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Exhibit 4(a)(3)
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BIRD INCORPORATED
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LOAN AND SECURITY AGREEMENT
Dated: November 30, 1994
$39,000,000.00
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BARCLAYS BUSINESS CREDIT, INC.
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TABLE OF CONTENTS
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 30th day of
November, 1994, by and between BARCLAYS BUSINESS CREDIT, INC. ("Lender"), a
Connecticut corporation with an office at 200 Glastonbury Boulevard,
Glastonbury, Connecticut 06033; and Bird Incorporated, a Massachusetts
corporation with its chief executive office and principal place of business at
980 Washington Street, Dedham, Massachusetts 02026 (the "Borrower").
Capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $39,000,000
available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
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1.1.1 LOANS AND RESERVES. Lender agrees, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to Borrower
from time to time, as requested by Borrower in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the Borrowing Base at such time MINUS the LC Amount and
reserves, if any. Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender shall deem reasonably
necessary or appropriate, against the amount of Revolving Credit Loans which
Borrower may otherwise request under this subsection 1.1.1 or subsection 1.1.2,
including, without limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which credit
memoranda are issued in the ordinary course of Borrower's business; (ii)
shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory;
(iv) other sums chargeable against Borrower's Loan Account as Revolving Credit
Loans under any section of this Agreement; (v) amounts owing by Borrower to any
Person to the extent secured by a Lien on, or trust over, any Property of
Borrower; and (vi) such other matters, events, conditions or contingencies as
to which Lender, in its reasonable credit judgment, determines reserves should
be established from time to time hereunder.
1.1.2 SEASONAL OVERADVANCE. During the period from January 1
through and including April 30 of each calendar year, Lender may, in its
discretion, make Revolving Credit Loans
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to Borrower up to a maximum principal amount at any time outstanding equal to
the Borrowing Base at such time PLUS $2,000,000 MINUS the LC Amount and
reserves, if any (any such Revolving Credit Loans in excess of the
Borrowing Base are referred to individually as a "Seasonal Overadvance" and
collectively as "Seasonal Overadvances"). In no event shall the total of the
Revolving Credit Loans, Seasonal Overadvances and the LC Amount outstanding at
any time exceed $24,000,000. All Seasonal Overadvances shall be payable on the
earlier of demand by Lender or April 30 of each year, shall be secured by the
Collateral and shall bear interest as provided in this Agreement for Revolving
Credit Loans generally.
1.1.3 USE OF PROCEEDS. The Revolving Credit Loans shall be
used solely for the satisfaction of existing Indebtedness of Borrower to The
First National Bank of Boston, Philadelphia National Bank, incorporated as
Corestates Bank, N.A. and The Bank of Tokyo Trust Company, Citicorp and for
Borrower's general operating capital needs in a manner consistent with the
provisions of this Agreement and all applicable laws.
1.2 Term Loans.
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1.2.1 TERM LOAN A. Lender agrees to make a term loan to
Borrower on the Closing Date in the principal amount of $7,500,000.00, which
shall be repayable in accordance with the terms of the Term Note A and
shall be secured by all of the Collateral. The proceeds of the Term Loan A
shall be used solely for purposes for which the proceeds of the Revolving
Credit Loans are authorized to be used.
1.2.2 TERM LOAN B. Lender agrees to make a term loan to
Borrower on the Closing Date in the principal amount of $7,500,000.00, which
shall be repayable in accordance with the terms of the Term Note B and shall be
secured by all of the Collateral. The proceeds of the Term Loan B shall be used
solely for purposes for which the proceeds of the Revolving Credit Loans are
authorized to be used.
1.3 LETTERS OF CREDIT; LC GUARANTIES. Lender agrees, for so
long as no Default or Event of Default exists and if requested by Borrower, to
(i) issue its, or cause to be issued its Affiliate's, Letters of Credit for the
account of Borrower or (ii) execute LC Guaranties by which Lender or its
Affiliate shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to Letters of Credit and letters of
credit issued for Borrower's account by other Persons in support of Borrower's
obligations (other than obligations for the repayment of Money Borrowed),
PROVIDED that the LC Amount at any time shall not exceed $5,000,000.00. No
Letter of Credit or LC Guaranty may have an expiration date that is after the
last day of the Original Term or the then applicable Renewal Term. Any amounts
paid by Lender under any LC Guaranty or in connection
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with any Letter of Credit shall be treated as Revolving Credit Loans,
shall be secured by all of the Collateral and shall bear interest and be
payable at the same rate and in the same manner as Revolving Credit Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
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2.1.1 RATES OF INTEREST. Interest shall accrue on the Term
Loans in accordance with the terms of the Term Notes. Interest shall accrue on
the principal amount of the Revolving Credit Loans outstanding at the end of
each day at a fluctuating rate per annum equal to the Base Rate PLUS 1.0%. The
rate of interest shall increase or decrease by an amount equal to any increase
or decrease in the Base Rate, effective as of the opening of business on the
day that any such change in the Base Rate occurs.
2.1.2 DEFAULT RATE OF INTEREST. Upon and after the occurrence
of an Event of Default, and notice thereof by Lender and during the
continuation thereof, the principal amount of all Loans shall bear interest at
a rate per annum equal to 2.0% above the interest rate otherwise applicable
thereto (the "Default Rate").
2.1.3 MAXIMUM INTEREST. In no event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under the Term Notes
and charged collected pursuant to the terms of this Agreement or pursuant to
the Term Notes exceed the highest rate permissible under any law which a court
of competent jurisdiction shall, in a final determination, deem applicable
hereto. If any provisions of this Agreement, or the Term Notes are in
contravention of any such law, such provisions shall be deemed amended to
conform thereto.
2.2 COMPUTATION OF INTEREST AND FEES. Interest, Letter
of Credit and LC Guaranty fees and unused line fees and collection charges
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of such items)
one (1) Business Day after receipt by Lender of such items in Lender's account
located in Glastonbury, Connecticut.
2.3 COMMITMENT FEE. Borrower shall pay to Lender a
commitment fee of $150,000.00, which shall be fully earned and
nonrefundable on the Closing Date and shall be paid concurrently with the
initial Loan hereunder.
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2.4 LETTER OF CREDIT AND LC GUARANTY FEES. Borrower
shall pay to Lender:
(i) for standby Letters of Credit and LC Guaranties
of standby Letters of Credit, 1.75% per annum of the aggregate
face amount of such Letters of Credit and LC Guaranties
outstanding from time to time during the term of this
Agreement, PLUS all normal and customary charges associated
with the issuance thereof, which fees and charges shall be
deemed fully earned upon issuance of each such Letter of
Credit or LC Guaranty, shall be due and payable on the first
Business Day of each month and shall not be subject to rebate
or proration upon the termination of this Agreement for any
reason; and
(ii) for documentary Letters of Credit and LC
Guaranties of documentary Letters of Credit, a fee equal to
1.75% per annum of the face amount of each such Letter of
Credit or LC Guaranty, payable upon the issuance of such
Letter of Credit or execution of such LC Guaranty and
an additional fee equal to 1.75% per annum of the face amount
of such Letter of Credit or LC Guaranty payable upon each
renewal thereof and each extension thereof PLUS the normal and
customary charges associated with the issuance and
administration of each such Letter of Credit or LC Guaranty
(which fees and charges shall be fully earned upon issuance,
renewal or extension (as the case may be) of each such Letter
of Credit or LC Guaranty, shall be due and payable on the
first Business Day of each month, and shall not be subject to
rebate or proration upon the termination of this Agreement for
any reason).
2.5 UNUSED LINE FEE. Borrower shall pay to Lender a fee
equal to the greater of (i) $25,000 per year, or (ii) .25% per annum of
the average monthly amount by which the Total Credit Facility exceeds the sum
of the outstanding principal balance of the Revolving Credit Loans, Term Loans
and LC Amount. The unused line fee shall be payable monthly in arrears on the
first day of each calendar month hereafter. At year end, Lender shall determine
the balance of the unused line fee then owing for such year and if any is
owing, Borrower shall pay such amount to Lender on demand.
2.6 [Intentionally Deleted].
2.7 REIMBURSEMENT OF AUDIT AND APPRAISAL EXPENSES.
Borrower shall reimburse Lender for its out of pocket audit and appraisal
expenses incurred from time to time in connection with audits and
appraisals of Borrower's books and records and such other matters as Lender
shall deem appropriate. Audit expenses shall be payable on the first day of
the month following the date of issuance by Lender of a request for payment
thereof to Borrower.
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2.8 REIMBURSEMENT OF EXPENSES. If, at any time or times
regardless of whether or not an Event of Default then exists, Lender or any
Participating Lender incurs legal or accounting expenses or any other costs
or out-of-pocket expenses in connection with (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents, or any
sale or attempted sale of any interest herein to a Participating Lender; (ii)
the administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender, Borrower or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce
any rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Lender by virtue of this Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors;
or (v) any attempt to inspect, verify, protect, preserve, restore, collect,
sell, liquidate or otherwise dispose of or realize upon the Collateral; then
all such legal and accounting expenses, other costs and out of pocket expenses
of Lender shall be charged to Borrower. All amounts chargeable to Borrower
under this Section 2.8 shall be Obligations secured by all of the Collateral,
shall be payable on demand to Lender or to such Participating Lender, as the
case may be, and shall bear interest from the due date thereof until paid in
full at the rate applicable to Revolving Credit Loans from time to time.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 6 hereof. Lender acknowledges the receipt from Borrower of a $50,000
deposit prior to the Closing Date for application to Lender's costs and
expenses incurred prior thereto, and that the balance, if any, of such deposit
remaining after payment of such costs and expenses will be credited to the
Borrower's Loan Account.
