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: October 23, 1995
PUBLICKER INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Pennsylvania
(State of incorporation)
1-3315 23-0991870
(Commission file number) (I.R.S. Employer
Identification No.)
1445 East Putnam Avenue
Old Greenwich, Connecticut 06870
(Address of principal executive offices) (Zip code)
(203) 637-4500
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
(a) On October 11, 1995, certain of the Registrant's subsidiaries
entered into a three-year credit agreement ("Loan Agreement")
with Congress Financial Corporation (New England), a
subsidiary of Corestates Financial Corp. The Loan Agreement
provides for a $13,161,000 revolving credit line, subject to
availability limitations and reserves, $2,149,000 of term
promissory notes and $1,750,000 credit facility for future
capital expenditure financing. The Loan Agreement is
guaranteed by the Registrant, collateralized by substantially
all of the Registrant's and subsidiaries' assets and bears
interest at a rate of one and one-half percent (1.5 %) in
excess of the prime rate. The Loan Agreement and related
documents (the "Financing Agreements") contain affirmative,
negative and financial covenants typical of this type of
credit facility, including a prohibition on the payment of
dividends by the subsidiaries.
Item 7. Financial Statements and Exhibits
The following Exhibits are filed as part of this report:
4.1 Loan and Security Agreement, dated October 11, 1995, by and
between Congress Financial Corporation (New England) and the
Company's Subsidiaries as Borrowers.
4.2 Term Promissory Notes dated October 11, 1995, from the
Company's Subsidiaries as Debtors and Congress Financial
Corporation (New England) in the amount of $2,149,000.
4.3 Guarantee dated October 11, 1995, by Publicker Industries Inc.
to Congress Financial Corporation (New England) of the
obligations of the Company's subsidiaries under the Financing
Agreements.
4.4 General Security Agreement dated October 11, 1995 by Publicker
Industries Inc. in favor of Congress Financial Corporation
(New England).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PUBLICKER INDUSTRIES INC.
By
Antonio L. DeLise
Vice President,
Chief Financial Officer
and Secretary
Dated: October 23, 1995
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PUBLICKER INDUSTRIES INC.
/s/Antonio L. DeLise
Antonio L. DeLise
Vice President,
Chief Financial Officer
and Secretary
Dated: October 25, 1995
Exhibit 4.2
TERM PROMISSORY NOTE
$190,000.00 Boston,
Massachusetts
October 11, 1995
FOR VALUE RECEIVED, BRIGHT STAR INDUSTRIES, INCORPORATED, a Delaware corporation
(the
"Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION (NEW ENGLAND), a Massachusetts corporation (the
"Payee"), at the offices of Payee at One Post Office Square, Boston,
Massachusetts 02109, or at such other place as the Payee or any holder hereof
may from time to time designate, the principal sum of ONE HUNDRED NINETY
THOUSAND DOLLARS ($190,000.00) in lawful money of the United States of America
and in immediately available funds, in thirty six (36) consecutive monthly
installments (or earlier as hereinafter provided) on the first day of each
month commencing November 1, 1995 of which the first thirty-five (35)
installments shall each be in the amount of FIVE THOUSAND TWO HUNDRED
SEVENTY-SEVEN AND 79/100 DOLLARS ($5,277.78), and the last installment shall
be in the
amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on the
unpaid
principal balance hereof at the Interest Rate (as hereinafter defined). Such
interest shall be paid in like money at said office or place from the date
hereof, commencing November 1, 1995 and on the first day of each month
thereafter until the indebtedness evidenced by this Note is paid in full.
Interest payable upon and after an Event of Default or termination or
non-renewal of the Loan Agreement shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean a rate of one
and one-half
(1 1/2%) percent per annum in excess of the Prime Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of two and one-half
(2-1/2%) percent per annum in excess of the Prime Rate upon and after an
Event of
Default or termination or non-renewal of the Loan Agreement, (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
Philadelphia National Bank, incorporated as CoreStates Bank, N.A., or its
successors, at its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at such bank,
(c) the term "Event of Default" shall mean an Event of Default as such term is
defined in the Loan Agreement, and (d) the term "Loan Agreement" shall mean
the Loan and Security Agreement, dated of even date herewith, between Debtor
and Payee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise
defined herein, all capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an amount
equal to
each increase or decrease, respectively, in the Prime Rate, effective on the
first day of the month after any change in the Prime Rate, based on the Prime
Rate in effect on the last day of the month in which any such change occurs.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the Commonwealth of
Massachusetts or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to
evidence the Term Loan by Payee to Debtor. This Note is secured by the
Collateral described in the Loan Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Debtor or any other party in connection
therewith (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, being collectively referred to herein as the
"Financing Agreements"), and is entitled to all of the benefits and rights
thereof and of the other Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder, or if
any other
Event of Default shall occur for any reason, or if the Loan Agreement shall be
terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Payee under the Financing
Agreements, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest
accruing thereafter at the then applicable Interest Rate stated above until
the indebtedness evidenced by this Note is paid in full, plus the costs and
expenses of collection hereof, including, but not limited to, attorneys' fees
and legal expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, (ii)
agrees that it will not be necessary for Payee to first institute suit in
order to enforce payment of this Note and (iii) consents to any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived by Debtor.
Upon any Event of Default or termination or non-renewal of the Loan Agreement,
Payee shall have the right, but not the obligation to setoff against this Note
all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but may
proceed
against Debtor and any guarantors or endorsers hereof in such order and manner
as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing
Agreements and any dispute arising in connection herewith or therewith shall
be governed by the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive jurisdiction of
the Courts
of Massachusetts and the United States District Court for the District of
Massachusetts and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note or any
of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Debtor and Payee or the conduct of such
persons in connection with this Note or otherwise shall be heard only in the
courts described above (except that Payee shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it and
consents that
all such service of process may be made by certified mail (return receipt
requested) directed to it and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Payee's option, by service upon Debtor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE
OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE IN RESPECT OF
THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the Board of
Directors
and by any necessary vote or consent of the stockholders of Debtor. Debtor
hereby authorizes Payee to complete this Note in any particulars according to
the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor and
inure to the
benefit of Payee and its successors, endorsees and assigns. Whenever used
herein, the term "Debtor" shall be deemed to include its successors and
assigns and the term "Payee" shall be deemed to include its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ATTEST: BRIGHT STAR INDUSTRIES, INCORPORATED
__________________________ By:
Secretary Name:
Title:
[Corporate Seal]
<PAGE>
TERM PROMISSORY NOTE
$565,000.00 Boston,
Massachusetts
October 11, 1995
FOR VALUE RECEIVED, FENWAL ELECTRONICS, INC. a Delaware corporation (the
"Debtor"),
hereby unconditionally promises to pay to the order of CONGRESS FINANCIAL
CORPORATION (NEW ENGLAND), a Massachusetts corporation (the "Payee"), at the
offices of Payee at One Post Office Square, Boston, Massachusetts 02109, or at
such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of FIVE HUNDRED SIXTY-FIVE THOUSAND DOLLARS
($565,000.00) in lawful money of the United States of America and in
immediately available funds, in thirty six (36) consecutive monthly
installments (or earlier as hereinafter provided) on the first day of each
month commencing November 1, 1995 of which the first thirty-five (35)
installments shall each be in the amount of FIFTEEN THOUSAND SIX HUNDRED
NINETY-FOUR AND 44/100 DOLLARS ($15,694.44), and the last installment shall be
in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on the
unpaid
principal balance hereof at the Interest Rate (as hereinafter defined). Such
interest shall be paid in like money at said office or place from the date
hereof, commencing November 1, 1995 and on the first day of each month
thereafter until the indebtedness evidenced by this Note is paid in full.
Interest payable upon and after an Event of Default or termination or
non-renewal of the Loan Agreement shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean a rate of one
and one-half
(1 1/2%) percent per annum in excess of the Prime Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of two and one-half
(2-1/2%) percent per annum in excess of the Prime Rate upon and after an
Event of
Default or termination or non-renewal of the Loan Agreement, (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
Philadelphia National Bank, incorporated as CoreStates Bank, N.A., or its
successors, at its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at such bank,
(c) the term "Event of Default" shall mean an Event of Default as such term is
defined in the Loan Agreement, and (d) the term "Loan Agreement" shall mean
the Loan and Security Agreement, dated of even date herewith, between Debtor
and Payee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise
defined herein, all capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an amount
equal to
each increase or decrease, respectively, in the Prime Rate, effective on the
first day of the month after any change in the Prime Rate, based on the Prime
Rate in effect on the last day of the month in which any such change occurs.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the Commonwealth of
Massachusetts or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to
evidence the Term Loan by Payee to Debtor. This Note is secured by the
Collateral described in the Loan Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Debtor or any other party in connection
therewith (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, being collectively referred to herein as the
"Financing Agreements"), and is entitled to all of the benefits and rights
thereof and of the other Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder, or if
any other
Event of Default shall occur for any reason, or if the Loan Agreement shall be
terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Payee under the Financing
Agreements, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest
accruing thereafter at the then applicable Interest Rate stated above until
the indebtedness evidenced by this Note is paid in full, plus the costs and
expenses of collection hereof, including, but not limited to, attorneys' fees
and legal expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, (ii)
agrees that it will not be necessary for Payee to first institute suit in
order to enforce payment of this Note and (iii) consents to any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived by Debtor.
Upon any Event of Default or termination or non-renewal of the Loan Agreement,
Payee shall have the right, but not the obligation to setoff against this Note
all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but may
proceed
against Debtor and any guarantors or endorsers hereof in such order and manner
as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing
Agreements and any dispute arising in connection herewith or therewith shall
be governed by the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive jurisdiction of
the Courts
of Massachusetts and the United States District Court for the District of
Massachusetts and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note or any
of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Debtor and Payee or the conduct of such
persons in connection with this Note or otherwise shall be heard only in the
courts described above (except that Payee shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it and
consents that
all such service of process may be made by certified mail (return receipt
requested) directed to it and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Payee's option, by service upon Debtor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE
OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE IN RESPECT OF
THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the Board of
Directors
and by any necessary vote or consent of the stockholders of Debtor. Debtor
hereby authorizes Payee to complete this Note in any particulars according to
the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor and
inure to the
benefit of Payee and its successors, endorsees and assigns. Whenever used
herein, the term "Debtor" shall be deemed to include its successors and
assigns and the term "Payee" shall be deemed to include its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ATTEST: FENWAL ELECTRONICS, INC.
__________________________ By:
Secretary Name:
Title:
[Corporate Seal]
<PAGE>
TERM PROMISSORY NOTE
$392,000.00 Boston,
Massachusetts
October 11, 1995
FOR VALUE RECEIVED, GREENWALD INDUSTRIES INC. a Delaware corporation (the
"Debtor"),
hereby unconditionally promises to pay to the order of CONGRESS FINANCIAL
CORPORATION (NEW ENGLAND), a Massachusetts corporation (the "Payee"), at the
offices of Payee at One Post Office Square, Boston, Massachusetts 02109, or at
such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of THREE HUNDRED NINETY-TWO THOUSAND DOLLARS
($392,000.00) in lawful money of the United States of America and in
immediately available funds, in thirty six (36) consecutive monthly
installments (or earlier as hereinafter provided) on the first day of each
month commencing November 1, 1995 of which the first thirty-five (35)
installments shall each be in the amount of TEN THOUSAND EIGHT HUNDRED
EIGHTY-EIGHT AND 89/100 DOLLARS ($10,888.89), and the last installment shall
be in
the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on the
unpaid
principal balance hereof at the Interest Rate (as hereinafter defined). Such
interest shall be paid in like money at said office or place from the date
hereof, commencing November 1, 1995 and on the first day of each month
thereafter until the indebtedness evidenced by this Note is paid in full.
Interest payable upon and after an Event of Default or termination or
non-renewal of the Loan Agreement shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean a rate of one
and one-half
(1 1/2%) percent per annum in excess of the Prime Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of two and one-half
(2-1/2%) percent per annum in excess of the Prime Rate upon and after an
Event of
Default or termination or non-renewal of the Loan Agreement, (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
Philadelphia National Bank, incorporated as CoreStates Bank, N.A., or its
successors, at its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at such bank,
(c) the term "Event of Default" shall mean an Event of Default as such term is
defined in the Loan Agreement, and (d) the term "Loan Agreement" shall mean
the Loan and Security Agreement, dated of even date herewith, between Debtor
and Payee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise
defined herein, all capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an amount
equal to
each increase or decrease, respectively, in the Prime Rate, effective on the
first day of the month after any change in the Prime Rate, based on the Prime
Rate in effect on the last day of the month in which any such change occurs.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the Commonwealth of
Massachusetts or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to
evidence the Term Loan by Payee to Debtor. This Note is secured by the
Collateral described in the Loan Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Debtor or any other party in connection
therewith (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, being collectively referred to herein as the
"Financing Agreements"), and is entitled to all of the benefits and rights
thereof and of the other Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder, or if
any other
Event of Default shall occur for any reason, or if the Loan Agreement shall be
terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Payee under the Financing
Agreements, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest
accruing thereafter at the then applicable Interest Rate stated above until
the indebtedness evidenced by this Note is paid in full, plus the costs and
expenses of collection hereof, including, but not limited to, attorneys' fees
and legal expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, (ii)
agrees that it will not be necessary for Payee to first institute suit in
order to enforce payment of this Note and (iii) consents to any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived by Debtor.
Upon any Event of Default or termination or non-renewal of the Loan Agreement,
Payee shall have the right, but not the obligation to setoff against this Note
all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but may
proceed
against Debtor and any guarantors or endorsers hereof in such order and manner
as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing
Agreements and any dispute arising in connection herewith or therewith shall
be governed by the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive jurisdiction of
the Courts
of Massachusetts and the United States District Court for the District of
Massachusetts and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note or any
of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Debtor and Payee or the conduct of such
persons in connection with this Note or otherwise shall be heard only in the
courts described above (except that Payee shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it and
consents that
all such service of process may be made by certified mail (return receipt
requested) directed to it and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Payee's option, by service upon Debtor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE
OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE IN RESPECT OF
THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the Board of
Directors
and by any necessary vote or consent of the stockholders of Debtor. Debtor
hereby authorizes Payee to complete this Note in any particulars according to
the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor and
inure to the
benefit of Payee and its successors, endorsees and assigns. Whenever used
herein, the term "Debtor" shall be deemed to include its successors and
assigns and the term "Payee" shall be deemed to include its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ATTEST: GREENWALD INDUSTRIES INC.
__________________________ By:
Secretary Name:
Title:
[Corporate Seal]
<PAGE>
TERM PROMISSORY NOTE
$916,000.00 Boston,
Massachusetts
October 11, 1995
FOR VALUE RECEIVED, MASTERVIEW WINDOW COMPANY, INC. a Delaware corporation (the
"Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION (NEW ENGLAND), a Massachusetts corporation (the
"Payee"), at the offices of Payee at One Post Office Square, Boston,
Massachusetts 02109, or at such other place as the Payee or any holder hereof
may from time to time designate, the principal sum of NINE HUNDRED SIXTEEN
THOUSAND DOLLARS ($916,000.00) in lawful money of the United States of America
and in immediately available funds, in thirty six (36) consecutive monthly
installments (or earlier as hereinafter provided) on the first day of each
month commencing November 1, 1995 of which the first thirty-five (35)
installments shall each be in the amount of TWENTY FIVE THOUSAND FOUR HUNDRED
FORTY-FOUR AND 44/100 DOLLARS ($25,444.44), and the last installment shall be
in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on the
unpaid
principal balance hereof at the Interest Rate (as hereinafter defined). Such
interest shall be paid in like money at said office or place from the date
hereof, commencing November 1, 1995 and on the first day of each month
thereafter until the indebtedness evidenced by this Note is paid in full.
Interest payable upon and after an Event of Default or termination or
non-renewal of the Loan Agreement shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean a rate of one
and one-half
(1 1/2%) percent per annum in excess of the Prime Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of two and one-half
(2-1/2%) percent per annum in excess of the Prime Rate upon and after an
Event of
Default or termination or non-renewal of the Loan Agreement, (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
Philadelphia National Bank, incorporated as CoreStates Bank, N.A., or its
successors, at its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at such bank,
(c) the term "Event of Default" shall mean an Event of Default as such term is
defined in the Loan Agreement, and (d) the term "Loan Agreement" shall mean
the Loan and Security Agreement, dated of even date herewith, between Debtor
and Payee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise
defined herein, all capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an amount
equal to
each increase or decrease, respectively, in the Prime Rate, effective on the
first day of the month after any change in the Prime Rate, based on the Prime
Rate in effect on the last day of the month in which any such change occurs.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the Commonwealth of
Massachusetts or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to
evidence the Term Loan by Payee to Debtor. This Note is secured by the
Collateral described in the Loan Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Debtor or any other party in connection
therewith (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, being collectively referred to herein as the
"Financing Agreements"), and is entitled to all of the benefits and rights
thereof and of the other Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder, or if
any other
Event of Default shall occur for any reason, or if the Loan Agreement shall be
terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Payee under the Financing
Agreements, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest
accruing thereafter at the then applicable Interest Rate stated above until
the indebtedness evidenced by this Note is paid in full, plus the costs and
expenses of collection hereof, including, but not limited to, attorneys' fees
and legal expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, (ii)
agrees that it will not be necessary for Payee to first institute suit in
order to enforce payment of this Note and (iii) consents to any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived by Debtor.
Upon any Event of Default or termination or non-renewal of the Loan Agreement,
Payee shall have the right, but not the obligation to setoff against this Note
all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but may
proceed
against Debtor and any guarantors or endorsers hereof in such order and manner
as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing
Agreements and any dispute arising in connection herewith or therewith shall
be governed by the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive jurisdiction of
the Courts
of Massachusetts and the United States District Court for the District of
Massachusetts and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note or any
of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Debtor and Payee or the conduct of such
persons in connection with this Note or otherwise shall be heard only in the
courts described above (except that Payee shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it and
consents that
all such service of process may be made by certified mail (return receipt
requested) directed to it and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Payee's option, by service upon Debtor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE
OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE IN RESPECT OF
THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the Board of
Directors
and by any necessary vote or consent of the stockholders of Debtor. Debtor
hereby authorizes Payee to complete this Note in any particulars according to
the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor and
inure to the
benefit of Payee and its successors, endorsees and assigns. Whenever used
herein, the term "Debtor" shall be deemed to include its successors and
assigns and the term "Payee" shall be deemed to include its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ATTEST: MASTERVIEW WINDOW COMPANY, INC.
__________________________ By:
Secretary Name:
Title:
[Corporate Seal]
<PAGE>
TERM PROMISSORY NOTE
$86,000.00 Boston, Massachusetts
October 11, 1995
FOR VALUE RECEIVED, ORR-SCHELEN-MAYERON & ASSOCIATES, INC. a Minnesota
corporation (the
"Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION (NEW ENGLAND), a Massachusetts corporation (the
"Payee"), at the offices of Payee at One Post Office Square, Boston,
Massachusetts 02109, or at such other place as the Payee or any holder hereof
may from time to time designate, the principal sum of EIIGHTY-SIX THOUSAND
DOLLARS ($86,000.00) in lawful money of the United States of America and in
immediately available funds, in thirty six (36) consecutive monthly
installments (or earlier as hereinafter provided) on the first day of each
month commencing November 1, 1995 of which the first thirty-five (35)
installments shall each be in the amount of TWO THOUSAND THREE HUNDRED
EIGHTY-EIGHT AND 89/100 DOLLARS ($2,388.89), and the last installment shall
be in the
amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee on the
unpaid
principal balance hereof at the Interest Rate (as hereinafter defined). Such
interest shall be paid in like money at said office or place from the date
hereof, commencing November 1, 1995 and on the first day of each month
thereafter until the indebtedness evidenced by this Note is paid in full.
