SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 21, 1996
EDISON CONTROL CORPORATION
(Exact name of registrant as specified in charter)
New Jersey 0-14812 22-2716367
(State or other jurisdiction Commission (IRS Employer
of Incorporation) File Number Identification No.)
140 Ethel Road West, Piscataway, N.J. 08854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 819-8800
Not Applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets
(a) On June 21, 1996, Registrant through a newly
organized, wholly-owned subsidiary, purchased from unaffiliated
persons, namely, Messrs. Allen W. Duhr, Joseph F. Bennett, Alan
J. Kastelic, Robert E. Klemm and Jay R. Hanamann, (herein the
"Shareholders") all of the issued and outstanding stock (the
"Conforms Stock") of Construction Forms, Inc., a Wisconsin
corporation ("ConForms") and its affiliate C F Gilco, Inc.
("Gilco") and all of the issued and outstanding units of another
affiliate, JABCO, LLC, a Wisconsin limited liability company
("JABCO") for an aggregate cash consideration of $20,605,695, of
which $574,000 were Registrant's acquisition costs and of which
$1,500,000 is held in escrow pending certain environmental
remediation on property held by ConForms. In connection with the
acquisition of ConForms, Registrant also acquired all of the
outstanding stock of CF Ultra Tech, Inc., a wholly-owned
Wisconsin subsidiary of ConForms ("Ultra Tech").
ConForms is a leading manufacturer and distributor
of systems of pipes, couplings and hoses and other equipment used
for the pumping of concrete. It manufactures a wide variety of
finished products with which it creates appropriate config-
urations of systems for various concrete pumps. CF UltraTech
processes steel pipe into abrasion resistant hardened pipe for
use in such industries as mining, pulp and paper, power and waste
treatment. C F Gilco produces a line of concrete and
plaster/mortar mixers.
The transaction was negotiated at arm's length and
was based upon Management's analysis of ConForms' assets and
properties, historical profitability and growth, industry
position, business prospects and market valuations of companies
considered to be in related industries and businesses. Funds
utilized in the acquisition included approximately $4,800,000 of
Registrant's operating capital, approximately $9,740,000
available under a Master Credit Agreement between LaSalle
National Bank of Milwaukee, Wisconsin ("LaSalle"), ConForms, C F
Gilco and CF UltraTech (collectively the "Borrowers") and
$6,800,000 under a Loan Agreement between Bank Audi USA of
New York, New York ("Bank Audi") and the Borrowers. JABCO
provided a guarantee in connection with the LaSalle and Bank Audi
loans.
The LaSalle facility includes an $8,000,000
working capital line, of which $5,540,000 was drawn upon at
closing, a $4,300,000 term/overadvance funding line and a
$3,000,000 letter of credit to support an Industrial Revenue Bond
issued on the JABCO property. All of such facilities are cross-
collateralized by the corporate assets of ConForms, Ultra Tech
and Gilco, including accounts receivable, inventory and property
and equipment as well as certain marketable securities of
Registrant. The Credit Agreement contains covenants customary in
such arrangements, including maintenance of certain financial
ratios and minimum tangible net worth and limitations on capital
expenditures. For details, reference is made to the Master
Credit Agreement, filed as Exhibit 10(vi) to this Report.
The Bank Audi long-term facility is subordinated
to LaSalle. For details, reference is made to the Loan Agreement
filed as Exhibit 10(vii) to this Report. In connection there-
with, William Finneran, Chairman of the Board and a principal
shareholder of the Registrant, provided collateral to the Bank to
support a guaranty of repayment by Borrowers of the principal and
interest on the loan. The guaranty is limited to the collateral
value. The foregoing arrangement was made by Mr. Finneran to
reduce Registrant's cost of borrowed funds from that which would
have been otherwise obtainable from unaffiliated "mezzanine"
lenders. In consideration of his providing such collateral,
Registrant issued to Mr. Finneran a ten (10) year Warrant to
purchase 500,000 shares of Registrant's Common Stock exercisable
at a price of $1.60 per share. At the time the transaction was
negotiated, Registrant's Common Stock was quoted at approximately
$4 per share and, on the date the ConForms acquisition was
consummated, the closing sale price for Registrant's Common Stock
in the over-the-counter market was $7 1/2 per share. It is
believed that the transaction with Mr. Finneran was on terms not
less favorable to Registrant than those available from a non-
affiliated person.
(b) As indicated in (a) above, the ConForms purchase
entailed the acquisition of certain property, plant and equipment
used in the ConForms business. Registrant intends to continue
the use of such assets as previously utilized.
Item 5. Other Events.
In connection with the ConForms acquisition, Registrant
entered into agreements for the sale for investment of an
aggregate of 114,933 shares of Registrant's Common Stock for a
total purchase price of $862,000 to the key management personnel
of ConForms and its affiliates as follows: Alan J. Kastelic
(66,667 shares); Jay R. Hanamann (33,333 shares); Robert E. Klemm
(13,333 shares); Craig T. Winebrenner (1,000 shares) and David
Edwards (600 shares). In addition, Registrant granted ten
(10)year options to purchase an aggregate of 167,611 shares of
Common Stock exercisable at $3.00 per share to the foregoing
persons in the following respective denominations: 97,222,
48,611, 19,444, 1,458, and 876 shares. Such options vest fully
on the first anniversary of the closing of the acquisition. On
the date of grant of the options, the closing sale price for
Registrant's Common Stock in the over-the-counter market was
$7 1/2 per share. The foregoing stock sales and option grants
were intended to provide such key personnel with a proprietary
interest in Registrant and to better identify their interests
with those of Registrant's shareholders.
Effective July 1, 1996, Mr. Hanamann was appointed as
Registrant's Treasurer and Chief Financial Officer succeeding
Jack Miller who continues as a Vice President of Registrant in
charge of its electronic fault indicator operations.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
Financial Statements and Pro Forma
Financial Information
It is impracticable for Registrant to provide the
required financial statements (including pro forma financial
information) for the acquired businesses at the date of this
Report. The required financial statements and pro forma
financial information shall be filed as soon as available but in
any event not later than 60 days after the date of this Report.
EXHIBITS
10(v) Stock and Unit Purchase Agreement dated June
21, 1996 by and among Registrant,
Construction Forms Acquisition Inc. and the
Shareholders of Construction Forms, Inc., CF
Gilco, Inc. and JABCO, LLC.
10(vi) Master Credit Agreement dated as of June 21, 1996 by
and among Construction Forms, Inc., CF Ultra Tech, Inc.
and CF Gilco, Inc.
10(vii) Loan Agreement dated June 21, 1996 between
Constructions Forms, Inc., CF Ultra Tech, Inc.,
CF Gilco, Inc. and Bank Audi USA.
Schedules and exhibits to the foregoing Exhibits which
are described in the respective documents are omitted.
Registrant agrees to furnish a copy of any such omitted schedule
or exhibit to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed by the undersigned thereto duly authorized.
EDISON CONTROL CORPORATION
(Registrant)
Date: July 8, 1996 By /s/ Mary McCormack
Mary McCormack, President
EXHIBIT 10(v)
STOCK AND UNIT PURCHASE AGREEMENT
THIS STOCK AND UNIT PURCHASE AGREEMENT is made this
21st day of June, 1996 by and among EDISON CONTROL CORPORATION, a
New Jersey Corporation ("Edison"), CONSTRUCTION FORMS
ACQUISITION, INC., a Delaware corporation ("Buyer"); and ALLEN W.
DUHR, JOSEPH F. BENNETT, ALAN J. KASTELIC, ROBERT E. KLEMM
and JAY R. HANAMANN (individually, a "Shareholder" and collectively,
the "Shareholders").
RECITALS
A. Allen W. Duhr, Joseph F. Bennett Alan J. Kastelic,
Robert E. Klemm and Jay R. Hanamann are the owners of all of the issued
and outstanding shares of the $.01 par value common stock (collectively,
the "ConForms Stock") of Construction Forms, Inc., a Wisconsin
corporation ("ConForms").
B. ConForms is the owner of all of the issued and
outstanding shares of the $.01 par value common stock (the "Ultra Tech
Stock") of CF Ultra Tech, Inc., a Wisconsin corporation ("Ultra Tech").
C. ConForms and Allen W. Duhr, Joseph F. Bennett and
Alan J. Kastelic are the owners of all of the issued and outstanding shares
of the $.01 par value common stock (the "Gilco Stock") of CF Gilco, Inc., a
Wisconsin corporation ("Gilco").
D. ConForms, Ultra Tech and Gilco are engaged in the
businesses of manufacturing and selling concrete pumping systems and
accessories; processing steel pipe into abrasion-resistant hardened pipe;
and manufacturing and selling concrete, utility and mortar/plaster mixers
(collectively, the "Business").
E. The Shareholders are the owners of all of the issued and
outstanding units (the "JABCO Units") of JABCO, LLC, a Wisconsin limited
liability company ("JABCO") which owns the real estate and certain
equipment used by Ultra Tech in Port Washington, Wisconsin.
F. The Shareholders desire to sell all of the (1) ConForms
Stock; all of the Gilco Stock they own personally (collectively, the
"Shares") to Buyer and Buyer desires to purchase the Shares from
Shareholders and (2) JABCO Units to Buyer and Edison and Buyer and
Edison desire to purchase the Units from Shareholders, on the terms and
conditions set forth in this Agreement.
G. Buyer is a wholly-owned subsidiary of Edison created
solely for the purpose of effectuating the acquisitions described herein and
will be merged with and into ConForms immediately after the Closing and
will thereafter cease to exist.
H. ConForms, Ultra Tech, Gilco and JABCO are
individually referred to herein as a "Company" and collectively as the
"Companies."
AGREEMENTS
In consideration of the premises and the mutual agreements
herein contained, the parties agree as follows:
1. Purchase and Sale of Shares and Units. 1.01
Shares. On the terms and subject to the conditions contained in this
Agreement, Buyer agrees to purchase from the Shareholders, and the
Shareholders agree to sell to Buyer, all of the Shares.
1.02 JABCO Units. Buyer and Edison agree to
purchase from Shareholders and Shareholders agree to sell to Buyer and
Edison all of the Units as follows:
Units
Shareholder
Buyer
Edison
Total
Allen W. Duhr
39
1
40
Joseph F.Bennett
40
0
40
Alan J. Kastelic
10
0
10
Robert E. Klemm
5
0
5
Jay R. Hanamann
5
0
5
99
1
100
2. Purchase Price. In consideration of Shareholders' sale,
assignment and transfer of the Shares and Units and the performance by
them of all of the terms, covenants and provisions of this Agreement on
their part to be kept and performed, Buyer and Edison (with respect to
Edison's purchase of 1 Unit from Allen W. Duhr) shall pay to Shareholders
the sum of $20,032,400 for the Shares and Units (collectively, the
"Purchase Price") by (a) issuance to Shareholders of Promissory Notes of
Buyer in the form attached hereto as Exhibits A-1 through A-6 (the
"Notes") in amounts equal to the difference between each Shareholder's pro
rata share as reflected on Schedule 2 of (i) the Purchase Price minus
(ii) $1,500,000 (the "Escrow Amount") and (b) depositing the Escrow
Amount with Firstar Bank Milwaukee, N.A. (the "Escrow Agent") to be
held by Escrow Agent pursuant to the terms of this Agreement and the
Escrow Agreement attached hereto as Exhibit B. Immediately following
issuance of the Notes, Buyer will merge with and into ConForms, with
ConForms as the surviving entity (the "Merger"). The Notes shall be paid
in full immediately following consummation of the Merger by wire transfer of
immediately available funds to each Shareholder based upon the Purchase
Price allocations set forth on Schedule 2.
3. Employment Agreements. At Closing, Messrs. Kastelic
and Hanamann shall each enter into Employment Agreements with Buyer in
the forms attached hereto as Exhibits C-1 and C-2 (the "Employment
Agreements").
4. Closing. The transaction contemplated by this
Agreement is being consummated (the "Closing") at 10:00 a.m. on June 21,
1996 (the "Closing Date"), at the offices of Reinhart, Boerner,
Van Deuren, Norris & Rieselbach, s.c., 1000 North Water Street,
Suite 2100, Milwaukee, Wisconsin.
5. Individual
Representations and Warranties of Shareholders. The representations and
warranties shall be deemed representations and warranties of each
individual Shareholder; provided, however, that the representation and
warranty of the Shareholders in the first sentence of section 5.08 of this
Agreement shall be joint and several. References to the knowledge of the
Shareholders shall mean the actual knowledge of the Shareholder providing
the representation and warranty. If a document or a matter is listed in one
section of the Disclosure Schedules to this Agreement delivered herewith,
such listing shall suffice, without specific repetition and with or without
cross reference, as a response to any other section. Except as otherwise
set forth in this Agreement, the Ancillary Agreements (defined below)
and/or in the Schedules to this Agreement, each Shareholder hereby
severally represents and warrants to Buyer and Edison as follows:
5.01 Authorization of Agreement. Shareholder has all
necessary power and authority to execute and deliver this Agreement and
all other agreements contemplated hereby (the "Ancillary Agreements") and
to consummate the transactions provided for herein. Except as set forth in
Schedule 5.01, the execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not, with or without the
giving of notice or the passage of time, conflict with, result in or constitute
a breach, default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to the terms or
conditions of the respective Companies' Articles of Incorporation, Articles
of Organization, By-Laws or Operating Agreement or, to Shareholder's
knowledge, any law, rule, regulation, statute, order, judgment or decree
or any contract, agreement, lease, license or instrument or other
arrangement to which Shareholder is a party or by which Shareholder or
his Shares or Units are bound. This Agreement and the Ancillary
Agreements to be executed by Shareholder pursuant hereto will be when so
executed, a legal, valid and binding obligation of Shareholder, enforceable
in accordance with their terms, except that enforcement may be limited by a
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general equitable principles.
Shareholder has the authority to sell the Shares and Units to Buyer and
will deliver to Buyer at Closing, good and marketable title to the Shares
and Units free and clear of all liens, security interests and encumbrances.
To Shareholder's knowledge, except as provided otherwise in this
Agreement, Shareholder need not give any notice to, make any filings with,
or obtain any authorization, consent or approval of any court, arbitrator,
administrative, government or governmental agency or self-regulatory
agency of which Shareholders or the Companies should reasonably have
knowledge in order to consummate the transactions contemplated by this
Agreement.
5.02 Title to Shares and Units. As of the Closing,
except as set forth on Schedule 5.02, Shareholder will hold of record and
own beneficially the number of Shares and Units set forth next to his name
in Schedule 2, free and clear of any restrictions on transfer, options,
warrants, purchase rights, contracts, commitments, claims, demands,
mortgages, pledges, liens, encumbrances, charges or other security
interests. As of the Closing, the Shareholder is not a party to any option,
warrant, purchase right or other contract or commitment relating to the
capital stock of the Companies (other than this Agreement). As of the
Closing, the Shareholder is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital stock
of the Companies. As of the Closing, the Companies have no outstanding
securities that are convertible into capital stock of the Companies.
5.03 Corporate Organization; No Conflict. Each of the
Companies is a corporation or limited liability company duly incorporated or
organized, as the case may be, validly existing under the laws of the State
of Wisconsin and each has all requisite corporate or limited liability
company, as the case may be, power to carry on their respective
businesses as they are now being conducted (the business as conducted by
the Companies is collectively, the "Business"). The Companies are in good
standing and duly qualified to do business in each jurisdiction where the
failure to do so would have a material adverse effect on the Business. The
Companies have, and as of the Closing will have, all material licenses and
permits required under all applicable laws, regulations and orders of all
necessary public authorities to carry on the Business in the places and in
the manner presently conducted. To Shareholder's knowledge, the
execution and delivery of this Agreement and the Ancillary Agreements
by Shareholder and the consummation of the transactions contemplated
hereby and thereby, will violate neither the (a) Articles of Incorporation or
By-Laws nor (b) Articles of Organization or Operating Agreement, as the
case may be, of the Companies or any agreement or instrument to which
Shareholder or the Companies are a party or subject or any judgment,
order, law, ordinance or regulation applicable to Shareholder or the
Companies.
5.04 Corporate Records. Shareholder has delivered to
Buyer true and complete copies of the Articles of Incorporation or Articles
of Organization, as amended to date, and the By-Laws or Operating
Agreement, as in effect on the date hereof, of each of the Companies. The
stock certificate and transfer books and the minute books of the Companies
(copies of which have been made available for inspection by the Buyer and
its representatives) are true and complete.
5.05 Financial Statements. Shareholder has delivered
to Buyer copies of the following financial statements, including in each case
all notes thereto, all of which have been prepared from the books and
records of the Companies in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods
indicated ("GAAP") (except as otherwise disclosed on Schedule 5.05):
(a) audited balance sheets of ConForms, Ultra
Tech and Gilco as of January 31, 1994, January 31, 1995 and January 31,
1996 and unaudited balance sheets of JABCO as of December 31, 1994 and
December 31, 1995 (January 31, 1996 in the case of ConForms, Ultra Tech
and Gilco and December 31, 1995 in the case of JABCO being referred to
herein collectively as the "Balance Sheet Date") and statements of income,
changes in shareholders' equity and cash flows of the Companies for each
of their respective years then ended; and
(b) an unaudited balance sheet of the
Companies as of April 30, 1996 (the "Interim Balance Sheet") and the
related unaudited statement of income for the three-month period in the
case of ConForms, Ultra Tech and Gilco and the four-month period in the
case of JABCO ending April 30, 1996 (collectively, the "Interim Balance
Sheet Date").
Such financial statements do not contain any items
of special or nonrecurring income in excess of $100,000 or any other income
not earned in the ordinary course of business except as expressly specified
therein, and such interim financial statements include all adjustments,
which consist only of normal recurring accruals, necessary for such fair
representation.
5.06 Capital Stock/Units. The aggregate number of
shares or units, as the case may be, which the Companies are authorized to
issue are set forth in Schedule 5.06. All the issued and outstanding Shares
have been duly authorized, are validly issued and outstanding and are
fully paid and nonassessable (except as provided in Wisconsin Statutes
section 180.0622, as judicially interpreted), and held of record and
beneficially by the respective Shareholders and ConForms as set forth in
Schedule 5.06. All of the issued and outstanding Units have been duly
authorized, are validly issued and outstanding and are fully paid and
nonassessable and held of record and beneficially by the respective
members as set forth in Schedule 5.06.
The Shares or Units, as the case may be,
constitute all of the issued and outstanding shares of capital stock or
units, as the case may be, of the Companies of whatever class, series or
designation. As of the Closing, there are no outstanding options,
contracts, warrants or subscription rights of any nature relating to the
issuance, sale or acquisition of the Shares or Units, as the case may be, or
of any additional securities of the Companies of whatever series, class or
designation. As of the Closing, none of the Shares or Units, as the case
may be, is subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, except for this
Agreement and the Ancillary Agreements.
5.07 Title to Assets; Real Property Owned or Leased.
(a) Except as disclosed in Schedule 5.07(a) or
as specifically disclosed pursuant to any provision of this Agreement and
except for such imperfections of title and encumbrances, if any, that are
not substantial in character, amount or extent, and do not individually or
in the aggregate materially detract from the value, or interfere with the
present or intended use, of the property or assets subject thereto or
affected thereby, or otherwise materially impair the Business, and except
for tax liens for amounts not yet due or liens shown on the financial
statements described in section 5.05, to Shareholder's knowledge, the
Companies have, and will have at the Closing, good and marketable title to,
or a valid leasehold interest in, all of their assets, free and clear of all
liens, claims, encumbrances and restrictions.
(b) Set forth in Schedule 5.07(b) is a list of all
of the real property owned or leased by the Companies. To the
Shareholders' knowledge, no parcel of real property so listed as owned or
leased or its use is (i) in violation of any applicable zoning laws nor in
violation of any local, state or federal laws and regulations affecting the
use and occupancy of such property or (ii) subject to any pending or
threatened condemnation proceedings. Except as set forth on section
Schedule 5.07(b), to the Shareholder's knowledge, all certificates of
occupancy, permits, licenses, franchises, approvals and authorizations of
all governmental authorities having jurisdiction over the real property
owned or leased by the Companies, and from all insurance companies and
fire rating and other similar boards and organizations required or
appropriate to have been used for all of the purposes for which they are
currently occupied and used, have been lawfully issued and are, as of the
date hereof, in full force and effect, except for those certificates of
occupancy, permits, licenses, franchises, approvals and authorizations,
the failure of which to have been issued and effective will not materially
and adversely affect the financial condition or results of operations of the
Companies.
5.08 Undisclosed Liabilities. Each Shareholder jointly
and severally for purposes of this sentence only, represents and warrants,
to such Shareholder's knowledge, and with the knowledge of each
Shareholder being imputed to all Shareholders, except for liabilities
disclosed in the balance sheets of the Companies referred to in
section 5.05, liabilities which under GAAP would not be required to be
disclosed on the Interim Balance Sheet or the financial statements referred
to in section 5.05, liabilities disclosed pursuant to any section of this
Agreement or on Schedule 5.08 and liabilities incurred in the ordinary
course of business since January 31, 1996, the Companies have no material
liabilities. Except as disclosed on Schedule 5.08, there are no proceedings
pending against the Companies or their properties or assets in any court,
which, if adversely determined, will materially and adversely affect the
financial condition or results of operations of the Companies, or which seek
to prohibit, restrict or delay consummation of the sale contemplated hereby
or any of the conditions to consummation of such sale or to limit in any
manner the right of the Buyer to control the Companies after the Closing
and the Companies are not in default with respect to any order, writ,
injunction or decree of any court, governmental authority or arbitration
board or tribunal.
5.09 Taxes.
(a) Definitions. The following definitions shall
apply for purposes of this Agreement.
(i) The term "Taxes" means all federal,
state, local, foreign and other income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional amounts with respect
thereto, and the term "Tax" means any one of the foregoing Taxes;
(ii) The term "Returns" means all
returns, declarations, reports, statements and other documents required
to be filed by the Companies as of the date hereof or which will be due as of
the Closing Date by applicable law, other than as a result of the Closing, in
respect of Taxes and the term "Return" means any one of the foregoing
Returns;
(iii) The term "Code" means the Internal
Revenue Code of 1986, as amended. All citations to the Code, or to the
Treasury Regulations promulgated thereunder, shall include any
amendments or any substitute or successor thereto enacted into law as of
the filing date of each Return.
(b) Filing of Returns and Payment of Taxes.
To Shareholder's knowledge, each of the Companies has (i) filed all
Returns and all such Returns were in all material respects true, complete
and correct and filed on a timely basis and (ii) within the time and in the
manner prescribed by law, paid (and until the Closing will pay within the
time and in the manner prescribed by law) all Taxes that were or are due
and payable, other than as a result of the transactions contemplated by
this Agreement or the Ancillary Agreements. None of the Companies has
requested any extension of time within which to file any Return, which
Return has not been filed as of the date hereof.
(c) Withholding. Except for Taxes that are due
but not yet payable, each of the Companies has withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or
other third party.
(d) Audit History. No issues have been raised
and are currently pending by any taxing authority in connection with any
of the Returns. No deficiency for any Taxes has been asserted or assessed
against any of the Companies that has not been resolved and paid in full or
otherwise settled, no audits or other administrative proceedings or court
proceedings are presently in progress, pending or, to Shareholder's
knowledge, threatened with regard to any Taxes or Returns of any of the
Companies, and no claim is currently being made by any authority in a
jurisdiction where any of the Companies does not file Returns that it is or
may be subject to Tax in that jurisdiction. No waivers of statutes of
limitation with respect to the Returns have been given by or requested
from the Companies.
(e) Tax Rulings and Closing Agreements. None
of the Companies has received a Tax Ruling (as defined below) or entered
into a Closing Agreement (as defined below) that would have any
continuing effect after the Closing. "Tax Ruling" shall mean a written
ruling of a taxing authority relating to Taxes. "Closing Agreement" shall
mean a written and legally binding agreement with a taxing authority
relating to Taxes.
(f) JABCO Status. JABCO has, since the date
of its formation, qualified (and, up until the Closing, will qualify) to be
treated as a partnership for federal income tax purposes and neither
JABCO nor, to Shareholder's knowledge, any of the Shareholders has
taken any position inconsistent with such treatment.
(g) Prior Affiliated Groups. Except for the
group of which ConForms is presently the parent, ConForms has never
been a member of an affiliated group of corporations, within the meaning of
section 1504 of the Code, other than as a common parent corporation and
each of Gilco and Ultra Tech has never been a member of an affiliated group
of corporations, within the meaning of section 1504 of the Code, except
where ConForms was the common parent corporation of such affiliated
group. Gilco and Ultra Tech have, since the date of their formation, each
been a member (and up until the Closing, will continue to be a member) of
an affiliated group of corporations, within the meaning of section 1504 of
the Code, in which ConForms is the common parent.
(h) Section 341(f) Consent. None of the
Companies has filed a consent pursuant to the collapsible corporation
provisions of section 341(f) of the Code (or any corresponding provision of
state, local or foreign income tax law) or agreed to have section 341(f)(2)
of the Code (or any corresponding provision of state, local or foreign tax
law) apply to any disposition of any asset owned by it.
(i) Foreign Person. None of the Shareholders
is a person other than a United States person within the meaning of the
Code.
(j) Liens. To Shareholder's knowledge, there
are no liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of any of the Companies.
5.10 Conduct Out of Ordinary Course. To
Shareholder's knowledge, except as disclosed on Schedule 5.10, the
Companies have, since the date of the Interim Balance Sheet, conducted the
Business in the normal and ordinary course and have not, and will not have
between such date and the Closing: (a) mortgaged or pledged any of the
assets or business of the Companies outside the ordinary course of
business, except for this Agreement; (b) sold, transferred or leased to
others any of the material assets of the Companies (except sales of
inventory in the ordinary course of business and except as contemplated in
connection with this Agreement); (c) suffered any material damage,
destruction or loss affecting any of the significant assets, or the Business,
reasonable wear and tear excepted; (d) borrowed, or agreed to borrow,
funds (except credit received by vendors and draws on the Companies
existing lines of credit in the ordinary course of business); (e) incurred
any obligation or liability, except current liabilities incurred in the
ordinary course of its business; (f) discharged or satisfied any material
lien, charge or encumbrance, canceled or compromised any material debt or
claim or paid any material obligation or liability, other than in the normal
course of its business; (g) declared, set aside or paid any dividend or
made any other distribution with respect to the Shares; (h) entered into
any transaction, contract or commitment involving amounts in excess of
Twenty-Five Thousand Dollars ($25,000) other than in the ordinary course
of its business; (i) made or permitted any material amendment or
termination of any material contract, mortgage, lease, license or agreement
to which it is a party, other than in the ordinary course of its business;
(j) made any accrual or arrangement for or payment of any significant
bonuses or special compensation of any kind to any employee other than
under a plan or arrangement in effect on or accrued at such date or other
than in the ordinary course of business; (k) directly or indirectly paid any
severance or termination pay to any employee which was not accrued at
such date other than in the ordinary course of business; (l) made any
material changes in accounting for receivables or payment methods or
practices; (m) materially increased the regular rate of compensation
payable by it to any officer, director or employee, other than in the
ordinary course of its business; (n) entered into any other material
transaction, other than in the ordinary course of business, except the
transactions contemplated by this Agreement; (o) incurred any
cancellations by suppliers or contractors that could have a material adverse
effect on the Business; (p) received notice from any customer accounting
for more than five (5) percent of the Companies' annual gross revenues of
an intent to cease doing business with the Companies; (q) directly or
indirectly paid or reimbursed any out-of-pocket expenses of any
Shareholder, or any affiliate or family member of any Shareholder, or any
officer, director, employee or affiliate of any of the Companies (any such
person shall be referred to as a "Restricted Person") other than those
expenses incurred by a Restricted Person in the ordinary course of the
Business or as otherwise provided for in this Agreement; or (r) except as
described in this Agreement or any of the Ancillary Agreements, entered
into any loan transactions, arrangements or agreements with any
Restricted Person.
5.11 Insurance. Schedule 5.11 contains a list of all
insurance maintained by the Company. Except as set forth on
Schedule 5.11, premiums on policies due to the date hereof have been paid,
and no notice has been received that any such insurance is in default, will
be canceled or not renewed.
5.12 Material Contracts.
(a) Schedule 5.12 is a list of (i) any contract
for the lease by the Companies of personal property from third parties
providing for lease payments in excess of Twenty-Five Thousand Dollars
($25,000.00) per annum; (ii) any contract in effect on the date hereof
which involves more than Twenty-Five Thousand Dollars ($25,000.00) for
the purchase of materials, commodities, supplies or other personal
property or for the receipts of services, other than purchase orders issued
by the Companies in the ordinary course of their business; (iii) any joint
venture or partnership agreement to which the Companies are a party or
are bound; (iv) any material agreement under which the Companies are
indebted for borrowed money; (v) any written employment agreement to
which the Companies are a party or are bound; (vi) any other agreement,
license or lease which involves a payment by the Companies of more than
Twenty-Five Thousand Dollars ($25,000.00) other than in the ordinary
course of business (collectively, the "Contracts").
(b) Each of the Contracts is in full force and
effect and the Companies are in compliance, and to Shareholder's
knowledge all other parties to the Contracts are in compliance, with all
material terms and conditions set forth in the Contracts, except as limited
by bankruptcy, insolvency, reorganization, moratorium, marshaling or
other similar laws relating to creditors' rights generally or by general
principles of equity (whether considered in an action at law or in equity)
and to the discretion of the court before which any proceedings therefor
may be brought.
(c) All material purchase orders or purchasing
commitments and all material sales orders and commitments of the Companies
have been entered into in the ordinary course of business.
(d) To Shareholder's knowledge, there does not
exist under any of the Contracts any default on the part of the Companies
which has a material adverse effect on the Business, operation or financial
condition of the Companies taken as a whole.
5.13 Consents and Approvals. To Shareholder's
knowledge, no material consent, order or authorization of, or filing or
registration with any governmental authority on the part of the Companies
in connection with the execution, delivery or performance of this
Agreement and the Ancillary Agreements is required to be made or obtained
with respect to any Shareholder or the Companies.
5.14 Inventory. The inventory of the Companies as
disclosed on the Interim Balance Sheet or thereafter acquired by the
Companies prior to Closing consists of raw materials and supplies,
manufactured and purchased parts, goods in process and finished goods,
all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is obsolete, damaged or
defective, subject only to the reserve for inventory write down set forth on
the face of the Interim Balance Sheet.
5.15 Accounts Receivable. Except as set forth on
Schedule 5.15, each account receivable of the Companies as disclosed on
the Interim Balance Sheet or thereafter acquired by the Companies prior to
Closing has arisen from a bona fide transaction in the ordinary course of
business and is collectible within 90 days (except as reserved on the
Interim Balance Sheets) in accordance with GAAP.
