<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number 1-9634
[LOGO]
LARIZZA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Ohio 34-1376202
- -------------------------- --------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
Suite 1040
201 West Big Beaver Road
Troy, Michigan 48084
(Address of principal executive offices and zip code)
(810) 689-5800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares of Common Stock, without par value, of the registrant
outstanding as of April 30, 1994: 22,088,107
<PAGE> 2
LARIZZA INDUSTRIES, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1994
INDEX
<TABLE>
<CAPTION>
Page No.
--------
Part I. Financial Information:
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets -
March 31, 1994 and December 31, 1993 . . . . . . . . . . 3
Consolidated Condensed Statements of Operations -
Three Months Ended March 31, 1994 and 1993 . . . . . . . 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31,1994 and 1993 . . . . . . . 5
Notes to Consolidated Condensed Financial Statements . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 7
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 8
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
---------------- ----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8 559
Accounts receivable, net 24,159 20,426
Inventories:
Raw materials 4,477 4,428
Work in process 937 1,032
Finished goods 1,899 1,808
----------- -----------
Total inventories 7,313 7,268
----------- -----------
Reimbursable tooling costs 2,961 2,178
Net current assets of discontinued operations 1,975 1,627
Other current assets 1,031 625
----------- -----------
Total current assets 37,447 32,683
----------- -----------
Property, plant and equipment, at cost 46,880 46,978
Less accumulated depreciation and amortization 20,631 20,862
----------- -----------
Net property, plant and equipment 26,249 26,116
----------- -----------
Notes receivable from principal shareholders 2,167 2,136
Goodwill and other intangibles, net 2,700 2,782
Net noncurrent assets of discontinued operations 158 137
----------- -----------
$ 68,721 63,854
----------- -----------
----------- -----------
Current liabilities:
Current installments of long-term debt and capitalized lease obligation $ 4,675 4,679
Accounts payable 17,866 14,267
Income taxes payable 2,838 1,008
Accrued salaries and wages 2,078 1,469
Accrual for loss on sale of discontinued operations 2,165 2,118
Other accrued expenses 4,628 4,863
----------- -----------
Total current liabilities 34,250 28,404
----------- -----------
Long-term debt, excluding current installments 31,160 81,460
Capitalized lease obligation, excluding current installments 691 780
Deferred gain on debt restructure 2,461 6,097
Deferred income taxes 1,400 1,400
Accrued interest - 8,463
Other long-term liabilities 1,296 1,323
Shareholders' deficit:
Common stock 76,780 17,202
Additional paid-in capital 5,551 5,551
Accumulated deficit (80,474) (83,873)
Foreign currency translation adjustment (4,394) (2,953)
----------- -----------
Total shareholders' deficit (2,537) (64,073)
----------- -----------
$ 68,721 63,854
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
3
<PAGE> 4
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1994 1993
----------- -----------
<S> <C> <C>
Net sales $ 41,061 39,615
Cost of goods sold 32,174 30,673
---------- ---------
Gross profit 8,887 8,942
Selling, general and administrative expenses 3,096 2,848
---------- ---------
Operating income 5,791 6,094
---------- ---------
Operating income (expense):
Interest expense, net (1,151) (1,661)
Foreign exchange gain (loss) 258 (254)
Other, net 336 (5)
---------- ---------
(557) (1,920)
---------- ---------
Income before income tax provision 5,234 4,174
Income tax provision 1,835 -
---------- ---------
Net income $ 3,399 4,174
---------- ---------
---------- ---------
Income per common share:
Primary $ .22 .30
---------- ---------
---------- ---------
Fully diluted $ .19 .24
---------- ---------
---------- ---------
Weighted average number of shares of common stock outstanding
Primary 15,738 13,805
Fully diluted 22,088 22,088
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
4
<PAGE> 5
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1994 1993
-------- --------
<S> <C> <C>
Operations:
Net income $ 3,399 4,174
Noncash items:
Depreciation and amortization 1,037 1,127
Foreign exchange (gain) loss (258) 254
Amortization of deferred gain (313) (336)
Interest accrued on long-term debt 791 1,029
Operating working capital decrease (increase) 249 (388)
Other, net (292) 17
------------ ------------
4,613 5,877
------------ ------------
Investments:
Property, plant and equipment, net (1,529) (359)
Other, net (31) (38)
------------ ------------
(1,560) (397)
------------ ------------
Financing:
Repayments of debt (3,350) (4,516)
Other, net - (121)
------------ ------------
(3,350) (4,637)
Effect of exchange rates on cash (254) (94)
------------ ------------
Net increase (decrease) in cash and cash equivalents (551) 749
Cash and cash equivalents at beginning of period 559 489
------------ ------------
Cash and cash equivalents at end of period $ 8 1,238
------------ ------------
------------ ------------
Noncash financing activities:
Conversion of debt to equity $ 59,578 -
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
5
<PAGE> 6
LARIZZA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1994
(1) Basis of Presentation
In the opinion of management, the information furnished herein includes
all adjustments (all of which are of a normal recurring nature) necessary
for fair presentation of the results for the interim periods.
(2) Income Per Share
Primary income per common share is calculated by dividing net income by
the weighted average number of common shares outstanding during the
period.
On a fully-diluted basis, both net income and shares outstanding are
adjusted to assume the conversion of the U.S. Loan of $47.0 million plus
accrued interest into 8,283,040 shares of common stock at the beginning of
the period. To adjust net income for the first quarter of 1994, interest
expense of $791,000 related to the U.S. Loan was added back into income.
To adjust net income for the first quarter of 1993, interest expense of
$1,029,000 related to the U.S. Loan was added back into income.
On March 11, 1994, $47,000,000 in principal and $9,254,000 of accrued
interest relating to the Term Loans under the U.S. Loan (the then
outstanding principal and accrued interest with respect to such loans)
were converted into 8,283,040 shares of common stock. The conversion
reduces long-term debt, accrued interest and deferred gain on debt
restructure on the Company's balance sheet as of March 11, 1994 by
$47,000,000, $9,254,000 and $3,324,000 and increases common stock by
$59,578,000.
(3) New Credit Facility
On May 6 1994, the Company signed a new $50.0 million credit facility
agented by Continental Bank N.A..The initial borrowing of $36.0 million
consisted of $35.6 million used to repay existing indebtedness, resulting
in the recognition of the remaining $2.4 million of deferred gain on debt
restructure, and $.4 million used to pay various loan fees and expenses.
The new facility includes a $27 million revolving line of credit for the
Company and an $8 million revolving line of credit for tooling and capital
equipment for the Company. The amount available under the $27 million
line of credit is reduced by $250,000 at the end of each quarter in 1994
and $1,250,000 at the end of each subsequent quarter during the term of
the loan. Both lines of credit expire May 6, 1997. Interest on the loans
is based on Eurodollar rates or the bank's reference rate, plus a margin
(up to 3.00% for Eurodollar loans and 1.25% for reference rate loans) that
would vary each quarter based on specified financial covenants. The line
of credit also requires the Company to pay a commitment fee of .375% a
year on the average unused amount of the facility, plus additional annual
agent's fees. Interest and the commitment fee are payable quarterly. The
revolving line of credit is also available for letters of credit in
amounts not to exceed $2 million. On May 6, 1994, the Company borrowed
$21 million under the $27 million revolving credit facility and the bank
issued a $500,000 (Canadian) letter of credit securing checking account
overdrafts. Both lines of credit are secured by all of the assets of the
Company including the stock of its subsidiaries.
In addition, the new facility includes a $15 million term loan to
Manchester Plastics, Ltd., the Company's Canadian subsidiary, secured by
all of its assets. The loan is payable in four quarterly installments of
$937,500 beginning June 30, 1994, with the balance due May 7, 1999.
Interest on the loan is based on Eurodollar rates or the bank's reference
rate, plus a margin (up to 3.50% for Eurodollar loans and 1.75% for
reference rate loans) which vary each quarter based on the Manchester
Plastics' net worth.
The loans to the Company and to Manchester Plastics, Ltd. contain
various covenants, the more restrictive of which include limits on the
disposition of properties, limits on capital expenditures, maintenance of
certain financial levels and ratios and restrictions on additional
indebtedness and on the payment of dividends. The Company was in
compliance with all such covenants at May 6, 1994, and expects to be in
compliance throughout 1994.
Aggregate principal payments due on long-term debt for the next five
years are as follows: 1994 - $2,812,500; 1995 - $937,500; 1996 - $0; 1997
- $21,000,000; 1998 - $0; 1999 - $11,250,000.
6
<PAGE> 7
ITEM 2.
LARIZZA INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
First Quarter Ended March 31, 1994 compared with
First Quarter Ended March 31, 1993
Net sales increased $1,446,000, or 3.7%, in the quarter ended March 31, 1994
compared to the quarter ended March 31, 1993. This increase in sales resulted
largely from increased production levels of vehicles in which the Company's
products are used.
Gross income decreased $55,000, or 0.6%, in the quarter ended March 31, 1994
compared to the quarter ended March 31, 1993. The gross profit margin
decreased to 21.6% in the 1994 period from 22.6% in the 1993 period. Gross
profit margins were impacted negatively by start-up costs associated with new
programs.
Operating income for the quarter ended March 31, 1994 decreased $303,000, or
5.0%, compared to the quarter ended March 31, 1993. Operating income as a
percentage of net sales was 14.1% in the current quarter compared to 15.4% in
the comparable quarter of the prior year. This decrease in operating income
margins resulted primarily from an increase in selling expenses.
Selling, general and administrative expenses for the quarter increased by
$248,000, or 8.7%, due primarily to increased selling expenses. Selling,
general and administrative expenses as a percentage of net sales were 7.5% in
the first quarter of 1994 and 7.2% in the first quarter of 1993.
Interest expense for the quarter ended March 31, 1994 decreased $510,000, or
30.7% from the quarter ended March 31, 1993, primarily as a result of the
conversion of $47 million in principal amount of debt, plus the related accrued
interest, into equity on March 11, 1994. The conversion will reduce interest
expense in future periods.
Foreign exchange resulted in a $258,000 gain in the first quarter ended March
31, 1994, compared to a $254,000 loss in the first quarter last year. The
change is a result of currency fluctuations between the U.S. and Canadian
dollars.
During 1993, the Company's Canadian net operating loss carryforwards were fully
used, resulting in an income tax provision in the first quarter ended March 31,
1994 of $1,835,000, compared to no provision for income taxes in the first
quarter of 1993.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's net cash position decreased by $551,000 during the first quarter
of 1994. Cash in the amount of $4,613,000 was generated from operations. Cash
of $1,529,000 was used for capital expenditures and $3,350,000 was used to pay
debt.
On March 11, 1994, the Company's lenders converted $47,000,000 of principal and
$9,254,000 of accrued interest into 8,283,040 shares of common stock,
representing 37.5% of the company's outstanding common stock after such
conversion. This conversion reduced long-term debt, accrued interest and
deferred gain on debt restructure on the Company's balance sheet as of the
date of the conversion by $47,000,000, $9,254,000 and $3,324,000, respectively,
and increased shareholders' equity by $59,578,000.
The Company's primary needs for liquidity in the next twelve months will be to
support its working capital needs, debt service requirements and capital
expenditure requirements. The Company believes that cash generated by
operations plus amounts available under its new credit facility will be
adequate to fund its cash needs for the next twelve months. As of May 9, 1994,
the Company had $6 million available under its new line of credit, plus an
additional $8 million available for tooling and capital expenditure loans;
provided that, for loans to the Company or its Canadian subsidiary for capital
expenditures, the company seeking the loan first spends $5 million for capital
expenditures. For a description of the Company' s new credit facilities and
the amounts initially borrowed under the new facilities, see note 3 of Notes to
Consolidated Condensed Financial Statements contained in Part I of this Report.
7
<PAGE> 8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
9.1 Amended and Restated Voting Trust Agreement among
Larizza Industries, Inc., Ronald T. Larizza and the
shareholders signing the agreement, dated as of May 4, 1994.
10.2 Asset Sale and Purchase Agreement, dated as of May 6,
1994, between Manchester Plastics, Ltd. and Larizza
Industries, Inc.
10.8(a) Amended and Restated Marketing, Selling, Administrative
and Management Services Agreement, dated as of May 6, 1994,
between Larizza Industries, Inc. and Manchester Plastics,
Ltd.
10.10(a) Credit Agreement, dated as of May 6, 1994, among Larizza
Industries, Inc., various financial institutions and
Continental Bank N.A.
10.10(b) Note, dated as of May 6, 1994, in the principal amount
of $35,000,000 from Larizza Industries, Inc. to Continental
Bank N.A.
10.10(c) Security Agreement, dated as of May 6, 1994, between
Larizza Industries, Inc. and Continental Bank N.A.
10.10(d) Company Pledge Agreement, dated as of May 6, 1994, between
Larizza Industries, Inc. and Continental Bank N.A.
10.10 (e) Form of Mortgage, Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Financing Statement, dated
as of May 6, 1994, between Larizza Industries, Inc. and
Continental Bank N.A. covering properties located in
Manchester, Ann Arbor, Homer and Williamston, Michigan.
10.11(a) Credit Agreement, dated as of May 6, 1994, among
Manchester Plastics, Ltd., various financial institutions and
Continental Bank N.A.
10.11(b) Note, dated as of May 6, 1994, in the principal amount
of $15,000,000 from Manchester Plastics, Ltd. to Continental
Bank N.A.
10.11(c) General Security Agreement, dated as of May 6 1994,
between Manchester Plastics, Ltd. and Continental Bank N.A.
10.11(d) Demand Debenture, dated as of May 6, 1994, from
Manchester Plastics, Ltd. to Continental Bank N.A.
10.11(e) Debenture Pledge Agreement, dated as of May 6,
1994, between Manchester Plastics, Ltd. and Continental Bank
N.A.
10.11(f) Patent Security Agreement, dated as of May 6, 1994,
between Manchester Plastics, Ltd. and Continental Bank N.A.
10.11(g)(1) Charge/Mortgage of Land, dated as of May 6, 1994, from
Manchester Plastics, Ltd. to Continental Bank N.A. concerning
Gananoque and Stratford, Ontario properties.
10.11(g)(2) Charge/Mortgage of Land, dated as of May 6, 1994, from
Manchester Plastics, Ltd. to Continental Bank N.A. concerning
Scarborough, Ontario lease.
(b) Reports on Form 8-K filed during the first quarter:
There were no reports on Form 8-K filed by the Registrant
during the quarter ended March 31, 1994.
8
<PAGE> 9
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 thereunto duly authorized.
LARIZZA INDUSTRIES, INC.
/S/ Terence C. Seikel
Terence C. Seikel
Date: May 11, 1994 Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer of the
Registrant)
9
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
9.1 Amended and Restated Voting Trust Agreement among
Larizza Industries, Inc., Ronald T. Larizza and the
shareholders signing the agreement, dated as of May 4, 1994.
10.2 Asset Sale and Purchase Agreement, dated as of May 6, 1994,
between Manchester Plastics, Ltd. and Larizza Industries, Inc.
10.8(a) Amended and Restated Marketing, Selling,
Administrative and Management Services Agreement, dated as of
May 6, 1994, between Larizza Industries, Inc. and Manchester
Plastics, Ltd.
10.10(a) Credit Agreement, dated as of May 6, 1994, among
Larizza Industries, Inc., various financial institutions and
Continental Bank N.A.
10.10(b) Note, dated as of May 6, 1994, in the principal
amount of $35,000,000 from Larizza Industries, Inc. to Continental
Bank N.A.
10.10(c) Security Agreement, dated as of May 6, 1994,
between Larizza Industries, Inc. and Continental Bank N.A.
10.10(d) Company Pledge Agreement, dated as of May 6, 1994,
between Larizza Industries, Inc. and Continental Bank N.A.
10.10(e) Form of Mortgage, Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Financing Statement, dated as of May 6,
1994, between Larizza Industries, Inc. and Continental Bank N.A.
covering properties located in Manchester, Ann Arbor, Homer and
Williamston, Michigan.
10.11(a) Credit Agreement, dated as of May 6, 1994, among Manchester
Plastics, Ltd., various financial institutions and Continental
Bank N.A.
10.11(b) Note, dated as of May 6, 1994, in the principal amount of
$15,000,000 from Manchester Plastics, Ltd. to Continental Bank
N.A.
10.11(c) General Security Agreement, dated as of May 6 1994,
between Manchester Plastics, Ltd. and Continental Bank N.A.
10.11(d) Demand Debenture, dated as of May 6, 1994, from
Manchester Plastics, Ltd. to Continental Bank N.A.
10.11(e) Debenture Pledge Agreement, dated as of May 6, 1994, between
Manchester Plastics, Ltd. and Continental Bank N.A.
10.11(f) Patent Security Agreement, dated as of May 6, 1994,
between Manchester Plastics, Ltd. and Continental Bank N.A.
10.11(g)(1) Charge/Mortgage of Land, dated as of May 6, 1994,
from Manchester Plastics, Ltd. to Continental Bank N.A. concerning
Gananoque and Stratford, Ontario properties.
10.11(g)(2) Charge/Mortgage of Land, dated as of May 6, 1994, from
Manchester Plastics, Ltd. to Continental Bank N.A. concerning
Scarborough, Ontario lease.
</TABLE>
<PAGE> 1
EXHIBIT 9.1
AMENDED AND RESTATED VOTING TRUST AGREEMENT
THIS AMENDED AND RESTATED VOTING TRUST AGREEMENT (this "Agreement") is
made as of May 4, 1994, among Ronald T. Larizza (the "Voting Trustee"), Larizza
Industries, Inc., an Ohio corporation (the "Depositary") and the shareholders
of the Depositary set forth on the signature pages of this Agreement
(individually, a "Beneficial Owner", and collectively, the "Beneficial
Owners").
RECITALS
The parties hereto acknowledge the truth and accuracy of the following
recitals and incorporate them as a part of this Agreement:
A. The Beneficial Owners collectively hold of record or beneficially
own 3,272,177 shares of Common Stock, no par value, of the Depositary. Such
shares are collectively referred to herein as the "Shares".
B. It is a condition precedent to effecting a transfer of Shares held
by Edward L. Sawyer, Jr. and subject to the predecessor to this Agreement, that
the Beneficial Owners, including transferees from Mr. Sawyer, transfer voting
control of the Shares to the Voting Trustee.
C. For such reasons and in order to ensure the continuity of management
and policy of the Depositary, it is deemed to be in the best interests of
Beneficial Owners and the Depositary to vest the voting power of Beneficial
Owners in the Voting Trustee. Accordingly, Beneficial Owners desire to deposit
the Shares with the Depositary as agent for the Voting Trustee. The parties
acknowledge that the Shares covered by this Agreement, when added to the number
of shares of Common Stock of the Depositary held of record or beneficially
owned by the Voting Trustee from time to time, will enable the Voting Trustee
to elect a majority of the members of the Board of Directors of the Depositary.
THEREFORE, for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties, desiring to create a trust in
the manner herein provided and intending to be legally bound, agree as follows:
1. Promptly after the execution and delivery of this Agreement, each
Beneficial Owner will deposit with and deliver to the Depositary (as agent of
the Voting Trustee and Beneficial Owners) such Beneficial Owner's stock
certificate(s) evidencing all of such Beneficial Owner's Shares, accompanied by
a stock power duly endorsed in blank, in transferable form and further endorsed
so as to make ownership or transferability subject to this Agreement, together
with all other documents reasonably requested by the Voting Trustee or the
Depositary. If the Voting Trustee so elects, any or all of the Shares may be
registered in the name of "Voting Trustee of Common Stock of Larizza
Industries, Inc. under Voting Trust Agreement dated as of May 4, 1994."
<PAGE> 2
2. The certificate(s) for the Shares delivered to the Depositary
pursuant to the terms of this Agreement, or any certificate(s) issued in
replacement thereof, shall be held at all times while this Agreement is in
force by the Depositary for the sole and exclusive benefit of:
(a) Beneficial Owners or their successors as herein provided; and
(b) the person(s) entitled by this Agreement to exercise the
voting rights herein granted.
3. During the term that this Agreement is in effect, none of the
Shares, nor any interest of any Beneficial Owner therein, may be sold,
transferred, pledged or otherwise disposed of or encumbered in any manner,
voluntarily or involuntarily by such Beneficial Owner, without the prior
written consent of the Voting Trustee.
4. At the Voting Trustee's request, the certificates(s) representing
any or all of the Shares deposited by any Beneficial Owner hereunder may be
surrendered to and cancelled by the Depositary, in which case new
certificate(s) for such Shares shall be issued by the Depositary in the name of
the Voting Trustee, as specified in a writing signed by the Voting Trustee and
delivered to the Depositary. Such new certificates shall be delivered to the
Voting Trustee or the Depositary, as the trustees may direct, and shall bear
the following legend:
"The shares of stock represented by this certificate are restricted
as to transfer in accordance with, and are otherwise subject to the terms
of, a Voting Trust Agreement dated as of May 4, 1994, among various
shareholders of Larizza Industries, Inc., Ronald T. Larizza and Larizza
Industries, Inc., a copy of which is on file at the office of Larizza
Industries, Inc."
If new certificates are so issued in accordance with the foregoing, this fact
shall be noted in the proper books and records of the Depositary.
5. Each Beneficial Owner does hereby irrevocably make, constitute and
appoint the Voting Trustee as his, her or its true and lawful attorney and
proxy to appear for, represent and vote the Shares for him, her or it at all
meetings of the shareholders of the Depositary, or to take action by written
consent without a meeting, in such manner and upon such issues and matters as
the Voting Trustee may, in his sole discretion determine, and on which such
Beneficial Owner is entitled to vote.
6. In the event that the Voting Trustee, or any successor Voting
Trustee, shall fail to continue to serve as Voting Trustee, then the
Depositary's Board of Directors shall appoint a person to serve as a successor
Voting Trustee. A successor Voting Trustee shall have and exercise all of the
powers and privileges of his predecessor pursuant to this Agreement without
limitation. The appointment of a successor Voting
2
<PAGE> 3
Trustee shall be conclusively deemed to have been effected at the time
when the Board of Directors of the Depositary adopts a resolution of such
appointment.
7. Unless otherwise agreed among the parties hereto, this Agreement
shall terminate on December 31, 1998. In the event of any such termination,
the Voting Trustee and the Depositary will transfer and/or redeliver as soon as
practicable after being requested to do so by a Beneficial Owner or his or its
successor, the certificate(s) for the Shares of such Beneficial Owner then held
by the Depositary. It is acknowledged and agreed by all parties hereto that
the voting rights herein granted by Beneficial Owners to the Voting Trustee are
granted in connection with the transfer of shares formerly held by Edward L.
Sawyer and subject to the predecessor to this Agreement. Accordingly, such
rights are coupled with an interest in the Shares to which such rights relate
and are irrevocable by Beneficial Owners so long as this Agreement remains in
force.
8. The entire beneficial interest in the Shares, and all rights in the
Shares not specifically granted to the Voting Trustee or the Depositary by the
terms of this Agreement, are retained by Beneficial Owners.
9. The Voting Trustee and the Depositary shall incur no responsibility
as shareholder, trustee, or otherwise, by reason of any error of judgment or
mistake of law or other mistake, for any misconstruction of this Agreement, or
for any action of any nature taken or omitted hereunder or believed by either
of them to be in accordance with the provisions and intent hereof or otherwise,
except for the willful misconduct of such party. If so requested by the Voting
Trustee, the Depositary shall indemnify the Voting Trustee and hold him
harmless from and against all losses, claims, liabilities and demands,
including, without limitation, any such losses, claims, liabilities and demands
in connection with or growing out of the administration of the trust created by
this Agreement, except that the Voting Trustee shall not be entitled to such
indemnification if any such loss, claim, liability or demand shall arise from
his willful misconduct. The Voting Trustee shall not be required to give a
bond or security for the discharge of his duties under this Agreement.
10. The following provisions shall be used in interpreting this
Agreement:
(a) This Agreement shall be binding upon and inure to the benefit
of the heirs, executors, administrators and permitted successors and
assigns of the parties hereto.
(b) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) This Agreement shall become effective when it shall be signed
by the Voting Trustee and Beneficial Owners.
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<PAGE> 4
(d) The validity of this Agreement, or any part thereof, and
interpretations of all provisions hereof, shall be governed by the laws
of the State of Ohio.
(e) The invalidity of any term or provision of this Agreement
shall not affect the validity of the remainder of this Agreement.
(f) An executed counterpart of this Agreement may, but shall not
be required to, be filed with the Secretary of the Depositary, and upon
such filing shall be open to inspection by any shareholder of the
Depositary at the executive offices of the Depositary at all reasonable
times.
(g) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
BENEFICIAL OWNERS:
/s/ EDWARD L. SAWYER, JR.
Edward L. Sawyer, Jr.
/s/ DOROTHY M. SAWYER
Dorothy M. Sawyer
THE ALEXANDER SAWYER TRUST UNDER
IRREVOCABLE TRUST AGREEMENT
DATED JULY 21, 1987
By: /s/ ROBERT H. JACKSON
Robert H. Jackson, Trustee
/s/ EDWARD W. WELLS /s/ ANGELA WELLS
Edward W. & Angela Wells
/s/ TERENCE C. SEIKEL
Terence C. Seikel, Trustee of the
Revocable Trust Dated Feb 15, 1993
(Signatures continued)
4
<PAGE> 5
PRUDENTIAL SECURITIES, CUSTODIAN FOR
TERENCE C. SEIKEL, I.R.A.
By: /s/ THOMAS WARDELL
Its: Assistant Vice President
/s/ VINCENT L. DONOVAN
Vincent L. Donovan
/s/ WILLIAM H. KETT /s/ GAIL KETT
William H. & Gail Kett
/s/ LARRY PHILLIPS
Larry Phillips
/s/ SHEILA J. PHILLIPS
Sheila J. Phillips
/s/ MICHAEL JAMES PROKOPETZ /s/ NICOLE PROKOPETZ
Michael James & Nicole Prokopetz
/s/ P. BALLANTYNE
P. Ballantyne
/s/ MARY JANE VICARY /s/ MICHAEL S. VICARY
Mary Jane & Michael S. Vicary
/s/ SANDRA A. COSTILL
Sandra A. Costill
/s/ NORMAN K. KROL /s/ LINDA KROL
Norman K. and Linda Krol
(Signatures continued)
5
<PAGE> 6
PRUDENTIAL SECURITIES, INC. to be
deposited in Norman K. Krol I.R.A.
Rollover Account #013-R40616
By: /s/ THOMAS WARDELL
Its: Assistant Vice President
/s/ HOSSEIN REZA NIKOUI
Hossein Reza Nikoui
/s/ JOHN C. TAYLOR
John C. Taylor
/s/ MICHAEL LIETERT /s/ LISA LIETERT
Michael & Lisa Lietert
/s/ JAMES L. CURTIS
James L. Curtis
/s/ RICHARD J. LORIA
Richard J. Loria
/s/ JOHN R. PALMER
John R. Palmer
/s/ ROBERT T. HOWELL /s/ MICHELE HOWELL
Robert T. & Michele Howell
/s/ JEFF HORTON /s/ DONNA HORTON
Jeff & Donna Horton
VOTING TRUSTEE:
/s/ RONALD T. LARIZZA
Ronald T. Larizza
(Signatures continued)
6
<PAGE> 7
DEPOSITARY:
LARIZZA INDUSTRIES, INC., an
Ohio corporation
By: /s/ TERENCE C. SEIKEL
Its: Chief Financial Officer
7
<PAGE> 1
EXHIBIT 10.2
ASSET SALE AND PURCHASE AGREEMENT
Dated May 6, 1994
<PAGE> 2
TABLE OF CONTENTS
-----------------
Paragraph No. Description Page No.
------------ ----------- -------
1. Sale and Purchase of Assets 1
2. Assumption of Liabilities 2
2.1 Assumption by Buyer 2
2.2 Buyer's Acknowledgement 3
3. Purchase Price and Payment 3
3.1 Cash Purchase Price 3
3.2 Assumption of Liabilities 3
3.3 Return of Capital 3
3.4 Allocation of Purchase Price 3
4. The Closing 3
4.1 Date and Time 3
4.2 Transactions at the Closing 4
5. Representations and Warranties 4
5.1 Representations and Warranties
of Sellers 4
5.1.1 Organization and Power 4
5.1.2 Authority Relative to This Agreement 4
5.1.3 Consents and Approvals; No Violation 4
5.1.4 Title 5
5.2 Representations and Warranties of Buyer 5
5.2.1 Organization 5
5.2.2 Authority Relative to This Agreement 5
5.2.3 Consents and Approvals; No Violation 6
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Paragraph No. Description Page No.
------------ ----------- -------
5.2.4 Licenses 6
5.2.5 Litigation and Claims 6
5.2.6 Performance of Assumed Obligations 6
6. Other Covenants and Agreements 7
6.1 Performance of Obligations 7
6.2 Payment of Payables 7
6.3 Payment of Taxes 7
6.4 Responsibility for Costs and Expenses 7
6.5 Compliance with Agreements 7
7. Miscellaneous 7
7.1 Entire Agreement 7
7.2 Waivers and Amendments 8
7.3 Governing Law and Forum 8
7.4 Counterparts 8
7.5 Exhibits 8
7.6 Headings 8
7.7 Binding Effect 8
7.8 Severability 8
7.9 Survival of Provisions 9
7.10 Bulk Transfer Provisions 9
ii
<PAGE> 4
ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT (the "Agreement") is made as of
May 6, 1994, between Manchester Plastics, Ltd., a corporation amalgamated under
the laws of the province of Ontario, Canada ("Seller") and Larizza Industries,
Inc., an Ohio corporation ("Buyer").
RECITAL
Seller desires to sell and assign to Buyer, and Buyer desires to buy and
assume from Seller, all of Seller's right, title and interest in certain assets
and liabilities of Seller, upon the terms set forth in this Agreement.
THEREFORE, the parties agree as follows:
1. SALE AND PURCHASE OF ASSETS.
Upon the terms set forth in this Agreement, at the Closing (as defined in
Section 4.1), Seller shall sell, convey, assign and deliver to Buyer, and Buyer
shall purchase or assume from Seller, all of Seller's right, title and interest
(as lessee or owner) in and to all of the assets of Seller located at, or
related to, the Seller's Manchester, Williamston (two), Homer or Ann Arbor,
Michigan facilities or the business conducted at such facilities as of the date
of this Agreement (collectively, the "Purchased Assets"). The "Purchased
Assets" include the following:
(a) the land, buildings, improvements and other real estate owned by the
Seller and located in Ann Arbor, Homer, Manchester or Williamston,
Michigan (the "Owned Real Estate").
