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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 23, 1998
MINUTEMAN INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Illinois 604540104 36-2262931
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
111 South Rohlwing Road, Addison, Illinois 60601
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(Address of principal executive offices) (Zip Code)
(630) 627-6900
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(Registrant's telephone number, including area code)
NO CHANGE
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(Former name, former address and former fiscal year if changed since last
report)
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Item 2. Acquisition or Disposition of Assets
On November 23, 1998, Minuteman International, Inc., (the "Company"),
entered into an Asset Purchase Agreement with AAR PowerBoss, Inc., for the
acquisition of substantially all of the net assets and assumption of certain
liabilities of AAR PowerBoss, Inc., ("PowerBoss"), an Illinois corporation.
PowerBoss designs, manufactures, and repairs ride-on and walk-behind sweepers
and scrubbers for floor and carpet care utilizing industrial application. The
Assets acquired pursuant to the Closing, which was completed on November 24,
1998, consist of business operations, machinery, equipment, inventory, accounts
receivable, and intellectual property rights. The liabilities assumed by the
Company are certain liabilities incurred by PowerBoss in the ordinary course of
business as reflected on the Final Closing Balance Sheet to be prepared pursuant
to the Asset Purchase Agreement.
The cash purchase price under the terms of the Asset Purchase Agreement,
paid on November 24, 1998, was in the amount of $12,012,659.00. The purchase
price is subject to certain post closing adjustments as provided for in the
Asset Purchase Agreement.
The Company paid for this acquisition with borrowed funds pursuant to
the terms of a Loan Agreement entered into with LaSalle National Bank. The Loan
Agreement includes a Term Note and a Revolving Line of Credit with LaSalle
National Bank.
PowerBoss's primary operations were conducted out of its plant in
Aberdeen, North Carolina. The Company has entered into a three-year lease for
the utilization of the plant and property located in Aberdeen. Rent is the sum
of $17,000.00 per month plus payment of insurance, taxes and maintenance of
these facilities as provided in the Lease.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
The financial statements required by Form 8-K are not included in this
report and will be filed by amendment to this report on or before February
7, 1999.
(b) Pro forma financial information.
The pro forma financial statements required by Form 8-K are not included
in this report and will be filed by amendment to this report on or before
February 7, 1999.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of November 23, 1998, by and
between Minuteman International, Inc., and AAR PowerBoss, Inc.
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2.2 Lease Agreement, dated as of November 23, 1998, by and between
Minuteman International, Inc., and AAR PowerBoss, Inc.
10.1 Loan Agreement, dated as of November, 1998, by and between Minuteman
International, Inc., and LaSalle National Bank.
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.
Dated: December 7, 1998
MINUTEMAN INTERNATIONAL, INC.
By:
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Jerome E. Rau
President and Chief Executive Officer
By:
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Thomas J. Nolan
Vice President, Treasurer, and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit Description
2.1 Asset Purchase Agreement, dated as of November 23, 1998, by and
between Minuteman International, Inc., and AAR PowerBoss, Inc.
The following exhibits and schedules to the Asset Purchase
Agreement have been omitted and will be provided to the Securities
and Exchange Commission upon request:
Schedule 1.1(c) Leasehold Interest
Schedule 1.1(d) Customer's Purchase Orders
Schedule 1.1(e) Seller's Purchase Orders
Schedule 1.1(f) Machinery and Equipment (Included and Excluded)
Schedule 1.1(h) Intellectual Property
Schedule 1.1(j) Vehicles (Owned or Leased)
Schedule 1.1(l) Major items of Personal Property
Schedule 1.2(j)
Schedule 2.4(c) XS and obsolete Inventory
Schedule 3.1(f) Contracts
Schedule 3.1(g) Warranty Claims
Schedule 5.4(a) May 31, 1998 Balance Sheet
Schedule 5.4(b) May 31, 1998 Financial Statement
Schedule 5.5(b) Change in Business (None)
Schedule 5.8 Notice of Violation
Schedule 5.9 Claims and Litigation
Schedule 5.10 Employment Arrangements (None)
Schedule 5.11 Taxes
Schedule 5.12 Arrangements with Related Parties
Exhibit 5.23 Environmental Matters
Schedule 5.24 Employee List
Schedule 5.25(b) Intellectual Property Contracts
Schedule 5.26 Permits and Licenses
Exhibit 8.4 Seller's Attorney Opinion
Exhibit 8.6 Bill of Sale
Exhibit 8.8 Real Property Lease Agreement
Exhibit 9.6 Buyer's Attorney Opinion
Schedule 12.5 Transferred MIS Files
Schedule 12.6 Remarketing Equipment
Schedule 13.1 Broker Arrangements
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2.2 Lease Agreement, dated as of November 30, 1998, by and between
Minuteman International, Inc., and AAR PowerBoss, Inc.
10.1 Loan Agreement dated as of November, 1998, by and between
Minuteman International, Inc., and LaSalle National Bank.
Exhibit B Revolving Loan Notes
Exhibit C Term Loan Note
Schedule 5.12 Environmental Disclosure
Schedule 5.16 Other Names
Schedule 5.20 Subsidiaries
The foregoing exhibits and schedules to the Loan Agreement have been
omitted and will be provided to the Securities and Exchange Commission upon
request.
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ASSET PURCHASE AGREEMENT
By and Among
AAR POWERBOSS, INC.
And
MINUTEMAN INTERNATIONAL, INC.
November ___, 1998
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement"), dated as of November ___,
1998, is made by and among AAR POWERBOSS, INC., an Illinois corporation
(including its division, AAR POWER-CLEAN) ("Seller"), and MINUTEMAN
INTERNATIONAL, INC., an Illinois corporation ("Buyer").
WHEREAS, Buyer desires to buy, and Seller desires to sell to Buyer, the
business and certain assets of Seller, subject to certain liabilities, for a
purchase price and upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, Buyer and Seller hereby
agree as follows:
1. SALE AND PURCHASE OF ASSETS. For the price, on the terms and subject
to the conditions herein set forth, Seller hereby agrees to convey, transfer,
assign and deliver to Buyer, and Buyer (directly or through its designee
acceptable to Seller) agrees to purchase and acquire at the Closing (as
hereinafter defined), in Section 4.1, but effective at and as of the Effective
Time (as hereinafter defined), all of the business and assets now owned or
acquired prior to the Effective Time by Seller used or held for use exclusively
in Seller's business (other than the "Retained Assets" as hereinafter defined),
including but not limited to those related to the business of designing,
manufacturing, repairing and distributing ride-on and walk behind sweepers and
scrubbers, as well as parts and accessories ("PowerBoss Products") (collectively
the "Transferred Assets"), free and clear of all liens, claims, charges or
encumbrances of
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any kind or nature whatsoever. The term "Effective Time" shall mean the close of
business on the business day immediately preceding the Closing or such other
time and date as shall be established by written agreement of Seller and Buyer.
1.1 TRANSFERRED ASSETS. The term "Transferred Assets" includes the
following:
(a) All inventory, wherever located, of Seller as of the Effective Time
used or held for use exclusively in Seller's business, including raw materials,
work in process and finished products (the "Inventory");
(b) Intentionally Omitted.
(c) The leasehold interests of Seller as lessee under the leases of all
personal property listed in Schedule 1.1(c);
(d) Seller's rights and interest in all bids and proposals, written or
oral, submitted by Seller and those contracts, engagements, commitments and
orders, written or oral, awarded to or received by Seller for the design,
manufacture, repair or distribution of the PowerBoss Products a list of which as
of the date hereof is set forth on Schedule 1.1(d) (the "Customer Purchase
Orders");
(e) Seller's interest in all those incomplete or unfilled contracts,
commitments and orders or portions thereof issued by Seller for the purchase by
Seller of supplies, materials, inventory, raw materials and finished products a
list of which as
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of the date hereof is set forth on Schedule 1.1(e) (the "Seller's Purchase
Orders").
(f) All machinery, equipment, jigs, tools, dies, furniture, fixtures
and office and other equipment and spare parts therefor owned by Seller used or
held for use exclusively in Seller's business (the "Machinery and Equipment"),
including but not limited to the items listed on Schedule l.l(f) hereto; but
excluding the items specifically identified on Schedule 1.1(f) hereto as not
being transferred;
(g) All files, books, records, accounts, manuals and incidental
documentation of Seller (the "Books and Records"), including without limitation
all computer reports and records, customer lists, bidding and contract
information, credit records and information, purchase and sales records and
information, merchandise records and sales promotion materials, procedural
manuals and technical manuals, manufacturer's specifications, overhaul manuals,
service bulletins and field service notes, except for any items expressly
included in the Retained Assets. For a period of three (3) years after the
Closing Date (defined in Section 4.1), Seller may have access to any Books and
Records and may make copies thereof, if appropriate, during normal business
hours upon reasonable notice to Buyer; and
(h) All items of intellectual property, tangible or intangible,
including without limitation, trademarks, trademark registrations, trade names,
engineering and other drawings, plans
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and specifications, blueprints, processes, procedures, manufacturing
instructions, manufacturing bills of materials, patents, patent applications,
copyrights, copyright registrations, chip registrations, trademarks, service
marks, know-how, inventions, designs, laboratory books and information,
confidential business information, research and development, trade secrets
including without limitation with respect to the foregoing all related
international priority rights and all rights to sue for past infringement
("Intellectual Property") and licenses of Intellectual Property owned by Seller
and used or held for use exclusively in Seller's business. Major items of such
Intellectual Property are listed on Schedule 1.1(h). Notwithstanding anything in
this Agreement to the contrary the property name of "AAR" is not a Transferred
Asset.
(i) Seller's rights against suppliers of inventory or other items,
including without limitation, any express or implied warranties and any
entitlement to volume or other discounts or rebates;
(j) All trucks, cars and other vehicles owned or leased by Seller (the
"Vehicles"), including but not limited to those owned and leased vehicles listed
on Schedule 1.1(j) hereto;
(k) All accounts receivable, trade accounts, notes receivables and
other debts owing to Seller (the "Receivables") as of the Effective Time as set
forth in the Final Closing Balance Sheet (defined in Section 2.3), including the
benefit of all
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collateral, security, guarantees and similar undertakings received or held in
connection therewith but excluding (A) any receivables from AAR Corp., the sole
shareholder of Seller ("AAR Corp."), or from any affiliate of AAR Corp. and (B)
all receivables, guaranties or other obligations with respect to factoring,
lease, sale or other transfer arrangements with Sanwa Bank, NationsBank or any
other financial institution;
(l) Except as shown on Schedule 1.2 hereto, all other items of personal
property, tangible or intangible, exclusively owned by Seller, including without
limitation, confidentiality agreements, (including without limitation those
listed on Schedule 3.1(f)) restrictive and negative covenant agreements with
employees and others, non-financial computer hardware and software specifically
identified in Schedule 1.1(l), laptops, personal computers, terminals, printers,
tapes and discs, governmental licenses and permits, telephone numbers,
advertisements in yellow pages of telephone directories and contracts therefor
and those dealer/distributorship agreements and representation agreements, and
all other agreements listed on Schedule 3.1(f) (the "Contracts"). Major items of
such other personal property are listed on Schedule 1.1(l) hereto. The computer
software specifically identified on Schedule 1.1(l) as "leased software", will
be leased to Buyer from Seller as follows: (A) the AS 400, the Data 3 Software
and associated technical support at the rate of Thirty-Two Thousand Eight
Hundred Seventy-Four Dollars
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($32,874.00) for 120 days following the Closing Date. The lease term will
terminate no later than 120 days after the Closing Date; and (B) the Lawson
Software at the rate of Three Thousand Nine Hundred and Twelve Dollars
($3,912.00) per month for 120 days following the Closing Date. The lease term
will terminate no later than 180 days after the Closing Date.
(m) Prepaid expenses and deposits associated with the aforementioned
Transferred Assets, except to the extent excluded in Section 1.2.
The term "Transferred Assets" shall not include such of those assets
and properties of Seller as: (i) may have been disposed of prior to the
Effective Time in the ordinary course of Seller's business and (ii) may have
been otherwise disposed of prior to the Effective Time at the written request,
or with the prior written consent, of Buyer, (provided that the value of any
such assets and properties so disposed of prior to the Effective Time shall not
be included in the Final Closing Balance Sheet).
1.2 RETAINED ASSETS. Seller shall retain the following assets
("Retained Assets"):
a. Checkbooks, and canceled checks.
b. All cash, cash equivalents and securities on hand at Closing.
c. All prepaid expenses with respect to Liabilities not assumed.
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d. The books and records including but not limited to all tax records,
employment files and records, inspection records, customer contracts, purchase
orders, correspondence and filings with respect thereto relating to transactions
closed and completed prior to the Effective Time, for which liability is not
being assumed hereunder ("Retained Records"). For a period of three (3) years
after the Closing Date, Buyer may have access to the Retained Records and may
make copies thereof, if appropriate, during normal business hours upon
reasonable notice to Seller.
e. All financial systems hardware and software.
f. Any insurance policies and participation in self-insurance programs,
and any coverages thereunder of Seller.
g. Any claim for refund, carry back or carry forward in connection with
taxes constituting Liabilities not assumed.
h. All assets of all compensation, benefit and contribution plans of
Seller and all assets of all trusts with respect thereto.
i. All minute books, stock transfer books and records, certificates of
incorporation, qualifications to do business and all other corporate books and
records.
j. The name "AAR" and its symbol as specifically identified in Schedule
1.2(j).
k. The (i) AS 400 Operational Hardware, (ii) associated Data 3
Software, and (iii) the Lawson Software.
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l. All Receivables, guaranties or other obligations with respect to
factoring, lease, sale or other transfer arrangements with Sanwa Bank,
NationsBank or other financial institutions.
m. All Seller's rights, title and interest in and to the Premises (land
and building) located at Anderson and Taylor Streets, P.O. Box 1227, Aberdeen,
North Carolina.
2. PURCHASE PRICE.
2.1 PURCHASE PRICE. The aggregate purchase price payable to Seller for
the Transferred Assets and the covenants and agreements of Seller set forth
herein shall be the cash sum of Twelve Million Twelve Thousand Six Hundred
Fifty-Nine Dollars ($12,012,659) adjusted as provided below (the "Cash Purchase
Price"), plus the assumed liability specified in Section 3 of this Agreement
(the "Purchase Price").
2.2 CALCULATION OF CASH PURCHASE PRICE. The Cash Purchase Price shall
be subject to adjustment as follows: the Cash Purchase Price which is based on
Net Asset Value (assets less liabilities) for the Net Transferred Assets of
$6,662,093 as of 5/31.1/98 (as specified in Seller's Balance Sheet attached as
Schedule 5.4) shall be increased, dollar for dollar, to the extent that the
Closing Net Asset Value for the Transferred Assets is greater than $6,662,093;
and the Cash Purchase Price shall be decreased, dollar for dollar, to the extent
that the Closing Net
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Asset Value for the Transferred Assets is less than $6,662,093, determined in
accordance wit1h Section 2.4.
2.3 DEFINITION OF FINAL CLOSING BALANCE SHEET AND CLOSING NET ASSET
VALUE. The Final Closing Balance Sheet shall mean the balance sheet of the
Transferred Assets as of the Closing prepared by Seller in accordance with
Section 2.4. The Closing Net Asset Value shall mean the Net Asset Value of the
Transferred Assets as reflected in the Final Closing Balance Sheet.
2.4 PREPARATION OF FINAL CLOSING BALANCE SHEET. The Final Closing
Balance Sheet shall be prepared from the books and records of Seller in
accordance with the following:
(a) Assets shall be valued at $8,501,698; which the Parties agree was
the value as of May 31, 1998, plus or minus any activity with respect thereto,
including acquisitions and dispositions thereof in the period between May 31,
1998 and Closing; determined on a basis consistent with generally accepted
accounting principals ("GAAP") applied on a consistent basis.
(b) Liabilities shall be valued at $1,839,605, which the Parties agree
was the value as of May 31, 1998 plus or minus activity with respect thereto in
the period between May 31, 1998 and Closing valued in accordance with GAAP
applied on a consistent basis.
(c) Notwithstanding anything herein to the contrary, the Parties agree
the value of Inventory as of May 31, 1998 was fixed
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at $4,549,255 and shall be adjusted only for any lost, missing, sold, purchased
or processed Inventory between May 31, 1998 and the Effective Time, provided and
in the event all "items on XS and Obsolete Reserve", "items returned on
consignment" and "parts (per aging)" received 1997 and prior (collectively,
"Obsolete/Excess/Aging Items") as identified by the check marks on Schedule
2.4(c), have a value as of the Effective Time of $200,000 above the book value
as of August 31, 1998 (which was $1,522,138), Buyer and Seller shall negotiate
in good faith toward a further adjustment to the Inventory Value.
(d) Accrues will be made in accordance with GAAP.
2.5 DELIVERY OF PRELIMINARY CLOSING BALANCE SHEET. Within thirty (30)
days following the Closing, Seller with the reasonable assistance and
cooperation of Buyer, shall prepare and deliver to Buyer a balance sheet of the
Transferred Assets (the "Preliminary Closing Balance Sheet"), prepared as
provided in Section 2.4. Buyer shall have thirty (30) days following its receipt
of the Preliminary Closing Balance Sheet (the "Review Period") to review the
same for compliance with Section 2.4. On or before the expiration of the Review
Period, Buyer shall delivery to seller a written statement accepting, or
objecting to, the Preliminary Closing Balance Sheet. In the event that Buyer
shall object to the Preliminary Closing Balance Sheet, such statement shall
include a detailed itemization of Buyer's objections and its reason therefor. If
no such statement is delivered by Buyer to
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Seller within the Review Period, Buyer shall be conclusively deemed to have
accepted the Preliminary Closing Balance Sheet.
In the event that Buyer shall accept or shall be conclusively deemed to
have accepted the Preliminary Closing Balance Sheet as prepared and delivered by
Seller, the Preliminary Closing Balance Sheet shall constitute the Final Closing
Balance Sheet for purposes of determining any Adjustment (as defined in Section
2.8) to the Cash Purchase Price.
2.6 RESOLUTION OF DISPUTES REGARDING PRELIMINARY CLOSING BALANCE SHEET.
In the event that Buyer shall object to the Preliminary Closing Balance Sheet
within the Review Period, Buyer and Seller shall promptly meet and in good faith
attempt to resolve such objections. If any of such objections of Buyer cannot be
resolved between Buyer and Seller within 30 days following Seller's receipt of
Buyer's statement of objections, then Seller and Buyer shall submit the dispute
to a nationally recognized "Big 5" independent accounting firm mutually
agreeable to Seller and Buyer, which firm shall not have had a material
relationship with either Seller or Buyer or their respective affiliates within
the three years preceding the appointment (the "Arbiter"), for resolution.
Promptly, but no later than 60 days after its acceptance of its appointment as
Arbiter, the Arbiter shall determine (based solely on presentations by Seller
and Buyer to the Arbiter and not by independent review) only those issues in
dispute and shall render a report as to the disputes and the
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resulting calculation of the Closing Net Asset Value and the Adjustment, if any,
which shall be conclusive and binding upon the parties. In resolving any
disputed item, the Arbiter may not assign a value to any item greater than the
greatest value for such items claimed by either party, or less than the smallest
value for such item claimed by either party, in each case, as presented to the
Arbiter. The fees, costs and expenses of the Arbiter shall be paid one-half by
Seller and one-half by Buyer. The resolution so made shall be final and binding
on the parties, and the Preliminary Closing Balance Sheet, as adjusted to
reflect the adjustments agreed upon by the parties or determined by the Arbiter,
shall constitute the Final Closing Balance Sheet for purposes of determining any
Adjustment to the Cash Purchase Price.
2.7 PAYMENT AT CLOSING. On the Closing, Buyer will pay to Seller the
sum of Twelve Million Twelve Thousand Six Hundred and Fifty-Nine Dollars
($12,012,659) by wire transfer of immediately available federal funds to
Seller's bank account #58-04493 in the name of "AAR CORP Depository" at the
First National Bank of Chicago, One First National Plaza, Chicago, Illinois
60670 ABA # 071000013.
2.8 SETTLEMENT OF CASH PURCHASE PRICE. In the event that the Cash
Purchase Price as finally determined is greater or less than the $12,012,659
(such excess or deficiency being referred to herein as the "Adjustment"), on the
third business day following
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the date upon which the Cash Purchase Price is finally determined as provided
for in Section 2.5 or 2.6, Buyer shall pay and remit to Seller if the Cash
Purchase Price is greater than $12,012,659 or Seller shall pay and remit to
Buyer if the Cash Purchase Price is less than $12,012,659, the amount of the
Adjustment, in either case, plus interest on such amount from the Closing to the
date the Adjustment is paid, at 6% per annum. Payment of the Adjustment and the
applicable interest shall be made by wire transfer of immediately available
federal funds to such bank account as is specified by written instructions given
by the recipient of the Adjustment to the party paying the Adjustment.
2.9 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Transferred Assets for all purposes as agreed upon by the parties.
Seller and Buyer agree that the respective amounts allocated to the various
Transferred Assets constitute the bargained value of the Transferred Assets and
covenants and agreements of Seller herein. Each agrees that it will not take a
position on any income tax return or in any proceeding regarding collection of
any tax which is materially inconsistent with the allocations agreed upon.
3 ASSUMPTION OF CERTAIN LIABILITIES.
3.1 LIABILITIES ASSUMED. Upon the sale and purchase of the Transferred
Assets, except as specifically set forth in Section
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3.2, Buyer shall assume and pay, perform and discharge when due all the
following obligations and liabilities of Seller:
(a) To the extent not paid or otherwise discharged before the Closing, all
obligations and liabilities of Seller accrued, incurred or payable as of May 31,
1998, as reflected on the Balance Sheet, subject to all obligations and
liabilities accrued, incurred or payable in the ordinary course of business of
Seller between that date and the Effective Time all of which obligations and
liabilities shall be reflected on the Final Closing Balance Sheet; and
(b) Subject to the provisions of section 3.3 hereof, all Seller's
obligations and liabilities under the Seller's Purchase Orders and the
Customer's Purchase Orders; and
(c) Subject to the provisions of Section 3.3 hereof, all liabilities and
obligations of Seller for performance under the leases referred to in Section
1.1(c); and
(d) All liabilities for unpaid wages, salaries, bonuses, vacation and
holiday pay, employee benefits and insurance shown on the Final Balance Sheet;
and
(e) All personal property taxes not incurred or not due and payable prior
to the Effective Time; (an accrual for personal property taxes related to
ownership of the Transferred Assets prior to the Effective Time will be
reflected in the Final Balance Sheet); and
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(f) All obligations under the Contracts.
(g) All warranty obligations set forth in Schedule 3.1(g).
(h) Any liability or obligation of Buyer, (including but not limited to
fines, penalties, special, punitive and consequential damages), for any course
of action, including but not limited to breach of contract, breach of duty,
violation of law, strict liability, personal injury, property damage,
infringement of patent or other intangible rights, defective products or
improper design, or servicing thereof related to products sold and shipped
subsequent to the Effective Time.
3.2 LIABILITIES NOT ASSUMED. Except as set forth in Section 3.1, Buyer
shall not assume any liabilities of Seller, including without limitation the
following liabilities or obligations:
(a) Liabilities or obligations incurred by Seller solely in connection
with this Agreement and the transactions provided for herein, including
attorneys' and accountants' fees;
(b) Any tax liabilities or obligations, including without limitation
federal, foreign, state or local income tax withholding, FICA or FUTA tax, sales
or use tax, excise, franchise or capital stock tax or ad valorem or personal
property tax, owed by Seller with respect to any period on or prior to the
Effective Time;
(c) Liabilities, obligations and expenses arising out of litigation and
claims commenced or asserted in writing prior to
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the Effective Time including, but not limited to the claims described on
Schedule 5.9.
(d) Liabilities or obligations relating to any contracts not specifically
assumed by Buyer;
(e) Any liabilities or obligations of Seller (including any fines,
penalties, special, punitive and consequential damages) relating to breach of
contract, breach of duty, violation of law, strict liability, personal injury,
property damage, infringement of patent or other intangible rights, defective
products or improper design, or servicing thereof related to products sold and
shipped prior to the Effective Time, except for warranty claims assumed by Buyer
in Section 3.1(g);
(f) Any obligations to pay civil or criminal fines, penalties or punitive
damages with respect to any act or omission of Seller or its officers or
employees, whether known or unknown to Buyer.
(g) To the extent not accrued on the Final Closing Balance Sheet,
liabilities for unpaid wages, salaries, commissions, bonuses, severance and
holiday pay, employee benefits and insurance and any of the liabilities to
employees or former employees with respect to occurrences on or prior to the
Effective Time.
(h) All other liabilities of Seller not specifically assumed by Buyer in
Section 3.1.
3.3 THIRD PARTY CONSENTS. If any of the contracts or agreements or any
other property or rights to be assigned or
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transferred to, and assumed by, Buyer hereunder are not assignable or
transferable either by virtue of the provisions thereof or under applicable law
without the consent of some party or parties, Seller will use its best efforts
to obtain such consents prior to the Closing. If any such consent cannot be
obtained prior to the Closing and Buyer elects to close, this agreement shall
not constitute an assignment or transfer thereof and Buyer shall not assume
Seller's obligations with respect thereto, but Seller shall to the extent
permitted by law hold the same in trust for Buyer. In the event that any
Seller's Purchase Order shall not be assignable by Seller and Buyer elects to
close, Buyer agrees to purchase from Seller at the contract price all property
thereunder which Seller is obligated to purchase. In the event that any
Customer's Purchase Orders shall not be assignable and Buyer elects to close,
Buyer agrees to sell to Seller any products required to complete such contracts
at the same prices provided for therein and otherwise to complete such contracts
on behalf of Seller. Buyer shall provide all services and bear all costs
necessary to complete such contracts, and Seller shall promptly remit to Buyer
amounts received with respect to such contracts. Seller shall take such steps to
collect overdue amounts owed with respect to such contracts as a reasonable and
prudent business person would take to collect similar amounts for his own
account. If Seller has been dissolved or otherwise fails to comply with the
provisions of this Section 3.3, Buyer may on its own behalf
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undertake to complete such contracts and collect amounts due thereunder in the
name of Seller.