2.9 BANK CHARGES. Borrower shall pay to Lender, on demand,
any and all reasonable fees, costs or expenses which Lender or any
Participating Lender pays to a bank or other similar institution (including,
without limitation, any reasonable fees paid by Lender to any Participating
Lender) arising out of or in connection with (i) the forwarding to Borrower or
any other Person on behalf of Borrower, by Lender or any Participating Lender,
of proceeds of loans made by Lender to Borrower pursuant to this Agreement and
(ii) the depositing for collection, by Lender or any Participating Lender, of
any check or item of payment received or delivered to Lender or any
Participating Lender on account of the Obligations.
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SECTION 3. LOAN ADMINISTRATION.
3.1 MANNER OF BORROWING REVOLVING CREDIT LOANS. Borrowings under
the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 LOAN REQUESTS. A request for a Revolving Credit Loan
shall be made, or shall be deemed to be made, in the following manner: (i)
Borrower may give Lender notice of its intention to borrow, in which notice
Borrower shall specify the amount of the proposed borrowing and the proposed
borrowing date, no later than 11:00 a.m. Glastonbury, Connecticut time on the
proposed borrowing date, PROVIDED, however, that no such request may be made at
a time when there exists a Default or an Event of Default; and (ii) the becoming
due of any amount required to be paid under this Agreement or the Term Notes,
whether as interest or for any other Obligation, shall be deemed irrevocably to
be a request for a Revolving Credit Loan on the due date in the amount required
to pay such interest or other Obligation. As an accommodation to Borrower,
Lender may permit telephonic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act
upon telephonic or electronic communications from Borrower, Lender shall have
no liability to Borrower for any loss or damage suffered by Borrower as a
result of Lender's honoring of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Lender by
Borrower and Lender shall have no duty to verify the origin of any such
communication or the authority of the person sending it.
3. 1.2 DISBURSEMENT. Borrower hereby irrevocably authorizes
Lender to disburse the proceeds of each Revolving Credit Loan requested,
or deemed to be requested, pursuant to this subsection 3.1.2 as follows: (i)
the proceeds of each Revolving Credit Loan requested under subsection 3.1.1(i)
shall be disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in
accordance with the terms of the written disbursement letter from Borrower, and
in the case of each subsequent borrowing, by wire transfer to such bank account
as may be agreed upon by Borrower and Lender from time to time or elsewhere if
pursuant to a written direction from Borrower; and (ii) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(ii) shall be disbursed
by Lender by way of direct payment of the relevant interest or other
Obligation.
3.1.3 AUTHORIZATION. Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
Borrower's Loan Account hereunder as a Revolving Credit Loan, a sum sufficient
to pay all interest
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accrued on the Obligations during the immediately preceding month and to
pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.
3.2 PAYMENTS. Except where evidenced by notes or other
instruments issued or made by Borrower to Lender specifically containing
payment provisions which are in conflict with this Section 3.2 (in which event
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1 PRINCIPAL. Principal payable on account of Revolving
Credit Loans shall be payable by Borrower to Lender immediately upon the
earliest of (i) the receipt by Lender or Borrower of any proceeds of any of the
Collateral other than Equipment or real Property, to the extent of said
proceeds, (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the Obligations, or
(iii) termination of this Agreement pursuant to Section 4 hereof; PROVIDED,
HOWEVER, that if an Overadvance shall exist at any time, Borrower shall, on
demand, repay the Overadvance.
3.2.2 INTEREST. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations
or (iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided
in Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 OTHER OBLIGATIONS. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to
Lender as and when provided in this Agreement, the Other Agreements or the
Security Documents, or on demand, whichever is later.
3.3 Mandatory Prepayments.
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3.3.1 PROCEEDS OF SALE, LOSS, DESTRUCTION OR CONDEMNATION OF
COLLATERAL. Except as provided in subsection 3.3.2 hereof and subsection
6.4.2 hereof, if Borrower sells any of the Equipment or real Property, or if
any of the Collateral is lost or destroyed or taken by condemnation, Borrower
shall pay to Lender, unless otherwise agreed by Lender, as and when received by
Borrower and as a mandatory prepayment of the Term loans (as determined by
Lender), a sum equal to the net proceeds, i.e.,
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a request by Borrower from Lender for a Revolving Credit Loan on the due
date of, and in an aggregate amount required to pay, such principal, accrued
interest, fees or other charges, and the proceeds of each such Revolving Credit
Loan may be disbursed by Lender by way of direct payment of the relevant
Obligation and shall bear interest as a Base Rate Advance.
(ii) Whenever Borrower desires to convert all or a
portion of an outstanding Base Rate Advance or LIBOR Rate
Advance into one or more Advances of another type, or to
continue outstanding a LIBOR Rate Advance for a new Interest
Period, Borrower shall have Lender written notice (or telephone
notice promptly confirmed in writing) at least one (1) Business
Day before the conversion into a Base Rate Advance and at least
three (3) Business days before the conversion into or
continuation of a LIBOR Rate Advance. Such notice (a "Notice
of Conversion/Continuation") shall be given prior to
11:00 a.m., Glastonbury, Connecticut time, on the date
specified. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify the aggregate principal amount of
the Advance to be converted or continued, the date of such
conversion or continuation, whether the Advance is being
converted into or continued as a LIBOR Rate Advance (and, if so,
the duration of the Interest Period to be applicable thereto)
or a Base Rate Advance. If, upon the expiration of any
Interest Period in respect of any LIBOR Rate Advance, Borrower
shall have failed, or pursuant to the following sentence be
unable, to deliver the Notice of Conversion/Continuation,
Borrower shall be deemed to have elected to convert or
continue such LIBOR Rate Advance to a Base Rate Advance. So
long as any Default or Event of Default shall have occurred
and be continuing, no Advance may be converted into or
continued as (upon expiration of the current Interest Period)
a LIBOR Rate Advance. No conversion of any LIBOR Rate
Advance shall be permitted except on the last day of the
Interest Period in respect thereto.
(iii) The becoming due of any amount required to be paid
under this Agreement or the Term Note, whether as interest or
for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the
amount required to pay such interest or other Obligation.
(iv) In no event shall the number of Advances outstanding
under the Revolving Credit Loans or the Term Loan exceed four
(4), but for purposes of determining the number of Advances
outstanding, all Base Rate Advances outstanding at any time
shall be considered as
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gross revenues less reasonable out of pocket expenses associated with
sale or disposition (including insurance payments) received by Borrower from
such sale, loss, destruction or condemnation.
3.3.2 PROCEEDS OF BEGC SALE. If BET sells its interest in
BEGC or BEGC sells the San Leon Facility, Borrower shall pay or cause to
be paid to Lender as and when received and as a mandatory prepayment of Term
Loan A, a sum equal to the lesser of (a) the proceeds received from such sale
and (b) the outstanding principal balance and accrued and unpaid interest on
Term Loan A.
3.3.3 PROCEEDS OF VINYL PRODUCTS DIVISION SALE. If Borrower
sells the Vinyl Products Division, the proceeds shall be applied as set forth
in Section 3.8.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. All items of
payment received by Lender by 12:00 noon, Glastonbury, Connecticut time, on
any Business Day shall be deemed received on that Business Day. All items of
payment received after 12:00 noon, Glastonbury, Connecticut time, on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Lender from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that Lender
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Lender or
its agent against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records;
provided, however, that prior to an Event of Default, Lender will use its
reasonable efforts to apply items of payment received in respect of Accounts
and Inventory to the Revolving Credit Loans and items of payment received in
respect of the assets described in Section 3.3 hereof in accordance with the
terms thereof; and provided, further, that upon and after the occurrence of an
Event of Default, Lender may, in its sole discretion, apply such items against
any of the Obligations. If as the result of collections of Accounts as
authorized by subsection 6.2.6 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower,
but shall be available to Borrower at any time or times for so long as no
Default or Event of Default exists. Such credit balance shall not be applied or
be deemed to have been applied as a prepayment of the Term Loans, except that
Lender may, at its option, offset such credit balance against any of the
Obligations upon and after the occurrence of an Event of Default.
3.5 ALL LOANS TO CONSTITUTE ONE OBLIGATION. The Loans shall
constitute one general Obligation of Borrower, and shall be secured by Lender's
Lien upon all of the Collateral.
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3.6 LOAN ACCOUNT. Lender shall enter all Loans as debits
to the Loan Account and shall also record in the Loan Account all payments
made by Borrower on any Obligations and all proceeds of Collateral which are
finally paid to Lender, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrower.
3.7 STATEMENTS OF ACCOUNT. Lender will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower unless Lender is notified by Borrower in writing
to the contrary within 30 days of the date each accounting is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8 AMENDMENT UPON CLOSING OF SALE OF VINYL PRODUCTS
OPERATION. If Borrower closes the sale of its Vinyl Products Division with
Jannock Limited pursuant to the agreement attached as Exhibit R hereto, the
proceeds shall be applied first to the repayment of Term Loan A, second to the
repayment of Term Loan B so that the outstanding principal amount equals
$5,000,000, third to the outstanding Revolving Credit Loans and the balance
will be retained by the Borrower. Upon the closing of the Vinyl Products
Division sale and the application of the net proceeds as provided herein, the
Lender and Borrower shall then enter into an Amendment to this Agreement in
substantially the form set forth as Exhibit S hereto and the instruments and
documents referred to therein and Borrower shall thereupon have the right to
request Revolving Credit Loans in accordance with the terms of this Agreement,
as amended by such Amendment.
SECTION 4. TERM AND TERMINATION
4.1 TERM OF AGREEMENT. Subject to Lender's right to cease making
Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period of three (3) years from
the date hereof, through and including November 30, 1997 (the "Original Term"),
and this Agreement shall automatically renew itself for one-year periods
thereafter (the "Renewal Terms"), unless terminated as provided in Section 4.2
hereof.