(b) the lease covering the land and buildings in Williamston, Michigan
leased by Seller, together with the related leasehold estate (the
"Lease").
(c) all structures, facilities, fixtures, machinery, equipment,
furniture, tools, rolling stock, inventories, receivables
(including, without limitation, receivables from other divisions of
Seller, which divisions are not included in the Purchased Assets),
goods, intangibles, other personal property and leasehold
improvements owned or leased by the Seller and at or related to the
Owned Real Estate or the premises covered by the Lease or related to
the business conducted by the Seller at the Owned Real Estate or the
premises covered by the Lease.
<PAGE> 5
(d) all existing agreements and contracts to which the Seller is a party
that are related to the Owned Real Estate or the premises covered by
the Lease or related to the business conducted by the Seller at the
Owned Real Estate or the premises covered by the Lease, including,
without limitation, the contracts relating to the production of door
panels for the Chrysler Jeep Grand Cherokee (the "Contracts").
(e) all of Seller's licenses and permits that are related to the Owned
Real Estate or the premises covered by the Lease or related to the
business conducted by the Seller at the Owned Real Estate or the
premises covered by the Lease.
(f) all of Seller's files, records and related information that are
related to the Owned Real Estate or the premises covered by the
Lease or related to the business conducted by the Seller at the
Owned Real Estate or the premises covered by the Lease.
(g) all of Seller's patents, copyrights, trade names, trademarks and
service marks, know-how and goodwill that are related to the Owned
Real Estate or the premises covered by the Lease or related to the
business conducted by the Seller at the Owned Real Estate or the
premises covered by the Lease.
2. ASSUMPTION OF LIABILITIES.
2.1 Assumption by Buyer. Buyer shall, by appropriate instruments to be
executed and delivered at the Closing, agree to perform, pay or discharge, to
the extent not previously performed, paid or discharged, and to assume in full
all obligations and liabilities of Seller relating to the Purchased Assets,
other than the "Excluded Liabilities" (as defined below) (collectively, the
"Assumed Liabilities"). "Excluded Liabilities" means (i) any liabilities of
the Seller (including, without limitation, any such liabilities to the Buyer)
not relating to the Purchased Assets, and (ii) the liabilities and obligations
of the Seller to the banks (the "Banks") which are parties to the Credit
Agreement, dated as of January 18, 1989, as amended, and related documents, or
which are parties to the Credit Agreement, dated as of December 23, 1991, as
amended, and related documents (collectively, the "Credit Documents"). The
"Assumed Liabilities" include the following to the extent not paid as of the
date of this Agreement and to the extent they are not Excluded Liabilities and
to the extent they are related to the Purchased Assets: (i) any liability or
obligation reflected or reserved against in Seller's books, records or
financial statements, (ii) trade accounts payable, accruals and other current
liabilities of the Seller, (iii) all of the Seller's obligations for services,
goods, equipment
2
<PAGE> 6
or supplies regardless of whether delivered before, on or after the Closing,
(iv) all obligations, responsibilities or liabilities of Seller under the Lease
or under the Contracts, (v) all obligations or liabilities of the Seller with
respect to its employees, including salaries, commissions, bonuses, vacation
pay, sick pay, severance pay, employee benefits, and unemployment taxes, and
(vi) all obligations or liabilities of the Seller to Buyer.
2.2 Buyer's Acknowledgement. Buyer acknowledges and agrees that the
Seller's sale of the Purchased Assets to Buyer is in reliance upon, and
conditioned upon, Buyer's assumption of the Assumed Liabilities and that the
total aggregate consideration to be paid by Buyer for the Purchased Assets is
based upon and reflects Buyer's assumption and performance of the Assumed
Liabilities.
3. PURCHASE PRICE AND PAYMENT.
3.1 Cash Purchase Price. For and in consideration of the sale of the
Purchased Assets by Seller to Buyer pursuant to the terms of this Agreement,
within 14 days of the date of the execution of this Agreement Buyer shall pay
to Seller $20,625,000 (U.S.) in cash (the "Purchase Price").
3.2 Assumption of Liabilities. As additional consideration for the sale
of the Purchased Assets to Buyer, Buyer shall assume and agree to perform the
Assumed Liabilities. Buyer shall execute appropriate instruments requested by
Seller to evidence Buyer's assumption of the Assumed Liabilities.
3.3 Return of Capital. An amount of the Purchased Assets with a fair
market value equal to $35 million (Canadian) less the amount of Canadian
dollars that could be purchased with the Purchase Price (at the spot exchange
rate on the Closing Date) shall be distributed to Buyer as of the Closing Date
as a return of paid-up capital, and the Seller's capital shall be reduced by
the same amount.
3.4 Allocation of the Purchase Price. The aggregate consideration for
the Purchased Assets shall be allocated among the Purchased Assets as agreed
upon by the parties. The parties agree that such allocation shall be
conclusive and binding for all purposes, and Buyer and Seller shall each file
all income or other tax returns in a manner consistent with such allocation.
4. THE CLOSING.
4.1 Date and Time. The sale and purchase of the Purchased Assets
pursuant to this Agreement shall be closed and consummated (the "Closing") at
10:00 a.m. on May 6, 1994, or at such other time as may be mutually agreeable
to the parties (the "Closing Date").
3
<PAGE> 7
4.2 Transactions at the Closing. At the Closing the parties shall take
the following actions and execute and deliver the following documents:
(a) Seller shall deliver to Buyer a Bill of Sale and Assignment and
Assumption of Leases, Contracts and Liabilities in the form attached as
Exhibit 4.2(a). Buyer shall deliver to Seller appropriate instruments of
assumption of the Assumed Liabilities, including the Bill of Sale and
Assignment and Assumption of Leases, Contracts and Liabilities in the
form attached as Exhibit 4.2(a).
(b) Seller shall deliver to Buyer warranty deeds in the form
attached as Exhibit 4.2(b) transferring the Owned Real Estate to Buyer.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following as of the date of this Agreement:
5.1.1 Organization and Power. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario. Seller has all requisite corporate power and authority to own,
lease, and operate its assets, properties and business and to carry on its
business as now being conducted.
5.1.2 Authority Relative to This Agreement. Seller has full
corporate power and authority to enter into and perform this Agreement. The
execution, delivery and performance by Seller of this Agreement have been duly
and validly authorized on behalf of the Seller by its Board of Directors and,
if necessary, its shareholder. No other corporate action by the Seller is
necessary to authorize Seller's execution and performance of this Agreement.
This Agreement has been duly and validly executed and delivered by the Seller
and constitutes a valid and binding agreement of the Seller, enforceable
against the Seller in accordance with its terms, except as it may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
equitable defenses and to the discretion of the court before which any
proceedings may be brought.
5.1.3 Consents and Approvals; No Violation. Except for any
consents required under the Credit Documents, customer or supplier purchase
orders, service agreements, insurance policies, licenses and permits, and
leases being assigned to, and assumed by, Buyer pursuant to this Agreement
(which consents the parties acknowledge are not being obtained and which are
hereby waived), and except as set forth in the attached Exhibit 5.1.3, neither
the execution nor the performance by the Seller of this Agreement, (a) will
require any authorization, consent or approval of any governmental or
regulatory authority or of any other person or entity, the absence of which
would have a material adverse effect on the business of Seller, (b) will
conflict with, or breach any provision of, the Articles of
4
<PAGE> 8
Incorporation or bylaws of the Seller, (c) will conflict with, in any material
respect, violate or breach, in any material respect, any provision of, or
require the consent of any governmental agency or body or any third party, the
absence of which would have a material adverse effect on the business of
Seller, under, any of the provisions of any material authorization or order of
any governmental agency or body or any third party, or any material note,
lease, agreement or other instrument or obligation to which the Seller is a
party, or by which it or any of its properties or assets may be bound, or (d)
will violate, in any material respect, any material order, injunction, or
arbitration award, or any statute, rule, regulation or ruling of any court or
governmental authority, Canadian, United States or foreign, applicable to the
Seller or to any of the Purchased Assets.
5.1.4 Title. Except for those liens and encumbrances relating
to assets described in UCC financing statements currently on file listing the
Seller as debtor, except for liens and encumbrances in favor of the Banks in
connection with the Credit Documents, and except as set forth in the attached
Exhibit 5.1.4, Seller has good, valid and marketable title to all of the
Purchased Assets (except for Purchased Assets subject to leases assumed by
Buyer pursuant to this Agreement) free and clear of all liens, encumbrances,
security interests, mortgages and leases in favor of third parties. Seller has
good and valid leasehold interests in all of the Purchased Assets subject to
leases assumed by Buyer pursuant to this Agreement.
5.2 Representations and Warranties of Buyer. Buyer represents and
warrants to the Seller the following as of the date of this Agreement:
5.2.1 Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio.
Buyer has all requisite corporate power and authority to own, lease and operate
its assets, properties and business and the Purchased Assets and to carry on
its business and the business related to the Purchased Assets as now being
conducted.
5.2.2 Authority Relative to This Agreement. Buyer has full
corporate power and authority to enter into and perform this Agreement. The
execution, delivery and performance by Buyer of this Agreement have been duly
and validly authorized on behalf of Buyer by its Board of Directors. No other
corporate action by Buyer is necessary to authorize Buyer's execution and
performance of this Agreement. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes a valid and binding agreement
of Buyer, enforceable against Buyer in accordance with its terms, except as it
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights and except that the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to equitable defenses and to the discretion of the court before which
any proceedings may be brought.
5
<PAGE> 9
5.2.3 Consents and Approvals; No Violation. Except for any
consents required under the Credit Documents, customer or supplier purchase
orders, service agreements, insurance policies, licenses and permits, and
leases being assigned to, and assumed by, Buyer pursuant to this Agreement
(which consents the parties acknowledge are not being obtained and which are
hereby waived), and except as set forth in the attached Exhibit 5.2.3, neither
the execution nor the performance by Buyer of this Agreement, (a) will require
any authorization, consent or approval of any governmental or regulatory
authority or of any other person or entity, the absence of which would have a
material adverse effect on Buyer's business, (b) will conflict with, or breach
any provision of, the Articles of Incorporation or bylaws of Buyer, (c) will
conflict with, in any material respect, violate or breach, in any material
respect, any provision of, or require the consent of any governmental agency or
body or any third party, the absence of which would have a material adverse
effect on Buyer's business, under, any of the provisions of any material
authorization or order of any governmental agency or body or any third party,
or any material note, lease, agreement or other instrument or obligation to
which Buyer is a party, or by which it or any of its properties or assets may
be bound, or (d) will violate, in any material respect, any material order,
injunction, or arbitration award, or any statute, rule, regulation or ruling of
any court or governmental authority, United States or foreign, applicable to
Buyer or to any of its properties or assets.
5.2.4 Licenses. Buyer has obtained, or will obtain as soon as
practicable after the date of this Agreement, all licenses, permits, bonds,
certifications, registrations, authorizations and approvals necessary to
Buyer's operation of, and ownership and use of, the Purchased Assets.
5.2.5 Litigation and Claims. There is no action, lawsuit, or
proceeding pending or threatened, nor is there any claim or investigation
against Buyer in any court or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator that would preclude Buyer from
consummating the transactions contemplated by this Agreement, preclude Buyer
from performing all of the obligations assumed by it under this Agreement, or
materially adversely affect Buyer from performing all of the obligations
assumed under this Agreement. Buyer is not subject to any consent decree,
order, writ, decree, injunction, judgment or other finding or determination of
any court or before any Federal, State, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, in connection with any such proceeding to which Buyer is an affected
party and which is applicable to Buyer's consummation of the transactions
contemplated by this Agreement or its performance of this Agreement.
5.2.6 Performance of Assumed Obligations. Buyer has all
necessary and appropriate power, capacity and authority to, and Buyer shall,
perform all obligations and responsibilities assumed by Buyer pursuant to this
Agreement.
6
<PAGE> 10
6. OTHER COVENANTS AND AGREEMENTS.
6.1 Performance of Obligations. Buyer shall perform any and all duties
and obligations of Seller with respect to the Purchased Assets from and after
the date of this Agreement, including, without limitation, all duties or
obligations imposed pursuant to the Assumed Liabilities, the Contracts and the
Lease or by any governmental body or agency or pursuant to any foreign,
federal, state or local law, rule, regulation or ordinance, including, but not
limited to, correction of any existing violations of any foreign, federal,
state or local law, rule, regulation or ordinance, whether or not any of such
duties, obligations or violations existed before the date hereof.
6.2 Payment of Payables. After the date of this Agreement, Buyer shall
make all payments and do all other things to cause the Assumed Liabilities
assumed by Buyer pursuant to Section 2.1 to be paid in the ordinary course of
business.
6.3 Payment of Taxes. Buyer shall be responsible for, and shall
discharge, all taxes, assessments, interest and penalties, including property
and ad valorem taxes, with respect to the Purchased Assets relating to periods
on or after the date of this Agreement.
6.4 Responsibility for Costs and Expenses. Buyer shall be responsible
for, and shall pay, all costs and expenses of any nature whatsoever arising
from, or in any way connected with or related to, the Purchased Assets and
incurred on or after the date of this Agreement, including, without limitation,
rent or other payments arising with respect to leases, carrying costs,
operating expenses and other costs and expenses, costs for materials and
equipment, and cost of repairs. Seller shall have no costs or expenses
whatsoever with respect to such Purchased Assets on or after the date of this
Agreement.
6.5 Compliance with Agreements. Buyer shall observe and comply with all
covenants, terms and provisions, expressed or implied, contained in the
agreements, the Contracts, the Lease and all other contracts pertaining to
Seller's interest in the Purchased Assets.
6.6 Assistance after Closing. Seller shall cooperate with Buyer after
the Closing to the extent reasonably necessary to transfer of record title to
any titled vehicles and to transfer any licenses or permits into Buyer's name.
7. MISCELLANEOUS.
7.1 Entire Agreement. This Agreement (including the Exhibits to this
Agreement) contains the entire agreement among the parties with respect to the
purchase and sale of the Purchased Assets and the other transactions
contemplated by this Agreement and supersedes all prior agreements, commitments
and discussions, written or oral, with respect to such transactions, which are
merged into this Agreement and shall be of no further force or effect.
7
<PAGE> 11
7.2 Waivers and Amendments. This Agreement may be amended, modified, or
superseded, and the terms and conditions of this Agreement may be waived, only
by a written instrument signed by the parties or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege under this Agreement shall operate as a waiver of
such right, power or privilege, nor shall any waiver on the part of any party
of any right, power or privilege under this Agreement, nor any single or
partial exercise of any right, power or privilege under this Agreement,
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege under this Agreement.
7.3 Governing Law and Forum. This Agreement is being executed in the
State of Michigan and shall be governed by and construed in accordance with the
laws of the State of Michigan, except that if any provision of this Agreement
would be illegal, void, invalid or unenforceable under such laws in connection
with a suit or proceeding validly instituted in another jurisdiction, then the
laws of such other jurisdiction shall govern insofar as is necessary to sustain
the validity or enforceability of the terms of this Agreement.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.5 Exhibits. The Exhibits to this Agreement are a part of this
Agreement as if set forth in full in this Agreement.
7.6 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
7.7 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective permitted
successors and assigns; provided that the parties may not assign or transfer
any of their rights or delegate any of their obligations under this Agreement
without the prior written consent of the other party, and any purported
assignment or transfer by any party that is not in compliance with the
foregoing is void.
7.8 Severability. The provisions of this Agreement shall be deemed
severable, and if any provision of this Agreement is determined to be illegal
or invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding. If any provision of this Agreement is determined to be illegal or
invalid in its entirety, such illegality or invalidity shall have no effect on
the other provisions of this Agreement, which shall remain valid, operative and
enforceable
8
<PAGE> 12
7.9 Survival of Provisions. The provisions and the rights and
obligations of the parties set forth in Sections 2, 3.2 and 6 shall survive and
be binding upon and fully enforceable against the parties and their respective
successors and assigns as applicable at all times on or after the date hereof,
in accordance with their terms, except as otherwise expressly provided by this
Agreement.
7.10 Bulk Transfer Provisions. If the bulk transfer provisions of the
applicable states' Uniform Commercial Codes were applicable to the transactions
contemplated by this Agreement, it would be impracticable to comply with such
provisions. Accordingly, Seller covenants to hold Buyer harmless from any
claims and demands of creditors of Seller arising out of any failure of Buyer
to comply with the bulk transfer provisions of the Uniform Commercial Code if
such provisions would be applicable, except for claims and demands in
connection with the Assumed Liabilities.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BUYER:
LARIZZA INDUSTRIES, INC.
By: /s/ TERENCE C. SEIKEL
Its: Chief Financial Officer
SELLER:
MANCHESTER PLASTICS, LTD.
By: /s/ TERENCE C. SEIKEL
Its: Chief Financial Officer
9
<PAGE> 13
EXHIBIT INDEX
-------------
Exhibit Number Description
-------------- -----------
4.2(a) Bill of Sale and Assignment and
Assumption
4.2(b) Warranty Deeds
5.1.3 Additional Required Consents
5.1.4 Additional Liens
5.2.3 Required Consents
10
<PAGE> 1
EXHIBIT 10.8(a)
AMENDED AND RESTATED MARKETING, SELLING,
ADMINISTRATIVE AND MANAGEMENT SERVICES AGREEMENT
THIS AMENDED AND RESTATED MARKETING, SELLING, ADMINISTRATIVE AND MANAGEMENT
SERVICES AGREEMENT ("Agreement") is made as of May 6, 1994, between Larizza
Industries, Inc., an Ohio corporation whose address is 201 West Big Beaver
Road, Suite 1040, Columbia Center, Troy, Michigan, U.S.A. 48084 ("Larizza"),
and Manchester Plastics, Ltd., an Ontario corporation whose address is 900
Queen Street, Gananoque, Ontario, Canada K7G 2W7 ("Manchester").
R E C I T A L S
A. Manchester is a wholly-owned subsidiary of Larizza.
B. Manchester has obtained and will continue to obtain from time to time
certain marketing, selling and sales representative services from Larizza.
C. Larizza and Manchester have previously entered into the Marketing,
Selling, Administrative and Management Services Agreement, dated as of December
20, 1991 (the "Prior Agreement"). Simultaneously with the execution of this
Agreement, Manchester is selling certain assets to Larizza pursuant to the
Asset Sale and Purchase Agreement between the parties.
D. Larizza and Manchester desire to amend and restate the Prior Agreement and
to set forth in writing their understanding and agreement with respect to
Larizza's provision of, and Manchester's payment for, marketing, selling, sales
representative, administrative and management services.
THEREFORE, Larizza and Manchester agree as follows:
1. Marketing, Selling, Sales Representative, Administrative and Management
Services. Larizza has rendered and shall, during the term of this Agreement,
continue to render, to Manchester marketing, selling, sales representative,
administrative and management services. Such services shall include, without
limitation, (i) those described in the attached Exhibit A, which is
incorporated into and made a part of this Agreement, (ii) soliciting and
securing purchase orders from existing and potential new customers for the
manufacturing of products of Manchester, (iii) preserving the relationships
with manufacturers representatives seeking to secure such purchase orders for
Manchester, (iv) servicing Manchester customers with respect to current and
future purchase orders, (v) preparing and distributing marketing and
advertising literature, and (v) developing and coordinating Manchester's
marketing strategy and program. The services to be rendered by Larizza under
this Section 1 shall be modified from time to time by agreement of the parties
to reflect changes in the business and activities of the parties.
<PAGE> 2
2. Compensation and Reimbursement. During the term of this Agreement,
Manchester shall (i) pay to Larizza, as full compensation for its services
rendered pursuant to Section 1, (A) 3% of its "Gross Sales" (as defined below)
during the term, minus (B) amounts payable by Manchester to third party
manufacturers' representatives engaged by Manchester, with respect to "Gross
Sales" during the term, and (ii) reimburse Larizza for all expenses incurred by
Larizza in rendering the services described in Exhibit A plus an additional
amount equal to 15% of such expenses. Larizza shall be responsible for
compensating its own marketing and sales representatives and employees.
Larizza shall submit a bill to Manchester for the expenses described above, and
Manchester shall pay all of the compensation and reimbursements described above
to Larizza on a monthly or other periodic basis. For purposes of this
Agreement, "Gross Sales" shall mean the total price charged by Manchester
during the term of this Agreement to its customers, as such price and the date
of the charge are shown by its invoices to customers, less any returns and
allowances granted by Manchester with respect to such invoices. All payments
under this agreement and the computations of such payments shall be made in
United States dollars.
3. Term. The "term" of this Agreement shall begin effective as of January 1,
1994 and shall terminate upon not less than 30 days prior written notice from
the party desiring to terminate this Agreement to the other party.
4. Indemnities. If the payments required under Section 2 shall, upon audit
or other examination of the tax returns of Larizza and/or Manchester, be
determined to be more or less than the fair market value of the services
rendered under this Agreement, and either:
(a) such determination shall be acceded to by both of the parties to this
Agreement, or
(b) such determination shall be made final by the appropriate taxing
authority or a court of competent jurisdiction of a taxing state (and no
appeal shall be taken therefrom or the applicable period for filing notice of
appeal shall have expired), and appropriate relief from double taxation on
account of such determination shall have been obtained from the other taxing
state's competent authority, within the meaning of the Canada - United States
Tax Convention, with any Protocols, as amended (or the applicable period for
obtaining such relief shall have expired),
then, in the case of excessive payments, Larizza shall repay the excess to
Manchester (after reduction for any applicable withholding taxes) and, in the
case of deficient payments, Manchester shall pay the deficiency to Larizza
(after reduction for any applicable withholding taxes).
5. Interest Rate. Each of Larizza and Manchester agrees to pay to the other
interest on all sums not paid by Larizza or Manchester to the other when due
and owing under the provisions of this Agreement from the date of
2
<PAGE> 3
such delinquency until paid at the rate applicable to intercompany indebtedness
owing by Larizza or Manchester to the other; provided, however, that such
interest rate shall constitute an "arms-length rate of interest" within the
meaning of Section 1.482-2(a)(2)(iii) of the United States Treasury
Regulations, as amended.
6. Notices. All notices given pursuant to this Agreement shall be in writing
and shall be delivered by first class mail to the appropriate party, at the
address of such party set forth above, or at such other address as may be
designated by such party in writing from time to time.
7. Nonassignability. This Agreement and the obligations and rights of the
parties under this Agreement shall not be assignable by either party without
the prior written consent of the other party.
8. Governing Law. This Agreement has been entered into in Michigan, and
shall be governed and construed in accordance with the laws of the State of
Michigan.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date set forth in the introductory paragraph of this Agreement.
LARIZZA INDUSTRIES, INC.
By: /s/ TERENCE C. SEIKEL
Its: Chief Financial Officer
MANCHESTER PLASTICS, LTD.
By: /s/ TERENCE C. SEIKEL
Its: Chief Financial Officer
3
<PAGE> 4
EXHIBIT A
TO MARKETING, SELLING, ADMINISTRATIVE
AND MANAGEMENT SERVICES AGREEMENT BY AND
BETWEEN LARIZZA INDUSTRIES, INC. ("Larizza")
AND MANCHESTER PLASTICS, LTD. ("Manchester")
The marketing, selling, administrative and management services to be
performed by Larizza under the Agreement shall include the following, as well
as such other marketing, selling, administrative and management services as
shall be established by the parties from time to time:
1. Marketing and Selling Services.
a. Preparation and distribution of marketing and advertising literature.
b. Representation of Manchester with respect to soliciting new orders
from existing and potential new customers and servicing such customers with
respect to current and future purchase orders.
2. Administrative and Financial Services.
a. Developing, reviewing and implementing financial, capital and operating
plans, forecasts and budgets.
b. Providing overall guidance and assistance with respect to financial and
accounting systems, including ensuring uniformity of financial reporting.
c. Assistance in preparation of financial statements, tax returns and
representation regarding tax controversies.
d. Planning and coordination of audits by Manchester's independent
auditors and preparation of schedules and workpapers related to such audits.
e. Overall coordination of cash, including cash management, assistance in
the preparation of cash flow projections and investing excess cash.
f. Negotiating and maintenance of credit facilities, including assistance
in management of credit and collection and the monitoring of representations,
warranties and covenants in order to ensure compliance with credit
arrangements.
g. Coordination of risk management, including assistance in obtaining and
establishing insurance policies.
<PAGE> 5
h. Providing credit guarantees, enhanced credit leverage and other
services in obtaining required credit.
i. Coordinating Manchester's involvement in litigation, including
contracting for and coordinating legal services and maintaining relationships
with outside counsel.
3. Management Services.
a. Assistance in selecting personnel, making recommendations as to
compensation and incentive plans and negotiating union contracts and
responding to all grievances under such union contracts.
b. Providing overall executive management services including, without
limitation, long-term corporate guidance, planning and decision-making.
c. Assistance in developing and coordinating new manufacturing procedures
and technologies.
d. Assistance in establishing and ensuring compliance with quality systems
in accordance with customer requirements and coordinating quality audits
performed by customers.
e. Overall management of manufacturing facilities.
