SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission File No. 1-5027
AMDURA CORPORATION
(Exact name of Registrant as Specified in Its Charter)
Delaware 41-0121800
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
900 Main Street South
Suite 2A, Building B
Southbury, Connecticut 06488-0870
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, Including Area Code:
(203) 262-0570
_________________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
___________ _________
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes X No
_________ _________
The number of shares outstanding of the registrant's only class
of Common Stock, $.01 par value, as of the close of business on
November 1, 1994 was 24,664,709.<PAGE>
<PAGE>
AMDURA CORPORATION
FORM 10-Q
For the quarterly period ended September 30, 1994
CONTENTS
Page
____
PART I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets . . . . . . . . 3
Consolidated Condensed Statements
of Operations . . . . . . . . . . . . . . . . . . . 4
Consolidated Condensed Statements
of Changes in Stockholders' Capital . . . . . . . . 5
Consolidated Condensed Statements
of Cash Flows . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Condensed
Financial Statements . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . 11
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . 15
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . 17
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
_________________________________________________________________
<CAPTION>
September 30,
1994 December 31,
ASSETS (Unaudited) 1993
___________ ____
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,720 $ 4,377
Accounts and notes receivable, net 20,611 16,676
Inventories 39,516 33,179
Other current assets 2,336 2,148
___________ ___________
Total current assets 66,183 56,380
Property, plant and equipment, net 39,065 38,240
Other Assets:
Reorganization value in excess of amounts
allocable to identifiable assets, net 10,355 11,824
PBGC Trust 1,807 3,122
Other assets 3,686 2,935
_________ __________
15,848 17,881
_________ __________
Total assets $ 121,096 $ 112,501
========= ==========
LIABILITIES AND STOCKHOLDERS' CAPITAL
Current Liabilities:
Notes payable $ 1,247 $ 2,062
Trade accounts payable 10,851 8,468
Accrued expenses 18,114 17,504
Current maturities of long-term debt:
Related party Bank Group 507
Other 1,146 188
__________ __________
Total current liabilities 31,358 28,729
Long-Term Debt:
Related party Bank Group 24,583
Other
25,264 89
Other long-term liabilities
11,461 12,680
___________ __________
Total liabilities 68,083 66,081
Stockholders' capital 53,013 46,420
___________ __________
Total liabilities and stockholders'
capital $ 121,096 $ 112,501
=========== =========
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Amounts)
_________________________________________________________________
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1994 1993 1994 1993
____ ____ ____ ____
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 39,041 $ 31,105 $ 105,217 $ 98,621
Other 228 73 396 245
______ ________ __________ ________
Total revenues 39,269 31,178 105,613 98,866
Cost of products sold 31,119 24,843 83,435 78,829
______ ________ __________ ________
Gross margin 8,150 6,335 22,178 20,037
Selling and administration 6,549 5,198 17,433 15,906
______ ________ __________ ________
Income before special charges,
interest and taxes 1,601 1,137 4,745 4,131
Special charges 1,875 1,875
Interest:
Related party Bank Group 469 410 1,384 1,215
Other 34 112 148 331
______ ________ __________ ________
Total interest 503 522 1,532 1,546
______ ________ __________ ________
Income (loss) before (777) 615 1,338 2,585
income tax (benefit)
Income tax (benefit) (125) 89 817 176
________ ________ __________ ________
Net income (loss) $ (652) $ 526 $ 521 $ 2,409
======== ======== ========== ========
Net income (loss) per common
and common equivalent share $ (.03) $ .02 $ .02 $ .10
======= ======== ========== ========
Weighted average number of
common and common equivalent
shares used in computing net
income (loss) per share
26,798 24,862 25,605 25,220
====== ======== ========= ========
See notes to consolidated condensed financial statements.
</TABLE>
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<PAGE>
<TABLE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' CAPITAL
(Unaudited)
(In Thousands)
_________________________________________________________________
<CAPTION>
Cumulative Excess
Common AdditionalAccumulated Translation Pension
Stock Capital Deficit Adjustments Liability Total
_____ _______ _______ ___________ _________ _____
<S> <C> <C> <C> <C> <C> <C>
Balance,
January 1,
1993 $ 125 $ 66,772 $ (19,676) $ (1,119) $ -0- $ 46,102
Net income 2,409 2,409
Conversion of
Series A
Preferred
Stock 120 (120) -0-
Exercise of
Warrants 11 11
Other (2) (482) (484)
______ _________ ________ _________ _________ _________
Balance,
September 30,
1993 $ 245 $ 66,661 $ (17,267) (1,601) $ -0- $ 48,038
===== ========= ========== =========== ======== =========
Balance,
January 1,
1994 $ 245 $ 66,728 $ (16,871) $ (1,811) $ (1,871) $ 46,420
Net income 521 521
Issuance of
Series B
Preferred
Stock 5,378 5,378
Cash
dividends
declared on
Series B
Preferred
Stock (108) (108)
Exercise
of Warrants 1 338 339
Other 2 461 463
______ _________ __________ ________ _________ _______
Balance,
September 30,
1994 $ 246 $ 72,446 $ (16,458) $ (1,350) $ (1,871) $ 53,013
====== ======== ========== ========= ========= ========
See notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
_________________________________________________________________
<CAPTION>
Nine Months Ended September 30,
1994 1993
_______________ _____________
<S> <C> <C>
Operating Activities:
Net income $ 521 $ 2,409
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 4,999 4,627
Provision for deferred income taxes 660
Change in operating assets and
liabilities:
Accounts and notes receivable (3,935) (3,265)
Inventories (2,753) 2,908
Trade accounts payable 2,383 (392)
Other assets and liabilities 13 (5,930)
_________ _________
Net cash provided by
operating activities 1,888 357
_________ _________
Investing Activities:
Capital expenditures (3,012) (1,941)
Other 9 208
_________ _________
Net cash used in
investing activities (3,003) (1,733)
_________ _________
Financing Activities:
Proceeds from issuance of
long-term debt and notes payable 26,274 391
Principal payments of long-term
debt and notes payable (26,047) (470)
Preferred stock dividends paid (108)
Proceeds from exercise of warrants 339
_________ _________
Net cash provided by (used in)
financing activities 458 (79)
_________ _________
Decrease in cash and cash equivalents (657) (1,455)
_________ _________
Cash and cash equivalents at beginning
of period 4,377 6,909
_________ _________
Cash and cash equivalents at end of
period $ 3,720 $ 5,454
========= =========
Supplemental Information:
Cash payments for:
Interest $ 1,532 $ 1,495
Income taxes 48 80
See notes to consolidated condensed financial statements.
</TABLE>
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<PAGE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED SEPTEMBER 30, 1994
(Unaudited)
________________________________________________________________
1. ACCOUNTING POLICIES
The unaudited consolidated condensed financial statements
reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results
of operations and financial position for the periods
presented and which are of a normal recurring nature.
Accounting policies for the periods ended September 30, 1994
and 1993, are the same as those outlined in the Annual Report
on Form 10-K of Amdura Corporation (the "Company" or
"Amdura") filed for the fiscal year ended December 31, 1993.
The information presented herein represents only condensed
financial data and should be read in connection with the
Annual Report on Form 10-K.
2. INVENTORIES
September 30,
(In Thousands) 1994 December 31,
(Unaudited) 1993
______________ ____________
Finished goods $16,469 $ 15,822
Work-in-process 15,751 11,855
Raw materials 9,514 6,216
_________ _________
Total 41,734 33,893
Allowance to
adjust the carrying
value of certain
inventories to a
LIFO basis (427) (138)
_________ _________
Total before
advance payments 41,307 33,755
Less advance payments (1,791) (576)
_________ _________
Total $39,516 $ 33,179
========= =========
Inventories valued using the LIFO method comprised 84.8
percent and 81.1 percent of inventories at September 30, 1994
and December 31, 1993, respectively.
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<PAGE>
3. LONG-TERM DEBT
Effective September 30, 1994, Amdura refinanced $25,090,000
in long-term debt with Sanwa Business Credit Corporation, as
Agent, and Bank of Oklahoma, N.A. The previous group of
lenders was composed of a group of certain stockholders of
the Company. Proceeds from the Loan Agreements, which were
entered into by The Crosby Group, Inc. and The Harris Waste
Management Group, Inc., both wholly-owned subsidiaries of
Amdura Corporation, which is the guarantor of all of the
obligations under the Crosby and Harris Loan Agreements, were
used to pay the outstanding principal and interest under the
former Amended and Restated Senior and Subordinated Term Loan
Agreements, loan closing fees and other costs incidental to
the borrowing.
Each of the Crosby and Harris Loan Agreements provide for a
Revolving Credit Facility, a Term Loan and a CAPEX Loan. At
the selection of the borrower, the loans may be divided into
(a) Base Rate Loans, which accrue interest at one-half of one
percent, for the Revolving Loan, and one percent, for the
Term and CAPEX Loans, over the highest "prime rate of
interest" quoted, from time to time, by The Wall Street
Journal; or (b) LIBOR Rate Loans, which accrue interest at
two percent, for the Revolving Loan, and two and one-half
percent, for the Term and CAPEX Loans, over the London
interbank offered rates for deposits in U.S. dollars quoted
by selected banks. The Loan Agreements also require the
payment of a 0.5 percent fee on the average unused available
Revolving Loan balance and other annual fees. Interest and
fees on the Revolving, Term and CAPEX Loans are generally
payable monthly.
The total availability under the Loan Agreements is
$45,000,000. This availability is subject to limitations
such that, until such time as an additional financial
institution(s) satisfactory to the Lenders and the Company
shall commit at least $10,000,000 to the loans, the draws
against the loans shall be limited to: (a) $24,000,000 on the
Revolving Loans; (b) $11,000,000 on the Term Loans; and (c)
$-0- on the CAPEX Loans.
According to the Loan Agreements, the maximum allowable
balances on the Revolving Loans are $16,000,000 and
$14,000,000 for Crosby and Harris, respectively, but in total
are currently limited to $24,000,000. The Revolving Loans
are also subject to restrictions based on eligible accounts
receivable and inventory, as defined by the Loan Agreements,
and are also limited by outstanding letters of credit issued
thereunder. As of September 30, 1994, the balances in the
Revolving Loans for Crosby and Harris were $8,323,000 and
$6,500,000, respectively. The Revolving Loans mature on
October 1, 1997, and are subject to extension at the option
of the Lenders.
According to the Loan Agreements, the maximum allowable
balances on the Term Loans are $8,000,000 and $3,000,000 for
Crosby and Harris, respectively . The balances of these loans
as of September 30, 1994 were the maximum amounts. The
maturity date of the Term Loans is October 1, 2001, and the
Loan Agreements provide for quarterly principal payments,
which commence April 1, 1995, of $286,000 for Crosby and
$107,000 for Harris.
According to the Loan Agreements, advances under the CAPEX
Loans shall be used solely for the purchase of equipment or
real property, subject to limitations provided by the Loan
Agreements. There were no balances outstanding on the CAPEX
Loans as of September 30, 1994. Each advance under the CAPEX
Loans shall be evidenced by separate installment notes and
require repayment in 24 equal quarterly installments
commencing six months or less from the date of advance.
The long-term debt is secured by substantially all of the
assets of Amdura, Crosby and Harris.
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<PAGE>
Covenants contained in the Loan Agreements require minimum
consolidated tangible net worth, limit the total amount of funded
debt and require that consolidated cash flow be sufficient to
cover debt service. The Company, Crosby and Harris are in
compliance with all financial covenants in the Loan Agreements.
4. COMMITMENTS AND CONTINGENCIES
Settlement of Securities Class Actions
In January 1990, an action styled Saul Jones, et al. vs.
Amdura Corporation. et al., Case No 90-F-167 (the "Jones
Complaint") was commenced in the United States District Court
for the District of Colorado. This action purported to be
brought on behalf of a class of all persons who purchased
Amdura's old common stock during the "class period", December
27, 1988 through November 14, 1989, and alleged, under
Section 10(b) and 2b(a) of the Securities Exchange Act of
1934, claims to the effect that Amdura's public business and
financial disclosures were materially false or misleading
during this period. The Jones complaint named Amdura and
certain former directors as defendants. An action initially
styled Amfax Company. et al. vs. Amdura Corporation. et al.,
case No 90-F-500 (the "Amfax Complaint") in the same forum
and based on similar legal theories, for the "class period"
December 27, 1988 through March 19, 1990, was commenced in
March 1990 on behalf of holders of Amdura's old common stock
and its old preferred stock, Series D. The Amfax Complaint
named the same defendants and certain additional former
Amdura directors as the Jones Complaint. Upon its 1990 filing
of a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code, Amdura was severed from the
Jones Complaint and the Amfax Complaint because of the
automatic stay of actions pending against companies that file
for bankruptcy. During the bankruptcy proceedings, both
actions proceeded as to the individual defendants, and the
plaintiffs and individual defendants subsequently reached a
settlement agreement.
As a result of the consummation of Amdura's plan of
reorganization (the "Plan"), the plaintiff's' claims against
Amdura were discharged, with their rights limited to
distributions, if any, available to them under the Plan. In
this regard, prior to the confirmation of the Plan, the
Bankruptcy Court disallowed the "class claims" filed by the
plaintiffs against Amdura as part of the bankruptcy cases,
thereby leaving the individual class representatives, as
opposed to the entire class, as the only parties with
possible claims against Amdura.
The plaintiffs appealed the disallowance of such "class
claims" as well as the order of the Bankruptcy Court
confirming the Plan. On August 3, 1994, the United States
District Court for the District of Colorado issued an order
reinstating the "class claims" which had been disallowed by
the Bankruptcy Court. The order also purported to reverse the
Bankruptcy Court's order confirming the Plan. The
effectiveness of this order has been stayed, continuously
since August 3, 1994, currently until December 19, 1994.
Amdura has entered into a definitive Stipulation of
Settlement with the representatives of the plaintiff class in
the Jones and Amfax Complaints. Pursuant to the Stipulation
of Settlement, Amdura will pay $500,000 in cash and issue
approximately 564,302 shares of its common stock in exchange
for a full and final release of all claims under those
complaints. Final settlement is subject to a number of
substantive and procedural conditions, including the receipt
of approval of the settlement by the District Court. The
Company recognized a one-time special charge of $1,875,000 as
a result of this settlement.
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<PAGE>
Other Commitments and Contingencies
As discussed in Item 3, "Legal Proceedings" in Amdura's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 and in Note 13, "Commitments and Contingencies" to
the Consolidated Financial Statements, included in the 1993
Annual Report to Stockholders, there remains pending against
Amdura one administrative claim for which the parties have
reached a settlement agreement subject to approval by the
Bankruptcy Court. Amdura has a liability recorded in its
financial statements equal to the amount it will be required
to pay pursuant to this settlement agreement. In addition,
parties holding claims that have been disallowed or ruled by
the Bankruptcy Court to be unsecured may attempt to reassert
their claims as administrative or priority claims. Also,
some creditors may attempt to assert that their claims are
not discharged and should continue as post bankruptcy
obligations of the Company. Although management, in
consultation with legal counsel, is taking certain actions in
connection with defending against or resolving these claims,
it is currently not determinable if any of these claims will
be allowed by the Bankruptcy Court or, if allowed, the
ultimate liability to the Company.
The Company and its subsidiaries from time to time are
presented with claims arising out of their current and former
manufacturing and other operations, including claims
asserting personal injury arising out of the manufacture,
sale and use of the products of those businesses based on
various theories of recovery for product liability and for
workers compensation. The Company believes that no one such
outstanding claim or group of related claims is material to
the consolidated financial position of Amdura. Amdura and
its subsidiaries vigorously defend all product liability
claims, and believe that their products are safe and suitable
for their intended uses. Amdura and its subsidiaries have
comprehensive general liability insurance under various
programs which may afford total or partial coverage for
certain product claims.
The remainder of this page is intentionally left blank.
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<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial
condition and results of operations of Amdura Corporation and its
wholly-owned subsidiaries, The Crosby Group, Inc. ("Crosby") and
The Harris Waste Management Group, Inc. ("Harris"), should be
read in conjunction with the Consolidated Condensed Financial
Statements and related Notes included in Part I, Item 1 hereof
and in conjunction with the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and the Company's
1993 Annual Report to stockholders incorporated therein by
reference (the "1993 Form 10-K"). This discussion covers
activities of the Company for the three months ended September
30, 1994 ("third quarter 1994") and September 30, 1993 ("third
quarter 1993"); and for the nine months ended September 30, 1994
("year-to-date 1994") and September 30, 1993 ("year-to-date
1993").
CHANGES IN FINANCIAL CONDITION
The Company reported a consolidated net loss of ($652,000),
or ($.03) per share, for the third quarter 1994, compared to
consolidated net income of $526,000, or $.02 per share, for the
third quarter 1993. The reason for this decline in net income was
the recording of a one-time special charge of $1,875,000 for the
settlement of a 1991 bankruptcy-related legal action. Net income
of $521,000, or $.02 per share, was reported for year-to-date
1994, compared to $2,409,000, or $.10 per share, for year-to-date
1993. In addition to the special charge described above, the 1994
Statements of Operations reflect year-to-date income tax expense
of $817,000, compared to $176,000 for year-to-date 1993. The
special charge and increase in income tax expense are discussed
more fully in "Results of Operations", below.
Changes in financial condition were primarily due to the
manufacturing activities of the Company and the acquisition by
Harris of the assets and business of the Mosley line of balers
for municipal recycling and waste handling, effective April 1,
1994. The Mosley acquisition was accounted for as a purchase of
assets in exchange for 2,151 shares of the Company's Series B
Cumulative Convertible Preferred Stock, par value $.01 per share
("Series B Preferred Stock"). The purchase price of $5,378,000
was primarily allocated to inventory and equipment. The Series B
Preferred Stock is convertible into 2,151,000 shares of Common
Stock, par value $.01 per share, at the option of the holder
through April 1, 1997, whereupon unconverted shares of Series B
Preferred Stock will automatically be converted to Common Stock.
Changes in financial condition have also resulted from the
Company's payments under obligations resulting from the
bankruptcy proceedings. For year-to-date 1993, a total of
$4,060,000 was expended for bankruptcy administrative claims,
remedial activities at the CAP/SKB Landfill and professional fees
related to the 1991 bankruptcy reorganization and the 1992 term
note restructuring. By comparison, $442,000, or a reduction of
89 percent, was disbursed for these matters during year-to-date
1994. This favorable impact on Amdura's financial condition was
partially offset by an increase of $1,202,000 in contributions to
certain pension plans in accordance with a settlement with the
Pension Benefit Guaranty Corporation, from $838,000 for year-to-
date 1993 to $2,040,000 for year-to-date 1994.
The Company paid total interest and fees related to its
senior and subordinated secured loans and revolving line of
credit of $1,385,000 and $1,328,000 for year-to-date 1994 and
1993, respectively. These amounts include $681,000 and $679,000,
respectively, of interest on the
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<PAGE>
subordinated secured loan, which Amdura elected to pay in cash
rather than "in-kind" as permitted by the related loan agreement.
As described in "Liquidity Requirements and Capital Resources",
below, effective September 30, 1994, the Company refinanced the
long term debt under which this interest was previously paid.
LIQUIDITY REQUIREMENTS AND CAPITAL RESOURCES
As of September 30, 1994, current assets of the Company
exceeded current liabilities by $34,825,000. The Company
believes that cash flow from current operations is sufficient to
meet liquidity requirements for its continuing operations.
Effective September 30, 1994, Amdura refinanced $25,090,000 in
long-term debt with Sanwa Business Credit Corporation, as Agent,
and Bank of Oklahoma, N.A. The previous group of lenders was
composed of a group of certain stockholders of the Company.
Proceeds from the Loan Agreements, which were entered into by
Crosby Harris and guaranteed by Amdura, were used to pay the
outstanding principal and interest under the former Amended and
Restated Senior and Subordinated Term Loan Agreements, loan
closing fees and other costs incidental to the borrowing.
Each of the Crosby and Harris Loan Agreements provide for a
Revolving Credit Facility, a Term Loan and a CAPEX Loan. At the
selection of the borrower, the loans may be divided into (a) Base
Rate Loans, which accrue interest at one-half of one percent, for
the Revolving Loan, and one percent, for the Term and CAPEX
Loans, over the highest "prime rate of interest" quoted, from
time to time, by The Wall Street Journal; or (b) LIBOR Rate
Loans, which accrue interest at two percent, for the Revolving
Loan, and two and one-half percent, for the Term and CAPEX Loans,
over the London interbank offered rates for deposits in U.S.
dollars quoted by selected banks. The Loan Agreements also
require the payment of a 0.5 percent fee on the average unused
available Revolving Loan balance and other annual fees. Interest
and fees on the Revolving, Term and CAPEX Loans are generally
payable monthly.
The total availability under the Loan Agreements is
$45,000,000. This availability is subject to limitations such
that, until such time as an additional financial institution(s)
satisfactory to the Lenders and the Company shall commit at least
$10,000,000 to the loans, the draws against the loans shall be
limited to: (a) $24,000,000 on the Revolving Loans;
(b) $11,000,000 on the Term Loans; and (c) $-0- on the CAPEX
Loans.
According to the Loan Agreements, the maximum allowable
balances on the Revolving Loans are $16,000,000 and $14,000,000
for Crosby and Harris, respectively, but in total are currently
limited to $24,000,000. The Revolving Loans are also subject to
restrictions based on eligible accounts receivable and inventory,
as defined by the Loan Agreements, and are also limited by
outstanding letters of credit issued thereunder. As of September
30, 1994, the balances in the Revolving Loans for Crosby and
Harris were $8,323,000 and $6,500,000, respectively. The
Revolving Loans mature on October 1, 1997, and are subject to
extension at the option of the Lenders.
According to the Loan Agreements, the maximum allowable
balances on the Term Loans are $8,000,000 and $3,000,000 for
Crosby and Harris, respectively. The balances of these loans as
of September 30, 1994 were the maximum amounts. The maturity date
of the Term Loans is October 1, 2001, and the Loan Agreements
provide for quarterly principal payments, which commence April 1,
1995, of $286,000 for Crosby and $107,000 for Harris.
According to the Loan Agreements, advances under the CAPEX
Loans shall be used solely for the purchase of equipment or real
property, subject to limitations provided by the Loan Agreements.
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<PAGE>
There were no balances outstanding on the CAPEX Loans as of
September 30, 1994. Each advance under the CAPEX Loans shall be
evidenced by separate installment notes and require repayment in
24 equal quarterly installments commencing six months or less
from the date of advance.
The long-term debt is secured by substantially all of the
assets of Amdura, Crosby and Harris. Covenants contained in the
Loan Agreements require minimum consolidated tangible net worth,
limit the total amount of funded debt and require that
consolidated cash flow be sufficient to cover debt service. The
Company, Crosby and Harris are in compliance with all financial
covenants in the Loan Agreements.
The terms of the refinanced Loan Agreements, when compared to
the former Amended and Restated Senior, Subordinated and
Revolving Credit Agreements, generally result in a lower interest
rate and an extended period over which principal will be repaid.
In addition, the refinanced Loan Agreements provide $10,000,000
of higher borrowing capacity.
In addition to the foregoing, Amdura's foreign subsidiaries
have available working capital credit agreements of $5,254,000.
As of September 30, 1994, the foreign subsidiaries had
outstanding indebtedness of $1,247,000 under these agreements.
RESULTS OF OPERATIONS
Total revenues for the third quarter 1994 were $39,269,000,
consisting of $24,742,000 at Crosby and $14,457,000 at Harris.
This represents a 26 percent increase over revenues for the third
quarter 1993. Consolidated year-to-date 1994 revenues were
$105,613,000, or 6.8 percent above year-to-date 1993. These
favorable increases are due to a continued recovery in domestic
markets due to improvements in the North American economy and the
addition of sales of a recently-acquired business of Harris.
Costs of products sold increased 25.3 percent from the third
quarter 1993 to 1994 and 5.8 percent from the year-to-date 1993
to 1994. The Company's gross margin as a percentage of sales
improved from 20.3 to 20.8 percent for the third quarter and from
20.3 to 21.0 percent for the year-to-date reporting periods.
Reasons for this improvement include increased manufacturing
efficiencies and the reduction of certain controllable overhead
expenses included in costs of products sold.
Third quarter 1994 selling and administration expenses were
$1,351,000, or 26 percent, above third quarter 1993. Year-to-
date 1994 selling and administration expenses were $1,527,000, or
9.6 percent, above year-to-date 1993. These changes are
consistent with the increases experienced in total revenues and
also reflect increased marketing and engineering costs associated
with the Company's efforts to expand its businesses, particularly
Harris' efforts to develop sales in international markets. These
increased selling and administration expenses were partially
offset by a favorable resolution of certain matters related to
the Amdura bankruptcy reorganization which occurred during the
second quarter of 1994.
Interest expense was approximately the same for the 1994 and
1993 third quarter and year-to-date periods. This was due to the
increase in the interest rate paid on the Company's senior term
loan, offset by reductions in debt outstanding on foreign lines
of credit and capital leases. As discussed above in "Liquidity
Requirements and Capital Resources", the Company refinanced its
long-term debt effective September 30, 1994.
As discussed in Part I, "Financial Information", Note 3,
"Commitments and Contingencies - Settlement of Securities Class
Actions", the Company has entered into a definitive Stipulation of
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<PAGE>
Settlement with the representatives of the plaintiff class in
securities class actions which were commenced in 1990. Pursuant
to the Stipulation of Settlement, Amdura will pay $500,000 in
cash and issue approximately 564,302 shares of its common stock.
In the third quarter 1994, Amdura recognized a one-time special
charge of $1,875,000 as a result of this settlement.
For the third quarter 1994, Amdura reported a loss before
income tax benefit of ($777,000), compared to income before taxes
of $615,000 for the third quarter 1993. The year-to-date income
before taxes was $1,338,000 and $2,585,000 for 1994 and 1993,
respectively. The reason for this decline was primarily due to
the special charge for settlement of securities class actions
described, offset by the improved results of operations.
The remainder of this page is intentionally left blank.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
________
The following documents are filed or incorporated by
reference as Exhibits to this Quarterly Report on Form
10-Q:
Exhibit Number Description
______________ ___________
10.1 Parent Guaranty (excluding the schedules and
exhibits thereto), dated as of September 30, 1994,
by Amdura Corporation in favor of Sanwa Business
Credit Corporation.
10.2 Loan Agreement (excluding the schedules and
exhibits thereto), dated as of September 30, 1994,
among The Crosby Group, Inc. as Borrower, the
Lenders named therein and Sanwa Business Credit
Corporation, as agent.
10.3 Loan Agreement (excluding the schedules and
exhibits thereto), dated as of September 30, 1994,
among The Harris Waste Management Group, Inc. as
Borrower, the Lenders named therein and Sanwa
Business Credit Corporation, as agent.
11.1 Calculation of Net Income (Loss) per Common Share
and Common Equivalent Share.
27.1 Financial Data Schedule.
(b) During the third quarter of 1994, Amdura filed the
following Current Reports on Form 8-K:
Current Report on Form 8-K, dated June 30, 1994, filed
with respect to Items 5 and 7 on July 21, 1994.
Current Report on Form 8-K, dated August 12, 1994, filed
with respect to Items 5 and 7 on August 12, 1994.
Current Report on Form 8-K, dated August 15, 1994, filed
with respect to Items 5 and 7 on August 16, 1994.
Current Report on Form 8-K, dated August 17, 1994, filed
with respect to Items 5 and 7 on August 18, 1994.
Current Report on Form 8-K, dated August 19, 1994, filed
with respect to Items 5 and 7 on August 22, 1994.
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<PAGE>
(b) During the third quarter of 1994, Amdura filed the
following Current Reports on Form 8-K
(continued):
Current Report on Form 8-K, dated August 23, 1994, filed
with respect to Items 5 and 7 on August 24, 1994.
Current Report on Form 8-K, dated August 29, 1994, filed
with respect to Items 5 and 7 on August 30, 1994.
Current Report on Form 8-K, dated September 9, 1994,
filed with respect to Items 5 and 7 on September 12, 1994.
The remainder of this page is intentionally left blank.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
AMDURA CORPORATION
Date: November 11, 1994 By /s/ C. David Bushley
_________________________________
C. David Bushley, Senior Vice
President, Finance and
Administration and Chief
Financial Officer and
Accounting Officer)
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<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
Sequentially
Exhibit No. Description Numbered Page
___________ ___________ _____________
<S> <C> <C>
10.1 Parent Guaranty (excluding the schedules and
exhibits thereto), dated as of September 30,
1994, by Amdura Corporation in favor of
Sanwa Business Credit Corporation . . . . . . . 19
10.2 Loan Agreement (excluding the schedules and
exhibits thereto), dated as of September 30, 1994,
among The Crosby Group, Inc. as Borrower, the
Lenders named therein and Sanwa Business Credit
Corporation, as agent . . . . . . . . . . . . . 46
10.3 Loan Agreement (excluding the schedules and
exhibits thereto), dated as of September 30, 1994,
among The Harris Waste Management Group, Inc.
as Borrower, the Lenders named therein and Sanwa
Business Credit Corporation, as agent . . . . . 146
11.1 Calculation of Net Income Per Common
Share and Common Equivalent Share . . . . . . . 246
27.1 Financial Data Schedule . . . . . . . . . . . . 247
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<PAGE>
PARENT GUARANTY
_______________
This GUARANTY("Guaranty") is dated as of September 30,
1994, by AMDURA CORPORATION, a Delaware corporation
("Guarantor"), having its principal place of business and chief
executive office at 900 Main Street South, Suite 2A, Southbury,
Connecticut 06488, in favor of SANWA BUSINESS CREDIT CORPORATION,
a Delaware corporation as agent ("Agent") on behalf of the
Lenders, having an office at One South Wacker Drive, Chicago,
Illinois 60606. Unless otherwise defined herein, all capitalized
terms used herein shall have the meaning assigned to such terms
in the Loan Agreements.
WHEREAS, the Guarantor is the legal and beneficial
owner of all of the issued and outstanding capital stock of The
Crosby Group, Inc., a Delaware corporation ("Crosby") and The
Harris Waste Management Group, Inc., a Delaware corporation
("Harris") (Crosby and Harris being collectively referred to
herein as the "Debtors"); and
WHEREAS, the Agent and the Lenders have entered into
(i) that certain Loan Agreement of even date herewith (as the
same may hereafter be amended, supplemented or otherwise modified
from time to time, the "Crosby Loan Agreement") with Crosby and
(ii) that certain Loan Agreement of even date herewith (as the
same may hereafter be amended, supplemented or otherwise modified
from time to time, the "Harris Loan Agreement") with Harris (the
Harris Loan Agreement and the Crosby Loan Agreement being
collectively referred to herein as the "Loan Agreements"); and
WHEREAS, each Debtor will become liable for its
respective Obligations including, without limitation, loans and
other financial accommodations from the Lenders (including the
Agent in its individual capacity) under the Loan Agreements (all
Obligations being referred to herein as the "Guaranty
Indebtedness"); and
WHEREAS, the Guarantor will derive substantial direct
benefit and advantage from the financial accommodations to the
Debtors set forth in the Loan Agreements, including the loans and
advances made to the Debtors thereunder, and it will be to the
Guarantor's direct interest and economic benefit to assist the
Debtors in procuring such financial accommodations from the
Lenders; and
WHEREAS, a condition to the Agent and the Lenders
entering into the Loan Agreements is that the Guarantor execute
and deliver this Guaranty;
NOW, THEREFORE, for and in consideration of the
premises and in order to induce the Agent and the Lenders to
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<PAGE>
enter into the Loan Agreements and the Lenders to make loans
thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees as follows:
SECTION 1. Definitions.
___________
When used herein, the following terms shall have the
following meanings:
"Acquisition" shall mean any transaction, or any
series of related transactions, consummated after the date of
this Agreement, by which the Guarantor or any Subsidiary
acquires, directly or indirectly, any business or all or
substantially all of the assets of the business of any Person,
whether through purchase of assets, merger or otherwise.
"Affiliate" shall mean any Person (a) that
directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with the
Guarantor, including, without limitation, the officers and
directors of the Guarantor, (b) that directly or beneficially
owns or holds ten percent (10%) or more of any equity interest in
the Guarantor, or (c) ten percent (10%) or more of whose voting
stock (or in the case of a Person which is not a corporation, ten
percent (10%) or more of any equity interest) is owned directly
or beneficially or held by the Guarantor. Affiliate shall not be
deemed to include the Agent or any Lender. As used herein, the
term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to
direct the management or policies of a Person, whether through
ownership of securities, by contract or otherwise.
"Comfort Letter" shall mean that certain letter,
dated January 12, 1993, executed by the Guarantor in favor of
Generale Bank as in effect on the date hereof whereby the
Guarantor agrees to certain undertakings with respect to N.V.
Crosby Europe.
"ERISA Affiliate" shall mean any Person, trade or
business that is, or was at any time during the previous six (6)
years, along with the Guarantor, treated as a single employer for
any purpose under Section 414 of the IRC.
"Financial Statements" shall have the meaning
ascribed thereto in subsection 7(a) hereof.
"Indebtedness" shall mean at a particular time (i)
indebtedness for borrowed money or for the deferred purchase
price of property or services (other than current accounts
payable arising in the ordinary course of business on terms
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customary in the trade) in respect of which the Guarantor is
liable, contingently or otherwise, as obligor or otherwise or any
commitment by which the Guarantor assures a creditor against
loss, including contingent reimbursement obligations with respect
to letters of credit, (ii) indebtedness guaranteed in any manner
by the Guarantor, including guaranties in the form of an
agreement to repurchase or reimburse; provided that the amount of
indebtedness represented by any guaranty of limited recourse
shall be the lesser of the amount of indebtedness so guaranteed
or the value of the asset to which the recourse of such
indebtedness is limited to, (iii) obligations under leases which
shall have been or should be, in accordance with Generally
Accepted Accounting Principles, recorded as capital leases in
respect of which obligations the Guarantor is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or
in respect of which obligations the Guarantor assures a creditor
against loss, and (iv) all accounts payable of the Guarantor,
which are not being contested in good faith and which are more
than ninety (90) days past due.
"Material Adverse Effect" shall mean, as
determined by the Required Lenders in their reasonable business
judgment, a material adverse effect upon (i) the Agent's Lien
priority in, or the value of, the Collateral, or (ii) the
business, properties, operations or condition (financial or
otherwise) of the Guarantor or any of its Subsidiaries taken as a
whole as a result of the occurrence or existence of any single
event or condition or series of events or conditions in the
aggregate or (iii) the ability of the Guarantor to perform its
obligations under any of the Financing Agreements or (iv) the
validity or enforceability of any of the Financing Documents or
the rights, powers and remedies of the Agent or any Lender to
enforce or collect the Obligations.
"Multiemployer Plan" shall mean any multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA to which
the Guarantor or any ERISA Affiliate contributes or was required
to contribute within the immediately preceding six (6) years.
"Plan" shall mean any employee benefit plan within
the meaning of Section 3(3) of ERISA (other than any
Multiemployer Plan) under which the Guarantor or any ERISA
Affiliate is, or was at any time within the previous six (6)
years, an "employer" within the meaning of Section 3(5) of ERISA.
"Restricted Payment" shall mean: (a) any dividend
or other distribution, direct or indirect, on account of any
shares of any class of stock of the Guarantor now or hereafter
outstanding; (b) any redemption, conversion (other than the
conversion of Series B preferred stock of the Guarantor and of
options to acquire capital stock into common stock in accordance
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with their respective terms), exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value
direct or indirect of any shares of any class of stock of the
Guarantor now or hereafter outstanding; (c) any payment or
prepayment of principal of premium, if any, or interest on, fees
with respect to, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with
respect to Subordinated Debt of the Guarantor; (d) any payment
made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class
of stock of the Guarantor now or hereafter outstanding; or (e)
any payment by the Guarantor of any management fees, advisor fees
or similar fees whether pursuant to a management agreement or
otherwise to any Affiliate of the Guarantor.
"Subordinated Debt" shall mean any Guaranty
Indebtedness issued or otherwise owing by the Guarantor in favor
of any Subsidiary (a) the payment of which is subordinated to the
payment of the Obligations and (b) which is incurred pursuant to
documentation or entry in the financial records of such
Subsidiary in form and substance satisfactory to the Agent in its
sole discretion.
"Subsidiary" of a Person shall mean (i) any
corporation of which more than fifty percent (50%) of the
outstanding securities having ordinary voting power to elect a
majority of the board of directors is at any time of
determination, directly or indirectly, owned or controlled by
such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any
partnership, association, trust, grantor trust, joint venture or
similar business organization more than 50% of the equity or
partnership interests having ordinary voting power or power of
direction of which shall at any time of determination be so owned
or controlled. Unless otherwise expressly provided or the
context requires otherwise, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Guarantor.
SECTION 2. Guaranty of Payment.
___________________
(a) The Guarantor hereby absolutely and
unconditionally guarantees the full and prompt payment to the
Agent, for the benefit of the Lenders, when due, upon demand, at
maturity or by reason of acceleration or otherwise and at all
times thereafter, of any and all existing and future Guaranty
Indebtedness.
(b) The Guarantor acknowledges that valuable
consideration supports this Guaranty, including, without
limitation, the consideration set forth in the recitals above as
well as any commitment to lend, extension of credit or other
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<PAGE>
financial accommodation, whether heretofore or hereafter made by
the Lenders to the Debtors; any extension, renewal or replacement
of any of the Guaranty Indebtedness; any forbearance with respect
to any of the Guaranty Indebtedness or otherwise; any
cancellation of an existing guaranty; any purchase of either of
the Debtors' assets by the Lenders; or any other valuable
consideration.
(c) The Guarantor agrees that all payments under this
Guaranty shall be made in United States currency and in the same
manner as provided for the Guaranty Indebtedness.
SECTION 3. Costs and Expenses.
__________________
The Guarantor agrees to pay on demand, if not paid by
the Debtors, all costs and expenses of every kind incurred by the
Agent or the Lenders: (a) in enforcing this Guaranty, (b) in
collecting any of the Guaranty Indebtedness from either Debtor or
the Guarantor, (c) in realizing upon or protecting any collateral
for this Guaranty or for payment of any of the Guaranty
Indebtedness, and (d) for any other purpose related to the
Guaranty Indebtedness or this Guaranty. "Costs and expenses" as
used in the preceding sentence shall include, without limitation,
reasonable attorneys' fees incurred by the Agent or any Lender in
retaining counsel for advice, suit, appeal, any insolvency or
other proceedings under the Bankruptcy Code or otherwise, or for
any purpose specified in the preceding sentence.
SECTION 4. Nature of Guaranty: Continuing, Absolute
________________________________________
and Unconditional.
_________________
(a) This Guaranty is and is intended to be a
continuing guaranty of payment of the Guaranty Indebtedness,
independent of and in addition to any other guaranty,
indorsement, collateral or other agreement held by the Agent or
the Lenders therefor or with respect thereto, whether or not
furnished by the Guarantor. The obligations of the Guarantor to
repay the Guaranty Indebtedness hereunder shall be unlimited.
(b) The Guarantor shall have no right, claim or remedy
of subrogation, reimbursement, contribution or any similar rights
against either Crosby or Harris or any other guarantor with
respect to the Guaranty Indebtedness and hereby waives all such
rights including, without limitation, any right to enforce any
remedy which Agent or any Lender now has or may hereafter have
against either Debtor, any endorser or any other guarantor of all
or any part of the Guaranty Indebtedness, and Guarantor hereby
waives any benefit of, and any right to participate in, any
security or collateral given to Agent, on behalf of the Lenders,
to secure payment of the Guaranty Indebtedness or any part
thereof or any other liability of the Debtors to the Agent or the
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<PAGE>
Lenders. If any amount shall be paid to Guarantor on account of
any payment made hereunder at any time when the Guaranty
Indebtedness shall not have been paid in full, such amount shall
be held in trust for the benefit of Agent and Lenders and shall
forthwith be paid to Agent to be credited and applied, whether
the Guaranty Indebtedness is matured or unmatured, in accordance
with the terms of the Loan Agreements. Guarantor hereby
releases each Debtor from all, and agrees not to assert or
enforce (whether by or in a legal or equitable proceeding or
otherwise) any, "claims" (as defined in Section 101(4) of the
Bankruptcy Code), whether arising under any law, statute,
governmental rule or regulation or judicial determination or
otherwise, to which Guarantor is or would at any time be entitled
by virtue of its obligations hereunder, any payment made pursuant
hereto or the exercise by Agent or Lenders of their rights with
respect to any Collateral for the Guaranty Indebtedness,
including any such claims to which Guarantor may be entitled as a
result of any right of subrogation, contribution, exoneration or
reimbursement. The Guarantor authorizes the Agent, on behalf of
the Lenders, to take any action or exercise any remedy with
respect to such collateral which the Agent, on behalf of the
Lenders, in its sole discretion shall determine, without notice
to the Guarantor. The Guarantor further agrees that any and all
claims of the Guarantor against either Debtor, any endorser or
any other guarantor of all or any part of the Guaranty
Indebtedness, or against any of their respective properties,
whether arising by reason of any payment by the Guarantor to the
Agent, on behalf of the Lenders, pursuant to the provisions
hereof, or otherwise, shall be subordinate and subject in right
of payment to the prior payment, in full, of any and all
principal and interest, all fees, all reasonable costs of
collection (including reasonable attorneys' fees and time
charges) and any other liabilities or obligations owing to the
Lenders by the Debtors which may arise either with respect to or
on any note, instrument, document, item, agreement or other
writing heretofore, now or hereafter delivered to any Lender or
the Agent. In the event the Agent, on behalf of the Lenders, in
its sole discretion elects to give notice of any action with
respect to the collateral securing the Guaranty Indebtedness or
any part thereof, fifteen (15) days' written notice mailed to the
Guarantor by ordinary mail at the address shown hereon shall be
deemed reasonable notice of any matters contained in such notice.
The Guarantor consents and agrees that the Agent, on behalf of
the Lenders, shall be under no obligation to marshall any assets
in favor of the Guarantor or against or in payment of any or all
of the Guaranty Indebtedness.
(c) For the further security of the Lenders and
without in any way diminishing the liability of the Guarantor,
following the occurrence of an Event of Default and acceleration
of the Guaranty Indebtedness of either Debtor, all debts and
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<PAGE>
liabilities, present or future of such Debtor to the Guarantor
and all monies received from such Debtor or for its account by
the Guarantor in respect thereof shall be received in trust for
the Lenders and forthwith upon receipt shall be paid over to the
Agent, for the benefit of the Lenders, until all of such Guaranty
Indebtedness has been paid in full. This assignment and
postponement is independent of and severable from this Guaranty
and shall remain in full force and effect whether or not the
Guarantor is liable for any amount under this Guaranty.
(d) This Guaranty and Guarantor's obligations
hereunder are absolute and unconditional and shall not be changed
or affected by any representation, oral agreement, act or thing
whatsoever, except as herein provided. This Guaranty is intended
by the Guarantor to be the final, complete and exclusive
expression of the guaranty agreement between the Guarantor and
the Agent, on behalf of the Lenders. No modification or
amendment of any provision of this Guaranty shall be effective
unless in writing and signed by a duly authorized officer of the
Agent, on behalf of the Lenders.
SECTION 5. Certain Rights and Obligations.
______________________________
(a) The Guarantor authorizes the Agent and the
Lenders, without notice, demand or any reservation of rights
against the Guarantor and without impairing or affecting the
validity or enforceability of this Guaranty or the Guarantor's
obligations hereunder, from time to time: (i) to renew, extend,
increase, accelerate or otherwise change the time for payment of,
the terms of or the interest on the Guaranty Indebtedness or any
part thereof or grant other indulgences to the Debtors or others;
(ii) to accept from any Person and hold collateral for the
payment of the Guaranty Indebtedness or any part thereof, and to
modify, exchange, enforce or refrain from enforcing, or release,
compromise, settle, waive, subordinate or surrender, with or
without consideration, such collateral or any part thereof; (iii)
to accept and hold any indorsement or guaranty of payment of the
Guaranty Indebtedness or any part thereof, and to discharge,
release or substitute any such obligation of any such indorser or
guarantor, or any Person who has given any security interest in
any collateral as security for the payment of the Guaranty
Indebtedness or any part thereof, or any other Person in any way
obligated to pay the Guaranty Indebtedness or any part thereof,
and to enforce or refrain from enforcing, or compromise or
modify, the terms of any obligation of any such indorser,
guarantor, or Person; (iv) to dispose of any and all collateral
securing the Guaranty Indebtedness in any manner as the Agent or
the Lenders, in their sole discretion, may deem appropriate, and
to direct the order or manner of such disposition and the
enforcement of any and all endorsements and guaranties relating
to the Guaranty Indebtedness or any part thereof as the Agent or
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the Lenders, in their sole discretion may determine; (v) except
as otherwise provided in the Loan Agreements, to determine the
manner, amount and time of application of payments and credits,
if any, to be made on all or any part of any component or
components of the Guaranty Indebtedness (whether principal,
interest, fees, costs, and expenses, or otherwise) including,
without limitation, the application of payments received from any
source to the payment of indebtedness other than the Guaranty
Indebtedness even though the Lenders might lawfully have elected
to apply such payments to the Guaranty Indebtedness to amounts
which are not covered by this Guaranty; and (vi) to take
advantage or refrain from taking advantage of any security or
accept or make or refrain from accepting or making any
compositions or arrangements when and in such manner as the Agent
or the Lenders, in their sole discretion, may deem appropriate
and generally do or refrain from doing any act or thing which
might otherwise, at law or in equity, release the liability of
Guarantor as a guarantor or surety in whole or in part, and in no
case shall the Agent or the Lenders be responsible or shall the
Guarantor be released either in whole or in part for any act or
omission in connection with the Agent or the Lenders having sold
any security at an under value.
(b) If any default shall be made in the payment of any
of the Guaranty Indebtedness and any grace period has expired
with respect thereto, the Guarantor hereby agrees to pay the same
in full to the extent hereinafter provided: (i) without
deduction by reason of any setoff, defense (other than payment)
or counterclaim of either Debtor; (ii) without requiring
presentment, protest or notice of nonpayment or notice of default
to the Guarantor, to either Debtor or to any other Person; (iii)
without demand for payment or proof of such demand or filing of
claims with a court in the event of receivership, bankruptcy or
reorganization of either Debtor; (iv) without requiring the Agent
or the Lenders to resort first to either Debtor (this being a
guaranty of payment and not of collection) or to any other
guaranty or any collateral which the Lenders may hold; (v)
without requiring notice of acceptance hereof or assent hereto by
the Agent or the Lenders; and (vi) without requiring notice that
any of the Guaranty Indebtedness has been incurred, extended or
continued or of the reliance by the Agent or the Lenders upon
this Guaranty; all of which the Guarantor hereby waives.
(c) This Guaranty and the Guarantor's obligation
hereunder shall at all times be valid and enforceable and shall
not be impaired or affected by any other agreements or
circumstances of any nature whatsoever which otherwise constitute
a defense to this Guaranty, including without limitation, any of
the following, all of which the Guarantor hereby waives: (i) any
failure or omission to perfect or continue the perfection of any
security interest in or other lien on, or preserve rights to, any
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collateral securing payment of any of the Guaranty Indebtedness
or the Guarantor's obligation hereunder; (ii) the invalidity,
unenforceability, propriety of manner of enforcement of, or loss
or change in priority of any such security interest or other lien
or guaranty of the Guaranty Indebtedness; (iii) any failure or
omission to protect, preserve or insure any such collateral; (iv)
failure of the Guarantor to receive notice of any intended
disposition of such collateral; (v) any defense arising by reason
of the cessation from any cause whatsoever of liability of either
Debtor including, without limitation, any failure, negligence or
omission by the Agent or the Lenders in enforcing their claims
against either Debtor; (vi) any waiver of any right, remedy or
power or of any default with respect to the Guaranty Indebtedness
or any part thereof or any release, settlement or compromise of
any obligation of either Debtor; (vii) the invalidity or
unenforceability of any of the Guaranty Indebtedness or the
invalidity or unenforceability of any agreement relating thereto
or with respect of any collateral securing the Guaranty
Indebtedness or any part thereof; (viii) any change of ownership
of either Debtor or the insolvency, bankruptcy or any other
change in the legal status of either Debtor; (ix) any change in,
or the imposition of, any law, decree, regulation or other
governmental act which does or might impair, delay or in any way
affect the validity, enforceability or the payment when due of
the Guaranty Indebtedness; (x) the existence of any claim, setoff
or other right which the Guarantor may have at any time against
the Agent, any Lender, either Debtor or any other guarantor in
connection herewith or any unrelated transaction; (xi) the
failure of either Debtor or the Guarantor to maintain in full
force, validity or effect or to obtain or renew when required all
governmental and other approvals, licenses or consents required
in connection with the Guaranty Indebtedness or this Guaranty, or
to take any other action required in connection with the
performance of all obligations pursuant to the Guaranty
Indebtedness or this Guaranty; (xii) the Agent's election, on
behalf of the Lenders, in any case instituted under chapter 11 of
the Bankruptcy Code, of the application of section 1111(b)(2) of
the Bankruptcy Code; (xiii) any borrowing, use of cash
collateral, or grant of a security interest by either Debtor, as
debtor in possession, under section 363 or 364 of the Bankruptcy
Code; (xiv) the disallowance of all or any portion of any of the
Lenders' claims for repayment of the Guaranty Indebtedness under
section 502 or 506 of the Bankruptcy Code; or (xv) any other fact
or circumstance which might otherwise constitute grounds at law
or in equity for the discharge or release of the Guarantor from
its obligations hereunder, all whether or not the Guarantor shall
have had notice or knowledge of any act or omission referred to
in the foregoing clauses (i) through (xv) of this subsection
5(c). It is agreed that the Guarantor's liability hereunder is
independent of any other guaranties or other obligations at any
time in effect with respect to the Guaranty Indebtedness or any
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part thereof and that the Guarantor's liability hereunder may be
enforced regardless of the existence, validity, enforcement or
non-enforcement of any such other guaranties or other obligations
or any provision of any applicable law or regulation purporting
to prohibit payment by either Debtor of the Guaranty Indebtedness
in the manner agreed upon between the Lenders and such Debtor.
SECTION 6. Representations and Warranties.
______________________________
The Guarantor represents and warrants that:
(a) Existence. The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to transact business as
a foreign corporation in, and is in good standing under the laws
of, all states in which it is required by applicable law to
maintain such qualification and good standing except where the
failure to so qualify would not have a Material Adverse Effect.
(b) Authority. The Guarantor has full power,
authority and legal right to enter into this Guaranty and the
other Financing Agreements to which the Guarantor is a party.
The execution and delivery by the Guarantor of this Guaranty and
such other Financing Agreements: (i) have been duly authorized
by all necessary action on the part of the Guarantor; (ii) are
not in contravention of the terms of the Guarantor's Certificate
of Incorporation or Bylaws or of any indenture, agreement or
undertaking to which the Guarantor is a party or by which the
Guarantor or any of its Property is bound; (iii) do not and will
not require any governmental consent, registration or approval or
the consent of any other Person that has not been obtained;
(iv) do not and will not contravene any contractual or
governmental restriction to which the Guarantor or any of its
Property may be subject; and (v) do not and will not, except as
contemplated herein, result in the imposition of any Lien upon
any Property of the Guarantor under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Guarantor is a
party or by which the Guarantor or any of its Property may be
bound or affected. The Guarantor has the full corporate
authority to own or lease and operate its property and to conduct
the business in which it is currently engaged and in which it
proposes to engage.
(c) Binding Effect. This Guaranty and all of the
other Financing Agreements to which the Guarantor is a party have
been duly executed and delivered by the Guarantor, are the legal,
valid and binding obligations of the Guarantor and are
enforceable against the Guarantor in accordance with their terms.
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(d) Financial Data. The Guarantor has furnished to
each Lender the consolidated and consolidating financial
statements (the "Financial Statements") of the Guarantor and its
Subsidiaries based on financial data as of August 31, 1994. As
of the date of this Guaranty, the Financial Statements are
complete and accurate and fairly represent the Guarantor's
consolidated assets, liabilities, financial condition and results
of operations in accordance with Generally Accepted Accounting
Principles, consistently applied, as of August 31, 1994 (subject
to normal year-end adjustment and the absence of full footnote
disclosure) and the consolidated results of their operations for
the respective periods then ended (subject to normal year-end
adjustments). There are no omissions from the Financial
Statements or other facts and circumstances not reflected in the
Financial Statements which are material. There has been no
material and adverse change in the business, operations or
condition (financial or other) of the Guarantor and its
Subsidiaries since the date of the Financial Statements.
(e) Solvency. The Guarantor is Solvent and will
continue to be Solvent following the consummation of the
transactions contemplated by this Guaranty and the Loan
Agreements.
(f) Tax Obligations. The Guarantor and each
Subsidiary have filed complete and correct federal, state and
local tax reports and returns required to be filed by it,
prepared in accordance with applicable laws or regulations, and,
except for extensions duly obtained, has either duly paid all
taxes, duties and charges owed by it, or made adequate provision
for the payment thereof. There are no material unresolved
questions or claims concerning any tax liability of the Guarantor
or any Subsidiary.
(g) Indebtedness and Liabilities. As of August 31,
1994, the Guarantor and its Subsidiaries had no Indebtedness
other than Indebtedness reflected on the Financial Statements.
Except for such Indebtedness and liabilities reflected on the
Financial Statements, the Guarantor and its Subsidiaries have no
liabilities required to be reflected on a balance sheet prepared
in accordance with GAAP (subject to normal year-end adjustments).
(h) Use of Proceeds and Margin Security. Neither the
Guarantor nor any Subsidiary is engaged, directly or indirectly,
principally, or as one of its important activities, in the
business of extending, or arranging for the extension of, credit
for the purpose of purchasing or carrying Margin Stock. As of
the date hereof, neither the Guarantor nor any Subsidiary owns
any Margin Stock. None of the proceeds of the Loans advanced or
funded under the Loan Agreements (including, without limitation,
proceeds advanced to the Guarantor by either Debtor) or any
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Restricted Payments (as defined in the Loan Agreements) or any
Restricted Debt will be used, directly or indirectly, for any
purpose which might cause any of the Loans, Letters of Credit or
other extensions of credit under the Loan Agreements or any other
Financing Agreement or any document or instrument delivered
pursuant thereto to violate any regulation of the Federal Reserve
Board. At all times less than twenty-five percent (25%) of the
value (as determined by any reasonable method) of the Property of
the Guarantor on a consolidated basis which is subject to any
limitation on sale, pledge, or other restriction hereunder or
under any other Financing Agreement will be represented by Margin
Stock.
(i) Litigation and Proceedings. As of the Closing
Date, except as disclosed on Exhibit 6.14 of the Loan Agreements,
no judgments are outstanding against the Guarantor or any
Subsidiary or binding upon any of their respective Property.
Except as disclosed on Exhibit 6.14 of the Loan Agreements, there
is not now pending or threatened, any litigation, claim,
arbitration or governmental proceeding ("Litigation") by or
against the Guarantor or any Subsidiary which, if adversely
determined, would have a Material Adverse Effect, and to the best
of the Guarantor's knowledge after diligent inquiry, there are no
presently existing facts or circumstances likely to give rise to
any such Litigation. None of the Litigation will prevent, enjoin
or delay the consummation of the transactions contemplated by the
Financing Agreements. Except as disclosed on Exhibit 6.14 of the
Loan Agreements, the items disclosed on Exhibit 6.14 will not
have a Material Adverse Effect.
(j) Compliance with Laws and Regulations. The
execution and delivery by the Guarantor of this Agreement, all of
the other Financing Agreements to which it is a party and the
performance of the Guarantor's obligations hereunder and
thereunder are not in contravention of any order applicable to
the Guarantor or, to the Guarantor's best knowledge, any laws,
regulations or ordinances the violation of which would have a
Material Adverse Effect. The Guarantor and its Subsidiaries are
in compliance with all laws, orders, regulations and ordinances
of all federal, foreign, state and local governmental authorities
relating to the business operations and the Property of the
Guarantor or a Subsidiary except for laws, orders, regulations
and ordinances the non-compliance with or violation of which
would not, in the aggregate, have a Material Adverse Effect.
(k) ERISA. (i) Neither the Guarantor nor any ERISA
Affiliate has sponsored or contributed to, or has had any
obligation under, any Plan or Multiemployer Plan other than those
identified on Exhibit 6.19 of each of the Loan Agreements.
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(ii) With respect to all Plans, the Guarantor and each
ERISA Affiliate is in compliance with the applicable provisions
of ERISA and the IRC and the PBGC Grantor Trust in all material
respects. Each Plan that is intended to be qualified under
Section 401(a) of the IRC has either been determined by the
Internal Revenue Service to be so qualified or is the subject of
a pending request to the Internal Revenue Service for a favorable
determination letter for which the Guarantor believes it is
entitled, and each trust related to such Plans has been
determined to be exempt from federal income tax under Section
501(a) of the IRC or is the subject of a pending request to the
Internal Revenue Service for a favorable determination letter for
which the Guarantor believes it is entitled. No liability has
been incurred by the Guarantor or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to
any Plan or any Multiemployer Plan or the PBGC Grantor Trust.
(l) Full Disclosure. This Guaranty, the Financial
Statements, the representations and warranties of the Guarantor
in any other Financing Agreement delivered or to be delivered by
the Guarantor, do not and will not contain any untrue statement
of a material fact or omit a material fact necessary to make the
statements contained therein or herein, in light of the
circumstances under which they were made, not misleading. There
is no material fact which the Guarantor has not disclosed to the
Agent in writing which has had or, so far as the Guarantor can
now foresee, will have a Material Adverse Effect.
(m) Subsidiaries. Exhibit 6(m) contains an accurate
list of all of the existing Subsidiaries of the Guarantor as of
the date of this Guaranty, setting forth their respective
jurisdictions of incorporation and the percentage of their
capital stock owned by the Guarantor or other Subsidiaries.
(n) Negative Pledge. Neither the Guarantor nor any of
its Subsidiaries is a party to or bound by any indenture,
contract, instrument or other agreement which prohibits the
creation, incurrence or sufferance to exist of any Lien upon its
Property, except the Financing Agreements and the Foreign
Indebtedness Documents.
(o) Plan of Reorganization. The Guarantor is in
compliance with all of the terms and conditions of the Plan of
Reorganization and the PBGC Grantor Trust.
(p) Survival of Warranties. All representations and
warranties contained in this Guaranty or any of the other
Financing Agreements to which the Guarantor is a party shall
survive the execution and delivery of this Guaranty and the
termination hereof.
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SECTION 7. Covenants
_________
The Guarantor covenants that:
(a) Financial Statements. The Guarantor shall keep
proper books of record and account in which full and true entries
will be made of all dealings or transactions in respect of or in
relation to the business and affairs of the Guarantor and its
Subsidiaries, in accordance with Generally Accepted Accounting
Principles consistently applied, and the Guarantor shall: (i)
furnish to each Lender as soon as practicable and in any event
within thirty (30) days after the end of each month, a detailed
computation of Consolidated Tangible Net Worth, Consolidated Cash
Flow Coverage and Leverage Ratio, showing the calculations
necessary to determine compliance by the Debtors with the Loan
Agreements; (ii) furnish to each Lender as soon as practicable
and in any event within ninety (90) days after the end of each
Fiscal Year, statements of net income and cash flow of the
Guarantor and its Subsidiaries for such year, and a balance sheet
of the Guarantor and its Subsidiaries as of the end of such year,
setting forth in each case, in comparative form and on a
consolidated basis, if applicable, corresponding figures for the
period covered by the preceding annual audit and as of the end of
the preceding Fiscal Year, all in reasonable detail and
satisfactory in scope to the Required Lenders and examined and
certified by Arthur Andersen L.L.P. or any other independent
public accountants of recognized national standing selected by
the Guarantor and acceptable to the Required Lenders, whose
opinion shall be in scope and substance satisfactory to the
Required Lenders; (iii) concurrently with the preparation of the
Guarantor's annual audited financial statements, send a letter to
such accountants with a copy to each Lender, notifying such
accountants that one of the primary purposes for retaining such
accountants' services and having audited financial statements
prepared by them is for use by the Lenders and such accountants
shall deliver a letter addressed to each Lender acknowledging
such Lender's reliance thereon in form and substance satisfactory
to such Lender; (iv) prior to the end of each Fiscal year,
Projections prepared in the same manner as the Projections
attached as Exhibit 6.4-2 to each of the Loan Agreements,
including projected balance sheets for the forthcoming Fiscal
Year, on a quarterly basis; projected cash flow statements
(including, without limitation, proposed Capital Expenditures)
for the forthcoming Fiscal Year, on a quarterly basis; projected
profit and loss statements for the forthcoming Fiscal Year, on a
quarterly basis, together with appropriate supporting details as
reasonably requested by any Lender; (v) as soon as practicable
and in any event within ten (10) days of delivery to the
Guarantor, furnish to each Lender a copy of any letter issued by
the Guarantor's independent public accountants or other
management consultants with respect to the Guarantor's financial
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or accounting systems or controls, including all so-called
"management letters"; and (vi) promptly upon their filing,
furnish to each Lender all regular and periodic reports and final
registration statements or other official statements and all
amendments or supplements thereto required to be filed by the
Guarantor with the Securities and Exchange Commission.
All financial statements delivered to the Lenders
pursuant to the requirements of this subsection 7(a) (except
where otherwise expressly indicated) shall be prepared in
accordance with Generally Accepted Accounting Principles
consistently applied. Changes in accounting principles or
applications shall be approved by the Lenders and the Guarantor's
independent auditors in advance and shall not be permitted to
amend or distort any financial covenant (all of which were
negotiated based on the Projections), advance rate or other
provision contained in the Loan Agreements.
The Guarantor authorizes the Agent and each Lender to
discuss the financial condition of the Guarantor and its
Subsidiaries with the Guarantor's independent public accountants
and agrees that such discussion or communication shall be without
liability to any such Person or the Guarantor's independent
public accountants. The Guarantor shall deliver a letter
addressed to such accountants authorizing them to comply with the
provisions of this subsection 7(a).
(b) Inspections and Audits. Upon reasonable notice
prior to the occurrence of a Default or Event of Default but
without notice after the occurrence thereof, the Agent, or any
Person designated by the Agent in writing, shall have the right,
from time to time hereafter, to call at the Guarantor's place or
places of business (or any other place where the Collateral or
any information relating thereto is kept or located) during
reasonable business hours, and, without hindrance or delay (i) to
inspect, audit, check and make copies of and extracts from the
Guarantor's books, records, journals, orders, receipts and any
correspondence and other data relating to the Guarantor's or any
Subsidiary's business or to any transactions between the parties
hereto, (ii) to make such verification concerning the Collateral
as the Agent may consider reasonable under the circumstances, and
(iii) to discuss the affairs, finances and business of the
Guarantor with any officers, employees or directors of the
Guarantor.
(c) Conduct of Business; Compliance With Laws. The
Guarantor shall, and shall cause each Subsidiary to, maintain its
corporate existence and all licenses, bonds, franchises, leases,
patents, contracts and other rights necessary or desirable to the
profitable conduct of its business, and shall, and shall cause
each Subsidiary to, comply with all applicable laws, rules,
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regulations and orders of any federal, state or local
governmental authority, except for such laws, rules and
regulations the violation of which would not, in the aggregate,
have a Material Adverse Effect.
(d) Claims and Taxes. (i) The Guarantor agrees to
indemnify and hold the Agent and each Lender harmless from and
against any and all claims, demands, obligations, losses,
damages, penalties, costs, and expenses (including reasonable
attorneys' fees) asserted by any Person (other than the Guarantor
or any Subsidiary) in connection with this Guaranty or the other
Financing Agreements or asserted by any Person and relating to or
in any way arising out of the possession, use, operation or
control of any of the Guarantor's or any Subsidiary's Property.
The Guarantor shall, and shall cause each Subsidiary to, file all
tax and information returns and reports required by and prepared
in accordance with applicable law and shall pay or cause to be
paid all license fees, bonding premiums and related taxes and
charges, and shall pay or cause to be paid all real and personal
property taxes, assessments and charges and franchise, income,
unemployment, use, excise, old age benefit, withholding, sales
and other taxes and other governmental charges assessed against
the Guarantor or any Subsidiary, or payable by the Guarantor or
any Subsidiary, at such times and in such manner as to prevent
any penalty from accruing or any Lien from attaching to Property
of the Guarantor or any Subsidiary; provided that the Guarantor
or such Subsidiary shall have the right to contest in good faith,
by an appropriate proceeding promptly initiated and diligently
conducted, the validity, amount or imposition of any such tax,
assessment or charge, and upon such good faith contest to delay
or refuse payment thereof (1) so long as no Lien which will have
priority over the Agent's Lien granted under the other Financing
Agreements with respect to any Collateral is filed or recorded
with respect thereto, and (2) so long as such contest does not
have a Material Adverse Effect.
(ii) The Guarantor shall notify each Lender promptly
(and in no event later than ten (10) days) after becoming aware
of the intent of the Service to assert a deficiency with respect
to it or any Subsidiary, and shall promptly (and in no event
later than five (5) days after receipt) send each Lender copies
of any notices of proposed deficiency and any notices of
deficiency received from the Service. The Guarantor shall take
all reasonable actions necessary to contest such claimed
deficiency and shall provide the Agent with periodic status
reports on such contest.