4.2 Termination.
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4.2.1 TERMINATION BY LENDER. Upon at least 90 days prior written
notice to Borrower, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term and Lender may terminate
this Agreement without notice upon or after the occurrence of an Event of
Default.
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4.2.2 TERMINATION BY BORROWER. Upon at least 90 days prior
written notice to Lender, Borrower may, at its option, terminate this
Agreement; PROVIDED, HOWEVER, no such termination shall be effective until
Borrower has paid all of the Obligations (including charges due under Section
4.2.3) in immediately available funds and all Letters of Credit and LC
Guaranties have expired or have been cash collateralized to Lender's
satisfaction. Any notice of termination given by Borrower shall be irrevocable
unless Lender otherwise agrees in writing, and Lender shall have no obligation
to make any Loans or issue or procure any Letters of Credit or LC Guaranties on
or after the termination date stated in such notice. Borrower may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.
4.2.3 TERMINATION CHARGES. At the effective date of termination
of this Agreement for any reason, Borrower shall pay to Lender (in addition
to the then outstanding principal, accrued interest and other charges
owing under the terms of this Agreement and any of the other Loan Documents) as
liquidated damages for the loss of the bargain and not as a penalty, an amount
equal to 2.0% of the highest of the Average Loan Balances outstanding during
the immediately prior twelve (12) month period if termination occurs during the
first twelve-month period of the Original Term (November 30, 1994 through
November 30, 1995); 1.0% of the highest of the Average Loan Balances
outstanding during the immediately prior twelve (12) month period if
termination occurs during the second twelve-month period of the Original Term
December 1, 1995) through November 30, 1994); and if termination occurs
thereafter, no termination charge shall be payable.
4.2.4 EFFECT OF TERMINATION. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice
of termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents
shall survive any such termination and Lender shall retain its Liens in the
Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
termination charge, if any. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its security interests
in the Collateral unless, with respect to any loss or damage Lender may incur
as a result of dishonored checks or other items of payment received by Lender
from Borrower or any Account Debtor and applied to the Obligations, Lender
shall, at its option, (i) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used
in whole or in part to satisfy the Obligations, indemnifying Lender from any
such loss or damage; or (ii) have retained such monetary reserves or received a
letter of credit in
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form and substance and from a bank satisfactory to Lender for such period of
time as Lender, in its reasonable discretion, may deem necessary to protect
Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 SECURITY INTEREST IN COLLATERAL. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby grants to
Lender a continuing Lien upon all of Borrower's assets, including all of the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) All monies and other Property of any kind now or at
any time or times hereafter in the possession or under the
control of Lender or a bailee or Affiliate of Lender;
(vi) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of
(i) through (v) above, including, without limitation, proceeds
of and unearned premiums with respect to insurance policies
insuring any of the Collateral; and
(vii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs,
and other computer materials and records) of Borrower
pertaining to any of (i) through (vi) above.
5.2 LIEN PERFECTION; FURTHER ASSURANCES. Borrower shall
execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Lender's Lien upon any of the Collateral and shall take such other action as
may be required to perfect or to continue the perfection of Lender's Lien upon
the Collateral. Unless prohibited by applicable law, Borrower hereby authorizes
Lender to execute and file any such financing statement on Borrower's behalf.
The parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Lender's request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Lender any and
all documents, instruments and agreements deemed necessary by
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a Lender to give effect to or carry out the terms or intent of the Loan
Documents.
5.3 LIEN ON REALTY. The due and punctual payment and
performance of the Obligations shall also be secured by the Lien created
by the Mortgages upon all real Property of Borrower and its Subsidiaries
described therein. The Mortgages shall be executed by Borrower in favor of
Lender and shall be duly recorded, at Borrower's expense, in each office where
such recording is required to constitute a fully perfected Lien on the real
Property covered thereby. Borrower shall deliver to Lender, at Borrower's
expense, mortgagee title insurance policies issued by a title insurance company
satisfactory to Lender, which policies shall be in form and substance
satisfactory to Lender and shall insure a valid first Lien in favor of Lender
on the Property covered thereby, subject only to those exceptions acceptable to
Lender and its counsel. Borrower shall deliver to Lender such other documents,
including, without limitation, instrument surveys of real Property, as Lender
and its counsel may reasonably request relating to the real Property subject to
the Mortgage.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
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6.1.1 LOCATION OF COLLATERAL. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by
Borrower and its Subsidiaries at one or more of the business locations set
forth in EXHIBIT B hereto and shall not, without the prior written approval of
Lender, be moved therefrom except, prior to an Event of Default and Lender's
acceleration of the maturity of the Obligations in consequence thereof, for (i)
sales of Inventory in the ordinary course of business; and (ii) removals in
connection with dispositions of Equipment that are authorized by subsection
6.4.2 hereof.
6.1.2 INSURANCE OF COLLATERAL. Borrower shall maintain and
pay for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are
reasonably satisfactory to Lender. Borrower shall deliver true and complete
photocopies of such policies to Lender with satisfactory lender's loss payable
endorsements, naming Lender as sole loss payee, assignee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever and
a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or
by the occupation of the premises for purposes more hazardous than are
permitted by said
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a policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3 PROTECTION OF COLLATERAL. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral,
any and all excise, property, sales, and use taxes imposed by any state,
federal, or local authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrower. If Borrower fails to promptly pay
any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be
at Borrower's sole risk.
6.2 Administration of Accounts.
--------------------------
6.2.1 RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Borrower shall
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on a weekly or more frequent
basis, as Lender shall request, a sales and collections report for the
preceding period, in form satisfactory to Lender. On or before the fifteenth
day of each month from and after the date hereof, Borrower shall deliver to
Lender, in form acceptable to Lender, a detailed aged trial balance of all
Accounts existing as of the last day of the preceding month, specifying the
names, addresses, face value, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon
Lender's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request. In addition, if Accounts in an aggregate face amount in
excess of $100,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts or otherwise established by Lender, Borrower shall notify Lender of
such occurrence on the first Business Day following such occurrence and the
Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal
written assignments of all of its Accounts weekly or daily, which shall include
all Accounts that have been created since the date of the last assignment,
together with copies of invoices or invoice registers related thereto.
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6.2.2 DISCOUNTS, ALLOWANCES, DISPUTES. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrower shall report such discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts. If any amounts due and owing in excess of
$75,000 are in dispute between Borrower and any Account Debtor, Borrower shall
provide Lender with written notice thereof at the time of submission of the
next Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.
6.2.3 TAXES. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided, however that
Lender shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.4 ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall
have the right, at any time or times hereafter, in the name of Lender, any
designee of Lender or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, telegraph or otherwise.
Borrower shall cooperate fully with Lender in an effort to facilitate and
promptly conclude any such verification process.
6.2.5 MAINTENANCE OF DOMINION ACCOUNT. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the
lockbox to the Dominion Account for application on account of the Obligations.
All funds deposited in the Dominion Account shall immediately become the
property of Lender and Borrower shall obtain the agreement by such banks in
favor of Lender to waive any offset rights against the funds so deposited.
Lender assumes no responsibility for such lockbox arrangement, including,
without limitation, any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
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6.2.6 COLLECTION OF ACCOUNTS, PROCEEDS OF COLLATERAL. To expedite
collection, Borrower shall endeavor in the first instance to make collection
of its Accounts for Lender. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a
Default or an Event of Default to notify Account Debtors that Accounts have
been assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including attorneys' fees to
Borrower.
6.3 Administration of Inventory.
---------------------------
6.3.1 RECORDS AND REPORTS OF INVENTORY. Borrower shall keep accurate
and complete records of its inventory. Borrower shall furnish to Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each month, not later than the twentieth
day of such month. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Lender a report based on each
such physical inventory promptly thereafter, together with such supporting
information as Lender shall request.
6.3.2 RETURNS OF INVENTORY. If at any time or times hereafter any
Account Debtor returns any Inventory to Borrower the shipment of which
generated an Account on which such Account Debtor is obligated in excess of
$100,000, Borrower shall immediately notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory.
6.4 Administration of Equipment.
---------------------------
6.4.1 RECORDS AND SCHEDULES OF EQUIPMENT. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity
and value of its Equipment and all dispositions made in accordance with
subsection 6.4.2 hereof, and shall furnish Lender with a current schedule
containing the foregoing information on at least an annual basis and more often
if reasonably requested by Lender. Immediately on request therefor by Lender,
Borrower shall deliver to Lender any and all evidence of ownership, if any, of
any of the Equipment.
6.4.2 DISPOSITIONS OF EQUIPMENT. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply, for so long as.no Default or Event
of Default exists, to (i) dispositions of Equipment which, in the aggregate
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during any consecutive twelve-month period, has a fair market value or book
value, whichever is less, of $100,000 or less, provided that all proceeds
thereof are remitted to Lender for application to the Revolving Credit
Loans,/or (ii) replacements of Equipment that is substantially worn, damaged or
obsolete with Equipment of like kind, function and value, provided that the
replacement Equipment shall be acquired prior to or concurrently with any
disposition of the Equipment that is to be replaced, the replacement Equipment
shall be free and clear of Liens other than Permitted Liens that are not
Purchase Money Liens, and Borrower shall have given Lender at least 5 days
prior written notice of such disposition.
6.5 PAYMENT OF CHARGES. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral,
shall be payable on demand and shall bear interest from the date such advance
was made until paid in full at the rate applicable to Revolving Credit Loans
from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
7.1.1 ORGANIZATION AND QUALIFICATION. Each of Parent, Borrower and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Parent, Borrower and its Subsidiaries is duly qualified and is authorized to
do business and is in good standing as a foreign corporation in each state or
jurisdiction listed on EXHIBIT C hereto and in all other states and
jurisdictions in which the failure of Parent or Borrower or any of its
Subsidiaries to be so qualified would have a material adverse effect on the
financial condition, business or Properties of Borrower or Parent, Borrower and
its Subsidiaries, taken as a whole.
