolution law
or stature and, with respect to any such proceeding against the Obligor or the
undersigned, remains undismissed for a period of thirty (30) days, unless the
Obligor or the undersigned shall earlier acquiesce thereto - then and in any
such event, and at any time thereafter, Congress may, without notice to the
Obligor or the undersigned, make the Obligations, whether or not then due,
immediately due and payable hereunder as to the undersigned, and Congress shall
be entitled to enforce the obligations of the undersigned hereunder.
All sums of money at any time to the credit of the undersigned with
Congress and any of the property of the undersigned on which Congress, at any
time, has a lien or security interest or is in the possession of Congress at
any time may be held by Congress as security for any and all obligations of the
undersigned hereunder, notwithstanding that any of said money or property may
have been deposited, pledged or delivered by the undersigned for any other,
different or specific purpose. Any and all claims of any nature which the
undersigned may now or hereafter have against the Obligor, and payment of all
amounts now or hereafter owed to the undersigned by the Obligor or any other
obligor with respect to the Obligations (whether by contribution or otherwise)
are hereby subordinated to the full payment to Congress of the Obligations and
are hereby assigned to Congress as additional Collateral security therefor.
In the event Congress retains attorneys for the purpose of effecting
collection of the Obligations or the liabilities of the undersigned hereunder,
the undersigned shall pay all costs and expenses of every kind for collection,
including reasonable attorneys' fees.
If claim is ever made upon Congress for repayment or recovery of any
amount or amounts received by Congress in payment or on account of any of the
Obligations and Congress repays all or part of said amount by reason of (a) any
judgment, decree or order of any court or administrative body having
jurisdiction over Congress or any of its property, or (b) any settlement or
compromise of any such claim effected by Congress with any such claimant
(including the Obligor), then and in such event the undersigned agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon
the undersigned, notwithstanding any revocation hereof or the cancellation of
any note or other instrument evidencing any Obligation, and the undersigned
shall be and remain liable to Congress hereunder for the amount so repaid or
recovered to the same extend as if such amount had never originally been
received by Congress.
No delay on the part of Congress in exercising any of its options,
power or rights, or partial or single exercise thereof, shall constitute a
waiver thereof. No notice or demand on the undersigned shall be deemed to be
a waiver of the obligation of the undersigned to take further action without
notice or demand as provided herein. No waiver of any of its rights hereunder,
and no modification or amendment of this guarantee, shall be deemed to be made
by Congress unless the same shall be in writing, duly signed on behalf of
Congress, and each such waiver, if any, shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of Congress
or the obligations of the undersigned to Congress in any other respect ant any
other time. The undersigned shall have no right of subrogation,
indemnification or recourse to any Obligations or collateral or guarantees
therefor or against the Obligor or any of its assets or property until Congress
shall have been indefeasibly paid in full all Obligations.
This guarantee and the rights and obligations of Congress and of the
undersigned hereunder shall be governed and construed in accordance with the
laws of the State of Illinois; and this guarantee is binding upon the
undersigned and its successors or assigns, and shall inure to the benefit of
Congress, its successors or assigns.
The undersigned does hereby waive trial by jury in any action,
proceeding or counterclaim brought against the undersigned on any matters
whatsoever arising out of or in any way connected with this guarantee, and the
undersigned hereby agrees that all actions and proceedings relating directly or
indirectly hereto may, at the option of Congress, be litigated exclusively in
courts having their situs in Cook County, Illinois, and the undersigned hereby
irrevocably submits and consents to the jurisdiction of the Circuit Court of
Cook County, Illinois and the United States District Court for the Northern
District of Illinois, Eastern Division, and consents to the service of process
in any such action or proceeding by certified or registered mail sent to the
undersigned at the address of the undersigned shown from time to time on the
records of Congress or by any other method permitted by law.