4 THE CLOSING.
4.1 TIME AND PLACE OF CLOSING. The Closing of the purchase and sale of the
Transferred Assets (the "Closing") shall be held at the office of AAR CORP., in
Wood Dale, Illinois, at 10:00 A.M. on November 23, 1998 (the "Closing Date"), or
at such other place, date or time as may be fixed by mutual agreement of the
parties.
4.2 SELLER'S DELIVERIES. At the Closing, Seller shall deliver to Buyer the
documents to be delivered to Buyer pursuant to Article 8 hereof.
4.3 BUYER'S DELIVERIES. At the Closing, Buyer shall deliver to Seller the
Purchase Price and the documents to be delivered to Seller pursuant to Article 9
hereof.
4.4 COOPERATION REGARDING CONDITIONS PRECEDENT. Seller and Buyer shall
take all steps reasonably necessary to consummate the transactions contemplated
hereby at the Closing in accordance with the terms of this Agreement, including
but not limited to the execution, verification and filing of such agreements,
certificates and instruments as may be required under the laws of any state or
the federal government.
5 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer as follows:
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5.1 ORGANIZATION AND STANDING OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. Seller has the corporate power to own its property and to carry on its
business as now being conducted and to execute and perform this Agreement.
Seller is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it requires such qualification, except where such
failure to be qualified or to be in good standing, if any, individually or in
the aggregate would not have a material adverse effect on Seller.
5.2 NO SUBSIDIARIES. Seller has no subsidiaries.
5.3 TITLE. Except as shown on Seller's Balance Sheet provided herein or on
the Schedules hereto, including, but not limited to Schedule 5.3, Seller has, or
will have at the time of Closing, good and marketable title to all the
Transferred Assets, free and clear of any and all liens, claims, security
interests, charges or encumbrances of any kind or character and the sale and
delivery of the Transferred Assets pursuant to this Agreement shall vest in
Buyer good and marketable title thereto, free and clear of any liens, claims,
security interests and charges or encumbrances of any kind or character.
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5.4 FINANCIAL STATEMENTS. The May 31, 1998 Balance Sheet set forth in
Schedule 5.4(a) has been, and the financial statement set forth in Schedule
5.4(b) has been, prepared from the books and records of Seller in accordance
with generally accepted accounting principles applied on a consistent basis with
prior records, and fairly present the financial condition of Seller at and as of
May 31, 1998, and the results of its operations for the year then ended, and
cash flows of Seller for the respective period then ended.
5.5 CONDUCT OF BUSINESS; NO CHANGES. (a) Since May 31, 1998, Seller has
conducted its business only in the ordinary course and, except as consented to
in writing by Buyer, has not:
(i) Subjected or suffered to be subjected any of its assets to any
lien or encumbrance other than in the ordinary course of business;
(ii) Sold or transferred any of its assets other than by sales made in
the ordinary course of business;
(iii) Purchased any property or assets other than in the ordinary course
of business or leased any property or guaranteed the indebtedness of any other
person or entity other than in the ordinary course of business;
(b) Except as set forth in the Schedule 5.5(b), since the May 31, 1998
Balance Sheet, there has not been any:
(i) damage to or destruction or loss of any asset or property
whether or not covered by insurance, materially and
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adversely affecting the properties, assets, business, financial condition, or
prospects of Seller, taken as a whole;
(ii) sale, lease, or other disposition of any asset or property or
mortgage, pledge, or imposition of any lien or other encumbrance (other than
inventory in the ordinary course of business) on any material asset or property,
including the sale, lease, or other disposition of Intellectual Property Assets;
(iii) cancellation or waiver of any material claims or rights; (iv)
material change in the accounting methods used.
5.6 CONDITION OF ASSETS, ETC. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS SECTION 5, ALL OF THE TRANSFERRED ASSETS AND LEASED SOFTWARE (AND RELATED
SERVICES) ARE SOLD, LEASED OR FURNISHED IN "AS IS" "WHERE IS" CONDITION AND WITH
ALL FAULTS; SELLER DISCLAIMS ALL OTHER WARRANTIES IN ANY WAY RELATING TO THE
TRANSFERRED ASSETS AND LEASED SOFTWARE, (AND SERVICES RELATED THERETO), AND THE
OBLIGATIONS AND LIABILITIES OF SELLER HEREIN ARE EXPRESSLY IN LIEU OF AND BUYER
HEREBY WAIVES AND RELEASES SELLER FROM ANY AND ALL CLAIMS ARISING FROM THE
TRANSFERRED ASSETS, LEASED SOFTWARE AND SERVICES, AND ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE.
5.7 COMPLIANCE WITH LAW. To the best of Seller's knowledge, Seller is
conducting its business in compliance with all applicable laws, rules and
regulations of each jurisdiction in
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which such business is carried on and is not in breach of any such laws, rules
or regulations.
5.8 NO NOTICE OF VIOLATIONS. Except as set forth in Schedule 5.8, there
are no outstanding orders, directions, deficiency notices, notices of building
code, fire code or other violations relating to the Premises from any police or
fire department or authority, sanitation, health, environmental or factory
authority or any other federal, state or municipal authority, nor are any such
matters under discussion between Seller and any such department, authority or
agency, or any authority having jurisdiction. Except as set forth in Schedule
5.8, no notice has been received by Seller that would give rise to any
obligation on the part of the Seller to undertake, or to bear all or any portion
of the cost of any environmental remediation of the Premises.
5.9 CLAIMS AND LITIGATION. Except as set forth in Schedule 5.9 hereto,
Seller has not received notice of any actions, suits, judgments, decrees,
orders, investigations, or proceedings pending against or, to its knowledge,
threatened against Seller or any of its directors, officers and employees (in
their capacities as such) or affecting the Transferred Assets or the sale
thereof.
5.10 EMPLOYMENT ARRANGEMENTS. Schedule 5.10 hereto lists each employment
contract, collective bargaining agreement, compensation arrangement and all
other agreements respecting
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officers, directors or employees of Seller. Seller has no grievances, unfair
labor practice complaints, strikes or work stoppages pending or threatened.
5.11 PAYMENT OF TAXES. Except as set forth in Schedule 5.11, all foreign
and U.S. federal, state, and local tax returns and reports relating to the
operation of Seller's business required to be filed have been or will be
prepared and filed, and all taxes shown thereon have been paid or will be paid.
All returns for the current year will be timely filed or appropriate extensions
obtained and all taxes will be paid. Seller will make available to Buyer,
promptly after Closing, Seller's federal income tax returns for fiscal years
1997 and 1996.
5.12 ARRANGEMENTS WITH RELATED PARTIES. Except as set forth in Schedule
5.12 hereto, no officer, or director of Seller: (a) has any contractual
relationship with Seller; or (b) has any direct or indirect interest in (i) any
entity which does business with Seller or is competitive with the business of
Seller, but not including shareholdings in publicly held companies or (ii) any
property, asset or right which is used by Seller in the conduct of its business.
5.13 ABSENCE OF OTHER BUYERS. No other party has the right to purchase
Seller's assets or stock, and this Agreement and transactions contemplated
herein do not interfere improperly with
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any contract, understanding or arrangement that the Seller or AAR Corp. may have
with any other party.
5.14 AUTHORITY FOR TRANSACTION. Seller has all requisite corporate power
and authority to execute and deliver this Agreement and all documents related
thereto (the "Related Documents"), to perform its obligations hereunder and to
consummate the transactions herein provided for. This Agreement and the Related
Documents, the execution and delivery hereof and thereof by Seller, the
performance by Seller of its obligations hereunder and thereunder, and the
consummation of the transactions herein provided for have been duly authorized
and approved by the Board of Directors and sole stockholder of Seller. This
Agreement constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
5.15 NO CONFLICT. The execution and delivery of this Agreement and the
Related Documents, and the consummation of the transactions provided for herein,
and the fulfillment of the terms hereof, will not result in a breach of any of
the terms and provisions of, or constitute a default under or conflict with, any
agreement, indenture or other instrument to which Seller is a party or by which
it is bound, the Articles of Incorporation or Bylaws of Seller or any judgment,
decree, order or award of any court, governmental body or arbitrator or, to the
best of Seller's knowledge, any law, rule or regulation applicable to Seller,
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except where any such breach, default or conflict would not have a material
adverse effect on Seller.
5.16 COMPLIANCE WITH CONTRACTS: NO DEFAULTS. (a) Seller is not now in
violation of or in default with respect to any obligation to be performed by it
under any agreement relating to the Transferred Assets, nor has there occurred
any event which with notice or lapse of time or both, could become a violation
or default or result in an acceleration thereunder, and Seller has no knowledge
of any notice, proceeding, or claim charging such default which has been given,
pending, threatened, or contemplated, except where any such defaults or
violations would not exceed in the aggregate $5,000.
(b) Schedule 3.1(f) contains a complete and accurate list, and Seller has
made available to Buyer true and complete copies of (i) each applicable contract
(other than Customer's or Seller's Purchase Orders which are listed in Schedule
1.1(c) and 1.1(d) respectively) that involves performance of services or
delivery of goods or materials which requires payment by or to Seller;
(ii) each applicable contract that was not entered into in the
ordinary course of business that involves expenditures or receipts;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other
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applicable contracts affecting the ownership of, leasing, title to, use of, or
any leasehold or other interest in, any real property or personal property which
requires payment by or to Seller;
(iv) each current written licensing agreement or other
applicable contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors which requires payment by or to Seller regarding the
appropriation or the non disclosure of any intellectual property assets;
(v) each applicable contract containing covenants that in any
way purport to restrict the current business activity of Seller;
(vi) each applicable contract providing for payments to or by
any person based on sales, purchases, or profits, other than direct payments for
goods.
5.17 WARRANTY CLAIMS. Except as shown on Schedule 3.1(g), Seller has not
received notice of any warranty claims regarding any product sold by Seller.
5.18 GOVERNMENTAL APPROVALS. No notices, reports or other filings are
required to be made by Seller with, nor are any consents, registrations,
approvals, permits, licenses, orders or authorizations required to be obtained
by Seller from, any
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governmental or regulatory authorities of the United States, the several states
or, to the best of Seller's knowledge, any foreign jurisdiction in connection
with the execution and delivery of this Agreement by Seller and the consummation
of the transactions contemplated hereby.
5.19 REAL PROPERTY. Except for the facility located at Anderson and Taylor
Streets, P.O. Box 1227, Aberdeen, North Carolina, Seller does not own any Real
Property and Seller is not a party to any agreement to acquire Real Property or
interest therein.
5.20 ACCOUNTS RECEIVABLE. The Receivables reflected on the Final Closing
Balance Sheet and on the accounting records of Seller as of the Effective Date
represents or will represent valid obligations arising from sales actually made
or services actually performed in the ordinary course of business. The
Receivables will not include any receivables factored, sold, leased or otherwise
transferred under agreements with Sanwa Bank, Nation's Bank or others. To the
best of Seller's knowledge, there is no contest, claim, or right of set off,
other than returns in the ordinary course of business, under any contract with
any obligor of any Receivable relating to the amount or validity of such
Receivable.
5.21 INVENTORY. Obsolete/Excess/Aging Items, as of August 31, 1998, have
been taken into consideration in the mutually
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agreed upon Inventory reserve. The Parties disputing the reserve, as of August
31, 1998, agreed to increase the reserve by $200,000. As a result, any
adjustment to Inventory shall be made only in accordance with Section 2.4(c).
5.22 FIXED ASSETS. The buildings, structures, machinery and other
equipment of Seller included in the Transferred Assets and the assets to be
leased to Buyer pursuant to this Agreement are sufficient for the continued
conduct of Seller's businesses after the Closing in substantially the same
manner as conducted prior to the Closing.
5.23 ENVIRONMENTAL MATTERS. Except as set forth in the Schedule 5.23, (a)
To the best of Seller's knowledge, Seller is in full compliance with and is not
in violation of or liable under, any Environmental Law (as hereinafter defined).
Seller has not received any actual or threatened order, notice, or other written
communication from any governmental body, entity or person of any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear the cost of any
environmental, health, and safety liabilities with respect to the Aberdeen Plant
or any of the other facilities or any other properties or assets (whether real,
personal, or mixed) in which Seller has an interest, or with respect to the
Aberdeen Plant or any property at or to which Hazardous Materials (defined
below) were generated, manufactured,
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refined, transferred, imported, used, processed or migrated onto, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(b) There are no pending or, to the best of Seller's knowledge,
threatened claims, encumbrances, or other restrictions of any nature, resulting
from any environmental, health, and safety liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Aberdeen Plant or any other properties or assets of Seller.
(c) Seller has not received, any citation, directive, inquiry, notice,
order, summons, warning, or other written communication that relates to any
alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any environmental, health, and safety liabilities
with respect to the Aberdeen Plant or any other properties or assets, or
property or facility at which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, processed or migrated onto or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received prior to the Closing.
(d) To the best of Seller's knowledge, there are no Hazardous Materials
present in, on or under the environment at the Aberdeen Plant or at any
geologically or hydrologically adjoining property, including any Hazardous
Materials contained
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in barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and disposed of, released into or located in land, water, sumps, or
any other part of the Aberdeen Plant, or incorporated into any structure therein
or thereon. Neither Seller, nor to Seller's knowledge has any other person,
permitted or conducted, or is aware of, any hazardous activity conducted with
respect to the Aberdeen Plant or any other properties or assets (whether real,
personal, or mixed) of Seller except in full compliance with all applicable
Environmental Laws.
(e) To the best of Seller's knowledge, there has been no Release
(defined below) or threat of Release, of any Hazardous Materials at or from the
Aberdeen Plant or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Aberdeen Plant, or from or by any other properties or
assets (whether real, personal, or mixed), or any geologically or hydrologically
adjoining property, whether by Seller, or any other person.
(f) To the extent in Seller's possession and control, Seller has
delivered to Buyer true and complete copies and results of any environmental
reports, studies, analyses, tests, or monitoring data, inspection reports,
correspondence between Seller and any Governmental Entity and any and all
written
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documentation in the possession of or known to Seller pertaining to Hazardous
Materials or hazardous activities in, on, or under the Aberdeen Plant, or
concerning compliance by Seller with Environmental Laws.
(g) For purposes of this Agreement, the following terms have the
meaning set forth below:
"Environmental Law" means any Law (defined below) with respect
to the preservation of the environment or the promotion of worker health and
safety, including any Law relating to Hazardous Materials, drinking water,
surface water, groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm water run-off,
noises, odors, air emissions, waste emissions or wells. Without limiting the
generality of the foregoing, the term will encompass each of the following
statutes and the regulations promulgated thereunder, and any similar applicable
state, local or foreign Law, each as amended (a) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, (b) the Resource Conservation
and Recovery Act as amended by the Solid Waste Disposal Act, (c) the Hazardous
Materials Transportation Act, (d) the Toxic Substances Control Act, (e) the
Clean Water Act, (f) the Clean Air Act, (g) the Safe Drinking Water Act, (h) the
National Environmental Policy Act of 1969, (i) the Superfund Amendments and
Reauthorization Act of 1986, (j) Title III of the Superfund Amendments and
Reauthorization Act, (k) the Federal
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Insecticide, Fungicide and Rodenticide Act and (l) the provisions of the
Occupational Safety and Health Act of 1970 relating to the handling of and
exposure to Hazardous Materials and similar substances.
"Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
"Hazardous Materials" means each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
that is defined, determined or identified as hazardous or toxic under any
Environmental Law or the Release of which is prohibited under any Environmental
Law. Without limiting the generality of the foregoing, the term will include (a)
"hazardous substances" and "extremely hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization act for 1986, or Title III of the
Superfund Amendments and Reauthorization Act and regulations promulgated
thereunder, each as amended, (b) "hazardous waste" as defined in the Resource
Conservation and Recovery Act and the Solid Waste Disposal Act and regulations
promulgated thereunder, each as amended, (c) "hazardous materials" as defined in
the Hazardous Materials Transportation Act and the regulations promulgated
thereunder, each as amended, (d) "chemical substance
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or mixture" as defined in the Toxic Substances Control Act and regulations
promulgated thereunder, each as amended, (e) petroleum and petroleum products
and byproducts and (f) asbestos.
"Law" means any constitutional provision, statute, law, rule,
regulation, Permit, decree, injunction, judgment, order, ruling, determination,
finding or writ of any Governmental Entity.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, escaping, leaching,
dumping, discarding, burying, abandoning or disposing into the environment.
5.24 EMPLOYEES. Schedule 5.24 contains a complete and accurate list of
the following information for each employee of Seller including each employee on
leave of absence or layoff status: employer, name, job title, current
compensation paid or payable and any change to be made in such compensation, and
vacation accrued. No employee is a party to or is otherwise bound by any
agreement or arrangement with Seller, including any confidentiality,
noncompetition, or proprietary rights agreement that will affect the performance
or his or her duties as an employee, or the ability of Seller to conduct the
business currently conducted by Seller.
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5.25 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets--The term "Intellectual
Property Assets" includes, without limitation of the general definition in
Section 1.1(h):
(i) the names "PowerBoss", "PowerClean", "Armadillo",
"Badger," and "Prowler", all fictional business names, trading names, registered
and unregistered trademarks, service marks, and applications (collectively,
"MARKS"); the name "AAR" is specifically excluded from this Agreement:
(ii) all patents, patent applications, and inventions and
discoveries that are patented and owned by Seller, including, without
limitation, those listed on Schedule 1.1(h) (collectively, "PATENTS");
(iii) all copyrights in both published works and
unpublished works that are owned by Seller (collectively, "COPYRIGHTS");
(iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively, "TRADE SECRETS");
owned or licensed by Seller as licensee or licensor.
(b) Agreements-- Schedule 5.25(b) contains a complete and accurate list
of all contracts relating to the Intellectual Property Assets to which Seller is
a party, except for any license implied by the sale of a product and perpetual,
paid-up
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licenses for commonly available software programs with a value of less than
$1,000 under which Seller is the licensee. There are no outstanding and, to
Seller's knowledge, no threatened disputes or disagreements with respect to any
such agreement.
(c) Patents-- (i) To the best of Seller's knowledge, the Schedule
1.1(h) contains a complete and accurate list of all Patents. Seller or the
parent AAR Corp. is the owner of all right, title, and interest in and to each
of the Patents, free and clear of all liens, security interests, charges,
encumbrances, entities and other adverse claims.
(ii) To the best of Seller's knowledge, all of the issued Patents
are currently in compliance with formal legal requirements (including payment of
filing, examination and maintenance fees and proofs of working or use), are
valid and enforceable.
(iii) To the best of Seller's knowledge, no Patent has been or is
now involved in any interference, reissue, reexamination, or opposition
proceeding. To Seller's knowledge, there is no potentially interfering patent or
patent application of any third party.
(iv) To the best of Seller's knowledge, no Patent is infringed or,
to Seller's knowledge, has been challenged or threatened in any way.
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(d) Trademark-- (i) To the best of Seller's knowledge, Schedule 1.1(h)
contains a complete and accurate list of all Marks. Seller or its parent AAR
Corp. is the owner of all right, title and interest in and to each of the Marks,
free and clear of all liens, security interests, charges, encumbrances, equities
and other adverse claims.
(ii) To the best of Seller's knowledge, all Marks that have
been registered with the United States Patent and Trademark Office are currently
in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable.
(iii) To the best of Seller's knowledge, no Mark has been or
is now involved in any opposition, invalidation or cancellation and, to Seller's
knowledge, no such action is threatened with respect to any of the Marks.
(iv) To the best of Seller's knowledge, there is no
potentially interfering trademark or trademark application of any third party.
(v) To the best of Seller's knowledge, no Mark is infringed
or, to Seller's knowledge, has been challenged or threatened in any way.
(e) Leased Software--Effective as of the Closing and for the respective
lease terms, Seller shall have obtained approval
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for Buyer to use the Leased Software as contemplated by this Agreement.
5.26 PERMITS AND LICENSES. Schedule 5.26 sets forth a description of each
waste water disposal, air or other permit or license currently in effect for
operation of the Aberdeen Plant.
5.27 DISCLOSURE. No representation or warranty of Seller in this Agreement
and no statement in any Schedule hereto omits to state a material fact necessary
to make the statement therein not misleading. There is no fact known to Seller
(other than general economic or industry conditions) that materially adversely
affects the assets, business, prospects, financial condition, or results of
operations of Seller that has not been so stated in this Agreement or the
Schedules hereto.
6 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
6.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. Buyer has the corporate power to own its property, to carry on its
business as now being conducted and to execute and perform this Agreement.
6.2 CORPORATE AUTHORIZATION. All necessary corporate action has been
taken by Buyer to authorize the execution and delivery by Buyer of this
Agreement and all other agreements and instruments contemplated hereby.
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6.3 NO CONFLICT. The execution and delivery of this Agreement, the
consummation of the transactions provided for herein, and the fulfillment of the
terms hereof, will not result in a breach of any of the terms and provisions of,
or constitute a default under or conflict with, any agreement, indenture or
other instrument to which Buyer is a party or by which it is bound, the charter
or Bylaws of Buyer or any judgment, decree, order or award of any court,
governmental body or arbitrator or any law, rule or regulation applicable to
Buyer.
6.4 GOVERNMENTAL APPROVALS. No notices, reports or other filings are
required to be made by Buyer with, nor are any consents, registrations,
approvals, permits, licenses, orders or authorizations required to be obtained
by Buyer from, any governmental or regulatory authorities of the United States,
the several states or, to the best of Buyer's knowledge, any foreign
jurisdiction in connection with the execution and delivery of this Agreement by
Buyer and the consummation of the transactions contemplated hereby.
6.5 NO LITIGATION. There is no litigation or other proceeding pending
against Buyer which, if adversely determined, would affect the validity or
enforceability of this agreement.
7 AGREEMENTS PRIOR TO THE CLOSING.
7.1 FULFILLMENT OF CONDITIONS. Seller shall use its good faith efforts to
take or cause to be taken all action reasonably
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necessary or appropriate to cause each of the conditions set forth in Section 8
hereof to be fulfilled at or prior to the Closing.
7.2 CONFIDENTIALITY; ACCESS TO INFORMATION. Each party hereto will hold
and will cause its representatives, consultants, and advisors to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
or, in the opinion of its counsel, by other requirements of law after having
given not less than twenty-four (24) hours notice thereof to the other parties
or unless consented to by the other parties in writing prior to the disclosure,
the existence and contents of all negotiations and documents in connection with
the transactions contemplated by this Agreement. Each party will not release or
disclose such information to any other person, except its auditors, attorneys,
financial advisors, bankers, and other consultants and advisors in connection
with this Agreement. Between the date of this Agreement and the Closing, Seller
shall allow the employees, representatives, attorneys, and accountants of Buyer
reasonable access at reasonable times to the records, files, correspondence,
audits, and properties of Seller and to all information relating to the business
and affairs of Seller and shall permit Buyer to contact current employees (as
arranged through Seller) of Seller with regard to their prospective employment
by Buyer. If the transactions contemplated by this Agreement are not
consummated, such confidentiality requirements will continue, and such
information will not be used to the
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detriment of the other parties, and all such documents (including copies
thereof) will be returned to the other party immediately upon the written
request of such other party. Each party will be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care with respect to such information as it takes
to preserve confidentiality for its own similar information.
7.3 PAYMENT OF DIVIDENDS. Between the date of this Agreement and the
Closing, Seller shall not:
(i) pay or declare any dividend or other distribution, whether payable in
cash, property or securities, with respect to Seller's capital stock;
(ii) directly or indirectly call, redeem, purchase or otherwise acquire
any such stock or any other securities of Seller;
(iii) issue any additional shares of any class or series of capital stock
or create, authorize or issue any new class or series of capital stock or any
other debt or equity securities, or issue any option, warrant or right to
acquire any such securities.
7.4 PRESERVATION OF SELLER'S EXISTING RELATIONSHIPS. Between the date of
this Agreement and the Closing, Seller shall use its best good faith efforts to:
(i) conduct the business of Seller in the ordinary course of
business;
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(ii) preserve intact the current business organization of Seller;
(iii) keep available the services of the current employees, and
maintain the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and other having business relationships with
Seller;
(iv) confer with the Buyer concerning operational matters of a
material nature; and (v) otherwise report periodically to the Buyer concerning
the status of the business and operations of Seller.
(vi) assist Buyer in transferring, if applicable, the permits
specified in Schedule 5.26.
7.5 CHANGE OF NAMES; USE OF NAMES. Seller shall take all action necessary
or appropriate to change its corporate name, within a reasonable time after the
Closing, to a name that does not include the word "PowerBoss", or any words
confusingly similar thereto. From and after the effective date of the change of
said corporate names, Seller shall not use the name or any names which include
such words or which are confusingly similar thereto other than in connection
with its compliance with Section 3.3 hereof.
8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. All obligations of Buyer
under this Agreement are subject to fulfillment of each of the following
conditions prior to or at the Closing:
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8.1 REPRESENTATIONS TRUE AT CLOSING. The representations and warranties of
Seller in this Agreement shall be true at the date hereof, and shall be repeated
at the time of the Closing as though made at and with respect to the time of the
Closing and shall then be true also in all material respects.