Interest payable upon and after an Event of Default or termination or
non-renewal of the Loan Agreement shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean a rate of one
and one-half
(1 1/2%) percent per annum in excess of the Prime Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of two and one-half
(2-1/2%) percent per annum in excess of the Prime Rate upon and after an
Event of
Default or termination or non-renewal of the Loan Agreement, (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
Philadelphia National Bank, incorporated as CoreStates Bank, N.A., or its
successors, at its office in Philadelphia, Pennsylvania, as its prime rate,
whether or not such announced rate is the best rate available at such bank,
(c) the term "Event of Default" shall mean an Event of Default as such term is
defined in the Loan Agreement, and (d) the term "Loan Agreement" shall mean
the Loan and Security Agreement, dated of even date herewith, between Debtor
and Payee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. Unless otherwise
defined herein, all capitalized terms used herein shall have the meaning
assigned thereto in the Loan Agreement.
The Interest Rate payable hereunder shall increase or decrease by an amount
equal to
each increase or decrease, respectively, in the Prime Rate, effective on the
first day of the month after any change in the Prime Rate, based on the Prime
Rate in effect on the last day of the month in which any such change occurs.
Interest shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. In no event shall the interest charged
hereunder exceed the maximum permitted under the laws of the Commonwealth of
Massachusetts or other applicable law.
This Note is issued pursuant to the terms and provisions of the Loan
Agreement to
evidence the Term Loan by Payee to Debtor. This Note is secured by the
Collateral described in the Loan Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Debtor or any other party in connection
therewith (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, being collectively referred to herein as the
"Financing Agreements"), and is entitled to all of the benefits and rights
thereof and of the other Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
If any payment of principal or interest is not made when due hereunder, or if
any other
Event of Default shall occur for any reason, or if the Loan Agreement shall be
terminated or not renewed for any reason whatsoever, then and in any such
event, in addition to all rights and remedies of Payee under the Financing
Agreements, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Loan
Agreement and the other Financing Agreements (the "Obligations"), including,
without limitation, all amounts owing under this Note, to be due and payable,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest
accruing thereafter at the then applicable Interest Rate stated above until
the indebtedness evidenced by this Note is paid in full, plus the costs and
expenses of collection hereof, including, but not limited to, attorneys' fees
and legal expenses.
Debtor (i) waives diligence, demand, presentment, protest and notice of any
kind, (ii)
agrees that it will not be necessary for Payee to first institute suit in
order to enforce payment of this Note and (iii) consents to any one or more
extensions or postponements of time of payment, release, surrender or
substitution of collateral security, or forbearance or other indulgence,
without notice or consent. The pleading of any statute of limitations as a
defense to any demand against Debtor is expressly hereby waived by Debtor.
Upon any Event of Default or termination or non-renewal of the Loan Agreement,
Payee shall have the right, but not the obligation to setoff against this Note
all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment, but may
proceed
against Debtor and any guarantors or endorsers hereof in such order and manner
as Payee may choose. None of the rights of Payee shall be waived or
diminished by any failure or delay in the exercise thereof.
The validity, interpretation and enforcement of this Note and the other
Financing
Agreements and any dispute arising in connection herewith or therewith shall
be governed by the internal laws of the Commonwealth of Massachusetts (without
giving effect to principles of conflicts of law).
Debtor irrevocably consents and submits to the non-exclusive jurisdiction of
the Courts
of Massachusetts and the United States District Court for the District of
Massachusetts and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note or any
of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any
of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether
in contract, tort, equity or otherwise, and agrees that any dispute arising
out of the relationship between Debtor and Payee or the conduct of such
persons in connection with this Note or otherwise shall be heard only in the
courts described above (except that Payee shall have the right to bring any
action or proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
Debtor hereby waives personal service of any and all process upon it and
consents that
all such service of process may be made by certified mail (return receipt
requested) directed to it and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Payee's option, by service upon Debtor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE
OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE IN RESPECT OF
THIS NOTE OR THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY.
The execution and delivery of this Note has been authorized by the Board of
Directors
and by any necessary vote or consent of the stockholders of Debtor. Debtor
hereby authorizes Payee to complete this Note in any particulars according to
the terms of the loan evidenced hereby.
This Note shall be binding upon the successors and assigns of Debtor and
inure to the
benefit of Payee and its successors, endorsees and assigns. Whenever used
herein, the term "Debtor" shall be deemed to include its successors and
assigns and the term "Payee" shall be deemed to include its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ATTEST: ORR-SCHELEN-MAYERON & ASSOCIATES,
INC.
__________________________ By:
Secretary Name:
Title:
[Corporate Seal]
<PAGE>
Exhibit 4.1
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (NEW ENGLAND)
as Lender
and
BRIGHT STAR INDUSTRIES, INCORPORATED
FENWAL ELECTRONICS, INC.
GREENWALD INDUSTRIES INC.
MASTERVIEW WINDOW COMPANY, INC.
ORR-SCHELEN-MAYERON & ASSOCIATES, INC.
as Borrowers
Dated: October 11, 1995
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS 2
SECTION 2. CREDIT FACILITIES. . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Letter of Credit Accommodations. . . . . . . . . . . . . . . . . . . . 12
2.3 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Equipment Acquisition Facility.. . . . . . . . . . . . . . . . . . . . 14
2.5 Availability Reserves. . . . . . . . . . . . . . . . . . . . . . . . . 15
2.6 Appointment of Fenwal as Agent for Requesting Loans and Receipt of
Statements. . . . . . . 16
SECTION 3. INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . . . 16
3.1. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Closing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4 Unused Line Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 18
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations
. . . . . . .18
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations. .
. . . . 20
SECTION 5. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . 20
SECTION 6. COLLECTION AND ADMINISTRATION. . . . . . . . . . . . . . . . . 21
6.1 Borrower's Loan Account. . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Authorization to Make Loans. . . . . . . . . . . . . . . . . . . . . . 23
6.6 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. COLLATERAL REPORTING AND COVENANTS . . . . . . . . . . . . . . 24
7.1 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Accounts Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Inventory Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Equipment Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Right to Cure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.7 Access to Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.8 Recordation of Greenwald Mortgage. . . . . . . . . . . . . . . . . . . 28
SECTION 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 28
8.1 Corporate Existence, Power and Authority; Subsidiaries . . . . . . . . 28
8.2 Financial Statements; No Material Adverse Change . . . . . . . . . . . 29
8.3 Chief Executive Office; Collateral Locations . . . . . . . . . . . . . 29
8.4 Priority of Liens; Title to Properties . . . . . . . . . . . . . . . . 29
8.5 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Compliance with Other Agreements and Applicable Laws . . . . . . . . . 30
8.8 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.9 Environmental Compliance.. . . . . . . . . . . . . . . . . . . . . . . 31
8.10 Accuracy and Completeness of Information. . . . . . . . . . . . . . . 32
8.11 Interrelated Businesses . . . . . . . . . . . . . . . . . . . . . . . 32
8.12 Survival of Warranties; Cumulative. . . . . . . . . . . . . . . . . . 32
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS . . . . . . . . . . . . . . 32
9.1 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 New Collateral Locations . . . . . . . . . . . . . . . . . . . . . . . 33
9.3 Compliance with Laws, Regulations, Etc . . . . . . . . . . . . . . . . 33
9.4 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . . . . 34
9.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.6 Financial Statements and Other Information . . . . . . . . . . . . . . 35
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. . . . . . . . 36
9.8 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.9 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.10 Loans, Investments, Guarantees, Etc . . . . . . . . . . . . . . . . . 38
9.11 Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . 38
9.12 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . 39
9.13 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.14 Adjusted Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.15 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . 39
9.16 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.17 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10. EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . 41
10.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW. .
. . . . 44
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver .
. . . . 44
11.2 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.3 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . 45
11.4 Waiver of Counterclaims . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS. . . . . . . . . . . . . . . 46
12.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.4 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.5 Participant's Security Interest . . . . . . . . . . . . . . . . . . . 49
12.6 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . 49
12.7 Suretyship Waivers and Consents. . . . . . . . . . . . . . . . . . . 49
12.8 Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . 51
12.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
<PAGE>
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B Form of Equipment Loan Promissory Note
Exhibit C Form of Auditor's Letter Relating to Borrowers
Schedule 1.11(m) Account Debtors with Approved
Concentrations
Schedule 8.4 Existing Liens
Schedule 9.10 Permitted
Loans to Parent
<PAGE>
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated October 11, 1995 is entered into by
and between Congress Financial Corporation (New England), a Massachusetts
corporation ("Lender"), and Bright Star Industries, Incorporated, a Delaware
corporation ("Bright Star"), Fenwal Electronics, Inc., a Delaware corporation
("Fenwal"), Greenwald Industries Inc., a Delaware corporation, ("Greenwald"),
Masterview Window Company, Inc., a Delaware corporation ("Masterview") and
Orr-Schelen-Mayeron & Associates, Inc., a Minnesota corporation ("OSM") (Bright
Star, Fenwal, Greenwald, Masterview and OSM are each referred to, singly, as a
"Borrower" and, collectively, as the "Borrowers").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Lender enter into certain financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1.DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also
mean the
singular and to the singular shall also mean the plural. All references to
Borrowers and Lender pursuant to the definitions set forth in the recitals
hereto,
or to any other person herein, shall include their respective successors and
assigns. The words "hereof", "herein", "hereunder", "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this
Agreement now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced. An Event of Default shall exist or continue or be
continuing
until such Event of Default is waived in accordance with Section 11.3. Any
accounting term used herein unless otherwise defined in this Agreement shall
have
the meanings customarily given to such term in accordance with GAAP. For
purposes
of this Agreement, the following terms shall have the respective meanings
given to
them below:
1.1 "Accounts" shall mean all present and future rights of each Borrower
to payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal
to: (a) the difference between: (i) the aggregate net book value of all
assets of
such Person and its subsidiaries, calculating the book value of inventory
for this
purpose on a first-in-first-out basis, after deducting from such book values all
appropriate reserves in accordance with GAAP (including all reserves for
doubtful
receivables, obsolescence, depreciation and amortization) and (ii) the aggregate
amount of the indebtedness and other liabilities of such Person and its
subsidiaries
(including tax and other proper accruals) plus (b) indebtedness of such
Person and
its subsidiaries which is subordinated in right of payment to the full and final
payment of all of the Obligations on terms and conditions acceptable to Lender.
Any charges taken with respect to the relocation of Greenwald to Connecticut
in an
amount not to exceed $1,500,000 shall not be included in the determination
of the
Adjusted Net Worth of Greenwald.
1.3 "Agent" shall mean, Fenwal, or such other Borrower as may be
designated from time to time by the Borrowers, with the prior consent of Lender,
as their agent hereunder to request Loans and Letter of Credit Accommodations.
1.4 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrowers under the lending formula(s) provided
for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may affect either (i) the
Collateral or
any other property which is security for the Obligations or its value, (ii) the
assets, business or prospects of any Borrower or any Obligor or (iii) the
security
interests and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Lender's good
faith belief that any collateral report or financial information furnished by
or on
behalf of any Borrower or any Obligor to Lender is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any
state of
facts which Lender determines in good faith constitutes an Event of Default
or may,
with notice or passage of time or both, constitute an Event of Default.
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified,
recodified or
supplemented, together with all rules, regulations and interpretations
thereunder
or related thereto.
1.7 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.8 "Default Rate" shall have the meaning set forth in Section 3.1(a)
hereof.
1.9 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.10 "ERISA Affiliate" shall mean any person required to be aggregated
with any Borrower or any of its subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.11 "Eligible Accounts" shall mean Accounts created by each Borrower
which are and continue to be acceptable to Lender based on the criteria set
forth
below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by any Borrower or rendition of services by any Borrower
in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after
the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sales, sales and returns, sales on approval, or other terms under
which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America, or, at Lender's
option, if either: (i) the account debtor has delivered to Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Lender, sufficient to cover such Account, in form and substance satisfactory to
Lender and, if required by Lender, the original of such letter of credit has
been
delivered to Lender or Lender's agent and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by an insurer
and
on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress billings, bill and
hold invoices or retainage invoices, except as to bill and hold invoices, if
Lender shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts;
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectibility of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with any Borrower or any Obligor directly or indirectly by virtue
of family membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision,
department, agency or instrumentality thereof, upon Lender's request, the
Federal
Assignment of Claims Act of 1940, as amended or any similar State or local law,
if applicable, has been complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its affiliates
owing to any Borrower do not constitute more than twenty (20%) percent of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
such percentage may be deemed Eligible Accounts) due to such Borrower except as
set forth on Schedule 1.11(m) hereto or as may be approved by Lender (subject to
such percentage with respect thereto as Lender may determine);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than ninety (90) days after the date of the original
invoice
for them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to any Borrower does not exceed the credit limit with respect to
such account debtors as determined by Lender from time to time (but the portion
of the Accounts not in excess of such credit limit may still be deemed Eligible
Accounts); and
(p) such Accounts are owed by account debtors deemed creditworthy
at all times by Lender, as determined by Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Any Accounts which are not Eligible Accounts
shall nevertheless be part of the Collateral.
1.12 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrowers and
raw
materials for such finished goods which are acceptable to Lender based on the
criteria set forth below. In general, Eligible Inventory shall not include (a)
work-in-process; (b) components which are not part of finished goods; (c) spare
parts for equipment; (d) packaging and shipping materials; (e) supplies used or
consumed in any Borrower's business; (f) Inventory at premises other than those
owned and controlled by a Borrower, except if Lender shall have received an
agreement in writing from the person in possession of such Inventory and/or the
owner or operator of such premises in form and substance satisfactory to Lender
acknowledging Lender's first priority security interest in the Inventory,
waiving
security interests and claims by such person against the Inventory and
permitting
Lender access to, and the right to remain on, the premises so as to exercise
Lender's rights and remedies and otherwise deal with the Collateral; (g)
Inventory subject to a security interest or lien in favor of any person other
than Lender except those permitted in this Agreement; (h) bill and hold goods;
(i) unserviceable, obsolete or slow moving Inventory; (j) Inventory which is not
subject to the first priority, valid and perfected security interest of Lender;
(k) returned, damaged and/or defective Inventory; and (l) Inventory purchased or
sold on consignment. General criteria for Eligible Inventory may be established
and revised from time to time by Lender in good faith. Any Inventory which is
not Eligible Inventory shall nevertheless be part of the Collateral.
1.13 "Eligible Equipment" shall mean Equipment acquired by a Borrower
after the date hereof, which is in new and unused condition, located at such
Borrower's premises and acceptable to Lender in all respects. General criteria
for Eligible Equipment may be established and revised from time to time by
Lender
in Lender's good faith judgment. In determining such acceptability Lender may,
but need not, rely on reports furnished to Lender by a Borrower, but reliance
thereon by Congress from time to time shall not be deemed to limit Lender's
right
to revise standards of eligibility at any time. In general, except in Lender's
discretion, Eligible Equipment shall not include Equipment at the premises of
third parties or subject to a security interest or lien in favor of any third
parties, Equipment which is not subject to Lender's perfected security interest,
fixtures, defective Equipment or Equipment not used or usable in the ordinary
course of Borrower's business as presently conducted; provided, however, any
Equipment which would otherwise be deemed Eligible Equipment at locations which
are not owned and operated by Borrower may nevertheless be considered Eligible
Equipment if Lender shall have received an agreement in writing, in form and
substance satisfactory to Lender, from the owner and/or operator of such
location, as the case may be, pursuant to which such owner and/or operator, if
required by Lender: (a) acknowledges the first priority lien of Lender on such
Equipment, (b) agrees to waive any and all claims such owner and/or operator
may,
at any time, have against such Equipment and (c) grants to Lender the right to
enter and remain on the premises in order to exercise Lender's rights and
remedies on terms acceptable to Lender. Any Equipment which Lender determines
to be ineligible or unacceptable for purposes of the lending formula shall
nevertheless be and remain at all times part of the Collateral.
1.14 "Environmental Laws" shall mean all federal, state, district, and
local laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now
or at any time hereafter in effect, applicable to Borrowers' businesses or any
facilities owned, operated or used by any Borrower,, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) or otherwise
relating to the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or hazardous or toxic substances, materials or wastes regulated by
governmental entities.
1.15 "Equipment Acquisition Loans" shall mean the loans now or hereafter
made by Lender to Borrowers as provided in Section 2.4 hereof.
1.16 "Excess Availability" shall mean the amount, as determined by Lender
with respect to individual Borrowers or all Borrowers, collectively, calculated
at any time, equal to: (a) the lesser of: (i) the amount of the Revolving Loans
available to such Borrower or Borrowers as of such time based on the applicable
lending formulas multiplied by the Net Amount of Eligible Accounts and the Value
of Eligible Inventory, as determined by Lender, and subject to the sublimits and
Availability Reserves from time to time established by Lender hereunder, and
(ii)
the applicable Revolving Credit Limit, minus the sum of: (i) the amount of all
then outstanding and unpaid Revolving Loans, plus (ii) the aggregate amount of
all then outstanding and unpaid trade payables of such Borrower or Borrowers
which are more than sixty (60) days past due as of such time.
1.17 "Equipment" shall mean all of Borrowers' now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.18 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.19 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, mortgages and other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by any Borrower or any Obligor in connection with this Agreement, as the same
now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.20 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.13 and 9.14 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to Lender
prior to the date hereof.
1.21 "Hard Cost of Eligible Equipment" shall mean the price paid by a
Borrower for Eligible Equipment excluding any and all "soft costs", as
determined
by Lender, including, without limitation, shipping, engineering, labor,
installation, setup, testing and software costs and expenses and further
excluding all commissions, fees and sales, excise and other taxes.
1.22 "Hazardous Materials" shall mean any hazardous or toxic substances,
materials and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man- made petroleum and hydrocarbons), flammable
explosives, friable asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes,
that are or become regulated under any Environmental Law (including, without
limitation, any that are or become classified as hazardous or toxic under any
Environmental Law).
1.23 "Information Certificate" shall mean the Information Certificates
of each Borrower constituting Exhibit A hereto containing material information
with respect to each Borrower, its business and assets provided by or on behalf
of Borrowers to Lender in connection with the preparation of this Agreement and
the other Financing Agreements and the financing arrangements provided for
herein.
1.24 "Inventory" shall mean all of each Borrower's now owned and
hereafter existing or acquired raw materials, work in process, finished goods
and
all other inventory of whatsoever kind or nature, wherever located.
1.25 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either (a)
issued or opened by Lender for the account of any Borrower or any Obligor or (b)
with respect to which Lender has agreed to indemnify the issuer or guaranteed to
the issuer the performance by a Borrower of its obligations to such issuer.
1.26 "Loans" shall mean the Revolving Loans, the Term Loans and the
Equipment Acquisition Loans.
1.27 "Maximum Credit" shall mean, collectively, with respect to all
Borrowers - $17,060,000; and with respect to individual Borrowers the following
amounts: Bright Star - $2,810,000.00; Fenwal - $3,645,000.00; Greenwald -
$4,458,000.00; Masterview - $4,466,000.00; OSM - $1,681,000.00.
1.28 "Mortgage" shall mean, individually and collectively, each of the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Mortgage and
Security Agreement, dated of even date herewith, by Greenwald in favor of Lender
with respect to the Real Property and related assets of Greenwald in Brooklyn,
New York, which may be recorded by Lender, at Borrower's expense, as provided in
Section 7.8 hereof and (b) the Mortgage and Security Agreement, dated of even
date herewith, by Masterview in favor of Lender with respect to the Real
Property
and related assets of Masterview in Phoenix, Arizona.