2
<PAGE> 1
EXHIBIT 10.10(a)
CREDIT AGREEMENT
dated as of May 6, 1994
among
LARIZZA INDUSTRIES, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
CONTINENTAL BANK N.A.,
individually and as Agent
<PAGE> 2
||
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; LETTERS OF CREDIT;
BORROWING AND CONVERSION PROCEDURES . . . . . . . . . . . . . 18
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1.1 Commitment A . . . . . . . . . . . . . . . . . . 18
2.1.2 Commitment B . . . . . . . . . . . . . . . . . . 18
2.1.3 Certain Limitations on Usage of Commitments . . . 18
2.2 Various Types of Loans . . . . . . . . . . . . . . . . . . . . 19
2.3 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . 19
2.4 Conversion Procedures . . . . . . . . . . . . . . . . . . . . 19
2.5 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . 20
2.6 Letter of Credit Procedures . . . . . . . . . . . . . . . . . 20
2.7 Participations in Letters of Credit . . . . . . . . . . . . . 20
2.8 Reimbursement Obligations . . . . . . . . . . . . . . . . . . 21
2.9 Limitation on the Issuing Bank's Obligations . . . . . . . . . 21
2.10 Funding by Banks to the Issuing Bank . . . . . . . . . . . . . 22
2.11 Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.12 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.13 Commitments Several . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3 NOTES EVIDENCING LOANS . . . . . . . . . . . . . . . . . . . . 23
3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . 24
4.3 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Setting and Notice of Eurodollar Rates . . . . . . . . . . . . 25
4.5 Computation of Interest . . . . . . . . . . . . . . . . . . . 25
SECTION 5 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Non-Use Fee . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . 26
<PAGE> 3
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS . . . . 26
6.1 Reduction or Termination of the
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1.1 Scheduled Reductions of Commitment A . . . . . . . . 26
6.1.2 Mandatory Reductions . . . . . . . . . . . . . . . . 27
6.1.3 Voluntary Reduction or Termination . . . . . . . . . 27
6.1.4 Reductions Pro Rata . . . . . . . . . . . . . . . . . 27
6.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2.1 Mandatory Prepayments due to Commitment
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2.2 Mandatory Prepayments from Asset Sales . . . . . . . 28
6.2.3 Voluntary Prepayments . . . . . . . . . . . . . . . . 28
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . . . . . . . 28
7.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Application of Certain Payments . . . . . . . . . . . . . . . . . . 29
7.3 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS . . . . 32
8.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Changes in Law Rendering Eurodollar Loans Unlawful . . . . . . . . 34
8.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.5 Right of Banks to Fund through Other Offices . . . . . . . . . . . 35
8.6 Discretion of Banks as to Manner of Funding . . . . . . . . . . . . 35
8.7 Mitigation of Circumstances; Replacement of Affected Bank . . . . 35
8.8 Conclusiveness of Statements; Survival of Provisions . . . . . . . 36
SECTION 9 WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . 37
9.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . 37
9.4 Financial Information . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 37
9.6 Litigation and Suretyship Liabilities . . . . . . . . . . . . . . . 38
9.7 Ownership of Properties; Liens . . . . . . . . . . . . . . . . . . 38
9.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.9 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . 38
9.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . 38
9.12 Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . 39
9.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.14 Solvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ii
<PAGE> 4
<TABLE>
<S> <C>
9.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.16 Contracts; Labor Matters . . . . . . . . . . . . . . . . . . 39
9.17 Environmental and Safety and Health Matters . . . . . . . . . 40
9.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . 41
9.19 Information . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Reports, Certificates and Other Information . . . . . . . . . 41
10.1.1 Audit Report . . . . . . . . . . . . . . . . . . . . 41
10.1.2 Quarterly Reports . . . . . . . . . . . . . . . . . 42
10.1.3 Compliance Certificates . . . . . . . . . . . . . . 42
10.1.4 Reports to SEC and to Shareholders . . . . . . . . . 43
10.1.5 Notice of Default, Litigation and
ERISA Matters . . . . . . . . . . . . . . . . . . . 43
10.1.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . 43
10.1.7 Management Reports . . . . . . . . . . . . . . . . . 43
10.1.8 Projections, etc. . . . . . . . . . . . . . . . . . 44
10.1.9 Other Information . . . . . . . . . . . . . . . . . 44
10.2 Books, Records and Inspections . . . . . . . . . . . . . . . 44
10.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.4 Compliance with Laws; Maintenance of Property; Payment of
Taxes and Liabilities . . . . . . . . . . . . . . . . . . . 44
10.5 Maintenance of Existence, etc. . . . . . . . . . . . . . . . 45
10.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . 45
10.6.1 Minimum Net Worth . . . . . . . . . . . . . . . . . 45
10.6.2 Accounts Payable to Inventory Ratio . . . . . . . . 45
10.6.3 Fixed Charge Coverage Ratio . . . . . . . . . . . . 45
10.6.4 Consolidated Fixed Charge Coverage Ratio . . . . . . 46
10.6.5 Operating Leases . . . . . . . . . . . . . . . . . . 46
10.7 Limitations on Debt . . . . . . . . . . . . . . . . . . . . 46
10.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.9 Capital Expenditures . . . . . . . . . . . . . . . . . . . . 47
10.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . 47
10.11 Investments . . . . . . . . . . . . . . . . . . . . . . . . 48
10.12 Mergers, Consolidations, Sales . . . . . . . . . . . . . . . 48
10.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 49
10.14 Transactions with Affiliates . . . . . . . . . . . . . . . . 49
10.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 50
10.16 Environmental Covenants . . . . . . . . . . . . . . . . . . 50
10.16.1 Environmental Response Obligation . . . . . . . . . 50
10.16.2 Environmental Liabilities . . . . . . . . . . . . . 50
10.16.3 Environmental Assessments . . . . . . . . . . . . . 50
10.17 Unconditional Purchase Obligations . . . . . . . . . . . . . 51
10.18 Inconsistent Agreements . . . . . . . . . . . . . . . . . . 51
10.19 Further Assurances . . . . . . . . . . . . . . . . . . . . . 51
10.20 Limitations on Sale and Leaseback Transactions . . . . . . . 51
10.21 Business . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 11 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . 52
11.1 Initial Loan or Letter of Credit . . . . . . . . . . . . . . 52
11.1.1 Notes . . . . . . . . . . . . . . . . . . . . . . . 52
11.1.2 Resolutions . . . . . . . . . . . . . . . . . . . . 52
11.1.3 Consents, etc . . . . . . . . . . . . . . . . . . . 52
11.1.4 Incumbency and Signature Certificates . . . . . . . 52
11.1.5 Security Agreement . . . . . . . . . . . . . . . . 52
11.1.6 Pledge Agreement . . . . . . . . . . . . . . . . . 53
11.1.7 Real Estate Documentation . . . . . . . . . . . . . 53
11.1.8 Opinions of Counsel for the Company . . . . . . . . 53
11.1.9 Insurance . . . . . . . . . . . . . . . . . . . . . 53
11.1.10 Debt to be Repaid, etc . . . . . . . . . . . . . . 53
11.1.11 Fees . . . . . . . . . . . . . . . . . . . . . . . 53
11.1.12 Transfer of Assets . . . . . . . . . . . . . . . . 53
11.1.13 Other . . . . . . . . . . . . . . . . . . . . . . . 53
11.2 All Loans and Letters of Credit . . . . . . . . . . . . . . . 54
11.2.1 No Default, etc. . . . . . . . . . . . . . . . . . 54
11.2.2 Confirmatory Certificate . . . . . . . . . . . . . 54
11.3 Condition for B Loans . . . . . . . . . . . . . . . . . . . . 54
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . 54
12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . 54
12.1.1 Non-Payment of the Loans, etc . . . . . . . . . . . 54
12.1.2 Non-Payment of Other Debt . . . . . . . . . . . . . 54
12.1.3 Other Material Obligations . . . . . . . . . . . . 55
12.1.4 Bankruptcy, Insolvency, etc . . . . . . . . . . . . 55
12.1.5 Non-Compliance with Provisions of This
Agreement . . . . . . . . . . . . . . . . . . . . 55
12.1.6 Warranties . . . . . . . . . . . . . . . . . . . . 56
12.1.7 Pension Plans . . . . . . . . . . . . . . . . . . . 56
12.1.8 Judgments . . . . . . . . . . . . . . . . . . . . . 56
12.1.9 Invalidity of Collateral Documents, etc. . . . . . 56
12.1.10 Material Adverse Change . . . . . . . . . . . . . . 56
12.1.11 Change in Control . . . . . . . . . . . . . . . . . 56
12.2 Effect of Event of Default . . . . . . . . . . . . . . . . . 56
SECTION 13 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 57
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 57
13.3 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.4 Credit Investigation . . . . . . . . . . . . . . . . . . . . 58
13.5 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . 58
13.6 Action on Instructions of the Required Banks . . . . . . . . 58
13.7 Funding Reliance . . . . . . . . . . . . . . . . . . . . . . 59
13.8 Collateral Matters . . . . . . . . . . . . . . . . . . . . . 59
13.9 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . 60
14.2 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . 61
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
14.4 Computations . . . . . . . . . . . . . . . . . . . . . . . . 61
14.5 Regulations G, T, U, And X . . . . . . . . . . . . . . . . . 62
14.6 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . 62
14.7 Subsidiary References . . . . . . . . . . . . . . . . . . . . 62
14.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.9 Assignments; Participations . . . . . . . . . . . . . . . . . 62
14.9.1 Assignments . . . . . . . . . . . . . . . . . 62
14.9.2 Participations . . . . . . . . . . . . . . . . 64
14.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 65
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 65
14.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . 65
14.13 Indemnification by the Company . . . . . . . . . . . . . . . 65
14.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 66
14.15 Forum Selection and Consent to Jurisdiction . . . . . . . . 67
14.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
v
<PAGE> 7
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of B Loan Request (Section 11.3)
EXHIBIT C Form of Compliance Certificate
(Section 10.1.3)
EXHIBIT D-1 Form of Security Agreement
(Section 11.1.5)
EXHIBIT D-2 Form of Patent Security Agreement
(Section 11.1.5)
EXHIBIT E Form of Pledge Agreement
(Section 11.1.6)
EXHIBIT F Form of Opinion[s] of Counsel for the
Company
(Section 11.1.8)
EXHIBIT G Form of Assignment Agreement
(Section 14.9)
SCHEDULE I Commitment Limits and Percentages
SCHEDULE 9.6 Litigation and Suretyship Liabilities
(Section 9.6)
SCHEDULE 9.8 Subsidiaries (Section 9.8)
SCHEDULE 9.9 Pension and Welfare Plan (Section 9.9)
SCHEDULE 9.15 Insurance (Section 9.15)
SCHEDULE 9.16 Contracts; Labor Matters (Section 9.16)
SCHEDULE 9.17 Environmental Matters (Section 9.17)
SCHEDULE 9.18 Real Property (Section 9.18)
SCHEDULE 10.7 Debt (Section 10.7)
SCHEDULE 10.8 Liens (Section 10.8)
SCHEDULE 10.11 Investments (Section 10.11)
SCHEDULE 10.14 Transactions with Affiliates (Section 10.14)
||
vi
<PAGE> 8
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 6, 1994 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), is
entered into among LARIZZA INDUSTRIES, INC., an Ohio corporation (the
"Company"), the undersigned financial institutions (together with their
respective successors and assigns, collectively the "Banks" and individually
each a "Bank") and CONTINENTAL BANK N.A. (in its individual capacity,
"Continental"), as agent for the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS. When used herein the following terms shall
have the following meaning (such definitions to be applicable to both the
singular and plural forms of such terms):
A Loans - see Section 2.1.1.
Accounts Payable to Inventory Ratio means, as of the end of any Fiscal
Quarter, the ratio of (a) the accounts payable of the Company to (b) the
Inventory of the Company.
Affected Bank means any Bank that has given notice to the Company
(which has not been rescinded) of (i) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any
circumstances of the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
Agent means Continental in its capacity as agent for the Banks
hereunder and any successor thereto in such capacity.
Agreement- see the Preamble.
Alternate Reference Rate means at any time the greater of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate per annum then most recently
announced by Continental as its reference rate at Chicago, Illinois.
Asset Sale means (a) any sale, lease, transfer or other disposition
(including by way of merger or consolidation) by the
<PAGE> 9
Company or any Subsidiary of any asset (including the sale of capital stock of
any Subsidiary) outside the ordinary course of business or (b) any sale or
assignment with or without recourse of accounts receivable of the Company or
any Subsidiary other than (i) sales, transfers or other dispositions by the
Company to a Wholly-Owned Subsidiary or a Wholly-Owned Subsidiary (other than
General Nuclear) to the Company provided (x) the Net Cash Proceeds thereof do
not exceed $500,000 in the aggregate in any Fiscal Year it being agreed that
sales between the Company and its Wholly-Owned Subsidiaries shall be netted in
determining said $500,000 and (y) if the Net Cash Proceeds thereof exceed
$200,000 in the aggregate in any Fiscal Year, such assets have been identified
to the Agent within 30 days of such sale, transfer or other disposition
exceeding $200,000 and the Company has taken all necessary steps to ensure that
the Liens of the Agent under this Agreement or under the Manchester Credit
Agreement, as applicable, will be first priority perfected Liens (it being
agreed that in connection with Asset Sales by the Company permitted under this
clause (i), the Lien of the Agent under the Collateral Documents shall be
released with respect to such assets), (ii) the transfer of
Manchester/Williamston/Homer from Manchester to the Company on or before the
Effective Date and (iii) the sale of all or any of the stock or assets of
General Nuclear or the merger of General Nuclear with any other entity provided
the Agent receives a Lien on the proceeds of such merger.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
B Loan Request-- see Section 11.3.
B Loans - see Section 2.1.2.
Bank- see the Preamble.
Bank Party - see Section 14.13.
Business Day means any day on which commercial banks are open for
commercial banking business in Chicago and, in the case of a Business Day which
relates to a Eurodollar Loan, on which dealings are carried on in the interbank
eurodollar market.
Capital Expenditures means all expenditures which, in accordance with
generally accepted accounting principles, would be required to be capitalized
and shown on the unconsolidated balance sheet of the Company, but excluding (a)
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or
2
<PAGE> 10
damage to the assets being replaced or restored or (ii) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced and (b) prepaid expenses, inventory and tooling
expenditures which would otherwise be treated as Capital Expenditures.
Capital Lease means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property,
property by such Person which, in conformity with generally accepted accounting
principles, is accounted for as a capital lease on the balance sheet of such
Person.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year
after such time, issued, insured or guaranteed by the United States
Government or the Government of Canada;
(b) commercial paper, maturing not more than one year from
the date of issue, which is issued by
(i) a corporation (except an Affiliate) organized under
the laws of any State of the United States of America or of
the District of Columbia or under the laws of Canada or any
Province of Canada and rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc. (or, in
the case of Canadian corporations, the equivalent rating by
the Canadian Bond Rating Service, the Dominion Bond Rating
Service or Dunn & Bradstreet), at the time of investment, or
(ii) any Bank (or its holding company);
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the
date of issue, which is issued by either
(i) a financial institution that is a member of the
Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $250,000,000, or
(ii) any Bank; or
(d) any repurchase agreement with a term of one year or less
which
(i) is entered into with
(A) any Bank, or
3
<PAGE> 11
(B) any other commercial banking
institution of the stature referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any
obligation of the type described in any of clauses (a)
through (c), and
(iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Bank (or other commercial banking
institution) thereunder;
(e) investments in money market funds that invest
substantially all of their assets in Cash Equivalent Investments
described in clauses (a) through (d); or
(f) investments in short-term asset management accounts
offered by any Bank, Bank One Cleveland or The Toronto-Dominion Bank
for the purpose of investing in loans to any corporation (other than
an Affiliate) organized under the laws of any State of the United
States or of the District of Columbia or under the laws of Canada or
any Province of Canada and rated at least A-1 by Standard & Poor's
corporation or P-1 by Moody's Investor Services, Inc. (or, in the case
of Canadian corporations, the equivalent rating by the Canadian Bond
Rating Service, the Dominion Bond Rating Service or Dunn &
Bradstreet).
Change in Control means the occurrence of any of the following: (a)
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) other than Ronald T.
Larizza is or becomes the "beneficial owner", directly or indirectly, of more
than 25% (38% if Ronald T. Larizza controls more voting power than such
"person" or "group") of the total voting power in the aggregate of all classes
of capital stock of the Company then outstanding normally entitled to vote in
elections of directors, or (b) during any period of 12 consecutive months after
the Effective Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election or appointment was approved by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election, appointment or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office.
Code means the Internal Revenue Code of 1986, as amended.
4
<PAGE> 12
Collateral means, collectively, all of the property and assets that
are from time to time subject to the Collateral Documents.
Collateral Documents means the Pledge Agreement, the Security
Agreement, the Patent Security Agreement and each Mortgage.
Commitment A means the Commitments of the Banks to make A Loans and
participate in Letters of Credit pursuant to Section 2.1.1.
Commitment A Reduction Date - see Section 6.1.1.
Commitment B means the Commitments of the Banks to make B Loans
pursuant to Section 2.1.2.
Commitment means (a) as to any Bank, such Bank's commitment to make
Loans and to issue or participate in Letters of Credit in such Bank's
Percentage of the amount of Commitment A and Commitment B and (b) in the case
of all Banks, Commitment A and Commitment B collectively. The amounts of the
initial Commitments of each Bank, and the initial amounts of Commitment A and
Commitment B are set forth on Schedule I.
Company- see the Preamble.
Computation Period means a Fiscal Quarter.
Consolidated Capital Expenditures means all expenditures which, in
accordance with generally accepted accounting principles, would be required to
be capitalized and shown on the consolidated balance sheet of the Company and
its Subsidiaries, but excluding (a) expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (i)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of
the assets being replaced and (b) prepaid expenses, inventory and tooling
expenditures which would otherwise be treated as Capital Expenditures.
Consolidated EBITDA means, for any Computation Period, the sum, without
duplication, of
(a) Consolidated Net Income for the Computation Period,
plus
5
<PAGE> 13
(b) the Consolidated Interest Expense for the Computation
Period,
plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company and its
Subsidiaries deducted in determining Consolidated Net Income for such
Computation Period,
plus
(d) all federal, state, local and foreign income taxes
(whether paid or deferred) of the Company and its Subsidiaries
deducted in determining Consolidated Net Income for such Computation
Period.
Consolidated Fixed Charge Coverage Ratio means, for any Computation
Period, the ratio of
(a) the sum, without duplication, of
(i) Consolidated EBITDA for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period,
minus
(iii) Consolidated Capital Expenditures for such Computation
Period,
minus
(iv) dividends paid by the Company during such Computation
Period
to
(b) the sum, without duplication, of
(i) Consolidated Interest Expense for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period.
6
<PAGE> 14
Consolidated Interest Expense means, for any period, the consolidated
interest expense of the Company and its Subsidiaries for such period
(including, without limitation, all imputed interest expense on Capital
Leases).
Consolidated Lease Expense means, for any period, the aggregate
payments by the Company and its Subsidiaries as lessee under Operating Leases.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period.
Consolidated Net Worth means the stockholder's equity of the Company.
Continental - see the Preamble.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee
under Capital Leases which have been recorded as liabilities on a balance sheet
of such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than prepaid interest and trade accounts
payable and accrued liabilities in the ordinary course of business), (d) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person (it being understood
that if such Person has not assumed or otherwise become personally liable for
any such indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such
indebtedness or the fair market value of all property of such Person securing
such indebtedness), (e) all obligations, contingent or otherwise, with respect
to the face amount of all letters of credit (whether or not drawn) and banker's
acceptances issued for the account of such Person (including, without
limitation, the Letters of Credit), (f) net liabilities of such Person under
all Hedging Agreements, and (g) all Suretyship Liabilities of such Person.
Debt to be Repaid means all Debt listed on Schedule 10.7 under the
heading "Debt to be Repaid."
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any Computation Period, the sum, without
duplication, of
7
<PAGE> 15
(a) Net Income for the Computation Period,
plus
(b) Interest Expense for the Computation Period,
plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company deducted in
determining Net Income for such Computation Period,
plus
(d) all federal, state, local and foreign income taxes
(whether paid or deferred) of the Company deducted in determining Net
Income for such Computation Period.
Effective Date - see Section 11.1.
Environmental Laws means the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, and
any other applicable federal, state or local statute, law, ordinance, code,
rule, regulation, order, decree or other requirement regulating, relating to,
or imposing liability or standards of conduct (including, but not limited to,
permit requirements and emission or effluent restrictions) concerning any
Hazardous Materials, as now or at any time hereafter in effect.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to
the daily average during such Interest Period of the percentage in effect on
each day of such Interest Period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor), for determining the aggregate
maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant
to Regulation D or any other then applicable regulation of such Board of
Governors which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in Regulation D.
8
<PAGE> 16
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Bank the office or offices
of such Bank which shall be making or maintaining the Eurodollar Loans of such
Bank hereunder or such other office or offices through which such Bank
determines its Eurodollar Rate. A Eurodollar Office of any Bank may be, at the
option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of Continental two
Business Days prior to the beginning of such Interest Period by major banks in
the interbank eurodollar market as at or about 10:00 a.m. Chicago time of such
Eurodollar Office, for delivery on the first day of such Interest Period, for
the number of days comprised therein and in an amount equal or comparable to
the amount of the Eurodollar Loan of Continental for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Federal Funds Rate means, for any day, the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate." If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m., New York City time, on such day by each of three leading
brokers of Federal funds transactions in New York City, selected by the Agent.
The rate for any day which is not a Business Day shall be the rate for the
immediately preceding Business Day.
9
<PAGE> 17
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1993") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of
(a) the sum, without duplication, of
(i) EBITDA for such Computation Period,
plus
(ii) Lease Expense for such Computation Period,
minus
(iii) Capital Expenditures for such Computation Period,
minus
(iv) dividends paid by the Company during such Computation
Period
to
(b) the sum, without duplication, of
(i) Interest Expense for such Computation Period,
plus
(ii) Lease Expense for such Computation Period.
Floating Rate Loan means any Loan which bears interest at or by
reference to the Alternate Reference Rate.
General Nuclear means General Nuclear Corp., a Pennsylvania
corporation.
Group - see Section 2.2.
Hazardous Material means any hazardous, toxic or dangerous substance
or material defined as such in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called
"Superfund" or "Superlien" law or any other Federal, state or local statute,
law, ordinance, code, regulation
10
<PAGE> 18
or order, or any other requirement of any governmental authority regulating,
relating to, or imposing liability for, or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material as now or any time
hereafter in effect and applicable to any real property owned by or leased to
the Company or any Subsidiary or on which the Company or any Subsidiary carries
on any of its operations (provided that no such state or local statute, law,
ordinance, code, regulation, order or other requirement shall be deemed to have
extraterritorial application).
Hedging Agreements means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity prices.
Interest Expense means for any period the unconsolidated interest
expense of the Company for such period (including, without limitation, all
imputed interest on the Company's Capital Leases).
Interest Period - see Section 4.3.
Interest Coverage Ratio means, for any Computation Period, the ratio of
(a) the sum, without duplication, of
(i) Consolidated Net Income for the Computation Period,
plus
(ii) Consolidated Interest Expense for the Computation
Period,
plus
(iii) all Federal, state, local and foreign income taxes
(whether paid or deferred) of the Company and its Subsidiaries
deducted in determining Consolidated Net Income for such Computation
Period,
plus
(iv) Consolidated Lease Expense for such Computation Period,
to
11
<PAGE> 19
(b) the sum, without duplication of
(i) Consolidated Interest Expense for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period.
Inventory means any and all of the goods of the Company (including,
without limitation, goods in transit) wheresoever located, which are or may at
any time be held for sale, furnished under any contract of service, or held as
raw materials, work in process, finished goods or supplies or materials used or
consumed in business of the Company, or which are held for use in connection
with the manufacture, packing, shipping, advertising, selling or finishing of
such goods.
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any other
Person (excluding (i) commission, travel and similar advances to
officers and employees made in the ordinary course of business and
(ii) advances to, and deposits with, contractors and suppliers in the
ordinary course of business, but solely to the extent consistent with
the past practice of the Company and its Subsidiaries); and
(b) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity thereon (and
without adjustment by reason of the financial condition of such other Person)
and shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
Issuing Bank means Continental in its capacity as issuer of Letters of
Credit.
Lease Expense means for any period the aggregate payments by the
Company as lessee under Operating Leases.
Letter of Credit means a letter of credit having terms and provisions
which are permitted by the Agreement and which otherwise are reasonably
satisfactory to the Issuing Bank.
12
<PAGE> 20
Letter of Credit Application means a letter of credit application in
the form then used by the Issuing Bank for letters of credit (with appropriate
adjustments to indicate that any letter of credit issued thereunder is to be
issued pursuant to, and subject to the terms and conditions of, this
Agreement).
Lien means, when used with respect to any Person, any interest granted
by such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, charge or
other security interest of any kind, whether arising by contract, as a matter
of law, by judicial process or otherwise.
Loans means the A Loans and B Loans.
Loan Commitment means Commitment A and Commitment B.
Loan Documents means this Agreement, the Notes, the Letter of Credit
Applications and the Collateral Documents.
Manchester means Manchester Plastics Ltd., an Ontario corporation.
Manchester Credit Agreement means the Credit Agreement dated as of May
6, 1994 among Manchester various financial institutions and Continental as
Agent, as amended, supplemented or otherwise modified from time to time.
Manchester/Williamston/Homer means the facilities and related assets in
Manchester, Williamston and Homer, Michigan owned by Manchester as of March 31,
1994.
Margin means (a) initially, .50% in the case of any Floating Rate
Loan, and 2.25% in the case of any Eurodollar Loan, and (b) on and after any
date specified below on which the Margin is to be adjusted, the rate per annum
set forth in the table below for the applicable type of Loan opposite the
applicable Level:
<TABLE>
<CAPTION>
Margin for Eurodollar Loans
Interest Coverage Ratio
Consolidated <2.5x 2.51-4.50% 4.51-6.0x 6.0x<
Net Worth ----- ---------- --------- -----
<S> <C> <C> <C> <C>
<$5MM 3.00% 2.50% 2.25% 1.75%
$5 - <$15MM 2.50% 2.00% 1.75% 1.25%
>$15 - <$25MM 2.00% 1.50% 1.25% .75%
- >$25MM 1.50% 1.00% .75% .75%
-
</TABLE>
13
<PAGE> 21
<TABLE>
<CAPTION>
Margin for Floating Rate Loans
Interest Coverage Ratio
Consolidated <2.5x 2.51-4.50% 4.51-6.0x 6.0x<
Net Worth ----- ---------- --------- -----
<S> <C> <C> <C> <C>
<$5MM 1.25% .75% .50% .0%
$5 - <$15MM .75% .25% .00% .0%
>$15 - <$25MM .25% .00% .00% .0%
- >$25MM .00% .00% .00% .0%
-
</TABLE>
If any Compliance Certificate delivered by the Company pursuant to Section
10.1.3 shall give rise to any adjustment in the Margin, such adjustment shall
be effective for all Loans (including any then-outstanding Loans) on the Margin
Determination Date.
Notwithstanding the foregoing, if the Company fails to deliver a
Compliance Certificate on or before such Margin Determination Date, "Margin"
shall mean the Margin currently in effect until the date on which the Company
delivers such Compliance Certificate, at which time (i) if such Compliance
Certificate results in a smaller Margin, such smaller Margin shall become
effective on the date on which the Company delivers such Compliance
Certificate, and (ii) if such report results in a larger Margin, such larger
Margin shall become effective as of the Margin Determination Date on or before
which such Compliance Certificate should have been delivered, and the Company
shall pay to the Agent for the pro rata accounts of the Banks the amount
determined to be owing by the Company to the Banks as a result of the
retroactive application of such larger Margin (such payment to be made (x) in
the case of any Eurodollar Loan on which interest has not been paid since the
most recent Margin Determination Date, on the next date on which interest is
payable on such Eurodollar Loan pursuant to Section 4.2, and (y) in the case of
any Eurodollar Loan which was outstanding on the Margin Determination Date and
(A) which is no longer outstanding on the date on which such Compliance
Certificate is delivered or (B) on which interest has been paid since the most
recent Margin Determination Date, immediately).
Margin Determination Date means the first day of the next succeeding
Fiscal Quarter after the date as of which the applicable Compliance Certificate
is prepared (i.e. if Compliance Certificate is prepared for 12/31/94, Margin
Determination Date is April 1, 1995).
Margin Stock means any "margin stock" as defined in any of Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System.
14
<PAGE> 22
Material Adverse Effect means, relative to any event or occurrence of
whatever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental proceeding), a material adverse
effect on (a) the financial condition, operations, business, revenues, assets
or properties or prospects of the Company and its Subsidiaries taken as a whole
or (b) the ability of the Company to timely and fully perform any of its
payment or other material obligations under this Agreement or any other Loan
Document to which it is a party.
Minimum Capital Equipment Expenditure means the purchase of capital
equipment after the Effective Date having an aggregate purchase price of (a)
$5,000,000 in the case of the Company and its Subsidiaries other than
Manchester and (b) $5,000,000 in the case of Manchester.
Mortgage means a mortgage, leasehold mortgage, deed of trust or
similar document granting a Lien on real property or interest therein in
appropriate form for filing or recording in the applicable jurisdiction and
otherwise reasonably satisfactory to the Agent.
Net Cash Proceeds means with respect to any Asset Sale, the aggregate
cash proceeds (including cash proceeds received in respect of non-cash
proceeds) received by the Company or any Subsidiary pursuant to such Asset
Sale, net of (i) the direct costs relating to such Asset Sale (including,
without limitation, sales commissions and legal, accounting and investment
banking fees), (ii) taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment of any
Debt secured by a Lien on the asset subject to such sale (other than the Loans)
and (iv) any reserve for adjustment in respect of the sale price of such asset
(until such amount is available to the Company or the applicable Subsidiary).
Net Income means, with respect to the Company on an unconsolidated
basis for any period, the net income (or loss) of the Company for such period.
Non-U.S. Person means a Person that is not (a) a citizen or resident
of the United States, (b) a corporation or partnership created or organized
under the laws of the United States or any state thereof or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
Note - see Section 3.1.
15
<PAGE> 23
Occupational Safety and Health Law means the Occupational Safety and
Health Act of 1970 and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to on
imposing liability or standards of conduct concerning employee health and/or
safety.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary,
as lessee, other than a Capital Lease.
Patent Security Agreement - see Section 11.1.5.
Participant- see Section 14.9
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Company or any corporation, trade or business that is, along with the Company,
a member of a controlled group of corporations or a controlled group of trades
or businesses, as described in sections 414(b) and 414(c), respectively, of the
Internal Revenue Code of 1986, as amended or section 4001 of ERISA, may have
any liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under section 4069 of ERISA.
Percentage means as to any Bank the percentage which (a) the amount of
such Bank's Commitment is of (b) the aggregate amount of Commitments of all
Banks; provided that after the Commitments have been terminated, "Percentage"
shall mean as to any Bank the percentage which the aggregate principal amount
of such Bank's Loans is of the aggregate principal amount of all Loans. The
initial Percentage for each Bank is set forth opposite such Bank's name on
Schedule I.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity, whether
acting in an individual, fiduciary or other capacity.
Pledge Agreement - see Section 11.1.6.
Required Banks means Banks having an aggregate Percentage of 51% or
more.
SEC means the Securities and Exchange Commission.
16
<PAGE> 24
Security Agreement - see Section 11.1.5.
Stated Amount means with respect to any Letter of Credit at any date
of determination, the maximum aggregate amount available thereunder at any time
during the then ensuing term of such Letter of Credit under any and all
circumstances, plus the aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit. If a Letter of Credit is payable in
currency other than Dollars, the Stated Amount shall be determined in
accordance with Section 2.8(b).
Subsidiary means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company.
Suretyship Liability means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to or otherwise to
invest in a debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts payable) of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's obligation under
any Suretyship Liability shall (subject to any limitation set forth therein) be
deemed to be the principal amount of the debt, obligation or other liability
guaranteed thereby.
Tangible Net Worth means the stockholder's equity of the Company
excluding foreign currency translation adjustments after subtracting all
Intangible Assets of the Company and its Subsidiaries. For purposes of the
foregoing, "Intangible Assets" means goodwill, patents, tradenames, trademarks,
copyrights, franchises, experimental expense, organization expense and any
other assets that are properly classified as Intangible Assets in accordance
with generally accepted accounting principles.
Termination Date means May 6, 1997 or such other date on which the
Commitments shall terminate pursuant to Section 6 or 12.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
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Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Welfare Plan means a "welfare plan", as such term is defined in section
3(1) of ERISA.
Wholly-Owned Subsidiary means a Subsidiary of which the Company and/or
its Subsidiaries own, directly or indirectly, all of the outstanding shares of
capital stock (other than directors' qualifying shares).
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; LETTERS OF
CREDIT; BORROWING AND CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to the Company as follows:
2.1.1 Commitment A. (a) Loans on a revolving basis ("A Loans") from
time to time before the Termination Date in such Bank's Percentage of such
aggregate amounts as the Company may from time to time request from all Banks
under Commitment A; provided that the aggregate principal amount of all A Loans
which all Banks shall be committed to have outstanding at any one time shall
not exceed an amount equal to (x) $27,000,000 (as such amount is reduced from
time to time pursuant to Section 6.1) minus (y) the Stated Amount of all
outstanding Letters of Credit; and (b) the Issuing Bank agrees to issue Letters
of Credit at the request of and for the account of the Company from time to
time before the Termination Date and, as more fully set forth in Section 2.7,
each Bank agrees to purchase a participation in each such Letter of Credit,
provided that the aggregate Stated Amount of all Letters of Credit shall not at
any time exceed the lesser of (i) $2,000,000 or (ii) an amount equal to (x) the
aggregate amount of Commitment A minus (y) the aggregate principal amount of
all outstanding A Loans.
2.1.2 Commitment B. Loans on a revolving basis ("B Loans") from time
to time before the Termination Date in such Bank's Percentage of such aggregate
amounts as the Company may from time to time request from all Banks under
Commitment B; provided that the aggregate principal amount of all B Loans which
all Banks shall be committed to have outstanding at any one time shall not
exceed $8,000,000 (as such amount is reduced from time to time pursuant to
Section 6.1).
2.1.3 Certain Limitations on Usage of Commitments. Notwithstanding
any other provision of this Agreement, (a) B Loans may only be requested in
connection with tooling and capital equipment as evidenced by a B Loan Request,
(b) B Loans
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may not be requested for Minimum Capital Equipment Expenditures and (c) the
initial request for a B Loan with respect to capital equipment for Larizza and
its Subsidiaries (other than Manchester) or Manchester must be accompanied by
invoices or other evidence satisfactory to the Agent documenting the Minimum
Capital Equipment Expenditures of Larizza and its Subsidiaries (other than
Manchester) or Manchester, as applicable.
2.2 Various Types of Loans. Each Loan shall be either a Floating
Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall
specify in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4. Eurodollar Loans having the same Interest Period are sometimes
called a "Group" or collectively "Groups". Floating Rate Loans and Eurodollar
Loans may be outstanding at the same time, provided that (a) not more than five
different Groups of A Loans shall be outstanding at any one time, (b) not more
than three different Groups of B Loans shall be outstanding at any one time and
(c) the aggregate principal amount of each Group of Eurodollar Loans shall at
all times be at least $1,000,000 and an integral multiple of $100,000.