8.2 PERFORMANCE. Seller shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing.
8.3 OFFICER'S CERTIFICATES. Buyer shall have received a certificate of the
President or a Vice President of Seller, dated as of the Closing, to the
fulfillment of the conditions specified in Sections 8.1 and 8.2 hereof.
8.4 OPINION OF SELLER'S COUNSEL. At the Closing, Seller shall have
furnished to Buyer an opinion of its counsel, dated the date of the Closing in
form and substance reasonably satisfactory to Buyer with respect to the matters
set forth in Exhibit 8.4 hereto.
8.5 LITIGATION. No litigation or proceeding shall be pending or threatened
to restrain, set aside or invalidate the transactions contemplated by this
agreement or any portion thereof.
8.6 INSTRUMENTS OF TRANSFER. Seller shall have delivered to Buyer a bill
of sale in the form attached hereto as Exhibit 8.6, and Assignments of Patents
and Trademarks transfer documents.
42
<PAGE> 44
8.7 CERTIFIED RESOLUTIONS. At the Closing, Buyer shall have received
copies certified by the Secretary or an Assistant Secretary of Seller of the
resolutions of the Board of Directors and of the sole shareholder of Seller
authorizing the execution and delivery of this Agreement and approving the sale
of assets and other transactions contemplated hereby.
8.8 ABERDEEN PROPERTY. At the Closing Seller shall have duly executed and
delivered to Buyer the Lease Agreement with respect to the Aberdeen Property
(the "Aberdeen Lease") in form and substance as set forth in Exhibit 8.8 hereto
and delivered to Buyer possession of the Aberdeen Property in at least the same
condition as the Aberdeen Property is at the date of this Agreement, ordinary
wear and tear excepted.
8.9 CUSTOMER FILES. Seller shall have delivered to Buyer current customer
credit files, including credit applications, credit reports, correspondence and
other papers relating to Customers.
8.10 LEASED SOFTWARE CONSENTS. Seller shall have delivered to Buyer all
consents, if any, for the use by Buyer of the Leased Software as contemplated
for in this Agreement.
9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. All obligations of Seller
under this Agreement are subject to the fulfillment, prior to or at the Closing,
of each of the following conditions:
43
<PAGE> 45
9.1 REPRESENTATIONS TRUE AT CLOSING. Buyer's representations and
warranties contained in this Agreement shall be true at the date hereof, and
shall be repeated at the time of the Closing as though made at and with respect
to the time of the Closing and shall then be true also in all material respects.
9.2 PERFORMANCE. Buyer shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing.
9.3 OFFICER'S CERTIFICATE. Buyer shall have delivered to Seller a
certificate of Buyer's President or a Vice President, dated as of the Closing,
certifying to the fulfillment of the conditions specified in Sections 9.1 and
9.2 hereof .
9.4 LITIGATION. No litigation or proceeding shall be pending or threatened
to restrain, set aside or invalidate the transactions contemplated by this
agreement or any portion thereof.
9.5 CERTIFIED RESOLUTION. At the Closing, Seller shall have received a
copy certified by the Secretary or an Assistant Secretary of Buyer of the
resolution of the Board of Directors of Buyer authorizing the execution and
delivery of this Agreement and approving the sale of assets and other
transactions contemplated hereby.
9.6 OPINION OF BUYER'S COUNSEL. At the Closing Seller shall have received
an opinion of Buyer's Counsel, dated the date of
44
<PAGE> 46
Closing, reasonably satisfactory to Seller with respect to the matter set forth
in Exhibit 9.6 hereto.
10 TERMINATION.
10.1 TERMINATION. In the event that any of the conditions set forth in
Article 8 hereof are not fulfilled or waived by Buyer in its sole discretion in
writing prior to or on the Closing, then Buyer may terminate this Agreement by
written notice to Seller. In the event that any of the conditions set forth in
Article 9 hereof are not fulfilled or waived by Seller in its sole discretion in
writing prior to or on such date, then Seller may terminate this Agreement by
written notice to Buyer. If the Closing has not occurred on or before November
20, 1998, Seller or Buyer may terminate the Agreement so long as the terminating
party is not in default of the Agreement. Each party's right of termination is
in addition to any other rights it may have under this Agreement or otherwise,
and the exercise of a right of termination will not be an election of remedies.
If this Agreement is terminated by a party because of breach of the Agreement by
the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
11 SURVIVAL AND INDEMNIFICATION.
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<PAGE> 47
11.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties of
the parties contained herein shall be continuing and shall survive the
consummation of this transaction for a period of one (1) year from the Closing
Date.
11.2 INDEMNIFICATION BY SELLER. Seller shall indemnify Buyer and hold
Buyer harmless from and against and in respect of any loss, damage (including
incidental and consequential damages), claim or expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third party claim, or liability whatever
("Buyer Damages"), suffered by or asserted against Buyer as a result of, subject
to provisions of Section 11.5, (i) any breach of any representation or warranty
made by Seller in this Agreement, or any certificate or document delivered by
Seller pursuant to this Agreement; (ii) any breach by Seller of any of its
covenants under this Agreement; (iii) any liability or obligation arising out of
the conduct of Seller's business, product shipped, or the ownership of the
Transferred Assets prior to the Effective Time, except to the extent of the
liabilities assumed by Buyer hereunder; (iv) any and all tax liabilities and
obligations owed by the Seller with respect to any period prior to the Effective
Time and (v) any environmental, health, and safety liabilities arising out of or
relating to: (A) any Hazardous Materials or other contaminants, wherever
located, that were generated, transported, stored, treated, Released, or
46
<PAGE> 48
otherwise handled by Seller prior to the Closing Date, or (B) any hazardous
activities that were conducted by Seller prior to the Closing Date or (C) the
Hazardous Materials present in, on or under the Premises on or prior to the
Effective Date and (vi) any use by Seller or its affiliates of the Leased
Software. Seller shall have no obligation to indemnify or hold harmless Buyer if
the claim or assertion arises to the extent from a release of Hazardous
Materials by Buyer.
11.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold Seller
harmless from and against and in respect of any loss, damage, (including
incidental and consequential damages), claim or expense (including cost of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third party claim on liability whatever
("Seller Damages") suffered by or asserted against Seller as a result of (i) any
breach by Buyer of its obligations under this Agreement; (ii) any liability or
obligation arising out of the conduct of Buyer's business or Buyer's ownership
of the Transferred Assets subsequent to the Effective Time, including, without
limitation, Buyer's failure to pay, perform or otherwise discharge any of the
liabilities assumed by Buyer herein; all warranty obligations assumed by Buyer
herein and on sales completed (shipped) subsequent to the Effective Time and any
and all tax liabilities or obligations owed by Buyer with respect to any period
subsequent to the Effective Time or any transaction occurring subsequent to
47
<PAGE> 49
the Effective Time; any environmental, health and safety liabilities arising out
of or relating to (a) any Hazardous Materials or other contaminants, wherever
located, that were generated, transported, stored, treated, Released or
otherwise handled by Buyer subsequent to the Closing Date, (except for any
existing contamination on the Premises as of the Effective Time), (b) any
hazardous activities that were conducted by Buyer subsequent to the Closing Date
or (c) the Hazardous Materials in, on or under the Premises to the extent caused
by Buyer; (iii) Buyer's use of, or acts or omissions with respect to, the Leased
Software except to the extent caused by Seller including Seller's failure to get
approval for lease; and (iv) Buyer's lease of the Livonia facility and the AAR
Corp. facility referenced in Section 12.4.
11.4 NOTICE OF CLAIM. In the event that any legal proceeding shall be
instituted or any claim or demand shall be asserted by any person in respect of
which indemnification may be sought under the provisions of Section 11.2 or
Section 11.3 hereof, the party claiming indemnification shall cause written
notice thereof to be given to the other parties. Notwithstanding the foregoing,
the right to indemnification hereunder shall not be affected by any delay in
giving notice unless, and then only to the extent that, the rights and remedies
of the indemnifying party shall have been prejudiced as a result of the delay in
giving such notice. In the event that the indemnifying party has acknowledged
that it will
48
<PAGE> 50
indemnify and reimburse the party claiming indemnification with respect to any
Buyer Damages or Seller Damages with respect to a particular lawsuit and have
demonstrated its financial ability so to indemnify and reimburse such party, the
indemnifying party shall be permitted to control the conduct of such defense
and, at the expense and option of the indemnifying parties, may settle such suit
provided however, the indemnifying party shall not consent to the entry of any
judgment against or effecting the party claiming indemnification or to the
settlement of any such matter, except with the written consent of the party
claiming indemnification. Buyer and Seller shall cooperate with each other in
the defense of any claims.
11.5 INDEMNIFICATION LIMITATIONS. The obligations of Seller to indemnify
Buyer, as set forth in Section 11.2 and Seller's obligations as a result of a
breach of any representations, warranties, covenants or agreements of Seller
herein shall be subject to the following limitations:
(a) the aggregate liability of Seller shall not exceed Three Million
Dollars ($3,000,000);
(b) Seller will have no obligation to indemnify Buyer from and against
claims made under this Agreement or to pay Buyer as a result of a breach of any
representation, warranty, covenant or agreement herein, until Buyer's actual
damages for such claims and breaches in the aggregate exceed One Hundred
Thousand Dollars
49
<PAGE> 51
($100,000), at which point Seller's obligations hereunder will be enforceable
for any amounts above the $100,000 aggregate.
(c) Notwithstanding anything in Section 11.5(a) to the contrary, Seller's
obligation to indemnify Buyer for environmental conditions as specified in
Section 11.2(v) shall be subject to an additional aggregate limit of Two Million
Dollars ($2,000,000) above the specified limit in Section 11.5(a) of $3,000,000.
The foregoing provisions of this Section 11.5 will not apply to the
adjustment provision set forth in Section 2.8. Further, nothing in this Section
11.5 shall obligate Buyer to assume any obligations of Seller not specifically
assumed by Buyer under Section 3.1, or limit any right of Buyer to defend
against obligations of Seller not assumed by Buyer under Section 3.1.
11.6 DISCLOSURE SCHEDULES.
The Seller disclosures in the Schedules hereto relate only to the
representations and warranties in the section of the Agreement to which they
expressly relate and not to any other representation and warranty in this
Agreement. In the event of any inconsistency between statements in the body of
the Agreement and those in a Schedule (other than an exception expressly set
forth in the Schedule with respect to a specifically identified representation
or warranty), the statements in the Agreement will control.
50
<PAGE> 52
12 POST-CLOSING COVENANTS AND AGREEMENTS
12.1 NON-COMPETITION
(a) For a period of three (3) years following the date of the Closing,
Seller shall not engage or participate directly or indirectly in any business
which is competitive with the business conducted by Seller in any of the states
or territories of the United States or any foreign territories, where Seller has
heretofore conducted its business or where Buyer has heretofore conducted its
business so long as Buyer, its successors and assigns shall carry on a like
business therein. Further, the Seller agrees that for a period of eighteen (18)
months following the date of the Closing, neither Seller nor AAR Corp. shall
solicit, directly or indirectly, any of the Seller's employees who are employed
by Buyer as of the Closing Date and continue to be employed by Buyer for such 18
month period, for any employment, consulting or other position without the
express written authorization of Buyer.
(b) The foregoing covenant shall be deemed to be a series of separate
covenants, one for each of the states of the United States and all applicable
foreign jurisdictions. If in any judicial proceeding a court shall refuse to
enforce one or more of these separate covenants deemed included herein, such
unenforceable covenant shall be deemed eliminated from the provisions hereof for
the purpose of such proceedings to the
51
<PAGE> 53
extent necessary to permit the remaining separate covenants to be enforced in
such proceedings.
12.2 COMMUNICATIONS TO SELLER; RECEIPTS. (a) Seller hereby authorizes and
empowers Buyer, from time to time after the Closing: (i) to receive and open all
mail and other communications to Seller received by Buyer; and (ii) to deal with
the contents of such communications at its sole expense and in any proper manner
if such communications relate to the business conducted by Buyer after the
Closing or to the Transferred Assets. If such communications do not relate to
the business conducted by Buyer after the Closing or the Transferred Assets, it
will be forwarded to Seller.
(b) Seller shall transmit by wire funds to Buyer on the first business day
of each week all Receivables received during the immediately preceding week and
transmit to Buyer a report that identifies the Payor, the amount paid and the
invoice, if any, identified with respect to the payment.
12.3 CONSULTATION REGARDING TAX MATTERS. (a) Seller agrees to consult with
Buyer, and Buyer agrees to consult with Seller, prior to any Internal Revenue
service or any other governmental or regulatory authority reviews and prior to
agreeing to any settlement with the Internal Revenue Service, which would
involve any adjustment or change in the allocation of the Final Purchase Price
or otherwise affect Buyer or Seller.
52
<PAGE> 54
(b) Seller agrees to reasonably cooperate with the Buyer's reasonable
request for any additional financial information, audited financial statements,
if any, auditor's work sheets and consents of Seller's auditors as may be
necessary to complete compliance on a timely basis of the Buyer's filing
requirements with the Securities and Exchange Commission (the "SEC").
12.4 SHORT TERM LEASE OF SPACE. (a) For a period of 90 days following the
Closing Date, Seller shall lease to Buyer the premises at 12633 Inkster Road,
Livonia, Michigan 48150 presently occupied by Seller for a rental of One Dollar
($1.00).
(b) From and after the Closing Date, Seller shall lease to Buyer the
premises located at 1100 North Wood Dale Road, Wood Dale, Illinois which
Seller's AAR Power-Clean Division presently occupies at a rental of $7,500 for
90 days after the Closing. The Lease terminates as of the 90th day.
12.5 CONSULTATION REGARDING SOFTWARE. For a period of 120 days
following the Closing Date Seller shall provide, without charge, reasonable
consultation and training to Buyer's personnel with respect to the financial
software included in the Transferred Assets or leased from Seller, including,
without limitation, financial software relating to Receivables and cash
applications. This consultation will include transferring the Data 3 and Lawson
information listed in Schedule 12.5, during such 120 day period as reasonably
requested by Buyer. Buyer
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<PAGE> 55
acknowledges that any such consultation, training and data supplied is merely an
accommodation to Buyer and is provided without any representations or warranties
as to its accurateness, completeness or reliability and is transferred "AS IS"
"WHERE IS", with all faults and Buyer waives any right to bring any cause of
action as a result of any such consultation, training or data provided
hereunder.
12.6 REMARKETING AGREEMENT. The Parties acknowledge that Seller has
guaranteed the payment, to NationsBank and Sanwa, for the machines specifically
listed in Schedule 12.6 from the Dealers listed in such Schedule. Buyer and
Seller shall use their best efforts to negotiate a Remarketing Agreement within
30 days after execution of this Agreement. If Buyer and Seller cannot agree on a
Remarketing Agreement, Seller or its affiliates shall have the right to remarket
the machines itself, notwithstanding the non-compete provisions in Section 12.1.
13 MISCELLANEOUS
13.1 BROKERAGE. Each party represents that except as set forth in Exhibit
13.1 such party has not retained any broker, in connection with this agreement
or the negotiations thereof. Each party shall indemnify and hold the other
parties harmless from and against all losses, liabilities, claims, damages and
expenses, including court costs and reasonable attorneys' fees, arising out of
any claim for brokerage or other commissions relative to this
54
<PAGE> 56
agreement or the transactions contemplated hereby insofar as any such claim
arises by reason of services alleged to have been rendered to or at the instance
of such indemnifying party by any other person.
13.2 PUBLIC ANNOUNCEMENT. Except as otherwise required by law in the
reasonable interpretation of counsel for a party, (i) no publicity or press
release or other public announcement with respect to this agreement or any of
the transactions contemplated hereby shall be made without the express consent
of the other parties, and (ii) Seller and the Buyer shall keep confidential the
Purchase Price and related terms of this Agreement.
13.3 PAYMENT OF COSTS. Except as otherwise provided herein, Buyer shall
bear the costs, fees and expenses incurred by it in connection with the
negotiation, execution and performance of this Agreement, including but not
limited to attorney's and accountant's fees, and Seller shall bear costs, fees
and expenses incurred by them in connection with the negotiation, execution and
performance of this Agreement, including but not limited to attorney's and
accountant's fees.
13.4 NON-ASSIGNMENT. This Agreement shall not be assignable by Seller or
Buyer; provided, however, that (i) this Agreement shall be binding upon and
shall inure to the benefit of the heirs, executors, administrators and legal
representatives of the Seller and Buyer, and (ii) Buyer may assign this
Agreement to a wholly-
55
<PAGE> 57
owned subsidiary of Buyer provided such assignment will not relieve Buyer of any
of its obligations under this Agreement.
13.5 ENTIRE AGREEMENT. Except as provided in this section, this Agreement
sets forth the entire understanding of the parties and supersedes all prior
agreements, arrangements and communications, whether oral or written, with
respect to the subject matter hereof and this Agreement shall not be modified or
amended except by written agreement of Seller and Buyer. Captions appearing in
this Agreement are for convenience only and shall not be deemed to explain,
limit or amplify the provisions hereof.
13.6 SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if the invalid or
unenforceable provision were omitted.
13.7 NOTICES. Any notice or other instrument or thing required or
permitted to be given, served or delivered to any of the parties hereto shall be
deemed to have been given, served or delivered when delivered personally or via
courier service such as Federal Express, UPS, etc., or when deposited in the
United States mails, registered and with proper postage prepaid or when faxed
with a confirmation of receipt, addressed as follows:
(i) If to Seller, to:
AAR PowerBoss, Inc.
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<PAGE> 58
P.O. Box 1227
Aberdeen, North Carolina 28315
Attn: President
And to:
AAR Corp.
1100 N. Wood Dale Road
Wood Dale, Illinois 60191
Attn: President
(ii) If to Buyer, to:
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
Attn: President
57
<PAGE> 59
And to:
Reynolds & Reynolds
111 West Washington Street, Suite 1631
Chicago, Illinois 60602
Attn: Frank R. Reynolds
13.8 GOVERNING LAW.
(a) This agreement shall be governed by and construed under the laws of
the State of Illinois.
(b) The parties agree that any state or federal court located in the
State of Illinois shall have jurisdiction to hear any suit, action or proceeding
arising out of or in connection with this Agreement. Each party hereby
acknowledges, and irrevocably consents and submits to the jurisdiction of any
such court in any such suit, action or proceeding. Service of process may be
made against a party either in person, wherever such party may be found, or by
notice as permitted herein to the address of the party set forth in this
Agreement.
(c) Seller and Buyer covenant and agree that any suit, action or
proceeding arising out of or relating to this Agreement or the matters dealt
with herein shall only be instituted by them or their permitted successors or
assigns, if at all, in a state or federal court located in Illinois.
13.9 BULK SALES. The parties agree that notifications shall not be
filed with respect to the purchase and sale contemplated hereby under the bulk
transfer or bulk sales provisions of
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<PAGE> 60
applicable laws. Such agreement shall not modify the obligations of the parties
hereto with respect to the retention of liabilities by Seller and the assumption
and payment of liabilities by Buyer.
13.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
AAR POWERBOSS, INC. MINUTEMAN INTERNATIONAL, INC.
BY:___________________________ BY:___________________________
NAME:_________________________ NAME:_________________________
TITLE:________________________ TITLE:________________________
59
<PAGE> 61
GUARANTY
FOR VALUE RECEIVED and as an inducement to MINUTEMAN INTERNATIONAL,
INC. entering into the foregoing Asset Purchase Agreement, the undersigned,
being the owner of all the capital stock of AAR PowerBoss, Inc. ("Seller") does
hereby guaranty the prompt and full performance and any payment by Seller of all
Seller's obligations under the Asset Purchase Agreement.
Dated: November ____, 1998 AAR Corp.___________________
By:_________________________
Name:_______________________
Title:______________________
60
<PAGE> 62
Schedule 1.1(c)
Leasehold Interest
<TABLE>
<CAPTION>
Lessor Description Serial No. Term
- ------ ----------- ---------- ----
<S> <C> <C> <C>
Vanguard Toshiba Copier CG412561 4/96-3/99
Packaging & Padpak Jr. Table 25066562 9/97-2/99
Specialty Top
Papers
Ascom Hasler Postage Meter 9/98-12/98
Xerox 7033 Copier 0D7-081236 1/96-12/98
Xerox DWC Pro Laser Fax G4E-021157 2/98-1/99
Xerox 5818 2 Tray N7N-030624 12/97-11/00
Xerox 5818 2 Tray N7N-030644 12/97-11/00
Motor Truck Trailer
Industrial Clark Lift 0399-8990 1/94-12/98
Truck Truck
Industrial Used Clark OP15 0391-7935 9/97-10/98
Truck
Dougherty Yale Lift 578155 10/95-9/00
Equipment Truck
Dougherty Yale Lift A807N03334S 12/96-3/01
Equipment Truck
Dougherty LP Forklift E177B12589T 5 Years
Equipment Truck
Lease Plan Auto Lease(salesman) 2/97-8/00
</TABLE>
61
<PAGE> 63
Schedule 1.1(d)
Customer's Purchase Orders
See Attached
62
<PAGE> 64
Schedule 1.1(e)
Seller's Purchase Orders
See Attached
63
<PAGE> 65
Schedule 1.1(f)
Machinery and Equipment (Included and Excluded)
64
<PAGE> 66
Schedule 1.1(h)
Intellectual Property
See Attached
65
<PAGE> 67
Schedule 1.1(j)
Vehicles (Owned or Leased)
<TABLE>
<CAPTION>
Make Year Model VIN Location Status
- ---- ---------- --- -------- ------
<S> <C> <C> <C> <C>
E350 1995Ford Van 1FTJE34H6SHB72920 Chicago Lease
E150 1991Ford Van 1FTEE14Y6MHA66301 Chicago Own
F150 1995Ford Pick-UP 1FTEX15HXSKA15750 Detroit Own
E150 1998Ford Van 1FTRE1429WHA43370 Detroit Lease
E150 1997Ford Van Chicago Lease
E150 1998Ford Van 1FTRE142XWHA0345 Chicago Lease
NPR 1997 Isuzu Box 4KLB4B1R1VJ001990 Chicago Lease
Truck
AJAX 1992 Trailer JT2687 Chicago Own
Utility 1994 Trailer 57EEOOC71J1001009 Chicago Own
Avenge 1997 Trailer 4T6UB1423UM003766 Chicago Own
LN 900 Ford DSL R902VS05212 Aberdeen Own
Truck
</TABLE>
66
<PAGE> 68
Schedule 1.1(l)
Major Item of Personal Property
"Leases Software": AS 400 - IBM Hardware
- Data 3 Software
- Lawson Software
- Pinehurst Country Club Membership
67
<PAGE> 69
Schedule 1.2(j)
See attached
68
<PAGE> 70
Schedule 2.4(c)
XS and Obsolete Inventory
69
<PAGE> 71
Schedule 3.1(f)
Contracts
70
<PAGE> 72
Schedule 3.1(g)
Warranty Claims
71
<PAGE> 73
Schedule 5.4(a)
May 31, 1998 Balance Sheet
72
<PAGE> 74
Schedule 5.4(b)
May 31, 1998 Financial Statement
73
<PAGE> 75
Schedule 5.5(b)
Changes in Business
None
74
<PAGE> 76
Schedule 5.8
Notice of Violations
"United States Environmental Protection Agency Letter dated
October 25, 1991 regarding Aberdeen Pesticide Dump Site"
- OSHA Inspection(s) Attached
75
<PAGE> 77
Schedule 5.9
Claims and Litigation
- Bell et Tom v AAR PowerBoss, Inc.
- Ben Fitzgerald Real Estate Services v AAR PowerBoss, Inc.
76
<PAGE> 78
Schedule 5.10
Employment Arrangements
None
77
<PAGE> 79
Schedule 5.11
Taxes
Seller agreed with Holland Tax Authorities to pay post VAT and
wage taxes in the amount of approximately $136,000 Guilders.
78
<PAGE> 80
Schedule 5.12
Arrangements with Related Parties
None
79
<PAGE> 81
Exhibit 5.23
Environmental Matters
Aberdeen Pesticide Dump Sites - All Applicable Material
- Phased Environmental Assessment prepaid by Environmental Strategies
Corporation dated November 5, 1998
- Letter from Hunton & Williams dated January 23, 1997 regarding
investigatory activities conducted at the PowerBoss facility in
connection with the Aberdeen Pesticide Dump Site
- Letter from the United States Environmental Protection Agency dated
August 4, 1997 regarding the Deminimis Settlement of the Cherokee
Resources Sites (Settlement of $17,807.42)
80
<PAGE> 82
Schedule 5.24
Employee List
See Attached
81
<PAGE> 83
Schedule 5.25(b)
Intellectual Property Contracts
None
82
<PAGE> 84
Schedule 5.26
Permits and Licenses
See Attached
83
<PAGE> 85
Exhibit 8.4
Seller's Attorney's Opinion
84
<PAGE> 86
Exhibit 8.6
Bill of Sale
85
<PAGE> 87
Exhibit 8.8
Real Property Lease Agreement
86
<PAGE> 88
Exhibit 9.6
Buyer's Attorney's Opinion
87
<PAGE> 89
Schedule 12.5
Transferred MIS Files
See Attached
88
<PAGE> 90
Schedule 12.6
Remarketing Equipment
See Attached
89
<PAGE> 91
Schedule 13.1
Broker Arrangements
Green Park International
AAR PowerBoss, Inc., ("AAR") and Green Park International, Inc., ("GP")
entered into a brokerage agreement (the "Agreement") dated April 14, 1998 in an
effort to effect the sale of PowerBoss.