(e) Liability Insurance. The Guarantor shall, and
shall cause each Subsidiary to, maintain, at its expense, such
public liability and third party property damage insurance in
such amounts and with such deductibles as are acceptable to the
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Required Lenders naming the Agent, on behalf of the Lenders, as
an additional insured and providing the Agent with 30 days'
written notice prior to cancellation or any material change in
coverage.
(f) Encumbrances. The Guarantor shall not, nor shall
it permit any Subsidiary to, create, incur, assume or suffer to
exist any Lien of any nature whatsoever on any of its Property,
including, without limitation, the Collateral, other than (i) the
Permitted Liens and (ii) subject to the limitation set forth in
subsection 7(i) hereof, Liens granted by the Guarantor on Margin
Stock in favor of non-Affiliates to secure Restricted Debt.
(g) Indebtedness. The Guarantor shall not incur,
create, assume, become or be liable in any manner with respect
to, or suffer to exist, any Restricted Debt which might cause
any such Restricted Debt to violate any regulation of the Federal
Reserve Board. The aggregate principal amount of Restricted Debt
shall not exceed Three Million Dollars ($3,000,000) during the
term of this Guaranty; provided that for the period from the
Closing Date through the earlier of the date of entry of the
Final Order or June 30, 1995, the aggregate principal amount of
Restricted Debt shall not exceed One Million Dollars
($1,000,000); and provided further that in the event the Final
Order is not entered by June 30, 1995, the Guarantor shall not
incur any further Restricted Debt. The Guarantor shall not incur
any Restricted Debt in favor of any Debtor unless at the time of
the incurrence of any such Restricted Debt (A) the Net Worth of
Crosby and Harris shall be not less than $46,000,000 and
$17,000,000, respectively. In the event that the Net Worth of
Crosby or Harris shall at any time be less than the respective
amounts set forth above, all outstanding Restricted Debt in favor
of the Debtors at such time shall be immediately prepaid in full.
After the occurrence of a Default or an Event of Default, the
Guarantor shall not voluntarily prepay, defease, purchase,
redeem, retire or otherwise acquire any Indebtedness other than
the Obligations.
(h) Consolidations and Acquisitions. Except with the
consent of the Required Lenders, which consent shall not be
unreasonably withheld, the Guarantor shall not merge or
consolidate with, purchase, lease or otherwise acquire all or
substantially all of the assets or properties of, or acquire any
capital stock, equity interests, debt or other securities of, any
other Person (whether through an Acquisition or otherwise) except
that any Subsidiary may merge or consolidate with or into the
Guarantor; provided that the Guarantor is the surviving Person.
The Guarantor shall not dissolve, liquidate, enter into any joint
venture or become a partner in any partnership.
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(i) Investments. The Guarantor shall not make or
permit to exist Investments (including, without limitation, loans
and advances to, and other Investments in, Subsidiaries and
Affiliates), or commitments therefor, or to create any Subsidiary
except (i) Investments in Subsidiaries and other Investments in
existence on the date hereof and disclosed on Exhibit 7(i)
hereof, (ii) mergers and consolidations permitted by subsection
7(h) hereof, (iii) Investments in Persons other than Subsidiaries
in an aggregate amount during the term of this Guaranty not to
exceed Three Million Dollars ($3,000,000) of which not more than
Five Hundred Thousand Dollars ($500,000) shall be in stock
options; provided that for the period from the Closing Date
through the earlier of the date of entry of the Final Order or
June 30, 1995, the aggregate Investments in such other Persons
shall not exceed One Million Dollars ($1,000,000) of which not
more than Five Hundred Thousand Dollars ($500,000) shall be in
stock options; and provided further that in the event the Final
Order is not entered by June 30, 1995, the Guarantor shall not
make any further Investments in such other Persons.
(j) Guaranties. The Guarantor shall not make or
suffer to exist any Guaranty except (i) endorsements of
negotiable instruments for collection in the ordinary course of
business, (ii) Guaranties in favor of the Agent, for the benefit
of the Lenders, and (iii) the Comfort Letter and any other
similar agreement whereby the Guarantor on an unsecured basis
issues a Guaranty of the repayment of a Subsidiary's
Indebtedness.
(k) Disposal of Property. Except with the consent of
the Required Lenders, which consent shall not be unreasonably
withheld, the Guarantor shall not sell, lease, assign, transfer
or otherwise dispose of any of its Property, assets, business or
rights to any Person; provided that the Guarantor may sell,
transfer or otherwise dispose of Margin Stock.
(l) Restricted Payments. The Guarantor shall not,
without the prior written consent of the Required Lenders,
declare, pay, order, make or set apart any Restricted Payment;
provided that (i) the Guarantor may pay dividends payable solely
in shares of stock to the holders of that stock, and (ii) so long
as no Default or Event of Default has occurred or, after giving
effect thereto, would occur, the Guarantor may pay cash dividends
on its capital stock; provided that the aggregate amount of all
cash dividends paid on all classes of capital stock for any
Fiscal Year shall not exceed twenty-five percent (25%) of Net
Income for such Fiscal Year.
(m) Securities. The Guarantor shall not, nor shall it
permit any of its Subsidiaries to, issue or distribute any of its
capital stock for any Acquisition not permitted under subsection
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7(h) or redeem, repurchase or acquire any of its capital stock or
debt securities of any description for consideration or
otherwise; provided that the Guarantor may redeem, repurchase or
acquire its capital stock for the purpose of funding any Plan in
lieu of cash contributions.
(n) Changes in Charter, Bylaws or Fiscal Year. The
Guarantor shall not (i) permit any amendment to its certificate
of incorporation or bylaws or its corporate structure which could
have a Material Adverse Effect , or (ii) change its Fiscal Year,
without the Required Lenders' prior written consent which shall
not be unreasonably withheld.
(o) Transactions with Affiliates. The Guarantor shall
not enter into any transaction including, without limitation, the
purchase, sale, lease or exchange of property or the rendering or
purchase of any service to or from any Affiliate except (i) in
the ordinary course of and pursuant to the reasonable
requirements of the Guarantor's business and upon fair and
reasonable terms no less favorable to the Guarantor than the
Guarantor would obtain in a comparable arm's length transaction
with an unaffiliated Person and (ii) Investments permitted by
subsection 7(i) hereof.
(p) Corporate Accounts. The Guarantor shall not
maintain corporate deposit accounts jointly with any Affiliate or
commingle any funds with funds of any Affiliate.
(q) Purchase of Stock. The Guarantor shall not use
any proceeds of any Loan or Letter of Credit for any purpose
which might cause any of the Loans or Letters of Credit or other
extensions of credit under the Loan Agreements to violate any
regulation of the Federal Reserve Board.
(r) Negative Pledges. The Guarantor shall not enter
into or assume any agreement (other than the Financing
Agreements) containing a negative pledge provision which would
require a sharing of any interest in the Collateral or
prohibiting or limiting the creation or assumption of any Lien
upon its Property, whether now owned or hereafter acquired.
SECTION 8. Termination.
___________
This Guaranty shall remain in full force and effect
until all of the Guaranty Indebtedness shall be finally and
irrevocably paid in full and the Commitments under the Loan
Agreements shall have been terminated. Payment of all of the
Guaranty Indebtedness from time to time shall not operate as a
discontinuance of this Guaranty. The Guarantor further agrees
that, to the extent that either Debtor makes a payment or
payments to the Agent or any of the Lenders on the Guaranty
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Indebtedness, or the Agent or the Lenders receive any proceeds of
collateral securing the Guaranty Indebtedness, which payment or
receipt of proceeds or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be returned or repaid to either Debtor, its
estate, trustee, receiver, debtor in possession or any other
Person, including, without limitation, any guarantor, under any
insolvency or bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment, return or
repayment, the obligation or part thereof which has been paid,
reduced or satisfied by such amount shall be reinstated and
continued in full force and effect as of the date when such
initial payment, reduction or satisfaction occurred, and this
Guaranty shall continue in full force notwithstanding any
contrary action which may have been taken by the Lenders in
reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent's or the Lenders' rights
under this Guaranty and shall be deemed to have been conditioned
upon such payment having become final and irrevocable.
SECTION 9. Guaranty of Performance.
_______________________
The Guarantor also guarantees the full, prompt and
unconditional performance of all obligations and agreements of
every kind owed or hereafter to be owed by the Guarantor or
either Debtor to the Agent or the Lenders. Every provision for
the benefit of the Agent or the Lenders contained in this
Guaranty shall apply to the guaranty of performance given in this
subsection 9.
SECTION 10. Taxes.
_____
All payments hereunder shall be made without any
counter-claim or set-off, free and clear of, and without
reduction by reason of, any taxes, levies, imposts, charges and
withholdings, restrictions or conditions of any nature ("Taxes"),
which are now or may hereafter be imposed, levied or assessed by
any country, political subdivision or taxing authority, all of
which will be for the account of and paid by the Guarantor. If
for any reason, any such reduction is made or any Taxes are paid
by the Lender, the Guarantor will pay to the Agent for the
benefit of the Lenders such additional amounts as may be
necessary to ensure that the Agent and the Lenders receive the
same net amount which it would have received had no reduction
been made or Taxes paid.
SECTION 11. Security.
________
To secure payment of the Guarantor's obligations under
this Guaranty, concurrently with the execution of this Guaranty,
the Guarantor is entering into a Pledge Agreement granting to the
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Agent for the benefit of the Lenders a first Lien on all of the
capital stock of the Debtors and a Security Agreement granting to
the Agent for the benefit of the Lenders a Lien on all of the
assets of the Guarantor.
SECTION 12. Miscellaneous.
_____________
(a) In addition to and without limiting any other
right, power or remedy of the Agent or any Lender, whenever the
Agent or the Lenders have the right to declare any of the
Guaranty Indebtedness to be immediately due and payable (whether
or not it has been so declared), the Lenders at their sole
election without notice to the Guarantor may appropriate and set
off against the Guaranty Indebtedness: (i) any and all
indebtedness or other monies due or to become due to the
Guarantor by the Agent or the Lenders in any capacity; and (ii)
any moneys, credits or other property belonging to the Guarantor
(including all account balances, whether provisional or final and
whether or not collected or available) at any time held by or
coming into the possession of the Agent or any of the Lenders, or
any affiliate of the Agent or any of the Lenders, whether for
deposit or otherwise, whether or not the Guaranty Indebtedness or
the obligation to pay such monies owed by the Agent or the
Lenders is then due, and the Agent, on behalf of the Lenders, is
hereby granted a security interest in and lien upon such moneys,
credits and other property. The Agent or the Lenders shall be
deemed to have exercised such right of set off immediately at the
time of such election even though any charge therefor is made or
entered on the Agent's or the Lenders' records subsequent
thereto.
(b) In the event that acceleration of the time for
payment of any of the Guaranty Indebtedness is stayed, upon the
insolvency, bankruptcy or reorganization of either Debtor, or
otherwise, all such amounts shall nonetheless be payable by the
Guarantor forthwith upon demand by the Agent, on behalf of the
Lenders.
(c) No delay on the part of the Agent or any Lender in
the exercise of any right, power or remedy shall operate as a
waiver thereof, and no single or partial exercise by the Agent or
any Lender of any right, power or remedy shall preclude any
further exercise thereof; nor shall any amendment, supplement,
modification or waiver of any of the terms or provisions of this
Guaranty be binding upon the Agent or the Lenders, except as
expressly set forth in a writing duly signed and delivered by the
Agent. The failure by the Agent or any Lender at any time or
times hereafter to require strict performance by the Debtors or
the Guarantor of any of the provisions, warranties, terms and
conditions contained in any promissory note, security agreement,
agreement, indenture, guaranty, instrument or document now or at
-21-
<PAGE>
<PAGE>
any time or times hereafter executed by the Debtors or the
Guarantor and delivered to the Agent or any Lender shall not
waive, affect or diminish any right of the Agent or any Lender at
any time or times hereafter to demand strict performance thereof,
and such right shall not be deemed to have been waived by any act
or knowledge of the Agent or any Lender, their agents, officers
or employees, unless such waiver is contained in an instrument in
writing duly signed and delivered by the Agent and/or the
Lenders, as the case may be. No waiver by the Agent or the
Lenders of any default shall operate as a waiver of any other
default hereunder or the same default on a future occasion, and
no action by the Agent or the Lenders permitted hereunder shall
in any way affect or impair the Agent's or any Lender's rights,
powers or the obligations of the Guarantor under this Guaranty.
Any determination by a court of competent jurisdiction of the
amount of any Guaranty Indebtedness owing by either Debtor to the
Lenders shall be conclusive and binding on the Guarantor
irrespective of whether either Debtor was a party to the suit or
action in which such determination was made. The rights and
remedies of the Agent and the Lenders hereunder are cumulative
and may be exercised singly or concurrently, and are not
exclusive of any rights or remedies provided by law.
(d) This Guaranty shall bind the Guarantor and the
successors and assigns of the Guarantor and shall inure to the
benefit of the Agent and the Lenders, their successors and
assigns. All references herein to any Lender shall for all
purposes also include all Participants. All references herein to
either Debtor shall be deemed to include its successors and
assigns including, without limitation, a receiver, trustee or
debtor in possession of or for such Debtor.
(e) Section headings in this Guaranty are included
herein for convenience of reference only and shall not constitute
a part of this Guaranty for any other purpose or be given any
substantive effect.
(f) Whenever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid
under applicable law. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remainder of such
provision or the remaining provisions of the Guaranty, and any
such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction.
(g) It is understood that while the amount of the
Guaranty Indebtedness is not limited, if, in any action or
proceeding involving any state or federal bankruptcy, insolvency
-22-
<PAGE>
<PAGE>
or other law affecting the rights of creditors generally, this
Guaranty would be held or determined to be void, invalid or
unenforceable on account of the amount of the aggregate liability
under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the aggregate amount of such
liability shall, without any further action of the Guarantor, the
Lenders, the Agent or any other Person, be automatically limited
and reduced to the highest amount which is valid and enforceable
as determined in such action or proceeding.
(h) This Guaranty sets forth the entire understanding
and agreement of the Guarantor and the Agent with respect to the
subject matter hereof and supersedes all other understandings,
oral or written, with respect to the subject matter hereof.
(i) THE GUARANTOR AND THE AGENT HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS GUARANTY
OR THE OTHER FINANCING AGREEMENTS TO WHICH THE GUARANTOR IS A
PARTY SHALL BE LITIGATED IN SUCH COURTS, AND THE GUARANTOR AND
THE AGENT EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON
IMPROPER VENUE OF FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE
ADDRESS SET FORTH IN SECTION 13 HEREOF AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING CONTAINED IN
THIS SECTION 12 SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT
NECESSARY TO ENFORCE ITS LIENS AGAINST ASSETS LOCATED IN SUCH
JURISDICTION.
(j) THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED UNDER AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS
PROVISIONS.
SECTION 13. Notices.
_______
Unless otherwise specifically provided herein, any
notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set
forth below and may be personally served, telecopied or sent by
overnight courier service or United States mail certified or
registered and shall be deemed to have been given (a) if
delivered in person, when delivered; (b) if delivered by
telecopy, on the date of transmission if transmitted on a
Business Day before 5:00 p.m. (Chicago time) or, if not, on the
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<PAGE>
<PAGE>
next succeeding Business Day; (c) if delivered by overnight
courier, two Business Days after delivery to such courier
properly addressed; or (d) if by United States mail, four
Business Days after depositing in the United States mail, with
postage prepaid and properly addressed.
Notices shall be addressed as follows:
(a) If to Guarantor:
Amdura Corporation
900 Main Street South
Suite 2A
Southbury, Connecticut 06488
Attn: Chief Financial Officer
Telecopy: (203) 262-1270
(b) If to Agent:
Sanwa Business Credit Corporation
One South Wacker Drive
Chicago, Illinois 60606
Attn: Commercial Finance Division
Telecopy: (312) 782-6035
or in any case, to such other address as the party addressed
shall have previously designated by written notice to the serving
party, given in accordance with this Section 13. A notice not
given as provided above shall, if it is in writing, be deemed
given if and when actually received by the party to whom given.
SECTION 14. Waivers.
_______
(a) THE GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION,
APPRAISAL AND EXEMPTION LAWS.
(b) IN THE EVENT OF A DEFAULT UNDER EITHER LOAN
AGREEMENT, THE GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OR THE
LENDERS OF THEIR RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING. THE GUARANTOR
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE
WITH RESPECT TO THIS TRANSACTION AND THIS GUARANTY.
(c) THE GUARANTOR AND THE AGENT ACKNOWLEDGE THAT THE
TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND
EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE
EXTENT PERMITTED BY LAW, TRIAL BY JURY, ANY OBJECTION BASED ON
FORUM NON CONVENIENS, ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND WAIVE ANY BOND OR SURETY OR SECURITY
-24-
<PAGE>
<PAGE>
UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
THE AGENT OR THE LENDERS.
(d) THE GUARANTOR ABSOLUTELY, UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY RIGHT TO ASSERT ANY DEFENSE, SETOFF,
COUNTERCLAIM OR CROSS-CLAIM OF ANY NATURE WHATSOEVER WITH RESPECT
TO THIS GUARANTY OR THE OBLIGATIONS OF THE GUARANTOR HEREUNDER OR
THE OBLIGATIONS OF ANY OTHER PERSON OR PARTY (INCLUDING THE
DEBTORS) RELATING TO THIS GUARANTY, THE GUARANTY INDEBTEDNESS OR
THE OBLIGATIONS OF THE GUARANTOR IN ANY ACTION OR PROCEEDING
BROUGHT BY THE LENDERS TO COLLECT THE GUARANTY INDEBTEDNESS OR TO
ENFORCE THE OBLIGATIONS OF THE GUARANTOR.
-25-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed as
of the day first written above.
AMDURA CORPORATION
By: /s/ C. David Bushley
--------------------
Title: Senior Vice President,
Finance and
Administration and Chief
Financial Officer
-26-
LOAN AGREEMENT
AMONG
THE CROSBY GROUP, INC.
as Borrower,
THE LENDERS NAMED HEREIN
AND
SANWA BUSINESS CREDIT CORPORATION,
as Agent
Dated as of
September 30, 1994
<PAGE>
<PAGE>
Table of Contents
_________________
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General Terms . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . 26
1.3 Other Terms Defined in Illinois Uniform Commercial
Code . . . . . . . . . . . . . . . . . . . . . . . 26
1.4 Effective Date . . . . . . . . . . . . . . . . . . 26
1.5 References . . . . . . . . . . . . . . . . . . . . 27
2. CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.1 Revolving Credit Facility, Revolving Loan and Loan
Guaranties . . . . . . . . . . . . . . . . . . . . 27
2.2 Maximum Principal Balance of Revolving Loan . . . . 31
2.3 Evidence of Revolving Loan Indebtedness . . . . . . 31
2.4 Term Loan . . . . . . . . . . . . . . . . . . . . . 32
2.5 CAPEX Loan . . . . . . . . . . . . . . . . . . . . 32
2.6 Interest . . . . . . . . . . . . . . . . . . . . . 33
2.7 Method of Borrowing; Method of Making Interest and
Other Payments . . . . . . . . . . . . . . . . . . 36
2.8 Term of this Agreement . . . . . . . . . . . . . . 38
2.9 Collateral Fee . . . . . . . . . . . . . . . . . . 40
2.10 Closing Fee . . . . . . . . . . . . . . . . . . . . 41
2.11 Agent's Fee . . . . . . . . . . . . . . . . . . . . 41
2.12 Unused Line Fee . . . . . . . . . . . . . . . . . . 41
2.13 CAPEX Loan Fee . . . . . . . . . . . . . . . . . . 41
2.14 Other Fees, Costs and Expenses . . . . . . . . . . 41
2.15 Borrower's Loan Account . . . . . . . . . . . . . . 42
2.16 Statements . . . . . . . . . . . . . . . . . . . . 43
2.17 Payment Dates . . . . . . . . . . . . . . . . . . . 43
2.18 Risk Participation Fees . . . . . . . . . . . . . . 43
2.19 Other Risk Participation Provisions . . . . . . . . 44
2.20 Taxes; Changes In Law . . . . . . . . . . . . . . . 46
2.21 Special Provisions Governing LIBOR Rate Loans . . . 47
3. REPORTING AND ELIGIBILITY REQUIREMENTS . . . . . . . . . 49
3.1 Monthly Reports and Collateral Reports . . . . . . 49
3.2 Eligible Accounts . . . . . . . . . . . . . . . . . 49
3.3 Account Warranties . . . . . . . . . . . . . . . . 51
3.4 Collection of Accounts and Payments . . . . . . . . 52
3.5 Appointment of the Agent as Borrower's Attorney-
in-Fact . . . . . . . . . . . . . . . . . . . . . . 53
3.6 Eligible Inventory . . . . . . . . . . . . . . . . 54
3.7 Inventory Warranties . . . . . . . . . . . . . . . 54
3.8 Safekeeping of Inventory and Inventory Covenants . 55
4. CONDITIONS TO ADVANCES . . . . . . . . . . . . . . . . . 55
4.1 Conditions to All Advances . . . . . . . . . . . . 55
4.2 Conditions to Initial Advances. . . . . . . . . . . 56
5. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . 60
5.1 Security Interest . . . . . . . . . . . . . . . . . 60
5.2 Preservation of Collateral and Perfection of
Security Interests Therein . . . . . . . . . . . . 60
<PAGE>
<PAGE>
5.3 CAPEX Loan Collateral . . . . . . . . . . . . . . . 61
6. WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . 61
6.1 Existence . . . . . . . . . . . . . . . . . . . . . 61
6.2 Authority . . . . . . . . . . . . . . . . . . . . . 61
6.3 Binding Effect . . . . . . . . . . . . . . . . . . 62
6.4 Financial Data . . . . . . . . . . . . . . . . . . 62
6.5 Collateral . . . . . . . . . . . . . . . . . . . . 63
6.6 Solvency . . . . . . . . . . . . . . . . . . . . . 63
6.7 Places of Business . . . . . . . . . . . . . . . . 63
6.8 Other Names . . . . . . . . . . . . . . . . . . . . 63
6.9 Tax Obligations . . . . . . . . . . . . . . . . . . 63
6.10 Indebtedness and Liabilities . . . . . . . . . . . 64
6.11 Use of Proceeds and Margin Security . . . . . . . . 64
6.12 Government Contracts . . . . . . . . . . . . . . . 64
6.13 Investments . . . . . . . . . . . . . . . . . . . . 64
6.14 Litigation and Proceedings . . . . . . . . . . . . 65
6.15 Other Agreements and Deliveries . . . . . . . . . . 65
6.16 Employee Controversies . . . . . . . . . . . . . . 65
6.17 Compliance with Laws and Regulations . . . . . . . 66
6.18 Patents, Trademarks and Licenses . . . . . . . . . 66
6.19 ERISA . . . . . . . . . . . . . . . . . . . . . . . 66
6.20 Property . . . . . . . . . . . . . . . . . . . . . 67
6.21 Investment Company Act . . . . . . . . . . . . . . 67
6.22 Broker's Fees . . . . . . . . . . . . . . . . . . . 68
6.23 Licenses and Permits . . . . . . . . . . . . . . . 68
6.24 Environmental Compliance . . . . . . . . . . . . . 68
6.25 Full Disclosure . . . . . . . . . . . . . . . . . . 70
6.26 Subsidiaries . . . . . . . . . . . . . . . . . . . 71
6.27 Survival of Warranties . . . . . . . . . . . . . . 71
7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 71
7.1 Financial Statements . . . . . . . . . . . . . . . 71
7.2 Inspections and Audits . . . . . . . . . . . . . . 74
7.3 Conduct of Business; Compliance With Laws . . . . . 74
7.4 Claims and Taxes . . . . . . . . . . . . . . . . . 74
7.5 Borrower's Liability Insurance . . . . . . . . . . 75
7.6 Borrower's Property and Business Interruption
Insurance; Condemnation . . . . . . . . . . . . . . 75
7.7 Pension Plans . . . . . . . . . . . . . . . . . . . 76
7.8 Notice of Suit or Adverse Change in Business . . . 78
8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 78
8.1 Encumbrances . . . . . . . . . . . . . . . . . . . 78
8.2 Intercompany Indebtedness . . . . . . . . . . . . . 79
8.3 Consolidations and Acquisitions . . . . . . . . . . 79
8.4 Investments . . . . . . . . . . . . . . . . . . . . 79
8.5 Guaranties . . . . . . . . . . . . . . . . . . . . 80
8.6 Collateral Locations . . . . . . . . . . . . . . . 80
8.7 Disposal of Property . . . . . . . . . . . . . . . 80
8.8 Employee Loans . . . . . . . . . . . . . . . . . . 81
8.9 Restricted Payments . . . . . . . . . . . . . . . . 81
8.10 Securities . . . . . . . . . . . . . . . . . . . . 81
- ii -
<PAGE>
<PAGE>
8.11 Changes in Charter, Bylaws or Fiscal Year . . . . . 82
8.12 Transactions with Affiliates . . . . . . . . . . . 82
8.13 Corporate Accounts . . . . . . . . . . . . . . . . 82
8.14 Sale and Leaseback . . . . . . . . . . . . . . . . 82
8.15 Purchase of Stock . . . . . . . . . . . . . . . . . 82
8.16 Negative Pledges . . . . . . . . . . . . . . . . . 82
8.17 Aggregate Limits . . . . . . . . . . . . . . . . . 83
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER . . . . . . . 83
9.1 Obligations . . . . . . . . . . . . . . . . . . . . 83
9.2 Rights and Remedies Generally . . . . . . . . . . . 83
9.3 Entry Upon Premises and Access to Information . . . 84
9.4 Sale or Other Disposition of Collateral by the
Agent . . . . . . . . . . . . . . . . . . . . . . . 84
9.5 Waiver of Demand . . . . . . . . . . . . . . . . . 85
9.6 Waiver of Notice . . . . . . . . . . . . . . . . . 85
10. OTHER RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . . 85
10.1 Waiver . . . . . . . . . . . . . . . . . . . . . . 85
10.2 Costs and Attorneys' Fees . . . . . . . . . . . . . 85
10.3 Expenditures by the Agent and the Lenders . . . . . 86
10.4 Custody and Preservation of Collateral . . . . . . 86
10.5 Reliance . . . . . . . . . . . . . . . . . . . . . 87
10.6 Parties and Assignment . . . . . . . . . . . . . . 87
10.7 Applicable Law; Severability . . . . . . . . . . . 87
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND
BOND . . . . . . . . . . . . . . . . . . . . . . . 87
10.9 Marshalling . . . . . . . . . . . . . . . . . . . . 88
10.10 Section Titles . . . . . . . . . . . . . . . . 88
10.11 Continuing Effect . . . . . . . . . . . . . . 88
10.12 Incorporation by Reference . . . . . . . . . . 88
10.13 Notices . . . . . . . . . . . . . . . . . . . 88
10.14 Waivers With Respect to Other Instruments . . 89
10.15 Retention of the Borrower's Documents . . . . 90
10.16 Entire Agreement . . . . . . . . . . . . . . . 90
10.17 Equitable Relief . . . . . . . . . . . . . . . 90
10.18 Counterparts . . . . . . . . . . . . . . . . . 90
10.19 No Fiduciary Relationship . . . . . . . . . . 90
10.20 Exceptions to Covenants . . . . . . . . . . . 90
10.21 Construction . . . . . . . . . . . . . . . . . 90
11. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . 91
11.1 Assignments. . . . . . . . . . . . . . . . . . . 91
11.2 Participations. . . . . . . . . . . . . . . . . . . 91
12. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.1 Appointment . . . . . . . . . . . . . . . . . . . . 91
12.2 Powers . . . . . . . . . . . . . . . . . . . . . . 91
12.3 General Immunity . . . . . . . . . . . . . . . . . 91
12.4 No Responsibility for Loans, Recitals, etc. . . . . 92
12.5 Action on Instructions of Lenders . . . . . . . . . 92
12.6 Employment of Agents and Counsel . . . . . . . . . 92
12.7 Reliance on Documents; Counsel . . . . . . . . . . 92
- iii -
<PAGE>
<PAGE>
12.8 Agent's Reimbursement and Indemnification . . . . . 92
12.9 Rights as a Lender . . . . . . . . . . . . . . . . 93
12.10 Lender Credit Decision . . . . . . . . . . . . 93
12.11 Successor Agent . . . . . . . . . . . . . . . 93
12.12 Notice of Default . . . . . . . . . . . . . . 94
13. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . 94
14. SET OFF AND SHARING OF PAYMENTS . . . . . . . . . . . . 95
14.1 Setoff . . . . . . . . . . . . . . . . . . . . . . 95
14.2 Ratable Payments . . . . . . . . . . . . . . . . . 96
EXHIBITS
________
Exhibit 1.1(a) Form of Notice of Conversion/Continuation
Exhibit 1.1(b) Form of Solvency Certificate
Exhibit 2.3 Form of Revolving Loan Note
Exhibit 2.4 Form of Term Loan Note
Exhibit 2.5 Form of Capex Loan Note
Exhibit 3.1 Form of Monthly Report Certificate
Exhibit 3.6 Inventory Locations
Exhibit 6.1 Foreign Corporation Jurisdictions
Exhibit 6.4-1 Financial Statements
Exhibit 6.4-2 Initial Projections
Exhibit 6.8 Trade Names
Exhibit 6.11 Use of Proceeds
Exhibit 6.12 Government Contracts
Exhibit 6.14 Judgments
Exhibit 6.15 Other Agreements
Exhibit 6.19 Plans
Exhibit 6.22 Broker's Fees
Exhibit 6.24 Environmental Matters
Exhibit 6.26 List of Subsidiaries
Exhibit 7.5 Liability Insurance Policies
Exhibit 8.1 Liens
Exhibit 8.4 Existing Investments
SCHEDULES
_________
Schedule 1 Commitments of Each Lender
- iv -
<PAGE>
<PAGE>
LOAN AGREEMENT
______________
This LOAN AGREEMENT, dated as of this 30th day of
September, 1994, is entered into by and among THE CROSBY GROUP,
INC., the LENDERS and SANWA BUSINESS CREDIT CORPORATION, as Agent
for the Lenders.
W I T N E S S E T H:
___________________
WHEREAS, in connection with the repayment of certain
pre-existing indebtedness of the Borrower and the continued
working capital needs of the Borrower subsequent to such
repayment, the Borrower desires to borrow up to Twenty Eight
Million Dollars ($28,000,000) from the Lenders, and the Lenders
are willing to make certain loans to the Borrower of up to such
amount, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and
conditions contained herein, and of any loans or extensions of
credit heretofore, now or hereafter made to or for the benefit of
the Borrower by the Lenders, the parties hereto hereby agree as
follows:
1. DEFINITIONS.
___________
1.1 General Terms. When used herein, the following
terms shall have the following meanings:
"Account Debtor" shall mean the party who is
obligated on or under an Account.
"Accounts" shall mean all of the Borrower's
presently existing and hereafter arising or acquired accounts,
accounts receivable, margin accounts, futures positions, book
debts, instruments, documents, contracts, notes, drafts,
acceptances, chattel paper, and other forms of obligations now or
hereafter owned or held by or payable to the Borrower relating
in any way to Inventory or arising from the sale of Inventory or
the rendering of services by the Borrower or howsoever otherwise
arising, including the right to payment of any interest or
finance charges with respect thereto, together with all
merchandise represented by any of the Accounts; all such
merchandise that may be reclaimed or repossessed or returned to
the Borrower; all of the Borrower's rights as an unpaid vendor,
including stoppage in transit, reclamation, replevin, and
sequestration; all pledged assets and all letters of credit,
guaranty claims, liens, and security interests held by or granted
to the Borrower to secure payment of any Accounts; all proceeds
and products of all of the foregoing described properties and
interests in properties; and all proceeds of insurance with
respect thereto, including the proceeds of any applicable
casualty or credit insurance or fidelity bond, whether payable in
cash or in kind; and all customer lists, ledgers, books of
account, records, computer programs, computer disks or tape files
<PAGE>
<PAGE>
(including, without limitation, all microfilm), computer
printouts, computer runs, and other computer prepared information
relating to any of the foregoing.
"Accounts Trial Balance" shall have the meaning
ascribed thereto in subsection 3.1.
"Acquisition" shall mean any transaction, or any
series of related transactions, consummated after the date of
this Agreement, by which the Borrower or any Subsidiary (i)
acquires, directly or indirectly, any business or all or
substantially all of the assets of the business of any Person,
whether through purchase of assets, merger or otherwise.
"Administrative Costs" shall mean operating costs
and expenses of the Parent for general administrative costs,
salaries, audit and director fees, insurance costs, legal fees,
preferred and common stock dividends, and settlement of the Class
Action Litigation.
"Affiliate" shall mean any Person (a) that
directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with the
Borrower, including, without limitation, the officers and
directors of the Borrower, (b) that directly or beneficially owns
or holds ten percent (10%) or more of any equity interest in the
Borrower, or (c) ten percent (10%) or more of whose voting stock
(or in the case of a Person which is not a corporation, ten
percent (10%) or more of any equity interest) is owned directly
or beneficially or held by the Borrower. Affiliate shall not be
deemed to include the Agent or any Lender. As used herein, the
term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to
direct the management or policies of a Person, whether through
ownership of securities, by contract or otherwise.
"Agent" shall mean Sanwa Business Credit
Corporation, in its capacity as agent for the Lenders and not in
its individual capacity as a Lender, and any successor in such
capacity appointed pursuant to subsection 12.11.
"Agent's Fee" shall have the meaning ascribed
thereto in subsection 2.11.
"Agreement" shall mean this Loan Agreement, as the
same may hereafter be amended, modified or supplemented from time
to time.
"Appraisal (Equipment)" shall mean that certain
equipment valuation report dated as of June 30, 1994 and prepared
by MB Evaluation, a copy of which has been provided to the
Lenders.
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"Assets" shall mean the Property of the Borrower
which are or should be reflected on a balance sheet of the
Borrower in accordance with Generally Accepted Accounting
Principles, except that investments in or monies due from any
Affiliate shall be excluded therefrom.
"Authorized Officer" shall mean the chief
executive officer or chief financial officer of the Borrower or
the chief executive officer, chief financial officer or chief
operating officer of the Parent.
"Bankruptcy Code" shall mean Title 11, United
States Code, as amended from time to time.
"Base Rate" shall mean (i) with respect to the
Revolving Loan, the fluctuating interest rate equal to one-half
of one percent (1/2%) per annum in excess of the Prime Rate from
time to time in effect and (ii) with respect to the Term Loan and
the CAPEX Loan, the fluctuating interest rate equal to one
percent (1%) per annum in excess of the Prime Rate from time to
time in effect.
"Base Rate Loans" shall mean Loans bearing
interest at the Base Rate.
"Blocked Accounts" shall have the meaning ascribed
thereto in subsection 3.4.
"Blocked Account Agreements" shall have the
meaning ascribed thereto in subsection 3.4.
"Borrower" shall mean The Crosby Group, Inc., a
Delaware corporation, and its successors and assigns.
"Borrower Pledge Agreement" shall mean that
certain Pledge Agreement, dated as of the Closing Date, duly
executed and delivered by the Borrower in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Borrower Security Agreement" shall mean that
certain Security Agreement, dated as of the Closing Date, duly
executed and delivered by the Borrower in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Borrowing Notice" shall have the meaning ascribed
thereto in subsection 2.6(e).
"Business Day" shall mean (i) for all purposes
other than as specified in clause (ii), any day other than a
Saturday, Sunday or other day on which banks in Chicago, Illinois
are authorized or required to be closed and (ii) with respect to
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all notices, determinations, borrowings, rate selections and
payments in connection with LIBOR Rate Loans, any day that is a
Business Day described in clause (i) and that is also a day on
which dealing in U.S. dollar deposits are carried on in the
applicable interbank LIBOR market.
"CAPEX Loan" shall have the meaning ascribed
thereto in subsection 2.5.
"CAPEX Notes" shall have the meaning ascribed
thereto in subsection 2.5.
"Capital Expenditures" shall mean all expenditures
for any fixed assets or improvements, or for replacements,
substitutions or additions thereto, which have a useful life of
more than one (1) year, and shall include the principal portion
of capitalized lease payments.
"Cash Equivalents" shall mean (i) bank
certificates of deposit, bankers' acceptances or time deposits
(but only with banks (x) which do not have set-off rights against
the foregoing, other than set-offs for nominal service charges
and similar fees incurred in the ordinary course, and (y) which
have combined capital and surplus in excess of Two Hundred Fifty
Million Dollars ($250,000,000), (ii) commercial paper maturing
within one (1) year and rated at least A-1 or the equivalent
thereof by Standard & Poors Corporation, or P-1 or the equivalent
thereof by Moody's Investors Service, Inc., and (iii) obligations
maturing within one (1) year issued or directly and fully
guaranteed by the United States Government or any agency thereof.
"Class Action Litigation" shall mean the civil
action pending in the United States District Court for the
District of Colorado entitled Saul Jones, on behalf of himself
and all others similarly situated, v. Amdura Corporation, no. 91-
K-1521 (consolidated with 91-K-1728).
"Closing Date" shall mean the date of this
Agreement.
"Closing Fee" shall have the meaning ascribed
thereto in subsection 2.10.
"Code" shall have the meaning ascribed thereto in
subsection 1.3.
"Collateral" shall mean all property and interests
in property now owned or hereafter acquired by the Borrower in or
upon which a Lien or mortgage is granted to the Agent, for the
benefit of the Lenders, by the Borrower, whether under this
Agreement or the other Financing Agreements or under any other
documents, instruments or writings executed by the Borrower and
delivered to the Agent.
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"Collateral Monitoring Fee" shall have the meaning
ascribed thereto in subsection 2.9.
"Collateral Report" shall have the meaning
ascribed thereto in subsection 3.1.
"Collecting Banks" shall have the meaning ascribed
thereto in subsection 3.4.
"Commitment" or "Commitments" shall mean the
commitment or commitments of a Lender to make Loans as set forth
in Schedule 1.
"Consolidated Cash Flow Coverage" shall mean, for
any applicable fiscal period, determined on a consolidated basis
for the Parent and its Subsidiaries, Consolidated EBITDA divided
by the sum of (i) interest payments made or accrued (without
duplication) with respect to any outstanding Indebtedness, (ii)
scheduled payments on Funded Debt, (iii) taxes paid, (iv) cash
dividends paid on capital stock, and (v) Capital Expenditures.
"Consolidated EBITDA" shall mean, for any
applicable fiscal period, determined on a consolidated basis for
the Parent and its Subsidiaries, (i) Net Income plus (ii) to the
extent deducted in determining Net Income, interest expense,
taxes, depreciation, amortization and other similar non-cash
charges and extraordinary losses, minus (iii) to the extent added
in determining Net Income, extraordinary gains.
"Consolidated Net Worth" shall mean, as of the
date of determination thereof, the aggregate amount of total
shareholders' equity of the Parent and the Subsidiaries on a
consolidated basis as determined in accordance with Generally
Accepted Accounting Principles.
"Consolidated Tangible Net Worth" shall mean the
aggregate amount of total stockholders' equity (excluding
adjustments directly to stockholders' equity as required by the
Statement of Financial Accounting Standard No. 87, "Employers'
Account for Pensions") of the Parent and its Subsidiaries, less
prepaid expenses and the net book value of all assets of the
Parent and its Subsidiaries which would be treated as intangibles
under Generally Accepted Accounting Principals including, without
limitation, unamortized deferred charges, franchise rights,
unamortized debt discounts, non-compete agreements, goodwill,
patents, trademarks, tradenames, copyrights, licenses, premiums
on purchased assets, treasury stock and organization or
developmental expenses.
"Conversion/Continuation Notice" shall have the
meaning ascribed thereto in subsection 2.6(f).
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"Crosby Guaranty" shall mean the Guaranty, dated
as of the date hereof, duly executed and delivered by the
Borrower in favor of the Agent and Lenders with respect to
certain indebtedness and other obligations of Harris owing to
such Persons.
"Current Asset Base" shall have the meaning
ascribed thereto in subsection 2.1.
"Default" shall mean an event which through the
passage of time or the service of notice or both would mature
into an Event of Default.
"Default Rate" shall mean an interest rate per
annum equal to the sum of (a) the Base Rate or the LIBOR Rate
from time to time in effect, as applicable, plus (b) two percent
(2%). With respect to Base Rate Loans, such interest rate shall
be a fluctuating rate and each change in such interest rate shall
take effect simultaneously with the corresponding change in the
Base Rate.
"Depository Account" shall have the meaning
ascribed thereto in subsection 3.4.
"Eligible Accounts" shall have the meaning
ascribed thereto in subsection 3.2.
"Eligible Inventory" shall have the meaning
ascribed thereto in subsection 3.6.
"Environmental Laws" shall mean and includes the
following as now in effect or hereafter amended: the
Comprehensive Environmental Response Compensation and Liability
Act, ("CERCLA"), 42 U.S.C. 9601 et. seq.; the Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. 6901 et. seq.; the Toxic
Substances Control Act, 15 U.S.C. 2601, et. seq.; the Clean Air
Act, 42 U.S.C. 7401 et. seq.; the Federal Water Pollution
Control Act ("Clean Water Act"), 33 U.S.C. 1251 et. seq.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
11001 et. seq.; the Hazardous Materials Transportation Act, 49
U.S.C. 1801 et. seq.; the Atomic Energy Act, 42 U.S.C. 2011 et.
seq.; the Safe Drinking Water Act, 42 U.S.C. 300f et. seq. and
the state law equivalents; any so-called "Superfund" or
"Superlien" law; and any code, rule, regulation, order, decree or
requirement under international, federal, state, regional,
provincial or local law (including, without limitation,
administrative orders and consent decrees) in effect and as
amended regulating, relating to or imposing liability or
standards of conduct concerning public health and safety,
protection of the environment, or any pollutant or contaminant or
hazardous, toxic or dangerous substance, waste, chemical or
material, as now or any time hereafter may be existing.
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"Environmental Matters" shall have the meaning
ascribed thereto in subsection 6.24.
"Equipment" shall mean all of the Borrower's
machinery and equipment, including, without limitation,
processing equipment, conveyors, machine tools, data processing
and computer equipment with software and peripheral equipment
(other than software constituting part of the Accounts), and all
engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks,
ships, vessels, airplanes, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and
nature, and fixtures not forming a part of real estate, all
whether now owned or hereafter acquired, and wherever situated,
together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and
insurance proceeds with respect thereto, and including, without
limitation, the items of equipment described in the Appraisal
(Equipment), which description is incorporated herein by
reference.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and all rules
and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Person, trade or
business that is, or was at any time during the previous six (6)
years, along with the Borrower, treated as a single employer for
any purpose under Section 414 of the IRC.
"Event of Default" shall mean the occurrence or
existence of any one or more of the following events:
(a) the Borrower fails to pay interest on any
Note within three (3) days after the same becomes due
or fails to pay any other Obligations hereunder when
the Obligations are due or are declared due;
(b) the Borrower fails or neglects to perform,
keep or observe any of the covenants, conditions or
agreements contained in any of the subsections of this
Agreement or in any of the other Financing Agreements
for a period of thirty (30) days after the earlier of
(i) the Borrower's receipt of notice from the Agent
(other than occurrences referred to or embodied in
other provisions of this definition constituting
immediate Events of Default) or (ii) actual knowledge
of such breach by the Borrower;
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(c) any warranty or representation now or
hereafter made by the Borrower or the Parent in
connection with this Agreement or any of the other
Financing Agreements is untrue or incorrect in any
material respect, or any schedule, certificate,
statement, report, financial data, notice or writing
furnished at any time by the Borrower or the Parent to
the Agent or any Lender is untrue or incorrect in any
material respect, as of the date on which the warranty,
representation or the facts set forth therein are
stated, certified or deemed made;
(d) any Lien, levy or assessment is filed or
recorded with respect to or otherwise imposed upon all
or any part of the Collateral or the assets of the
Borrower, any Subsidiary or the Parent by the United
States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other
governmental agency and that either (i) is in excess of
Five Hundred Thousand Dollars ($500,000), or (ii) is
superior to the Liens granted to the Lender;
(e) all or any part of the Collateral or the
assets of the Borrower, any Subsidiary or the Parent
with a value in excess of Five Hundred Thousand Dollars
($500,000) in the aggregate are attached, seized,
subjected to a writ or distress warrant, or levied
upon, or come within the possession or control of any
judgment creditor and on or before the twentieth (20th)
day thereafter such Collateral or assets are not
returned to the Borrower, any Subsidiary or the Parent,
as applicable, or such writ, distress warrant or levy
is not dismissed, stayed or lifted;
(f) the Borrower or any Subsidiary or the Parent
makes an assignment for the benefit of creditors;
convenes a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts; commences any
bankruptcy, reorganization or insolvency proceeding or
other proceeding under any federal, state or other law
for relief of debtors; or the Borrower or any
Subsidiary or the Parent authorizes or consents to the
taking of any of the foregoing actions;
(g) the Borrower or any Subsidiary or the Parent
fails to obtain the dismissal, within sixty (60) days
after the commencement thereof, of any bankruptcy,
reorganization or insolvency proceeding, or other
proceeding under any law for the relief of debtors
instituted against it; fails actively to oppose any
such proceeding; or in any such proceeding, defaults or
files an answer admitting the material allegations upon
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which the proceeding was based or states in any filing
in such proceeding its willingness to have an order for
relief entered or its desire to seek liquidation,
reorganization or adjustment of any of its debts;
(h) any receiver, trustee, examiner, liquidator,
custodian or similar official is appointed to take
possession of all or any substantial portion of the
Property of the Borrower or any Subsidiary or the
Parent;
(i) the Borrower or any Subsidiary or the Parent
admits in writing that it is not Solvent or fails to
pay all or any material portion (measured in numbers of
debts or dollar amounts) of its debts as they become
due or admits in writing its present or prospective
inability to pay its debts as they become due;
(j) the Borrower or any Subsidiary or the Parent
is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory
agency from conducting all or any material part of its
business representing ten percent (10%) or more of the
Borrower's business (based upon the Borrower's gross
revenues for the most recent twelve months ending on
the date of such occurrence);
(k) any default or breach under any agreement(s)
evidencing Indebtedness of the Borrower or any
Subsidiary or the Parent in an aggregate amount in
excess of Five Hundred Thousand Dollars ($500,000)
shall occur and shall continue after any applicable
grace period specified in any such document if the
effect of such default or breach is to accelerate, or
to permit the acceleration of, the maturity of such
Indebtedness, whether or not such default or breach
shall be waived by the holders or trustees (if any) for
such Indebtedness, or any such Indebtedness shall be
declared to be due and payable, or be required to be
prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(l) a breach by the Borrower or any Subsidiary or
the Parent occurs under any material
agreement, document or instrument (other than an
agreement, document or instrument evidencing
Indebtedness), whether heretofore, now or hereafter
existing between the Borrower or any Subsidiary or the
Parent and any other Person, and such breach continues
for more than thirty (30) days after such breach first
occurs; provided that such grace period shall not
apply, and such breach shall constitute an Event of
Default, if such breach may not, in the determination
of the Required Lenders, be cured by the Borrower, such
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Subsidiary or the Parent, as applicable, during such
thirty (30) day grace period, and the failure to have
cured such breach could have a Material Adverse Effect;
(m) the Parent ceases to own, legally and
beneficially, 100% of the issued and outstanding
capital stock of the Borrower for any reason;
(n) entry of a judgment or judgments in an
aggregate amount in excess of Five Hundred Thousand
Dollars ($500,000) against the Borrower or any
Subsidiary or the Parent which are not stayed, bonded,
vacated, paid or discharged within thirty (30) days
after entry;
(o) any Termination Event which the Required
Lenders, in good faith, determine is reasonably likely
to have a Material Adverse Effect and which is not
cured within thirty (30) days after the occurrence of
such Termination Event;
(p) the Borrower fails to perform, keep or
observe any of the covenants contained in clause (vii)
of subsection 7.1, in subsections 3.4, 7.5, 7.6, or in
Section 8;
(q) the Agent does not have or ceases to have a
legal, valid and perfected first priority Lien on the
Collateral (subject to Permitted Liens), in each case,
for any reason other than the failure of the Agent to
take any action within its total control;
(r) any of the Financing Agreements shall cease
for any reason to be in full force and effect or is
declared null and void or the Borrower or any other
Person (other than the Lender) shall disavow its
respective obligations thereunder or shall deny that it
has any further obligations thereunder or shall contest
the validity as enforceability of any thereof or gives
notice to such effect;
(s) the occurrence of any "Default" or "Event of
Default" as defined in the Harris Loan Agreement or any
default or breach under the Parent Guaranty;
(t) as of the end of any month during the
following calendar years, the Consolidated Tangible Net
Worth shall be less than the following:
Consolidated Tangible
Calendar Year Net Worth
_____________ _____________________
1994 $30,000,000
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1995 $32,000,000
1996 $34,000,000
1997 $36,000,000
1998 $38,000,000
1999 $40,000,000
2000 $42,000,000
2001 and each $44,000,000
year thereafter
(u) as of the end of any fiscal quarter, the
Leverage Ratio shall be greater than fifty percent
(50%); or
(v) (i) as of the end of any month during
calendar year 1994 for the twelve-month period then
ended, the Consolidated Cash Flow Coverage shall be
less than 1.1 or (ii) as of the end of any month
occurring after calendar year 1994 for the twelve-month
period then ended, the Consolidated Cash Flow Coverage
shall be less than 1.2.
The occurrence or existence of any of the
foregoing events shall constitute an immediate Event of Default
unless notice by the Agent or a cure period is specifically
required by the description of such event before such event
matures into an Event of Default.
"Facility" shall mean each of the Borrower's
facilities located, respectively, at 2857 Dawson Road, Tulsa,
Oklahoma; 900 Fisher Road, Longview, Texas; 2511 West Main
Street, Jacksonville, Arkansas; 2101 Exchange Drive, Arlington,
Texas; 5260 East Westgate Drive, Atlanta, Georgia; 6086 West
115th Street, Worth, Illinois; 1505 South 19th Street,
Harrisburg, Pennsylvania; 1133 Andover Park West, Tukwila,
Washington; and 5980 Boxford Avenue, Commerce, California, and
any other facility established by the Borrower hereafter in
accordance with the terms of this Agreement.
"Federal Funds Rate" shall mean on any given day
the weighted average of the rate on overnight Federal funds
transactions with members of the Federal Reserve System only
arranged by Federal Funds brokers as published as of such day by
the Federal Reserve Bank of New York, or if not so published, the
rate then used by first class banks in extending overnight loans
to other first class banks.
"Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System.
"Final Order" shall mean (a) the order or orders
entered on the docket of the United States District Court for the
District of Colorado (the "District Court") or any other court
exercising jurisdiction over the subject matter and the parties
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which order modifies the order and judgment (the "District
Order") entered by the District Court on August 3, 1994 reversing
the bankruptcy court order entered on August 22, 1991 confirming
the Plan of Reorganization (the "Confirmation Order") to the
effect that the decretal paragraph of the District Order
reversing the Confirmation Order shall be modified in its
entirety to order that the bankruptcy claims related to the Class
Action Litigation were not discharged by the Confirmation Order,
and (b) a stipulation or settlement order that (i) dismisses the
Class Action Litigation, and (ii) withdraws the class proof of
claim in the bankruptcy case with respect to the Class Action
Litigation and, in either case, as to which the time to appeal,
petition for certiorari or seek rehearing has expired and no
appeal or petition for certiorari or rehearing has been timely
filed or requested or is still pending, or as to which any motion
for appeal, petition for certiorari or rehearing that has been
filed or requested has been resolved by the highest court to
which the order was timely appealed or from which certiorari or
rehearing was sought.
"Financial Statements" shall have the meaning
ascribed thereto in subsection 6.4(a).
"Financing Agreements" shall mean, collectively,
this Agreement, the Revolving Notes, the Term Notes, the CAPEX
Notes, the Borrower Pledge Agreement, the Borrower Security
Agreement, the Harris Guaranty, the Intellectual Property
Security Agreement, the Mortgages, the Parent Guaranty, the
Parent Pledge Agreement, the Parent Security Agreement and all
other agreements, instruments and documents, including, without
limitation, security agreements, loan agreements, notes,
guaranties, mortgages, deeds of trust, agreements, documents,
instruments, pledges, powers of attorney, consents, assignments,
contracts, notices, leases and all other written matter whether
heretofore, now, or hereafter executed by or on behalf of the
Borrower or any Guarantor and delivered to the Agent or any
Lender in accordance with this Agreement, together with all
agreements and documents between the Borrower or any Guarantor
and the Agent or any Lender referred to therein or contemplated
thereby, as the same may hereafter be amended, modified or
supplemented.
"Fiscal Year" shall mean the fiscal year of the
Borrower ending on December 31 each year.
"Fixed Charges" shall mean, for any fiscal period,
the Borrower's scheduled principal payments on its Indebtedness
plus Capital Expenditures.
"Fixtures" shall mean all "fixtures" as such term
is defined in the Code, now owned or hereafter acquired by the
Borrower.
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"Foreign Indebtedness" shall mean Indebtedness
incurred by a Foreign Subsidiary.
"Foreign Indebtedness Documents" shall mean
written evidence of Foreign Indebtedness including, without
limitation, all loan agreements, credit agreements, promissory
notes, security agreements and guaranty agreements.
"Foreign Subsidiaries" shall mean Crosby Canada,
Ltd., a Canadian corporation; Crosby Europe (U.K) Ltd., formed
under the laws of the United Kingdom, Crosby Europe N.V., formed
under the laws of Belgium and Crosby France SARL, formed under
the laws of France.
"Funded Debt" shall mean, for any applicable
fiscal period, determined on a consolidated basis for the Parent
and its Subsidiaries, all Indebtedness which by the terms of the
agreement governing or instrument evidencing such Indebtedness
matures more than one year from or is directly or indirectly
renewable or extendible at its option under a revolving credit or
similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of
creation thereof, including in each instance current maturities
of long-term debt (and the current portion of long-term debt in
the last year of its term), revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and shall
also include, without limitation, Indebtedness arising under or
in connection with any interest rate swap agreement or
arrangements, the Revolving Credit Loan, the Term Loan and the
CAPEX Loan.
"Funding Date" shall mean the date of each
funding, conversion or continuation of a Loan or issuance of a
Letter of Credit or a Risk Participation therefor, which date
shall be a Business Day.
"Generally Accepted Accounting Principles or
"GAAP"" shall mean, as of the date of any determination with
respect thereto, generally accepted accounting principles as used
by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants, consistently applied
and maintained throughout the periods indicated.
"General Intangibles" shall mean all of the
Borrower's presently owned or hereafter acquired general
intangibles, including, without limitation, goodwill, choses in
action, causes of action, franchises, methods, sales literature,
drawings, specifications, descriptions, name plates, catalogs,
dealer contracts, supplier contracts, distributor agreements,
customer lists, contract rights, confidential information,
consulting agreements, employment agreements, engineering
contracts, leasehold interests in real and personal property,
insurance policies (including business interruption insurance),
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licenses, permits, and such other assets which uniquely reflect
the goodwill of the business of the Borrower; deposit accounts,
letters of credit, and General Intangibles relating to other
items of Collateral, including, without limitation, rights to
refunds or indemnification; reversionary or other rights of the
Borrower to excess Plan assets upon termination or amendment
thereof; and proceeds of all of the foregoing, including without
limitation, insurance proceeds, including proceeds of business
interruption insurance, income tax refunds, and claims for tax or
other refunds against any city, county, state, or federal
government, or any agency or authority or other subdivision
thereof.
"Government Acts" shall have the meaning ascribed
thereto in subsection 2.19(b).
"Guarantor" shall mean each of the Parent and
Harris.
"Guaranty" of a Person shall mean any agreement by
which such Person guarantees, endorses or otherwise in any way
becomes or is responsible for any obligations of any other
Person, whether directly or indirectly by agreement to purchase
the indebtedness of any other Person or through the purchase of
goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose
of paying or discharging any indebtedness or obligation of such
other Person or otherwise assures any creditor of such other
Person against loss.
"Harris" shall mean The Harris Waste Management
Group, Inc., a Delaware corporation.
"Harris CAPEX Loan" shall mean the capital
expenditures line of Harris under the Harris Loan Agreement.
"Harris Guaranty" shall mean that certain
Guaranty, dated as of the date hereof, made by Harris in favor of
the Agent, for the benefit of the Lenders, with respect to the
Obligations hereunder.
"Harris Loan Agreement" shall mean that certain
Loan Agreement, dated as of the date hereof, by and among The
Harris Waste Management Group, Inc., the Lenders and SBCC, as
agent, as the same may hereafter be amended, modified or
supplemented from time to time.
"Harris Term Loan" shall mean the term loan of
Harris under the Harris Loan Agreement.
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"Harris Total Revolving Loan Facility" shall mean
the revolving loan facility of Harris under the Harris Loan
Agreement.
"Hazardous Materials" shall mean and include the
following: hazardous substances; hazardous wastes;
polychlorinated biphenyls or any asbestos containing materials in
any form or condition; radon; any other radioactive materials
including any source, special nuclear or by-product material;
petroleum, crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute); and any
other pollutant or contaminant or hazardous, toxic or dangerous
chemicals, materials or substances, as all such terms are used in
their broadest sense and defined by Environmental Laws.
"Indebtedness" of a Person shall mean at a
particular time (i) indebtedness for borrowed money or for the
deferred purchase price of property or services (other than
current accounts payable arising in the ordinary course of
business on terms customary in the trade) in respect of which the
Person is liable, contingently or otherwise, as obligor or
otherwise or any commitment by which the Person assures a
creditor against loss, including contingent reimbursement
obligations with respect to letters of credit, (ii) indebtedness
guaranteed in any manner by the Person, including guaranties in
the form of an agreement to repurchase or reimburse; provided
that the amount of indebtedness represented by any guaranty of
limited recourse shall be the lesser of the amount of
indebtedness so guaranteed or the value of the asset to which the
recourse of such indebtedness is limited to, (iii) obligations
under leases which shall have been or should be, in accordance
with Generally Accepted Accounting Principles, recorded as
capital leases in respect of which obligations the Person is
liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations the Person assures
a creditor against loss, and (iv) all accounts payable of the
Person, which are not being contested in good faith and which are
more than ninety (90) days past due. Unless otherwise expressly
provided or the context requires otherwise, all references to
"Indebtedness" shall mean Indebtedness of the Borrower.
"Intellectual Property" shall mean all of the
Borrower's present and future designs, patents, patent rights and
applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights,
advertising matter and all applications and registrations
therefor, software or computer programs, license rights, trade
secrets, methods, processes, knowhow, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect
to any research and development, whether now owned or hereafter
acquired by the Borrower, and proceeds of all of the foregoing,
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including, without limitation, proceeds of insurance policies
thereon.
"Intellectual Property Security Agreement" shall
mean that certain Continuing Security Interest and Conditional
Assignment of Patents, Trademarks, Copyrights and Licenses, dated
as of the Closing Date, duly executed and delivered by the
Borrower in favor of the Agent, for the benefit of the Lenders,
with respect to Intellectual Property, as the same may hereafter
be amended, modified or supplemented from time to time.
"Interest Period" shall mean. with respect to a
LIBOR Rate Loan, a period of one, two or three months, as
available, commencing on a Business Day, selected by Borrower
pursuant to subsection 2.6. Such Interest Period shall end on
the day in the relevant succeeding calendar month which
corresponds numerically to the beginning day of such Interest
Period; provided that if there is no such numerically
corresponding day in such next, second or third succeeding month,
such Interest Period shall end on the last Business Day of such
next, second or third succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day;
provided that if such next succeeding Business Day falls in a new
month, such Interest Period shall end on the immediately
preceding Business Day. In the case of immediately succeeding
Interest Periods, each successive Interest Period shall commence
on the day on which the immediately preceding Interest Period
expires. Notwithstanding any of the foregoing, no Interest
Period shall extend beyond the Termination Date.
"Inventory" shall mean all of the inventory of the
Borrower of every kind and description, now or at any time
hereafter owned by or in the custody or possession, actual or
constructive, of the Borrower, wherever located, including,
without limitation, all merchandise, raw materials, parts,
supplies, work-in-process and finished goods intended for sale,
together with all the containers, packing, packaging, shipping
and similar materials related thereto, and including such
inventory as is temporarily out of the Borrower's custody or
possession, including inventory on the premises of other Persons
and items in transit, and including any returns and repossessions
upon any accounts, documents, instruments or chattel paper
relating to or arising from the sale of inventory, and all
substitutions and replacements therefor, and all additions and
accessions thereto, and all ledgers, books of account, records,
computer printouts, computer runs, microfilm, microfiche and
other computer-prepared information relating to any of the
foregoing, and any and all proceeds of any of the foregoing,
including, without limitation, proceeds of insurance policies
thereon.
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"Investment" of a Person shall mean any loan,
advance, extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in
the trade), deposit account or contribution of capital by such
Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, notes,
debentures or other securities of any other Person made by such
Person.
"IRC" shall mean the Internal Revenue Code of
1986, as amended from time to time, and all regulations
promulgated thereunder.
"Issuing Bank" shall mean any bank or financial
institution which is approved by the Borrower and the Required
Lenders and which issues Letters of Credit for the account of the
Borrower pursuant to subsection 2.1.
"Keepwell Agreement" shall mean, collectively, (i)
that certain letter, dated May 16, 1990, executed by the Borrower
in favor of The Royal Bank of Canada as in effect on the date
hereof whereby the Borrower agrees to certain undertakings with
respect to Crosby Canada, Ltd., and (ii) that certain letter,
dated March 5, 1991, executed by the Borrower in form of Banco
Hispano American Benelux N.V. as in effect on the date hereof
whereby Borrower agrees to certain undertakings with respect to
Crosby Europe N.V.
"Lenders" shall mean the financial institutions
signatory hereto and, subject to the terms and conditions hereof,
their respective successors and assigns.
"Letter of Credit" shall mean a standby letter of
credit or bankers acceptance issued by an Issuing Bank at the
request and for the account of the Borrower and for which the
Lenders incur Risk Participations.
"Leverage Ratio" shall mean, for any applicable
fiscal period, the ratio (expressed as a percentage) of (i)
Funded Debt to (ii) the sum of (a) Consolidated Net Worth and (b)
Funded Debt.
"Liabilities" shall mean liabilities of the
Borrower which are or should be reflected on a balance sheet of
the Borrower in accordance with Generally Accepted Accounting
Principles, and shall include Indebtedness.
"LIBOR Rate" shall mean, for each Interest Period,
a rate of interest equal to:
(a) the rate of interest determined by the Agent
at which deposits in U.S. Dollars for the relevant
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Interest Period are offered based on information
presented on the Telerate Screen as of 11:00 a.m.
(London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the
LIBOR Rate Loan and having a maturity approximately
equal to such Interest Period; provided that if at
least two such offered rates appear on the Telerate
Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by the
Agent) will be the rate used; provided further, that if
Telerate ceases to provide LIBOR quotations, such rate
shall be the average rate of interest determined by the
Agent at which deposits in U.S. Dollars are offered for
the relevant Interest Period by The Sanwa Bank, Limited
(or its successor) to banks with combined capital and
surplus in excess of Five Hundred Million Dollars
($500,000,000) in the London interbank market as of
11:00 a.m. (London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the
LIBOR Rate Loan and having a maturity approximately
equal to such Interest Period, divided by
(b) one minus the rate (expressed as a decimal)
of reserve requirements in effect on the LIBOR Rate
Determination Date (including, without limitation, all
basic, supplemental, marginal and emergency reserves
under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and
from time to time in effect) for Eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in
Regulation D) which are required to be maintained by a
member bank of the Federal Reserve System;
(such rate to be adjusted to the nearest one
sixteenth of one percent (1/16 of 1%) or, if there is no nearest
one sixteenth of one percent (1/16 of 1%), to the next higher one
sixteenth of one percent (1/16 of 1%)), plus, in the case of the
Term Loan and the CAPEX Loan, 2.5% per annum, and in the case of
the Revolving Loan, 2.0% per annum, in the absence of an Event of
Default).
"LIBOR Rate Determination Date" shall mean each
date for calculating the LIBOR Rate for purposes of determining
the interest rate applicable to any LIBOR Rate Loan made pursuant
to subsection 2.6. The LIBOR Rate Determination Date shall be
the second Business Day prior to the first day of the related
Interest Period for a LIBOR Rate Loan.
"LIBOR Rate Loans" shall mean Loans bearing
interest at the LIBOR Rate.
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"Lien" shall mean, with respect to the Property of
any Person, any statutory or contractual lien, security interest,
mortgage, pledge, claim, encumbrance, charge, hypothecation,
assignment, deposit arrangement, filing of a financing statement,
encumbrance or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever,
whether voluntary or involuntary (including, without limitation,
the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention agreement), in, of or
on any of the Property of such Person in favor of any other
Person.
"Litigation" shall have the meaning ascribed
thereto in subsection 6.14.
"Loan Account" shall have the meaning ascribed
thereto in subsection 2.15.
"Loan Year" shall mean the period of twelve (12)
consecutive months commencing on the date hereof and each
succeeding period of twelve (12) consecutive months commencing on
each anniversary of the date hereof during the Revolving Loan
Initial Term and any Revolving Loan Renewal Term.
"Loans" shall mean, collectively, the Revolving
Loan, the Term Loan and the CAPEX Loan.
"Margin Stock" shall mean margin stock within the
meaning of Regulation U.