7.1.2 CORPORATE POWER AND AUTHORITY. Each of Parent, Borrower and
its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform each of the Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate action and
do not and will not (i) require any consent or approval of the shareholders of
Parent or Borrower or any of its Subsidiaries; (ii) contravene Parent's or
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause Parent or Borrower or any of
its Subsidiaries to be in default under, any provision of any law, rule,
regulation, order, writ, judgment,
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injunction, decree, determination or award in effect having applicability
to Parent or Borrower or any of its Subsidiaries; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Parent or Borrower or any of its
Subsidiaries is a party or by which Parent or Borrower or its Subsidiaries'
Properties may be bound or affected; or (v) result in, or require, the creation
or imposition of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by Parent or Borrower or
any of its Subsidiaries.
7.1.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered, under this Agreement will be, a legal,
valid and binding obligation of each of Parent, Borrower and its Subsidiaries
executing such document, enforceable against such party in accordance with its
respective terms.
7.1.4 CAPITAL STRUCTURE. Exhibit D hereto states (i) the correct name
of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by Borrower, (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary of Borrower and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower.
Borrower has good title to all of the shares it purports to own of the stock of
each of its Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such shares have been duly issued and are fully paid and
non-assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell,
or any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its
Subsidiaries. There are no outstanding agreements or instruments binding upon
any of Borrower's shareholders relating to the ownership of its shares of
capital stock.
7.1.5 CORPORATE NAMES. Neither Borrower, Parent nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on EXHIBIT E hereto. Except as set forth on EXHIBIT E,
neither Borrower, Parent nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all
of the assets of any Person.
7.1.6 BUSINESS LOCATIONS; Agent for Process. Each of Parent's,
Borrower's and its Subsidiaries' chief executive office and other places of
business are as listed on EXHIBIT B hereto. During the preceding one-year
period, neither Parent, Borrower nor any of its Subsidiaries has had an office,
place of
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business or agent for service of process other than as listed on EXHIBIT B.
Except as shown on EXHIBIT B, no inventory is stored with a bailee,
warehouseman or similar party, nor is any Inventory consigned to any Person.
7.1.7 TITLE TO PROPERTIES; PRIORITY OF LIENS. Each of Parent, Borrower
and its Subsidiaries has good, indefeasible and marketable title to and fee
simple ownership of, or valid and subsisting leasehold interests in, all of its
real Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of Borrower's Properties that is not a Permitted Lien
The Liens granted to Lender under Section 5 hereof are first priority Liens,
subject only to Permitted Liens.
7.1.8 ACCOUNTS. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to be, and it is
not evidenced by an instrument or a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of goods
or rendition of services by Borrower in the ordinary course of its business
and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which has
been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is not, and
Borrower has no knowledge that such Account will (by voluntary act or
omission of Borrower) be in the future, subject to any offset, Lien,
deduction, defense, dispute, counterclaim or any other adverse condition
except for disputes resulting in returned goods where the amount in
controversy is reasonably deemed by Lender to be immaterial, and each such
Account is absolutely owing to Borrower and is not contingent in any
respect or for any reason;
(v) Borrower has made no agreement with any Account Debtor thereunder
for any extension, compromise,
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settlement or modification of any such Account or any deduction therefrom,
except discounts or allowances which are granted by Borrower in the ordinary
course of its business for prompt payment and which are reflected in the
calculation of the net amount of each respective invoice related thereto and
are reflected in the Schedules of Accounts submitted to Lender pursuant to
subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any way impair
the validity or enforceability of any Accounts or tend to reduce the amount
payable thereunder from the face amount of the invoice and statements
delivered to Lender with respect thereto;
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor
thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
7.1.9 EQUIPMENT. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained
and preserved, reasonable wear and tear excepted. Borrower will not permit any
of the Equipment to become affixed to any real Property leased to Borrower so
that an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form acceptable to Lender, and
Borrower will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to first priority
(except for Permitted Liens) Liens in favor of Lender.
7.1.10 FINANCIAL STATEMENTS; FISCAL YEAR. The consolidated and
consolidating balance sheets of Parent, Borrower and such other Persons
described therein (including the accounts of all Subsidiaries of Borrower for
the respective periods during which a Subsidiary relationship existed) as of
September 30, 1994, and the related statements of income, changes in
stockholder's equity, and changes in financial position for the periods ended
on such dates, have been prepared in accordance with GAAP, and present fairly
the financial positions of Parent, Borrower and such Persons at such dates and
the results of
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Borrower's operations for such periods. Since September 30, 1994, there has
been no material adverse change in the condition, financial or otherwise, of
Parent, Borrower and such other Persons as shown on the Consolidated balance
sheet as of such date and no change in the aggregate value of Equipment and
real Property owned by Borrower or such other Persons, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. The fiscal year of Parent, Borrower and each of its
Subsidiaries ends on December 31 of each year.
7.1.11 FULL DISCLOSURE. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower, Parent or any Subsidiary to Lender, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact which
Borrower has failed to disclose to Lender in writing which materially affects
adversely or, so far as Borrower can now foresee, will materially affect
adversely the Properties, business, prospects, profits or condition (financial
or otherwise) of Borrower or of Parent, Borrower and its Subsidiaries, taken as
a whole, or the ability of Parent, Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.
7.1.12 SOLVENT FINANCIAL CONDITION. Borrower is and Parent, Borrower
and its Subsidiaries collectively on a Consolidated basis are now and, after
giving effect to the Loans to be made and the Letters of Credit and LC
Guaranties to be issued hereunder, at all times will be, Solvent.
7.1.13 SURETY OBLIGATIONS. Neither Parent, Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into or any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person, except as set forth in Exhibit T.
7.1.14 TAXES. Borrower's federal tax identification number is
04-1090960. The federal tax identification number of Parent and each of
Borrower's Subsidiaries is shown on EXHIBIT F hereto. Parent, Borrower and each
of its Subsidiaries has filed all federal, state and local tax returns and
other reports it is required by law to file and has paid, or made provision for
the payment of, all taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrower maintains reasonable reserves on its books therefor.
The provision for taxes on the books of Borrower and its Subsidiaries are
adequate for all years
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not closed by applicable statutes, and for its current fiscal year.
7.1.15 BROKERS. There are no claims for brokerage commissions, finder's
fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each of Parent,
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for the present
and planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit G hereto.
7.1.17 GOVERNMENTAL CONSENTS. Each of Parent, Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate
its Properties as now owned or leased by it.
7.1.18 COMPLIANCE WITH LAWS. Each of Parent, Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations
and leaseholds are in compliance in all material respects with, the provisions
of all federal, state and local laws, rules and regulations applicable to
Parent, Borrower or such Subsidiary, as applicable, its Properties or the
conduct of its business including, without limitation, all applicable
Environmental Laws, and there have been no citations, notices or orders of
noncompliance issued to Parent, Borrower or any of its Subsidiaries under any
such law, rule or regulation, except as set forth in Exhibit U. Each of Parent,
Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it including, without
limitation, all applicable Environmental Laws. No Inventory has been produced
in violation of the Fair Labor Standards Act (29 U.S.C. section 201 ET SEQ.),
as amended.
7.1.19 RESTRICTIONS. Neither Parent, Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its
business or the use or ownership of any of its Properties. Neither Parent,
Borrower nor any of its Subsidiaries is a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness, other
than as set forth on EXHIBIT H hereto, none of which prohibit the execution of
or compliance with this Agreement or the other Loan Documents by Parent,
Borrower or any of its Subsidiaries, as applicable.
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7.1.20 LITIGATION. Except as set forth on EXHIBIT I hereto, there are
no actions, suits, proceedings or investigations pending, or to the knowledge
of Borrower, threatened, against or affecting Parent, Borrower or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of Parent, Borrower or any of its Subsidiaries. Neither Parent,
Borrower nor any of its Subsidiaries is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal.
7.1.21 NO DEFAULTS. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or Borrower's
performance hereunder, constitute a Default or an Event of Default. Neither
Parent, Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage
of time or the giving of notice or both would constitute, a default in the
payment of any Indebtedness to any Person for Money Borrowed.
7.1.22 LEASES. EXHIBIT J hereto is a complete listing of all
capitalized leases of Parent, Borrower and its Subsidiaries and EXHIBIT K
hereto is a complete listing of all operating leases of Parent, Borrower and
its Subsidiaries. Each of Borrower and its Subsidiaries is in full compliance
with all of the terms of each of its respective capitalized and operating
leases.
7.1.23 PENSION PLANS. Except as disclosed on EXHIBIT L hereto, neither
Parent, Borrower nor any of its Subsidiaries has any Plan. Parent, Borrower and
each of its Subsidiaries is in full compliance with the requirements of ERISA
and the regulations promulgated thereunder with respect to each Plan. No fact
or situation that could result in a material adverse change in the financial
condition of Parent, Borrower and its Subsidiaries taken as a whole exists in
connection with any Plan. Neither Parent, Borrower nor any of its Subsidiaries
has any withdrawal liability in connection with a Multiemployer Plan.
7.1.24 TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between (a) Borrower or (b) Parent, Borrower and its
Subsidiaries, taken as a whole, and any customer or any group of customers
whose purchases individually or in the aggregate are material to the business
of Parent, Borrower or any of its Subsidiaries, or with any material supplier,
and there exists no present condition or state of facts or circumstances
which would materially and adversely affect Borrower or Borrower and its
Subsidiaries, taken as whole, or prevent Borrower or Borrower and its
Subsidiaries, taken as whole, from conducting such business after the
consummation of
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the transaction contemplated by this Agreement in substantially the same manner
in which it has heretofore been conducted.