5.16 Government Licenses and Permits. Except as set
forth on Schedule 5.16, to Shareholder's knowledge, the Companies have
all domestic and foreign governmental licenses and permits necessary to
conduct the Business and such licenses and permits are in full force and
effect. Except as set forth on Schedule 5.16, all the rights of the
Companies under such licenses and permits will be exercisable by Buyer
after the consummation of the transactions contemplated by this
Agreement. None of the Companies have received notice within the
four-year period preceding the date of this Agreement, and no proceeding
is pending or, to Shareholder's knowledge, threatened, regarding the
revocation or limitation of any such governmental license or permit and
there is no basis or grounds for any such revocation or limitation.
5.17 Employee Benefit Plans.
(a) Schedule 5.17 lists all "employee pension
benefit plans," as such term is defined in section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA") without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by the Companies or with respect to which the Companies
have an obligation to contribute or any liability (the "Pension Plans"). The
term "Pension Plans" shall also include any terminated "employee pension
benefit plan" previously maintained, sponsored or contributed to by the
Companies or with respect to which the Companies had an obligation to
contribute or any liability which, as of the Closing Date, has not
distributed all of its assets in full satisfaction of accrued benefits. The
Companies have made available to Buyer true and complete copies of (i) the
documents governing each of the Pension Plans as in effect on the Closing
Date; (ii) the most recent annual report prepared on the appropriate
Internal Revenue Service Form 5500 series, including all required
attachments, for each of the Pension Plans subject to such reporting
requirements; and (iii) the most recent determination letter issued by the
Internal Revenue Service concerning the qualification of any Pension Plan
pursuant to section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). None of the assets of the Companies are subject to
any lien, constructive or otherwise, arising under ERISA sections 4068 or
302(f) or under Code section 412(n).
(b) Schedule 5.17 lists all "employee welfare
benefit plans," as defined in ERISA section 3(1) without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by the Companies or with respect to which the Companies
have an obligation to contribute or any liability (the "Welfare Plans"). The
term "Welfare Plans" shall also include any terminated employee welfare
benefit plan previously maintained, sponsored or contributed to by the
Companies or with respect to which the Companies had an obligation to
contribute or any liability which, as of the Closing Date, has not
distributed all of its assets. The Companies have made available to Buyer
true and complete copies of the documents governing or relating to each of
the Welfare Plans as in effect on the Closing Date.
(c) Schedule 5.17 lists all plans, agreements or
programs to provide fringe or other benefits to the Companies current or
former employees (other than Pension Plans, and Welfare Plans) including,
but not limited to, vacation, holiday, sick leave, disability, retirement,
stock bonus, savings, thrift, bonus, stock appreciation, deferred
compensation, severance, employment, consulting, medical,
hospitalization, welfare, life insurance and other insurance plans, group
insurance or other benefit plans, agreements or programs (the "Fringe
Benefit Plans"). The Companies have made available to Buyer true and
complete copies of the documents governing or affecting each Fringe
Benefit Plan together with any summary plan description or other document
describing such Fringe Benefit Plan.
(d) Except as described in Schedule 5.17, the
Companies have no direct or indirect, formal or informal, plan or program
to change any Pension Plan, Welfare Plan or Fringe Benefit Plan
(collectively, the "Plans") that would affect any employees of the
Companies after Closing. The Companies have made no material
modification, within the meaning of ERISA section 102 and the regulations
thereunder, to any existing Plans.
(e) Except as set forth on Schedule 5.17,
neither the Companies nor any Plan maintained or contributed to by the
Companies provides or has any obligation to provide (or contribute towards
the cost of) post-retirement, welfare benefits with respect to current or
former employees of the Companies or any other entity, including, without
limitation, post-retirement, medical, dental, life insurance, severance, or
any other similar benefit, whether provided on an insured or self insured
basis.
(f) Except as disclosed on Schedule 5.17, with
respect to each of the Plans (i) all payments due from any such Plan (or
from the Companies with respect to any such Plan) have been made, and all
amounts properly accrued to date as liabilities of the Companies which have
not been paid have been properly recorded on the books of the Companies;
(ii) to the Shareholder's knowledge, the Companies have complied with,
and each such Plan conforms in form and operation to, all applicable laws
and regulations, including, but not limited to, ERISA and the Code in all
material respects, and all reports and information relating to such Plans
required to be filed with any governmental entity have been timely filed;
(iii) to the Shareholder's knowledge, all reports and information required
to be disclosed or provided to participants or the beneficiaries have been
timely disclosed or provided; (iv) there have been no prohibited
transactions within the meaning of sections 406 and 407 of ERISA or
section 4975 of the Code resulting from actions or omissions of the
Companies or any of its employees; (v) to the Shareholder's knowledge, no
event or omission has occurred in connection with any Plan that would
subject the Companies or such Plan to a fine, penalty, tax or liability,
whether pursuant to any agreement, instrument, indemnification
obligation, or statute, regulation or rule of law; and (vi) there are no
actions, suits or claims pending (other than routine claims for benefits) or,
to Shareholder's knowledge, threatened with respect to any Plan or against
the assets of any Plan.
(g) Neither the Companies nor any entity that
is or was at any time treated as a single employer with the Companies under
section 414(b), (c), (m) or (o) of the Code has at any time (i) maintained,
contributed to or been required to contribute to any plan under which more
than one employer makes contributions (within the meaning of
section 4064(a) of ERISA) or to any multiemployer plan (within the meaning
of section 3(37) of ERISA); (ii) incurred or expects to incur any liability to
the Pension Benefit Guaranty Corporation or otherwise under Title IV of
ERISA (other than the payment of premiums none of which are overdue); or
(iii) incurred or expects to incur liability in connection with an
"accumulated funding deficiency" within the meaning of section 412 of the
Code, whether or not waived.
(h) The Pension Plans are qualified and exempt
from federal income tax under sections 401(a) and 501(a), respectively, of
the Code. The ConForms has received favorable determination letters from
the Internal Revenue Service stating that such plans are so qualified and
nothing has occurred since the date of such letters to cause the letters to
be no longer valid or effective. To Shareholder's knowledge, the assets of
the Pension Plans are at least as great as the liabilities on a termination
basis based on the assumptions used in the most recent actuarial valuation.
(i) The events contemplated by this Agreement
(either alone or together with any other event) will not (i) entitle any
current or former employees of the Companies to severance pay,
unemployment compensation or other similar payments under any Plan or
Law; (ii) accelerate the time of payment or vesting or increase the amount
of benefits due under any Plan or compensation to any current or former
employees of the Companies; (iii) result in any payments (including
parachute payments) under any Plan or law becoming due to any current or
former employees of the Companies; or (iv) terminate or modify or give a
third party a right to terminate or modify the provisions or terms of any
Plan.
(j) The Companies and each member of their
business enterprise have complied with the Worker Adjustment and
Retraining Notification Act.
(k) The Companies do not have any actual or
contingent liability with respect to the Construction Forms, Inc. Employee
Equity Participation Plan.
5.18 Labor Matters.
(a) The Companies are not a party to or bound
by any union collective bargaining agreements or other labor contracts.
The Companies are not, with respect to the Business, a party to any
pending arbitration or grievance proceeding or other claim relating to any
labor contract nor, to Shareholder's knowledge, is any such action
threatened and no set of facts would reasonably be expected to constitute a
basis for any such action. Except as set forth on Schedule 5.18, within the
last five years, the Companies have not experienced any labor disputes,
union organization attempts or any work stoppage due to labor
disagreements in connection with its Business, and there is currently no
labor strike, dispute, request for representation, slow down or stoppage
actually pending, or to the knowledge of Shareholder threatened against or
affecting the Companies.
(b) The Companies are not bound by any court,
administrative agency, tribunal, commission or board decree, judgment,
decision, arbitration agreement or settlement relating to collective
bargaining agreements, conditions of employment, employment
discrimination or attempts to organize a collective bargaining unit which in
any case may materially and adversely affect the Companies or the
Business. Shareholder has no notice or knowledge of any employment
discrimination, safety or unfair labor practice or other employment-related
investigation, claim or allegation against the Companies or any set of facts
which would reasonably be expected to constitute a basis for such an
action.
(c) Shareholder has provided Buyer all of the
Companies' written employment policies presently in effect.
(d) The Companies have made all required
payments to the appropriate governmental authorities with respect to
applicable unemployment compensation reserve accounts for their
employees.
5.19 Intangible Assets. Schedule 5.19 contains a true
and complete list of all patents, trademarks, trade names, trade dress,
service marks, copyrights and licenses thereof relating to the Business and
all pending applications and applications to be filed therefor used in the
operation of the Business (collectively, the "Intellectual Property"), all of
which are fully assignable by the Companies and are free and clear of any
adverse claims or interests. To Shareholder's knowledge, all other trade
secrets, confidential information, know-how, inventions and formulas used
in the Business are fully assignable by the Companies and are free and
clear of any adverse claims or interests. No licenses, sublicenses,
covenants or agreements have been granted or entered into by the
Companies relating to the Intellectual Property and any such trade secrets,
know-how and formulas, other than those attached hereto on
Schedule 5.19. To Shareholder's knowledge, the Business and the use of
its products by customers have not involved any infringement, and there
exists no basis for any claim of infringement, of any patents, trademarks,
trade names, service marks, copyrights, licenses or intangible assets of
others. To Shareholder's knowledge, all patents, trademarks, trademark
registrations, trade names and copyrights are valid and in full force and
effect. There are no pending claims or litigation, and to Shareholder's
knowledge, there are no inquiries or investigations challenging or
threatening to challenge the Companies' right, title and interest with
respect to its continued use and right to preclude others from using any
such trade rights or intangible assets. To Shareholder's knowledge, no
other person is infringing on the trade rights and intangible assets of the
Companies.
5.20 Compliance with Environmental Laws. For the
purpose of this section 5.20, "Environmental Laws" shall mean all federal,
state and local laws relating to pollution or protection of the environment
including, without limitation, laws relating to the emission, discharge,
release, manufacture, processing, use, generation, management,
handling, treatment, storage, transportation and/or disposal of wastes,
pollutants, contaminants, oil, chemical substances or mixtures and/or
hazardous or toxic substances, mixtures or wastes. To Shareholder's
knowledge, except as set forth on Schedule 5.20, (a) the Companies have
obtained all material permits, certificates, licenses and other authorizations
required in connection with the Business or required under all applicable
Environmental Laws (the "Environmental Permits"); (b) the Companies are
in compliance in all material respects with all such required Environmental
Permits; (c) the Business has been operated in material compliance with all
Environmental Laws, except for failure in compliance which would not
materially and adversely affect the Business taken as a whole; (d) without
limiting the generality of the foregoing the Companies have received no
notice of violations of any applicable Environmental Laws by the Companies;
(e) there is no environmental condition which would materially and
adversely affect the financial condition of the Companies; (f) no notice has
been issued and no investigation or review is pending by any governmental
entity or other party with respect to (i) any alleged violation by the
Companies of any Environmental Law, (ii) any alleged failure to have all
Environmental Permits, or (iii) any actual or threatened release (including,
without limitation, any spill, discharge, leak, emission, ejection, escape or
dumping) or inadequate storage or contamination caused by any waste,
pollutants, contaminant, oil, chemical substance or mixture and/or
hazardous or toxic substances, mixture or leaks in connection with the
operation of the Business.
5.21 Product Recalls and Warranty. None of the
Companies' products are subject to any product recall action.
Schedule 5.21 sets forth a description of all warranties provided by the
Companies with respect to the Business. No warranty claims in excess of
$10,000 have been executed against or paid by the Companies since the
Interim Balance Sheet Date. To Shareholder's knowledge, the Interim
Balance Sheet contains adequate reserves for all anticipated warranty
expenses for products sold by the Companies through the Interim Balance
Sheet Date.
5.22 Litigation. Except as set forth in Schedule 5.22,
there is no suit, action or arbitration, nor any legal or administrative or
other proceeding before or by any federal, local or other governmental
agency, pending or, to Shareholder's knowledge, threatened against
(a) the Companies relating to their property, assets or the Business or
(b) Shareholder with respect to the Companies or his Shares, nor does
Shareholder have knowledge of any valid basis for any such suit, action,
arbitration or proceeding which if adversely determined could reasonably
be expected, in any one case or the aggregate, to interfere with the ability
of Shareholder to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements, or have a material adverse effect
on the Business. Except as set forth on Schedule 5.22, the Companies
have not commenced nor threatened to commence any suit, action,
arbitration or proceeding against any other party. There are no decrees,
injunctions or orders of any court or governmental department or agency
outstanding against the Companies or Shareholder with respect to the
Companies or his Shares or Units.
5.23 Legal Compliance. To Shareholder's knowledge,
each of the Companies has complied with all applicable laws of federal, state
and local governments (and all agencies thereof) the violation of which
would have a material adverse effect on any of the Companies or the
Business, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced against any
of them, alleging any failure to so comply.
6. Representations and Warranties of Buyer and Edison.
Buyer jointly and severally represent and warrant to each Shareholder as
of the Closing Date that:
6.01 Corporate Organization. Buyer is a corporation
duly organized and validly existing under the laws of the State of Delaware
and Edison is a corporation duly organized and validly existing under the
laws of the State of New Jersey. Buyer and Edison each have all corporate
power and authority to own, operate and lease their respective properties
and carry on their respective businesses as now conducted. Buyer and
Edison are each duly licensed and qualified to do business in and are in
good standing under the laws of each state where failure to do so would
adversely affect the business of Buyer or Edison.
6.02 Authorization of Agreement. Buyer and Edison
each have all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions provided for
herein and the performance by them of the obligations to be performed
thereunder have been duly authorized by all necessary and appropriate
action by the Board of Directors of Buyer and Edison. The execution and
delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated thereby do not and will not,
with or without the giving of notice or the passage of time, conflict with,
result in or constitute a breach of, a default, right to accelerate or loss of
rights under, or result in the creation of any lien, charge as encumbrance
pursuant to the terms or conditions of Buyer's or Edison's Articles of
Incorporation or By-Laws, any law, rule, regulation, statute, order,
judgment or decree or any contract, agreement, lease, license or
instrument or other arrangement to which Buyer or Edison is a party or by
which Buyer or Edison or their assets are bound or affected. This
Agreement is, and the Ancillary Agreements to be executed by Buyer and
Edison pursuant hereto will be when so executed, a legal, valid and
binding obligation of Buyer and Edison enforceable in accordance with their
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, moratorium and
other similar laws relating to or affecting the rights and remedies or
creditors generally and by general principles of equity. To Buyer's and
Edison's knowledge, except as provided in this Agreement, neither Buyer
nor Edison need give notice to, make any filings with, or obtain any
authorization, consent or approval of any court, arbitrator,
administrative, government or governmental agency or self-regulatory
agency of which Buyer or Edison should reasonably have knowledge in
order to consummate the transactions contemplated by this Agreement.
6.03 Litigation. There is no suit, action or
arbitration, nor any legal or administrative or other proceeding before or
by any federal, local or other governmental agency, pending or, to Buyer's
or Edison's knowledge, threatened against the Buyer or Edison relating to
their respective property, assets or business, nor does Buyer or Edison
have knowledge of any valid basis for any such suit, action, arbitration or
proceeding which if adversely determined could reasonably be expected, in
any one case or in the aggregate, to interfere with the ability of Buyer or
Edison to consummate the transactions contemplated by this Agreement or
the Ancillary Agreements, or have a material adverse effect on the
transactions contemplated by this Agreement or the Ancillary Agreements.
Neither Buyer nor Edison has commenced or threatened to commence any
suit, action, arbitration or proceeding against any other party. There are
no decrees, injunctions or orders of any court or governmental department
or agency outstanding against the Buyer or Edison.
6.04 Full Disclosure. The Buyer and Edison have
completed their due diligence investigation of the Companies. The Buyer
and Edison have enjoyed and used access to the Companies' officers,
employees, records, physical plant and facilities to the extent the Buyer
and Edison have deemed necessary to enable the Buyer and Edison to fully
evaluate the merits and risks of closing the transaction contemplated
hereby. The Buyer and Edison have notified the Shareholders in writing
(a) of any fact, condition or circumstance of which the Buyer or Edison
have knowledge which the Buyer or Edison reasonably believes would
constitute a breach or default by the Shareholders under this Agreement
and (b) of any fact, condition or circumstance which the Buyer or Edison,
in the exercise of reasonable business judgment, believes would, after
notice or lapse of time or both, constitute a breach or default by the
Shareholders under this Agreement.
6.05 Solvency.
Following the Closing, the Companies will not have
incurred, and do not intend to, or believe that they will, incur
indebtedness beyond their ability to pay such indebtedness as it matures
(taking into account the timing and amounts of cash to be received from any
one source). Following the Closing, none of the Companies intends to make
any transfer or incur any obligations, with the intent to disturb, delay,
hinder or defraud either present or future creditors. Following the
Closing, each of the Companies will have sufficient capital with which to
conduct its present or proposed business and its property will not
constitute unreasonably small capital with which to conduct its present or
proposed business and Buyer and Edison have no reason to believe the
Companies will engage in a business or transaction for which they have
unreasonably small capital.
6.06 Ownership of Buyer; No Prior Activities. Buyer
is a wholly owned subsidiary of Edison and was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement.
The Merger will occur immediately upon the issuance of the Notes, with the
result being that all of the outstanding capital stock of ConForms will be
owned by Edison; all of the outstanding capital stock of Ultra Tech and
Gilco will be owned directly by ConForms and 99% of the Units of JABCO will
be owned by ConForms and 1% of the Units of JABCO will be owned by
Edison. As of the Closing Date, there will be no options, warrants or other
rights (including registration rights), agreements, arrangements or
commitments to which Buyer is a party of any character relating to the
issued or unissued capital stock of, or other equity interests in, Buyer or
obligating Edison to grant, issue or sell shares of the capital stock of, or
other equity interests in, Buyer, by sale, lease, license or otherwise.
There are no obligations, contingent or otherwise, of Buyer to repurchase,
redeem or otherwise acquire any shares of the capital stock of Buyer.
As of the Closing Date, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, Buyer has not and will
not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreement or
arrangements with any person or entity.
7. Covenants and Agreements of Buyer and Edison. Buyer
and Edison jointly and severally covenant and agree that Buyer and Edison
shall, or shall cause the Companies to, for so long as each Shareholder's
indemnification obligations survive the Closing, use reasonable efforts to
maintain insurance coverage which is at least as extensive as the actual
insurance coverage of the Companies in effect as of the Closing Date to the
extent such insurance coverage is available on terms that are substantially
similar to those in effect on the Closing Date.
8. Noncompetition and Nonsolicitation Covenants. Each of
Allen W. Duhr, Joseph F. Bennett and Robert E. Klemm (collectively, the
"Restricted Shareholders") hereby individually covenants and agrees to
Buyer and Edison that:
(a) During the two-year period from and after
the date of this Agreement, Restricted Shareholder shall not, directly or
indirectly (i) enter into or engage in any business of the Companies, their
subsidiaries or affiliates as now conducted or as contemplated by the
Companies, their subsidiaries or affiliates, either on his own account or as
a partner or joint venturer, or as an employee, agent, consultant or
salesman for any individual or entity, or as an officer, director or
stockholder of a corporation, or as a lender, sales agent or sales
representative or otherwise, within the United States or any other
country, (ii) solicit or induce, or cause any business, firm or corporation
to solicit or induce, the employment of or business with, any of the present
or future employees, agents or customers of the Companies, their
subsidiaries or affiliates or (iii) engage in or participate in , directly or
indirectly, any business conducted under any name that shall be the same
as or similar to any trade name used by the Companies, their subsidiaries
or affiliates in connection with their business and operations. Nothing in
the foregoing shall be deemed to prohibit any Shareholder from continuing
employment with ConForms, Ultra Tech or Gilco after the Closing or from
owning stock, but not otherwise participating in the management, of any
corporation which is listed on a national stock exchange or the Nasdaq
National Market system, provided such stock interest does not exceed five
percent (5%) of the outstanding stock of any class of such corporation.
(b) During the two-year period from and after
the date of this Agreement, Restricted Shareholder shall not, directly or
indirectly, solicit or encourage any employee of the Companies or their
subsidiaries to cease his or her employment with the Companies, their
subsidiaries or affiliates or to commit any act or engage in any activity
which would violate the conditions set forth in section 8(a) of this
Agreement if it were committed or engaged in by the Shareholder himself
nor shall any Shareholder induce or attempt to induce any customer or
other person having a business relationship with the Companies, their
subsidiaries or affiliates or interfere materially with the relationship
between any such person and the Companies, their subsidiaries or
affiliates.
(c) Each Restricted Shareholder acknowledges
and agrees that (i) irreparable damage would result if the provisions of
section 8 hereof were not complied with in accordance with their respective
specific terms, (ii) such damage will be incapable of precise measurement
and (iii) neither Buyer nor Edison will have an adequate remedy at law to
redress the harm which such violations shall cause. Accordingly, each
Restricted Shareholder agrees that Buyer and Edison shall have the right
to injunctive relief, in addition to any other rights or remedies it may have,
in respect of any failure on the part of any Restricted Shareholder to
comply with the provisions of this section 8 including, but not limited to,
temporary restraining orders and temporary injunctions to restrain any
violation of this section by any Restricted Shareholder.
9. Conditions Precedent to each Shareholder's Obligations.
The obligations of each Shareholder under this Agreement are, at the
option of each Shareholder, subject to the fulfillment at Closing of each of
the following conditions:
9.01 Accuracy of Representations and Warranties.
Each of the representations and warranties of Buyer and Edison contained
in this Agreement shall be true and correct in all respects and Buyer and
Edison shall have performed and satisfied all of their covenants, conditions
and agreements and shall have delivered to each Shareholder all documents
and agreements required by this Agreement to be performed, satisfied or
delivered by Buyer and Edison prior to Closing.
9.02 Duhr/Bennett Bonus. ConForms having paid each
of Allen W. Duhr and Joseph F. Bennett a $35,000 bonus in consideration of
their services to ConForms during ConForms' current fiscal year, which
payments have been approved pursuant to the Shareholder votes described
in section 10.05. In addition, ConForms shall have provided Allen W. Duhr
with the opportunity to purchase its 1995 Cadillac for the fair market value
purchase price of $29,666.
9.03 Equity Contribution. Edison shall contribute at
least $5.8 million of equity capital to Buyer of which $820,000 will be
contributed by Alan J. Kastelic, Robert E. Klemm, Jay R. Hanamann, Craig
Weinbrenner and David Edwards at Closing.
9.04 Deliveries on Closing. Buyer and Edison shall
have delivered or cause to be delivered to each Shareholder the following
documents at or prior to Closing:
(a) The Notes, duly executed by Buyer and,
immediately following the Merger, a wire transfer to each Shareholder in
the amount necessary to pay his Note in full.
(b) Certified copies of resolutions adopted by
the Board of Directors of Buyer and Edison authorizing the purchase of the
Shares and Units by Buyer and Edison in accordance with this Agreement
and the Ancillary Agreements.
(c) A certificate of good standing for Buyer
issued by the Secretary of State of Delaware within one week of the Closing
Date and a certificate of good standing for Edison issued by the Secretary
of State of New Jersey within one week of the Closing.
(d) An opinion of Buyer's and Edison's counsel
in the form of Exhibit D.
(e) The Escrow Agreement, duly executed by
Buyer and Edison.
10. Conditions Precedent to Buyer's and Edison's
Obligations. The obligations of Buyer and Edison under this Agreement
are, at the option of Buyer and Edison, subject to the fulfillment at Closing
of each of the following conditions:
10.01Accuracy of Representations and Warranties.
Each of the representations and warranties of each Shareholder contained
in this Agreement shall be true and correct in all respects, each
Shareholder shall have performed and satisfied all of his covenants, and
each Shareholder shall have performed and satisfied all of his or its
conditions and agreements and shall have delivered to Buyer and Edison all
documents and agreements required by this Agreement to be performed,
satisfied or delivered by each such Shareholder prior to Closing.
10.02Nonforeign Persons. Each of the Shareholders
shall provide Buyer and Edison with a certification of nonforeign status as
described under Treasury Regulations section 1.1445-2(b)(2).
10.03Funded Debt. The Companies shall have no
Funded Debt obligations other than as set forth on the Interim Balance
Sheet and Schedules 5.05, 5.08, 5.10 or 5.12. The term "Funded Debt" of
the Companies for purposes of this section 10.03 shall be limited to loans,
promissory notes and mortgages of any kind, industrial development
revenue bonds, any obligation for borrowed money and capitalized leases.
Cash on the balance sheets of the Companies as of the Closing Date
(including cash generated or to be generated from the exercise of stock
options) shall be treated as reducing the Funded Debt of the Companies.
10.04Equity Contribution. Edison shall contribute at
least $5.8 million of equity capital to Buyer, of which $860,000 shall be
contributed by Messrs. Kastelic, Klemm and Hanamann to Edison at the
Closing to consummate the transactions contemplated by this Agreement.
10.05Compensation Payments. All payments to be made
to any employee of the Companies as a result of or in connection with the
transactions contemplated by this Agreement, whether pursuant to the
Employment Agreements or otherwise, shall have been put to an
independent vote of the Shareholders holding voting stock of the
Companies as contemplated by Proposed Regulation Section 1.280G-1
Q&A 7, which vote shall determine the right of the parties to receive such
amounts.
10.06Deliveries on Closing. Each Shareholder shall
have delivered or cause to be delivered to Buyer the following documents at
or prior to Closing:
(a) Stock certificates evidencing the Shares to
be sold by Shareholder hereunder, duly endorsed in blank or accompanied
by appropriate stock powers duly endorsed in blank with all documentary
or stock transfer stamps affixed.
(b) Employment agreements in the form attached
hereto at Exhibits C-1 and C-2 as approved pursuant to the Shareholder
Vote described in section 10.05.
(c) Buyer and Edison shall have received from
counsel to the Shareholders an opinion in form and substance as set forth
at Exhibit E attached hereto, addressed to Buyer and Edison.
(d) The Escrow Agreement, duly executed by
each Shareholder.
(e) Bond counsel opinion addressed to
Robert W. Baird & Co., Incorporated and Firstar Trust Company in form
and substance as set forth at Exhibit F.
(f) Buyer and Edison shall have received the
resignations, effective as of the Closing, of each director and officer of
ConForms, Ultra Tech and Gilco;
(g) Certificate of status of each of the
Companies issued by the Secretary of State of Wisconsin within one week of
the Closing Date and a certificate of good standing in each jurisdiction
where the Companies are registered to do business.
(h) All necessary third party consents and
approvals and all necessary governmental approvals, permits and licenses
required for the performance by Shareholders and Companies for the
closing of the transactions contemplated by this Agreement.
(i) Such other documents as Buyer and Edison
reasonably deems necessary or appropriate to vest in it good and
marketable title to all or any part of the Shares and Units, free and clear of
all liens, encumbrances and other rights as provided in this Agreement.
11. Conduct Subsequent to Closing.
11.01Access to Books and Records. The parties agree
that, for purposes of this section, the "Access Period" is defined as the
longer of (i) a period of five (5) years from the Closing Date or (ii) the
period of time beginning on the Closing Date and ending on the date on
which taxes may no longer be assessed under the applicable statutes of
limitations, including any period of waivers or extensions thereof. Buyer
and Edison hereby covenant and agree to maintain in a reasonably
accessible place, during the Access Period, the books and records
delivered by the Shareholders hereunder relating to the Companies and to
provide copies of such books and records to the Shareholders or their
representatives upon request, for any reasonable purpose, at the
requesting Shareholder's expense. Buyer and Edison agree to notify each
Shareholder prior to disposal of any such books and records and, upon
request made within thirty (30) days after receipt of such notice, to
deliver such books and records to any requesting Shareholder at such
Shareholder's expense.
11.02Reporting Assistance. Buyer and Edison agree to
cooperate with the Shareholders in preparing information for various
authorities after the Closing Date. This information includes, but is not
limited to, accounting and tax workbooks, responses to audit requests and
other filings with tax authorities. The Shareholders agree to provide the
same reporting assistance to the Buyer and Edison.
For tax reporting purposes, the parties agree
that as a result of the sale of the Units by Shareholders to Buyer and
Edison, JABCO's existence as a partnership will terminate for tax purposes
within the meaning of Code section 708 (and comparable state laws),
resulting in a deemed liquidation of JABCO and distribution of the assets
and liabilities of JABCO to Buyer and Edison. Shareholders will file
JABCO's final tax returns for the short year ending as of the Closing Date
on the basis set forth in section 14.06 of this Agreement.
11.03Liability Insurance. Buyer agrees to maintain in
effect the Company's liability insurance (whether general liability, product
liability, automobile liability or other type of liability insurance), without
material change in the coverage provided by such insurance as of the date
hereof to the extent reasonably possible, until such time as the
Shareholders are no longer subject to liability for liability matters pursuant
to section 12 of this Agreement.
12. Indemnification.
12.01Indemnification of the Buyer and Edison. Each
Shareholder shall, pro rata in accordance with the percentage of the total
Purchase Price set forth opposite his name on Schedule 2, indemnify the
Buyer and Edison and hold them harmless from and against any and all
losses, penalties, deficiencies, damages, costs and expenses (including
reasonable attorneys' fees) of or against Buyer and Edison, up to an
aggregate maximum of 20% of his share of the Purchase Price (the "Cap")
resulting from or arising out of any misrepresentation, breach of warranty
or nonfulfillment of any agreement of such Shareholder contained herein,
or in any certificate, document or instrument delivered hereunder or
pursuant hereto on the part of such Shareholder. In determining whether
the Cap has been reached, there shall be included such Shareholders
pro rata share of amounts paid out of the Escrow Amount. In the event the
amount paid by the Shareholders pursuant to the first sentence of this
section 12.01, together with all amounts paid out of the Escrow Account,
exceed the Cap, the Shareholders shall have no further obligation to
indemnify the Buyer and Edison pursuant to this section 12, and amounts
then held in the Escrow Account pursuant to the terms of the Escrow
Agreement shall promptly be released to the Shareholders in accordance
with the percentage of the total Purchase Price set forth on Schedule 2.
Each Shareholder shall indemnify the Buyer and Edison and hold them
harmless up to a maximum of his pro-rata share of the Escrow Amount for
any costs of investigation, monitoring, remediation, clean-up and closure
including, without limitation, all consulting fees, attorneys' fees,
laboratory fees, drilling, removal, disposal and treatment costs of soil and
water contamination at ConForms' facility located at 1040 North Ninth
Street, Grafton, Wisconsin (the "Grafton Facility") relating to or arising
from the following matters: (i) soil and groundwater contamination
associated with a former 550-gallon UST along 9th Avenue in the southwest
area of the Grafton Facility (the "UST Site"); (ii) contamination of soil and
groundwater adjacent to and under the garage area in the northern area of
the Grafton Facility (the "Garage Site"); (iii) contamination of soil and
groundwater in, around and from the eastern boundary of the Grafton
Facility (the "Spur Railroad Site"); (iv) impact to a municipal well, if any,
located adjacent to and northeast of the Grafton Facility by the
contamination at the Garage Site or the Spur Railroad Site, all as the above
are described in an Advent Environmental Services, Inc. Environmental
Assessment dated June 11, 1996 and in a Key Environmental Services, Inc.