90
<PAGE> 1
LEASE AGREEMENT (BUILDING LEASE)
BY AND BETWEEN
AAR POWERBOSS, INC.,
AN ILLINOIS CORPORATION,
AS LANDLORD
AND
MINUTEMAN POWER BOSS, INC.,
AN ILLINOIS CORPORATION,
AS TENANT
PREMISES LOCATED AT:
ANDERSON STREET AND TAYLOR STREET
ABERDEEN, NORTH CAROLINA
NOVEMBER __, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
1. LEASED PREMISES.................................................. 1
2. LEASE TERM....................................................... 1
2.1 Primary Term................................................ 1
3. RENTAL PAYMENTS.................................................. 1
3.1 Rent......................................................... 1
3.2 Utilities.................................................... 2
3.3 Interest on Late Payments.................................... 2
4. USE.............................................................. 2
5. TAXES............................................................ 2
6. CONDITION OF PREMISES............................................ 2
7. MAINTENANCE...................................................... 3
7.1 Landlord's Maintenance....................................... 3
7.2 Tenant's Maintenance......................................... 3
8. ASSIGNMENT AND SUBLETTING........................................ 3
9. LANDLORD'S TITLE and QUIET ENJOYMENT............................. 3
10. WARRANTIES, REPAIRS AND ALTERATIONS; LIENS....................... 4
10.1 Warranties.................................................. 4
10.2 Alterations and Improvements................................ 4
10.3 Liens....................................................... 4
11. TENANT'S MACHINERY AND EQUIPMENT................................. 4
12. INSURANCE........................................................ 5
12.1 Fire and Casualty Insurance................................. 5
12.2 Liability Insurance......................................... 5
12.3 Personal Property Insurance................................. 5
12.4 Form of Insurance........................................... 5
12.5 Waiver of Subrogation....................................... 5
13. DAMAGE AND CONDEMNATION.......................................... 6
13.1 Damages or Destruction...................................... 6
13.2 Condemnation................................................ 6
14. INDEMNITY........................................................ 7
14.1 Indemnity by Tenant......................................... 7
14.2 Indemnity by Landlord....................................... 7
15. RETURN OF PREMISES............................................... 8
16. HOLDOVER......................................................... 8
17. EVENTS OF DEFAULT; REMEDIES...................................... 8
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C> <C>
17.1 Events of Default.......................................... 8
17.2 Remedies.................................................... 9
17.3 Landlord Defaults........................................... 10
18. HAZARDOUS SUBSTANCES............................................. 10
18.1 Definitions................................................. 10
18.2 Tenant's Covenant........................................... 10
18.3 Indemnification by Landlord................................. 11
18.4 Indemnification by Tenant................................... 11
19. NOTICE........................................................... 12
20. ENTRY UPON PREMISES.............................................. 12
21. GENERAL PROVISIONS............................................... 12
21.1 Brokers.................................................... 12
21.2 Amendments................................................. 12
21.3 Severability............................................... 12
21.4 Attorney's Fees............................................ 13
21.5 Time of Essence............................................ 13
21.6 Waiver..................................................... 13
21.7 Successors and Assigns..................................... 13
21.8 Governing Law.............................................. 13
21.9 Estoppel Agreements........................................ 13
21.10 Subordination, Non-Disturbance Agreement................... 13
21.11 Memorandum of Lease........................................ 14
21.12 Execution of Lease......................................... 14
22. SIGNAGE.......................................................... 14
Exhibit A Premises
</TABLE>
ii
<PAGE> 4
LEASE AGREEMENT (BUILDING LEASE)
THIS LEASE AGREEMENT (the "LEASE") is made and entered into as of November
__, 1998, by and between AAR POWERBOSS, INC., an Illinois corporation
("LANDLORD"), and MINUTEMAN POWER BOSS, INC., an Illinois corporation
("TENANT").
WHEREAS, Landlord owns the Premises (as hereinafter defined); and
WHEREAS, Tenant desires to lease the Premises on the terms and conditions
hereinafter set forth; and
WHEREAS, concurrently with entering into the Lease, Landlord and Tenant
are entering into an Option to Purchase dated the date hereof with attached
Real Estate Purchase/Sale Agreement (collectively, the "OPTION TO PURCHASE").
NOW, THEREFORE, in consideration for the mutual covenants herein
contained, and other valuable consideration, the parties agree as follows:
1. LEASED PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord an approximately 133,000 square-foot building and an
approximately 2,000 square foot prototype shop, which buildings contain
manufacturing, warehousing, assembly and office space, plus approximately _____
acres of land at Anderson Street and Taylor Street, Aberdeen, North Carolina,
including parking and loading areas all more particularly described and shown
on the attached Exhibit A, together with all appurtenances belonging to or in
any way pertaining to said land and buildings (collectively, the "PREMISES").
2. LEASE TERM.
2.1 PRIMARY TERM. The primary term of this Lease shall commence as of
November 23, 1998 (hereinafter referred to as "COMMENCEMENT DATE") and shall
end thirty-six (36) months thereafter on November __, 2001, (hereinafter
referred to as "TERMINATION DATE"), unless sooner terminated as provided herein
or in the Option to Purchase.
3. RENTAL PAYMENTS.
3.1 RENT. Beginning with the Commencement Date, Tenant shall pay to
Landlord monthly rent ("RENT") of Seventeen Thousand Dollars ($17,000) in
advance on or before the first day of each calendar month during the term
hereof. Rent shall be paid to Landlord at
<PAGE> 5
Landlord's address set forth in Section 19 hereof and Rent for any partial
months shall be prorated based on the total number of days in that month. All
payments by Tenant shall be made in lawful money of the United States. The
rent specified in this lease shall be net to Landlord in each year during the
lease term in addition to obligations of Tenant with respect to insurance and
taxes as provided herein. The net rent shall be paid to Landlord without notice
or demand and without abatement, deduction or setoff.
3.2 UTILITIES. Tenant shall purchase and promptly pay for all utilities
and other services (including, but not limited to, water, sewage service
charges, garbage or trash removal, fuels, including natural gas, and
electricity, including electricity for any heating in the Premises) furnished
to and or used in or at the Premises for any purpose.
3.3 INTEREST ON LATE PAYMENTS. In the event that Tenant fails to pay Rent
or any other sum due under any provisions of this Lease when due and such
amount is not paid within five (5) business days after written notice of such
failure to pay as herein provided, then such sum shall bear interest thereafter
at the rate of 10% per annum.
4. USE. Tenant shall use the Premises for conducting the manufacturing,
assembly and/or storage of equipment that sweeps and/or scrubs floors and
related business operations including, without limitation, office use, or for
any other use permitted by law. Tenant shall comply with all laws, regulations
and other governmental requirements relating to its use and occupancy of the
Premises. Landlord represents and warrants that as of the date hereof, the
specified use of the Premises set forth above complies with applicable zoning
and to the best of Landlord's knowledge does not violate any certificate of
occupancy or law, ordinance or other governmental regulation, or any covenants,
conditions or restrictions of record.
5. TAXES. The Tenant, in addition to the Rent, shall pay all real estate
taxes upon the Premises on or before the date such taxes are due and payable.
Ad valorem real property taxes or special improvement taxes levied or assessed
against the Premises shall be paid by Landlord. All real estate taxes assessed
prior to but payable in whole or in installments after the Commencement Date,
and all real estate taxes assessed during the term but payable in whole or in
installments after the Commencement Date, shall be adjusted and prorated so
that the Landlord shall pay its prorated share for the periods preceding and
following the lease term and the Tenant shall pay its prorated share for the
lease term.
6. CONDITION OF PREMISES. It is understood and agreed that the Premises
are leased in an "as is, where is" condition without any representations or
warranty by Landlord concerning its condition.
2
<PAGE> 6
7. MAINTENANCE.
7.1 LANDLORD'S MAINTENANCE. During the primary term and any extended
term of this Lease, Landlord shall, at Landlord's sole cost and expense,
perform all maintenance, repairs and replacements relating to the exterior of
the roof, building footings, foundations, exterior walls, the building
skeleton, bearing columns, interior bearing walls, floor slabs, underground
utility and sewer pipes.
7.2 TENANT'S MAINTENANCE. Except as provided in Section 7.1 hereof,
Tenant shall keep and maintain the entire interior and exterior of the Premises
and any improvements thereon, including without limitation interior plumbing,
heating, air conditioning, ventilation, electrical, interior walls, ceilings,
floors, windows, doors, sidewalks, and landscaping, in good order, repair and
working condition. Any such maintenance or repairs will be limited to $10,000
per occurrence, except for any damages or repairs caused by Tenant.
8. ASSIGNMENT AND SUBLETTING. This Lease shall not be assigned by Tenant
to any other party, and Tenant shall have no right to sublet the Premises or
any part thereof, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed.
9. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and warrants
that Landlord has fee simple title to the Premises and full right and authority
to make this Lease. Landlord covenants that so long as Tenant is not in
default hereunder after the expiration of any applicable cure periods under
this Lease, Tenant shall have quiet and peaceful possession and enjoyment of
the Premises and shall not be interfered with by Landlord, or any party
claiming by, through or under Landlord or any party claiming title superior to
Landlord.
10. WARRANTIES, ALTERATIONS AND IMPROVEMENTS; LIENS.
10.1 WARRANTIES. As soon as possible, Landlord agrees to provide
copies of and to the extent assignable, assign to Tenant during the term of
this Lease such warranties as may exist for or pertain to the Premises and the
improvements thereon to the extent such warranties relate to items that Tenant
is obligated to repair pursuant to Section 7.2 hereof, or, if not assignable,
to work with Tenant to seek enforcement of such warranties as may be necessary
from time to time at Tenant's reasonable request.
10.2 ALTERATIONS AND IMPROVEMENTS. Except for non-structural changes
in amounts not exceeding Twenty-Five Thousand Dollars ($25,000), Tenant shall
not make any structural or non-structural alterations, additions or
improvements to the Premises without
3
<PAGE> 7
Landlord's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. All such alterations and improvements shall
be made with prior written notice to Landlord and in a good and workmanlike
manner in accordance with all applicable laws and ordinances. On surrendering
possession of the Premises to Landlord at the expiration or sooner termination
of the Lease, Landlord agrees to accept the Premises with all alterations and
improvements made by Tenant, which shall thereafter become Landlord's property,
and Tenant shall not be required to restore the Premises to the condition
existing prior to the making of such alterations and improvements at the
commencement of the term; provided, however, at Landlord's option, Tenant may
be required to remove any such alterations or improvements made by Tenant and
restores the Premises to their condition prior to the making of such
alterations or improvements if at the time Tenant makes the alterations
Landlord notifies Tenant that the alterations are to be removed upon
termination of the Lease.
10.3 LIENS. Tenant shall not permit the Premises to become subject to
any liens or encumbrances including but not limited to any mechanics',
laborers' or materialmen's lien on account of labor or material furnished to
Tenant or claimed to have been furnished to Tenant in connection with work of
any character performed or claimed to have been performed on the Premises by,
or at the direction of Tenant; provided, however, that Tenant shall have the
right to contest, in good faith and with reasonable diligence, the validity of
any such lien or claimed lien.
11. TENANT'S MACHINERY AND EQUIPMENT. Tenant may install in the Premises
such machinery and equipment as Tenant deems desirable as long as such
machinery is consistent with the use of the Premises as set forth herein, and
all of said items shall remain Tenant's property whether or not affixed or
attached to the Premises. Tenant may remove said machinery and equipment from
the Premises at any time during the term. Tenant shall, prior to expiration of
the term of this Lease, repair any damage to the Premises caused by Tenant's
installation or removal of any such machinery or equipment.
12. INSURANCE.
12.1 FIRE AND CASUALTY INSURANCE. Throughout the term, Tenant, at its
sole cost and expense, shall maintain insurance insuring the improvements at
any time situated upon the Premises against loss or damage by fire, lightning,
wind storm, hail storm, aircraft, vehicles, smoke, explosion, riot or civil
commotion as provided by the Standard Fire and Extended Coverage Policy and all
other risks of direct physical loss as insured against under Special Form ("all
risk" coverage). The insurance coverage shall be for not less than 100% of the
full replacement cost of such improvements with agreed amount endorsement, and
building ordinance coverage. Landlord shall be named as the additional insured
and all proceeds of insurance shall be payable to Landlord.
12.2 LIABILITY INSURANCE. Throughout the term, Tenant shall maintain
insurance insuring Tenant, Landlord (as an "additional insured"), and any
mortgagee of Landlord of which
4
<PAGE> 8
Tenant is given written notice, from all claims, demands or actions made by or
on behalf of any person or persons, firm or corporation and arising from,
related to or connected with the Premises, for bodily injury to or personal
injury to or death of any person, or more than one person, or for damage to
property in an amount of not less than $2,000,000.00 combined single limit per
occurrence/aggregate.
12.3 PERSONAL PROPERTY INSURANCE. Throughout the term, Tenant shall
maintain insurance insuring all contents and Tenant's trade fixtures,
machinery, equipment, furniture and furnishings in the Premises to the extent
of at least ninety percent (90%) of their replacement cost under Standard Fire
and Extended Coverage Policy and all other risks of direct physical loss as
insured against under Special Form ("all risk") coverage.
12.4 FORM OF INSURANCE. All of the aforesaid insurance policies shall
be issued by responsible companies reasonably acceptable to Landlord.
Certificates of the insurance policies required to be carried by any party
hereto, together with satisfactory evidence of payment of the premiums thereon,
shall be deposited with the other party hereto at the Commencement Date and
renewals thereof not less than thirty (30) days prior to the end of the term of
such coverage.
12.5 WAIVER OF SUBROGATION. Landlord and Tenant hereby waive any claim
or right of action, including any right of indemnity under Section 14 hereof,
which they may have against the other for loss or damage covered and satisfied
by any of the property insurance policies required to be maintained pursuant to
the terms of this Lease and covenant and agree to obtain a waiver or waivers in
writing from the carrier of such insurance releasing such carrier's subrogation
rights as against Landlord and Tenant.
13. DAMAGE AND CONDEMNATION.
13.1 DAMAGES OR DESTRUCTION.
(a) In the event of damage to, or destruction of, any improvements on
the Premises, by fire or other casualty, Landlord shall repair, restore or
rebuild the same to the condition existing prior to the happening of such
fire or other casualty; provided, however, that if the damage or
destruction is material and substantial, and in Landlord's reasonable
judgment, the Premises cannot be repaired, restored or rebuilt within 180
days after the date of the casualty, Tenant or Landlord shall have the
right to terminate this Lease, effective on the date of such damage or
destruction, by giving written notice thereof to the other party within 30
days after the event causing the damage or destruction. During the period
of repair the Rent shall be reduced to an amount which bears the same
ratio as the portion of the Premises then available for use bears to the
entire Premises.
5
<PAGE> 9
(b) Tenant or Landlord shall immediately upon receipt thereof
deposit all insurance proceeds received with respect to such loss into a
construction escrow account under the terms of a construction escrow
mutually acceptable to Landlord and Tenant (the "CONSTRUCTION ESCROW").
Landlord may withdraw such funds from the Construction Escrow as needed to
pay for the repair or rebuilding of the Premises. If Landlord shall not
commence the repair or rebuilding of the improvements within a period of
sixty (60) days after damage or destruction by fire or otherwise, and
prosecute the same thereafter with such dispatch as may be necessary to
complete the same within a reasonable period after said damage or
destruction occurs, not to exceed one hundred twenty (120) days after the
date of commencement of such repair or rebuilding, then, in addition to
whatever other remedies Tenant may have either under this Lease, at law or
in equity, Tenant may (i) but shall not be obligated to, perform such
repairs at Landlord's expense and may use the funds then remaining in the
Construction Escrow to complete such restoration, or (ii) terminate this
Lease.
13.2 CONDEMNATION.
(a) TAKING OF WHOLE. If the whole of the Premises shall be
taken or condemned for a public or quasi public use or purpose by a
competent authority, or if such a portion of the Premises shall be so taken
that, in Tenant's reasonable discretion, Tenant concludes that as a result
thereof the balance cannot be used for the same purpose and with
substantially the same utility to Tenant as immediately prior to such
taking, then in any of such events, the Lease shall terminate upon delivery
of possession to the condemning authority, and any award, compensation or
damages (hereinafter sometimes called the "AWARD") shall be paid to and be
the sole property of Landlord. Tenant shall have the right to make its own
claim against the condemning authority for any separate award that may be
made by the condemning authority for Tenant's loss of business or for the
taking of or injury to Tenant's improvements, or on account of any costs or
loss Tenant may sustain in the removal of Tenant's trade fixtures,
equipment, furnishings or other removable personal property, or as a result
of any alterations, modifications, or repairs which may be required by
Tenant in order to place the remaining portion of the Premises in a
suitable condition for the continuance of Tenant's business in the
Premises.
(b) PARTIAL TAKING. If only a part of the Leased Premises shall
be so taken or condemned, but the Lease is not terminated pursuant to
Section 13.2(a) hereof, Landlord, at its sole cost and expense, shall
repair and restore the Premises and all improvements to a complete
architectural unit and the Rent will be adjusted accordingly on a per
square foot basis (at the rate of $_____ per square foot of building
space). Landlord shall deposit any Award received by Landlord in a
Construction Escrow. If Landlord does not commence to promptly restore the
Premises to a complete architectural unit or does not
6
<PAGE> 10
complete such restoration within a reasonable period after such taking
or condemnation, not to exceed one hundred twenty (120) days, then Tenant
may, but shall not be obligated to, terminate the Lease.
14. INDEMNITY.
14.1 INDEMNITY BY TENANT. Tenant shall indemnify, defend (by counsel
reasonably approved by Landlord) and hold harmless Landlord, its officers,
directors, shareholders, employees and agents against and from any and all
claims, causes of action, liabilities, damages, penalties, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising from (i)
the occupancy or conduct of business by Tenant on or about the Premises during
the term of this Lease, (ii) any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of Tenant to be performed
pursuant to the terms of this Lease, and (iii) any act or negligence of Tenant
or any of Tenant's agents, contractors, servants, employees or licensees, or
arising from any accident, injury or damage whatsoever caused to any person or
entity (other than to the extent caused by Landlord or Landlord's employees,
agents or contractors) occurring on the Premises during the term of this Lease.
14.2 INDEMNITY BY LANDLORD. Landlord shall indemnify, defend (by
counsel reasonably approved by Tenant) and hold harmless Tenant, its officers,
directors, shareholders, employees and agents, against and from any and all
claims, causes of action, liabilities, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees) arising from (i) claims arising
from the ownership of the Premises, or the occupancy, use or conduct of
business on or about the Premises prior to the term of this Lease, (ii) any
breach of any representation or warranty hereunder or default on the part of
Landlord in the performance of any covenant or agreement on the part of
Landlord to be performed pursuant to the terms of this Lease, (iii) any act or
negligence of Landlord or any of Landlord's agents, contractors, employees or
licensees occurring on or about the Premises during or prior to the term of
this Lease, (iv) any accident, injury or damage whatsoever caused to any
person or entity (other than those to the extent caused by Tenant or Tenant's
employees, agents or contractors) occurring on or about the Premises prior to
the term of this Lease; and (v) the failure of the Premises to comply with all
applicable federal, state and local health, safety, zoning, or building codes
and regulations to the extent the condition giving rise to such failure to
comply existed prior to the term of this Lease.
15. RETURN OF PREMISES. Subject to Section 10.2 hereof, Tenant agrees to
deliver to Landlord physical possession of the Premises upon the termination of
the Lease in the same degree of repair as of the Commencement Date, excepting
ordinary wear and tear and damage from fire or any other casualty.
7
<PAGE> 11
16. HOLDOVER. Should Tenant continue to occupy the Premises after
expiration of the term or any renewal thereof Tenant shall be deemed to be
occupying the Premises without claim or right and Tenant shall pay Landlord all
costs arising out of loss or liability resulting from delay by Tenant in so
surrendering the Premises as above provided (excluding consequential damages)
and shall pay a charge for each day of occupancy an amount equal to 150% of the
Rent (on a per diem basis) then reserved hereunder.
17. EVENTS OF DEFAULT; REMEDIES.
17.1 EVENTS OF DEFAULT.
(a) Each of the following events shall constitute an Event of Default:
(i) if Tenant shall fail to pay any rent or any other charge or
sum to be paid by Tenant to Landlord when due in accordance with the
terms of this Lease and such default shall continue for a period of ten
(10) business days after written notice thereof to Tenant;
(ii) if Tenant shall fail to keep or perform or abide by any
other requirement, term, condition, covenant or agreement of this Lease
and such default shall continue for a period of thirty (30) days after
written notice to Tenant of such default, and, if more than thirty (30)
days shall reasonably be required to correct the breach complained of
in such notice, then if Tenant shall fail to commence promptly to
correct such breach and prosecute the same to completion with
reasonable diligence;
(iii) if Tenant shall be adjudged an involuntary bankrupt, or a
decree or order approving, as properly filed, a petition or answer
filed against Tenant asking reorganization of Tenant under the federal
bankruptcy laws as now or hereafter amended, or under the laws of any
state, shall be entered, and any such decree or judgment or order shall
not have been vacated or set aside within sixty (60) days from the date
of the entry or granting thereof;
(iv) if Tenant shall file or admit the jurisdiction of the court
and the material allegations contained in any petition in bankruptcy or
any petition pursuant or purporting to be pursuant to the federal
bankruptcy laws as now or hereafter amended;
(v) if Tenant shall institute any proceeding or shall give its
consent
8
<PAGE> 12
to the institution of any proceedings for any relief of Tenant under
any bankruptcy or insolvency laws or any laws relating to the relief of
debtors, readjustment of indebtedness, reorganization, arrangements,
composition or extension; or
(vi) if Tenant shall make any assignment for the benefit of creditors
or shall apply for or consent to the appointment of a receiver for Tenant;
or a decree or order appointing a receiver of the property of Tenant shall
be made and such decree or order shall not have been vacated or set aside
within sixty (60) days from the date of entry or granting thereof.
17.2 REMEDIES. Upon the occurrence of any one or more Events of Default,
Landlord may at its election terminate this Lease or terminate Tenant's right
to possession only, without terminating the Lease. Upon termination of the
Lease, or upon any termination of Tenant's right to possession without
termination of the Lease, Tenant shall surrender possession and vacate the
Premises immediately, and deliver possession thereof to Landlord, and hereby
grants to Landlord the full and free right, in compliance with applicable law,
to enter into and upon the Premises in such event with process of law and to
repossess the Premises as Landlord's former estate and to expel or remove
Tenant and any others who may be occupying or within the Premises without being
deemed in any manner guilty of trespass, eviction, or forcible entry or
detainer, and without relinquishing Landlord's rights to Rent or any other
right given to Landlord hereunder or by operation of law. Upon termination of
the Lease, Landlord shall be entitled to recover as damages all Rent and other
sums due and payable by Tenant on the date of termination, plus an amount equal
to the present value of the Rent and other sums provided herein to be paid by
Tenant for the residue of the Term hereof. If Landlord elects to terminate
Tenant's right to possession only without terminating the Lease, Landlord may,
at Landlord's option, enter into the Premises, remove Tenant's signs and other
evidences of tenancy, and take and hold possession thereof as hereinafter
provided, without such entry and possession terminating the Lease or releasing
Tenant, in whole or in part, from Tenant's obligations to pay the Rent and
other sums provided herein to be paid by Tenant for the full term or from any
other of its obligations under this Lease, without acceleration. Landlord may
relet all or any part of the Premises for such Rent and upon such terms as
shall be reasonably satisfactory to Landlord. For the purpose of such
reletting, Landlord may decorate or make any repairs in or to the Premises that
may be reasonably necessary. If Landlord does not relet the Premises, Tenant
shall pay to Landlord on demand damages equal to the amount of the Rent, and
other sums provided herein to be paid by Tenant for the remainder of the Term.
If the Premises are relet and a sufficient sum shall not be realized from such
reletting after paying all of the reasonable expenses of such decorations and
repairs, to satisfy the Rent and other sums herein provided to be paid for the
remainder of the Term, Tenant shall pay to Landlord on demand any
9
<PAGE> 13
deficiency and Tenant agrees that Landlord may file suit to recover any Rent or
other sums falling due under the terms of this Section 17.2 from time to
time. Landlord shall use reasonable good faith efforts to mitigate its damages
arising out of Tenant's default.
17.3 LANDLORD DEFAULTS. If Landlord defaults in the performance of
any of its obligations, covenants and warranties hereunder and such default
continues for a period of thirty (30) days after written notice thereof to
Landlord from Tenant specifying the nature of such default, or such additional
period as Landlord may reasonably require to cure the same (except in an
emergency, Landlord shall fail to cure immediately), in addition to all other
rights and remedies available to Tenant, Tenant may, at its option, cure the
same on behalf of Landlord, whereupon the cost of such cure shall be immediately
due and payable to Tenant from Landlord upon written demand therefor by Tenant.
18. HAZARDOUS SUBSTANCES. Intentionally Omitted.
19. NOTICE. All notices or demands required or permitted to be given or
served pursuant to this Lease shall be in writing and shall be deemed to have
been given or served when received or refused, if sent by United States
registered or certified mail, postage prepaid, or by nationally recognized
overnight courier, and addressed as follows:
If to Landlord: AAR PowerBoss, Inc.
1100 North Wood Dale Road
Wood Dale, Illinois 60191
Attn: President
If to Tenant: Minuteman Power Boss, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
Attn: President
Such address may be changed from time to time by either party by serving notice
as above provided.