The undersigned does hereby represent and warrant to Congress that the
execution and delivery of this instrument to Congress by the undersigned has
been duly authorized by all necessary action of the Board of Directors and
Shareholders of the undersigned, is validly issued in accordance with the
Certificate of Incorporation and By-laws of the undersigned and in accordance
with any statutes applicable
2
52
hereto. Without limitation of the foregoing, this guarantee may not be
terminated and shall continue so long as any obligation of the Obligor to
Congress shall be outstanding.
WIRE PRODUCTS COMPANY
By: /s/ HAROLD M. CURDY
Title: VICE PRESIDENT - TREASURER
3
53
RIDER NO. 1 TO GUARANTEE AND WAIVER
THIS Rider No. 1 to Guarantee and Waiver, is made and entered
into as of December 30, 1993 by WIRE PRODUCTS COMPANY, a Wisconsin corporation
(the "Guarantor"), in favor of CONGRESS FINANCIAL CORPORATION (CENTRAL), an
Illinois corporation ("Lender").
WITNESSETH:
WHEREAS, the Lender and Keystone Consolidated Industries,
Inc., a Delaware corporation (the "Guaranteed Party") have entered into that
certain Accounts Receivable Financing Agreement {Security Agreement} and a
Rider No. 1 thereto, each dated as of December 19, 1986 and that certain Term
Loan Agreement of even date herewith (collectively, the "Loan Agreements"); and
WHEREAS, the Lender and the Guarantor have entered into that
certain Guarantee and Waiver (as amended and supplemented hereby, the
"Guarantee") , providing for the guarantee of the Obligations (as defined in
the Guarantee) and desire to modify and supplement the terms of the Guarantee.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to extend credit, the Guarantor agrees with the Lender for its
benefit as follows:
1. Definitions. When capitalized and used herein, terms
defined in the Loan Agreements and not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreements.
2. Maximum Guaranteed Amount. Anything herein or in the
Guarantee to the contrary notwithstanding, the maximum liability of Guarantor
hereunder shall in no event exceed the lesser of (i) the highest amount which
is valid and enforceable in any action or proceeding involving any state
corporate law or any state or Federal bankruptcy, insolvency, reorganization,
fraudulent conveyance or other law involving the rights of creditors generally
and (ii) 95% of the excess of the present saleable value of the assets of
Guarantor as of date hereof over the amount of all liabilities of Guarantor,
contingent or otherwise, as of the date hereof, as such terms (or their
equivalent under applicable law) are determined in accordance with applicable
state and Federal laws governing the determination of the insolvency of a
debtor.
3. Waiver of Rights of Subrogation, Etc. Guarantor
waives, and agrees that it will not assert or otherwise claim, any right of
contribution, reimbursement, repayment, indemnity or subrogation under or in
respect of the Guarantee, whether arising by any payment made hereunder, by
agreement or otherwise.
54
Guarantor further agrees that it will not enter into any agreement providing,
directly or indirectly, for any contribution, reimbursement, repayment or
indemnity by the Guaranteed Party, any other Guarantor or any other Person, on
account of any payment by such Guarantor hereunder, and that any such agreement
would be void.