1.29 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.30 "Obligations" shall mean any and all Revolving Loans, the Term
Loans, the Equipment Loans, Letter of Credit Accommodations and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by any Borrower to Lender and/or its affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement
or after the commencement of any case with respect to any Borrower under the
United States Bankruptcy Code or any similar statute (including, without
limitation, the payment of interest and other amounts which would accrue and
become due but for the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by
Lender.
1.31 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.
1.32 "Parent" shall mean Hanten Acquisition Co., a Delaware corporation
and its successors and assigns.
1.33 "Participant" shall mean any person which at any time participates
with Lender in respect of the Loans, the Letter of Credit Accommodations or
other
Obligations or any portion thereof.
1.34 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.35 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency
or instrumentality or political subdivision thereof.
1.36 "Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate, whether or not such announced
rate
is the best rate available at such bank.
1.37 "Publicker" shall mean Publicker Industries Inc., a Pennsylvania
corporation and its successors and assigns.
1.38 "Records" shall mean all of Borrowers' present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of any Borrower with respect to the
foregoing maintained with or by any other person).
1.39 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrowers, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including
without
limitation, the real property and related assets more particularly described in
the Mortgages for the properties located in Brooklyn, New York and Phoenix,
Arizona.
1.40 "Revolving Credit Limit" shall mean, collectively for all Borrowers
$13,161,000 and the following amounts with respect to each Borrower: Bright
Star
- - $2,200,000; Fenwal - $2,500,000; Greenwald - $3,836,000; Masterview -
$3,200,000; and OSM - $1,425,000.
1.41 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrowers on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.42 "Term Loans" shall mean the term loans made by Lender to Borrowers
as provided for in Section 2.3 hereof.
1.43 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value.
1.44 "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
subsidiaries (as determined in accordance with GAAP), calculating the book value
of inventory for this purpose on a first-in-first-out basis, and (b) all current
liabilities of such Person and its subsidiaries (as determined in accordance
with
GAAP), provided, that, as to Borrowers, for purposes of Section 9.13, the
liabilities of Borrowers and their subsidiaries to Lender under this Agreement
shall not be considered current liabilities (whether or not classified as
current
liabilities in accordance with GAAP). Any charges taken with respect to the
relocation of Greenwald to Connecticut in an amount not to exceed $1,500,000
shall not be included in the determination of Working Capital of Greenwald.
SECTION 2. CREDIT FACILITIESSECTION 2.CREDIT FACILITIES
2.1Revolving Loans.
(a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to Borrowers from time to time
in amounts requested by Agent up to the amount equal to the sum of:
(i)eighty-five (85%) percent of the Net Amount of
Eligible Accounts, plus
(ii) the sum of: (A) the lesser of (1)
$1,200,000.00 or (2) the
sum of sixty-seven (67%) percent of the Value of Bright Star Eligible Inventory
consisting of finished goods plus seventeen (17%) percent of the Value of Bright
Star Eligible Inventory consisting of raw materials for such finished goods;
plus
(B) the lesser of (1) $800,000.00 or (2) the sum of thirty-one (31%) percent of
the Value of Fenwal Eligible Inventory consisting of finished goods plus twenty
(20%) percent of the Value of Fenwal Eligible Inventory consisting of raw
materials; plus (C) the lesser of (1) $1,500,000.00 or (2) the sum of fifty
eight
(58%) percent of the Value of Greenwald Eligible Inventory consisting of
finished
goods plus forty (40%) percent of the Value of Greenwald Eligible Inventory
consisting of raw materials; plus (D) the lesser of (1) $1,200,000.00 or (2) the
sum of fifty (50%) percent of the Value of Masterview Eligible Inventory
consisting of finished goods plus forty-five (45%) percent of the Value of
Masterview Eligible Inventory consisting of raw materials; less
(iii) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not
less than five (5) days prior notice to Borrowers, (i) reduce the lending
formula with respect to Eligible Accounts of any Borrower to the extent that
Lender determines in good faith that: (A) the dilution with respect to the
Accounts for any period (based on the ratio of (1) the aggregate amount of
reductions in Accounts other than as a result of payments in cash to (2) the
aggregate amount of total sales) has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (B) the general creditworthiness of account debtors has declined or
(ii) reduce the lending formula(s) with respect to Eligible Inventory to the
extent that Lender determines that: (A) the number of days of the turnover
of the
Inventory for any Borrower and for any period has changed in any material
respect
or (B) the liquidation value of the Eligible Inventory, or any category thereof,
has decreased, or (C) the nature and quality of the Inventory has deteriorated
in any material respect. In determining whether to reduce the lending
formula(s), Lender may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory of any
Borrower or in establishing Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of the
Revolving Loans and the Letter of Credit Accommodations outstanding at any time
to each Borrower shall not exceed the Revolving Credit Limit for such Borrower
and the aggregate amount of Loans and the Letter of Credit Accommodations
outstanding at any time to such Borrower shall not exceed the Maximum Credit for
each Borrower. In the event that the outstanding amount of any component of the
Loans, or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations, exceed the amounts available under the lending formulas, the
sublimits for Letter of Credit Accommodations set forth in Section 2.2(c), the
sublimits for Equipment Acquisition Loans, the Revolving Credit Limit or the
Maximum Credit, as applicable, such event shall not limit, waive or otherwise
affect any rights of Lender in that circumstance or on any future occasions and
Borrowers shall, upon demand by Lender, which may be made at any time or from
time to time, immediately repay to Lender the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of Agent, Lender agrees to provide or arrange for Letter
of Credit Accommodations for the account of Borrowers, containing terms and
conditions acceptable to Lender and the issuer thereof. Any payments made by
Lender to any issuer thereof and/or related parties in connection with the
Letter
of Credit Accommodations shall constitute additional Revolving Loans to such
Borrowers pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Lender a letter of credit fee at a rate equal to three (3%) percent
per annum on the daily outstanding balance of the Letter of Credit
Accommodations
for the immediately preceding month (or part thereof), payable in arrears as of
the first day of each succeeding month. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrowers to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to Borrowers, (subject to the applicable Revolving
Credit Limit and any Availability Reserves), are equal to or greater than: (i)
if the proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory, the product of one (1) minus the percentage lending formula
for such Eligible Inventory times the cost of such Eligible Inventory, plus (B)
freight, taxes, duty and other amounts which Lender estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of
Borrowers'
locations for Eligible Inventory within the United States of America and (ii) if
the proposed Letter of Credit Accommodation is for any other purpose, an amount
equal to one hundred (100%) percent of the face amount thereof and all other
commitments and obligations made or incurred by Lender with respect thereto.
Effective on the issuance of each Letter of Credit Accommodation, the amount of
Revolving Loans which might otherwise be available to the Borrower for whom the
Letter of Credit Accommodation is issued, shall be reduced by the applicable
amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in Lender's discretion, (i) the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in connection therewith, shall not at any
time exceed $1,000,000.00, and (ii) the amount of all outstanding Letter of
Credit Accommodations for the purpose of purchasing Eligible Inventory of
Borrowers and all other commitments and obligations made or incurred by Lender
in connection therewith shall not at any time exceed with respect to any
Borrower, (A) the lesser of (1) $1,000,000 or (2) the limitation on Revolving
Loans permitted to be made against Eligible Inventory pursuant to Section
2.1(a)(ii) minus (B) the amount of the then outstanding Revolving Loans to such
Borrower based on Eligible Inventory pursuant to Section 2.1(a)(ii) hereof. At
any time an Event of Default exists or has occurred and is continuing, upon
Lender's request, Borrowers will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Lender for the Letter of Credit
Accommodations, and in either case, the Revolving Loans otherwise available to
Borrowers shall not be reduced as provided in Section 2.2(c) to the extent of
such cash collateral.
(e) Borrowers shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation. Borrowers assume all risks with respect
to the acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary shall be
deemed Borrowers' agent. Borrowers assume all risks for, and agree to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Borrowers hereby release and hold Lender harmless from
and against any acts, waivers, errors, delays or omissions, whether caused by
any
Borrower, by any issuer or correspondent or otherwise with respect to or
relating
to any Letter of Credit Accommodation. The provisions of this Section 2.2(e)
shall survive the payment of Obligations and the termination or non-renewal of
this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant Borrowers any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter
of Credit Accommodation provided by an issuer other than Lender unless Lender
has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers shall be bound by any interpretation made in good faith by Lender, or
any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of any Borrower. Lender shall have the sole and exclusive right
and
authority to, and Borrowers shall not: (i) at any time an Event of Default
exists
or has occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection
of any documents or goods or (C) execute any and all applications for steamship
or airway guaranties, indemnities or delivery orders, and (ii) at all times,
(A) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in any Borrower's name.
(g) any rights, remedies, duties or obligations granted or
undertaken by Borrowers to any issuer or correspondent in any application for
any
Letter of Credit Accommodations, or any other agreement in favor of any issuer
or correspondent relating to any Letter of Credit Accommodation, shall be deemed
to have been granted or undertaken by Borrowers to Lender. Any duties or
obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrowers to Lender
and
to apply in all respects to all Borrowers.
2.3 Term Loans . Lender is making Term Loans to each
Borrower in the original principal amounts set forth below:
Borrower
Original Term Loan Principal
Amount
Bright Star
$190,000.00
Fenwal
$565,000.00
Greenwald
$392,000.00
Masterview
$916,000.00
OSM
$86,000.00
The Term Loans are each (a) evidenced by a Term Promissory Note in such original
principal amount duly executed and delivered by the respective Borrowers to
Lender concurrently herewith; (b) to be repaid, together with interest and other
amounts, in accordance with this Agreement, the Term Promissory Notes, and the
other Financing Agreements and (c) secured by all of the Collateral.
2.4 Equipment Acquisition Facility.
Subject to, and upon the terms and conditions contained herein, Lender agrees
to make Equipment Loans to Borrowers from time to time, up to the amount equal
to the lesser of (a) the amounts set forth below opposite each Borrower's name,
or (b) seventy (70%) percent of the Hard Cost of Eligible Equipment:
Borrower
Maximum Principal Amount of Equipment Loans
Bright Star
$420,000
Fenwal
$580,000
Greenwald
$230,000
Masterview
$350,000
OSM
$170,000
Each Equipment Loan requested by a Borrower hereunder shall be in a minimum
amount of $50,000. Each request by a Borrower for an Equipment Loan shall be
accompanied by copies of all purchase orders, invoices and other documentation
relating to the Eligible Equipment to be purchased including a list and
description of the Eligible Equipment (by model, make, manufacturer, serial no.
(if available) and/or such other identifying information as may be required by
Lender) and such other information and documents as may be requested by Lender.
Each Equipment Loan shall be (a) evidenced by an Equipment Loan Promissory Note
substantially in the form attached as Exhibit B hereto, completed, executed and
delivered by the respective Borrower to Lender (in a manner satisfactory to
Lender) prior to the making of any Equipment Loan or by the records and loan
accounts maintained by Lender; (b) repaid, together with interest and other
amounts, in accordance with this Agreement, the Equipment Loan Promissory Note,
and the other Financing Agreements and (c) secured by a first and only security
interest on the acquired Equipment and by all the other Collateral. Borrower
shall deliver to Lender upon request evidence of full payment for all Eligible
Equipment acquired with the proceeds of an Equipment Loan and the absence of
liens thereon. The principal amount of each Equipment Loan shall be repaid in
equal consecutive monthly payments, payable on the first day of each calendar
month, commencing on the first such day to occur after the date each such Loan
is made. The principal amount shall be amortized over a sixty (60) month period
and the outstanding principal balance thereof and all accrued and unpaid
interest, fees and charges shall be due and payable on the first to occur of (a)
the election of Lender upon and following an Event of Default and (b) the date
of termination or nonrenewal of this Agreement. Interest on the Equipment Loans
shall be computed and paid in accordance with Section 3.1 hereof.
2.5 Availability Reserves . All Revolving
Loans otherwise available to Borrower pursuant to the lending formulas and
subject to the Maximum Credit and other applicable limits hereunder shall be
subject to Lender's continuing right to establish and revise Availability
Reserves in addition to the Availability Reserves established on the date hereof
including, without limitation an Availability Reserve in respect of the
Greenwald
Real Property in Brooklyn, New York in the amount of $500,000 (the "Greenwald
Availability Reserve"). The Greenwald Availability Reserve will be released on
a dollar for dollar basis upon Lender's receipt of at least $250,000 in proceeds
from the sale of the Greenwald Real Property (which shall be applied as provided
in Section 9.7) and/or when Borrowers furnish to Lender substitute Collateral
satisfactory to Lender in all respects including, if such substitute collateral
is real estate, an appraisal in form, scope and methodology and by an appraiser
satisfactory to Lender and an environmental assessment satisfactory to Lender in
good faith. The Greenwald Availability Reserve shall be increased by $250,000
up to a maximum of $500,000 in the event that the Greenwald Real Property is
sold
and the proceeds are applied as provided in Section 9.7, Greenwald relocates to
Connecticut in accordance with Section 9.8 and sufficient substitute collateral
is not provided as set forth above. In the event the Mortgage is recorded in
accordance with Section 9.7(b)(iii)(B), the Greenwald Availability Reserve will
be released.
2.6 Appointment of Fenwal as Agent for Requesting Loans and Receipt of
Statements.2.6Appointment of Fenwal as Agent for Requesting Loans and Receipt of
Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Fenwal as its agent ("Agent") to request Revolving Loans, Equipment Loans,
Letter
of Credit Accommodations and the Term Loans and to otherwise take action
pursuant
to this Agreement in the name or on behalf of each of and all of the Borrowers.
Lender may distribute Loans to Agent, such Borrowers' account(s) or otherwise
make such Loans to Borrowers as specified by Agent, or as determined by Lender
to pay Obligations, without notice to any other Borrower or any Obligor. Agent
agrees to immediately distribute the proceeds of Loans made to it to each of the
Borrowers in the amounts specified in its Loan requests to Lender and in
accordance with the lending formulas, sublimits and other limitations set forth
herein.
(b) Each Borrower hereby irrevocably appoints and constitutes
Fenwal as its agent to receive and redistribute Loans and to receive statements
of account and all other notices and materials from Lender under this Agreement
and the other Financing Agreements or otherwise in connection with or related to
the Obligations.
(c) No purported termination of the appointment of Fenwal as
agent as aforesaid shall be effective, except after thirty (30) business days
prior written notice to Lender and appointment of a substitute agent from among
the Borrowers acceptable to Lender in all respects.
SECTION 3.INTEREST AND FEES
3.1.Interest.
(a) Borrowers shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations at the rate of one and
one-half (1 1/2%) percent per annum in excess of the Prime Rate, except that
Borrowers shall pay to Lender interest, at Lender's option, without notice, at
the rate of two and one-half (2.5%) percent per annum in excess of the Prime
Rate
(the "Default Rate"): (i) on the non-contingent Obligations for the period from
and after the date of termination or non-renewal hereof, or the date of the
occurrence of an Event of Default, and for so long as such Event of Default is
continuing as determined by Lender and until such time as Lender has received
full and final payment of all such Obligations (notwithstanding entry of any
judgment against any or all Borrowers) and (ii) on the Revolving Loans at any
time outstanding in excess of the amounts available to Borrowers under Section
2 (whether or not such excess(es), arise or are made with or without Lender's
knowledge or consent and whether made before or after an Event of Default). All
interest accruing hereunder on and after the occurrence of any of the events
referred to in Sections 3.1(a)(i) or 3.1(a)(ii) above shall be payable on
demand.
(b) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate shall increase or decrease by an amount equal to
each
increase or decrease in the Prime Rate effective on the first day of the month
after any change in such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change occurs. In no
event
shall charges constituting interest payable by Borrowers to Lender exceed the
maximum amount or the rate permitted under any applicable law or regulation, and
if any part or provision of this Agreement is in contravention of any such law
or regulation, such part or provision shall be deemed amended to conform
thereto.
3.2 Closing Fee . Each Borrower shall pay to Lender a
closing fee in the amounts set forth below, which shall be fully earned as of
the
date hereof and payable in two equal installments on the date hereof and on the
first anniversary of the date hereof:
Borrower
Closing Fee
Bright Star
$28,100
Fenwal
$36,450
Greenwald
$44,580
Masterview
$44,660
OSM
$16,810
The second installment of the Greenwald closing fee is subject to reduction
by $1,960 in the event that prior to the first anniversary of the date hereof
Greenwald relocates to Connecticut and as a result the Greenwald Term Loan is
paid in full as provided in Section 9.8 hereof.
3.3 Servicing Fee . Each Borrower shall pay to Lender
monthly a servicing fee in an amount equal to $2,000 in respect of Lender's
services for each month (or part thereof) while this Agreement remains in effect
and for so long thereafter as any of the Obligations are outstanding, which fee
shall be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.4 Unused Line Fee . Each Borrower shall pay to
Lender monthly an unused line fee equal to one quarter (1/4%) percent per annum
calculated upon the amount by which the Revolving Credit Limit for each Borrower
exceeds the average daily principal balance of the outstanding Revolving Loans
and Letter of Credit Accommodations for each such Borrower during the
immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears.
SECTION 4.CONDITIONS PRECEDENT
4.1Conditions Precedent to Initial Loans and Letter of Credit
Accommodations . Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents as
Lender may request to evidence and effectuate the termination by the existing
lender or lenders to Borrowers of their respective financing arrangements with
Borrowers and the termination and release by it or them, as the case may be, of
any interest in and to any assets and properties of each Borrower and each
Obligor, duly authorized, executed and delivered by it or each of them,
including, but not limited to, (i) UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors,
as secured party and any Borrower or any Obligor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by any Borrower or any Obligor in favor of such existing lender or lenders,
in form acceptable for recording in the appropriate government office;
(b) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have in good faith requested
in connection therewith, such documents where requested by Lender or its counsel
to be certified by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of any Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral;
(e) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may in good
faith
require to determine the amount of Revolving Loans available to Borrowers, the
results of which shall be satisfactory to Lender, not more than three (3)
business days prior to the date hereof;
(f) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the
Collateral or to effectuate the provisions or purposes of this Agreement and the
other Financing Agreements, including, without limitation, acknowledgments by
lessors, mortgagees and warehousemen of Lender's security interests in the
Collateral, waivers by such persons of any security interests, liens or other
claims by such persons to the Collateral and agreements permitting Lender access
to, and the right to remain on, the premises to exercise its rights and remedies
and otherwise deal with the Collateral;
(g) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
(h) the aggregate Excess Availability for all the Borrowers as
determined by Lender, as of the date hereof, shall not be less than $1,500,000
after giving effect to the initial Loans made or to be made and Letter of Credit
Accommodations issued or to be issued in connection with the initial
transactions
hereunder;
(i) Lender shall have received an environmental audit of
Masterview's buildings and the Real Property in Phoenix, Arizona conducted by an
independent environmental engineering firm acceptable to Lender, and in form,
scope and methodology satisfactory to Lender, confirming (i) Masterview is in
compliance with all material applicable Environmental Laws and (ii) the absence
of any material environmental problems;
(j) Lender shall have received, in form and substance
satisfactory to Lender, a valid and effective title insurance policy issued by
a company and agent acceptable to Lender (i) insuring the priority, amount and
sufficiency of the Mortgage provided by Masterview, (ii) insuring against
matters
that would be disclosed by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by Lender in good
faith for protection of its interests;
(k) Lender shall have received, in form and substance
satisfactory to Lender, a fair market valuation of Publicker;
(l) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrowers and the
Obligors with respect to the Financing Agreements and such other matters as
Lender may request; and
(m) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.