2.3 Borrowing Procedures. The Company shall give written or
telephonic notice to the Agent of each proposed borrowing not later than (a) in
the case of a Floating Rate borrowing, 10:00 A.M., Chicago time, on the
proposed date of such borrowing, and (b) in the case of a Eurodollar borrowing,
11:00 A.M., Chicago time, at least three Business Days prior to the proposed
date of such borrowing. Each such notice shall be effective upon receipt by
the Agent and shall specify the date, amount and type of borrowing and, in the
case of a Eurodollar borrowing, the initial Interest Period therefor. Promptly
upon receipt of such notice, the Agent shall advise each Bank thereof. Not
later than 1:00 p.m., Chicago time, on the date of a proposed borrowing, each
Bank shall provide the Agent at the principal office of the Agent in Chicago
with immediately available funds covering such Bank's Percentage of such
borrowing and, subject to the satisfaction of the conditions precedent set
forth in Section 11 with respect to such borrowing, the Agent shall pay over
the requested amount to the Company on the requested borrowing date. Each
borrowing shall be on a Business Day and shall be in an aggregate amount of at
least $200,000 in the case of a Floating Rate Loan and $1,000,000 in the case
of a Eurodollar Rate Loan and an integral multiple of $100,000.
2.4 Conversion Procedures. Subject to the provisions of Section 2.2,
the Company may convert all or any part of any outstanding Loan into a Loan of
a different type by giving written or telephonic notice to the Agent not later
than (a) in the case of conversion into a Floating Rate Loan, 10:00 A.M.,
Chicago time, on the proposed date of such conversion, and (b) in
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the case of a conversion into a Eurodollar Loan, 11:00 A.M., Chicago time, at
least three Business Days prior to the proposed date of such conversion. Each
such notice shall be effective upon receipt by the Agent and shall specify the
date and amount of such conversion, the Loan to be so converted, the type of
Loan to be converted into and, in the case of a conversion into a Eurodollar
Loan, the initial Interest Period therefor. Promptly upon receipt of such
notice, the Agent shall advise each Bank thereof. Subject to Sections 2.11 and
2.12, such Loan shall be so converted on the requested date of conversion.
Each conversion shall be on a Business Day and, after giving effect to any
conversion, the aggregate principal amount of each Group of Eurodollar Loans
shall be at least $1,000,000 and an integral multiple of $100,000.
2.5 Pro Rata Treatment. All borrowings, conversions and repayments
shall be effected so that after giving effect thereto each Bank will have a pro
rata share (according to its Percentage) of all types and Groups of Loans.
2.6 Letter of Credit Procedures. The Company shall give notice to
the Issuing Bank of the proposed issuance of each Letter of Credit on a
Business Day which is at least three Business Days (or such lesser period as
the Issuing Bank may agree) prior to the proposed date of issuance of such
Letter of Credit. Each such notice shall be accompanied by a Letter of Credit
Application, duly executed by the Company and in all respects satisfactory to
the Issuing Bank, together with such other documentation as the Issuing Bank
may reasonably request in support thereof, it being understood that each Letter
of Credit Application shall specify, among other things, the date on which the
proposed Letter of Credit is to be issued, the expiration date of such Letter
of Credit (which shall not be later than the earlier of (x) one year from the
date of issuance or renewal or (y) five Business Days prior to the Termination
Date) and whether such Letter of Credit is to be transferable in whole or in
part. Subject to the satisfaction of the conditions precedent set forth in
Section 11 with respect to the issuance of such Letter of Credit, the Issuing
Bank shall issue such Letter of Credit on the requested issuance date. The
Company shall not be entitled to request the issuance of a Letter of Credit for
the account of Manchester in an amount exceeding $750,000.
2.7 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Bank shall be deemed to have
sold and transferred to each other Bank, and each other Bank shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such other Bank's Percentage, in such Letter of Credit and the
Company's reimbursement obligations with respect
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thereto. For the purposes of this Agreement, the unparticipated portion of
each Letter of Credit shall be deemed to be the Issuing Bank's "participation"
therein. The Issuing Bank hereby agrees, upon request of any Bank, to deliver
to such Bank a list of all outstanding Letters of Credit, together with such
information related thereto as such other Bank may reasonably request.
2.8 Reimbursement Obligations. (a) The Company hereby
unconditionally and irrevocably agrees to reimburse the Issuing Bank for each
payment or disbursement made by the Issuing Bank under any Letter of Credit
honoring any demand for payment made by the beneficiary thereunder, in each
case on the date that such payment or disbursement is made. Any amount not
reimbursed on the date of such payment or distribution shall bear interest from
and including the date of such payment or disbursement to but not including the
date that the Issuing Bank is reimbursed by the Company therefor, payable on
demand, at a rate per annum equal to the sum of the Alternate Reference Rate
from time to time in effect plus the applicable Margin (plus, at any time an
Event of Default exists, 2%). The Issuing Bank shall notify the Company and
the Agent whenever any demand for payment is made under any Letter of Credit by
the beneficiary thereunder; provided, however, that the failure of the Issuing
Bank to so notify the Company or the Agent shall not affect the rights of the
Issuing Bank or the Banks in any manner whatsoever.
(b) The Company agrees in the case of each draft drawn
under any Letter of Credit in currency other than Dollars (the "Foreign
Currency") to reimburse the Issuing Bank in Dollars for the equivalent of the
Foreign Currency amount paid at the rate of exchange the Issuing Bank is able,
on the relevant reimbursement date, to purchase the Foreign Currency with
Dollars in accordance with its customary practices in Chicago. If, for any
reason, there exists no rate of exchange generally current in Chicago for such
Foreign Currency, the Company agrees to pay the Issuing Bank, on demand, an
amount in Dollars equivalent to the actual cost of settlement of the Issuing
Bank's obligation to the beneficiary of such Letter of Credit, including
interest at the rate set forth in Section 2.8(a).
2.9 Limitation on the Issuing Bank's Obligations. In determining
whether to pay under any Letter of Credit, the Issuing Bank shall have no
obligation to the Company or any Bank other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and appear to comply on their face with the requirements of such
Letter of Credit. Any action taken or omitted to be taken by the Issuing Bank
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence and willful misconduct, shall not impose upon the
Issuing Bank any liability
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to the Company or any Bank and shall not reduce or impair the Company's
reimbursement obligations set forth in Section 2.8 or the obligations of the
Banks pursuant to Section 2.10.
2.10 Funding by Banks to the Issuing Bank. If the Issuing Bank makes
any payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Bank in full for such payment or disbursement by 10:00
A.M., Chicago time, on the date of such payment or disbursement or if any
reimbursement received by the Issuing Bank from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Bank shall be obligated to pay to the Issuing
Bank, in full or partial payment of the purchase price of its participation in
such Letter of Credit, its pro rata share (according to its Percentage) of such
payment or disbursement (but no such payment shall diminish the obligations of
the Company under Section 2.8), and the Agent shall promptly notify each other
Bank thereof. Each other Bank irrevocably and unconditionally agrees,
severally and for itself alone, to so pay to the Agent in immediately available
funds for the Issuing Bank's account the amount of such other Bank's Percentage
of such payment or disbursement. If and to the extent any Bank shall not have
made such amount available to the Agent by 2:00 P.M., Chicago time, on the
Business Day on which such Bank receives notice from the Agent of such payment
or disbursement (it being understood that any such notice received after noon,
Chicago time, on any Business Day shall be deemed to have been received on the
next following Business Day), such Bank agrees to pay interest on such amount
to the Agent for the Issuing Bank's account forthwith on demand for each day
from and including the date such amount was to have been delivered to the Agent
to but excluding the date such amount is paid, at a rate per annum equal to (a)
for the first three days after demand, the Federal Funds Rate from time to time
in effect and (b) thereafter, the Alternate Reference Rate from time to time in
effect. Any Bank's failure to make available to the Agent its Percentage of
any such payment or disbursement shall not relieve any other Bank of its
obligation hereunder to make available to the Agent such other Bank's
Percentage of such payment, but no Bank shall be responsible for the failure of
any other Bank to make available to the Agent such other Bank's Percentage of
any such payment or disbursement.
2.11 Warranty. Each notice of borrowing and/or of conversion pursuant
to Section 2.3 or 2.4 and the delivery of each Letter of Credit Application
pursuant to Section 2.6 shall automatically constitute a warranty by the
Company to the Agent and each Bank to the effect that on the date of such
requested borrowing or conversion (other than any conversion from a Eurodollar
Loan to a Floating Rate Loan required by Section 8.3) (a) the warranties of the
Company contained in Section 9
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(excluding Sections 9.4, 9.6, 9.8, 9.15 through 9.18 and except to the extent
changes in facts or conditions are expressly permitted or required hereunder)
of this Agreement shall be true and correct as of such requested date as though
made on the date thereof and (b) no Event of Default or Unmatured Event of
Default shall have then occurred and be continuing or will result therefrom.
2.12 Conditions. Notwithstanding any other provision of this
Agreement, (a) no Bank shall be obligated to make any Loan, (b) no Bank shall
be obligated to convert into or permit the continuation at the end of the
applicable Interest Period of any Eurodollar Loan and (c) the Issuing Bank
shall not be obligated to issue any Letter of Credit if, in any such case, an
Event of Default or Unmatured Event of Default exists or would result
therefrom.
2.13 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation to make a
Loan on such date, but no Bank shall be responsible for the failure of any
other Bank to make any Loan to be made by such other Bank.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
note (as amended, supplemented, replaced or otherwise modified from time to
time, individually each a "Note" and collectively for all Banks the "Notes")
substantially in the form of Exhibit A, with appropriate insertions, dated the
Effective Date (or such earlier date as shall be satisfactory to the Agent),
payable to the order of such Bank in an amount equal to such Bank's Percentage
of the Loan Commitment (or, if less, in the aggregate unpaid principal amount
of such Bank's Loans).
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Bank, each repayment or conversion thereof and, in the case of
each Eurodollar Loan, the dates on which each Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall
be rebuttable presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under any Note to repay the principal
amount of the Loans evidenced by such Note together with all interest accruing
thereon.
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SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at
a rate per annum equal to the sum of the Alternate Reference
Rate from time to time in effect plus the applicable Margin; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
applicable Margin;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate
Loan shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of each Eurodollar
Loan with an Interest period in excess of three months, on each three-month
anniversary of such Loan) and at maturity. After maturity, accrued interest on
all Loans shall be payable on demand.
4.3 Interest Periods. Each Interest Period for a Eurodollar Loan
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is one, two,
three or six months thereafter, as the Company may specify:
(a) in the case of an Interest Period which commences on the
date a Eurodollar Loan is made or converted from a Floating Rate Loan,
in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4, or
(b) in the case of a succeeding Interest Period with respect
to any Eurodollar Loan, by written or telephonic notice to the Agent
not later than 11:00 A.M., Chicago time, at least three Business Days
prior to the first day of such succeeding Interest Period, it being
understood that (i) each such notice shall be effective upon receipt
by the Agent and (ii) if the Company fails to give such notice,
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such Loan shall automatically become a Floating Rate Loan at the end
of its then-current Interest Period.
Each Interest Period for a Eurodollar Loan which would otherwise end on a day
which is not a Business Day shall end on the immediately succeeding Business
Day (unless such immediately succeeding Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day). The Company may not select any Interest
Period which would (a) end after the scheduled Termination Date or (b) result
in the aggregate principal amount of all Eurodollar Loans under Commitment A
having an Interest Period ending after the next Commitment A Reduction Date
being in excess of the scheduled amount of Commitment A after such Commitment A
Reduction Date.
4.4 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing the
computations used by the Agent in determining any applicable Eurodollar Rate
hereunder.
4.5 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Floating Rate Loan shall change
simultaneously with each change in the Alternate Reference Rate.
SECTION 5 FEES.
5.1 Non-Use Fee. The Company agrees to pay to the Agent for the
benefit of each Bank a non-use fee for the period from and including the
Effective Date to but excluding the Termination Date of .375% per annum on the
daily average of the unused amount of such Bank's Percentage of the
Commitments. Such non-use fee shall be payable in arrears for the period from
and including the Effective Date to but excluding the Termination Date, on the
last day of each calendar quarter and on the Termination Date for any period
then ending for which such non-use fee shall not have been theretofore paid.
The non-use fee shall be computed for the actual number of days elapsed on the
basis of a year of 360 days.
5.2 Agent's Fees. The Company agrees to pay to the Agent certain
fees at such times and in such amounts as are mutually agreed upon by the
Company and the Agent.
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5.3 Letter of Credit Fees. (a) The Company agrees to pay to the
Agent for the account of the Banks pro rata according to their respective
Percentages a letter of credit fee for each Letter of Credit in an amount per
annum of the daily average of the aggregate Stated Amount of such Letter of
Credit (excluding any unreimbursed payment or disbursement thereunder) equal to
1.00%
(b) The Company agrees to pay to the Issuing Bank a fronting fee
in an amount equal to .25% per annum of the daily average of the aggregate
Stated Amount of each Letter of Credit (excluding any unreimbursed payment or
disbursement thereunder).
(c) The fees payable pursuant to clauses (a) and (b) above shall
be computed for the actual number of days elapsed on the basis of a year of 360
days and shall be payable in arrears on the last day of each calendar quarter
and on the Termination Date for the period from and including the date of the
issuance of the applicable Letter of Credit to but excluding the date such
payment is due or, if earlier, the date on which such Letter of Credit expired
or was terminated.
(d) In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Issuing Bank such fees and expenses as the Issuing
Bank customarily requires in connection with the issuance, amendment, transfer,
negotiation, processing and/or administration of letters of credit.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
6.1 Reduction or Termination of the Commitments.
6.1.1 Scheduled Reductions of Commitment A. Commitment A shall be
permanently reduced on each of the following dates (each a "Commitment A
Reduction Date") by the amounts set forth opposite such dates:
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Reducing Revolver Amortization
------------------------------
Facility
Date Amortization
-------- ------------
06/30/94 $ 250,000
09/30/94 250,000
12/31/94 250,000
03/31/95 1,250,000
06/30/95 1,250,000
09/30/95 1,250,000
12/30/95 1,250,000
03/31/96 1,250,000
06/30/96 1,250,000
09/30/96 1,250,000
12/31/96 1,250,000
03/31/97 1,250,000
6.1.2 Mandatory Reductions. Commitment A shall be reduced, dollar for
dollar, by the amount of any Loans repaid pursuant to Section 6.2.2.
6.1.3 Voluntary Reduction or Termination. The Company may from time
to time on at least five Business Days' prior written notice received by the
Agent (which shall promptly advise each Bank thereof) permanently reduce the
amount of any Commitment to an amount not less than (a) in the case of a
reduction in Commitment A, the sum of (x) the aggregate unpaid principal amount
of the A Loans and (y) the Stated Amount of all outstanding Letters of Credit
and (b) in the case of a reduction in Commitment B, the aggregate unpaid
principal amount of the B Loans. Any such reduction (a) shall be in an amount
not less than $5,000,000 and an integral multiple of $1,000,000 and (b) shall
not reduce the scheduled reductions of Commitment A pursuant to Section 6.1.1.
The Company may at any time on like notice terminate any Commitment (i) in the
case of the termination of Commitment A, upon payment in full of all A Loans,
the expiration, cancellation or cash collateralization (on terms satisfactory
to the Agent and the Issuing Bank) of all outstanding Letters of Credit and the
payment in full of all other obligations of the Company hereunder in respect of
Commitment A and (ii) in the case of the termination of Commitment B, upon
payment in full of all B Loans and all other obligations of the Company
hereunder in respect of Commitment B.
6.1.4 Reductions Pro Rata. All reductions of the Commitments shall be
pro rata among the Banks according to their respective Percentages.
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6.2 Prepayments.
6.2.1 Mandatory Prepayments due to Commitment Reductions. On each
date on which either Loan Commitment is reduced pursuant to Section 6.1.1 or
6.1.3, the Company shall make a prepayment of the applicable Loans in the
amount (if any) by which the outstanding principal amount of such Loans exceeds
the applicable Commitment.
6.2.2 Mandatory Prepayments from Asset Sales. Within 30 days after
any Asset Sale permitted by the terms hereof, the Company shall apply an amount
equal to the Net Cash Proceeds of such Asset Sale to the extent in excess of
$500,000 in any Fiscal Year, first to prepayment of the A Loans and, the
balance, if any, to payment of the B Loans.
6.2.3 Voluntary Prepayments. The Company may from time to time prepay
the Loans in whole or in part, provided that (a) the Company shall give the
Agent (which shall promptly advise each Bank) not less than one Business Day's
prior written notice thereof, specifying the Loans to be prepaid and the date
and amount of prepayment, (b) any prepayment of a Eurodollar Loan prior to the
end of an Interest Period therefor shall be subject to Section 8.4, (c) each
partial prepayment shall be in a principal amount of at least $200,000 in the
case of a Floating Rate Loan and at least $500,000 in the case of a Eurodollar
Loan and an integral multiple of $100,000 and (d) any prepayment of a
Eurodollar Loan shall include accrued interest to the date of prepayment on the
principal amount being repaid.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on
the Notes and of all non-use fees shall be made by the Company to the Agent in
immediately available funds at its office in Chicago not later than 1:00 P.M.,
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the next following Business Day.
The Company hereby authorizes the Agent to charge the Company's demand deposit
account no. 75-06813 maintained with Continental for the amount of any such
payment on the due date therefor, but the Agent's failure to so charge such
account shall in no way affect the obligation of the Company to make any such
payment. The Agent shall promptly remit to each Bank or other holder of a Note
its share of all such payments received in collected funds by the Agent for the
account of such Bank or holder.
All payments underSections 8.1 and 8.4 shall be made by the Company
directly to the Bank or Banks entitled thereto.
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7.2 Application of Certain Payments. Each payment of principal shall
be applied to such Loans as the Company shall direct by notice to be received
by the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion. Concurrently with each
remittance to any Bank of its share of any such payment, the Agent shall advise
such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes or of non-use fees falls due on a day which is not
a Business Day, then such due date shall be extended to the next following
Business Day (unless, in the case of a Eurodollar Loan, such next following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of
any such extension.
7.4 Setoff. The Company agrees that the Agent, each Bank and each
other holder of a Note have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, the Company agrees that at any time
(a) any payment or other amount owing by the Company under this Agreement is
then due to the Agent, any Bank or any such holder or (b) any Unmatured Event
of Default under Section 12.1.4 or any Event of Default exists, the Agent, each
Bank and each such holder may apply to the payment of such payment or other
amount (or, in the case of clause (b), to any obligations of the Company
hereunder, whether or not then due) any and all balances, credits, deposits,
accounts or moneys of the Company then or thereafter with the Agent, such Bank
or such holder.
7.5 Proration of Payments. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Note (or on account of
its participation in any Letter of Credit) in excess of its pro rata share of
payments and other recoveries obtained by all Banks on account of principal of
and interest on Notes then held by them (other than in respect of an Affected
Loan or as a result of replacement of a Bank pursuant to Section 8.7), such
Bank shall purchase from the other Banks such participation in the Notes (or
sub-participations in Letters of Credit) held by them as shall be necessary to
cause such purchasing Bank to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Bank, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.
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7.6 Taxes. (a) All payments by the Company hereunder (including
all payments of principal of and interest on the Loans) to any Non-U.S. Person
shall be made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any Non-U.S. Person's gross or net income or receipts (all non-excluded items
being called "Taxes"). If any deduction or withholding from any payment to be
made by the Company hereunder is required in respect of any Taxes in respect of
payments to a Non-U.S. Person then the Company will
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(iii) except to the extent that such deduction or withholding
results from the breach by such Person of its agreement contained
in clause (b) or (c) below, or would not be required if such Person's
representation and warranty contained in clause (c) below were true,
pay such additional amounts as may be necessary in order that the net
amount received by such Person after such deduction or withholding
(including any required deduction or withholding on such additional
amounts) shall equal the amount such Person would have received had no
such deduction or withholding been made.
Moreover, if any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder, the Agent
or such Bank may pay such Taxes and the Company will promptly pay such
additional amount (including any penalty, interest and expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted (except to the
extent that such Taxes result from such Person's gross negligence or willful
misconduct or from the breach by such Person of its agreement contained in
clause (b) or (c) below or would not be asserted if such Person's
representation and warranty contained in clause (c) below were true). For
purposes of this Section 7.6, a distribution hereunder by the Agent or any Bank
to or for the account of any Bank shall be deemed a payment by the Company.
(b) Each Bank which is a Non-U.S. Person agrees (to the
extent it is permitted to do so under the laws of the
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United States, any applicable double taxation treaties of the United
States, the jurisdiction of its incorporation and the jurisdiction in
which its Eurodollar Office is located) to execute and deliver to the
Agent for delivery to the Company, before the Effective Date and
before the first scheduled payment date in each taxable year
thereafter of such Bank, either (i) a United States Internal Revenue
Service Form 1001 or (ii) a United States Internal Revenue Form 4224
together with a United States Internal Revenue Service Form W-9, or
any successor forms, as appropriate, and such other and further forms
which the Company may reasonably request, in each case properly and
accurately completed and properly claiming complete or partial, as the
case may be, exemption from withholding and deduction of United States
Federal Taxes.
(c) Each Bank which is a Non-U.S. Person represents and
warrants to the Company and the Agent that, as of the date of this
Agreement (or in the case of any Assignee, as of the effective date of
the assignment to such Assignee, or in the case of any transfer of any
rights under a Loan from one office to another of a Bank, as of the
effective date of such transfer),
(i) it is entitled to receive all payments hereunder
without deduction or withholding for or on account of any
Taxes, and
(ii) it is permitted to take the actions described
in clause (b) above, claiming a complete exemption from
withholding of United States Federal Taxes, under the laws of
the United States and any applicable double taxation treaties
of the jurisdictions specified in clause (b) above.
Each Bank which is a Non-U.S. Person further agrees that, to the
extent any form claiming complete or partial exemption from
withholding and deduction of United States Federal Taxes delivered
under clause (b) above is found to be incomplete or incorrect in any
material respect when delivered, or thereafter based on a change in
law or a change in circumstances or other factors, such Bank shall
execute and deliver to the Agent a complete and correct replacement
form, or shall notify the Agent, which shall give notice thereof to
the Company, that such form is incomplete or incorrect and that no
replacement form claiming an exemption from withholding and deduction
of United States Federal Taxes can be given.
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SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If 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 any Bank (or any Eurodollar Office of
such Bank) 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 any Bank (or any Eurodollar Office of such
Bank) to any tax (other than any tax referred to in Section 7.6), duty
or other charge with respect to its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans, or shall change the basis of taxation of payments to
any Bank of the principal of or interest on its Eurodollar Loans or
any other amounts due under this Agreement in respect of its
Eurodollar Loans or its obligation to make Eurodollar Loans (except
for changes in the rate of tax on the overall net income of such Bank
or its Eurodollar Office imposed by the jurisdiction in which such
Bank's principal executive office or Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
4), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by any Bank (or any
Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System,
to impose a cost on) such Bank (or any Eurodollar Office of such Bank) of
making or maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Eurodollar Office) under this
Agreement or under its Note with respect thereto, then within 10 days after
demand by such Bank (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for and a calculation of the amount of
such demand, a copy of which shall be furnished to the Agent), the Company
shall pay directly
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to such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or such reduction; provided that the Company shall not be
liable for any increased cost or reduced amount as to which such Bank became
aware and failed to notify the Company promptly if and to the extent that
prompt notice could have avoided or materially decreased the amount of payment
by the Company hereunder.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
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 any
Bank (or its Eurodollar Office) or any Person controlling such Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's or such
controlling Person's capital as a consequence of such Bank's obligations
hereunder (including, without limitation, such Bank's obligations under
Commitment A or Commitment B) to a level below that which such Bank or such
controlling Person could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by such Bank or
such controlling Person to be material, then from time to time, within 10 days
after demand by such Bank (which demand shall be accompanied by a statement
setting forth in reasonable detail the basis for and a calculation of the
amount of such demand, a copy of which shall be furnished to the Agent), the
Company shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such controlling Person for such reduction; provided
that in determining any reduction in rate of return on capital, each Bank shall
act reasonably and in good faith and will, to the extent any reduction relates
to such Bank's loans and commitments in general and is not specifically
attributable to the Loans and the Commitments hereunder, use averaging and
attribution methods which are reasonable and which cover all loans and
commitments made by such Bank which are similar to the Loans and Commitments
whether or not the loan documentation for such other loans and commitments
permits such Bank to receive increased costs of the type described in this
clause (b).
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the relevant market for such Interest Period, or the
Agent otherwise reasonably determines
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(which determination shall be binding and conclusive on the Company) that by
reason of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Eurodollar Rate;
or
(b) Banks having an aggregate Percentage of 30% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of maintaining or
funding such Loans for such Interest Period (taking into account any amount to
which such Banks may be entitled under Section 8.1), or that the making or
funding of Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such Banks
materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make, or convert any Floating Rate Loan into, Eurodollar Loans and (ii) on the
last day of the current Interest Period for each Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically convert to a Floating Rate
Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
that any change in (including the adoption of any new) applicable laws or
regulations, or any change in the interpretation of applicable laws or
regulations by any governmental or other regulatory body charged with the
administration thereof, should make it (or in the good faith judgment of any
Bank cause a substantial question as to whether it is) unlawful for any Bank to
make, maintain or fund Eurodollar Loans, then such Bank shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Bank shall have no obligation to make or convert into
Eurodollar Loans (but shall make Floating Rate Loans concurrently with the
making of or conversion into Eurodollar Loans by the Banks which are not so
affected, in each case in an amount equal to such Bank's Percentage of all
Eurodollar Loans which would be made or converted into at such time in the
absence of such circumstances) and (b) on the last day of the current Interest
Period for each Eurodollar Loan of such Bank (or, in any event, if such Bank so
requests, on such earlier date as may be required by the relevant law,
regulation or interpretation), such Eurodollar Loan shall, unless then repaid
in full, automatically convert to a Floating Rate Loan. Each Floating Rate
Loan made by a Bank which, but for the circumstances described in the foregoing
sentence, would be a Eurodollar Loan (an "Affected Loan") shall,
notwithstanding any other provision of this Agreement, remain outstanding for
the same period as the Group of Eurodollar Loans of which such Affected Loan
would be a part absent such circumstances.
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8.4 Funding Losses. The Company hereby agrees that upon demand by
any Bank (which demand shall be accompanied by a statement setting forth the
basis for the calculations of the amount being claimed, a copy of which shall
be furnished to the Agent) the Company will indemnify such Bank against any net
loss or expense which such Bank may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain any Eurodollar Loan), as reasonably determined by such Bank, as a
result of (a) any payment or prepayment or conversion of any Eurodollar Loan of
such Bank on a date other than the last day of an Interest Period for such Loan
(including, without limitation, any conversion pursuant to Section 8.3) or (b)
any failure of the Company to borrow or convert any Loans on a date specified
therefor in a notice of borrowing or conversion pursuant to this Agreement.
For this purpose, all notices to the Agent pursuant to this Agreement shall be
deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or affiliate of such Bank to make such Loan, provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Bank and the obligation of the Company to repay such Loan
shall nevertheless be to such Bank and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank 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 such Bank had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a)
Each Bank shall promptly notify the Company and the Agent of any event of which
it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence
of any circumstances of the nature described in Section 8.2 or 8.3 (and, if any
Bank has given notice of any such event described in clause (i) or (ii)
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above and thereafter such event ceases to exist, such Bank shall promptly so
notify the Company and the Agent). Without limiting the foregoing, each Bank
will designate a different funding office if such designation will avoid (or
reduce the cost to the Company of) any event described in clause (i) or (ii) of
the preceding sentence and such designation will not, in such Bank's sole
judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Company may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have Commitments in such amounts as shall be
reasonably satisfactory to the Agent (and upon notice from the Company such
Affected Bank shall assign pursuant to an Assignment Agreement, and without
recourse or warranty, its Commitments, its Loans, its Note, its participation
in Letters of Credit, if any, and all of its other rights and obligations
hereunder to such replacement bank(s) or other financial institution(s) for a
purchase price equal to the sum of the principal amount of the Loans so
assigned, all accrued and unpaid interest thereon, its ratable share of all
accrued and unpaid non-use fees and Letter of Credit fees, any amounts payable
under Section 8.4 as a result of such Bank receiving payment of any Eurodollar
Loan prior to the end of an Interest Period therefor and all other obligations
owed to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections
8.1 and 8.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes, cancellation or expiration of the Letters of
Credit and any termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement, the
Issuing Bank to issue Letters of Credit and the Banks to make Loans and
purchase participations in Letters of Credit hereunder, the Company warrants to
the Agent, the Issuing Bank and the Banks that:
9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio; each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the jurisdiction of its incorporation; the Company and each
Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business makes such qualification
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necessary, except where the failure to be so qualified would not have a
Material Adverse Effect; and the Company and each Subsidiary has full corporate
power and authority to own its property and conduct its business as presently
conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party
and the borrowings hereunder and the performance by each of the Company of its
obligations under each Loan Document to which it is a party are within the
corporate powers of the Company, have been duly authorized by all necessary
corporate action on the part of the Company (including any necessary
shareholder action), have received all necessary governmental approval (if any
shall be required), and do not and will not (a) violate any provision of law or
any order, decree or judgment of any court or other government agency which is
binding on the Company, (b) contravene or conflict with, or result in a breach
of, any provision of the Certificate of Incorporation, By-Laws or other
organizational documents of the Company or of any material agreement,
indenture, instrument or other document, or any material judgment, order or
decree, which is binding on the Company or any Subsidiary or (c) result in, or
require, the creation or imposition of any Lien on any property of the Company
or any Subsidiary (other than Liens arising under the Loan Documents).
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which the Company is
a party will be, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
9.4 Financial Information. The audited consolidated financial
statements of the Company and its Subsidiaries at December 31, 1993, copies of
which have been delivered to each Bank, have been prepared in accordance with
generally accepted accounting principles and present fairly the consolidated
financial condition of the Company and its Subsidiaries taken as a whole as at
such date and the results of their operations for the Fiscal Year then ended.
9.5 No Material Adverse Change. Since the date of the audited
consolidated financial statements described in Section 9.4, no event or events
have occurred which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
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9.6 Litigation and Suretyship Liabilities. No litigation (including,
without limitation, derivative actions), arbitration proceeding or governmental
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary which is reasonably likely to have a Material Adverse
Effect except as set forth in Schedule 9.6. Other than any liability incident
to such litigation or proceedings, neither the Company nor any Subsidiary has
any material contingent liabilities not provided for or disclosed in the
financial statements referred to in Section 9.4 or listed in Schedule 9.6.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and marketable title to, or a valid leasehold interest in,
all of its properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including patents, trademarks, trade names, service
marks and copyrights), free and clear of all Liens, charges and claims
(including infringement claims with respect to patents, trademarks, copyrights
and the like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Company has no Subsidiaries except those
listed in Schedule 9.8.