"Material Adverse Effect" shall mean, as
determined by the Required Lenders in their reasonable business
judgment, a material adverse effect upon (i) the Agent's Lien
priority in, or the value of, the Collateral, or (ii) the
business, properties, operations or condition (financial or
otherwise) of the Borrower or any of its Subsidiaries taken as a
whole as a result of the occurrence or existence of any single
event or condition or series of events or conditions in the
aggregate or (iii) the ability of the Borrower or the Parent to
perform its obligations under any of the Financing Agreements or
(iv) the validity or enforceability of any of the Financing
Documents or the rights, powers and remedies of the Agent or any
Lender to enforce or collect the Obligations.
"Monthly Report" shall have the meaning ascribed
thereto in subsection 3.1.
"Mortgages" shall mean the first mortgages or
deeds of trust, all in form and substance satisfactory to the
Agent, dated the Closing Date, duly executed and delivered by the
Borrower in favor of the Agent, for the benefit of the Lenders,
as security for the Obligations, as the same may hereafter be
amended, modified or supplemented from time to time.
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"Multiemployer Plan" shall mean any multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA to which
the Borrower or any ERISA Affiliate contributes or was required
to contribute within the immediately preceding six (6) years.
"Net Income" shall mean, for any applicable fiscal
period, determined on a consolidated basis for the Parent and its
Subsidiaries, consolidated net income after income and franchise
taxes and shall have the meaning given such term by Generally
Accepted Accounting Principles; provided that there shall be
specifically excluded therefrom tax-adjusted (i) gains or losses
from the sale of capital assets, (ii) net income of any Person
that is not a Subsidiary unless received by the Parent in cash,
and (iii) any gains arising from extraordinary items, as defined
by Generally Accepted Accounting Principles.
"Net Worth" of a Person shall mean, as of the date
of determination thereof, the aggregate amount of total
shareholders' equity as determined in accordance with Generally
Accepted Accounting Principles.
"Note" shall mean any of the Revolving Loan Notes,
the Term Loan Notes or the CAPEX Notes.
"Notice of Conversion/Continuation" shall mean a
notice substantially in the form of Exhibit 1.1(a).
"Obligations" shall mean all of the Borrower's
obligations, liabilities and indebtedness to the Agent and the
Lenders of any and every kind and nature, whether heretofore, now
or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired, or owing, whether
primary, secondary, direct, indirect, contingent, fixed or
otherwise (including obligations of performance) and whether
arising or existing under written agreement, oral agreement or
operation of law including, without limitation, all of the
Borrower's indebtedness, liabilities and obligations to the Agent
and the Lenders or any Participant under the Financing
Agreements.
"Parent" shall mean Amdura Corporation, a Delaware
corporation, and the beneficial owner of one hundred percent
(100%) of the issued and outstanding capital stock of the
Borrower.
"Parent Guaranty" shall mean that certain Guaranty
dated as of the date hereof, made by the Parent in favor of the
Agent, for the benefit of the Lenders, as the same may hereafter
be amended, modified or supplemented from time to time.
"Parent Pledge Agreement" shall mean that certain
Pledge Agreement, dated as of the Closing Date, duly executed and
delivered by the Parent in favor of the Agent, for the benefit of
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the Lenders, as the same may hereafter be amended, modified or
supplemented from time to time.
"Parent Security Agreement" shall mean that
certain Security Agreement, dated as of the date hereof, duly
executed and delivered by the Parent in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Participant" shall mean any Person now or from
time to time hereafter participating with any Lender in the Loans
made by such Lender to the Borrower pursuant to this Agreement.
"PBGC Grantor Trust" shall mean the trust
established pursuant to a settlement with the Pension Benefit
Guaranty Corporation in connection with the Plan of
Reorganization to satisfy the Parent's underfunded liabilities
for eight frozen Pension Plans.
"Pension Plan" shall mean any Plan that is a
defined benefit plan (other than a Multiemployer Plan) defined in
Section 3(35) of ERISA.
"Permitted Investments" shall have the meaning
ascribed thereto in subsection 8.4.
"Permitted Liens" shall have the meaning ascribed
thereto in subsection 8.1.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity,
party, or government (whether national, federal, state,
provincial, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body
or department thereof).
"Phase I Audits" shall mean those certain Phase I
environmental audits with respect to the Facilities located at
Longview, Texas, Jacksonville, Arkansas and Tulsa, Oklahoma
delivered to the Agent.
"Plan" shall mean any employee benefit plan within
the meaning of Section 3(3) of ERISA (other than any
Multiemployer Plan) under which the Borrower or any ERISA
Affiliate is, or was at any time within the previous six (6)
years, an "employer" within the meaning of Section 3(5) of ERISA.
"Plan of Reorganization" shall mean the Parent's
Fifth Amended Joint Plan of Reorganization, as amended, confirmed
by the United States Bankruptcy Court for the District of
Colorado on September 19, 1991, and effective on October 23,
1991.
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"Prime Rate" shall mean the highest "Prime Rate"
of interest quoted, from time to time, by The Wall Street
Journal, provided, however, that in the event that The Wall
Street Journal ceases quoting a "Prime Rate", "Prime Rate" shall
mean the per annum rate of interest quoted as the "Bank Prime
Loan" rate for the most recent weekday for which such rate is
quoted in Statistical Release H.15 (519) published from time to
time by the Board of Governors of the Federal Reserve System,
provided further that in the event that both of the aforesaid
indices cease to be published or to quote rates of the aforesaid
types, the "Prime Rate" shall be determined from a comparable
index chosen by SBCC in good faith. The "Prime Rate" shall
change effective on the date of the publication of any change in
the applicable index by which such "Prime Rate" is determined.
"Pro Rata Share" shall mean the percentage
obtained by dividing (a) the Commitments of a Lender by (b) the
aggregate Commitments of all Lenders, as such percentage may be
adjusted by assignments permitted pursuant to subsection 11.1.
The Commitments of each Lender with respect to the Revolving
Loan, the CAPEX Loan and the Term Loan as of the Closing Date are
set forth on Schedule 1; Schedule 1 shall be amended and the
Lenders' Pro Rata Shares shall be adjusted from time to time to
give effect to the addition of any new Lenders pursuant to
subsection 11.1. The sum of the Pro Rata Shares of all Lenders
at any date of determination shall equal one hundred percent
(100%).
"Projections" shall mean the projected balance
sheets, profit and loss statements, and cash flow statements of
the Borrower, prepared in accordance with Generally Accepted
Accounting Principles, together with appropriate supporting
details and a statement of underlying assumptions, which have
been and will be delivered to the Lenders in accordance with the
terms of the Parent Guaranty by the Parent, a copy of the first
of which is attached hereto as Exhibit 6.4-2.
"Property" of a Person shall mean any and all
assets or property, whether real, personal, tangible, intangible,
or mixed, of such Person, or other assets or property owned,
leased or operated by such Person.
"Rate Option" shall mean the LIBOR Rate or the
Base Rate.
"Real Estate" shall mean the real property,
leasehold or other interests in real property and other rights
related to such leaseholds or other interests now owned or
hereafter acquired by the Borrower, all fixtures and personal
property used in conjunction therewith and the Borrower's rights
to leases, rents and profits with respect thereto.
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"Redirection Notice" shall have the meaning
ascribed thereto in subsection 3.4.
"Refinancing Payment" shall mean an amount equal
to not less than Fifteen Million Dollars ($15,000,000) but not
more than Twenty-Five Million Dollars ($25,000,000) obtained
through either (i) the proceeds of Indebtedness of the Borrower
and/or Harris and/or the Parent as to which (x) the final
maturity date is at least July 1, 2002 and (y) the annual
aggregate principal payments are not greater than the aggregate
annual principal payments due under the Term Loan, the CAPEX
Loan, the Harris CAPEX Loan and the Harris Term Loan, or (ii) the
sale by the Parent of its equity securities, the proceeds of
which shall be used (A) to prepay the Term Loan, the CAPEX Loan,
the Harris CAPEX Loan and the Harris Term Loan in full, and (B)
to the extent that any portion of the Refinancing Payment remains
unapplied, at the Borrower's option, to permanently reduce the
Total Revolving Loan Facility and the Harris Total Revolving Loan
Facility on a pro rata basis.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System from time to time in
effect and shall include any successor or other regulation or
official interpretation of said Board of Governors relating to
the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Required Lenders" shall mean (i) at least two
unaffiliated Lenders, having in the aggregate at least fifty-one
percent (51%) of the Total Revolving Loan Facility, or (ii) if
the Revolving Credit Facility has been terminated, at least two
unaffiliated Lenders having in the aggregate at least fifty-one
percent (51%) of the aggregate outstanding amount of the Loans;
provided that, so long as subsection 2.2(b) shall be in effect,
the required percentage in each instance shall be at least
seventy-five percent (75%); and provided further that, if the
terms of subsection 2.2(b) shall no longer be in effect, the
required percentage in each instance for consent with regard to
consolidations and Acquisitions pursuant to subsection 8.3 and
Section 7(b) of the Parent Guaranty shall be at least sixty-six
percent (66%).
"Restricted Debt" shall mean any Indebtedness
incurred by the Parent for the purpose of purchasing or carrying
Margin Stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase any Margin
Stock.
"Restricted Payment" of a Person shall mean: (a)
any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of the Person now or
hereafter outstanding; (b) any redemption, conversion, exchange,
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retirement, sinking fund or similar payment, purchase or other
acquisition for value direct or indirect of any shares of any
class of stock of the Person now or hereafter outstanding; (c)
any payment or prepayment of principal of premium, if any, or
interest on, fees with respect to, redemption, conversion,
exchange, purchase, retirement, defeasance, sinking fund or
similar payment with respect to Subordinated Debt of the Person;
(d) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Person now or hereafter
outstanding; or (e) any payment by the Person of any management
fees, advisor fees or similar fees whether pursuant to a
management agreement or otherwise to any Affiliate of the Person.
Unless otherwise expressly provided or the context requires
otherwise, all references herein to a "Restricted Payment" shall
mean a Restricted Payment of the Borrower.
"Revolving Credit Facility" shall mean the
revolving credit facility provided under subsection 2.1 from time
to time in effect.
"Revolving Loan" shall have the meaning ascribed
thereto in subsection 2.1.
"Revolving Loan Initial Term" shall have the
meaning ascribed thereto in subsection 2.8.
"Revolving Loan Notes" shall have the meaning
ascribed thereto in subsection 2.3.
"Revolving Loan Renewal Term" shall have the
meaning ascribed thereto in subsection 2.8.
"Risk Participations" and "Risk Participation"
shall have the respective meanings ascribed thereto in subsection
2.1(c).
"Risk Participation Liability" shall mean, as to
each Risk Participation, all liabilities or portion thereof, as
applicable, of the Lenders or the Borrower with respect to the
transaction for which such Risk Participation was issued, whether
contingent or otherwise, including, without duplication, with
respect to a letter of credit: (a) the amount available to be
drawn or which may become available to be drawn; (b) all amounts
which have been paid or made available by the Issuing Bank to the
extent not reimbursed; and (c) all unpaid interest, fees and
expenses with respect thereto.
"Risk Participation Reserve" shall mean, at any
time, a reserve deducted from the Total Revolving Loan Facility,
in an amount equal to (a) the aggregate amount of Risk
Participation Liability with respect to Risk Participations
outstanding at such time, plus, without duplication, (b) the
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aggregate amount theretofore paid by the Lenders under the Risk
Participations and not reimbursed or debited to the Loan Account
pursuant to subsection 2.1(c)(i).
"SBCC" shall mean Sanwa Business Credit
Corporation in its individual capacity, and its successors.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Service" shall mean the Internal Revenue Service
and any successor thereof.
"Soft Costs" shall have the meaning ascribed
thereto in subsection 2.5(a).
"Solvency Certificate" shall mean the Certificate
of Solvency in the form of Exhibit 1.1(b), dated the Closing
Date, executed and delivered by the chief executive officer of
the Borrower in favor of the Lenders.
"Solvent" shall mean, when used with respect to
any Person, that (i) the fair saleable value of its Property is
in excess of the total amount of its Liabilities (including for
purposes of this definition all liabilities, whether or not
reflected on a balance sheet prepared in accordance with
Generally Accepted Accounting Principles, and whether direct or
indirect, fixed or contingent, secured or unsecured, disputed or
undisputed), (ii) it is able to pay its debts or obligations in
the ordinary course as they mature, and (iii) that Person has
capital sufficient to carry on its business and all businesses in
which it is about to engage.
"Subordinated Debt" shall mean any Indebtedness
issued or otherwise owing by the Borrower in favor of a Person
(a) the payment of which is subordinated to the payment of the
Obligations and (b) which is incurred pursuant to documentation
or entry in the financial records of such Person in each case in
form and substance satisfactory to the Agent in its sole
discretion.
"Subsidiary" of a Person shall mean (i) any
corporation of which more than fifty percent (50%) of the
outstanding securities having ordinary voting power to elect a
majority of the board of directors is at any time of
determination, directly or indirectly, owned or controlled by
such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any
partnership, association, trust, grantor trust, joint venture or
similar business organization more than 50% of the equity or
partnership interests having ordinary voting power or power of
direction of which shall at any time of determination be so owned
or controlled. Unless otherwise expressly provided or the
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context requires otherwise, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning specified in
subsection 2.20(a).
"Telerate Screen" shall mean the display
designated as Screen 3750 on the Telerate System or such other
screen on the Telerate System as shall display the London
interbank offered rates for deposits in U.S. dollars quoted by
selected banks.
"Term Loan" shall have the meaning ascribed
thereto in subsection 2.4.
"Term Loan Notes" shall have the meaning ascribed
thereto in subsection 2.4.
"Termination Date" shall mean the date on which
this Agreement terminates as provided in subsection 2.8(a).
"Termination Event" shall mean: (a) the tax
disqualification of a Plan under Section 401(a) of the IRC; (b) a
"Reportable Event" described in Section 4043 of ERISA and the
regulations issued thereunder unless the thirty (30) day notice
to the Pension Benefit Guaranty Corporation ("PBGC") has been
waived for the event; (c) the withdrawal of the Borrower or any
ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA or was deemed such under Section 4062(e) of ERISA; (d)
the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041(e) of ERISA;
(e) the institution of proceedings to terminate a Pension Plan by
the PBGC; (f) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (g)
the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan; (h) the imposition of a Lien
pursuant to Section 412 of the IRC or Section 302 of ERISA; (i)
any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section
4245 of ERISA, respectively; or (j) any event or condition which
results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Revolving Loan Facility" shall mean the
amount of Sixteen Million Dollars ($16,000,000).
"Unused Availability" shall mean the difference at
any time between the amount available to be loaned to the
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Borrower under the Revolving Credit Facility and the principal
balance of the Revolving Loan then outstanding.
"Unused Line Fee" shall have the meaning ascribed
thereto in subsection 2.12.
1.2 Accounting Terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall
have the meanings customarily given them in accordance with
Generally Accepted Accounting Principles. All determinations of
the book value of Inventory contemplated hereby shall be at the
lower of cost (on a first-in, first-out basis) or market.
1.3 Other Terms Defined in Illinois Uniform Commercial
Code. All other terms contained in this Agreement (and which are
not otherwise specifically defined herein) shall have the
meanings provided in the Uniform Commercial Code of the State of
Illinois or the laws of any other state which are required to be
applied in connection with the issue of perfection or non-
perfection of security interests in the Collateral (the "Code")
to the extent the same are used or defined therein.
1.4 Effective Date. All references to "the date
hereof," "the date of this Agreement," "the effective date
hereof," "effective as of the date hereof" or "of even date
herewith" contained herein or in the other Financing Agreements
shall be deemed to refer to the date of this Agreement.
1.5 References. The foregoing definitions shall be
equally applicable to both the singular and plural forms of the
defined terms. Unless otherwise expressly provided or unless the
context requires otherwise, all references in this Agreement to
Sections, subsections, Schedules and Exhibits shall mean and
refer to Sections, subsections, Schedules and Exhibits of this
Agreement. References to Persons include their respective
permitted successors and assigns or, in the case of a
governmental authority, Persons succeeding to the relevant
functions of such Persons. All references to statutes and
related regulations shall include all amendments of same and any
successor or replacement statutes and regulations.
2. CREDIT.
______
2.1 Revolving Credit Facility, Revolving Loan and Loan
Guaranties.
(a) Revolving Loan. Provided there does not then
exist a Default or an Event of Default, and subject to the terms
and conditions herein set forth, each Lender agrees severally
(and not jointly) to make its Pro Rata Share of advances to the
Borrower, on a revolving credit basis (the "Revolving Loan"), in
an aggregate amount not in excess of the lesser of (i) the Total
Revolving Loan Facility less the Risk Participation Reserve, or
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(ii) the "Current Asset Base." As used herein, the "Current
Asset Base" shall mean an amount equal to:
(1) eighty-five percent (85%) of the face amount
(less maximum discounts, credits and allowances which
may be taken by or granted to Account Debtors in
connection therewith) then outstanding of Eligible
Accounts, less such reserves as the Agent in good faith
in accordance with its customary asset-based financing
practices elects to establish, plus
(2) (i) sixty percent (60%) of the book value of
the Borrower's then existing Eligible Inventory
consisting of finished goods and raw materials and (ii)
fifty percent (50%) of the book value of the Borrower's
then existing Eligible Inventory consisting of work in
process; provided that aggregate advances against
Eligible Inventory consisting of work in process shall
not exceed Three Million Five Hundred Thousand Dollars
($3,500,000) at any one time; and provided further that
no more than Ten Million Five Hundred Thousand Dollars
($10,500,000) of the principal balance of the Revolving
Loan outstanding plus the Risk Participation Reserve
amount at any one time shall be attributable to that
portion of the Current Asset Base consisting of
Eligible Inventory as derived from the foregoing
formula. The book value of Eligible Inventory shall be
determined at the lower of cost (determined on a first-
in-first-out ("FIFO") basis) or market, less such
reserves as the Agent in good faith in accordance with
its customary asset-based financing practices elects to
establish, minus
(3) the Risk Participation Reserve.
(b) Deposit of Advances. Each advance to the Borrower
shall, on the day of such advance, be deposited, in immediately
available funds, in such account as the Borrower may, from time
to time, designate, unless otherwise requested by the Borrower in
writing.
(c) Risk Participation. Subject to the terms and
conditions of this Agreement, as part of the Total Revolving Loan
Facility and in addition to advances under the Revolving Loan,
upon the request of the Borrower, SBCC, on behalf of each Lender
according to such Lender's Pro Rata Share, agrees to issue or
arrange for the issuance of Letters of Credit for the account of
the Borrower or to confirm, or otherwise become obligated for,
the payment to the Issuing Bank which issues Letters of Credit
for the account of the Borrower (all such confirmations,
obligations and standby Letters of Credit issued by SBCC are
collectively referred to herein as "Risk Participations" and
individually as a "Risk Participation"); provided that SBCC shall
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not be under any obligation to issue any Risk Participation if
(i) any order, judgment or decree of any government authority or
other regulatory body shall purport by its terms to enjoin or
restrain SBCC or any Lender from issuing such Risk Participation,
or any law or governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) from any
governmental authority or other regulatory body with jurisdiction
over SBCC or any Lender shall prohibit, or request that SBCC or
such Lender refrain from, the issuance of Risk Participations in
particular or shall impose upon SBCC or any Lender with respect
to such Risk Participations any restriction or reserve or capital
requirement (for which SBCC or such Lender is not otherwise
compensated) or any unreimbursed loss, cost or expense which SBCC
or any Lender in good faith deems material to it or (ii) the
issuance thereof would violate any established credit policy of a
Lender or would be unacceptable as determined by the Required
Lenders in accordance with their respective customary asset-based
financing criteria. In no event shall SBCC issue, confirm or
otherwise become obligated with respect to a Letter of Credit
(including, without limitation, Letters of Credit issued with an
automatic "evergreen" provision) having an expiration date, or a
date for payment of any draft presented thereunder, later than
the earlier of (i) eighteen months from the date of issuance or
(ii) thirty (30) days prior to the Termination Date. Such
issuance, confirmations and obligations with respect to a Letter
of Credit pursuant to this subsection 2.1(c) shall be deemed to
be a Revolving Loan for purposes of requiring the satisfaction of
the applicable conditions set forth in Section 4. Additions to
the Risk Participation Reserve shall be established concurrently
with the issuance of each Risk Participation. Immediately upon
the issuance of any Risk Participation in accordance with this
subsection 2.1(c), each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from SBCC,
without recourse, representation or warranty, an individual
participation interest equal to its Pro Rata Share of the
principal amount of such Risk Participation and each draw paid by
the Issuing Bank under the Letter of Credit issued in connection
therewith. Each Lender's obligation to pay its Pro Rata Share of
all draws under the Letters of Credit issued in connection with
such Risk Participations shall be absolute, unconditional and
irrevocable and in each case shall be made without counterclaim
or set-off by such Lender.
(i) Maximum Amount. The aggregate amount of
Risk Participation Liability with respect to Risk
Participations outstanding at any time shall not exceed
Two Million Dollars ($2,000,000).
(ii) Reimbursement. The Borrower shall be
irrevocably and unconditionally obligated forthwith
without presentment, demand, protest or other
formalities of any kind, to reimburse the Agent, on
behalf of the Lenders, for any amounts paid by the
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Lenders with respect to each Risk Participation,
including, without limitation, all amounts paid by the
Lenders upon any draw with respect to a standby Letter
of Credit, any reimbursement obligation paid by the
Lenders to any Person upon any draw upon a Letter of
Credit and all fees, costs and expenses paid by the
Lenders to any Issuing Bank. All such reimbursement
obligations shall be due and payable on demand. If not
paid within one (1) Business Day following demand, or,
if an Event of Default shall have occurred and be
continuing, on the date such reimbursement obligations
arise, the Borrower hereby authorizes and directs the
Lenders, at the Lenders' option, to debit the Loan
Account (by increasing the principal balance of the
Revolving Loan), in the amount of any payment made by
the Lenders with respect to any Risk Participation and,
in connection therewith, the Risk Participation Reserve
then in effect shall be reduced by the amount of such
debit. All amounts paid by the Lenders with respect to
any Risk Participation that are not immediately repaid
by the Borrower with the proceeds of the Revolving Loan
or otherwise shall bear interest at the interest rate
applicable to Revolving Loans. If SBCC makes a payment
on account of any Risk Participation and is not
concurrently reimbursed therefor by the Borrower and if
for any reason an advance under the Revolving Loan may
not be made as stated in this subsection 2.1(c), then
as promptly as practical during normal banking hours on
the date of its receipt of such notice or, if not
practicable on such date, not later than 12:00 noon
(Chicago time) on the Business Day immediately
succeeding such date of notification, each Lender shall
deliver to the Agent for the account of the Issuing
Bank, in immediately available funds, the purchase
price for such Lender's interest in such unreimbursed
Risk Participation, which shall be an amount equal to
such Lender's Pro Rata Share of such payment.
(iii) Conditions of Issuance of Risk
Participations. Each Letter of Credit shall be
supported by a duly executed application and
reimbursement agreement in form satisfactory to the
Agent. The Borrower shall comply with all such terms
and conditions imposed on the Borrower by the Issuing
Bank with respect to the issuance of any Letter of
Credit, whether such terms and conditions are imposed
in the application for such Letter of Credit or
otherwise. Each Risk Participation shall be in form
and substance reasonably satisfactory to the Agent and
shall provide that the Risk Participation terminates
and all demands or claims for payment must be presented
by a date certain, which date will be at least thirty
(30) days before the Termination Date.
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(iv) Request for Risk Participation. Prior to
the issuance of a Risk Participation, and as a
condition of such issuance, the Borrower shall give the
Agent prior written notice specifying the date a Risk
Participation is to be issued, identifying the
beneficiary of the Risk Participation and describing
the nature of the transactions proposed to be supported
thereby and specifying whether the Borrower is
requesting a Risk Participation in the form of a Letter
of Credit to be issued by a Lender or a Risk
Participation of a Letter of Credit to be issued by
another Issuing Bank. If applicable, the notice shall
be accompanied by the form of the Letter of Credit to
be guarantied. Subject to the terms hereof, the Agent
shall issue the requested Risk Participation as soon as
practicable and not more than fifteen (15) Business
Days following the date of the applicable notice;
provided that as to Risk Participations consisting of
guaranties of reimbursement obligations owed to another
Issuing Bank, the Risk Participation shall not be
issued until the Agent and such Issuing Bank have
mutually agreed upon the form of such Risk
Participation.
(v) Indemnification. The Borrower hereby agrees
to indemnify, pay and hold the Agent and each Lender
harmless from and against any and all pending or
threatened claims, litigation, damages, losses and
liabilities incurred by the Agent or any Lender (or
which may be claimed against the Agent or any Lender by
any Person whatsoever) and costs and expenses incurred
in defending or responding to pending or threatened
claims or litigation by reason of or in connection with
the execution, delivery or transfer of, or payment or
failure to pay under, any Risk Participation including,
without limitation, any action taken or omitted, by any
Issuing Bank, other than claims, litigation, damages,
losses, liabilities, costs or expenses resulting from
the gross negligence or willful misconduct of such
Person. The Borrower's unconditional obligations to
the Agent and the Lenders hereunder shall not be
modified or diminished for any reason or in any manner
whatsoever. The Borrower agrees that any charges made
to the Agent or the Lenders for the Borrower's account
by any Issuing Bank shall be conclusive as between such
Persons and the Borrower and may be charged to the
Borrower's Loan Account hereunder. The Borrower hereby
agrees that any action taken by the Agent or the
Lenders, if taken in good faith, or any action taken by
any Issuing Bank, under or in connection with the Risk
Participations, or the Collateral relating thereto,
shall be binding on the Borrower and shall not impose
any resulting liability on the Agent or any Lender
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other than claims, litigation, damages, losses,
liabilities, costs or expenses resulting from the gross
negligence or willful misconduct of such Person.
2.2 Maximum Principal Balance of Revolving Loan. (a)
Except as provided in subsection 2.2(b), the aggregate
outstanding principal balance of the Revolving Loan shall at no
time exceed the lesser of (i) the Current Asset Base, or (ii) the
Total Revolving Loan Facility less the Risk Participation Reserve
(any such excess amount being an "Over Advance"). If an Over
Advance shall occur, such Over Advance shall be immediately due
and payable.
(b) Notwithstanding anything contained in this
Agreement to the contrary, until such time as an additional
financial institution or institutions satisfactory to the Lenders
and the Borrower shall become a Lender under this Agreement with
an aggregate Commitment of at least Ten Million Dollars
($10,000,000), the aggregate outstanding principal balance of (i)
the Revolving Loan and (ii) the Revolving Loan (as defined in the
Harris Loan Agreement) of Harris shall at no time exceed Twenty-
Four Million Dollars ($24,000,000).
2.3 Evidence of Revolving Loan Indebtedness. The
advances by each Lender constituting the Revolving Loan shall be
evidenced by a promissory note in favor of each respective Lender
(collectively, the "Revolving Loan Notes") of even date herewith
in the form attached as Exhibit 2.3. All of the Borrower's
Revolving Loan Obligations to the Lenders hereunder shall be
payable by the Borrower by application of the proceeds of all
Accounts and other Collateral in accordance with subsection 3.4,
and shall be payable in full upon termination of this Agreement,
and the principal amount of such Revolving Loan Obligations shall
bear interest as hereinafter provided. Each advance by the
Lenders and each repayment of principal applicable to such
advance shall be reflected in the Borrower's Loan Account.
2.4 Term Loan. (a) Simultaneously with the initial
advance of the Revolving Loan and subject to the terms and
conditions of this Agreement, each Lender agrees to loan the
Borrower its Pro Rata Share of the sum of Eight Million Dollars
($8,000,000) in the aggregate (the "Term Loan"), evidenced by a
promissory note of even date herewith, executed by the Borrower
and payable by the Borrower to the order of a Lender in the
amount of its Pro Rata Share of the Term Loan, in the form
attached as Exhibit 2.4 (collectively, the "Term Loan Notes").
(b) Subject to subsection 2.8, the aggregate principal
balance of the Term Loan shall be payable to the Agent, for the
benefit of the Lenders, in twenty-six (26) equal, consecutive
quarterly installments on the first day of each January, April,
July and October commencing April 1, 1995, of Two Hundred Eighty-
Five Thousand Seven Hundred Fifteen Dollars ($285,715) and a
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final installment on October 1, 2001 in the amount of Five
Hundred Seventy-One Thousand Four Hundred Ten Dollars ($571,410)
or, if less, the entire outstanding balance of the Term Loan.
2.5 CAPEX Loan.
(a) Provided there does not then exist a Default or an
Event of Default, and subject to the terms and conditions herein
set forth, each Lender agrees to loan the Borrower its Pro Rata
Share of the sum of up to Four Million Dollars ($4,000,000) in
the aggregate during the term of this Agreement (collectively,
the "CAPEX Loan"). The Borrower may request advances under the
CAPEX Loan not more than once during each fiscal quarter of the
Borrower in a minimum amount of Two Hundred Fifty Thousand
Dollars ($250,000); provided that no CAPEX Loan shall be
requested by the Borrower and no CAPEX Loan shall be made by the
Lenders so long as the terms of subsection 2.2(b) shall be in
effect. Each advance under the CAPEX Loan shall be evidenced by
a separate installment note dated the date of such advance,
executed by the Borrower and payable by the Borrower to the order
of a Lender in the amount of its Pro Rata Share of such CAPEX
Loan advance, in the form attached as Exhibit 2.5 (collectively,
the "CAPEX Notes"). Payments made on the CAPEX Loan may not be
reborrowed. Each advance under the CAPEX Loan shall be (i) used
by the Borrower solely for the purpose of purchasing Equipment or
real property, (ii) in an amount not to exceed (x) in the case of
new Equipment, the sum of (A) eighty-five percent (85%) of the
actual invoice cost of the Equipment (excluding therefrom any
other costs, fees and expenses relating to installation,
services, maintenance, processing, insurance or similar items
(collectively, the "Soft Costs")) and (B) twenty-five percent
(25%) of the Soft Costs of such Equipment, (y) in the case of
used Equipment, ninety percent (90%) of the value of the
Equipment, as determined by the Agent in its reasonable
discretion, and (z) with respect to real property, sixty percent
(60%) of the fair market value, as determined by the Agent in its
reasonable discretion; provided that the aggregate advances in
any Fiscal Year under the CAPEX Loan with respect to real
property shall not exceed Two Million Dollars ($2,000,000);
provided further that all such acquired Equipment and real
property shall be free and clear of all Liens, except for Liens
in favor of the Agent for the benefit of the Lenders.
(b) Subject to subsection 2.8, the principal balance
of each CAPEX Note shall be payable to the Agent, for the benefit
of the Lenders, in twenty-four (24) equal, consecutive quarterly
installments on the first day of each January, April, July and
October, commencing on the first such payment date occurring not
less than six (6) months after the date of such advance in the
amount of one twenty-fourth (1/24th) of the principal balance
thereof.
2.6 Interest.
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(a) Subject to the terms and conditions of this
Agreement, the Revolving Loan, the Term Loan and the CAPEX Loan
may be divided into Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, selected by the Borrower in accordance with
subsections 2.6(e) and 2.6(f); provided that each Loan shall not
have more than one (1) Interest Period outstanding with respect
to such Loan at any one time. So long as no Event of Default has
occurred and is continuing, the Borrower shall pay to the Agent,
for the benefit of the Lenders, interest on the outstanding
principal balance of the Loans at the Base Rate or the LIBOR
Rate, as applicable, in accordance with subsection 2.17.
Interest shall be computed by multiplying the closing daily
principal balance in the Borrower's Loan Account for each day
during the preceding month by the interest rate determined to be
applicable hereunder on each such day.
(b) Interest and all fees (other than prepayment fees)
shall be computed (on a daily basis) on the basis of a three
hundred sixty (360) day year for the actual number of days
elapsed. In computing interest on any Loan, the date of funding
of the Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted
from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate
Loan to such Base Rate Loan, shall be included and the date of
payment of such Loan or the expiration date of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan
being converted to a LIBOR Rate Loan, the date of conversion of
such Base Rate Loan to such LIBOR Rate Loan, shall be excluded;
provided that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.
(c) So long as an Event of Default shall have occurred
and be continuing, the Borrower shall pay to the Lenders interest
from the date of such Event of Default to and including the date
of cure of such Event of Default on the outstanding principal
balance of the Obligations at the Default Rate applicable to such
Obligations; provided that in the case of LIBOR Rate Loans, upon
the expiration of the Interest Period in effect at the time any
Event of Default shall have occurred and be continuing, such
LIBOR Rate Loans shall automatically become Base Rate Loans and
thereafter bear interest at the Default Rate applicable to Base
Rate Loans.
(d) (i) Interest shall be due at the Base Rate, the
LIBOR Rate or the Default Rate, as provided herein, after as well
as before demand, default and judgment notwithstanding any
judgment rate of interest provided for in any statute. If any
interest payment or other charge or fee payable hereunder exceeds
the maximum amount then permitted by applicable law, then to the
extent permitted by law and subject to the provisions of clause
(ii) of this subsection 2.6(d) below, the Borrower shall be
obligated to pay the maximum amount then permitted by applicable
law and the Borrower shall continue to pay the maximum amount
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from time to time permitted by applicable law until all such
interest payments and other charges and fees otherwise due
hereunder (in the absence of such restraint imposed by applicable
law) have been paid in full.
(ii) It is the intention of the Lenders and the
Borrower to comply with the laws of the State of
Illinois, and notwithstanding any provision to the
contrary contained herein or in the other Financing
Agreements, the Borrower shall not be required to pay
and the Lenders shall not be permitted to collect any
amount in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess
Interest is provided for or determined to have been
provided for by a court of competent jurisdiction in
this Agreement or in any of the other Financing
Agreements, then in such event: (A) the provisions of
this subparagraph shall govern and control; (B) neither
the Borrower nor any guarantor or endorser shall be
obligated to pay any Excess Interest; (C) any Excess
Interest that any Lender may have received hereunder
shall be, at such Lender's option (1) applied as a
credit against the outstanding principal balance of the
Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law) owed to
such Lender, (2) refunded to the payor thereof, or (3)
any combination of the foregoing; (D) the interest
rate(s) provided for herein shall be automatically
reduced to the maximum lawful rate allowed under
applicable law, and this Agreement and the other
Financing Agreements shall be deemed to have been, and
shall be, reformed and modified to reflect such
reduction; and (E) neither the Borrower nor any
guarantor or endorser shall have any action against any
Lender for any damages arising out of the payment or
collection of any Excess Interest.
(e) Subject to the terms of this Agreement, the
Borrower shall select the Rate Option and, in the case of LIBOR
Rate Loans, the Interest Period applicable to each LIBOR Rate
Loan from time to time by giving the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:30 a.m. (Chicago time) (i)
on the Funding Date of any Base Rate Loan, and (ii) three (3)
Business Days before the Funding Date for each LIBOR Rate Loan,
specifying:
(i) the Funding Date of each Loan,
(ii) the aggregate amount of such Loan (and, if
such Borrowing Notice refers to more than one Rate
Option, the amount of each Base Rate Loan and LIBOR
Rate Loan which will become part of the Revolving Loan,
Term Loan or the CAPEX Loan, as the case may be).
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(iii) the Rate Option(s) selected for such Loan,
and
(iv) in the case of each LIBOR Rate Loan, the
Interest Period applicable thereto;
provided that no Loan may be made as a LIBOR Loan if any Default
with respect to the payment of money or any Event of Default has
occurred and is continuing.
The Borrower shall select Interest Periods so that it
is not necessary to repay any portion of a LIBOR Rate Loan prior
to the last day of the applicable Interest Period in order to
make a payment or prepayment of principal on the Term Loan, the
CAPEX Loan or the Revolving Loan, as the case may be, required by
the terms hereof including, without limitation, prepayments
pursuant to subsection 2.8.
(f) Base Rate Loans shall continue as Base Rate Loans
unless and until such Base Rate Loans are converted by the
Borrower in accordance with this subsection 2.6(f) into LIBOR
Rate Loans. Each LIBOR Rate Loan shall continue as a LIBOR Rate
Loan until the end of the then applicable Interest Period, at
which time such LIBOR Rate Loan shall be automatically converted
into a Base Rate Loan unless Borrower shall have given Agent an
irrevocable notice (a "Conversion/Continuation Notice")
requesting that, at the end of such Interest Period, such LIBOR
Rate Loan continue as a LIBOR Rate Loan for the same or another
Interest Period; provided that no outstanding Loan may be
continued as, or be converted into, a LIBOR Rate Loan if any
Default with respect to the payment of money or any Event of
Default has occurred and is continuing. Subject to the terms of
this Agreement, the Borrower may elect from time to time to
convert all or any part of a Loan of any Rate Option into any
other Rate Option; provided that any conversion of a LIBOR Rate
Loan shall be made on, and only on, the last day of the Interest
Period applicable thereto. The Borrower shall give the Agent a
Conversion/Continuation Notice of each conversion or continuation
of a Base Rate Loan or LIBOR Rate Loan, as the case may be, not
later than 10:30 a.m. (Chicago time) (i) on the Funding Date, in
the case of a conversion into a Base Rate Loan, and (ii) at least
three (3) Business Days before the Funding Date of the requested
conversion or continuation of a LIBOR Rate Loan, specifying:
(i) the Funding Date of such conversion or
continuation;
(ii) the aggregate amount and Rate Option(s) of
the Loan which is to be converted or continued; and
(iii) the amount and Rate Option(s) of the Base
Rate Loans or LIBOR Rate Loans into which such Loan is
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to be converted or continued and, in the case of a
conversion into or continuation of a LIBOR Rate Loan,
the duration of the Interest Period applicable thereto.
(g) In lieu of delivering a Notice of Borrowing or a
Notice of Conversion/Continuation, the Borrower may give the
Agent notice by telephone or telecopy by the required time of any
proposed borrowing or conversion/continuation under this
subsection 2.6; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing or a
Notice of Conversion/Continuation, as the case may be, to the
Agent on or before the proposed Funding Date. Neither the Agent
nor any Lender shall incur any liability to the Borrower in
acting upon any such notice by telephone that the Agent believes
in good faith to have been given by an Authorized Officer or for
otherwise acting in good faith under this subsection 2.6 and,
upon the funding or conversion/continuation, as the case may be,
by the Agent in accordance with this Agreement pursuant to any
such notice, the Borrower shall have effected such funding,
conversion or continuation, as the case may be, hereunder. A
Notice of Borrowing or a Notice of Conversion/Continuation for
the funding of, or conversion to, or continuation of, a LIBOR
Rate Loan (or notice by telephone or telecopy in lieu thereof)
shall be irrevocable once given, and the Borrower shall be bound
to convert or continue in accordance therewith.
(h) Each LIBOR Rate Loan (whether resulting from a
Borrowing Notice or a Conversion/Continuation Notice) shall be in
the minimum amount of Five Hundred Thousand Dollars ($500,000)
and in integral multiples of One Hundred Thousand Dollars
($100,000) if in excess thereof.
2.7 Method of Borrowing; Method of Making Interest and
Other Payments. (a) Not later than noon (Chicago time) on each
Funding Date, each Lender shall make available its Pro Rata Share
of the Loan or Loans (except with respect to Loans made pursuant
to a Conversion/Continuation Notice in which case each Lender
shall be deemed to have made available its Loan or Loans) in
funds immediately available in Chicago, Illinois to the Agent at
its address specified pursuant to subsection 10.13. The Agent
will make the funds so received from the Lenders available to the
Borrower in accordance with subsection 2.1(b). Notwithstanding
the foregoing provisions of this subsection 2.7(a), to the extent
that a Loan or portion thereof made by a Lender matures or is to
be repaid on the Funding Date of a requested Loan, such Lender
shall first apply the proceeds of the Loan it is then making to
the repayment of the maturing Loan or portion thereof.
(b) In the event that the Borrower fails to pay
interest or other Obligations payable hereunder (other than the
principal balance of the Revolving Loan) as of their respective
due dates, the Borrower authorizes the Lenders, in their sole
discretion, to cause such amounts to be paid by adding such
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amounts to the principal balance of the Revolving Loan and
charging such payment to the Borrower's Loan Account, all as set
forth on the Agent's books and records. Unless otherwise
directed by the Required Lenders, all payments to the Lenders
hereunder shall be made by delivery thereof to the Agent, for the
benefit of the Lenders, at its address set forth in subsection
10.13 or, with respect to the Revolving Loan only, by delivery to
the Agent for deposit in the Blocked Accounts of all proceeds of
Accounts or other Collateral in accordance with subsection 3.4.
If the Agent elects to bill the Borrower for any amount due
hereunder, such amount shall be immediately due and payable with
interest thereon as provided herein. Solely for the purpose of
calculating interest earned by each Lender with respect to the
Revolving Loan, any check, draft or similar item of payment by or
for the account of the Borrower delivered to the Agent or
deposited in a Blocked Account in accordance with subsection 3.4
shall be applied by the Agent on account of the Borrower's
Revolving Loan Obligations on the Business Day that the Agent
receives immediately available funds as a result of the deposit
thereof in accordance with subsection 3.4. Immediately available
funds received by the Agent after 2:00 p.m. Chicago time shall be
deemed to have been received on the following Business Day.
(c) (i) Unless the Borrower or a Lender, as the case
may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (A) in the case of a
Lender, the proceeds of a Loan or (B) in the case of the
Borrower, a payment of principal, interest, fees or other
Obligations to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that
such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If the
Borrower or such Lender, as the case may be, has not in fact made
such payment to the Agent, the recipient of such payment shall,
on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by
a Lender, the Federal Funds Rate for such day (as determined by
the Agent) or (y) in the case of payment by the Borrower, the
interest rate applicable to the relevant Loan.
(ii) Nothing contained in this subsection 2.7(c)
will be deemed to relieve a Lender of its obligation to
fulfill its Commitments or to prejudice any rights the
Agent or the Borrower may have against such Lender as a
result of any default by such Lender under this
Agreement.
(iii) If the Agent determines at any time that any
amount received by the Agent under this Agreement must
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be returned to the Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this
Agreement, the Agent will not be required to distribute
any portion thereof to any Lender. In addition, each
Lender will repay to the Agent on demand any portion of
such amount that the Agent has distributed to such
Lender.
(iv) Without limiting the generality of the
foregoing, each Lender shall be obligated to fund its
Pro Rata Share of any Revolving Loan made after any
acceleration of the Loans with respect to any draw on a
Letter of Credit or Risk Participation therefor.
2.8 Term of this Agreement.
(a) Term. With respect to the Term Loan and the
issuance of CAPEX Notes, this Agreement shall be effective until
October 1, 2001; provided that if the Revolving Loan is
terminated at any time prior to October 1, 1997, the entire
principal balance of the Term Loan and the CAPEX Loan shall be
immediately due and payable. With respect to the Revolving Loan,
this Agreement shall be effective until October 1, 1997 (the
"Revolving Loan Initial Term"), subject to annual renewals
thereafter as hereinafter provided (each such renewal being
referred to as a "Revolving Loan Renewal Term"). Not less than
ninety (90) days prior to the end of the Revolving Loan Initial
Term or any Revolving Loan Renewal Term, the Borrower shall
notify the Agent in writing if it elects to renew this Agreement
for a Revolving Loan Renewal Term, and not less than sixty (60)
days prior to the end of the Revolving Loan Initial Term or any
Revolving Loan Renewal Term, the Agent shall notify the Borrower
in writing if the Lenders elect to accept such renewal. Unless
the Borrower and each Lender shall agree in writing to extend
this Agreement in accordance with the preceding sentence, this
Agreement shall terminate upon the earlier to occur of the
expiration of the Revolving Loan Initial Term or any Revolving
Loan Renewal Term, as applicable, or the final payment in full of
all of the Obligations. In addition, this Agreement may be
terminated as set forth in Section 9.1. Upon the effective date
of termination, all of the Obligations shall become immediately
due and payable without notice or demand. Notwithstanding any
termination, until all of the Obligations shall have been fully
and finally paid and satisfied and the Risk Participations shall
have been terminated or payment thereof shall have been secured
in accordance with subsection 2.8(b) on terms satisfactory to the
Lenders all of Agent's and the Lenders' rights and remedies under
the Financing Agreements shall survive such termination and,
notwithstanding such payment, for so long as any pending or
threatened action which could result in a claim by any Lender
under subsection 6.26 exists hereunder, the Agent, on behalf of
the Lenders, shall be entitled to retain Liens upon all existing
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and future Collateral, and the Borrower shall continue to remit
collections of Accounts and proceeds as provided herein.
(b) Prepayment of All Obligations. Subject to the
payment set forth in subsection 2.8(g) the Borrower may prepay in
full all of the Obligations arising hereunder, by paying the
aggregate outstanding principal balance of all Loans, together
with all interest and fees accrued thereon, and all other
outstanding Obligations.
(c) Term Debt Prepayment. The Borrower may prepay the
Loans and, at the Borrower's option, reduce the Total Revolving
Loan Facility from the Refinancing Payment, without premium or
penalty; provided that (i) such prepayment occurs within eighteen
(18) months after the Closing Date, (ii) as part of such payment
the Term Loan, the CAPEX Loan, the Harris CAPEX Loan and the
Harris Term Loan are prepaid in full, (iii) after giving effect
to such prepayment, no Default or Event of Default has occurred
and is continuing, and (iv) after giving effect to the
application of such prepayment and reduction, the Borrower shall
have Unused Availability equal to at least ten percent (10%) of
the Total Revolving Loan Facility. Any prepayment under this
subsection 2.8(c) shall include all unpaid accrued interest to
the date of prepayment on the principal balance so prepaid. The
prepayment and reduction made under this subsection 2.8(c) shall
be applied in the following priority: (i) to the Term Loan until
paid in full, (ii) to the CAPEX Notes until paid in full and
(iii) at the Borrower's option, to permanently reduce the Total
Revolving Loan Facility.
(d) Partial Prepayment. Subject to the payment set
forth in subsection 2.8(g), the Borrower may prepay the entire
principal amount of the Term Loan or the CAPEX Loan or, in a
minimum amount of Five Hundred Thousand Dollars ($500,000) or any
integral multiple of One Hundred Thousand Dollars ($100,000) if
in excess thereof, any portion of the Term Loan or the CAPEX Loan
by paying the principal amount to be prepaid, together with all
unpaid accrued interest thereon to the date of prepayment. All
prepayments made by the Borrower under this subsection 2.8(d)
shall be made and applied to scheduled installments of principal
due on such Loans in the following priority: (i) to the Term
Loan until paid in full, and (ii) to the CAPEX Notes in the
inverse order of their issuance dates, in the case of each of the
Term Loan and the CAPEX Notes in the inverse order of the
maturities thereof.
(e) Total Revolving Loan Facility. Subject to the
payment set forth in subsection 2.8(g), the Borrower may
permanently reduce the Total Revolving Loan Facility in whole, or
in part in a minimum amount of Five Hundred Thousand Dollars
($500,000) or any integral multiple of One Hundred Thousand
Dollars ($100,000) if in excess thereof.
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(f) Pro Rata Reduction. Any prepayment of the Loans
or any reduction of the Total Revolving Loan Facility pursuant to
this subsection 2.8 shall ratably reduce the amounts outstanding
under the Notes of each Lender and each Lender's Pro Rata Share
of the Total Revolving Loan Facility, as the case may be.
(g) Prepayment Fee. Except as set forth in subsection
2.8(c) or with respect to prepayments made pursuant to
subsections 7.6 or 8.7 as set forth therein, if the Borrower
shall prepay all or any part of the Obligations during the first
eighteen (18) months after the Closing Date, the Borrower shall
pay to the Lender as liquidated damages and compensation for the
costs of being prepared to make funds available to the Borrower
hereunder an amount equal to one percent (1%) of principal
balance so prepaid.
(h) Notice. All prepayments under this subsection 2.8
shall be subject to not less than ten (10) days prior written
irrevocable notice to the Agent and each Lender specifying the
date of prepayment (which date, if any outstanding LIBOR Rate
Loans are to be prepaid, shall be the last day of the applicable
Interest Period).
(i) Reductions. Notwithstanding anything contained in
this subsection 2.8 to the contrary, the amount of the Total
Revolving Loan Facility may not be reduced below the aggregate
principal amount of the Revolving Loan and the Risk Participation
Obligations at the time such reduction is to take effect.
2.9 Collateral Fee. As incurred, the Borrower shall
pay to SBCC, individually in its capacity as the Agent a
collateral monitoring fee (the "Collateral Monitoring Fee") in an
amount equal to (x) the Agent's reasonable out-of-pocket costs of
performing semi-annual audits, plus Five Thousand Dollars
($5,000) per audit, plus (y) so long as either the Term Loan or
any CAPEX Note remains outstanding, the Agent's reasonable out-
of-pocket costs of performing annual "desk-top" appraisal updates
of the Equipment and the Real Estate, plus Ten Thousand Dollars
($10,000) per update.
2.10 Closing Fee. On the Closing Date, the Borrower
shall pay the Agent, for the benefit of the Lenders, a closing
fee (the "Closing Fee") in an amount equal to the sum of (i)
Sixty Thousand Dollars ($60,000) and (ii) three-quarters of one
percent (0.75%) of the Term Loan. On the date on which the terms
of subsection 2.2(b) shall no longer be in effect, the Borrower
shall pay to the Agent, for the benefit of the Lenders, the
additional sum of Fifteen Thousand Dollars ($15,000).
2.11 Agent's Fee. On the Closing Date and on each
anniversary of such date during the term of this Agreement, the
Borrowers shall pay to SBCC, individually in its capacity as the
Agent an agent's fee (the "Agent's Fee"), payable in an amount
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equal to 0.10% of the sum of (i) the Total Revolving Loan
Facility; provided that so long as the terms of subsection 2.2(b)
shall be in effect the calculation of the Agent's Fee shall be
subject to the effect of the limitations set forth therein, (ii)
the outstanding principal balance of the Term Loan, and (iii) the
aggregate outstanding balance of the CAPEX Notes.
2.12 Unused Line Fee. From and after the Closing Date,
the Borrower shall pay ratably to the Lenders a fee (the "Unused
Line Fee") in an amount equal to the Total Revolving Loan
Facility (less the Risk Participation Reserve) less the average
daily closing balance of the Revolving Loan advanced to the
Borrower during the preceding month multiplied by one-half of one
percent (0.50%) per annum, calculated on the basis of a three
hundred sixty (360) day year for the actual number of days
elapsed; provided that so long as the terms of subsection 2.2(b)
shall be in effect the calculation of the Unused Line Fee shall
be subject to the effect of the limitation set forth therein.
The Unused Line Fee shall be payable in arrears on the first day
of each calendar month following the Closing Date and at
maturity, whether on the termination of this Agreement or
earlier.
2.13 CAPEX Loan Fee. On the date of any advance under
the CAPEX Loan, the Borrower shall pay ratably to the Lenders a
CAPEX Loan fee (the "CAPEX Loan Fee") in an amount equal to one-
half of one percent (0.50%) of the principal amount so advanced.
2.14 Other Fees, Costs and Expenses. All reasonable
fees, costs and expenses incurred by the Agent in connection with
the negotiation, preparation, review, execution, delivery,
closing, amendment, modification and waiver of the Financing
Agreements shall be part of the Obligations payable as provided
in this subsection 2.14 and secured by the Collateral, including,
without limitation, the following: (i) in connection with
opening and maintaining the Blocked Accounts and depositing for
collection any check or item of payment received by and/or
delivered to any Collecting Bank or the Agent or any Lender on
account of the Obligations; (ii) arising out of the
indemnification by the Agent of any such Collecting Bank against
damages incurred by the Collecting Bank in the operation of a
Blocked Account; (iii) in connection with the Agent's forwarding
to the Borrower the proceeds of Loans or advances hereunder;
(iv) arising from photocopying and other mechanical or electronic
reproduction in connection with the rights of inspection under
subsection 7.2; (v) search fees, appraisal fees and expenses,
title insurance policy fees, costs and expenses; filing and
recording fees; reasonable fees, costs and expenses of the
Agent's attorneys and paralegals and all taxes payable in
connection with this Agreement or the other Financing Agreements,
whether such expenses and fees are incurred prior to, on or after
the date hereof; and (vi) arising from the Agent's employment of
counsel in connection with any matters contemplated by or arising
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out of this Agreement. Any portion of the foregoing fees, costs
and expenses which remains unpaid thirty (30) days following the
Lender's statement and request for payment thereof shall bear
interest from the date of such statement and request for payment
at the Default Rate applicable to Revolving Loans accruing
interest at the Base Rate.
2.15 Borrower's Loan Account. The Agent shall maintain
a loan account ("Loan Account") on its books in which shall be
recorded (i) all Loans and advances made by each Lender to the
Borrower pursuant to this Agreement, (ii) the issuance of all
Risk Participations, (iii) all payments made by the Borrower on
all such Loans and advances and (iv) all other appropriate debits
and credits as provided in this Agreement, including, without
limitation, all fees, charges, expenses and interest. All
entries in the Borrower's Loan Account shall be made in
accordance with the Agent's customary accounting practices as in
effect from time to time. The Borrower promises to pay the
amount reflected as owing by it under its Loan Account and all of
its other Obligations hereunder as such amounts become due or are
declared due pursuant to the terms of this Agreement. The
Borrower irrevocably waives the right to direct the internal
application of any and all payments at any time or times
thereafter received by the Agent or any Lender from or on behalf
of the Borrower, and the Borrower hereby irrevocably agrees that
each Lender shall have the continuing exclusive right to apply
and to reapply any and all payments received at any time or times
after the occurrence of an Event of Default against the
Obligations in such manner as such Lender may deem advisable
notwithstanding any previous entry by such Lender upon any of its
books and records.
The Borrower expressly agrees that to the extent the
Borrower makes a payment or payments and such payment or
payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment,
the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment
or payments had not been made.
2.16 Statements. All advances to the Borrower, and all
other debits and credits provided for in this Agreement, shall be
evidenced by entries made by the Agent in the Loan Account and in
the Agent's books and records showing the date, amount and reason
for each such debit or credit. Until such time as the Agent
shall have rendered to the Borrower written statements of account
as provided herein, the balance in the Borrower's Loan Account,
as set forth on the Agent's most recent printout or other written
statement, shall be rebuttably presumptive evidence of the
amounts due and owing to each Lender by the Borrower. Not more
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than twenty (20) days after the last day of each calendar month,
the Agent shall render to the Borrower a statement setting forth
the principal balance of the Loans and the calculation of
interest due thereon. Each such statement shall be subject to
subsequent adjustment by the Agent but shall, absent manifest
errors or omissions, be presumed correct and binding upon the
Borrower, and shall constitute an account stated unless, within
thirty (30) days after receipt of any statement from the Agent,
the Borrower shall deliver to the Agent by registered or
certified mail written objection thereto specifying the error or
errors, if any, contained in such statement. In the absence of a
written objection delivered to the Agent as set forth in this
subsection 2.16, the Agent's statement of the Borrower's Loan
Account shall be conclusive evidence of the amount of the
Borrower's Obligations.
2.17 Payment Dates. Interest shall be payable on Base
Rate Loans monthly in arrears on the first day of each calendar
month for all periods during the prior month for which such Base
Rate Loans are or, if converted to a LIBOR Rate Loan during the
prior month, were outstanding and on LIBOR Rate Loans at the end
of each Interest Period and, in the case of an Interest Period
longer than one month, on the last day of each month during such
Interest Period, in each case commencing September 1, 1994. Any
payment due hereunder on any day other than a Business Day shall
be due on the next succeeding Business Day, and if such payment
shall bear interest in accordance herewith, interest shall accrue
to the date of payment.
2.18 Risk Participation Fees. The Borrower shall pay
to the Agent, for the benefit of the Lenders, fees for any Risk
Participation for the period from and including the date of
issuance of such Risk Participation to and excluding the date of
expiration or termination of such Risk Participation, equal to
the daily average amount of the Risk Participation Liability
multiplied by two percent (2.0%) per annum, such fees to be
calculated on the basis of a 360-day year for the actual number
of days elapsed and to be payable monthly in arrears on the first
day of the month following the date of issuance of any such Risk
Participation and the first day of each month thereafter. The
Borrower shall also reimburse the Agent and each Lender for any
and all normal and customary fees and expenses paid to the
Issuing Bank.
2.19 Other Risk Participation Provisions.
(a) Obligations Absolute. The obligation of the
Borrower to reimburse the Agent and each Lender for payments made
under any Risk Participation shall be unconditional and
irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including the
following circumstances:
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(i) any lack of validity or enforceability of
any Risk Participation or any other agreement;
(ii) the existence of any claim, set-off, defense
or other right which the Borrower or any of its
Affiliates may have at any time against a beneficiary
or any transferee of any Risk Participation (or any
Persons for whom any such transferee may be acting),
the Agent or any Lender or any other Person, whether in
connection with this Agreement, the transactions
contemplated herein or any unrelated transaction
(including any underlying transaction between the
Borrower or any of their Affiliates and the beneficiary
for which such Risk Participation was procured);
(iii) any draft, demand, certificate or any other
document presented under any Risk Participation proving
to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Agent or any Lender under any
Risk Participation against presentation of a demand,
draft or certificate or other document which does not
comply with the terms of such Risk Participation;
provided that, in the case of any payment by the Agent
or any Lender under such Risk Participation, such
Person has not acted with gross negligence or willful
misconduct as determined by a final judgment, not
subject to review on appeal, of a court of competent
jurisdiction in determining that the demand for payment
under any Risk Participation complies on its face with
any applicable requirements for a demand for payment
under such Risk Participation;
(v) any other circumstance or happening
whatsoever, which is similar to any of the foregoing;
or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(b) Indemnification; Nature of the Agent and each
Lender's Duties. In addition to amounts payable as elsewhere
provided in this Agreement, the Borrower hereby agrees to
protect, indemnify, pay and save the Agent and each Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which the Agent or any
Lender may incur or be subject to as a consequence, direct or
indirect, of (1) the issuance of any Risk Participation, other
than as a result of the gross negligence or willful misconduct of
such Person as determined by a final order, not subject to review
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on appeal, of a court of competent jurisdiction, or (2) the
failure of the Agent or any Lender to honor a demand for payment
under any Risk Participation as a result of any act or omission,
whether rightful or wrongful, of any governmental authority (all
such acts or omissions herein called "Government Acts").
As among the Agent, the Lenders and the Borrower, the
Borrower assumes all risks of the acts and omissions of, or
misuse of any Risk Participation by, beneficiaries thereof. In
furtherance and not in limitation of the foregoing, neither the
Agent nor any Lender shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of
any document by any party in connection with the application for
and issuance of any Risk Participation, even if it should in fact
prove to be in any and all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Risk Participation or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of any Risk
Participation to comply fully with conditions required in order
to demand payment under such Risk Participation; provided that,
in the case of any payment by the Agent or any Lender under any
Risk Participation, such Person has not acted with gross
negligence or willful misconduct in determining that the demand
for payment under any Risk Participation complies on its face
with any applicable requirements for a demand for payment under
such Risk Participation; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph or otherwise; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay
in the transmission or otherwise of any document required in
order to make a payment under any Risk Participation or of the
proceeds thereof; (vii) for the credit of the proceeds of any
drawing under any Risk Participation; and (viii) for any
consequences arising from causes beyond the control of the
Lender, including any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of the Agent or any
Lender's rights or powers hereunder.
In furtherance and extension of, and not in limitation
of, the specific provisions hereinabove set forth, any action
taken or omitted by the Agent or any Lender under or in
connection with any Risk Participation, if taken or omitted in
good faith and without gross negligence or willful misconduct,
shall not put the Agent or any Lender under any resulting
liability to the Borrower.
2.20 Taxes; Changes In Law.
(a) Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and
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without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto, excluding income taxes imposed by foreign,
federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or any
transfer taxes imposed as a result of the transfer of any Notes
(all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter
collectively referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, then the sum
payable hereunder shall be increased as may be necessary so that,
after making all required deductions, such Lender or the Agent
receives an amount equal to the sum it would have received had no
such deductions been made. The Borrower hereby indemnifies and
agrees to hold the Agent and each Lender harmless from and
against all Taxes.
(b) In the event that, subsequent to the Closing Date,
or, in the case of a Person assigned an interest in or sold a
participation in the Loans pursuant to subsection 11.1,
subsequent to the date of such assignment or sale, (a) any change
in any existing law, regulation, treaty or directive or in the
interpretation or application thereof (including, without
limitation, any change resulting from the implementation of risk
based capital guidelines), (b) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof or
(c) compliance by any Lender with any request or directive
(whether or not having the force of law and including by way of
withdrawal or termination of any previously available exemption)
from any governmental authority, agency or instrumentality
(including, without limitation, any request or directive
regarding capital adequacy)
(i) does or shall subject a Lender to any Tax
with respect to this Agreement, the other Financing
Agreements or any Loans made hereunder, or change the
basis of taxation of payments to such Lender of
principal, commitment, fees, interest or any other
amount payable hereunder (except for changes in the
rate of tax on the overall net income of such Lender);
or
(ii) does or shall impose on such Lender any
other condition or increased cost in connection with
the transactions contemplated hereby or participation
herein; or
(iii) affects the amount of capital required or
expected to be maintained by such Lender or any
corporation controlling such Lender and such Lender
determines the amount of capital required or expected
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is increased by or based upon the existence of this
Agreement or its Commitment or Loans hereunder,
and the result of any of the foregoing is to increase the cost to
such Lender of making or continuing any Loan hereunder or selling
any participation therein or assigning any of its Commitments to
make Loans hereunder, as the case may be, or to reduce any amount
receivable thereunder, then, in any such case, the Borrower shall
within fifteen (15) days pay to such Lender, upon its demand, any
additional amounts which are necessary to compensate such Lender
for such additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such
Lender with respect to this Agreement, the other Financing
Agreements or the Loans made hereunder. If such Lender becomes
entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower in writing of
the event by reason of which such Lender has become so entitled.
A certificate as to any additional amounts payable pursuant to
this subsection 2.20 submitted by such Lender to the Borrower
shall be presumed correct in the absence of manifest error.
2.21 Special Provisions Governing LIBOR Rate Loans.
Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with
respect to LIBOR Rate Loans as to the matters covered:
(a) As soon as practicable after 10:30 a.m. (Chicago
time) on each LIBOR Rate Determination Date, the Agent shall
determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate
that shall apply to the LIBOR Rate Loans for which an interest
rate is then being determined for the applicable Interest Period
and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the Borrower and each Lender.
(b) If on any LIBOR Rate Determination Date any Lender
shall have determined (which determination shall be final and
conclusive and binding upon all parties) that:
(i) adequate and fair means do not exist for
ascertaining the applicable interest rate by reference
to the LIBOR Rate with respect to the LIBOR Rate Loans
as to which an interest rate determination is then
being made; or
(ii) the LIBOR Rate does not accurately or fairly
represent the effective pricing to that Lender for
dollar deposits of comparable amounts for the relevant
period; or
(iii) deposits of a type and maturity appropriate
to match fund LIBOR Rate Loans are not available; or
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(iv) maintenance of LIBOR Rate Loans would violate
any applicable law, rule, regulation or directive,
whether or not having the force of law;
then, and in any such event, such Lender shall, promptly after
being notified of a borrowing, conversion or continuation, give
notice (by telephone confirmed in writing) to the Borrower and
the Agent (which notice the Agent shall promptly transmit to each
other Lender) of such determination, and the Agent shall suspend
the availability of LIBOR Rate Loans and require any LIBOR Rate
Loans to be repaid and the Borrower shall repay or prepay the
LIBOR Rate Loans, together with all interest accrued thereon.
(c) The Borrower shall indemnify the Agent and each
Lender, upon written request (which request shall set forth in
reasonable detail the basis for requesting such amounts and which
shall, absent manifest error, be presumed correct and binding
upon all parties hereto), for reasonable losses, expenses and
liabilities (including, without limitation, any loss (including
interest paid) sustained by it in connection with the liquidation
or re-employment of such funds), that such Person may sustain:
(i) if for any reason (other than a default by the Lenders) a
borrowing of any LIBOR Rate Loan does not occur on a date
specified therefor in a Borrowing Notice, a Notice of
Conversion/Continuation or a request by telephone or telecopy for
borrowing or conversion/continuation or a successive Interest
Period does not commence after notice therefor is given pursuant
to subsection 2.6(e) or 2.6(f); (ii) if any prepayment of any of
its LIBOR Rate Loans occurs on a date that is not the last day of
the Interest Period applicable to that Loan whether because of
acceleration, prepayment or otherwise (unless such prepayment is
required pursuant to the provisions of subsection 2.21(b)); (iii)
if any of its LIBOR Rate Loans are not paid on any date specified
in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR
Rate Loans when required by the terms of this Agreement; provided
that during the period while any such amounts have not been paid,
the Lenders shall reserve an equal amount from amounts otherwise
available to be borrowed under the Revolving Loan. The
provisions of this subsection 2.21(c) shall survive the
termination of this Agreement, the repayment of the Loans and the
discharge of the Borrower's other Obligations hereunder.
(d) Any Lender may make, carry or transfer LIBOR Rate
Loans at, to, or for the account of, any of its branch offices or
the office of an affiliate of such Lender.