7.1.25 LABOR RELATIONS. Except as described on EXHIBIT M hereto,
neither Parent, Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Parent's or
Borrower's or any of its Subsidiaries' employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any
union or organization.
7.2 CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Parent's or Borrower's or its Subsidiaries' business
or operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Parent, Borrower and its Subsidiaries contained in this Agreement
or any of the other Loan Documents shall survive the execution, delivery and
acceptance thereof by Lender and the parties thereto and the closing of the
transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 AFFIRMATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 VISITS AND INSPECTIONS. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of Parent, Borrower and
each of its Subsidiaries, inspect, audit and make extracts from its books and
records, and discuss with its officers, its employees and its independent
accountants, Parent's, Borrower's and each of its Subsidiaries' business,
assets, liabilities, financial condition, business prospects and results of
operations.
8.1.2 NOTICES. Promptly notify Lender in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
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8.1.3 FINANCIAL STATEMENTS. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities
in which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrower's certified public accountants concur in any change
therein and such change is disclosed to Lender and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal year
of Borrower, unqualified audited financial statements of Borrower and
its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified
public accountants of recognized standing selected by Borrower but
acceptable to Lender (except for a qualification for a change in
accounting principles with which the accountant concurs);
(ii) not later than 30 days after the end of each month
hereafter, including the last month of Borrower's fiscal year,
unaudited interim financial statements of Borrower and its Subsidiaries
as of the end of such month and of the portion of Parent's and
Borrower's financial year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Borrower
and its Subsidiaries for such month and period subject only to changes
from audit and year-end adjustments and except that such statements
need not contain notes;
(iii) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which Parent has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which
Parent files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan; and
(v) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Parent's or Borrower's and each of its
Subsidiaries' financial condition or results of operations.
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Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Borrower shall forward to Lender a copy of
the accountants' letter to Parent's and Borrower's management that is prepared
in connection with such financial statements. Concurrently with the delivery of
the financial statements described in clauses (i) and (ii) of this subsection
8.1.3, or more frequently if requested by Lender, Borrower shall cause to be
prepared and furnished to Lender a Compliance Certificate in the form of
EXHIBIT N hereto executed by the Chief Financial Officer of Borrower.
8.1.4 LANDLORD AND STORAGE AGREEMENTS. Provide Lender with copies of
all agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
8.1.5 GUARANTOR FINANCIAL STATEMENTS. Deliver or cause to be
delivered to Lender financial statements for each Guarantor in form and
substance satisfactory to Lender at such intervals and covering such time
periods as Lender may request.
8.1.6 PROJECTIONS. No later than 30 days prior to the end of each
fiscal year of Borrower, deliver to Lender Projections of Borrower for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month
by month.
8.2 NEGATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
8.2.1 MERGERS; CONSOLIDATIONS; ACQUISITIONS. Merge or consolidate, or
permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person.
8.2.2 LOANS. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person except as set forth on EXHIBIT O hereto.
8.2.3 TOTAL INDEBTEDNESS. Create, incur, assume, or suffer to exist, or
permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this Agreement;
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(iii) Indebtedness of any Subsidiary of Borrower to Borrower;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than 120 days from billing date or more than 60 days from the due
date, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are being actively contested
in good faith and by appropriate and lawful proceedings; and Parent,
Borrower or such Subsidiary shall have set aside such reserves, if any,
with respect thereto as are required by GAAP and deemed adequate by
Parent, Borrower or such Subsidiary and its independent accountants;
(v) Obligations to pay Rentals permitted by subsection
8.2.13;
(vi) Permitted Purchase Money Indebtedness (including
Capitalized Lease Obligations);
(vii) Indebtedness existing as of the Closing Date set forth
on Exhibit V_ PROVIDED, THAT, Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto
as in effect on the date hereof, or (B) redeem, retire, defease,
purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and Borrower
shall furnish to Lender all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf, promptly
after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be; and
(viii) Such additional Indebtedness as Lender may hereafter
approve in writing.
8.2.4 AFFILIATE TRANSACTIONS. Enter into, or be a party to, or permit
any Subsidiary of Borrower to enter into or be a party to, any transaction with
any Affiliate of Parent or Borrower or stockholder, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to Borrower than would obtain in
a comparable arm's length transaction with a Person not an Affiliate or
stockholder of Parent, Borrower or such Subsidiary.
8.2.5 LIMITATION ON LIENS. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
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(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in Lender's
judgment such Lien does not adversely affect Lender's rights or the
priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required and such Liens do
not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the
operation of Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) such other Liens as appear on EXHIBIT P hereto; and
(vii) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Subordinated Debt. Make, or permit any Subsidiary of Borrower to
make, any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with the Subordination Agreement relative thereto.
8.2.7 DISTRIBUTIONS. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions except as set forth on EXHIBIT Q
hereto.
8.2.8 CAPITAL EXPENDITURES. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as
to Parent, Borrower and its Subsidiaries, exceed the amounts set forth below
for the period corresponding thereto:
PERIOD AMOUNT
January 1, 1995 through December 31, 1995 $5,000,000
January 1, 1996 through December 31, 1996 $4,650,000
January 1, 1997 through December 31, 1997 $4,900,000
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8.2.9 DISPOSITION OF ASSETS. Except as set forth on Exhibit
X_, sell, lease or otherwise dispose of any of, or permit any Subsidiary of
Borrower to sell, lease or otherwise dispose any of, its Properties, including
any disposition of Property as part of a sale and leaseback transaction, to or
in favor of any Person, except (i) sales of Inventory in the ordinary course of
business for so long as no Event of Default exists hereunder, (ii) a transfer
of Property to Borrower by Parent or a Subsidiary of Borrower or (iii)
dispositions expressly authorized by this Agreement.
8.2.10 STOCK OF SUBSIDIARIES. Permit any of its Subsidiaries
to issue any additional shares of its capital stock except director's
qualifying shares.
8.2.11 BILL-AND-HOLD SALES, ETC. Make a sale to any customer
on a bill-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis, except for
consignment sales made in the ordinary course of the Borrower's business, and
in a manner consistent with the Borrower's past practices, set forth on Exhibit
W. Borrower shall notify Lender of any new consignment accounts by immediately
submitting to Lender a revised Exhibit W when any new consignment account is
opened.
8.2.12 RESTRICTED INVESTMENT. Make or have, or permit any
Subsidiary of Borrower to make or have, any Restricted Investment.
8.2.13 LEASES. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of 12 consecutive months
under the lease in question and all other leases under which Borrower or any of
its Subsidiaries is then lessee would exceed $750,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.14 TAX CONSOLIDATION. File or consent to the filing of any
consolidated income tax return with any Person other than Parent and a
Subsidiary of Borrower.
8.2.15 GUARANTIES. Guarantee, assume, endorse or otherwise, in
any way, become directly or contingently liable with respect to the
Indebtedness of any Person except by endorsement of instruments or items of
payment for deposit or collection.
8.3 SPECIFIC FINANCIAL COVENANTS. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
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8.3.1 MINIMUM WORKING CAPITAL. Maintain at all time Consolidated
Working Capital of not less than the amount shown for the period corresponding
thereto:
Period Amount
------ ------
Closing Date $250,000
December 1, 1994 through December 31, 1994 ($500,000)
January 1 through March 31 of each year ($3,000,000)
Apri1 through June 30 of each year $0
July 1 through September 30 of each year $2,000,000
October 1 through December 31 of each year $1,000,000
8.3.2 MINIMUM ADJUSTED TANGIBLE NET WORTH. Maintain at all times a
Consolidated Adjusted Tangible Net worth of not less than the amount shown
below for the period corresponding thereto:
Period Amount
------ ------
Closing Date through June 29, 1995 $15,000,000
June 30, 1995 through September 29, 1995 $16,500,000
September 30, 1995 through June 29, 1996 $17,500,000
June 30, 1996 through September 29, 1996 $19,000,000
September 30, 1996 through June 29, 1997 $20,000,000
June 30, 1997 through September 29, 1997 $21,500,000
September 30, 1997 through June 29, 1998 $22,500 000
8.3.3 CASH FLOW. Achieve Cash Flow for each fiscal quarter of not
less than the amount show below for the period corresponding thereto:
Period Amount
------ ------
January 1, 1995 through March 31, 1995 ($2,500,000)
January 1, 1995 through June 30, 1995 ($500,000)
January 1, 1995 through September 30, 1995 $1,000,000
January 1, 1995 through December 31, 1995 $750,000
Each fiscal quarter end thereafter,
retrospectively, for the preceding four
fiscal quarters $750,000
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make any
Loan under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
9.1 DOCUMENTATION. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly
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executed copy of this Agreement and the other Loan Documents, together with
such additional documents, instruments and certificates as Lender and its
counsel shall require in connection therewith from time to time, all in form and
substance satisfactory to Lender and its counsel.
9.2 NO DEFAULT. No Default or Event of Default shall exist.
9.3 OTHER LOAN DOCUMENTS. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.
9.4 AVAILABILITY. Lender shall have determined that immediately
after Lender has made the initial Loans and issued the initial Letters of
Credit and LC Guaranties contemplated hereby, and paid all closing costs
incurred in connection with the transactions contemplated hereby, Availability
shall not be less than $2,000,000.
9.5 NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of, or which is related to or
arises out of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 EVENTS OF DEFAULT. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 PAYMENT OF NOTES. Borrower shall fail to pay any
installment of principal, interest or premium, if any, owing on the Term Notes.