9.9 Pension and Welfare Plans. Except as disclosed to the Banks in
writing prior to the date of this Agreement, during the twelve-
consecutive-month period prior to the date of the execution and delivery of
this Agreement or the making of any Loan hereunder, (a) no steps have been
taken to terminate any Pension Plan which would be reasonably likely to result
in the Company being required to make a contribution to such Pension Plan, or
incurring a liability or obligation to such Pension Plan, in excess of
$250,000, and (b) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
No condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by the Company of any
material liability, fine or penalty under ERISA or the Code. Except as set
forth on Schedule 9.9, the Company has no contingent liability with respect to
any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of subtitle B of title I of ERISA.
9.10 Investment Company Act. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of
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a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
9.12 Regulations G, T, U and X. Neither the Company nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
9.13 Taxes. Each of the Company and each Subsidiary has filed all tax
returns and reports required by law to have been filed by it (except for such
tax returns and reports with respect to which the failure to file timely would
not have a Material Adverse Effect) and has paid all taxes and governmental
charges thereby shown to be owing, except for (a) as disclosed on Schedule 9.6
and (b) for charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles shall have been set aside on its
books.
9.14 Solvency, etc. On the Effective Date and immediately prior to
and after giving effect to each borrowing hereunder and the use of the proceeds
thereof, (a) the Company's assets will exceed its liabilities and (b) the
Company will be solvent, will be able to pay its debts as they mature and will
have capital sufficient to carry on its business as then constituted.
9.15 Insurance. Set forth on Schedule 9.15 is a complete and accurate
summary of the property, casualty and business interruption insurance program
carried by the Company and its Subsidiaries on the date of this Agreement
including the insurer's(s') name(s), policy number(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, the annual premium(s), endorsed
exclusions, deductibles and self- insured retention and a description in
reasonable detail of (a) any retrospective rating plan, fronting arrangement or
other self-insurance or risk assumption agreed to by the Company or any
Subsidiary or imposed upon the Company or any Subsidiary by any such insurer
and (b) any self- insurance program that is in effect.
9.16 Contracts; Labor Matters. Except as disclosed on Schedule 9.16:
(a) neither the Company nor any Subsidiary is a party to any contract or
agreement, or is subject to any charge, corporate restriction, judgment, decree
or order, which materially and adversely affects the Company's consolidated
business, property, assets, operations or condition, financial or otherwise;
(b) no labor contract to which the Company or any Subsidiary is a party or is
otherwise subject is scheduled to expire prior to the Termination Date; (c)
neither the Company nor any Subsidiary has, within the two-year period
preceding the date
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of this Agreement, taken any action which would have constituted or resulted in
a "plant closing" or "mass layoff" within the meaning of the Federal Worker
Adjustment and Retraining Notification Act of 1988 or any similar applicable
federal, state or local law, and the Company has no reasonable expectation that
any such action is or will be required at any time prior to the Termination
Date; and (d) on the date of this Agreement there are no strikes or walkouts
relating to any labor contracts to which the Company or any Subsidiary is a
party or is otherwise subject.
9.17 Environmental and Safety and Health Matters. Except as disclosed
on Schedule 9.17 and except to the extent any of the following is not
reasonably expected to have a Material Adverse Effect, the Company and each of
its Subsidiaries and each property, operation and facility that the Company or
any Subsidiary may own, operate or control (i) complies in all material
respects with (A) all applicable Environmental Laws and (B) all applicable
Occupational Safety and Health Laws; (ii) is not subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law; (iii) has not received any notice (A) that
it may be in violation of any Environmental Law or Occupational Safety and
Health Law, or (B) threatening the commencement of any proceeding relating to
allegedly unlawful, unsafe or unhealthy conditions or (C) alleging that it is
or may be responsible for any response, cleanup, or corrective action,
including, but not limited to, any remedial investigation/feasibility study,
under any Environmental Law or Occupational Safety and Health Law; (iv) has not
received any notice that it is the subject of federal or state investigation
evaluating whether any investigation, remedial action or other response is
needed to respond to (A) a spillage, disposal or release or threatened release
into the environment of any Hazardous Material, or (B) any alleged violation of
any Occupational Safety and Health Law; (v) has not filed any notice under or
relating to any Environmental Law or Occupational Safety and Health Law
indicating or reporting (A) any past or present spillage, disposal or release
into the environment of, or treatment, storage or disposal of, any Hazardous
Material in excess of quantities requiring notification under any Environmental
Law, or (B) any violation of any Occupational Safety and Health Law and (vi)
has no material contingent liability in connection with (A) any actual or
potential spillage, disposal or release into the environment of, or otherwise
with respect to, any Hazardous Material, whether on any premises owned or
occupied by the Company or any Subsidiary or on any other premises or (B) any
unsafe or unhealthful condition. Except as disclosed on Schedule 9.17, there
are no Hazardous Materials on, in or under any property or facilities, owned,
operated or controlled by the Company or any Subsidiary (except Hazardous
Materials used in the ordinary course of the business of the Company and its
Subsidiaries and used, stored, handled,
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treated and disposed of in all material respects in accordance with all
applicable Environmental Laws and Occupational Safety and Health Laws) that,
under applicable Environmental Laws or Occupational Safety and Health Laws (A)
impose or could reasonably be expected to impose a liability for removal,
remediation, or other cleanup or damage to natural resources, in an amount
equal to or greater than $500,000; (B) could reasonably be expected to have a
Material Adverse Effect; or (C) could reasonably be expected to result in the
imposition of a Lien securing more than $500,000 of liability on the property
or other assets of the Company or its Subsidiaries.
9.18 Real Property. Set forth on Schedule 9.18 is a complete and
accurate list, as of the date of this Agreement, of the address and legal
description of any real property owned or leased by the Company or any
Subsidiary, together with, in the case of leased property, the name and mailing
and address of the lessor of such property.
9.19 Information. All written information taken as a whole heretofore
or contemporaneously herewith furnished by or on behalf of the Company or any
Subsidiary to the Agent or any Bank for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all written
information taken as a whole hereafter furnished by or on behalf of the Company
or any Subsidiary to the Agent or any Bank pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is
or will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full, the Company agrees that, unless at any time the
Required Banks shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each
Bank:
10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year, (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year, which audit
report shall be without qualification as to
<PAGE> 49
going concern or scope and shall be prepared by KMPG Peat Marwick or other
independent auditors of national recognized standing selected by the Company
and reasonably acceptable to the Required Banks, together with a written
statement from such auditors to the effect that in making the audit necessary
for the signing of such audit report by such accountants, they have not become
aware of any Event of Default or Unmatured Event of Default that has occurred
and is continuing or, if they have become aware of any such event, describing
it in reasonable detail; and (b) consolidating balance sheets of the Company
and its Subsidiaries as of the end of such Fiscal Year and consolidating
statements of earnings for the Company and its Subsidiaries for such Fiscal
Year, together with a certificate of the Chief Executive Officer, the Chief
Financial Officer or the Treasurer of the Company certifying that such
financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated.
10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter,
consolidated and consolidating statements of earnings for such Fiscal Quarter,
consolidated and consolidating statements of earnings and consolidated
statements of cash flow for the period beginning with the first day of such
Fiscal Year and ending on the last day of such Fiscal Quarter, together with a
certificate of the Chief Executive Officer, the Chief Financial Officer or the
Treasurer of the Company, certifying that such financial statements fairly
present the financial condition and results of operations of the Company and
its Subsidiaries as of the dates and periods indicated, subject to changes
resulting from audit and normal year-end adjustments.
10.1.3 Compliance Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report pursuant to Section 10.1.1 and
of each set of quarterly statements pursuant to Section 10.1.2, a duly
completed certificate in the form of Exhibit C, with appropriate insertions,
dated the date of such annual report or such quarterly statements and signed by
the Chief Executive Officer, the Chief Financial Officer or the Treasurer of
the Company, containing a computation of each of the financial ratios and
restrictions set forth in Sections 10.6, 10.7, 10.9 and 10.11 and to the effect
that such officer has not become aware of any Event of Default or Unmatured
Event of Default that has occurred and is continuing or, if there is any such
event, describing it and the steps, if any, being taken to cure it.
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10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing
or sending thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed with the SEC or
any securities exchange and any report, proxy statement or other communication
to the Company's shareholders generally.
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly
(and in any event within one Business Day in the case of clause (a) and within
ten days in the case of clauses (b) through (f)) upon an executive officer of
the Company (which shall include, without limitation, the Chief Executive
Officer, the Chief Financial Officer, the President and the Treasurer of the
Company) becoming aware of any of the following, written notice describing the
same and the steps being taken by the Company or the Subsidiary affected
thereby with respect thereto: (a) the occurrence of an Event of Default or an
Unmatured Event of Default; (b) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to the
Banks which has been instituted or, to the knowledge of the Company, is
threatened against the Company or any Subsidiary or to which any of the
properties of any thereof is subject which has had or is reasonably likely to
have a Material Adverse Effect; (c) any material adverse development which
occurs in any litigation, arbitration or governmental investigation or
proceeding previously disclosed pursuant to clause (b); (d) the institution of
any steps by the Company, any of its Subsidiaries or any other Person to
terminate any Pension Plan, or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Company furnish a bond or
other security to the PBGC or such Pension Plan, or the occurrence of any event
with respect to any Pension Plan which could result in the incurrence by the
Company of any material liability, fine or penalty, or any material increase in
the contingent liability of the Company with respect to any post-retirement
Welfare Plan benefit (e) any lapse, cancellation or termination of, or other
material change in, any pollution liability insurance policy maintained by the
Company; and (f) the occurrence of any other event or circumstance which has
had or is reasonably likely to have a Material Adverse Effect.
10.1.6 Subsidiaries. Promptly upon the occurrences thereof, a
written report of any change in the list of its Subsidiaries other than the
sale or other disposition of General Nuclear.
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and
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management reports submitted to the Company by independent auditors in
connection with each annual or interim audit made by such auditors of the books
of the Company.
10.1.8 Projections, etc. As soon as practicable, and in any event
within 90 days after the commencement of each Fiscal Year, a five- year budget
and projected cash flow, including J.D. Powers Auto Production forecasts.
10.1.9 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary
to keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
generally accepted accounting principles; permit, and cause each Subsidiary to
permit, on reasonable notice and at reasonable times and intervals (or at any
time without notice during the existence of an Event of Default) any Bank or
the Agent or any representative thereof to inspect the properties and
operations of the Company and of such Subsidiary; and permit, and cause each
Subsidiary to permit, on reasonable notice and at reasonable times and
intervals (or at any time without notice during the existence of an Event of
Default) any Bank or the Agent or any representative thereof to visit any or
all of its offices, to discuss its financial matters with its officers and its
independent auditors (and the Company hereby authorizes such independent
auditors to discuss such financial matters with any Bank or the Agent or any
representative thereof), and to examine (and, at the expense of the Company or
the applicable Subsidiary, photocopy extracts from) any of its books or other
corporate records. The Company agrees to pay the fees of its auditors incurred
in connection with any reasonable exercise of the rights of the Agent and the
Banks pursuant to this Section.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
reputable, financially sound insurance companies (rated at least B+ by A. M.
Best & Co.), insurance to such extent and against such hazards and liabilities
as is customarily maintained by companies similarly situated (and, in any
event, such insurance as may be required by any law or governmental regulation
or any court order or decree); and, upon request of the Agent or any Bank,
furnish to the Agent or such Bank a certificate setting forth in reasonable
detail the nature and extent of all insurance maintained by the Company and its
Subsidiaries.
10.4 Compliance with Laws; Maintenance of Property; Payment of Taxes
and Liabilities. (a) Comply, and cause each Subsidiary
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to comply, in all material respects with all applicable laws, rules,
regulations and orders the noncompliance with which would be reasonably likely
to have a Material Adverse Effect; (b) maintain or cause to be maintained, and
cause each Subsidiary other than General Nuclear to maintain or cause to be
maintained, in good repair, working order and condition all material properties
used in its business, and make, and cause each Subsidiary other than General
Nuclear to make, all appropriate repairs, renewals and replacements of such
properties; (c) pay, and cause each Subsidiary to pay, prior to delinquency,
all taxes and other governmental charges against it or any of its property;
provided, however, that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside
on its books adequate reserves with respect thereto; and (d) not, and not
permit any Subsidiary to, file or consent to the filing of any consolidated
income tax return with any Person other than the Company and its Subsidiaries.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.12) cause each Subsidiary other than General Nuclear to
maintain and preserve, (a) its existence and good standing in the jurisdiction
of its incorporation and (b) its qualification and good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing would not (i) if cured, foreclose access to the
courts of such jurisdiction in respect of events occurring prior to such cure
or (ii) in any event, be reasonably likely to result in a Material Adverse
Effect).
10.6 Financial Covenants.
10.6.1 Minimum Net Worth. Not permit Tangible Net Worth at any time
to be less than (a) $1,600,000 plus (b) 90% of Consolidated Net Income for the
period beginning with the first full Fiscal Quarter occurring after the
Effective Date and ending on the last day of the most recently ended Fiscal
Quarter (excluding any loss for any Fiscal Quarter in such period).
10.6.2 Accounts Payable to Inventory Ratio. Not permit the Accounts
Payable to Inventory Ratio at the end of any Fiscal Quarter to be less than 1.3
to 1.0.
10.6.3 Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio to be less than 2.0 to 1.0.
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10.6.4 Consolidated Fixed Charge Coverage Ratio. Not permit the
Consolidated Fixed Charge Coverage Ratio to be less than 2.5 to 1.0.
10.6.5 Operating Leases. Not permit Consolidated Lease Expense to
exceed $2,000,000 in any Fiscal Year.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except (a) obligations
arising under the Loan Documents; (b) current accounts payable and accrued
liabilities arising in the ordinary course of business; (c) Debt in respect of
Capital Leases to the extent permitted by Section 10.9; (d) unsecured Debt of
(i) Manchester to the Company not exceeding $500,000 at any time and (ii)
General Nuclear to the Company not exceeding $4,400,000 at any time; (e)
unsecured Debt of the Company to Manchester not exceeding $9,500,000; (f)
Hedging Agreements entered into by the Company or any Subsidiary; (g)
Suretyship Liabilities in respect of any obligation of the Company or any
Subsidiary permitted under this Agreement; (h) Debt in respect of taxes,
assessments or governmental charges to the extent that payment thereof shall
not at the time be required to be made in accordance with Section 10.4; (i)
Debt in respect of judgments or awards not constituting an Event of Default
under Section 12.1.8; (j) Debt under the "Loan Documents" (as defined in the
Manchester Credit Agreement); (k) Debt to be Repaid, Debt outstanding on the
date hereof and listed in Schedule 10.7 under the heading "Continuing Debt" and
other Debt hereafter incurred in connection with Liens permitted by Sections
10.8(d) and (e), and extensions, renewals and refinancings of any Debt (other
than Debt to be Repaid) described in this clause (k) so long as the principal
amount thereof is not increased.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit
to exist any Lien on any of its real or personal properties, assets or rights
of whatsoever nature (whether now owned or hereafter acquired), except (a)
Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves; (b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other similar
Liens imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety and appeal
bonds, bids, performance bonds, utility deposits and similar obligations) for
sums not overdue or being contested in good faith by appropriate proceedings
and not involving any advances or borrowed money or the deferred purchase price
of property or services (other than those described in
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subclauses (i) and (ii) of this clause (b)), and, in each case, for which it
maintains adequate reserves; (c) Liens identified on Schedule 10.8; (d) Liens
in connection with Capital Leases (to the extent permitted by Section 10.9);
(e) any Lien arising in connection with the acquisition, construction or
improvement of property after the date hereof, and attaching only to the
property being acquired, constructed or improved, if the Debt secured thereby
does not exceed 90% of the fair market value of the property acquired at the
time of acquisition thereof or 90% of the cost of such construction or
improvement, as the case may be, nor $1,000,000 in the aggregate for all such
Debt of the Company and all Subsidiaries at any one time outstanding; (f)
attachments, judgments and other similar Liens, for sums not exceeding $500,000
arising in connection with court proceedings, provided the execution or other
enforcement of such Liens is effectively stayed and claims secured thereby are
being actively contested in good faith and by appropriate proceedings; (g)
easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of the Company and its Subsidiaries taken as a
whole; (h) Liens in favor of the Agent arising under the Loan Documents; (i)
Liens under the "Loan Documents" (as defined in the Manchester Credit
Agreement); (j) leases or subleases granted by the Company or any Subsidiary in
the ordinary course of its business; (k) the interest or title of the lessor of
any lease with respect to which the Company or a Subsidiary is lessee; and (l)
extensions, renewals or replacements of any Lien permitted by the foregoing
provisions of this Section 10.8, but only if the principal amount of the Debt
secured thereby immediately prior to such extension, renewal or replacement is
not increased and such Lien is not extended to any other property.
10.9 Capital Expenditures. Not, and not permit any Subsidiary to,
make or commit to make any Consolidated Capital Expenditures in any Fiscal Year
unless, after giving effect to such Capital Expenditure, the aggregate amount
of all Consolidated Capital Expenditures during such Fiscal Year shall not
exceed $7,500,000.
10.10 Restricted Payments. Not, and not permit any Subsidiary to, (a)
declare or pay any dividends on any of its capital stock (other than stock
dividends and declaration or payment or both by a Subsidiary to the Company or
to any other Wholly-Owned Subsidiary), (b) purchase or redeem any such stock or
any warrants, options or other rights in respect of such stock, (c) make any
other distribution to shareholders (other than the issuance of stock, or
options in respect thereof, to directors, officers and employees), (d) prepay,
purchase or redeem any subordinated Debt or (e) set aside funds for any of the
foregoing except that provided (i) no Unmatured Event of
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Default or Event of Default has occurred and is continuing or would occur as a
result of such payment and (ii) the Company has at least $25,000,000 of
Tangible Net Worth, the Company may declare and pay dividends in an amount not
to exceed 10% of Consolidated Net Income after June 30, 1994.
10.11 Investments. The Company will not, nor will it permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person, except:
(a) Investments existing on the Effective Date and identified
in Schedule 10.11;
(b) Cash Equivalent Investments;
(c) Investments by the Company in its Subsidiaries in the
form of contributions to capital or loans or advances not to exceed
$500,000 in the aggregate in the case of Manchester and $4,400,000 in
the case of General Nuclear; provided that immediately before and after
giving effect to such Investment, no Unmatured Event of Default or
Event of Default shall have occurred and be continuing and (ii) any
loans or advances to Manchester are reasonably expected to be repaid
within one year;
(d) Investments by the Company or any Subsidiary in any
Subsidiary, in the form of capital contributions existing on the date
hereof;
(e) loans or advances made by Manchester to the Company not
to exceed $9,500,000 in the aggregate provided such loans and advances
are reasonably expected to be repaid within one year;
(f) loans or advances to officers and employees of the
Company or of any Subsidiary for travel or other ordinary business
expenses not in excess of $150,000 in the aggregate at any time;
(g) extensions of credit in the nature of Accounts Receivable
or notes receivable arising from the sale of goods and services in the
ordinary course of business or from Asset Sales permitted by this
Agreement; and
(h) shares of stock, obligations or other securities received
in settlement of claims arising in the ordinary course of business.
10.12 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary other than General Nuclear to, (a) be a party to any merger or
consolidation, (b) purchase or otherwise acquire
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all or substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or (c) be a party
to any Asset Sale, except for (i) any such merger or consolidation, sale,
transfer, conveyance, lease or assignment of or by any Wholly-Owned Subsidiary
into the Company or into, with or to any other Wholly-Owned Subsidiary, (ii)
Investments permitted by Section 10.11 or (iii) Asset Sales (other than sales
or assignments of accounts receivable or sales of all or substantially all the
assets of the Company or any Subsidiary or sales of stock of any Subsidiary
other than General Nuclear) provided that (x) no Event of Default of Unmatured
Event of Default has occurred and is continuing or would result therefrom, (y)
the gross proceeds of such Asset Sales do not exceed $1,000,000 in the
aggregate in any Fiscal Year and (z) the Net Cash Proceeds thereof shall be
applied in accordance with Section 6.2.2.
10.13 Use of Proceeds. Use the proceeds of the Loans solely (i) to
repay Debt to be Repaid, (ii) to purchase Manchester/Williamston/Homer from
Manchester and (iii) for working capital, capital expenditure, tooling and
other corporate purposes; and not use or permit any proceeds of any Loan to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying" any Margin Stock; provided,
however, that Loans under Commitment B shall be used solely for purchase of
tooling and capital equipment.
10.14 Transactions with Affiliates. Except as set forth on Schedule
10.14, not, and not permit any Subsidiary to, enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract with any of its other
Affiliates (other than the Company and its Subsidiaries) which is on terms
which are less favorable than are obtainable from any Person which is not one
of its Affiliates. Without limiting the foregoing except as set forth on
Schedule 10.14, the Company will not, and will not permit any Subsidiary to,
pay any management, consulting or similar fee (other than board fees and
reasonable expense reimbursements) to any Affiliate (other than to the Company
or a Subsidiary).
10.15 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in compliance with all applicable requirements of
law and regulations.
10.16 Environmental Covenants.
10.16.1 Environmental Response Obligation. (a) Comply, and cause each
Subsidiary to comply, with any Federal or state judicial or administrative
order requiring the performance at any real property owned, operated or leased
by the Company or any
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Subsidiary of activities in response to the release or threatened release of a
Hazardous Material, except for the period of time that the Company or such
Subsidiary is diligently in good faith contesting such order; (b) notify the
Agent within ten days of the receipt of any written claim, demand, proceeding,
action or notice of liability by any Person arising out of or relating to the
release or threatened release of a Hazardous Material at any such property; and
(c) notify the Agent within ten days of any release, threat of release, or
disposal of Hazardous Material reported by the Company or any Subsidiary to any
governmental or regulatory authority at any real property owned, operated, or
leased by the Company or any Subsidiary.
10.16.2 Environmental Liabilities. (a) Comply, and cause each
Subsidiary to comply, in all material respects with all material Environmental
Laws; (b) without limiting clause (a), not commence disposal of any Hazardous
Material into or onto any real property owned, operated or leased by the
Company or any Subsidiary; and (c) without limiting clause (a), not allow any
Lien imposed pursuant to any law, regulation or order relating to Hazardous
Materials or the disposal thereof to remain on any real property owned,
operated or leased by the Company or any Subsidiary, except to the extent that
the Company or such Subsidiary is contesting such Lien in good faith by
appropriate proceedings and, in each case, for which no action to enforce such
Lien has been commenced.
10.16.3 Environmental Assessments. Without limiting any other
provision of this Agreement, permit, and cause each Subsidiary to permit, the
Agent to investigate the environmental aspects of the properties, facilities
and operations of the Company or such Subsidiary (including taking samples and
conducting such other activities as the Agent deems appropriate). If the Agent
decides to cause such an environmental assessment of any property to be
conducted because of (a) the Agent's considering taking possession of or title
to such property after the occurrence of an Event of Default or (b) a material
change in the use of the property which, in the opinion of the Required Banks,
materially increases the risk of non-compliance with Environmental Laws or
materially increases the risk of cost or liabilities thereunder, then the
Company shall pay upon demand all reasonable costs and expenses (including
reasonable attorney's fees) connected with such assessment. Nothing in this
Section 10.16.3, and no actions taken by the Agent or any Bank pursuant hereto,
shall give, or be construed as giving, to the Bank the right or obligation to
direct or control the conduct or action or inaction of the Company or any
Subsidiary with respect to any environmental matters, including but not limited
to those pertaining to compliance with any Environmental Law.
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10.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any material contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
10.18 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any material agreement containing any provision which would be
violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of any of its obligations
hereunder or under any other Loan Document.
10.19 Further Assurances. Take such actions as the Agent may
reasonably request from time to time (including, without limitation, the
execution and delivery of guaranties, security agreements, pledge agreements,
mortgages, stock powers, financing statements and other documents, the filing
or recording of any of the foregoing, and the delivery of stock certificates
and other collateral with respect to which perfection is obtained by
possession) to ensure that the obligations of the Company and its Subsidiaries
hereunder and under the other Loan Documents are secured by substantially all
assets of the Company subject to such exceptions as the Agent or the Required
Banks from time to time may permit.
10.20 Limitations on Sale and Leaseback Transactions. Not, and not
permit any Subsidiary to, enter into any arrangement with any Person providing
for the leasing by the Company or any Subsidiary of any real or tangible
personal property, which property has been or is to be sold or transferred by
the Company or such Subsidiary to such Person in contemplation of such leasing.
10.21 Business. The Company will not, and will not permit any
Subsidiary to, enter into any business which differs in any material respect
from the business in which the Company, or any Subsidiary of the Company, is
engaged on the date of this Agreement.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Bank to make any Loan and of the Issuing Bank
to issue any Letter of Credit is subject to the following conditions precedent:
11.1 Initial Loan or Letter of Credit. The obligation of each Bank to
make its initial Loan and of the Issuing Bank to issue the initial Letter of
Credit, is, in addition to the
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conditions precedent specified in Section 11.2 and, if applicable, Section
11.3, subject to the conditions precedent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Banks is
called the "Effective Date") that the Agent shall have received all of the
following, each duly executed and dated the Effective Date (or such earlier
date as shall be satisfactory to the Agent), in form and substance satisfactory
to the Agent, and each (except for the Notes, of which only the originals shall
be signed) in sufficient number of signed counterparts to provide one for each
Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Agreement, the Notes and the other Loan
Documents to which the Company is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance of the Loan Documents by
the Company.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company certifying the names of the
officer or officers of such entity authorized to sign the Loan Documents to
which such entity is a party, together with a sample of the true signature of
each such officer (it being understood that the Agent and each Bank may
conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Security Agreement. A security agreement, substantially in
the form of Exhibit D-1, issued by the Company (as amended, supplemented or
otherwise modified from time to time, the "Security Agreement"), together with
evidence, satisfactory to the Agent, that substantially all filings (including,
without limitation, a patent security agreement substantially in the form of
Exhibit D-2, as amended, supplemented or otherwise modified from time to time,
the "Patent Security Agreement) necessary to perfect the Agent's Lien on any
collateral granted under the Security Agreement have been duly made and are in
full force and effect (subject to such exceptions as the Agent may approve).
11.1.6 Pledge Agreement. A pledge agreement, substantially in the
form of Exhibit E, issued by the Company (as amended, supplemented or otherwise
modified from time to time, the "Pledge Agreement").
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11.1.7 Real Estate Documentation. With respect to each parcel
of real property owned by the Company, (a) a duly executed Mortgage; (b) a
currently effective, marked-up title commitment, in form and amount
satisfactory to the Agent, insuring such Mortgage and subject only to those
exceptions approved by the Agent; and (c) a survey acceptable to the Agent.
11.1.8 Opinions of Counsel for the Company. The opinions of
Honigman, Miller, Schwartz & Cohn substantially in the form of Exhibit F.
11.1.9 Insurance. Copies of insurance binders or Certificates of
insurance as required pursuant to Section 10.3 and the Loan Documents
satisfactory to the Agent along with evidence that the Agent and Banks are
named as loss payee and additional insured.
11.1.10 Debt to be Repaid, etc. The Agent shall have received
evidence, reasonably satisfactory to the Agent, that (a) all Debt to be Repaid
has been, or concurrently with the making of such Loan and/or issuance of such
Letter of Credit will be, paid in full; and (b) all commitments under the
agreements relating to such Debt, and all Liens securing such Debt, have been,
or concurrently with the making of such Loan and/or issuance of such Letter of
Credit will be, terminated.
11.1.11 Fees. The Company shall have paid (or shall have made
arrangements to pay with the proceeds of the initial Loan) all fees and
expenses then due and payable to the Agent or any Bank (including, to the
extent then billed, all amounts payable pursuant to Section 14.6).
11.1.12 Transfer of Assets. Manchester/Williamston/Homer shall have
been transferred from Manchester to the Company in a manner satisfactory to the
Agent.
11.1.13 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 All Loans and Letters of Credit. The obligation of each Bank to
make each Loan and of the Issuing Bank to issue the Letter of Credit, whichever
first occurs, is subject to the following further conditions precedent that:
11.2.1 No Default, etc. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the making of
such Loan and (b) the warranties of the Company contained in Section 9
(excluding, in the case of all Loans other than the initial Loan hereunder,
Sections 9.4, 9.6, 9.8 and 9.15 through 9.18) are true and correct in all
material respects as of the date of such requested Loan or the issuance of
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such Letter of Credit, with the same effect as though made on such date.
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank, the Agent shall have received (in sufficient counterparts to provide one
to each Bank) a certificate dated the date of such requested Loan or Letter of
Credit and signed by a duly authorized representative of the Company as to the
matters set out in Section 11.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a warranty by the Company that the conditions precedent
set forth in Section 11.2.1 will be satisfied at the time of the making of such
Loan or issuing such Letter of Credit), together with such other documents as
the Agent or any Bank may reasonably request in support thereof.
11.3 Condition for B Loans. The obligation of each Bank to make any B
Loan is subject to the further condition precedent that the Company deliver a
loan request in the form of Exhibit B (as amended, supplemented or otherwise
modified from time to time, the "B Loan Request") accompanied by an invoice for
the tooling or capital equipment being purchased with the proceeds of such B
Loan.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of the principal of any Loan; or default, and continuance thereof for five
days, in the payment when due of any interest on any Loan, any reimbursement
obligation with respect to any Letter of Credit or any fee or other amount
payable by the Company hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all Debt so affected) exceeding $500,000 and such default shall (a)
consist of the failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (b) accelerate the
maturity of such Debt or permit the holder or holders thereof, or any trustee
or agent for such holder or holders, to cause such Debt to become due and
payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due
of more than $500,000 in the aggregate, or in the performance or observance of,
any material obligation of, or
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condition agreed to by, the Company or any Subsidiary with respect to any
material purchase or lease of goods or services (except only to the extent that
the existence of any such default is being contested by the Company or such
Subsidiary in good faith and by appropriate proceedings and appropriate
reserves have been made in respect of such default).
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 60
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary), is commenced in respect of the
Company or any Subsidiary, and if such case or proceeding is not commenced by
the Company or such Subsidiary, it is consented to or acquiesced in by the
Company or such Subsidiary, or remains for 60 days undismissed; or the Company
or any Subsidiary takes any corporate action to authorize, or in furtherance
of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any covenant set forth in Sections
10.6 through 10.14 or Section 10.19; or failure by the Company to comply with
or to perform any other provision of this Agreement (and not constituting an
Event of Default under any of the other provisions of this Section 12) and
continuance of such failure for 30 days (or, in the case of Section 10.15, five
Business Days) after notice thereof to the Company from the Agent, any Bank or
the holder of any Note.