(e) Calculation of all amounts payable to a Lender
under subsection 2.21(b) or 2.21(c) shall be made as though each
Lender had actually funded its relevant LIBOR Rate Loan through
the purchase of a LIBOR deposit bearing interest at the LIBOR
Rate in an amount equal to the amount of such LIBOR Rate Loan and
having a maturity comparable to the relevant Interest Period and
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through the transfer of such LIBOR deposit from an offshore
office to a domestic office in the United States of America;
provided that each Lender may fund each of its LIBOR Rate Loans
in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this
subsection 2.21.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
______________________________________
3.1 Monthly Reports and Collateral Reports. The
Borrower shall submit to each Lender, not later than the twenty-
seventh (27th) day of each month, a monthly report ("Monthly
Report"), accompanied by a certificate in the form attached as
Exhibit 3.1, which shall be signed by the chief executive or
chief financial executive of the Borrower. The Monthly Report
shall be in form and substance satisfactory to the Agent and
shall include, as of the last Business Day of the preceding month
(and with respect to the initial Monthly Report as of a date not
more than two (2) Business Days prior to the date hereof):
(i) an aged trial balance of Accounts ("Accounts Trial Balance")
as described in subsection 7.1(ii)(b) and a payables report in a
form satisfactory to the Required Lenders; and (ii) a schedule of
Inventory owned by the Borrower and in the Borrower's possession
valued at the lower of cost or market on a FIFO basis. The
Borrower shall provide in all Monthly Reports and more frequently
if requested by the Required Lenders, and in form satisfactory to
the Required Lenders, information on each of the following
occurrences arising subsequent to the immediately preceding
Monthly Report: all sales or other reductions of and all
additions to Inventory, all returns of Inventory, and all credits
issued by the Borrower, all complaints and claims against the
Borrower in connection with Inventory. In addition, the Borrower
shall provide each Lender with a written report on a semi-monthly
basis, or such shorter time as the Required Lenders may require,
(the "Collateral Report") in form and substance satisfactory to
the Agent. The Borrower shall furnish copies of any other
reports or information, in a form and with such specificity as is
satisfactory to the Required Lenders, concerning Accounts
included, described or referred to in the Collateral Reports and
any other documents in connection therewith requested by the
Required Lenders including, without limitation, but only if
specifically requested by the Required Lenders, copies of all
invoices prepared in connection with such Accounts.
Notwithstanding the form of Exhibit 3.1B, the Collateral Reports
shall contain such additional information as the Required Lenders
may require.
3.2 Eligible Accounts. "Eligible Accounts" shall mean
all Accounts other than the following: (i) Accounts which remain
unpaid as of ninety (90) days after the date of the original
invoice with respect thereto; (ii) all Accounts owing by a single
Account Debtor, including a currently scheduled Account, if fifty
percent (50%) or more of the balance owing by such Account Debtor
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is ineligible by reason of the criterion set forth in clause
(i) of this subsection 3.2; (iii) Accounts with respect to which
the Account Debtor is an Affiliate of the Borrower or a director,
officer or employee of the Borrower or its Affiliates; (iv)
Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality
thereof unless the Borrower has complied with the Federal
Assignment of Claims Act of 1940, as amended in a manner
satisfactory to the Agent; (v) Accounts with respect to which the
Account Debtor is not a resident of the United States unless the
Account Debtor has (A) supplied the Borrower with an irrevocable
letter of credit, issued by a financial institution satisfactory
to the Required Lenders, or (B) obtained foreign credit
insurance, in each case in an amount sufficient to cover such
Account and in form and substance satisfactory to the Required
Lenders and without right of setoff; provided that even if the
Borrower has complied with the terms of subsections (A) or (B) of
this clause (v), in no event shall more than $3,000,000 of
Accounts with respect to which the account debtor is not a
resident of the United States be Eligible Accounts; (vi) Accounts
arising with respect to goods which have not been shipped and
delivered to and accepted as satisfactory by the Account Debtor
or arising with respect to services which have not been fully
performed and accepted as satisfactory by the Account Debtor;
(vii) Accounts for which the prospect of payment in full or
performance in a timely manner by the Account Debtor is or is
likely to become impaired as determined by the Agent in
accordance with its customary asset-based financing criteria;
(viii) Accounts which are not invoiced (and dated as of the date
of such invoice) and sent to the Account Debtor within five (5)
days after delivery of the underlying goods to or performance of
the underlying services for the Account Debtor; (ix) Accounts
with respect to which the Agent, on behalf of the Lenders, does
not have a first and valid fully perfected security interest;
(x) Accounts with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has
made an assignment for the benefit of creditors or whose assets
have been conveyed to a receiver or trustee; (xi) Accounts with
respect to which the Account Debtor's obligation to pay the
Account is conditional upon the Account Debtor's approval or is
otherwise subject to any repurchase obligation or return right,
as with sales made on a guaranteed sale, sale-and-return, sale on
approval (except with respect to Accounts in connection with
which Account Debtors are entitled to return Inventory solely on
the basis of the quality of such Inventory) or consignment basis;
(xii) Accounts to the extent that at any time the aggregate
amount of the Account Debtor's indebtedness to the Borrower
exceeds seven percent (7%) of the aggregate amount of all
Accounts at such time; (xiii) Accounts with respect to which any
disclosure is required in accordance with subsection 3.3; (xiv)
contra Accounts to the extent of the amount of the accounts
payable owed by the Borrower to the Account Debtor; (xv) Accounts
with respect to which the Account Debtor is located in Minnesota,
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Indiana, New Jersey or any other state denying creditors access
to its courts in the absence of a Notice of Business Activities
Report or other similar filing unless the Borrower has either
qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business
Activities Report or similar filing with the applicable state
agency for the then current year; and (xvi) Accounts which the
Agent determines in good faith in accordance with its customary
asset-based financing criteria to be unacceptable. In the event
that a previously scheduled Eligible Account ceases to be an
Eligible Account under the above described criteria, the Borrower
shall notify the Lender thereof.
3.3 Account Warranties. With respect to Accounts
scheduled, listed or referred to on the initial Accounts Trial
Balance (included in the initial Monthly Report attached as
Exhibit 3.1) or on any subsequent Accounts Trial Balance or
Collateral Report, the Borrower warrants and represents to the
Agent and each Lender that, except as disclosed on the applicable
Accounts Trial Balance or Collateral Report: (i) the Accounts
represent bona fide sales of Inventory or the provision of
services to customers in the ordinary course of business
completed in accordance with the terms and provisions contained
in the documents available to the Agent and each Lender with
respect thereto and are not evidenced by a judgment, instrument
or chattel paper; (ii) the amounts shown on the applicable
Accounts Trial Balance and on the Borrower's books and records
and all invoices and statements which may be delivered to the
Agent or any Lender with respect thereto are actually and
absolutely owing to the Borrower and are not in any way
contingent; (iii) no payments have been or shall be made thereon
except payments immediately delivered to the Agent pursuant to
this Agreement; (iv) there are no setoffs, claims or disputes
existing or asserted with respect thereto and the Borrower has
not made any agreement with any Account Debtor for any deduction
therefrom except a discount or allowance allowed by the Borrower
in the ordinary course of its business for prompt payment; (v) to
the best of the Borrower's knowledge, there are no facts, events
or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable
thereunder as shown on the respective Accounts Trial Balances or
Collateral Reports, the Borrower's books and records and all
invoices and statements delivered to the Agent or any Lender with
respect thereto; (vi) to the best of the Borrower's knowledge,
all Account Debtors have the capacity to contract; (vii) the
Borrower has received no notice of proceedings or actions which
are threatened or pending against any Account Debtor which might
result in any material adverse change in such Account Debtor's
financial condition; (viii) the Borrower has no knowledge that
any Account Debtor is unable generally to pay its debts as they
become due; (ix) the Accounts do not arise from the sale of
Inventory produced in violation of the Fair Labor Standards Act
so as to be subject to the so-called "hot goods" provision
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contained in Title 29 U.S.C., Section 215(a)(1); (x) the services
furnished and/or goods sold giving rise thereto are not subject
to any Lien, except that of the Agent; and (xi) with respect to
Accounts for which the Account Debtor is located in Minnesota,
Indiana, New Jersey or any other state denying creditors access
to its courts in the absence of a Notice of Business Activities
Report or other similar failing, the Borrower has either
qualified as a foreign corporation authorized to transact
business in such state or has filed all required Notice of
Business Activities Reports or comparable filings with the
applicable governmental agency or authority.
3.4 Collection of Accounts and Payments. On or prior
to the date hereof, the Borrower shall establish lock box
accounts ("Blocked Accounts") in the Borrower's name with such
banks as are acceptable to the Agent ("Collecting Banks") and
enter into blocked account agreements among the Borrower, the
Agent and each Collecting Bank ("Blocked Account Agreements').
All Account Debtors shall directly remit all payments on Accounts
into a Blocked Account and the Borrower will immediately deposit
all cash payments made for Inventory or other cash payments
constituting proceeds of Collateral into a Blocked Account in the
identical form in which such payment was made, whether by cash or
check. On or prior to the date hereof, the Borrower shall notify
in writing each of the existing Account Debtors of the name and
address of the Blocked Account to which each such Account Debtor
shall be directed to remit all payments on its Accounts. In
addition, the Agent shall establish for the benefit of the
Lenders a depository account at each Collecting Bank or at a
centrally located bank (the "Depository Account"). Each Blocked
Account Agreement shall provide, among other things, that (i) all
items of payment deposited in each Blocked Account are held by
such Collecting Bank as agent and bailee-in-possession for the
Agent, (ii) the Collecting Bank has no rights of setoff or
recoupment or any other claim against such Blocked Account, other
than for payment of its service fees and other charges directly
related to the administration of such Blocked Account and for
returned checks or other items of payment, (iii) unless and until
the Agent shall have given such Collecting Bank a Redirection
Notice (as such term is defined below), such Collecting Bank
agrees to forward all amounts received in such Blocked Account to
such accounts or for such uses as the Borrower may from time to
time instruct, and (iv) at all times following delivery of notice
by the Agent to such Collecting Bank to do so (a "Redirection
Notice"), such Collecting Bank agrees to immediately forward all
amounts received in such Blocked Account to the Collection
Account through daily sweeps from the Blocked Account into the
Collection Account. The Agent shall not be entitled to deliver a
Redirection Notice to any Collecting Bank until the occurrence of
an Event of Default. The Borrower hereby agrees that all
payments received by the Agent, whether by cash, check, wire
transfer or any other instrument, made to such Blocked Accounts
or otherwise received by the Agent and whether on the Accounts or
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as proceeds of other Collateral or otherwise will be the sole and
exclusive property of the Agent, for the benefit of the Lenders.
The Borrower shall irrevocably instruct each Collecting Bank
that, upon receipt of a Redirection Notice, each Collecting Bank
shall promptly transfer all payments or deposits to the Blocked
Accounts into the Agent's Depository Account. The Borrower, and
any of its Affiliates, employees, agents or other Persons acting
for or in concert with the Borrower, shall, acting as trustee for
the Agent, receive, as the sole and exclusive property of the
Agent, for the benefit of the Lenders, any monies, checks, notes,
drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral which come into the possession or
under the control of the Borrower or any Affiliates, employees,
agents or other Persons acting for or in concert with the
Borrower, and immediately upon receipt thereof, the Borrower or
such Persons shall deposit the same or cause the same to be
deposited, in kind, in a Blocked Account or, at the direction of
the Agent, shall remit the same or cause the same to be remitted,
in kind, to the Agent, at the Agent's address set forth in
subsection 10.13.
3.5 Appointment of the Agent as Borrower's Attorney-
in-Fact. The Borrower hereby irrevocably designates, makes,
constitutes and appoints the Agent (and all Persons designated by
the Agent) the Borrower's true and lawful agent and attorney-in-
fact (which appointment shall for all purposes be deemed to be
coupled with an interest and shall be irrevocable for so long as
any Obligations are outstanding), and authorizes the Agent, in
the Borrower's or the Agent's name, to, following the occurrence
of an Event of Default (i) demand payment of Accounts,
(ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of the Borrower's rights and
remedies with respect to proceedings brought to collect an
Account, (iv) sell or assign any Account upon such terms, for
such amount and at such time or times as the Agent deems
advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Account, (vii) prepare,
file and sign the Borrower's name on any proof of claim in
bankruptcy or other similar document against an Account Debtor,
(viii) have access to any lockbox or postal box into which the
Borrower's mail is deposited or notify the postal authorities of
any change of the address for delivery of the Borrower's mail to
an address designated by the Agent, and open and dispose of all
mail addressed to the Borrower, (ix) do all acts and things which
are necessary, in the Agent's sole discretion, to fulfill the
Borrower's Obligations under this Agreement, (x) take control in
any manner of any item of payment or proceeds of any Account,
(xi) endorse the Borrower's name upon any items of payment or
proceeds thereof and deposit the same in the Agent's account on
account of the Borrower's Obligations, (xii) endorse the
Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account
or any goods pertaining thereto, (xiii) execute in the Borrower's
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name and on the Borrower's behalf any financing statements or
amendments thereto, (xiv) endorse the Borrower's name on any
verification of Accounts and notices thereof to Account Debtors,
and (xv) communicate with the Borrower's independent certified
public accountants.
3.6 Eligible Inventory. "Eligible Inventory" shall
consist of all of the Inventory, except the following:
(i) Inventory consisting of castings; (ii) consigned Inventory;
(iii) Inventory which is damaged, obsolete, not in good
condition, or not either currently usable or currently saleable
in the ordinary course of the Borrower's business as determined
by the Agent in good faith in accordance with its customary
asset-based financing criteria; (iv) Inventory which the Agent
determines in good faith in accordance with its customary asset-
based financing criteria, or which in accordance with the
Borrower's customary business practices, is unacceptable due to
age, type, category and/or quantity, including, without
limitation, any Inventory which is in excess of a one (1) year's
supply or is otherwise slow-moving; (v) Inventory with respect to
which the Agent does not have a first and valid, fully perfected
security interest; (vi) Inventory consisting of packaging or
supplies; (vii) Inventory in the possession of the Borrower but
not owned by the Borrower; (viii) Inventory produced in violation
of the Fair Labor Standards Act and subject to the so-called "hot
goods" provision contained in Title 29 U.S.C. 215(a)(1); (ix)
Inventory with respect to which any disclosure is required in the
applicable Monthly Report or Collateral Report in accordance with
subsection 3.7; (x) Inventory which is located at a place other
than the places of business and collateral locations of the
Borrower listed on Exhibit 3.6 (provided, however, that in the
case of leased locations listed on Exhibit 3.6, no Inventory
located at any such location shall be "Eligible Inventory" until
the applicable landlord has executed a lien waiver in form and
substance satisfactory to the Agent) including, without
limitation, Inventory in transit (other than Inventory in transit
from the Borrower to any of its Subsidiaries or between places of
business or collateral locations of the Borrower); (xi) Inventory
consisting of finished goods which do not meet the specifications
of the purchase order for which such Inventory was produced; and
(xii) Inventory which fails to meet the standards imposed by any
governmental agency, or department or division thereof, having
regulatory authority over such goods, its use and/or sale. In
the event that Inventory previously scheduled in a Monthly Report
or Collateral Report ceases to be Eligible Inventory, the
Borrower shall notify the Agent thereof immediately.
3.7 Inventory Warranties. With respect to Inventory
scheduled, listed or referred to in any Monthly Report or
Collateral Report, the Borrower warrants and represents that,
except as disclosed on such Monthly Reports or Collateral Reports
(i) such Inventory is located at one of the Facilities, (ii) the
Borrower has good, indefeasible and merchantable title to such
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Inventory and such Inventory is not subject to any Lien or
document whatsoever except for the prior, first perfected Lien
granted to the Agent hereunder, (iii) such Inventory is of good
and merchantable quality, free from any defects, (iv) such
Inventory is not subject to any licensing, patent, royalty,
trademark, tradename or copyright agreements with any third
parties, and (v) the completion of manufacture, sale or other
disposition of such Inventory by the Agent following an Event of
Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to
which the Borrower is a party or to which the Inventory is
subject.
3.8 Safekeeping of Inventory and Inventory Covenants.
Neither the Agent nor any Lender shall be responsible for:
(i) the safekeeping of the Inventory; (ii) any loss or damage to
the Inventory; (iii) any diminution in the value of the
Inventory; or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency or any other Person. As
between the Borrower and the Agent and each Lender, all risk of
loss, damage, destruction or diminution in value of the Inventory
shall be borne by the Borrower. No Inventory is or shall be at
any time or times hereafter stored with a bailee, warehouseman,
consignee or similar third party without the Agent's prior
written consent and unless the Agent shall have received
warehouse receipts or bailee letters satisfactory to the Agent
prior to the commencement of such storage. The Borrower shall
not sell any Inventory to any customer on approval or on any
other basis which entitles the customer to return, or which may
obligate the Borrower to repurchase, such Inventory.
4. CONDITIONS TO ADVANCES.
______________________
4.1 Conditions to All Advances. In addition to those
conditions set forth in subsection 4.2 regarding the initial
advance of funds or issuance of a Risk Participation under the
Revolving Credit Facility, and notwithstanding any other
provisions contained in this Agreement, the making of any advance
or the issuance of any Risk Participation provided for in this
Agreement shall be conditioned upon the matters set forth in this
subsection 4.1:
(a) Warranties and Representations. All of the
warranties and representations of the Borrower contained herein
or in any of the other Financing Agreements shall be true and
correct in all material respects on and as of the date of such
advance as if made on such date, except to the extent that any
such representation or warranty expressly relates to an earlier
date.
(b) Borrower's Request. The Agent shall have
received, on or prior to 12:00 noon (Chicago time) on the day a
Base Rate Loan is to be made, and at least three (3) Business
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Days prior to the day a LIBOR Rate Loan is to be made and at
least fifteen (15) Business Days prior to the date a Risk
Participation is to be issued (i) a Notice of Borrowing or a
Notice of Conversion/Continuation from the Borrower for an
advance in a specific amount, (ii) a Monthly Report from the
Borrower dated no more than thirty-one (31) days prior to the
date of such advance, and (iii) a current Collateral Report and
all other documents required to have been delivered to the Agent
hereunder prior to such date.
(c) Financial Condition. As determined by the
Required Lenders in their reasonable discretion, no material and
adverse change in the business, operations or condition
(financial or other) of the Borrower shall have occurred at any
time or times subsequent to the most recent annual financial
statements provided pursuant to subsection 7.1(iii).
(d) No Default. As determined by the Required
Lenders, neither a Default nor an Event of Default shall have
occurred and be continuing or will result from such advance.
(e) No Litigation. (i) No Litigation shall be pending
or threatened against the Borrower or any officer, director, or
executive of the Borrower (A) in connection with this Agreement,
the Financing Agreements or (B) which, if adversely determined,
would have a Material Adverse Effect; and (ii) no injunction,
writ, restraining order or other order of any nature materially
adverse to the Borrower shall have been issued or threatened by
any court or governmental agency.
(f) Aggregate Revolving Loan. After giving effect to
such advance or the issuance of such Risk Participation, the
aggregate principal amount of the Revolving Loan shall not exceed
the maximum amount permitted by subsection 2.2.
(g) Other Requirements. All legal matters incident to
the making of an advance of funds or issuance of a Risk
Participation under the Revolving Loan shall be satisfactory to
the Agent and its counsel.
Each request and acceptance by the Borrower of the
proceeds of any advance under the Revolving Loan and the request
by the Borrower for the incurrence by the Lenders of any Risk
Participation Liability shall constitute a representation and
warranty by the Borrower that the conditions contained in
subsections 4.1(a), 4.1(d) and 4.1(e) have been satisfied.
4.2 Conditions to Initial Advances. In addition to
those conditions set forth in subsection 4.1 with respect to all
advances or issuances of Risk Participations hereunder, the
making of the initial advance of funds under the Revolving Loan
and the funding of the Term Loan and the CAPEX Loan (if
applicable) shall be conditioned upon the satisfaction on or
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before the Closing Date of the conditions set forth in this
subsection 4.2 and the delivery on or before the Closing Date of
the following documents to each Lender, in form and substance
satisfactory to such Lender, and consummation of all of the
transactions or the satisfaction of each condition contemplated
by each such document in a manner satisfactory to each Lender and
its counsel.
(a) Agreement; Notes. Four (4) duly executed copies
of this Agreement, the Borrower Security Agreement, the Parent
Security Agreement, the Intellectual Property Security Agreement,
the Borrower Pledge Agreement, the Parent Pledge Agreement, the
Harris Guaranty, the Parent Guaranty, the other Financing
Agreements and one (1) duly executed copy of each of the
Revolving Loan Notes, the Term Loan Notes and a CAPEX Note (if
applicable) conforming to the requirements hereof, together with
all Schedules, Exhibits, certificates, instruments, documents and
financial statements required to be delivered pursuant hereto and
thereto.
(b) Legal Opinion. The legal opinion of the
Borrower's counsel and such local counsel deemed necessary by the
Lenders in form and substance satisfactory to the Lenders and
their counsel.
(c) UCC. Evidence of the proper filing of UCC
financing statements perfecting security interests in favor of
the Agent in the Collateral and copies of searches of financing
statements filed under the Code, together with tax lien and
judgment searches with respect to the Property of the Borrower,
Harris and the Parent, in each case in such jurisdictions as the
Agent may request.
(d) Officer's Certificate. A certificate executed by
the chief executive officer or chief financial officer of the
Borrower, stating that to the best of his knowledge (i) no
Default or Event of Default has occurred and is continuing,
(ii) no material adverse change in the financial condition or
operations of the Borrower's business has occurred, (iii) no
litigation, investigation or proceeding, or injunction, writ or
restraining order of the type described in subsection 4.1(e) is
pending or threatened, (iv) each of the conditions precedent to
the consummation of the Loans contemplated hereby has been met or
satisfied, and (v) the representations and warranties of the
Borrower are correct and complete in all material respects on and
as of the Closing Date.
(e) Insurance Policies and Endorsements. Copies of
policies of insurance required hereby together with loss payable
endorsements on the Agent's standard form, duly executed, and
evidence of the payment of the first year's premium therefor.
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(f) Initial Monthly Report and Other Exhibits. Copies
the initial Monthly Report, the Solvency Certificate, the initial
Projections, and all financial statements and other Exhibits and
Schedules required hereby.
(g) Fees. The Closing Fee payable pursuant to
subsection 2.10 and the Agent's Fee payable pursuant to
subsection 2.11 have been paid.
(h) Charter and Bylaws. A copy of the Certificate of
Incorporation of each of the Borrower and the Parent, certified
by the Secretary of State of Delaware as of a date not more than
twenty (20) days prior to the Closing Date and a copy of the
bylaws of each of the Borrower and the Parent, and any amendments
thereto certified by its respective Secretary.
(i) Good Standing Certificates. A good standing
certificate for each of the Borrower and the Parent from the
State of Delaware and from each other state in which such Person
is required to be qualified to transact business as a foreign
corporation.
(j) Board Resolutions. Certified copies of
resolutions of the board of directors of (i) the Borrower
authorizing the execution and delivery of and the consummation of
the transactions contemplated by this Agreement, the other
Financing Agreements and all other documents or instruments to be
executed and delivered in conjunction herewith and therewith,
which resolutions shall also designate which officers of the
Borrower shall be authorized to make a request for an advance of
the Revolving Loan hereunder, (ii) the Parent authorizing the
execution and delivery of the Parent Guaranty and the other
Financing Agreements to which it is a party and the performance
of its obligations thereunder, and (iii) Harris authorizing the
execution and delivery of the Harris Guaranty and the performance
of its obligations thereunder.
(k) Incumbency Certificates. Incumbency certificates
with respect to the officers of the Borrower, the Parent and
Harris, respectively, executing the documents referred to in item
(j) above.
(l) Landlord Waivers. Landlord waivers with respect
to all real property leased to the Borrower.
(m) Accountants' Letter. A letter authorizing
Borrower's independent certified public accountants to
communicate with each Lender in accordance with subsection 7.1
and acknowledging the Lenders' reliance on future financial
statements.
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(n) Bailee Letters. Bailee letters from each
warehouseman or bailee, if any, having possession of any
Inventory.
(o) Power of Attorney. A power of attorney in favor
of the Agent with respect to the matters set forth in subsections
3.5, 5.2 and 7.6 in form and substance satisfactory to the
Lenders.
(p) Letter of Direction. A letter of direction from
the Borrower with respect to the disbursement of the proceeds of
the initial advance of funds hereunder.
(q) Closing Date Availability. After giving effect to
the initial advance under the Revolving Credit Facility, the
Borrower shall have Unused Availability of at least Two Million
Dollars ($2,000,000).
(r) No Material Adverse Change. No material and
adverse change in the business, operations or condition
(financial or other) or prospects of the Borrower shall have
occurred since August 31, 1994.
(s) No Accounting Changes. The Borrower shall not
have made any material change in its accounting methods or
principles since August 31, 1994.
(t) Blocked Account Agreements. Executed copies of
each of the Blocked Account Agreements.
(u) Regulation U. The Agent shall have received from
the Borrower a Federal Reserve Board Form U-1 with respect to
each Lender's Commitment, dated the initial Funding Date,
together with such other documents as may be reasonably requested
by the Agent in order to determine compliance with Regulation U.
(v) Mortgages. Duly executed copies of the Mortgages.
(w) Mortgagee's Title Insurance. An ALTA Loan Policy,
dated the date of the initial advance under the Revolving Loan
and the funding of the Term Loan, for each parcel of Real Estate
subject to a Mortgage, from a title insurance company acceptable
to the Agent, subject only to such exceptions and exclusions as
are acceptable to the Agent and its counsel and containing such
information and endorsements as may be required by the Agent,
including, without limitation, usury, zoning, comprehensive and
revolving credit endorsements.
(x) Surveys. A survey for each parcel of Real Estate
subject to a Mortgage, prepared by a licensed surveyor in
accordance with the "Minimum Standard Detail Requirements for
ALTA/ASCM Land Title Surveys" jointly established and adopted by
the American Congress on Surveying and Mapping and the American
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Land Title Association in 1992, meeting the accuracy requirements
defined therein as applicable (hereinafter "ALTA Standards"),
dated within thirty (30) days of the Closing Date and certified
to the Agent and the Title Company; provided that the survey for
the Real Estate in Longview, Texas provided to the Agent shall be
prepared as indicated hereinabove by a licensed Texas surveyor in
accordance with Texas Land Title Survey standards rather than
ALTA Standards; and provided further that regarding the Real
Estate in Jacksonville, Arkansas the survey provided to the Agent
shall be prepared as indicated hereinabove by a licensed Arkansas
surveyor in accordance with Arkansas boundary survey standards
rather than ALTA Standards.
(y) Payoff Letter; Termination Statements; Releases.
Letter(s) from Continental Bank itemizing amounts of principal,
interest, fees, expenses or other amounts payable on any
Indebtedness other than the Obligations through the Closing Date;
UCC-3 termination statements, mortgage releases and all other
instruments and documents necessary to terminate all Liens except
Permitted Liens; and all releases and all other instruments
necessary to terminate all Liens on the Borrower's Intellectual
Property except the Lien of the Agent.
(z) Plan of Reorganization. The Parent shall have
performed and be in compliance with all agreements and conditions
set forth as contemplated in the Plan of Reorganization which are
required to be performed by or complied with by it through the
Closing Date.
(aa) Form W-9. A copy of IRS Form W-9, Taxpayer
Identification Number and Certification.
(bb) Other Documents. Such other documents as the
Lenders may reasonably request.
5. COLLATERAL.
__________
5.1 Security Interest. All of the Borrower's
Obligations constitute one (1) loan secured by the Agent's Liens
on the Collateral and by all other Liens now or from time to time
hereafter granted by the Borrower to the Lender. To secure
timely payment and performance in full of the Obligations, the
Borrower shall grant to the Agent, for the benefit of the Lenders
pursuant to the Financing Agreements a right of setoff against
and a continuing Lien upon all of the Borrower's right, title and
interest in and to its Property and interests in Property,
whether now owned or hereafter acquired by the Borrower and
wheresoever located. In addition, concurrently with the
execution and delivery hereof the Borrower shall deliver the
Mortgages, and concurrently with the acquisition of any real
property after the date hereof, the Borrower shall grant and
convey to the Agent, for the benefit of the Lenders, as security
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for the Obligations, first mortgage Liens on all such real
property.
5.2 Preservation of Collateral and Perfection of
Security Interests Therein. Prior to the execution of this
Agreement, the Borrower shall have executed and delivered to the
Agent, and at any time or times hereafter at the request of the
Agent, the Borrower shall execute and deliver, all financing
statements, security agreements, pledge agreements, mortgages,
amendments thereto, or other documents (and pay the cost of
filing or recording the same in all public offices deemed
necessary by the Agent) as the Agent may request, in a form
satisfactory to the Agent, to perfect and maintain the security
interests in the Collateral granted by the Borrower to the Agent
or to otherwise protect and preserve the Collateral and the
Agent's security interests therein or to enforce the Agent's
security interests in the Collateral. Should the Borrower fail
to do so, the Agent is authorized to sign any such financing
statements or other documents as the Borrower's agent. The
Borrower further agrees that a carbon, photocopy or other
reproduction of this Agreement or of a financing statement is
sufficient as a financing statement. The Borrower shall make
appropriate entries upon its books and records disclosing the
Agent's Liens on the Collateral.
5.3 CAPEX Loan Collateral. Simultaneously with any
advance under the CAPEX Loan, the Borrower shall grant to the
Agent, for the benefit of the Lenders, to secure the Obligations
a Lien on the Real Estate so acquired by way of mortgage or
comparable agreements in form and substance satisfactory to the
Agent, and will furnish to the Agent a mortgagee's title policy
in an amount satisfactory to the Agent ensuring that, subject
only to Permitted Liens, the Agent, for the benefit of the
Lenders, has a valid first priority Lien on such Real Estate.
6. WARRANTIES AND REPRESENTATIONS.
______________________________
The Borrower represents and warrants and covenants and
agrees that as of the date hereof and continuing so long as any
Obligations remain outstanding, and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in
effect:
6.1 Existence. The Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified to transact
business as a foreign corporation in, and is in good standing
under the laws of, all states in which it is required by
applicable law to maintain such qualification and good standing
except where the failure to so qualify would not have a Material
Adverse Effect. All such jurisdictions are listed on Exhibit
6.1.
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6.2 Authority. The Borrower has full power, authority
and legal right to enter into this Agreement and the other
Financing Agreements to which it is a party. The execution and
delivery by the Borrower of this Agreement and such other
Financing Agreements: (i) have been duly authorized by all
necessary action on the part of the Borrower; (ii) are not in
contravention of the terms of the Borrower's Articles of
Incorporation or Bylaws or of any indenture, agreement or
undertaking to which the Borrower is a party or by which the
Borrower or any of its Property is bound; (iii) do not and will
not require any governmental consent, registration or approval or
the consent of any other Person that has not been obtained;
(iv) do not and will not contravene any contractual or
governmental restriction to which the Borrower or any of its
Property may be subject; and (v) do not and will not, except as
contemplated herein, result in the imposition of any Lien upon
any Property of the Borrower under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Borrower is a party
or by which the Borrower or any of its Property may be bound or
affected. The Borrower has the full corporate authority to own
or lease and operate its property and to conduct the business in
which it is currently engaged and in which it proposes to engage.
6.3 Binding Effect. This Agreement and all of the
other Financing Agreements to which it is a party have been duly
executed and delivered by the Borrower, are the legal, valid and
binding obligations of the Borrower and are enforceable against
the Borrower in accordance with their terms.
6.4 Financial Data. (a) The Borrower has furnished to
each Lender the consolidated and consolidating financial
statements (the "Financial Statements") of the Parent and its
Subsidiaries based on financial data as of August 31, 1994 and
attached as Exhibit 6.4-1. As of the date of this Agreement, the
Financial Statements are complete and accurate and fairly
represent the Parent's consolidated assets, liabilities,
financial condition and results of operations in accordance with
Generally Accepted Accounting Principles, consistently applied,
as of August 31, 1994 (subject to normal year-end adjustment,
without full footnote disclosure) and the consolidated results of
their operations for the respective periods then ended (subject
to normal year-end adjustments). There are no omissions from the
Financial Statements or other facts and circumstances not
reflected in the Financial Statements which are material. Except
as contemplated hereby or otherwise permitted by the Financing
Agreements, since the date of the Financial Statements through
the date of this Agreement, neither the Borrower nor any of its
Subsidiaries has: (i) incurred any debts, obligations, or
liabilities (absolute, accrued, or contingent and whether due or
to become due) except liabilities incurred in the ordinary course
of business, none of which (individually or in the aggregate)
materially and adversely affects the business or properties of
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the Borrower or any Subsidiary; (ii) paid any obligation or
liability other than liabilities in the ordinary course of
business; (iii) declared or made any Restricted Payment or
obligated itself to do so; (iv) mortgaged, pledged, or subjected
to any Lien on any of its Property; (v) sold, transferred, or
leased any of its Property except in the usual and ordinary
course of business; (vi) entered into any transaction other than
in the usual and ordinary course of business and other than as
contemplated hereby; (vii) issued or sold any shares of capital
stock or other securities or granted any options or similar
rights with respect thereto other than pursuant hereto; or (viii)
agreed to do any of the foregoing other than pursuant hereto.
There has been no material and adverse change in the business,
operations or condition (financial or other) of the Borrower and
its Subsidiaries since the date of the Financial Statements.
(b) Attached as Exhibit 6.4-2 are the initial
Projections for the Borrower which contain the information
required by clause (v) of subsection 7.1. The initial
Projections have been prepared, and all Projections hereafter
delivered in accordance with clause (v) of subsection 7.1 shall
be prepared, by the chief financial officer of the Borrower on
the basis of the assumptions set forth therein and will, when
prepared, represent, the best available good faith estimate of
the Borrower's management regarding the course of the Borrower's
business for the periods covered thereby. The assumptions set
forth in the initial Projections are, and the assumptions set
forth in the future Projections delivered hereafter shall be,
reasonable and realistic based on then current economic
conditions.
(c) The Borrower has also provided to the Lenders (i)
audited statements of income and cash flow and balance sheets for
the Parent and its Subsidiaries for each of its three (3) most
recent Fiscal Years and (ii) unaudited statements of income and
cash flow and balance sheets for the Borrower and its
Subsidiaries as of August 31, 1994 and for the eight months then
ended and such financial statements fairly present the financial
condition and results of operations of each of the Parent and its
Subsidiaries and the Borrower and its Subsidiaries, respectively,
for the periods indicated therein, in accordance with Generally
Accepted Accounting Principles, consistently applied (subject to
normal year-end adjustments, without full footnote disclosure).
6.5 Collateral. Except as disclosed on Exhibit 8.1
and except for Permitted Liens described in subsection 8.1, all
of the Collateral is and will continue to be owned by the
Borrower free and clear of all Liens, subject only to the prior
perfected Liens in favor of the Agent, for the benefit of the
Lenders.
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6.6 Solvency. The Borrower and each Guarantor is
Solvent and will continue to be Solvent following the
consummation of the transactions contemplated by this Agreement.
6.7 Places of Business. As of the Closing Date, the
principal place of business and chief executive office of the
Borrower is located at 2801 Dawson Road, Tulsa, Oklahoma which is
within Tulsa County, Oklahoma. As of the execution hereof, the
books and records of the Borrower and all chattel paper and all
records of account are located and hereafter shall continue to be
located at the principal place of business and chief executive
office of the Borrower.
6.8 Other Names. The business conducted by the
Borrower has not been conducted under any corporate, trade or
fictitious name other than those names listed on Exhibit 6.8, and
following the date hereof the Borrower will not conduct its
business under any trade or fictitious name without providing the
Agent with at least 30 days prior written notice thereof.
6.9 Tax Obligations. The Borrower and each Subsidiary
have filed complete and correct federal, state and local tax
reports and returns required to be filed by it, prepared in
accordance with applicable laws or regulations, and, except for
extensions duly obtained, has either duly paid all taxes, duties
and charges owed by it, or made adequate provision for the
payment thereof. There are no material unresolved questions or
claims concerning any tax liability of the Borrower or any
Subsidiary.
6.10 Indebtedness and Liabilities. As of August 31,
1994, the Borrower and its Subsidiaries had no Indebtedness other
than Indebtedness reflected on the Financial Statements. Except
for such Indebtedness and liabilities reflected on the Financial
Statements, the Borrower and its Subsidiaries have no liabilities
required to be reflected on a balance sheet prepared in
accordance with GAAP (subject to normal year-end adjustments).
6.11 Use of Proceeds and Margin Security. The Borrower
shall use the proceeds of the initial advance under the Revolving
Loan and the Term Loan for the purposes set forth on Exhibit 6.11
and advances under the CAPEX Loan for the purposes set forth in
subsection 2.5 and shall use the proceeds of subsequent advances
under the Revolving Loan solely for proper corporate purposes,
consistent with all applicable laws, statutes, rules and
regulations. Neither the Borrower, the Parent nor any Subsidiary
is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging
for the extension of, credit for the purpose of purchasing or
carrying Margin Stock. Neither the Borrower nor any Subsidiary
owns or will own any Margin Stock and none of the Loans advanced
or funded hereunder or any Risk Participation will be used,
directly or indirectly, for the purpose of purchasing or carrying
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any Margin Stock or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any Margin
Stock (except as permitted by subsection 8.2) or for any other
purpose which might cause any of the Loans, Risk Participations
or other extensions of credit under this Agreement or this
Agreement or any other Financing Agreement or any document or
instrument delivered pursuant hereto to violate any regulation of
the Federal Reserve Board. Following the application of the
proceeds of the Loans from time to time, less than twenty-five
percent (25%) of the value (as determined by any reasonable
method) of the Property of the Parent which is subject to any
limitation on sale, pledge, or other restriction hereunder or any
other Financing Agreement taken as a whole will be represented by
Margin Stock.
6.12 Government Contracts. As of the Closing Date,
except as disclosed on Exhibit 6.12, neither the Borrower nor any
Subsidiary is a party to or bound by any supply agreements with
the federal government or any agency thereof.
6.13 Investments. Except as disclosed on Exhibit 8.4,
as of the date hereof, the Borrower and its Subsidiaries have no
Investment in any Person other than Permitted Investments and are
not engaged in any joint venture or partnership with any other
Person.
6.14 Litigation and Proceedings. As of the Closing
Date, except as disclosed on Exhibit 6.14, no judgments are
outstanding against the Borrower or any Subsidiary or the Parent
or binding upon any of their respective Property. Except as
disclosed on Exhibit 6.14, there is not now pending or
threatened, any litigation, claim, arbitration or governmental
proceeding ("Litigation") by or against the Borrower or any
Subsidiary or the Parent which, if adversely determined, would
have a Material Adverse Effect, and to the best of the Borrower's
knowledge after diligent inquiry, there are no presently existing
facts or circumstances likely to give rise to any such
Litigation. None of the Litigation will prevent, enjoin or delay
the consummation of the transactions contemplated by the
Financing Agreements. Except as disclosed on Exhibit 6.14, the
items disclosed on Exhibit 6.14 will not have a Material Adverse
Effect.
6.15 Other Agreements and Deliveries. (a) Except as
disclosed on Exhibit 6.15, neither the Borrower nor any
Subsidiary is in default under any indenture, loan agreement,
mortgage, deed of trust or similar document relating to the
borrowing of monies or any other material contract, lease, or
commitment to which it is a party or by which it is bound.
Except as disclosed on Exhibit 6.15, there is no dispute
regarding any contract, lease, or commitment which is material to
the business, operations or condition (financial or other) of the
Borrower or any Subsidiary.
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(b) The Borrower has provided to the Agent accurate
and complete copies of all of the following agreements or
documents to which the Borrower or any Subsidiary is subject:
(i) each Plan which the Borrower or any ERISA
Affiliate sponsors or is committed to contribute to as
of the date hereof and, where applicable, each Plan's
most recent summary plan description, actuarial report,
determination letter from the Service and Forms 5500
for the previous five (5) years filed in respect of
each such Plan;
(ii) collective bargaining agreements;
(iii) leases of real property; and
(iv) the Plan of Reorganization.
6.16 Employee Controversies. As of the Closing Date,
there are no strikes, work stoppages, union organizing efforts or
controversies pending or, to the best of the Borrower's knowledge
after diligent inquiry, threatened, between the Borrower or any
Subsidiary and any of its employees which would have a Material
Adverse Effect. All collective bargaining agreements, labor
agreements or other contracts with or affecting any employee of
the Borrower or any Subsidiary necessary to continue to conduct
the business operations of the Borrower or such Subsidiary are in
full force and effect.
6.17 Compliance with Laws and Regulations. The
execution and delivery by the Borrower of this Agreement, all of
the other Financing Agreements to which it is a party and the
performance of the Borrower's obligations hereunder and
thereunder are not in contravention of any order applicable to
the Borrower or, to the Borrower's best knowledge, any laws,
regulations or ordinances the violation of which would have a
Material Adverse Effect. The Borrower and its Subsidiaries are
in compliance with all laws, orders, regulations and ordinances
of all federal, foreign, state and local governmental authorities
relating to the business operations and the Property of the
Borrower or a Subsidiary except for laws, orders, regulations and
ordinances the non-compliance with or violation of which would
not, in the aggregate, have a Material Adverse Effect.
6.18 Patents, Trademarks and Licenses. The Borrower
and its Subsidiaries own or possess rights to use all licenses,
patents, patent applications, copyrights, service marks,
trademarks and tradenames required to continue to conduct their
respective businesses as heretofore conducted; and no such
license, patent or trademark has been declared invalid, been
limited by order of any court or by agreement, or is the subject
of any infringement, interference or similar proceeding or
challenge.
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6.19 ERISA.
(a) Neither the Borrower nor any ERISA Affiliate has
sponsored or contributed to, or has had any obligation under, any
Plan or Multiemployer Plan other than those identified on Exhibit
6.19.
(b) With respect to all Plans, the Borrower and each
ERISA Affiliate is in compliance with the applicable provisions
of ERISA and the IRC and the PBGC Grantor Trust in all material
respects. Each Plan that is intended to be qualified under
Section 401(a) of the IRC has either been determined by the
Internal Revenue Service to be so qualified or is the subject of
a pending request to the Internal Revenue Service for a favorable
determination letter for which the Borrower believes it is
entitled, and each trust related to such Plans has been
determined to be exempt from federal income tax under Section
501(a) of the IRC or is the subject of a pending request to the
Internal Revenue Service for a favorable determination letter for
which the Borrower believes it is entitled. No liability has
been incurred by the Borrower or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to
any Plan or any Multiemployer Plan or the PBGC Grantor Trust.
(c) The present value of all benefit liabilities under
all Pension Plans of the Parent exceeded the present value of the
assets of such Plans by an amount not exceeding $7,000,000
determined as of May 31, 1994, which liabilities will be
partially satisfied by the balance remaining in the PBGC Grantor
Trust, totaling $2,689,858 as of June 30, 1994, which amount must
be applied to the funding of the Pension Plans. Except as
disclosed on Exhibit 6.19, no Pension Plan has been terminated,
nor has any accumulated funding deficiency (as defined in Section
412 of the IRC) been incurred (without regard to any waiver
granted under Section 412 of the IRC), nor has any funding waiver
from the Internal Revenue Service been received or requested with
respect to any Pension Plan, nor has the Borrower or any Related
Company failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the IRC, Section 302
of ERISA or the terms of any Pension Plan by the applicable due
dates, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C), or 4062(e) or 4063(a) of ERISA with
respect to any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate has:
(i) engaged in a nonexempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the IRC which would have
a Material Adverse Effect; (ii) incurred any liability to the
PBGC which remains outstanding other than the Parent's
obligations under the PBGC Grantor Trust and the payment of
premiums and there are no premium payments which are due and
unpaid; or (iii) failed to make a required contribution or
payment to a Multiemployer Plan.
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(e) No Termination Event has occurred and no
Termination Event is reasonably expected to occur which could
result in a liability to the Borrower or any ERISA Affiliate.
(f) Neither the Borrower nor any ERISA Affiliate has
any contingent liability with respect to any post-retirement
benefit under any Plan which is a welfare plan (as defined in
Section 3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I of ERISA
except for post-retirement benefits under the Plans listed on
Exhibit 6.19. As of December 31, 1993, the net aggregate present
value of all liabilities with respect to such benefits disclosed
on Exhibit 6.19 calculated in accordance with GAAP is Six Million
Nine Hundred Eighteen Thousand Dollars ($6,918,000).
(g) The Borrower has no obligations or liabilities,
direct or indirect, contingent or otherwise, with respect to the
PBGC Grantor Trust.
6.20 Property. The Borrower and its Subsidiaries own,
possess, or have unrestricted rights to use or exercise all
assets and rights necessary for the conduct of business as
heretofore conducted.
6.21 Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company
"controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
6.22 Broker's Fees. Neither the Agent or any Lender
nor the Borrower is or will become obligated to any Person with
respect to any finder's or brokerage or similar fee or commission
in connection with the transactions contemplated hereby, except
that the Borrower will become obligated to pay certain fees as
set forth in Exhibit 6.22.
6.23 Licenses and Permits. The Borrower and its
Subsidiaries have been and are current and in good standing with
respect to all material governmental approvals, permits,
certificates, licenses, inspections, consents and franchises
(collectively, the "Licenses") necessary to continue to conduct
their respective businesses and to own or lease and operate,
their respective properties as heretofore conducted, owned,
leased or operated including any and all Licenses with respect to
federal, state or local environmental laws.
6.24 Environmental Compliance.
(a) Except as disclosed in the Phase I Audits (but
only to the extent disclosed therein) or on Exhibit 6.24, the
operations of the Parent and the Borrower and its Subsidiaries
comply in all material respects with all applicable Environmental
Laws.
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(b) Except as disclosed on Exhibit 6.24 or in any
regular or periodic report subsequently filed by the Parent with
the Securities and Exchange Commission, there are no claims,
investigations, litigation, administrative proceedings, whether
pending or, to the knowledge of the Borrower after diligent
inquiry, threatened, or judgments or orders, relating to any
Hazardous Materials or alleging the violation of any
Environmental Laws (collectively "Environmental Matters")
relating in any way to any real property leased or otherwise used
by the Parent or the Borrower or any Subsidiary or to the
operations of the Parent or the Borrower or any Subsidiary.
(c) Except as disclosed in the Phase I Audits (but
only to the extent disclosed therein) or on Exhibit 6.24, no
Hazardous Materials are presently stored or otherwise located on,
in or under any real property leased or otherwise used by the
Parent or the Borrower or any Subsidiary except in substantial
compliance with all applicable Environmental Laws, and, no part
of any real property leased or otherwise used by the Parent or
the Borrower or any Subsidiary or to the Borrower's best
knowledge, adjacent parcels, including the groundwater located
thereon, is presently contaminated in any material respect by any
such Hazardous Material.
(d) Except as disclosed on Exhibit 6.24, neither the
Parent, the Borrower nor any Subsidiary has filed any notice
under any international, federal, state, regional, provincial or
local law indicating past or present treatment, storage or
disposal of a Hazardous Material or reporting a spill or release
of a Hazardous Material into the environment.
(e) Except as disclosed in the Phase I Audits (but
only to the extent disclosed therein) or on Exhibit 6.24 or in
any regular or periodic report subsequently filed by the Parent
with the Securities and Exchange Commission, neither the Parent,
the Borrower nor its Subsidiaries have any known material
liability, contingent or otherwise, in connection with any
release of any Hazardous Material into the environment.
(f) So long as any Obligations are outstanding, no
Hazardous Materials may be used, generated, treated, stored or
disposed of by any Person for any purpose upon any real property
leased or otherwise used by the Parent or the Borrower or its
Subsidiaries except in substantial compliance with all applicable
Environmental laws.
(g) The Borrower hereby indemnifies the Agent and each
Lender and agrees to hold each such Person harmless from and
against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever
(including, without limitation, court costs and reasonable
attorneys' fees and legal expenses and solicitors' fees on a
solicitor and client basis) which at any time or from time to
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time may be paid, incurred or suffered by, or asserted against,
such Person arising directly or indirectly from the violation of
any Environmental Law or the imposition of liability on the
Parent or the Borrower or any Subsidiary under any Environmental
Law or any laws or regulations relating to Hazardous Material,
treatment, storage, disposal, generation and transportation, air,
water and noise pollution, soil or ground or water contamination,
the handling, storage or release into the environment of
Hazardous Materials, and the transportation of Hazardous
Materials; or with respect to, or as a direct or indirect result
of the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, properties
utilized by the Parent or the Borrower or any Subsidiary in the
conduct of its business into or upon any land, the atmosphere, or
any watercourse, body of water or wetland, of any Hazardous
Material (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); provided that to the extent that
the Parent or the Borrower or any Subsidiary is strictly liable
under any Environmental Laws, the Borrower's obligations to
indemnify the Agent and each Lender under this subsection 6.24(g)
shall likewise be without regard to fault on the part of the
Parent or the Borrower or any Subsidiary and with respect to the
violation of law which results in liability to such Person. To
the extent that the undertaking to indemnify, pay and hold
harmless set forth in this subsection 6.24(g) may be
unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnifications set forth in
this subsection 6.24(g). Notwithstanding any other provision of
this Agreement to the contrary, the provisions of and
undertakings and indemnifications set forth in this subsection
6.24(g) shall survive the satisfaction and payment of the
Obligations and the termination of this Agreement, and shall
continue to be the liability, obligation and indemnification of
the Borrower.
(h) So long as any Obligations are outstanding, if the
Agent or any Lender, at any time, has a reasonable basis to
believe that any real property leased or otherwise used by the
Parent or the Borrower or any Subsidiary, or real property
adjacent to such real property, has or may become contaminated in
any material respect or subject to a clean up order or decree by
an agency having jurisdiction over the Parent or the Borrower or
such Subsidiary; then the Borrower agrees, upon request from such
Person, to provide the Agent and each Lender with such reports,
certificates, engineering studies or other written material or
data as the Agent or such Lender in its reasonable discretion,
may require from it so as to satisfy the Agent or such Lender
that such Person is in substantial compliance with all applicable
Environmental Laws; provided that with respect to real property
adjacent to real property owned by or leased to the Borrower or
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any Subsidiary, such reports, certificates, studies and other
material or data shall not be required to be provided by the
Parent or the Borrower if (i) they are not otherwise required to
be created or provided pursuant to statute, regulation, order or
otherwise, and (ii) such contamination is not attributable to the
acts or omissions of the Borrower or any Affiliate or predecessor
of any of them or any previous owner, lessee, lessor or other
user of such real property.
(i) The materiality standard used in this subsection
6.24 shall be exceeded if the facts giving rise to a breach or
breaches of the representations or warranties contained herein
might result in liability or potential liability in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate.
(j) None of the items disclosed on Exhibit 6.24 would
be reasonably likely to have a reasonable likelihood to cause a
Material Adverse Effect.
6.25 Full Disclosure. This Agreement, the financial
statements delivered in connection herewith, the representations
and warranties of the Borrower in any other Financing Agreement
delivered or to be delivered by the Borrower, do not and will not
contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein
or herein, in light of the circumstances under which they were
made, not misleading. There is no material fact which the
Borrower has not disclosed to the Agent in writing which has had
or, so far as the Borrower can now foresee, will have a Material
Adverse Effect.
6.26 Subsidiaries. Exhibit 6.26 contains an accurate
list of all of the existing Subsidiaries as of the date of this
Agreement, setting forth their respective jurisdictions of
incorporation and the percentage of their capital stock owned by
the Borrower or other Subsidiaries.
6.27 Survival of Warranties. All representations and
warranties contained in this Agreement or any of the other
Financing Agreements to which the Borrower is a party shall
survive the execution and delivery of this Agreement and the
termination hereof. The Borrower shall supplement in writing and
deliver to each Lender all Exhibits required in accordance with
this Agreement so that the representations and warranties subject
to such supplemental disclosure shall continue to be true and
accurate in all material respects; provided that the furnishing
of such supplemental disclosure shall not constitute a cure or
waiver of any Default or Event of Default resulting from the
matters disclosed therein or otherwise then existing.
6.28 Negative Pledges. Neither the Borrower nor any
Subsidiary is a party to or bound by any indenture, contract,
instrument or other agreement which prohibits the creation,
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incurrence or sufferance to exist of any Lien upon its Property,
except the Financing Agreements and the Foreign Indebtedness
Documents.
7. AFFIRMATIVE COVENANTS.
_____________________
The Borrower covenants and agrees that so long as any
Obligations remain outstanding and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in
effect:
7.1 Financial Statements. The Borrower shall keep
proper books of record and account in which full and true entries
will be made of all dealings or transactions in respect of or in
relation to the business and affairs of the Borrower and its
Subsidiaries, in accordance with Generally Accepted Accounting
Principles consistently applied, and the Borrower shall furnish
or cause to be furnished to each Lender: (i) as soon as
practicable and in any event within thirty (30) days after the
end of each month, statements of net income and cash flow, of the
Borrower and its Subsidiaries for such month and for the period
from the beginning of the then current Fiscal Year to the end of
such month and a balance sheet of the Borrower and its
Subsidiaries as of the end of such month, on a consolidated
basis, if applicable, setting forth in each case, in comparative
form, figures for the corresponding periods in the preceding
Fiscal Year and as of a date one (1) year earlier, all in
reasonable detail and certified as accurate by the chief
financial officer or treasurer of the Borrower, subject to
changes resulting from normal year-end adjustments (but excluding
footnotes); (ii) as part of the Monthly Report, as soon as
practicable and in any event within twenty-seven (27) days after
the end of each month, (a) copies of all operating statements for
such month prepared by the Borrower for its internal use and
other similar data as the Lender may reasonably request, (b) an
Accounts Trial Balance indicating which Accounts are current, up
to 30, 30 to 60, 60 to 90 and 90 days or more past the original
invoice date and listing the names and customer numbers of all
applicable Account Debtors, and (c) a summary of accounts payable
showing which accounts payable are current, up to 30, 30 to 60,
60 to 90 and 90 days or more past due and listing the names of
applicable creditors and, in the case of past due accounts, the
address of the applicable creditor; (iii) as soon as practicable
and in any event within ninety (90) days after the end of each
Fiscal Year, statements of net income and cash flow of the Parent
and its Subsidiaries for such year, and a balance sheet of the
Parent and its Subsidiaries as of the end of such year, setting
forth in each case, in comparative form and on a consolidated
basis, if applicable, corresponding figures for the period
covered by the preceding annual audit and as of the end of the
preceding Fiscal Year, all in reasonable detail and satisfactory
in scope to the Required Lenders and examined and certified by
Arthur Andersen L.L.P. or any other independent public
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accountants of recognized national standing selected by the
Borrower and acceptable to the Required Lenders, whose opinion
shall be in scope and substance satisfactory to the Required
Lenders; (iv) within thirty (30) days after the close of each
fiscal quarter of the Borrower, a statement in which the actual
results of such quarterly period are compared with the most
recent Projections for such quarter; (v) as soon as practicable
(but in any event not more than ten (10) days after any officer
of the Borrower obtains knowledge of the occurrence of a Default
or an Event of Default) notice of any and all Defaults or Events
of Default hereunder; (vi) not later than the twenty-seventh
(27th) day of each month, a Monthly Report for the Borrower
computed as of the last Business Day of the preceding month,
signed by the chief executive officer or chief financial officer
of the Borrower; (vii) within 30 days after the end of each
Fiscal Year, or more frequently as the Required Lenders may
reasonably require, the names and addresses of all existing
Account Debtors; and (viii) with reasonable promptness, such
other business or financial data as any Lender may reasonably
request, including, without limitation, Collateral Reports.
All financial statements delivered to the Lenders
pursuant to the requirements of this subsection 7.1 (except where
otherwise expressly indicated) shall be prepared in accordance
with Generally Accepted Accounting Principles consistently
applied. Changes in accounting principles or applications shall
be approved by the Lenders and the Borrower's independent
auditors in advance and shall not be permitted to amend or
distort any financial covenant (all of which were negotiated
based on the Projections), advance rate or other provision herein
contained. Together with each delivery of financial statements
required by clauses (i) and (iii) of this subsection 7.1, the
Borrower shall deliver to each Lender an officer's certificate
stating that there exists no Default or Event of Default, or, if
any Default or Event of Default exists, specifying the nature
thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto. Together with
each delivery of financial statements required by clause (iii) of
this subsection 7.1, the Borrower shall deliver or cause to be
delivered to each Lender a certificate of the accountants who
performed the audit in connection with such statements stating
that in making the audit necessary to the issuance of a report on
such financial statements, they have obtained no knowledge of any
Default or Event of Default with respect to Consolidated Tangible
Net Worth, Cash Flow Coverage and Leverage Ratio and subsection
8.8, or, if such accountants have obtained knowledge of a Default
or Event of Default, specifying the nature and period of
existence thereof. Such accountants shall not be liable by
reason of any failure to obtain knowledge of any Default or Event
of Default which would not be disclosed in the ordinary course of
an audit.
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Each of the Lenders and the Agent agree to keep any
information, whether written or oral, delivered or made available
to it pursuant to this Agreement or any other Financing Agreement
regarding the Borrower and/or its Subsidiaries or Parent
(including, without limitation, information concerning their
respective finances, assets, operations, properties, pension and
other employee benefit plans, strategies or projections)
confidential from any Person other than officers, employees,
legal counsel, agents or representatives of such Lender or Agent
who are engaged in evaluating, approving, structuring or
administering the Financing Agreements; provided that nothing
contained in this subsection 7.1 shall prevent any Lender or the
Agent from disclosing any such information that (i) is or becomes
available to the public other than by reason of a disclosure by
any Lender or the Agent, or (ii) was or becomes available to any
Lender or the Agent on a non-confidential basis from a lawful
source other than the Borrower and/or its Subsidiaries or Parent.
Notwithstanding anything contained herein to the contrary, any
Lender or the Agent may disclose such information (i) to any
regulatory authority having jurisdiction over such Lender or the
Agent, (ii) to any prospective or actual transferee, assignee or
participant in connection with such Lender's transfer, assignment
or participation of the Loans or its Commitments that have agreed
to be bound by these confidentiality provisions, (iii) to any of
its affiliates to the extent any such affiliate requires such
information in the ordinary course of such Lender's or the
Agent's credit committee or asset management procedures and
agrees to be bound by these confidentiality provisions, (iv) as
required by law, regulation or pursuant to legal process, (v) in
connection with any legal proceeding to which such Lender or the
Agent is a party, or (vi) to any Person in connection with the
enforcement of such Lender's or the Agent's rights or remedies
under any Financing Agreement. In the event that any Lender or
the Agent is requested by any governmental regulatory
organization or is required by law, rule, regulation or legal
process to disclose any of such information, such Lender or the
Agent, as applicable, agrees to provide the Borrower with prompt
notice of such request or requirement to enable the Borrower to
seek whatever protective action that the Borrower deems
appropriate and/or waive such Lender's or the Agent's compliance
with the provisions of this subsection 7.1.
The Borrower authorizes the Agent and each Lender to
discuss the financial condition of the Borrower with the
Borrower's independent public accountants and agrees that such
discussion or communication shall be without liability to any
such Person or the Borrower's independent public accountants.
The Borrower shall deliver a letter addressed to such accountants
authorizing them to comply with the provisions of this subsection
7.1.
7.2 Inspections and Audits. Upon reasonable notice
prior to the occurrence of a Default or Event of Default but
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without notice after the occurrence thereof, the Agent, or any
Person designated by the Agent in writing, shall have the right,
from time to time hereafter, to call at the Borrower's place or
places of business (or any other place where the Collateral or
any information relating thereto is kept or located) during
reasonable business hours, and, without hindrance or delay (i) to
inspect, audit, check and make copies of and extracts from the
Borrower's books, records, journals, orders, receipts and any
correspondence and other data relating to the Borrower's or any
Subsidiary's business or to any transactions between the parties
hereto, (ii) to make such verification concerning the Collateral
as the Agent may consider reasonable under the circumstances, and
(iii) to discuss the affairs, finances and business of the
Borrower with any officers, employees or directors of the
Borrower.
7.3 Conduct of Business; Compliance With Laws. The
Borrower shall, and shall cause each Subsidiary to, maintain its
corporate existence and all licenses, bonds, franchises, leases,
patents, contracts and other rights necessary or desirable to the
profitable conduct of its business, and shall, and shall cause
each Subsidiary to, comply with all applicable laws, rules,
regulations and orders of any federal, state or local
governmental authority, except for such laws, rules and
regulations the violation of which would not, in the aggregate,
have a Material Adverse Effect.
7.4 Claims and Taxes. (a) The Borrower agrees to
indemnify and hold the Agent and each Lender harmless from and
against any and all claims, demands, obligations, losses,
damages, penalties, costs, and expenses (including reasonable
attorneys' fees) asserted by any Person (other than the Borrower)
in connection with this Agreement or the other Financing
Agreements or asserted by any Person and relating to or in any
way arising out of the possession, use, operation or control of
any of the Borrower's or any Subsidiary's Property by any Person.
The Borrower shall, and shall cause each Subsidiary to, file all
tax and information returns and reports required by and prepared
in accordance with applicable law and shall pay or cause to be
paid all license fees, bonding premiums and related taxes and
charges, and shall pay or cause to be paid all real and personal
property taxes, assessments and charges and franchise, income,
unemployment, use, excise, old age benefit, withholding, sales
and other taxes and other governmental charges assessed against
the Borrower or any Subsidiary, or payable by the Borrower or any
Subsidiary, at such times and in such manner as to prevent any
penalty from accruing or any Lien from attaching to Property of
the Borrower or any Subsidiary; provided that the Borrower or
such Subsidiary shall have the right to contest in good faith, by
an appropriate proceeding promptly initiated and diligently
conducted, the validity, amount or imposition of any such tax,
assessment or charge, and upon such good faith contest to delay
or refuse payment thereof (i) so long as no Lien which will have
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priority over the Agent's Lien granted hereunder with respect to
any Collateral is filed or recorded with respect thereto, and
(ii) so long as such contest does not have a Material Adverse
Effect.
(b) The Borrower shall notify each Lender promptly
(and in no event later than ten (10) days) after becoming aware
of the intent of the Service to assert a deficiency with respect
to it or any Subsidiary, and shall promptly (and in no event
later than five (5) days after receipt) send each Lender copies
of any notices of proposed deficiency and any notices of
deficiency received from the Service. The Borrower shall take
all reasonable actions necessary to contest such claimed
deficiency and shall provide the Agent with periodic status
reports on such contest.
7.5 Borrower's Liability Insurance. The Borrower
shall, and shall cause each Subsidiary to, maintain, at its
expense, such public liability and third party property damage
insurance in such amounts and with such deductibles as are
acceptable to the Required Lenders naming the Agent, on behalf of
the Lenders, as an additional insured and providing the Agent
with 30 days' written notice prior to cancellation or any
material change in coverage. The Borrower's current liability
insurance policies are summarized on Exhibit 7.5.
7.6 Borrower's Property and Business Interruption
Insurance; Condemnation. The Borrower shall, and shall cause
each Subsidiary to, at its expense, keep and maintain its assets
insured against loss or damage by fire, theft, explosion,
spoilage and all other hazards and risks ordinarily insured
against by other owners or users of such properties in similar
businesses in an amount at least equal to the full insurable
value thereof (including at least six (6) months business
interruption insurance in an amount not less than Thirty Million
Dollars ($30,000,000)). All such policies of insurance shall
contain a breach or violation of warranty, declarations or
conditions endorsement in favor of the Agent, shall provide that
the Agent shall receive 30 days' written notice prior to
cancellation or any material change in coverage and shall
otherwise be in form and substance satisfactory to the Required
Lenders. The Borrower shall deliver to each Lender the original
(or a certified) copy of each policy of insurance and, upon the
renewal thereof, a binder evidencing such renewal, and evidence
of payment of all premiums therefor. Such policies of insurance
of the Borrower shall contain an endorsement in form and
substance satisfactory to the Agent naming the Agent, on behalf
of the Lenders, as loss payee and additional insured. So long as
no Default or Event of Default has occurred, Borrower is hereby
authorized by the Lenders to make, settle or adjust any claims
(i) under the insurance policies for damage or destruction of its
properties or the properties of the Subsidiaries and (ii) for the
proceeds of any award or payment in respect of any condemnation
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or other eminent domain proceedings by any governmental
authority; provided that if the amount of any such claim (whether
made as a single claim or a series of claims for the same
occurrence) is in excess of $500,000, the Required Lenders may
elect in their reasonable business judgment to apply the proceeds
thereof to the prepayment of the Obligations in the following
priority: (x) to the Term Loan in the inverse order of the
maturities thereof until paid in full, (y) to the CAPEX Notes in
the inverse order of their issuance dates and in the inverse
order of the maturities thereof until paid in full, and (z) to
permanently reduce the Total Revolving Loan Facility. After the
occurrence of a Default or Event of Default, the Borrower
irrevocably makes, constitutes and appoints the Agent (and all
officers, employees or agents designated by the Agent) as the
Borrower's true and lawful attorney-in-fact for the purpose of
making, settling and adjusting claims under all such policies of
insurance, endorsing the name of the Borrower on any check,
draft, instrument or other item of payment received by the
Borrower or the Agent pursuant to any such policies of insurance
and for making all determinations and decisions with respect to
such policies of insurance. If the Borrower or any Subsidiary,
at any time or times hereafter, shall fail to obtain or maintain
any of the policies of insurance required by this subsection 7.6
or to pay any premium in whole or in part relating thereto, then
the Agent, without waiving or releasing any Obligation, Default
or Event of Default by the Borrower hereunder, may at any time or
times thereafter (but shall be under no obligation to do so)
obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the
Agent deems advisable.