4.2Conditions Precedent to All Loans and Letter of Credit
Accommodations . Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to
Borrowers, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making of
such Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
SECTION 5.GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property
and interests in property of Borrowers, whether now owned or hereafter acquired
or existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered
patents, trademarks, service marks, copyrights, trade names, applications
for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action and other
claims and existing and future leasehold interests in equipment, real estate and
fixtures), chattel paper, documents, instruments, letters of credit, bankers'
acceptances and guaranties;
5.3 all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Borrowers now or hereafter held
or received by or in transit to Lender or its affiliates or at any other
depository or other institution from or for the account of any Borrower, whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related
to the Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (c) goods described in invoices, documents, contracts or instruments with
respect to, or otherwise representing or evidencing, Accounts or other
Collateral, including, without limitation, returned, repossessed and reclaimed
goods, and (d) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Real Property;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
5.9 Lender acknowledges that certain pre-existing financing
arrangements of Borrowers as set forth on Schedule 8.4 are secured by security
interests in Equipment that restrict Borrowers' right to grant security
interests
thereon. The security interest granted to Lender in such Equipment that is
subject to pre-existing liens shall attach to the maximum extent not limited by
such pre-existing financing arrangements.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts6.1Borrower's Loan Account . Lender shall
maintain one or more loan account(s) on its books in which shall be recorded (a)
all Loans, Letter of Credit Accommodations and other Obligations and the
Collateral, (b) all payments made by or on behalf of Borrowers and (c) all other
appropriate debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in the
loan
account(s) shall be made in accordance with Lender's customary practices as in
effect from time to time.
6.2 Statements . Lender shall render to Agent each month
a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Lender for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
conclusively binding upon Borrowers as an account stated except to the extent
that Lender receives a written notice from Agent of any specific exceptions of
Borrowers thereto within thirty (30) days after the date such statement has been
mailed by Lender. Until such time as Lender shall have rendered to Agent a
written statement as provided above, the balance in Borrowers' loan account(s)
shall be presumptive evidence of the amounts due and owing to Lender by
Borrowers.
6.3 Collection of Accounts
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which Borrowers shall promptly deposit and direct their account
debtors to directly remit all payments on Accounts and all payments constituting
proceeds of Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. The banks at which
the Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or deposited
in the Blocked Accounts are the property of Lender, that the depository bank has
no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account"). Borrowers agree that all
payments made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of Inventory or other Collateral
or otherwise shall be the property of Lender.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations two (2) business days following the date of
receipt of immediately available funds by Lender in the Payment Account. For
purposes of calculating the amount of the Revolving Loans available to Borrowers
such payments will be applied (conditional upon final collection) to the
Obligations on the business day of receipt by Lender in the Payment Account, if
such payments are received within sufficient time (in accordance with Lender's
usual and customary practices as in effect from time to time) to credit
Borrowers' loan account(s) on such day, and if not, then on the next business
day.
(c) Borrowers and all of their affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender,
receive, as the property of Lender, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts,
or remit the same or cause the same to be remitted, in kind, to Lender. In no
event shall the same be commingled with Borrowers' own funds. Borrowers agree
to reimburse Lender on demand for any amounts owed or paid to any bank at which
a Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of
Borrowers to reimburse Lender for such amounts pursuant to this Section 6.3
shall
survive the termination or non-renewal of this Agreement.
6.4 Payments All Obligations shall be payable to the
Payment Account as provided in Section 6.3 or such other place as Lender may
designate from time to time. Lender may apply payments received or collected
from Borrowers or for the account of any Borrower (including, without
limitation,
the monetary proceeds of collections or of realization upon any Collateral) to
such of the Revolving Loans and other Obligations (except for the Term Loans and
Equipment Loans which so long as no Event of Default exists or has occurred and
is continuing shall be paid in accordance with the promissory notes evidencing
such loans), whether or not then due, in such order and manner as Lender
determines. At Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrowers.
Borrowers shall make all payments to Lender on the Obligations free and clear
of,
and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrowers shall be liable to pay to Lender, and do
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon
such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans . Lender
is authorized to make the Loans and provide the Letter of Credit Accommodations
based upon telephonic or other instructions received from anyone purporting to
be an officer of Agent or other authorized person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All requests
for
Loans or Letter of Credit Accommodations hereunder shall specify the date on
which the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a business day) and the amount of the requested
Loan. Requests received after 11:00 a.m. Boston, Massachusetts time on any day
shall be deemed to have been made as of the opening of business on the
immediately following business day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, Borrowers when deposited
to the credit of Agent or otherwise disbursed or established in accordance with
the instructions of Agent or in accordance with the terms and conditions of this
Agreement.
6.6 Use of Proceeds . Borrowers shall use the
initial proceeds of the Loans provided by Lender to Borrowers hereunder only
for:
(a) payments to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Lender on or about the date hereof and (b) costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements. All other Loans
made or Letter of Credit Accommodations provided by Lender to Borrowers pursuant
to the provisions hereof shall be used by Borrowers only for general operating,
working capital and other proper corporate purposes of Borrowers not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a "purpose credit" within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System,
as amended.
SECTION 7.COLLATERAL REPORTING AND
COVENANTS
7.1 Collateral Reporting . Borrowers shall
provide Lender with the following documents in a form satisfactory to Lender:
(a)
on a regular basis as required by Lender, schedules of Accounts; (b) on a
monthly
basis or more frequently as Lender may request, (i) perpetual inventory reports,
(ii) inventory reports by category and (iii) agings of accounts payable,
(c) upon
Lender's request, (i) copies of customer statements and credit memos, remittance
advices and reports, and copies of deposit slips and bank statements,
(ii) copies
of shipping and delivery documents, and (iii) copies of purchase orders,
invoices
and delivery documents for Inventory and Equipment acquired by Borrowers; (d)
agings of accounts receivable on a weekly basis or more frequently as Lender
may
request; and (e) such other reports as to the Collateral as Lender shall request
from time to time. If any of Borrowers' records or reports of the Collateral
are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrowers hereby irrevocably authorize such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Lender and
to follow Lender's instructions with respect to further services at any time
that
an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants .
(a) Borrowers shall notify Lender promptly of: (i) any material
delay in any Borrower's performance of any of its obligations to any account
debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any disputes with account debtors, or
any
settlement, adjustment or compromise thereof that are reasonably likely to
result
in a material reduction in an Account, (ii) all material adverse information
relating to the financial condition of any account debtor and (iii) any event
or circumstance which, to Borrowers' knowledge, would cause Lender to consider
any then existing Accounts as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Lender's consent, except in the
ordinary course of Borrowers' businesses in accordance with practices and
policies previously disclosed in writing to Lender. So long as no Event of
Default exists or has occurred and is continuing, Borrowers shall settle, adjust
or compromise any claim, offset, counterclaim or dispute with any account
debtor.
At any time that an Event of Default exists or has occurred and is continuing,
Lender shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) Borrowers shall promptly report to Lender any return of
Inventory by an account debtor having a sales price in excess of $25,000.
At any
time that Inventory is returned, reclaimed or repossessed, the related Account
shall not be deemed an Eligible Account. In the event any account debtor
returns
Inventory when an Event of Default exists or has occurred and is continuing,
each
Borrower shall, upon Lender's request, (i) hold the returned Inventory in trust
for Lender, (ii) segregate all returned Inventory from all of its other
property,
(iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true
and complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Lender in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrowers' businesses in accordance with
practices and policies previously disclosed to Lender, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance with
the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable State or Federal laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and
all such documentation will be legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(e) Borrowers shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Borrowers,
all
chattel paper and instruments which any Borrower now owns or may at any time
acquire immediately upon such Borrower's receipt thereof, except as Lender may
otherwise agree.
(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all account debtors to make
payment
of Accounts directly to Lender, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such
other obligations, but without any duty to do so, and Lender shall not be liable
for its failure to collect or enforce the payment thereof nor for the negligence
of its agents or attorneys with respect thereto and (iv) take whatever other
action Lender may deem necessary or desirable for the protection of its
interests. At any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any account
debtor shall state that the Accounts and such other obligations have been
assigned to Lender and are payable directly and only to Lender and Borrowers
shall deliver to Lender such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Lender may require.
7.3 Inventory Covenants . With respect to the
Inventory: (a) Borrowers shall at all times maintain inventory records
reasonably satisfactory to Lender, keeping correct and accurate records
itemizing
and describing the kind, type, quality and quantity of Inventory, Borrowers'
cost
therefor and daily withdrawals therefrom and additions thereto; (b) Borrowers
shall conduct a physical count of the Inventory at least once each year, but at
any time or times as Lender may request on or after an Event of Default, and
promptly following such physical inventory shall supply Lender with a report in
the form and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count; (c) Borrowers shall not remove any Inventory
from
the locations set forth or permitted herein, without the prior written consent
of Lender, except for sales of Inventory in the ordinary course of Borrowers'
businesses and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon Lender's request, each
Borrower shall, at its expense, no more than once in any twelve (12) month
period, but at any time or times as Lender may request on or after an Event of
Default, deliver or cause to be delivered to Lender written reports or
appraisals
as to the Inventory in form, scope and methodology acceptable to Lender and by
an appraiser acceptable to Lender, addressed to Lender or upon which Lender is
expressly permitted to rely; (e) Borrowers shall produce, use, store and
maintain
the Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (f) Borrowers assume all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (g)
Borrowers shall not sell Inventory to any customer on approval, or any other
basis which entitles the customer to return or may obligate any Borrower to
repurchase such Inventory; (h) Borrowers shall keep the Inventory in good and
marketable condition; and (i) Borrowers shall not, without prior written notice
to Lender, acquire or accept any Inventory on consignment or approval.
7.4 Equipment Covenants . With respect to the
Equipment: (a) upon Lender's request, each Borrower shall, at its expense, at
any time or times as Lender may request on or after an Event of Default, deliver
or cause to be delivered to Lender written reports or appraisals as to the
Equipment in form, scope and methodology acceptable to Lender and by an
appraiser
acceptable to Lender; (b) Borrowers shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear excepted); (c)
Borrowers shall use the Equipment with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with all
applicable laws; (d) the Equipment is and shall be used in Borrowers' businesses
and not for personal, family, household or farming use; (e) Borrowers shall not
remove any Equipment from the locations set forth or permitted herein, except to
the extent necessary to have any Equipment repaired or maintained in the
ordinary
course of the business of Borrowers or to move Equipment directly from one
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of Borrowers in the
ordinary course of business; (f) the Equipment is now and shall remain personal
property and Borrowers shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (g) Borrowers assume all responsibility
and liability arising from the use of the Equipment.
7.5 Power of Attorney . Each Borrower hereby
irrevocably designates and appoints Lender (and all persons designated by
Lender)
as such Borrower's true and lawful attorney-in-fact, and authorizes Lender, in
any Borrower's or Lender's name, to: (a) at any time an Event of Default exists
or has occurred and is continuing (i) demand payment on Accounts or other
proceeds of Inventory or other Collateral, (ii) enforce payment of Accounts by
legal proceedings or otherwise, (iii) exercise all of Borrowers' rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any
Account upon such terms, for such amount and at such time or times as the Lender
deems advisable, (v) settle, adjust, compromise, extend or renew an Account,
(vi)
discharge and release any Account, (vii) prepare, file and sign any Borrower's
name on any proof of claim in bankruptcy or other similar document against an
account debtor, (viii) notify the post office authorities to change the address
for delivery of any Borrower's mail to an address designated by Lender, and open
and dispose of all mail addressed to Borrowers, and (ix) do all acts and things
which are necessary, in Lender's determination, to fulfill Borrowers'
Obligations
under this Agreement and the other Financing Agreements and (b) at any time to
(i) take control in any manner of any item of payment or proceeds thereof, (ii)
have access to any lockbox or postal box into which Borrowers' mail is
deposited,
(iii) endorse any Borrower's name upon any items of payment or proceeds thereof
and deposit the same in the Lender's account for application to the Obligations,
(iv) endorse Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign any Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi) execute
in any Borrower's name and file any UCC financing statements or amendments
thereto. Each Borrower hereby releases Lender and its officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Lender's own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure . Lender may, at its option, (a)
cure any default by any Borrower under any agreement with a third party or pay
or bond on appeal any judgment entered against Borrower, (b) discharge taxes,
liens, security interests or other encumbrances at any time levied on or
existing
with respect to the Collateral and (c) pay any amount, incur any expense or
perform any act which, in Lender's judgment, is necessary or appropriate to
preserve, protect, insure or maintain the Collateral and the rights of Lender
with respect thereto. Lender may add any amounts so expended to the Obligations
and charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Borrowers. Any payment made or other action taken by
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises . From time to time as
requested by Lender, at the cost and expense of Borrowers, (a) Lender or its
designee shall have complete access to all of Borrowers' premises during normal
business hours and after notice to Borrowers, or at any time and without notice
to Borrowers if an Event of Default exists or has occurred and is continuing,
for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrowers' books and records, including, without limitation, the Records, and
(b)
Borrowers shall promptly furnish to Lender such copies of such books and records
or extracts therefrom as Lender may request, and (c) use during normal business
hours such of Borrowers' personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Accounts and realization of
other Collateral. Lender agrees that environmental assessments and audits will
be conducted by environmental consultants of recognized standing and that
intrusive testing of the kind required under a phase II assessment may be
performed only as recommended by such consultant in a phase I assessment.
7.8 Recordation of Greenwald
Mortgage Based upon Borrowers' assurances that Greenwald will close on the
sale
of its Brooklyn, New York Real Property within ninety (90) days of the date
hereof, Lender has elected not to record the Mortgage with respect to such Real
Property. Lender may, in its discretion, and at Borrower's expense record such
Mortgage on the first to occur of (i) an Event of Default or (ii) the
ninety-first (91st) day after the date hereof in the event such sale does not
close
prior thereto. Greenwald shall include in the purchase agreement with the buyer
of this Real Property an assignment to Lender of all proceeds from the sale and
an affirmative binding agreement of the buyer to pay such proceeds directly to
Lender, with such purchase and sale agreement to be furnished to Lender prior to
signing for its review and approval, in good faith. The proceeds from such sale
shall be applied as set forth in Section 9.7. Upon the recording of such
Mortgage Borrowers shall cause to be issued and furnished to Lender a title
insurance policy with respect to such Real Property satisfying the requirements
of Section 4.1(j) and an environmental assessment of such Real Property
satisfying the requirements of Section 4.1(i).
SECTION 8.REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans and
providing
Letter of Credit Accommodations by Lender to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries .
Each Borrower is a corporation
duly organized and in good standing under the laws of its state of incorporation
and is duly qualified as a foreign corporation and in good standing in all
states
or other jurisdictions where the nature and extent of the business transacted by
it or the ownership of assets makes such qualification necessary, except for
those jurisdictions in which the failure to so qualify would not have a material
adverse effect on such Borrower's financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral. The execution,
delivery and performance of this Agreement, the other Financing Agreements to
which the Borrowers are parties and the transactions contemplated hereunder and
thereunder are all within Borrowers' corporate powers, have been duly authorized
and are not in contravention of law or the terms of Borrowers' certificates of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which any Borrower is a party or by which any
Borrower or its property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of Borrowers
enforceable in accordance with their respective terms. Borrowers do not
have any
subsidiaries except as set forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change .
All financial statements relating to
Borrowers which have been or may hereafter be delivered by Borrowers to Lender
have been prepared in accordance with GAAP and fairly present the financial
condition and the results of operation of Borrowers as at the dates and for the
periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrowers to Lender prior to the date of this Agreement,
there has been no material adverse change in the assets, liabilities, properties
and condition, financial or otherwise, of Borrowers, since the date of the most
recent audited financial statements furnished by Borrowers to Lender prior to
the
date of this Agreement.
8.3 Chief Executive Offices; Collateral Locations
The chief executive offices of Borrowers and
Borrowers' Records concerning Accounts are located only at the addresses set
forth below and their only other places of business and the only other locations
of Collateral, if any, are the addresses set forth in the Information
Certificate, subject to the right of Borrowers to establish new locations in
accordance with Section 9.2 below. The Information Certificate correctly
identifies any of such locations which are not owned by Borrowers and sets forth
the owners and/or operators thereof and to the best of Borrowers' knowledge, the
holders of any mortgages on such locations.
8.4 Priority of Liens; Title to Properties Title
to Properties . The security interests and liens granted to Lender under this
Agreement and the other Financing Agreements constitute valid and perfected
first
priority liens and security interests in and upon the Collateral subject only to
the liens indicated on Schedule 8.4 hereto and the other liens permitted under
Section 9.8 hereof. Each Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Lender
and such others as are specifically listed on Schedule 8.4 hereto or permitted
under Section 9.8 hereof.
8.5 Tax Returns Each Borrower has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it (after giving effect to extensions requested in the
ordinary course of Borrowers' businesses or as previously disclosed in writing
to Lender). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Each Borrower has paid or
caused
to be paid all taxes due and payable or claimed due and payable in any
assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrowers
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet
due and
payable and whether or not disputed.
8.6 Litigation . Except as set forth on the Information
Certificate, there is no present investigation by any governmental agency
pending, or to the best of Borrowers' knowledge threatened, against or affecting
any Borrower, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrowers' knowledge threatened,
against any Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against any Borrower would result in any material adverse change in the assets,
business or prospects of any Borrower or would impair the ability of any
Borrower
to perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Lender to enforce any Obligations or
realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws
No Borrower is in default in any
material respect under, or in violation in any material respect of any of the
terms of, any agreement, contract, instrument, lease or other commitment to
which
it is a party or by which it or any of its assets are bound where such default
or violation could reasonably be expected to result in any material adverse
change in the assets, business, or prospects of any Borrower or would impair the
ability of any Borrower to perform its obligations hereunder or under any of the
Financing Agreements and each Borrower is in compliance in all material respects
with all applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority.
8.8 Employee Benefits.
(a) No Borrower has engaged in any transaction in connection with
which any Borrower or any of its then current ERISA Affiliates could be subject
to either a civil penalty assessed pursuant to Section 502(i) or (e) of ERISA or
a tax imposed by Section 4975 of the Code.
(b) Other than premiums payable in the ordinary course of operations
of an employee pension benefit plan pursuant to Section 4007(a) of ERISA, and
except as set forth on the Information Certificate, no liability to the Pension
Benefit Guaranty Corporation has been or is expected by Borrowers to be incurred
by any Borrower or, to the best of Borrower's knowledge, any of their then
current ERISA Affiliates with respect to any employee pension benefit plan.
Except as set forth on the Information Certificate, there has been no reportable
event (within the meaning of Section 4043(c) of ERISA) or any other event or
condition with respect to any employee pension benefit plan of any Borrower or,
to the best of Borrowers' knowledge, any of their then current ERISA Affiliates
which is reasonably likely to result in a termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Except as set forth on the Information Certificate, full payment
has been made of all amounts which Borrowers or, to the best of Borrowers'
knowledge, any of their then current ERISA Affiliates is required under Section
302 of ERISA and Section 412 of the Code to have paid under the terms of each
employee pension benefit plan as contributions to such plan as of the last day
of the most recent fiscal year of such plan ended prior to the date hereof, and
no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section
412 of the Code), whether or not waived, exists with respect to any employee
pension benefit plan, including any penalty or tax described in Section 8.8(a)
hereof and any deficiency with respect to vested accrued benefits described in
Section 8.8(d) hereof.
(d) Except as set forth on the Information Certificate, the current
value of all vested accrued benefits under all employee pension benefit plans
maintained by Borrowers and their then current ERISA Affiliates that are subject
to Title IV of ERISA does not exceed the current value of the assets of such
plans allocable to such vested accrued benefits, including any penalty or tax
described in Section 8.8(a) hereof and any accumulated funding deficiency
described in Section 8.8(c) hereof. The terms "current value" and "accrued
benefit" have the meanings specified in ERISA.