Phase I Environmental Site Assessment dated January 24, 1996 and any
extensions or continuations of any such contaminations or impacts (the
"Grafton Pre-Closing Contamination"). The obligation of each Shareholder
to indemnify and hold harmless Buyer and Edison as to the Grafton
Pre-Closing Contamination shall be limited to the payment of his pro-rata
share of the Escrow Amount from the Escrow Account.
It is understood and agreed by Buyer and Edison
that, except as expressly provided in this section 12, after Closing no
Shareholder will have any obligation or liability to Buyer, Edison or their
shareholders, officers, directors or affiliates, and such parties will have
no claim or recourse against Shareholders arising out of or in connection
with the transactions contemplated by this Agreement, it being understood
and agreed that the remedies provided for in this section 12 will be the sole
and exclusive remedies for any such claim by Buyer, Edison and such
parties for any such matters, whether such claims are framed in contract,
tort or otherwise.
No Shareholder shall have any liability under any
circumstances pursuant to this section 12 in connection with a breach of a
representation or warranty regarding title to Shares which were owned by
another Shareholder. The indemnification obligation of each Shareholder
shall terminate on July 31, 1997 and Buyer's and Edison's failure to provide
each respective Shareholder with a notice of claim of indemnification on or
before July 31, 1997 shall act as a complete bar on recovery thereunder.
Notwithstanding the foregoing, each Shareholder's indemnification
obligations with respect to the representations and warranties set forth at
(a) section 5.09 of this Agreement (relating to tax matters) shall continue
until and terminate upon the expiration of the applicable statutes of
limitation (including any extension thereof) and (b) section 5.20 of this
Agreement (relating to environmental matters), excluding the obligations
set forth in this Agreement relating to the Grafton Pre-Closing
Contamination as described in section 12.07, shall continue until and
terminate upon the first to occur of the expiration of the applicable statutes
of limitation (including any extensions thereof) or the sixty (60) month
anniversary date of the Closing, and Buyer's and Edison's failure to
provide each respective Shareholder with a notice of claim for
indemnification prior to expiration of such applicable indemnification period
shall act as a complete bar thereunder. Notwithstanding the foregoing,
each Shareholder's indemnification obligations as provided in this
section 12 with respect to the Grafton Pre-Closing Contamination shall
continue until and terminate upon the receipt of Case Closure as provided
in section 12.07. In no event shall the Shareholders be liable for any
product liability claims relating to products manufactured after the date of
Closing or for any damages, losses, costs or expenses relating to
environmental occurrences or conditions arising after the date of Closing.
The determination of any liability, claim, lien,
encumbrance, charge, fine or penalty for which indemnification may be
claimed by Buyer and Edison under this section 12 shall take into account
the cost to Buyer, Edison or the Companies of any current or reasonably
anticipated future tax payment which is or may be incurred, as well as the
value to Buyer, Edison or the Companies of any current or reasonably
anticipated future tax benefit which is or may be derived by Buyer, Edison
or the Companies, by reason of (i) the receipt or accrual of the
indemnification payment, (ii) the payment or accrual of any amount giving
rise to the indemnification payment, or (iii) the adjustment or other event
or circumstance giving rise to the indemnification payment. The calculation
of the cost of any future tax payment and the value of any future tax
benefit shall be determined by (x) discounting the amount of the
reasonably anticipated future tax payment or benefit (taking into account,
where relevant, the existing and reasonably anticipated future tax
attributes of the Buyer, Edison and the Companies) from the period such
payment or benefit is reasonably anticipated to be made or realized to the
date the related payment hereunder is to be made, utilizing a discount rate
equal to the prime rate of interest charged by LaSalle National Bank as of
the date of such indemnification payment, and (y) assuming that the
calculation of the current or reasonably anticipated future tax payment or
benefit for the item in question is based on the application of the highest
federal and state income tax rates in effect for the taxable period(s) during
which the related payment hereunder is to be made. Except for the Grafton
Pre-Closing Contamination, no Shareholder shall be under any duty to
indemnify or hold harmless Buyer or Edison pursuant to this section 12 for
any damages caused by the breach or inaccuracy of any representation,
warranty or covenant if such breach or inaccuracy is fairly disclosed on
the Disclosure Schedules to this Agreement or in writing prior to Closing,
and in any such event such damages (including damages related to the
Grafton Pre-Closing Contamination) shall not reduce the Basket defined in
section 12.04.
12.02Survival. Each Shareholder's representations,
warranties and covenants shall expire on July 31, 1997; provided,
however, that each Shareholder's representations and warranties set forth
at (a) section 5.09 of this Agreement (relating to tax matters) shall survive
until the expiration of the applicable statutes of limitation (including any
extensions thereof) and (b) section 5.20 of this Agreement (relating to
environmental matters) shall survive until the first to occur of the
expiration of the applicable statutes of limitation (including any extensions
thereof) or the sixty (60) month anniversary date of the Closing and
provided further however that each Shareholder's obligations as provided
in this section 12 with respect to the Grafton Pre-Closing Contamination
shall survive until the receipt of Case Closure provided in section 12.07.
12.03Effect of Insurance. The determination of any
liability, claim, lien, encumbrance, charge, fine or penalty for which
indemnification may be claimed by Buyer or Edison under this section 12
shall be net of any insurance proceeds received by Buyer, Edison or the
Companies.
12.04Minimum Indemnification Claim. No Shareholder
shall be required to indemnify the Buyer or Edison hereunder unless the
claim(s) of indemnification of the Buyer and Edison with respect to the
Companies shall exceed in the aggregate $300,000 (the "Basket"), except
as to the Grafton Pre-Closing Contamination, which shall be indemnified
from the first dollar as provided in this section 12. In the event the
Buyer's and Edison's claim (excluding claims relating to the Grafton
Pre-Closing Contamination which shall be paid out of the Escrow Amount)
shall exceed the Basket, then the Buyer and Edison shall have the right to
be indemnified by each Shareholder on a several basis, pro rata in
accordance with the percentage of the Purchase Price he receives as set
forth on Schedule 2, only for amounts in excess of the Basket, subject to
the Cap. The Buyer and Edison agree to promptly notify each Shareholder
of any claim which would be indemnifiable but for the fact that the claim
does not exceed the Basket. Except for obligations relating to Grafton
Pre-Closing Contamination, neither the Buyer nor Edison shall have any
claim against any Shareholder for any damages, costs or expenses up to the
amount of the Basket and the Shareholders shall have no liability to the
Buyer or Edison for claims in excess of the Cap.
12.05Indemnification of the Shareholders. The Buyer
and Edison shall jointly and severally indemnify each Shareholder and hold
him harmless from and against any damages, costs and expenses (including
reasonable attorneys' fees), of or against any Shareholder resulting from
any misrepresentation, breach of warranty or non-fulfillment of any
agreement contained herein or in any certificate, document or instrument
delivered hereunder or pursuant hereto on the part of the Buyer or
Edison, and any liabilities relating to the Company and its operations
arising after the Closing Date. Except as provided in section 14.06 and
except for the covenant of Buyer and Edison in section 7 with respect to
the maintenance of insurance which shall survive closing for so long as
Shareholder's indemnification obligations survive Closing, all
representations, warranties, obligations, covenants and agreements made
by Buyer and Edison in this Agreement or in any certificate or document
delivered pursuant hereto shall survive Closing for a period of twelve
months.
12.06Procedure For Establishment of Claims.
(a) In the event that any claims shall be
asserted by any party against a party hereto entitled to indemnification
hereunder (the "Indemnified Party"), which, if sustained, could result in a
claim by a party (an "Indemnifiable Claim"), the Indemnified Party, within
thirty (30) days after learning of such claim, shall notify in writing the
other party (the "Indemnifying Party") of such claim giving the particulars
thereof; provided, however, that the Indemnified Party shall in any event
give written notice to the Indemnifying Party within such period of time as
shall be reasonably necessary to allow the Indemnifying Party to respond to
any pleading or other document for which a timely response is required.
Provided such notice occurs before expiration of the indemnification
periods set forth in sections 12.01 and 12.05 of this Agreement, such notice
shall not be a condition precedent to the Indemnifying Party's obligations to
provide indemnification hereunder unless the failure to give such notice
shall prejudice or impair the Indemnifying Party's ability to defend,
compromise or verify such claim, in which case the Indemnifying Party is
relieved of its indemnification obligations to such extent. The expiration of
the indemnification periods set forth in sections 12.01 and 12.05 of this
Agreement (the "Expiration Periods") shall not affect the Indemnified
Party's right to receive indemnification from the Indemnifying Party of an
Indemnifiable Claim which the Indemnifying Party received notice of prior
to expiration of the Expiration Periods but which was resolved after
expiration of the Expiration Periods.
The Indemnified Party shall extend to the
Indemnifying Party a reasonable opportunity to defend against such claim,
at the Indemnifying Party's sole expense and through counsel reasonably
acceptable to the Indemnified Party, provided the Indemnifying Party
proceeds in good faith, expeditiously and diligently. No determination
shall be made pursuant to subsection 12.06(b) below while such defense is
still being made until the earlier of (i) the resolution of said claim by the
Indemnifying Party with the claimant or (ii) the termination of the defense
by the Indemnifying Party against such claim or the failure of the
Indemnifying Party to prosecute such defense in good faith in an
expeditious and diligent manner. The Indemnified Party shall be entitled to
rely upon the opinion of its counsel as to the occurrence of either of said
events. The Indemnified Party, at its option and expense, shall have the
right to participate in any defense undertaken by the Indemnifying Party
with legal counsel of its own selection. No settlement or compromise of any
claim which may result in an Indemnifiable Claim, may be made by the
Indemnifying Party without the prior written consent of the Indemnified
Party unless (i) prior to such settlement or compromise the Indemnifying
Party acknowledges in writing its obligation to pay in full the amount of the
settlement or compromise and all associated expenses and (ii) the
Indemnified Party is furnished with security reasonably satisfactory to the
Indemnified Party that the Indemnifying Party will, in fact, pay such
amount and expenses.
(b) In the event that an Indemnified Party
asserts the existence of an Indemnifiable Claim, the Indemnified Party shall
given written notice to the Indemnifying Party of the nature and amount of
the Indemnifiable Claim asserted. If the Indemnifying Party, within a
period of fifteen (15) days after the giving of the Indemnified Party's
notice, shall not give written notice to the Indemnified Party announcing its
intent to contest such assertion of the Indemnified Party (such notice by
the Indemnifying Party being hereafter called the "Contest Notice"), such
assertion of the Indemnified Party shall be deemed accepted and the amount
of the Indemnifiable Claim shall be deemed established. In the event,
however, a Contest Notice is given to the Indemnified Party within said
fifteen (15) day period, then at any time thereafter a party may commence a
proceeding in accordance with section 14.10 to resolve the contested
assertion of an Indemnifiable Claim.
(c) The Indemnified Party and the Indemnifying
Party may agree in writing, at any time, as to the existence and amount of
an Indemnifiable Claim, and, upon the execution of such agreement, such
Indemnifiable Claim shall be deemed established.
12.07Procedures for Grafton Environmental Matters.
Promptly following the Closing, Shareholders shall, in accordance with
applicable Wisconsin environmental laws and regulations, take steps
required by governmental entities having jurisdiction over the Grafton
Facility to investigate and remediate the Grafton Pre-Closing Contamination
to the extent required by applicable law or regulation. The Buyer and
Edison covenant and agree that Shareholders shall, pursuant to their
indemnification obligations contained in this section 12, have full and
exclusive responsibility and authority for all investigation, monitoring
remediation cleanup, closure, removal, disposal and treatment and other
measures relating to the Grafton Pre-Closing Contamination from and after
the date of this Agreement. Shareholders' obligations with respect to the
Grafton Pre-Closing Contamination shall be limited to the Escrow Amount,
which Escrow Amount shall be the sole and exclusive recourse of Buyer and
Edison against the Shareholders with respect to the Grafton Pre-Closing
Contamination. Such responsibility and authority shall include (subject to
the limitations provided in this section 12) restoring the environmental
condition of the Grafton Facility to obtain receipt of "Case Closure" for the
Grafton Pre-Closing Contamination. The term "Case Closure" for purposes
of this Agreement shall have the meaning set forth in the Wisconsin
Statutes and the Wisconsin Administrative Code, including, without
limitation, Wisconsin Administrative Code Chapter NR726, as those
provisions may be amended from time to time, except that Shareholders'
Representatives (as defined in the Escrow Agreement), and not the owner
or operator, shall control the investigatory and remedial matters impacting
the Grafton Facility until the first to occur of Case Closure for all Grafton
Pre-Closing Contamination or expenditure of the entire Escrow Amount.
Upon receipt of Case Closure for the UST Site, the Garage Site and the
Spur Railroad Site and payment by the Shareholders of all expenses
incurred by them in connection with the investigation and remediation of
the Grafton Pre-Closing Contamination, Escrow Agent shall promptly pay
the balance of the Escrow Fund to the Shareholders' Representatives for
distribution to the Shareholders. Upon expenditure of the entire Escrow
Amount, the responsibility and authority for investigation and remediation
for all Grafton Pre-Closing Contamination shall revert to the owner or
operator. In the event the Wisconsin Department of Natural Resources
("WDNR") relinquishes its authority for Case Closure, Case Closure shall
be pursued with the appropriate party or entity then having jurisdiction
pursuant to applicable statutes, rules or regulations.
Notwithstanding the foregoing, if the
Shareholders are unable to obtain receipt of "Case Closure" as a result of
actions or operations of Buyer or the Companies following Closing,
Shareholders shall be deemed to have obtained "Case Closure" and shall
thereafter be released of all obligation to provide indemnification once they
have completed all remediation work required by the Wisconsin Department
of Natural Resources with respect to the Grafton Pre-Closing Contamination
and Shareholders have paid all expenses incurred by them in connection
with the investigation and remediation of the Grafton Pre-Closing
Contamination, other than work required as a consequence of the actions or
operations of Buyer or the Companies following the Closing pursuant to this
Agreement with respect to the Grafton Pre-Closing Contamination and all
amounts remaining in the Escrow Account shall promptly be distributed to
the Shareholders.
In connection with the investigatory and remedial
aspects of the Grafton Pre-Closing Contamination, the parties agree:
(a) Up to the Escrow Amount, Shareholders'
Representatives shall have the sole and exclusive right to defend, settle,
appeal, compromise, arbitrate or negotiate any investigative or remedial
measures proposed or required by any governmental entity and to take or
cause to be taken any such remedial measures, including, without
limitation, (i) soil/water sampling, laboratory testing and analysis;
(ii) contracting for and monitoring, investigative and/or remedial work;
(iii) preparation and filing of all documents required by local, state and
federal environmental agencies having jurisdiction over the Grafton
Facility. Shareholders' Representatives shall have the authority to
negotiate with any governmental entity having jurisdiction over the Grafton
Facility as to the investigation, remediation, monitoring and/or closure of
the Grafton Pre-Closing Contamination. Shareholders' Representatives
agree to act promptly with respect to any final or definitive request or
direction for action by any governmental entity having jurisdiction over the
Grafton Facility with respect to Grafton Pre-Closing Contamination. In the
event that Shareholders' Representatives shall fail to take action with
respect to any final or definitive request or direction for action with regard
to the Grafton Pre-Closing Contamination (unless such failure is occasioned
by the appeal of such a request or direction for action by the
Shareholders) by any governmental entity having jurisdiction over the
Grafton Facility, then Buyer and Edison shall have the right to undertake
the action requested or directed and shall be entitled to have the costs of
such action paid out of the Escrow Account, subject to the right of the
Shareholders' Representatives to resume such action in accordance with
request or direction of the governmental entity.
(b) Shareholders' Representatives shall
promptly provide Buyer and Edison with true, correct and complete copies
of all correspondence and reports filed with environmental agencies.
During such time as Shareholders' Representatives are performing such
investigative and remedial work as described above, neither Buyer nor
Edison, nor their representatives, shall contact regulators with respect to
the Grafton Pre-Closing Contamination without Shareholders'
Representatives prior written consent, which consent may be withheld in
the discretion of Shareholders' Representatives.
(c) Buyer and Edison shall cooperate with
Shareholders' Representatives in the investigation, remediation,
monitoring and closure activities at the reasonable request of Shareholders'
Representatives, at no cost to the Shareholders, including, without
limitation, (i) joining in the execution of documents required by
governmental authorities to be executed by Buyer as owner or operator of
the Grafton Facility; and (ii) allowing Shareholders' Representatives, and
agents, subcontractors and designees of Shareholders' Representatives, to
have access to the Grafton Facility at reasonable times in order to carry out
the Shareholders' Representatives investigation, remediation, monitoring
and closure responsibilities hereunder; and (iii) by not obstructing,
inhibiting or interfering with the investigation, remediation or monitoring
to be performed by Shareholders' Representatives in, on or about the
Grafton Facility.
(d) Until the Shareholders' Representatives
have received Case Closure, Buyer and Edison agree that neither Buyer
nor Edison, or their agents, invitees and assignees shall utilize or store,
or permit the utilization or storage of any hazardous substances, hazardous
waste or any toxic materials in connection with Buyer's activities on the
Grafton Facility, except in compliance with all applicable laws, rules and
regulations. In the event of a release of a hazardous substance at or on
the Grafton Facility following Closing, Buyer and Edison shall provide
prompt written notice of the release to the Shareholders' Representatives.
Buyer and Edison shall provide Shareholders' Representatives with a copy
of all Inventory and Form R Toxic Chemical Release reports concerning the
use, manufacturing or storage of Extremely Hazardous Substances,
Hazardous Substances and Toxic Chemicals on the property as defined by,
and that may be required under, the Emergency Planning and Community
Right-To-Know Act (42 U.S. C 1101-1150).
(e) Shareholders' Representatives, Buyer and
Edison agree that Shareholders' Representatives shall contract with and
utilize the services of STS Consultants, Ltd. ("STS") to carry out
Shareholders' Representatives duties with regard to the investigation,
remediation and monitoring of the Grafton Pre-Closing Contamination, as
more particularly described in the Escrow Agreement. Buyer and Edison
shall have the right to consult with and ask questions of STS with respect
to the Grafton Pre-Closing Contamination, but shall not have the right to
direct the activities of STS. However, Buyer and Edison agree that they
shall not consult with and ask questions of STS unless the Shareholders'
Representatives (or one of their designated substitutes) have been
provided a reasonable opportunity to be present during all such
consultation and inquiry. Buyer hereby consents to the employment of STS
by Shareholders and waives any claim of conflict of interest against STS
arising out of any prior contractual arrangement between Buyer and STS.
Seller and Buyer agree that Seller may terminate the services of STS (and
retain a different consultant to complete the necessary work) for good
cause, and with the consent of Buyer, which consent shall not be
unreasonably withheld.
In consideration of the foregoing agreements of the
Shareholders, the Buyer and Edison hereby assign to the Shareholders any
and all claims, defenses, rights, powers, privileges and remedies of the
Buyer and Edison arising at law or in equity against any person, firm,
corporation or other legal or governmental entity arising out of or relating
in any way to the Grafton Pre-Closing Contamination provided that any
amounts received by Shareholders from any such person, firm, corporation
or other legal or governmental entity in excess of the amounts expended
from the Escrow Amount shall be paid to Buyer and Edison. To the extent
that such excess amounts are paid to Buyer or Edison, the Escrow Agent
shall distribute a like amount of proceeds from the Escrow Account to the
Shareholders, and thereafter the Escrow Amount shall be reduced by such
distribution. It is the intention of the parties that such distribution shall
thereafter reduce the amount of indemnification required from the
Shareholders so that such obligation shall not exceed the remaining amount
of the Escrow Amount.
13. Business Brokers. Buyer, Edison and each Shareholder
represents and warrants to each other that there are no business
brokerage or finders' fees in connection with the transactions contemplated
hereby resulting from any actions taken by them and they hereby
indemnify, save and hold each other harmless from and against claims by
any broker or finder for a fee or expense which is based in any way on an
agreement, arrangement or understanding made or alleged to have been
made by them relating to the transactions contemplated hereby.
14. Miscellaneous.
14.01Amendment and Severability. This Agreement
may only be amended by a written agreement of the parties hereto. If any
provision, clause or part of this Agreement or the application thereof under
certain circumstances, is held invalid, the remainder of this Agreement, or
the applications of each provision, clause or part under other
circumstances, shall not be affected thereby.
14.02Waiver. The failure of any Shareholder, Buyer or
Edison to insist, in any one or more instances, upon performance of any of
the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment of any rights granted hereunder or the future
performance of any such term, covenant or condition. Moreover, Buyer's
and Edison's decision to close this transaction notwithstanding their
constructive or actual knowledge of the breach by any Shareholder of one
or more of his or its representations, warranties or obligations hereunder
shall not relieve such parties of their indemnification obligations hereunder
with respect to such breach; in such case, Buyer and Edison specifically
are relying upon such Shareholder's indemnification obligation, as well as
the underlying representation, warranty or contractual obligation. All
rights and remedies granted in this Agreement to Buyer and Edison shall
be cumulative and nonexclusive of all other rights and remedies that Buyer
and Edison may have.
14.03Notices. Any notice to be given hereunder shall
be deemed given and sufficient if in writing and delivered or mailed by
registered or certified mail, in the case of each Shareholder, to:
Allen W. Duhr
10227 North Waterleaf
Mequon, WI 53092
Joseph F. Bennett
10245 North Westport Circle
Mequon, WI 53092
Alan J. Kastelic
265 Huntington Drive
Cedarburg, WI 53012
Robert E. Klemm
485 Beechwood Drive
Cedarburg, WI 53012
Jay R. Hanamann
N108 W7075 Berkshire Drive
Cedarburg, WI 53012
with a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
P.O. Box 92900
Milwaukee, WI 53202-0900
Attn: James M. Bedore, Esq.
Facsimile No. 414-298-8097
and, in the case of Buyer and Edison, to:
Edison Control Corporation
360 Lexington Avenue, 14th Floor
New York, NY 10017
Attn: Mary McCormack
Facsimile No. 212-972-6109
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019-6092
Attn: Mark R. Baker
Facsimile No. 212-259-6333
or to such other address as each Shareholder, Buyer or Edison may
designate by notice in writing to the other.
14.04Benefit. This Agreement shall be binding upon
and inure to the benefit and burden of and shall be enforceable by Buyer
and Edison, their respective successors and assigns, and Shareholders,
their successors and assigns. This Agreement may not be assigned by any
party without the written consent of the others.
14.05Expenses. All expenses incurred by
Shareholders, Buyer or Edison in connection with the transactions
contemplated hereby, including, without limitation, legal and accounting
fees, shall be the responsibility of and for the account of the party who
ordered the particular service or incurred the particular expense, except
(a) as otherwise provided herein and (b) the costs and expenses of the
transactions contemplated hereby other than the costs and expenses of
Buyer or Edison, through and including the date of this Agreement shall be
borne by ConForms.
14.06Allocation of Purchase Price of JABCO Units. The
Purchase Price paid to the Shareholders for their JABCO Units shall be
assigned and allocated to the assets owned by JABCO as set forth on
Schedule 14.06 by operation of Code sections 741, 751(a) and 755.
Shareholders, Buyer and Edison shall mutually agree on the content of the
reporting requirements to the Internal Revenue Service with respect to
such allocation in accordance with Treasury Regulations section 1.755-2T.
Each Shareholder, to the extent of his indemnification obligations under
section 12, shall indemnify and hold Buyer and Edison, and Buyer and
Edison shall indemnify and hold each Shareholder, harmless for failure to
report and file in accordance with this section 14.06. Notwithstanding
section 12.05, Buyer and Edison agree that their indemnification
obligations to Shareholders and Shareholders agree that their
indemnification obligations to Buyer and Edison under this section 14.06
shall terminate upon the expiration of the applicable statutes of limitation
with respect to the tax reporting obligation under this section 14.06.
14.07Public Announcement. No public announcement of
the transactions contemplated hereby shall be made by way of press
release, disclosure to the trade or otherwise except with the mutual
approval of the parties.
14.08Entire Agreement. This Agreement and the
schedules and Ancillary Agreements to be delivered pursuant hereto
constitute the entire agreement among the parties hereto and there are no
agreements, representations or warranties which are not set forth herein.
All prior negotiations, agreements and understandings are superseded
hereby. This Agreement may not be amended or revised except be a
writing signed by the parties hereto. All parties being represented by
counsel, no one party shall be deemed the drafter of this Agreement with
respect to its interpretation.
14.09Governing Law. This Agreement and all questions
arising in connection herewith shall be governed by and construed in
accordance with the internal laws of the State of Wisconsin without regard
to its choice of laws.
14.10Arbitration. All claims, disputes and other
matters in question between the parties to this Agreement arising out of or
in any way relating to this Agreement or the breach thereof shall be
determined by arbitration in Milwaukee, Wisconsin in accordance with the
rules of the American Arbitration Association then in effect unless the
parties mutually agree in writing to waive this provision. This agreement
to arbitrate shall be specifically enforceable under the prevailing
arbitration law. Notice of the demand for arbitration shall be filed in
writing with the other party or parties to this Agreement and with the
American Arbitration Association in Chicago, Illinois. The demand shall be
made within a reasonable time after the claim, dispute or other matter in
question has arisen. In no event shall the demand for arbitration be made
after the date when an institution of legal or equitable proceedings based
upon such claim, dispute or other matter in question would be barred by
this Agreement or the applicable statute of limitations. The arbitration
shall be before a single arbitrator who shall interpret this Agreement in
accordance with the internal laws of the State of Wisconsin. The award
rendered by the arbitrator shall be final and any judgment may be entered
upon it in accordance with the applicable law in any court having
jurisdiction thereof. In no event shall any party be awarded punitive
damages.
14.11Closing Null and Void. Notwithstanding anything
else in this Agreement to the contrary, in the event the Notes are not paid
in full by close of business on the Closing Date, all transactions
contemplated by this Agreement and each Ancillary Agreement in
connection with the sale of the Shares and Units shall be deemed null and
void and of no further force and effect. In such event, the Buyer and
Edison shall deliver to the Shareholders all purported documents of
transfer, and the Shareholders shall deliver to the Buyer and Edison all of
the documents evidencing the Purchase Price delivered pursuant to the
Agreement and Ancillary Agreement. Thereafter, neither Buyer nor
Edison shall have any right, title or interest in and to any of the Shares or
Units and Shareholders shall have no interest in any of the consideration
paid pursuant to the Agreement and each Ancillary Agreement.
SHAREHOLDERS:
____________________________CONSTRUCTION FORMS,
Allen W. Duhr ACQUISITION, INC.
____________________________BY______________________________
Joseph F. Bennett Its____________________________
____________________________EDISON CONTROL CORPORATION
Alan J. Kastelic
____________________________BY______________________________
Robert E. Klemm Its____________________________
____________________________
Jay R. Hanamann
EXHIBITS
Exhibit
A-1
A-2
A-3
A-4
A-5
A-6
Promissory Note of Allen W. Duhr
Promissory Note of Joseph F. Bennett
Promissory Note of Alan J. Kastelic
Promissory Note of Robert E. Klemm
Promissory Note of Jay R. Hanamann
Promissory Note of Allen W. Duhr
B
Escrow Agreement
C-1
C-2
Employment Agreement of Alan J. Kastelic
Employment Agreement of Jay R. Hanamann
D
Opinion of Dewey Ballantine
E
Opinion of Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
F
Bond Counsel Opinion of Reinhart, Boerner,
Van Deuren, Norris & Rieselbach, s.c.
SCHEDULES
Schedule
2
Purchase Price Allocation
5.01
Authorization of Agreement
5.02
Title to Shares
5.05
Financial Statements
5.06
Capital Stock
5.07(a)
Title to Assets
5.07(b)
Real Property Owned or Leased
5.08
Undisclosed Liabilities
5.06
Taxes
5.10
Conduct Out of Ordinary Course
5.11
Insurance
5.12
Material Contracts
5.15
Accounts Receivable
5.16
Government Licenses and Permits
5.17
Employee Benefit Plans
5.18
Labor Matters
5.19
Intangible Assets
5.20
Compliance with Environmental
Laws
5.21
Product Recalls and Warranty
5.22Litigation14.06Allocation of
Purchase Price of JABCO Assets
EXHIBIT 10(vi)
MASTER
CREDIT AGREEMENT
Dated as of June 21, 1996
by and among
Construction Forms, Inc.,
CF Ultra Tech, Inc. and
CF Gilco, Inc.
and
LaSalle National Bank
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS. . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting and Financial Determinations. . . . . . . . . . . . 13
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS . . . . . . . . . . . . . . 14
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Overadvance Term Loan. . . . . . . . . . . . . . . . . . . . . 16
2.3 LIBOR Rate Restrictions. . . . . . . . . . . . . . . . . . . . 17
2.4 Joint and Several Obligations, Etc.. . . . . . . . . . . . . . 18
2.5 Interest After Default . . . . . . . . . . . . . . . . . . . . 19
2.6 Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Lockbox. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 Effect of Regulatory Change. . . . . . . . . . . . . . . . . . 22
2.11 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.12 No Obligation to Extend or Forbear . . . . . . . . . . . . . . 22
SECTION 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 22
3.1 Organization, Qualification and Subsidiaries . . . . . . . . . 22
3.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . 23
3.3 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Absence of Conflicting Obligations . . . . . . . . . . . . . . 23
3.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.6 Absence of Litigation. . . . . . . . . . . . . . . . . . . . . 24
3.7 Accuracy of Information. . . . . . . . . . . . . . . . . . . . 24
3.8 Ownership of Property. . . . . . . . . . . . . . . . . . . . . 24
3.9 Federal Reserve Regulations. . . . . . . . . . . . . . . . . . 25
3.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.11 Security Interests . . . . . . . . . . . . . . . . . . . . . . 25
3.12 Places of Business . . . . . . . . . . . . . . . . . . . . . . 25
3.13 Other Names. . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.14 Not an Investment Company. . . . . . . . . . . . . . . . . . . 26
3.15 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 26
3.18 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 26
3.19 Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS. . . . . . . . . . . . . . 27
4.1 Initial Obligations. . . . . . . . . . . . . . . . . . . . . . 27
4.2 Subsequent Obligations . . . . . . . . . . . . . . . . . . . . 30
SECTION 5 AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 31
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes . . . . . . . . . . . . . . . . 31
5.2 Maintenance of Property; Insurance . . . . . . . . . . . . . . 31
5.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . 32
5.4 Inspection of Property and Records . . . . . . . . . . . . . . 33
5.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 34
5.6 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7 Comply With, Pay and Discharge All Notes,
Mortgages, Deeds of Trust and Leases . . . . . . . . . . . . . 34
5.8 Environmental Compliance . . . . . . . . . . . . . . . . . . . 34
5.9 Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . 35
5.10 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.11 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.12 Post-Closing Delivery . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Sale of Assets, Consolidation, Merger,
Acquisitions, Etc. . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 38
6.6 Loans, Investments . . . . . . . . . . . . . . . . . . . . . . 38
6.7 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . 39
6.8 Fixed Asset Expenditures . . . . . . . . . . . . . . . . . . . 39
6.9 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . 39
6.11 Maximum Funded Debt to Tangible Net Worth. . . . . . . . . . . 40
6.12 Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.13 Minimum Fixed Charge Coverage Ratio. . . . . . . . . . . . . . 40
6.14 Modification of the Subordinated Debt
Documentation. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.15 Modification of the Stock Purchase Documentation . . . . . . . 40
SECTION 7 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 41
7.1 Events of Default Defined. . . . . . . . . . . . . . . . . . . 41
7.2 Remedies Upon Event of Default . . . . . . . . . . . . . . . . 42
SECTION 8 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Assignability; Successors. . . . . . . . . . . . . . . . . . . 43
8.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4 Counterparts; Headings . . . . . . . . . . . . . . . . . . . . 44
8.5 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . 44
8.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Conflicts and Ambiguities. . . . . . . . . . . . . . . . . . . 45
8.10 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . 45
8.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 46
EXHIBITS
EXHIBIT A: Schedule of Bank's Collateral
EXHIBIT B-1: Collateral Assignment of Lease (Ultra)
EXHIBIT B-2: Collateral Assignment of Lease (Gilco)
EXHIBIT B-3: Collateral Assignment of Lease (CF)
EXHIBIT C: Guaranty of JABCO, Limited Liability Company
EXHIBIT D: Master Revolving Credit Note
EXHIBIT E-1: Mortgage (Cedarburg)
EXHIBIT E-2: Mortgage (Grafton)
EXHIBIT F: Pledge Agreement
EXHIBIT G-1: Security Agreement (CF)
EXHIBIT G-2: Security Agreement (Ultra)
EXHIBIT G-3: Security Agreement (Gilco)
EXHIBIT H: Subordination Agreement
EXHIBIT I: Master Overadvance Term Note
EXHIBIT J-1: Opinion of Borrower's General Counsel
EXHIBIT J-2: Opinion of Borrower's Local Counsel
EXHIBIT K-1: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (CF)
EXHIBIT K-2: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (JABCO)
EXHIBIT K-3: Lessor's Consent, Estoppel Certificate, Waiver and
Agreement (Greenberg)
SCHEDULES
SCHEDULE 1: Company Facilities Locations
SCHEDULE 2: Stock Ownership of Each Company
SCHEDULE 3: Subsidiaries, Options, Warrants, Etc.