7.7 Pension Plans. (a) The Borrower shall, and shall
cause each ERISA Affiliate to (i) maintain all Plans which are
presently in existence or may, from time to time, come into
existence, in compliance with ERISA, the IRC and all other
applicable laws in all material respects unless such Plans can be
terminated or merged without material liability to the Borrower
or any ERISA Affiliate in connection with such termination or
merger (as distinguished from any continuing funding obligation),
(ii) make contributions to all of its Pension Plans in a timely
manner and in a sufficient amount to comply with the requirements
of ERISA, (iii) comply with all material requirements of ERISA
and the IRC which relate to such Plans so as to preclude the
occurrence of any Termination Event, prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of
the IRC) or material "accumulated funding deficiency" as such
term is defined in ERISA, and (iv) except as set forth on Exhibit
6.19, not permit any Plan to provide post-retirement medical
benefits, nor shall the Borrower, any Subsidiary or any ERISA
Affiliate undertake any new or increased obligation with respect
to any Pension Plan or Multiemployer Plan which would result in
any Material Adverse Effect.
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(b) The Borrower shall promptly deliver written notice
of any of the following to each Lender, but in no event later
than thirty (30) days after such event or occurrence:
(1) the Borrower, any Subsidiary or any ERISA
Affiliate knows or has reason to know that a
Termination Event has occurred, with such notice
setting forth the details of such event;
(2) the filing of a request for a funding waiver
by the Borrower, any Subsidiary or any ERISA Affiliate
with respect to any Pension Plan, a copy of such
request and all correspondence received by Borrower or
any ERISA Affiliate with respect to such request;
(3) the Borrower, any Subsidiary or any ERISA
Affiliate fails to make a required installment or
payment under Section 302 of ERISA or Section 412 of
the IRC by the applicable due date;
(4) the Borrower, any Subsidiary or any ERISA
Affiliate knows or has reason to know that a prohibited
transaction (as defined in Section 406 of ERISA or
Section 4975 of the IRC) has occurred with respect to
any Plan with a statement describing such transaction
and the action or response taken with respect thereto;
(5) any increase in the benefits of any existing
Plan or contribution rate to a Multiemployer Plan or
the establishment of any new Plan or the commencement
of contributions to any Plan or Multiemployer Plan to
which the Borrower, any Subsidiary or any ERISA
Affiliate had not been contributing;
(6) receipt by the Borrower, any Subsidiary or
any ERISA Affiliate of any adverse ruling from the
Service regarding the qualification of a Plan under
Section 401(a) of the IRC, with a copy of such ruling;
(7) the Parent fails to make any required
installment payment or other payment obligation under
the PBGC Grantor Trust; and
(8) any other report such as an annual report on
Form 5500 or actuarial report in which any Lender may
request from time to time.
7.8 Notice of Suit or Adverse Change in Business. The
Borrower shall, as soon as possible, and in any event within five
(5) days after the Borrower learns of the following, give written
notice to each Lender of (i) any material Litigation being
instituted or threatened to be instituted by or against the
Parent, the Borrower or any Subsidiary in any federal, state,
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local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) including,
without limitation, any and all pending or threatened proceedings
with respect to Environmental Matters and (ii) any event or
occurrence which could have a Material Adverse Effect.
8. NEGATIVE COVENANTS.
__________________
The Borrower covenants and agrees that so long as any
of the Obligations remain outstanding and (even if there shall be
no Obligations outstanding) so long as this Agreement remains in
effect:
8.1 Encumbrances. Except for Liens existing on the
date hereof and disclosed on Exhibit 8.1, the Borrower shall not,
nor shall it permit any Subsidiary to, create, incur, assume or
suffer to exist any Lien of any nature whatsoever on any of its
Property, including, without limitation, the Collateral, other
than the following "Permitted Liens": (i) Liens securing the
payment of taxes or other governmental charges not yet due and
payable; (ii) deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or to secure
the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations
or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business; (iii) the
Liens in favor of the Agent, for the benefit of the Lenders; (iv)
purchase money Liens (including capitalized leases and other
forms of installment purchase financing) granted to the Person by
the Borrower financing a purchase of Equipment so long as the
Lien granted is limited to the specific fixed assets so acquired,
the debt secured by the Lien is not more than one hundred percent
(100%) of the acquisition cost of the specific item of Equipment
on which the Lien is granted, the aggregate amount of
Indebtedness secured by such Liens as a result of purchases shall
not exceed Two Million Dollars ($2,000,000) at any time during
the term hereof, and the transaction does not violate any other
provision of this Agreement (notification of such purchase money
Lien to be provided within ten (10) days of acquisition of such
fixed asset); (v) Liens permitted in accordance with subsection
7.4(a); and (vi) other Liens on Real Estate which do not, in the
Agent's sole determination, (a) materially impair the use of such
property, or (b) materially lessen the value of such property for
the purposes for which the same is held by the Borrower.
8.2 Intercompany Indebtedness. The Borrower shall
not, nor shall it permit any Subsidiary to, incur, create,
assume, become or be liable in any manner with respect to, or
suffer to exist, any Indebtedness with the Borrower, Harris, the
Parent or the Subsidiaries, as the case may be, except for (i)
the Indebtedness of the Borrower in favor of Harris, the Parent
or any Subsidiary existing on the date hereof and described in
subsection 6.10, (ii) Subordinated Debt issued after the Closing
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Date by the Borrower in favor of a Subsidiary and (iii)
Indebtedness issued after the Closing Date by the Borrower in
favor of Harris. After the occurrence of a Default or an Event
of Default, neither the Borrower nor any Subsidiary shall
voluntarily prepay, defease, purchase, redeem, retire or
otherwise acquire any Indebtedness other than the Obligations.
8.3 Consolidations and Acquisitions. Except with the
consent of the Required Lenders, which consent shall not be
unreasonably withheld, the Borrower shall not, nor shall it
permit any Subsidiary to, merge or consolidate with, purchase,
lease or otherwise acquire all or substantially all of the assets
or properties of, or acquire any capital stock, equity interests,
debt or other securities of, any other Person (whether through an
Acquisition or otherwise) except that any Subsidiary may merge or
consolidate with or into the Borrower; provided that the Borrower
is the surviving Person. The Borrower shall not enter into any
joint venture or dissolve or liquidate any joint venture (other
than the Crosby Yutaka Engineering Company, Ltd.) or become a
partner in any partnership.
8.4 Investments. The Borrower shall not, nor shall it
permit any Subsidiary (other than a Foreign Subsidiary) to, make
or permit to exist Investments (including, without limitation,
loans and advances to, and other Investments in, the Parent, any
of the Subsidiaries and other Affiliates), or commitments
therefor, or to create any Subsidiary other than the following
"Permitted Investments": (i) loans made in accordance with
subsection 8.8, (ii) existing Investments in Subsidiaries and
other Investments in existence on the date hereof and disclosed
on Exhibit 8.4, (iii) mergers and consolidations permitted by
subsection 8.3, (iv) so long as no Default or Event of Default
shall have occurred and be continuing, Investments in Cash
Equivalents not to exceed Three Million Dollars ($3,000,000) in
the aggregate at any one time, (v) loans made after the Closing
Date by the Borrower to Harris for working capital purposes, and
(vi) loans made after the Closing Date by the Borrower to the
Parent; provided that (A) the issuance of such Indebtedness by
the Parent does not violate the terms of the Parent Guaranty, (B)
at the time of, and after giving effect to, the making of any
such loan to the Parent (x) the Net Worth of Crosby and Harris
shall not be less than $46,000,000 and $17,000,000, respectively,
(C) no more than $3,000,000 of such loans during the term of this
Agreement shall be Restricted Debt; provided further that for the
period from the Closing Date through the earlier of the date of
entry of the Final Order or June 30, 1995, subject to subsection
8.17, the Borrower shall make no loans to the Parent except for
(x) loans for Administrative Costs in an aggregate amount not to
exceed $6,000,000. and (y) loans with respect to Restricted Debt
in an aggregate amount not to exceed $1,000,000; and provided
further that in the event the Final Order is not entered by June
30, 1995, the Borrower shall make no further loans to the Parent.
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8.5 Guaranties. The Borrower shall not, nor shall it
permit any Subsidiary to, make or suffer to exist any Guaranty,
except (i) endorsements of negotiable instruments for collection
in the ordinary course of business, (ii) the Crosby Guaranty,
(iii) the Keepwell Agreement and any other similar agreement
whereby the Borrower on an unsecured basis issues a Guaranty of
the repayment of a Subsidiary's Indebtedness, and (iv) the
Guaranty by the Borrower of any Indebtedness of Harris incurred
as a result of the Refinancing Payment.
8.6 Collateral Locations. The Borrower shall not sell
any of the Inventory on a guaranteed sale, sale-and-return, sale
on approval or consignment basis or any other basis subject to a
repurchase obligation or return right. Neither the location of
the principal place of business and chief executive office of the
Borrower, the locations of Collateral as set forth in subsection
3.6 nor the corporate name or mailing address of the Borrower
shall be changed, nor shall there be established additional
places of business or additional locations at which Collateral is
stored, kept or processed unless the Borrower shall have given
the Agent not less than 30 days prior written notice thereof, and
the Agent shall have determined that, after giving effect to any
such change of name, address or location, the Agent shall have a
first perfected security interest in the Collateral except for
Permitted Liens. Prior to making any such change or establishing
such new location, the Borrower shall execute any additional
financing statements or other documents or notices required by
the Agent.
8.7 Disposal of Property. The Borrower shall not, nor
shall it permit any Subsidiary to, sell, lease, assign, transfer
or otherwise dispose of any of its Property, assets, business or
rights to any Person except for (i) bona fide sales of Inventory
to customers for fair value in the ordinary course of business
and (ii) sales of Equipment which is obsolete, worn-out or
otherwise not useable in its business or Real Estate. In the
event any Equipment of the Borrower is sold, transferred or
otherwise disposed of as permitted by this subsection 8.7 or with
the Required Lenders' consent, and (x) such sale, transfer or
disposition is effected without replacement of the Equipment so
sold, transferred or disposed of or such Equipment is replaced by
Equipment leased by the Borrower, the Borrower shall deliver
promptly (but in any event not more than five (5) Business Days
after the receipt thereof) all of the cash proceeds of any such
sale, transfer or disposition to the Agent, which proceeds shall
be applied in the following priority: (i) to the Term Loan
Obligations until paid in full, (ii) to the outstanding CAPEX
Notes until paid in full, and (iii) to the Revolving Loan
Obligations (the Total Revolving Loan Facility to be permanently
reduced by such amount) without premium or penalty, except as
provided in subsections 2.21 and 2.8(g) (provided that no
prepayment fee shall be applicable to the first $3,000,000 of
aggregate sale proceeds for such sales of Equipment and Real
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Estate permitted under this subsection 8.7 and under subsection
8.7 of the Harris Loan Agreement), or (y) such sale, transfer or
disposition is made in connection with the purchase by the
Borrower of replacement Equipment, the Borrower shall use the
proceeds of such sale, transfer or disposition to finance the
purchase by the Borrower of replacement Equipment and shall
deliver to the Agent written evidence of the use of the proceeds
for such purchase. Except as permitted by subsection 8.1, all
replacement Equipment purchased by the Borrower shall be free and
clear of all Liens, except for Liens in favor the Agent for the
benefit of the Lenders. Neither the Borrower nor any Subsidiary
shall transfer any Property to any Affiliate except in accordance
with the terms of subsection 8.12.
8.8 Employee Loans. Except for (i) advances for
travel and related expenses to the Borrower's employees in the
ordinary course of business in an amount not to exceed One
Hundred Thousand Dollars ($100,000) in the aggregate at any one
time, and (ii) commission advances to employees of the Borrower
in an amount not to exceed Ten Thousand Dollars ($10,000) at any
one time, the Borrower shall not make any loans or other advances
to any employee.
8.9 Restricted Payments. The Borrower shall not, nor
shall it permit any Subsidiary to, directly or indirectly,
without the prior written consent of the Required Lenders,
declare, pay, order, make or set apart any Restricted Payment;
provided that (i) any Subsidiary may declare and pay dividends to
the Borrower, and (ii) so long as at the time of or after giving
effect thereto no Default or Event of Default has occurred and is
continuing and the payment thereof would not have a Material
Adverse Effect, the Borrower may declare and pay cash dividends
to the Parent in accordance with applicable law; provided that
for the period from the Closing Date through the earlier of the
date of entry of the Final Order or June 30, 1995, subject to
subsection 8.17, the Borrower shall make no Restricted Payments
to the Parent except for Administrative Costs in an aggregate
amount not to exceed $6,000,000; and provided further that in the
event the Final Order is not entered by June 30, 1995, the
Borrower shall make no further Restricted Payments.
8.10 Securities. The Borrower shall not, nor shall it
permit any Subsidiary to, issue or distribute or redeem,
repurchase or acquire any of its capital stock or debt securities
of any description for consideration or otherwise.
8.11 Changes in Charter, Bylaws or Fiscal Year. The
Borrower shall not, nor shall it permit any Subsidiary to (i)
permit any amendment to its certificate of incorporation or
bylaws or its corporate structure which could have a Material
Adverse Effect, or (ii) change the Borrower's Fiscal Year,
without the Required Lenders' prior written consent which shall
not be unreasonably withheld.
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8.12 Transactions with Affiliates. The Borrower shall
not, nor shall it permit any Subsidiary to, enter into any
transaction including, without limitation, the purchase, sale,
lease or exchange of property or the rendering or purchase of any
service to or from any Affiliate except (i) in the ordinary
course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arm's length transaction with an unaffiliated Person
and (ii) Permitted Investments.
8.13 Corporate Accounts. The Borrower shall not, nor
shall it permit any Subsidiary to, maintain corporate deposit
accounts jointly with any Affiliate or commingle any funds with
funds of any Affiliate.
8.14 Sale and Leaseback. The Borrower shall not, nor
shall it permit any Subsidiary to, sell or transfer any of its
Property in order to concurrently or subsequently lease as lessee
such or similar Property unless (i) any such sale is made for the
fair market value of the Property, (ii) the sale consideration
received is cash, (iii) the sale is upon fair and reasonable
terms in an arm's length transaction, and (iv) all proceeds of
any sale are used to prepay the Obligations in the priority set
forth in subsection 8.7.
8.15 Purchase of Stock. The Borrower shall not, nor
shall it permit any Subsidiary to (i) directly use any proceeds
of any Loan or Letter of Credit to purchase or carry any Margin
Stock which might cause any of the Loans or Letters of Credit or
other extensions of credit under this Agreement to be considered
a "purpose credit" within the meaning of Regulation G, T, U or X
of the Federal Reserve Board, or (ii), except as permitted by
subsection 8.2, extend credit to any Person for the purpose of
purchasing or carrying any Margin Stock or for the purpose of
reducing or retiring any indebtedness which was originally
incurred to purchase any Margin Stock or other margin securities
or for any other purpose.
8.16 Negative Pledges. Neither the Borrower nor any
Subsidiary shall enter into or assume any agreement (other than
the Financing Agreements) containing a negative pledge provision
which would require a sharing of any interest in the Collateral
or prohibiting or limiting the creation or assumption of any Lien
upon its Property (other than the Property of a Foreign
Subsidiary), whether now owned or hereafter acquired.
8.17 Aggregate Limits. Notwithstanding anything
contained in subsections 8.4 or 8.9 to the contrary, (i) the
aggregate amount of loans made by the Borrower and Harris to the
Parent in the form of Restricted Debt shall not exceed the
aggregate amounts permitted under subsection 8.4 for the
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applicable time periods, and (ii) for the period from the Closing
Date through the earlier of the date of entry of the Final Order
or June 30, 1995, the aggregate amount of loans made by the
Borrower and Harris to the Parent for Administrative Costs
combined with the aggregate amount of Restricted Payments made by
the Borrower and Harris the proceeds of which are used to pay
Administrative Costs shall not exceed $6,000,000.
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER.
__________________________________________
9.1 Obligations. If an Event of Default shall exist
or occur, the Required Lenders (or the Agent with the consent of
the Required Lenders) may elect to (i) make no further advances
hereunder and/or (ii) terminate this Agreement in which case,
upon termination, the Obligations shall be accelerated (and the
Agent shall so notify the Borrower) and all of the Obligations
shall automatically, without notice of any kind, be immediately
due and payable; provided that upon the occurrence of any Event
of Default referred to in clauses (f), (g) or (h) within the
definition of "Event of Default," no notice of any kind need be
given to the Borrower prior to acceleration of the Obligations
which shall occur automatically, and (b) demand that the Borrower
immediately deposit with the Agent an amount equal to the Risk
Participation Liability to enable the Agent to make payments
under the Risk Participations when required and such amount shall
become immediately due and payable.
9.2 Rights and Remedies Generally. Upon acceleration
of the Obligations, the Agent, on behalf of the Lenders, shall
have, in addition to any other rights and remedies contained in
this Agreement or in any of the other Financing Agreements, all
of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In
addition to all such rights and remedies, the Agent shall have
the right to sell, lease or otherwise dispose of all or any part
of the Collateral and the sale, lease or other disposition of the
Collateral, or any part thereof, by the Agent after an Event of
Default may be for cash, credit or any combination thereof, and
the Agent or any 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 purchase price against the Obligations then owing.
Any sales of the Collateral may be adjourned from time to time
with or without notice. The Agent may, in its sole discretion,
cause the Collateral to remain on the Borrower's premises or
otherwise or to be removed and stored at premises owned by other
Persons, at the Borrower's expense, pending sale or other
disposition of the Collateral. The Agent shall have the right to
conduct such sales on the Borrower's premises, at the Borrower's
expense, or elsewhere, on such occasion or occasions as the Agent
may see fit.
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9.3 Entry Upon Premises and Access to Information.
Upon acceleration of the Obligations, the Agent shall have the
right to enter upon the premises of the Borrower where the
Collateral is located (or is believed to be located) without any
obligation to pay rent to the Borrower, or any other place or
places where the Collateral is believed to be located and kept,
to render the Collateral usable or saleable, to remove the
Collateral therefrom to the premises of the Agent or any agent of
the Agent for such time as the Agent may desire in order
effectively to collect or liquidate the Collateral, and/or to
require the Borrower to assemble the Collateral and make it
available to the Agent at a place or places to be designated by
the Agent. Upon acceleration of the Obligations, the Agent shall
have the right to take possession of the Borrower's original
books and records, to obtain access to Borrower's data processing
equipment, computer hardware and software relating to the
Collateral and to use all of the foregoing and the information
contained therein in any manner the Agent deems appropriate; and
the Agent shall have the right to notify postal authorities to
change the address for delivery of the Borrower's mail to an
address designated by the Agent and to receive, open and dispose
of all mail addressed to the Borrower.
9.4 Sale or Other Disposition of Collateral by the
Agent. Any notice required to be given by the Agent of a sale,
lease or other disposition or other intended action by the Agent
with respect to any of the Collateral which is deposited in the
United States mails, postage prepaid and duly addressed to the
Borrower at the address specified in subsection 10.13, at least
fifteen (15) days prior to such proposed action, shall constitute
fair and reasonable notice to the Borrower of any such action.
The net proceeds realized by the Agent upon any such sale or
other disposition, after deduction for the expenses of retaking,
holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by the Agent in
connection therewith, shall be applied as provided herein toward
satisfaction of the Obligations including, without limitation,
the Obligations described in subsections 2.14 and 10.2. The
Agent shall account to the Borrower for any surplus realized upon
such sale or other disposition, and the Borrower shall remain
liable for any deficiency. The commencement of any action, legal
or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's security interest in the
Collateral until the Obligations are fully paid. The Borrower
agrees that neither the Agent nor any Lender has any obligation
to preserve rights to the Collateral against any other parties.
The Agent is hereby granted a license, lease or other right to
use, without charge, the Borrower's General Intangibles,
Intellectual Property, Equipment, Fixtures, Real Estate, patents,
copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale or lease and
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selling or leasing any Inventory or other Collateral and the
Borrower's rights under all licenses, leases and franchise
agreements shall inure to the Agent's benefit until all
Obligations are paid in full.
9.5 Waiver of Demand. DEMAND, PRESENTMENT, PROTEST
AND NOTICE OF DEMAND, PRESENTMENT, PROTEST AND NONPAYMENT ARE
HEREBY WAIVED BY THE BORROWER. THE BORROWER ALSO WAIVES THE
BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
9.6 Waiver of Notice. IN THE EVENT OF A DEFAULT, THE
BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE AGENT OF ITS RIGHTS TO
REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
AGREEMENT.
10. OTHER RIGHTS AND OBLIGATIONS.
____________________________
10.1 Waiver. The failure of the Agent or any Lender, at
any time or times hereafter, to require strict performance by the
Borrower of any provision of this Agreement shall not waive,
affect or diminish any right of any such Person thereafter to
demand strict compliance and performance therewith. Any
suspension or waiver by the Lenders or the Required Lenders, as
applicable, of a Default or an Event of Default under this
Agreement or any of the other Financing Agreements shall not
suspend, waive or affect any other Default or Event of Default
under this Agreement or any of the other Financing Agreements,
whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. None of the
undertakings, agreements, warranties, covenants and
representations of the Borrower contained in this Agreement or
any of the other Financing Agreements and no Default or Event of
Default by the Borrower under this Agreement or any of the other
Financing Agreements shall be deemed to have been suspended or
waived by the Lenders or the Required Lenders, as applicable,
unless such suspension or waiver is in writing and signed by an
officer of each of the Lenders or the Required Lenders, as
applicable, and directed to the Borrower specifying such
suspension or waiver.
10.2 Costs and Attorneys' Fees. All fees, costs and
expenses incurred by the Agent or any Lender in connection with
protecting, perfecting or preserving the Agent's Lien on the
Collateral or the collection of the Obligations or the
enforcement of the Financing Agreements including, without
limitation (i) verifying or inspecting any of the Collateral or
the Borrower's records with respect thereto, (ii) protecting,
perfecting or preserving the Collateral (iii) commencing,
defending, or intervening in any litigation or filing a petition,
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complaint, answer, motion or other pleadings, (iv) taking any
other action in or with respect to any suit or proceedings
(bankruptcy or otherwise), (v) consulting with officers of the
Agent or any Lender or advising the Agent or any Lender, (vi)
protecting, collecting, leasing, selling, taking possession of,
or liquidating any of the Collateral, or (vii) attempting to
enforce or enforcing any security interest in any of the
Collateral, or (viii) enforcing any rights of the Agent or any
Lender to collect any of the Obligations, including, without
limitation, reasonable fees, costs and expenses of attorneys and
paralegals of the Agent or any Lender, and the out-of-pocket
costs and the per diem charges for the examiners of such Persons
at their then applicable rates, together with interest thereon at
the Base Rate or the Default Rate then applicable to the
Revolving Loan, shall be part of the Obligations, payable on
demand and secured by the Collateral.
10.3 Expenditures by the Agent and the Lenders. In the
event the Borrower shall fail to pay taxes, insurance,
assessments, costs or expenses which the Borrower is, under any
of the terms hereof, required to pay, or fails to keep the
Collateral free from Liens, except Permitted Liens, or fails to
maintain, replace or repair the Collateral as required hereby,
the Agent or any Lender may, in its sole discretion, make
expenditures for any or all of such purposes and acquire or
accept an assignment of any Lien against the Collateral, and the
amount so expended (including, without limitation, reasonable
attorneys' fees and expenses, court costs, filing fees and other
charges), together with interest thereon at the Base Rate or the
Default Rate then applicable to the Revolving Loan shall be part
of the Obligations, payable on demand and secured by the
Collateral.
10.4 Custody and Preservation of Collateral. The Agent
shall be deemed to have exercised reasonable care in the custody
and preservation of any of the Collateral in its possession if it
takes such action for that purpose as the Borrower shall request
in writing, but failure by the Agent to comply with any such
request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by the Agent to comply with any
such request shall of itself be deemed a failure to exercise
reasonable care, and no failure by the Lender to preserve or
protect any right with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of
such Collateral not so requested by the Borrower, shall of itself
be deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral.
10.5 Reliance. All covenants, agreements,
representations and warranties made herein or in any of the other
Financing Agreements by the Borrower or the Parent shall,
notwithstanding any investigation by the Agent or any Lender, be
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deemed to be material to and to have been relied upon by each
such Person.
10.6 Parties and Assignment. Whenever in this
Agreement reference is made to any of the parties hereto, such
reference shall be deemed to include, wherever applicable, a
reference to the successors and assigns of such party.
Notwithstanding the foregoing, the Borrower may not sell, assign
or transfer this Agreement, or the other Financing Agreements or
any portion thereof, including without limitation its rights,
titles, interests, remedies, powers and/or duties hereunder or
thereunder. The Borrower hereby consents to any Lender's sale,
assignment, transfer or other disposition, at any time and from
time to time hereafter, of this Agreement, or the other Financing
Agreements or any portion thereof, including, without limitation,
all or any part of such Lender's rights, titles, interests,
remedies, powers and/or duties hereunder or thereunder.
10.7 Applicable Law; Severability. This Agreement and
the other Financing Agreements have been submitted to the Agent
and each Lender at its office in Illinois, and this Agreement and
the other Financing Agreements shall not be binding upon the
Agent or any Lender or effective until accepted by each such
Person and shall be construed in all respects in accordance with,
and governed by, all of the provisions of the Code and by the
other internal laws (as opposed to conflicts of law provisions)
of the State of Illinois, except for the perfection and
enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible,
each provision of this Agreement shall be interpreted in such a
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 provisions or the remaining
provisions of this Agreement.
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND
BOND. THE BORROWER AND THE AGENT AND EACH LENDER HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS, AND
IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS SHALL BE
LITIGATED IN SUCH COURTS, AND THE BORROWER AND THE AGENT AND EACH
LENDER EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE
ADDRESS SET FORTH IN SUBSECTION 10.13 AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE SUFFICIENT NOTICE. THE AGENT, EACH
LENDER AND THE BORROWER ACKNOWLEDGE THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED
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FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SUBSECTION 10.8
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT
NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH
JURISDICTION.
10.9 Marshalling. The Agent shall be under no
obligation to marshall any assets in favor of the Borrower or any
other party or against or in payment of any or all of the
Obligations.
10.10 Section Titles. The section titles contained
in this Agreement shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties.
10.11 Continuing Effect. This Agreement, the
Agent's security interests in the Collateral, and all of the
other Financing Agreements shall continue in full force and
effect so long as any Obligations shall be owed to the Agent or
any Lender, and (even if there shall be no Obligations
outstanding) so long as this Agreement has not been terminated as
provided in subsection 2.8; provided that the Borrower's
obligations to indemnify the Agent and each Lender shall continue
notwithstanding any termination of this Agreement.
10.12 Incorporation by Reference. The provisions
of the other Financing Agreements are incorporated in this
Agreement by this reference. Except as otherwise provided in
this Agreement and except as otherwise provided in the other
Financing Agreements by specific reference to the applicable
provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any
provisions in the other Financing Agreements, the provision
contained in this Agreement shall govern and control.
10.13 Notices. Except as otherwise expressly
provided herein, any notice required or desired to be served,
given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered three (3)
days after deposit in the United States mails (by certified mail,
return receipt requested), with proper postage prepaid, or upon
delivery by courier or upon transmission by telex, telecopy or
similar electronic medium to the following addresses:
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(i) If to the Agent, at:
SANWA BUSINESS CREDIT CORPORATION
One South Wacker Drive, 39th Floor
Chicago, Illinois 60606
Attn: Commercial Finance Division
Telecopy No.: (312) 782-6035
With a copy to:
WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Jim L. Blanco
Telecopy No.: (312) 558-5700
(ii) If to a Lender, at the address opposite its name
on Schedule 1 hereto.
(iii) If to the Borrower, at:
The Crosby Group, Inc.
2801 Dawson Road
Tulsa, Oklahoma 74110
Attn: Mark M. Metz
Telecopy No.: (918) 835-5736
With a copy to:
Amdura Corporation
900 Main Street South
Suite 2A
P.O. Box 870
Southbury, Connecticut 06488
Attn: C. David Bushley
Telecopy No.: (203) 262-1270
and
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attn: Ronald D. West
Telecopy No.: (412) 355-6501
or to such other address as each party designates to the other in
the manner herein prescribed.
10.14 Waivers With Respect to Other Instruments.
The Borrower waives presentment, demand and protest and notice of
presentment, demand protest, default, nonpayment, maturity,
release, compromise, settlement, extension, or renewal of any or
all commercial paper, Accounts, contract rights, documents,
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instruments, chattel paper and guaranties at any time held by the
Agent on which the Borrower may in any way be liable and hereby
ratifies and confirms whatever the Agent may do regarding the
enforcement, collection, compromise, or release thereof.
10.15 Retention of the Borrower's Documents. The
Agent or any Lender may destroy or otherwise dispose of all
documents, schedules, invoices or other papers delivered to such
Person in accordance with customary practices unless the Borrower
requests in writing that same be returned. Upon the Borrower's
request and at the Borrower's expense, such Person shall return
such papers when such Person's actual or anticipated need for
same has terminated.
10.16 Entire Agreement. The Financing Agreements,
including all Exhibits, Schedules and other documents attached
thereto or incorporated by reference therein, constitute the
entire agreement of the parties with respect to the subject
matter thereof and supersede all other understandings, oral or
written, with respect to the subject matter thereof.
10.17 Equitable Relief. The Borrower recognizes
that, in the event the Borrower fails to perform, observe or
discharge any of its Obligations under this Agreement, any remedy
at law may prove to be inadequate relief to the Agent or any
Lender; therefore, the Borrower agrees that the Agent or any
Lender, if such Person so requests, shall be entitled to
temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
10.18 Counterparts. This Agreement and any
amendments, waivers, consents or supplements may be executed in
any number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered shall
be deemed an original, but all of which counterparts together
shall constitute but one and the same agreement.
10.19 No Fiduciary Relationship. No provision
contained herein or in any other Financing Agreement and no
course of dealing among the parties shall be deemed to create any
fiduciary relationship between the Agent or any Lender and the
Borrower.
10.20 Exceptions to Covenants. Neither the
Borrower nor any Subsidiary shall be deemed to be permitted to
take any action or omit to take any action which is permitted as
an exception to any of the terms, provisions or covenants
contained in any of the Financing Agreements if such action or
omission would result in a Default or Event of Default or the
breach of any term, provision or covenant contained in any
Financing Agreement.
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10.21 Construction. The Borrower acknowledges that
it and its counsel have approved the Financing Agreements and
that the usual rule of construction to the effect that any
ambiguities or inconsistencies are to be resolved against the
drafting Person shall not be applicable in the interpretation of
any of the Financing Agreements.
11. ASSIGNMENT AND PARTICIPATION.
____________________________
11.1 Assignments. Each Lender may, in the ordinary
course of its business and in accordance with applicable law,
assign all or any part of its rights and obligations under the
Financing Agreements to any Person; provided that such Lender
shall first obtain the written consent of the Agent and the
Borrower prior to any assignment becoming effective with respect
to any Person which is not a Lender or an affiliate thereof,
which consent shall not be unreasonably withheld. The assigning
Lender shall be relieved of its obligations hereunder with
respect to its Commitment or assigned portion thereof. The
Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of the Borrower to the assignee
and that the assignee shall be considered to be a "Lender".
11.2 Participations. Each Lender shall have the right
to sell or assign to a Participant or Participants participating
interests in the Borrower's Obligations hereunder in such amounts
and on such terms and conditions as such Lender shall determine.
12. AGENT.
_____
12.1 Appointment. SBCC is hereby appointed Agent
hereunder and under each other Financing Agreements, and each of
the Lenders authorizes the Agent to act as the agent of such
Lender. The Agent agrees to act as such upon the express
conditions contained in this Section 12. The Agent shall not
have a fiduciary relationship in respect of the Borrower or any
Lender by reason of this Agreement.
12.2 Powers. The Agent shall have and may exercise
such powers under the Financing Agreements as are specifically
delegated to the Agent by the terms of each thereof, together
with such powers as are reasonably incidental thereto. The Agent
shall have no implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder, except any action
specifically provided by the Financing Agreements to be taken by
the Agent.
12.3 General Immunity. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to
the Borrower or any Lender for any action taken or omitted to be
taken by it or them hereunder or under any other Financing
Agreements or in connection herewith or therewith except for its
or their own gross negligence or willful misconduct as determined
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by a final order, not subject to review, of a court of competent
jurisdiction.
12.4 No Responsibility for Loans, Recitals, etc.
Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (a) any statement, warranty or
representation made in connection with any Financing Agreements
or any borrowing hereunder, (b) the performance or observance of
any of the covenants or agreements of any obligor under any
Financing Agreements, (c) the satisfaction of any condition
specified in Section 4, except receipt of items required to be
delivered to the Agent and not waived at closing, or (d) the
validity, effectiveness or genuineness of any Financing
Agreements or any other instrument or writing furnished in
connection therewith.
12.5 Action on Instructions of Lenders. The Agent
shall in all cases be fully protected in acting, or in refraining
from acting, hereunder and under any other Financing Agreements
in accordance with written instructions signed by the Required
Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders and
on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any
other Financing Agreements unless it shall first be indemnified
to its satisfaction by the Lenders pro-rata against any and all
liability, cost and expense that it may incur by reason of taking
or continuing to take any such action.
12.6 Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent hereunder and under any other
Financing Agreements by or through employees, agents and
attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder
and under any other Financing Agreements.
12.7 Reliance on Documents; Counsel. The Agent shall
be entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed
or sent by the proper Person or Persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
12.8 Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective Commitments (a) for any amounts
not reimbursed by the Borrower for which the Agent is entitled to
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reimbursement by the Borrower under the Financing Agreements, (b)
for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Financing Agreements, and
(c) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind and nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in any way relating to or
arising out of the Financing Agreements or any other document
delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents; provided that no Lender
shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent as
determined by a final order, not subject to appeal, of a court of
competent jurisdiction. The obligations of the Lenders under
this subsection 12.8 shall survive payment of the Obligations and
termination of this Agreement.
12.9 Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder
and under any other Financing Agreements as any Lender and may
exercise the same as though it were not the Agent, and the term
"Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from,
lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by
this Agreement or any other Financing Agreements, with the
Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other
Person.
12.10 Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other
Financing Agreements. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement and the other Financing Agreements.
12.11 Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the
Borrower. The Agent may be removed at any time for cause by the
Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of
the Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders and
- 95 -
<PAGE>
<PAGE>
shall have accepted such appointment within thirty days after the
retiring Agent's giving notice of resignation or within thirty
days after the removal of such Agent, then the retiring Agent
shall use reasonable efforts to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. Such successor
Agent shall be a financial institution having capital and
retained earnings of at least One Hundred Fifty Million Dollars
($150,000,000). Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Financing Agreements.
After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 12 shall continue in effect
for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as the Agent hereunder and under
the other Financing Agreements.
12.12 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this
Agreement describing such Default or Event of Default and stating
that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. Subject to the provisions of subsection
12.5, the Agent shall take any action of the type specified in
this Agreement with respect to such Default or Event of Default
as shall be reasonably directed by the Required Lenders (or, if
so required by Section 13, by all Lenders); provided that unless
and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as the Agent shall determine is in the best
interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
______________________
Subject to the provisions of this Section 13, the
Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding, terminating or
modifying any provisions to the Financing Agreements or changing
in any manner the rights of the Lenders or the Borrower hereunder
or waiving any Event of Default hereunder; provided that no such
supplemental agreement shall, without the consent of each Lender
affected thereby:
(a) extend the final maturity of any Loan or Note or
reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest or fees thereon;
- 96 -
<PAGE>
<PAGE>
(b) reduce the percentage specified in the definition
of Required Lenders;
(c) reduce the amount or extend the payment date for
the mandatory payments required hereunder, or increase the amount
of the Revolving Credit Commitment of any Lender hereunder (other
than an increase in the Revolving Credit Commitment of any Lender
as a result of an assignment consummated between such Lender and
another Lender pursuant to subsection 11.1);
(d) extend the Revolving Loan Initial Term or the
Revolving Loan Renewal Term, as applicable (except as
contemplated by subsection 2.8), or permit any Letter of Credit
to have an expiry date beyond August 31, 1997;
(e) amend this Section 13;
(f) change the definition of "Current Asset Base",
"Eligible Accounts" or "Eligible Inventory";
(g) release the Parent Guaranty or the Harris Guaranty
or all or any substantial portion of the Collateral or the real
property subject to the Mortgages;
(h) permit any assignment by the Borrower of its
Obligations or its rights hereunder; or
(i) amend the definition of the term "Commitment"
without the consent of each Lender affected thereby.
No amendment, modification, termination or waiver
affecting the rights or duties of the Agent under any Financing
Agreement shall be effective without the written consent of the
Agent.
Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the
specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for the
Agent to take additional Collateral pursuant to any Financing
Agreement. No notice to or demand on the Borrower not required
by the terms hereof in any case shall entitle the Borrower to any
other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 13 shall be
binding upon each holder of the Notes at the time outstanding,
each future holder of the Notes and the Borrower.
Notwithstanding anything to the contrary contained
herein, the Agent may, at its sole discretion, release or
compromise Collateral and the proceeds thereof to the extent of
asset dispositions permitted by the terms hereof.
- 97 -
<PAGE>
<PAGE>
14. SET OFF AND SHARING OF PAYMENTS.
_______________________________
14.1 Setoff. In addition to any rights now or
hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby
authorized by the Borrower at any time or from time to time, with
reasonably prompt subsequent notice to the Borrower or to any
other Person (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any
and all (a) balances (including, without limitation, all account
balances, whether provisional or final and whether or not
collected or available) held or owing by such Lender at any of
its offices to or for the credit or account of the Borrower
(regardless of whether such balances are then due to the
Borrower) and (b) other property held or owing by such Lender to
or for the credit or the account of the Borrower, toward the
payment of the Obligations owing to such Lender, whether or not
the Obligations, or any part hereof, shall then be due.
14.2 Ratable Payments. If any Lender, whether by
setoff or otherwise, has payment made to it upon its Loans (other
than payments received pursuant to subsections 2.19 and 2.20) in
a greater proportion than its Pro Rata Share of such Loans, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of
the Notes held by such Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness
evidenced by such Notes. The Borrower agrees, to the fullest
extent permitted by law, that (x) any Lender may exercise its
right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participation in such
excess to other Lenders, and (y) any Lender so purchasing a
participation in the Loans made or other Obligations held by
other Lenders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation
as fully as if such Lender were a direct holder of Loans and
other Obligations in the amount of such participation.
- 98 -
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year first above written.
THE CROSBY GROUP, INC.
By: /s/ Mark Metz
-------------------------
Title: Vice President
SANWA BUSINESS CREDIT
CORPORATION, As Agent and
as Lender
By: /s/ Frank Plank
-------------------------
Title: First Vice President
BANK OF OKLAHOMA, N.A.
By: /s/ Jeffrey R. Dunn
-------------------------
Title: Vice President
THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS LOAN AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND THE BORROWER ACKNOWLEDGES
AND AGREES THAT (i) EACH OF THE WAIVERS SET FORTH HEREIN,
INCLUDING, WITHOUT LIMITATION, THOSE WAIVERS SET FORTH IN
SUBSECTIONS 9.5, 9.6 AND 10.8 WERE KNOWINGLY AND VOLUNTARILY
MADE, (ii) THE OBLIGATIONS OF THE LENDERS HEREUNDER, INCLUDING
THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE BORROWER IN
ACCORDANCE HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE
EXPRESSLY SUBJECT TO THE BORROWER'S COMPLIANCE IN ALL RESPECTS
WITH THE TERMS AND CONDITIONS HEREIN SET FORTH, AND (iii) NO
REPRESENTATIVE OF THE AGENT OR ANY LENDER HAS WAIVED OR MODIFIED
ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND
NO SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE
EFFECTIVE UNLESS MADE IN ACCORDANCE WITH SECTION 13.
- 99 -
LOAN AGREEMENT
AMONG
THE HARRIS WASTE MANAGEMENT GROUP, INC.
as Borrower,
THE LENDERS NAMED HEREIN
AND
SANWA BUSINESS CREDIT CORPORATION,
as Agent
Dated as of
September 30, 1994<PAGE>
<PAGE>
Table of Contents
_________________
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 General Terms . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . 26
1.3 Other Terms Defined in Illinois Uniform
Commercial Code . . . . . . . . . . . . . . . . . 26
1.4 Effective Date . . . . . . . . . . . . . . . . . . 26
1.5 References . . . . . . . . . . . . . . . . . . . . 26
2. CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 Revolving Credit Facility, Revolving Loan and
Loan Guaranties . . . . . . . . . . . . . . . . . 26
2.2 Maximum Principal Balance of Revolving Loan . . . 31
2.3 Evidence of Revolving Loan Indebtedness . . . . . 31
2.4 Term Loan . . . . . . . . . . . . . . . . . . . . 32
2.5 CAPEX Loan . . . . . . . . . . . . . . . . . . . . 32
2.6 Interest . . . . . . . . . . . . . . . . . . . . . 33
2.7 Method of Borrowing; Method of Making Interest
and Other Payments . . . . . . . . . . . . . . . 36
2.8 Term of this Agreement . . . . . . . . . . . . . . 38
2.9 Collateral Fee . . . . . . . . . . . . . . . . . . 40
2.10 Closing Fee . . . . . . . . . . . . . . . . . . . 41
2.11 Agent's Fee . . . . . . . . . . . . . . . . . . . 41
2.12 Unused Line Fee . . . . . . . . . . . . . . . . . 41
2.13 CAPEX Loan Fee . . . . . . . . . . . . . . . . . . 41
2.14 Other Fees, Costs and Expenses . . . . . . . . . . 42
2.15 Borrower's Loan Account . . . . . . . . . . . . . 42
2.16 Statements . . . . . . . . . . . . . . . . . . . . 43
2.17 Payment Dates . . . . . . . . . . . . . . . . . . 43
2.18 Risk Participation Fees . . . . . . . . . . . . . 44
2.19 Other Risk Participation Provisions . . . . . . . 44
2.20 Taxes; Changes In Law . . . . . . . . . . . . . . 46
2.21 Special Provisions Governing LIBOR Rate Loans . . 47
3. REPORTING AND ELIGIBILITY REQUIREMENTS . . . . . . . . . 49
3.1 Monthly Reports and Collateral Reports . . . . . . 49
3.2 Eligible Accounts . . . . . . . . . . . . . . . . 50
3.3 Account Warranties . . . . . . . . . . . . . . . . 51
3.4 Collection of Accounts and Payments . . . . . . . 52
3.5 Appointment of the Agent as Borrower's Attorney-
in-Fact . . . . . . . . . . . . . . . . . . . . . 53
3.6 Eligible Inventory . . . . . . . . . . . . . . . . 54
3.7 Inventory Warranties . . . . . . . . . . . . . . . 55
3.8 Safekeeping of Inventory and Inventory Covenants . 55
4. CONDITIONS TO ADVANCES . . . . . . . . . . . . . . . . . 56
4.1 Conditions to All Advances . . . . . . . . . . . . 56
4.2 Conditions to Initial Advances. . . . . . . . . . 57
5. COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . 61
5.1 Security Interest . . . . . . . . . . . . . . . . 61
5.2 Preservation of Collateral and Perfection of
Security Interests Therein . . . . . . . . . . . . 61
<PAGE>
5.3 CAPEX Loan Collateral . . . . . . . . . . . . . . 62
6. WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . 62
6.1 Existence . . . . . . . . . . . . . . . . . . . . 62
6.2 Authority . . . . . . . . . . . . . . . . . . . . 62
6.3 Binding Effect . . . . . . . . . . . . . . . . . . 62
6.4 Financial Data . . . . . . . . . . . . . . . . . . 62
6.5 Collateral . . . . . . . . . . . . . . . . . . . . 64
6.6 Solvency . . . . . . . . . . . . . . . . . . . . . 64
6.7 Places of Business . . . . . . . . . . . . . . . . 64
6.8 Other Names . . . . . . . . . . . . . . . . . . . 64
6.9 Tax Obligations . . . . . . . . . . . . . . . . . 64
6.10 Indebtedness and Liabilities . . . . . . . . . . . 64
6.11 Use of Proceeds and Margin Security . . . . . . . 65
6.12 Government Contracts . . . . . . . . . . . . . . . 65
6.13 Investments . . . . . . . . . . . . . . . . . . . 65
6.14 Litigation and Proceedings . . . . . . . . . . . . 65
6.15 Other Agreements and Deliveries . . . . . . . . . 66
6.16 Employee Controversies . . . . . . . . . . . . . . 66
6.17 Compliance with Laws and Regulations . . . . . . . 66
6.18 Patents, Trademarks and Licenses . . . . . . . . . 67
6.19 ERISA . . . . . . . . . . . . . . . . . . . . . . 67
6.20 Property . . . . . . . . . . . . . . . . . . . . . 68
6.21 Investment Company Act . . . . . . . . . . . . . . 68
6.22 Broker's Fees . . . . . . . . . . . . . . . . . . 68
6.23 Licenses and Permits . . . . . . . . . . . . . . . 69
6.24 Environmental Compliance . . . . . . . . . . . . . 69
6.25 Full Disclosure . . . . . . . . . . . . . . . . . 71
6.26 Subsidiaries . . . . . . . . . . . . . . . . . . . 71
6.27 Survival of Warranties . . . . . . . . . . . . . . 72
7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 72
7.1 Financial Statements . . . . . . . . . . . . . . . 72
7.2 Inspections and Audits . . . . . . . . . . . . . . 75
7.3 Conduct of Business; Compliance With Laws . . . . 75
7.4 Claims and Taxes . . . . . . . . . . . . . . . . . 75
7.5 Borrower's Liability Insurance . . . . . . . . . . 76
7.6 Borrower's Property and Business Interruption
Insurance; Condemnation . . . . . . . . . . . . . 76
7.7 Pension Plans . . . . . . . . . . . . . . . . . . 77
7.8 Notice of Suit or Adverse Change in Business . . . 79
8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 79
8.1 Encumbrances . . . . . . . . . . . . . . . . . . . 79
8.2 Indebtedness . . . . . . . . . . . . . . . . . . . 80
8.3 Consolidations and Acquisitions . . . . . . . . . 80
8.4 Investments . . . . . . . . . . . . . . . . . . . 80
8.5 Guaranties . . . . . . . . . . . . . . . . . . . . 81
8.6 Collateral Locations . . . . . . . . . . . . . . . 81
8.7 Disposal of Property . . . . . . . . . . . . . . . 81
8.8 Employee Loans . . . . . . . . . . . . . . . . . . 82
8.9 Restricted Payments . . . . . . . . . . . . . . . 82
8.10 Securities . . . . . . . . . . . . . . . . . . . . 83
ii <PAGE>
<PAGE>
8.11 Changes in Charter, Bylaws or Fiscal Year . . . . 83
8.12 Transactions with Affiliates . . . . . . . . . . . 83
8.13 Corporate Accounts . . . . . . . . . . . . . . . . 83
8.14 Sale and Leaseback . . . . . . . . . . . . . . . . 83
8.15 Purchase of Stock . . . . . . . . . . . . . . . . 83
8.16 Negative Pledges . . . . . . . . . . . . . . . . . 84
8.17 Aggregate Limits . . . . . . . . . . . . . . . . . 84
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER . . . . . . . 84
9.1 Obligations . . . . . . . . . . . . . . . . . . . 84
9.2 Rights and Remedies Generally . . . . . . . . . . 84
9.3 Entry Upon Premises and Access to Information . . 85
9.4 Sale or Other Disposition of Collateral by the
Agent . . . . . . . . . . . . . . . . . . . . . . 85
9.5 Waiver of Demand . . . . . . . . . . . . . . . . . 86
9.6 Waiver of Notice . . . . . . . . . . . . . . . . . 86
10. OTHER RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . . 86
10.1 Waiver . . . . . . . . . . . . . . . . . . . . . . 86
10.2 Costs and Attorneys' Fees . . . . . . . . . . . . 87
10.3 Expenditures by the Agent and the Lenders . . . . 87
10.4 Custody and Preservation of Collateral . . . . . . 87
10.5 Reliance . . . . . . . . . . . . . . . . . . . . . 88
10.6 Parties and Assignment . . . . . . . . . . . . . . 88
10.7 Applicable Law; Severability . . . . . . . . . . . 88
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND
BOND . . . . . . . . . . . . . . . . . . . . . . . 88
10.9 Marshalling . . . . . . . . . . . . . . . . . . . 89
10.10 Section Titles . . . . . . . . . . . . . . . . . . 89
10.11 Continuing Effect . . . . . . . . . . . . . . . . 89
10.12 Incorporation by Reference . . . . . . . . . . . . 89
10.13 Notices . . . . . . . . . . . . . . . . . . . . . 90
10.14 Waivers With Respect to Other Instruments . . . . 91
10.15 Retention of the Borrower's Documents . . . . . . 91
10.16 Entire Agreement . . . . . . . . . . . . . . . . . 91
10.17 Equitable Relief . . . . . . . . . . . . . . . . . 91
10.18 Counterparts . . . . . . . . . . . . . . . . . . . 92
10.19 No Fiduciary Relationship . . . . . . . . . . . . 92
10.20 Exceptions to Covenants . . . . . . . . . . . . . 92
10.21 Construction . . . . . . . . . . . . . . . . . . . 92
11. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . 92
11.1 Assignments. . . . . . . . . . . . . . . . . . . 92
11.2 Participations. . . . . . . . . . . . . . . . . . 92
12. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.1 Appointment . . . . . . . . . . . . . . . . . . . 93
12.2 Powers . . . . . . . . . . . . . . . . . . . . . . 93
12.3 General Immunity . . . . . . . . . . . . . . . . . 93
12.4 No Responsibility for Loans, Recitals, etc. . . . 93
12.5 Action on Instructions of Lenders . . . . . . . . 93
12.6 Employment of Agents and Counsel . . . . . . . . . 94
12.7 Reliance on Documents; Counsel . . . . . . . . . . 94
iii
<PAGE>
<PAGE>
12.8 Agent's Reimbursement and Indemnification . . . . 94
12.9 Rights as a Lender . . . . . . . . . . . . . . . . 94
12.10 Lender Credit Decision . . . . . . . . . . . . . . 95
12.11 Successor Agent . . . . . . . . . . . . . . . . . 95
12.12 Notice of Default . . . . . . . . . . . . . . . . 95
13. AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . 96
14. SET OFF AND SHARING OF PAYMENTS . . . . . . . . . . . . 97
14.1 Setoff . . . . . . . . . . . . . . . . . . . . . . 97
14.2 Ratable Payments . . . . . . . . . . . . . . . . . 97
EXHIBITS
________
Exhibit 1.1(a) Form of Notice of Conversion/Continuation
Exhibit 1.1(b) Form of Solvency Certificate
Exhibit 2.3 Form of Revolving Loan Note
Exhibit 2.4 Form of Term Loan Note
Exhibit 2.5 Form of Capex Loan Note
Exhibit 3.1 Form of Monthly Report Certificate
Exhibit 3.6 Inventory Locations
Exhibit 6.1 Foreign Corporation Jurisdictions
Exhibit 6.4-1 Financial Statements
Exhibit 6.4-2 Initial Projections
Exhibit 6.8 Trade Names
Exhibit 6.11 Use of Proceeds
Exhibit 6.12 Government Contracts
Exhibit 6.14 Judgments
Exhibit 6.15 Other Agreements
Exhibit 6.19 Plans
Exhibit 6.22 Broker's Fees
Exhibit 6.24 Environmental Matters
Exhibit 6.26 List of Subsidiaries
Exhibit 7.5 Liability Insurance Policies
Exhibit 8.1 Liens
Exhibit 8.4 Existing Investments
iv<PAGE>
<PAGE>
SCHEDULES
_________
Schedule 1 Commitments of Each Lender
v
<PAGE>
<PAGE>
LOAN AGREEMENT
______________
This LOAN AGREEMENT, dated as of this 30th day of
September, 1994, is entered into by and among THE HARRIS WASTE
MANAGEMENT GROUP, INC., the LENDERS and SANWA BUSINESS CREDIT
CORPORATION, as Agent for the Lenders.
W I T N E S S E T H:
___________________
WHEREAS, in connection with the repayment of certain
pre-existing indebtedness of the Borrower and the continued
working capital needs of the Borrower subsequent to such
repayment, the Borrower desires to borrow up to Seventeen Million
Five Hundred Dollars ($17,000,500) from the Lenders, and the
Lenders are willing to make certain loans to the Borrower of up
to such amount, upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and
conditions contained herein, and of any loans or extensions of
credit heretofore, now or hereafter made to or for the benefit of
the Borrower by the Lenders, the parties hereto hereby agree as
follows:
1. DEFINITIONS.
___________
1.1 General Terms. When used herein, the following
terms shall have the following meanings:
"Account Debtor" shall mean the party who is
obligated on or under an Account.
"Accounts" shall mean all of the Borrower's
presently existing and hereafter arising or acquired accounts,
accounts receivable, margin accounts, futures positions, book
debts, instruments, documents, contracts, notes, drafts,
acceptances, chattel paper, and other forms of obligations now or
hereafter owned or held by or payable to the Borrower relating
in any way to Inventory or arising from the sale of Inventory or
the rendering of services by the Borrower or howsoever otherwise
arising, including the right to payment of any interest or
finance charges with respect thereto, together with all
merchandise represented by any of the Accounts; all such
merchandise that may be reclaimed or repossessed or returned to
the Borrower; all of the Borrower's rights as an unpaid vendor,
including stoppage in transit, reclamation, replevin, and
sequestration; all pledged assets and all letters of credit,
guaranty claims, liens, and security interests held by or granted
to the Borrower to secure payment of any Accounts; all proceeds
and products of all of the foregoing described properties and
interests in properties; and all proceeds of insurance with
respect thereto, including the proceeds of any applicable
casualty or credit insurance or fidelity bond, whether payable in
cash or in kind; and all customer lists, ledgers, books of
account, records, computer programs, computer disks or tape files
<PAGE>
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(including, without limitation, all microfilm), computer
printouts, computer runs, and other computer prepared information
relating to any of the foregoing.
"Accounts Trial Balance" shall have the meaning
ascribed thereto in subsection 3.1.
"Acquisition" shall mean any transaction, or any
series of related transactions, consummated after the date of
this Agreement, by which the Borrower or any Subsidiary (i)
acquires, directly or indirectly, any business or all or
substantially all of the assets of the business of any Person,
whether through purchase of assets, merger or otherwise.
"Administrative Costs" shall mean operating costs
and expenses of the Parent for general administrative costs,
salaries, audit and director fees, insurance costs, legal fees,
preferred and common stock dividends, and settlement of the Class
Action Litigation.
"Affiliate" shall mean any Person (a) that
directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with the
Borrower, including, without limitation, the officers and
directors of the Borrower, (b) that directly or beneficially owns
or holds ten percent (10%) or more of any equity interest in the
Borrower, or (c) ten percent (10%) or more of whose voting stock
(or in the case of a Person which is not a corporation, ten
percent (10%) or more of any equity interest) is owned directly
or beneficially or held by the Borrower. Affiliate shall not be
deemed to include the Agent or any Lender. As used herein, the
term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to
direct the management or policies of a Person, whether through
ownership of securities, by contract or otherwise.
"Agent" shall mean Sanwa Business Credit
Corporation, in its capacity as agent for the Lenders and not in
its individual capacity as a Lender, and any successor in such
capacity appointed pursuant to subsection 12.11.
"Agent's Fee" shall have the meaning ascribed
thereto in subsection 2.11.
"Agreement" shall mean this Loan Agreement, as the
same may hereafter be amended, modified or supplemented from time
to time.
"Appraisal (Equipment)" shall mean that certain
equipment valuation report dated as of June 28, 1994 and prepared
by MB Evaluation, a copy of which has been provided to the
Lenders.
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"Assets" shall mean the Property of the Borrower
which are or should be reflected on a balance sheet of the
Borrower in accordance with Generally Accepted Accounting
Principles, except that investments in or monies due from any
Affiliate shall be excluded therefrom.
"Authorized Officer" shall mean the chief
executive officer or chief financial officer of the Borrower or
the chief executive officer, chief financial officer or chief
operating officer of the Parent.
"Bankruptcy Code" shall mean Title 11, United
States Code, as amended from time to time.
"Base Rate" shall mean (i) with respect to the
Revolving Loan, the fluctuating interest rate equal to one-half
of one percent (1/2%) per annum in excess of the Prime Rate from
time to time in effect and (ii) with respect to the Term Loan and
the CAPEX Loan, the fluctuating interest rate equal to one
percent (1%) per annum in excess of the Prime Rate from time to
time in effect.
"Base Rate Loans" shall mean Loans bearing
interest at the Base Rate.
"Blocked Accounts" shall have the meaning ascribed
thereto in subsection 3.4.
"Blocked Account Agreements" shall have the
meaning ascribed thereto in subsection 3.4.
"Borrower" shall mean The Harris Waste Management
Group, Inc., a Delaware corporation, and its successors and
assigns.
"Borrower Pledge Agreement" shall mean that
certain Pledge Agreement, dated as of the Closing Date, duly
executed and delivered by the Borrower in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Borrower Security Agreement" shall mean that
certain Security Agreement, dated as of the Closing Date, duly
executed and delivered by the Borrower in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Borrowing Notice" shall have the meaning ascribed
thereto in subsection 2.6(e).
"Business Day" shall mean (i) for all purposes
other than as specified in clause (ii), any day other than a
Saturday, Sunday or other day on which banks in Chicago, Illinois
3
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<PAGE>
are authorized or required to be closed and (ii) with respect to
all notices, determinations, borrowings, rate selections and
payments in connection with LIBOR Rate Loans, any day that is a
Business Day described in clause (i) and that is also a day on
which dealing in U.S. dollar deposits are carried on in the
applicable interbank LIBOR market.
"CAPEX Loan" shall have the meaning ascribed
thereto in subsection 2.5.
"CAPEX Notes" shall have the meaning ascribed
thereto in subsection 2.5.
"Capital Expenditures" shall mean all expenditures
for any fixed assets or improvements, or for replacements,
substitutions or additions thereto, which have a useful life of
more than one (1) year, and shall include the principal portion
of capitalized lease payments.
"Cash Equivalents" shall mean (i) bank
certificates of deposit, bankers' acceptances or time deposits
(but only with banks (x) which do not have set-off rights against
the foregoing, other than set-offs for nominal service charges
and similar fees incurred in the ordinary course, and (y) which
have combined capital and surplus in excess of Two Hundred Fifty
Million Dollars ($250,000,000), (ii) commercial paper maturing
within one (1) year and rated at least A-1 or the equivalent
thereof by Standard & Poors Corporation, or P-1 or the equivalent
thereof by Moody's Investors Service, Inc., and (iii) obligations
maturing within one (1) year issued or directly and fully
guaranteed by the United States Government or any agency thereof.
"Class Action Litigation" shall mean the civil
action pending in the United States District Court for the
District of Colorado entitled Saul Jones, on behalf of himself
and all others similarly situated, v. Amdura Corporation, no. 91-
K-1521 (consolidated with 91-K-1728).
"Closing Date" shall mean the date of this
Agreement.
"Closing Fee" shall have the meaning ascribed
thereto in subsection 2.10.
"Code" shall have the meaning ascribed thereto in
subsection 1.3.
"Collateral" shall mean all property and interests
in property now owned or hereafter acquired by the Borrower in or
upon which a Lien or mortgage is granted to the Agent, for the
benefit of the Lenders, by the Borrower, whether under this
Agreement or the other Financing Agreements or under any other
4
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documents, instruments or writings executed by the Borrower and
delivered to the Agent.
"Collateral Monitoring Fee" shall have the meaning
ascribed thereto in subsection 2.9.
"Collateral Report" shall have the meaning
ascribed thereto in subsection 3.1.
"Collecting Banks" shall have the meaning ascribed
thereto in subsection 3.4.
"Commitment" or "Commitments" shall mean the
commitment or commitments of a Lender to make Loans as set forth
in Schedule 1.
"Consolidated Cash Flow Coverage" shall mean, for
any applicable fiscal period, determined on a consolidated basis
for the Parent and its Subsidiaries, Consolidated EBITDA divided
by the sum of (i) interest payments made or accrued (without
duplication) with respect to any outstanding Indebtedness, (ii)
scheduled payments on Funded Debt, (iii) taxes paid, (iv) cash
dividends paid on capital stock, and (v) Capital Expenditures.
"Consolidated EBITDA" shall mean, for any
applicable fiscal period, determined on a consolidated basis for
the Parent and its Subsidiaries, (i) Net Income plus (ii) to the
extent deducted in determining Net Income, interest expense,
taxes, depreciation, amortization and other similar non-cash
charges and extraordinary losses, minus (iii) to the extent added
in determining Net Income, extraordinary gains.
"Consolidated Net Worth" shall mean, as of the
date of determination thereof, the aggregate amount of total
shareholders' equity of the Parent and the Subsidiaries on a
consolidated basis as determined in accordance with Generally
Accepted Accounting Principles.
"Consolidated Tangible Net Worth" shall mean the
aggregate amount of total stockholders' equity (excluding
adjustments directly to stockholders' equity as required by the
Statement of Financial Accounting Standard No. 87, "Employers'
Account for Pensions") of the Parent and its Subsidiaries, less
prepaid expenses and the net book value of all assets of the
Parent and its Subsidiaries which would be treated as intangibles
under Generally Accepted Accounting Principals including, without
limitation, unamortized deferred charges, franchise rights,
unamortized debt discounts, non-compete agreements, goodwill,
patents, trademarks, tradenames, copyrights, licenses, premiums
on purchased assets, treasury stock and organization or
developmental expenses.
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"Conversion/Continuation Notice" shall have the
meaning ascribed thereto in subsection 2.6(f).
"Crosby" shall mean The Crosby Group, Inc., a
Delaware corporation.
"Crosby CAPEX Loan" shall mean the capital
expenditures line of Crosby under the Crosby Loan Agreement.
"Crosby Guaranty" shall mean that certain
Guaranty, dated as of the date hereof, made by Crosby in favor of
the Agent, for the benefit of the Lenders, with respect to the
Obligations hereunder.
"Crosby Loan Agreement" shall mean that certain
Loan Agreement, dated as of the date hereof, by and among Crosby,
the Lenders and SBCC, as agent, as the same may hereafter be
amended, modified or supplemented from time to time.
"Crosby Term Loan" shall mean the term loan of
Crosby under the Crosby Loan Agreement.
"Crosby Total Revolving Loan Facility" shall mean
the revolving loan facility of Crosby under the Crosby Loan
Agreement.
"Current Asset Base" shall have the meaning
ascribed thereto in subsection 2.1.
"Default" shall mean an event which through the
passage of time or the service of notice or both would mature
into an Event of Default.
"Default Rate" shall mean an interest rate per
annum equal to the sum of (a) the Base Rate or the LIBOR Rate
from time to time in effect, as applicable, plus (b) two percent
(2%). With respect to Base Rate Loans, such interest rate shall
be a fluctuating rate and each change in such interest rate shall
take effect simultaneously with the corresponding change in the
Base Rate.
"Depository Account" shall have the meaning
ascribed thereto in subsection 3.4.
"Eligible Accounts" shall have the meaning
ascribed thereto in subsection 3.2.
"Eligible Inventory" shall have the meaning
ascribed thereto in subsection 3.6.
"Environmental Laws" shall mean and includes the
following as now in effect or hereafter amended: the
Comprehensive Environmental Response Compensation and Liability
6<PAGE>
<PAGE>
Act, ("CERCLA"), 42 U.S.C. Section 9601 et. seq.; the Solid Waste
Disposal Act, as amended by the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et. seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601, et. seq.; the
Clean Air Act, 42 U.S.C. Section 7401 et. seq.; the Federal Water
Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251
et. seq.; the Emergency Planning and Community Right-to-Know Act,
42 U.S.C. Section 11001 et. seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et. seq.; the Atomic
Energy Act, 42 U.S.C. Section 2011 et. seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et. seq. and the state law
equivalents; any so-called "Superfund" or "Superlien" law; and
any code, rule, regulation, order, decree or requirement under
international, federal, state, regional, provincial or local law
(including, without limitation, administrative orders and consent
decrees) in effect and as amended regulating, relating to or
imposing liability or standards of conduct concerning public
health and safety, protection of the environment, or any
pollutant or contaminant or hazardous, toxic or dangerous
substance, waste, chemical or material, as now or any time
hereafter may be existing.
"Environmental Matters" shall have the meaning
ascribed thereto in subsection 6.24.
"Equipment" shall mean all of the Borrower's
machinery and equipment, including, without limitation,
processing equipment, conveyors, machine tools, data processing
and computer equipment with software and peripheral equipment
(other than software constituting part of the Accounts), and all
engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks,
ships, vessels, airplanes, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and
nature, and fixtures not forming a part of real estate, all
whether now owned or hereafter acquired, and wherever situated,
together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and
insurance proceeds with respect thereto, and including, without
limitation, the items of equipment described in the Appraisal
(Equipment), which description is incorporated herein by
reference.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and all rules
and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Person, trade or
business that is, or was at any time during the previous six (6)
7<PAGE>
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years, along with the Borrower, treated as a single employer for
any purpose under Section 414 of the IRC.