(e) Except as set forth on the Information Certificate, no Borrower
nor any of their then current ERISA Affiliates is or has ever been obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, no Borrower has
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Materials, on or off the Real Property or any real
property operated or used by any Borrower in any manner which at any time
materially violated any applicable Environmental Law or any license, permit,
certificate, approval or authorization issued under any Environmental Law
("Environmental Permits") and the operations of Borrowers comply in all material
respects with all Environmental Laws and all Environmental Permits.
(b) Except as set forth on Schedule 8.9 hereto, no Borrower has
received notice or otherwise has knowledge that there is any investigation,
proceeding, complaint, order, directive, claim, citation or notice by any
governmental authority or any other person pending or threatened, with respect
to any non- compliance with or violation of the requirements of any
Environmental
Law by Borrowers or the release, spill or discharge, threatened or actual,
of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which would materially affect any
Borrower or its business, operations or assets or any properties at which any
Borrower has transported, stored or disposed of any Hazardous Materials.
(c) No Borrower has a material liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Borrowers have all Environmental Permits required to be obtained
or filed in connection with the operations of Borrowers under any Environmental
Law except where the failure to obtain or file any of the foregoing would not
have a material adverse effect on any Borrower's financial condition, results of
operations, business or prospects and all of such licenses, permits, certif-
icates, approvals or similar authorizations are valid and in full force and
effect.
8.10 Accuracy and Completeness of Information
All information furnished by or on behalf of
Borrowers in writing to Lender in connection with this Agreement or any of the
other Financing Agreements or any transaction contemplated hereby or thereby,
including, without limitation, all information on the Information Certificate is
true and correct in all material respects on the date as of which such
information is dated or certified and does not omit any material fact necessary
in order to make such information not misleading. No event or circumstance has
occurred which has had or could reasonably be expected to have a material
adverse
affect on the businesses, assets or prospects of Borrowers, which has not been
fully and accurately disclosed to Lender in writing.
8.11 Interrelated Businesses. (a) Parent
owns beneficially and of record all the outstanding capital stock of each
Borrower; (b) the financial condition and business prospects of each Borrower
are
of direct economic benefit to the other Borrowers; and (c) each Borrower's
access
to the financing arrangements through Lender hereunder significantly enhances
its
own financial condition and business prospects and, consequently, directly
benefits all other Borrowers.
8.12 Survival of Warranties; Cumulative
All representations and warranties contained in this Agreement or
any of the other Financing Agreements shall survive the execution and delivery
of this Agreement and shall be deemed to have been made again to Lender on the
date of each additional borrowing or other credit accommodation hereunder
(subject to transactions permitted under Article 9 hereof and, as to financial
statements, shall pertain to the latest financial statements furnished to
Lender)
and shall be conclusively presumed to have been relied on by Lender regardless
of any investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrowers shall now or
hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each
Borrower shall at all times preserve, renew and keep in full, force and effect
its corporate existence and material rights and franchises with respect thereto
and maintain in full force and effect all permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on its business as presently or proposed to be conducted. Each Borrower shall
give Lender thirty (30) days prior written notice of any proposed change in its
corporate name, which notice shall set forth the new name and such Borrower
shall
deliver to Lender a copy of the amendment to the Certificate of Incorporation of
such Borrower providing for the name change certified by the Secretary of State
of the jurisdiction of incorporation of such Borrower as soon as it is
available.
9.2 New Collateral Locations Each
Borrower may open any new location within the continental United States provided
such Borrower (a) gives Lender thirty (30) days prior written notice of the
intended opening of any such new location and (b) executes and delivers, or
causes to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to protect its
interests in the Collateral at such location, including, without limitation, UCC
financing statements.
9.3 Compliance with Laws, Regulations, Etc
(a) Borrowers shall, at all times, comply in all material
respects with all laws, rules, regulations, licenses, permits, approvals and
orders applicable to it and duly observe in all material respects all
requirements of any Federal, State or local governmental authority, including,
without limitation, the Employee Retirement Security Act of 1974, as amended,
the
Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, and all statutes, rules, regulations, orders, permits
and stipulations relating to environmental pollution and employee health and
safety, including, without limitation, all of the Environmental Laws.
(b) Borrowers shall establish and maintain, at their expense,
procedures to assure and monitor their continued compliance with all
Environmental Laws. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations relating to the
Borrower's operations, the Collateral, the Real Property or any other real
property operated or used by any Borrower, shall be promptly furnished, or
caused
to be furnished, by Borrowers to Lender. Borrowers shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental
Laws and shall regularly report to Lender on such response; provided, however,
that Borrowers may contest in good faith any claim of non-compliance by
appropriate proceedings diligently pursued and available to Borrowers so long as
no lien is asserted with respect to such claim and adequate reserves are
established by Borrowers.
(c) Borrowers shall give both oral and written notice to Lender
immediately upon any Borrower's receipt of any notice of, or any Borrower's
otherwise obtaining knowledge of, (i) the occurrence of any material event
involving the release, spill or discharge, threatened or actual, of any
Hazardous
Material or (ii) any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any noncompliance with or
violation of any Environmental Law by any Borrower or (B) the release, spill or
discharge, threatened or actual, of any Hazardous Material or (C) the
generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or (D) any other environmental, health or
safety matter, which materially affects any Borrower or its business, operations
or assets or any properties at which any Borrower transported, stored or
disposed
of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is material noncompliance, or any condition
which requires any action by or on behalf of any Borrower in order to avoid any
material non-compliance, with any Environmental Law, Borrowers shall, at
Lender's
request and Borrowers' expense: (i) cause an independent environmental engineer
acceptable to Lender to conduct such tests of the site where such Borrower 's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Lender a report as
to such non- compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(e) Each Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and
assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including, without limitation, the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of Borrowers and the preparation and implementation of any closure,
remedial or other required plans. The covenants and indemnifications in this
Section 9.3(e) shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
9.4 Payment of Taxes and Claims. Each
Borrower shall duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrowers and with respect to
which adequate reserves have been set aside on their books. Borrowers shall be
liable for any tax or penalties imposed on Lender as a result of the financing
arrangements provided for herein and each Borrower agrees to indemnify and hold
Lender harmless with respect to the foregoing, and to repay to Lender on demand
the amount thereof, and until paid by Borrowers such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrowers to pay any income or franchise taxes attributable
to the income of Lender from any amounts charged or paid hereunder to Lender.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
9.5 Insurance. Borrowers shall, at all times, maintain
with financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the
amounts customarily insured against or carried by corporations of established
reputation engaged in the same or similar businesses and similarly situated.
Said policies of insurance shall be satisfactory to Lender as to form, amount
and
insurer. Borrowers shall furnish certificates, policies or endorsements to
Lender as Lender shall reasonably require as proof of such insurance, and, if
Borrowers fail to do so, Lender is authorized, but not required, to obtain such
insurance at the expense of Borrowers. All policies shall provide for at least
thirty (30) days prior written notice to Lender of any cancellation or reduction
of coverage. Lender may act as attorney for Borrowers in obtaining, and at any
time an Event of Default exists or has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrowers shall cause Lender
to be named as a loss payee and an additional insured (but without any liability
for any premiums) under such insurance policies and Borrowers shall obtain
non-contributory lender's loss payable endorsements to all insurance policies
in form
and substance satisfactory to Lender. Such lender's loss payable endorsements
shall specify that the proceeds of such insurance shall be payable to Lender as
its interests may appear and further specify that Lender shall be paid
regardless
of any act or omission by Borrowers or any of their affiliates. At its option,
Lender may apply any insurance proceeds received by Lender at any time to the
cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Lender
may determine or hold such proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Borrowers shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrowers and their subsidiaries
(if any) in accordance with GAAP and Borrowers shall furnish or cause to be
furnished to Lender: (i) within thirty (30) days after the end of each fiscal
month other than December and within forty-five (45) days after the end of each
December, monthly unaudited consolidated financial statements of each Borrower
and, if a Borrower has any subsidiaries, unaudited consolidating financial
statements (including in each case balance sheets, statements of income and loss
and statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of each
Borrower and its subsidiaries as of the end of and through such fiscal month and
(ii) within ninety (90) days after the end of each fiscal year, audited
consolidated financial statements of Publicker and its subsidiaries and,
unaudited consolidating financial statements of Publicker and its subsidiaries
(including in each case balance sheets, statements of income and loss,
statements
of cash flow and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
the results of the operations of Publicker, each Borrower and their respective
subsidiaries as of the end of and for such fiscal year, together with the
opinion
of independent certified public accountants, which accountants shall be an
independent accounting firm selected by Publicker and reasonably acceptable to
Lender, that such financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial condition of
Publicker, and its subsidiaries as of the end of and for the fiscal year then
ended together with a letter relating to the Borrowers in substantially the form
of Exhibit C hereto and any letters or reports to management made by such
accountants.
(b) Borrowers shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim
relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in any
Borrower's business, properties, assets, goodwill or condition, financial or
otherwise and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Borrowers shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which any
Borrower sends to its stockholders generally and copies of all reports and
registration statements which any Borrower files with the Securities and
Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrowers shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the businesses of Borrowers, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of any
Borrower to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Each Borrower hereby
irrevocably authorizes and directs all accountants or auditors to deliver to
Lender, at Borrowers' expense, copies of the financial statements of Borrowers
and any reports or management letters prepared by such accountants or auditors
on behalf of Borrowers and to disclose to Lender such information as they may
have regarding the business of Borrowers. Any documents, schedules, invoices or
other papers delivered to Lender may be destroyed or otherwise disposed of by
Lender one (1) year after the same are delivered to Lender, except as otherwise
designated by Borrowers to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
No Borrower shall, directly
or indirectly, (a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, or (b)
sell, assign, lease, transfer, abandon or otherwise dispose of any stock or
indebtedness to any other Person or any of its assets to any other Person
(except
for (i) sales of Inventory in the ordinary course of business; (ii) the
disposition of worn-out or obsolete Equipment or Equipment no longer used in the
business of Borrowers so long as (A) if an Event of Default exists or has
occurred and is continuing, any proceeds are paid to Lender, (B) if an Equipment
Acquisition Loan was made to acquire such Equipment, the Equipment Acquisition
Loan is repaid in full, and (C) such sales do not involve Equipment having an
aggregate fair market value in excess of $100,000 for all such Equipment
disposed
of in any fiscal year of Borrowers; (iii) the sale of the Real Property of
Greenwald located in Brooklyn, New York provided that (A) no Event of Default
exists or has occurred and is continuing and (B) upon the sale of this Real
Property not less than $250,000 of the proceeds of the sale are applied to the
outstanding Greenwald Term Loan and the balance to the outstanding Revolving
Loans of the Borrowers; and (iv) the sale of substantially all the assets of any
Borrower in an actual and bona fide transaction to an independent Person, not an
affiliate of Borrowers or their affiliates, provided that (A) no Event of
Default
exists or has occurred and is continuing, (B) all documentation relating to the
transaction in substantially final form is provided to Lender for its review at
least 14 days prior to the closing date and all such documentation and the
transaction are satisfactory to Lender in its good faith determination and (C)
the proceeds of such transaction are sufficient to repay the Loans, Letter of
Credit Accommodations and other Obligations outstanding with respect to such
Borrower and to the extent excess proceeds from the transaction exceeds the
required repayment of Loans Letter of Credit Accommodations and Obligations of
such Borrower, an Availability Reserve shall be established in the amount of
such
excess, but not to exceed $500,000 for each Borrower that is sold), or (c) form
or acquire any subsidiaries without the prior consent of Lender, or (d) wind up,
liquidate or dissolve or (e) agree to do any of the foregoing.
9.8 Encumbrances . No Borrower shall create, incur,
assume or suffer to exist any security interest, mortgage, pledge, lien, charge
or other encumbrance of any nature whatsoever on any of its assets or
properties,
including, without limitation, the Collateral, except: (a) liens and security
interests of Lender; (b) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate
proceedings diligently pursued and available to Borrowers and with respect to
which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes or amounts under
ERISA or Section 412 of the Code, except as the Lender, in good faith, deems
immaterial and de minimis) arising in the ordinary course of Borrowers' business
to the extent: (i) such liens secure indebtedness which is not overdue or (ii)
such liens secure indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to Borrowers, in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the
use of real property which do not interfere in any material respect with the use
of such real property or ordinary conduct of the business of Borrowers as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) other than as set forth on Schedule 8.4
hereto,
purchase money security interests in Equipment (including capital leases), in
addition to any Equipment Loans incurred hereunder, and purchase money mortgages
on real estate not to exceed $1,500,000 in the aggregate incurred in any fiscal
year of Borrowers (and any refinancings thereof to the extent of the outstanding
balance of such purchase money financing or capital lease and on other terms no
less favorable to such Borrower than the financing that is repaid and otherwise
conforming to the requirements of this Agreement) so long as such security
interests and mortgages do not apply to any property of Borrowers other than the
Equipment or real estate so acquired, and the indebtedness secured thereby does
not exceed the cost of the Equipment or real estate so acquired, as the case may
be; and (f) the security interests and liens set forth on Schedule 8.4 hereto.
At Closing Greenwald has disclosed to Lender that it intends, subject to
financing and the acquisition of a suitable site, to relocate its business to
Connecticut and in connection therewith has applied to the Connecticut
Department
of Economic Development ("CDED") for loans and/or loan guaranties to secure the
necessary financing. If Greenwald proceeds with this relocation, Greenwald
shall
furnish to Lender copies in substantially final form of all documents relating
to such relocation and financing at least 14 days before execution for Lender to
review and approve in good faith. Upon closing of any financing provided or
guarantied by CDED or otherwise obtained by Greenwald in connection with such
relocation, the outstanding Term Loan to Greenwald will be repaid. the Greenwald
Availability Reserve shall be reduced to $250,000. Provided that the terms of
such financing are satisfactory to Lender and Lender's Term Loan to Greenwald is
repaid, Lender will subordinate to the CDED its security interest in Greenwald's
Equipment (but not Equipment, if any, of Greenwald financed with Equipment Loans
or any other Collateral provided by Greenwald or any other Borrower or Obligor
pursuant to a mutually satisfactory subordination agreement.
9.9 Indebtedness . No Borrower shall incur, create,
assume, become or be liable in any manner with respect to, or permit to exist,
any obligations or indebtedness, except (a) the Obligations; (b) trade
obligations and normal accruals in the ordinary course of business not yet due
and payable, or with respect to which the Borrowers are contesting in good faith
the amount or validity thereof by appropriate proceedings diligently pursued and
available to Borrowers, and with respect to which adequate reserves have been
set
aside on its books; (c) purchase money indebtedness (including capital leases)
to the extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement; (d) indebtedness incurred
among the Borrowers or from the Parent or Publicker the payment of which shall
be, in each case, fully subordinated to the payment of the Obligations in a
manner satisfactory to Lender; and (e) obligations or indebtedness set forth on
the Information Certificate including, without limitation, the capital lease
with
Softech evidenced by the capital lease agreement and lease schedule in effect on
the date hereof; provided, that, (i) Borrowers may only make regularly scheduled
payments of principal and interest in respect of such indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) Borrowers shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such indebtedness
or any agreement, document or instrument related thereto as in effect on the
date
hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Borrowers shall furnish to Lender all notices or demands in
connection with such indebtedness either received by any Borrower or on its
behalf, promptly after the receipt thereof, or sent by any Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc.
No Borrower shall, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or indebtedness or
all
or a substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the
indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, except: (a) the endorsement of instruments for collection
or deposit in the ordinary course of business; (b) investments in:
(i) short-term
direct obligations of the United States Government, (ii) negotiable certificates
of deposit issued by any bank satisfactory to Lender, payable to the order of
the
Borrower or to bearer and delivered to Lender, and (iii) commercial paper rated
A1 or P1; provided, that, as to any of the foregoing, unless waived in writing
by Lender, Borrower shall take such actions as are deemed necessary by Lender to
perfect the security interest of Lender in such investments; (c) loans made to
Parent and/or Publicker subject to the limitations set forth in Schedule 9.10
hereof; (d) loans made among Borrowers the payment of which is fully
subordinated
to the payment of the Obligations in a manner satisfactory to Lender; (e) the
guarantees set forth in the Information Certificate; and (f) loans and advances
to employees consistent with prior practices and not exceeding at any time
$100,000 in the aggregate.
9.11 Dividends and Redemptions. No
Borrower shall, directly or indirectly, declare or pay any dividends on account
of any shares of class of capital stock of any Borrower now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the foregoing.
9.12 Transactions with Affiliates. No
Borrower shall enter into any transaction for the purchase, sale or exchange of
property or the rendering of any service to or by any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrowers'
businesses and upon fair and reasonable terms no less favorable to the Borrowers
than Borrowers would obtain in a comparable arm's length transaction with an
unaffiliated person; provided, that, as to Parent and Publicker no payments of
any kind shall be made except as permitted pursuant to Section 9.10(c).
9.13 Working Capital . Borrowers shall, at all
times, maintain Working Capital of not less than the amounts set forth below for
each Borrower:
Borrower
Working Capital
Bright Star
$1,435,000
Fenwal
$1,844,000
Greenwald
$2,153,000
Masterview
$1,286,000
OSM
$686,000
9.14 Adjusted Net Worth . Borrowers shall, at all
times, maintain Adjusted Net Worth of not less than the amounts set forth below
for each Borrower:
Borrower
Adjusted Net Worth
Bright Star
$6,866,000
Fenwal
$14,813,000
Greenwald
$12,565,000
Masterview
$6,118,000
OSM
$6,729,000
9.15 Compliance with ERISA . Borrowers shall not
with respect to any "employee pension benefit plans" maintained by any Borrower
or any of its then current ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any prohibited
transaction involving any of such employee pension benefit plans or any trust
created thereunder which would subject Borrower or such ERISA Affiliate to a tax
or penalty or other material liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA, (iii) fail to pay to any such employee
pension
benefit plan any contribution which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such plan, (iv) allow or suffer
to exist any accumulated funding deficiency, whether or not waived, with respect
to any such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of
any
such employee pension benefit plan that is a single employer plan, which
termination could result in any material liability to the Pension Benefit
Guaranty Corporation or (vi) incur any withdrawal liability with respect to any
multiemployer pension plan.
(b) As used in this Section 9.15, the term "employee pension benefit
plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
9.16 Costs and Expenses . Borrowers shall pay to
Lender on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including
any amendments, supplements or consents which may hereafter be contemplated
(whether or not executed) or entered into in respect hereof and thereof,
including, but not limited to: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for all title insurance and other
insurance premiums, environmental audits, surveys, assessments, engineering
reports and inspections, appraisal fees and search fees; (c) costs and expenses
of remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Lender's
customary charges and fees with respect thereto and all amounts payable by
Lender
to any bank with respect to a Blocked Account as a result of an indemnity or
otherwise; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses paid or
incurred
in connection with obtaining payment of the Obligations, enforcing the security
interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any
such matters); (g) all out-of-pocket expenses and costs heretofore and from time
to time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrowers' operations, plus a per diem charge
at the rate of $600 per person per day for Lender's examiners in the field and
office; and (h) the fees and disbursements of counsel (including legal
assistants) to Lender and any Participant in connection with any of the
foregoing.