20. ENTRY UPON PREMISES. Landlord and Landlord's representatives shall be
permitted to enter the Premises at all reasonable times during usual business
hours upon 24 hours prior written notice to Tenant (except in case of
emergency) for purposes of inspecting the Premises, making any necessary
repairs to the Premises and performing any work therein that may be necessary
by reason of Tenant's default under the terms of this Lease, or exhibiting the
Premises for sale or mortgage financing or, within the last six
10
<PAGE> 14
(6) months of the Lease term, to prospective tenants.
21. GENERAL PROVISIONS.
21.1 BROKERS. Landlord and Tenant each represents and warrants to the
other that it has not engaged or dealt with any broker in connection with this
Lease. Landlord and Tenant each agree to indemnify and hold the other harmless
from and against all liability, claims, demands, damages, or costs of any kind
arising from or connected with any broker's commission, finder's fee, consulting
fee or other charge claimed to be due any person or entity arising from the
indemnifying party's conduct with respect to this Lease.
21.2 AMENDMENTS. No amendment or modification of this Lease shall be
effective unless in writing and executed by Landlord and Tenant.
21.3 SEVERABILITY. If any term or provision of this Lease shall to any
extent be held invalid or unenforceable, the remaining terms and provisions of
this Lease shall not be affected thereby, but each term and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.
21.4 ATTORNEY'S FEES. In the event Landlord or Tenant is required to
use the services of any attorney for the enforcement of any of the terms,
covenants or provisions hereof, the prevailing party shall be entitled to
recover reasonable attorney's fees and expenses from the non-prevailing party.
21.5 TIME OF ESSENCE. Time is of the essence of this Lease, and all
provisions herein relating thereto shall be strictly construed.
21.6 WAIVER. No waiver of any provision of this Lease shall be deemed
to be a waiver of any other provision hereof or of any subsequent or continuing
breach of the same or any other provision. Landlord's consent to or approval of
any act by Tenant shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act.
21.7 SUCCESSORS AND ASSIGNS. All of the covenants, conditions, and
provisions of this Lease shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
executors, administrators, successors and assigns, when permitted hereunder.
21.8 GOVERNING LAW. This Lease shall be construed in accordance with
the laws of the State of Illinois.
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21.9 ESTOPPEL AGREEMENTS. Each of Tenant and Landlord agrees that from
time to time within ten (10) business days after written request by the other
party hereto, it will execute, acknowledge and deliver to the requesting party
or to such other party as may be designated by the requesting party, a
certificate stating that this Lease is then in full force and effect and has
not been modified, supplemented or amended in any way, except as indicated in
such certificate; that all conditions and agreements under this Lease to be
performed by Landlord or Tenant, as applicable, have been satisfied or
performed, except as set forth in such certificate; that, to such party's
knowledge, there are no existing defenses or offsets of Tenant, except as
indicated in such certificate; that Tenant has not paid any rental more than
one month in advance, except as indicated in such certificate; and that, to
such party's knowledge, Tenant is not in default in the payment of rent or any
of the other obligations required of Tenant under this Lease.
21.10 SUBORDINATION, NON-DISTURBANCE AGREEMENT. Landlord shall obtain for
the benefit of Tenant, and shall deliver to Tenant, from any person now or
hereafter holding a mortgage, deed of trust, hypothecation or other security
device such person's written assurance that Tenant's occupation and use of the
Premises during the initial term and any renewal term shall not be disrupted or
disturbed by such person so long as Tenant is not in default under this Lease
(after the expiration of any applicable cure period). In connection with such
non-disturbance agreement, Tenant shall, within ten (10) business days after
Landlord's written request, execute a subordination agreement (in form and
substance reasonably acceptable to Landlord and Tenant) in favor of any such
mortgagee agreeing that Tenant's rights and interests under this Lease shall be
subject and subordinate to such first mortgage or first deed of trust and to
any and all advances to be made thereunder, and to the interest thereon, and
all renewals, replacements and extensions thereof.
21.11 MEMORANDUM OF LEASE. Neither party will record this Lease, but each
party will, on request by the other party, execute an appropriate memorandum or
notice of Lease in form and substance reasonably satisfactory to both parties
hereto, and the requesting party may record the same at its expense.
21.12 EXECUTION OF LEASE. The submission of this document for examination
and negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Leased Premises and this document shall become effective and
binding only upon the execution and delivery hereof by Tenant and by Landlord.
12
<PAGE> 16
22. SIGNAGE. Tenant may install, at Tenant's sole cost and expense,
exterior signs on the Premises with Landlord's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, provided
such signs comply with all applicable laws and ordinances.
IN WITNESS WHEREOF, the parties hereto have executed this Lease by and
through their corporate officers thereunto duly authorized, the day and year
first above written.
LANDLORD: TENANT:
AAR PowerBoss, Inc., Minuteman Power Boss, Inc.,
an Illinois corporation an Illinois corporation
By: __________________________ By:__________________________
Name:________________________
Title: _________________________ Title: ______________________
13
<PAGE> 17
GUARANTY
FOR VALUE RECEIVED and as an inducement to MINUTEMAN POWER BOSS, INC.
entering into the foregoing Lease, the undersigned, being the indirect owner of
all the capital stock of AAR PowerBoss, Inc. ("Landlord") does hereby guaranty
the prompt and full performance and any payment by Landlord of all Landlord's
obligations under the Lease.
Dated: November ____, 1998 AAR Corp.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
14
<PAGE> 18
Exhibit A
Premises
<PAGE> 1
LOAN AGREEMENT
Dated as of November, 1998
between
MINUTEMAN INTERNATIONAL, INC.
and
LASALLE NATIONAL BANK,
<PAGE> 2
LOAN AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of November 18, 1998, is entered
into by and between "Lender" and "Borrower" (hereinafter defined).
RECITALS:
In order to finance Borrower's acquisition of AAR PowerBoss, Borrower
desires to borrow from Lender and has requested that Lender make available and
lend to Borrower, a revolving loan in the amount of up to $5,000,000 and a term
loan in the principal amount of $14,000,000, upon the satisfaction of certain
terms and conditions, all as more fully set forth below.
NOW, THEREFORE, in consideration of the parties' mutual agreements
contained herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 GENERAL TERMS. As used in this Agreement, the following terms shall
have the following definitions:
"AFFILIATE" shall mean any Person (a) that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common
control with Borrower, (b) that directly or beneficially owns or holds five
percent (5%) or more of any class of the interests of Borrower, (c) five
percent (5%) or more of whose voting stock (or in the case of a Person which is
not a corporation, five percent (5%) or more of the equity interest or economic
value of which) is owned directly or beneficially or held by Borrower, or (d)
five percent (5%) or more of whose voting stock (or in case of a Person which
is not a corporation, five percent (5%) or more of the equity interest or
economic value of which) is owned directly or beneficially or held by a Person
referred to in (a), (b) or (c) above.
"APPLICABLE LIBOR MARGIN" means an incremental amount in excess of the LIBOR
Rate, as set forth on Annex A attached hereto, which will fluctuate as a
function of the Total Debt to Total EBITDA Ratio.
"AGREEMENT" shall mean this Loan Agreement, any and all exhibits or schedules
thereto, any and all concurrent or subsequent riders to this Loan Agreement and
any extensions, supplements, amendments, modifications or restatements to or of
this Loan Agreement and/or to or of any such rider.
"AUTHORIZED REPRESENTATIVE" shall mean any of the Chief Executive Officer, Chief
Financial Officer, Treasurer, President, or any Vice President of the Borrower
or any other officer of the
2
<PAGE> 3
Borrower which is designated in writing to the Lender by any of the foregoing
officers of the Borrower as being authorized to take actions or give notices as
provided in this Agreement.
"BENEFIT PLAN" shall mean an employee pension benefit plan of Borrower or an
ERISA Affiliate, as defined in Section 3(2) of ERISA, which is subject to Title
IV of ERISA.
"BORROWER" shall mean Minuteman International, Inc., an Illinois corporation
with its chief executive office and principal place of business at 111 South
Rohlwing Road, Addison, Illinois 60101.
"BORROWER'S BOOKS" shall mean all of Borrower's books and records including,
but not limited to: minute books; ledgers; records indicating, summarizing, or
evidencing Borrowers assets, liabilities; records indicating, summarizing, or
evidencing Borrower's business operations or financial condition; records
indicating, summarizing, or evidencing Borrower's compliance with or problems
or activities concerning Environmental Laws; and all computer programs, disc or
tape files, printouts, runs, and other computer prepared information and the
equipment containing such information and any software necessary to operate the
same.
"BORROWER'S LOAN ACCOUNT" shall mean a loan account maintained by Lender on its
books in which shall be recorded (i) all loans and advances made by Lender to
Borrower pursuant to this Agreement, (ii) all payments made by Borrower on all
such loans and advances, and (iii) all other appropriate debits and credits as
provided in this Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or other day
on which commercial banks in Illinois are required to be closed, or any other
day on which dealings are not carried on in the applicable offshore dollar
interbank market.
"CLOSING" shall have the meaning set forth in Section 4.1 hereof.
"CODE" shall mean the Uniform Commercial Code of the State of Illinois as in
effect from time to time during the Initial Term and any renewal term hereof
and any and all terms used in this Agreement which are not otherwise defined
herein but are defined in the Code shall be construed and defined in accordance
with the meaning and definition ascribed to such terms under the Code.
"COMMITMENTS" shall mean Lender's Revolving Loan Commitment and Term Loan
Commitment.
"DAILY BALANCES" shall mean the amount determined by taking the amount of the
Revolving Loans owed at the begging of the given day, adding any Revolving
Loans advanced or incurred on such date, and subtracting any payments or
collections of Revolving Loans which are deemed to be paid on that date under
the provisions of this Agreement.
"DEFAULT RATE" shall have the meaning set forth in Section 2.5(b) hereof.
3
<PAGE> 4
"EBIT" means, as to Borrower for any Fiscal Quarter, the sum of (without
duplication)(i) net income for that Fiscal Quarter, less any extraordinary
gains or losses, (ii) Interest Expense of Borrower for that Fiscal Quarter,
and (iii) income taxes paid or provided for by Borrower for that Fiscal
Quarter, all determined in accordance with Generally Accepted Accounting
Principles consistently applied.
"EBITDA" means, as to Borrower for any Fiscal Quarter, the sum of (without
duplication) (i) net income for that Fiscal Quarter, less any extraordinary
gains or losses, (ii) Interest Expense of Borrower for that Fiscal Quarter,
(iii) depreciation and amortization expenses of Borrower for that Fiscal
Quarter, and (iv) income taxes paid or provided for by Borrower for that Fiscal
Quarter, all determined in accordance with Generally Accepted Accounting
Principles consistently applied.
"EFFECTIVE DATE" shall mean the date on which the conditions precedent for
initial loans under Section 4 hereof have been satisfied and the initial
Revolving Loan or Term Loan has been made.
"ENVIRONMENTAL LAWS" shall mean any applicable laws, statutes, rules,
regulations, orders, consent decrees, permits or licenses of any governmental
authority, relating to prevention, remediation, reduction or control of
pollution, or protection of the environment, natural resources and/or human
health and safety, including, without limitation, such applicable laws,
statutes, rules, regulations, orders, consent decrees, permits or licenses
relating to (a) solid waste and/or Hazardous Materials treatment, storage,
disposal, generation and transportation, (b) air, water, and noise pollution,
(c) soil, ground, water or groundwater contamination, (d) the generation,
handling, storage, transportation or Release into the environment of Hazardous
Materials, and (e) regulation of underground and above ground storage tanks.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and all references to sections thereof shall include such sections and
any predecessor and successor provisions thereto.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which, together with Borrower, would be treated as a single
employer under Section 4001(a)(14) of ERISA or IRC Section 414(b), (c), (m),
(n) or (o), as applicable.
"EVENT OF DEFAULT" shall mean the occurrence of any one or more of the events
set forth in Section 10 of this Agreement.
"FISCAL MONTH" shall mean those periods of approximately one-month duration
used by Borrower for accounting purposes, as more fully so forth on Schedule 1
hereto.
"FISCAL QUARTER" shall mean each fiscal period of Borrower consisting of three
Fiscal Months and of approximately a 13-week duration, which is used by
Borrower for accounting purposes.
4
<PAGE> 5
"FISCAL YEAR" shall mean with respect to Borrower, the fiscal year of Borrower
ending on December 31st.
"FIXED CHARGE COVERAGE RATIO" shall mean, at the end of any Fiscal Quarter, the
ratio of (a) EBITDA to (b) current maturities of long term debt and capitalized
leases paid or scheduled to be paid during such period, Interest Expanse, any
prepayments on any Indebtedness (except prepayments on trade payables,
Revolving Loans and Term Loans) paid during such period, for such Fiscal
Quarter plus the 3 immediately preceding Fiscal Quarters.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean, with respect to any date
of determination, generally accepted accounting principles as used by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants consistently applied and maintained throughout the periods
indicated.
"HAZARDOUS MATERIALS" shall mean any flammable or explosive materials,
petroleum (including crude oil), radioactive materials, hazardous wastes, toxic
substances or related hazardous materials, including without limitation
polychlorinated biphenyls, friable asbestos, and any substances defined as, or
included in the definition of toxic or hazardous substances, wastes, or
materials under any federal or applicable state or local laws, ordinances,
rules or regulations including Environmental Laws.
"INDEBTEDNESS" shall mean, with respect to any Person, (a) indebtedness for
borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obliger
or otherwise, including without limitation accounts payable and accrued
indebtedness owed by such Person or any commitment by which such Person assures
a creditor against loss, (b) indebtedness guaranteed in any manner by such
Person, including guarantees in the form of an agreement to repurchase or
reimburse, (c) obligations under leases which shall have been or should be, in
accordance with Generally Accepted Accounting Principles, recorded as capital
leases, in respect of which obligations such Person is liable, contingently or
otherwise, as obliger, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss, and (d) any unfunded
obligation of such Person to any Benefit Plan or Multi-employer Plan; provided,
however, any amounts in the nature of accrued vacation, commissions and
overtime pay shall not be considered Indebtedness hereunder.
"INITIAL TERM" shall have the meaning set forth in Section 3.1 hereof.
"INSOLVENCY PROCEEDING" shall mean, with respect to any Person, any proceeding
commenced by or against such Person, under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy, reorganization or
insolvency law, or any assignment for the benefit of creditors, formal or
informal moratorium, compositions or extensions with some or all creditors of
such Person.
5
<PAGE> 6
"INTEREST EXPENSE" shall mean, for any period, for the Borrower and determined
in accordance with Generally Accepted Accounting Principles, (i) gross interest
expense for the period (including that portion of capital leases attributable
to Interest), Plus (ii) any payments made under interest rate Swap Contracts to
the extent not included in clause (i) of this definition, and (iii) the sum of
any payments received under interest rate Swap Contracts and up to $50,000 of
any other interest received on a rolling twelve-month basis.
"INTEREST PAYMENT DATE" shall mean the last day of any Interest Period.
"INTEREST PERIOD" shall mean, with respect to (A) any LIBOR Loan, the period
commencing on the borrowing date or on the conversion or continuation date of
such LIBOR Loan and ending on the numerically corresponding day (or, if there
is no numerically corresponding day, on the last day) in the calendar month
that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, and (B) any
Reference Rate Loan, the period commencing on the date of conversion of such
Loan to a Reference Rate Loan and ending on the last business day of each
calendar quarter, or the expiration or earlier termination of this Agreement,
whichever occurs first; provided, however, that (i) each such Interest Period
occurring after the initial Interest Period shall commence on the day on which
the preceding Interest Period expires, (ii) if any Interest Period would end on
a day that shall not be a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless, with respect to Eurodollar Loans
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the immediately preceding
Business Day, (iii) no Interest Period with respect to any Revolving Loan shall
end later than the expiration of the term of this Agreement, and (iv) interest
shall accrue from and including the first day of an Interest Period to and
including the last day of such Interest Period.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and all
references to sections thereof shall include such sections and any predecessor
and successor provisions thereto.
"JUDICIAL OFFICER OR ASSIGNEE" shall mean any trustee, receive, controller,
custodian, assignee for the benefit of creditors or any other Person or entity
having powers or duties like or similar to the powers and duties of a trustee,
receiver, controller, custodian, or assignee for the benefit of creditors.
"LIBOR RATE OR EURODOLLAR RATE" shall mean, with respect to any LIBOR Loan for
any Interest Period, the interest rate per annum equal to the quotient obtained
by dividing (x) the rate of interest determined by Lender to be the average of
the rate per annum at which deposits in U.S. dollars are generally offered in
the London Interbank Bank at 11:00 A M. London time, three (3) Business Days
before the first day of such Interest Period, for a period equal to such
Interest Period and in the amount of the applicable LIBOR Loan, by (y) the
difference between one hundred percent (100%) and any applicable reserve
requirements (rounded upward to the nearest whole multiple of one hundredth
(1/100) of one percent (1%) per annum), including, without limitation, any
statutory maximum requirement for Lender to hold reserves for "Eurocurrency
Liabilities" under Regulation D of the Board of Governors of the Federal
Reserve System (or any similar reserves under any successor regulation or
regulations).
6
<PAGE> 7
"LIBOR LOAN" shall mean all of the Loans of Borrower unless Lender elects to
convert such Loan to a Reference Rate Loan as provided herein.
"LIEN" shall mean any mortgage, deed of trust, pledge, fixed or floating
charge, lien, security interest, or encumbrance or security arrangement of any
nature whatsoever, whether arising by written or oral agreement or by operation
of law, including without limitation any conditional sale or Idle retention
arrangement and any assignment, deposit arrangement or lease intended as or
having the effect of, security.
"LOAN DOCUMENTS" mean all agreements, instruments and documents, including
without limitation loan agreements (including without limitation this
Agreement), notes, subordination agreements, intercreditor agreements,
affidavits, certificates, powers of attorney, consents, opinions, notices, and
all amendments, supplements, restatements and renewals thereof, and all other
written matter, whether heretofore, now or hereafter executed by or on behalf
of Borrower, or any other Person in connection with the Obligations or the
transactions contemplated hereby, and delivered to Lender, together with all
agreements, instruments and documents referred to therein or contemplated
thereby whether heretofore, now or hereafter executed by or on behalf of
Borrower or any such other Persons and delivered to Lender, and all amendments,
supplements, restatements and renewals thereof, but not including any proposal
letter, commitment letter or other comparable documents delivered prior to the
date hereof and not expressly incorporated herein and made a part hereof.
"LOANS" shall mean the collective reference to the Revolving Loan and Term
Loan.
"MAXIMUM FACILITY" shall mean $19,000,000.
"MAXIMUM REVOLVING CREDIT FACILITY" shall mean $5,000,000.
"MULTI EMPLOYER PLAN" shall mean a plan described in Section 4001(a)(3) of
ERISA which covers employees of Borrower or any ERISA Affiliate.
"NOTES" shall mean the Revolving Loan Note and Term Loan Note.
"OBLIGATIONS" shall mean all loans, advances, overdraws, debts, liabilities
(including without limitation any and all amounts charged to Borrower's account
pursuant to any agreement authorizing Lender to charge Borrower's Loan
Account), obligations, obligations with respect to Permitted Swap Obligations,
covenants, lease payments, guarantees and duties owing by Borrower Lender of
any kind or description (whether advanced pursuant to or evidenced by this
Agreement, by the Revolving Loan Note and Term Loan Note, by any other Loan
Document or other agreement, instrument or document or otherwise), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including without limitation all interest, all
Out-of-Pocket Fees and Costs which Borrower is required to pay or reimburse by
this Agreement or any other Loan Document, by law or otherwise.
7
<PAGE> 8
"OUT-OF-POCKET FEES AND COSTS" shall have the meaning set forth in Section 2.6
hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
agency.
"PERMITTED LIENS" shall have the meaning set forth in Section 6.1 hereof.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or otherwise) of
the Borrower existing or arising under Swap Contracts, provided that each of
the following criteria is satisfied: (i) such obligations are entered into by
Borrower either to mitigate risks associated with the Term Loans or in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by Borrower, or changes in the value of securities issued by
Borrower in conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation; (ii) such Swap
Contracts do not contain (a) any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party, or (b) any provisions creating or permitting the declaration
of an event of default, termination event or similar event upon the occurrence
of an Event of Default hereunder (other than an Event of Default under
subsection 10.1). Any Swap Contract entered into by Borrower with LaSalle or
ABN-AMRO is considered a Permitted Swap Obligation hereunder.
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, end or governmental entity.
"POTENTIAL DEFAULT" shall mean any event which through the passage of time,
service of notice or both, would mature into an Event of Default.
"PROHIBITED TRANSACTION" shall mean any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Sections 4975(c)(2) or (d) of the IRC, and which could result in any
excise tax, fine, penalty or other liability being imposed on Borrower.
"PURCHASE" shall mean the acquisition of AAR PowerBoss by Borrower.
"REFERENCE RATE" shall mean the variable per annum rate of interest announced
from time to time by LaSalle at its corporate headquarters in Chicago,
Illinois, as its Prime or equivalent rate. The "Reference Rate" is one of
LaSalle's index rates and merely serves as a basis under which effective rates
of interest are calculated for loans making reference thereto and may not be
the lowest or best rate at which LaSalle calculates interest or extends credit.
8
<PAGE> 9
"REFERENCE RATE LOAN" shall mean any Loan with respect to which Lender shall
have required an interest rate based upon the Reference Rate in accordance with
the provisions of Section 2 of this Agreement.
"RELEASE" shall mean any actual or threatened past, present or future
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, seeping, injecting, escaping, leaching, dumping or disposing,
whether intentional or not.
"REPORTABLE EVENT" shall mean a reportable event described in Section 4043 of
ERISA or the regulations thereunder, for which the thirty (30) day notice
requirement has not been waived.
"REVOLVING LOAN NOTE" shall have the meaning set forth in Section 2.1 hereof.
"REVOLVING LOAN TERMINATION DATE" shall mean November 17, 1999.
"REVOLVING LOAN" shall have the meaning set forth in Section 2.1 hereof.
"SUBORDINATED INDEBTEDNESS" shall mean Borrower's Indebtedness to any Person
subordinated to the repayment of the Obligations on terms acceptable to Lender,
including.
"SUBSIDIARY" shall mean any corporation of which more than fifty percent (50%)
of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether
at the time stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned by Borrower, or any partnership or
joint venture of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by Borrower.
"SWAP CONTRACT" means any agreement, in writing, relating to any transaction
that its a rate swap, basis swap, forward rate transaction, commodity swap,
equity or equity index swap, interest rate option, cap, collar or floor
transaction, currency swap, cross currency rate swap, currency option or any
other similar transaction (including, the option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing all
or any of the foregoing.
"TANGIBLE ASSETS" shall mean the total of all assets appearing on a balance
sheet of the Borrower prepared in accordance with Generally Accepted Accounting
Principals (with inventory valued on a first in/first out basis), after
deducting all proper reserves (including reserves for depreciation,
obsolescence and amortization) less the sum of (i) goodwill, patents,
trademarks, prepaid expenses, deposits, deferred charges and other personal
property which is classified as intangible property in accordance with
Generally Accepted Accounting Principals, and (ii) any amounts due from
shareholders, affiliates, officers or employees of Borrower.
9
<PAGE> 10
"TANGIBLE NET WORTH" Shall mean at any time the total of (a) Tangible Assets
less liabilities, plus (b) the unpaid principal amount of Subordinated Debt.
"TERM LOANS" shall have the meaning set forth in Section 2.2 of this Agreement.
"TERM LOAN NOTES" shall have the meaning set forth in Section 2.2 of this
Agreement.
"TERM LOAN TERMINATION DATE" shall have the meaning set forth in Section 2.2 of
this Agreement.
"TOTAL DEBT" shall mean the Maximum Facility hereunder, $19,000,000.
"TOTAL DEBT TO EBIDTA RATIO" shall mean, at the end of any Fiscal Quarter, the
ratio of (i) Total Debt to (ii) the EBITDA for such Fiscal Quarter plus the 3
immediately preceding Fiscal Quarters.
"UNCURED DEFAULT" shall mean an Event of Default which shall be continuing.
1.2 ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily given
them in accordance with Generally Accepted Accounting Principles. In the event
that changes in Generally Accepted Accounting Principles shall be mandated by
the Financial Accounting Standards Board and/or the American Institute of
Certified Public Accountants or any similar accounting body of comparable
standing, or shall be recommended by Borrower's certified public accountants,
to the extent that such changes would modify such accounting terms or the
interpretation or computation thereof as contemplated by this Agreement at the
time of execution hereof, then in such event such changes shall be followed in
defining such accounting terms only after the Borrower and Lender shall have
agreed to amend this Agreement to reflect the original intent of such terms in
light of such changes, and such terms shall continue to be applied and
interpreted without such change until such agreement.
1.3 CERTAIN MATTERS OF CONSTRUCTION. The terms "herein" "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or subdivision. Any pronoun
used shall be deemed to cover all genders. The section titles, table of
contents and list of exhibits appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any instruments or agreements,
including, without limitation, references to any of the Loan Documents shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof. The Recitals to this Agreement are
incorporated into this Agreement in their entirety and deemed to be a part
hereof.
2. LOANS; FEES; TERMS OF PAYMENT
10
<PAGE> 11
2.1 REVOLVING CREDIT FACILITY. Subject to the terms and provisions of this
Agreement including without limitation, that no Event of Default or Potential
Default has occurred and all other conditions precedent to lending under
Section 4 hereof have been satisfied, upon the request of Borrower, made at any
time and from time to time until the Revolving Loan Termination Date, Lender
agrees to make loans and advances (hereinafter individually referred to as a
"Revolving Loan" and collectively as "Revolving Loans") to Borrower from time
to time so long as the aggregate amount of the Revolving Loans outstanding at
any time does not exceed the Maximum Revolving Credit Facility. The Revolving
Loans shall be evidenced by, and repayable in accordance with, Revolving Loan
Notes substantially in the form of Exhibit B ("Revolving Loan Notes").