SCHEDULE 3.6: Litigation
SCHEDULE 3.16: Environmental Laws
SCHEDULE 4: Permitted Liens
MASTER CREDIT AGREEMENT
THIS MASTER CREDIT AGREEMENT is made and entered into as of
this 21st day of June, 1996, by and among CONSTRUCTION FORMS, INC.,
a Wisconsin corporation ("CF"), CF ULTRA TECH, INC., a Wisconsin
corporation ("Ultra") and CF Gilco, Inc., a Wisconsin corporation
("Gilco") (CF, Ultra and Gilco are collectively, the "Companies"
and individually, a "Company") and LASALLE NATIONAL BANK, a
national banking association (the "Bank").
RECITALS
The Companies have requested that the Bank extend to them, on
a joint and several basis, a credit not to exceed $12,300,000, in
the form of (a) Revolving Loans in an aggregate principal amount
not to exceed $8,000,000, and (b) an Overadvance Term Loan in an
aggregate principal amount of $4,300,000. The Bank has agreed to
extend credit to the Companies, jointly and severally, upon all of
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Affiliate" shall mean any (a) director, officer or
employee of the Person, or (b) Person directly or indirectly
controlling or controlled by, or under direct or indirect common
control with, another Person. A Person shall be deemed to control
another Person if the controlling Person directly or indirectly,
either individually or together with (in the case of an individual)
his spouse, lineal descendants and ascendants and brothers or
sisters by blood or adoption or spouses of such descendants,
ascendants, brothers and sisters, owns five percent or more of any
class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct, or cause the direction
of, the management or policies of the controlled Person, whether
through the ownership of voting securities, through common
directors, trustees or officers, by contract or otherwise.
"Agreement" shall mean this Master Credit Agreement,
as amended, supplemented, modified or extended from time to time.
"Assignment" shall mean the Collateral Assignment of
Stock and Unit Purchase Agreement and Escrow Agreement, of even
date herewith, of Edison Control Corporation, a New Jersey
corporation, and CF in favor of Bank.
"Borrowing Base" shall mean, as of any date, the sum
of (a) 85% of Qualified Accounts, plus (b) 50% of Qualified
Inventory (up to a maximum of $4,500,000), plus (c) 80% of
Marketable Securities (up to a maximum of $1,150,000), plus (d) up
to a maximum of an additional $500,000 through December 31, 1996
(the "Revolving Loan Overadvance").
"Borrowing Base Certificate" shall mean a schedule
of the Bank's collateral in the form of Exhibit A separately
setting forth accounts receivable, Qualified Accounts, inventory,
Qualified Inventory and Marketable Securities.
"Borrowing Date" shall have the meaning assigned in
Section 2.1(c).
"Business Day" shall mean a day other than a
Saturday or Sunday on which banks are open for business in
Milwaukee, Wisconsin; provided, however, that for purposes of LIBOR
Rate Loans, the term "Business Day" shall mean only those days on
which dealings in U.S. dollar deposits are carried out by U.S.
financial institutions in the London Interbank Eurodollar Market.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute, together with the
regulations and published interpretations thereunder, in each case
as in effect from time to time.
"Collateral" shall mean all of each Company's
Property granted to the Bank as collateral under the Related
Documents.
"Collateral Assignments" shall mean the collateral
assignments of lease from Ultra, Gilco and CF to the Bank in the
form of Exhibits B-1, B-2 and B-3, respectively, each as amended,
supplemented, modified or extended from time to time.
"Current Assets" shall mean all assets which would
appear as current assets on the consolidated balance sheet of CF
and its Subsidiaries under GAAP.
"Current Liabilities" shall mean all liabilities
which would appear as current liabilities on the consolidated
balance sheet of CF and its Subsidiaries under GAAP or which
otherwise constitute Indebtedness of CF or its Subsidiaries payable
on demand or payable within one year (excluding Revolving Loans)
including, without limitation, that portion of the principal
balance of the Overadvance Term Loan due within one year and all
outstanding customers' advances and progress billings on contracts.
"Default" shall mean an Event of Default or an event
which with the giving of notice or the passage of time or both
would constitute an Event of Default.
"Employee Plan" shall mean any savings, profit
sharing, or retirement plan or any deferred compensation contract
or other plan maintained for employees of the Companies and covered
by Title IV of ERISA,other than any "multiemployer plan" as defined
in ERISA (a "Multiemployer Plan").
"Environmental Law" shall mean any local, state or
federal law or other statute, law, ordinance, rule, code,
regulation, decree or order, presently in effect or hereafter
enacted, promulgated or implemented governing, regulating or
imposing liability or standards of conduct concerning the use,
treatment, generation, storage, disposal, discharge or other
handling or release of any Hazardous Substance.
"Environmental Liability" shall mean all liability
arising under, resulting from or imposed by any Environmental Law
and all liability imposed under common law with respect to the use,
treatment, generation, storage, disposal, discharge or other
handling or release of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute,
together with the regulations and published interpretations
thereunder, in each case as in effect from time to time.
"Event of Default" shall have the meaning assigned
in Section 7.1.
"Excess Cash Flow" shall mean for any period of
determination (i) Net Income of the Companies, plus (ii), to the
extent deducted in determining Net Income of the Companies, the sum
of each Company's (a) interest expense, (b) depreciation expense,
(c) amortization expense and (d) income tax expense, minus (iii)
the sum of (a) capital expenditures paid by any Company (other than
capital expenditures paid for with proceeds of a new purchase money
loan from the Bank, Funded Debt received from Persons other than
the Bank or any capitalized lease obligations of any Company to
Persons other than the Bank), (b) the Companies' required payments
of principal and interest on Funded Debt (including all amounts
paid on any capitalized lease obligations) other than mandatory
prepayments under Section 2.9(b)(ii), (c) dividends paid by any
Company and (d) actual income taxes paid by any Company.
"Excess Cash Flow Payment" shall mean an amount
equal to 70% of Excess Cash Flow for the relevant period of
determination.
"Fixed Term Loan Period" shall mean with respect to
the Overadvance Term Loan, the period commencing on the Fixed Term
Rate Borrowing Date (as defined in Section 2.2 (b)), provided, that
if the Fixed Term Loan Period would otherwise end on a day which is
not a Business Day it shall be extended to the next succeeding
Business Day.
"Fixed Term Rate" shall mean a rate of interest per
annum equal to (a) the ask yield, one Business Day prior to the
Fixed Term Rate Borrowing Date, on U.S. Treasury Bills, Notes or
Bonds, selected by the Bank, in its sole discretion, having a
maturity comparable to or as close thereto as possible to the Fixed
Term Loan Period, plus (b) 3.25% per annum.
"Funded Debt" shall mean all Indebtedness which by
its terms matures more than one year from the date as of which any
calculation of Funded Debt is made, and any Indebtedness maturing
within one year from such date which is renewable or extendible at
the option of the obligor to a date beyond one year from such date,
including any Indebtedness renewable or extendible (whether or not
theretofore renewed or extended) under, or payable from the
proceeds of other Indebtedness which may be incurred pursuant to
the provisions of any agreement.
"GAAP" shall mean those generally accepted
accounting principles and practices which are recognized as such by
the American Institute of Certified Public Accountants acting
through appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the
financial condition, results of operations and cash flows of the
Companies.
"Government Authority" shall mean any nation or
government, any state or other political subdivision thereof, and
any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantor" shall mean JABCO, Limited Liability
Company, a Wisconsin limited liability company, and any other
Person who guaranties the obligations of the Companies hereunder.
"Guaranty" shall mean the Guaranty of the Guarantor
in the form of Exhibit C, as amended, supplemented, modified, or
extended from time to time.
"Hazardous Substance" shall mean any pollutant,
contaminant, waste or toxic or hazardous chemicals, wastes or
substances, including, without limitation, asbestos, urea
formaldehyde insulation, petroleum, PCB's, air pollutants, water
pollutants, and other substances defined as hazardous or toxic in
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9061 et seq.,
Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. 6901
et seq., the Toxic Substance Control Act of 1976, as amended, 15
U.S.C. 2601 et seq., the Solid Waste Disposal Act, 42 U.S.C.
3251 et seq., the Clean Air Act, 42 U.S.C. 1857 et seq., the
Clean Water Act, 33 U.S.C. 1251 et seq., Emergency Planning and
Community Right to Know Act, 42 U.S.C. 11001, et seq.,
Chapter 144 of the Wisconsin Statutes, or any other statute, rule,
regulation or order of any Government Authority having jurisdiction
over the control of such wastes or substances, including without
limitation the United States Environmental Protection Agency, the
United States Nuclear Regulatory Agency, the State of Wisconsin,
the Wisconsin Department of Natural Resources and the Ozaukee
County Department of Health.
"Indebtedness" shall mean all (a) indebtedness for
borrowed money; (b) indebtedness for the deferred purchase price of
property or services for which any Company is liable, contingently
or otherwise, as obligor, guarantor or otherwise; (c) commitments
by which any Company assures a creditor against loss, including,
without limitation, contingent reimbursement obligations with
respect to letters of credit; (d) obligations which are evidenced
by notes, acceptances or other instruments; (e) indebtedness
guaranteed in any manner by any Company including, without
limitation, guaranties in the form of an agreement to repurchase or
reimburse; (f) obligations under leases which are or should be, in
accordance with GAAP, recorded as capital leases for which
obligations any Company is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations
any Company assures a creditor against loss; (g) unfunded
obligations of any Company to any Employee Plan; (h) liabilities
secured by any Lien, other than a Permitted Lien, on any Property
owned by any Company even though it has not assumed or otherwise
become liable for the payment thereof; and (i) other liabilities or
obligations of any Company which would, in accordance with GAAP, be
included on the liability portion of a balance sheet.
"IRB Documentation" shall mean that certain
Irrevocable Direct Pay Letter of Credit, dated the date hereof,
issued by the Bank in favor of Firstar Trust Company ("Firstar")
(the "Letter of Credit"); the Loan Agreement, dated as of February
1, 1995, between the City of Port Washington, Wisconsin ("Port
Washington") and Guarantor; the Indenture of Trust, dated as of
February 1, 1995, between Port Washington and Firstar; the
Promissory Note of Guarantor in favor of Port Washington, dated
February 15, 1995, in the original principal amount of $3,000,000;
the Bond Purchase Agreement, dated as of February 1, 1995, among
Port Washington, Guarantor, Firstar and Robert W. Baird & Co.
Incorporated ("Baird"); the Remarketing Agreement, dated as of
February 1, 1995, between Guarantor and Baird; the Reimbursement
Agreement, dated the date hereof, between Guarantor and the Bank
(the "Reimbursement Agreement"); the IRB Mortgage; any UCC
financing statement evidencing a Lien relating to any of the
foregoing; and all exhibits, schedules, certificates, resolutions,
or other documents delivered, required or contemplated pursuant to
any of the foregoing.
"IRB Mortgage" shall mean the Mortgage granted by
Guarantor, to the Bank, dated the date hereof, as amended,
supplemented, modified or extended from time to time, encumbering
certain real estate located in Port Washington, Wisconsin.
"LIBOR Index Rate" shall mean with respect to a
LIBOR Rate Loan for any Loan Period, the rate of interest per annum
determined by the Bank to be the average offered rate for deposits
in U.S. dollars for the applicable Loan Period (rounded up to the
next whole multiple of 1/100 of 1%) which appear on the Reuters
Screen LIBO Page (or such other page on which the appropriate
information may be displayed), on the electronic communications
terminals in the Bank's money center as of 10:00 a.m. (London time)
for the day two Business Days prior to the first day of the
applicable Loan Period. If fewer than two offered rates appear for
a Loan Period, then the applicable LIBOR Rate shall be the average
of the rates per annum (rounded up to the next whole multiple of
1/100 of 1%) at which deposits for a period of time equal or
comparable to the applicable Loan Period in immediately available
funds in United States dollars are offered to the Bank two Business
Days prior to the beginning of such Loan Period by at least four
major banks in the London Interbank Eurodollar Market at or about
10:00 a.m. London time for delivery on the first day of such Loan
Period.
"LIBOR Rate" for any Loan Period shall mean a rate
per annum equal to the sum of the quotient of the LIBOR Index Rate
divided by the difference (expressed as a decimal) computed by
subtracting the LIBOR Reserve Requirement from one, plus the
applicable LIBOR Spread.
"LIBOR Rate Loans" shall mean Revolving Loans and
Overadvance Term Loans for which the Company has selected the LIBOR
Rate as the base rate of interest under Sections 2.1 and 2.2.
"LIBOR Reserve Requirement" shall mean, with respect
to each Loan Period, the stated rate of all reserve requirements
(including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments or other scheduled
changes in reserve requirements during such Loan Period) that is
specified on the first day of such Loan Period by the Board of
Governors of the Federal Reserve System for determining the reserve
requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D)
applicable to the Bank.
"LIBOR Spread" shall mean an amount equal to (i)
1.25% per annum with respect to all outstanding Revolving Loans up
to $1,000,000, (ii) 2.0% per annum with respect to all outstanding
Revolving Loans in excess of $1,000,000, and (iii) 3.10% per annum
with respect to all Overadvance Term Loans.
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), deed of trust, charge, preference, priority,
security interest or other security agreement or preferential
arrangement of any kind or nature whatsoever including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the UCC or comparable law of any
jurisdiction.
"Loan Account" shall mean an account on the books of
the Bank in which the Bank will record, pursuant to Section 2.6,
Obligations of the Companies to the Bank, payments made upon such
Obligations and other advances, debits and credits pertaining to
the Obligations or the Collateral.
"Loan Period" shall mean with respect to each LIBOR
Rate Loan, the period commencing on the date of such LIBOR Rate
Loan and ending one, two or three months thereafter, as the Company
may elect in the notice of borrowing under Sections 2.1(c) and
2.2(c), as the case may be, provided that (a) any Loan Period which
would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless the Loan Period
would thereby be extended into the next calendar month, in which
case the Loan Period shall end on the preceding Business Day, and
(b) no Loan Period shall extend beyond the Termination Date.
"Make Whole Payment" shall mean an amount equal to
the present value of (i) the interest that would have accrued on
the amount prepaid at the Fixed Term Rate, minus (ii) the interest
that would have accrued on the amount prepaid at the Treasury Rate,
discounted at the Treasury Rate. In both cases, interest will be
calculated from the prepayment date to the maturity date of the
Overadvance Term Loan. In no event shall the prepayment
indemnification payment be less than zero.
"Marketable Securities" shall mean the securities
owned by Edison Control Corporation which are pledged to the Bank
pursuant to the Pledge Agreement.
"Master Overadvance Term Note" shall mean the
promissory note of the Companies to the Bank in the form of Exhibit
I, evidencing the Term Loan, as amended, supplemented, modified or
extended from time to time.
"Master Revolving Credit Note" shall mean the
promissory note from the Companies to the Bank in the form of
Exhibit D, evidencing the Revolving Loans, as amended,
supplemented, modified or extended from time to time.
"Material Adverse Effect" shall mean (a) a Default,
(b) a material adverse change in the business, prospects or
condition (financial or otherwise) of any Company or in any
Property, (c) the termination of any material agreement to which
any Company is a party, or (d) any material impairment of the
ability of any Company to perform its obligations under this
Agreement or the Related Documents.
"Maximum Available Commitment" shall mean an amount
equal to the excess (if any) of (a) the lesser of the Revolving
Loan Commitment and the Borrowing Base, minus (b) the aggregate
unpaid principal amount outstanding of all Revolving Loans made by
the Bank.
"Mortgages" shall mean the mortgages in the form of
Exhibits E-1 and E-2 granted by CF to the Bank and encumbering
certain real property in Cedarburg, Wisconsin and Grafton,
Wisconsin, respectively, each as amended, supplemented, modified or
extended, from time to time.
"Net Income" or "Net Loss" shall mean, for any
period, the net after-tax income (or net loss) of a Person on a
consolidated basis determined in accordance with GAAP, excluding
the after-tax effect of the sum of (a) any net earnings of any
Subsidiary which are unavailable for the payment of dividends, (b)
interest in any net earnings of Persons in which a Person has an
ownership interest, other than Subsidiaries, not actually received,
(c) gains arising from a write-up of assets, (d) gains arising from
the acquisition of any securities of the Person or any Subsidiary,
(e) gains resulting from the sale of any investments or capital
assets, (f) amortization of any deferred credit arising from the
acquisition of any Person or in the property or assets of any
Person, (g) earnings of any Subsidiary prior to the date it became
a Subsidiary, (h) earnings acquired by the Person or any Subsidiary
through purchase, merger or consolidation or otherwise for any
period prior to the date of acquisition, and (i) proceeds of any
life insurance policies payable to the Person or any Subsidiary.
"Notes" shall mean the Master Revolving Credit Note
and the Master Overadvance Term Note and any note(s) or
obligation(s) issued in substitution, replacement or renewal
thereof.
"Obligations" shall mean the Revolving Loans, the
Overadvance Term Loan, all mandatory prepayments, all costs and
expenses and all other Indebtedness of any Company to the Bank,
including, without limitation, all liabilities under interest rate
swap agreements, interest rate cap agreements and interest rate
collar agreements, and all other agreements designed to protect
against fluctuations in interest rates or currency exchange rates.
"Overadvance Term Loan" shall mean the loans to the
Companies pursuant to Section 2.2 evidenced by the Overadvance Term
Note.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA.
"Permitted Liens" shall have the meaning assigned in
Section 6.3.
"Person" shall mean an individual, partnership,
corporation, firm, enterprise, business trust, joint stock company,
trust, unincorporated association, joint venture, Government
Authority or other entity of whatever nature.
"Pledge Agreement" shall mean the pledge agreement
in the form of Exhibit F by and between Edison Control Corporation
and the Bank, as amended, supplemented, modified or extended, from
time to time.
"Prime Rate" shall mean the interest rate publicly
announced by the Bank from time to time in Chicago, Illinois as its
prime rate for interest rate determinations, which is solely a
reference rate and may be at, above or below the rate or rates at
which the Bank lends to other Persons. Any change in the Prime
Rate shall become effective as of the opening of business on the
day on which such change is publicly announced by the Bank.
"Property" shall mean any interest of any Company of
any kind in property or assets, whether real, personal, mixed,
tangible or intangible, wherever located, and whether now owned or
subsequently acquired or arising and in the products, proceeds,
additions and accessions thereof or thereto.
"Qualified Account" shall mean an account (as that
term is defined in the UCC) owing solely to any Company which meets
the following requirements at the time it comes into existence and
continues to meet the same until collected in full: (a) it arose
from the performance of services by any Company, or from a bona
fide sale or lease of goods, which have been delivered or shipped
to an account debtor in the United States or a foreign debtor which
has issued a transferable letter of credit, or is appropriately
insured, acceptable to the Bank to secure payment, and for which
any Company has genuine invoices, shipping documents or receipts;
(b) it is payable not more than 30 days from the earlier of
performance of the services, delivery of goods or date(s) of
invoice; (c) it has not been unpaid more than 90 days past the
earlier of performance of the services, delivery of goods or
date(s) of invoice and it is not owed by an account debtor which
has 10% or more of its aggregate dollar amount of accounts owed to
any Company unpaid more than 90 days past the earlier of
performance of the services, delivery of goods or date(s) of
invoice (provided that, and notwithstanding anything herein to the
contrary, all Qualified Accounts of any Company shall forthwith
cease to be deemed Qualified Accounts at such time that 25% or more
of such Company's Qualified Accounts have been unpaid more than 90
days past the earlier of performance of the services, delivery of
goods or date(s) of invoice); (d) it is owned by any Company and
not subject to any assignment, claim, lien, encumbrance or security
interest whatsoever other than those securing any such Company's
obligations to the Bank; (e) it is a valid and legally enforceable
obligation of an account debtor which is (i) satisfactory to the
Bank, (ii) not an Affiliate of any Company and (iii) not the United
States of America or any department, agency or instrumentality
thereof unless the Company has complied with the Assignment of
Claims Act of 1940, to the satisfaction of the Bank; (f) it is not
subject to setoff, counterclaim, credit allowance, or adjustment by
the account debtor thereunder, except for discount for prompt
payment, or to any claim by such account debtor denying liability
thereunder in whole or in part, and such account debtor has not
refused to accept and has not returned or offered to return any of
the goods which are subject to such account; (g) it arose in the
ordinary course of any Company's business and in compliance with
all Requirements of Law; (h) each Company has no notice or
knowledge of the bankruptcy, insolvency, or similar proceeding of
the account debtor thereunder, or of the inability of the account
debtor thereunder to pay its debts as they become due, or of
anything which might impair the credit standing of the account
debtor; (i) it is assignable to the Bank and it does not arise out
of a contract or order which by its terms forbids or makes void or
unenforceable the assignment by any Company to the Bank of the
account arising with respect thereto; (j) it is not evidenced by
instruments or chattel paper unless the same has been endorsed and
delivered to the Bank; (k) it does not arise from a sale on
consignment, sale on return, bill and hold sale or any other type
of conditional sale except as permitted in writing by the Bank; and
(l) it is certified by the applicable Company within fifteen days
after the end of each month (or at such more frequent intervals as
the Bank shall request) as to the amount thereof and all other
matters set forth herein or reasonably required by the Bank;
provided, however, that with respect to CF Europe, the
certification within said fifteen-day period shall contain
reasonable estimates of the items described above, which estimates
shall, in each instance, be confirmed and recertified within an
additional fifteen day period. A Qualified Account which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be a Qualified Account.
"Qualified Inventory" shall mean inventory (as that
term is defined in the UCC) solely owned by any Company which meets
the following requirements and continues to meet the same until
sold or otherwise disposed of as permitted by this Agreement: (a)
it is not subject to any assignment, claim, lien, or security
interest whatsoever other than those securing the Obligations; (b)
it is located at one of the Companies' facilities set forth on
Schedule 1, none of which is a public warehouse or leased facility,
except for the Gardena, California warehouse and as permitted in
writing by the Bank; (c) it is not obsolete, is in good condition
and is either currently usable or saleable; (d) it is raw materials
or finished goods satisfactory to the Bank; (e) it is valued at the
lower of cost (on a FIFO basis) or wholesale market value
(exclusive of any transportation, processing or handling charges);
and (f) its existence, location, amount, and lower of cost (on a
FIFO basis) or wholesale market value (exclusive of any
transportation, processing or handling charges) have been certified
by the applicable Company within fifteen days after the end of each
month (or at such more frequent intervals as the Bank shall
request) as to the amount thereof and all other matters set forth
herein or reasonably required by the Bank; provided, however, that
with respect to CF Europe, the certification within said fifteen-
day period shall contain reasonable estimates of the items
described above, which estimates shall be confirmed, in each
instance, and recertified within an additional fifteen day period.
Qualified Inventory which subsequently fails to meet any of the
foregoing requirements, shall forthwith cease to be Qualified
Inventory.
"Regulatory Change" shall mean the adoption or
amendment, after the date of this Agreement, of any federal or
state law, regulation, interpretation, direction, policy, guideline
or court decision applicable to the Bank or the London Interbank
Eurodollar Market which increases the cost to the Bank of making or
maintaining the Obligations or reduces the rate of return to the
Bank (by reduction of principal, interest or otherwise) on the
Obligations by subjecting the Bank to any tax, duty or other charge
with respect to the Obligations, imposing any reserve requirement
(except any reserve requirement reflected in the LIBOR Rate or the
LIBOR Reserve Requirement), affecting the treatment of any
Obligation for purposes of calculating the appropriate amount of
capital to be maintained by the Bank or any Person controlling the
Bank, or imposing on the Bank any other condition affecting the
Obligations.
"Related Documents" shall mean the Master Revolving
Credit Note, the Master Overadvance Term Note, the Security
Agreements, the Guaranty, the Collateral Assignments, the
Mortgages, the Pledge Agreement, the Assignment, the IRB
Documentation, the Subordination Agreement and all other
certificates, resolutions, or other documents required or
contemplated hereunder.
"Requirements of Law" shall mean as to any matter or
Person, the Certificate or Articles of Incorporation and Bylaws or
other organizational or governing documents of such Person, and any
law (including, without limitation, any Environmental Law),
ordinance, treaty, rule, regulation, order, decree, determination
or other requirement having the force of law relating to such
matter or Person and, where applicable, any interpretation thereof
by any Government Authority.
"Restricted Payments" shall mean (a) dividends or
other distributions by any Company based upon the stock of any
Company (except dividends payable solely in stock of the Company
and dividends payable by Ultra and Gilco to CF), (b) purchases,
redemptions or other acquisitions, direct or indirect, by any
Company, of stock of the Company, whether now or hereafter
outstanding, (c) any other distribution by any Company in respect
of stock of any such Company, whether now or hereafter outstanding,
either directly or indirectly, whether in cash or property or
otherwise, and (d) payment of management fees by any Company to any
Affiliate, either directly or indirectly, whether in cash or
property or otherwise.
"Revolving Loan Commitment" shall mean an aggregate
principal amount not to exceed $8,000,000, or such lesser amount to
which the Revolving Loan Commitment is reduced under Section
2.1(f).
"Revolving Loans" shall mean the loans to the
Companies pursuant to Section 2.1 evidenced by the Master Revolving
Credit Note.
"Security Agreements" shall mean each of the
Security Agreements in the form of Exhibits G-1, G-2 and G-3,
between CF and the Bank, Ultra and the Bank and Gilco and the Bank,
respectively, each as amended, supplemented, modified or extended
from time to time.
"Stock Purchase Documentation" shall mean that
certain Stock and Unit Purchase Agreement, of even date herewith
(the "Stock Purchase Agreement"), among Edison Control Corporation,
Construction Forms Acquisition Corp., a Delaware Corporation (n/k/a
Construction Forms, Inc., a Wisconsin corporation), Allen W. Duhr,
Joseph F. Bennett, Alan J. Kastelic, Robert E. Klemm and Jay R.
Hanamann, together with all documents, certificates and agreements
delivered in connection therewith or contemplated thereunder,
including, without limitation, the Notes, the Escrow Agreement, the
Employment Agreements, the Amendment of JABCO Lease and the
Ancillary Agreements (each as defined in the Stock Purchase
Agreement).
"Stock Purchase Transaction" shall mean
collectively, (A) the purchase by Construction Forms Acquisition,
Inc. of (i) all of the issued and outstanding shares of $.01 par
value common stock of CF, (ii) all of the issued and outstanding
common stock of Gilco not owned by CF, and (iii) 99% of the
membership interests of Guarantor; and (B) the purchase by Edison
Control Corporation of 1% of the membership interest of Guarantor,
each as evidenced by the Stock Purchase Documentation.
"Subordinated Loan Transaction" shall mean the
extension of a credit to CF, Gilco and Ultra, jointly and
severally, by Bank Audi (USA), a New York State Chartered Bank
Association, in the amount of $6,800,000, as evidenced by a
Subordinated Promissory Note, of even date herewith, of CF, Gilco
and Ultra in favor of Bank Audi (USA); the Loan Agreement, of even
date herewith, among Bank Audi (USA), CF, Gilco and Ultra; the
Pledge and Security Agreement, of even date herewith, of William B.
Finneran in favor of Bank Audi (USA); the Letter Agreement, of even
date herewith, among William B. Finneran, Bank Audi (USA) and
Global Opportunity Partners -- Lazard Freres Asset Management; the
Letter Agreement, of even date herewith, among William B. Finneran,
Bank Audi (USA) and Odyssey Partners; the Guaranty, of even date
herewith, of Guarantor in favor of Bank Audi (USA); together with
all documents, certificates and agreements delivered in connection
with or contemplated under any of the foregoing.
"Subordination Agreement" shall mean the
subordination agreement by and between the Bank and Bank Audi (USA)
in the form of Exhibit H, as amended, supplemented, modified or
extended from time to time.
"Subsidiary" shall mean as to any Person, a
corporation of which shares of stock having voting power (other
than stock having such power only by reason of the happening of a
contingency that has not occurred) sufficient to elect a majority
of the board of directors or other managers of such corporation are
at the time owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person.