9.17 Further Assurances . At the request of
Lender, acting in good faith, at any time and from time to time, Borrowers
shall,
at their expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or cause
to be done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Lender may at any time and
from time to time request a certificate from an officer of any Borrower
representing that all conditions precedent to the making of Loans and providing
Letter of Credit Accommodations contained herein are satisfied. In the event of
such request by Lender, Lender may, at its option, cease to make any further
Loans or provide any further Letter of Credit Accommodations until Lender has
received such certificate and, in addition, Lender has determined that such
conditions are satisfied. Where permitted by law, Borrowers hereby authorizes
Lender to execute and file one or more UCC financing statements signed only by
Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIESSECTION
10.1 Events of Default . The occurrence or
existence of any one or more of the following events are referred to herein
individually as an "Event of Default", and collectively as "Events of Default":
(a) any Borrower fails to pay when due any of the Obligations or
fails to perform any of the terms, covenants, conditions or provisions contained
in this Agreement or any of the other Financing Agreements;
(b) any representation, warranty or statement of fact made by any
Borrower to Lender in this Agreement, the other Financing Agreements or any
other
agreement, schedule, confirmatory assignment or otherwise shall when made or
deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or any Obligor in excess of $100,000 in any one case or in excess of
$200,000 in the aggregate and shall remain undischarged or unvacated for a
period
in excess of thirty (30) days or execution shall at any time not be effectively
stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any Borrower or any
Obligor or any of their assets;
(e) any Obligor (being a natural person or a general partner of
an Obligor which is a partnership) dies or any Borrower or any Obligor, which is
a partnership or corporation, dissolves or suspends or discontinues doing
business;
(f) any Borrower or any Obligor becomes insolvent (however
defined or evidenced), makes an assignment for the benefit of creditors, makes
or sends notice of a bulk transfer or calls a meeting of its creditors or
principal creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or any Obligor or all or any part of
its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or any Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or any Obligor or for all or any part of its
property; or
(i) any default by any Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money
owing to any person other than Lender, or any capitalized lease obligations,
contingent indebtedness in connection with any guarantee, letter of credit,
indemnity or similar type of instrument in favor of any person other than
Lender,
in any case in an amount in excess of $100,000, which default continues for more
than the applicable cure period, if any, with respect thereto, or any default by
any Borrower or any Obligor under any material contract, lease, license or other
obligation to any person other than Lender, which default continues for more
than
the applicable cure period, if any, with respect thereto;
(j) any change in the controlling ownership of any Borrower or
Parent, other than as expressly permitted under Section 9.7 hereof or
Section 5.7
of the Security Agreement with Parent;
(k) the indictment of any Borrower or any Obligor under any
criminal statute, or commencement of criminal or civil proceedings against
Borrower or any Obligor, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any material property of
any Borrower or such Obligor which proceeding is not dismissed within 60 days
after the date of filing;
(l) there shall be a material adverse change in the business or
assets of any Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and
is continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or any Obligor, except as such notice or consent
is expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing
Agreements, the Uniform Commercial Code or other applicable law, are cumulative,
not exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower of this Agreement or any
of the other Financing Agreements. Lender may, at any time or times, proceed
directly against any Borrower or any Obligor to collect the Obligations without
prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrowers, at Borrowers' expense, to assemble and make
available to Lender any part or all of the Collateral at any place and time
designated by Lender, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral
from
any premises on or in which the same may be located for the purpose of effecting
the sale, foreclosure or other disposition thereof or for any other purpose,
(vi)
sell, lease, transfer, assign, deliver or otherwise dispose of any and all
Collateral (including, without limitation, entering into contracts with respect
thereto, public or private sales at any exchange, broker's board, at any office
of Lender or elsewhere) at such prices or terms as Lender may deem reasonable,
for cash, upon credit or for future delivery, with the Lender having the right
to purchase the whole or any part of the Collateral at any such public sale, all
of the foregoing being free from any right or equity of redemption of any
Borrower, which right or equity of redemption is hereby expressly waived and
released by each Borrower and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If notice of disposition of Collateral is
required by law, five (5) days prior notice by Lender to Borrowers designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and each Borrower waives any other notice. In the
event Lender institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, each Borrower waives the posting of
any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrowers shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the
lending formulas or amounts of Revolving Loans, Equipment Loans and Letter of
Credit Accommodations available to Borrowers and/or (ii) terminate any
provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Lender to Borrowers.
SECTION 11.JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the Commonwealth of
Massachusetts (without giving effect to principles of conflicts of law).
(b) Each Borrower and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Commonwealth of Massachusetts and the
United States District Court for the District of Massachusetts and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Lender shall have the
right
to bring any action or proceeding against Borrower or its property in the courts
of any other jurisdiction which Lender deems necessary or appropriate in order
to realize on the Collateral or to otherwise enforce its rights against Borrower
or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon Borrowers in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Borrowers shall appear in answer to such process, failing which Borrowers and
each Borrower shall be deemed in default and judgment may be entered by Lender
against Borrowers and each Borrower for the amount of the claim and other relief
requested.
(d) EACH BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER AND LENDER EACH
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT EACH BORROWER OR LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrowers (whether in
tort, contract, equity or otherwise) for losses suffered by Borrowers or any of
them in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order binding on Lender, that the
losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.
11.2 Waiver of Notices . Each Borrower hereby
expressly waives demand, presentment, protest and notice of protest and notice
of dishonor with respect to any and all instruments and commercial paper,
included in or evidencing any of the Obligations or the Collateral, and any and
all other demands and notices of any kind or nature whatsoever with respect to
the Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower which Lender may
elect to give shall entitle any Borrower to any other or further notice or
demand
in the same, similar or other circumstances.
11.3 Amendments and Waivers . Neither this
Agreement nor any provision hereof shall be amended, modified, waived or
discharged orally or by course of conduct, but only by a written agreement
signed
by an authorized officer of Lender and an authorized officer of Agent or
authorized officers of the Borrowers. Lender shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
rights, powers and/or remedies unless such waiver shall be in writing and signed
by an authorized officer of Lender. Any such waiver shall be enforceable only
to the extent specifically set forth therein. A waiver by Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Lender would otherwise have
on any future occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims . Each Borrower
waives all rights to interpose any claims, deductions, setoffs or counterclaims
of any nature (other then compulsory counterclaims) in any action or proceeding
with respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
11.5 Indemnification . Each Borrower shall indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers shall pay the maximum portion which
they are permitted to pay under applicable law to Lender in satisfaction of
indemnified matters under this Section. The foregoing indemnity shall survive
the payment of the Obligations and the termination or non-renewal of this
Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof; provided, that, Lender
may, at its option, extend the Renewal Date to the date four (4) years from the
date hereof by giving Borrowers notice at least sixty (60) days prior to the
third anniversary of this Agreement. Borrowers may terminate this Agreement and
the Financing Agreements at any time and Lender (subject to Lender's right to
extend the Renewal Date as provided above) may terminate this Agreement and the
other Financing Agreements effective on the Renewal Date or on the anniversary
of the Renewal Date thereafter, in each case for Borrower and Lender, by giving
to the other party at least sixty (60) days prior written notice; provided,
that,
this Agreement and all other Financing Agreements must be terminated
simultaneously; and provided, further, that only all the Borrowers together may
terminate this Agreement and no single Borrower or group of Borrowers other than
all the Borrowers together may terminate this Agreement except pursuant to
Section 9.7 upon the sale of a Borrower in accordance with the requirements of
Section 9.7. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrowers shall pay to Lender, in full, all outstanding
and
unpaid Obligations of all the Borrowers and shall furnish cash collateral to
Lender in such amounts as Lender determines are reasonably necessary to secure
Lender from loss, cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any contingent Obligations, including issued and
outstanding Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Lender has not yet
received final and indefeasible payment. Such cash collateral shall be remitted
by wire transfer in Federal funds to such bank account of Lender, as Lender may,
in its discretion, designate in writing to Borrowers for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrowers to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Boston, Massachusetts time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrowers of their respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable
law, shall remain in effect until all such Obligations have been fully and
finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
third anniversary of this Agreement, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of Lender's lost profits as a result thereof,
Borrowers agree to pay to Lender, upon the effective date of such termination,
an early termination fee in the amount set forth below if such termination is
effective in the period indicated:
Amount
Period
(i)
3.0% of the aggregate
Maximum Credit for all
Borrowers or, in the case
of the sale of a Borrower
under Section 9.7 or
pursuant to the Security
Agreement with Parent, the
Maximum Credit of such
Borrower
Date hereof to and
including first
anniversary of the date
hereof
(ii)
2.0% of the aggregate
Maximum Credit for all
Borrowers or, in the case
of the sale of a Borrower
under Section 9.7 or
pursuant to the Security
Agreement with Parent, the
Maximum Credit of such
Borrower
Day after the first
anniversary of the date
hereof to and including
second anniversary of the
date hereof
(iii)
1.0% of the aggregate
Maximum Credit for all
Borrowers or, in the case
of the sale of a Borrower
under Section 9.7 or
pursuant to the Security
Agreement with Parent, the
Maximum Credit of such
Borrower
Day after the second
anniversary of the date
hereof to and including
third anniversary of the
date hereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. The early
termination fee provided for in this Section 12.1 shall be deemed included in
the
Obligations.
12.2 Notices . All notices, requests and demands hereunder
shall be in writing and (a) made to Lender at its address set forth below and to
Borrowers at their chief executive offices set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
12.3 Partial Invalidity . If any provision of
this Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.
12.4 Successors . This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrowers and
their respective successors and assigns, except that no Borrower may assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender. Lender may, after written notice to Borrowers, assign its rights and
delegate its obligations under this Agreement and the other Financing Agreements
and further may assign, or sell participations in, all or any part of the Loans,
the Letter of Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the assignee or
participant shall have, to the extent of such assignment or participation, the
same rights and benefits as it would have if it were the Lender hereunder,
except
as otherwise provided by the terms of such assignment or participation.
12.5 Participant's Security Interest .
If a Participant shall at any time participate with Lender in the Loans, Letter
of Credit Accommodations or other Obligations, each Borrower hereby grants to
such Participant and such Participant shall have and is hereby given, a
continuing lien on and security interest in any money, securities and other
property of Borrowers in the custody or possession of the Participant, including
the right of setoff, to the extent of the Participant's participation in the
Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have
if it were a direct lender.
12.6 Joint and Several Liability . All Loans
made hereunder are made to or for the benefit of each of the Borrowers. The
Borrowers are jointly and severally, directly and primarily liable for the full
and indefeasible payment when due and performance of all Obligations and for the
prompt and full payment and performance of all of the promises, covenants,
repre-
sentations, and warranties made or undertaken by each Borrower under the
Financing Agreements and Borrowers agree that such liability is independent of
the duties, obligations, and liabilities of each of the joint and several
Borrowers. In furtherance of the foregoing, each Borrower jointly and
severally,
absolutely and unconditionally guaranties to Lender and agrees to be liable for
the full and indefeasible payment and performance when due of all the
Obligations. This guarantee is a continuing guarantee, and shall apply to all
Obligations whenever arising.
12.7 Suretyship Waivers and Consents .
(a) Each Borrower acknowledges that the obligations of such Borrower
undertaken herein might be construed to consist, at least in part, of the
guaranty of obligations of persons other than such Borrower (including the other
Borrowers) and, in full recognition of that fact, each Borrower consents and
agrees that Lender may, at any time and from time to time, without notice or
demand (except as provided in and in accordance with the terms of this
Agreement), whether before or after any actual or purported termination,
repudiation or revocation of this Agreement by any Borrower, and without
affecting the enforceability or continuing effectiveness hereof as to each
Borrower: (i) increase, extend, or otherwise change the time for payment or the
terms of the Obligations or any part thereof; (ii) supplement, restate, modify,
amend, increase, decrease, or waive, or enter into or give any agreement,
approval or consent with respect to, the Obligations or any part thereof, or any
of the Financing Agreements or any additional security or guarantees, or any
condition, covenant, default, remedy, right, representation, or term thereof or
thereunder; (iii) accept new or additional instruments, documents, or agreements
in exchange for or relative to any of the Financing Agreements or the
Obligations
or any part thereof; (iv) accept partial payments on the Obligations; (v)
receive
and hold additional security or guarantees for the Obligations or any part
thereof; (vi) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer, or enforce any Collateral, security
or guarantees, and apply any Collateral or security and direct the order or
manner of sale thereof as Lender in its sole and absolute discretion may
determine; (vii) release any person from any personal liability with respect to
the Obligations or any part thereof; (viii) settle, release on terms
satisfactory
to Lender or by operation of applicable laws or otherwise liquidate or enforce
any Obligations and any Collateral or security therefor or guaranty thereof in
any manner, consent to the transfer of any Collateral or security and bid and
purchase at any sale; or (ix) consent to the merger, change, or any other
restructuring or termination of the corporate or partnership existence of any
Borrower, and correspondingly restructure the Obligations, and any such merger,
change, restructuring, or termination shall not affect the liability of any
Borrower or the continuing effectiveness hereof, or the enforceability hereof
with respect to all or any part of the Obligations.
(b) Lender may enforce this Agreement independently as to each
Borrower and independently of any other remedy or security Lender at any time
may
have or hold in connection with the Obligations, and it shall not be necessary
for Lender to marshal assets in favor of any Borrower or any Obligor or to
proceed upon or against or exhaust any Collateral or security or remedy before
proceeding to enforce this Agreement. Each Borrower expressly waives any right
to require Lender to marshal assets in favor of any Borrower or any guarantor of
the Obligations or to proceed against any other Borrower, and agrees that Lender
may proceed against Borrowers or any Collateral in such order as Lender shall
determine in its sole and absolute discretion.
(c) Lender may file a separate action or actions against any Borrower,
whether such action is brought or prosecuted with respect to any security or
against any guarantor of the Obligations, or whether any other person is joined
in any such action or actions. Each Borrower agrees that Lender and each
Borrower and any affiliate of any Borrower may deal with each other in
connection
with the Obligations or otherwise, or alter any contracts or agreements now or
hereafter existing between any of them, in any manner whatsoever, all without in
any way altering or affecting the continuing enforceability of this Agreement.
Each Borrower, as a joint and several Borrower hereunder, expressly waives the
benefit of any statute of limitations affecting its joint and several liability
hereunder (but not its primary liability) or the enforcement of the Obligations
or any rights of Lender created or granted herein.
(d) Lender's rights hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount at
any time paid on account of the Obligations which thereafter shall be required
to be restored or returned by Lender, all as though such amount had not been
paid. The rights of Lender created or granted herein and the enforceability of
this Agreement at all times shall remain effective to cover the full amount of
all the Obligations even though the Obligations, including any part thereof or
any Collateral, other security or guaranty therefor, may be or hereafter may
become invalid or otherwise unenforceable as against any Borrower and whether or
not any Borrower shall have any personal liability with respect thereto.
(e) Each Borrower expressly waives any and all defenses now or
hereafter arising or asserted by reason of (i) any disability or other defense
of any other Borrower with respect to the Obligations; (ii) the unenforceability
or invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations; (iii) the cessation for any cause whatsoever of the liability
of any Borrower (other than by reason of the full payment and performance of all
Obligations); (iv) any failure of Lender to marshall assets in favor of any
Borrower; (v) any failure of Lender to give notice to any Borrower of sale or
other disposition of Collateral of another Borrower or any defect in any notice
that may be given in connection with any such sale or disposition of Collateral
of any Borrower securing the Obligations; (vi) any failure of Lender to comply
with applicable law in connection with the sale or other disposition of any
Collateral or other security of any Borrower, for any Obligation, including any
failure of Lender to conduct a commercially reasonable sale or other disposition
of any Collateral or other security of any Borrower for any Obligation; (vii)
any
act or omission of Lender or others that directly or indirectly results in or
aids the discharge or release of any Borrower or the Obligations of any Borrower
or any security or guaranty therefor by operation of law or otherwise; (viii)
any
law which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal
or which reduces a surety's or guarantor's obligation in proportion to the
principal obligation; (ix) any failure of Lender to file or enforce a claim in
any bankruptcy or other proceeding with respect to any Borrower; (x) the
avoidance of any lien or security interest in assets of any Borrower in favor of
Lender for any reason; or (xi) any action taken by Lender that is authorized by
this section or any other provision of any Loan Document. Until such time, if
any, as all of the Obligations have been indefeasibly paid and performed in full
and no portion of any commitment of Lender to Borrowers under any Financing
Agreement remains in effect, each Borrowers' indebtedness, claims and rights of
subrogation, contribution, reimbursement, or indemnity against the other
Borrowers shall be fully and completely subordinated to the indefeasible repay-
ment in full of the Obligations, and each Borrower expressly waives until such
indefeasible payment any right to enforce any remedy that it now has or
hereafter
may have against any other Person and waives the benefit of, or any right to
participate in, any Collateral now or hereafter held by Lender.
(f) To the fullest extent permitted by applicable law, each Borrower
expressly waives and agrees not to assert, any and all defenses in its favor
based upon an election of remedies by Lender which destroys, diminishes, or
affects such Borrower's subrogation rights against the other Borrowers, or
against any Obligor, and/or (except as explicitly provided for herein) any
rights
to proceed against each other Borrower, or any other party liable to Lender, for
reimbursement, contribution, indemnity, or otherwise.
(g) Borrowers and each of them warrant and agree that each of the
waivers and consents set forth herein are made after consultation with legal
counsel and with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy, or otherwise adversely affect rights which Borrowers
otherwise
may have against each other, Lender, or others, or against Collateral, and that,
under the circumstances, the waivers and consents herein given are reasonable
and
not contrary to public policy or law. If any of the waivers or consents herein
are determined to be contrary to any applicable law or public policy, such
waivers and consents shall be effective to the maximum extent permitted by law.
12.8 Contribution Agreement . As an inducement
to Lender to enter into the Financing Agreements and to make the loans and
extend
credit to the Borrowers, each Borrower and each Obligor agrees to indemnify and
hold the other harmless from and each shall have a continuing right of
contribution against the other Borrowers and any Obligors, if and to the extent
that a Borrower makes or is caused to make disproportionate payments in excess
of that Borrower's Proportionate Share (as defined herein) of the Loans or
contributions (from dispositions of its assets or otherwise) to the
repayment and
satisfaction of the Obligations. These indemnification and contribution
obligations shall be unconditional and continuing obligations of the Borrowers
and Obligors and shall not be waived, rescinded, modified, limited or terminated
in any way whatsoever without the prior written consent of Lender, in its sole
discretion. For purposes hereof, Proportionate Share shall mean the actual
amount of Loans made to a Borrower and Letter of Credit Accommodations
issued for
the account of such Borrower based upon the lending formulas and other
provisions
of Section 2 hereof.
12.9 Entire Agreement . This Agreement, the other
Financing Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. To the extent that the terms and
provisions of this Agreement are expressly inconsistent with the terms and
provisions of any other Financing Agreement, the terms and provisions of this
Agreement shall govern.
IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to be
duly executed as of the day and year first above written.
LENDER BORROWERS
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND) BRIGHT STAR
INDUSTRIES,
INCORPORATED
By: By:
Name: Name:
Title: Title:
Address: Chief Executive Office:
One Post Office Square 380 Stewart Road
Boston, MA 02109 Wilkes-Barr, PA 18706
FENWAL ELECTRONICS, INC.
By:
Name:
Title:
Chief Executive Office:
450 Fortune Boulevard
Milford, MA 01757
GREENWALD
INDUSTRIES INC.
By:
Name:
Title:
Chief Executive Office:
1340 Metropolitan Avenue
Brooklyn, NY 11237
MASTERVIEW WINDOW
COMPANY, INC.
By:
Name:
Title:
Chief Executive Office:
3065 South 43rd Avenue
Phoenix, AZ 85009
ORR-SCHELEN-MAYERON
& ASSOCIATES, INC.