10.1.2 PAYMENT OF OTHER OBLIGATIONS. Borrower shall fail to pay
any of the Obligations that are not evidenced by the Term Notes on the due date
thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise).
10.1.3 MISREPRESENTATIONS. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.
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10.1.4 BREACH OF SPECIFIC COVENANTS. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2,
5.3, 6.1, 6.2, 6.3, 6.4, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that
Borrower is required to perform, keep or observe such covenant.
10.1.5 BREACH OF OTHER COVENANTS. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
10.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 20 days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.
10.1.6 DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. Any
event of default shall occur under, or Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in, any of the Security Documents; or the Other Agreements; and such
default shall continue beyond any applicable grace period.
10.1.7 OTHER DEFAULTS. There shall occur any default or event
of default on the part of Borrower under any agreement, document or instrument
to which Borrower is a party or by which Borrower or any of its Property is
bound, creating or relating to any Indebtedness (other than the Obligations) if
the payment or maturity of such Indebtedness is accelerated in consequence of
such event of default or demand for payment of such Indebtedness is made.
10.1.8 UNINSURED LOSSES. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 ADVERSE CHANGES. There shall occur any material adverse
change in the financial condition or business prospects of Borrower or Parent,
Borrower and its Subsidiaries, taken as a whole.
10.1.10 INSOLVENCY AND RELATED PROCEEDINGS. (I) Borrower or
Borrower and the Guarantors taken as a whole shall cease to be Solvent or (ii)
Borrower or any Guarantor shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
Borrower or any Guarantor under the Bankruptcy Code (if against Borrower or any
Guarantor, the continuation of such proceeding for more than 30 days), or
Borrower or any Guarantor shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally.
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10.1.11 BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of Borrower or Parent, Borrower
and its Subsidiaries, taken as a whole, for a period which significantly
affects Borrower's or Parent, Borrower and its Subsidiaries' capacity to
continue its or their business on a profitable basis; or Borrower or Parent,
Borrower and its Subsidiaries shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by such entities which is
necessary to the continued or lawful operation of its or their business; or
Borrower or Parent, Borrower and its Subsidiaries, taken as a whole, shall be
enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which Borrower or
Parent, Borrower and its Subsidiaries, taken as a whole, leases, uses or
occupies any Property shall be canceled or terminated prior to the expiration
of its stated term; or any part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired through
condemnation.
10.1.12 CHANGE OF OWNERSHIP. Parent shall cease to own and
control, beneficially and of record, all of the issued and outstanding capital
stock of Borrower.
10.1.13 ERISA. A Reportable Event shall occur which Lender, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for
any Plan, or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrower, any Subsidiary of Borrower or any
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from Borrower's, such
Subsidiary's or such Guarantor's complete or partial withdrawal from such Plan.
10.1.14 CHALLENGE TO AGREEMENT. Borrower, any Subsidiary of
Borrower or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of
this Agreement, or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Lender.
10.1.15 REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
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10.1.16 CRIMINAL FORFEITURE. Borrower, any Subsidiary of
Borrower or any Guarantor shall be criminally indicted or convicted under any
law that could lead to a forfeiture of any Property of Borrower, any Subsidiary
of Borrower or any Guarantor.
10.1.17 JUDGMENTS. Any money judgment, writ of attachment or
similar process is filed against Borrower, any Subsidiary of Borrower or any
Guarantor, or any of their respective Property, and is not paid or bonded, in
full, or dismissed within 10 days of such filing.
10.2 ACCELERATION OF THE OBLIGATIONS. Without in any way limiting
the right of Lender to demand payment of any portion of the Obligations payable
on demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations, PROVIDED, that upon the
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all
of the Obligations shall become automatically due and payable without
declaration, notice or demand by Lender.
10.3 OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
10.3.1 All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan Documents, and none of
which shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender,
in its sole discretion, may deem advisable. Borrower agrees that 10 days
written notice to Borrower of any public or private sale or
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other disposition of Collateral shall be reasonable notice thereof, and such
sale shall be at such locations as Lender may designate in said notice. Lender
shall have the right to conduct such sales on Borrower's premises without
charge therefor and such sales may be adjourned from time to time in accordance
with applicable law. Lender shall have the right to sell, lease or otherwise
dispose of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Lender may purchase all or any part of the Collateral
at public or, if permitted by law, private sale and, in lieu of actual payment
of such purchase price, may set off the amount of such price against the
Obligations. The proceeds realized from the sale of any Collateral may be
applied, after allowing 2 Business Days for collection, first to the costs,
expenses and attorneys' fees incurred by Lender in collecting the Obligations,
in enforcing the rights of Lender under the Loan Documents and in collecting,
retaking, completing, protecting, removing, storing, advertising for sale,
selling and delivering any Collateral, second to the interest due upon any of
the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower and each Guarantor shall remain jointly and
severally liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenemes, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, require Borrower to deposit
with Lender funds equal to the LC Amount and, if Borrower fails to promptly
make such deposit, Lender may advance such amount as a Revolving Credit Loan
(whether or not an Overadvance is created thereby). Any such deposit or advance
shall be held by Lender as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have
been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4 REMEDIES CUMULATIVE; NO WAIVER. All covenants,
conditions, provisions, warranties, guaranties, indemnities, and other
undertakings of Borrower contained in this Agreement and the other Loan
Documents, or in any document referred to herein or contained in any agreement
supplementary hereto or in any schedule or in any Guaranty Agreement given to
Lender or contained in any other agreement between Lender and Borrower,
heretofore, concurrently, or hereafter entered into, shall be
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deemed cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained. The failure
or delay of Lender to require strict performance by Borrower of any provision
of this Agreement or to exercise or enforce any rights, Liens, powers, or
remedies hereunder or under any of the aforesaid agreements or other documents
or security or Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements, Liens, rights,
powers, and remedies shall continue in full force and effect until all Loans
and all other Obligations owing or to become owing from Borrower to Lender
shall have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in this
Agreement or any of the other Loan Documents and no Event of Default by
Borrower under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by
a duly authorized representative of Lender and directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 POWER OF ATTORNEY. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender)
as Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to Borrower and in either Borrower's or
Lender's name, but at the cost and expense of Borrower:
11.1.1 At such time or times upon or after the occurrence of a
Default or an Event of Default as Lender or said agent, in its sole discretion,
may determine, endorse Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control.
11.1.2 At such time or times upon or after the occurrence of
an Event of Default as Lender or its agent in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection
of the Accounts; (ii) settle, adjust, compromise, discharge or release any of
the Accounts or other Collateral or any legal proceedings brought to collect
any of the Accounts or other Collateral; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of
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lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify
postal authorities to change the address for delivery thereof to such address
as Lender may designate; (vii) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral and deposit the same to
the account of Lender on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things
necessary, in Lender's determination, to fulfill Borrower's obligations under
this Agreement.
11.2 INDEMNITY. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe,
perform or discharge Borrower's duties hereunder. In addition, Borrower shall
defend Lender against and save it harmless from all claims of any Person with
respect to the Collateral. Without limiting the generality of the foregoing,
these indemnities shall extend to any claims asserted against Lender by any
Person under any Environmental Laws or similar laws by reason of Borrower's or
any other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Notwithstanding any contrary
provision in this Agreement, the obligation of Borrower under this Section 11.2
shall survive the payment in full of the Obligations and the termination of
this Agreement.
11.3 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed
by Borrower and Lender. Borrower may not sell, assign or transfer any interest
in this Agreement, any of the other Loan Documents, or any of the Obligations,
or any portion thereof, including, without limitation, Borrower's rights,
title, interests, remedies, powers, and duties hereunder or thereunder.
Borrower hereby consents to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter, of this Agreement and any
of the other Loan Documents, or of any portion hereof or thereof, including,
without limitation, Lender's rights, title, interests, remedies powers, and
duties hereunder or thereunder. Lender , will give Borrower prior notice of any
such participation, sale, assignment, transfer or other disposition. In the
case of an
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assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender" hereunder and
Lender shall be relieved of all obligations hereunder upon any such
assignments. Borrower agrees that it will use its best efforts to assist and
cooperate with Lender in any manner reasonably requested by Lender to effect
the sale of participations in or assignments of any of the Loan Documents or
any portion thereof or interest therein, including, without limitation,
assisting in the preparation of appropriate disclosure documents. Borrower
further agrees that Lender may disclose credit information regarding Borrower
and its Subsidiaries to any potential participant or assignee.
11.4 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Agreement.
11.5 SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements
and the Security Documents shall be binding upon and inure to the benefit of
the successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2
hereof and except as otherwise provided in any of the other Loan Documents by
specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute
but one and the same instrument.
11.8 NOTICE. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered
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against receipt, one Business Day after deposit in the mail, postage paid,
or with an overnight courier or, in the case of facsimile notice, when sent,
addressed as follows:
If to Lender: Barclays Business Credit, Inc.
200 Glastonbury Boulevard
Glastonbury, CT 06033
Attention: Jeffrey P. Hoffman
Facsimile No.: (203) 657-7759
With a copy to: Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, MA 02111
Attention: Jeffery L. Keffer
Facsimile No.: (617) 439-3278
If to Borrower: Bird Incorporated
980 Washington Street
Dedham, MA 02026
Attention: Joseph M. Grigelevich, Jr.
Treasurer
Facsimile No.: (617) 461-1618
With a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo
One Financial Center
Boston, MA 02111
Attention: Whitton E. Norris, III
Facsimile No.: (617) 542-2241
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; PROVIDED, HOWEVER, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2
hereof shall not be effective until received by Lender.
11.9 LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its reasonable
discretion (unless this Agreement provides otherwise) and to condition its
consent upon the giving of additional collateral security for the Obligations,
the payment of money or any other matter.