2.2 TERM LOAN FACILITY. Subject to the terms and provisions of this
Agreement, at the time of Closing hereunder, upon fulfillment of all the
conditions precedent to any Loans under Section 4 hereof, Lender agrees to make
a term loan to Borrower in the amount of $14,000,000 (the "Term Loan") on the
date hereof. The Term Loan shall be evidenced by, and repayable in accordance
with, the Term Loan Note substantially in the form of Exhibit C ("Term Loan
Note"). The outstanding principal balance of the Term Loan shall be payable in
twelve (12) semi-annual installments each in the amount set forth below,
payable on May 18th and November 18th each year commencing May 18, 2000, with a
final payment of the then outstanding principal balance and all interest
accrued thereon on November 18, 2005 (the "Term Loan Termination Date"):
<TABLE>
<CAPTION>
Installment Semi-Annual Payment
----------- -------------------
<S> <C>
1 $750,000
2 $750,000
3 $750,000
4 $750,000
5 $750,000
6 $750,000
7 $750,000
8 $750,000
9 $750,000
10 $750,000
11 $750,000
12 $5,750,000
TOTAL $14,000,000
</TABLE>
2.3 BORROWING PROCEDURES. (a) Lender shall have received, on or before
two (2) Business Days prior to the date a Revolving Loan is to be made, (i) an
oral request from Borrower for a Revolving Loan in a specific amount (and a
request in writing, which shall be delivered to Lender on the same Business
Day, executed by an Authorized Representative of Borrower), and (ii) copies of
all other documents which the Borrower is required to deliver to Lender
hereunder. If such
11
<PAGE> 12
request for a Revolving Loan is received by Lender orally before 12:00 p.m.
Chicago time two (2) Business Days prior to the date a LIBOR Loan is to be
made, subject to the other terms and conditions of this Agreement, Lender will
make such Revolving Loan on the applicable day on which such Revolving Loan is
to be funded hereunder, subject to any delays beyond Lender's reasonable
control, provided that Lender shall not be liable for any damages or
liabilities for the failure to so make any Revolving Loan on the day requested
unless such failure was due to Lender's gross negligence or wilful misconduct.
If no Interest Period is specified with respect to a LIBOR Loan in such notice,
then Borrower shall be deemed to have selected an Interest Period of one
month's duration.
2.4 PAYMENTS AND PREPAYMENTS. Borrower shall make each payment in respect
of the principal of and interest on the Revolving Loans, Term Loans and any
other payments due under this Agreement not later than 12:00 p.m. Chicago time
on the day when due, in U.S. dollars, to the Lender in immediately available
funds.
(a) Borrower shall, at the time of making such payment under this
Agreement, any Revolving Loan Note, or any Term Loan Note, specify to the
Lender the Revolving Loans, Term Loan or other amounts payable by Borrower
hereunder to which such payment is to be applied (and in the event that it
fails to so specify, or if an Event of Default has occurred and is an Uncured
Default, the Lender shall allocate such payment in such manner as Lender may
determine to be appropriate.
(b) Subject to Section 3.4 of this Agreement and except as otherwise
provided herein, any prepayment of the Obligations by Borrower shall be without
premium or penalty, other than the imposition of the Default Rate of interest,
where applicable. Except as otherwise provided herein, any prepayments of the
Term Loan shall be applied pro rata to the installments due thereunder in the
inverse order of their maturity.
2.5 INTEREST. (a) RATE. Each Loan shall bear interest on the unpaid
principal balance thereof at a rate per annum (computed on the basis of the
actual number of days elapsed over a 360-day year) equal to the Libor Rate for
the Interest Period in effect plus the Applicable Margin (the "Eurodollar
Rate") (unless the Reference Rate is used as provided herein). Interest on
Loans for 1, 2, 3 and 6-month Interest Periods shall be payable in arrears on
the applicable Interest Payment Date. The interest rate on the Loans from the
date of Closing through the date on which Borrower submits its first Compliance
Certificate (as required pursuant to Section 8.1 hereof) shall be calculated at
the applicable Level III rate set forth on Annex A hereto. Thereafter, the
interest rate shall be calculated as set forth in this Section 2.
(b) DEFAULT RATE. Notwithstanding the foregoing, the Revolving Loan and
Term Loan shall bear interest, from and after written notice by Lender to
Borrower of the occurrence of an Event of Default and for so long as an Event
of Default shall be an Uncured Default and without constituting a waiver of any
such Event of Default, on the balances owing from time to time, at a rate per
annum equal to two (2) percentage points above the Eurodollar Rate (or
Reference Rate, as the
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case may be) then in effect (the "Default Rate"), payable monthly in arrears
on the last day of each month.
(c) MAXIMUM INTEREST. It is the intention of Lender and Borrower to
comply with the laws of the State of Illinois, and notwithstanding any
provision to the contrary contained herein or in the other Loan Documents,
Borrower shall not be required to pay, and Lender shall not be permitted to
collect, any amount in excess of the maximum amount of interest permitted by
applicable law ("Excess Interest"). If any Excess Interest is provided for or
determined to have been provided for in this Agreement or any other Loan
Documents by a court of competent jurisdiction, then in such event (i) the
provisions of this Section shall govern and control; (ii) Borrower shall not be
obligated to pay any Excess Interest; (iii) any Excess Interest that Lender may
have received hereunder shall be, at Lender's option, (A) applied as a credit
against either the outstanding principal balance of the Loans or accrued and
unpaid interest hereon, (B) refunded to the Borrower thereof, or (C) any
combination of the foregoing; (iv) the interest rate(s) provided for herein
shall be automatically reduced to the maximum rate allowed under applicable
law, and this Agreement and the other Loan Documents shall be deemed to have
been, and shall be, reformed and modified to reflect such reduction; and (v)
Borrower shall not have any action against Lender for any damages arising out
of the payment or collection of any Excess Interest. Notwithstanding the
foregoing, if any interest payment or other charge or fee payable hereunder or
under any of the other Loan Documents exceeds the maximum amount then permitted
by applicable law, then to the extent permitted by law, Borrower shall be
obligated to pay the maximum amount then permitted by applicable law and
Borrower shall continue to pay the maximum amount from time to time permitted
by applicable law until all such interest payments and other charges and fees
otherwise due hereunder or under any of the other Loan Documents (in the
absence of such restraint imposed by applicable law) have been paid in full.
(d) CHARGES TO LOAN ACCOUNT. Lender may, at its option, charge any
interest and fees payable hereunder or under any of the other Loan Documents to
Borrower's Loan Account, and any amounts so charged shall thereupon constitute
Obligations hereunder, and shall thereafter accrue interest as provided in this
Agreement.
2.6 FEES. In consideration of Lender's establishing the Maximum Facility
hereunder and making of the Loans hereunder, Borrower shall pay to Lender:
(a) Loan Fee. A one (1) time loan fee in the amount of Twenty-One
Thousand and No/100 Dollars ($21,000.00), due upon Closing.
(b) Out-of-Pocket Fees. All reasonable out-of-pocket fees, costs and
expenses ("Out-of-Pocket Fees and Costs"), incurred by Lender in connection
with any matters contemplated by or arising out of this Agreement, or any other
Loan Document, all of which shall be part of the Obligations, payable on
demand, including without limitation the following: (i) expenses in verifying
or inspecting the Borrower's Books with respect hereto; (ii) wire transfer fees
in connection with Lender's forwarding to Borrower the proceeds of the
Revolving Loan hereunder; (iii) photocopying and other mechanical or electronic
reproduction expenses in connection with Lender's
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rights of inspection under this Agreement or any other Loan Document or in
connection with any service utilized by Lender to perform such functions; (iv)
expenses in connection with the documentation, negotiation and closing of the
Revolving Loan and Term Loan (including any and all amendments or waivers with
respect hereto), including without limitation, reasonable fees, costs and
expenses of Lender for attorneys and paralegals (provided that such costs set
forth in (i) through (iv) shall not exceed, in the aggregate, $5,000.00); (v)
costs and expenses to correct any Event of Default or enforce any provision
hereof.
2.7 PAYMENT DATES. Any payment due under this Agreement on any day other
than a Business Day shall be due on the next succeeding Business Day, and such
payment shall bear interest in accordance herewith until actually received.
2.8 REGULATIONS AFFECTING LOANS. If (a) Regulation D or any other
regulation of the Board of Governors of the Federal Reserve System or any other
Federal regulation, or (b) after the date hereof, the adoption of any
applicable law, rule or regulation, or any change, amendment to, deletion from
or revision, modification or other change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or by any court, or compliance by Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency,
(i) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve Board), special
deposit, special assessment or similar requirement against assets of, deposits
with or for the account of, or credit extended by Lender; or
(ii) shall impose on Lender any other condition affecting the Loans; and
the result of any of the foregoing is to increase the cost to Lender of making
or maintaining the Loans, or to reduce the amount of any sum received or
receivable by Lender under this Agreement or under any Note with respect
thereto, then on the earlier of termination of this Agreement or fifteen days
after demand, unless such increased cost is a direct result of an increase
required by a regulatory body in Lender's capital and Borrower immediately
notifies Lender in writing of its intention to prepay the Obligations in full
within ninety (90) days of such demand, and makes payment to Lender of the
Obligations within such ninety (90) day period, Borrower shall pay to Lender
from time to time such additional amount or amounts as Lender reasonably
determines will compensate Lender for such increased cost or such reduction.
2.9 INDEMNITY. The Borrower shall indemnify Lender against any loss, fee,
claim, damage, liability or expense which Lender may sustain or incur as a
consequence of (i) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in this Agreement, (ii)
any failure by the Borrower to borrow hereunder after notice of borrowing
pursuant to this Agreement has been given, (iii) any payment or prepayment
required by any provision of this Agreement, other than Section 2.10 of this
Agreement, and made on a date other than the last day of the applicable
Interest Period, or (iv) the occurrence of any Event of Default.
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Such loss or reasonable expense shall include, without limitation, an amount
equal to the excess, if any, as reasonably determined by Lender of its cost of
obtaining the funds for the Loan being paid or prepaid or not borrowed (based
on the Libor Rate applicable thereto) for the period from the date of such
payment, prepayment or failure to borrow to the last day of the Interest Period
for such Loan (or, in the case of a failure to borrow, the Interest Period for
such Loan which would have commenced on the date of such failure to borrow)
over the amount of interest (as reasonably determined by Lender) that could be
realized by Lender in re-employing during such period the funds so paid,
prepaid or not borrowed. A certificate of Lender setting forth any amount or
amounts which Lender is entitled to receive pursuant to this Section 2.9 shall
be conclusive absent manifest error.
2.10 CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary herein contained, if any
change in any law or regulation or in the interpretation thereof by any
governmental authority charged with the administration or interpretation
thereof shall make it unlawful for any Lender to make or maintain any LIBOR
Loan or to give effect to its obligations as contemplated hereby (an
"Illegality"), or if Lender determine that maintenance of LIBOR Loans would
cause it to implement or modify any reserve, special deposit or assessment or
other requirement, or impose any other condition on Lender affecting the
Revolving Loan or the Term Loan not applicable to Lender on the Closing (each
of the foregoing circumstances called a "Regulatory Action"), then, by written
notice to the Borrower, Lender shall:
(i) declare that LIBOR Loans will not thereafter be made by Lender
hereunder, whereupon the Borrower shall be prohibited from requesting LIBOR
Loans from Lender hereunder unless such declaration is subsequently withdrawn;
provided, however, that if after the date of any such declaration there shall
occur any change in law or regulation or in the interpretation thereof by any
government authority charged with the administration or interpretation thereof
that shall eliminate such Illegality, Lender shall as promptly as reasonably
practicable notify the Borrower of such occurrence and withdraw such
declaration; and
(ii) require that all outstanding LIBOR Loans made by it be converted
loans at the Reference Rate, in which event all Loans shall be automatically
converted to loans at the Reference Rate as of the effective date of such
notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.10, a notice to the Borrower by Lender
pursuant to paragraph (a) above shall be effective on the date of receipt by
the Borrower.
2.11 UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN, OR INADEQUACY
OF LIBOR RATE. If on or prior to the first day of any Interest Period for any
Borrowing of LIBOR Loans:
(a) Lender advises the Borrower that deposits in U. S. dollars (in the
applicable amounts) are not being offered to it in the off-shore U.S. dollar
interbank market for such Interest Period, or
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(b) Lender determines that the Libor Rate will not adequately and fairly
reflect the cost to such Lender of funding the Loans for such Interest Period,
then the Lender shall forthwith give notice thereof to the Borrower and the
Lender, whereupon until the Lender notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Lender
to make Loans shall be suspended without liability to Lender.
2.12 INCREASED COST AND REDUCED RETURN; LIBOR LOANS. If on or after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(a) shall subject Lender to any tax, duty or other charge with respect to
the Revolving Loan Note or the Term Loan Note, or shall change the basis of
taxation of payments to Lender of the principal of or interest on the Loans or
any other amounts due under this Agreement in respect of its Loans or its
obligation to make Loans (except for changes in the rate of tax on the overall
net income of Lender imposed by the jurisdiction in which Lender's principal
executive office); or
(b) shall impose, modify or deem applicable any reserve, special deposit
or similar requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, against assets
of, deposits with or for the account of, or credit extended by, Lender (or its
Applicable Lending Office) or shall impose on Lender or on the interbank market
any other condition affecting the Revolving Loan Note, the Term Loan Note, or
its obligation to make Loans; and the result of any of the foregoing is to
increase the cost to Lender of making or maintaining any Loan, or to reduce
the amount of any sum received or receivable by Lender under this Agreement or
under the Revolving Loan Note or the Term Loan Note with respect thereto, by an
amount deemed reasonably and in good faith by Lender to be material, then, if
such Loan is for an Interest Period of more than ninety (90) days, Borrower
shall, within fifteen (15) days after demand by Lender, be obligated to pay
Lender such additional amount or amounts as will compensate lender for such
increased cost or reduction (computed commencing on the effective date of any
event mentioned herein). Lender agrees to use its best efforts to give the
Borrower notice of the occurrence of any event mentioned herein. In addition,
Lender may, upon notice to Borrower, elect to increase the interest rate
applicable to all Loans made subsequent thereto, to compensate Lender for such
increased cost or reduced yield.
2.13 DISCRETION OF LENDER AS TO MANNER OF FUNDING. Notwithstanding any
other provision of this Agreement, Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if Lender had actually funded and
maintained the Loans through the purchase of deposits in the interbank market
having a maturity
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corresponding to each Loan's Interest Period and bearing an interest rate equal
to the Libor Rate for such interest period.
2.14 ADJUSTMENTS TO INTEREST RATES. The LIBOR Rate shall be adjusted as
to the Applicable Margin based on changes in the Total Debt to EBITDA Ratio.
Such adjustments shall be made by the Bank without notice to Borrower, based on
such Ratio as of the end of a Fiscal Quarter. The Applicable Margin shall be
reduced to a specified level only in the event that (A) no Potential Default or
Event of Default exists as of the date of determination and (B) the required
Total Debt to EBITDA Ratio has been satisfied. All adjustments shall be
effective as follows:
(a) Lender shall make its Applicable Margin determination within 10
Business Days of the receipt by Lender (the "Review Periods) of Borrower's
quarterly or annual financial statements and Compliance Certificate indicating
that an adjustment in the Applicable Margin is warranted;
(b) any reduction or increase in the Applicable Margin after the Review
Period shall be effective on the first day of the Fiscal Quarter following such
increase or reduction, and
(c) if any Financial Statements necessary for calculation of the Total
Debt to EBITDA Ratio provided for in this Section 2.14 are not delivered to the
Lender within the time periods specified in Section 8.2, and such statements
when ultimately delivered give rise to an increase or decrease in the
applicable Margin, such increase or decrease shall be retroactive to the date
such Financial Statements were required to be delivered pursuant to Section
8.2.
3. TERMS OF THIS AGREEMENT; PREPAYMENTS
3.1 INITIAL TERM AND RENEWAL TERMS. This Agreement shall have a term (the
"Initial Term") commencing on the Effective Date and expiring on November 17,
1999 with respect to the Revolving Loan Note, and on November 18, 2005, with
respect to the Term Loan Note, and shall not be extended thereafter except by
written agreement of the parties hereto.
3.2 LENDER'S RIGHT TO TERMINATE. Notwithstanding the foregoing, upon the
occurrence of an Event of Default, Lender may in accordance with Sections 11.1
of this Agreement terminate this Agreement without notice, except that this
Agreement shall terminate automatically upon an Event of Default under Section
10.6 or 10 7.
3.3 EFFECTS OF TERMINATION. On the date of termination or expiration of
this Agreement, all Obligations owed by Borrower shall become immediately due
and payable without notice or demand and shall be repaid in cash or by a wire
transfer of immediately available funds.
3.4 PREPAYMENTS. Borrower may borrow, repay and reborrow the Revolving
Loan in whole or in part at any time subject to the terms of this Agreement.
Borrower may repay and prepay the Term Loan in whole or in part at any time.
Payments and prepayments of the Term Loan may not be reborrowed.
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3.5 TERMINATION; REDUCTION OF MAXIMUM CREDIT FACILITY. Subject to the
terms of Section 3.4 of this Agreement and this Section 3.5, Borrower may, at
any time, on thirty (30) days written notice prior to the end of any month,
prepay in full the Loans and terminate this Agreement by paying to Lender, in
cash or by a wire transfer of immediately available funds, the Obligations then
outstanding.
4. CONDITIONS PRECEDENT
4.1 CLOSING; CONDITIONS TO INITIAL LOAN AND CLOSING. The initial Revolving
Loan and Term Loan hereunder shall be made upon the Effective Date hereunder at
the offices of Lender's counsel ("Closing"). In addition to those conditions
set forth hereunder in Section 4.2 with respect to all Loans hereunder, prior
to or contemporaneously with the making of the initial Revolving Loan and/or
Term Loan hereunder at Closing, Lender shall be satisfied that all of the
following conditions precedent shall have been satisfied in a manner
satisfactory to Lender.
(a) SATISFACTORY DUE DILIGENCE. Lender shall have completed and shall be
satisfied with the results of (i) the Borrower's most recent interim financial
statements; and (ii) any governmental approvals, waivers or consents.
(b) NO ADVERSE CHANGE. There shall have been, as determined by Lender in
its discretion, (i) no material adverse change since June 30, 1998 in the
operations (financial or otherwise) of Borrower, and (ii) no material
litigation or claims with respect to this Agreement which is adverse to
Borrower.
(c) REQUIRED DOCUMENTS. Lender shall have received all of the following
documents, each in form and substance satisfactory to Lender and its counsel,
duly executed and dated the Effective Date (or such other date prior thereto as
shall be satisfactory to Lender):
(i) Agreement. Multiple copies of this Agreement as requested by Lender.
(ii) Revolving Loan Note. The Revolving Loan Note.
(iii) Term Loan Note. The Term Loan Note.
(iv) Organizational Documents. Copies, certified no earlier than
thirty days before the Closing, by the Secretary of State of the
State of Illinois, of the Articles of Incorporation, and any
amendments thereto, of the Borrower.
(v) Certificate of Existence. A certificate of the Secretary of State
of the State of Illinois dated no earlier than thirty days before
the Closing, as to the good standing of Borrower in Illinois and
in each other State in which the failure of Borrower to be qualified
to transact business as a foreign corporation would have a material
adverse impact on Borrower.
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(vi) Opinion of Counsel. The written opinion, in a form acceptable to
Lender, of Borrower's counsel, dated as of the date hereof and
addressed to Lender
(vii) Financial Statements. All information, Financial Statements, or
notices to be delivered to the Lender pursuant to Section 8 hereof;
(viii) Letter of Direction. Copies of a letter of direction with
wire transfers or other appropriate instructions directing Lender
to disburse funds in appropriate amounts to specific accounts;
(ix) Directors' Consents. Certified copies of the unanimous written
consents, or resolutions duly adopted at meetings, of the Board of
Directors of the Borrower, in form reasonably acceptable to Lender,
authorizing the execution, delivery and performance by the Borrower
of this Agreement, the Notes and the other Loan Documents.
(x) Borrower's Deliveries. In form and substance reasonably
satisfactory to the Lender, each and every agreement, document,
note, release, certificate, notice, affidavit, exhibit, schedule,
legal opinion or assignment, which the Lender may reasonably
request from the Borrower to effect the intent of this Agreement.
(xi) Completion of Transactions. Satisfactory evidence of completion
of the Purchase.
(xii) Other. Such other documents as Lender shall reasonably request.
(d) OUT-OF-POCKET FEES AND COSTS. Lender shall have received reimbursement
for all Out-of-Pocket Fees and Costs which then have been paid or accrued by
Lender, not to exceed $5,000.00.
4.2 CONDITION OF ALL LOANS. Notwithstanding any other provisions contained
in this Agreement, the making of each Loan shall be conditioned upon the
satisfaction of the matters set forth in this Section 4.2, and each request by
Borrower for a Revolving Loan shall constitute a representation to Lender that
each such condition set forth below has been met or satisfied.
(a) WARRANTIES AND REPRESENTATIONS. All of the warranties and
representations contained in this Agreement or any other Loan Document shall be
true and correct in all material respects on and as of the date of such
Revolving Loan as if made on such date and each request for a Revolving Loan
shall constitute an affirmation by Borrower that such warranties and
representations are then true and correct in all material respects (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
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(b) BORROWER'S REQUEST. Lender shall have received on or before 12:00 p.m.
central standard time two (2) Business Days prior to the date a Revolving Loan
is to be made a written or telephonic request from an officer of Borrower (or
any other Person believed by to be authorized by Borrower pursuant to Section
2.1), for a Revolving Loan in a specific amount. In addition, with respect to
a request for a Revolving Loan, Lender shall have received copies of all other
documents required to have been delivered to Lender hereunder. Lender shall be
entitled, but not required, to rely on oral requests for Revolving Loans from
officers from time to time designated by Borrower to Lender in writing, and
shall be fully protected in doing so.
(c) NO DEFAULT. As determined by Lender in its reasonable discretion, no
Potential Default shall have occurred or will result from such Revolving Loan
and no Event of Default shall have occurred which shall be an Uncured Default
or will result from such Revolving Loan.
(d) NO LITIGATION. (i) Except as set forth on Schedule 5.8 no-litigation,
investigation or proceeding before any court or other governmental authority
shall be pending or threatened against Borrower or any officer, director, or
employee of Borrower which, in the reasonable opinion of Lender, is likely to
have a material adverse effect on the condition, financial or otherwise,
business, property or results of operations of Borrower; and (ii) no
injunction, writ, restraining order, judgment, decree, or other order of any
nature which could reasonably have a material adverse effect on the condition,
financial or otherwise, business, property or results of operations of Borrower
shall have been issued or threatened by any court or other governmental
authority.
(e) OTHER REQUIREMENTS AND OTHER DOCUMENTS. Lender shall have received, in
form and substance reasonably satisfactory to it, all certificates, orders,
authorizations, consents, affidavits, schedules, instruments and other
documents which are provided for hereunder, or which Lender may at any time
reasonably request.
5. GENERAL CONTINUING WARRANTIES AND REPRESENTATIONS.
Borrower warrants, represents, covenants and agrees that:
5.1 OFFICE. The chief executive office or principal place of business of
Borrower is at the address indicated in Section 13 hereof and Borrower
covenants and agrees that it will not, during the term of thus Agreement,
without at least 45 days prior written notification to Lender.
5.2 EXISTENCE. Borrower is and shall at all times hereafter be a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its organization and is qualified and licensed to do
business, and is in good standing, in any state in which it conducts its
business or in which the failure to qualifier could have a material adverse
effect on the condition, financial or otherwise, business, property or results
of operations of Borrower.
5.3 AUTHORITY. Borrower has the right and power and is duly authorized to
enter into this Agreement and the other Loan Documents.
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5.4 VALIDITY. This Agreement and all of the other Loan Documents are the
legal, valid and binding obligations of Borrower, enforceable in accordance
with their terms, except as limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting the enforcement of creditor's
rights generally, and the application of general principles of equity and to
the extent that specific performance may be granted or denied in a court's
discretion.
5.5 NO BREACH. The execution by Borrower of this Agreement and the other
Loan Documents shall not constitute a breach of any provision contained in
Borrower's Articles of Incorporation or Bylaws, nor does it constitute an event
of default under any material agreement to which Borrower is now or hereafter
becomes a party, nor does it violate any order, decree or judgment of any court
or governmental commission or agency applicable to Borrower.
5.6 SOLVENCY. On the Effective Date both prior to and after the
transactions contemplated in connection with the Closing, and at all times
thereafter, the fair value of Borrower's assets is and shall be greater than
its liabilities; Borrower is and shall be able to pay its debts as they mature
and Borrower does not and will not have an unreasonably small amount of
capital. Borrower has and at all times hereafter will have sufficient capital
to carry on its business and transactions as now conducted and as planned to be
conducted in the future.
5.7 COMPLIANCE WITH LAWS. To the best of its knowledge, Borrower is in
compliance in all respects with all applicable laws, rules and regulations of
any governmental authority, including but not limited to the Securities Act of
1933, the Securities Exchange Act of 1934, the Fair Labor Standards Act,
Environmental Laws, laws relating to income, unemployment, payroll or social
security taxes and employee benefit plans (as defined in Section 3(3) of ERISA)
as required by ERISA, except for those laws, rules and regulations the
violation of which would not have a material adverse effect on the condition,
financial or otherwise, business, property or results of operations of
Borrower.