"Tangible Net Worth" shall be determined on a
consolidated basis in accordance with GAAP and mean the excess, if
any, of all assets of CF over all liabilities of CF, excluding (a)
any goodwill, patents, trademarks, trade names, copyrights,
operating rights, organizational or developmental expenses,
unamortized debt discount or expense, unamortized deferred charges,
and other assets properly classified as intangible assets, (b) any
write-ups of assets subsequent to the date of this Agreement, (c)
any treasury stock, and (d) all investments in foreign Affiliates
and unconsolidated domestic Affiliates other than South Houston
Hose Company, Inc., a Texas corporation.
"Termination Date" shall mean, as to the Revolving
Loans June 21, 1999, and as to the Overadvance Term Loan June 21,
1999, or such earlier date on which the Obligations shall terminate
as provided in Section 7.2.
"Treasury Rate" shall mean the Ask Yield, one
Business Day prior to the date of prepayment, on U.S. Treasury
Bills, Notes, or Bonds, selected by the Bank, in its sole
discretion, having a maturity comparable to or as close thereto as
possible to the Fixed Term Loan Period.
"UCC" shall mean the Uniform Commercial Code of the
State of Wisconsin, as amended from time to time.
1.2 Accounting and Financial Determinations. Where the
character or amount of any asset or liability or item of income or
expense is required to be determined, or any accounting computation
is required to be made, for the purpose of this Agreement, such
determination or calculation shall be made on a consolidated basis
so as to include CF and its Subsidiaries, in each such calculation
and, to the extent applicable and except as otherwise specified in
this Agreement, shall be made in accordance with GAAP; provided,
however, that if any change in GAAP from those applied in the
preparation of the financial statements referred to in Section 5.3
is occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the American
Institute of Certified Public Accountants (or its boards or
committees or successors thereto or agencies with similar
functions), the initial announcement of which change is made after
the date hereof, results in a change in the method of calculation
of financial covenants, standards or terms found in Section 6, the
parties hereto agree to enter into good faith negotiations in order
to amend such provisions so as to reflect such changes with the
desired result that the criteria for evaluating each Company's
financial condition shall be the same after such changes as if such
changes had not been made; and provided, further, that until such
time as the parties hereto agree upon such amendments, such
financial covenants, standards and terms shall be construed and
calculated as though no change had taken place. When used herein,
the term "financial statement" shall include balance sheets,
statements of earnings, statements of stockholders' equity,
statements of cash flows and the notes and schedules thereto, and
each reference herein to a balance sheet or other financial
statement of CF shall be to a statement prepared on a consolidated
and consolidating basis, unless otherwise specified.
1.3 Interpretation. The words "hereof," "herein" and
"hereunder" and words of a similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, Schedule and
Exhibit references contained in this Agreement are references to
sections, schedules and exhibits in or to this Agreement unless
otherwise specified. Any reference in any Section or definition to
any clause is, unless otherwise specified, to such clause of such
Section or definition.
1.4 Other Terms. Except as otherwise specifically
provided, each accounting term used herein shall have the meaning
given to it under GAAP, and all other terms contained in this
Agreement (and which are not otherwise specifically defined herein)
shall have the meanings provided in the UCC to the extent the same
are used or defined therein unless the context otherwise requires.
Terms defined in other Sections of this Agreement shall have the
meanings set forth therein.
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Revolving Loans.
(a) Prior to the Termination Date and so long as no
Default has occurred and is continuing, the Bank agrees on the
terms and conditions set forth in this Agreement to extend to
the Companies, jointly and severally, Revolving Loans from
time to time in amounts not to exceed in the aggregate at any
one time outstanding the lesser of (i) the Revolving Loan
Commitment, and (ii) the Borrowing Base. Subject to the terms
of this Agreement, each Company may borrow, repay (in whole or
in part) and reborrow the Revolving Loans prior to the
Termination Date for Revolving Loans. The Revolving Loans
made by the Bank to each Company shall be evidenced by the
Master Revolving Credit Note. Notwithstanding anything
contained herein to the contrary, the aggregate principal
amount of Revolving Loans outstanding to each Company at any
time hereunder shall not exceed the applicable amount set
forth below:
Company Borrowing Sublimit
CF $5,750,000
Ultra $1,500,000
Gilco $ 750,000
(b) From the date of the first Revolving Loan and
until all Revolving Loans are paid in full, the Companies
shall pay all accrued and unpaid interest on the Revolving
Loans on the first day of each month. Prior to an Event of
Default, interest shall accrue on the aggregate unpaid
principal amount from time to time outstanding under the
Master Revolving Credit Note at a rate per annum equal to (i)
the applicable LIBOR Rate on each LIBOR Rate Loan, and (ii)
the applicable Prime Rate on Revolving Loans which are not
LIBOR Rate Loans. Notwithstanding the foregoing, all
Revolving Loans outstanding at any time which are part of the
Revolving Loan Overadvance shall, prior to an Event of
Default, accrue interest at a rate per annum equal to the
applicable Prime Rate plus 0.50%. Interest shall be computed
and adjusted daily based on the actual number of days elapsed
in a year of 360 days. All outstanding unpaid principal and
accrued interest on the Revolving Loans shall be due and
payable on the Termination Date for the Revolving Loans.
(c) Each Company may obtain Revolving Loans by
making a request therefor to the Bank, orally or in writing.
Such request shall specify a Business Day prior to the
Termination Date on which such Revolving Loans are to be made
(the "Borrowing Date"), shall be received by the Bank by 12:00
Noon (Milwaukee time) three Business Days before the Borrowing
Date in the case of LIBOR Rate Loans or otherwise by 12:00
Noon (Milwaukee time) of the Borrowing Date, and shall specify
the amount of the Revolving Loans requested, whether the
Revolving Loans are to be LIBOR Rate Loans and, if so, the
requested Loan Period; provided, however, that within three
days after any oral request for a Revolving Loan, the Bank
shall receive from the Company making such request a written
confirmation in form acceptable to the Bank confirming such
Company's Revolving Loan request, and the Bank's obligation to
make further Revolving Loans hereunder to any Company shall be
suspended until such confirmation has been received by the
Bank. In the event of any inconsistency between the
telephonic notice and the written confirmation thereof, the
telephonic notice shall control. The Companies shall be
obligated, jointly and severally, to repay all Revolving Loans
notwithstanding the failure of the Bank to receive written
confirmation, and notwithstanding the fact that the person
requesting the Revolving Loan was not in fact authorized to do
so. No Revolving Loan request shall be modified, altered or
amended without the prior written consent of the Bank. Each
Revolving Loan shall be in the principal amount of the lesser
of (i) $25,000 or a multiple thereof, (ii) the Maximum
Available Commitment or (iii) the remaining amount available
under the applicable Company's Borrowing Sublimit; provided,
however, that the Companies may not request LIBOR Rate Loans
in an amount less than $250,000 per request (and additional
increments of $100,000). Upon fulfillment of the conditions
specified in Section 4.2, the Bank shall promptly deposit the
amount of such Revolving Loan in the general deposit account
of the Companies maintained at the Bank.
(d) Except for Revolving Loans which are part of
the Revolving Loan Overadvance, Revolving Loans which are not
LIBOR Rate Loans may be converted (in increments of $250,000
(and additional increments of $100,000)) into LIBOR Rate Loans
by notice from the applicable Company to the Bank meeting the
requirements of, Section 2.1(c). At the end of each
respective Loan Period, LIBOR Rate Loans shall become
Revolving Loans which are not LIBOR Rate Loans unless and
until the Company converts such Revolving Loans to LIBOR Rate
Loans.
(f) On the final day of each fiscal quarter, the
Company may, upon five Business Days' prior written notice to
the Bank, permanently reduce the aggregate amount of the
Revolving Loan Commitment; provided that no such reduction
shall reduce the aggregate amount of the Revolving Loan
Commitment to an amount less than the aggregate unpaid
principal balance of the Master Revolving Credit Note on the
effective date of such reduction. Each reduction in the
Revolving Loan Commitment shall be in a minimum amount of
$250,000 and in integral multiples of $250,000 above such
minimum.
2.2 Overadvance Term Loan.
(a) On the date hereof, the Bank agrees to extend
to the Companies, jointly and severally, the Overadvance Term
Loan in an aggregate principal amount of $4,300,000 and such
Overadvance Term Loan shall be subject to all of the terms and
conditions set forth in this Agreement. The Overadvance Term
Loan made by the Bank to each Company pursuant hereto shall be
evidenced by the Master Overadvance Term Note.
Notwithstanding anything contained herein to the contrary, the
aggregate principal amount of the Overadvance Term Loan
outstanding to each Company at any time hereunder shall not
exceed the applicable amount set forth below:
Company Borrowing Sublimit
CF $3,300,000
Ultra $ 500,000
Gilco $ 500,000
(b) The Companies shall pay all accrued and unpaid
interest on the Overadvance Term Loan on the first day of each
month commencing on the first day of August, 1996, and
continuing until the Overadvance Term Loan is paid in full.
Prior to an Event of Default, interest shall accrue on the
aggregate unpaid principal amount outstanding under the
Overadvance Term Note at a rate per annum equal to (i) the
applicable LIBOR Rate or (ii) the applicable Prime Rate plus
0.375% per annum. Notwithstanding the foregoing, and so long
as no Default has occurred and is continuing, the Companies
may elect to fix the interest rate on all, but not less than
all, of the outstanding Overadvance Term Loan (provided that
no such portion of the Loan at the time of such conversion may
be LIBOR Rate Loans) at the Fixed Term Rate by delivering an
irrevocable written notice to the Bank at least three Business
Days prior to the effective date of such election as specified
therein (the "Fixed Term Rate Borrowing Date"); and,
thereafter, interest shall accrue on the aggregate unpaid
principal amount of the Overadvance Term Loan at a rate per
annum equal to the Fixed Term Rate. Interest shall be
computed and adjusted daily based on the actual number of days
elapsed in a year of 360 days. The Companies shall pay
principal outstanding under such Overadvance Term Note in
thirty-five (35) equal monthly installments of $59,722.22 each
payable commencing on the first day of July, 1996 and on the
first day of each month thereafter, and a final payment of the
balance of all unpaid principal and accrued interest on the
Termination Date for such Overadvance Term Loan. Amounts paid
or prepaid on the Overadvance Term Loan may not be reborrowed.
(c) So long as no Default has occurred and is
continuing and provided that the Companies have not elected to
convert the Overadvance Term Loan to the Fixed Term Rate
pursuant to Section 2.2(b), the portion of the Overadvance
Term Loan which is not a LIBOR Rate Loan may be converted into
a LIBOR Rate Loan of at least $250,000 (and additional
increments of $100,000) by written notice from the requesting
Company to the Bank and received by Bank by 12:00 p.m.
(Milwaukee time) three Business Days before the requested
borrowing date (such date which shall be prior to the
Termination Date for the Overadvance Term Loan); such notice
which shall specify the amount of the Overadvance Term Loan to
be converted and the requested Loan Period. No Overadvance
Term Loan conversion request shall be modified, altered or
amended without the prior written consent of the Bank. At the
end of each respective Loan Period, each LIBOR Rate Loan shall
become an Overadvance Term Loan which is not a LIBOR Rate Loan
unless and until a Company converts such Overadvance Term Loan
to a LIBOR Rate Loan.
2.3 LIBOR Rate Restrictions.
(a) The Companies may request LIBOR Rate Loans only
so long as the outstanding LIBOR Rate Loans bear no more than
ten different LIBOR Rates. The Bank may require any LIBOR
Rate Loans to be repaid prior to the applicable Termination
Date for Revolving Loans and may refuse to make LIBOR Rate
Loans in the event the Bank determines that (i) maintenance of
the LIBOR Rate Loans would violate any applicable Requirements
of Law, (ii) the interest rates on LIBOR Rate Loans do not
accurately reflect the cost of making such Revolving Loans, or
(iii) deposits in the amount of any LIBOR Rate Loan are not
available to the Bank in the London interbank market.
(b) In the event the Bank shall incur any loss,
cost, expense or premium (including, without limitation, any
loss of profit or loss, cost, expense or premium incurred by
reason of the liquidation or reemployment of deposits or other
funds acquired or contracted to be acquired by the Bank to
fund or maintain LIBOR Rate Loans or the relending or
reinvesting of such deposits or other funds or amounts paid or
prepaid to the Bank), as a result of:
(i) any payment of any LIBOR Rate Loans on a
date other than the last day of the then applicable Loan
Period for any reason, whether before or after Default,
and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by any Company to create,
borrow, continue or effect by conversion any LIBOR Rate
Loans on the date specified in a notice given pursuant to
this Agreement;
then upon the demand of the Bank, the Companies shall pay to
the Bank such amount as will reimburse the Bank for such loss,
cost, expense or premium. If the Bank requests such a
reimbursement it shall provide the applicable Company with a
certificate setting forth the computation of the loss, cost,
expense or premium giving rise to the request for
reimbursement in reasonable detail and such certificate shall
be deemed prima facie correct.
2.4 Joint and Several Obligations, Etc.
(a) The Obligations shall be joint and several;
provided, however, that notwithstanding any other provisions
hereof to the contrary, the maximum liability of each Company
hereunder and under the Notes shall be limited to the greater
of (i) the proceeds of loans made by the Bank hereunder to the
extent such proceeds are advanced, transferred or applied to
or for the benefit of such Company, and (ii) ninety-five
percent (95%) of the difference between (A) the present fair
saleable value of the Company's assets as of the date of this
Agreement or any subsequent date (if greater, and to the
extent permitted by law) and (B) the amount of all liabilities
of the Company, including liabilities under this Agreement and
the Notes and probable exposure under contingent liabilities,
as of such date.
(b) The Obligations shall be absolute and
unconditional unto each Company; each Company unconditionally
and irrevocably waives each and every defense which, under
principles of guarantee or suretyship law or otherwise, would
operate to impair or diminish such liability; and nothing
whatsoever except actual full payment and performance to the
Bank of such Obligations shall operate to discharge the
liability of the Companies hereunder. Without limitation of
the foregoing, the Obligations shall not be affected by the
invalidity or unenforceability of all or part of the
Obligations with respect to any Company.
(c) The Bank shall not be obligated to: (a) take
any steps whatsoever to collect from, or to file any claim of
any kind against, any Company or any other person or entity
liable for payment or performance of any of the Obligations;
or (b) take any steps whatsoever to protect, accept, obtain,
enforce, take possession of, perfect its interest in,
foreclose or realize on collateral or security, if any, for
the payment or performance of any of the Obligations; or (c)
in any other respect exercise any diligence whatsoever in
collecting or attempting to collect any of the Obligations by
any means.
(d) Without limiting the generality of the
foregoing, there shall be no diminution or impairment of the
liability of any Company in any respect, if the Bank exercises
any of the following rights without notice of any kind to the
Companies: (a) extends any additional credit to any Company;
(b) accepts any Collateral, security or guarantee for any
obligations or any other credit; (c) determines how, when and
what application of payments, credits and collections, if any,
shall be made on the Obligations and any other credit and
accepts partial payments; (d) determines what, if anything,
shall at any time be done with respect to any collateral or
security; subordinates, sells, transfers, surrenders, releases
or otherwise disposes of all or any of such collateral or
security; and purchases or otherwise acquires any such
collateral or security at foreclosure or otherwise; and (e)
with or without consideration grants, permits or enters into
any waiver, amendment, extension, modification, refinancing,
indulgence, compromise,settlement, subordination, discharge or
release of (i) any of the Obligations, (ii) any obligations of
any other Person liable for payment or performance of any of
the Obligations, and any agreement relating to such
obligations and (iii) any collateral or security or agreement
relating to collateral or security for any of the foregoing.
(e) Each Company hereby unconditionally waives (i)
presentment, notice of dishonor, protest, demand for payment
and all notices of any kind, including, without limitation:
notice of acceptance hereof; notice of the creation of any of
the Obligations; notice of nonpayment, nonperformance or other
default on any of the Obligations; and notice of any action
taken to collect upon or enforce any of the Obligations; (ii)
any subrogation to the rights of the Bank against any other
Company, any other claim against any other Company which
arises as a result of payments made by a Company pursuant to
this Agreement, and any claim for contribution against any
other Company whether or not the Obligations have been paid or
performed in full; and (iii) any setoffs or counterclaims
against the Bank which would otherwise impair the Bank's
rights against any Company hereunder.
2.5 Interest After Default. After an Event of Default,
each of the Obligations shall bear interest at the rate of 3% per
annum in excess of the applicable rates set forth herein; provided,
that in the case of a LIBOR Rate Loan the maturity of which is
accelerated, such LIBOR Rate Loan shall bear interest for the
remainder of the applicable Loan Period at a rate equal to 3% plus
the higher of the rate on the LIBOR Rate Loan or the rate on
Revolving Loans or the portion of the Term Loan, as the case may
be, which are not LIBOR Rate Loans. In no event shall the interest
rates under the Notes exceed the highest rate permitted by law.
2.6 Loan Account. The Bank will enter as a debit to the
Loan Account the aggregate principal amount of each Obligation as
disbursed or issued from time to time by the Bank. The Bank shall
also record in the Loan Account, in accordance with the Bank's
customary accounting practices: accrued interest and all other
charges, expenses and other items properly chargeable to any
Company hereunder or under the Related Documents; all payments made
by any Company with respect to the Obligations, if any; and all
other appropriate debits and credits. The debit balance of the
Loan Account shall reflect the amount of the Obligations and other
appropriate charges hereunder. Not more frequently than once each
month, the Bank shall render a statement of account of the Loan
Account including, with respect to Revolving Loans and the
Overadvance Term Loan, a statement of the outstanding principal
balance, Loan Period and applicable LIBOR Rate for each LIBOR Rate
Loan, which statement shall be considered correct and accepted by
the Companies and conclusively binding upon the Companies unless
any Company notifies the Bank to the contrary within 30 days of the
mailing of such statement by the Bank to the Companies; provided,
however, that the failure of the Bank to record any of the
foregoing items in the Loan Account shall not limit or otherwise
affect the Companies' joint and several obligation to repay the
Obligations.
2.7 Lockbox.
(a) The Companies agree that following a Default,
and upon the request of the Bank, they shall immediately
direct each of their respective account debtors and other
obligors to make payments due under their accounts,
instruments and/or chattel paper directly to a special lockbox
to be under the exclusive control of the Bank.
(b) Upon the establishment of the special lockbox
referred to in Section 2.7(a), the Companies authorize and
direct the Bank to deposit into a special collateral account
to be established and maintained by the Bank all drafts,
checks and cash payments received in said lockbox or otherwise
received by the Bank. All deposits in said collateral account
shall constitute proceeds of Collateral. The Bank shall apply
finally collected funds on deposit in said collateral account
immediately to the Loan Account as payment of the Obligations,
in such order of application as the Bank may determine;
provided, however, that the Bank shall not apply such
collected funds to prepay the Overadvance Term Loan except
upon any Company's request or unless an Event of Default has
occurred. The Companies agree that they shall promptly
deliver to the Bank for deposit in said collateral account all
payments received by them, including, without limitation, all
payments on accounts, instruments and chattel paper, all cash
received by each Company and all other proceeds of Collateral.
All payments shall immediately be delivered to the Bank in the
form received (except for the applicable Company's endorsement
where necessary) and, until so deposited, shall be held in
trust by such Company for and as the exclusive property of the
Bank and shall not be commingled with any funds or property of
such Company.
2.8 Payments. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest on the Notes. The Bank may
debit to the depository accounts maintained by the Companies with
the Bank all payments on the Obligations when due without prior
notice to or consent of any Company.
2.9 Prepayments.
(a) Optional Prepayments. The Companies may at
their option, at any time upon three (3) days' prior written
notice to the Bank, prepay the Obligations, in whole or in
part. Partial prepayments shall be in the principal amount of
$100,000 or a multiple thereof, together with accrued interest
to the date of prepayment on the amount prepaid. There shall
be no prepayment premium or penalty except: (i) as provided in
Section 2.3(a); and (ii) that, if the Companies have converted
the Overadvance Term Loan to the Fixed Term Rate, the Company
shall upon prepayment or partial prepayment of such
Overadvance Term Loan (whether upon mandatory or optional
redemption, acceleration or maturity) pay the Bank the Make
Whole Payment on the date of prepayment. The Companies agree
that the Make Whole Payment constitutes a reasonable method of
measuring the Bank's estimated loss in the event of a
prepayment, that it is not a penalty, and that the Bank's
determination of the Make Whole Payment, in the absence of
manifest error, shall be conclusive, final, and binding on the
Companies.
(b) Mandatory Prepayment.
(i) At any time that the aggregate principal
amount of Revolving Loans outstanding exceeds the lesser of
the Revolving Loan Commitment or the Borrowing Base, the
Companies shall immediately pay the amount of such excess in
immediately available funds, together with interest accrued on
the amount of the payment.
(ii) So long as any amounts remain outstanding
under the Overadvance Term Loan, the Companies jointly and
severally agree to make an Excess Cash Flow Payment on April
30 of each year, commencing on April 30, 1997 through and
including April 30, 1999, based on year-end audited financial
statements. All Excess Cash Flow Payments shall be applied to
reduce the regularly scheduled principal installments on the
Overadvance Term Loan in the inverse order of their maturity.
2.10 Effect of Regulatory Change. In the event of a
Regulatory Change deemed by the Bank in good faith to be material,
the Companies shall pay to the Bank (within ten days after notice
by the Bank to the Companies of such Regulatory Change) such
amounts as the Bank deems reasonably necessary to compensate the
Bank for the increase in the cost of making or maintaining the
Obligations or the reduction in the rate of return to the Bank on
the Obligations resulting from the Regulatory Change.
2.11 Security. Payment of all Obligations shall be
secured, subject only to Permitted Liens, by a first lien on all of
the Property in accordance with this Agreement and the Related
Documents.
2.12 No Obligation to Extend or Forbear. The Companies
acknowledge and agree that the Bank (a) upon execution hereof, has
no duty or obligation of any kind to, and has made no
representations of any kind or nature that the Bank will, extend
credit or any other kind of financial accommodations to any Company
after the Termination Date, or forbear at any time from the
exercise of any of its rights or remedies under this Agreement, the
Related Documents and applicable law, and (b) may at any time, in
its sole and absolute discretion, exercise whatever rights and
remedies the Bank may have under this Agreement, the Related
Documents and applicable law. All Obligations shall be due in full
on the Termination Date without further demand.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement
and make and incur the Obligations as herein provided, each Company
hereby severally represents and warrants to the Bank as follows:
3.1 Organization, Qualification and Subsidiaries. The
Company and each of its Subsidiaries is a corporation duly
organized and validly existing and in good standing under the laws
of the state of its incorporation. The Company and each of its
Subsidiaries has the corporate power and authority and all
necessary licenses, permits and franchises to borrow hereunder and
to grant the liens and security interests provided for in the
Related Documents and to own its assets and conduct its business as
presently conducted. The Company and each of its Subsidiaries is
duly licensed or qualified to do business and is in good standing
in all jurisdictions where it is required to be qualified. All of
the issued and outstanding capital stock of the Company and each of
its Subsidiaries has been validly issued and is fully paid and
non-assessable, except as provided in Section 180.0622(2)(b) of the
Wisconsin Statutes. The name and the number of shares of capital
stock owned by each shareholder of the Company is set forth on
Schedule 2. Except as set forth on Schedule 3, (a) the Company has
no Subsidiaries, (b) the Company does not own, directly or
indirectly, more than 1% of the total outstanding shares of any
class of capital stock of any other Person, (c) there are no
outstanding options, warrants or other rights to subscribe for or
purchase from the Company any capital stock of the Company or
securities convertible into or exchangeable for capital stock of
the Company.
3.2 Financial Statements.
(a) The Company's year-end audited financial
statements for its fiscal years ended January 31, 1996 and
January 31, 1995, audited by Deloitte & Touche, and the
financial statements prepared by the Company for the three-
month period ended April 30, 1996 are accurate and complete
and were prepared in accordance with GAAP (except that the
interim financial statements are subject to normal year-end
audit adjustments) consistently applied throughout the
applicable periods, and present fairly the financial condition
of the Company as of such dates and the results of its
operations and cash flows for the periods then ended. The
balance sheets and footnotes thereto show all known
liabilities, direct or contingent, of the Company and its
Subsidiaries as of the respective dates thereof in accordance
with GAAP. There has been no Material Adverse Effect since
the date of the latest of such statements. The Company's
fiscal year begins on February 1.
(b) The financial forecasts dated March 11, 1996
and furnished to the Bank by the Company are based on
information and assumptions that are accurate and reasonable
as of the date hereof.
3.3 Authorization. The making, execution, delivery and
performance of this Agreement and the Related Documents by the
Company have each been duly authorized by all necessary corporate
action. The valid execution, delivery and performance of this
Agreement, the Related Documents and the transactions contemplated
hereby and thereby, are not and will not be subject to any
approval, consent or authorization of any Government Authority.
This Agreement and the Related Documents are the valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms.
3.4 Absence of Conflicting Obligations. The making,
execution, delivery and performance of this Agreement and the
Related Documents and compliance with their respective terms do not
violate or constitute a default, breach or violation under any
Requirements of Law or any covenant, indenture, deed, lease,
contract, agreement, mortgage, deed of trust, note or instrument to
which the Company is a party or by which it is bound.
3.5 Taxes. The Company has filed all federal, state,
foreign and local tax returns which were required to be filed,
except those returns for which the due date has been validly
extended. The Company has paid or made provisions for the payment
of all taxes, assessments, fees and other governmental charges
owed, and no tax deficiencies have been proposed, threatened or
assessed against the Company. The federal income tax liability of
the Company has been finally determined by the Internal Revenue
Service and satisfied for all taxable years up to and including the
taxable year ended January 31, 1993 and there is no pending or, to
the best of the Company's knowledge, threatened tax controversy or
dispute as of the date hereof.
3.6 Absence of Litigation. Except as set forth on
Schedule 3.6, there is no pending or, to the knowledge of the
Company, threatened litigation or administrative proceeding at law
or in equity which would, if adversely determined, result in a
Material Adverse Effect, and, to the best of the Company's
knowledge after diligent inquiry, there are no presently existing
facts or circumstances likely to give rise to any such litigation
or administrative proceeding.
3.7 Accuracy of Information. All information,
certificates or statements given by the Company to the Bank under
this Agreement and the Related Documents were accurate, true and
complete in all material respects when given, continue to be
accurate, true and complete in all material respects as of the date
hereof, and do not contain any untrue statement or omission of a
material fact necessary to make the statements herein or therein
not misleading. There is no fact known to the Company which is not
set forth in this Agreement, the Related Documents or other
documents, certificates or statements furnished to the Bank by or
on behalf of the Company in connection with the transactions
contemplated hereby and which will, or which in the future may (so
far as the Company can reasonably foresee), cause a Material
Adverse Effect.
3.8 Ownership of Property. The Company has good and
marketable title to all of its Property, including, without
limitation, the Property reflected in the balance sheets referred
to in Section 3.2 and CF has fee simple title to the Property
subject to the Mortgages. There are no Liens of any nature on any
of the Property except Permitted Liens. All Property useful or
necessary in the Company's business, whether leased or owned, is in
good condition, repair (ordinary wear and tear excepted) and
working order and, to the best of the Company's knowledge after
diligent inquiry, conforms to all applicable Requirements of Law.
The Company owns (or is licensed to use) and possesses all such
patents, trademarks, trade names, service marks, copyrights and
rights with respect to the foregoing as are reasonably necessary
for the conduct of the business(es) of the Company as now conducted
and proposed to be conducted without, individually or in the
aggregate, any infringement upon rights of other Persons. Schedule
1 contains a true, correct and complete list of all real estate
used by the Company.
3.9 Federal Reserve Regulations. The Company will not,
directly or indirectly use any proceeds of the Obligations to: (a)
purchase or carry any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System (12 C.F.R. 221, as amended); (b) extend credit to other
Persons for any such purpose or refund indebtedness originally
incurred for any such purpose; or (c) otherwise take or permit any
action which would involve a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation of
the Board of Governors of the Federal Reserve System.
3.10 ERISA. The Company and anyone under common control
with the Company under Section 4001(b) of ERISA (an "ERISA
Affiliate") is in compliance in all material respects with the
applicable provisions of ERISA and, with respect to each Employee
Plan: (a) no "prohibited transaction" as defined in Section 406 of
ERISA or Section 4975 of the Code has occurred which will subject
the Company to any tax or penalty imposed under Section 4975 of the
Code; (b) no "reportable event" as defined in Section 4043 of ERISA
has occurred (other than reportable events for which the notice
requirement has been waived); (c) no "accumulated funding
deficiency" as defined in Section 302 of ERISA (whether or not
waived) has occurred; (d) the assets are at least as great as the
liabilities on a terminated basis based on the reasonable
assumptions used in the most recent actuarial valuation; and (e)
the Company or the plan sponsor has timely filed all returns and
reports required to be. Neither the Company nor any ERISA
Affiliate has any obligation to contribute to any Multiemployer
Plan.
3.11 Security Interests. The Bank has a legal, valid,
perfected and, except for Permitted Liens, first priority security
interest in the Collateral and the Collateral is and at all times
shall be free and clear of all Liens, except Permitted Liens,
whatsoever.
3.12 Places of Business. The principal place of business
of CF and the chief executive office of CF, Ultra and Gilco is
located at the address specified in Section 8.6, and the books and
records of CF, Ultra and Gilco and all records of account are
located and hereafter shall continue to be located at such
principal place of business and chief executive office. The
principal place of business for Ultra is located at 1325 Park
Street, Port Washington, Wisconsin. The principal place of
business for Gilco is located at 1040 N. 9th Street, Grafton,
Wisconsin.
3.13 Other Names. The business conducted by the Company
has not been conducted under any corporate, trade or fictitious
name, and following the date hereof the Company will not conduct
its business under any corporate, trade or fictitious name unless
the Company shall have delivered at least 30 days' prior written
notice to the Bank of such name change.
3.14 Not an Investment Company. The Company is not (a)
an "investment company" or a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940,
as amended, or (b) a "holding company" or a "subsidiary" of a
"holding company" or an "affiliate of a "holding company" or a
"subsidiary" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
3.15 No Defaults. The Company is not in default under or
in violation of (a) any Requirements of Law, (b) any covenant,
indenture, deed, lease, agreement, mortgage, deed of trust, note or
other instrument to which the Company is a party or by which the
Company is bound, or to which any Property is subject, or (c) any
Indebtedness; or if any default or violation under Sections
3.15(a), (b) or (c) exists, it is an immaterial default or
violation and the failure to cure such default or violation would
not result in a Material Adverse Effect.
3.16 Environmental Laws. Except as disclosed on Schedule
3.16 attached hereto and incorporated herein, the business of the
Company has been operated in full compliance with all Environmental
Laws and the Company is not subject to any Environmental Liability
relating to the conduct of its business or the ownership of its
Property and no facts or circumstances exist which could give rise
to such Environmental Liabilities. No notice has been served on
the Company claiming any violation of Environmental Laws, asserting
Environmental Liability or demanding payment or contribution for
Environmental Liability or violation of Environmental Laws.