11.10 CREDIT INQUIRIES. Borrower hereby authorizes and permits Lender
to respond to usual and customary credit inquiries from third parties
concerning Borrower or any of its Subsidiaries.
11.11 TIME OF ESSENCE. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
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11.12 ENTIRE AGREEMENT. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by
the parties in connection therewith or with reference thereto embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
BOSTON, MASSACHUSETTS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS: PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN MASSACHUSETTS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM
OR INCONSISTENT WITH THE LAWS OF MASSACHUSETTS. AS PART OF THE CONSIDERATION
FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND
AGREES THAT THE SUPERIOR COURT OF SUFFOLK COUNTY, MASSACHUSETTS, OR, AT
LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT
THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
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ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL: (ii) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE
LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD;
(iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER
TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.16 PREJUDGMENT REMEDIES. BORROWER HEREBY WAIVES SUCH RIGHTS AS IT
MAY HAVE TO NOTICE AND/OR HEARING UNDER ANY APPLICABLE FEDERAL OR STATE LAWS
INCLUDING, WITHOUT LIMITATION, CONNECTICUT GENERAL STATUTES SECTIONS 52-278A,
ET-SEQ., AS AMENDED, PERTAINING TO THE EXERCISE BY LENDER OF SUCH RIGHTS AS THE
LENDER MAY HAVE INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO SEEK PREJUDGMENT
REMEDIES AND/OR DEPRIVE BORROWER OF OR AFFECT THE USE OF OR POSSESSION OR
ENJOYMENT OF BORROWER'S PROPERTY PRIOR TO THE RENDITION OF A FINAL JUDGMENT
AGAINST THE BORROWER. THE BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO
REQUIRE LENDER TO PROVIDE A BOND OR OTHER SECURITY AS A PRECONDITION TO OR IN
CONNECTION WITH ANY PREJUDGMENT REMEDY SOUGHT BY LENDER.
IN WITNESS WHEREOF, this Agreement has been duly executed in Boston,
Massachusetts, on the day and year specified at the beginning of this
Agreement.
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ATTEST: BIRD INCORPORATED
("Borrower")
By
------------------------------ --------------------------------
Clerk Title
[CORPORATE SEAL] -------------------------
Accepted in , :
------- -----------
BARCLAYS BUSINESS CREDIT, INC.
("Lender")
By
--------------------------------
Title
-------------------------
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of November 30,
1994, by and between Barclays Business Credit, Inc. and Bird Incorporated, the
following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
ACCOUNT DEBTOR - any Person who is or may become obligated under or on
account of an Account.
ACCOUNTS - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower
or in which Borrower now has or hereafter acquired any interest.
ADJUSTED NET EARNINGS FROM OPERATIONS - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes for
such fiscal period of Borrower, as reflected on the financial statement of
Borrower supplied to Lender pursuant to subsection 8.1.3 of the Agreement, but
excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of Borrower accrued prior to the
date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of Borrower) in which Borrower has an ownership interest unless
such net earnings shall have actually been received by Borrower in the form
of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of
Borrower which for any reason is unavailable for payment of dividends to
Borrower;
(vii) the earnings of any Person to which any assets of Borrower
shall have been sold, transferred of disposed of, or into which Borrower
shall have merged, or
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been a party to any consolidation or other form of reorganization,
prior to the date of such transaction;
(viii) any gain arising from the acquisition of any
Securities of Borrower; and
(ix) any non-cash gain or loss arising from
extraordinary or non-recurring items.
ADJUSTED TANGIBLE ASSETS - all assets except: (i) any surplus
resulting from any write-up of assets subsequent to September 30, 1994;
(ii) deferred assets, other than prepaid insurance and prepaid taxes; (iii)
patents, copyrights, trademarks, trade names, non-compete agreements,
franchises and other similar intangibles; (iv) goodwill, including any amounts,
however designated on a Consolidated balance sheet of a Person or its
Subsidiaries, representing the excess of the purchase price paid for assets or
stock over the value assigned thereto on the books of such Person; (v)
Restricted Investments; (vi) unamortized debt discount and expense; (vii)
assets located and notes and receivables due from obligors outside of the
United States of America; and (viii) Accounts, notes and other receivables due
from Affiliates or employees.
ADJUSTED TANGIBLE NET WORTH - at any date means a sum equal to:
(i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other
proper reserves) at which the Adjusted Tangible Assets of a Person
would be shown on a balance sheet at such date in accordance with
GAAP, minus
-----
(ii) the amount at which such Person's liabilities (other than
capital stock and surplus) would be shown on such balance sheet in
accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities.
AFFILIATE - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, a Person; (ii) which beneficially owns or
holds 5% or more of any class of the Voting Stock of a Person; or (iii) 5% or
more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held by a Person or a Subsidiary of a Person.
AGREEMENT - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
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APPLICABLE INVENTORY RATE - the following percentages with respect
to the respective types of Eligible Inventory:
Type of
-------
Eligible Inventory Percentage
------------------ ----------
Raw Materials 60%
Vinyl Products Finished Goods 60%
Roofing Materials Finished Goods 70%
AVAILABILITY - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Lender may have paid for the
account of Borrower pursuant to any of the Loan Documents and which have not
been reimbursed by Borrower) and the LC Amount is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing Base,
Availability is 0.
AVERAGE LOAN BALANCE - for any month, the amount obtained by adding
the unpaid balance of the Revolving Credit Loans and Term Loans owing by
Borrower to Lender at the end of each day for each day during the month in
question and by dividing such sum by the number of days in such month.
BEGC - Bird Environmental Gulf Coast, Inc., a Texas corporation,
of which BET owns eighty percent (80%) of the capital stock, and its
successors and assigns.
BET - Bird Environmental Technology, Inc., a Delaware corporation
and Subsidiary of Borrower, and its successors and assigns.
BANK - Shawmut Bank Connecticut, N.A.
BANKRUPTCY CODE - the Bankruptcy Reform Act of 1978, as amended and
restated from time to time, and codified as in U.S.C. [SECTION] 101 et. seq.
BASE RATE - the rate of interest generally announced or quoted by
Bank from time to time as its base rate for commercial loans, whether or not
such rate is the lowest rate charged by Bank to its most preferred borrowers;
and if such base rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
BORROWING BASE - as at any date of determination thereof, an amount
equal to the lesser of:
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(i) $39,000,000 minus the unpaid principal
balance of the Term Loans at such date; or
(ii) an amount equal to:
(a) 85% of the net amount of Eligible
Accounts outstanding at such date;
PLUS
(b) the lesser of $10,000,000 or 70% of
the net amount of Eligible Deferred Accounts outstanding
on such date;
PLUS
(c) the lesser of (1) $10,000,000 or (2)
the Applicable Eligible Inventory Advance Rate of the value
of Eligible Inventory at such date calculated on the basis of
the lower of cost or market with the cost of raw materials and
finished goods calculated on a first-in, first-out basis.
For purposes hereof, the net amount of
Eligible Accounts at any-time shall be the face amount of
such Eligible Accounts less any and all returns, rebates,
discounts (which may, at Lender's option, be calculated on
shortest terms), credits, allowances or excise taxes of any
nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such
Accounts at such time.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the Commonwealth of Massachusetts, State of
Connecticut or the State of Illinois or is a day on which banking institutions
located in any of such states are closed. The Borrowing Base will be determined
from time to time by Lender based upon the reports and information furnished
under Sections 6.2 and 6.3 hereof.
CAPITAL EXPENDITURES - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations.
CAPITALIZED LEASE OBLIGATION - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
CASH FLOW - for any period, means Borrower's Consolidated (i) Adjusted
Net Earnings from Operations for such period, PLUS
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(ii) depreciation and amortization expenses for such period, MINUS (iii)
Fixed Charges, MINUS (iv) non-financed Capital Expenditures, MINUS (v)
Distributions.
CLOSING DATE - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or
the initial Letter of Credit or LC Guaranty is issued under the Agreement.
CODE - the Uniform Commercial Code as adopted and in force in the
Commonwealth of Massachusetts, as from time to time in effect.
COLLATERAL - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any of the
Obligations.
CONSOLIDATED - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
CURRENT ASSETS - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets shown
on a balance sheet at such date in accordance with GAAP except that
amounts due from Affiliates and investments in Affiliates shall be excluded
therefrom.
CURRENT LIABILITIES - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP.
DEFAULT - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an Event
of Default.
DEFAULT RATE - as defined in subsection 2.1.2 of the Agreement.
DISTRIBUTION - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds
of the sale of Securities.
DOMINION ACCOUNT - a special account of Lender established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which Lender shall
have sole and exclusive access and control for withdrawal purposes.
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ELIGIBLE ACCOUNT - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which
Lender, in its sole credit judgment, deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an Eligible
Account- if:
(i) it arises out of a sale made by Borrower to a Subsidiary
or an Affiliate of Borrower or to a Person controlled by an Affiliate
of Borrower; or
(ii) it is unpaid for more than 60 days after the original due
date shown on the invoice; or
(iii) it is due or unpaid more than 120 days after the original
invoice date; or
(iv) 50% or more of the Accounts from the Account Debtor are
not deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account Debtor exceed 20%
of the net amount of all Eligible Accounts, to the extent of such
excess; or
(vi) any covenant, representation or warranty contained in the
Agreement with respect to such Account has been breached; or
(vii) the Account Debtor is also Borrower's creditor or supplier,
or the Account Debtor has disputed liability with respect to such Account, or
the Account Debtor has made any claim with respect to any other Account due
from such Account Debtor to Borrower, or the Account otherwise is or may become
subject to any right of setoff by the Account Debtor; or
(viii) the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other application
for relief under the federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended business, ceased to be
Solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs; or
(ix) it arises from a sale to an Account Debtor outside the
United States, unless the sale is on letter of
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credit, guaranty or acceptance terms, in each case acceptable to
Lender in its sole discretion; or
(x) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(xi) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns
its right to payment of such Account to Lender, in a manner
satisfactory to Lender, so as to comply with the Assignment of
Claims Act of 1940 (31 U.S.C. [SECTION]203 ET SEQ., as amended); or
(xii) the Account is subject to a Lien other than a Permitted
Lien; or
(xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and accepted
by the Account Debtor or the Account otherwise does not represent a
final sale; or
(xiv) the Account is evidenced by chattel paper or an instrument
of any kind, or has been reduced to judgment; or
(xv) Borrower has made any agreement with the Account Debtor
for any deduction therefrom, except for discounts or allowances which
are made in the ordinary course of business for prompt payment and
which discounts or allowances are reflected in the calculation of the
face value of each invoice related to such Account; or
(xvi) Borrower has made an agreement with the Account Debtor to
extend the time of payment thereof except for agreements entered into
in conformity with a dating program reasonably satisfactory to Lender.