"Event of Default" shall mean the occurrence or
existence of any one or more of the following events:
(a) the Borrower fails to pay interest on any
Note within three (3) days after the same becomes due
or fails to pay any other Obligations hereunder when
the Obligations are due or are declared due;
(b) the Borrower fails or neglects to perform,
keep or observe any of the covenants, conditions or
agreements contained in any of the subsections of this
Agreement or in any of the other Financing Agreements
for a period of thirty (30) days after the earlier of
(i) the Borrower's receipt of notice from the Agent
(other than occurrences referred to or embodied in
other provisions of this definition constituting
immediate Events of Default) or (ii) actual knowledge
of such breach by the Borrower;
(c) any warranty or representation now or
hereafter made by the Borrower or the Parent in
connection with this Agreement or any of the other
Financing Agreements is untrue or incorrect in any
material respect, or any schedule, certificate,
statement, report, financial data, notice or writing
furnished at any time by the Borrower or the Parent to
the Agent or any Lender is untrue or incorrect in any
material respect, as of the date on which the warranty,
representation or the facts set forth therein are
stated, certified or deemed made;
(d) any Lien, levy or assessment is filed or
recorded with respect to or otherwise imposed upon all
or any part of the Collateral or the assets of the
Borrower, any Subsidiary or the Parent by the United
States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other
governmental agency and that either (i) is in excess of
Five Hundred Thousand Dollars ($500,000), or (ii) is
superior to the Liens granted to the Lender;
(e) all or any part of the Collateral or the
assets of the Borrower, any Subsidiary or the Parent
with a value in excess of Five Hundred Thousand Dollars
($500,000) in the aggregate are attached, seized,
subjected to a writ or distress warrant, or levied
upon, or come within the possession or control of any
judgment creditor and on or before the twentieth (20th)
day thereafter such Collateral or assets are not
returned to the Borrower, any Subsidiary or the Parent,
8<PAGE>
<PAGE>
as applicable, or such writ, distress warrant or levy is not
dismissed, stayed or lifted;
(f) the Borrower or any Subsidiary or the Parent
makes an assignment for the benefit of creditors;
convenes a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts; commences any
bankruptcy, reorganization or insolvency proceeding or
other proceeding under any federal, state or other law
for relief of debtors; or the Borrower or any
Subsidiary or the Parent authorizes or consents to the
taking of any of the foregoing actions;
(g) the Borrower or any Subsidiary or the Parent
fails to obtain the dismissal, within sixty (60) days
after the commencement thereof, of any bankruptcy,
reorganization or insolvency proceeding, or other
proceeding under any law for the relief of debtors
instituted against it; fails actively to oppose any
such proceeding; or in any such proceeding, defaults or
files an answer admitting the material allegations upon
which the proceeding was based or states in any filing
in such proceeding its willingness to have an order for
relief entered or its desire to seek liquidation,
reorganization or adjustment of any of its debts;
(h) any receiver, trustee, examiner, liquidator,
custodian or similar official is appointed to take
possession of all or any substantial portion of the
Property of the Borrower or any Subsidiary or the
Parent;
(i) the Borrower or any Subsidiary or the Parent
admits in writing that it is not Solvent or fails to
pay all or any material portion (measured in numbers of
debts or dollar amounts) of its debts as they become
due or admits in writing its present or prospective
inability to pay its debts as they become due;
(j) the Borrower or any Subsidiary or the Parent
is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory
agency from conducting all or any material part of its
business representing ten percent (10%) or more of the
Borrower's business (based upon the Borrower's gross
revenues for the most recent twelve months ending on
the date of such occurrence);
(k) any default or breach under any agreement(s)
evidencing Indebtedness of the Borrower or any
Subsidiary or the Parent in an aggregate amount in
excess of Five Hundred Thousand Dollars ($500,000)
shall occur and shall continue after any applicable
9<PAGE>
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grace period specified in any such document if the effect of such
default or breach is to accelerate, or to permit the acceleration
of, the maturity of such Indebtedness, whether or not such
default or breach shall be waived by the holders or trustees (if
any) for such Indebtedness, or any such Indebtedness shall be
declared to be due and payable, or be required to be prepaid
(other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof;
(l) a breach by the Borrower or any Subsidiary or
the Parent occurs under any material
agreement, document or instrument (other than an
agreement, document or instrument evidencing
Indebtedness), whether heretofore, now or hereafter
existing between the Borrower or any Subsidiary or the
Parent and any other Person, and such breach continues
for more than thirty (30) days after such breach first
occurs; provided that such grace period shall not
apply, and such breach shall constitute an Event of
Default, if such breach may not, in the determination
of the Required Lenders, be cured by the Borrower, such
Subsidiary or the Parent, as applicable, during such
thirty (30) day grace period, and the failure to have
cured such breach could have a Material Adverse Effect;
(m) the Parent ceases to own, legally and
beneficially, 100% of the issued and outstanding
capital stock of the Borrower for any reason;
(n) entry of a judgment or judgments in an
aggregate amount in excess of Five Hundred Thousand
Dollars ($500,000) against the Borrower or any
Subsidiary or the Parent which are not stayed, bonded,
vacated, paid or discharged within thirty (30) days
after entry;
(o) any Termination Event which the Required
Lenders, in good faith, determine is reasonably likely
to have a Material Adverse Effect and which is not
cured within thirty (30) days after the occurrence of
such Termination Event;
(p) the Borrower fails to perform, keep or
observe any of the covenants contained in clause (vii)
of subsection 7.1, in subsections 3.4, 7.5, 7.6, or in
Section 8;
(q) the Agent does not have or ceases to have a
legal, valid and perfected first priority Lien on the
Collateral (subject to Permitted Liens), in each case,
for any reason other than the failure of the Agent to
take any action within its total control;
10<PAGE>
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(r) any of the Financing Agreements shall cease
for any reason to be in full force and effect or is
declared null and void or the Borrower or any other
Person (other than the Lender) shall disavow its
respective obligations thereunder or shall deny that it
has any further obligations thereunder or shall contest
the validity as enforceability of any thereof or gives
notice to such effect;
(s) the occurrence of any "Default" or "Event of
Default" as defined in the Crosby Loan Agreement or any
default or breach under the Parent Guaranty;
(t) as of the end of any month during the
following calendar years, the Consolidated Tangible Net
Worth shall be less than the following:
Consolidated Tangible
Calendar Year Net Worth
1994 $30,000,000
1995 $32,000,000
1996 $34,000,000
1997 $36,000,000
1998 $38,000,000
1999 $40,000,000
2000 $42,000,000
2001 and each $44,000,000
year thereafter
(u) as of the end of any fiscal quarter, the
Leverage Ratio shall be greater than fifty percent
(50%); or
(v) (i) as of the end of any month during
calendar year 1994 for the twelve-month period then
ended, the Consolidated Cash Flow Coverage shall be
less than 1.1 or (ii) as of the end of any month
occurring after calendar year 1994 for the twelve-month
period then ended, the Consolidated Cash Flow Coverage
shall be less than 1.2.
The occurrence or existence of any of the
foregoing events shall constitute an immediate Event of Default
unless notice by the Agent or a cure period is specifically
required by the description of such event before such event
matures into an Event of Default.
"Facility" shall mean each of the Borrower's
facilities located, respectively, at 315 West 12th Avenue,
Cordele, Georgia 31015; Clover Reach Office Park, Building 1, 200
Clover Reach Drive, Peachtree City, Georgia 30269; 14000 Woodway
Drive, Waco, Texas 76712; Jekyll Road, Baxley, Georgia 31513; and
11<PAGE>
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2519 North Front Street, Woodburn, Oregon 97071, and any other
facility established by the Borrower hereafter in accordance with
the terms of this Agreement.
"Federal Funds Rate" shall mean on any given day
the weighted average of the rate on overnight Federal funds
transactions with members of the Federal Reserve System only
arranged by Federal Funds brokers as published as of such day by
the Federal Reserve Bank of New York, or if not so published, the
rate then used by first class banks in extending overnight loans
to other first class banks.
"Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System.
"FINAL ORDER" SHALL MEAN (A) THE ORDER OR ORDERS
ENTERED ON THE DOCKET OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLORADO (THE "DISTRICT COURT") OR ANY OTHER COURT
EXERCISING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES
WHICH ORDER MODIFIES THE ORDER AND JUDGMENT (THE "DISTRICT
ORDER") ENTERED BY THE DISTRICT COURT ON AUGUST 3, 1994 REVERSING
THE BANKRUPTCY COURT ORDER ENTERED ON AUGUST 22, 1991 CONFIRMING
THE PLAN OF REORGANIZATION (THE "CONFIRMATION ORDER") TO THE
EFFECT THAT THE DECRETAL PARAGRAPH OF THE DISTRICT ORDER
REVERSING THE CONFIRMATION ORDER SHALL BE MODIFIED IN ITS
ENTIRETY TO ORDER THAT THE BANKRUPTCY CLAIMS RELATED TO THE CLASS
ACTION LITIGATION WERE NOT DISCHARGED BY THE CONFIRMATION ORDER,
AND (B) A STIPULATION OR SETTLEMENT ORDER THAT (I) DISMISSES THE
CLASS ACTION LITIGATION, AND (II) WITHDRAWS THE CLASS PROOF OF
CLAIM IN THE BANKRUPTCY CASES WITH RESPECT TO THE CLASS ACTIO
NLITIGATIO NAND, IN EITHER CASE, AS TO WHICH THE TIME TO APPEAL,
PETITION FOR CERTIORARI OR SEEK REHEARING HAS EXPIRED AND NO
APPEAL OR PETITION FOR CERTIORARI OR REHERING HAS EXPIRED AND NO
APPEAL OR PETITION FOR CERTIORARI OR REHEARING HAS BEEN TIMELY
FILED OR REQUESTED OR IS STILL PENDING, OR AS TO WHICH ANY MOTION
FOR APPEAL, PETITION FOR CERTIORARI OR REHEARING THAT HAS BEEN
FILED OR REQUESTED HAS BEEN RESOLVED BY THE HIGHEST COURT TO
WHICH THE ORDER WAS TIMELY APPEALED OR FROM WHICH CERTIORARI OR
REHEARING WAS SOUGHT.
"Financial Statements" shall have the meaning
ascribed thereto in subsection 6.4(a).
"Financing Agreements" shall mean, collectively,
this Agreement, the Revolving Notes, the Term Notes, the CAPEX
Notes, the Borrower Pledge Agreement, the Borrower Security
Agreement, the Crosby Guaranty, the Intellectual Property
Security Agreement, the Mortgages, the Parent Guaranty, the
Parent Pledge Agreement, the Parent Security Agreement and all
other agreements, instruments and documents, including, without
limitation, security agreements, loan agreements, notes,
guaranties, mortgages, deeds of trust, agreements, documents,
instruments, pledges, powers of attorney, consents, assignments,
12<PAGE>
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contracts, notices, leases and all other written matter whether
heretofore, now, or hereafter executed by or on behalf of the
Borrower or any Guarantor and delivered to the Agent or any
Lender in accordance with this Agreement, together with all
agreements and documents between the Borrower or any Guarantor
and the Agent or any Lender referred to therein or contemplated
thereby, as the same may hereafter be amended, modified or
supplemented.
"Fiscal Year" shall mean the fiscal year of the
Borrower ending on December 31 each year.
"Fixed Charges" shall mean, for any fiscal period,
the Borrower's scheduled principal payments on its Indebtedness
plus Capital Expenditures.
"Fixtures" shall mean all "fixtures" as such term
is defined in the Code, now owned or hereafter acquired by the
Borrower.
"Funded Debt" shall mean, for any applicable
fiscal period, determined on a consolidated basis for the Parent
and its Subsidiaries, all Indebtedness which by the terms of the
agreement governing or instrument evidencing such Indebtedness
matures more than one year from or is directly or indirectly
renewable or extendible at its option under a revolving credit or
similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of
creation thereof, including in each instance current maturities
of long-term debt (and the current portion of long-term debt in
the last year of its term), revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and shall
also include, without limitation, Indebtedness arising under or
in connection with any interest rate swap agreement or
arrangements, the Revolving Credit Loan, the Term Loan and the
CAPEX Loan.
"Funding Date" shall mean the date of each
funding, conversion or continuation of a Loan or issuance of a
Letter of Credit or a Risk Participation therefor, which date
shall be a Business Day.
"Generally Accepted Accounting Principles or
"GAAP"" shall mean, as of the date of any determination with
respect thereto, generally accepted accounting principles as used
by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants, consistently applied
and maintained throughout the periods indicated.
"General Intangibles" shall mean all of the
Borrower's presently owned or hereafter acquired general
intangibles, including, without limitation, goodwill, choses in
action, causes of action, franchises, methods, sales literature,
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drawings, specifications, descriptions, name plates, catalogs,
dealer contracts, supplier contracts, distributor agreements,
customer lists, contract rights, confidential information,
consulting agreements, employment agreements, engineering
contracts, leasehold interests in real and personal property,
insurance policies (including business interruption insurance),
licenses, permits, and such other assets which uniquely reflect
the goodwill of the business of the Borrower; deposit accounts,
letters of credit, and General Intangibles relating to other
items of Collateral, including, without limitation, rights to
refunds or indemnification; reversionary or other rights of the
Borrower to excess Plan assets upon termination or amendment
thereof; and proceeds of all of the foregoing, including without
limitation, insurance proceeds, including proceeds of business
interruption insurance, income tax refunds, and claims for tax or
other refunds against any city, county, state, or federal
government, or any agency or authority or other subdivision
thereof.
"Government Acts" shall have the meaning ascribed
thereto in subsection 2.19(b).
"Guarantor" shall mean each of the Parent and
Crosby.
"Guaranty" of a Person shall mean any agreement by
which such Person guarantees, endorses or otherwise in any way
becomes or is responsible for any obligations of any other
Person, whether directly or indirectly by agreement to purchase
the indebtedness of any other Person or through the purchase of
goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose
of paying or discharging any indebtedness or obligation of such
other Person or otherwise assures any creditor of such other
Person against loss.
"Harris Guaranty" shall mean the Guaranty, dated
as of the date hereof, duly executed and delivered by the
Borrower in favor of the Agent and Lenders with respect to
certain indebtedness and other obligations of Crosby owing to
such Persons.
"Hazardous Materials" shall mean and include the
following: hazardous substances; hazardous wastes;
polychlorinated biphenyls or any asbestos containing materials in
any form or condition; radon; any other radioactive materials
including any source, special nuclear or by-product material;
petroleum, crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute); and any
other pollutant or contaminant or hazardous, toxic or dangerous
14<PAGE>
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chemicals, materials or substances, as all such terms are used in
their broadest sense and defined by Environmental Laws.
"Indebtedness" of a Person shall mean at a
particular time (i) indebtedness for borrowed money or for the
deferred purchase price of property or services (other than
current accounts payable arising in the ordinary course of
business on terms customary in the trade) in respect of which the
Person is liable, contingently or otherwise, as obligor or
otherwise or any commitment by which the Person assures a
creditor against loss, including contingent reimbursement
obligations with respect to letters of credit, (ii) indebtedness
guaranteed in any manner by the Person, including guaranties in
the form of an agreement to repurchase or reimburse; provided
that the amount of indebtedness represented by any guaranty of
limited recourse shall be the lesser of the amount of
indebtedness so guaranteed or the value of the asset to which the
recourse of such indebtedness is limited to, (iii) obligations
under leases which shall have been or should be, in accordance
with Generally Accepted Accounting Principles, recorded as
capital leases in respect of which obligations the Person is
liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations the Person assures
a creditor against loss, and (iv) all accounts payable of the
Person, which are not being contested in good faith and which are
more than ninety (90) days past due. Unless otherwise expressly
provided or the context requires otherwise, all references to
"Indebtedness" shall mean Indebtedness of the Borrower.
"Intellectual Property" shall mean all of the
Borrower's present and future designs, patents, patent rights and
applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights,
advertising matter and all applications and registrations
therefor, software or computer programs, license rights, trade
secrets, methods, processes, knowhow, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect
to any research and development, whether now owned or hereafter
acquired by the Borrower, and proceeds of all of the foregoing,
including, without limitation, proceeds of insurance policies
thereon.
"Intellectual Property Security Agreement" shall
mean that certain Continuing Security Interest and Conditional
Assignment of Patents, Trademarks, Copyrights and Licenses, dated
as of the Closing Date, duly executed and delivered by the
Borrower in favor of the Agent, for the benefit of the Lenders,
with respect to Intellectual Property, as the same may hereafter
be amended, modified or supplemented from time to time.
"Interest Period" shall mean. with respect to a
LIBOR Rate Loan, a period of one, two or three months, as
available, commencing on a Business Day, selected by Borrower
15<PAGE>
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pursuant to subsection 2.6. Such Interest Period shall end on
the day in the relevant succeeding calendar month which
corresponds numerically to the beginning day of such Interest
Period; provided that if there is no such numerically
corresponding day in such next, second or third succeeding month,
such Interest Period shall end on the last Business Day of such
next, second or third succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day;
provided that if such next succeeding Business Day falls in a new
month, such Interest Period shall end on the immediately
preceding Business Day. In the case of immediately succeeding
Interest Periods, each successive Interest Period shall commence
on the day on which the immediately preceding Interest Period
expires. Notwithstanding any of the foregoing, no Interest
Period shall extend beyond the Termination Date.
"Inventory" shall mean all of the inventory of the
Borrower of every kind and description, now or at any time
hereafter owned by or in the custody or possession, actual or
constructive, of the Borrower, wherever located, including,
without limitation, all merchandise, raw materials, parts,
supplies, work-in-process and finished goods intended for sale,
together with all the containers, packing, packaging, shipping
and similar materials related thereto, and including such
inventory as is temporarily out of the Borrower's custody or
possession, including inventory on the premises of other Persons
and items in transit, and including any returns and repossessions
upon any accounts, documents, instruments or chattel paper
relating to or arising from the sale of inventory, and all
substitutions and replacements therefor, and all additions and
accessions thereto, and all ledgers, books of account, records,
computer printouts, computer runs, microfilm, microfiche and
other computer-prepared information relating to any of the
foregoing, and any and all proceeds of any of the foregoing,
including, without limitation, proceeds of insurance policies
thereon.
"Investment" of a Person shall mean any loan,
advance, extension of credit (other than accounts receivable
arising in the ordinary course of business on terms customary in
the trade), deposit account or contribution of capital by such
Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, notes,
debentures or other securities of any other Person made by such
Person.
"IRC" shall mean the Internal Revenue Code of
1986, as amended from time to time, and all regulations
promulgated thereunder.
"Issuing Bank" shall mean any bank or financial
institution which is approved by the Borrower and the Required
16<PAGE>
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Lenders and which issues Letters of Credit for the account of the
Borrower pursuant to subsection 2.1.
"Lenders" shall mean the financial institutions
signatory hereto and, subject to the terms and conditions hereof,
their respective successors and assigns.
"Letter of Credit" shall mean a standby letter of
credit or bankers acceptance issued by an Issuing Bank at the
request and for the account of the Borrower and for which the
Lenders incur Risk Participations.
"Leverage Ratio" shall mean, for any applicable
fiscal period, the ratio (expressed as a percentage) of (i)
Funded Debt to (ii) the sum of (a) Consolidated Net Worth and (b)
Funded Debt.
"Liabilities" shall mean liabilities of the
Borrower which are or should be reflected on a balance sheet of
the Borrower in accordance with Generally Accepted Accounting
Principles, and shall include Indebtedness.
"LIBOR Rate" shall mean, for each Interest Period,
a rate of interest equal to:
(a) the rate of interest determined by the Agent
at which deposits in U.S. Dollars for the relevant
Interest Period are offered based on information
presented on the Telerate Screen as of 11:00 a.m.
(London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the
LIBOR Rate Loan and having a maturity approximately
equal to such Interest Period; provided that if at
least two such offered rates appear on the Telerate
Screen in respect of such Interest Period, the
arithmetic mean of all such rates (as determined by the
Agent) will be the rate used; provided further, that if
Telerate ceases to provide LIBOR quotations, such rate
shall be the average rate of interest determined by the
Agent at which deposits in U.S. Dollars are offered for
the relevant Interest Period by The Sanwa Bank, Limited
(or its successor) to banks with combined capital and
surplus in excess of Five Hundred Million Dollars
($500,000,000) in the London interbank market as of
11:00 a.m. (London time) on the applicable LIBOR Rate
Determination Date in the approximate amount of the
LIBOR Rate Loan and having a maturity approximately
equal to such Interest Period, divided by
(b) one minus the rate (expressed as a decimal)
of reserve requirements in effect on the LIBOR Rate
Determination Date (including, without limitation, all
basic, supplemental, marginal and emergency reserves
17<PAGE>
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under any regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having
jurisdiction with respect thereto, as now and from time to time
in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D) which are required to
be maintained by a member bank of the Federal Reserve System;
(such rate to be adjusted to the nearest one
sixteenth of one percent (1/16 of 1%) or, if there is no nearest
one sixteenth of one percent (1/16 of 1%), to the next higher one
sixteenth of one percent (1/16 of 1%)), plus, in the case of the
Term Loan and the CAPEX Loan, 2.5% per annum, and in the case of
the Revolving Loan, 2.0% per annum, in the absence of an Event of
Default).
"LIBOR Rate Determination Date" shall mean each
date for calculating the LIBOR Rate for purposes of determining
the interest rate applicable to any LIBOR Rate Loan made pursuant
to subsection 2.6. The LIBOR Rate Determination Date shall be
the second Business Day prior to the first day of the related
Interest Period for a LIBOR Rate Loan.
"LIBOR Rate Loans" shall mean Loans bearing
interest at the LIBOR Rate.
"Lien" shall mean, with respect to the Property of
any Person, any statutory or contractual lien, security interest,
mortgage, pledge, claim, encumbrance, charge, hypothecation,
assignment, deposit arrangement, filing of a financing statement,
encumbrance or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever,
whether voluntary or involuntary (including, without limitation,
the interest of a vendor or lessor under any conditional sale,
capitalized lease or other title retention agreement), in, of or
on any of the Property of such Person in favor of any other
Person.
"Litigation" shall have the meaning ascribed
thereto in subsection 6.14.
"Loan Account" shall have the meaning ascribed
thereto in subsection 2.15.
"Loan Year" shall mean the period of twelve (12)
consecutive months commencing on the date hereof and each
succeeding period of twelve (12) consecutive months commencing on
each anniversary of the date hereof during the Revolving Loan
Initial Term and any Revolving Loan Renewal Term.
"Loans" shall mean, collectively, the Revolving
Loan, the Term Loan and the CAPEX Loan.
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"Margin Stock" shall mean margin stock within the
meaning of Regulation U.
"Material Adverse Effect" shall mean, as
determined by the Required Lenders in their reasonable business
judgment, a material adverse effect upon (i) the Agent's Lien
priority in, or the value of, the Collateral, or (ii) the
business, properties, operations or condition (financial or
otherwise) of the Borrower or any of its Subsidiaries taken as a
whole as a result of the occurrence or existence of any single
event or condition or series of events or conditions in the
aggregate or (iii) the ability of the Borrower or the Parent to
perform its obligations under any of the Financing Agreements or
(iv) the validity or enforceability of any of the Financing
Documents or the rights, powers and remedies of the Agent or any
Lender to enforce or collect the Obligations.
"Monthly Report" shall have the meaning ascribed
thereto in subsection 3.1.
"Mortgages" shall mean the first mortgages or
deeds of trust, all in form and substance satisfactory to the
Agent, dated the Closing Date, duly executed and delivered by the
Borrower in favor of the Agent, for the benefit of the Lenders,
as security for the Obligations, as the same may hereafter be
amended, modified or supplemented from time to time.
"Multiemployer Plan" shall mean any multiemployer
plan within the meaning of Section 4001(a)(3) of ERISA to which
the Borrower or any ERISA Affiliate contributes or was required
to contribute within the immediately preceding six (6) years.
"Net Income" shall mean, for any applicable fiscal
period, determined on a consolidated basis for the Parent and its
Subsidiaries, consolidated net income after income and franchise
taxes and shall have the meaning given such term by Generally
Accepted Accounting Principles; provided that there shall be
specifically excluded therefrom tax-adjusted (i) gains or losses
from the sale of capital assets, (ii) net income of any Person
that is not a Subsidiary unless received by the Parent in cash,
and (iii) any gains arising from extraordinary items, as defined
by Generally Accepted Accounting Principles.
"Net Worth" of a Person shall mean, as of the date
of determination thereof, the aggregate amount of total
shareholders' equity as determined in accordance with Generally
Accepted Accounting Principles.
"Note" shall mean any of the Revolving Loan Notes,
the Term Loan Notes or the CAPEX Notes.
"Notice of Conversion/Continuation" shall mean a
notice substantially in the form of Exhibit 1.1(a).
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"Obligations" shall mean all of the Borrower's
obligations, liabilities and indebtedness to the Agent and the
Lenders of any and every kind and nature, whether heretofore, now
or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired, or owing, whether
primary, secondary, direct, indirect, contingent, fixed or
otherwise (including obligations of performance) and whether
arising or existing under written agreement, oral agreement or
operation of law including, without limitation, all of the
Borrower's indebtedness, liabilities and obligations to the Agent
and the Lenders or any Participant under the Financing
Agreements.
"Parent" shall mean Amdura Corporation, a Delaware
corporation, and the beneficial owner of one hundred percent
(100%) of the issued and outstanding capital stock of the
Borrower.
"Parent Guaranty" shall mean that certain Guaranty
dated as of the date hereof, made by the Parent in favor of the
Agent, for the benefit of the Lenders, as the same may hereafter
be amended, modified or supplemented from time to time.
"Parent Pledge Agreement" shall mean that certain
Pledge Agreement, dated as of the Closing Date, duly executed and
delivered by the Parent in favor of the Agent, for the benefit of
the Lenders, as the same may hereafter be amended, modified or
supplemented from time to time.
"Parent Security Agreement" shall mean that
certain Security Agreement, dated as of the date hereof, duly
executed and delivered by the Parent in favor of the Agent, for
the benefit of the Lenders, as the same may hereafter be amended,
modified or supplemented from time to time.
"Participant" shall mean any Person now or from
time to time hereafter participating with any Lender in the Loans
made by such Lender to the Borrower pursuant to this Agreement.
"PBGC Grantor Trust" shall mean the trust
established pursuant to a settlement with the Pension Benefit
Guaranty Corporation in connection with the Plan of
Reorganization to satisfy the Parent's underfunded liabilities
for eight frozen Pension Plans.
"Pension Plan" shall mean any Plan that is a
defined benefit plan (other than a Multiemployer Plan) defined in
Section 3(35) of ERISA.
"Permitted Investments" shall have the meaning
ascribed thereto in subsection 8.4.
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"Permitted Liens" shall have the meaning ascribed
thereto in subsection 8.1.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity,
party, or government (whether national, federal, state,
provincial, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body
or department thereof).
"Plan" shall mean any employee benefit plan within
the meaning of Section 3(3) of ERISA (other than any
Multiemployer Plan) under which the Borrower or any ERISA
Affiliate is, or was at any time within the previous six (6)
years, an "employer" within the meaning of Section 3(5) of ERISA.
"Plan of Reorganization" shall mean the Parent's
Fifth Amended Joint Plan of Reorganization, as amended, confirmed
by the United States Bankruptcy Court for the District of
Colorado on September 19, 1991, and effective on October 23,
1991.
"Prime Rate" shall mean the highest "Prime Rate"
of interest quoted, from time to time, by The Wall Street
Journal, provided, however, that in the event that The Wall
Street Journal ceases quoting a "Prime Rate", "Prime Rate" shall
mean the per annum rate of interest quoted as the "Bank Prime
Loan" rate for the most recent weekday for which such rate is
quoted in Statistical Release H.15 (519) published from time to
time by the Board of Governors of the Federal Reserve System,
provided further that in the event that both of the aforesaid
indices cease to be published or to quote rates of the aforesaid
types, the "Prime Rate" shall be determined from a comparable
index chosen by SBCC in good faith. The "Prime Rate" shall
change effective on the date of the publication of any change in
the applicable index by which such "Prime Rate" is determined.
"Pro Rata Share" shall mean the percentage
obtained by dividing (a) the Commitments of a Lender by (b) the
aggregate Commitments of all Lenders, as such percentage may be
adjusted by assignments permitted pursuant to subsection 11.1.
The Commitments of each Lender with respect to the Revolving
Loan, the CAPEX Loan and the Term Loan as of the Closing Date are
set forth on Schedule 1; Schedule 1 shall be amended and the
Lenders' Pro Rata Shares shall be adjusted from time to time to
give effect to the addition of any new Lenders pursuant to
subsection 11.1. The sum of the Pro Rata Shares of all Lenders
at any date of determination shall equal one hundred percent
(100%).
"Projections" shall mean the projected balance
sheets, profit and loss statements, and cash flow statements of
21<PAGE>
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the Borrower, prepared in accordance with Generally Accepted
Accounting Principles, together with appropriate supporting
details and a statement of underlying assumptions, which have
been and will be delivered to the Lenders in accordance with the
terms of the Parent Guaranty by the Parent, a copy of the first
of which is attached hereto as Exhibit 6.4-2.
"Property" of a Person shall mean any and all
assets or property, whether real, personal, tangible, intangible,
or mixed, of such Person, or other assets or property owned,
leased or operated by such Person.
"Rate Option" shall mean the LIBOR Rate or the
Base Rate.
"Real Estate" shall mean the real property,
leasehold or other interests in real property and other rights
related to such leaseholds or other interests now owned or
hereafter acquired by the Borrower, all fixtures and personal
property used in conjunction therewith and the Borrower's rights
to leases, rents and profits with respect thereto.
"Redirection Notice" shall have the meaning
ascribed thereto in subsection 3.4.
"Refinancing Payment" shall mean an amount equal
to not less than Fifteen Million Dollars ($15,000,000) but not
more than Twenty-Five Million Dollars ($25,000,000) obtained
through either (i) the proceeds of Indebtedness of the Borrower
and/or Crosby and/or the Parent as to which (x) the final
maturity date is at least July 1, 2002 and (y) the annual
aggregate principal payments are not greater than the aggregate
annual principal payments due under the Term Loan, the CAPEX
Loan, the Crosby CAPEX Loan and the Crosby Term Loan, or (ii) the
sale by the Parent of its equity securities, the proceeds of
which shall be used (A) to prepay the Term Loan, the CAPEX Loan,
the Crosby CAPEX Loan and the Crosby Term Loan in full, and (B)
to the extent that any portion of the Refinancing Payment remains
unapplied, at the Borrower's option, to permanently reduce the
Total Revolving Loan Facility and the Crosby Total Revolving Loan
Facility on a pro rata basis.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System from time to time in
effect and shall include any successor or other regulation or
official interpretation of said Board of Governors relating to
the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Required Lenders" shall mean (i) at least two
unaffiliated Lenders, having in the aggregate at least fifty-one
22<PAGE>
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(51%) of the Total Revolving Loan Facility, or (ii) if the
Revolving Credit Facility has been terminated, at least two
unaffiliated Lenders having in the aggregate at least fifty-one
percent (51%) of the aggregate outstanding amount of the Loans;
provided that, so long as subsection 2.2(b) shall be in effect,
the required percentage in each instance shall be at least
seventy-five percent (75%); and provided further that, if the
terms of subsection 2.2(b) shall no longer be in effect, the
required percentage in each instance for consent with regard to
consolidations and Acquisitions pursuant to subsection 8.3 and
Section 7(b) of the Parent Guaranty shall be at least sixty-six
percent (66%).
"Restricted Debt" shall mean any Indebtedness
incurred by the Parent for the purpose of purchasing or carrying
Margin Stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase any Margin
Stock.
"Restricted Payment" of a Person shall mean: (a)
any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of the Person now or
hereafter outstanding; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other
acquisition for value direct or indirect of any shares of any
class of stock of the Person now or hereafter outstanding; (c)
any payment or prepayment of principal of premium, if any, or
interest on, fees with respect to, redemption, conversion,
exchange, purchase, retirement, defeasance, sinking fund or
similar payment with respect to Subordinated Debt of the Person;
(d) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire
shares of any class of stock of the Person now or hereafter
outstanding; or (e) any payment by the Person of any management
fees, advisor fees or similar fees whether pursuant to a
management agreement or otherwise to any Affiliate of the Person.
Unless otherwise expressly provided or the context requires
otherwise, all references herein to a "Restricted Payment" shall
mean a Restricted Payment of the Borrower.
"Revolving Credit Facility" shall mean the
revolving credit facility provided under subsection 2.1 from time
to time in effect.
"Revolving Loan" shall have the meaning ascribed
thereto in subsection 2.1.
"Revolving Loan Initial Term" shall have the
meaning ascribed thereto in subsection 2.8.
"Revolving Loan Notes" shall have the meaning
ascribed thereto in subsection 2.3.
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"Revolving Loan Renewal Term" shall have the
meaning ascribed thereto in subsection 2.8.
"Risk Participations" and "Risk Participation"
shall have the respective meanings ascribed thereto in subsection
2.1(c).
"Risk Participation Liability" shall mean, as to
each Risk Participation, all liabilities or portion thereof, as
applicable, of the Lenders or the Borrower with respect to the
transaction for which such Risk Participation was issued, whether
contingent or otherwise, including, without duplication, with
respect to a letter of credit: (a) the amount available to be
drawn or which may become available to be drawn; (b) all amounts
which have been paid or made available by the Issuing Bank to the
extent not reimbursed; and (c) all unpaid interest, fees and
expenses with respect thereto.
"Risk Participation Reserve" shall mean, at any
time, a reserve deducted from the Total Revolving Loan Facility,
in an amount equal to (a) the aggregate amount of Risk
Participation Liability with respect to Risk Participations
outstanding at such time, plus, without duplication, (b) the
aggregate amount theretofore paid by the Lenders under the Risk
Participations and not reimbursed or debited to the Loan Account
pursuant to subsection 2.1(c)(i).
"SBCC" shall mean Sanwa Business Credit
Corporation in its individual capacity, and its successors.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Service" shall mean the Internal Revenue Service
and any successor thereof.
"Soft Costs" shall have the meaning ascribed
thereto in subsection 2.5(a).
"Solvency Certificate" shall mean the Certificate
of Solvency in the form of Exhibit 1.1(b), dated the Closing
Date, executed and delivered by the chief executive officer of
the Borrower in favor of the Lenders.
"Solvent" shall mean, when used with respect to
any Person, that (i) the fair saleable value of its Property is
in excess of the total amount of its Liabilities (including for
purposes of this definition all liabilities, whether or not
reflected on a balance sheet prepared in accordance with
Generally Accepted Accounting Principles, and whether direct or
indirect, fixed or contingent, secured or unsecured, disputed or
undisputed), (ii) it is able to pay its debts or obligations in
the ordinary course as they mature, and (iii) that Person has
24<PAGE>
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capital sufficient to carry on its business and all businesses in
which it is about to engage.
"Subordinated Debt" shall mean any Indebtedness
issued or otherwise owing by the Borrower in favor of a Person
(a) the payment of which is subordinated to the payment of the
Obligations and (b) which is incurred pursuant to documentation
or entry in the financial records of such Person in each case in
form and substance satisfactory to the Agent in its sole
discretion.
"Subsidiary" of a Person shall mean (i) any
corporation of which more than fifty percent (50%) of the
outstanding securities having ordinary voting power to elect a
majority of the board of directors is at any time of
determination, directly or indirectly, owned or controlled by
such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any
partnership, association, trust, grantor trust, joint venture or
similar business organization more than 50% of the equity or
partnership interests having ordinary voting power or power of
direction of which shall at any time of determination be so owned
or controlled. Unless otherwise expressly provided or the
context requires otherwise, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning specified in
subsection 2.20(a).
"Telerate Screen" shall mean the display
designated as Screen 3750 on the Telerate System or such other
screen on the Telerate System as shall display the London
interbank offered rates for deposits in U.S. dollars quoted by
selected banks.
"Term Loan" shall have the meaning ascribed
thereto in subsection 2.4.
"Term Loan Notes" shall have the meaning ascribed
thereto in subsection 2.4.
"Termination Date" shall mean the date on which
this Agreement terminates as provided in subsection 2.8(a).
"Termination Event" shall mean: (a) the tax
disqualification of a Plan under Section 401(a) of the IRC; (b) a
"Reportable Event" described in Section 4043 of ERISA and the
regulations issued thereunder unless the thirty (30) day notice
to the Pension Benefit Guaranty Corporation ("PBGC") has been
waived for the event; (c) the withdrawal of the Borrower or any
ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA or was deemed such under Section 4062(e) of ERISA; (d)
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the termination of a Pension Plan, the filing of a notice of
intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041(e) of ERISA;
(e) the institution of proceedings to terminate a Pension Plan by
the PBGC; (f) any other event or condition which would constitute
grounds under Section 4042(a) of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (g)
the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan; (h) the imposition of a Lien
pursuant to Section 412 of the IRC or Section 302 of ERISA; (i)
any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section
4245 of ERISA, respectively; or (j) any event or condition which
results in the termination of a Multiemployer Plan under Section
4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Revolving Loan Facility" shall mean the
amount of Fourteen Million Dollars ($14,000,000).
"Unused Availability" shall mean the difference at
any time between the amount available to be loaned to the
Borrower under the Revolving Credit Facility and the principal
balance of the Revolving Loan then outstanding.
"Unused Line Fee" shall have the meaning ascribed
thereto in subsection 2.12.
1.2 Accounting Terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall
have the meanings customarily given them in accordance with
Generally Accepted Accounting Principles. All determinations of
the book value of Inventory contemplated hereby shall be at the
lower of cost (on a first-in, first-out basis) or market.
1.3 Other Terms Defined in Illinois Uniform Commercial
Code. All other terms contained in this Agreement (and which are
not otherwise specifically defined herein) shall have the
meanings provided in the Uniform Commercial Code of the State of
Illinois or the laws of any other state which are required to be
applied in connection with the issue of perfection or non-
perfection of security interests in the Collateral (the "Code")
to the extent the same are used or defined therein.
1.4 Effective Date. All references to "the date
hereof," "the date of this Agreement," "the effective date
hereof," "effective as of the date hereof" or "of even date
herewith" contained herein or in the other Financing Agreements
shall be deemed to refer to the date of this Agreement.
1.5 References. The foregoing definitions shall be
equally applicable to both the singular and plural forms of the
defined terms. Unless otherwise expressly provided or unless the
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context requires otherwise, all references in this Agreement to
Sections, subsections, Schedules and Exhibits shall mean and
refer to Sections, subsections, Schedules and Exhibits of this
Agreement. References to Persons include their respective
permitted successors and assigns or, in the case of a
governmental authority, Persons succeeding to the relevant
functions of such Persons. All references to statutes and
related regulations shall include all amendments of same and any
successor or replacement statutes and regulations.
2. CREDIT.
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2.1 Revolving Credit Facility, Revolving Loan and Loan
Guaranties.
(a) Revolving Loan. Provided there does not then
exist a Default or an Event of Default, and subject to the terms
and conditions herein set forth, each Lender agrees severally
(and not jointly) to make its Pro Rata Share of advances to the
Borrower, on a revolving credit basis (the "Revolving Loan"), in
an aggregate amount not in excess of the lesser of (i) the Total
Revolving Loan Facility less the Risk Participation Reserve, or
(ii) the "Current Asset Base." As used herein, the "Current
Asset Base" shall mean an amount equal to:
(1) eighty-five percent (85%) of the face amount
(less maximum discounts, credits and allowances which
may be taken by or granted to Account Debtors in
connection therewith) then outstanding of Eligible
Accounts, less such reserves as the Agent in good faith
in accordance with its customary asset-based financing
practices elects to establish, plus
(2) (i) sixty percent (60%) of the book value of
the Borrower's then existing Eligible Inventory
consisting of finished goods and raw materials and (ii)
fifty percent (50%) of the book value of the Borrower's
then existing Eligible Inventory consisting of work in
process; provided that aggregate advances against
Eligible Inventory consisting of work in process shall
not exceed Five Million Dollars ($5,000,000) at any one
time; and provided further that no more than Eight
Million Four Hundred Thousand Dollars ($8,400,000) of
the principal balance of the Revolving Loan outstanding
plus the Risk Participation Reserve amount at any one
time shall be attributable to that portion of the
Current Asset Base consisting of Eligible Inventory as
derived from the foregoing formula. The book value of
Eligible Inventory shall be determined at the lower of
cost (determined on a first-in-first-out ("FIFO")
basis) or market, less such reserves as the Agent in
good faith in accordance with its customary asset-based
financing practices elects to establish, minus
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(3) the Risk Participation Reserve.
(b) Deposit of Advances. Each advance to the Borrower
shall, on the day of such advance, be deposited, in immediately
available funds, in such account as the Borrower may, from time
to time, designate, unless otherwise requested by the Borrower in
writing.
(c) Risk Participation. Subject to the terms and
conditions of this Agreement, in addition to advances under the
Revolving Loan, upon the request of the Borrower, SBCC, on behalf
of each Lender according to such Lender's Pro Rata Share, agrees
to issue or arrange for the issuance of Letters of Credit for the
account of the Borrower or to confirm, or otherwise become
obligated for, the payment to the Issuing Bank which issues
Letters of Credit for the account of the Borrower (all such
confirmations, obligations and standby Letters of Credit issued
by SBCC are collectively referred to herein as "Risk
Participations" and individually as a "Risk Participation");
provided that SBCC shall not be under any obligation to issue any
Risk Participation if (i) any order, judgment or decree of any
government authority or other regulatory body shall purport by
its terms to enjoin or restrain SBCC or any Lender from issuing
such Risk Participation, or any law or governmental rule,
regulation, policy, guideline or directive (whether or not having
the force of law) from any governmental authority or other
regulatory body with jurisdiction over SBCC or any Lender shall
prohibit, or request that SBCC or such Lender refrain from, the
issuance of Risk Participations in particular or shall impose
upon SBCC or any Lender with respect to such Risk Participations
any restriction or reserve or capital requirement (for which SBCC
or such Lender is not otherwise compensated) or any unreimbursed
loss, cost or expense which SBCC or any Lender in good faith
deems material to it or (ii) the issuance thereof would violate
any established credit policy of a Lender or would be
unacceptable as determined by the Required Lenders in accordance
with their respective customary asset-based financing criteria.
In no event shall SBCC issue or confirm or otherwise become
obligated with respect to a Letter of Credit (including, without
limitation, Letters of Credit issued with an automatic
"evergreen" provision) having an expiration date, or a date for
payment of any draft presented thereunder, later than the earlier
of (i) eighteen months from the date of issuance or (ii) thirty
(30) days prior to the Termination Date. Such issuance,
confirmation and obligations with respect to a Letter of Credit
pursuant to this subsection 2.1(c) shall be deemed to be a
Revolving Loan for purposes of requiring the satisfaction of the
applicable conditions set forth in Section 4. Additions to the
Risk Participation Reserve shall be established concurrently with
the issuance of each Risk Participation. Immediately upon the
issuance of any Risk Participation in accordance with this
subsection 2.1(c), each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from SBCC,
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without recourse, representation or warranty, an individual
participation interest equal to its Pro Rata Share of the
principal amount of such Risk Participation and each draw paid by
the Issuing Bank under the Letter of Credit issued in connection
therewith. Each Lender's obligation to pay its Pro Rata Share of
all draws under the Letters of Credit issued in connection with
such Risk Participations shall be absolute, unconditional and
irrevocable and in each case shall be made without counterclaim
or set-off by such Lender.
(i) Maximum Amount. The aggregate amount of
Risk Participation Liability with respect to Risk
Participations outstanding at any time shall not exceed
One Million Dollars ($1,000,000).
(ii) Reimbursement. The Borrower shall be
irrevocably and unconditionally obligated forthwith
without presentment, demand, protest or other
formalities of any kind, to reimburse the Agent, on
behalf of the Lenders, for any amounts paid by the
Lenders with respect to each Risk Participation,
including, without limitation, all amounts paid by the
Lenders upon any draw with respect to a standby Letter
of Credit, any reimbursement obligation paid by the
Lenders to any Person upon any draw upon a Letter of
Credit and all fees, costs and expenses paid by the
Lenders to any Issuing Bank. All such reimbursement
obligations shall be due and payable on demand. If not
paid within one (1) Business Day following demand, or,
if an Event of Default shall have occurred and be
continuing, on the date such reimbursement obligations
arise, the Borrower hereby authorizes and directs the
Lenders, at the Lenders' option, to debit the Loan
Account (by increasing the principal balance of the
Revolving Loan), in the amount of any payment made by
the Lenders with respect to any Risk Participation and,
in connection therewith, the Risk Participation Reserve
then in effect shall be reduced by the amount of such
debit. All amounts paid by the Lenders with respect to
any Risk Participation that are not immediately repaid
by the Borrower with the proceeds of the Revolving Loan
or otherwise shall bear interest at the interest rate
applicable to Revolving Loans. If SBCC makes a payment
on account of any Risk Participation and is not
concurrently reimbursed therefor by the Borrower and if
for any reason an advance under the Revolving Loan may
not be made as stated in this subsection 2.1(c), then
as promptly as practical during normal banking hours on
the date of its receipt of such notice or, if not
practicable on such date, not later than 12:00 noon
(Chicago time) on the Business Day immediately
succeeding such date of notification, each Lender shall
deliver to the Agent for the account of the Issuing
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Bank, in immediately available funds, the purchase price for such
Lender's interest in such unreimbursed Risk Participation, which
shall be an amount equal to such Lender's Pro Rata Share of such
payment.
(iii) Conditions of Issuance of Risk
Participations. Each Letter of Credit shall be
supported by a duly executed application and
reimbursement agreement in form satisfactory to the
Agent. The Borrower shall comply with all such terms
and conditions imposed on the Borrower by the Issuing
Bank with respect to the issuance of any Letter of
Credit, whether such terms and conditions are imposed
in the application for such Letter of Credit or
otherwise. Each Risk Participation shall be in form
and substance reasonably satisfactory to the Agent and
shall provide that the Risk Participation terminates
and all demands or claims for payment must be presented
by a date certain, which date will be at least thirty
(30) days before the Termination Date.
(iv) Request for Risk Participation. Prior to
the issuance of a Risk Participation, and as a
condition of such issuance, the Borrower shall give the
Agent prior written notice specifying the date a Risk
Participation is to be issued, identifying the
beneficiary of the Risk Participation and describing
the nature of the transactions proposed to be supported
thereby and specifying whether the Borrower is
requesting a Risk Participation in the form of a Letter
of Credit to be issued by a Lender or a Risk
Participation of a Letter of Credit to be issued by
another Issuing Bank. If applicable, the notice shall
be accompanied by the form of the Letter of Credit to
be guarantied. Subject to the terms hereof, the Agent
shall issue the requested Risk Participation as soon as
practicable and not more than fifteen (15) Business
Days following the date of the applicable notice;
provided that as to Risk Participations consisting of
guaranties of reimbursement obligations owed to another
Issuing Bank, the Risk Participation shall not be
issued until the Agent and such Issuing Bank have
mutually agreed upon the form of such Risk
Participation.
(v) Indemnification. The Borrower hereby agrees
to indemnify, pay and hold the Agent and each Lender
harmless from and against any and all pending or
threatened claims, litigation, damages, losses and
liabilities incurred by the Agent or any Lender (or
which may be claimed against the Agent or any Lender by
any Person whatsoever) and costs and expenses incurred
in defending or responding to pending or threatened
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claims or litigation by reason of or in connection with the
execution, delivery or transfer of, or payment or failure to pay
under, any Risk Participation including, without limitation, any
action taken or omitted, by any Issuing Bank, other than claims,
litigation, damages, losses, liabilities, costs or expenses
resulting from the gross negligence or willful misconduct of such
Person. The Borrower's unconditional obligations to the Agent
and the Lenders hereunder shall not be modified or diminished for
any reason or in any manner whatsoever. The Borrower agrees that
any charges made to the Agent or the Lenders for the Borrower's
account by any Issuing Bank shall be conclusive as between such
Persons and the Borrower and may be charged to the Borrower's
Loan Account hereunder. The Borrower hereby agrees that any
action taken by the Agent or the Lenders, if taken in good faith,
or any action taken by any Issuing Bank, under or in connection
with the Risk Participations, or the Collateral relating thereto,
shall be binding on the Borrower and shall not impose any
resulting liability on the Agent or any Lender other than claims,
litigation, damages, losses, liabilities, costs or expenses
resulting from the gross negligence or willful misconduct of such
Person.
2.2 Maximum Principal Balance of Revolving Loan. (a)
Except as provided in subsection 2.2(b), the aggregate
outstanding principal balance of the Revolving Loan shall at no
time exceed the lesser of (i) the Current Asset Base, or (ii) the
Total Revolving Loan Facility less the Risk Participation Reserve
(any such excess amount being an "Over Advance"). If an Over
Advance shall occur, such Over Advance shall be immediately due
and payable.
(b) Notwithstanding anything contained in this
Agreement to the contrary, until such time as an additional
financial institution or institutions satisfactory to the Lenders
and the Borrower shall become a Lender under this Agreement with
an aggregate Commitment of at least Ten Million Dollars
($10,000,000), the aggregate outstanding principal balance of (i)
the Revolving Loan and (ii) the Revolving Loan (as defined in the
Crosby Loan Agreement) of Crosby shall at no time exceed Twenty-
Four Million Dollars ($24,000,000).
2.3 Evidence of Revolving Loan Indebtedness. The
advances by each Lender constituting the Revolving Loan shall be
evidenced by a promissory note in favor of each respective Lender
(collectively, the "Revolving Loan Notes") of even date herewith
in the form attached as Exhibit 2.3. All of the Borrower's
Revolving Loan Obligations to the Lenders hereunder shall be
payable by the Borrower by application of the proceeds of all
Accounts and other Collateral in accordance with subsection 3.4,
and shall be payable in full upon termination of this Agreement,
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and the principal amount of such Revolving Loan Obligations shall
bear interest as hereinafter provided. Each advance by the
Lenders and each repayment of principal applicable to such
advance shall be reflected in the Borrower's Loan Account.
2.4 Term Loan. (a) Simultaneously with the initial
advance of the Revolving Loan and subject to the terms and
conditions of this Agreement, each Lender agrees to loan the
Borrower its Pro Rata Share of the sum of Three Million Dollars
($3,000,000) in the aggregate (the "Term Loan"), evidenced by a
promissory note of even date herewith, executed by the Borrower
and payable by the Borrower to the order of a Lender in the
amount of its Pro Rata Share of the Term Loan, in the form
attached as Exhibit 2.4 (collectively, the "Term Loan Notes").
(b) Subject to subsection 2.8, the aggregate principal
balance of the Term Loan shall be payable to the Agent, for the
benefit of the Lenders, in twenty-six (26) equal, consecutive
quarterly installments on the first day of each January, April,
July and October commencing April 1, 1995, of One Hundred Seven
Thousand One Hundred Forty-Two and 86/00 Dollars ($107,142.86)
and a final installment on October 1, 2001 in the amount of Three
Hundred Twenty-One Thousand Four Hundred Twenty-Eight and 50/00
Dollars ($321,428.50) or, if less, the entire outstanding balance
of the Term Loan.
2.5 CAPEX Loan.
(a) Provided there does not then exist a Default or an
Event of Default, and subject to the terms and conditions herein
set forth, each Lender agrees to loan the Borrower its Pro Rata
Share of the sum of up to Zero Dollars ($0) in the aggregate
during the term of this Agreement (collectively, the "CAPEX
Loan"). The Borrower may request advances under the CAPEX Loan
not more than once during each fiscal quarter; provided that no
CAPEX Loan shall be requested by the Borrower and no CAPEX Loan
shall be made by the Lenders so long as the terms of subsection
2.2(b) shall be in effect. Each advance under the CAPEX Loan
shall be evidenced by a separate installment note dated the date
of such advance, executed by the Borrower and payable by the
Borrower to the order of a Lender in the amount of its Pro Rata
Share of such CAPEX Loan advance, in the form attached as Exhibit
2.5 (collectively, the "CAPEX Notes"). Payments made on the
CAPEX Loan may not be reborrowed. Each advance under the CAPEX
Loan shall be (i) used by the Borrower solely for the purpose of
purchasing Equipment or real property, (ii) in an amount not to
exceed (x) in the case of new Equipment, the sum of (A) eighty-
five percent (85%) of the actual invoice cost of the Equipment
(excluding therefrom any other costs, fees and expenses relating
to installation, services, maintenance, processing, insurance or
similar items (collectively, the "Soft Costs")) and (B) twenty-
five percent (25%) of the Soft Costs of such Equipment, (y) in
the case of used Equipment, ninety percent (90%) of the value of
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the Equipment, as determined by the Agent in its reasonable
discretion, and (z) with respect to real property, sixty percent
(60%) of the fair market value, as determined by the Agent in its
reasonable discretion; provided that all such acquired Equipment
and real property shall be free and clear of all Liens, except
for Liens in favor of the Agent for the benefit of the Lenders.
(b) Subject to subsection 2.8, the principal balance
of each CAPEX Note shall be payable to the Agent, for the benefit
of the Lenders, in twenty-four (24) equal, consecutive quarterly
installments on the first day of each January, April, July and
October, commencing on the first such payment date occurring not
less than six (6) months after the date of such advance in the
amount of one twenty-fourth (1/24th) of the principal balance
thereof.
2.6 Interest.
(a) Subject to the terms and conditions of this
Agreement, the Revolving Loan, the Term Loan and the CAPEX Loan
may be divided into Base Rate Loans or LIBOR Rate Loans, or a
combination thereof, selected by the Borrower in accordance with
subsections 2.6(e) and 2.6(f); provided that each Loan shall not
have more than one (1) Interest Period outstanding with respect
to such Loan at any one time. So long as no Event of Default has
occurred and is continuing, the Borrower shall pay to the Agent,
for the benefit of the Lenders, interest on the outstanding
principal balance of the Loans at the Base Rate or the LIBOR
Rate, as applicable, in accordance with subsection 2.17.
Interest shall be computed by multiplying the closing daily
principal balance in the Borrower's Loan Account for each day
during the preceding month by the interest rate determined to be
applicable hereunder on each such day.
(b) Interest and all fees (other than prepayment fees)
shall be computed (on a daily basis) on the basis of a three
hundred sixty (360) day year for the actual number of days
elapsed. In computing interest on any Loan, the date of funding
of the Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted
from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate
Loan to such Base Rate Loan, shall be included and the date of
payment of such Loan or the expiration date of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan
being converted to a LIBOR Rate Loan, the date of conversion of
such Base Rate Loan to such LIBOR Rate Loan, shall be excluded;
provided that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.
(c) So long as an Event of Default shall have occurred
and be continuing, the Borrower shall pay to the Lenders interest
from the date of such Event of Default to and including the date
of cure of such Event of Default on the outstanding principal
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balance of the Obligations at the Default Rate applicable to such
Obligations; provided that in the case of LIBOR Rate Loans, upon
the expiration of the Interest Period in effect at the time any
Event of Default shall have occurred and be continuing, such
LIBOR Rate Loans shall automatically become Base Rate Loans and
thereafter bear interest at the Default Rate applicable to Base
Rate Loans.
(d) (i) Interest shall be due at the Base Rate, the
LIBOR Rate or the Default Rate, as provided herein, after as well
as before demand, default and judgment notwithstanding any
judgment rate of interest provided for in any statute. If any
interest payment or other charge or fee payable hereunder exceeds
the maximum amount then permitted by applicable law, then to the
extent permitted by law and subject to the provisions of clause
(ii) of this subsection 2.6(d) below, the Borrower shall be
obligated to pay the maximum amount then permitted by applicable
law and the Borrower shall continue to pay the maximum amount
from time to time permitted by applicable law until all such
interest payments and other charges and fees otherwise due
hereunder (in the absence of such restraint imposed by applicable
law) have been paid in full.
(ii) It is the intention of the Lenders and the
Borrower to comply with the laws of the State of
Illinois, and notwithstanding any provision to the
contrary contained herein or in the other Financing
Agreements, the Borrower shall not be required to pay
and the Lenders shall not be permitted to collect any
amount in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess
Interest is provided for or determined to have been
provided for by a court of competent jurisdiction in
this Agreement or in any of the other Financing
Agreements, then in such event: (A) the provisions of
this subparagraph shall govern and control; (B) neither
the Borrower nor any guarantor or endorser shall be
obligated to pay any Excess Interest; (C) any Excess
Interest that any Lender may have received hereunder
shall be, at such Lender's option (1) applied as a
credit against the outstanding principal balance of the
Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law) owed to
such Lender, (2) refunded to the payor thereof, or (3)
any combination of the foregoing; (D) the interest
rate(s) provided for herein shall be automatically
reduced to the maximum lawful rate allowed under
applicable law, and this Agreement and the other
Financing Agreements shall be deemed to have been, and
shall be, reformed and modified to reflect such
reduction; and (E) neither the Borrower nor any
guarantor or endorser shall have any action against any
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Lender for any damages arising out of the payment or collection
of any Excess Interest.
(e) Subject to the terms of this Agreement, the
Borrower shall select the Rate Option and, in the case of LIBOR
Rate Loans, the Interest Period applicable to each LIBOR Rate
Loan from time to time by giving the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:30 a.m. (Chicago time) (i)
on the Funding Date of any Base Rate Loan, and (ii) three (3)
Business Days before the Funding Date for each LIBOR Rate Loan,
specifying:
(i) the Funding Date of each Loan,
(ii) the aggregate amount of such Loan (and, if
such Borrowing Notice refers to more than one Rate
Option, the amount of each Base Rate Loan and LIBOR
Rate Loan which will become part of the Revolving Loan,
Term Loan or the CAPEX Loan, as the case may be).
(iii) the Rate Option(s) selected for such Loan,
and
(iv) in the case of each LIBOR Rate Loan, the
Interest Period applicable thereto;
provided that no Loan may be made as a LIBOR Loan if any Default
with respect to the payment of money or any Event of Default has
occurred and is continuing.
The Borrower shall select Interest Periods so that it
is not necessary to repay any portion of a LIBOR Rate Loan prior
to the last day of the applicable Interest Period in order to
make a payment or prepayment of principal on the Term Loan, the
CAPEX Loan or the Revolving Loan, as the case may be, required by
the terms hereof including, without limitation, prepayments
pursuant to subsection 2.8.
(f) Base Rate Loans shall continue as Base Rate Loans
unless and until such Base Rate Loans are converted by the
Borrower in accordance with this subsection 2.6(f) into LIBOR
Rate Loans. Each LIBOR Rate Loan shall continue as a LIBOR Rate
Loan until the end of the then applicable Interest Period, at
which time such LIBOR Rate Loan shall be automatically converted
into a Base Rate Loan unless Borrower shall have given Agent an
irrevocable notice (a "Conversion/Continuation Notice")
requesting that, at the end of such Interest Period, such LIBOR
Rate Loan continue as a LIBOR Rate Loan for the same or another
Interest Period; provided that no outstanding Loan may be
continued as, or be converted into, a LIBOR Rate Loan if any
Default with respect to the payment of money or any Event of
Default has occurred and is continuing. Subject to the terms of
this Agreement, the Borrower may elect from time to time to
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convert all or any part of a Loan of any Rate Option into any
other Rate Option; provided that any conversion of a LIBOR Rate
Loan shall be made on, and only on, the last day of the Interest
Period applicable thereto. The Borrower shall give the Agent a
Conversion/Continuation Notice of each conversion or continuation
of a Base Rate Loan or LIBOR Rate Loan, as the case may be, not
later than 10:30 a.m. (Chicago time) (i) on the Funding Date, in
the case of a conversion into a Base Rate Loan, and (ii) at least
three (3) Business Days before the Funding Date of the requested
conversion or continuation of a LIBOR Rate Loan, specifying:
(i) the Funding Date of such conversion or
continuation;
(ii) the aggregate amount and Rate Option(s) of
the Loan which is to be converted or continued; and
(iii) the amount and Rate Option(s) of the Base
Rate Loans or LIBOR Rate Loans into which such Loan is
to be converted or continued and, in the case of a
conversion into or continuation of a LIBOR Rate Loan,
the duration of the Interest Period applicable thereto.
(g) In lieu of delivering a Notice of Borrowing or a
Notice of Conversion/Continuation, the Borrower may give the
Agent notice by telephone or telecopy by the required time of any
proposed borrowing or conversion/continuation under this
subsection 2.6; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing or a
Notice of Conversion/Continuation, as the case may be, to the
Agent on or before the proposed Funding Date. Neither the Agent
nor any Lender shall incur any liability to the Borrower in
acting upon any such notice by telephone that the Agent believes
in good faith to have been given by an Authorized Officer or for
otherwise acting in good faith under this subsection 2.6 and,
upon the funding or conversion/continuation, as the case may be,
by the Agent in accordance with this Agreement pursuant to any
such notice, the Borrower shall have effected such funding,
conversion or continuation, as the case may be, hereunder. A
Notice of Borrowing or a Notice of Conversion/Continuation for
the funding of, or conversion to, or continuation of, a LIBOR
Rate Loan (or notice by telephone or telecopy in lieu thereof)
shall be irrevocable once given, and the Borrower shall be bound
to convert or continue in accordance therewith.
(h) Each LIBOR Rate Loan (whether resulting from a
Borrowing Notice or a Conversion/Continuation Notice) shall be in
the minimum amount of Five Hundred Thousand Dollars ($500,000)
and in integral multiples of One Hundred Thousand Dollars
($100,000) if in excess thereof.
2.7 Method of Borrowing; Method of Making Interest and
Other Payments. (a) Not later than noon (Chicago time) on each
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Funding Date, each Lender shall make available its Pro Rata Share
of the Loan or Loans (except with respect to Loans made pursuant
to a Conversion/Continuation Notice in which case each Lender
shall be deemed to have made available its Loan or Loans) in
funds immediately available in Chicago, Illinois to the Agent at
its address specified pursuant to subsection 10.13. The Agent
will make the funds so received from the Lenders available to the
Borrower in accordance with subsection 2.1(b). Notwithstanding
the foregoing provisions of this subsection 2.7(a), to the extent
that a Loan or portion thereof made by a Lender matures or is to
be repaid on the Funding Date of a requested Loan, such Lender
shall first apply the proceeds of the Loan it is then making to
the repayment of the maturing Loan or portion thereof.
(b) In the event that the Borrower fails to pay
interest or other Obligations payable hereunder (other than the
principal balance of the Revolving Loan) as of their respective
due dates, the Borrower authorizes the Lenders, in their sole
discretion, to cause such amounts to be paid by adding such
amounts to the principal balance of the Revolving Loan and
charging such payment to the Borrower's Loan Account, all as set
forth on the Agent's books and records. Unless otherwise
directed by the Required Lenders, all payments to the Lenders
hereunder shall be made by delivery thereof to the Agent, for the
benefit of the Lenders, at its address set forth in subsection
10.13 or, with respect to the Revolving Loan only, by delivery to
the Agent for deposit in the Blocked Accounts of all proceeds of
Accounts or other Collateral in accordance with subsection 3.4.
If the Agent elects to bill the Borrower for any amount due
hereunder, such amount shall be immediately due and payable with
interest thereon as provided herein. Solely for the purpose of
calculating interest earned by each Lender with respect to the
Revolving Loan, any check, draft or similar item of payment by or
for the account of the Borrower delivered to the Agent or
deposited in a Blocked Account in accordance with subsection 3.4
shall be applied by the Agent on account of the Borrower's
Revolving Loan Obligations on the Business Day that the Agent
receives immediately available funds as a result of the deposit
thereof in accordance with subsection 3.4. Immediately available
funds received by the Agent after 2:00 p.m. Chicago time shall be
deemed to have been received on the following Business Day.
(c) (i) Unless the Borrower or a Lender, as the case
may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (A) in the case of a
Lender, the proceeds of a Loan or (B) in the case of the
Borrower, a payment of principal, interest, fees or other
Obligations to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that
such payment has been made. The Agent may, but shall not be
obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If the
Borrower or such Lender, as the case may be, has not in fact made
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such payment to the Agent, the recipient of such payment shall,
on demand by the Agent, repay to the Agent the amount so made
available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by
a Lender, the Federal Funds Rate for such day (as determined by
the Agent) or (y) in the case of payment by the Borrower, the
interest rate applicable to the relevant Loan.
(ii) Nothing contained in this subsection 2.7(c)
will be deemed to relieve a Lender of its obligation to
fulfill its Commitments or to prejudice any rights the
Agent or the Borrower may have against such Lender as a
result of any default by such Lender under this
Agreement.
(iii) If the Agent determines at any time that any
amount received by the Agent under this Agreement must
be returned to the Borrower or paid to any other Person
pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this
Agreement, the Agent will not be required to distribute
any portion thereof to any Lender. In addition, each
Lender will repay to the Agent on demand any portion of
such amount that the Agent has distributed to such
Lender.
(iv) Without limiting the generality of the
foregoing, each Lender shall be obligated to fund its
Pro Rata Share of any Revolving Loan made after any
acceleration of the Loans with respect to any draw on a
Letter of Credit or Risk Participation therefor.