By:
Name:
Title:
Chief Executive Office:
5775 Wayzata Boulevard
300 Park Place Center
Minneapolis, MN 55416
<PAGE>
Schedule 9.10
Permitted Loans to Parent
So long as no Event of Default exists or has occurred and is continuing,
Borrowers may from time to time make loans to Parent and Publicker for the
purpose of paying necessary corporate expenses and liabilities of Parent or
Publicker provided that at all times before and after giving effect to each
such loan, the Borrowers maintain an aggregate Excess Availability of not less
than $1,500,000 (the "Excess Availability Level") and provided further that no
Event of Default will or does occur as a result of making any such loans. The
Excess Availability Level shall be reduced by $300,000 upon the sale of any
Borrower in accordance with Section 9.7 hereof or Section 5.7 of the Security
Agreement with Parent.
<PAGE>
Exhibit 4.3
Guarantee
October 11, 1995
Congress Financial Corporation (New England)
One Post Office Square
Boston, MA 02109
Re: Bright Star Industries, Incorporated; Fenwal Electronics, Inc.;
Greenwald Industries,Inc.; Masterview Window Company, Inc.; and
Orr-Schelen-Mayeron & Associates, Inc. (collectively, the "Borrowers")
Gentlemen:
Congress Financial Corporation (New England) ("Lender") and Borrowers have
entered into certain financing arrangements pursuant to which Lender may make
loans and advances and provide other financial accommodations to Borrowers as
set forth in the Loan and Security Agreement, dated October 11, 1995, by and
between Borrowers and Lender (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement"), and other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto, including, but not limited to, this Guarantee (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the "Financing
Agreements").
Due to the close business and financial relationships between Borrowers and
the undersigned ("Guarantor"), including that the Guarantor owns all the
issued and outstanding capital stock or each Borrower, in consideration of the
benefits which will accrue to Guarantor and as an inducement for and in
consideration of Lender making loans and advances and providing other
financial accommodations to Borrowers pursuant to the Loan Agreeement and the
other Financing Agreements, Guarantor hereby agrees in favor of Lender as
follows:
1. Guarantee.
(a) Guarantor absolutely and unconditionally guarantees and agrees
to be liable for the full and indefeasible payment and performance when due of
the following (all of which are collectively referred to herein as the
"Guaranteed Obligations"): (i) all obligaitons, liabilitites and idebtedness
of any kind, nature and description of Borrowers to Lender and/or its
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under the Loan Agreement, the other Financing
Agreements or otherwise, whether now existing or thereafter arising, whether
arising before, during or after the intial or any renewal term of the Loan
Agreement or after the commencement of any case with respect to Borrowers
under the United States Bankruptcy Code or any similar statute (including,
without limitation, the payment of interest and other amounts, which would
accrue and become due but for the commencement of such case and including
loans, interest, fees, charges and expenses related thereto and all other
obligations of Borrowers or its successors to Lender arising after the
commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Lender and (ii)
all expenses (including, without limitation, attorneys' fees and legal
expenses) incurred by Lender in connection with the preparation, execution,
delivery, recording, administration, collection, liquidation, enforcement and
defense of Borrowers' obligations, liabilities and indebtedness as aforesaid
to Lender, the rights of Lender in any collateral or under this Guarantee and
all other Financing Agreements or in any way involving claims by or against
Lender directly or indirectly arising out of or related to the relationships
between Borrowers, Guarantor or any other Obligor (as hereinafter defined) and
Lender, whether such expenses are incurred before, during or after the initial
or any renewal term of the Loan Agreement and the other Financing Agreements
or after the commencement of any case with respect to Borrowers or Guarantor
under the United States Bankruptcy Code or any similar statute.
(b) This Guarantee is a guaranty of payment and not of collection.
Guarantor agrees that Lender need not attempt to collect any Guaranteed
Obligations from Borrower, Guarantor or any other Obligor or to realize upon
any collateral, buy may require Guarantor to make immediate payment of all of
the Guaranteed Obligations to Lender when due, whether by maturity,
acceleration or otherwise, or at any time thereafter. Lender may apply any
amounts received in respect of the Guaranteed Obligations to any of the
Guaranteed Obligations, in whole or in part (including attorneys' fees and
legal expenses incurred by Lender with respect thereto or otherwise chargeable
to Borrowers or Guarantor) and in such order as Lender may elect.
(c) Payment by Guarantor shall be made to Lender at the office of
Lender from time to time on demand as Guaranteed Obligations become due.
Guarantor shall make all payments to Lender on the Guaranteed Obligations free
and clear, and without deduction or withholding for or an account of, any
setoff, couterclaim, defense, duties, taxes, levies, imposts,fees, deductions,
withholding, restrictions or conditions of any kind. One or more successive
or concurrent actions may be brought hereon against Guarantor either in the
same action in which Borrowers or any other Obligor is sued or in separate
actions. In the event any claim or action, or action on any judgement, based
on this Guarantee is brought against Guarantor, Guarantor agrees not to
deduct, set-off, or seek any counterclaim for or recoup any amounts which are
or may be owed by Lender to Guarantor.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrowers and
presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Borrowers or Guarantor is entitled are
hereby waived by Guarantor. Guarantor also waives notice of and hereby
consents to, (i) any amendment, modification, supplement, extension, renewal,
or without limitation, extensions of time of payment of or increase or
decrease in the amount of any of the Guaranteed Obligations or any collateral,
and the guarantee made herein shall apply to the Loan Agreement and the other
Financing Agreements and the Guaranteed Obligations as so amended, modified,
supplemented, renewed, restated or extended, increased or decreased, (ii) the
taking, exchange, surrender and releasing of collateral or guarantees now or
at any time held by or available to Lender for the obligations of Borrowers or
any other party at any time liable on or in respect of the Guaranteed
Obligations or who is the owner of any property which is security for the
Guaranteed Obligations (individually, an "Obligor" and collectively, the
"Obligors"), (iii) the exercise of, or refraining from the exercise of any
rights against Borrowers or any other Obligor or any collateral, (iv) the
settlement, compromise or release of, or the waiver of any default with
respect to, any of the Guaranteed Obligaitons and (v) any financing by Lender
of Borrowers under Section 364 of hte United States Bankruptcy Code or consent
to the use of cash collateral by Lender under Section 363 of the United States
Bankruptcy Code. Guarantor agrees that the amount of the Guaranteed
Obligations shall not be diminished and the liability of Guarantor hereunder
shall not be otherwise impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations shall affect, impair or be a defense to
this Guarantee, nor shall any other circumstances which might otherwise
constitute a defense available to or legal or equitable discharge of any
Borrower in respect of any other Guaranteed Obligations, or Guarantor in
respect of this Guarantee, affect, impair or be a defense to this Guarantee.
Without limitation of the foregoing, the liability of Guarantor hereunder
shall not be discharged or impaired in any respect by reason of any failure by
Lender to perfect or continue perfection of any lien or security interest in
any collateral or any delay by Lender in perfecting any such lien or security
interest. As to interest, fees and expenses, whether arising before or after
the commencement of any case with respect to any Borrower under the United
States Bankruptcy Code or any similar statute, Guarantor shall be liable
therfor, even if such Borrower's liability for such amounts does not, or
ceases to, exist by operation of law.
3. Subordination. Payment of all amounts now or herafter owed to
Guarantor by Borrowers or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lender of the Guaranteed
Obligations and all such amounts and any security and guarantees therefor are
hereby assigned to Lender as security for the Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of the other Financing Agreements, the liability of
Guarantor for the entire Guaranteed Obligations shall mature and become
immediately due and payable, even if the liability of any Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the
Loan Agreement.
5. Account Stated. The books and records of Lender showing the
account(s) between Lender and Borrowers shall be admissible in evidence in any
action or proceeding against or involving Guarantor as prima facie proof or
the items therin set forth, and the monthly statements of Lender rendered to
Borrowers, to the extent to which no written objection is made within thirty
(30) days from the date of sending thereof to Borrowers, shall be deemed
conclusively correct and constitute an account stated between Lender and
Borrowers and be binding on Guarantor.
6. Termination. This Guarantee is continuing, unlimited, absolute
and unconditional. All Guaranteed Obligaitons shall be conclusively presumed
to have been created in reliance on this Guarantee. Guarantor shall continue
to be liable hereunder until one of Lender's officers actually receives a
written termination notice from Guarantor sent to Lender at its addresss set
forth above by certified mail, return receipt requested and thereafter as set
forth below. Revocation or termination hereof by Guarantor shall not affect,
in any manner, the rights of Lender or any obligations or duties of Guarantor
under this Guarantee with respect to (a) Guaranteed Obligations which have
been created, contracted, assumed or incurred prior to the receipt by Lender
of such written notice of revocation or termination as provided herein,
including, without limitation, (i) all amendments, extensions, renewals and
modifications of such Guaranteed Obligations (whether or not evidenced by new
or additional agreements, documents or instruments executed on or after such
notice of revocation or termination), (ii) all interest, fees and similar
charges accruing or due on and after revocation or termination, and (iii) all
attorneys' fees and legal expenses, costs and other expenses paid or incurred
on or after such notice of revocation or termination in attempting to collect
or enforce any of the Guaranteed Obligaitons against Borrowers, Guarantor or
any other Obligor (whether or not suit be brought), or (b) Guaranteed
Obligations which have been created, contracted, assumed or incurred after the
receipt by Lender of such written notice or revocation or termination as
provided herein pursuant to any contract entered into by Lender prior to
receipt of such notice. The sole effect of such revocation or termination by
Guarantor shall be to exclude from this Guarantee the liability of Guarantor
for those Guaranteed Obligations arising after the date of receipt by Lender
of such written notice which are unrelated to Guaranteed Obligaitons arising
or transactions entered into prior to such date. Without limiting the
foregoing, this Guarantee may not be terminated and shall continue so long as
the Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligaitons,
Lender is required to surrender or return such payment or proceeds to any
person for any reason, then the Guaranteed Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and
this Guarantee shall continue in full force and effect as if such payment or
proceeds had not been received by Lender. Guarantor shall be liable to pay to
Lender, and shall indemnify and hold Lender harmless for the amount of any
payments or proceeds surrended or returned. This Section 7 shall remain
effective notwithstanding any contrary action which may be taken by Lender in
reliance upon such payment or proceeds. This Section 7 shall survive the
termination or revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Lender of any right, power and/or
remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Guarantor is a corporation
duly organized and in good standing under the laws of its state or other
jurisdiction of incorporation and is duly qualified as a foreign corporation
and in good standing in all states or other jurusdictions where the nature and
extend of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdicitons in which the failure
to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of Guarantor or the rights of
Lender hereunder or under any of the other Financing Agreements. The
execution, delivery and performance of this Guarantee is within the corporate
powers of Guarantor, have been duly authorized and is not in contravention of
law or the terms of hte certificates of incorporation, by-laws, or other
organizational documentation of Guarantor, or any indenture, agreement or
undertaking to which Guarantor is a party or by which Guarantor or its
property are bound. This Guarantee constitutes the legal, valid and binding
obligation of Guarantor enforecable in accordance with its terms.
10. Governing Law; Choice Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Guarantee
and any dispute arising out of the realtionship between Guarantor and Lender,
whether in contract, tort, equity or otherwise, shall be governed by
theinternal laws of the Commonwealth of Massachusetts (without giving effect
to principles of conflicts of law).
(b) Guarantor hereby irrevocably consents and submits to the
non-exclusive jurisdiction of the courts of the Commonwealth of Massachusetts
and
the United States District Court for the District of Massachusetts and waives
any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of Guarantor and Lender in respect of this Guarnatee or any of
the other Financing Agreements or the transactions related hereto or thereto,
in each case whether now existing or therafter arising and whether in
contract, tort, equity or otherwise, and agrees that any dispute arising out
of the relationship between Guarantor or Borrowers and Lender or the conduct
of any such persons in connection with this Guarantee, the other Financing
Agreements or otherwise shall be heard only in the courts described above
(except that Lender shall have the right to bring any action or proceeding
against Guarantor or its property in the courts of any other jurisdiction
which Lender deems necessary or appropriate in order to realize on any
collateral at any time granted by Borrowers or Guarantor to Lender or to
otherwise enforce its rights against Guarantor or its property).
(c) Guarantor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its addresses set forth on the
signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Lender's option, by service upon Guarantor in any other manner porvided
under the rules of any such courts. Within thirty (30) days after such
service, Guarantor shall appear in answer to such process, failing which
Guarantor shall be deemed in default and judgement may be entered by Lender
against Guarantor for the amount of hte claim and other relief requested.
(d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTEE OR ANY
OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTALLY TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF THIS
GUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERTO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT GUARANTOR OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTOR AND LENDER TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
(e) Lender shall not have any liability to Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Guarantee, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
nonappealable judgement or court order binding on Lender that the losses were
the result of acts of omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit
of the rebuttable presumption that it acted in good faith and with the
exercise of oridinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth above and to Guarantor
at its chief executive office set forth below, or to such other address either
party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforcable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement and
understanding of the parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, committments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantor and its successors and assigns and shall inure to the benefit of
Lender and its successors, endorsees, transferees and assigns. The
liquidation, dissolution or termination of Guarantor shall not terminate this
Guarantee as to such entity or as to Guarantor.
15. Construction. All references to the term "Guarantor" wherever used
herein shall mean Guarantor and its successors and assigns (including, without
limitation, any receiver, trustee or custodian for Guarantor or any of its
assets or Guarantor in its capacity as debtor or debtor-in-possession under
the United States Bankruptcy Code). All references to the term "Lender"
wherever used herein shall mean Lender and its successors and assigns and all
references to the term "Borrowers" wherever used herein shall mean Borrowers
and their successors and assigns (including, without limitation, any receiver,
trustee or custodian for any Borrower or any of its assets or any Borrower in
its capacity as debtor or debtor-in-possession under the United States
Bankruptcy Code). All references to the term "Person" or "person" wherever
used herein shall mean any individual, sole proprietorship, partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as amended),
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency instrumentality
or political subdivision thereof. All references to the plural shall also
mean the singular and to the singular shall also mean the plural.
IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as
of the day and year first above written.
ATTEST PUBLICKER INDUSTRIES INC.
By:
Title:
Chief Executive Office
1445 East Putnam Avenue
Old Greenwich, CT 06870<PAGE>
Exhibit 4.4
GENERAL SECURITY AGREEMENT
This General Security Agreement dated October 11, 1995 is by Publicker
Industries Inc., a Pennsylvania corporation ("Guarantor"), in favor of
Congress Financial Corporation (New England), a Massachusetts corporation
("Lender").
W I T N E S S E T H
WHEREAS, Lender has entered or is about to enter into certain financing
arrangements with Bright Star Industries, Incorporated, a Delaware
corporation; Fenwal Electronics, Inc. a Delaware corporation; Greenwald
Industries Inc., a Delaware corporation; Masterview Window Company, Inc., a
Delaware corporation, and Orr-Schelen-Mayeron & Associates, Inc., a Minnesota
corporation (collectively, the "Borrowers") pursuant to which Lender may make
loans and provide other financial accommodations to Borrowers; and
WHEREAS, Guarantor has executed and delivered or is about to execute and
deliver to Lender a guarantee in favor of Lender pursuant to which Guarantor
absolutely and unconditionally guarantees to Lender the payment and
performance of all now existing and hereafter arising obligations, liabilities
and indebtedness of Borrowers to Lender; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also
mean the singular and to the singular shall also mean the plural. All
references to Guarantor, Borrowers and Lender pursuant to the definitions set
forth in the recitals hereto, or to any other person herein, shall include
their respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
An Event of Default shall exist or continue or be continuing until such Event
of Default is waived in accordance with Section 7.3. Any accounting term used
herein unless otherwise defined in this Agreement shall have the meanings
customarily given to such term in accordance with GAAP. For purposes of this
Agreement, the following terms shall have the respective meanings given to
them below:
1.1. "Accounts" shall mean all present and future rights of Guarantor to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2. "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to: (a) the difference between: (i) the aggregate net book value of all
assets of such Person and its subsidiaries, calculating the book value of
inventory for this purpose on a first-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including
all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (ii) the aggregate amount of the indebtedness and other
liabilities of such Person and its subsidiaries (including tax and other
proper accruals).
1.3. "Equipment" shall mean all of Guarantor's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used
in connection therewith, and substitutions and replacements thereof, wherever
located.
1.4. "Event of Default" shall have the meaning set forth in Section 6.1
hereof.
1.5. "Financing Agreements" shall mean, collectively, the Loan
Agreement, this Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrowers, Guarantor or any Obligor in connection
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.6. "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances as of the date of determination consistently
applied, except that, for purposes of Sections 5.10 and 5.11 hereof, GAAP
shall be determined on the basis of such principles in effect on the date
hereof and consistent with those used in the preparation of the audited
financial statements delivered to Lender prior to the date hereof.
1.7. "Information Certificate" shall mean the Information Certificate of
Guarantor constituting Exhibit A hereto containing material information with
respect to Guarantor, its business and assets provided by or on behalf of
Guarantor to Lender in connection with the preparation of this Agreement and
the other Financing Agreements and the financing arrangements provided for
herein.
1.8. "Inventory" shall mean all of Guarantor's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.9. "Loan Agreement" shall mean the Loan and Security Agreement, of
even date, by and between Borrowers and Lender, as the same now exists and may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.10. "Obligations" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by Guarantor to
Lender and/or its affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Guarantor under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but
for the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Lender.
1.11. "Obligor" shall mean any other guarantor, endorser, acceptor,
surety or other person liable on or with respect to the Obligations or who is
the owner of any property which is security for the Obligations, other than
Borrowers.
1.12. "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code
of 1986, as amended), business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.13. "Records" shall mean all of Guarantor's present and future books of
account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of
Guarantor with respect to the foregoing maintained with or by any other
person).
1.14. "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such person and its
subsidiaries (as determined in accordance with GAAP), calculating the book
value of inventory for this purpose on a first-in-first-out basis, and (b) all
current liabilities of such Person and its subsidiaries (as determined in
accordance with GAAP), provided, however, that if within 12 months of the date
hereof any of the payments to be made by Guarantor to the United States of
America pursuant to the consent decree between Guarantor, the Environmental
Protection Agency and certain other parties are classified as current
liabilities, the amount thereof, up to but not exceeding $4,850,000 shall not
be deducted for purposes of determining Working Capital under Section 5.10
hereof.
SECTION 2. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Guarantor hereby
grants to Lender a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Lender as security, the following
property and interests in property of Guarantor, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
2.1. Accounts;
2.2. all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses
in action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties;
2.3. all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Guarantor now or hereafter
held or received by or in transit to Lender or its affiliates or at any other
depository or other institution from or for the account of Guarantor whether
for safekeeping, pledge, custody, transmission, collection or otherwise, and
all present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of <PAGE>
Accounts and other Collateral, including,
without limitation, (a) rights and
remedies under or relating to guaranties, contracts of suretyship, letters of
credit and credit and other insurance related to the Collateral, (b) rights of
stoppage in transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, (c) goods described in
invoices, documents, contracts or instruments with respect to, or otherwise
representing or evidencing, Accounts or other Collateral, including, without
limitation, returned, repossessed and reclaimed goods, and (d) deposits by and
property of account debtors or other persons securing the obligations of
account debtors;
2.4. Inventory;
2.5. Equipment;
2.6. Records; and
2.7. all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties
for loss or damage to or destruction of any or all of the foregoing.
SECTION 3. COLLATERAL COVENANTS
3.1. Accounts Covenants.
(a) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(b) Guarantor shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Guarantor,
all chattel paper and instruments which Guarantor now owns or may at any time
acquire immediately upon Guarantor's receipt thereof, except as Lender may
otherwise agree.