3.17 Labor Matters. There are no labor disputes between
the Company and any of its employees which individually or in the
aggregate, if resolved in a manner adverse to the Company, would
result in a Material Adverse Effect.
3.18 Restricted Payments. The Company has not, since the
date of the most recent financial statements referred to in Section
3.2, made any Restricted Payments.
3.19 Solvency. Each Company is not "insolvent," nor will
each Company's incurrence of loans, direct or contingent, to repay
the Obligations render any Company "insolvent." For purposes of
this subsection 3.19, a corporation is "insolvent" if (i) the
"present fair salable value" (as defined below) of its assets is
less than the amount that will be required to pay its probable
liability on its existing debts and other liabilities (including
contingent liabilities) as they become absolute and matured; (ii)
its property constitutes unreasonably small capital for it to carry
out its business as now conducted and as proposed to be conducted
including its capital needs; (iii) it intends to, or believes that
it will, incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be
received by it and amounts to be payable on or in respect of debt
of it), or the cash available to it after taking into account all
of its other anticipated uses of the cash is anticipated to be
insufficient to pay all such amounts on or in respect of its debt
when such amounts are required to be paid; or (iv) it believes that
final judgments against it in actions for money damages will be
rendered at a time when, or in an amount such that, it will be
unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of
such judgments in any such actions and the earliest reasonable time
at which such judgments might be rendered), or the cash available
to it after taking into account all other anticipated uses of its
cash, is anticipated to be insufficient to pay all such judgments
promptly in accordance with their terms. For purposes of this
subsection 3.19, the following terms have the following meanings:
(x) the term "debts" includes any legal liability, whether matured
or unmatured, liquidated, absolute, fixed or contingent, (y) the
term "present fair salable value" of assets means the amount which
may be realized, within a reasonable time, either through
collection or sale of such assets at their regular market value and
(z) the term "regular market value" means the amount which a
capable and diligent businessman could obtain for the property in
question within a reasonable time from an interested buyer who is
willing to purchase under ordinary conditions.
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS
4.1 Initial Obligations. In addition to the terms and
conditions otherwise contained herein, the obligation of the Bank
to make or incur any Obligation is conditioned on the Bank
receiving, prior to or on the date of the Bank's first extension of
credit, each of the following items in form, detail and content
satisfactory to the Bank:
(a) the executed Master Revolving Credit Note;
(b) the executed Master Overadvance Term Note;
(c) the executed Security Agreements;
(d) the Guaranty executed by the Guarantor;
(e) the executed Mortgages;
(f) executed financing statements in each
jurisdiction where such filing is necessary to perfect the
security interests of the Bank created by the Security
Agreements, and the Mortgages;
(g) a certificate of the secretary or an assistant
secretary of each Company and the Guarantor certifying (i) an
attached complete and correct copy of its bylaws; (ii) an
attached complete and correct copy of resolutions duly adopted
by its board of directors which have not been amended since
their adoption and remain in full force and effect,
authorizing the execution, delivery and performance of this
Agreement and the Related Documents to which it is a party;
(iii) that its articles of incorporation have not been amended
since the date of the last date of amendment thereto indicated
on the certificate of the secretary of state; and (iv) as to
the incumbency and specimen signature of each officer
executing this Agreement and all other Related Documents to
which it is a party, and including a certification by another
officer as to the incumbency and signature of the secretary or
assistant secretary executing the certificate;
(h) the opinions of counsel for the Companies, the
Guarantor and Edison Control Corporation in the form of
Exhibits J-1 and J-2;
(i) certificates of status or good standing for the
Companies, and the Guarantor and certified copies of the
Articles of Incorporation for the Companies and the Guarantor,
all issued by the Office of the Secretary of State of
incorporation within 30 days of the date hereof;
(j) evidence that there are no Liens of record on
the Property other than Permitted Liens including UCC
information searches in the names of the Companies, and the
Guarantor of the filing records in the offices of each
Secretary of State and each county Register of Deeds office
required by the Bank;
(k) a commitment for mortgage title insurance
issued by a title insurance company acceptable to the Bank
with respect to each Mortgage on ALTA Form 1970 (i) insuring
that CF has a fee simple estate in the property subject to
such Mortgage, (ii) insuring that such Mortgage is a valid
paramount lien on the property in an amount of $1,630,000 (as
to the Mortgage attached as Exhibit E-1) and $510,000 (as to
the Mortgage attached as Exhibit E-2), respectively, subject
only to Permitted Liens, (iii) insuring against loss or damage
incurred by reason of construction liens which are or may be
prior to the lien of such Mortgage, (iv) excluding any
exceptions for rights of parties in possession or matters
which would be disclosed by a survey of the property except
for Permitted Liens, and (v) containing ALTA revolving credit,
access, contiguity, zoning, usury and comprehensive
endorsements;
(l) a commitment for mortgage title insurance
issued by a title insurance company acceptable to the Bank on
ALTA Form 1970 (i) insuring that Guarantor has a fee simple
estate in the property subject to the IRB Mortgage, (ii)
insuring that the IRB Mortgage is a valid paramount lien on
the property in an amount of $1,020,000, subject only to
Permitted Liens, (iii) insuring against loss or damage
incurred by reason of construction liens which are or may be
prior to the lien of the IRB Mortgage, (iv) excluding any
exceptions for rights of parties in possession or matters
which would be disclosed by a survey of the property except
for Permitted Liens, and (v) containing ALTA revolving credit,
access, contiguity, zoning, usury and comprehensive
endorsements;
(m) evidence that all real estate taxes, special
assessments, and any other charges against the property
subject to the Mortgages and the IRB Mortgage have been paid
in full for 1995 and prior years and have been paid to the
extent of any installments due for 1996;
(n) surveys of the property subject to the
Mortgages and the IRB Mortgage;
(o) the facility fee under Section 5.9(a);
(p) an executed Borrowing Base Certificate;
(q) Phase I environmental assessment reports for
the property subject to the Mortgages and the IRB Mortgage;
(r) the executed Pledge Agreement, together with
such consents to the collateral pledge as the Bank shall
require;
(s) the Lessor's Consent, Estoppel Certificate,
Waiver and Agreement in the form of Exhibits K-1 and K-2,
executed by CF and Guarantor, respectively;
(t) the collateral assignment to the Bank of the
life insurance policy maintained by the Company on the life of
Alan Kastelic in the amount of $500,000;
(u) certificates of title for all goods subject to
the security interest created by the Security Agreements which
are represented by certificates of title, together with a
notation of the Bank's security interest on each such
certificate;
(v) the executed Subordination Agreement;
(w) certificates of insurance evidencing that the
Bank has been named as a loss payee and/or mortgagee under the
insurance policies required to be carried under this
Agreement;
(x) the executed Collateral Assignments, documents
underlying the Collateral Assignments and such consents to the
Collateral Assignments as the Bank shall require;
(y) assignment documents complying with the
Assignment of Claims Act of 1940 for each Qualified Account of
the United States of America or any department, agency or
instrumentality thereof, if any;
(z) the executed Letter of Credit, Reimbursement
Agreement and IRB Mortgage, and all other documents,
instruments, certificates and legal opinions which are
required by the Bank to effectuate the substitution of the
Bank for Firstar as the letter of credit issuer under the IRB
Documentation;
(aa) copies of all executed documents evidencing the
consummation of the Stock Purchase Transaction;
(bb) copies of all executed documents evidencing the
Subordinated Loan Transaction;
(cc) Form U-1 executed by the Companies; and
(dd) such additional supporting documents and
materials as the Bank may request.
4.2 Subsequent Obligations. In addition to the terms
and conditions otherwise contained herein, the obligation of the
Bank to make or incur subsequent Obligations is subject to the
satisfaction, on the date of making or incurring each such
Obligation, of the following conditions:
(a) All of the representations, warranties and
acknowledgments of each Company contained in this Agreement
and the Related Documents shall be true and accurate as if
made on such date, and each request by the Companies for
credit shall constitute an affirmation by each Company,
severally, that such representations, warranties and
acknowledgements are then true and accurate;
(b) There shall not exist on such date any Default
and no Default shall occur as the result of the making or
incurring of such Obligation;
(c) The aggregate principal amount of all Revolving
Loans outstanding, together with the amount of any Revolving
Loan requested shall not exceed the lesser of the Revolving
Loan Commitment or the Borrowing Base;
(d) The Bank shall have received executed loan
requests for all Revolving Loans previously requested by the
Companies and the matters certified therein and herein shall
have been true, correct and complete on the date thereof and
shall continue to be true and correct on the date of the
requested Revolving Loans or other Obligations; and
(e) Each of the Related Documents shall remain in
full force and effect and continue to secure the Obligations.
SECTION 5 AFFIRMATIVE COVENANTS
Each Company severally covenants and agrees that, from
and after the date of this Agreement and until the Termination Date
and until the entire amount of all Obligations to the Bank are paid
in full, it shall:
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes. (a) Maintain its corporate
existence, licenses, permits, rights and franchises; (b) comply in
all material respects with all Requirements of Law; (c) conduct its
business substantially as now conducted; (d) pay before the same
become delinquent and before penalties accrue thereon, all taxes,
assessments and other government charges against it and its
Property, and all other liabilities except to the extent and so
long as the same are being contested in good faith by appropriate
proceedings, with adequate reserves having been provided.
5.2 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its
business, whether leased or owned, in good condition, repair
and working order (ordinary wear and tear excepted) and from
time to time make or cause to be made all needed and proper
repairs, renewals, replacements, additions and improvements so
that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
(b) Maintain with good, reputable and financially
sound insurance underwriters insurance of such nature and in
such amounts as is customarily maintained by companies engaged
in the same or similar business and such other insurance as
may be required by law or as may be reasonably required in
writing by the Bank. Each policy providing liability coverage
to any Company shall name the Bank as an additional insured,
and each policy insuring the Property shall name the Bank as
loss payee and/or mortgagee, as its interest appears, and all
policies shall require the insurer to give the Bank 30 days
prior written notice of the modification, cancellation or
nonrenewal of the policy; the Companies shall furnish copies
of all such insurance policies or a certificate evidencing
that each Company has complied with the requirements of this
paragraph on the date hereof and on each renewal date of such
policies; and within 90 days after the end of each fiscal
year, the Companies shall deliver to the Bank a schedule
showing all insurance policies in force as of the end of such
year, signed by an authorized officer of the Companies.
5.3 Financial Statements. Maintain a standard system of
accounting in accordance with sound accounting practice, and
furnish to the Bank such information respecting the business,
assets and financial condition of each Company as the Bank may
reasonably request and, without request furnish to the Bank:
(a) as soon as available, and in any event within
30 days after the end of each month of CF's fiscal year (or 50
days after the end of the first and last months of CF's fiscal
year), financial statements including the balance sheet for CF
and its Subsidiaries as of the end of each such month and
statements of income and year-to-date cash flows of CF and its
Subsidiaries for each such month and for that part of the
fiscal year ending with such month, setting forth in each
case, in comparative form, figures for the corresponding
periods in the preceding fiscal year and a comparison of
actual cash flow, income and capital expenditures with amounts
budgeted for such period, all in reasonable detail and
certified as true, correct and complete, subject to review and
normal year-end adjustments, by the chief financial officer of
CF;
(b) as soon as available, and in any event within
90 days after the close of each fiscal year, a copy of the
detailed annual audit report for such year and accompanying
financial statements for CF and its Subsidiaries as of the end
of such year, containing balance sheets and statements of
income, retained earnings and cash flows for such year and for
the previous fiscal year, as audited by independent certified
public accountants of recognized standing selected by CF and
satisfactory to the Bank, which report shall be accompanied by
(i) the unqualified opinion of such accountants to the effect
that the statements present fairly, in all material respects,
the financial position of CF and its Subsidiaries as of the
end of such year and the results of its operations and its
cash flows for the year then ended in conformity with GAAP;
(ii) a certificate of such accountants showing their
calculation of the financial covenants contained herein and
stating that their review disclosed no Default or that their
review disclosed a Default and specifying the same and the
action taken or proposed to be taken with respect thereto; and
(iii) any supplementary comments and reports submitted by such
accountants to CF including the management letter, if any;
(c) with the financial statements described in
Section 5.3(a), the certificate of the president or chief
financial officer of CF to the effect that (i) a review of the
activities of the Companies during such period has been made
under his supervision to determine whether the Companies have
observed, performed and fulfilled each and every covenant and
condition in this Agreement and the Related Documents, and
(ii) no Default has occurred (or if such Default has occurred,
specifying the nature thereof and the period of existence
thereof and the steps, if any, being undertaken to correct the
same);
(d) within 15 days after the end of each month or
more frequently as the Bank may from time to time request, a
Borrowing Base Certificate; and
(e) promptly upon learning of the occurrence of any
of the following, written notice thereof, describing the same
and the steps being taken with respect thereto: (i) the
occurrence of any Default, (ii) the institution of, or any
materially adverse determination or development in, any
litigation, arbitration proceeding or governmental proceeding,
(iii) the occurrence of a "reportable event" under, or the
institution of steps by any Company to withdraw from, or the
institution of any steps to terminate, any Employee Plan as to
which any Company may have liability, (iv) the commencement of
any dispute which might lead to the modification, transfer,
revocation, suspension or termination of this Agreement or any
Related Document, or (v) any event which would have a Material
Adverse Effect.
All financial statements referred to herein shall be complete and
correct in all material respects and shall be prepared in
reasonable detail and on a consolidated and consolidating basis in
accordance with GAAP, applied consistently throughout all
accounting periods.
5.4 Inspection of Property and Records. At any
reasonable time following reasonable notice, as often as may be
reasonably desired and at each Company's expense, permit
representatives of the Bank to visit their Property, examine their
books and records and discuss their affairs, finances and accounts
with their officers and independent certified public accountants
(who shall be instructed by the Company to make available to the
Bank or its agents the work papers of such accountants) and the
applicable Company shall facilitate such inspection and
examination.
5.5 Use of Proceeds. Use the entire proceeds of the
Obligations as follows:
(a) the proceeds of the Revolving Loans shall be
used to provide working capital to the Companies and to
finance, in part, payments required by the Companies with
respect to the Stock Purchase Transaction; and
(b) the proceeds of the Overadvance Term Loan shall
be used to finance, in part, payments required by the
Companies with respect to the Stock Purchase Transaction.
5.6 Bank Accounts. Maintain all of its primary deposit
and operating accounts of any kind with the Bank.
5.7 Comply With, Pay and Discharge All Notes, Mortgages,
Deeds of Trust and Leases. Comply with, pay and discharge all
existing notes, mortgages, deeds of trust, leases, indentures and
any other contractual arrangements to which any Company is a party
(including, without limitation, all Indebtedness) in accordance
with the respective terms of such instruments so as to prevent any
default thereunder.
5.8 Environmental Compliance.
(a) Maintain at all times all permits, licenses and
other authorizations required under Environmental Laws, and
comply in all respects with all terms and conditions of the
required permits, licenses and authorizations and all other
limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws.
(b) Notify the Bank promptly upon obtaining
knowledge that (i) any Property previously or presently owned
or operated is the subject of an environmental investigation
by any Government Authority having jurisdiction over the
enforcement of Environmental Laws, (ii) any Company has been
or may be named as a responsible party subject to
Environmental Liability, or (iii) any Company obtains
knowledge of any Hazardous Substance located on any Property
except in compliance with all Requirements of Law.
(c) At any reasonable time following reasonable
notice and as often as may be reasonably desired, permit the
Bank or an independent consultant selected by the Bank to
conduct an environmental investigation satisfactory to the
Bank for the purpose of determining whether any Company, and
its Property comply with Environmental Laws and whether there
exists any condition or circumstance which may require a
cleanup, removal or other remedial action by the Company with
respect to any Hazardous Substance. The applicable Company
shall facilitate such environmental audit. The Bank shall
provide the applicable Company, at such Company's request,
with all reports and findings but such Company may not rely on
such environmental investigation for any purpose. Any such
environmental investigation of Property shall be at each
Company's expense at any time following an Event of Default or
at any time the Property is the subject of an environmental
investigation by a Government Authority having jurisdiction
over the enforcement of Environmental Laws; provided, however,
that the Bank's environmental investigation shall not be at
such Company's expense if (i) a Government Authority or a firm
or firms of geotechnical engineers and/or environmental
consultants hired by such Company and reasonably acceptable to
the Bank shall undertake to make an environmental audit, and
(ii) such Company shall provide the Bank at such Company's
expense with, and the Bank shall be entitled to rely on, all
reports and findings of such Government Authority or
geotechnical engineers as soon as such reports and findings
are made available to the Company.
Notwithstanding the foregoing, nothing contained in this Agreement,
or in the Related Documents, or in the enforcement of this
Agreement or the Related Documents, shall constitute or be
construed as granting or providing the right, power or capacity to
the Bank to exercise (a) decision making control of any Company's
compliance with any environmental law, or (b) day to day decision
making of any Company with respect to (i) compliance with
environmental laws or (ii) all or substantially all of the
operational aspects of any Company.
5.9 Fees and Costs.
(a) Pay the Bank a facility fee in consideration
for the Overadvance Term Loan made hereunder in an amount
equal to $25,000 payable on the date hereof.
(b) Pay the Bank on the first day of each month the
accrued and unpaid commitment fee for the Revolving Loan
Commitment. The commitment fee shall accrue at a rate per
annum equal to 0.375% of the difference between (i) the
Revolving Loan Commitment and (ii) the outstanding principal
balance of the Revolving Loans. The commitment fee shall be
computed and adjusted daily based on the actual number of days
elapsed in a year of 360 days. All unpaid commitment fees
shall be due and payable on the Termination Date. The Bank
may debit to the Companies' Loan Account all commitment fees
when due without prior notice to or consent of any Company.
(c) Pay the Bank all additional costs including,
without limitation, wire transfer or other charges pertaining
to the transfer of funds, lockbox fees and charges arising
from returned or dishonored checks of any account debtor.
(d) Pay immediately upon receipt of an invoice the
reasonable fees and expenses incurred by the Bank in
connection with any inspection pursuant to Section 5.4,
including, without limitation, travel and administration
expenses incurred by representatives of the Bank.
(e) Pay immediately upon receipt of an invoice all
reasonable fees and expenses incurred by the Bank with respect
to this Agreement, the Related Documents and the Obligations,
and any amendments thereof and supplements thereto, including,
without limitation, appraisal fees, environmental inspection
fees (including fees and expenses as provided in Section
5.8(c)) and the reasonable fees of in-house and outside
counsel in connection with the preparation and negotiation of
this Agreement, the Related Documents and all amendments
thereto and any waivers of the terms and provisions thereof
and the consummation of the transactions contemplated herein.
(f) Pay immediately upon receipt of an invoice all
fees and expenses incurred by the Bank with respect to
protection or enforcement (including collection and
disposition of Collateral) of the Bank's rights under this
Agreement and the Related Documents and with respect to the
Obligations and all costs and expenses which may be incurred
by the Bank with respect to a Default as provided in Section
7.2(d).
5.10 Indemnity. Indemnify the Bank and its employees,
officers, directors, shareholders, agents, attorneys, successors
and assigns against any and all losses, claims, damages,
liabilities, obligations, penalties, actions, judgments, suits,
costs and expenses of any kind or nature whatsoever, including
without limitation attorneys' fees and expenses, incurred by them
arising out of, in any way connected with, or as a result of (a)
this Agreement or the Related Documents or the transactions
contemplated hereby or protection or enforcement (including
collection or disposition of Collateral) of the Bank's rights under
this Agreement or the Related Documents, (b) the execution and
delivery of this Agreement by the parties hereto and the
performance of their respective obligations hereunder, (c) any
violation of Environmental Laws by any Company, or any of its
Property as well as any cost or expense incurred in remedying such
condition, and (d) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not the
Bank is a party thereto; provided, however, that such indemnity
shall not apply to any such losses, claims, damages, liabilities or
related expenses to the extent caused by any gross negligence or
willful misconduct of the Bank. The foregoing indemnities shall
survive the Termination Date, the consummation of the transactions
contemplated by this Agreement, the repayment of the Obligations
and the invalidity or unenforceability of any term or provision of
this Agreement or of the Related Documents and shall remain in
effect regardless of any investigation made by or on behalf of the
Bank or any Company and the content or accuracy of any
representation or warranty made under this Agreement.
5.11 Appraisals. If and to the extent required at any
time of the Bank by any Government Authority or Requirements of
Law, permit an independent appraiser selected by the Bank to
conduct appraisals at any reasonable time following reasonable
notice, at each Company's expense, of the Property. Each Company
shall facilitate such appraisals and may obtain copies of, but may
not rely, on such appraisals for any purpose.
5.12 Post-Closing Delivery. Deliver to the Bank, in
form, detail and content satisfactory to the Bank, a collateral
assignment to the Bank of a life insurance policy maintained by the
Company on the life of Alan Kastelic in an amount not less than
$5,000,000, within thirty days after the date hereof.
SECTION 6 NEGATIVE COVENANTS
Each Company covenants and agrees that, from and after
the date of this Agreement and until the Termination Date and until
all Obligations to the Bank are paid in full, no Company shall
directly or indirectly:
6.1 Sale of Assets, Consolidation, Merger, Acquisitions,
Etc. (a) Except for sales of inventory in the ordinary course of
business, in any fiscal year of the Company sell, lease, transfer
or otherwise dispose of Property having an aggregate net book value
in excess of $50,000, whether in one or in a series of
transactions; (b) consolidate or merge with or into any other
Person; (c) directly or indirectly, sell or transfer any Property,
real or personal, used or useful in its business, and thereafter
lease such property or other property which it intends to use for
substantially the same purposes; (d) sell, issue or otherwise
distribute any security, including any shares of the capital stock
of the Company; (e) create or permit any Subsidiary to create a new
Subsidiary; or (f) purchase or otherwise acquire all or
substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person.
6.2 Indebtedness. Issue, create, incur, assume or
otherwise become liable with respect to (or agree to issue, create,
incur, assume or otherwise become liable with respect to), or
permit to remain outstanding, any Indebtedness except (a) the
Obligations; (b) Indebtedness which has been subordinated to the
Bank in form and substance satisfactory to the Bank, including the
Indebtedness evidenced by the Subordinated Loan Transaction; (c)
current liabilities (other than for borrowed money) of any Company
incurred in the ordinary course of business which are not more than
90 days overdue, unless being contested in good faith and with due
diligence; (d) Indebtedness secured by Permitted Liens; (e)
Indebtedness disclosed on CF's most recent financial statements
described in Section 3.2(a) other than Indebtedness owed to Firstar
Bank Milwaukee, N.A., provided that such Indebtedness shall not be
renewed, extended or increased; and (f) Indebtedness in an
aggregate amount of not more than $100,000 in excess of the amounts
permitted by Sections 6.2(a), (b), (c), (d) and (e).
6.3 Liens. Create or permit to be created or allow to
exist any Lien upon or interest in any Property except Permitted
Liens. For purposes herein, Permitted Liens shall mean: (a) Liens
for taxes, assessments, or governmental charges, carriers',
warehousemen's, repairmen's, mechanics', materialmen's and other
like Liens, which are either not delinquent or are being contested
in good faith by appropriate proceedings which will prevent
foreclosure of such Liens, and against which adequate cash reserves
have been provided; (b) easements, restrictions, minor title
irregularities and similar matters which have no material adverse
effect upon the ownership and use of the affected Property; (c)
Liens or deposits in connection with worker's compensation,
unemployment insurance, social security or other insurance or to
secure customs duties, public or statutory obligations in lieu of
surety, stay or appeal bonds, or to secure performance of contracts
or bids, other than contracts for the payment of money borrowed, or
deposits required by law as a condition to the transaction of
business or other Liens or deposits of a like nature made in the
ordinary course of business; (d) Liens in favor of the Bank
pursuant to the Related Documents; (e) Liens evidenced by
conditional sales, purchase money mortgages or other title
retention agreements on machinery and equipment (acquired in the
ordinary course of business and otherwise permitted to be acquired
hereunder) which are created at the time of the acquisition of such
property solely for the purposes of securing the Indebtedness
incurred to finance the cost of such property, provided no such
Lien shall extend to any property other than the property so
acquired and identifiable proceeds; and (f) Liens described in
Schedule 4, provided that the Indebtedness secured thereby shall
not be renewed, extended or increased.
6.4 Guaranty. Guaranty or otherwise in any way become
or be responsible for obligations of any other Person, whether by
an agreement to purchase the indebtedness of any other Person, or
agreement for the furnishing of funds to any other Person through
the purchase of goods, supplies or services (or by way of stock
purchase, capital contribution advanced or loaned) for the purpose
of paying or discharging the indebtedness of any Person, or
otherwise, except for the endorsement of negotiable instruments by
any Company for deposit or collection or similar transactions in
the ordinary course of business.
6.5 Restricted Payments. Make any Restricted Payments.
6.6 Loans, Investments. Make or commit to make
advances, loans, extensions of credit or capital contributions to,
or purchases of any stock, bonds, notes, debentures or other
securities of, or make any other investment in, any Person except:
(a) accounts, chattel paper, and notes receivable created by any
Company in the ordinary course of business and loans or advances
made by one Company to any other Company provided that the Company
receiving any loan or advance under this Agreement has reached the
applicable Borrowing Sublimit set forth in Sections 2.1(a) or
2.2(a), as the case may be; (b) advances in the ordinary course of
business to suppliers, employees and officers of any Company
consistent with past practices in an aggregate amount at any time
outstanding of not more than $50,000; (c) investments in bank
certificates of deposit (but only with FDIC-insured commercial
banks having a combined capital and surplus in excess of
$20,000,000), open market commercial paper maturing within one year
having the highest rating of either Standard & Poors Corporation or
Moody's Investors Services, Inc., U.S. Treasury Bills subject to
repurchase agreements and short-term obligations issued or
guaranteed by the U.S. Government or any agency thereof; and (d)
investments in open-end diversified investment companies of
recognized financial standing investing solely in short-term money
market instruments consisting of securities issued or guaranteed by
the United States government, its agencies or instrumentalities,
time deposits and certificates of deposit issued by domestic banks
or London branches of domestic banks, bankers acceptances,
repurchase agreements, high grade commercial paper and the like;
provided, that for Sections 6.6(a) through (d), each such
investment has a maturity date not later than 180 days after the
date of purchase or making thereof and, except for advances under
Section 6.6(b), is pledged and delivered to the Bank as additional
security for the Obligations.
6.7 Compliance with ERISA. (a) Terminate any Employee
Plan so as to result in any material liability to PBGC; (b) engage
in any "prohibited transaction" (as defined in Section 4975 of the
Code) involving any Employee Plan which would result in a material
liability for an excise tax or civil penalty to the Company in
connection therewith; or (c) incur or suffer to exist any material
"accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived.
6.8 Fixed Asset Expenditures. Purchase, become
obligated for, invest in, acquire or otherwise expend for the
acquisition of real estate, machinery, equipment or other fixed
assets (including capitalized lease obligations) during any fiscal
year an amount exceeding $720,000; provided, that such amount shall
be $920,000 during the fiscal year ended January 31, 1998.
6.9 Affiliates. Permit any transaction with any
Affiliate, except on terms not less favorable to the Company than
would be usual and customary in similar transactions with Persons
who are not Affiliates; provided, however, that the Company may
engage in transactions with South Houston Hose Company, Inc. which
are consistent with past practices and are conducted on terms not
less favorable to the Company than were customary in similar
transactions prior to the date hereof.
6.10 Tangible Net Worth. Permit Tangible Net Worth, plus
the Indebtedness evidenced by the Subordinated Loan Transaction, at
the end of any fiscal quarter of the Companies to be less than (a)
$2,000,000 from the date hereof through January 31, 1997, (b)
$2,200,000 from February 1, 1997 through January 31, 1998, (c)
$3,250,000 from February 1, 1998 through January 31, 1999 and (d)
$4,750,000 from February 1, 1999 through the Termination Date.
6.11 Maximum Funded Debt to Tangible Net Worth. Permit
the ratio of Funded Debt to Tangible Net Worth, plus the
Indebtedness evidenced by the Subordinated Loan Transaction, to
exceed (a) 9 to 1 at the end of any fiscal quarter of the Companies
from the date hereof through January 31, 1997, (b) 7.50 to 1 at the
end of any fiscal quarter of the Companies from February 1, 1997
through January 31, 1998, (c) 4.75 to 1 at the end of any fiscal
quarter of the Companies from February 1, 1998 through January 31,
1999 and (d) 3 to 1 for any fiscal quarters of the Companies from
February 1, 1999 through the Termination Date.
6.12 Current Ratio. Permit the ratio of Current Assets
to Current Liabilities to be less than 1.50 to 1 at any time.
6.13 Minimum Fixed Charge Coverage Ratio. Permit the
ratio of (a) Net Income of the Companies for the applicable period,
plus all amounts deducted in the computation of such Net Income on
account of payment or provision for income and other taxes, plus
all interest expense paid or accrued by any Company during such
period on Indebtedness, to (b) all principal payments and interest
expense paid or accrued by any Company during the applicable period
on Indebtedness, plus all dividends paid by any Company during the
applicable period, plus all rental payments made by any Company
during the applicable period in respect of operating leases, to be
less than (i) 1 to 1 for any fiscal quarter of the Companies from
the date hereof through January 31, 1997, (ii) 1.20 to 1 for any
fiscal quarter of the Companies from February 1, 1997 through
January 31, 1998 and (iii) 1.45 to 1 for any fiscal quarter of the
Companies from February 1, 1998 through the Termination Date.
6.14 Modification of the Subordinated Debt Documentation.
The Companies shall not amend, waive or otherwise modify any of the
terms or provisions of any of the documentation evidencing the
Subordinated Loan Transaction, except as otherwise permitted under
the Subordination Agreement.
6.15 Modification of the Stock Purchase Documentation.
The Companies shall not amend, waive or otherwise modify any of the
terms or provisions of any of the Stock Purchase Documentation, or
any related agreements, instruments or documents, without the prior
written consent of the Bank, which consent shall not be
unreasonably withheld.