12.1.6 Warranties. Any warranty made by the Company herein or in any
Loan Document is breached or is false or misleading in any material respect, or
any schedule, certificate, financial statement, report, notice or other writing
furnished by the Company to the Agent or any Bank is false or misleading in any
material respect on the date as of which the facts therein set forth are stated
or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability
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or obligation to such Pension Plan, in excess of $500,000, or (ii) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under section 302(f) of ERISA.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$500,000 shall be rendered against the Company, or any Subsidiary and shall not
have been discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the
Company, the Company shall fail to comply with or to perform any applicable
material provision of any Collateral Document and such failure continues for 30
days after notice to the Company by the Agent, any Bank or the holder of any
Note or the Company (or any Person by, through or on behalf of the Company)
shall contest in any manner the validity, binding nature or enforceability of
any Collateral Document.
12.1.10 Material Adverse Change. The Required Lenders shall have
reasonably determined in good faith that an event has occurred or a condition
exists that has had or will have a Material Adverse Effect.
12.1.11 Change in Control. A Change in Control shall occur.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to deliver to the Agent cash collateral in an amount
equal to the outstanding face amount of all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, in the case of any
other Event of Default, the Agent may (and upon written request of the Required
Banks shall) declare the Commitments (if they have not theretofore terminated)
to be terminated and/or declare all Notes and all other obligations hereunder
to be due and payable and/or demand that the Company immediately deliver to the
Agent cash collateral in an amount equal to the outstanding face amount of all
Letters of Credit, whereupon the Commitments (if they have not theretofore
terminated) shall immediately terminate and/or all Notes and all other
obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to deliver to the Agent cash
collateral in an amount equal to the face amount of all Letters of Credit, all
without presentment, demand, protest or notice of any kind. The Agent shall
promptly
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advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks,
and the effect as an Event of Default of any other event described in this
Section 12 may be waived by the written concurrence of the Required Banks. Any
cash collateral delivered hereunder shall be held by the Agent and applied to
obligations arising in connection with any drawing under a Letter of Credit.
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by the Agent to any remaining obligations hereunder
and any excess shall be delivered to the Company or as a court of competent
jurisdiction may direct.
SECTION 13 THE AGENT.
13.1 Authorization. Each Bank and the holder of each Note authorizes
the Agent to act on behalf of such Bank or holder to the extent provided herein
or in any other Loan Document or any other document or instrument delivered
hereunder or in connection herewith, and to take such other action as may be
reasonably incidental thereto.
13.2 Indemnification. Each Bank and the holder of each Note agrees to
reimburse and indemnify the Agent for, and hold the Agent harmless against, a
share (determined in accordance with its respective Percentage) of any loss,
damages, penalty, action, judgment, obligation, cost, disbursement, liability
or expense (including attorneys' fees) incurred without gross negligence or
willful misconduct on the part of the Agent arising out of or in connection
with the performance of its obligations or the exercise of its powers hereunder
or under any other Loan Document or any other document or instrument delivered
hereunder or in connection herewith, as well as the costs and expenses of
defending against any claim against the Agent arising hereunder or thereunder.
13.3 Exculpation. The Agent shall be entitled to rely upon advice of
counsel concerning legal matters, and upon this Agreement, any other Loan
Document and any schedule, certificate, statement, report, notice or other
writing which it believes to be genuine or to have been presented by a proper
person. Neither the Agent nor any of its directors, officers, employees or
agents shall (i) be responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of, this Agreement, any other Loan Document or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
responsible for the validity, genuineness, perfection, effectiveness,
enforceability, existence, value or enforcement of
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any collateral security, (iii) be under any duty to inquire into or pass upon
any of the foregoing matters, or to make any inquiry concerning the performance
by the Company or any other obligor of its obligations, or (iv) in any event,
be liable as such for any action taken or omitted by it or them, except for its
or their own gross negligence or willful misconduct. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, the Agent in its individual capacity.
13.4 Credit Investigation. Each Bank acknowledges that it has made
such inquiries and taken such care on its own behalf as would have been the
case had such Bank's Commitments been granted, the Letter of Credit had been
issued and such Bank's Loans been made directly by such Bank to the Company
without the intervention of the Agent or any other Bank. Each Bank agrees and
acknowledges that the Agent makes no representations or warranties about the
creditworthiness of the Company or any other party to this Agreement or any
other Loan Document or with respect to the legality, validity, sufficiency or
enforceability of this Agreement or any other Loan Document or the value of any
security therefor.
13.5 Agent and Affiliates. The Agent in its individual capacity shall
have the same rights and powers hereunder as any other Bank and may exercise or
refrain from exercising the same as though it were not the Agent, and the Agent
and its Affiliates may accept deposits from and generally engage in any kind of
business with the Company or any Affiliate thereof as if the Agent were not the
Agent hereunder.
13.6 Action on Instructions of the Required Banks. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement of any Loan Document or collection of the Loans), the Agent shall
not be required to exercise any discretion or take any action, but the Agent
shall in all cases be fully protected in acting or refraining from acting upon
the written instructions from (i) the Required Banks, except for instructions
which under the express provisions hereof must be received by the Agent from
all Banks, and (ii) in the case of such instructions, from all Banks. In no
event will the Agent be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Loan
Document or applicable law. The relationship between the Agent and the Banks
is and shall be that of agent and principal only and nothing herein contained
shall be construed to constitute the Agent a trustee for any holder of a Note
or of a participation therein nor to impose on the Agent duties and obligations
other than those expressly provided for herein.
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13.7 Funding Reliance. (a) Unless the Agent receives notice from a
Bank by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such
Bank will not make available to the Agent the amount which would constitute its
Percentage of such borrowing in accordance with Section 2.3, the Agent may
assume that such Bank has made such amount available to the Agent and, in
reliance upon such assumption, make a corresponding amount available to the
Company. If and to the extent such Bank has not made any such amount available
to the Agent, such Bank and the Company jointly and severally agree to repay
such amount to the Agent forthwith on demand, together with interest thereon at
the interest rate applicable to Loans comprising such borrowing. Nothing set
forth in this clause (a) shall relieve any Bank of any obligation it may have
to make any Loan hereunder.
(b) Unless the Agent receives notice from the Company prior to the
due date for any payment hereunder that the Company does not intend to make
such payment, the Agent may assume that the Company has made such payment and,
in reliance upon such assumption, make available to each Bank its share of such
payment. If and to the extent that the Company has not made any such payment
to the Agent, each Bank which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Alternate Reference Rate. Nothing set
forth in this clause (b) shall relieve the Company of any obligation it may
have to make any payment hereunder.
13.8 Collateral Matters. The Banks irrevocably authorize the Agent,
at its option and in its discretion, to release any Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments and any
Hedging Agreements with any Bank and payment in full of all Loans and all other
obligations of the Company under this Agreement and under any other Loan
Document and any Hedging Agreements with any Bank; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company or any Subsidiary owned no interest at the time the Lien was granted or
at any time thereafter; (iv) constituting property leased to the Company or any
Subsidiary under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been,
and is not intended by the Company or such Subsidiary to be, renewed or
extended; or (v) subject to the penultimate sentence of Section 14.1, if
approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
Section 13.8.
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13.9 Resignation. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Company and the Banks. In the event of any
such resignation, the Required Banks shall as promptly as practicable appoint a
successor Agent. If no successor shall have been so appointed, and shall have
accepted such appointment, within 30 days after the giving of notice of such
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America having a combined capital, surplus and undivided
profits of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations under this Agreement. After any resignation pursuant to
this Section 13.9, the provisions of this Section 13 shall inure to the benefit
of the retiring Agent as to any actions taken or omitted to be taken by it
while it was Agent hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of any Agent or any
Bank in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by the Company and by Banks having an aggregate Percentage of not
less than the aggregate Percentage expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement or the Notes, by the Required Banks, and then any such amendment,
modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (a) shall amend, modify or waive any condition
precedent to any Loan without the consent of Banks holding 100% of the
Commitments or (b) shall (i) extend or increase the amount of any Commitment,
(ii) extend the date for payment of any principal of or interest on the Loans
or any fees payable hereunder, (iii) reduce the principal amount of any Loan,
the rate of interest thereon or any fees payable hereunder, (iv) release any
substantial part of the Collateral granted under the Collateral Documents
except Collateral having a fair market value of less than $5,000,000 in the
aggregate or as otherwise permitted under this Agreement or the Collateral
Documents or (v) change the aggregate Percentage required to effect an
amendment, modification, waiver or consent or amend this Section 14.1
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without, in each case, the consent of all Banks. No provisions of Section 13
shall be amended, modified or waived without the consent of the Agent. No
provision relating to Section 2.6, 2.7, 2.8, 2.9, 2.10, 2.12(c) or 5.3 shall be
amended, modified or waived without the consent of the Issuing Bank.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such
Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and
4.3, all notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and shall be sent to the applicable party at its
address shown below its signature hereto or at such other address as such party
may, by written notice received by the other party, have designated as its
address for such purpose. Notices sent by facsimile transmission shall be
deemed to have been given when sent; notices sent by mail shall be deemed to
have been given three Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery shall be
deemed to have been given when received. For purposes of Sections 2.3, 2.4 and
4.3, the Agent shall be entitled to rely on telephonic instructions from any
person that the Agent in good faith believes is an authorized officer or
employee of the Company, and the Company shall hold the Agent and each Bank
harmless from any loss, cost or expense resulting from any such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Company's audited
financial statements for the 1993 Fiscal Year.
14.5 Regulations G, T, U, And X. Each Bank represents that it in good
faith is not relying, either directly or indirectly, upon any Margin Stock as
collateral security for the extension or maintenance by it of any credit
provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent (including the
fees and charges of counsel for the Agent and of local counsel, if any, who may
be retained by said counsel) in connection with the preparation, execution,
delivery
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and administration of this Agreement, the other Loan Documents and all other
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith (including, without limitation, any amendments, supplements
or waivers to any Loan Documents), and all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees, court costs and other legal
expenses) incurred by the Agent and each Bank after an Event of Default in
connection with the enforcement of this Agreement, the other Loan Documents or
any such other documents. Each Bank agrees to reimburse the Agent for such
Bank's pro rata share (based on its respective Percentage) of any such costs
and expenses of the Agent not paid by the Company. In addition, the Company
agrees to pay, and to save the Agent and the Banks harmless from all liability
for, any stamp or other taxes (excluding income taxes) which may be payable in
connection with the execution and delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes or the execution and delivery of any other
Loan Document or any other document provided for herein or delivered or to be
delivered hereunder or in connection herewith. All obligations provided for in
this Section 14.6 shall survive repayment of the Loans, cancellation of the
Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Company has one or
more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Company, the Issuing Bank and the Agent (which consents shall not be
unreasonably delayed or withheld), at any time assign and delegate to one or
more commercial banks or other Persons (any Person to whom such an assignment
and delegation is to be made being herein called an "Assignee"), all or any
fraction of such Bank's Loans and Commitments (which assignment and delegation
shall be of a constant, and not a varying, percentage of all the assigning
Bank's Loans and Commitments) in a minimum aggregate amount equal to the lesser
of (i) the assigning Bank's remaining aggregate Loans, participation in Letters
of Credit and (to the extent not used) Commitments and (ii) $5,000,000;
provided, however, that (a) no assignment and delegation may be made to any
Person if, at the time of such assignment and delegation, the Company would be
obligated to pay any greater amount under Section 7.6 or Section 8 to the
Assignee than the Company is then obligated to pay to the assigning Bank under
such Sections and (b) the Company, the Issuing Bank and the
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Agent shall be entitled to continue to deal solely and directly with such Bank
in connection with the interests so assigned and delegated to an Assignee until
the date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect
to such Assignee, shall have been given to the Company and the Agent
by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent the Issuing
Bank and the Company, and
(z) the assigning Bank or the Assignee shall have paid the
Agent a processing fee of $3,000.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have
the rights and obligations of a Bank hereunder, and (y) the assigning Bank, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of
any assignment and delegation, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note
in the principal amount of the Assignee's Loan Commitment and, if the assigning
Bank has retained a Loan Commitment hereunder, a replacement Note in the
principal amount of the Loan Commitment retained by the assigning Bank (such
Note to be in exchange for, but not in payment of, the predecessor Note held by
such assigning Bank). Each such Note shall be dated the effective date of such
assignment. The assigning Bank shall mark the predecessor Note "exchanged" and
deliver it to the Company. Accrued interest on that part of the predecessor
Note being assigned shall be paid as provided in the Assignment Agreement.
Accrued interest and fees on that part of the predecessor Note not being
assigned shall be paid to the assigning Bank. Accrued interest and accrued
fees shall be paid at the same time or times provided in the predecessor Note
and in
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this Agreement. Any attempted assignment and delegation not made in accordance
with this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, (a) any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder) and
(b) no assignment pursuant to this Section 14.9.1 shall require the Company to
file any registration statement with the SEC or to apply to qualify any
interest herein or in any Note under the "blue sky" or other securities laws of
any jurisdiction.
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Bank, the Note held by such Bank, the Commitments of such Bank or any
other interest of such Bank hereunder, the direct or participation interest of
such Bank in any Letter of Credit or any other interest of such Bank hereunder
(any Person purchasing any such participating interest being herein called a
"Participant"). In the event of a sale by a Bank of a participating interest
to a Participant, (x) such Bank shall remain the holder of its Note for all
purposes of this Agreement, (y) the Company and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations hereunder and (z) all amounts payable by the Company shall be
determined as if such Bank had not sold such participation and shall be paid
directly to such Bank. No Participant shall have any direct or indirect voting
rights hereunder except with respect to any of the events described in the
penultimate sentence of Section 14.1. Each Bank agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Bank enters into with any Participant. The Company agrees that if amounts
outstanding under this Agreement and the Notes are due and payable (as a result
of acceleration or otherwise), each Participant shall be deemed to have the
right of setoff in respect of its participating interest in amounts owing under
this Agreement, any Note and with respect to any Letter of Credit to the same
extent as if the amount of its participating interest were owing directly to it
as a Bank under this Agreement or such Note; provided that such right of setoff
shall be subject to the obligation of each Participant to share with the Banks,
and the Banks agree to share with each Participant, as provided in Section 7.5.
The Company also agrees that each Participant shall be entitled to the benefits
of Section 7.6 and Section 8 as if it were a Bank (provided that no Participant
shall receive any greater compensation pursuant to Section 7.6 or Section 8
than would have been paid to the participating Bank if no participation had
been sold).
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14.10 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the internal laws of the State of Illinois.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. All obligations of the Company and rights of the
Agent, the Banks and any other holder of a Note expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart
shall not have been so lodged, the Agent shall have received confirmation from
such Bank of execution of a counterpart hereof by such Bank), this Agreement
shall become effective as of the date hereof, and at such time the Agent shall
notify the Company and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and the permitted successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder and issue Letters of Credit hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, the Issuing Bank, each Bank and each
of the officers, directors, employees and agents of the Agent and each Bank
(collectively the "Bank Parties" and individually each a "Bank Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including, without limitation, reasonable
attorneys' fees and charges (collectively therein called the "Indemnified
Liabilities"), incurred by the Bank Parties or any of them as a result of, or
arising out of, or relating to (i) any tender offer, merger, purchase of stock,
purchase of assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the proceeds of
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any of the Loans or (ii) the execution, delivery, performance or enforcement of
this Agreement or any other Loan Document by any of the Bank Parties, except
for (a) any such Indemnified Liabilities arising on account of any such Bank
Party's bad faith, gross negligence or willful misconduct and (b) any taxes for
which the Company is not liable pursuant to the provisions of Section 7.6. If
and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Nothing set forth above shall be construed
to relieve any Bank Party from any obligation it may have under this Agreement.
(b) Without limiting the provisions of clause (a) above, the Company
agrees to reimburse each Bank Party against any and all losses, claims,
damages, penalties, judgments, liabilities and expenses (including reasonable
attorneys' and consultant's fees) which any Bank Party may pay, incur or become
subject to arising out of or relating to the use, handling, release, emission,
discharge, transportation, storage, treatment or disposal of any Hazardous
Material at any real property owned or leased by the Company or any Subsidiary
or used by the Company or any Subsidiary in its business or operations, except
to the extent caused by the acts or omissions of any Bank Party.
(c) All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
14.14 Confidentiality. The Agent and the Banks shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and, in any event, may make
disclosure on the same confidential basis as provided for herein that is
reasonably required by any actual or bona fide potential transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or in any Letter of Credit or as required or requested by
any governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
each of the Agent and each Bank shall notify the Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of the Agent or such
Bank by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and further provided that
in no event shall the
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<PAGE> 74
Agent or any Bank be obligated or required to return any materials furnished by
Company.
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH OF THE COMPANY, THE AGENT AND EACH BANK
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH OF THE COMPANY, THE AGENT AND EACH BANK FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY, THE AGENT AND
EACH BANK HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY, THE AGENT OR ANY BANK HAS
OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF
OR ITS PROPERTY, THE COMPANY, THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVE
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
14.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
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<PAGE> 75
Delivered at Chicago, Illinois, as of the day and year first above written.
LARIZZA INDUSTRIES, INC.
By /s/ Terence C. Seikel
Title Chief Financial Officer
201 West Big Beaver Road
Troy, Michigan 48084
Attention: President
Facsimile: (810) 524-4996
68
<PAGE> 76
CONTINENTAL BANK N.A., individually, as
Issuing Bank and as Agent
By /s/ Steven Ahrenholz
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Steven K. Ahrenholz
Facsimile: (312) 987-5500
69
<PAGE> 77
SCHEDULE I
COMMITMENT LIMITS AND PERCENTAGES
<TABLE>
<CAPTION>
Amount of Amount of Total of
Name of Bank Commitment A Commitment B Commitments Percentage
- ------------ ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Continental Bank $27,000,000 $ 8,000,000 $35,000,000 100%
N.A.
----------- ----------- ----------- -----
TOTALS $27,000,000 $ 8,000,000 $35,000,000 100%
</TABLE>
<PAGE> 1
EXHIBIT 10.10(b)
NOTE
$35,000,000 May 6, 1994
Chicago, Illinois
On or before the Termination Date (as defined in the Credit Agreement
referred to below), the undersigned, for value received, promises to pay to the
order of Continental Bank N.A. at the principal office of Continental Bank N.A.
(the "Agent"), in Chicago, Illinois, Thirty-Five Million Dollars ($35,000,000)
or, if less, the aggregate unpaid amount of all Loans made by the payee to the
undersigned pursuant to the Credit Agreement (as shown in the records of the
payee or, at the payee's option, on the schedule attached hereto and any
continuation thereof).
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan evidenced hereby from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the terms
and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein, as
amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the provisions of
the Credit Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the holder of this
Note in endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State of
Illinois.
LARIZZA INDUSTRIES, INC.
By /s/ Terence C. Seikel
Title Chief Financial Officer
<PAGE> 2
Schedule Attached to Note dated May 6, 1994 of LARIZZA INDUSTRIES, INC. payable
to the order of Continental Bank N.A.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2. EURODOLLAR LOANS
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 1
EXHIBIT 10.10(c)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of May 6, 1994 is
among LARIZZA INDUSTRIES, INC., an Ohio corporation (the "Debtor") and
CONTINENTAL BANK N.A. in its capacity as agent for the Banks referred to below
(in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Debtor has entered into a Credit Agreement dated as of
May 6, 1994 (as amended or otherwise modified from time to time, the "Credit
Agreement") with various financial institutions (collectively the "Banks" and
individually each a "Bank"), and the Agent, pursuant to which the Banks have
agreed to make loans to, and issue or participate in letters of credit for the
account of, the Company;
WHEREAS, the obligations of the Debtor under the Credit Agreement are
to be secured pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance,
issuance of letters of credit or other financial accommodation heretofore or
hereafter made to the Debtor by the Banks or any of them, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) the terms Certificated
Security, Chattel Paper, Deposit Account, Document, Equipment, Fixture, Goods,
Inventory, Instrument, Security and Uncertificated Security shall have the
respective meanings assigned to such terms in the Uniform Commercial Code (as
defined below) and (b) the following terms have the following meanings (such
definitions to be applicable to both the singular and plural forms of such
terms):
Account Debtor means the party who is obligated on or under any
Account Receivable, Contract Right or General Intangible.
Account Receivable means, with respect to the Debtor, any right of the
Debtor to payment for goods sold or leased or for services rendered.
Agent - see the Preamble.
Agreement - see the Preamble.
<PAGE> 2
Assignee Deposit Account - see Section 4
Banks - see the Recitals.
Collateral means, with respect to the Debtor, all property and rights
of the Debtor in which a security interest is granted hereunder.
Commitments has the meaning assigned to such term in the Credit
Agreement.
Computer Hardware and Software means, with respect to the Debtor, (i)
all of the Debtor's rights (including rights as licensee and lessee) with
respect to computer and other electronic data processing hardware, whether now
owned or hereafter acquired by the Debtor, including, without limitation, all
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories and all peripheral devices and other related
computer hardware; (ii) all of the Debtor's rights (including rights as
licensee and lessee) with respect to software programs, whether now owned or
hereafter acquired by the Debtor, designed for use on the computers and
electronic data processing hardware described in clause (i) above, including,
without limitation, all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) all of the
Debtor's rights (including rights as licensee and lessee) with respect to any
firmware associated with any of the foregoing, whether now owned or hereafter
acquired by the Debtor; and (iv) all of the Debtor's rights (including rights
as licensee and lessee) with respect to documentation for hardware, software
and firmware described in the preceding clauses (i), (ii) and (iii) above,
whether now owned or hereafter acquired by the Debtor, including, without
limitation, flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes.
Contract Right means, with respect to the Debtor, any right of the
Debtor to payment under a contract for the sale or lease of goods or the
rendering of services, which right is at the time not yet earned by
performance.
Credit Agreement - see the Recitals.
Debtor - see the Preamble.
Default means the occurrence of any of the following events:
(a) any Unmatured Event of Default under Section 12.1.4 of the
2
<PAGE> 3
Credit Agreement; (b) any Event of Default; or (c) any warranty of the Debtor
herein is untrue or misleading in any material respect and, as a result
thereof, the Agent's security interest in, or rights and remedies with respect
to, any material portion of the Collateral of the Debtor is impaired or
otherwise adversely affected.
Event of Default has the meaning assigned to such term in the Credit
Agreement.
General Intangibles means, with respect to the Debtor, all of the
Debtor's "general intangibles" as defined in Uniform Commercial Code as in
effect in Illinois on the date hereof and, in any event, includes (without
limitation) all of the Debtor's trademarks, trade names, patents, copyrights,
trade secrets, customer lists, inventions, designs, software programs, mask
works, goodwill, registrations, licenses, franchises, tax refund claims,
guarantee claims, security interests and rights to indemnification.
Intellectual Property means all past, present and future: trade
secrets and other proprietary information; trademarks, service marks, business
names, designs, logos, indicia, and/or other source and/or business identifiers
and the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including, without limitation,
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing set
forth in this definition and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, source codes,
object codes and other physical manifestations, embodiments or incorporations
of any of the foregoing owned by the Company set forth in this definition; the
right to sue for all past, present and future infringements of any of the
foregoing owned by the Company set forth in this definition; and all common law
and other rights throughout the world in and to all of the foregoing set forth
in this definition.
Letter of Credit means any letter of credit issued pursuant to the
Credit Agreement.
Liabilities means all obligations (monetary or otherwise) of the
Debtor under or in connection with the Credit Agreement, any Note, any Letter
of Credit, any other Loan Document or any other
3
<PAGE> 4
document or instrument (including any Hedging Agreement (as defined in the
Credit Agreement) entered into with any Banks or any affiliate thereof)
executed in connection therewith, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due including, without limitation, any post-petition
interest accruing during any bankruptcy reorganization of the Debtor or other
similar proceeding.
Loan Document has the meaning assigned to such term in the Credit
Agreement.
Non-Tangible Collateral means, with respect to the Debtor, the
Debtor's Accounts Receivable, Contract Rights and General Intangibles.
Notes has the meaning assigned to such term in the Credit Agreement.
Permitted Liens - see clause (i) of Section 3.
Subsidiary has the meaning assigned to such term in the Credit
Agreement.
Uniform Commercial Code means the Uniform Commercial Code as in effect
in the State of Illinois on the date of this Agreement; provided, however, as
used in Section 8 hereof, "Uniform Commercial Code" means the Uniform
Commercial Code as in effect from time to time in the applicable jurisdiction.
Unmatured Event of Default has the meaning assigned to such term in
the Credit Agreement.
Terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
2. Grant of Security Interest. As security for the payment of
all Liabilities, the Debtor hereby assigns to the Agent for the benefit of the
Banks, and grants to the Agent for the benefit of the Banks a continuing
security interest in, the following, whether now or hereafter existing or
acquired:
All of the Debtor's:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
4
<PAGE> 5
(iv) Computer Hardware and Software and all rights with respect
thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of
any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) General Intangibles;
(ix) Goods (including, without limitation, all of its Equipment,
Fixtures and Inventory), and all accessions, additions,
attachments, improvements, substitutions and replacements
thereto and therefor;
(x) Instruments;
(xi) Intellectual Property;
(xii) money (of every jurisdiction whatsoever);
(xiii) Uncertificated Securities; and
(xiv) to the extent not included in the foregoing, all personal
property of any kind or description;
together with all books, records, writings, data bases,
information and other property relating to, used or useful in
connection with, evidencing, embodying, incorporating or
referring to any of the foregoing, and all proceeds, products,
offspring, rents, issues, profits and returns of and from any of
the foregoing; provided, however, that to the extent that the
provisions of any lease or license of Computer Hardware and
Software or Intellectual Property prohibit (which prohibition is
enforceable under applicable law) the assignment thereof or the
grant of a security interest therein, the Debtor's rights in such
lease or license shall be excluded from the foregoing assignment
and grant for so long as such prohibition continues, it being
understood that upon request of the Agent, the Debtor will in
good faith use all reasonable efforts to obtain consent for the
creation of a security interest in favor of the Agent in the
Debtor's rights under such lease or license.
5
<PAGE> 6
3. Warranties. The Debtor warrants that: (i) no financing
statement (other than any which may have been filed on behalf of the Agent or
in connection with security interests or liens permitted by the Credit
Agreement ("Permitted Liens") or other than in connection with indebtedness
that will be repaid on the date hereof) covering any of the Collateral is on
file in any public office; (ii) the Debtor is and will be the lawful owner,
lessee or licensee of all Collateral, free of all liens and claims whatsoever,
other than the security interest created hereunder and Permitted Liens, with
full power and authority to execute this Agreement and perform the Debtor's
obligations hereunder, and to subject the Collateral to the security interest
hereunder; (iii) all information with respect to Collateral and Account Debtors
set forth in any schedule, certificate or other writing at any time heretofore
or hereafter furnished by the Debtor to the Agent or any Banks, and all other
written information heretofore or hereafter furnished by the Debtor to the
Agent or any Banks, is and will be true and correct in all material respects as
of the date furnished; (iv) the Debtor's chief executive office and principal
place of business are as set forth on Schedule I hereto (and the Debtor has not
maintained its chief executive office and principal place of business at any
other location at any time after January 1, 1993); (v) each other location
where the Debtor maintains a place of business or where any Collateral is
located is set forth on Schedule II hereto and no Collateral is in the
possession of any bailee, warehouseman, agent or processor except as
specifically described on Schedule II hereto; (vi) the Debtor is not now known
and during the five years preceding the date hereof has not previously been
known by any trade name except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth on
Schedule II); (vii) during the five years preceding the date hereof, the Debtor
has not been known by any legal name different from the one set forth on the
signature page of this Agreement except as previously disclosed to the Banks in
writing prior to the date hereof, nor has the Debtor been the subject of any
merger or other corporate reorganization except as previously disclosed to the
Banks in writing prior to the date hereof (including those set forth on
Schedule II); (viii) Schedule III hereto contains a complete listing of all of
the Debtor's Intellectual Property which is subject to registration statutes;
(ix) the execution and delivery of this Agreement and the performance by the
Debtor of its obligations hereunder are within the Debtor's corporate powers,
have been duly authorized by all necessary corporate action, have received all
necessary governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of the organizational
documents of the Debtor or of any agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon the Debtor;
(x) this Agreement is a legal, valid and binding obligation of the Debtor,
6
<PAGE> 7
enforceable in accordance with its terms, except that the enforceability of
this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and creates a valid and, except for Permitted
Liens, first priority security interest in the Collateral and such security
interest is entitled to all rights, priorities and benefits afforded by the
Uniform Commercial Code; and (xi) the Debtor is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental authority, the non-compliance with which would materially
adversely affect any material portion of the Collateral of the Debtor.
4. Collections, etc. Until such time as the Agent shall notify
the Debtor of the revocation of such power and authority, the Debtor (a) may,
in the ordinary course of its business, at its own expense, sell, lease or
furnish under contracts of service any of the Inventory normally held by the
Debtor for such purpose, and use and consume, in the ordinary course of its
business, any raw materials, work in process or materials normally held by the
Debtor for such purpose, (b) will, at its own expense, endeavor to collect, as
and when due, all amounts due under any of the Non-Tangible Collateral,
including the taking of such action with respect to such collection as the
Agent may reasonably request or, in the absence of such request, as the Debtor
may deem advisable, and (c) may grant, in the ordinary course of business, to
any party obligated on any of the Non-Tangible Collateral, any rebate, refund
or allowance to which such party may be lawfully entitled, and may accept, in
connection therewith, the return of Goods, the sale or lease of which shall
have given rise to such Non-Tangible Collateral. The Agent, however, may, at
any time that a Default exists, whether before or after any revocation of such
power and authority or the maturity of any of the Liabilities, notify any
parties obligated on any of the Non-Tangible Collateral to make payment to the
Agent of any amounts due or to become due thereunder and enforce collection of
any of the Non-Tangible Collateral by suit or otherwise and surrender, release
or exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Agent during the
existence of a Default, the Debtor will, at its own expense, notify any parties
obligated on any of the Non-Tangible Collateral to make payment directly to the
Agent of any amounts due or to become due thereunder.