ELIGIBLE DEFERRED ACCOUNT - an Account that otherwise satisfies all
the criteria for an Eligible Account, except that the Account is subject
to Borrower's deferral program as in effect on the Closing Date and it is not
unpaid for more than 60 days after the due date established pursuant to
Borrower's deferral program to but not to exceed 120 days after the original
invoice date thereof provided, that such Account shall be deemed to be an
Eligible Account only to the extent that it is due and not subject to any
credit or guarantee from the Borrower.
ELIGIBLE INVENTORY - such Inventory of Borrower (other than packaging
materials and supplies) which Lender, in its sole
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credit judgment, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory if:
(i) it iS not raw materials or finished goods, or
work-in-process that is, in Lender's opinion,. readily marketable in
its current form; or
(ii) it is not in good, new and saleable condition; or
(iii) it is slow-moving, obsolete or unmerchantable; or
(iv) it does not meet all standards imposed by any governmental
agency or authority; or
(v) it does not conform in all respects to the warranties and
representations set forth in the Agreement,
(vi) it is not at all times subject to Lender's duly perfected,
first priority security interest and no other Lien except a Permitted
Lien; or
(vii) it is not situated at a location in compliance with the
Agreement or is in transit.
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
EQUIPMENT - all machinery, apparatus, equipment, fittings, furniture
fixtures motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or
hereafter acquired by Borrower and wherever located, and all parts, accessories
and special tools and all increases and accessions thereto and substitutions
and replacements therefor.
ERISA - a the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated thereunder.
EVENT OF DEFAULT - as defined in Section 10.1 of the Agreement.
FIXED CHARGES - for any accounting period, the sum of: (i) scheduled
principal payments required to be made during such period in respect to
Indebtedness, plus (ii) Capital Expenditures not financed by borrowings under
any other financing arrangement otherwise permitted hereunder during any such
period, all determined in accordance with GAAP.
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GAAP - generally accepted account principles in the United
States of America in effect from time to time.
GENERAL INTANGIBLES - all personal property of Borrower (including
things in action) other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or acquired by
Borrower.
GUARANTORS - the Parent and each Subsidiary and any other Person who
may hereafter guarantee payment or performance of the whole or any part of
the Obligations.
GUARANTY AGREEMENTS - the Continuing Guaranty Agreements which are to
be executed by each Guarantor in form and substance satisfactory to Lender.
INDEBTEDNESS - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including, without limitation, Capitalized
Lease Obligations,
(ii) all obligations of other Persons which such Person
has guaranteed,
(iii) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the account of
such Person including obligations for letters of credit which have
been drawn upon, and
(iv) in the case of Borrower (without duplication), the
Obligations.
INTEREST EXPENSE - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP
plus the Letter of Credit and LC Guaranty fees owing for such period.
INVENTORY - all of Borrower's inventory, whether now owned or hereafter
acquired including, but not limited to, all goods intended for sale or lease by
Borrower, or for display or demonstration; all work in process; all raw
materials, including but not limited to, all sand, gravel, stone and rhyolite
granulars and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or
otherwise used or consumed
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in Borrower's business; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter acquired
by Borrower.
KENSINGTON - Kensington Partners, a Pennsylvania general partnership,
and its successors and assigns.
LC AMOUNT - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC GUARANTY - any guaranty pursuant to which Lender or any Affiliate
of Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
LETTER OF CREDIT - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.
LIEN - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
LOAN ACCOUNT - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
LOAN DOCUMENTS - the Agreement, the Other Agreements and the Security
Documents.
LOANS - all loans and advances of any kind made by Lender pursuant to
the Agreement.
MONEY BORROWED - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any such
case arising from the lending by any Person of money to Borrower, (A) which is
represented bynotes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of Borrower under any
guaranty of obligations that would constitute
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Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if
owed directly by Borrower.
MORTGAGES - the mortgage, security agreement and financing statements
to be executed by Borrower and Guarantors on or about the Closing Date in favor
of Lender and by which Borrower shall grant and convey to Lender, as security
for the Obligations, a Lien upon the real Property of Borrower and/or
Guarantors located at Norwood, Massachusetts, Walpole, Massachusetts;
Barnstable, Massachusetts; Franklin Massachusetts; Wrentham, Massachusetts; and
Bardstown, Kentucky.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
of ERISA.
NET WORTH - at any date of determination thereof, (i) the aggregate
amount of all assets of Borrower and its Subsidiaries on a Consolidated basis
as may be properly classified as such, less (ii) the aggregate amount of all
liabilities of Borrower [and its Subsidiaries on a Consolidated basis], all as
determined in accordance with GAAP.
OBLIGATIONS - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrower to Lender of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising and however acquired.
ORIGINAL TERM - as defined in Section 4.1 of the Agreement.
OTHER AGREEMENTS - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other third
party and delivered to Lender in respect of the transactions contemplated by
the Agreement.
OVERADVANCE - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Borrowing Base.
PARENT - Bird Corporation, a Massachusetts corporation and its
successors and assigns.
PARTICIPATING LENDER - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
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PERMITTED LIENS - any Lien of a kind specified in subsection 8.2.5
of the Agreement.
PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed $2,000,000 on the Closing Date and not more than
$2,000,000 incurred in each fiscal year of the Borrower thereafter. For the
purposes of this definition, the principal amount of any Purchase Money
Indebtedness consisting of capitalized leases shall be computed as a
Capitalized Lease Obligation.
PERSON - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
PLAN - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
PROJECTIONS - Borrower's forecasted Consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements, and
(d) capitalization statements all , prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
PROPERTY - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
PURCHASE MONEY INDEBTEDNESS - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the purchase
price of any fixed assets, (ii) any Indebtedness (other than the Obligations)
incurred at the time of or within 10 days prior to or after the acquisition of
any fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof, but
not any increases in the principal amounts thereof outstanding at the time.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
RENTALS - as defined in subsection 8.2.12 of the Agreement.
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RENEWAL TERMS - as defined in Section 4.1 of the Agreement.
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA.
RESTRICTED INVESTMENT - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to the
extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one
year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and
(vi) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than 270 days
from the date of creation thereof.
REVOLVING CREDIT LOAN - a Loan made by Lender as provided in Section 2.1
of the Agreement.
SAN LEON FACILITY - the waste processing facility owned by BAGC located
in San Leon, Texas.
SCHEDULE OF ACCOUNTS - as defined in subsection 6.4.1 of the Agreement.
SEASONAL OVERADVANCE - a Revolving Credit Loan made pursuant to
subsection 1.1.2.
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SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
SECURITY DOCUMENTS - the Guaranty Agreements, the Mortgages, Trademark
Collateral Assignment and Security Agreement, Patent Collateral Assignment and
Security Agreement, Collateral Assignment of Licenses, Permits and Contracts,
Collateral Assignments of Leases and Rents, Environmental Indemnities, Pledge
and Security Agreements, and all other instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations.
SOLVENT - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
STOCKHOLDER'S EQUITY - at any date, the sum of Borrower's stated
capital, paid-in surplus and retained earnings, less treasury stock, all as
determined in accordance with GAAP, and specifically not including any
reevaluation surplus.
SUBORDINATED DEBT - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Lender.
SUBORDINATION AGREEMENT - a Subordination Agreement among Borrower,
Lender and the holder of any Subordinated Debt, in form and substance
satisfactory to Lender.
SUBSIDIARY - any corporation, partnership, joint venture or other
entity of which a Person owns, directly or indirectly through one or more
intermediaries, 50% or more of the Voting Stock at the time of determination.
TERM LOANS - the Loans described in subsections 1.2.1 and 1.2.2 of the
Agreement.
TERM NOTES - the Secured Promissory Notes to be executed by Borrower on
or about the Closing Date in favor of Lender to evidence the Term Loans which
shall be in the form of EXHIBITS A-1 AND A-2 to the Agreement.
TOTAL CREDIT FACILITY - $39,000,000.
TOTAL LIABILITIES - at any date means all amounts properly classified
as liabilities on a balance sheet at such date in accordance with GAAP, plus
all reserves for contingencies.
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VINYL PRODUCTS DIVISION - the vinyl products manufacturing operation of
Borrower which is primarily located in Bardstown, Kentucky.
VOTING STOCK - Securities of any class or classes of a corporation,
partnership, joint venture or other legalentity the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a majority of
the corporate directors (or Persons performing similar functions).
WORKING CAPITAL - at any date means Current Assets minus Current
Liabilities.
OTHER TERMS. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents
and list of exhibits appear as a matter of convenience only and shall not
affect the interpretation of the Agreement. All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any of the Loan Documents shall
include any and all modifications thereto and any and all extensions or
renewals thereof.
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