SECTION 7 DEFAULT AND REMEDIES
7.1 Events of Default Defined. Any one or more of the
following shall constitute an "Event of Default":
(a) the Companies shall fail to pay any Obligation
(including, without limitation, the Notes and the payments
required by Sections 2.9(b) and 5.9) when and as the same
shall become due and payable, whether upon demand, at
maturity, by acceleration or otherwise;
(b) any Company shall fail to observe or perform
any of the covenants, agreements or conditions contained in
Sections 2.7, 4.1, 4.2, 5.1(a), 5.2(b), 5.4, 5.6, 5.8(a), or
any provision of Section 6;
(c) (i) Guarantor shall default in the payment of
any indebtedness evidenced by the IRB Documentation, or (ii)
any Company shall default (as principal or guarantor or
otherwise) in the payment of any other Indebtedness
aggregating $50,000 or more, or with respect to any of the
provisions of any agreement evidencing such Indebtedness, and
such default shall continue beyond any period of grace, if
any, specified in such agreement, unless such Company is
contesting such default in good faith and the Bank agrees, in
its sole discretion, that Company is so contesting such
default;
(d) any Company shall fail to observe or perform
any of the other covenants, agreements or conditions contained
in this Agreement or the Related Documents and such failure
shall continue for thirty days after written notice thereof is
given by the Bank to the Company;
(e) any representation or warranty made by any
Company herein or in any of the Related Documents or in any
certificate, document or financial statement delivered to the
Bank shall prove to have been incorrect in any material
adverse respect as of the time when made or given;
(f) a final judgment (or judgments) for the payment
of amounts aggregating in excess of $75,000 shall be entered
against any Company, and such judgment (or judgments) shall
remain outstanding and unsatisfied, unbonded or unstayed after
thirty days from the date of entry thereof;
(g) any Company shall (i) become insolvent or take
or fail to take any action which constitutes an admission of
inability to pay its debts as they mature; (ii) make an
assignment for the benefit of creditors; (iii) petition or
apply to any tribunal for the appointment of a custodian,
receiver or any trustee for the Company or a substantial part
of its respective assets; (vi) suffer any such custodianship,
receivership or trusteeship to continue undischarged for a
period of thirty days or more; (iv) commence any proceeding
under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; (v) by any act or omission indicate its consent to,
approval of or acquiescence in any such petition, application
or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial
part of any of its properties; or adopts a plan of liquidation
of its assets;
(h) if any Person shall: (i) petition or apply to
any tribunal for the appointment of a custodian, receiver or
any trustee for any Company or a substantial part of its
respective assets which continues undischarged for a period of
thirty days or more; (ii) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, in which an order for
relief is entered or which remains undismissed for a period of
thirty days or more;
(i) any Government Authority, STS Consultants or
any other geotechnical engineer or environmental consultant
hired by any Company, any former equity holder of any Borrower
or Guarantor, the Bank or any Government Authority determines
that the costs to investigate, test, cleanup and remediate any
Hazardous Substance (collectively, "Remediation Costs") in any
way related to or associated with the real property secured by
the Mortgage 2, may exceed $1,500,000 in the aggregate
(provided that such Remediation Costs are disclosed in a
remedial action plan, feasibility study or other similar
report)and the Company is unable to provide for payment of
such Remediation Costs in a manner reasonably acceptable to
the Bank;
(j) except as provided in Section 7.1(i), any Government
Authority shall determine that the potential uninsured
liability of the Company for damages caused by the presence or
discharge of any Hazardous Substance, including liability for
claims for diminution in value of any real property of a third
party or liability for personal injury claims, exceeds
$50,000, and the Company is unable to provide for such
liability in a manner reasonably acceptable to the Bank;;
(k) Alan Kastelic shall cease to be president of
each Company; or
(l) this Agreement or any of the Related Documents
shall at any time cease to be in full force and effect, or the
Company or the Guarantor shall contest or deny any liability
or obligation under, or attempt to revoke or terminate, this
Agreement or any Related Document.
7.2 Remedies Upon Event of Default. Upon the occurrence
of an Event of Default:
(a) specified in clauses (g) or (h) of Section 7.1,
then, without presentment, notice, demand or action of any
kind by the Bank, all of which are hereby waived: (i) the
Revolving Loan Commitment and the obligations of the Bank to
make or incur any Obligations shall automatically and
immediately terminate; and (ii) the entire amount of the
Obligations shall be automatically accelerated and immediately
due and payable.
(b) specified in clauses (a), (b), (c), (d), (e),
(f), (i), (j), (k) or (l) of Section 7.1, the Bank may,
without presentment, notice, demand or action of any kind, all
of which are hereby waived: (i) immediately terminate the
Bank's obligation to make or incur any Obligations, and the
same shall immediately terminate; and (ii) declare the entire
amount of the Obligations immediately accelerated, due and
payable.
(c) the Bank may at any time without prior notice
or demand set off against any credit balance or other money
now or hereafter owed it by the Bank all or any part of the
Obligations. Each Company hereby grants to the Bank a
security interest in and lien on any such credit balance or
other money.
(d) the Bank shall have all of the rights and
remedies provided to the Bank by the Related Documents, at law
and in equity, by statute or otherwise, and no remedy herein
conferred upon the Bank is intended to be exclusive of any
other remedy and each remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or
hereafter existing at law, in equity, by statute or otherwise.
In addition to and not in lieu of any other right or remedy
the Bank might have, the Bank at any time and from time to
time at its election may (but shall not be required to) do or
perform or comply with or cause to be done or performed or
complied with anything which any Company may be required to
do, perform or comply with and the Companies shall reimburse
the Bank upon demand for any cost or expense which the Bank
may incur in such respect, together with interest thereon at
the rate equal to the rate payable under the Master
Overadvance Term Note following an Event of Default from the
date of such demand until paid. No failure or delay on the
part of the Bank in exercising any right or remedy hereunder
shall operate as a waiver thereof nor shall any single or
partial exercise of any right hereunder preclude any further
exercise thereof or the exercise of any other right or remedy.
SECTION 8 MISCELLANEOUS
8.1 Assignability; Successors. The provisions of this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of the parties hereto. Each of
the Companies' rights and liabilities under this Agreement and the
Related Documents are not assignable in whole or in part without
the prior written consent of the Bank. The Bank may at any time
sell, assign or transfer to one or more banks or other entities
other than any competitor of the Companies ("Participants")
interests in any Note held by the Bank or any other interest of the
Bank in the Obligations. Each Company authorizes the Bank to
disclose to any Participant or prospective Participant any and all
financial information in the Bank's possession concerning each such
Company and its Affiliates which has been delivered to the Bank by
or on behalf of such Company. Each Company agrees that upon the
occurrence of any Event of Default each Participant shall be deemed
to have the right of setoff in respect of its participating
interest in the Obligations to the same extent as if the amount of
its participating interest were owing directly to it as a Bank
under this Agreement.
8.2 Survival. All agreements, covenants,
representations and warranties made herein and in the Related
Documents shall survive the execution and delivery of this
Agreement and the Related Documents, the making of the Obligations
and the termination of this Agreement.
8.3 Governing Law. This Agreement and the Related
Documents shall be governed by the internal laws of the State of
Wisconsin.
8.4 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one
and the same agreement. The descriptive headings in this Agreement
are inserted for convenience of reference only and shall not affect
the construction of this Agreement.
8.5 Entire Agreement; Amendments. This Agreement, the
Exhibits and Schedules attached hereto, and the Related Documents
contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all other understandings, oral
or written, with respect to the subject matter hereof. No
amendment, modification, alteration, or waiver of the terms of this
Agreement or consent required under the terms of this Agreement
shall be effective unless made in a writing, which makes specific
reference to this Agreement and which has been signed by the party
against which enforcement thereof is sought. Any such amendment,
modification, alteration, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
8.6 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed
to have been given or made when delivered in hand, deposited in the
mail, or sent by facsimile. Communications or notices shall be
delivered personally or by certified or registered mail, postage
prepaid, or by facsimile and addressed as follows, unless and until
either of such parties notifies the other in accordance with this
section of a change of address:
if to the Companies: Construction Forms, Inc.
W60 N151 Cardinal Avenue
Cedarburg, WI 53012-0326
Attn: Mr. Alan Kastelic,
President
FAX: (414) 377-4049
with copies to: Edison Control Corporation
360 Lexington Avenue
New York, NY 10017
Attn: Ms. Mary E. McCormack
President and CEO
FAX (212) 972-6109
if to the Bank: LaSalle National Bank
411 East Wisconsin Avenue
Suite 1150
Milwaukee, WI 53202
Attn: Mr. Michael H. Gandrud,
Assistant Vice President
FAX (414) 224-0071
with copies to: Michael, Best & Friedrich
100 East Wisconsin, Suite 3300
Milwaukee, WI 53202-4108
Attn: Jonathan D. Kron, Esq.
FAX (414) 277-0656
8.7 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.8 Further Assurances. Each Company severally agrees
to do such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments, as
the Bank may at any time request in connection with the
administration or enforcement of this Agreement or the Related
Documents or in order better to assure and confirm unto the Bank
its rights, powers and remedies hereunder.
8.9 Conflicts and Ambiguities. In the event of any
ambiguity or conflict as between the terms of this Agreement, the
Related Documents or any other document executed and delivered
pursuant to this Agreement, the terms of this Agreement shall
control.
8.10 Submission to Jurisdiction. The Bank may enforce
any claim arising out of this Agreement or the Related Documents in
any state or federal court having subject matter jurisdiction and
located in Milwaukee, Wisconsin. For the purpose of any action or
proceeding instituted with respect to any such claim, each Company
hereby irrevocably submits to the jurisdiction of such courts.
Each Company irrevocably consents to the service of process out of
said courts by mailing a copy thereof, by registered mail, postage
prepaid, to each Company at the address specified in Section 8.6
and agrees that such service, to the fullest extent permitted by
law (a) shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding, and (b)
shall be taken and held to be valid personal service upon personal
delivery to it. Nothing herein contained shall affect the right of
the Bank to serve process in any other manner permitted by law or
preclude the Bank from bringing an action or proceeding in respect
hereof in any other country, state or place having jurisdiction
over such action. Each Company hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any court located in Milwaukee, Wisconsin
and any claim that any such suit, action or proceeding brought in
such a court has been brought in an inconvenient forum.
8.11 Waiver of Jury Trial. Each party hereto knowingly,
voluntarily and without coercion, waives all rights to a trial by
jury of all disputes arising out of or in relation to this
Agreement or any Related Document to which it is a party, or under
any amendment, instrument, document or agreement delivered or which
may in the future be delivered in connection therewith or arising
from any relationship existing in connection with this Agreement or
and any Related Document, and agrees that any such action or
proceeding shall be tried before a court and not before a jury.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
CONSTRUCTION FORMS, INC.
By:
_______________, _____________
CF ULTRA TECH, INC.
By:
_______________,______________
CF GILCO, INC.
By:
_______________,____________
LASALLE NATIONAL BANK
By:
Michael H. Gandrud,
Assistant Vice President
CONSENT AND ACKNOWLEDGMENT
IN WITNESS WHEREOF, the Guarantor has executed this Agreement
as of the date first above written and hereby (i) agrees and
consents to all of the terms and conditions of the foregoing
Agreement; and (ii) ratifies and confirms its representations,
warranties, covenants and agreements contained in, and obligations
and liabilities under, the Guaranty, the Agreement and each of the
other Related Documents to which it is a party or by which it may
be bound. The Guarantor hereby affirms and agrees that it has
received sufficient value (as described in Section 9-203(1)(b) of
the Uniform Commercial Code) and benefit (whether direct or
indirect) in exchange for its execution of or ratification of, as
the case may be, and obligations under the Guaranty, the Agreement,
and other Related Documents.
JABCO, LIMITED LIABILITY COMPANY
By:________________________________
_______________,________________
r:\xf\client\58328\0002\creditB.ag1|07/10/96
EXHIBIT 10(vii)
LOAN AGREEMENT
Dated as of June 21, 1996
by and among
Constructions Forms, Inc.,
CF Ultra Tech, Inc. and
CF Gilco, Inc.
and
Bank Audi (USA)
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of
this 21st day of June, 1996, by and among CONSTRUCTION
FORMS, INC., a Wisconsin corporation ("CF"), CF ULTRA TECH,
INC., a Wisconsin corporation ("Ultra") and CF GILCO, INC.,
a Wisconsin corporation ("Gilco") (CF, Ultra and Gilco are
collectively, the "Companies" and individually, a "Company")
and BANK AUDI (USA), a New York State Chartered Bank
association (the "Bank").
RECITALS
The Companies have requested that the Bank loan to
them, on a joint and several basis, the aggregate principal
amount of $6,800,000.00.
NOW, THEREFORE, in consideration of the premises
and the mutual agreements contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
AGREEMENT
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Affiliate" shall mean any (a) director, officer
or employee of the Person, or (b) Person directly or
indirectly controlling or controlled by, or under direct or
indirect common control with, another Person. A Person shall
be deemed to control another Person if the controlling
Person directly or indirectly, either individually or
together with (in the case of an individual) his spouse,
lineal descendants and ascendants and brothers or sisters by
blood or adoption or spouses of such descendants,
ascendants, brothers and sisters, owns five percent or more
of any class of voting securities of the controlled Person
or possesses, directly or indirectly, the power to direct,
or cause the direction of, the management or policies of the
controlled Person, whether through the ownership of voting
securities, through common directors, trustees or officers,
by contract or otherwise.
"Agreement" shall mean this Loan Agreement, as
amended, supplemented, modified or extended from time to
time.
"Business Day" shall mean a day other than a
Saturday or Sunday on which banks are open for business in
Milwaukee, Wisconsin; provided, however, that for purposes
of LIBOR Rate Loans, the term "Business Day" shall mean only
those days on which dealings in U.S. dollar deposits are
carried out by U.S. financial institutions in the London
Interbank Eurodollar Market.
"Code" shall mean the Internal Revenue Code of
1986, as amended, and any successor statute, together with
the regulations and published interpretations thereunder, in
each case as in effect from time to time.
"Collateral" shall mean all of the assets pledged
by Pledgor to the Bank pursuant to the Pledge Agreement.
"Default" shall mean an Event of Default or an
event with which the giving of notice or the passage of time
or both would constitute an Event of Default.
"Employee Plan" shall mean any savings, profit
sharing, or retirement plan or any deferred compensation
contract or other plan maintained for employees of the
Companies and covered by Title IV of ERISA, other than any
multiemployer plan" as defined in ERISA (a "Multiemployer
Plan").
"Environmental Law" shall mean any local, state or
federal law or other statute, law, ordinance, rule, code,
regulation, decree or order, presently in effect or
hereafter enacted, promulgated or implemented governing,
regulating or imposing liability or standards of conduct
concerning the use, treatment, generation, storage,
disposal, discharge or other handling or release of any
Hazardous Substance.
"Environmental Liability" shall mean all liability
arising under, resulting from or imposed by any
Environmental Law and all liability imposed under common law
with respect to the use, treatment, generation, storage,
disposal, discharge or other handling or release of any
Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute,
together with the regulations and published interpretations
thereunder, in each case as in effect from time to time.
"Event of Default" shall have the meaning assigned
in Section 6.1.
"GAAP" shall mean those generally accepted
accounting principles and practices which are recognized as
such by the American Institute of Certified Public
Accountants acting through appropriate boards or committees
thereof and which are consistently applied for all periods
so as to properly reflect the financial condition, results
of operations and cash flows of the Companies.
"Government Authority" shall mean any nation or
government, any state or other political subdivision
thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other
entity owned or controlled through stock or capital
ownership or otherwise, by any of the foregoing.
"Guarantor" shall mean JABCO, L.L.C., a Wisconsin
limited liability company, and any other Person who
guaranties the obligations of the Companies hereunder.
"Guaranty" shall mean the Guaranty of the
Guarantor in the form of Exhibit A, as amended,
supplemented, modified, or extended from time to time.
"Hazardous Substance" shall mean any pollutant,
contaminant, waste or toxic or hazardous chemicals, wastes
or substances, including, without limitation, asbestos, urea
formaldehyde insulation, petroleum, PCB's, air pollutants,
water pollutants, and other substances defined as hazardous
or toxic in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9061 et seq., Hazardous Materials Transportation
Act, 49 U.S.C. 1801, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. 6901 et seq., the Toxic
Substance Control Act of 1976, as amended, 15 U.S.C. 2601
et seq., the Solid Waste Disposal Act, 42 U.S.C. 3251 et
seq., the Clean Air Act, 42 U.S.C. 1857 et seq., the Clean
Water Act, 33 U.S.C. 1251 et seq., Emergency Planning and
Community Right to Know Act, 42 U.S.C. 11001, et seq.,
Chapter and Liability Act of 1980, as amended, 42 144 of the
Wisconsin Statutes, or any other statute, rule, regulation
or order of any Government Authority having jurisdiction
over the control of such wastes or substances, including
without limitation the United States Environmental
Protection Agency, the United States Nuclear Regulatory
Agency, the State of Wisconsin, the Wisconsin Department of
Natural Resources and the Ozaukee County Department of
Health.
"Indebtedness" shall mean all (a) indebtedness for
borrowed money; (b) indebtedness for the deferred purchase
price of property or services for which any Company is
liable, contingently or otherwise, as obligor, guarantor or
otherwise; (c) commitments by which any Company assures a
creditor against loss, including, without limitation,
contingent reimbursement obligations with respect to letters
of credit; (d) obligations which are evidenced by notes,
acceptances or other instruments; (e) indebtedness
guaranteed in any manner by any Company including, without
limitation, guaranties in the form of an agreement to
repurchase or reimburse; (f) obligations under leases which
are or should be, in accordance with GAAP, recorded as
capital leases for which obligations any Company is liable,
contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations any Company
assures a creditor against loss; (g) unfunded obligations of
any Company to any Employee Plan; (h) liabilities secured by
any Lien, other than a Permitted Lien, on any Property owned
by any Company even though it has not assumed or otherwise
become liable for the payment thereof; and (i) other
liabilities or obligations of any Company which would, in
accordance with GAAP, be included on the liability portion
of a balance sheet.
"IRB Documentation" shall mean that certain
Irrevocable Direct Pay Letter of Credit, dated the date
hereof, issued by the Bank in favor of Firstar Trust Company
("Firstar") (the "Letter of Credit"); the Loan Agreement,
dated as of February 1, 1995, between the City of Port
Washington, Wisconsin ("Port Washington") and Guarantor; the
Indenture of Trust, dated as of February 1, 1995, between
Port Washington and Firstar; the Promissory Note of
Guarantor in favor of Port Washington, dated February 15,
1995, in the original principal amount of $3,000,000; the
Bond Purchase Agreement, dated as of February 1, 1995, among
Port Washington, Guarantor, Firstar and Robert W. Baird &
Co. Incorporated ("Baird"); the Remarketing Agreement, dated
as of February 1, 1995, between Guarantor and Baird; the
Reimbursement Agreement, dated the date hereof, between
Guarantor and the Bank (the "Reimbursement Agreement"); the
IRB Mortgage; any UCC financing statement evidencing a Lien
relating to any of the foregoing; and all exhibits,
schedules, certificates, resolutions, or other documents
delivered, required or contemplated pursuant to any of the
foregoing.
"IRB Mortgage" shall mean the Mortgage granted by
Guarantor to the Bank, dated the date hereof, as amended,
supplemented, modified or extended from time to time,
encumbering certain real estate located in Port Washington,
Wisconsin.
"LIBOR Index Rate" shall mean the rate of interest
per annum determined by the Bank to be the average offered
rate for deposits with six-month maturities in U.S. dollars
(rounded up to the next whole multiple of 1/100 of 1%) which
appear on the Reuters Screen LIBO Page (or such other page
on which the appropriate information may be displayed), on
the electronic communications terminals in the Bank's money
center as of 10:00 a.m. (London time) for the day two
Business Days prior to the first day of the applicable Loan
Period. If fewer than two offered rates appear for a Loan
Period, then the applicable LIBOR Rate shall be the average
of the rates per annum (rounded up to the next whole
multiple of 1/100 of 1%) at which deposits with six-month
maturities in immediately available funds in United States
dollars are offered to the Bank two Business Days prior to
the beginning of such Loan Period by at least four major
banks in the London Interbank Eurodollar Market at or about
10:00 a.m. London time for delivery on the first day of such
Loan Period.
"LIBOR Rate" shall mean a rate per annum equal to
the sum of the quotient of the LIBOR Index Rate divided by
the difference (expressed as a decimal) computed by
subtracting the LIBOR Reserve Requirement from one, plus
1.25% per annum.
"LIBOR Reserve Requirement" shall mean, with
respect to each Loan Period, the stated rate of all reserve
requirements (including all basic, supplemental, marginal
and other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve
requirements during such Loan Period) that is specified on
the first day of such Loan Period by the Board of Governors
of the Federal Reserve System for determining the reserve
requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D)
applicable to the Bank.
"Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), deed of trust, charge,
preference, priority, security interest or other security
agreement or preferential arrangement of any kind or nature
whatsoever including, without limitation, any conditional
sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under
the UCC or comparable law of any jurisdiction.
"Loan" shall mean the aggregate principal amount
of $6,800,000.00 to be loaned by the Bank to the Companies
pursuant hereto.
"Loan Period" shall mean the period beginning on
the date of the execution of the Note and ending on June 30,
1996 (in the case of the initial Loan Period) and thereafter
it shall mean each calendar month except for the month of
the Maturity Date where the Loan Period shall mean the
period beginning on the first day of such month and ending
on the Termination Date.
"Material Adverse Effect" shall mean (a) a
Default, (b) a material adverse change in the business,
prospects or condition (financial or otherwise) of any
Company or in any Property, (c) the termination of any
material agreement to which any Company is a party, (d) any
material impairment of the right to carry on the business as
now or proposed to be conducted by any Company, or (e) any
material impairment of the ability of any Company to perform
its obligations under this Agreement or the Related
Documents.
"Note" shall mean the promissory note from the
Companies to the Bank in the form of Exhibit B, evidencing
the Loan, as amended, supplemented, modified or extended
from time to time.
"Obligations" shall mean the principal and
interest on the Loan and all costs and expenses and any
other Indebtedness of any Company to the Bank.
"Person" shall mean an individual, partnership,
corporation, firm, enterprise, business trust, joint stock
company, trust, unincorporated association, joint venture,
Government Authority or other entity of whatever nature.
"Pledge Agreement" shall mean the security and
pledge agreement in the form of Exhibit C by and between
Pledgor and the Bank, as amended, supplemented, modified or
extended, from time to time.
"Pledgor" shall mean William B. Finneran.
"Property" shall mean any interest of any Company
of any kind in property or assets, whether real, personal,
mixed, tangible or intangible, wherever located, and whether
now owned or subsequently acquired or arising and in the
products, proceeds, additions and accessions thereof or
thereto.
"Regulatory Change" shall mean the adoption or
amendment, after the date of this Agreement, of any federal
or state law, regulation, interpretation, direction, policy,
guideline or court decision applicable to the Bank or the
London Interbank Eurodollar Market which increases the cost
to the Bank of making or maintaining the Obligations or
reduces the rate of return to the Bank (by reduction of
principal, interest or otherwise) on the Obligations by
subjecting the Bank to any tax, duty or other charge with
respect to the Obligations, imposing any reserve requirement
(except any reserve requirement reflected in the LIBOR Rate
or the LIBOR Reserve Requirement), affecting the treatment
of any Obligations for purposes of calculating the
appropriate amount of capital to be maintained by the Bank
or any Person controlling the Bank, or imposing on the Bank
any other condition affecting the Obligations.
"Requirements of Law" shall mean as to any matter
or Person, the Certificate of Articles of Incorporation and
Bylaws or other organizational or governing documents of
such Person, and any law (including, without limitation, any
Environmental Law), ordinance, treaty, rule, regulation,
order, decree, determination or other requirement having the
force of law relating to such matter or Person and, where
applicable, any interpretation thereof by and Government
Authority.
"Related Documents" shall mean the Note, the
Guaranty, the Pledge Agreement, the Subordination Agreement
and all other certificates, resolutions, or other documents
required or contemplated hereunder.
"Senior Lender" shall mean LaSalle National Bank.
"Stock Purchase Transaction" shall mean the
transactions contemplated by the Stock and Unit Purchase
Agreement dated the date hereof among Construction Forms
Acquisition, Inc., a Delaware company, the Companies, the
Guarantor and certain selling stockholders named therein.
"Subordination Agreement" shall mean the
subordination agreement by and between the Bank and the
Senior Lender in the form of Exhibit D, as amended,
supplemented, modified or extended from time to time.
"Termination Date" shall mean June 22, 1999 or
such earlier date on which the Obligations shall terminate
as provided in Section 6.2; provided, however, that the
Termination Date shall under no circumstances be earlier
than the date upon which the Companies and the Guarantor pay
in full all outstanding principal and interest due to the
Senior Lender. The Termination Date may be extended as
provided in Section 2.1.
1.2 Accounting and Financial Determinations.
Where the character or amount of any asset or liability or
item of income or expense is required to be determined, or
any accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation
shall be made on a consolidated basis so as to include CF
and its Subsidiaries, in each such calculation and, to the
extent applicable, shall be made in accordance with GAAP.
When used herein, the term "financial statement" shall
include balance sheets, statements of earnings, statements
of stockholders' equity, statements of cash flows and the
notes and schedules thereto, and each reference herein to a
balance sheet or other financial statement of CF shall be to
a statement prepared on a consolidated and consolidating
basis, unless otherwise specified.
1.3 Interpretation. The words "hereof," "herein"
and "hereunder" and words of a similar import when used in
this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Section,
Schedule and Exhibit references contained in this Agreement
are references to sections, schedules and exhibits in or to
this Agreement unless otherwise specified. Any reference in
any Section or definition to any clause is, unless otherwise
specified, to such clause of such Section or definition.
1.4 Other Terms. Except as otherwise specifically
provided, each accounting term used herein shall have the
meaning given to it under GAAP, and all other terms
contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings
provided in the UCC to the extent the same are used or
defined therein unless the context otherwise requires.
Terms defined in other Sections of this Agreement shall have
the meanings set forth therein.
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Loan.
(a) On the date hereof, the Bank agrees to loan
to the Companies, jointly and severally, the Loan in the
aggregate principal amount of $6,800,000 and such Loan shall
be subject to all of the terms and conditions set forth in
this Agreement. The Loan made by the Bank to each Company
pursuant hereto shall be evidenced by the Note.
(b) All outstanding principal and interest on the
Loan shall be due and payable on the Termination Date;
provided, however, that the parties hereto may agree to
extend the Termination Date for a maximum of an additional
three years.
(c) The Companies shall pay all accrued and
unpaid interest on the Loan on the last day of each Loan
Period continuing until the Loan is paid in full. Prior to
an Event of Default, interest shall accrue on the aggregate
unpaid principal amount outstanding under the Note at a rate
per annum equal to the LIBOR Rate.
2.2 LIBOR Rate Restrictions.
(a) The Bank may require any Loan to be repaid
prior to the Termination Date in the event that the Bank
determines that maintenance of the Loan would violate any
applicable Requirements of Law.
(b) In the event the Bank shall incur any loss,
cost, expense or premium (including, without limitation, any
loss of profit or loss, cost, expense or premium incurred by
reason of the liquidation or reemployment of deposits or
other funds acquired or contracted to be acquired by the
Bank to fund the Loan or the relending or reinvesting of
such deposits or other funds or amounts paid or prepaid to
the Bank), as a result of any payment of the Loan on a date
other than the Termination Date and whether or not such
payment is required by any provisions of this Agreement;
then upon the demand of the Bank, the Companies shall pay to
the Bank such amount as will reimburse the Bank for such
loss, cost, expense or premium. If the Bank requests such a
reimbursement it shall provide the applicable Company with a
certificate setting forth the computation of the loss, cost,
expense or premium giving rise to the request for
reimbursement in reasonable detail and such certificate
shall be deemed pima facie correct.
2.3 Joint and Several Obligations Etc.
(a) The Obligations shall be joint and several;
provided, however, that notwithstanding any other provisions
hereof to the contrary, the maximum liability of each
Company hereunder and under the Notes shall be limited to
the greater of (i) the proceeds of loans made by the Bank
hereunder to the extent such proceeds are advanced,
transferred or applied to or for the benefit of such
Company, and (ii) ninety-five percent (95%) of the
difference between (A) the present fair saleable value of
the Company's assets as of the date of this Agreement or any
subsequent date (if greater, and to the extent permitted by
law) and (B) the amount of all liabilities of the Company,
including liabilities under this Agreement and the Notes and
probable exposure under contingent liabilities, as of such
date.
(b) The Obligations shall be absolute and
unconditional unto each Company; each Company
unconditionally and irrevocably waives each and every
defense which, under principles of guarantee or suretyship
law or otherwise, would operate to impair or diminish such
liability; and nothing whatsoever except actual full payment
and performance to the Bank of such Obligations shall
operate to discharge the liability of the Companies
hereunder. Without limitation of the foregoing, the
Obligations shall not be affected by the invalidity or
unenforceability of all or part of the Obligations with
respect to any Company.
(c) The Bank shall not be obligated to: (a) take
any steps whatsoever to collect from, or to file any claim
of any kind against, any Company or any other person or
entity liable for payment or performance of any of the
Obligations; or (b) take any steps whatsoever to protect,
accept, obtain, enforce, take possession of, perfect its
interest in, foreclose or realize on collateral or security,
if any, for the payment or performance of any of the
Obligations; or (c) in any other respect exercise any
diligence whatsoever in collecting or attempting to collect
any of the Obligations by any means.
(d) Without limiting the generality of foregoing,
there shall be no diminution or impairment of liability of
any Company in any respect, if the Bank exercises any of the
following rights without notice of any kind to Companies:
(i) extends any additional credit to any Company (ii)
accepts any Collateral, security or guarantee for
obligations or any other credit; (iii) determines how, when,
what application of payments, credits and collections, if
any, shall be made on the Obligations and any other credit
and accepts partial payments; (iv) determines what, if
anything, shall at any time be done with respect to any
collateral or security; subordinates, sells, transfers,
surrenders, releases or otherwise disposes of all or any of
such collateral or security; and purchases or otherwise
acquires any such collateral or security at foreclosure or
otherwise; and (v) with or without consideration grants,
permits or enters any waiver, amendment, extension,
modification, refinancing, indulgence, compromise,
settlement, subordination, discharge or release of (A) any
of the Obligations, (B) any obligations of any other Person
liable for payment or performance of any of the Obligations,
and any agreement relating to obligations and (C) any
collateral or security or agreement relating to collateral
or security for any of the foregoing.
(e) Each Company hereby unconditionally waives
(i) presentment, notice of dishonor, protest, demand for
payment and all notices of any kind, including, without
limitation: notice of acceptance hereof; notice of the
creation of any of the Obligations; notice of nonpayment,
nonperformance or other default on any of the Obligations;
and notice of any action taken to collect upon or enforce
any of the Obligations; (ii) any subrogation to the rights
of the Bank against any other Company, any other claim
against any other Company which arises as a result of
payments made by a Company pursuant this Agreement, and any
claim for contribution against any other Company whether or
not the Obligations have been paid or performed in full; and
(iii) any setoffs or counterclaim, against the Bank which
would otherwise impair the Bank's rights against any Company
hereunder.
2.4 Interest After Default. After an Event of
Default, the Loan shall bear interest at the rate of the
then prime rate of the Bank plus 4% per annum.