7
<PAGE> 8
During the existence of a Default, all items or amounts which are
delivered by the Debtor to the Agent on account of partial or full payment or
otherwise as proceeds of any of the Collateral shall be deposited to the credit
of a deposit account (each an "Assignee Deposit Account") of the Debtor with
the Agent, or a bank designated by the Agent, as security for payment of the
Liabilities. No Debtor shall have any right to withdraw any funds deposited in
the applicable Assignee Deposit Account. The Agent may, from time to time, in
its discretion, and shall upon request of the applicable Debtor made not more
than once in any week, apply all or any of the then balance, representing
collected funds, in the Assignee Deposit Account, toward payment of the
Liabilities, whether or not then due, in such order of application as the Agent
may determine, and the Agent may, from time to time, in its discretion, release
all or any of such balance to the applicable Debtor.
If and to the extent that a perfected security interest hereunder in
any Collateral shall cease to be perfected for any reason whatsoever
(including, without limitation, use or disposition by the Debtor of any
proceeds of Collateral), then such Collateral (referred to in this paragraph as
"released Collateral") shall be deemed thereby released from the security
interest hereunder in exchange, as of the time of such release, for any other
Collateral of equivalent value in which a perfected security interest hereunder
is being obtained contemporaneously or has been most recently obtained, but
only to the extent such other Collateral does not represent either (a)
Collateral in exchange for which any previously released Collateral shall have
been deemed released, or (b) Collateral of equivalent value to any loan or
advance (otherwise than by renewal or extension) from the Agent to the Company
in which Collateral a perfected security interest hereunder shall have been
obtained contemporaneously with or most recently prior to such loan or advance.
After a Default, the Agent is authorized to endorse, in the name of
the applicable Debtor, any item, howsoever received by the Agent, representing
any payment on or other proceeds of any of the Collateral.
5. Certificates, Schedules and Reports. The Debtor will from
time to time, as the Agent may request, deliver to the Agent such schedules,
certificates and reports respecting all or any of the Collateral at the time
subject to the security interest hereunder, and the items or amounts received
by the Debtor in full or partial payment of any of the Collateral, as the Agent
may reasonably request. Any such schedule, certificate or report shall be
executed by a duly authorized officer of the Debtor and shall be in such form
and detail as the Agent may specify. The Debtor shall promptly notify the
Agent of the occurrence of any event causing any loss or depreciation in the
value of its
8
<PAGE> 9
Inventory or other Goods which is material to the Debtor, and such notice shall
specify the amount of such loss or depreciation.
6. Agreements of the Debtors. The Debtor (a) will, upon request
of the Agent, execute such financing statements and other documents (and pay
the cost of filing or recording the same in all public offices reasonably
deemed appropriate by the Agent) and do such other acts and things (including,
without limitation, delivery to the Agent of any Instruments or Certificated
Securities which constitute Collateral), all as the Agent may from time to time
reasonably request, to establish and maintain a valid security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever, other than Permitted Liens) to secure the payment of the
Liabilities; (b) will keep all its Inventory at, and will not maintain any
place of business at any location other than, its address(es) shown on
Schedules I and II hereto or at such other addresses of which the Debtor shall
have given the Agent not less than 10 days' prior written notice; (c) will keep
its records concerning the Non-Tangible Collateral in such a manner as will
enable the Agent or its designees to determine at any time the status of the
Non-Tangible Collateral; (d) will furnish the Agent such information concerning
the Debtor, the Collateral and the Account Debtors as the Agent may from time
to time reasonably request; (e) will permit the Agent and its designees, from
time to time, on reasonable notice and at reasonable times and intervals during
normal business hours (or at any time without notice during the existence of a
Default) to inspect the Debtor's Inventory and other Goods, and to inspect,
audit and make copies of and extracts from all records and all other papers in
the possession of the Debtor pertaining to the Collateral and the Account
Debtors, and will, upon request of the Agent during the existence of a Default,
deliver to the Agent all of such records and papers; (f) will, upon request of
the Agent, stamp on its records concerning the Collateral, and add on all
Chattel Paper constituting a portion of the Collateral, a notation, in form
satisfactory to the Agent, of the security interest of the Agent hereunder; (g)
except as permitted by the Credit Agreement or as excluded from the definition
of Asset Sale under the Credit Agreement, will not sell, lease, assign or
create or permit to exist any lien on or security interest in any Collateral
other than Permitted Liens and liens and security interests in favor of the
Agent; (h) without limiting the provisions of Section 10.3 of the Credit
Agreement, will at all times keep all its Inventory and other Goods insured
under policies maintained with reputable, financially sound insurance companies
against loss, damage, theft and other risks to such extent as is customarily
maintained by companies similarly situated, and cause all such policies to
provide that loss thereunder shall be payable to the Agent as its interest may
appear and such policies or certificates thereof
9
<PAGE> 10
shall, if the Agent so requests, be deposited with or furnished to the Agent;
(i) will take such actions as are reasonably necessary to keep its Inventory in
good repair and condition, ordinary wear and tear and up to $500,000 of
obsolescent Inventory excepted; (j) will take such actions as are reasonably
necessary to keep its Equipment in good repair and condition and in good
working or running order to the extent necessary to conduct Debtor's business
in all material respects, ordinary wear and tear excepted; (k) will promptly
pay before delinquent all license fees, registration fees, taxes, assessments
and other charges which may be levied upon or assessed against the ownership,
operation, possession, maintenance or use of its Equipment and other Goods
except as permitted by Section 10.4(c) of the Credit Agreement; (l) will, upon
request of the Agent, (i) cause to be noted on the applicable certificate, in
the event any of its Equipment is covered by a certificate of title, the
security interest of the Agent in the Equipment covered thereby, and (ii)
deliver all such certificates to the Agent or its designees; (m) will take all
steps reasonably necessary to protect, preserve and maintain all of its rights
in the Collateral except as otherwise permitted by the Loan Documents; (n) will
keep all of the tangible Collateral in the United States; and (o) will
reimburse the Agent for all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the Agent in seeking to collect or enforce any
rights in respect of the Debtor's Collateral.
Any expenses incurred in protecting, preserving and maintaining any
Collateral shall be borne by the applicable Debtor. Whenever a Default shall
be existing, the Agent shall have the right to bring suit to enforce any or all
of the Intellectual Property or licenses thereunder, in which event the
applicable Debtor shall at the request of the Agent do any and all lawful acts
and execute any and all proper documents required by the Agent in aid of such
enforcement and the Debtor shall promptly, upon demand, reimburse and indemnify
the Agent for all reasonable costs and expenses incurred by the Agent in the
exercise of its rights under this Section 6. Notwithstanding the foregoing,
the Agent shall have no obligations or liabilities regarding any of the
Collateral by reason of, or arising out of, this Agreement in the absence of
its gross negligence or willful misconduct.
7. Default. Whenever a Default shall be existing, the Agent may
exercise from time to time any rights and remedies available to it under
applicable law. The Debtor agrees, in case of Default, (i) to assemble, at its
expense, all its Inventory and other Goods (other than Fixtures) at a
convenient place or places acceptable to the Agent, and (ii) at the Agent's
request, to execute all such documents and do all such other things which may
be necessary or desirable in order to enable the Agent or its
10
<PAGE> 11
nominee to be registered as owner of the Intellectual Property with any
competent registration authority. Any notification of intended disposition of
any of the Collateral required by law shall be deemed reasonably and properly
given if given at least ten days before such disposition. Any proceeds of any
disposition by the Agent of any of the Collateral may be applied by the Agent
to payment of expenses in connection with the Collateral, including reasonable
attorneys' fees and legal expenses, and any balance of such proceeds may be
applied by the Agent toward the payment of such of the Liabilities, and in such
order of application, as the Agent may from time to time elect.
The Debtor hereby appoints the Agent as the Debtor's attorney-in-fact,
with full power authority in the place of the Debtor and in the name of the
Debtor, upon the occurrence and during the continuance of a Default, in Agent's
discretion, to take any action and to execute any instrument that it may deem
necessary to accomplish the purposes of this Agreement.
8. General. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as any applicable Debtor
requests in writing, but failure of the Agent to comply with any such request
shall not of itself be deemed a failure to exercise reasonable care, and no
failure of the Agent to preserve or protect any rights with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Debtor, shall be deemed
of itself a failure to exercise reasonable care in the custody or preservation
of such Collateral.
Any notice from the Agent to the Debtor, or from the Debtor to the
Agent shall be given in accordance with Section 14.3 of the Credit Agreement.
The Debtor agrees to pay all expenses (including reasonable attorney's
fees and legal expenses) paid or incurred by the Agent or any Banks in
endeavoring to collect the Liabilities of the Debtor, or any part thereof, and
in enforcing this Agreement against the Debtor, and such obligations will
themselves be Liabilities.
No delay on the part of the Agent in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Agent of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
This Security Agreement shall remain in full force and effect until
all Liabilities have been paid in full and all
11
<PAGE> 12
Commitments, Letters of Credit and Hedging Agreements entered into with the
Banks or any affiliate thereof have terminated. If at any time all or any part
of any payment theretofore applied by the Agent or any Banks to any of the
Liabilities is or must be rescinded or returned by the Agent or such Banks for
any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Debtor), such Liabilities shall, for the
purposes of this Agreement, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Banks, and this Agreement
shall continue to be effective or be reinstated, as the case may be, as to such
Liabilities, all as though such application by the Agent or such Banks had not
been made.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within the State of
Illinois, subject, however, to the applicability of the Uniform Commercial Code
of any jurisdiction in which any Goods of the Debtor may be located at any
given time. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
The rights and privileges of the Agent hereunder shall inure to the
benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute one and the same Agreement. At any time after the date of
this Agreement, one or more additional persons or entities may become parties
hereto by executing and delivering to the Agent a counterpart of this
Agreement. Immediately upon such execution and delivery (and without any
further action), each such additional person or entity will become a party to,
and will be bound by all the terms of, this Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
12
<PAGE> 13
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE DEBTOR
AND THE AGENT HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE DEBTOR AND THE AGENT FURTHER IRREVOCABLY CONSENT TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET
FORTH ON SCHEDULE I HERETO IN THE CASE OF THE DEBTOR AND IN THE CASE OF THE
AGENT TO 231 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60697 (OR SUCH OTHER
ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE OTHER PARTY AS ITS ADDRESS
FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE DEBTOR AND THE AGENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF)
EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
LARIZZA INDUSTRIES, INC.
By: /s/ Terence C. Seikel
Name: Terence C. Seikel
Title: Chief Financial Officer
CONTINENTAL BANK N.A., as Agent
By: /s/ Steven Ahrenholz
Name: Steven Ahrenholz
Title: Vice President
13
<PAGE> 1
EXHIBIT 10.10(d)
COMPANY PLEDGE AGREEMENT
THIS COMPANY PLEDGE AGREEMENT (this "Agreement") dated as of May 6,
1994, is between LARIZZA INDUSTRIES, INC., an Ohio corporation (the "Company"),
and CONTINENTAL BANK N.A. in its capacity as agent for the Banks referred to
below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of even date herewith
(as amended or otherwise modified from time to time, the "Credit Agreement")
among the Company, various financial institutions (such financial institutions,
together with their respective successors and assigns, collectively the "Banks"
and individually each a "Bank") and the Agent, the Banks have agreed to make
loans to, and issue or participate in letters of credit for the account of, the
Company from time to time; and
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreement that the Company
execute and deliver this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance, issuance
of letters of credit or other financial accommodation heretofore or hereafter
made to the Company under or in connection with the Credit Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, the following terms have the
following meanings (such meanings to be applicable to both the singular and
plural forms of such terms):
Agent - see Preamble.
Collateral - see Section 2.
Default means the occurrence of any of the following events: (a) any
Unmatured Event of Default under Section 12.1.4 of the Credit Agreement; or
(b) any Event of Default.
Event of Default has the meaning assigned to such term in the Credit
Agreement.
Issuer means the issuer of any of the shares of stock or other
securities representing all or any of the Collateral.
<PAGE> 2
Letter of Credit means any letter of credit issued pursuant to the
Credit Agreement.
Liabilities means all obligations (monetary or otherwise) of the
Company, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to
become due, which arise out of or in connection with the Credit Agreement,
the Notes, this Agreement, the Letters of Credit, the Letter of Credit
Applications, any other Loan Document or any other document or instrument
executed in connection therewith (including any Hedging Agreement (as
defined in the Credit Agreement) entered into with any Bank or any
affiliate thereof).
Loan Document has the meaning assigned to such term in the Credit
Agreement.
Unmatured Event of Default has the meaning assigned to such term in the
Credit Agreement.
2. Pledge. As security for the payment of all Liabilities, the Company
hereby pledges to the Agent for the benefit of the Banks and the Agent, and
grants to the Agent for the benefit of the Banks and the Agent a continuing
security interest in, all of the following:
A. All of the shares of stock and other securities described in
Schedule I hereto as pledged, all of the certificates and/or instruments
representing such shares of stock and other securities, and all cash,
securities, dividends, rights and other property at any time and from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares or other securities;
B. All additional shares of stock of any of the Issuers listed in
Schedule I hereto at any time and from time to time acquired by the Company
in respect of the stock and other securities described in Schedule I as
pledged, all of the certificates representing such additional shares, and
all cash, securities, dividends, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares;
C. All other property hereafter delivered to the Agent in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at any time
2
<PAGE> 3
and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof; and
D. All products and proceeds of all of the foregoing;
provided, however in no event shall the shares of stock of Manchester Plastics,
Ltd. pledged hereunder exceed 65% of its issued and outstanding stock.
All of the foregoing are herein collectively called the "Collateral".
The Company agrees to deliver to the Agent, promptly upon receipt and
in due form for transfer (i.e., endorsed in blank or accompanied by stock or
bond powers executed in blank), any Collateral which may at any time or from
time to time be in or come into the possession or control of the Company; and
prior to the delivery thereof to the Agent, such Collateral shall be held by
the Company separate and apart from its other property and in express trust for
the Agent.
3. Warranties; Further Assurances. The Company warrants to the Agent
and each Bank that: (a) the Company is (or at the time of any future delivery,
pledge, assignment or transfer thereof will be) the legal and equitable owner
of the Collateral free and clear of all liens, security interests and
encumbrances of every description whatsoever other than the security interest
created hereunder; (b) the pledge and delivery of the Collateral pursuant to
this Agreement will create a valid perfected security interest in the
Collateral in favor of the Agent; (c) all shares of stock referred to in
Schedule I hereto are duly authorized, validly issued, fully paid and
non-assessable; (d) as to each Issuer whose name appears in Schedule I hereto,
the Collateral represents on the date hereof not less than the applicable
percent (as shown in Schedule I hereto) of the total shares of capital stock
issued and outstanding of such Issuer; and (e) the information contained in
Schedule I hereto is true and accurate in all respects.
So long as any of the Liabilities shall be outstanding or any
commitment shall exist on the part of any Agent or any Bank with respect to the
creation of any Liabilities, the Company (i) shall not, without the express
prior written consent of the Agent, (x) sell, assign, exchange, pledge or
otherwise transfer, encumber, or grant any option, warrant or other right to
purchase the stock of any Issuer which is pledged hereunder (except for the
stock of General Nuclear Corp.), or (y) otherwise diminish or impair any of its
rights in, to or under any of the Collateral (except for any sale, transfer or
other disposition of the stock of General Nuclear Corp.); (ii) shall execute
such Uniform
3
<PAGE> 4
Commercial Code financing statements and other documents (and pay the costs of
filing and recording or re-filing and re-recording the same in all public
offices reasonably deemed necessary or appropriate by the Agent) and do such
other acts and things, all as the Agent may from time to time reasonably
request, to establish and maintain a valid, perfected security interest in the
Collateral (free of all other liens, claims and rights of third parties
whatsoever) to secure the performance and payment of the Liabilities; (iii)
will execute and deliver to the Agent such stock powers, endorsements and
similar documents relating to the Collateral, satisfactory in form and
substance to the Agent, as the Agent may reasonably request; and (iv) will
furnish the Agent or any Bank such information concerning the Collateral as
such Agent or such Bank may from time to time reasonably request, and will
permit any Agent or any Bank or any designee of any Agent or any Bank, from
time to time at reasonable times and on reasonable notice, to inspect, audit
and make copies of and extracts from all records and all other papers in the
possession of the Company which pertain to the Collateral as set forth in
Section 10.2 of the Credit Agreement, and will, upon request of the Agent at
any time when a Default has occurred and is continuing, deliver to the Agent
all of such records and papers.
4. Holding in Name of Agent, etc. The Agent may from time to time
after the occurrence and during the continuance of a Default, without notice to
the Company, take all or any of the following actions: (a) transfer all or any
part of the Collateral into the name of the Agent or any nominee or sub-agent
for the Agent, with or without disclosing that such Collateral is subject to
the lien and security interest hereunder, (b) appoint one or more sub-agents or
nominees for the purpose of retaining physical possession of the Collateral,
(c) notify the parties obligated on any of the Collateral to make payment to
the Agent of any amounts due or to become due thereunder, (d) endorse any
checks, drafts or other writings in the name of the Company to allow collection
of the Collateral, (e) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with respect thereto, and
(f) take control of any proceeds of the Collateral.
5. Voting Rights, Dividends, Payments etc. (a) Notwithstanding certain
provisions of Section 4 hereof, so long as the Agent has not given the notice
referred to in paragraph (b) below:
A. The Company shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights (but
any such exercise by the Company of stock purchase or subscription rights
may be
4
<PAGE> 5
made only from funds of the Company not comprising part of the
Collateral) relating or pertaining to the Collateral constituting stock or
any part thereof for any purpose; provided, however, that the Company
agrees that it will not exercise any such right or power in any manner
which would have a material adverse effect on the value of such Collateral
or any part thereof (except for any sale, transfer or other disposition of
the stock of General Nuclear Corp.).
B. The Company shall be entitled to receive and retain any and all
lawful dividends payable in respect of the Collateral constituting stock
which are paid in cash by any Issuer if such dividends are permitted by the
Credit Agreement, but all dividends and distributions in respect of such
Collateral or any part thereof made in shares of stock or other property or
representing any return of capital, whether resulting from a subdivision,
combination or reclassification of such Collateral or any part thereof or
received in exchange for such Collateral or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of assets to
which any Issuer may be a party or otherwise or as a result of any exercise
of any stock purchase or subscription right, shall be and become part of
the Collateral hereunder and, if received by the Company, shall be
forthwith delivered to the Agent in due form for transfer (i.e., endorsed
in blank or accompanied by stock or bond powers executed in blank) to be
held for the purposes of this Agreement (except for any sale, transfer or
other disposition of the stock of General Nuclear Corp.).
C. The Agent shall execute and deliver, or cause to be executed and
delivered, to the Company, all such proxies, powers of attorney, dividend
orders and other instruments as the Company may request for the purpose of
enabling the Company to exercise the rights and powers which it is entitled
to exercise pursuant to clause (A) above and to receive the dividends which
it is authorized to retain pursuant to clause (B) above.
(b) Upon notice from the Agent during the existence of a Default, and
so long as the same shall be continuing, all rights and powers which the
Company is entitled to exercise pursuant to Section 5(a)(A) hereof, and all
rights of the Company to receive and retain dividends pursuant to Section
5(a)(B) hereof, shall forthwith cease, and all such rights and powers shall
thereupon become vested in the Agent which shall have, during the continuance
of such Default, the sole and exclusive authority to exercise such rights and
powers and to receive such dividends and payments. Any and all money and other
property paid over to or received by the Agent pursuant to this paragraph (b)
shall be
5
<PAGE> 6
retained by the Agent as additional Collateral hereunder and applied in
accordance with the provisions hereof.
6. Remedies. Whenever a Default shall exist, the Agent may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code as in effect in Illinois or otherwise available to it. Without
limiting the foregoing, whenever a Default shall exist the Agent (a) may, to
the fullest extent permitted by applicable law, without notice, advertisement,
hearing or process of law of any kind, (i) sell any or all of the Collateral,
free of all rights and claims of the Company therein and thereto, at any public
or private sale or brokers' board and (ii) bid for and purchase any or all of
the Collateral at any such public sale and (b) shall have the right, for and in
the name, place and stead of the Company, to execute endorsements, assignments,
stock powers and other instruments of conveyance or transfer with respect to
all or any of the Collateral. The Company hereby expressly waives, to the
fullest extent permitted by applicable law, any and all notices,
advertisements, hearings or process of law in connection with the exercise by
the Agent of any of its rights and remedies during the continuance of a
Default. If any notification of intended disposition of any of the Collateral
is required by law, such notification, if mailed, shall be deemed reasonably
and properly given if mailed at least ten (10) days before such disposition,
postage prepaid, addressed to the Company, either at the address of the Company
shown below, or at any other address of the Company appearing on the records of
the Agent. Any proceeds of any of the Collateral may be applied by the Agent
to the payment of expenses in connection with the Collateral, including,
without limitation, reasonable attorneys' fees and legal expenses, and any
balance of such proceeds may be applied by the Agent toward the payment of such
of the Liabilities, and in such order of application, as the Agent may from
time to time elect (and, after payment in full of all Liabilities, any excess
shall be delivered to the Company or as a court of competent jurisdiction shall
direct).
The Agent is hereby authorized to comply with any limitation or
restriction in connection with any sale of Collateral as it may be advised by
counsel is necessary in order to (a) avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not
with a view to the distribution or resale of such Collateral) or (b) obtain any
required approval of the sale or of the purchase by any governmental regulatory
authority or official, and the Company agrees that such compliance shall not
result in such sale being considered or
6
<PAGE> 7
deemed not to have been made in a commercially reasonable manner and that the
Agent shall not be liable or accountable to the Company for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
7. General. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral if it takes such action
for that purpose as the Company shall request in writing, but failure of the
Agent to comply with any such request shall not of itself be deemed a failure
to exercise reasonable care, and no failure of the Agent to preserve or protect
any rights with respect to the Collateral against prior parties, or to do any
act with respect to preservation of the Collateral not so requested by the
Company, shall be deemed of itself a failure to exercise reasonable care in the
custody or preservation of any Collateral.
No delay on the part of the Agent in exercising any right, power or
remedy shall operate as a waiver thereof, and no single or partial exercise of
any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement shall be effective unless the same shall be in writing and signed and
delivered by the Agent, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
All obligations of the Company and all rights, powers and remedies of
the Agent and the Banks expressed herein are in addition to all other rights,
powers and remedies possessed by them, including, without limitation, those
provided by applicable law or in any other written instrument or agreement
relating to any of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
This Agreement shall be binding upon the Company and the Agent and
their respective successors and assigns, and shall inure to the benefit of the
Company and the Agent and the successors and assigns of the Agent.
7
<PAGE> 8
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed an original but all such counterparts shall together constitute
but one and the same Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COMPANY AND THE AGENT HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE
COMPANY AND THE AGENT FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS OF THE PERSON SPECIFIED IN, OR
PURSUANT TO, THE CREDIT AGREEMENT, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. THE COMPANY AND THE AGENT HEREBY EXPRESSLY AND IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE COMPANY OR THE AGENT
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF
OR ITS PROPERTY, THE COMPANY AND THE AGENT HEREBY IRREVOCABLY WAIVE SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
EACH OF THE COMPANY, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF)
EACH BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
8
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the day and year first written above.
Larizza Industries, Inc.
Address:
201 West Big Beaver Road By: /s/ Terence C. Seikel
Suite 1040 Name: Terence C. Seikel
Troy, MI 48084 Title: Chief Financial Officer
Continental Bank N.A.,
as Agent
Address:
231 South LaSalle Street By: /s/ Steven Ahrenholz
Chicago, IL 60697 Name: Steven Ahrenholz
Title: Vice President
9
<PAGE> 1
EXHIBIT 10.10(e)
MORTGAGE, DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT and FINANCING STATEMENT
THIS MORTGAGE, DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT and FINANCING STATEMENT (herein sometimes called "Mortgage") is made
as of May 6, 1994, by and between the undersigned Mortgagor (herein, together
with its successors and assigns, the "Mortgagor"), and Continental Bank N.A.,
as Agent under the Credit Agreement referred to below (herein, together with
its successors and assigns, called the "Mortgagee").
R E C I T A L S
A. Credit Agreement. Pursuant to a Credit Agreement, dated as of
May 6, 1994 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Mortgagor, various financial institutions
(collectively the "Banks" and individually each a "Bank") and the Mortgagee,
the Banks have agreed to make revolving loans in an amount not to exceed
thirty-five million dollars ($35,000,000). In addition, the Mortgagor has the
right, pursuant to the terms of the Credit Agreement, to request that the
Issuing Bank (as defined in the Credit Agreement) issue letters of credit in
the aggregate amount of Two Million Dollars ($2,000,000) expiring no later than
May 6, 1997 (herein such letters of credit, together with all renewals,
extensions and modifications thereof, are collectively referred to as the
"Letters of Credit"). In connection therewith the Company has executed
promissory notes in favor of the Banks (herein, such promissory notes, together
with any and all amendments or supplements thereto, extensions thereof and
notes which may be taken in whole or partial renewal, substitution or extension
thereof, shall be collectively called the "Note") due and payable in full if
not sooner paid on or before May 6, 1997, subject to extension and acceleration
as set forth in the Note and the Credit Agreement, bearing interest as provided
in the Note on the principal amount thereof from time to time outstanding.
Unless otherwise defined herein or defined by reference to other documents or
instruments, terms used herein which are defined or defined by reference to
other documents or instruments in the Credit Agreement shall have the same
meanings when used herein as such terms have therein.
B. Debt Papers. The Note, the Credit Agreement, the Letters of
Credit, and any other documents and instruments executed and delivered by or
for the benefit of the Mortgagor, in connection with the Note, the Letters of
Credit or the Credit Agreement or as security therefor, including any Hedging
Agreement entered into by
<PAGE> 2
the Company with any Bank or its affiliate in connection with the Credit
Agreement and any other documents and instruments executed and delivered by or
for the benefit of the Mortgagor in connection with the Credit Agreement or
security therefore, or for the purpose of supplementing or amending all or any
of the foregoing, as the same may be amended, modified or supplemented from
time to time, are hereinafter referred to as the "Debt Papers". For purposes
hereof, "Collateral Documents" shall mean all documents and instruments
pursuant to which a lien is granted to Mortgagee (or to any agent, trustee, or
other party acting on behalf of Mortgagee) as security for any of the
Liabilities, as the same may be amended, modified or supplemented from time to
time.
C. The Liabilities. As used in this Mortgage, the term "Liabilities"
means and includes all of the following: (i) all obligations of the Mortgagor
to the Mortgagee and the Banks and their respective successors and assigns
under or in connection with the Credit Agreement, the Note, the Letters of
Credit or any of the other Debt Papers and (ii) all other obligations of the
Mortgagor to the Mortgagee and the Banks and their respective successors and
assigns, in each case howsoever created, arising or evidenced, whether direct
or indirect, joint or several, absolute or contingent, now or hereafter
existing, or due or to become due, arising out of or in connection with the
Credit Agreement or any of the other Debt Papers, including, without
limitation, all indebtedness of any kind arising under, and all amounts of any
kind which at any time become due or owing to the Mortgagee under or with
respect to, this Mortgage, all of the covenants, obligations and agreements in,
under or pursuant to the Note, the Credit Agreement, this Mortgage, and the
other Debt Papers, any and all advances, costs or expenses paid or incurred by
the Mortgagee to protect any or all of the Collateral (hereinafter defined) and
other collateral under the Debt Papers, to perform any obligation of the
Mortgagor hereunder and any obligation of the Mortgagor under the Debt Papers
or collect any amount owing to the Mortgagee which is secured hereby or under
the Debt Papers; interest on all of the foregoing; and all costs of enforcement
and collection (including, without limitation, attorneys' fees and court costs)
of this Mortgage, the Debt Papers and the Liabilities. Any future advances
under the Note, the Letters of Credit or any Hedging Agreement entered into by
the Mortgagor with any Bank or its affiliate, whether obligatory or made at the
option of the Mortgagee, shall be secured by this Mortgage, and shall be
entitled to the same priority as if such future advances were made on the date
hereof.
D. The Collateral. For purposes of this Mortgage, the term
"Collateral" means and includes all right, title and interest of the Mortgagor
in and to all of the following:
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(i) Real Estate. All of the land described on Exhibit A attached
hereto (the "Land"), together with all and singular the tenements, rights,
easements, hereditaments, rights of way, privileges, liberties, appendages and
appurtenances now or hereafter belonging or in anywise appertaining to the Land
(including, without limitation, all rights relating to storm and sanitary
sewer, water, gas, electric, railway and telephone services); all development
rights, air rights, water, water rights, water stock, gas, oil, minerals, coal
and other substances of any kind or character underlying or relating to the
Land; all estate, claim, demand, right, title or interest of the Mortgagor in
and to any street, road, highway, or alley (vacated or otherwise) adjoining the
Land or any part thereof; all strips and gores belonging, adjacent or
pertaining to the Land; and any after-acquired title to any of the foregoing
(all of the foregoing is herein referred to collectively as the "Real Estate");
(ii) Improvements and Fixtures. All buildings, structures,
replacements, furnishings, fixtures, fittings and other improvements and
property of every kind and character now or hereafter located or erected on the
Real Estate and owned or purported to be owned by the Mortgagor, together with
all building or construction materials, equipment, appliances, machinery, plant
equipment, fittings, apparatus, fixtures and other articles of any kind or
nature whatsoever now or hereafter found on, affixed to or attached to the Real
Estate and owned or purported to be owned by the Mortgagor, including (without
limitation) all motors, boilers, engines and devices for the operation of
pumps, and all heating, electrical, lighting, power, plumbing, air
conditioning, refrigeration and ventilation equipment (all of the foregoing is
herein referred to collectively as the "Improvements");
(iii) Personal Property. All furniture, furnishings, equipment
(including, without limitation, telephone and other communications equipment,
window cleaning, building cleaning, monitoring, garbage, air conditioning, pest
control and other equipment) and all other tangible property of any kind or
character now or hereafter owned or purported to be owned by the Mortgagor and
used or useful in connection with the Real Estate, regardless of whether
located on the Real Estate or located elsewhere including, without limitation,
all rights of the Mortgagor under any lease to furniture, furnishings, fixtures
and other items of personal property at any time during the term of such lease
below (all of the foregoing is herein referred to collectively as the "Goods");
(iv) Intangibles. All goodwill, trademarks, trade names, option
rights, purchase contracts, books and records and general intangibles of the
Mortgagor relating to the Real Estate or the Improvements and all accounts,
contract rights, instruments, chattel paper and other rights of the Mortgagor
for payment of
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money to it for property sold or lent by it, for services rendered by it, for
money lent by it, or for advances or deposits made by it, and any other
intangible property of the Mortgagor related to the Real Estate or the
Improvements (all of the foregoing is herein referred to collectively as the
"Intangibles"); and
(v) Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned by the Mortgagor directly or indirectly from
the Real Estate or the Improvements (all of the foregoing is herein
collectively called the "Rents");
(vi) Leases. All rights of the Mortgagor under all leases, licenses,
occupancy agreements, concessions or other arrangements, whether written or
oral, whether now existing or entered into at any time hereafter, whereby any
Person agrees to pay money to the Mortgagor or any consideration for the use,
possession or occupancy of, or any estate in, the Real Estate or the
Improvements or any part thereof, and all rents, income, profits, benefits,
avails, advantages and claims against guarantors under any thereof (all of the
foregoing is herein referred to collectively as the "Leases"); and
(vii) Other Property. All other property or rights of the Mortgagor
of any kind or character related to the Real Estate or the Improvements, and
all proceeds (including insurance and condemnation proceeds) and products of
any of the foregoing. (All of the Real Estate and the Improvements, and any
other property which is real estate under applicable law, is sometimes referred
to collectively herein as the "Premises").