2.8 Term of this Agreement.
(a) Term. With respect to the Term Loan and the
issuance of CAPEX Notes, this Agreement shall be effective until
October 1, 2001; provided that if the Revolving Loan is
terminated at any time prior to October 1, 1997, the entire
principal balance of the Term Loan and the CAPEX Loan shall be
immediately due and payable. With respect to the Revolving Loan,
this Agreement shall be effective until October 1, 1997 (the
"Revolving Loan Initial Term"), subject to annual renewals
thereafter as hereinafter provided (each such renewal being
referred to as a "Revolving Loan Renewal Term"). Not less than
ninety (90) days prior to the end of the Revolving Loan Initial
Term or any Revolving Loan Renewal Term, the Borrower shall
notify the Agent in writing if it elects to renew this Agreement
for a Revolving Loan Renewal Term, and not less than sixty (60)
days prior to the end of the Revolving Loan Initial Term or any
Revolving Loan Renewal Term, the Agent shall notify the Borrower
in writing if the Lenders elect to accept such renewal. Unless
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the Borrower and each Lender shall agree in writing to extend
this Agreement in accordance with the preceding sentence, this
Agreement shall terminate upon the earlier to occur of the
expiration of the Revolving Loan Initial Term or any Revolving
Loan Renewal Term, as applicable, or the final payment in full of
all of the Obligations. In addition, this Agreement may be
terminated as set forth in Section 9.1. Upon the effective date
of termination, all of the Obligations shall become immediately
due and payable without notice or demand. Notwithstanding any
termination, until all of the Obligations shall have been fully
and finally paid and satisfied and the Risk Participations shall
have been terminated or payment thereof shall have been secured
in accordance with subsection 2.8(b) on terms satisfactory to the
Lenders all of Agent's and the Lenders' rights and remedies under
the Financing Agreements shall survive such termination and,
notwithstanding such payment, for so long as any pending or
threatened action which could result in a claim by any Lender
under subsection 6.26 exists hereunder, the Agent, on behalf of
the Lenders, shall be entitled to retain Liens upon all existing
and future Collateral, and the Borrower shall continue to remit
collections of Accounts and proceeds as provided herein.
(b) Prepayment of All Obligations. Subject to the
payment set forth in subsection 2.8(g) the Borrower may prepay in
full all of the Obligations arising hereunder, by paying the
aggregate outstanding principal balance of all Loans, together
with all interest and fees accrued thereon, and all other
outstanding Obligations.
(c) Term Debt Prepayment. The Borrower may prepay the
Loans and, at the Borrower's option, reduce the Total Revolving
Loan Facility from the Refinancing Payment, without premium or
penalty; provided that (i) such prepayment occurs within eighteen
(18) months after the Closing Date, (ii) as part of such payment
the Term Loan, the CAPEX Loan, the Crosby CAPEX Loan and the
Crosby Term Loan are prepaid in full, (iii) after giving effect
to such prepayment, no Default or Event of Default has occurred
and is continuing, and (iv) after giving effect to the
application of such prepayment and reduction, the Borrower shall
have Unused Availability equal to at least ten percent (10%) of
the Total Revolving Loan Facility. Any prepayment under this
subsection 2.8(c) shall include all unpaid accrued interest to
the date of prepayment on the principal balance so prepaid. The
prepayment and reduction made under this subsection 2.8(c) shall
be applied in the following priority: (i) to the Term Loan until
paid in full, (ii) to the CAPEX Notes until paid in full and
(iii) at the Borrower's option, to permanently reduce the Total
Revolving Loan Facility.
(d) Partial Prepayment. Subject to the payment set
forth in subsection 2.8(g), the Borrower may prepay the entire
principal amount of the Term Loan or the CAPEX Loan or, in a
minimum amount of Five Hundred Thousand Dollars ($500,000) or any
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integral multiple of One Hundred Thousand Dollars ($100,000) if
in excess thereof, any portion of the Term Loan or the CAPEX Loan
by paying the principal amount to be prepaid, together with all
unpaid accrued interest thereon to the date of prepayment. All
prepayments made by the Borrower under this subsection 2.8(d)
shall be made and applied to scheduled installments of principal
due on such Loans in the following priority: (i) to the Term
Loan until paid in full, and (ii) to the CAPEX Notes in the
inverse order of their issuance dates, in the case of each of the
Term Loan and the CAPEX Notes in the inverse order of the
maturities thereof.
(e) Total Revolving Loan Facility. Subject to the
payment set forth in subsection 2.8(g), the Borrower may
permanently reduce the Total Revolving Loan Facility in whole, or
in part in a minimum amount of Five Hundred Thousand Dollars
($500,000) or any integral multiple of One Hundred Thousand
Dollars ($100,000) if in excess thereof.
(f) Pro Rata Reduction. Any prepayment of the Loans
or any reduction of the Total Revolving Loan Facility pursuant to
this subsection 2.8 shall ratably reduce the amounts outstanding
under the Notes of each Lender and each Lender's Pro Rata Share
of the Total Revolving Loan Facility, as the case may be.
(g) Prepayment Fee. Except as set forth in subsection
2.8(c) or with respect to prepayments made pursuant to
subsections 7.6 or 8.7 as set forth therein, if the Borrower
shall prepay all or any part of the Obligations during the first
eighteen (18) months after the Closing Date, the Borrower shall
pay to the Lender as liquidated damages and compensation for the
costs of being prepared to make funds available to the Borrower
hereunder an amount equal to one percent (1%) of principal
balance so prepaid.
(h) Notice. All prepayments under this subsection 2.8
shall be subject to not less than ten (10) days prior written
irrevocable notice to the Agent and each Lender specifying the
date of prepayment (which date, if any outstanding LIBOR Rate
Loans are to be prepaid, shall be the last day of the applicable
Interest Period).
(i) Reductions. Notwithstanding anything contained in
this subsection 2.8 to the contrary, the amount of the Total
Revolving Loan Facility may not be reduced below the aggregate
principal amount of the Revolving Loan and the Risk Participation
Obligations at the time such reduction is to take effect.
2.9 Collateral Fee. As incurred, the Borrower shall
pay to SBCC, individually in its capacity as the Agent a
collateral monitoring fee (the "Collateral Monitoring Fee") in an
amount equal to (x) the Agent's reasonable out-of-pocket costs of
performing semi-annual audits, plus Five Thousand Dollars
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($5,000) per audit, plus (y) so long as either the Term Loan or
any CAPEX Note remains outstanding, the Agent's reasonable out-
of-pocket costs of performing annual "desk-top" appraisal updates
of the Equipment and the Real Estate, plus Ten Thousand Dollars
($10,000) per update.
2.10 Closing Fee. On the Closing Date, the Borrower
shall pay the Agent, for the benefit of the Lenders, a closing
fee (the "Closing Fee") in an amount equal to the sum of (i)
Sixty Thousand Dollars ($60,000) and (ii) three-quarters of one
percent (0.75%) of the Term Loan. On the date on which the terms
of subsection 2.2(b) shall no longer be in effect, the Borrower
shall pay to the Agent, for the benefit of the Lenders, the
additional sum of Fifteen Thousand Dollars ($15,000).
2.11 Agent's Fee. On the Closing Date and on each
anniversary of such date during the term of this Agreement, the
Borrowers shall pay to SBCC, individually in its capacity as the
Agent an agent's fee (the "Agent's Fee"), payable in an amount
equal to 0.10% of the sum of (i) the Total Revolving Loan
Facility; provided that so long as the terms of subsection 2.2(b)
shall be in effect the calculation of the Agent's Fee shall be
subject to the effect of the limitations set forth therein, (ii)
the outstanding principal balance of the Term Loan, and (iii) the
aggregate outstanding balance of the CAPEX Notes.
2.12 Unused Line Fee. From and after the Closing Date,
the Borrower shall pay ratably to the Lenders a fee (the "Unused
Line Fee") in an amount equal to the Total Revolving Loan
Facility (less the Risk Participation Reserve) less the average
daily closing balance of the Revolving Loan advanced to the
Borrower during the preceding month multiplied by one-half of one
percent (0.50%) per annum, calculated on the basis of a three
hundred sixty (360) day year for the actual number of days
elapsed; provided that so long as the terms of subsection 2.2(b)
shall be in effect the calculation of the Unused Line Fee shall
be subject to the effect of the limitation set forth therein.
The Unused Line Fee shall be payable in arrears on the first day
of each calendar month following the Closing Date and at
maturity, whether on the termination of this Agreement or
earlier.
2.13 CAPEX Loan Fee. On the date of any advance under
the CAPEX Loan, the Borrower shall pay ratably to the Lenders a
CAPEX Loan fee (the "CAPEX Loan Fee") in an amount equal to one-
half of one percent (0.50%) of the principal amount so advanced.
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2.14 Other Fees, Costs and Expenses. All reasonable
fees, costs and expenses incurred by the Agent in connection with
the negotiation, preparation, review, execution, delivery,
closing, amendment, modification and waiver of the Financing
Agreements shall be part of the Obligations payable as provided
in this subsection 2.14 and secured by the Collateral, including,
without limitation, the following: (i) in connection with
opening and maintaining the Blocked Accounts and depositing for
collection any check or item of payment received by and/or
delivered to any Collecting Bank or the Agent or any Lender on
account of the Obligations; (ii) arising out of the
indemnification by the Agent of any such Collecting Bank against
damages incurred by the Collecting Bank in the operation of a
Blocked Account; (iii) in connection with the Agent's forwarding
to the Borrower the proceeds of Loans or advances hereunder;
(iv) arising from photocopying and other mechanical or electronic
reproduction in connection with the rights of inspection under
subsection 7.2; (v) search fees, appraisal fees and expenses,
title insurance policy fees, costs and expenses; filing and
recording fees; reasonable fees, costs and expenses of the
Agent's attorneys and paralegals and all taxes payable in
connection with this Agreement or the other Financing Agreements,
whether such expenses and fees are incurred prior to, on or after
the date hereof; and (vi) arising from the Agent's employment of
counsel in connection with any matters contemplated by or arising
out of this Agreement. Any portion of the foregoing fees, costs
and expenses which remains unpaid thirty (30) days following the
Lender's statement and request for payment thereof shall bear
interest from the date of such statement and request for payment
at the Default Rate applicable to Revolving Loans accruing
interest at the Base Rate.
2.15 Borrower's Loan Account. The Agent shall maintain
a loan account ("Loan Account") on its books in which shall be
recorded (i) all Loans and advances made by each Lender to the
Borrower pursuant to this Agreement, (ii) the issuance of all
Risk Participations, (iii) all payments made by the Borrower on
all such Loans and advances and (iv) all other appropriate debits
and credits as provided in this Agreement, including, without
limitation, all fees, charges, expenses and interest. All
entries in the Borrower's Loan Account shall be made in
accordance with the Agent's customary accounting practices as in
effect from time to time. The Borrower promises to pay the
amount reflected as owing by it under its Loan Account and all of
its other Obligations hereunder as such amounts become due or are
declared due pursuant to the terms of this Agreement. The
Borrower irrevocably waives the right to direct the internal
application of any and all payments at any time or times
thereafter received by the Agent or any Lender from or on behalf
of the Borrower, and the Borrower hereby irrevocably agrees that
each Lender shall have the continuing exclusive right to apply
and to reapply any and all payments received at any time or times
after the occurrence of an Event of Default against the
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Obligations in such manner as such Lender may deem advisable
notwithstanding any previous entry by such Lender upon any of its
books and records.
The Borrower expressly agrees that to the extent the
Borrower makes a payment or payments and such payment or
payments, or any part thereof, are subsequently invalidated,
declared to be fraudulent or preferential, set aside or are
required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment,
the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment
or payments had not been made.
2.16 Statements. All advances to the Borrower, and all
other debits and credits provided for in this Agreement, shall be
evidenced by entries made by the Agent in the Loan Account and in
the Agent's books and records showing the date, amount and reason
for each such debit or credit. Until such time as the Agent
shall have rendered to the Borrower written statements of account
as provided herein, the balance in the Borrower's Loan Account,
as set forth on the Agent's most recent printout or other written
statement, shall be rebuttably presumptive evidence of the
amounts due and owing to each Lender by the Borrower. Not more
than twenty (20) days after the last day of each calendar month,
the Agent shall render to the Borrower a statement setting forth
the principal balance of the Loans and the calculation of
interest due thereon. Each such statement shall be subject to
subsequent adjustment by the Agent but shall, absent manifest
errors or omissions, be presumed correct and binding upon the
Borrower, and shall constitute an account stated unless, within
thirty (30) days after receipt of any statement from the Agent,
the Borrower shall deliver to the Agent by registered or
certified mail written objection thereto specifying the error or
errors, if any, contained in such statement. In the absence of a
written objection delivered to the Agent as set forth in this
subsection 2.16, the Agent's statement of the Borrower's Loan
Account shall be conclusive evidence of the amount of the
Borrower's Obligations.
2.17 Payment Dates. Interest shall be payable on Base
Rate Loans monthly in arrears on the first day of each calendar
month for all periods during the prior month for which such Base
Rate Loans are or, if converted to a LIBOR Rate Loan during the
prior month, were outstanding and on LIBOR Rate Loans at the end
of each Interest Period and, in the case of an Interest Period
longer than one month, on the last day of each month during such
Interest Period, in each case commencing September 1, 1994. Any
payment due hereunder on any day other than a Business Day shall
be due on the next succeeding Business Day, and if such payment
shall bear interest in accordance herewith, interest shall accrue
to the date of payment.
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2.18 Risk Participation Fees. The Borrower shall pay
to the Agent, for the benefit of the Lenders, fees for any Risk
Participation for the period from and including the date of
issuance of such Risk Participation to and excluding the date of
expiration or termination of such Risk Participation, equal to
the daily average amount of the Risk Participation Liability
multiplied by two percent (2.0%) per annum, such fees to be
calculated on the basis of a 360-day year for the actual number
of days elapsed and to be payable monthly in arrears on the first
day of the month following the date of issuance of any such Risk
Participation and the first day of each month thereafter. The
Borrower shall also reimburse the Agent and each Lender for any
and all normal and customary fees and expenses paid to the
Issuing Bank.
2.19 Other Risk Participation Provisions.
(a) Obligations Absolute. The obligation of the
Borrower to reimburse the Agent and each Lender for payments made
under any Risk Participation shall be unconditional and
irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including the
following circumstances:
(i) any lack of validity or enforceability of
any Risk Participation or any other agreement;
(ii) the existence of any claim, set-off, defense
or other right which the Borrower or any of its
Affiliates may have at any time against a beneficiary
or any transferee of any Risk Participation (or any
Persons for whom any such transferee may be acting),
the Agent or any Lender or any other Person, whether in
connection with this Agreement, the transactions
contemplated herein or any unrelated transaction
(including any underlying transaction between the
Borrower or any of their Affiliates and the beneficiary
for which such Risk Participation was procured);
(iii) any draft, demand, certificate or any other
document presented under any Risk Participation proving
to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Agent or any Lender under any
Risk Participation against presentation of a demand,
draft or certificate or other document which does not
comply with the terms of such Risk Participation;
provided that, in the case of any payment by the Agent
or any Lender under such Risk Participation, such
Person has not acted with gross negligence or willful
misconduct as determined by a final judgment, not
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subject to review on appeal, of a court of competent jurisdiction
in determining that the demand for payment under any Risk
Participation complies on its face with any applicable
requirements for a demand for payment under such Risk
Participation;
(v) any other circumstance or happening
whatsoever, which is similar to any of the foregoing;
or
(vi) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(b) Indemnification; Nature of the Agent and each
Lender's Duties. In addition to amounts payable as elsewhere
provided in this Agreement, the Borrower hereby agrees to
protect, indemnify, pay and save the Agent and each Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which the Agent or any
Lender may incur or be subject to as a consequence, direct or
indirect, of (1) the issuance of any Risk Participation, other
than as a result of the gross negligence or willful misconduct of
such Person as determined by a final order, not subject to review
on appeal, of a court of competent jurisdiction, or (2) the
failure of the Agent or any Lender to honor a demand for payment
under any Risk Participation as a result of any act or omission,
whether rightful or wrongful, of any governmental authority (all
such acts or omissions herein called "Government Acts").
As among the Agent, the Lenders and the Borrower, the
Borrower assumes all risks of the acts and omissions of, or
misuse of any Risk Participation by, beneficiaries thereof. In
furtherance and not in limitation of the foregoing, neither the
Agent nor any Lender shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of
any document by any party in connection with the application for
and issuance of any Risk Participation, even if it should in fact
prove to be in any and all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Risk Participation or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of any Risk
Participation to comply fully with conditions required in order
to demand payment under such Risk Participation; provided that,
in the case of any payment by the Agent or any Lender under any
Risk Participation, such Person has not acted with gross
negligence or willful misconduct in determining that the demand
for payment under any Risk Participation complies on its face
with any applicable requirements for a demand for payment under
such Risk Participation; (iv) for errors, omissions,
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interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph or otherwise; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay
in the transmission or otherwise of any document required in
order to make a payment under any Risk Participation or of the
proceeds thereof; (vii) for the credit of the proceeds of any
drawing under any Risk Participation; and (viii) for any
consequences arising from causes beyond the control of the
Lender, including any Government Acts. None of the above shall
affect, impair, or prevent the vesting of any of the Agent or any
Lender's rights or powers hereunder.
In furtherance and extension of, and not in limitation
of, the specific provisions hereinabove set forth, any action
taken or omitted by the Agent or any Lender under or in
connection with any Risk Participation, if taken or omitted in
good faith and without gross negligence or willful misconduct,
shall not put the Agent or any Lender under any resulting
liability to the Borrower.
2.20 Taxes; Changes In Law.
(a) Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and
without deduction for any and all taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto, excluding income taxes imposed by foreign,
federal, state or local taxing authorities with respect to
interest or commitment or other fees payable hereunder or any
transfer taxes imposed as a result of the transfer of any Notes
(all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter
collectively referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, then the sum
payable hereunder shall be increased as may be necessary so that,
after making all required deductions, such Lender or the Agent
receives an amount equal to the sum it would have received had no
such deductions been made. The Borrower hereby indemnifies and
agrees to hold the Agent and each Lender harmless from and
against all Taxes.
(b) In the event that, subsequent to the Closing Date,
or, in the case of a Person assigned an interest in or sold a
participation in the Loans pursuant to subsection 11.1,
subsequent to the date of such assignment or sale, (a) any change
in any existing law, regulation, treaty or directive or in the
interpretation or application thereof (including, without
limitation, any change resulting from the implementation of risk
based capital guidelines), (b) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof or
(c) compliance by any Lender with any request or directive
(whether or not having the force of law and including by way of
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withdrawal or termination of any previously available exemption)
from any governmental authority, agency or instrumentality
(including, without limitation, any request or directive
regarding capital adequacy)
(i) does or shall subject a Lender to any Tax
with respect to this Agreement, the other Financing
Agreements or any Loans made hereunder, or change the
basis of taxation of payments to such Lender of
principal, commitment, fees, interest or any other
amount payable hereunder (except for changes in the
rate of tax on the overall net income of such Lender);
or
(ii) does or shall impose on such Lender any
other condition or increased cost in connection with
the transactions contemplated hereby or participation
herein; or
(iii) affects the amount of capital required or
expected to be maintained by such Lender or any
corporation controlling such Lender and such Lender
determines the amount of capital required or expected
is increased by or based upon the existence of this
Agreement or its Commitment or Loans hereunder,
and the result of any of the foregoing is to increase the cost to
such Lender of making or continuing any Loan hereunder or selling
any participation therein or assigning any of its Commitments to
make Loans hereunder, as the case may be, or to reduce any amount
receivable thereunder, then, in any such case, the Borrower shall
within fifteen (15) days pay to such Lender, upon its demand, any
additional amounts which are necessary to compensate such Lender
for such additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such
Lender with respect to this Agreement, the other Financing
Agreements or the Loans made hereunder. If such Lender becomes
entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower in writing of
the event by reason of which such Lender has become so entitled.
A certificate as to any additional amounts payable pursuant to
this subsection 2.20 submitted by such Lender to the Borrower
shall be presumed correct in the absence of manifest error.
2.21 Special Provisions Governing LIBOR Rate Loans.
Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with
respect to LIBOR Rate Loans as to the matters covered:
(a) As soon as practicable after 10:30 a.m. (Chicago
time) on each LIBOR Rate Determination Date, the Agent shall
determine (which determination shall, absent manifest error, be
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final, conclusive and binding upon all parties) the interest rate
that shall apply to the LIBOR Rate Loans for which an interest
rate is then being determined for the applicable Interest Period
and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the Borrower and each Lender.
(b) If on any LIBOR Rate Determination Date any Lender
shall have determined (which determination shall be final and
conclusive and binding upon all parties) that:
(i) adequate and fair means do not exist for
ascertaining the applicable interest rate by reference
to the LIBOR Rate with respect to the LIBOR Rate Loans
as to which an interest rate determination is then
being made; or
(ii) the LIBOR Rate does not accurately or fairly
represent the effective pricing to that Lender for
dollar deposits of comparable amounts for the relevant
period; or
(iii) deposits of a type and maturity appropriate
to match fund LIBOR Rate Loans are not available; or
(iv) maintenance of LIBOR Rate Loans would violate
any applicable law, rule, regulation or directive,
whether or not having the force of law;
then, and in any such event, such Lender shall, promptly after
being notified of a borrowing, conversion or continuation, give
notice (by telephone confirmed in writing) to the Borrower and
the Agent (which notice the Agent shall promptly transmit to each
other Lender) of such determination, and the Agent shall suspend
the availability of LIBOR Rate Loans and require any LIBOR Rate
Loans to be repaid and the Borrower shall repay or prepay the
LIBOR Rate Loans, together with all interest accrued thereon.
(c) The Borrower shall indemnify the Agent and each
Lender, upon written request (which request shall set forth in
reasonable detail the basis for requesting such amounts and which
shall, absent manifest error, be presumed correct and binding
upon all parties hereto), for reasonable losses, expenses and
liabilities (including, without limitation, any loss (including
interest paid) sustained by it in connection with the liquidation
or re-employment of such funds), that such Person may sustain:
(i) if for any reason (other than a default by the Lenders) a
borrowing of any LIBOR Rate Loan does not occur on a date
specified therefor in a Borrowing Notice, a Notice of
Conversion/Continuation or a request by telephone or telecopy for
borrowing or conversion/continuation or a successive Interest
Period does not commence after notice therefor is given pursuant
to subsection 2.6(e) or 2.6(f); (ii) if any prepayment of any of
its LIBOR Rate Loans occurs on a date that is not the last day of
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the Interest Period applicable to that Loan whether because of
acceleration, prepayment or otherwise (unless such prepayment is
required pursuant to the provisions of subsection 2.21(b)); (iii)
if any of its LIBOR Rate Loans are not paid on any date specified
in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR
Rate Loans when required by the terms of this Agreement; provided
that during the period while any such amounts have not been paid,
the Lenders shall reserve an equal amount from amounts otherwise
available to be borrowed under the Revolving Loan. The
provisions of this subsection 2.21(c) shall survive the
termination of this Agreement, the repayment of the Loans and the
discharge of the Borrower's other Obligations hereunder.
(d) Any Lender may make, carry or transfer LIBOR Rate
Loans at, to, or for the account of, any of its branch offices or
the office of an affiliate of such Lender.
(e) Calculation of all amounts payable to a Lender
under subsection 2.21(b) or 2.21(c) shall be made as though each
Lender had actually funded its relevant LIBOR Rate Loan through
the purchase of a LIBOR deposit bearing interest at the LIBOR
Rate in an amount equal to the amount of such LIBOR Rate Loan and
having a maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore
office to a domestic office in the United States of America;
provided that each Lender may fund each of its LIBOR Rate Loans
in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this
subsection 2.21.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
______________________________________
3.1 Monthly Reports and Collateral Reports. The
Borrower shall submit to each Lender, not later than the twenty-
seventh (27th) day of each month, a monthly report ("Monthly
Report"), accompanied by a certificate in the form attached as
Exhibit 3.1, which shall be signed by the chief executive or
chief financial executive of the Borrower. The Monthly Report
shall be in form and substance satisfactory to the Agent and
shall include, as of the last Business Day of the preceding month
(and with respect to the initial Monthly Report as of a date not
more than two (2) Business Days prior to the date hereof):
(i) an aged trial balance of Accounts ("Accounts Trial Balance")
as described in subsection 7.1(ii)(b) and a payables report in a
form satisfactory to the Required Lenders; and (ii) a schedule of
Inventory owned by the Borrower and in the Borrower's possession
valued at the lower of cost or market on a FIFO basis. The
Borrower shall provide in all Monthly Reports and more frequently
if requested by the Required Lenders, and in form satisfactory to
the Required Lenders, information on each of the following
occurrences arising subsequent to the immediately preceding
Monthly Report: all sales or other reductions of and all
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additions to Inventory, all returns of Inventory, and all credits
issued by the Borrower, all complaints and claims against the
Borrower in connection with Inventory. In addition, the Borrower
shall provide each Lender with a written report on a semi-monthly
basis, or such shorter time as the Required Lenders may require,
(the "Collateral Report") in form and substance satisfactory to
the Agent. The Borrower shall furnish copies of any other
reports or information, in a form and with such specificity as is
satisfactory to the Required Lenders, concerning Accounts
included, described or referred to in the Collateral Reports and
any other documents in connection therewith requested by the
Required Lenders including, without limitation, but only if
specifically requested by the Required Lenders, copies of all
invoices prepared in connection with such Accounts.
Notwithstanding the form of Exhibit 3.1B, the Collateral Reports
shall contain such additional information as the Required Lenders
may require.
3.2 Eligible Accounts. "Eligible Accounts" shall mean
all Accounts other than the following: (i) Accounts which remain
unpaid as of ninety (90) days after the date of the original
invoice with respect thereto; (ii) all Accounts owing by a single
Account Debtor, including a currently scheduled Account, if fifty
percent (50%) or more of the balance owing by such Account Debtor
is ineligible by reason of the criterion set forth in clause
(i) of this subsection 3.2; (iii) Accounts with respect to which
the Account Debtor is an Affiliate of the Borrower or a director,
officer or employee of the Borrower or its Affiliates; (iv)
Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality
thereof unless the Borrower has complied with the Federal
Assignment of Claims Act of 1940, as amended in a manner
satisfactory to the Agent; (v) Accounts with respect to which the
Account Debtor is not a resident of the United States unless the
Account Debtor has (A) supplied the Borrower with an irrevocable
letter of credit, issued by a financial institution satisfactory
to the Required Lenders, or (B) obtained foreign credit
insurance, in each case in an amount sufficient to cover such
Account and in form and substance satisfactory to the Required
Lenders and without right of setoff; provided that even if the
Borrower has complied with the terms of subsections (A) or (B) of
this clause (v), in no event shall more than $100,000 of Accounts
with respect to which the account debtor is not a resident of the
United States be Eligible Accounts; (vi) Accounts arising with
respect to goods which have not been shipped and delivered to and
accepted as satisfactory by the Account Debtor or arising with
respect to services which have not been fully performed and
accepted as satisfactory by the Account Debtor; (vii) Accounts
for which the prospect of payment in full or performance in a
timely manner by the Account Debtor is or is likely to become
impaired as determined by the Agent in accordance with its
customary asset-based financing criteria; (viii) Accounts which
are not invoiced (and dated as of the date of such invoice) and
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sent to the Account Debtor within five (5) days after delivery of
the underlying goods to or performance of the underlying services
for the Account Debtor; (ix) Accounts with respect to which the
Agent, on behalf of the Lenders, does not have a first and valid
fully perfected security interest; (x) Accounts with respect to
which the Account Debtor is the subject of bankruptcy or a
similar insolvency proceeding or has made an assignment for the
benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (xi) Accounts with respect to which the
Account Debtor's obligation to pay the Account is conditional
upon the Account Debtor's approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a
guaranteed sale, sale-and-return, sale on approval (except with
respect to Accounts in connection with which Account Debtors are
entitled to return Inventory solely on the basis of the quality
of such Inventory) or consignment basis; (xii) Accounts (other
than the Defense Nuclear Agency Account) to the extent that at
any time the aggregate amount of the Account Debtor's
indebtedness to the Borrower exceeds fifteen percent (15%) of the
aggregate amount of all Accounts at such time; (xiii) Accounts
with respect to which any disclosure is required in accordance
with subsection 3.3; (xiv) contra Accounts to the extent of the
amount of the accounts payable owed by the Borrower to the
Account Debtor; (xv) Accounts with respect to which the Account
Debtor is located in Minnesota, Indiana, New Jersey or any other
state denying creditors access to its courts in the absence of a
Notice of Business Activities Report or other similar filing
unless the Borrower has either qualified as a foreign corporation
authorized to transact business in such state or has filed a
Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year; and (xvi)
Accounts which the Agent determines in good faith in accordance
with its customary asset-based financing criteria to be
unacceptable. In the event that a previously scheduled Eligible
Account ceases to be an Eligible Account under the above
described criteria, the Borrower shall notify the Lender thereof.
3.3 Account Warranties. With respect to Accounts
scheduled, listed or referred to on the initial Accounts Trial
Balance (included in the initial Monthly Report attached as
Exhibit 3.1) or on any subsequent Accounts Trial Balance or
Collateral Report, the Borrower warrants and represents to the
Agent and each Lender that, except as disclosed on the applicable
Accounts Trial Balance or Collateral Report: (i) the Accounts
represent bona fide sales of Inventory or the provision of
services to customers in the ordinary course of business
completed in accordance with the terms and provisions contained
in the documents available to the Agent and each Lender with
respect thereto and are not evidenced by a judgment, instrument
or chattel paper; (ii) the amounts shown on the applicable
Accounts Trial Balance and on the Borrower's books and records
and all invoices and statements which may be delivered to the
Agent or any Lender with respect thereto are actually and
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absolutely owing to the Borrower and are not in any way
contingent; (iii) no payments have been or shall be made thereon
except payments immediately delivered to the Agent pursuant to
this Agreement; (iv) there are no setoffs, claims or disputes
existing or asserted with respect thereto and the Borrower has
not made any agreement with any Account Debtor for any deduction
therefrom except a discount or allowance allowed by the Borrower
in the ordinary course of its business for prompt payment; (v) to
the best of the Borrower's knowledge, there are no facts, events
or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable
thereunder as shown on the respective Accounts Trial Balances or
Collateral Reports, the Borrower's books and records and all
invoices and statements delivered to the Agent or any Lender with
respect thereto; (vi) to the best of the Borrower's knowledge,
all Account Debtors have the capacity to contract; (vii) the
Borrower has received no notice of proceedings or actions which
are threatened or pending against any Account Debtor which might
result in any material adverse change in such Account Debtor's
financial condition; (viii) the Borrower has no knowledge that
any Account Debtor is unable generally to pay its debts as they
become due; (ix) the Accounts do not arise from the sale of
Inventory produced in violation of the Fair Labor Standards Act
so as to be subject to the so-called "hot goods" provision
contained in Title 29 U.S.C., Section 215(a)(1); (x) the services
furnished and/or goods sold giving rise thereto are not subject
to any Lien, except that of the Agent; and (xi) with respect to
Accounts for which the Account Debtor is located in Minnesota,
Indiana, New Jersey or any other state denying creditors access
to its courts in the absence of a Notice of Business Activities
Report or other similar failing, the Borrower has either
qualified as a foreign corporation authorized to transact
business in such state or has filed all required Notice of
Business Activities Reports or comparable filings with the
applicable governmental agency or authority.
3.4 Collection of Accounts and Payments. On or prior
to the date hereof, the Borrower shall establish lock box
accounts ("Blocked Accounts") in the Borrower's name with such
banks as are acceptable to the Agent ("Collecting Banks") and
enter into blocked account agreements among the Borrower, the
Agent and each Collecting Bank ("Blocked Account Agreements').
All Account Debtors shall directly remit all payments on Accounts
into a Blocked Account and the Borrower will immediately deposit
all cash payments made for Inventory or other cash payments
constituting proceeds of Collateral into a Blocked Account in the
identical form in which such payment was made, whether by cash or
check. On or prior to the date hereof, the Borrower shall notify
in writing each of the existing Account Debtors of the name and
address of the Blocked Account to which each such Account Debtor
shall be directed to remit all payments on its Accounts. In
addition, the Agent shall establish for the benefit of the
Lenders a depository account at each Collecting Bank or at a
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centrally located bank (the "Depository Account"). Each Blocked
Account Agreement shall provide, among other things, that (i) all
items of payment deposited in each Blocked Account are held by
such Collecting Bank as agent and bailee-in-possession for the
Agent, (ii) the Collecting Bank has no rights of setoff or
recoupment or any other claim against such Blocked Account, other
than for payment of its service fees and other charges directly
related to the administration of such Blocked Account and for
returned checks or other items of payment, (iii) unless and until
the Agent shall have given such Collecting Bank a Redirection
Notice (as such term is defined below), such Collecting Bank
agrees to forward all amounts received in such Blocked Account to
such accounts or for such uses as the Borrower may from time to
time instruct, and (iv) at all times following delivery of notice
by the Agent to such Collecting Bank to do so (a "Redirection
Notice"), such Collecting Bank agrees to immediately forward all
amounts received in such Blocked Account to the Collection
Account through daily sweeps from the Blocked Account into the
Collection Account. The Agent shall not be entitled to deliver a
Redirection Notice to any Collecting Bank until the occurrence of
an Event of Default. The Borrower hereby agrees that all
payments received by the Agent, whether by cash, check, wire
transfer or any other instrument, made to such Blocked Accounts
or otherwise received by the Agent and whether on the Accounts or
as proceeds of other Collateral or otherwise will be the sole and
exclusive property of the Agent, for the benefit of the Lenders.
The Borrower shall irrevocably instruct each Collecting Bank
that, upon receipt of a Redirection Notice, each Collecting Bank
shall promptly transfer all payments or deposits to the Blocked
Accounts into the Agent's Depository Account. The Borrower, and
any of its Affiliates, employees, agents or other Persons acting
for or in concert with the Borrower, shall, acting as trustee for
the Agent, receive, as the sole and exclusive property of the
Agent, for the benefit of the Lenders, any monies, checks, notes,
drafts or any other payments relating to and/or proceeds of
Accounts or other Collateral which come into the possession or
under the control of the Borrower or any Affiliates, employees,
agents or other Persons acting for or in concert with the
Borrower, and immediately upon receipt thereof, the Borrower or
such Persons shall deposit the same or cause the same to be
deposited, in kind, in a Blocked Account or, at the direction of
the Agent, shall remit the same or cause the same to be remitted,
in kind, to the Agent, at the Agent's address set forth in
subsection 10.13.
3.5 Appointment of the Agent as Borrower's Attorney-
in-Fact. The Borrower hereby irrevocably designates, makes,
constitutes and appoints the Agent (and all Persons designated by
the Agent) the Borrower's true and lawful agent and attorney-in-
fact (which appointment shall for all purposes be deemed to be
coupled with an interest and shall be irrevocable for so long as
any Obligations are outstanding), and authorizes the Agent, in
the Borrower's or the Agent's name, to, following the occurrence
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of an Event of Default (i) demand payment of Accounts,
(ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of the Borrower's rights and
remedies with respect to proceedings brought to collect an
Account, (iv) sell or assign any Account upon such terms, for
such amount and at such time or times as the Agent deems
advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Account, (vii) prepare,
file and sign the Borrower's name on any proof of claim in
bankruptcy or other similar document against an Account Debtor,
(viii) have access to any lockbox or postal box into which the
Borrower's mail is deposited or notify the postal authorities of
any change of the address for delivery of the Borrower's mail to
an address designated by the Agent, and open and dispose of all
mail addressed to the Borrower, (ix) do all acts and things which
are necessary, in the Agent's sole discretion, to fulfill the
Borrower's Obligations under this Agreement, (x) take control in
any manner of any item of payment or proceeds of any Account,
(xi) endorse the Borrower's name upon any items of payment or
proceeds thereof and deposit the same in the Agent's account on
account of the Borrower's Obligations, (xii) endorse the
Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account
or any goods pertaining thereto, (xiii) execute in the Borrower's
name and on the Borrower's behalf any financing statements or
amendments thereto, (xiv) endorse the Borrower's name on any
verification of Accounts and notices thereof to Account Debtors,
and (xv) communicate with the Borrower's independent certified
public accountants.
3.6 Eligible Inventory. "Eligible Inventory" shall
consist of all of the Inventory, except the following:
(i) Inventory consisting of castings; (ii) consigned Inventory;
(iii) Inventory which is damaged, obsolete, not in good
condition, or not either currently usable or currently saleable
in the ordinary course of the Borrower's business as determined
by the Agent in good faith in accordance with its customary
asset-based financing criteria; (iv) Inventory which the Agent
determines in good faith in accordance with its customary asset-
based financing criteria, or which in accordance with the
Borrower's customary business practices, is unacceptable due to
age, type, category and/or quantity, including, without
limitation, any Inventory which is in excess of a one (1) year's
supply or is otherwise slow-moving; (v) Inventory with respect to
which the Agent does not have a first and valid, fully perfected
security interest; (vi) Inventory consisting of packaging or
supplies; (vii) Inventory in the possession of the Borrower but
not owned by the Borrower; (viii) Inventory produced in violation
of the Fair Labor Standards Act and subject to the so-called "hot
goods" provision contained in Title 29 U.S.C. Section 215(a)(1);
(ix) Inventory with respect to which any disclosure is required
in the applicable Monthly Report or Collateral Report in
accordance with subsection 3.7; (x) Inventory which is located at
a place other
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than the places of business and collateral locations of the
Borrower listed on Exhibit 3.6 (provided, however, that in the
case of leased locations listed on Exhibit 3.6, no Inventory
located at any such location shall be "Eligible Inventory" until
the applicable landlord has executed a lien waiver in form and
substance satisfactory to the Agent) including, without
limitation, Inventory in transit (other than Inventory in transit
from the Borrower to any of its Subsidiaries or between places of
business or collateral locations of the Borrower); (xi) Inventory
consisting of finished goods which do not meet the specifications
of the purchase order for which such Inventory was produced; and
(xii) Inventory which fails to meet the standards imposed by any
governmental agency, or department or division thereof, having
regulatory authority over such goods, its use and/or sale. In
the event that Inventory previously scheduled in a Monthly Report
or Collateral Report ceases to be Eligible Inventory, the
Borrower shall notify the Agent thereof immediately.
3.7 Inventory Warranties. With respect to Inventory
scheduled, listed or referred to in any Monthly Report or
Collateral Report, the Borrower warrants and represents that,
except as disclosed on such Monthly Reports or Collateral Reports
(i) such Inventory is located at one of the Facilities, (ii) the
Borrower has good, indefeasible and merchantable title to such
Inventory and such Inventory is not subject to any Lien or
document whatsoever except for the prior, first perfected Lien
granted to the Agent hereunder, (iii) such Inventory is of good
and merchantable quality, free from any defects, (iv) such
Inventory is not subject to any licensing, patent, royalty,
trademark, tradename or copyright agreements with any third
parties, and (v) the completion of manufacture, sale or other
disposition of such Inventory by the Agent following an Event of
Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to
which the Borrower is a party or to which the Inventory is
subject.
3.8 Safekeeping of Inventory and Inventory Covenants.
Neither the Agent nor any Lender shall be responsible for:
(i) the safekeeping of the Inventory; (ii) any loss or damage to
the Inventory; (iii) any diminution in the value of the
Inventory; or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency or any other Person. As
between the Borrower and the Agent and each Lender, all risk of
loss, damage, destruction or diminution in value of the Inventory
shall be borne by the Borrower. No Inventory is or shall be at
any time or times hereafter stored with a bailee, warehouseman,
consignee or similar third party without the Agent's prior
written consent and unless the Agent shall have received
warehouse receipts or bailee letters satisfactory to the Agent
prior to the commencement of such storage. The Borrower shall
not sell any Inventory to any customer on approval or on any
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other basis which entitles the customer to return, or which may
obligate the Borrower to repurchase, such Inventory.
4. CONDITIONS TO ADVANCES.
______________________
4.1 Conditions to All Advances. In addition to those
conditions set forth in subsection 4.2 regarding the initial
advance of funds or issuance of a Risk Participation under the
Revolving Credit Facility, and notwithstanding any other
provisions contained in this Agreement, the making of any advance
or the issuance of any Risk Participation provided for in this
Agreement shall be conditioned upon the matters set forth in this
subsection 4.1:
(a) Warranties and Representations. All of the
warranties and representations of the Borrower contained herein
or in any of the other Financing Agreements shall be true and
correct in all material respects on and as of the date of such
advance as if made on such date, except to the extent that any
such representation or warranty expressly relates to an earlier
date.
(b) Borrower's Request. The Agent shall have
received, on or prior to 12:00 noon (Chicago time) on the day a
Base Rate Loan is to be made, and at least three (3) Business
Days prior to the day a LIBOR Rate Loan is to be made and at
least fifteen (15) Business Days prior to the date a Risk
Participation is to be issued (i) a Notice of Borrowing or a
Notice of Conversion/Continuation from the Borrower for an
advance in a specific amount, (ii) a Monthly Report from the
Borrower dated no more than thirty-one (31) days prior to the
date of such advance, and (iii) a current Collateral Report and
all other documents required to have been delivered to the Agent
hereunder prior to such date.
(c) Financial Condition. As determined by the
Required Lenders in their reasonable discretion, no material and
adverse change in the business, operations or condition
(financial or other) of the Borrower shall have occurred at any
time or times subsequent to the most recent annual financial
statements provided pursuant to subsection 7.1(iii).
(d) No Default. As determined by the Required
Lenders, neither a Default nor an Event of Default shall have
occurred and be continuing or will result from such advance.
(e) No Litigation. (i) No Litigation shall be pending
or threatened against the Borrower or any officer, director, or
executive of the Borrower (A) in connection with this Agreement,
the Financing Agreements or (B) which, if adversely determined,
would have a Material Adverse Effect; and (ii) no injunction,
writ, restraining order or other order of any nature materially
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adverse to the Borrower shall have been issued or threatened by
any court or governmental agency.
(f) Aggregate Revolving Loan. After giving effect to
such advance or the issuance of such Risk Participation, the
aggregate principal amount of the Revolving Loan shall not exceed
the maximum amount permitted by subsection 2.2.
(g) Other Requirements. All legal matters incident to
the making of an advance of funds or issuance of a Risk
Participation under the Revolving Loan shall be satisfactory to
the Agent and its counsel.
Each request and acceptance by the Borrower of the
proceeds of any advance under the Revolving Loan and the request
by the Borrower for the incurrence by the Lenders of any Risk
Participation Liability shall constitute a representation and
warranty by the Borrower that the conditions contained in
subsections 4.1(a), 4.1(d) and 4.1(e) have been satisfied.
4.2 Conditions to Initial Advances. In addition to
those conditions set forth in subsection 4.1 with respect to all
advances or issuances of Risk Participations hereunder, the
making of the initial advance of funds under the Revolving Loan
and the funding of the Term Loan and the CAPEX Loan (if
applicable) shall be conditioned upon the satisfaction on or
before the Closing Date of the conditions set forth in this
subsection 4.2 and the delivery on or before the Closing Date of
the following documents to each Lender, in form and substance
satisfactory to such Lender, and consummation of all of the
transactions or the satisfaction of each condition contemplated
by each such document in a manner satisfactory to each Lender and
its counsel.
(a) Agreement; Notes. Four (4) duly executed copies
of this Agreement, the Borrower Security Agreement, the Parent
Security Agreement, the Intellectual Property Security Agreement,
the Borrower Pledge Agreement, the Parent Pledge Agreement, the
Crosby Guaranty, the Parent Guaranty, the other Financing
Agreements and one (1) duly executed copy of each of the
Revolving Loan Notes, the Term Loan Notes and a CAPEX Note (if
applicable) conforming to the requirements hereof, together with
all Schedules, Exhibits, certificates, instruments, documents and
financial statements required to be delivered pursuant hereto and
thereto.
(b) Legal Opinion. The legal opinion of the
Borrower's counsel and such local counsel deemed necessary by the
Lenders in form and substance satisfactory to the Lenders and
their counsel.
(c) UCC. Evidence of the proper filing of UCC
financing statements perfecting security interests in favor of
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the Agent in the Collateral and copies of searches of financing
statements filed under the Code, together with tax lien and
judgment searches with respect to the Property of the Borrower,
Crosby and the Parent, in each case in such jurisdictions as the
Agent may request.
(d) Officer's Certificate. A certificate executed by
the chief executive officer or chief financial officer of the
Borrower, stating that to the best of his knowledge (i) no
Default or Event of Default has occurred and is continuing,
(ii) no material adverse change in the financial condition or
operations of the Borrower's business has occurred, (iii) no
litigation, investigation or proceeding, or injunction, writ or
restraining order of the type described in subsection 4.1(e) is
pending or threatened, (iv) each of the conditions precedent to
the consummation of the Loans contemplated hereby has been met or
satisfied, and (v) the representations and warranties of the
Borrower are correct and complete in all material respects on and
as of the Closing Date.
(e) Insurance Policies and Endorsements. Copies of
policies of insurance required hereby together with loss payable
endorsements on the Agent's standard form, duly executed, and
evidence of the payment of the first year's premium therefor.
(f) Initial Monthly Report and Other Exhibits. Copies
the initial Monthly Report, the Solvency Certificate, the initial
Projections, and all financial statements and other Exhibits and
Schedules required hereby.
(g) Fees. The Closing Fee payable pursuant to
subsection 2.10 and the Agent's Fee payable pursuant to
subsection 2.11 have been paid.
(h) Charter and Bylaws. A copy of the Certificate of
Incorporation of each of the Borrower and the Parent, certified
by the Secretary of State of Delaware as of a date not more than
twenty (20) days prior to the Closing Date and a copy of the
bylaws of each of the Borrower and the Parent, and any amendments
thereto certified by its respective Secretary.
(i) Good Standing Certificates. A good standing
certificate for each of the Borrower and the Parent from the
State of Delaware and from each other state in which such Person
is required to be qualified to transact business as a foreign
corporation.
(j) Board Resolutions. Certified copies of
resolutions of the board of directors of (i) the Borrower
authorizing the execution and delivery of and the consummation of
the transactions contemplated by this Agreement, the other
Financing Agreements and all other documents or instruments to be
executed and delivered in conjunction herewith and therewith,
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which resolutions shall also designate which officers of the
Borrower shall be authorized to make a request for an advance of
the Revolving Loan hereunder, (ii) the Parent authorizing the
execution and delivery of the Parent Guaranty and the other
Financing Agreements to which it is a party and the performance
of its obligations thereunder, and (iii) Crosby authorizing the
execution and delivery of the Crosby Guaranty and the performance
of its obligations thereunder.
(k) Incumbency Certificates. Incumbency certificates
with respect to the officers of the Borrower, the Parent and
Crosby, respectively, executing the documents referred to in item
(j) above.
(l) Landlord Waivers. Landlord waivers with respect
to all real property leased to the Borrower.
(m) Accountants' Letter. A letter authorizing
Borrower's independent certified public accountants to
communicate with each Lender in accordance with subsection 7.1
and acknowledging the Lenders' reliance on future financial
statements.
(n) Bailee Letters. Bailee letters from each
warehouseman or bailee, if any, having possession of any
Inventory.
(o) Power of Attorney. A power of attorney in favor
of the Agent with respect to the matters set forth in subsections
3.5, 5.2 and 7.6 in form and substance satisfactory to the
Lenders.
(p) Letter of Direction. A letter of direction from
the Borrower with respect to the disbursement of the proceeds of
the initial advance of funds hereunder.
(q) Closing Date Availability. After giving effect to
the initial advance under the Revolving Credit Facility, the
Borrower shall have Unused Availability of at least One Million
Five Hundred Thousand Dollars ($1,500,000).
(r) No Material Adverse Change. No material and
adverse change in the business, operations or condition
(financial or other) or prospects of the Borrower shall have
occurred since August 31, 1994.
(s) No Accounting Changes. The Borrower shall not
have made any material change in its accounting methods or
principles since August 31, 1994.
(t) Blocked Account Agreements. Executed copies of
each of the Blocked Account Agreements.
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(u) Regulation U. The Agent shall have received from
the Borrower a Federal Reserve Board Form U-1 with respect to
each Lender's Commitment, dated the initial Funding Date,
together with such other documents as may be reasonably requested
by the Agent in order to determine compliance with Regulation U.
(v) Mortgages. Duly executed copies of the Mortgages.
(w) Mortgagee's Title Insurance. An ALTA Loan Policy,
dated the date of the initial advance under the Revolving Loan
and the funding of the Term Loan, for each parcel of Real Estate
subject to a Mortgage, from a title insurance company acceptable
to the Agent, subject only to such exceptions and exclusions as
are acceptable to the Agent and its counsel and containing such
information and endorsements as may be required by the Agent,
including, without limitation, usury, zoning, comprehensive and
revolving credit endorsements.
(x) Surveys. A survey for each parcel of Real Estate
subject to a Mortgage, prepared by a licensed surveyor in
accordance with the "Minimum Standard Detail Requirements for
ALTA/ASCM Land Title Surveys" jointly established and adopted by
the American Congress on Surveying and Mapping and the American
Land Title Association in 1992, meeting the accuracy requirements
defined therein as applicable (hereinafter "ALTA Standards"),
dated within thirty (30) days of the Closing Date and certified
to the Agent and the Title Company.
(y) Payoff Letter; Termination Statements; Releases.
Letter from Continental Bank itemizing amounts of principal,
interest, fees, expenses or other amounts payable on any
Indebtedness other than the Obligations through the Closing Date;
UCC-3 termination statements, mortgage releases and all other
instruments and documents necessary to terminate all Liens except
Permitted Liens; and all releases and all other instruments
necessary to terminate all Liens on the Borrower's Intellectual
Property except the Lien of the Agent.
(z) Plan of Reorganization. The Parent shall have
performed and be in compliance with all agreements and conditions
set forth as contemplated in the Plan of Reorganization which are
required to be performed by or complied with by it through the
Closing Date.
(aa) Form W-9. A copy of IRS Form W-9, Taxpayer
Identification Number and Certification.
(bb) Other Documents. Such other documents as the
Lenders may reasonably request.
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5. COLLATERAL.
__________
5.1 Security Interest. All of the Borrower's
Obligations constitute one (1) loan secured by the Agent's Liens
on the Collateral and by all other Liens now or from time to time
hereafter granted by the Borrower to the Lender. To secure
timely payment and performance in full of the Obligations, the
Borrower shall grant to the Agent, for the benefit of the Lenders
pursuant to the Financing Agreements a right of setoff against
and a continuing Lien upon all of the Borrower's right, title and
interest in and to its Property and interests in Property,
whether now owned or hereafter acquired by the Borrower and
wheresoever located. In addition, concurrently with the
execution and delivery hereof the Borrower shall deliver the
Mortgages, and concurrently with the acquisition of any real
property after the date hereof, the Borrower shall grant and
convey to the Agent, for the benefit of the Lenders, as security
for the Obligations, first mortgage Liens on all such real
property.
5.2 Preservation of Collateral and Perfection of
Security Interests Therein. Prior to the execution of this
Agreement, the Borrower shall have executed and delivered to the
Agent, and at any time or times hereafter at the request of the
Agent, the Borrower shall execute and deliver, all financing
statements, security agreements, pledge agreements, mortgages,
amendments thereto, or other documents (and pay the cost of
filing or recording the same in all public offices deemed
necessary by the Agent) as the Agent may request, in a form
satisfactory to the Agent, to perfect and maintain the security
interests in the Collateral granted by the Borrower to the Agent
or to otherwise protect and preserve the Collateral and the
Agent's security interests therein or to enforce the Agent's
security interests in the Collateral. Should the Borrower fail
to do so, the Agent is authorized to sign any such financing
statements or other documents as the Borrower's agent. The
Borrower further agrees that a carbon, photocopy or other
reproduction of this Agreement or of a financing statement is
sufficient as a financing statement. The Borrower shall make
appropriate entries upon its books and records disclosing the
Agent's Liens on the Collateral.
5.3 CAPEX Loan Collateral. Simultaneously with any
advance under the CAPEX Loan, the Borrower shall grant to the
Agent, for the benefit of the Lenders, to secure the Obligations
a Lien on the Real Estate so acquired by way of mortgage or
comparable agreements in form and substance satisfactory to the
Agent, and will furnish to the Agent a mortgagee's title policy
in an amount satisfactory to the Agent ensuring that, subject
only to Permitted Liens, the Agent, for the benefit of the
Lenders, has a valid first priority Lien on such Real Estate.
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6. WARRANTIES AND REPRESENTATIONS.
______________________________
The Borrower represents and warrants and covenants and
agrees that as of the date hereof and continuing so long as any
Obligations remain outstanding, and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in
effect:
6.1 Existence. The Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective
jurisdiction of incorporation and is qualified to transact
business as a foreign corporation in, and is in good standing
under the laws of, all states in which it is required by
applicable law to maintain such qualification and good standing
except where the failure to so qualify would not have a Material
Adverse Effect. All such jurisdictions are listed on Exhibit
6.1.
6.2 Authority. The Borrower has full power, authority
and legal right to enter into this Agreement and the other
Financing Agreements to which it is a party. The execution and
delivery by the Borrower of this Agreement and such other
Financing Agreements: (i) have been duly authorized by all
necessary action on the part of the Borrower; (ii) are not in
contravention of the terms of the Borrower's Articles of
Incorporation or Bylaws or of any indenture, agreement or
undertaking to which the Borrower is a party or by which the
Borrower or any of its Property is bound; (iii) do not and will
not require any governmental consent, registration or approval or
the consent of any other Person that has not been obtained;
(iv) do not and will not contravene any contractual or
governmental restriction to which the Borrower or any of its
Property may be subject; and (v) do not and will not, except as
contemplated herein, result in the imposition of any Lien upon
any Property of the Borrower under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Borrower is a party
or by which the Borrower or any of its Property may be bound or
affected. The Borrower has the full corporate authority to own
or lease and operate its property and to conduct the business in
which it is currently engaged and in which it proposes to engage.
6.3 Binding Effect. This Agreement and all of the
other Financing Agreements to which it is a party have been duly
executed and delivered by the Borrower, are the legal, valid and
binding obligations of the Borrower and are enforceable against
the Borrower in accordance with their terms.
6.4 Financial Data. (a) The Borrower has furnished to
each Lender the consolidated and consolidating financial
statements (the "Financial Statements") of the Parent and its
Subsidiaries based on financial data as of August 31, 1994 and
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attached as Exhibit 6.4-1. As of the date of this Agreement, the
Financial Statements are complete and accurate and fairly
represent the Parent's consolidated assets, liabilities,
financial condition and results of operations in accordance with
Generally Accepted Accounting Principles, consistently applied,
as of August 31, 1994 (subject to normal year-end adjustment,
without full footnote disclosure) and the consolidated results of
their operations for the respective periods then ended (subject
to normal year-end adjustments). There are no omissions from the
Financial Statements or other facts and circumstances not
reflected in the Financial Statements which are material. Except
as contemplated hereby or otherwise permitted by the Financing
Agreements, since the date of the Financial Statements through
the date of this Agreement, neither the Borrower nor any of its
Subsidiaries has: (i) incurred any debts, obligations, or
liabilities (absolute, accrued, or contingent and whether due or
to become due) except liabilities incurred in the ordinary course
of business, none of which (individually or in the aggregate)
materially and adversely affects the business or properties of
the Borrower or any Subsidiary; (ii) paid any obligation or
liability other than liabilities in the ordinary course of
business; (iii) declared or made any Restricted Payment or
obligated itself to do so; (iv) mortgaged, pledged, or subjected
to any Lien on any of its Property; (v) sold, transferred, or
leased any of its Property except in the usual and ordinary
course of business; (vi) entered into any transaction other than
in the usual and ordinary course of business and other than as
contemplated hereby; (vii) issued or sold any shares of capital
stock or other securities or granted any options or similar
rights with respect thereto other than pursuant hereto; or (viii)
agreed to do any of the foregoing other than pursuant hereto.
There has been no material and adverse change in the business,
operations or condition (financial or other) of the Borrower and
its Subsidiaries since the date of the Financial Statements.
(b) Attached as Exhibit 6.4-2 are the initial
Projections for the Borrower which contain the information
required by clause (v) of subsection 7.1. The initial
Projections have been prepared, and all Projections hereafter
delivered in accordance with clause (v) of subsection 7.1 shall
be prepared, by the chief financial officer of the Borrower on
the basis of the assumptions set forth therein and will, when
prepared, represent, the best available good faith estimate of
the Borrower's management regarding the course of the Borrower's
business for the periods covered thereby. The assumptions set
forth in the initial Projections are, and the assumptions set
forth in the future Projections delivered hereafter shall be,
reasonable and realistic based on then current economic
conditions.
(c) The Borrower has also provided to the Lenders (i)
audited statements of income and cash flow and balance sheets for
the Parent and its Subsidiaries for each of its three (3) most
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recent Fiscal Years and (ii) unaudited statements of income and
cash flow and balance sheets for the Borrower and its
Subsidiaries as of August 31, 1994 and for the eight months then
ended and such financial statements fairly present the financial
condition and results of operations of each of the Parent and its
Subsidiaries and the Borrower and its Subsidiaries, respectively,
for the periods indicated therein, in accordance with Generally
Accepted Accounting Principles, consistently applied (subject to
normal year-end adjustments, without full footnote disclosure).
6.5 Collateral. Except as disclosed on Exhibit 8.1
and except for Permitted Liens described in subsection 8.1, all
of the Collateral is and will continue to be owned by the
Borrower free and clear of all Liens, subject only to the prior
perfected Liens in favor of the Agent, for the benefit of the
Lenders.
6.6 Solvency. The Borrower and each Guarantor is
Solvent and will continue to be Solvent following the
consummation of the transactions contemplated by this Agreement.
6.7 Places of Business. As of the Closing Date, the
principal place of business and chief executive office of the
Borrower is located at 200 Clover Reach Drive, Peachtree City,
Georgia which is within Fayette County, Georgia. As of the
execution hereof, the books and records of the Borrower and all
chattel paper and all records of account are located and
hereafter shall continue to be located at the principal place of
business and chief executive office of the Borrower.
6.8 Other Names. The business conducted by the
Borrower has not been conducted under any corporate, trade or
fictitious name other than those names listed on Exhibit 6.8, and
following the date hereof the Borrower will not conduct its
business under any trade or fictitious name without providing the
Agent with at least 30 days prior written notice thereof.
6.9 Tax Obligations. The Borrower and each Subsidiary
have filed complete and correct federal, state and local tax
reports and returns required to be filed by it, prepared in
accordance with applicable laws or regulations, and, except for
extensions duly obtained, has either duly paid all taxes, duties
and charges owed by it, or made adequate provision for the
payment thereof. There are no material unresolved questions or
claims concerning any tax liability of the Borrower or any
Subsidiary.
6.10 Indebtedness and Liabilities. As of August 31,
1994, the Borrower and its Subsidiaries had no Indebtedness other
than Indebtedness reflected on the Financial Statements. Except
for such Indebtedness and liabilities reflected on the Financial
Statements, the Borrower and its Subsidiaries have no liabilities
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required to be reflected on a balance sheet prepared in
accordance with GAAP (subject to normal year-end adjustments).
6.11 Use of Proceeds and Margin Security. The Borrower
shall use the proceeds of the initial advance under the Revolving
Loan and the Term Loan for the purposes set forth on Exhibit 6.11
and advances under the CAPEX Loan for the purposes set forth in
subsection 2.5 and shall use the proceeds of subsequent advances
under the Revolving Loan solely for proper corporate purposes,
consistent with all applicable laws, statutes, rules and
regulations. Neither the Borrower, the Parent nor any Subsidiary
is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging
for the extension of, credit for the purpose of purchasing or
carrying Margin Stock. Neither the Borrower nor any Subsidiary
owns or will own any Margin Stock and none of the Loans advanced
or funded hereunder or any Risk Participation will be used,
directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any Margin
Stock (except as permitted by subsection 8.2) or for any other
purpose which might cause any of the Loans, Risk Participations
or other extensions of credit under this Agreement or this
Agreement or any other Financing Agreement or any document or
instrument delivered pursuant hereto to violate any regulation of
the Federal Reserve Board. Following the application of the
proceeds of the Loans from time to time, less than twenty-five
percent (25%) of the value (as determined by any reasonable
method) of the Property of the Parent which is subject to any
limitation on sale, pledge, or other restriction hereunder or any
other Financing Agreement taken as a whole will be represented by
Margin Stock.
6.12 Government Contracts. As of the Closing Date,
except as disclosed on Exhibit 6.12, neither the Borrower nor any
Subsidiary is a party to or bound by any supply agreements with
the federal government or any agency thereof.
6.13 Investments. Except as disclosed on Exhibit 8.4,
as of the date hereof, the Borrower and its Subsidiaries have no
Investment in any Person other than Permitted Investments and are
not engaged in any joint venture or partnership with any other
Person.
6.14 Litigation and Proceedings. As of the Closing
Date, except as disclosed on Exhibit 6.14, no judgments are
outstanding against the Borrower or any Subsidiary or the Parent
or binding upon any of their respective Property. Except as
disclosed on Exhibit 6.14, there is not now pending or
threatened, any litigation, claim, arbitration or governmental
proceeding ("Litigation") by or against the Borrower or any
Subsidiary or the Parent which, if adversely determined, would
have a Material Adverse Effect, and to the best of the Borrower's
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knowledge after diligent inquiry, there are no presently existing
facts or circumstances likely to give rise to any such
Litigation. None of the Litigation will prevent, enjoin or delay
the consummation of the transactions contemplated by the
Financing Agreements. Except as disclosed on Exhibit 6.14, the
items disclosed on Exhibit 6.14 will not have a Material Adverse
Effect.
6.15 Other Agreements and Deliveries. (a) Except as
disclosed on Exhibit 6.15, neither the Borrower nor any
Subsidiary is in default under any indenture, loan agreement,
mortgage, deed of trust or similar document relating to the
borrowing of monies or any other material contract, lease, or
commitment to which it is a party or by which it is bound.
Except as disclosed on Exhibit 6.15, there is no dispute
regarding any contract, lease, or commitment which is material to
the business, operations or condition (financial or other) of the
Borrower or any Subsidiary.
(b) The Borrower has provided to the Agent accurate
and complete copies of all of the following agreements or
documents to which the Borrower or any Subsidiary is subject:
(i) each Plan which the Borrower or any ERISA
Affiliate sponsors or is committed to contribute to as
of the date hereof and, where applicable, each Plan's
most recent summary plan description, actuarial report,
determination letter from the Service and Forms 5500
for the previous five (5) years filed in respect of
each such Plan;
(ii) collective bargaining agreements;
(iii) leases of real property; and
(iv) the Plan of Reorganization.
6.16 Employee Controversies. As of the Closing Date,
there are no strikes, work stoppages, union organizing efforts or
controversies pending or, to the best of the Borrower's knowledge
after diligent inquiry, threatened, between the Borrower or any
Subsidiary and any of its employees which would have a Material
Adverse Effect. All collective bargaining agreements, labor
agreements or other contracts with or affecting any employee of
the Borrower or any Subsidiary necessary to continue to conduct
the business operations of the Borrower or such Subsidiary are in
full force and effect.
6.17 Compliance with Laws and Regulations. The
execution and delivery by the Borrower of this Agreement, all of
the other Financing Agreements to which it is a party and the
performance of the Borrower's obligations hereunder and
thereunder are not in contravention of any order applicable to
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the Borrower or, to the Borrower's best knowledge, any laws,
regulations or ordinances the violation of which would have a
Material Adverse Effect. The Borrower and its Subsidiaries are
in compliance with all laws, orders, regulations and ordinances
of all federal, foreign, state and local governmental authorities
relating to the business operations and the Property of the
Borrower or a Subsidiary except for laws, orders, regulations and
ordinances the non-compliance with or violation of which would
not, in the aggregate, have a Material Adverse Effect.
6.18 Patents, Trademarks and Licenses. The Borrower
and its Subsidiaries own or possess rights to use all licenses,
patents, patent applications, copyrights, service marks,
trademarks and tradenames required to continue to conduct their
respective businesses as heretofore conducted; and no such
license, patent or trademark has been declared invalid, been
limited by order of any court or by agreement, or is the subject
of any infringement, interference or similar proceeding or
challenge.
6.19 ERISA. (a) Neither the Borrower nor any ERISA
Affiliate has sponsored or contributed to, or has had any
obligation under, any Plan or Multiemployer Plan other than those
identified on Exhibit 6.19.
(b) With respect to all Plans, the Borrower and each
ERISA Affiliate is in compliance with the applicable provisions
of ERISA and the IRC and the PBGC Grantor Trust in all material
respects. Each Plan that is intended to be qualified under
Section 401(a) of the IRC has either been determined by the
Internal Revenue Service to be so qualified or is the subject of
a pending request to the Internal Revenue Service for a favorable
determination letter for which the Borrower believes it is
entitled, and each trust related to such Plans has been
determined to be exempt from federal income tax under Section
501(a) of the IRC or is the subject of a pending request to the
Internal Revenue Service for a favorable determination letter for
which the Borrower believes it is entitled. No liability has
been incurred by the Borrower or any ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to
any Plan or any Multiemployer Plan or the PBGC Grantor Trust.
(c) The present value of all benefit liabilities under
all Pension Plans of the Parent exceeded the present value of the
assets of such Plans by an amount not exceeding $7,000,000
determined as of May 31, 1994, which liabilities will be
partially satisfied by the balance remaining in the PBGC Grantor
Trust, totaling $2,689,858 as of June 30, 1994, which amount must
be applied to the funding of the Pension Plans. Except as
disclosed on Exhibit 6.19, no Pension Plan has been terminated,
nor has any accumulated funding deficiency (as defined in Section
412 of the IRC) been incurred (without regard to any waiver
granted under Section 412 of the IRC), nor has any funding waiver
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from the Internal Revenue Service been received or requested with
respect to any Pension Plan, nor has the Borrower or any Related
Company failed to make any contributions or to pay any amounts
due and owing as required by Section 412 of the IRC, Section 302
of ERISA or the terms of any Pension Plan by the applicable due
dates, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C), or 4062(e) or 4063(a) of ERISA with
respect to any Pension Plan.