(c) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account
debtors that the Accounts have been assigned to Lender and that Lender has a
security interest therein and Lender may direct any or all account debtors to
make payment of Accounts directly to Lender, (ii) extend the time of payment
of, compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any
duty to do so, and Lender shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action Lender may deem
necessary or desirable for the protection of its interests. At any time that
an Event of Default exists or has occurred and is continuing, at Lender's
request, all invoices and statements sent to any account debtor shall state
that the Accounts and such other obligations have been assigned to Lender and
are payable directly and only to Lender and Guarantor shall deliver to Lender
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Lender may in good
faith require.
3.2. Inventory Covenants. With respect to the Inventory: (a) Guarantor
shall at all times maintain inventory records reasonably satisfactory to
Lender, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, Guarantor's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Guarantor shall conduct
a physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the
form and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count; (c) Guarantor shall not remove any Inventory
from the locations set forth or permitted herein, without the prior written
consent of Lender, except for sales of Inventory in the ordinary course of
Guarantor's business and except to move Inventory directly from one location
set forth or permitted herein to another such location; (d) upon Lender's
request, Guarantor shall, at its expense, no more than once in any twelve (12)
month period, but at any time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written reports
or appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender or upon
which Lender is expressly permitted to rely; (e) Guarantor shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including, but not limited to, the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Guarantor assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) Guarantor shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate Guarantor to repurchase such Inventory;
(h) Guarantor shall keep the Inventory in good and marketable condition; and
(i) Guarantor shall not, without prior written notice to Lender, acquire or
accept any Inventory on consignment or approval.
3.3. Equipment Covenants. With respect to the Equipment: (a) upon
Lender's request, Guarantor shall, at its expense, at any time or times as
Lender may request on or after an Event of Default, deliver or cause to be
delivered to Lender written reports or appraisals as to the Equipment in form,
scope and methodology acceptable to Lender and by appraiser acceptable to
Lender; (b) Guarantor shall keep the Equipment in good order, repair, running
and marketable condition (ordinary wear and tear excepted); (c) Guarantor
shall use the Equipment with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with all
applicable laws; (d) the Equipment is and shall be used in Guarantor's
business and not for personal, family, household or farming use; (e)
Guarantor shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of Guarantor or
to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Guarantor shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Guarantor assumes all responsibility and liability arising
from the use of the Equipment.
3.4. Power of Attorney. Guarantor hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Guarantor's true and
lawful attorney-in-fact, and authorizes Lender, in Guarantor's or Lender's
name, to: (a) at any time an Event of Default or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Guarantor's rights and remedies to collect
any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Lender deems
advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi)
discharge and release any Account, (vii) prepare, file and sign Guarantor's
name on any proof of claim in bankruptcy or other similar document against an
account debtor, (viii) notify the post office authorities to change the
address for delivery of Guarantor's mail to an address designated by Lender,
and open and dispose of all mail addressed to Guarantor, and (ix) do all acts
and things which are necessary, in Lender's determination, to fulfill
Guarantor's obligations under this Agreement and the other Financing
Agreements and (b) at any time to (i) take control in any manner of any item
of payment or proceeds thereof, (ii) have access to any lockbox or postal box
into which Guarantor's mail is deposited, (iii) endorse Guarantor's name upon
any items of payment or proceeds thereof and deposit the same in the Lender's
account for application to the Obligations, (iv) endorse Guarantor's name upon
any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other
Collateral, and (v) sign Guarantor's name on any verification of Accounts and
notices thereof to account debtors and (vi) execute in Guarantor's name and
file any UCC financing statements or amendments thereto. Guarantor hereby
releases Lender and its officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Lender's own
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
3.5. Right to Cure. Lender may, at its option, (a) cure any default by
Guarantor under any agreement with a third party or pay or bond on appeal any
judgment entered against Guarantor, discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect
thereto. Lender may add any amounts so expended to the Obligations and charge
Guarantor's account therefor, such amounts to be repayable by Guarantor on
demand. Lender shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation
or liability of Guarantor. Any payment made or other action taken by Lender
under this Section shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed accordingly.
3.6. Access to Premises. From time to time as requested by Lender, at
the cost and expense of Guarantor, (a) Lender or its designee shall have
complete access to all of Guarantor's premises during normal business hours
and after notice to Guarantor, or at any time and without notice to Guarantor
if an Event of Default exists or has occurred and is continuing, for the
purposes of inspecting, verifying and auditing the Collateral and all of
Guarantor's books and records, including, without limitation, the Records, and
(b) Guarantor shall promptly furnish to Lender such copies of such books and
records or extracts therefrom as Lender may request, and (c) use during normal
business hours such of Guarantor's personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing and if an Event of Default
exists or has occurred and is continuing for the collection of Accounts and
realization of other Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Guarantor hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement):
4.1. Corporate Existence, Power and Authority; Subsidiaries. Guarantor
is a corporation duly organized and in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure
to so qualify would not have a material adverse effect on Guarantor's
financial condition, results of operation or business or the rights of Lender
in or to any of the Collateral. The execution, delivery and performance of
this Agreement, the other Financing Agreements to which Guarantor is a party
and the transactions contemplated hereunder and thereunder are all within
Guarantor's corporate powers, have been duly authorized and are not in
contravention of law or the terms of Guarantor's certificate of incorporation,
by-laws, or other organizational documentation, or any indenture, agreement or
undertaking to which Guarantor is a party or by which Guarantor or its
property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Guarantor enforceable in
accordance with their respective terms. Guarantor does not have any
subsidiaries except as set forth on the Information Certificate.
4.2. Financial Statements; No Material Adverse Change. All financial
statements relating to Guarantor which have been or may hereafter be delivered
by Guarantor to Lender have been prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Guarantor as
at the dates and for the periods set forth therein. Except as disclosed in
any interim financial statements furnished by Guarantor to Lender prior to the
date hereof, there has been no material adverse change in the assets, liabi-
lities, properties and condition, financial or otherwise, of Guarantor, since
the date of the most recent audited financial statements furnished by
Guarantor to Lender prior to the date hereof.
4.3. Chief Executive Office; Collateral Locations. The chief executive
office of Guarantor and Guarantor's Records concerning Accounts are located
only at the address set forth below and its only other places of business and
the only other locations of Collateral, if any, are the addresses set forth in
the Information Certificate, subject to the right of Guarantor to establish
new locations in accordance with Section 5.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by
Guarantor and sets forth the owners and/or operators thereof, and to the best
of Guarantor's knowledge, the holders of any mortgages on such locations.
4.4. Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 4.4 hereto and the other liens permitted under Section 5.8 hereof.
Guarantor has good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 4.4 hereto or permitted under Section 5.8
hereof.
4.5. Tax Returns. Guarantor has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to
be filed by it (after giving effect to extensions as previously disclosed in
writing to Lender). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Guarantor has
paid or caused to be paid all taxes due and payable or claimed due and payable
in any assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Guarantor and with respect to which adequate reserves have been
set aside on its books. Adequate provision has been made for the payment of
all accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
4.6. Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to
the best of Guarantor's knowledge threatened, against or affecting Guarantor,
its assets or business and there is no action, suit, proceeding or claim by
any Person pending, or to the best of Guarantor's knowledge threatened,
against Guarantor or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against Guarantor would result in any material adverse change in the financial
condition, assets or business of Guarantor or which would impair the ability
of Guarantor to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon any Collateral.
4.7. Compliance with Other Agreements and Applicable Laws. Guarantor is
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets
are bound and Guarantor is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local governmental
authority.
4.8. Accuracy and Completeness of Information. All information
furnished by or on behalf of Guarantor in writing to Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
expected to have a material adverse affect on the business, assets or
prospects of Guarantor, which has not been fully and accurately disclosed to
Lender in writing.
4.9. Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation under the Loan Agreement
(subject to transactions permitted under Section 5 hereof and, as to financial
statements, shall pertain to the latest financial statements furnished to
Lender) and shall be conclusively presumed to have been relied on by Lender
regardless of any investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Guarantor shall now
or hereafter give, or cause to be given, to Lender.
SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS
5.1. Maintenance of Existence. Guarantor shall at all times preserve,
renew and keep in full, force and effect its corporate existence and material
rights and franchises with respect thereto and maintain in full force and
effect all permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on its business as
presently or proposed to be conducted. Guarantor shall give Lender thirty
(30) days prior written notice of any proposed change in its corporate name,
which notice shall set forth the new name and Guarantor shall deliver to
Lender a copy of the amendment to the Certificate of Incorporation of
Guarantor providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation of Guarantor as soon as it is available.
5.2. New Collateral Locations. Guarantor may open any new location
within the continental United States provided Guarantor (a) gives Lender
thirty (30) days prior written notice of the intended opening of any such new
location and (b) executes and delivers, or causes to be executed and
delivered, to Lender such agreements, documents, and instruments as Lender may
deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements.
5.3. Compliance with Laws, Regulations, Etc. Guarantor shall, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it.
5.4. Payment of Taxes and Claims. Guarantor shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon
or against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to Guarantor and with respect to which adequate reserves
have been set aside on its books. Guarantor shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements provided
for herein and Guarantor agrees to indemnify and hold Lender harmless with
respect to the foregoing, and to repay to Lender on demand the amount thereof,
and until paid by Guarantor such amount shall be added and deemed part of the
Loans, provided, that, nothing contained herein shall be construed to require
Guarantor to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or paid hereunder to Lender. The foregoing
indemnity shall survive the payment of the Obligations, the termination of
this Agreement and the termination or non- renewal of the Loan Agreement.
5.5. Insurance. Guarantor shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to
form, amount and insurer. Guarantor shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance,
and, if Guarantor fails to do so, Lender is authorized, but not required, to
obtain such insurance at the expense of Guarantor. All policies shall provide
for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage. Lender may act as attorney for
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Guarantor shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Guarantor shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid regardless
of any act or omission by Guarantor or any of its affiliates. At its option,
Lender may apply any insurance proceeds received by Lender at any time to the
cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
5.6. Financial Statements and Other Information.
(a) Guarantor shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Guarantor and its subsidiaries
(if any) in accordance with GAAP and Guarantor shall furnish or cause to be
furnished to Lender: (i) within thirty (30) days after the end of each fiscal
month other than December and within forty-five (45) days after the end of
each December, monthly unaudited consolidated financial statements and, if
Guarantor has any subsidiaries, consolidating financial statements (including
in each case balance sheets, statements of income and loss and statements of
shareholders' equity), all in reasonable detail, fairly presenting the
financial position and the results of the operations of Guarantor and its
subsidiaries as of the end of and through such fiscal month and (ii) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements and, if Guarantor has any Subsidiaries, consolidating
financial statements of Guarantor and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all
in reasonable detail, fairly presenting the financial position and the results
of the operations of Guarantor and its subsidiaries as of the end of and for
such fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm
selected by Guarantor and reasonably acceptable to Lender, that such financial
statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of Guarantor and its
subsidiaries as of the end of and for the fiscal year then ended.
(b) Guarantor shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for
the Obligations or which would result in any material adverse change in
Guarantor's business, properties, assets, goodwill or condition, financial or
otherwise and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Guarantor shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which
Guarantor sends to its stockholders generally and copies of all reports and
registration statements which Guarantor files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Guarantor shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Guarantor, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Guarantor to any court or other government agency or to any participant or
assignee or prospective participant or assignee. Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Guarantor's expense, copies of the financial statements of Guarantor and any
reports or management letters prepared by such accountants or auditors on
behalf of Guarantor and to disclose to Lender such information as they may
have regarding the business of Guarantor. Any documents, schedules, invoices
or other papers delivered to Lender may be destroyed or otherwise disposed of
by Lender one (1) year after the same are delivered to Lender, except as
otherwise designated by Guarantor to Lender in writing.
5.7. Sale of Assets, Consolidation, Merger, Dissolution, Etc. Guarantor
shall not, directly or indirectly, (a) merge into or with or consolidate with
any other Person or permit any other Person to merge into or with or
consolidate with it, or sell, assign, lease, transfer, abandon or otherwise
dispose of any stock or indebtedness to any other Person or any of its assets
to any other Person (except for (i) sales of Inventory in the ordinary course
of business; (ii) the disposition of worn-out or obsolete Equipment or
Equipment no longer used in the business of Guarantor so long as (A) if an
Event of Default exists or has occurred and is continuing, any proceeds are
paid to Lender and (B) such sales do not involve Equipment having an
aggregate fair market value in excess of $50,000 for all such Equipment
disposed of in any fiscal year of Guarantor); and (iii) sales of the capital
stock of any subsidiary provided that such subsidiary is not an Obligor and no
Event of Default exists or has occurred and is continuing , or (c) wind up,
liquidate or dissolve, or (d) agree to do any of the foregoing.
5.8. Encumbrances. Guarantor shall not create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, the Collateral, except: (a) liens and security
interests of Lender; (b) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Guarantor and with
respect to which adequate reserves have been set aside on its books; (c) non-
consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of Guarantor's business to the extent: (i) such
liens secure indebtedness which is not overdue or (ii) such liens secure
indebtedness relating to claims or liabilities which are fully insured and
being defended at the sole cost and expense and at the sole risk of the
insurer or being contested in good faith by appropriate proceedings diligently
pursued and available to Guarantor, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books; (d) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of real property
which do not interfere in any material respect with the use of such real
property or ordinary conduct of the business of Guarantor as presently
conducted thereon or materially impair the value of the real property which
may be subject thereto; (e) other than as set forth on Schedule 4.4 hereto,
purchase money security interests in Equipment (including capital leases) and
purchase money mortgages on real estate not to exceed $100,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Guarantor other than the Equipment
or real estate so acquired, and the indebtedness secured thereby does not
exceed the cost of the Equipment or real estate so acquired, as the case may
be; and (f) the security interests and liens set forth on Schedule 4.4 hereto.
5.9. Transactions with Affiliates. Guarantor shall not enter into any
transaction for the purchase, sale or exchange of property or the rendering of
any service to or by any affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Guarantor's business and upon fair
and reasonable terms no less favorable to the Guarantor than Guarantor would
obtain in a comparable arm's length transaction with an unaffiliated person.
5.10. Working Capital. Guarantor shall, at all times, maintain Working
Capital of not less than $1,141,000.
5.11. Adjusted Net Worth. Guarantor shall, at all times, maintain
Adjusted Net Worth of not less than -$7,000,000.
5.12. Costs and Expenses. Guarantor shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and
all other documents related hereto or thereto, including any amendments,
supplements or consents which may hereafter be contemplated (whether or not
executed) or entered into in respect hereof and thereof, including, but not
limited to: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) all title insurance and other insurance premiums, appraisal
fees and search fees; (c) costs and expenses of preserving and protecting the
Collateral; (d) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender arising
out of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters);
and (e) the fees and disbursements of counsel (including legal assistants) to
Lender in connection with any of the foregoing.
5.13. Further Assurances. At the request of Lender at any time and from
time to time, Guarantor shall, at its expense, at any time or times duly
execute and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of
the other Financing Agreements. Where permitted by law, Guarantor hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES
6.1. Events of Default. The occurrence or existence of any Event of
Default under the Loan Agreement is referred to herein individually as an
"Event of Default", and collectively as "Events of Default".
6.2. Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and
other applicable law, all of which rights and remedies may be exercised
without notice to or consent by Guarantor or any Obligor, except as such
notice or consent is expressly provided for hereunder or required by
applicable law. All rights, remedies and powers granted to Lender hereunder,
under any of the other Financing Agreements, the Uniform Commercial Code or
other applicable law, are cumulative, not exclusive and enforceable, in
Lender's discretion, alternatively, successively, or concurrently on any one
or more occasions, and shall include, without limitation, the right to apply
to a court of equity for an injunction to restrain a breach or threatened
breach by Guarantor of this Agreement or any of the other Financing
Agreements. Lender may, at any time or times, proceed directly against
Guarantor or any Obligor to collect the Obligations without prior recourse to
the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation, (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) of the Loan Agreement, all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require Guarantor, at Guarantor's expense, to assemble and make
available to Lender any part or all of the Collateral at any place and time
designated by Lender, (iv) collect, foreclose, receive, appropriate, setoff
and realize upon any and all Collateral, (v) remove any or all of the
Collateral from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition thereof or for
any other purpose, (vi) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including, without limitation, entering
into contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or terms
as Lender may deem reasonable, for cash, upon credit or for future delivery,
with the Lender having the right to purchase the whole or any part of the
Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Guarantor, which right or equity of
redemption is hereby expressly waived and released by Guarantor. If any of
the Collateral is sold or leased by Lender upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until
payment therefor is finally collected by Lender. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Lender to
Guarantor designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Guarantor waives any
other notice. In the event Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy,
Guarantor waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of
the Collateral to payment of the Obligations, in whole or in part and in such
order as Lender may elect, whether or not then due. Guarantor shall remain
liable to Lender for the payment of any deficiency with interest at the
highest rate provided for in the Loan Agreement and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses.
SECTION 7. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
7.1. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the Commonwealth of
Massachusetts (without giving effect to principles of conflicts of law).
(b) Guarantor irrevocably consents and submits to the non-exclusive
jurisdiction of the courts of the Commonwealth of Massachusetts and
the United States District Court for the District of Massachusetts and waives
any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected or related or incidental to the
dealings of Guarantor and Lender in respect of this Agreement or the other
Financing Agreements or the transactions related hereto or thereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise, and agrees that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against Guarantor or
its property in the courts of any other jurisdiction which Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Guarantor or its property).
(c) Guarantor hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at Lender's option, by service upon Guarantor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such
service, Guarantor shall appear in answer to such process, failing which
Guarantor shall be deemed in default and judgment may be entered by Lender
against Guarantor for the amount of the claim and other relief requested.
(d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR
ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT GUARANTOR OR LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND LENDER TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and non-
appealable judgment or court order binding on Lender that the losses were the
result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit
of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement and the other Financing Agreements.
7.2. Waiver of Notices. Guarantor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and
notices of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on Guarantor which Lender may elect to give
shall entitle Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
7.3. Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender and an authorized officer of Guarantors. Lender shall not, by any act,
delay, omission or otherwise be deemed to have expressly or impliedly waived
any of its rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of Lender. Any such waiver shall
be enforceable only to the extent specifically set forth therein. A waiver by
Lender of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
7.4. Waiver of Counterclaims. Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
7.5. Indemnification. Guarantor shall indemnify and hold Lender, and
its directors, agents, employees and counsel, harmless from and against any
and all losses, claims, damages, liabilities, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant
thereto, including, without limitation, amounts paid in settlement, court
costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may
be unenforceable because it violates any law or public policy, Guarantor shall
pay the maximum portion which it is permitted to pay under applicable law to
Lender in satisfaction of indemnified matters under this Section. The
foregoing indemnity shall survive the payment of the Obligations, the
termination of this Agreement and the termination or non- renewal of the Loan
Agreement. All of the foregoing costs and expenses shall be part of the
Obligations and secured by the Collateral.
SECTION 8. MISCELLANEOUS
8.1. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at One Post Office Square, Boston,
Massachusetts 02109 and to Guarantor at its chief executive office set forth
below, or to such other address as either party may designate by written
notice to the other in accordance with this provision, and (b) deemed to have
been given or made: if delivered in person, immediately upon delivery; if by
telex, telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
8.2. Partial Invalidity. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
8.3. Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon Guarantor
and its successors and assigns and inure to the benefit of and be enforceable
by Lender and its successors and assigns, except that Guarantor may not assign
its rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender.
8.4. Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between Lender and Guarantor, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
IN WITNESS WHEREOF, Guarantor has caused these presents to be duly
executed as of the day and year first above written.
Attest: GUARANTOR
PUBLICKER INDUSTRIES INC.
Secretary
By:
Name:
Title:
CHIEF EXECUTIVE OFFICE:
[CORPORATE SEAL]
1445 East Putnam Avenue
Old Greenwich, CT 06870
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