5.8 ACTIONS OR PROCEEDING. Except as disclosed on Schedule 5.8, there are
no actions or proceedings pending by or against Borrower before any court,
administrative agency or other governmental entity and Borrower has no
knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions involving
Borrower, or any breaches by Borrower or any other Person of any agreement to
which Borrower is a party, except for actions, proceedings, litigation,
investigations, claims, complaints, actions, prosecutions and breaches that
would not have a material adverse effect on the condition, financial or
otherwise, business, property or results of operations of Borrower or Lender's
ability to enforce its rights and remedies hereunder.
5.9 TRADEMARKS, LICENSES, ETC. Borrower owns or possesses rights to use
all licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names required to continue to conduct its business as
heretofore or presently conducted. To the best of Borrower's knowledge, after
diligent inquiry, no such license or trademark has been declared invalid, been
limited by order of any governmental authority or by agreement, or is the
subject of any
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infringement, interference or similar proceeding or challenge, except for those
licenses or trademarks which if challenged, limited or rendered invalid, would
not have a material adverse effect on the condition, financial or otherwise,
business, property or results of operations of Borrower or Lender's ability to
enforce its rights and remedies hereunder.
5.10 FINANCIAL STATEMENTS. All financial statements relating to Borrower
which have been or may hereafter be delivered by Borrower to Lender fairly
present the financial condition of Borrower and have been prepared in
accordance with Generally Accepted Accounting Principles, subject to year-end
adjustments and the absence of footnotes with respect to interim financial
statements, and there has been no material adverse change in the financial
condition of Borrower since the submission of such financial information to
Lender.
5.11 CONDUCT OF BUSINESS. Except as contemplated hereby or pursuant to the
Purchases, since the date of June 30, 1998, Borrower has not: (i) incurred any
debts, obligations, or liabilities (absolute, accrued, or contingent and
whether due or to become due) except current liabilities incurred in the
ordinary course of business, none of which (individually or in the aggregate)
materially and adversely affects the business or properties of Borrower; (ii)
paid any obligation or liability other than current liabilities in the ordinary
course of business, or discharged or satisfied any liens or encumbrances other
than those securing current liabilities, in each case in the ordinary course of
business; (iii) declared or made any payment to or distribution to its
stockholders as such, or purchased or redeemed any of its shares of capital
stock or obligated itself to do so; (iv) mortgaged, pledged, or subjected to
any lien any of its assets (tangible or intangible); (v) sold, transferred or
leased any of its assets except in the usual and ordinary course of business;
(vi) suffered any physical damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the properties or business of
Borrower; (vii) entered into any transaction other than in the usual and
ordinary course of business and other than as contemplated hereby; (viii)
encountered any labor difficulties or labor union organizing activities; (ix)
issued or sold any shares of capital stock or other securities or granted any
options or similar rights with respect thereto other than pursuant hereto; or
(x) agreed to do any of the foregoing other than pursuant hereto. There has
been no material adverse change in the business, financial condition,
operations or results of operations of Borrower since the date of June 30,
1998.
5.12 ENVIRONMENTAL LAWS. Except as disclosed on Schedule 5.12, to the
best of Borrower's knowledge after diligent inquiry: (i) Borrower and all
properties owned or operated by Borrower comply with all Environmental Laws;
(ii) Borrower is not subject to any actual or threatened judicial or
administrative proceeding, investigation or inquiry into the possibility of
violation of any Environmental Laws; (iii) Borrower and its properties are not
the subject of actual or threatened governmental authority investigation or
inquiry evaluating whether any remedial action is needed to respond to a
Release of any Hazardous Material or other substance into the environment, and
Borrower does not have knowledge or notice of the presence on or under any
property owned or operated by it, or of the Release of, any Hazardous Material;
(iv) there is no claim pending or threatened against Borrower relating to
damage, contribution, cost recovery compensation, loss, or injury resulting
from the Release of, or exposure to, any Hazardous Material; and (v) Borrower
has
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not filed, nor was required to file, any notice under any law, regulation or
rule indicating past or present generation, transportation, treatment, storage
or disposal of a Hazardous Material or reporting a Release of a Hazardous
Material into the environment and has not engaged in such activity other than
in accordance with Environmental Laws where failure to file such notice or
report will not have an adverse effect on Borrower. Borrower does not have any
known contingent liability in connection with any Release of any Hazardous
Material into the environment; and Borrower has not received notice nor has
reason to expect notice, of any potential liability under any Environmental
Law.
5.13 PERMITS AND LICENSES. Except as set forth on Schedule 5.13, Borrower
has been and is current and in good standing with respect to all governmental
approvals, permits, certificates, licenses, inspections, consents and
franchises (collectively, the "Licenses") necessary to continue to conduct its
business and to own or lease and operate its properties as heretofore
conducted, owned, leased or operated, including, without limitation, any and
all Licenses related to Environmental Laws.
5.14 ERISA. Neither Borrower, any ERISA Affiliate of Borrower, nor any
Benefit Plan is in violation in any material respect of any of the provisions
of ERISA or any of the qualification requirements of Section 401(a) of the IRC;
no Prohibited Transaction or Reportable Event has occurred with respect to any
Benefit Plan, nor has any Benefit Plan been the subject of a waiver of the
minimum funding standard under Section 412 of the IRC; nor has any Benefit Plan
experienced an accumulated funding deficiency under Section 412 of the IRC; nor
has any lien been imposed upon the Borrower or any ERISA Affiliate of Borrower
under Section 412(n) of the IRC; nor has any Benefit Plan been amended in such
a way that the security requirements of Section 401(a)(29) of the IRC apply; no
notice of intent to terminate a Benefit Plan has been distributed to affected
parties or filed with the PBGC under Section 4041 of ERISA, nor has any Benefit
Plan been terminated under Section 4041(e) of ERISA; the PBGC has not
instituted proceedings to laminate, or appoint a trustee to administer, a
Benefit Plan and no event has occurred or condition exists which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; neither Borrower nor
any ERISA Affiliate of Borrower would be liable for any amount pursuant to
Sections 4062, 4063 or 4064 of ERISA if all Benefit Plans terminated as of the
most recent valuation dates of such Benefit Plans; neither Borrower nor any
ERISA Affiliate of Borrower maintains any employee welfare benefit plan, as
defined in Section 3(1) of ERISA, which provides any benefits to an employee or
the employee's dependents with respect to claims incurred after the employee
separates from service other than is required by applicable law; and neither
Borrower nor any ERISA Affiliate of Borrower has incurred or expects to incur
any withdrawal liability to any Multiemployer Plan.
5.15 CUSTOMER AND TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no
present condition or state of facts or circumstances which would materially
affect adversely
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Borrower or prevent Borrower from conducting such business after the
consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
5.16 OTHER NAMES. The business conducted by Borrower has not been
conducted under any corporate, trade or fictitious name other than those names
listed on Schedule 5.16 hereto.
5.17 TAX OBLIGATIONS. Borrower has filed complete and materially correct
federal, state and local tax reports and returns required to be filed by it,
prepared in accordance with any applicable laws or regulations, and except for
extensions duly obtained, has either duly paid all taxes, duties and charges
owed by it, or made adequate provision for the payment thereof. There are no
material unresolved questions or claims concerning any tax liability of
Borrower. None of the transactions contemplated hereby or under any agreements
referred to hereunder will result in any material tax liability for Borrower or
result in any other material adverse tax consequence for Borrower.
5.18 EMPLOYEE CONTROVERSIES. There are no strikes, work stoppages or
controversies pending or, to the best of Borrower's knowledge after diligent
inquiry and investigation, threatened, between Borrower and any of its
employees, other than Employee grievances arising in the ordinary course of
business which are not, in the aggregate, material to the financial condition,
results of operations or business of Borrower.
5.19 INVESTMENT COMPANY ACT. Borrower is not an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
5.20 SUBSIDIARIES. As of the Closing, Borrower has no Subsidiaries other
than those specifically disclosed on Schedule 5.20 hereto.
5.21 FULL DISCLOSURE. To the best of Borrower's knowledge after diligent
inquiry, this Agreement, the financial statements delivered in connection
herewith, and the representations and warranties of Borrower herein and in any
other document delivered or to be delivered by or on behalf of Borrower, do not
and will not contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein or herein, in light of
the circumstances under which they was made, not misleading. To the best
knowledge of Borrower after diligent inquiry and investigation, there is no
material fact which Borrower has not disclosed to Lender in writing which
materially and adversely affects or, so far as Borrower can foresee, could
materially and adversely affect the assets, business, prospects, profits, or
condition (financial or otherwise) of Borrower, the rights of Lender or the
ability of Borrower to perform this Agreement.
5.22 YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries, if any,
have reviewed the areas within their business and operation which could be
adversely affected by, and have developed or are developing, a program to
address on a timely basis, the "Year 2000 Problem" (that
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is, the risk that computer applications used by the Borrower and its
Subsidiaries, if any, may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date on or
after December 31, 1999), and have made related appropriate inquiry of material
suppliers and vendors. Based on such review and program, the Borrower believes
that the "Year 2000 Problem" will not have a material adverse effect on the
Borrower's business and operations, financial condition, and ability to pay and
perform the Obligations. From time to time, at the reasonable request of Lender
the Borrower shall provide to Lender such updated information or documentation
as is requested regarding the status of its efforts to address the Year 2000
Problem.
6. NEGATIVE COVENANTS.
Borrower will not, without Lender's prior written consent:
6.1 SALE, TRANSFER OR ENCUMBRANCE OF ASSETS. Sell lease, pledge, encumber,
grant or permit a lien on (other than Permitted Liens as defined below in this
Section 6.1), or otherwise dispose of or transfer, whether by sale or
otherwise, any of Borrower's assets, except for (A) dividends to the extent
they comply with Section 9.3 hereof, (B) sales of inventory in the ordinary
course of business, or (C) sales of items of equipment which are obsolete,
worn-out or otherwise not useable in Borrower's business up to an aggregate of
$150,000 in sales proceeds in any Fiscal Year so long as (i) no Event of
Default which is an Uncured Default or Potential Default exists and (ii) where
such sales aggregate in excess of the sum of $500,000 in any Fiscal Year, the
proceeds thereof are applied to the principal balance of the Term Loan, to be
applied in inverse order of maturity of installments thereunder. For purposes
of this Agreement, "Permitted Liens" shall mean any or all of the following:
(i) liens to Lender, (ii) liens securing the payment of taxes, assessments,
levies, or other governmental charges not yet due and payable or which are
being contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles, (iii) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons imposed by law,
provided that the payment thereof is not yet required or payment is being
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles, (iv) liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws or to secure performance of
tenders, statutory obligations, surety bonds, government contracts, performance
and return-of-money bonds and other similar obligations (exclusive of
obligations in respect of the payment for borrowed money), (v) liens in
connection with capitalized or operating leases or purchase money security
interests for purchase of equipment up to an aggregate sum not to exceed
$1,000,000 for leases or purchases during any Fiscal Year, the documents
relating to such liens to be in form acceptable to Lender, (vi) liens arising
form precautionary UCC financing statement filings in respect of operating
leases, (vii) liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such liens is effectively stayed and all such
liens in the aggregate at any time to not exceed $100,000, (viii) easements,
rights of way, restrictions, encroachments, and other similar encumbrances and
minor defects in title incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount,
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and which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of the
Borrower, and (ix) liens listed on Schedule 6.1.
6.2 NAME OR IDENTITY CHANGE. Change Borrower's name, business structure,
or identity, or add any new fictitious name or create any Subsidiaries without
forty-five (45) days prior written notice to Lender.
6.3 GUARANTIES. Guarantee or otherwise become in any way liable with
respect to the obligations of any third party except by endorsement of
instruments or items of payments for deposit to the general account of Borrower
or which are transmitted or turned over to Lender, or in connection with
Permitted Swap Obligations.
6.4 CHANGE IN BUSINESS. Enter into any business not related to Borrower's
present business or make any change in Borrower's financial structure or in any
of its business objectives, purposes, or operations which could adversely
affect the ability of Borrower to repay the Obligations, or Lender's rights and
remedies hereunder, or create any Subsidiary.
6.5 LOANS AND INVESTMENTS. Make any advance, loan, investment or material
acquisition of assets other than (i) advances made to employees in the ordinary
course of business for moving, travel and business related expenses so long as
the aggregate amount of such advances do not exceed $50,000 in the aggregate
outstanding at any time; (ii) investments in short-term direct obligations of
the United States government; (iii) investments in negotiable certificates of
deposit issued by a bank having capital and surplus of not less than
$100,000,000, payable to the order of Borrower or to bearer, and (iv)
investments in commercial paper rated A-1 or P-1.
6.6 INDEBTEDNESS. Incur any Indebtedness, other than (i) unsecured trade
debt arising in the ordinary course of Borrower's business, or (ii) unsecured
Indebtedness in an amount not to exceed $1,000,000 in the aggregate outstanding
during the term of this Agreement, or (iii) Indebtedness incurred in connection
with liens arising under Section 6. l of this Agreement, or (iv) Permitted Swap
Obligations.
6.7 PREPAYMENTS. Prepay any existing Indebtedness owing to any Person,
except that (i) Borrower may prepay Indebtedness outstanding in connection with
a purchase money Lien from the proceeds of the sale of property subject to such
Lien; (ii) Borrower may prepay trade creditors in the ordinary course of
business or (iii) Borrower may prepay Lender as provided in this Agreement.
6.8 AFFILIATE TRANSACTIONS. Transfer any cash or property to any direct or
indirect owner of or beneficial owner of any interest in Borrower or other
Affiliate or enter into any transaction, including without limitation the
purchase, lease, sale or exchange of property or the rendering of any service
to or by any direct or indirect owner of or beneficial owner of any interest in
Borrower or other Affiliate; provided that Borrower may (i) sell inventory or
provide services to Affiliates for
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cash for fair value in the ordinary course of business pursuant to terms
that are no less favorable to Borrower than the terms upon which such
transactions would have been made had such transfers or transactions been made
at arm's length to or with a Person that is not an Affiliate, (ii) pay
compensation for services to employees who are direct or indirect owners of or
beneficial owners of any interest in Borrower in the ordinary course of
Borrower's business.
6.9 CONSOLIDATIONS, MERGERS. Borrower shall not merge or consolidate with
any other Person, and Borrower shall not dissolve, enter into any joint venture
or become a partner in any partnership.
6.10 TRANSACTIONS NOT IN THE ORDINARY COURSE: LIQUIDATIONS. Enter into any
transaction not in the usual course of Borrower's business or adopt or
undertake a plan of liquidation or dissolution.
6.11 SUSPENSION OF BUSINESS. Suspend or terminate the transaction of its
business.
6.12 DISTRIBUTIONS. Except for and compensation for services to
employees who are direct or indirect owners of, or beneficial owners of, any
interest in the Borrower, pay, directly or indirectly, any cash, stock or other
securities or proper dividends or distributions to its shareholders, purchase,
redeem or otherwise acquire for value any shares of its capital stock or any
warrants, rights or options to acquire such shares.
6.13 UNPERMITTED USES OF LOANS. Use any part of the proceeds of the Loans
hereunder for any purpose which constitutes a violation of, or is inconsistent
with, any applicable regulations of the Board of Governors of the Federal
Reserve System, including without limitation, the purchase or carrying of (or
refinancing of indebtedness originally incurred to purchase or carry) margin
securities.
6.14 ERISA. Adopt or agree to contribute to any tax qualified Plan, except
for those Plans currently in effect on the date hereof and listed on Schedule
6.14.
6.15 CHANGE OF CONTROL. Permit the current owners of Borrower to own less
than fifty-one percent (51%) of the issued and outstanding shares of Borrower.
6.16 BANK ACCOUNTS. Establish any depository, operating or other account
at any financial institution other than Lender.
7. AFFIRMATIVE COVENANTS - GENERAL.
So long as any Obligations are outstanding, Borrower covenants and agrees that:
7.1 TAXES. All assessments and taxes, whether real, personal or
otherwise, due or payable by, or imposed, levied or assessed against, Borrower
or any of its property have been paid, and shall hereafter be paid in full,
before delinquency, except those assessments and taxes the
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validity of which is being contested in good faith by appropriate proceedings
and as to which Borrower shall have set aside adequate reserves (as determined
by Lender). Borrower will make timely payment or deposit of all FICA payments
and withholding taxes required of it by applicable laws, and will, upon
request, furnish Lender with proof satisfactory to it that Borrower has made
such payments or deposits. Lender may conclusively rely on the usual
statements of the amount owing or other office statements issued by the
appropriate governmental agency.
7.2 LITIGATION. Borrower shall immediately notify Lender in writing of (i)
any suit in law or equity or administrative proceeding involving money or
property, and seeking damages in excess of $50,000, and (ii) otherwise which
may materially and adversely affect Borrower's operations, financial condition
or business or Lender's ability to enforce its rights hereunder.
7.3 BOOKS AND RECORDS. Borrower at all times hereafter shall keep proper
books of record and account in which full and true entries will be made of all
dealings or transactions with respect to or in relation to the business and
affairs of Borrower, and shall maintain a standard and modern system of
accounting, in accordance with Generally Accepted Accounting Principles with
ledger and account cards and/or computer tapes, discs, printouts, and records
which contain information as may from time to time be reasonably requested by
Lender. Borrower shall notify Lender in writing if Borrower modifies or changes
its method of accounting or enters into, modifies, or terminates any agreement
presently existing, or at any time hereafter entered into with any third party
accounting firm and/or service bureau for the preparation and/or storage of
Borrower's accounting records; provided, that such accounting firm and/or
service bureau agrees to provide to Lender information regarding the Borrower's
financial condition. Borrower agrees to permit Lender and any of its employees,
officers or agents, at all times after the occurrence of a Potential Default or
Event of Default, and otherwise upon one (1) Business Day's prior notice,
during Borrower's usual business hours, or the usual business hours of third
Persons having control thereof, to have access to and examine all of Borrower's
Books relating to the Obligations, Borrower's financial condition and the
results of Borrower's operations, and, in connection therewith, permit Lender
or any of its agents, employees or officers to copy and make extracts
therefrom.
7.4 COMPLIANCE WITH LAWS. Borrower shall comply in all material respects
with all Federal, State, local and foreign laws, rules and regulations,
including, but not limited to the Securities Act of 1933, the Securities
Exchange Act of 1934, the Fair Labor Act, Environmental Laws, laws relating to
income, unemployment, payroll or social security taxes and pension funds and
retirement benefit programs as required by ERISA.
7.5 EXPENSE REIMBURSEMENTS. Borrower shall immediately and upon demand,
reimburse Lender for all sums expended by Lender which constitute Out-of Pocket
Fees and Costs and Borrower hereby authorizes and approves all advances and
payments by Lender for reasonably incurred expenses constituting Out-of-Pocket
Fees and Costs. Lender shall make all good faith reasonable attempts to notify
Borrower of such reimbursement, but the failure of Lender to so notify Borrower
shall impose no obligation or liability of any kind upon Lender.
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7.6 ERISA REPORTABLE EVENTS. Borrower shall furnish to Lender: (a) as soon
as possible, but in no event later than thirty (30) days after Borrower knows
or has reason to know that any Reportable Event with respect to any Benefit
Plan has occurred, a statement of the Chief Financial Officer of Borrower
setting forth the details concerning such Reportable Event and the action which
Borrower proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event given to the PBGC, if a copy of such notice is
available to Borrower; (b) promptly after the filing thereof with the United
States Internal Revenue Service or the PBGC, copies of each annual report with
respect to each Benefit Plan; (c) promptly after receipt thereof, a copy of any
notice of any potential material liability, adverse determination letter,
ruling or opinion Borrower may receive from the PBGC or the Internal Revenue
Service with respect to any Benefit Plan; (d) when the same is made available
to participants in a Benefit Plan, all notices of a significant reduction in
the rate of benefit accrual or plan termination to the participants by the
administrator of such Benefit Plan; and (e) promptly after receipt thereof, any
notice from any Multi Employer Plan to which Borrower or any ERISA Affiliate of
Borrower contributes which quantifies any actual or potential withdrawal
liability which will or may be imposed upon the withdrawal of the Borrower or
any ERISA Affiliate of Borrower from such Multi Employer Plan.
7.7 PRESERVATION OF CORPORATE EXISTENCE. The Borrower shall preserve and
maintain in full force and effect: (i) its corporate existence and good
standing under the laws of the state of its incorporation; and (ii) all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business.
7.8 LENDING RELATIONSHIP. Borrower shall utilize the Lender as its
primary bank of account and depository for all financial services, including
all receipts, disbursements and related services.
7.9 INSURANCE. The Borrower shall at all times insure and keep insured,
in insurance companies acceptable to Lender, all insurable property owned by it
which is of a character usually insured by companies similarly situated and
operating like properties, against loss or damage from fire and such other
hazards or risks as are customarily insured against by companies similarly
situated and operating like properties; and shall similarity insure employers',
public and professional liability risks. All such policies must be
satisfactory to Lender. At or prior to Closing, Borrower shall deliver to
Lender certificates for all such insurance policies.
8. AFFIRMATIVE COVENANTS - REPORTING.
Borrower shall furnish or cause to be furnished to Lender the following:
8.1 COMPLIANCE CERTIFICATE. As soon as practicable and in any event within
forty-five (45) days following the end of each Fiscal Quarter, a certificate
reflecting Borrower's compliance with the financial covenants set forth in
Section 9 of this Agreement as of the last day of the Fiscal Quarter. Such
certificate shall be in a form and with such specificity as is satisfactory to
Lender and shall contain such additional information as Lender may reasonably
require concerning financial
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covenant calculations included, described or referred to in such certificate
and any other documents in connection therewith requested by Lender.
8.2 Borrower shall further cause to be furnished to Lender:
(a) QUARTERLY FINANCIAL STATEMENT. As soon as practicable and in any
event within forty-five (45) days following the end of each Fiscal Quarter,
(i) statements of income and statements of cash flow of Borrower for each such
Fiscal Quarter and for the period from beginning of the then current Fiscal
Year of Borrower to the end of such Fiscal Quarter, (ii) balance sheets of
Borrower as of the end of such Fiscal Quarter, and (iii) with respect to such
statements of income and balance sheets, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year of Borrower, all in
reasonable detail. Such financial statements need not be prepared in accordance
with Generally Accepted Accounting Principles and shall be prepared in a manner
consistent with historical practices.
(b) YEARLY FINANCIAL STATEMENTS. As soon as practicable and in any event
within one-hundred twenty (120) days after the end of each Fiscal Year of
Borrower, (i) statements of income of Borrower for such Year, and a balance
sheet of Borrower as of the end of such Year, and (ii) statements of cash flow
of Borrower for such Year, all setting forth in comparative form, corresponding
figures for the period covered by the preceding annual audit and as of the end
of the preceding Fiscal Year of Borrower, all in reasonable detail and in scope
in accordance with audits performed for Borrower in prior years and examined
and certified by independent certified public accountants of recognized
national standing selected by Borrower and satisfactory to Lender, whose
opinion shall be unqualified and shall be in scope in accordance with audits
performed for Borrower in prior years, in form and substance satisfactory to
Lender.
(c) BUDGET; BUSINESS PLAN. As soon as practicable and in any event not
later than sixty (60) days after the end of each Fiscal Year of Borrower
hereafter, the annual budget and business plan of the Borrower.
(d) MANAGEMENT LETTERS. As soon as practicable and in any event within
ten (10) days of delivery to Borrower a copy of any letter issued by Borrower's
independent public accountants or other management consultants with respect to
Borrower's financial or accounting systems or controls, including all so-called
"management letters."
(e) OTHER INFORMATION. With reasonable promptness, such other business or
financial data, reports, appraisals and projections as Lender may reasonably
request.
All financial statements delivered to Lender pursuant to the requirements of
this subsection (except where otherwise expressly indicated) shall be prepared
in accordance with Generally Accepted Accounting Principles as provided in this
Agreement. Together with each delivery of financial statements required by
Subsections (a) and (b) above, Borrower shall deliver to Lender an officer's
certificate stating that (1) there exists no Event of Default or Potential
Default, or if there is an Event
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of Default or Potential Event of Default, specifying the nature thereof,
the period of existence thereof and what action Borrower proposes to take with
respect thereto, (2) no material adverse change in the condition, financial or
otherwise, business, property, including without imitation, to the best of
Borrower's knowledge after diligent inquiry, with respect to Environmental
Laws, or results of operations of Borrower has occurred since the previous
certificate was sent to Lender by Borrower or, if any such change has occurred,
specifying the nature thereof and what action Borrower has taken or proposes to
take with respect thereto, (3) all insurance premiums then due have been paid,
(4) all taxes then due have been paid or, for those taxes which have not been
paid, a statement of the taxes not paid and a description of Borrower's
rationale therefor, and (5) except as previously reported to Lender, to the
best of Borrower's knowledge after diligent inquiry, no litigation,
investigation or proceeding, or injunction, writ or restraining order is
pending or threatened. Together with each delivery of annual financial
statements required by Subsection (b) above, Borrower shall deliver to Lender a
certificate of the accountants who performed the audit in connection with such
statements stating that in making the audit necessary to the issuance of a
report on such financial statements, they have obtained no knowledge of any
Event of Default of a financial covenant, or, if such accountants have obtained
knowledge of an Event of Default of a financial covenant, specifying the nature
and period of existence thereof Lender shall exercise reasonable efforts to
keep such information, and all information acquired as a result of any
inspection conducted in accordance with this Agreement, confidential, provided
that Lender may communicate such information (1) to any other Person in
accordance with the customary practices of commercial lenders relating to
routine trade inquiries, (2) to any regulatory authority, or pursuant to any
other, judgement or decree of any court, having jurisdiction over Lender, (3)
to any other Person in connection with the exercise of Lender's rights
hereunder.