(d) Neither the Borrower nor any ERISA Affiliate has:
(i) engaged in a nonexempt prohibited transaction described in
Section 406 of ERISA or Section 4975 of the IRC which would have
a Material Adverse Effect; (ii) incurred any liability to the
PBGC which remains outstanding other than the Parent's
obligations under the PBGC Grantor Trust and the payment of
premiums and there are no premium payments which are due and
unpaid; or (iii) failed to make a required contribution or
payment to a Multiemployer Plan.
(e) No Termination Event has occurred and no
Termination Event is reasonably expected to occur which could
result in a liability to the Borrower or any ERISA Affiliate.
(f) Neither the Borrower nor any ERISA Affiliate has
any contingent liability with respect to any post-retirement
benefit under any Plan which is a welfare plan (as defined in
Section 3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I of ERISA
except for post-retirement benefits under the Plans listed on
Exhibit 6.19. As of December 31, 1993, the net aggregate present
value of all liabilities with respect to such benefits disclosed
on Exhibit 6.19 calculated in accordance with GAAP is Six Million
Nine Hundred Eighteen Thousand Dollars ($6,918,000).
(g) The Borrower has no obligations or liabilities,
direct or indirect, contingent or otherwise, with respect to the
PBGC Grantor Trust.
6.20 Property. The Borrower and its Subsidiaries own,
possess, or have unrestricted rights to use or exercise all
assets and rights necessary for the conduct of business as
heretofore conducted.
6.21 Investment Company Act. Neither the Borrower nor
any Subsidiary is an "investment company" or a company
"controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
6.22 Broker's Fees. Neither the Agent or any Lender
nor the Borrower is or will become obligated to any Person with
respect to any finder's or brokerage or similar fee or commission
in connection with the transactions contemplated hereby, except
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that the Borrower will become obligated to pay certain fees as
set forth in Exhibit 6.22.
6.23 Licenses and Permits. The Borrower and its
Subsidiaries have been and are current and in good standing with
respect to all material governmental approvals, permits,
certificates, licenses, inspections, consents and franchises
(collectively, the "Licenses") necessary to continue to conduct
their respective businesses and to own or lease and operate,
their respective properties as heretofore conducted, owned,
leased or operated including any and all Licenses with respect to
federal, state or local environmental laws.
6.24 Environmental Compliance.
(a) Except as disclosed on Exhibit 6.24, the
operations of the Parent and the Borrower and its Subsidiaries
comply in all material respects with all applicable Environmental
Laws.
(b) Except as disclosed on Exhibit 6.24 or in any
regular or periodic report subsequently filed by the Parent with
the Securities and Exchange Commission, there are no claims,
investigations, litigation, administrative proceedings, whether
pending or, to the knowledge of the Borrower after diligent
inquiry, threatened, or judgments or orders, relating to any
Hazardous Materials or alleging the violation of any
Environmental Laws (collectively "Environmental Matters")
relating in any way to any real property leased or otherwise used
by the Parent or the Borrower or any Subsidiary or to the
operations of the Parent or the Borrower or any Subsidiary.
(c) Except as disclosed on Exhibit 6.24, no Hazardous
Materials are presently stored or otherwise located on, in or
under any real property leased or otherwise used by the Parent or
the Borrower or any Subsidiary except in substantial compliance
with all applicable Environmental Laws, and, no part of any real
property leased or otherwise used by the Parent or the Borrower
or any Subsidiary or to the Borrower's best knowledge, adjacent
parcels, including the groundwater located thereon, is presently
contaminated in any material respect by any such Hazardous
Material.
(d) Except as disclosed on Exhibit 6.24, neither the
Parent, the Borrower nor any Subsidiary has filed any notice
under any international, federal, state, regional, provincial or
local law indicating past or present treatment, storage or
disposal of a Hazardous Material or reporting a spill or release
of a Hazardous Material into the environment.
(e) Except as disclosed on Exhibit 6.24 or in any
regular or periodic report subsequently filed by the Parent with
the Securities and Exchange Commission, neither the Parent, the
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Borrower nor its Subsidiaries have any known material liability,
contingent or otherwise, in connection with any release of any
Hazardous Material into the environment.
(f) So long as any Obligations are outstanding, no
Hazardous Materials may be used, generated, treated, stored or
disposed of by any Person for any purpose upon any real property
leased or otherwise used by the Parent or the Borrower or its
Subsidiaries except in substantial compliance with all applicable
Environmental laws.
(g) The Borrower hereby indemnifies the Agent and each
Lender and agrees to hold each such Person harmless from and
against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever
(including, without limitation, court costs and reasonable
attorneys' fees and legal expenses and solicitors' fees on a
solicitor and client basis) which at any time or from time to
time may be paid, incurred or suffered by, or asserted against,
such Person arising directly or indirectly from the violation of
any Environmental Law or the imposition of liability on the
Parent or the Borrower or any Subsidiary under any Environmental
Law or any laws or regulations relating to Hazardous Material,
treatment, storage, disposal, generation and transportation, air,
water and noise pollution, soil or ground or water contamination,
the handling, storage or release into the environment of
Hazardous Materials, and the transportation of Hazardous
Materials; or with respect to, or as a direct or indirect result
of the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from, properties
utilized by the Parent or the Borrower or any Subsidiary in the
conduct of its business into or upon any land, the atmosphere, or
any watercourse, body of water or wetland, of any Hazardous
Material (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); provided that to the extent that
the Parent or the Borrower or any Subsidiary is strictly liable
under any Environmental Laws, the Borrower's obligations to
indemnify the Agent and each Lender under this subsection 6.24(g)
shall likewise be without regard to fault on the part of the
Parent or the Borrower or any Subsidiary and with respect to the
violation of law which results in liability to such Person. To
the extent that the undertaking to indemnify, pay and hold
harmless set forth in this subsection 6.24(g) may be
unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnifications set forth in
this subsection 6.24(g). Notwithstanding any other provision of
this Agreement to the contrary, the provisions of and
undertakings and indemnifications set forth in this subsection
6.24(g) shall survive the satisfaction and payment of the
Obligations and the termination of this Agreement, and shall
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continue to be the liability, obligation and indemnification of
the Borrower.
(h) So long as any Obligations are outstanding, if the
Agent or any Lender, at any time, has a reasonable basis to
believe that any real property leased or otherwise used by the
Parent or the Borrower or any Subsidiary, or real property
adjacent to such real property, has or may become contaminated in
any material respect or subject to a clean up order or decree by
an agency having jurisdiction over the Parent or the Borrower or
such Subsidiary; then the Borrower agrees, upon request from such
Person, to provide the Agent and each Lender with such reports,
certificates, engineering studies or other written material or
data as the Agent or such Lender in its reasonable discretion,
may require from it so as to satisfy the Agent or such Lender
that such Person is in substantial compliance with all applicable
Environmental Laws; provided that with respect to real property
adjacent to real property owned by or leased to the Borrower or
any Subsidiary, such reports, certificates, studies and other
material or data shall not be required to be provided by the
Parent or the Borrower if (i) they are not otherwise required to
be created or provided pursuant to statute, regulation, order or
otherwise, and (ii) such contamination is not attributable to the
acts or omissions of the Borrower or any Affiliate or predecessor
of any of them or any previous owner, lessee, lessor or other
user of such real property.
(i) The materiality standard used in this subsection
6.24 shall be exceeded if the facts giving rise to a breach or
breaches of the representations or warranties contained herein
might result in liability or potential liability in excess of
Five Hundred Thousand Dollars ($500,000) in the aggregate.
(j) None of the items disclosed on Exhibit 6.24 would
be reasonably likely to have a reasonable likelihood to cause a
Material Adverse Effect.
6.25 Full Disclosure. This Agreement, the financial
statements delivered in connection herewith, the representations
and warranties of the Borrower in any other Financing Agreement
delivered or to be delivered by the Borrower, do not and will not
contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein
or herein, in light of the circumstances under which they were
made, not misleading. There is no material fact which the
Borrower has not disclosed to the Agent in writing which has had
or, so far as the Borrower can now foresee, will have a Material
Adverse Effect.
6.26 Subsidiaries. Exhibit 6.26 contains an accurate
list of all of the existing Subsidiaries as of the date of this
Agreement, setting forth their respective jurisdictions of
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incorporation and the percentage of their capital stock owned by
the Borrower or other Subsidiaries.
6.27 Survival of Warranties. All representations and
warranties contained in this Agreement or any of the other
Financing Agreements to which the Borrower is a party shall
survive the execution and delivery of this Agreement and the
termination hereof. The Borrower shall supplement in writing and
deliver to each Lender all Exhibits required in accordance with
this Agreement so that the representations and warranties subject
to such supplemental disclosure shall continue to be true and
accurate in all material respects; provided that the furnishing
of such supplemental disclosure shall not constitute a cure or
waiver of any Default or Event of Default resulting from the
matters disclosed therein or otherwise then existing.
6.28 Negative Pledges. Neither the Borrower nor any
Subsidiary is a party to or bound by any indenture, contract,
instrument or other agreement which prohibits the creation,
incurrence or sufferance to exist of any Lien upon its Property,
except the Financing Agreements.
7. AFFIRMATIVE COVENANTS.
_____________________
The Borrower covenants and agrees that so long as any
Obligations remain outstanding and (even if there shall be no
Obligations outstanding) so long as this Agreement remains in
effect:
7.1 Financial Statements. The Borrower shall keep
proper books of record and account in which full and true entries
will be made of all dealings or transactions in respect of or in
relation to the business and affairs of the Borrower and its
Subsidiaries, in accordance with Generally Accepted Accounting
Principles consistently applied, and the Borrower shall furnish
or cause to be furnished to each Lender: (i) as soon as
practicable and in any event within thirty (30) days after the
end of each month, statements of net income and cash flow, of the
Borrower and its Subsidiaries for such month and for the period
from the beginning of the then current Fiscal Year to the end of
such month and a balance sheet of the Borrower and its
Subsidiaries as of the end of such month, on a consolidated
basis, if applicable, setting forth in each case, in comparative
form, figures for the corresponding periods in the preceding
Fiscal Year and as of a date one (1) year earlier, all in
reasonable detail and certified as accurate by the chief
financial officer or treasurer of the Borrower, subject to
changes resulting from normal year-end adjustments (but excluding
footnotes); (ii) as part of the Monthly Report, as soon as
practicable and in any event within twenty-seven (27) days after
the end of each month, (a) copies of all operating statements for
such month prepared by the Borrower for its internal use and
other similar data as the Lender may reasonably request, (b) an
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Accounts Trial Balance indicating which Accounts are current, up
to 30, 30 to 60, 60 to 90 and 90 days or more past the original
invoice date and listing the names and customer numbers of all
applicable Account Debtors, and (c) a summary of accounts payable
showing which accounts payable are current, up to 30, 30 to 60,
60 to 90 and 90 days or more past due and listing the names of
applicable creditors and, in the case of past due accounts, the
address of the applicable creditor; (iii) as soon as practicable
and in any event within ninety (90) days after the end of each
Fiscal Year, statements of net income and cash flow of the Parent
and its Subsidiaries for such year, and a balance sheet of the
Parent and its Subsidiaries as of the end of such year, setting
forth in each case, in comparative form and on a consolidated
basis, if applicable, corresponding figures for the period
covered by the preceding annual audit and as of the end of the
preceding Fiscal Year, all in reasonable detail and satisfactory
in scope to the Required Lenders and examined and certified by
Arthur Andersen L.L.P. or any other independent public
accountants of recognized national standing selected by the
Borrower and acceptable to the Required Lenders, whose opinion
shall be in scope and substance satisfactory to the Required
Lenders; (iv) within thirty (30) days after the close of each
fiscal quarter of the Borrower, a statement in which the actual
results of such quarterly period are compared with the most
recent Projections for such quarter; (v) as soon as practicable
(but in any event not more than ten (10) days after any officer
of the Borrower obtains knowledge of the occurrence of a Default
or an Event of Default) notice of any and all Defaults or Events
of Default hereunder; (vi) not later than the twenty-seventh
(27th) day of each month, a Monthly Report for the Borrower
computed as of the last Business Day of the preceding month,
signed by the chief executive officer or chief financial officer
of the Borrower; (vii) within 30 days after the end of each
Fiscal Year, or more frequently as the Required Lenders may
reasonably require, the names and addresses of all existing
Account Debtors; and (viii) with reasonable promptness, such
other business or financial data as any Lender may reasonably
request, including, without limitation, Collateral Reports.
All financial statements delivered to the Lenders
pursuant to the requirements of this subsection 7.1 (except where
otherwise expressly indicated) shall be prepared in accordance
with Generally Accepted Accounting Principles consistently
applied. Changes in accounting principles or applications shall
be approved by the Lenders and the Borrower's independent
auditors in advance and shall not be permitted to amend or
distort any financial covenant (all of which were negotiated
based on the Projections), advance rate or other provision herein
contained. Together with each delivery of financial statements
required by clauses (i) and (iii) of this subsection 7.1, the
Borrower shall deliver to each Lender an officer's certificate
stating that there exists no Default or Event of Default, or, if
any Default or Event of Default exists, specifying the nature
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thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto. Together with
each delivery of financial statements required by clause (iii) of
this subsection 7.1, the Borrower shall deliver or cause to be
delivered to each Lender a certificate of the accountants who
performed the audit in connection with such statements stating
that in making the audit necessary to the issuance of a report on
such financial statements, they have obtained no knowledge of any
Default or Event of Default with respect to Consolidated Tangible
Net Worth, Cash Flow Coverage and Leverage Ratio and subsection
8.8, or, if such accountants have obtained knowledge of a Default
or Event of Default, specifying the nature and period of
existence thereof. Such accountants shall not be liable by
reason of any failure to obtain knowledge of any Default or Event
of Default which would not be disclosed in the ordinary course of
an audit.
Each of the Lenders and the Agent agree to keep any
information, whether written or oral, delivered or made available
to it pursuant to this Agreement or any other Financing Agreement
regarding the Borrower and/or its Subsidiaries or Parent
(including, without limitation, information concerning their
respective finances, assets, operations, properties, pension and
other employee benefit plans, strategies or projections)
confidential from any Person other than officers, employees,
legal counsel, agents or representatives of such Lender or Agent
who are engaged in evaluating, approving, structuring or
administering the Financing Agreements; provided that nothing
contained in this subsection 7.1 shall prevent any Lender or the
Agent from disclosing any such information that (i) is or becomes
available to the public other than by reason of a disclosure by
any Lender or the Agent, or (ii) was or becomes available to any
Lender or the Agent on a non-confidential basis from a lawful
source other than the Borrower and/or its Subsidiaries or Parent.
Notwithstanding anything contained herein to the contrary, any
Lender or the Agent may disclose such information (i) to any
regulatory authority having jurisdiction over such Lender or the
Agent, (ii) to any prospective or actual transferee, assignee or
participant in connection with such Lender's transfer, assignment
or participation of the Loans or its Commitments that have agreed
to be bound by these confidentiality provisions, (iii) to any of
its affiliates to the extent any such affiliate requires such
information in the ordinary course of such Lender's or the
Agent's credit committee or asset management procedures and
agrees to be bound by these confidentiality provisions, (iv) as
required by law, regulation or pursuant to legal process, (v) in
connection with any legal proceeding to which such Lender or the
Agent is a party, or (vi) to any Person in connection with the
enforcement of such Lender's or the Agent's rights or remedies
under any Financing Agreement. In the event that any Lender or
the Agent is requested by any governmental regulatory
organization or is required by law, rule, regulation or legal
process to disclose any of such information, such Lender or the
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Agent, as applicable, agrees to provide the Borrower with prompt
notice of such request or requirement to enable the Borrower to
seek whatever protective action that the Borrower deems
appropriate and/or waive such Lender's or the Agent's compliance
with the provisions of this subsection 7.1.
The Borrower authorizes the Agent and each Lender to
discuss the financial condition of the Borrower with the
Borrower's independent public accountants and agrees that such
discussion or communication shall be without liability to any
such Person or the Borrower's independent public accountants.
The Borrower shall deliver a letter addressed to such accountants
authorizing them to comply with the provisions of this subsection
7.1.
7.2 Inspections and Audits. Upon reasonable notice
prior to the occurrence of a Default or Event of Default but
without notice after the occurrence thereof, the Agent, or any
Person designated by the Agent in writing, shall have the right,
from time to time hereafter, to call at the Borrower's place or
places of business (or any other place where the Collateral or
any information relating thereto is kept or located) during
reasonable business hours, and, without hindrance or delay (i) to
inspect, audit, check and make copies of and extracts from the
Borrower's books, records, journals, orders, receipts and any
correspondence and other data relating to the Borrower's or any
Subsidiary's business or to any transactions between the parties
hereto, (ii) to make such verification concerning the Collateral
as the Agent may consider reasonable under the circumstances, and
(iii) to discuss the affairs, finances and business of the
Borrower with any officers, employees or directors of the
Borrower.
7.3 Conduct of Business; Compliance With Laws. The
Borrower shall, and shall cause each Subsidiary to, maintain its
corporate existence and all licenses, bonds, franchises, leases,
patents, contracts and other rights necessary or desirable to the
profitable conduct of its business, and shall, and shall cause
each Subsidiary to, comply with all applicable laws, rules,
regulations and orders of any federal, state or local
governmental authority, except for such laws, rules and
regulations the violation of which would not, in the aggregate,
have a Material Adverse Effect.
7.4 Claims and Taxes. (a) The Borrower agrees to
indemnify and hold the Agent and each Lender harmless from and
against any and all claims, demands, obligations, losses,
damages, penalties, costs, and expenses (including reasonable
attorneys' fees) asserted by any Person (other than the Borrower)
in connection with this Agreement or the other Financing
Agreements or asserted by any Person and relating to or in any
way arising out of the possession, use, operation or control of
any of the Borrower's or any Subsidiary's Property by any Person.
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The Borrower shall, and shall cause each Subsidiary to, file all
tax and information returns and reports required by and prepared
in accordance with applicable law and shall pay or cause to be
paid all license fees, bonding premiums and related taxes and
charges, and shall pay or cause to be paid all real and personal
property taxes, assessments and charges and franchise, income,
unemployment, use, excise, old age benefit, withholding, sales
and other taxes and other governmental charges assessed against
the Borrower or any Subsidiary, or payable by the Borrower or any
Subsidiary, at such times and in such manner as to prevent any
penalty from accruing or any Lien from attaching to Property of
the Borrower or any Subsidiary; provided that the Borrower or
such Subsidiary shall have the right to contest in good faith, by
an appropriate proceeding promptly initiated and diligently
conducted, the validity, amount or imposition of any such tax,
assessment or charge, and upon such good faith contest to delay
or refuse payment thereof (i) so long as no Lien which will have
priority over the Agent's Lien granted hereunder with respect to
any Collateral is filed or recorded with respect thereto, and
(ii) so long as such contest does not have a Material Adverse
Effect.
(b) The Borrower shall notify each Lender promptly
(and in no event later than ten (10) days) after becoming aware
of the intent of the Service to assert a deficiency with respect
to it or any Subsidiary, and shall promptly (and in no event
later than five (5) days after receipt) send each Lender copies
of any notices of proposed deficiency and any notices of
deficiency received from the Service. The Borrower shall take
all reasonable actions necessary to contest such claimed
deficiency and shall provide the Agent with periodic status
reports on such contest.
7.5 Borrower's Liability Insurance. The Borrower
shall, and shall cause each Subsidiary to, maintain, at its
expense, such public liability and third party property damage
insurance in such amounts and with such deductibles as are
acceptable to the Required Lenders naming the Agent, on behalf of
the Lenders, as an additional insured and providing the Agent
with 30 days' written notice prior to cancellation or any
material change in coverage. The Borrower's current liability
insurance policies are summarized on Exhibit 7.5.
7.6 Borrower's Property and Business Interruption
Insurance; Condemnation. The Borrower shall, and shall cause
each Subsidiary to, at its expense, keep and maintain its assets
insured against loss or damage by fire, theft, explosion,
spoilage and all other hazards and risks ordinarily insured
against by other owners or users of such properties in similar
businesses in an amount at least equal to the full insurable
value thereof (including at least six (6) months business
interruption insurance in an amount not less than Seventeen
Million Dollars ($17,000,000)). All such policies of insurance
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shall contain a breach or violation of warranty, declarations or
conditions endorsement in favor of the Agent, shall provide that
the Agent shall receive 30 days' written notice prior to
cancellation or any material change in coverage and shall
otherwise be in form and substance satisfactory to the Required
Lenders. The Borrower shall deliver to each Lender the original
(or a certified) copy of each policy of insurance and, upon the
renewal thereof, a binder evidencing such renewal, and evidence
of payment of all premiums therefor. Such policies of insurance
of the Borrower shall contain an endorsement in form and
substance satisfactory to the Agent, naming the Agent, on behalf
of the Lenders, as loss payee and additional insured. So long as
no Default or Event of Default has occurred, Borrower is hereby
authorized by the Lenders to make, settle or adjust any claims
(i) under the insurance policies for damage or destruction of its
properties or the properties of the Subsidiaries and (ii) for the
proceeds of any award or payment in respect of any condemnation
or other eminent domain proceedings by any governmental
authority; provided that if the amount of any such claim (whether
made as a single claim or a series of claims for the same
occurrence) is in excess of $500,000, the Required Lenders may
elect in their reasonable business judgment to apply the proceeds
thereof to the prepayment of the Obligations in the following
priority: (x) to the Term Loan in the inverse order of the
maturities thereof until paid in full, (y) to the CAPEX Notes in
the inverse order of their issuance dates and in the inverse
order of the maturities thereof until paid in full, and (z) to
permanently reduce the Total Revolving Loan Facility. After the
occurrence of a Default or Event of Default, the Borrower
irrevocably makes, constitutes and appoints the Agent (and all
officers, employees or agents designated by the Agent) as the
Borrower's true and lawful attorney-in-fact for the purpose of
making, settling and adjusting claims under all such policies of
insurance, endorsing the name of the Borrower on any check,
draft, instrument or other item of payment received by the
Borrower or the Agent pursuant to any such policies of insurance
and for making all determinations and decisions with respect to
such policies of insurance. If the Borrower or any Subsidiary,
at any time or times hereafter, shall fail to obtain or maintain
any of the policies of insurance required by this subsection 7.6
or to pay any premium in whole or in part relating thereto, then
the Agent, without waiving or releasing any Obligation, Default
or Event of Default by the Borrower hereunder, may at any time or
times thereafter (but shall be under no obligation to do so)
obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the
Agent deems advisable.
7.7 Pension Plans. (a) The Borrower shall, and shall
cause each ERISA Affiliate to (i) maintain all Plans which are
presently in existence or may, from time to time, come into
existence, in compliance with ERISA, the IRC and all other
applicable laws in all material respects unless such Plans can be
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terminated or merged without material liability to the Borrower
or any ERISA Affiliate in connection with such termination or
merger (as distinguished from any continuing funding obligation),
(ii) make contributions to all of its Pension Plans in a timely
manner and in a sufficient amount to comply with the requirements
of ERISA, (iii) comply with all material requirements of ERISA
and the IRC which relate to such Plans so as to preclude the
occurrence of any Termination Event, prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of
the IRC) or material "accumulated funding deficiency" as such
term is defined in ERISA, and (iv) except as set forth on Exhibit
6.19, not permit any Plan to provide post-retirement medical
benefits, nor shall the Borrower, any Subsidiary or any ERISA
Affiliate undertake any new or increased obligation with respect
to any Pension Plan or Multiemployer Plan which would result in
any Material Adverse Effect.
(b) The Borrower shall promptly deliver written notice
of any of the following to each Lender, but in no event later
than thirty (30) days after such event or occurrence:
(1) the Borrower, any Subsidiary or any ERISA
Affiliate knows or has reason to know that a
Termination Event has occurred, with such notice
setting forth the details of such event;
(2) the filing of a request for a funding waiver
by the Borrower, any Subsidiary or any ERISA Affiliate
with respect to any Pension Plan, a copy of such
request and all correspondence received by Borrower or
any ERISA Affiliate with respect to such request;
(3) the Borrower, any Subsidiary or any ERISA
Affiliate fails to make a required installment or
payment under Section 302 of ERISA or Section 412 of
the IRC by the applicable due date;
(4) the Borrower, any Subsidiary or any ERISA
Affiliate knows or has reason to know that a prohibited
transaction (as defined in Section 406 of ERISA or
Section 4975 of the IRC) has occurred with respect to
any Plan with a statement describing such transaction
and the action or response taken with respect thereto;
(5) any increase in the benefits of any existing
Plan or contribution rate to a Multiemployer Plan or
the establishment of any new Plan or the commencement
of contributions to any Plan or Multiemployer Plan to
which the Borrower, any Subsidiary or any ERISA
Affiliate had not been contributing;
(6) receipt by the Borrower, any Subsidiary or
any ERISA Affiliate of any adverse ruling from the
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Service regarding the qualification of a Plan under Section
401(a) of the IRC, with a copy of such ruling;
(7) the Parent fails to make any required
installment payment or other payment obligation under
the PBGC Grantor Trust; and
(8) any other report such as an annual report on
Form 5500 or actuarial report in which any Lender may
request from time to time.
7.8 Notice of Suit or Adverse Change in Business. The
Borrower shall, as soon as possible, and in any event within five
(5) days after the Borrower learns of the following, give written
notice to each Lender of (i) any material Litigation being
instituted or threatened to be instituted by or against the
Parent, the Borrower or any Subsidiary in any federal, state,
local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) including,
without limitation, any and all pending or threatened proceedings
with respect to Environmental Matters and (ii) any event or
occurrence which could have a Material Adverse Effect.
8. NEGATIVE COVENANTS.
__________________
The Borrower covenants and agrees that so long as any
of the Obligations remain outstanding and (even if there shall be
no Obligations outstanding) so long as this Agreement remains in
effect:
8.1 Encumbrances. Except for Liens existing on the
date hereof and disclosed on Exhibit 8.1, the Borrower shall not,
nor shall it permit any Subsidiary to, create, incur, assume or
suffer to exist any Lien of any nature whatsoever on any of its
Property, including, without limitation, the Collateral, other
than the following "Permitted Liens": (i) Liens securing the
payment of taxes or other governmental charges not yet due and
payable; (ii) deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or to secure
the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations
or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business; (iii) the
Liens in favor of the Agent, for the benefit of the Lenders; (iv)
purchase money Liens (including capitalized leases and other
forms of installment purchase financing) granted to the Person by
the Borrower financing a purchase of Equipment so long as the
Lien granted is limited to the specific fixed assets so acquired,
the debt secured by the Lien is not more than one hundred percent
(100%) of the acquisition cost of the specific item of Equipment
on which the Lien is granted, the aggregate amount of
Indebtedness secured by such Liens as a result of purchases shall
not exceed Two Million Dollars ($2,000,000) at any time during
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the term hereof, and the transaction does not violate any other
provision of this Agreement (notification of such purchase money
Lien to be provided within ten (10) days of acquisition of such
fixed asset); (v) Liens permitted in accordance with subsection
7.4(a); and (vi) other Liens on Real Estate which do not, in the
Agent's sole determination, (a) materially impair the use of such
property, or (b) materially lessen the value of such property for
the purposes for which the same is held by the Borrower.
8.2 Intercompany Indebtedness. The Borrower shall
not, nor shall it permit any Subsidiary to, incur, create,
assume, become or be liable in any manner with respect to, or
suffer to exist, any Indebtedness with the Borrower, Crosby, the
Parent or the Subsidiaries, as the case may be, except for (i)
the Indebtedness of the Borrower in favor of Crosby, the Parent
or any Subsidiary existing on the date hereof and described in
subsection 6.10, (ii) Subordinated Debt issued after the Closing
Date by the Borrower in favor of a Subsidiary and (iii)
Indebtedness issued after the Closing Date by the Borrower in
favor of Crosby. After the occurrence of a Default or an Event
of Default, neither the Borrower nor any Subsidiary shall
voluntarily prepay, defease, purchase, redeem, retire or
otherwise acquire any Indebtedness other than the Obligations.
8.3 Consolidations and Acquisitions. Except with the
consent of the Required Lenders, which consent shall not be
unreasonably withheld, the Borrower shall not, nor shall it
permit any Subsidiary to, merge or consolidate with, purchase,
lease or otherwise acquire all or substantially all of the assets
or properties of, or acquire any capital stock, equity interests,
debt or other securities of, any other Person (whether through an
Acquisition or otherwise) except that any Subsidiary may merge or
consolidate with or into the Borrower; provided that the Borrower
is the surviving Person. The Borrower shall not dissolve,
liquidate, enter into any joint venture (other than the Crosby
Yutaka Engineering Company, Ltd.) or become a partner in any
partnership.
8.4 Investments. The Borrower shall not, nor shall it
permit any Subsidiary to, make or permit to exist Investments
(including, without limitation, loans and advances to, and other
Investments in, the Parent, any of the Subsidiaries and other
Affiliates), or commitments therefor, or to create any Subsidiary
other than the following "Permitted Investments": (i) loans made
in accordance with subsection 8.8, (ii) existing Investments in
Subsidiaries and other Investments in existence on the date
hereof and disclosed on Exhibit 8.4, (iii) mergers and
consolidations permitted by subsection 8.3, (iv) so long as no
Default or Event of Default shall have occurred and be
continuing, Investments in Cash Equivalents not to exceed Three
Million Dollars ($3,000,000) in the aggregate at any one time,
(v) loans made after the Closing Date by the Borrower to Crosby
for working capital purposes, and (vi) loans made after the
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Closing Date by the Borrower to the Parent; provided that (A) the
issuance of such Indebtedness by the Parent does not violate the
terms of the Parent Guaranty, (B) at the time of, and after
giving effect to, the making of any such loan to the Parent (x)
the Net Worth of Crosby and Harris shall not be less than
$46,000,000 and $17,000,000, respectively, and (C) no more than
$3,000,000 of such loans during the term of this Agreement shall
be Restricted Debt; provided further that for the period from the
Closing Date through the earlier of the date of entry of the
Final Order or June 30, 1995, subject to subsection 8.17, the
Borrower shall make no loans to the Parent except for (x) loans
for Administrative Costs in an aggregate amount not to exceed
$6,000,000 and (y) loans with respect to Restricted Debt in an
aggregate amount not to exceed $1,000,000; and provided further
that in the event the Final Order is not entered by June 30,
1995, the Borrower shall make no further loans to the Parent.
8.5 Guaranties. The Borrower shall not, nor shall it
permit any Subsidiary to, make or suffer to exist any Guaranty,
except (i) endorsements of negotiable instruments for collection
in the ordinary course of business, (ii) the Harris Guaranty, and
(iii) the Guaranty by the Borrower of any Indebtedness of Crosby
incurred as a result of the Refinancing Payment.
8.6 Collateral Locations. The Borrower shall not sell
any of the Inventory on a guaranteed sale, sale-and-return, sale
on approval or consignment basis or any other basis subject to a
repurchase obligation or return right. Neither the location of
the principal place of business and chief executive office of the
Borrower, the locations of Collateral as set forth in subsection
3.6 nor the corporate name or mailing address of the Borrower
shall be changed, nor shall there be established additional
places of business or additional locations at which Collateral is
stored, kept or processed unless the Borrower shall have given
the Agent not less than 30 days prior written notice thereof, and
the Agent shall have determined that, after giving effect to any
such change of name, address or location, the Agent shall have a
first perfected security interest in the Collateral except for
Permitted Liens. Prior to making any such change or establishing
such new location, the Borrower shall execute any additional
financing statements or other documents or notices required by
the Agent.
8.7 Disposal of Property. The Borrower shall not, nor
shall it permit any Subsidiary to, sell, lease, assign, transfer
or otherwise dispose of any of its Property, assets, business or
rights to any Person except for (i) bona fide sales of Inventory
to customers for fair value in the ordinary course of business
and (ii) sales of Equipment which is obsolete, worn-out or
otherwise not useable in its business or Real Estate. In the
event any Equipment of the Borrower is sold, transferred or
otherwise disposed of as permitted by this subsection 8.7 or with
the Required Lenders' consent, and (x) such sale, transfer or
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disposition is effected without replacement of the Equipment so
sold, transferred or disposed of or such Equipment is replaced by
Equipment leased by the Borrower, the Borrower shall deliver
promptly (but in any event not more than five (5) Business Days
after the receipt thereof) all of the cash proceeds of any such
sale, transfer or disposition to the Agent, which proceeds shall
be applied in the following priority: (i) to the Term Loan
Obligations until paid in full, (ii) to the outstanding CAPEX
Notes until paid in full, and (iii) to the Revolving Loan
Obligations (the Total Revolving Loan Facility to be permanently
reduced by such amount) without premium or penalty, except as
provided in subsections 2.21 and 2.8(g) (provided that no
prepayment fee shall be applicable to the first $3,000,000 of
aggregate sale proceeds for such sales of Equipment and Real
Estate permitted under this subsection 8.7 and under subsection
8.7 of the Crosby Loan Agreement), or (y) such sale, transfer or
disposition is made in connection with the purchase by the
Borrower of replacement Equipment, the Borrower shall use the
proceeds of such sale, transfer or disposition to finance the
purchase by the Borrower of replacement Equipment and shall
deliver to the Agent written evidence of the use of the proceeds
for such purchase. Except as permitted by subsection 8.1, all
replacement Equipment purchased by the Borrower shall be free and
clear of all Liens, except for Liens in favor the Agent for the
benefit of the Lenders. Neither the Borrower nor any Subsidiary
shall transfer any Property to any Affiliate except in accordance
with the terms of subsection 8.12.
8.8 Employee Loans. Except for (i) advances for
travel and related expenses to the Borrower's employees in the
ordinary course of business in an amount not to exceed One
Hundred Thousand Dollars ($100,000) in the aggregate at any one
time, and (ii) commission advances to employees of the Borrower
in an amount not to exceed Ten Thousand Dollars ($10,000) at any
one time, the Borrower shall not make any loans or other advances
to any employee.
8.9 Restricted Payments. The Borrower shall not, nor
shall it permit any Subsidiary to, directly or indirectly,
without the prior written consent of the Required Lenders,
declare, pay, order, make or set apart any Restricted Payment;
provided that (i) any Subsidiary may declare and pay dividends to
the Borrower, and (ii) so long as at the time of or after giving
effect thereto no Default or Event of Default has occurred and is
continuing and the payment thereof would not have a Material
Adverse Effect, the Borrower may declare and pay cash dividends
to the Parent in accordance with applicable law; provided that
for the period from the Closing Date through the earlier of the
date of entry of the Final Order or June 30, 1995, subject to
subsection 8.17, the Borrower shall make no Restricted Payments
to the Parent except for Administrative Costs in an aggregate
amount not to exceed $6,000,000; and provided further that in the
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event the Final Order is not entered by June 30, 1995, the
Borrower shall make no further Restricted Payments.
8.10 Securities. The Borrower shall not, nor shall it
permit any Subsidiary to, issue or distribute or redeem,
repurchase or acquire any of its capital stock or debt securities
of any description for consideration or otherwise.
8.11 Changes in Charter, Bylaws or Fiscal Year. The
Borrower shall not, nor shall it permit any Subsidiary to (i)
permit any amendment to its certificate of incorporation or
bylaws or its corporate structure which could have a Material
Adverse Effect, or (ii) change the Borrower's Fiscal Year,
without the Required Lenders' prior written consent which shall
not be unreasonably withheld.
8.12 Transactions with Affiliates. The Borrower shall
not, nor shall it permit any Subsidiary to, enter into any
transaction including, without limitation, the purchase, sale,
lease or exchange of property or the rendering or purchase of any
service to or from any Affiliate except (i) in the ordinary
course of and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arm's length transaction with an unaffiliated Person
and (ii) Permitted Investments.
8.13 Corporate Accounts. The Borrower shall not, nor
shall it permit any Subsidiary to, maintain corporate deposit
accounts jointly with any Affiliate or commingle any funds with
funds of any Affiliate.
8.14 Sale and Leaseback. The Borrower shall not, nor
shall it permit any Subsidiary to, sell or transfer any of its
Property in order to concurrently or subsequently lease as lessee
such or similar Property unless (i) any such sale is made for the
fair market value of the Property, (ii) the sale consideration
received is cash, (iii) the sale is upon fair and reasonable
terms in an arm's length transaction, and (iv) all proceeds of
any sale are used to prepay the Obligations in the priority set
forth in subsection 8.7.
8.15 Purchase of Stock. The Borrower shall not, nor
shall it permit any Subsidiary to (i) directly use any proceeds
of any Loan or Letter of Credit to purchase or carry any Margin
Stock which might cause any of the Loans or Letters of Credit or
other extensions of credit under this Agreement to be considered
a "purpose credit" within the meaning of Regulation G, T, U or X
of the Federal Reserve Board, or (ii), except as permitted by
subsection 8.2, extend credit to any Person for the purpose of
purchasing or carrying any Margin Stock or for the purpose of
reducing or retiring any indebtedness which was originally
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incurred to purchase any Margin Stock or other margin securities
or for any other purpose.
8.16 Negative Pledges. Neither the Borrower nor any
Subsidiary shall enter into or assume any agreement (other than
the Financing Agreements) containing a negative pledge provision
which would require a sharing of any interest in the Collateral
or prohibiting or limiting the creation or assumption of any Lien
upon its Property, whether now owned or hereafter acquired.
8.17 Aggregate Limits. Notwithstanding anything
contained in subsections 8.4 or 8.9 to the contrary, (i) the
aggregate amount of loans made by the Borrower and Crosby to the
Parent in the form of Restricted Debt shall not exceed the
aggregate amounts permitted under subsection 8.4 for the
applicable time periods, and (ii) for the period from the Closing
Date through the earlier of the date of entry of the Final Order
or June 30, 1995, the aggregate amount of loans made by the
Borrower and Harris to the Parent for Administrative Costs
combined with the aggregate amount of Restricted Payments made by
the Borrower and Harris the proceeds of which are used to pay
Administrative Costs shall not exceed $6,000,000.
9. DEFAULT, RIGHTS AND REMEDIES OF THE LENDER.
__________________________________________
9.1 Obligations. If an Event of Default shall exist
or occur, the Required Lenders (or the Agent with the consent of
the Required Lenders) may elect to (i) make no further advances
hereunder and/or (ii) terminate this Agreement in which case,
upon termination, the Obligations shall be accelerated (and the
Agent shall so notify the Borrower) and all of the Obligations
shall automatically, without notice of any kind, be immediately
due and payable; provided that upon the occurrence of any Event
of Default referred to in clauses (f), (g) or (h) within the
definition of "Event of Default," no notice of any kind need be
given to the Borrower prior to acceleration of the Obligations
which shall occur automatically, and (b) demand that the Borrower
immediately deposit with the Agent an amount equal to the Risk
Participation Liability to enable the Agent to make payments
under the Risk Participations when required and such amount shall
become immediately due and payable.
9.2 Rights and Remedies Generally. Upon acceleration
of the Obligations, the Agent, on behalf of the Lenders, shall
have, in addition to any other rights and remedies contained in
this Agreement or in any of the other Financing Agreements, all
of the rights and remedies of a secured party under the Code or
other applicable laws, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by law. In
addition to all such rights and remedies, the Agent shall have
the right to sell, lease or otherwise dispose of all or any part
of the Collateral and the sale, lease or other disposition of the
Collateral, or any part thereof, by the Agent after an Event of
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Default may be for cash, credit or any combination thereof, and
the Agent or any 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 purchase price against the Obligations then owing.
Any sales of the Collateral may be adjourned from time to time
with or without notice. The Agent may, in its sole discretion,
cause the Collateral to remain on the Borrower's premises or
otherwise or to be removed and stored at premises owned by other
Persons, at the Borrower's expense, pending sale or other
disposition of the Collateral. The Agent shall have the right to
conduct such sales on the Borrower's premises, at the Borrower's
expense, or elsewhere, on such occasion or occasions as the Agent
may see fit.
9.3 Entry Upon Premises and Access to Information.
Upon acceleration of the Obligations, the Agent shall have the
right to enter upon the premises of the Borrower where the
Collateral is located (or is believed to be located) without any
obligation to pay rent to the Borrower, or any other place or
places where the Collateral is believed to be located and kept,
to render the Collateral usable or saleable, to remove the
Collateral therefrom to the premises of the Agent or any agent of
the Agent for such time as the Agent may desire in order
effectively to collect or liquidate the Collateral, and/or to
require the Borrower to assemble the Collateral and make it
available to the Agent at a place or places to be designated by
the Agent. Upon acceleration of the Obligations, the Agent shall
have the right to take possession of the Borrower's original
books and records, to obtain access to Borrower's data processing
equipment, computer hardware and software relating to the
Collateral and to use all of the foregoing and the information
contained therein in any manner the Agent deems appropriate; and
the Agent shall have the right to notify postal authorities to
change the address for delivery of the Borrower's mail to an
address designated by the Agent and to receive, open and dispose
of all mail addressed to the Borrower.
9.4 Sale or Other Disposition of Collateral by the
Agent. Any notice required to be given by the Agent of a sale,
lease or other disposition or other intended action by the Agent
with respect to any of the Collateral which is deposited in the
United States mails, postage prepaid and duly addressed to the
Borrower at the address specified in subsection 10.13, at least
fifteen (15) days prior to such proposed action, shall constitute
fair and reasonable notice to the Borrower of any such action.
The net proceeds realized by the Agent upon any such sale or
other disposition, after deduction for the expenses of retaking,
holding, storing, transporting, preparing for sale, selling or
otherwise disposing of the Collateral incurred by the Agent in
connection therewith, shall be applied as provided herein toward
satisfaction of the Obligations including, without limitation,
the Obligations described in subsections 2.14 and 10.2. The
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Agent shall account to the Borrower for any surplus realized upon
such sale or other disposition, and the Borrower shall remain
liable for any deficiency. The commencement of any action, legal
or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's security interest in the
Collateral until the Obligations are fully paid. The Borrower
agrees that neither the Agent nor any Lender has any obligation
to preserve rights to the Collateral against any other parties.
The Agent is hereby granted a license, lease or other right to
use, without charge, the Borrower's General Intangibles,
Intellectual Property, Equipment, Fixtures, Real Estate, patents,
copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale or lease and
selling or leasing any Inventory or other Collateral and the
Borrower's rights under all licenses, leases and franchise
agreements shall inure to the Agent's benefit until all
Obligations are paid in full.
9.5 Waiver of Demand. DEMAND, PRESENTMENT, PROTEST
AND NOTICE OF DEMAND, PRESENTMENT, PROTEST AND NONPAYMENT ARE
HEREBY WAIVED BY THE BORROWER. THE BORROWER ALSO WAIVES THE
BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
9.6 Waiver of Notice. IN THE EVENT OF A DEFAULT, THE
BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE AGENT OF ITS RIGHTS TO
REPOSSESS THE COLLATERAL WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR
HEARING. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
AGREEMENT.
10. OTHER RIGHTS AND OBLIGATIONS.
____________________________
10.1 Waiver. The failure of the Agent or any Lender, at
any time or times hereafter, to require strict performance by the
Borrower of any provision of this Agreement shall not waive,
affect or diminish any right of any such Person thereafter to
demand strict compliance and performance therewith. Any
suspension or waiver by the Lenders or the Required Lenders, as
applicable, of a Default or an Event of Default under this
Agreement or any of the other Financing Agreements shall not
suspend, waive or affect any other Default or Event of Default
under this Agreement or any of the other Financing Agreements,
whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. None of the
undertakings, agreements, warranties, covenants and
representations of the Borrower contained in this Agreement or
any of the other Financing Agreements and no Default or Event of
Default by the Borrower under this Agreement or any of the other
Financing Agreements shall be deemed to have been suspended or
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waived by the Lenders or the Required Lenders, as applicable,
unless such suspension or waiver is in writing and signed by an
officer of each of the Lenders or the Required Lenders, as
applicable, and directed to the Borrower specifying such
suspension or waiver.
10.2 Costs and Attorneys' Fees. All fees, costs and
expenses incurred by the Agent or any Lender in connection with
protecting, perfecting or preserving the Agent's Lien on the
Collateral or the collection of the Obligations or the
enforcement of the Financing Agreements including, without
limitation (i) verifying or inspecting any of the Collateral or
the Borrower's records with respect thereto, (ii) protecting,
perfecting or preserving the Collateral (iii) commencing,
defending, or intervening in any litigation or filing a petition,
complaint, answer, motion or other pleadings, (iv) taking any
other action in or with respect to any suit or proceedings
(bankruptcy or otherwise), (v) consulting with officers of the
Agent or any Lender or advising the Agent or any Lender, (vi)
protecting, collecting, leasing, selling, taking possession of,
or liquidating any of the Collateral, or (vii) attempting to
enforce or enforcing any security interest in any of the
Collateral, or (viii) enforcing any rights of the Agent or any
Lender to collect any of the Obligations, including, without
limitation, reasonable fees, costs and expenses of attorneys and
paralegals of the Agent or any Lender, and the out-of-pocket
costs and the per diem charges for the examiners of such Persons
at their then applicable rates, together with interest thereon at
the Base Rate or the Default Rate then applicable to the
Revolving Loan, shall be part of the Obligations, payable on
demand and secured by the Collateral.
10.3 Expenditures by the Agent and the Lenders. In the
event the Borrower shall fail to pay taxes, insurance,
assessments, costs or expenses which the Borrower is, under any
of the terms hereof, required to pay, or fails to keep the
Collateral free from Liens, except Permitted Liens, or fails to
maintain, replace or repair the Collateral as required hereby,
the Agent or any Lender may, in its sole discretion, make
expenditures for any or all of such purposes and acquire or
accept an assignment of any Lien against the Collateral, and the
amount so expended (including, without limitation, reasonable
attorneys' fees and expenses, court costs, filing fees and other
charges), together with interest thereon at the Base Rate or the
Default Rate then applicable to the Revolving Loan shall be part
of the Obligations, payable on demand and secured by the
Collateral.
10.4 Custody and Preservation of Collateral. The Agent
shall be deemed to have exercised reasonable care in the custody
and preservation of any of the Collateral in its possession if it
takes such action for that purpose as the Borrower shall request
in writing, but failure by the Agent to comply with any such
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request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by the Agent to comply with any
such request shall of itself be deemed a failure to exercise
reasonable care, and no failure by the Lender to preserve or
protect any right with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of
such Collateral not so requested by the Borrower, shall of itself
be deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral.
10.5 Reliance. All covenants, agreements,
representations and warranties made herein or in any of the other
Financing Agreements by the Borrower or the Parent shall,
notwithstanding any investigation by the Agent or any Lender, be
deemed to be material to and to have been relied upon by each
such Person.
10.6 Parties and Assignment. Whenever in this
Agreement reference is made to any of the parties hereto, such
reference shall be deemed to include, wherever applicable, a
reference to the successors and assigns of such party.
Notwithstanding the foregoing, the Borrower may not sell, assign
or transfer this Agreement, or the other Financing Agreements or
any portion thereof, including without limitation its rights,
titles, interests, remedies, powers and/or duties hereunder or
thereunder. The Borrower hereby consents to any Lender's sale,
assignment, transfer or other disposition, at any time and from
time to time hereafter, of this Agreement, or the other Financing
Agreements or any portion thereof, including, without limitation,
all or any part of such Lender's rights, titles, interests,
remedies, powers and/or duties hereunder or thereunder.
10.7 Applicable Law; Severability. This Agreement and
the other Financing Agreements have been submitted to the Agent
and each Lender at its office in Illinois, and this Agreement and
the other Financing Agreements shall not be binding upon the
Agent or any Lender or effective until accepted by each such
Person and shall be construed in all respects in accordance with,
and governed by, all of the provisions of the Code and by the
other internal laws (as opposed to conflicts of law provisions)
of the State of Illinois, except for the perfection and
enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible,
each provision of this Agreement shall be interpreted in such a
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 provisions or the remaining
provisions of this Agreement.
10.8 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND
BOND. THE BORROWER AND THE AGENT AND EACH LENDER HEREBY SUBMIT
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TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS, AND
IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS SHALL BE
LITIGATED IN SUCH COURTS, AND THE BORROWER AND THE AGENT AND EACH
LENDER EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE
ADDRESS SET FORTH IN SUBSECTION 10.13 AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE SUFFICIENT NOTICE. THE AGENT, EACH
LENDER AND THE BORROWER ACKNOWLEDGE THAT THE TIME AND EXPENSE
REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED
FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SUBSECTION 10.8
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT
NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH
JURISDICTION.
10.9 Marshalling. The Agent shall be under no
obligation to marshall any assets in favor of the Borrower or any
other party or against or in payment of any or all of the
Obligations.
10.10 Section Titles. The section titles contained
in this Agreement shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement
between the parties.
10.11 Continuing Effect. This Agreement, the
Agent's security interests in the Collateral, and all of the
other Financing Agreements shall continue in full force and
effect so long as any Obligations shall be owed to the Agent or
any Lender, and (even if there shall be no Obligations
outstanding) so long as this Agreement has not been terminated as
provided in subsection 2.8; provided that the Borrower's
obligations to indemnify the Agent and each Lender shall continue
notwithstanding any termination of this Agreement.
10.12 Incorporation by Reference. The provisions
of the other Financing Agreements are incorporated in this
Agreement by this reference. Except as otherwise provided in
this Agreement and except as otherwise provided in the other
Financing Agreements by specific reference to the applicable
provision of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any
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provisions in the other Financing Agreements, the provision
contained in this Agreement shall govern and control.
10.13 Notices. Except as otherwise expressly
provided herein, any notice required or desired to be served,
given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered three (3)
days after deposit in the United States mails (by certified mail,
return receipt requested), with proper postage prepaid, or upon
delivery by courier or upon transmission by telex, telecopy or
similar electronic medium to the following addresses:
(i) If to the Agent, at:
SANWA BUSINESS CREDIT CORPORATION
One South Wacker Drive, 39th Floor
Chicago, Illinois 60606
Attn: Commercial Finance Division
Telecopy No.: (312) 782-6035
With a copy to:
WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Jim L. Blanco
Telecopy No.: (312) 558-5700
(ii) If to a Lender, at the address opposite its name
on Schedule 1 hereto.
(iii) If to the Borrower, at:
The Harris Waste Management Group, Inc.
200 Clover Reach Drive
Peachtree City, Georgia 30269
Attn: Charles Walker
Telecopy No.: (912) 273-8791
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With a copy to:
Amdura Corporation
900 Main Street South
Suite 2A
P.O. Box 870
Southbury, Connecticut 06488
Attn: C. David Bushley
Telecopy No.: (203) 262-1270
and
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attn: Ronald D. West
Telecopy No.: (412) 355-6501
or to such other address as each party designates to the other in
the manner herein prescribed.
10.14 Waivers With Respect to Other Instruments.
The Borrower waives presentment, demand and protest and notice of
presentment, demand protest, default, nonpayment, 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 the
Agent on which the Borrower may in any way be liable and hereby
ratifies and confirms whatever the Agent may do regarding the
enforcement, collection, compromise, or release thereof.
10.15 Retention of the Borrower's Documents. The
Agent or any Lender may destroy or otherwise dispose of all
documents, schedules, invoices or other papers delivered to such
Person in accordance with customary practices unless the Borrower
requests in writing that same be returned. Upon the Borrower's
request and at the Borrower's expense, such Person shall return
such papers when such Person's actual or anticipated need for
same has terminated.
10.16 Entire Agreement. The Financing Agreements,
including all Exhibits, Schedules and other documents attached
thereto or incorporated by reference therein, constitute the
entire agreement of the parties with respect to the subject
matter thereof and supersede all other understandings, oral or
written, with respect to the subject matter thereof.
10.17 Equitable Relief. The Borrower recognizes
that, in the event the Borrower fails to perform, observe or
discharge any of its Obligations under this Agreement, any remedy
at law may prove to be inadequate relief to the Agent or any
Lender; therefore, the Borrower agrees that the Agent or any
Lender, if such Person so requests, shall be entitled to
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temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.
10.18 Counterparts. This Agreement and any
amendments, waivers, consents or supplements may be executed in
any number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered shall
be deemed an original, but all of which counterparts together
shall constitute but one and the same agreement.
10.19 No Fiduciary Relationship. No provision
contained herein or in any other Financing Agreement and no
course of dealing among the parties shall be deemed to create any
fiduciary relationship between the Agent or any Lender and the
Borrower.
10.20 Exceptions to Covenants. Neither the
Borrower nor any Subsidiary shall be deemed to be permitted to
take any action or omit to take any action which is permitted as
an exception to any of the terms, provisions or covenants
contained in any of the Financing Agreements if such action or
omission would result in a Default or Event of Default or the
breach of any term, provision or covenant contained in any
Financing Agreement.
10.21 Construction. The Borrower acknowledges that
it and its counsel have approved the Financing Agreements and
that the usual rule of construction to the effect that any
ambiguities or inconsistencies are to be resolved against the
drafting Person shall not be applicable in the interpretation of
any of the Financing Agreements.
11. ASSIGNMENT AND PARTICIPATION.
11.1 Assignments. Each Lender may, in the ordinary
course of its business and in accordance with applicable law,
assign all or any part of its rights and obligations under the
Financing Agreements to any Person; provided that such Lender
shall first obtain the written consent of the Agent and the
Borrower prior to any assignment becoming effective with respect
to any Person which is not a Lender or an affiliate thereof,
which consent shall not be unreasonably withheld. The assigning
Lender shall be relieved of its obligations hereunder with
respect to its Commitment or assigned portion thereof. The
Borrower hereby acknowledges and agrees that any assignment will
give rise to a direct obligation of the Borrower to the assignee
and that the assignee shall be considered to be a "Lender".
11.2 Participations. Each Lender shall have the right
to sell or assign to a Participant or Participants participating
interests in the Borrower's Obligations hereunder in such amounts
and on such terms and conditions as such Lender shall determine.
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12. AGENT.
12.1 Appointment. SBCC is hereby appointed Agent
hereunder and under each other Financing Agreements, and each of
the Lenders authorizes the Agent to act as the agent of such
Lender. The Agent agrees to act as such upon the express
conditions contained in this Section 12. The Agent shall not
have a fiduciary relationship in respect of the Borrower or any
Lender by reason of this Agreement.
12.2 Powers. The Agent shall have and may exercise
such powers under the Financing Agreements as are specifically
delegated to the Agent by the terms of each thereof, together
with such powers as are reasonably incidental thereto. The Agent
shall have no implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder, except any action
specifically provided by the Financing Agreements to be taken by
the Agent.
12.3 General Immunity. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to
the Borrower or any Lender for any action taken or omitted to be
taken by it or them hereunder or under any other Financing
Agreements or in connection herewith or therewith except for its
or their own gross negligence or willful misconduct as determined
by a final order, not subject to review, of a court of competent
jurisdiction.
12.4 No Responsibility for Loans, Recitals, etc.
Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (a) any statement, warranty or
representation made in connection with any Financing Agreements
or any borrowing hereunder, (b) the performance or observance of
any of the covenants or agreements of any obligor under any
Financing Agreements, (c) the satisfaction of any condition
specified in Section 4, except receipt of items required to be
delivered to the Agent and not waived at closing, or (d) the
validity, effectiveness or genuineness of any Financing
Agreements or any other instrument or writing furnished in
connection therewith.
12.5 Action on Instructions of Lenders. The Agent
shall in all cases be fully protected in acting, or in refraining
from acting, hereunder and under any other Financing Agreements
in accordance with written instructions signed by the Required
Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders and
on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any
other Financing Agreements unless it shall first be indemnified
to its satisfaction by the Lenders pro-rata against any and all
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liability, cost and expense that it may incur by reason of taking
or continuing to take any such action.
12.6 Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent hereunder and under any other
Financing Agreements by or through employees, agents and
attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder
and under any other Financing Agreements.
12.7 Reliance on Documents; Counsel. The Agent shall
be entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed
or sent by the proper Person or Persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
12.8 Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective Commitments (a) for any amounts
not reimbursed by the Borrower for which the Agent is entitled to
reimbursement by the Borrower under the Financing Agreements, (b)
for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Financing Agreements, and
(c) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind and nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in any way relating to or
arising out of the Financing Agreements or any other document
delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents; provided that no Lender
shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent as
determined by a final order, not subject to appeal, of a court of
competent jurisdiction. The obligations of the Lenders under
this subsection 12.8 shall survive payment of the Obligations and
termination of this Agreement.
12.9 Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder
and under any other Financing Agreements as any Lender and may
exercise the same as though it were not the Agent, and the term
"Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from,
lend money to, and generally engage in any kind of trust, debt,
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<PAGE>
equity or other transaction, in addition to those contemplated by
this Agreement or any other Financing Agreements, with the
Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other
Person.
12.10 Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other
Financing Agreements. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any
other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement and the other Financing Agreements.
12.11 Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the
Borrower. The Agent may be removed at any time for cause by the
Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of
the Borrower and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty days after the
retiring Agent's giving notice of resignation or within thirty
days after the removal of such Agent, then the retiring Agent
shall use reasonable efforts to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. Such successor
Agent shall be a financial institution having capital and
retained earnings of at least One Hundred Fifty Million Dollars
($150,000,000). Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Financing Agreements.
After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 12 shall continue in effect
for its benefit in respect of any actions taken or omitted to be
taken by it while it was acting as the Agent hereunder and under
the other Financing Agreements.
12.12 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this
Agreement describing such Default or Event of Default and stating
that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. Subject to the provisions of subsection
95<PAGE>
<PAGE>
12.5, the Agent shall take any action of the type specified in
this Agreement with respect to such Default or Event of Default
as shall be reasonably directed by the Required Lenders (or, if
so required by Section 13, by all Lenders); provided that unless
and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as the Agent shall determine is in the best
interests of the Lenders.
13. AMENDMENTS AND WAIVERS.
Subject to the provisions of this Section 13, the
Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding, terminating or
modifying any provisions to the Financing Agreements or changing
in any manner the rights of the Lenders or the Borrower hereunder
or waiving any Event of Default hereunder; provided that no such
supplemental agreement shall, without the consent of each Lender
affected thereby:
(a) extend the final maturity of any Loan or Note or
reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest or fees thereon;
(b) reduce the percentage specified in the definition
of Required Lenders;
(c) reduce the amount or extend the payment date for
the mandatory payments required hereunder, or increase the amount
of the Revolving Credit Commitment of any Lender hereunder (other
than an increase in the Revolving Credit Commitment of any Lender
as a result of an assignment consummated between such Lender and
another Lender pursuant to subsection 11.1);
(d) extend the Revolving Loan Initial Term or the
Revolving Loan Renewal Term, as applicable (except as
contemplated by subsection 2.8), or permit any Letter of Credit
to have an expiry date beyond August 31, 1997;
(e) amend this Section 13;
(f) change the definition of "Current Asset Base",
"Eligible Accounts" or "Eligible Inventory";
(g) release the Parent Guaranty or the Crosby Guaranty
or all or any substantial portion of the Collateral or the real
property subject to the Mortgages;
(h) permit any assignment by the Borrower of its
Obligations or its rights hereunder; or
96<PAGE>
<PAGE>
(i) amend the definition of the term "Commitment"
without the consent of each Lender affected thereby.
No amendment, modification, termination or waiver
affecting the rights or duties of the Agent under any Financing
Agreement shall be effective without the written consent of the
Agent.
Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the
specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for the
Agent to take additional Collateral pursuant to any Financing
Agreement. No notice to or demand on the Borrower not required
by the terms hereof in any case shall entitle the Borrower to any
other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 13 shall be
binding upon each holder of the Notes at the time outstanding,
each future holder of the Notes and the Borrower.
Notwithstanding anything to the contrary contained
herein, the Agent may, at its sole discretion, release or
compromise Collateral and the proceeds thereof to the extent of
asset dispositions permitted by the terms hereof.
14. SET OFF AND SHARING OF PAYMENTS.
_______________________________
14.1 Setoff. In addition to any rights now or
hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby
authorized by the Borrower at any time or from time to time, with
reasonably prompt subsequent notice to the Borrower or to any
other Person (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any
and all (a) balances (including, without limitation, all account
balances, whether provisional or final and whether or not
collected or available) held or owing by such Lender at any of
its offices to or for the credit or account of the Borrower
(regardless of whether such balances are then due to the
Borrower) and (b) other property held or owing by such Lender to
or for the credit or the account of the Borrower, toward the
payment of the Obligations owing to such Lender, whether or not
the Obligations, or any part hereof, shall then be due.
14.2 Ratable Payments. If any Lender, whether by
setoff or otherwise, has payment made to it upon its Loans (other
than payments received pursuant to subsections 2.19 and 2.20) in
a greater proportion than its Pro Rata Share of such Loans, such
Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of Loans. If any Lender,
97<PAGE>
<PAGE>
whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the
Borrower to a Lender, other than Indebtedness evidenced by any of
the Notes held by such Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness
evidenced by such Notes. The Borrower agrees, to the fullest
extent permitted by law, that (x) any Lender may exercise its
right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participation in such
excess to other Lenders, and (y) any Lender so purchasing a
participation in the Loans made or other Obligations held by
other Lenders may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation
as fully as if such Lender were a direct holder of Loans and
other Obligations in the amount of such participation.
98<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year first above written.
THE HARRIS WASTE MANAGEMENT
GROUP, INC.
By: /s/ Charles Walker
-------------------------
Title: Vice President
SANWA BUSINESS CREDIT
CORPORATION, As Agent and
as Lender
By: /s/ Frank Plank
-------------------------
Title: First Vice President
BANK OF OKLAHOMA, N.A.
By: /s/ Jeffrey R. Dunn
-------------------------
Title: Vice President
THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS LOAN AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AND THE BORROWER ACKNOWLEDGES
AND AGREES THAT (i) EACH OF THE WAIVERS SET FORTH HEREIN,
INCLUDING, WITHOUT LIMITATION, THOSE WAIVERS SET FORTH IN
SUBSECTIONS 9.5, 9.6 AND 10.8 WERE KNOWINGLY AND VOLUNTARILY
MADE, (ii) THE OBLIGATIONS OF THE LENDERS HEREUNDER, INCLUDING
THE OBLIGATION TO ADVANCE AND LEND FUNDS TO THE BORROWER IN
ACCORDANCE HEREWITH, SHALL BE STRICTLY CONSTRUED AND SHALL BE
EXPRESSLY SUBJECT TO THE BORROWER'S COMPLIANCE IN ALL RESPECTS
WITH THE TERMS AND CONDITIONS HEREIN SET FORTH, AND (iii) NO
REPRESENTATIVE OF THE AGENT OR ANY LENDER HAS WAIVED OR MODIFIED
ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF THE DATE HEREOF AND
NO SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE HEREOF SHALL BE
EFFECTIVE UNLESS MADE IN ACCORDANCE WITH SECTION 13.
99
EXHIBIT 11.1
<TABLE>
AMDURA CORPORATION AND SUBSIDIARIES
___________________________________
CALCULATION OF NET INCOME (LOSS) PER COMMON
SHARE AND COMMON EQUIVALENT SHARE
(Unaudited)
(In Thousands, Except Per Share Amounts)
________________________________________
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
________________ ________________
1994 1993 1994 1993
______ ______ ______ ______
<S> <C> <C> <C> <C>
Net Income (Loss) Applicable to
Common Stock:
Net income (loss) $ (652) $ 526 $ 521 $ 2,409
Less: Dividend requirements on
Series B Preferred Stock 54 108
________ ________ ________ ________
Net income (loss) applicable to
common stock $ (706) $ 526 $ 413 $ 2,409
________ ________ ________ ________
Average Number of Common and Common
Equivalent Shares Outstanding:
Average common shares outstanding 24,457 23,426 24,565 16,182
Add: Average common equivalent
shares outstanding:
Shares available upon conversion
of Preferred Stock:
Series A 1,040 8,284
Series B 2,151 966
Shares available upon exercise
of warrants 190 220 30 366
Shares available upon exercise
of stock options 176 44 388
________ ________ ________ ________
Average common and common
equivalent shares outstanding 26,798 24,862 25,605 25,220
________ ________ ________ ________
Net income (loss) per common share and
common equivalent share $ (.03) $ .02 $ .02 $ .10
________ ________ ________ ________
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited consolidated condensed financial statements of AMDURA Corporation and
subsidiaries at September 30, 1994 and for the nine-month period then ended,
including the related notes thereto, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,720,000
<SECURITIES> 0
<RECEIVABLES> 21,362,000
<ALLOWANCES> 751,000
<INVENTORY> 39,516,000
<CURRENT-ASSETS> 66,183,000
<PP&E> 52,318,000
<DEPRECIATION> 13,253,000
<TOTAL-ASSETS> 121,096,000
<CURRENT-LIABILITIES> 31,358,000
<BONDS> 0
<COMMON> 246,000
0
0
<OTHER-SE> 52,767,000
<TOTAL-LIABILITY-AND-EQUITY> 121,096,000
<SALES> 105,217,000
<TOTAL-REVENUES> 105,613,000
<CGS> 83,435,000
<TOTAL-COSTS> 17,433,000
<OTHER-EXPENSES> 1,875,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,532,000
<INCOME-PRETAX> 1,338,000
<INCOME-TAX> 817,000
<INCOME-CONTINUING> 521,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 521,000
<EPS-PRIMARY> 20
<EPS-DILUTED> 20
</TABLE>