4. Collateral.
4.1. In order to secure the prompt performance, observance
and payment in full of all its existing and hereafter arising obligations to
Lender under the Guarantee, Guarantor hereby grants to Lender a continuing
security interest in, a lien upon, and a right of setoff against, and Guarantor
hereby assigns, transfers, pledges and sets over to Lender all of the
following, wheresoever located, (collectively, "Collateral"):
(a) All of Guarantor's present and future accounts,
contract rights, general intangibles, chattel paper, documents and
instruments, as such terms are defined in the UCC, including, without
limitation, all obligations for the payment of money arising out of
Guarantor's sale, lease or other disposition of goods or other
property or rendition of services ("Accounts");
(b) All present and future moneys, securities and other
property and the proceeds thereof, now or hereafter held or received
by, or in transit to, Lender from or for Guarantor, whether for
safekeeping, pledge, custody, transmission, collection or otherwise,
and all of Guarantor's deposits (general or special), balances, sums
and credits with Lender at any time existing; all of Guarantor's
right, title and interest, and all of Guarantor's rights, remedies,
security and liens, in, to and in respect of the Accounts and other
Collateral, including, without limitation, rights of stoppage in
transit, replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, guaranties or
other contracts of suretyship with respect to the Accounts, deposits
or other security for the obligation of any debtor or obligor in any
way obligated on or in connection with any Account (an "Account
Debtor"), and credit and other insurance; all of Guarantor's right,
title and interest in, to and in respect of all goods relating to, or
which by sale have resulted in, Accounts including, without
limitation, all goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing,
any Accounts or other Collateral, including without limitation, all
returned, reclaimed or repossessed goods; all deposit accounts; all
books, records, ledger cards, computer programs, and other property
and general intangibles evidencing or relating to the Accounts and any
other Collateral or any Account Debtor, together with the file
cabinets or containers in which the foregoing are
2
55
stored; all other general intangibles of every kind and description,
including without limitation, trade names and trademarks, and the
goodwill of the business symbolized thereby, patents, copyrights,
licenses and Federal, State and local tax refund claims of all kinds;
(c) All raw materials, work in process, finished goods,
and all other inventory of whatsoever kind or nature, wherever located
whether now owned or hereafter existing or acquired by Guarantor
("Inventory"), including without limitation, all wrapping, packaging,
advertising, shipping materials, and all other goods consumed in
Guarantor's business, all labels and other devices, names or marks
affixed to or to be affixed thereto for purposes of selling or of
identifying the same or the seller or manufacturer thereof and all of
Guarantor's right, title and interest therein and thereto;
(d) All machinery, computers and computer hardware,
tools, dies, jigs, furniture, trade fixtures and fixtures; all
attachments, accessions and property now or hereafter affixed thereto
or used in connection therewith, substitutions and replacements
thereof, wherever located, whether now owned or hereafter acquired by
Guarantor ("Equipment");
(e) All books, records, documents, other property and
general intangibles at any time relating to the Accounts, Inventory
and Equipment; and
(f) All products and proceeds of the foregoing, in any
form, including, without limitation, insurance proceeds and any claims
against third parties for loss or damage to or destruction of any or
all of the foregoing.
4.2. Guarantor hereby represents, warrants and covenants
to Lender the following (which shall survive the execution and delivery of the
Guarantee), the truth and accuracy of which, or compliance with, being a
continuing condition of the making of loans by Lender under the Loan
Agreements:
(a) Guarantor is and shall be, with respect to all
Collateral now existing or hereafter acquired, the owner of such
Collateral free from any lien, security interest, claim or encumbrance
of any kind, except for liens in Lender's favor, purchase money liens
on specific inventory and its proceeds and as otherwise consented to
in writing by Lender, and Guarantor shall defend the same against the
claims of all persons.
(b) Guarantor will not directly or indirectly sell,
lease, transfer, abandon or otherwise dispose of all or any
substantial portion of Guarantor's property or assets or consolidate
or merge with or into any other entity or permit
3
56
any other entity to consolidate or merge with or into Guarantor.
Guarantor will at all times preserve, renew and keep in full force and
effect Guarantor's existence as a corporation and the rights and
franchises with respect thereto and continue to engage in business of
the same type as Guarantor is engaged as of the date hereof.
Guarantor shall give Lender thirty (30) days prior written notice of
any proposed change in Guarantor's corporate name which notice shall
set forth the new name.
(c) Guarantor shall not change the location of its chief
executive without Lender's prior written consent and prior to making
any such change, Guarantor agrees to execute any additional financing
statements or other documents or notices which Lender may require.
IN WITNESS WHEREOF, this Rider has been executed and delivered
as of the date first written above.
WIRE PRODUCTS COMPANY
By: /s/ HAROLD M. CURDY
Name: HAROLD M. CURDY
Title: VICE PRESIDENT - TREASURER
CONGRESS FINANCIAL
CORPORATION (CENTRAL)
By: /s/ GEORGE KALESNIK
Name: GEORGE KALESNIK
Title: SR. VICE PRES.
4