2.5 Payments. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a
Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of
interest on the Note.
2.6 Optional Prepayments. The Companies may at
their option, at any time upon three (3) days' prior written
notice to the Bank, prepay the Obligations, in whole or
part. Partial prepayments shall be in the principal amount
$100,000 or a multiple thereof, together with accrued
interest to the date of prepayment on the amount prepaid.
There shall be no prepayment premium or penalty.
2.7 Effect of Regulatory Change. In the event of
a Regulatory Change deemed by the Bank in good faith to be
material, the Companies shall pay to the Bank (within ten
days after notice by the Bank to the Companies of such
Regulatory Change) such amounts as the Bank deems reasonably
necessary to compensate the Bank for the increase in the
cost of making or maintaining the Obligations or the
reduction in the rate of return to the Bank on the
Obligations resulting from the Regulatory Change.
2.8 No Obligations to Extend or Forbear. The
Companies acknowledge and agree that the Bank (a) upon
execution hereof, has no duty or obligation of any kind to,
and has made no representations of any kind or nature that
the Bank will, extend credit or any other kind of financial
accommodations to any Company after the Termination Date, or
forbear at any time from the exercise of any of its rights
or remedies under this Agreement, the Related Documents and
applicable law, and (b) may at any time, in its sole and
absolute discretion, exercise whatever rights and remedies
the Bank may have under this Agreement, the Related
Documents and applicable law. The Obligations shall be due
in full on the Termination Date without further demand.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this
Agreement and make and incur the Obligations as herein
provided, each Company hereby severally represents and
warrants to the Bank as follows:
3.1 Organization, Qualification and Subsidiaries.
The Company and each of its Subsidiaries is a corporation
duly organized and validly existing and in good standing
under the laws of the state of its incorporation. The
Company and each of its Subsidiaries has the corporate power
and authority and all necessary licenses, permits and
franchises to borrow hereunder and to grant the liens and
security interests provided for in Related Documents and to
own its assets and conduct its business presently conducted.
The Company and each of its Subsidiaries is duly licensed or
qualified to do business and is in good standing in all
jurisdictions where it is required to be qualified. All the
issued and outstanding capital stock of the Company and each
of its Subsidiaries has been validly issued and is fully
paid and non-assessable, except as provided in Section
180.0622(2)(b) of Wisconsin Statutes. The name and the
number of shares of capital stock owned by each shareholder
of the Company is set forth on Schedule 1. Except as set
forth on Schedule 2, (a) the Company has no Subsidiaries,
(b) the Company does not own, directly or indirectly, more
than 1% of the total outstanding shares of any class of
capital stock of any other Person, (c) there are no
outstanding options, warrants or other rights to subscribe
for or purchase from the Company any capital stock of the
Company or securities convertible into or exchangeable for
capital stock of the Company.
3.2 Financial Statements.
(a) The Company's year-end audited financial
statements for its fiscal years ended January 31, 1996 and
January 31, 1995, audited by Deloitte & Touche, and the
financial statements prepared by the Company for the
three-month period ended April 30, 1996 furnished to the
Bank are accurate and complete and were prepared in
accordance with GAAP (except that the interim financial
statements are subject to normal year-end audit
adjustments) consistently applied throughout the
applicable periods, and present fairly the financial
condition of the Company as of such dates and the results
of its operations and cash flows for the periods then
ended. The balance sheets and footnotes thereto show all
known liabilities, direct or contingent, of the Company
and its Subsidiaries as of the respective dates thereof in
accordance with GAAP. There has been no Material Adverse
Effect since the date of the latest of such statements.
The Company's fiscal year begins on February 1.
(b) The financial forecasts dated March 11, 1996 and
furnished to the Bank by the Company are based on
information and assumptions that are accurate and
reasonable as of the date hereof.
3.3 Authorization. The making, execution,
delivery and performance of this Agreement and the Related
Documents by the Company have each been duly authorized by
all necessary corporate action. The valid execution,
delivery and performance of this Agreement, the Related
Documents and the transactions contemplated hereby and
thereby, are not and will not be subject to any approval,
consent or authorization of any Government Authority. This
Agreement and the Related Documents are the valid and
binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
3.4 Absence of Conflicting Obligations. The
making, execution, delivery and performance of this
Agreement and the Related Documents and compliance with
their respective terms do not violate or constitute a
default, breach or violation under any Requirements of Law
or any covenant, indenture, deed, lease, contract,
agreement, mortgage, deed of trust, note or instrument to
which the Company is a party or by which it is bound.
3.5 Taxes. The Company has filed all federal,
state, foreign and local tax returns which were required to
be filed, except those returns for which the due date has
been validly extended. The Company has paid or made
provisions for the payment owed, and no tax deficiencies
have been proposed, threatened or assessed against the
Company. The federal income tax liability of the Company
has been finally determined by the Internal Revenue Service
and satisfied for all taxable years up to and including the
taxable year ended January 31, 1993 and there is no pending
or, to the best of the Company's knowledge, threatened tax
controversy or dispute as of the date hereof.
3.6 Absence of Litigation. Except as set forth
in Schedule 3.06, there is no pending or, to the knowledge
of the Company, threatened litigation or administrative
proceeding at law or in equity which would, if adversely
determined, result in a Material Adverse Effect, and, to the
best of the Company's knowledge after diligent inquiry,
there are no presently existing facts or circumstances
likely to give rise to any such litigation or administrative
proceedings.
3.7 Accuracy of Information. All information,
certificates or statements given by the Company to the Bank
under this Agreement and the Related Documents were
accurate, true and complete in all material respects when
given, continue to be accurate, true and complete in all
materials respects as of the date hereof, and do not contain
any untrue statement or omission of a material fact
necessary to make the statements herein or therein not
misleading. There is no fact known to the Company which is
not set forth in this Agreement, the Related Documents or
other documents, certificates or statements furnished to the
Bank by or on behalf of the Company in connection with the
transactions contemplated hereby and which will, or which in
the future may (so far as the Company can reasonably
foresee), cause a Material Adverse Effect.
3.8 Federal Reserve Regulations. The Company
will not, directly or indirectly use any proceeds of the
Obligations to: (a) purchase or carry any "margin stock"
within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System (12 C.F.R. 221, as amended);
(b) extend credit to other Persons for any such purpose or
refund indebtedness originally incurred for any such
purpose; or (c) otherwise take or permit any action which
would involve a violation of Section 7 of the Securities
Value Exchange Act of 1934, as amended, or any regulation of
the Board of Governors of the Federal Reserve System.
3.9 ERISA. The Company and anyone under common
control with the Company under Section 4001(b) of ERISA (an
"ERISA Affiliate") is in compliance in all material respects
with the applicable provisions of ERISA and, with respect to
each Employee Plan: (a) no "prohibited transaction" as
defined in Section 406 of ERISA or Section 4975 of the Code
has occurred which will subject the Company to any tax or
penalty imposed under Section 4975 of the Code, (b) no
"reportable event" as defined in Section 4043 of ERISA has
occurred (other than reportable events for which the notice
requirement has been waived); (c) no "accumulated funding
deficiency" as defined in Section 302 of ERISA (whether or
not waived) has occurred; (d) the assets are at least as
great as the liabilities on a terminated basis, based on the
reasonable assumptions used in the most recent actuarial
valuation; and (e) the Company or the plan sponsor has
timely filed all returns and reports required to be filed
for each Employee Plan. Neither the Company nor any ERISA
Affiliate has an obligation to continue any Multiemployer
Plan.
3.10 Security Interests. The Bank has a legal,
valid, perfected and, except for Permitted Liens, first
priority security interest in the Collateral and the
Collateral is and at all times shall be free and clear of
all Liens whatsoever.
3.11 Places of Business. The principal place of
business of CF and the chief executive office of CF, Ultra
and Gilco is located at the address specified in Section
7.6, and the books and records of CF, Ultra and Gilco and
all records of account are located and hereafter shall
continue to be located at such principal place of business
and chief executive office. The principal place of business
for Ultra is located at 1325 Park Street, Port Washington,
Wisconsin. The principal place of business for Gilco is
located at 1040 N. 9th Street, Grafton, Wisconsin.
3.12 Other Names. The business conducted by the
Company has not been conducted under any corporate, trade or
fictitious name, and following the date hereof the Company
will not conduct its business under any corporate, trade or
fictitious name unless the Company shall have delivered at
least 30 days' prior written notice to the Bank of such name
change.
3.13 Not an Investment Company. The Company is
not (a) an "investment company" or a company "controlled by
an investment company" within the meaning of the Investment
Company Act of 1940, as amended, or (b) a "holding company"
or a "subsidiary" of a "holding company" or an "affiliate of
a "holding company" or a "subsidiary" of a "holding company"
within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
3.14 No Defaults. The Company is not in default
under or in violation of (a) any Requirements of Law, (b)
any covenant, indenture, deed, lease, agreement, mortgage,
deed of trust, note or other instrument to which the Company
is a party or by which the Company is bound, or to which any
Property is subject, or (c) any Indebtedness; or if any
default or violation under Sections 3.14(a), (b) or (c)
exists, it is an immaterial default or violation and the
failure to cure such default or violation would not result
in a Material Adverse Effect.
3.15 Environmental Laws. Except as disclosed on
Schedule 3.15 attached hereto and incorporated herein, the
business of the Company has been operated in full compliance
and with all Environmental Laws and the Company is not
subject to any Environmental Liability relating to the
conduct of its business or the ownership of its Property and
no facts or circumstances exist which could give rise to
such Environmental Liabilities. No notice has been served
on the Company claiming any violation of Environmental Laws,
asserting Environmental Liability or demanding payment or
contribution for Environmental Liability or violation of
Environmental Laws.
SECTION 4 CONDITIONS PRECEDENT TO OBLIGATIONS
In addition to the terms and conditions otherwise
contained herein, the obligation of the Bank to make or
incur any Obligations is conditioned on the Bank receiving,
prior to or on the date hereof, each of the following items
in form, detail and content satisfactory to the Bank:
(a) the executed Note;
(b) the executed Pledge Agreement together with such
consents to the collateral pledge as the Bank shall
require;
(c) the Guaranty executed by the Guarantor;
(d) executed financing statements or other
evidence to show that financing statements have been filed
in each jurisdiction where such filing is necessary to
perfect the security interests of the Bank created by the
Pledge Agreement;
(e) a certificate of the secretary or an
assistant secretary of each Company and the Guarantor
certifying (i) an attached complete and correct copy of its
bylaws; (ii) an attached complete and correct copy of
resolutions duly adopted by its board of directors which
have not been amended since their adoption and remain in
full force and effect, authorizing the execution, delivery
and performance of this Agreement and the Related Documents
to which it is a party; (iii) that its articles of
incorporation have not been amended since the date of the
last date of amendment thereto indicated on the certificate
of the secretary of state; and (iv) as to the incumbency and
specimen signature of each officer executing this Agreement
and all other Related Documents to which it is a party, and
including a certification by another officer as to the
incumbency and signature of the secretary or assistant
secretary executing the certificate;
(f) the opinion of counsel for the Companies and
the Guarantor in the form of Exhibit E;
(g) the opinion of counsel for the Pledgor in the
form of Exhibit F;
(h) certificates of status or good standing for
the Companies and the Guarantor, and certified copies of the
Articles of Incorporation for the Companies and the
Guarantor, all issued by the Office of the Secretary of
State of incorporation within 30 days of the date hereof;
(i) copies of all executed documents evidencing
the consummation of the Stock Purchase Transaction; and
(j) copies of all executed documents evidencing
the Senior Loan Transaction.
SECTION 5 AFFIRMATIVE COVENANTS
Each Company severally covenants and agrees that,
from and after the date of this Agreement and until the
Termination Date and until the entire amount of the
Obligations to the Bank is paid in full, it shall:
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes. (a) Maintain its corporate
existence, licenses, permits, rights and franchises;
(b) comply in all material respects with all Requirements of
Law; (c) conduct its business substantially as now
conducted; (d) pay before the same become delinquent and
before penalties accrue thereon, all taxes, assessments and
other government charges against it and its Property, and
all other liabilities except to the extent and so long as
the same are being contested in good faith by appropriate
proceedings, with adequate reserves having been provided.
5.2 Maintenance of Property; Insurance.
(a) Keep all Property useful and necessary in its
business, whether leased or owned, in good condition,
repair and working order (ordinary wear and tear excepted)
and from time to time make or cause to be made all needed
and proper repairs, renewals, replacements, additions and
improvements so that the business carried on in connection
therewith may be properly and advantageously conducted at
all times.
(b) Maintain with good, reputable and financially
sound insurance underwriters insurance of such nature and
in such amounts as is customarily maintained by companies
engaged in the same or similar business and such other
insurance as may be required by law or as may be
reasonably required in writing by the Bank. Each policy
providing liability coverage to any Company shall name the
Bank as an additional insured, and each policy insuring
the Property shall name the Bank as loss payee and/or
mortgagee, as its interest appears, and all policies shall
require the insurer to give the Bank 30 days prior written
notice of the modification, cancellation or nonrenewal of
the policy; the Companies shall furnish copies of all such
insurance policies or a certificate evidencing that each
Company has complied with the requirements of this
paragraph on the date hereof and on each renewal date of
such policies; and within 90 days after the end of each
fiscal year, the Companies shall deliver to the Bank a
schedule showing all insurance policies in force as of the
end of such year, signed by an authorized officer of the
Companies.
5.3 Financial Statements. Maintain a standard
system of accounting in accordance with sound accounting
practice, and furnish to the Bank such information
respecting the business, assets and financial condition of
each Company as the Bank may reasonably request and, without
request furnish to the Bank:
(a) as soon as available, and in any event within 30
days after the end of each month of CF's fiscal year (or
50 days after the end of the first and last months of CF's
fiscal year), financial statements including the balance
sheet for CF and its Subsidiaries as of the end of each
such month and statements of income and cash flows of CF
and its Subsidiaries for each such month and for that part
of the fiscal year ending with such month, setting forth
in each case, in comparative form, figures for the
corresponding periods in the preceding fiscal year and a
comparison of actual cash flow, income and capital
expenditures with amounts budgeted for such period, all in
reasonable detail and certified as true, correct and
complete, subject to review and normal year-end
adjustments, by the chief financial officer of CF;
(b) as soon as available, and in any event within 90
days after the close of each fiscal year, a copy of the
detailed annual audit report for such year and
accompanying financial statements for CF and its
Subsidiaries as of the end of such year, containing
balance sheets and statements of income, retained earnings
and cash flows for such year and for the previous fiscal
year, as audited by independent certified public
accountants of recognized standing selected by CF and
satisfactory to the Bank, which report shall be
accompanied by (i) the unqualified opinion of such
accountants to the effect that the statements present
fairly, in all material respects, the financial position
of CF and its Subsidiaries as of the end of such year and
the results of its operations and its cash flows for the
year then ended in conformity with GAAP; (ii) a
certificate of such accountants showing their calculation
of the financial covenants contained herein and stating
that their review disclosed no Default or that their
review disclosed a Default and specifying the same and the
action taken or proposed to be taken with respect thereto;
and (iii) any supplementary comments and reports submitted
by such accountants to CF including the management letter,
if any;
(c) with the financial statements described in Section
5.3(a), the certificate of the president or chief
financial officer of CF to the effect that (i) a review of
the activities of the Companies during such period has
been made under his supervision to determine whether the
Companies have observed, performed and fulfilled each and
every covenant and condition in this Agreement and the
Related Documents, and (ii) no Default has occurred (or if
such Default has occurred, specifying the nature thereof
and the period of existence thereof and the steps, if any,
being undertaken to correct the same); and
(d) promptly upon learning of the occurrence of any of
the following, written notice thereof, describing the same
and the steps being taken with respect thereto: (i) the
occurrence of any Default, (ii) the institution of, or any
materially adverse determination or development in, any
litigation, arbitration proceeding or governmental
proceeding, (iii) the occurrence of a "reportable event"
under, or the institution of steps by any Company to
withdraw from, or the institution of any steps to
terminate, any Employee Plan as to which any Company may
have liability, (iv) the commencement of any dispute which
might lead to the modification, transfer, revocation,
suspension or termination of this Agreement or any Related
Document, or (v) any event which would have a Material
Adverse Effect.
All financial statements referred to herein shall be
complete and correct in all material respects and shall be
prepared in reasonable detail and on a consolidated and
consolidating basis in accordance with GAAP, applied
consistently throughout all accounting periods.
5.4 Inspection of Property and Records. At any
reasonable time following reasonable notice, as often as may
be reasonably desired and at each Company's expense, permit
representatives of the Bank to visit its Property, examine
its books and records and discuss its affairs, finances and
accounts with its officers and independent certified public
accountants (who shall be instructed by the Company to make
available to the Bank or its agents the work papers of such
accountants) and the applicable Company shall facilitate
such inspection and examination.
SECTION 6 DEFAULT AND REMEDIES
6.1 Events of Default Defined. Any one or more
of the following shall constitute an "Event of Default":
(a) the Companies shall fail to pay any
Obligations when and as the same shall become due and
payable, whether upon demand, at maturity, by extension,
acceleration or otherwise;
(b) any Company shall fail to observe or perform
any of the covenants, agreements or conditions contained
in Sections 4, 5.1(a), 5.2(b) or 5.4;
(c) (i) Guarantor shall default in the payment of
any indebtedness evidenced by the IRB Documentation, or
(ii) any Company shall default (as principal or guarantor
or otherwise) in the payment of any other Indebtedness
aggregating $50,000 or more, or with respect to any of the
provisions of any agreement evidencing such Indebtedness,
and such default shall continue beyond any period of
grace, if any, specified in such agreement, unless such
Company is contesting such default in good faith and the
Bank agrees, in its sole discretion, that Company is so
contesting such default;
(d) any Company, the Guarantor or Pledgor shall
fail to observe or perform any of the other covenants,
agreements or conditions contained in this Agreement or
the Related Documents and such failure shall continue for
thirty days after written notice thereof is given by the
Bank to the Company;
(e) any representation or warranty made by any
Company, the Guarantor or Pledgor herein or in any of the
Related Documents or in any certificate, document or
financial statement delivered to the Bank shall prove to
have been incorrect in any material adverse respect as of
the time when made or given;
(f) a final judgment (or judgments) for the
payment of amounts aggregating in excess of $75,000 shall
be entered against any Company, and such judgment (or
judgments) shall remain outstanding and unsatisfied,
unbonded or unstayed after 30 days from the date of entry
thereof;
(g) any Company shall (i) become insolvent or
take or fail to take any action which constitutes an
admission of inability to pay its debts as they mature;
(ii) make an assignment for the benefit of creditors;
(iii) petition or apply to any tribunal for the
appointment of a custodian, receiver or any trustee for
the Company or a substantial part of its respective
assets; (vi) suffer any such custodianship, receivership
or trusteeship to continue undischarged for a period of 30
days or more; (iv) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; (v) by
any act or omission indicate its consent to, approval of
or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any
substantial part of any of its properties; or adopts a
plan of liquidation of its assets;
(h) if any Person shall: (i) petition or apply to
any tribunal for the appointment of a custodian, receiver
or any trustee for any Company or a substantial part of
its respective assets which continues undischarged for a
period of thirty days or more; (ii) commence any
proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether
now or hereafter in effect, in which an order for relief
is entered or which remains undismissed for a period of
thirty days or more;
(i) any Government Authority or any geotechnical
engineer or environmental consultant hired by any Company,
the Bank or any Government Authority shall determine that
the potential uninsured liability of the Company for
damages caused by the discharge of any Hazardous
Substance, including liability for real property damage or
remedial action related thereto or liability for personal
injury claims, exceeds $50,000 and the Company is unable
to provide for such liability in a manner reasonably
acceptable to the Bank, any Government Authority, STS
Consultants or any other geotechnical engineer or
environmental consultant hired by any Company, (the forma
equity holders of CF, Gilco, Ultra or the Guarantor), the
Bank or any Government Authority determines that the costs
to investigate, test, cleanup and remediate any Hazardous
Substance (collectively, "Remediation Costs") in any way
related to or associated with the real property located at
1040 Ninth Avenue, Grafton, Wisconsin, 53024, may exceed
$1,500,000 in the aggregate (provided that such
Remediation Costs are disclosed in a remedial action plan,
feasibility study or other similar report and the Company
is enable to provide for payment of such Remediation Costs
in a manner reasonably acceptable to the Bank;
(j) except as provided in Section 2.1 (i), any
Government Authority shall determine that the potential
uninsured liability of the Company for damages caused by
the presence or discharge of any Hazardous Substance,
including liability for claims for diminution in value of
any real property of a third party of liability for
personal injury claims, exceeds $50,000, and the Company
is unable to provide for such liability in a manner
reasonably acceptable to the Bank; or
(k) at any time during the term of the Loan and until
the full payment of all Obligations hereunder, in the
sole determination of the Bank, the market value of the
Collateral is less than the value of the Obligations.
(1) any of the Companies or the Guarantor
fails to pay any of its Indebtedness as and when that
Indebtedness becomes payable or any of the Companies or the
Guarantor fails to perform or observe any covenant or
agreement to be performed or observed by it contained in the
Master Credit Agreement dated June 21, 1996 among the
Companies and the Senior Lender and related documents,
including the guaranty of the Guarantor with respect to the
obligations of the Companies thereunder, and such failure to
pay, perform or obscure is not waived by the Senior Lender.
6.2 Remedies Upon Event of Default. Upon the
occurrence of an Event of Default:
(a) then, without presentment, notice, demand or
action of any kind by the Bank, all of which are hereby
waived, the entire amount of the Obligations shall be
automatically accelerated and immediately due and payable.
(b) the Bank shall have all of the rights and
remedies provided to the Bank by the Related Documents, at
law and in equity, by statute or otherwise, and no remedy
herein conferred upon the Bank is intended to be exclusive
of any other remedy and each remedy shall be cumulative
and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity,
by statute or otherwise. In addition to and not in lieu
of any other right or remedy the Bank might have, the Bank
at any time and from time to time at its election may (but
shall not be required to) do or perform or comply with or
cause to be done or performed or complied with anything
which any Company may be required to do, perform or comply
with and the Companies shall reimburse the Bank upon
demand for any cost or expense which the Bank may incur in
such respect, together with interest thereon at the rate
equal to the rate payable under the Note following an
Event of Default from the date of such demand until paid.
No failure or delay on the part of the Bank in exercising
any right or remedy hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any
right hereunder preclude any further exercise thereof or
the exercise of any other right or remedy.
SECTION 7 MISCELLANEOUS
7.1 Assignability; Successors. The provisions of
this Agreement shall inure to the benefit of and be binding
upon the permitted successors and assigns of the parties
hereto. Each of the Companies' rights and liabilities under
this Agreement and the Related Documents are not assignable
in whole or in part without the prior written consent of the
Bank. The Bank may at any time sell, assign or transfer to
one or more banks or other entities other than any
competitor of the Companies ("Participants") interests in
the Note held by the Bank or any other interest of the Bank
in the Obligations. Each Company authorizes the Bank to
disclose to any Participant or prospective Participant any
and all financial information in the Bank's possession
concerning each such Company and its Affiliates which has
been delivered to the Bank by or on behalf of such Company.
Each Company agrees that upon the occurrence of any Event of
Default each Participant shall be deemed to have the right
of setoff in respect of its participating interest in the
Obligations to the same extent as if the amount of its
participating interest were owing directly to it as a Bank
under this Agreement.
7.2 Survival. All agreements, covenants,
representations and warranties made herein and in the
Related Documents shall survive the execution and delivery
of this Agreement and the Related Documents, the making of
the Obligations and the termination of this Agreement.
7.3 Governing Law. This Agreement and the Related
Documents shall be governed by the internal laws of the
State of New York.
7.4 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be
deemed an original, but such counterparts shall together
constitute but one and the same agreement. The descriptive
headings in this Agreement are inserted for convenience of
reference only and shall not affect the construction of this
Agreement.
7.5 Entire Agreement; Amendments. This Agreement,
the Exhibits and Schedules attached hereto, and the Related
Documents contain the entire understanding of the parties
with respect to the subject matter hereof, and supersede all
other understandings, oral or written, with respect to the
subject matter hereof. No amendment, modification,
alteration, or waiver of the terms of this Agreement or
consent required under the terms of this Agreement shall be
effective unless made in a writing, which makes specific
reference to this Agreement and which has been signed by the
party against which enforcement thereof is sought. Any such
amendment, modification, alteration, waiver or consent shall
be effective only in the specific instance and for the
specific purpose for which given.
7.6 Notices. All communications or notices
required or permitted by this Agreement shall be in writing
and shall be deemed to have been given or made when
delivered in hand, deposited in the mail, or sent by
facsimile. Communications or notices shall be delivered
personally or by certified or registered mail, postage
prepaid, or by facsimile and addressed as follows, unless
and until either of such parties notifies the other in
accordance with this section of a change of address:
if to the Companies: Construction Forms, Inc.
W60 N151 Cardinal Avenue
Cedarburg, WI 53012-0326
Attn: Mr. Alan Kastelic,
President
FAX: (414) 377-4049
with copies to: Edison Control Corporation
360 Lexington Avenue
New York, NY 10017
Attn: Ms. Mary E. McCormack
President and CEO
FAX (212) 972-6109
if to the Bank: Bank Audi (USA)
19 East 54th Street
New York, NY 10022
Attn: Mr. Kenneth V. Brooks
Fax: (212) 833-1000
with copies to: Berge Setrakian, Esq.
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, NY 10166
Fax: (212) 351-3131
7.7 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
7.8 Further Assurances. Each Company severally
agrees to do such further acts and things, and to execute
and deliver such additional conveyances, assignments,
agreements and instruments, as the Bank may at any time
request in connection with the administration or enforcement
of this Agreement or the Related Documents or in order
better to assure and confirm unto the Bank its rights,
powers and remedies hereunder.
7.9 Conflicts and Ambiguities. In the event of
any ambiguity or conflict as between the terms of this
Agreement, the Related Documents or any other document
executed and delivered pursuant to this Agreement, the terms
of this Agreement shall control.
7.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO
KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVES ALL
RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR
IN RELATION TO THIS AGREEMENT OR ANY RELATED DOCUMENT TO
WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE
BE DELIVERED IN CONNECTION THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR
ANY RELATED DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first above
written.
CONSTRUCTION FORMS, INC.
By:
,
CF ULTRA TECH, INC.
By:
,
CF GILCO, INC.
By:
,
BANK AUDI (USA)
By:
,
CONSENT AND ACKNOWLEDGMENT
IN WITNESS WHEREOF, the Guarantor has executed this
Agreement as of the date first above written and hereby (i)
agrees and consents to all of the terms and conditions of
the foregoing Agreement; and (ii) ratifies and confirms its
representations, warranties, covenants and agreements
contained in, and obligations and liabilities under, the
Guaranty, the Agreement and each of the other Related
Documents to which it is a party or by which it may be
bound. The Guarantor hereby affirms and agrees that it has
received sufficient value (as described in Section
9-203(1)(b) of the Uniform Commercial Code of the State of
Wisconsin) and benefit (whether direct or indirect) in
exchange for its execution of or ratification of, as the
case may be, and obligations under the Guaranty, the
Agreement, and other Related Documents.
JABCO, L.L.C.
By:
,
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS AND TERMS
1.1 Definitions . . . . . . . . . . . . . . . . . .1
1.2 Accounting and Financial Determinations . . . .8
1.3 Interpretation. . . . . . . . . . . . . . . . .8
1.4 Other Terms . . . . . . . . . . . . . . . . . .9
SECTION 2 AMOUNTS AND TERMS OF OBLIGATIONS
2.1 Loan. . . . . . . . . . . . . . . . . . . . . .9
2.2 LIBOR Rate Restrictions . . . . . . . . . . . .9
2.3 Joint and Several Obligations Etc.. . . . . . .9
2.4 Interest After Default. . . . . . . . . . . . 11
2.5 Payments. . . . . . . . . . . . . . . . . . . 11
2.6 Optional Prepayments. . . . . . . . . . . . . 11
2.7 Effect of Regulatory Change . . . . . . . . . 11
2.8 No Obligations to Extend or Forbear . . . . . 11
SECTION 3 REPRESENTATIONS AND WARRANTIES
3.1 Organization, Qualification and
Subsidiaries. . . . . . . . . . . . . . . . . 12
3.2 Financial Statements. . . . . . . . . . . . . 12
3.3 Authorization . . . . . . . . . . . . . . . . 13
3.4 Absence of Conflicting Obligations. . . . . . 13
3.5 Taxes . . . . . . . . . . . . . . . . . . . . 13
3.7 Accuracy of Information . . . . . . . . . . . 14
3.8 Federal Reserve Regulations . . . . . . . . . 14
3.9 ERISA . . . . . . . . . . . . . . . . . . . . 14
3.10 Security Interests. . . . . . . . . . . . . . 15
3.11 Places of Business. . . . . . . . . . . . . . 15
3.12 Other Names . . . . . . . . . . . . . . . . . 15
3.13 Not an Investment Company . . . . . . . . . . 15
3.14 No Defaults . . . . . . . . . . . . . . . . . 15
3.15 Environmental Laws. . . . . . . . . . . . . . 15
SECTION 5 AFFIRMATIVE COVENANTS
5.1 Corporate Existence; Compliance With Laws;
Maintenance of Business; Taxes. . . . . . . . 17
5.2 Maintenance of Property; Insurance. . . . . . 17
5.3 Financial Statements. . . . . . . . . . . . . 18
5.4 Inspection of Property and Records. . . . . . 19
SECTION 6 DEFAULT AND REMEDIES
6.1 Events of Default Defined . . . . . . . . . . 21
6.2 Remedies Upon Event of Default. . . . . . . . 23
SECTION 7 MISCELLANEOUS
7.1 Assignability; Successors . . . . . . . . . . 23
7.2 Survival. . . . . . . . . . . . . . . . . . . 24
7.3 Governing Law . . . . . . . . . . . . . . . . 24
7.4 Counterparts; Headings. . . . . . . . . . . . 24
7.5 Entire Agreement; Amendments. . . . . . . . . 24
7.6 Notices . . . . . . . . . . . . . . . . . . . 25
7.7 Severability. . . . . . . . . . . . . . . . . 25
7.8 Further Assurances. . . . . . . . . . . . . . 25
7.9 Conflicts and Ambiguities . . . . . . . . . . 26
7.10 WAIVER OF JURY TRIAL. . . . . . . . . . . . . 26
Exhibits
Exhibit A Form of Guaranty
Exhibit B Form of Promissory Note
Exhibit C Form of Pledge Agreement
Exhibit D Form of Subordination Agreement
Exhibit E Form of Opinion of Counsel for Companies
Schedules
Schedule 1 Stock Ownership of Each Company
Schedule 2 Subsidiaries, Options, Warrants
Schedule 3 Litigation
Schedule 3.16 Compliance with Environmental Laws