8.3 ACCOUNTING INFORMATION. Borrower authorizes Lender to discuss the
financial condition of Borrower with Borrower's independent public accountants
and agrees that such discussion or communication shall be without liability to
either Lender or Borrower's independent public accountants. Prior to the
occurrence of a Potential Default or Event of Default, Lender shall use its
best efforts to notify Borrower of Lender's discussions with Borrower's
accountants.
8.4 OTHER INFORMATION AND CHANGES. Borrower shall promptly supply Lender
with such other information concerning its affairs as Lender may reasonably
request from time to time hereafter, and shall promptly notify Lender of any
material adverse change in Borrower's financial condition and of any condition
or event which constitutes a breach of or an Event of Default under this
Agreement.
9. AFFIRMATIVE COVENANTS - FINANCIAL.
9.1 FIXED CHARGE COVERAGE RATIO. Borrower shall maintain a Fixed Charge
Coverage Ratio during the Term of not less than 1.5:1.00. Such Ratio shall be
measured on a rolling basis as of the end of each Fiscal Quarter, including
such Fiscal Quarter and the three (3) consecutive Fiscal Quarter immediately
preceding such Fiscal Quarter, commencing with the first Fiscal Quarter
following the Closing.
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9.2 TOTAL DEBT TO EBITDA RATIO. Borrower shall maintain at all times
during the Term a ratio of Total Debt to EBIDTA of not more than 4.00:1.00.
Such Ratio shall be measured on a rolling basis as of the end of each Fiscal
Quarter, including such Fiscal Quarter and the three (3) consecutive Fiscal
Quarter immediately preceding such Fiscal Quarter, commencing with the first
Fiscal Quarter following the Closing.
9.3 MINIMUM TANGIBLE NET WORTH. Borrower shall at all times maintain a
Minimum Tangible Net Worth of not less than $22,000,000, which amount shall be
increased on January 1 of each year by an amount equal to fifty percent (50%)
of Borrowers annual net income for the immediately preceding calendar year.
10. EVENTS OF DEFAULT
Any one or more of the following shall constitute an Event of Default by
Borrower under this Agreement:
10.1 PAYMENT. If Borrower fails to pay when due and payable or when
declared due and payable, all or any portion of the Obligations owing to Lender
(whether of principal, interest, taxes, reimbursement of Out-of-Pocket Fees and
Costs, or otherwise) which is not cured within three (3) Business Days of when
due or payable with respect to payments of interest and other amounts due
hereunder which do not constitute principal, and which is not paid when due or
payable with respect to payments of principal.
10.2 BREACH OF COVENANTS. If Borrower fails or neglects to perform, keep
or observe any term, provision, condition, covenant, agreement contained in
this Agreement, any other Loan Document, or any other present or future
agreement between Borrower and Lender and/or evidencing the Obligations and
such failure continues for a period of fifteen (15) days following notice by
Lender to Borrower; provided, however, there shall be no grace or cure period
with respect to violations of any of the covenants set forth in Section 10
hereof.
10.3 BREACH OF REPRESENTATION. If any representation, warranty, statement,
report, or certificate made or delivered by Borrower, or any of its officers,
partners, employees or agents on behalf of Borrower, to Lender is false in any
material respect when made or deemed to be made.
10.4 MATERIAL ADVERSE CHANGE. If in Lender's commercially reasonable
discretion (i) there is a material impairment of the prospect of repayment of
all or any portion of the Obligations, or (ii) a material adverse change has
occurred in the condition (financial or otherwise), business, property or
results of operations of Borrower.
10.5 ATTACHMENT OR LEVY. If all or any of Borrower's assets in excess of
One Hundred Thousand Dollars ($100,000) in the aggregate are attached, seized,
subjected to a writ or distress warrant, or are levied upon, or come into the
possession of any Judicial Officer or assignee for the
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<PAGE> 33
benefit of creditors unless, with respect to any such assets, such attachment,
seizure, writ, warrant or levy shall be dismissed, released or stayed within
ten (10) days of issuance thereof.
10.6 VOLUNTARY INSOLVENCY. If an Insolvency Proceeding is commenced by
Borrower.
10.7 INVOLUNTARY INSOLVENCY. If an Insolvency Proceeding is commenced
against Borrower, except that if Borrower is contesting such Proceeding in good
faith, such Insolvency Proceeding shall not constitute an Event of Default
unless such Solvency Proceeding is not dismissed within forty-five (45) days of
the commencement of such Insolvency Proceedings.
10.8 INJUNCTION. If Borrower is enjoined, restrained or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs.
10.9 GOVERNMENTAL LIEN. If a notice of lien, levy or assessment in excess
of One Hundred Thousand Dollars ($100,000) in the aggregate, is filed of record
with respect to any or all of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or by any
state, county, municipal or other governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities in excess of
One Hundred Thousand Dollars ($100,000) in the aggregate, becomes a Lien,
whether choate or otherwise, upon any or all of Borrower's assets and the same
is not paid on the payment date thereof
10.10 JUDGMENT. If a judgment or order requiring payment of monies in the
aggregate involving more than $100,000 which is not covered by insurance, shall
be rendered against Borrower, and such judgment or order shall remain
unsatisfied or undischarged and in effect for forty-five (45) consecutive days
without a stay of enforcement or execution thereof or posting of a bond pending
appeal.
10.11 OTHER INDEBTEDNESS. If there is a default in any agreement with
respect to Indebtedness in excess of One Hundred Thousand Dollars ($100,000) to
which Borrower is a party with another Person resulting in a right by such
Person to accelerate the maturity of Borrower's Indebtedness or to exercise any
other right or remedy.
10.12 ERISA REPORTABLE EVENT. If (a) any Reportable Event which Lender
determines constitutes grounds for the termination of any Benefit Plan by the
PBGC or for the appointment by the appropriate United States District Court of
a trustee to administer any such Plan, shall have occurred and be continuing
thirty (30) days after written notice of such determination shall have been
given to Borrower by Lender, or any such Benefit Plan shall be terminated
within the meaning of Title IV of ERISA, or a trustee shall be appointed by the
appropriate United States District Court to administer any such Plan, or the
PBGC shall institute proceedings to terminate any Benefit Plan; or (b) there
shall be a withdrawal from any Multiemployer Plan.
Notwithstanding anything contained in this Section 10 or contained in any
other provision of this Agreement or the other Loan Documents to the contrary,
in the event of the institution of
33
<PAGE> 34
Insolvency Proceedings against Borrower, Lender shall not be obligated to make
advances to Borrower during the forty-five (45) day grace period under
Section 10.7.
11. RIGHTS AND REMEDIES
11.1 RIGHTS AND REMEDIES GENERALLY. Upon the occurrence of an Event of
Default by Borrower under this Agreement and notice thereof by Lender to
Borrower, except as hereinafter provided, Lender may, at its sole election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by
Notes, or otherwise, immediately due and payable; provided, that all
Obligations shall be immediately due and payable without notice or demand upon
an Event of Default under Section 10.6 or 10 7;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower and
Lender;
(c) Terminate this Agreement as to any future liability or obligation of
Lender but without affecting the Obligations owing by Borrower to Lender;
(d) Borrower shall pay all Out-of-Pocket Fees and Costs incurred in
connection with Lender's enforcement and exercise of any of its rights and
remedies as herein provided, whether or not suit is commenced by Lender; and/or
(e) Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties, to
Borrower by Lender.
11.2 RIGHTS CUMULATIVE. Lender's rights and remedies under this
Agreement, all other Loan Documents and all other agreements with Borrower
shall be cumulative. Lender shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Lender of one right or remedy shall be deemed an election, and no
waiver by Lender of any default on Borrower's part shall be deemed a continuing
waiver. No delay by Lender shall constitute a waiver, election or acquiescence
by it.
12. CERTAIN WAIVERS
12.1 APPLICATION OF PAYMENTS. Except as expressly provided in this
Agreement with respect to payments and prepayments on the Term Loan, Borrower
waives the right to direct the application of any and all payments at any time
or times hereafter received by Lender on account of any Obligations owed by
Borrower, and Borrower agrees that Lender shall have the continuing exclusive
right to apply and reapply such payments in any manner as Lender may deem
advisable, notwithstanding any entry by Lender upon its books.
34
<PAGE> 35
12.2 DEMAND, ETC. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, notice of nonpayment at maturity, notice of intent to accelerate, and
notice of acceleration, or any bond or security which might be required by any
court prior to allowing Lender to exercise any of Lender's remedies.
12.3 CONFIDENTIALITY. Borrower authorizes its accounting firm and/or
service bureau to provide Lender with such information requested by Lender
pursuant to or in accordance with this Agreement, and authorizes Lender to
contact directly any such accounting firm and/or service bureau in order to
obtain such information. Lender shall notify Borrower prior to contacting such
accounting firm or service bureau, but in no event shall Lender be liable to
Borrower for failure to provide such notice.
13. NOTICES
Except as otherwise expressly provided herein, any notice required or
desired to be served, given or delivered hereunder shall be in the form and
manner specified below, and shall be addressed to the party to be notified as
follows:
If to Lender at: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: Mr. Denis J . Campbell
With a copy to: Sugar, Friedberg & Felsenthal
30 N. LaSalle Street
Suite 2600
Chicago, Illinois 60602
Attention: Charles H. Braun, Esq.
If to Borrower at: Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
Attention: Mr. Thomas Nolan,
Vice President Finance
With a copy to: Reynolds & Reynolds, Ltd.
111 West Washington Street
Suite 1631
Chicago, Illinois 60602
Attention: Frank R. Reynolds, Esq.
35
<PAGE> 36
or to such other address as each party designates to the other by Notice in the
manner herein prescribed. Notice shall be deemed given hereunder if (i)
delivered personally or otherwise actually received, (ii) sent by overnight
delivery service, (iii) mailed by first-class United States mail, postage
prepaid, registered or certified, with return receipt requested, or (iv) sent
via telecopy machine with a duplicate signed copy sent on the same day as
provided in clause (ii) above. Notice mailed as provided in clause (iii) above
shall be effective upon the expiration of three (3) Business Days after its
deposit in the United States mail, and notice telecopied as provided in clause
(iv) above shall be effective upon receipt of such telecopy if the duplicate
signed copy is sent under clause (iii) above. Notice given in any other manner
described in this section shall be effective upon receipt by the addressee
thereof; provided, however, that if any notice is tendered an addressee and
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender unless expressly set forth in such notice.
14. CHOICE OF LAW AND VENUE.
This Agreement shall be deemed to have been made in the State of Illinois
and the validity of this Agreement, its construction, interpretation and
enforcement, and the rights of parties hereunder shall be determined under,
governed by and construed in accordance with the laws of the State of Illinois.
The parties agree that all actions or proceedings arising in connection with
this Agreement shall be tried and litigated only in the state and federal
courts located in the County of Cook State of Illinois. Borrower waives any
right it may have to assert the doctrine of forum or to object to such venue
and hereby consents to any court ordered relief Borrower constants that all
service of process upon it be made by registered mail or messenger directed to
it at the address set forth in Section 13 above and that service so made shall
be deemed to be completed upon the earlier of actual receipt or three (3)
Business Days after the same shall have been posted to Borrower's address by
Borrower's agent as set forth below. Nothing contained in this Section 14 shall
affect the right of Lender to serve legal process in any other manner
permitted by law or affect the right of Lender to bring any action or
proceeding against Borrower or its property in the courts of any other
jurisdiction.
15. INDEMNITY.
Borrower shall indemnify, hold harmless and defend Lender and its
directors, offices, agents, counsel and employees ("Indemnified Persons") from
and against all losses, claims, damages, costs, expenses and liabilities
("Losses"), whether such Losses arise or notice thereof is received by Lender
during the Initial Term or any renewal term or after termination of this
Agreement, incurred by any of them arising principally out of or relating to
this Agreement or any other transaction contemplated hereby except for any such
losses caused by the gross negligence or willful misconduct of such Indemnified
Persons, and shall reimburse Lender and each other Indemnified Person for any
expenses including in connection with the investigation of, preparation for or
defense of any actual or threatened claim, action or proceeding arising
therefrom (including any such costs of responding
36
<PAGE> 37
to discovery requests or subpoenas), regardless of whether any Indemnified
Person is a party thereto. Each Indemnified Person may select its own
counsel with respect to any Losses, in addition to any Borrower's counsel, and
shall be indemnified therefor hereunder.
16. GENERAL PROVISIONS.
16.1 ACCEPTANCE. This Agreement shall be binding and deemed effective
when executed by Borrower and accepted and executed by Lender.
16.2 BINDING AGREEMENT: ASSIGNABILITY.
(a) This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights hereunder without Lender's prior
written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Lender shall release Borrower from its Obligations
to Lender.
(b) Lender may assign this Agreement and its rights and duties hereunder,
and Borrower shall execute and deliver such documents in connection with such
assignment as Lender or such assignee may reasonably request. Lender reserve
the right to Sell, assign, transfer, negotiate or grant participation in all or
any part of, or any interest in their rights and benefits hereunder
16.3 SECTION HEADINGS. Section headings and section numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each paragraph applies equally to this entire
Agreement.
16.4 CONSTRUCTION. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.
16.5 SEVERABILITY. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.
16.6 ENTIRE AGREEMENT. This Agreement cannot be changed or terminated
orally. All prior agreements, understandings, representations, warranties, and
negotiations, if any, are merged into this Agreement. This Agreement may be
amended only by a written agreement signed by duly authorized officers of
Borrower and Lender.
16.7 NO FIDUCIARY RELATIONSHIP OR JOINT VENTURE. No provision herein or in
any of the other Loan Documents and no course of dealing between the parties
hereto shall be deemed to create
37
<PAGE> 38
any fiduciary relationship between Lender and Borrower nor to create any
partnership or joint venture between Lender and Borrower.
16.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same instrument.
16.9 CONFLICT. In the event of a conflict between the terms of this
Agreement and the terms of any Notes or other Loan Documents, the terms of this
Agreement shall be controlling.
17. WAIVER OF JURY TRIAL
BORROWER AND LENDER ACKNOWLEDGE THAT THE RIGHT TO A TRIAL BY JURY IS A
CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE WAIVED. BORROWER AND LENDER
EACH KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND WITHOUT COERCION, WAIVE ALL RIGHTS
TO TRIAL BY JURY OF ALL DISPUTES BETWEEN THEM. NEITHER LENDER NOR BORROWER
SHALL BE DEEMED TO HAVE GIVEN UP THIS WAIVER OF JURY TRIAL UNLESS THE PARTY
CLAIMING THAT THIS WAIVER HAS BEEN RELINQUISHED HAS A WRITTEN INSTRUMENT SIGNED
BY THE OTHER PARTY STATING THAT THIS WAIVER HAS BEEN GIVEN.
IN WITNESS WHEREOF, Borrower has executed and delivered this Agreement on
the date first written above.
BORROWER:
MINUTEMAN INTERNATIONAL, INC.
By:
----------------------------------
Title:
-------------------------------
ACCEPTED this 18th day of November, 1998, at Lender's place of business in
the City of Chicago, State of Illinois.
LENDER:
LASALLE NATIONAL BANK, a national
banking association
By:
----------------------------------
Title:
-------------------------------
38
<PAGE> 39
ANNEX A
Applicable Margin - Term Loan
Total Debt to EBITDA Ratio
<TABLE>
<CAPTION>
- ------------------------------------------------------------
LEVEL 1 LEVEL II LEVEL III LEVEL IV
-------- -------- --------- ---------
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
1.5 1.51-2.5 2.51-2.99 3.00
- ------------------------------------------------------------
LIBOR Rate Margin 70 bpts* 80 bpts* 100 bpts* 115 bpts*
- ------------------------------------------------------------
</TABLE>
Applicable Margin - Revolving Loan
Total Debt to EBITDA Ratio
<TABLE>
<CAPTION>
- ------------------------------------------------------------
LEVEL 1 LEVEL II LEVEL III LEVEL IV
-------- -------- --------- --------
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
<1.5 1.51-2.5 2.51-2.99 >3
- ------------------------------------------------------------
LIBOR Rate Margin 55 bpts* 65 bpts* 80 bpts* 90 bpts*
- ------------------------------------------------------------
</TABLE>
* bpts = basis points
39
<PAGE> 40
REVOLVING NOTE
$5,000,000 November 18, 1998
MINUTEMAN INTERNATIONAL, INC. an Illinois corporation ("Borrower"), for
value received, hereby promises to pay to the order of LaSalle National Bank
(the "Bank"), on November 17, 1999 the principal sum of Five Million and No/100
Dollars ($5,000,000), or such lesser amount of all of the then outstanding
advances made by the Bank to Borrower pursuant to the "Loan Agreement" (as
hereinafter defined), together with interest on any and all principal amounts
remaining unpaid hereunder from time to time from the date hereof until paid,
at the rate(s) set forth in the Loan Agreement, payable on each "Interest
Payment Date" (as defined in the Loan Agreement), commencing after November 18,
1998 and continuing until the Revolving Loans (as defined in the Loan
Agreement) are paid in full.
Any amount of interest or principal hereof which is not paid when due,
whether on an Interest Payment Date or at stated maturity, by acceleration or
otherwise, shall bear interest payable on demand at the "Default Rate" (as such
term is defined in the Loan Agreement).
All payments of principal and interest on this Note shall be payable in
lawful money of the United States of America. In no event shall the interest
payable exceed the highest rate permitted by law. Principal and interest shall
be paid to LaSalle National Bank, at its office at LaSalle National Bank, 135
South LaSalle Street, Chicago, Illinois 60603, or at such other place as the
holder of this Note may designate in writing to Borrower. All payments
hereunder shall be applied as provided in the Loan Agreement. In determining
Borrower's liability to the Bank hereunder, the books and records of the Bank
shall be controlling absent arithmetic or manifest error.
This Note evidences certain indebtedness incurred under the Loan
Agreement, dated as of the date hereof, between Borrower and the Bank (as
heretofore or hereafter amended, the "Loan Agreement"), to which reference is
hereby made for a statement of the terms and conditions under which the due
date of this Note or any payment thereon may be accelerated or is automatically
accelerated, or under which this Note may be prepaid or is required to be
prepaid. All capitalized terms used herein shall, unless otherwise defined
herein, have the meanings set forth in the Loan Agreement. The holder of this
Note is entitled to all of the benefits provided in said Loan Agreement and the
Loan Documents
1
<PAGE> 41
referred to herein. Borrower agrees to pay all costs of collection and all
reasonable attorneys' fees paid or incurred in enforcing any of the Bank's
rights hereunder promptly on demand of the Bank and as more fully set forth in
the Loan Agreement.
This Note may be prepaid in whole or in part in accordance with the terms
of the Loan Agreement, and shall be subject to mandatory prepayment in the
amounts and at the times set forth in the Loan Agreement.
2
<PAGE> 42
Except as set forth in the Loan Agreement, the Borrower waives
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Loan Agreement. In any action on this Note, the Bank or
its assignee need not file the original of this Note, but need only file a
photocopy of this Note certified by the Bank or such assignee to be a true and
correct copy of this Note.
No delay on the part of the Bank in exercising any right under this Note
or other undertaking affecting this Note, shall operate as a waiver of such
right or any other right under this Note, nor shall any omission in exercising
any right on the part of the Bank under this Note operate as a waiver of any
other rights.
Upon the occurrence of an Event of Default under the Loan Agreement, the
outstanding indebtedness evidenced by this Note, together with all accrued
interest, shall be due and payable in accordance with the terms of the Loan
Agreement, without notice to or demand upon the Borrower except as otherwise
provided in the Loan Agreement, and the Bank may exercise all of its rights and
remedies reserved to it under the Loan Agreement or applicable law.
If any provision of this Note or the application thereof to any party of
circumstance is held invalid or unenforceable, the remainder of this Note and
the application of such provision to other parties or circumstances will not be
affected thereby and the provisions of this Note shall be severable in any such
instance.
BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY NOW OR HEREAFTER HAVE TO
SUBMIT ANY CLAIM, ISSUE OR DEFENSE ARISING HEREUNDER OR UNDER THE OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.
This Note shall be deemed to have been made under and shall be governed in
accordance with the internal laws and not the conflict of law rules of the
State of Illinois.
BORROWER:
MINUTEMAN INTERNATIONAL, INC., AN
ILLINOIS CORPORATION,
BY:
--------------------------------------
TITLE:
-----------------------------------
3
<PAGE> 43
TERM NOTE
$14,000,000 November 18, 1998
MINUTEMAN INTERNATIONAL INC., an Illinois corporation, hereby promises to
pay to the order of LaSalle National Bank (the "Bank") the principal sum of
Fourteen Million and No/100 Dollars ($14,000,000), in twelve consecutive
semi-annual installments of principal, each in the amount set forth below,
payable on May 18 and November 18 each year commencing May 18, 2000, with a
final payment on November 18, 2005 (each, a "Semi-Annual Payment Date"):
<TABLE>
<CAPTION>
Semi-Annual
Installment Installments
----------- ------------
<S> <C>
1 $750,000
--------------------------------------
2 $750,000
--------------------------------------
3 $750,000
--------------------------------------
4 $750,000
--------------------------------------
5 $750,000
--------------------------------------
6 $750,000
--------------------------------------
7 $750,000
--------------------------------------
8 $750,000
--------------------------------------
9 $750,000
--------------------------------------
10 $750,000
--------------------------------------
11 $750,000
--------------------------------------
12 $5,750,000
--------------------------------------
TOTAL $14,000,000
--------------------------------------
</TABLE>
Any and all principal amounts remaining unpaid hereunder from time to time
shall bear interest from the date hereof until paid, computed on the basis of
1
<PAGE> 44
actual number of days elapsed over a 360-day year, payable on each Interest
Payment Date (as such term is defined in the "Loan Agreement" (as hereinafter
defined)) until payment in full, at the rate(s) set forth in the Loan
Agreement.
2
<PAGE> 45
Borrower may prepay in whole or in part, at any time and from time to
time, the principal, accrued interest and other amounts due under this Note
without premium or penalty. This Note shall be subject to mandatory prepayment
upon the terms and conditions set forth in the Loan Agreement.
Any amount of interest or principal hereof which is not paid when due,
whether on a Semi-Annual Payment Date, an Interest Payment Date, at stated
maturity, by acceleration or otherwise, shall bear interest payable on demand
at the "Default Rate" (as such term is defined in the Loan Agreement).
All payments of principal and interest on this Note shall be payable in
lawful money of the United States of America. In no event shall the interest
payable exceed the highest rate permitted by law. Principal and interest shall
be paid to LaSalle National Bank, at 135 South LaSalle Street, Chicago,
Illinois 60603, or at such other place as the holder of this Note may designate
in writing to Borrower. All payments hereunder shall be applied as provided in
the Loan Agreement. In determining Borrower's liability to the Bank hereunder,
the books and records of the Bank shall be controlling absent arithmetic or
manifest error.
This Note evidences certain indebtedness incurred under that certain Loan
Agreement dated as of the date hereof between Borrower and the Bank (as
heretofore or hereafter amended, the "Loan Agreement"), to which reference is
hereby made for a statement of the terms and conditions under which the due
date of this Note or any payment thereon may be accelerated or is automatically
accelerated, or under which this Note may be prepaid or is required to be
prepaid. All capitalized terms used herein shall, unless otherwise defined
herein, have the meanings set forth in the Loan Agreement. The holder of this
Note is entitled to all of the benefits provided in said Loan Agreement and the
Loan Documents referred to herein. Borrower agrees to pay all costs of
collection and all reasonable attorneys' fees paid or incurred in enforcing any
of the Bank's rights hereunder promptly on demand of the Bank and as more fully
set forth in the Loan Agreement.
Except as set forth in the Loan Agreement, the Borrower waives
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Loan Agreement. In any action on this Note, the Bank or
its assignee need not file the original of this Note, but need only file a
photocopy of this Note certified by the Bank or such assignee to be a true and
correct copy of this Note.
3
<PAGE> 46
No delay on the part of the Bank in exercising any right under this Note
or other undertaking affecting this Note, shall operate as a waiver of such
right or any other right under this Note, nor shall any omission in exercising
any right on the part of the Bank under this Note operate as a waiver of any
other rights.
Upon the occurrence of an Event of Default under the Loan Agreement, the
outstanding indebtedness evidenced by this Note, together with all accrued
interest, shall be due and payable in accordance with the terms of the Loan
Agreement, without notice to or demand upon the Borrower except as otherwise
set forth in the Loan Agreement, and the Bank may exercise all of its rights
and remedies reserved to it under the Loan Agreement or applicable law.
If any provision of this Note or the application thereof to any party of
circumstance is held invalid or unenforceable, the remainder of this Note and
the application of such provision to other parties or circumstances will not be
affected thereby and the provisions of this Note shall be severable in any such
instance.
BORROWER HEREBY WAIVES ANY RIGHT BORROWER MAY NOW OR HEREAFTER HAVE TO
SUBMIT ANY CLAIM, ISSUE OR DEFENSE ARISING HEREUNDER OR UNDER THE OTHER
DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.
This Note shall be deemed to have been made under and shall be governed in
accordance with the internal laws and not the conflict of law rules of the
State of Illinois.
BORROWER:
MINUTEMAN INTERNATIONAL, INC.
AN ILLINOIS CORPORATION,
BY:
-----------------------------------
TITLE:
--------------------------------
4