G R A N T
NOW THEREFORE, for and in consideration of the Banks making any loan,
advance or other financial accommodation to or for the benefit of the
Mortgagor, including sums advanced under the Note, the Letters of Credit or any
Hedging Agreement, and in consideration of the various agreements contained
herein, in the Note or any Hedging Agreement, the Credit Agreement, the Letters
of Credit and in the Debt Papers, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Mortgagor, and in order to secure the full, timely and proper payment and
performance of each and every one of the Liabilities,
THE MORTGAGOR HEREBY MORTGAGES, WARRANTS, CONVEYS, TRANSFERS AND
ASSIGNS TO THE MORTGAGEE, AND GRANTS TO THE MORTGAGEE AND ITS SUCCESSORS AND
ASSIGNS FOREVER A CONTINUING SECURITY INTEREST IN AND TO, ALL OF THE
COLLATERAL,
TO HAVE AND TO HOLD the Premises unto the Mortgagee, its successors
and assigns, forever, hereby expressly waiving and
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releasing any and all right, benefit, privilege, advantage or exemption under
and by virtue of any and all statutes and laws of the state or other
jurisdiction in which the Real Estate is located providing for the exemption of
homesteads from sale on execution or otherwise.
The Mortgagor hereby covenants with and warrants to the Mortgagee and
with the purchaser at any foreclosure sale: that at the execution and delivery
hereof it is well seized of the Premises, and of a good, indefeasible estate
therein, in fee simple; that the Collateral is free from all encumbrances
whatsoever (and any claim of any other Person thereto) other than the security
interest granted to the Mortgagee herein and pursuant to the Debt Papers and
liens and encumbrances permitted under Section 10.8 of the Credit Agreement
(the "Permitted Exceptions"); that it has good and lawful right to sell,
mortgage and convey the Collateral; and that it and its successors and assigns
will forever warrant and defend the Collateral against all claims and demands
whatsoever with the exception of the Permitted Exceptions.
I. C O V E N A N T S A N D A G R E E M E N T S
O F T H E M O R T G A G O R
Further to secure the payment and performance of the Liabilities, the
Mortgagor hereby covenants, warrants and agrees with the Mortgagee as follows:
1.1 Payment of Liabilities. The Mortgagor agrees that it will pay,
timely and in the manner required in the appropriate documents or instruments,
all amounts due under the Credit Agreement and all other Liabilities (including
fees and charges). All sums payable by the Mortgagor hereunder shall be paid
without demand, counterclaim, offset, deduction or defense. The Mortgagor
waives all rights now or hereafter conferred by statute or otherwise to any
such demand, counterclaim, offset, deduction or defense.
1.2 Payment of Taxes. The Mortgagor will pay or cause to be paid
before delinquent all taxes and assessments, general or special, and any and
all levies, claims, charges, expenses and liens, ordinary or extraordinary,
governmental or non-governmental, statutory or otherwise, due or to become due,
that may be levied, assessed, made, imposed or charged on or against the
Collateral or any property used in connection therewith, and will pay before
delinquent any tax or other charge on the interest or estate in lands created
or represented by this Mortgage or by any of the Debt Papers, whether levied
against the Mortgagor or the Mortgagee or otherwise.
1.3 Maintenance and Repair. The Mortgagor will: not abandon the
Premises; not do or suffer anything to be done which would
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materially depreciate or impair the value of the Collateral, reasonable wear
and tear excepted, or the security of this Mortgage; not remove or demolish any
of the Improvements; pay before delinquent for all labor and materials for all
construction, repairs and improvements to or on the Premises; not make any
changes, additions or alterations to the Premises or the Improvements except as
required by any applicable governmental requirement or as otherwise approved in
writing by the Mortgagee; maintain, preserve and keep the Goods and the
Improvements in good, safe and insurable condition and repair to the extent
necessary to conduct the Company's business in all material respects and
promptly make any needful and proper repairs, replacements, renewals, additions
or substitutions required by wear, damage, obsolescence or destruction, all as
promptly as possible under the circumstances but in all cases in compliance
with any time period provided under applicable requirements of governmental
authorities and insurance underwriters and all to the extent necessary to
conduct the Company's business in all material respects; not commit, suffer, or
permit waste of any part of the Premises; and maintain all grounds and abutting
streets and sidewalks in good and neat order and repair to the extent necessary
to conduct the Company's business in all material respects; provided that (i)
the Mortgagor may make changes, additions or alterations to the Premises and
may remove or demolish any of the Improvements to the extent that the cost of
the foregoing does not exceed $500,000 in any Fiscal Year or to the extent that
the Mortgagee does not object within 21 days after receiving notice of the
foregoing actions.
1.4 Sales; Liens. The Mortgagor will not: sell, lease, assign,
transfer or convey, or permit to be transferred or conveyed, the Collateral or
any part thereof or any interest or estate in any thereof (including any
conveyance into a trust or any conveyance of the beneficial interest in any
trust that may be holding title to the Premises) or remove any of the
Collateral from the Premises or from the state in which the Real Estate is
located except as permitted by Section 10.12 of the Credit Agreement or not
included in the definition of "Asset Sale" in the Credit Agreement; or create,
suffer or permit to be created or to exist any mortgage, lien, claim, security
interest, charge, encumbrance or other right or claim of any kind whatsoever
upon the Collateral or any part thereof, except the Permitted Exceptions.
1.5 Stamp and Other Taxes. If the Federal, or any state, county,
local, municipal or other, government or any subdivision of any thereof having
jurisdiction, shall levy, assess or charge any tax (excepting therefrom any
income tax on the Banks receipt of interest payments on the principal portion
of the Loan Amount), assessment or imposition upon this Mortgage, the Notes,
any of the other Liabilities, or any of the other Debt Papers, the interest of
the Mortgagee in the Collateral, or any of the foregoing, or upon the Mortgagee
by reason of or as holder of any of the foregoing, or
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shall at any time or times require revenue stamps to be affixed to this
Mortgage, the Notes, or any of the other Debt Papers, the Mortgagor shall pay
all such taxes and stamps to or for the Mortgagee before they become
delinquent. If any law or regulation is enacted or adopted permitting,
authorizing or requiring any material tax, assessment or imposition to be
levied, assessed or charged, which law or regulation prohibits the Mortgagor
from paying the tax, assessment, stamp, or imposition to or for the Mortgagee,
then all sums hereby secured shall become immediately due and payable at the
option of the Mortgagee.
1.6 Insurance. The Mortgagor will at all times maintain or cause to
be maintained on the Goods, the Improvements and on all other Collateral, all
insurance reasonably required at any time or from time to time by the Mortgagee
and in any event all-risk property insurance covering, without limitation,
fire, extended coverage, vandalism and malicious mischief, in an amount which
is not less than 100% of the replacement cost of the Improvements and Goods
without consideration for depreciation, with an inflation guard endorsement,
insurance against business interruption for such occurrences and in such
amounts as the Mortgagee may reasonably require, and insurance against flood if
required by the Federal Flood Disaster Protection Act of 1973 and regulations
issued thereunder, and comprehensive general public liability insurance,
protecting the Mortgagor in an amount reasonably acceptable to the Mortgagee,
and all other insurance commonly or, in the judgment of the Mortgagee,
prudently maintained by those whose business, improvement to, and use of real
estate is similar to that of the Mortgagor, all in amounts reasonably
satisfactory to the Mortgagee, and all of such insurance to be maintained in
such form and with such companies as shall be approved by the Mortgagee, and to
deliver to and keep deposited with the Mortgagee original certificates and
certified copies of all policies of such insurance and renewals thereof, with
premiums prepaid, and with standard non-contributory mortgagee and loss payable
clauses satisfactory to the Mortgagee, and clauses providing for not less than
10 days' prior written notice to the Mortgagee of cancellation or material
modification of such policies attached thereto in favor of the Mortgagee and
successors and assigns of each. All of the above-mentioned original insurance
policies or certified copies of such policies and certificates of such
insurance satisfactory to the Mortgagee, together with receipts for the payment
of premiums thereon, shall be delivered to and held by the Mortgagee, which
delivery shall constitute an assignment to the Mortgagee of a security interest
in all return premiums. The liability insurance policies required hereunder
shall name the Mortgagee as an additional insured. All renewal and replacement
policies shall be delivered to the Mortgagee at least thirty (30) days before
the expiration of the expiring policies. Subject to the terms of the
immediately succeeding paragraph, the Mortgagor agrees that any loss paid to
the Mortgagee under any of such policies shall be
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applied, at the option of the Mortgagee, toward pre-payment of the Notes or any
of the other Liabilities, or to the rebuilding or repairing of the damaged or
destroyed Improvements or other Collateral, as the Mortgagee in its sole and
unreviewable discretion may elect (which election shall not relieve the Grantor
of the duty to rebuild or repair).
Notwithstanding the foregoing, the Mortgagee shall consent to the
application of any proceeds of said insurance to the restoration of the
Collateral so damaged if and only if Mortgagor fulfills all of the following
conditions not waived in writing by Mortgagee: (i) that no Default or event
which, with the giving of notice or passage of time, or both, would constitute
an Event of Default, has occurred and is continuing under this Mortgage or the
Loan Documents; (ii) the Mortgagee is satisfied that the insurance proceeds
shall be sufficient to fully restore and rebuild the Collateral free and clear
of all liens except the lien of this Mortgage and the Permitted Exceptions, or
in the event that such proceeds are in Mortgagee's sole judgment insufficient
to restore and rebuild the Collateral, then Mortgagor shall deposit upon demand
the shortfall with Mortgagee; (iii) that the excess of said insurance proceeds
above the amount necessary to complete such restoration or rebuilding, if any,
shall be applied as a reduction in the principal amount of the Note; and (iv)
any and all monies which are made available for restoration and rebuilding
hereunder shall be disbursed through Mortgagee, the title company insuring this
Mortgage, or a title insurance and trust company satisfactory to Mortgagee, in
accordance with prudent construction lending practice, including, if requested
by Mortgagee, monthly lien waivers and title insurance date-downs, or in any
other manner proposed by Mortgagor which is approved by Mortgagee.
The Mortgagor hereby empowers the Mortgagee, in its discretion, to
settle, compromise and adjust any and all claims or rights under any insurance
policy maintained by the Mortgagor relating to the Collateral; provided,
however, that so long as no Event of Default or event which, with the giving of
notice or passage of time, or both, would constitute a Default, has occurred
and remains uncured, Mortgagor shall have the right, subject to Mortgagee's
approval for amounts in excess of $500,000, which approval shall not be
unreasonably withheld or delayed, to settle and compromise such claims. In the
event of foreclosure of this Mortgage or other transfer of title to the
Premises in extinguishment of the indebtedness secured hereby, all right, title
and interest of the Mortgagor in and to any insurance policies then in force
shall pass to the purchaser or grantee. Nothing contained in this Mortgage
shall create any responsibility or obligation on the Mortgagee to collect any
amounts owing on any insurance policy or resulting from any condemnation, to
rebuild or replace any damaged or destroyed Improvements or other Collateral or
to perform any other act hereunder. The Mortgagee shall not by the fact of
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approving, disapproving, accepting, preventing, obtaining or failing to obtain
any insurance, incur any liability for or with respect to the amount of
insurance carried, the form or legal sufficiency of insurance contracts,
solvency of insurance companies, or payment or defense of lawsuits, and the
Mortgagor hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.
1.7 Casualty Loss or Eminent Domain. In case the Collateral, or
any part or interest in any thereof, is damaged or destroyed or taken by
condemnation, prior to a Default, condemnation awards which may be paid in
connection with such damage or taking shall be applied, at the option of the
Mortgagor, either to pre-payment of the Note or any of the other Liabilities,
or to repair and restoration of the Collateral. After a Default, such
condemnation awards shall be applied to prepayment of the Liabilities in such
order as Mortgagee, in its absolute discretion, may elect.
1.8 No Mechanics' Liens. The Mortgagor will not suffer any
mechanic's, laborer's or materialmen's lien to be created or remain outstanding
upon the Premises or any part thereof, except as permitted by Section 10.8 of
the Credit Agreement. Anything herein contained to the contrary
notwithstanding, the Mortgagor shall not be deemed in Default with respect to
the provisions of this Section if the Mortgagor provides the Mortgagee with
written notice of the Mortgagor's good faith intention to diligently contest
such claim or lien (and the Mortgagor does so contest such claim or lien) at
the Mortgagor's sole expense and, if requested by the Mortgagee, the Mortgagor
furnishes to the Mortgagee either a bond, in form and with sureties reasonably
satisfactory to the Mortgagee, or a title insurance policy insuring over such
lien. The Mortgagor agrees to promptly deliver to the Mortgagee a copy of any
notices that the Mortgagor receives with respect to any pending or threatened
lien or the foreclosure thereof.
1.9 The Mortgagee's Performance. If the Mortgagor fails to pay or
perform any of its obligations herein contained (including payment of expenses
of foreclosure and court costs), the Mortgagee may (but need not), as agent or
attorney-in-fact of the Mortgagor, make any payment or perform (or cause to be
performed) any obligation of the Mortgagor hereunder, in any form and manner
deemed expedient by the Mortgagee, and any amount so paid or expended (plus
reasonable compensation to the Mortgagee for its out-of-pocket and other
expenses for each matter for which it acts under this Mortgage), with interest
thereon at the Alternate Reference Rate plus 3%, shall be added to the
principal debt hereby secured and shall be repaid to the Mortgagee upon demand.
1.10 Subrogation. To the extent that the Mortgagee, on or after the
date hereof, pays any sum under any provision of law or
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any instrument or document creating any lien or other interest prior or
superior to the lien of this Mortgage, or the Mortgagor or any other Person
pays any such sum with the proceeds of the loan secured hereby, the Mortgagee
shall have and be entitled to a lien or other interest on the Collateral equal
in priority to the lien or other interest discharged and the Mortgagee shall be
subrogated to, and receive and enjoy all rights and liens possessed, held or
enjoyed by, the holder of such lien, which shall remain in existence and
benefit the Mortgagee in securing the Liabilities.
II. D E F A U L T
Each of the following shall constitute a default ("Default") hereunder:
2.1 Note. The occurrence of an Event of Default under the terms and
provisions of the Note or the Credit Agreement; or
2.2 Provisions of this Mortgage. Non-compliance by the Mortgagor
with, or failure by the Mortgagor to perform, any agreement contained herein
(other than any non-compliance or failure which constitutes a Default under
Section 2.1) and continuance of such non-compliance or failure for ten (10)
days after notice thereof with respect to the payment of any amounts required
to be paid under this Mortgage or for thirty (30) days after notice thereof to
the Mortgagor from the Mortgagee with respect to all other Defaults under this
Mortgage.
III. R E M E D I E S
3.1 Acceleration. Upon the occurrence of any Default, the entire
indebtedness evidenced by the Note, the Credit Agreement and all other
Liabilities together with interest thereon at the default rate specified in the
Credit Agreement shall, subject to the terms of the Note, at the option of the
Mortgagee, become immediately due and payable.
3.2 Remedies Cumulative. No remedy or right of the Mortgagee
hereunder or under the Note, the Credit Agreement or any of the Debt Papers, or
otherwise, or available under applicable law or in equity, shall be exclusive
of any other right or remedy, but each such remedy or right shall be in
addition to every other remedy or right now or hereafter existing under any
such document or under applicable law or in equity. No delay in the exercise
of, or omission to exercise, any remedy or right accruing on any Default shall
impair any such remedy or right or be construed to be a waiver of any such
Default or an acquiescence therein, nor shall it affect any subsequent Default
of the same or a different nature. Every such remedy or right may be exercised
concurrently or
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independently, and when and as often as may be deemed expedient by the
Mortgagee. All obligations of the Mortgagor, and all rights, powers and
remedies of the Mortgagee, expressed herein shall be in addition to, and not in
limitation of, those provided by law or in equity or in the Notes or any other
Debt Papers or any other written agreement or instrument relating to any of the
Liabilities or any security therefor.
3.3 Foreclosure; Receiver. Upon the occurrence of any Default, the
Mortgagee shall also have the right immediately to foreclose this Mortgage or
proceed by power of sale (if available under the law of the jurisdiction where
the Collateral is located). Upon the filing of any complaint for that purpose,
the court in which such complaint is filed may (if permitted under the law of
the jurisdiction where the Collateral is located), upon application of the
Mortgagee or at any time thereafter, either before or after foreclosure sale,
and without notice to the Mortgagor or to any party claiming under the
Mortgagor and without regard to the solvency or insolvency at the time of such
application of any Person then liable for the payment of any of the
Liabilities, without regard to the then value of the Premises or whether the
same shall then be occupied, in whole or in part, as a homestead, by the owner
of the equity of redemption, and without regarding any bond from the
complainant in such proceedings, appoint a receiver for the benefit of the
Mortgagee, with power to take possession, charge, and control of the Premises,
to lease the same, to keep the buildings thereon insured and in good repair,
and to collect all Rents during the pendency of such foreclosure suit, and, in
case of foreclosure sale and a deficiency, during any period of redemption.
This Mortgage may be foreclosed once against all, or successively
against any portion or portions, of the Premises, as the Mortgagee may elect,
until all of the Premises have been foreclosed against and sold. As part of
the foreclosure, the Mortgagee in its discretion may, with or without entry,
personally or by attorney, sell to the highest bidder all or any part of the
Premises, and all right, title, interest, claim and demand therein, as an
entirety, or in separate lots, as Mortgagee may elect, and in one sale or in
any number of separate sales held at one time or at any number of times, all in
any manner and upon such notice as provided by applicable law. Upon the
completion of any such sale or sales, Mortgagee shall transfer and deliver, or
cause to be transferred and delivered, to the purchaser or purchasers the
property so sold, in the manner and form as provided by applicable law, and
Mortgagee is hereby irrevocably appointed the true and lawful attorney-in-fact
of Mortgagor, in its name and stead, to make all necessary transfers of
property thus sold, and for that purpose Mortgagee may execute and deliver, for
and in the name of Mortgagor, all necessary instruments of assignment and
transfer, Mortgagor hereby ratifying and confirming all that said attorney-
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in-fact shall lawfully do by virtue hereof. In the case of any sale of the
Premises pursuant to any judgment or decree of any court at public auction or
otherwise, Mortgagee may become the purchaser, and for the purpose of making
settlement for or payment of the purchase price, shall be entitled to deliver
over and use the Credit Agreement and any claims for the debt thereunder in
order that there may be credited as paid on the purchase price the amount of
such debt. In case of any foreclosure of this Mortgage (or the commencement of
or preparation therefor) in any court, all expenses of every kind paid or
incurred by the Mortgagee for the enforcement, protection or collection of this
security, including court costs, attorneys' fees, stenographers' fees, costs of
advertising, and costs of title insurance and any other documentary evidence of
title, shall be paid by the Mortgagor.
3.4 Personal Property. If any Default shall occur, the Mortgagee may
exercise from time to time any rights and remedies available to it under
applicable law upon default in payment of indebtedness. Without limiting the
foregoing, the Mortgagee may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code or other applicable law as in
effect from time to time or otherwise available to it under applicable law.
The Mortgagor hereby expressly waives, to the fullest extent permitted by
applicable law, any and all other notices, demands, advertisements, hearings or
process of law in connection with the exercise by the Mortgagee of any of its
rights and remedies hereunder. The Mortgagor hereby constitutes the Mortgagee
its attorney-in-fact with full power of substitution to take possession of the
Collateral upon any Default and, as the Mortgagee in its sole discretion deems
necessary or proper, to execute and deliver all instruments required by the
Mortgagee to accomplish the disposition of the Collateral; this power of
attorney is a power coupled with an interest and is irrevocable while any of
the Liabilities are outstanding.
3.5 No Liability on Mortgagee. Notwithstanding anything contained
herein, the Mortgagee shall not be obligated to perform or discharge, and does
not hereby undertake to perform or discharge, any obligation, duty or liability
of the Mortgagor, whether hereunder or otherwise. The Mortgagee shall not have
responsibility for the control, care, management or repair of the Premises or
be responsible or liable for any negligence in the management, operation,
upkeep, repair or control of the Premises resulting in loss, injury or death to
any tenant, licensee, employee, stranger or other Person. No liability shall
be enforced or asserted against the Mortgagee in its exercise of the powers
granted to it under this Mortgage, and the Mortgagor expressly waives and
releases any such liability. Should the Mortgagee incur any such liability,
loss or damage under or by reason hereof, or in the defense of any claims or
demands, the Mortgagor agrees to
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reimburse the Mortgagee immediately upon demand for the full amount thereof,
including costs, expenses and attorneys' fees.
IV. G E N E R A L
4.1 Permitted Acts. The Mortgagor agrees that, without affecting or
diminishing in any way the liability of the Mortgagor or any other Person,
except any Person expressly released in writing by the Mortgagee (with the
consent of any pledgee of the Liabilities), for the payment or performance of
any of the Liabilities or for the performance of any obligation contained
herein or affecting the lien hereof upon the Collateral or any part thereof,
the Mortgagee may at any time and from time to time, without notice to or the
consent of any Person, (i) release any Person liable for the payment or
performance of the Note or any of the other Liabilities or any guaranty given
in connection therewith; extend the time for, or agree to alter the terms of
payment of, any indebtedness under the Notes or any of the other Liabilities or
any guaranty given in connection therewith; modify or waive any obligation;
(ii) subordinate, modify or otherwise deal with the lien hereof; (iii) accept
additional security of any kind for repayment of the Note or the other
Liabilities or any guaranty given in connection therewith; release any
Collateral or other property securing any or all of the Notes or the other
Liabilities or any guaranty given in connection therewith; (iv) make releases
of any portion of the Premises; consent to the making of any map or plat of the
Premises or the creation of any easements on the Premises or of any covenants
restricting the use or occupancy thereof; or (v) exercise or refrain from
exercising, or waive, any right the Mortgagee may have.
4.2 Legal Expenses. The Mortgagor agrees to indemnify the Mortgagee
from all loss, damage and expense, including (without limitation) attorneys'
fees, incurred in connection with any suit or proceeding in or to which the
Mortgagee may be made or become a party for the purpose of protecting the lien
or priority of this Mortgage.
4.3 Security Agreement; Fixture Filing. This Mortgage, to the extent
that it conveys or otherwise deals with personal property or with items of
personal property which are or may become fixtures, shall also be construed as
a security agreement under the Uniform Commercial Code as in effect in the
state in which the Premises are located, and this Mortgage constitutes a
financing statement filed as a fixture filing in the Official Records of the
County Recorder of the County in which the Premises are located with respect to
any and all fixtures included within the term "Collateral" as used herein and
with respect to any Goods or other personal property that may now be or
hereafter become such fixtures. For purposes of the foregoing, the Mortgagor
is the debtor (with its address as set forth below), the Mortgagee is the
13
<PAGE> 14
secured party (with its address as set forth below). If any item of Collateral
hereunder also constitutes collateral granted to the Mortgagee under any other
mortgage, agreement, document, or instrument, in the event of any conflict
between the provisions of this Mortgage and the provisions of such other
mortgage, agreement, document, or instrument relating to the Collateral, the
provision or provisions selected by the Mortgagee shall control with respect to
the Collateral.
4.4 Defeasance. Upon full payment of all indebtedness secured hereby
and satisfaction of all the Liabilities in accordance with their respective
terms and at the time and in the manner provided, and when the Mortgagee has no
further obligation to make any advance, or extend any credit hereunder, under
the Note or any Debt Papers, this conveyance shall be null and void, and
thereafter, upon demand therefor, an appropriate instrument of reconveyance or
release shall promptly be made by the Mortgagee to the Mortgagor, at the
expense of the Mortgagor.
4.5 Notices. Except as otherwise provided under applicable law, all
notices, demands and other communications hereunder to either party shall be
given in accordance with the provisions of Section 14.3 of the Credit
Agreement.
4.6 Successors; The Mortgagor; Gender. All provisions hereof shall
bind the Mortgagor and the Mortgagee and their respective successors, vendees
and assigns and shall inure to the benefit of the Mortgagee, its successors and
assigns, and the Mortgagor and its permitted successors and assigns. The
Mortgagor shall not have any right to assign any of its rights hereunder.
Except as limited by the preceding sentence, the word "Mortgagor" shall include
all Persons claiming under or through the Mortgagor and all Persons liable for
the payment or performance by the Mortgagor of any of the Liabilities whether
or not such Persons shall have executed the Note or this Mortgage. Wherever
used, the singular number shall include the plural, the plural the singular,
and the use of any gender shall be applicable to all genders.
4.7 Care by the Mortgagee. The Mortgagee shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral assigned by the Mortgagor to the Mortgagee or in the Mortgagee's
possession if it takes such action for that purpose as the Mortgagor requests
in writing, but failure of the Mortgagee to comply with any such request shall
not be deemed to be (or to be evidence of) a failure to exercise reasonable
care, and no failure of the Mortgagee to preserve or protect any rights with
respect to such Collateral against prior parties, or to do any act with respect
to the preservation of such Collateral not so requested by the Mortgagor, shall
be deemed a failure to exercise reasonable care in the custody or preservation
of such Collateral.
14
<PAGE> 15
4.8 No Waiver; Writing. No delay on the part of the Mortgagee in the
exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Mortgagee of any right or remedy shall
preclude other or further exercise thereof or the exercise of any other right
or remedy. The granting or withholding of consent by Mortgagee to any
transaction as required by the terms hereof shall not be deemed a waiver of the
right to require consent to future or successive transactions.
4.9 Governing Law. This Mortgage shall be a contract made under and
governed by the internal laws of the State where the Premises are located.
4.10 Waiver. The Mortgagor, on behalf of itself and all Persons now
or hereafter interested in the Premises or the Collateral, to the fullest
extent permitted by applicable law hereby waives all rights under all
appraisement, marshalling, homestead, moratorium, valuation, exemption, stay,
extension, and redemption statutes, laws or equities now or hereafter existing,
and hereby further waives the pleading of any statute of limitations as a
defense to any and all Liabilities secured by this Mortgage, and the Mortgagor
agrees that no defense, claim or right based on any thereof will be asserted,
or may be enforced, in any action enforcing or relating to this Mortgage or any
of this Collateral. Without limiting the generality of the preceding sentence,
the Mortgagor, on its own behalf and on behalf of each and every Person
acquiring any interest in or title to the Premises subsequent to the date of
this Mortgage, to the fullest extent permitted by applicable law, hereby
irrevocably waives any and all rights of redemption from sale under any order
or decree of foreclosure of this Mortgage or under any power contained herein
or under any sale pursuant to any statute, order, decree or judgment of any
court. The Mortgagor, for itself and for all Persons hereafter claiming
through or under it or who may at any time hereafter become holders of liens
junior to the lien of this Mortgage, hereby expressly waives and releases all
rights to direct the order in which any of the Collateral shall be sold in the
event of any sale or sales pursuant hereto and to have any of the Collateral
and/or any other property now or hereafter constituting security for any of the
indebtedness secured hereby marshalled upon any foreclosure of this Mortgage or
of any other security for any of said indebtedness.
4.11 JURY TRIAL. THE MORTGAGOR AND THE MORTGAGEE HEREBY EXPRESSLY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS MORTGAGE OR ANY DEBT PAPERS TO WHICH IT IS A
PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS MORTGAGE OR
15
<PAGE> 16
ANY RELATED DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
4.12 No Merger. It being the desire and intention of the parties
hereto that this Mortgage and the lien hereof do not merge in fee simple title
to the Premises, it is hereby understood and agreed that should the Mortgagee
acquire an additional or other interests in or to the Premises or the ownership
thereof, then, unless a contrary intent is manifested by the Mortgagee as
evidenced by an express statement to that effect in an appropriate document
duly recorded, this Mortgage and the lien hereof shall not merge in the fee
simple title, toward the end that this Mortgage may be foreclosed as if owned
by a stranger to the fee simple title.
4.13 Time of Essence. Time is declared to be of the essence in this
Mortgage, the Notes and the Debt Papers and of every part hereof and thereof.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Mortgage on the day and year first above written.
WITNESS: LARIZZA INDUSTRIES, INC.,
an Ohio corporation
By: /s/ Terence C. Seikel
Name: Terence C. Seikel
Title: Chief Financial Officer
Address of Mortgagor/Debtor:
201 West Big Beaver Road
Suite 1040
Troy, Michigan 48084
Attention: President
Federal I.D. No. 34-1376202
WITNESS: CONTINENTAL BANK N.A.
By: /s/ Steven Ahrenholz
Name: Steven Ahrenholz
Title: Vice President
Address of Mortgagee/Secured Party:
16
<PAGE> 17
Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Steven K. Ahrenholz
THIS INSTRUMENT WAS PREPARED BY
AND UPON RECORDING RETURN TO:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Patricia V. Gentry
17
<PAGE> 18
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, , a Notary Public, do hereby certify
that , personally known to me to be the president of
Larizza Industries, Inc., an Ohio corporation, and personally known to me to be
the same person whose name is subscribed to the foregoing document, appeared
before me this day in person and acknowledged that as such president he/
she signed and delivered the said document as president of said
corporation pursuant to authority given by the Board of Directors of said
corporation as his/her free and voluntary act, and as the free and voluntary
act and deed of said corporation, for the uses and purposes therein set forth.
Given under my hand and notarial seal, this day of May, 1994.
Notary Public
Type or
Print Name:
My commission expires:
<PAGE> 19
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, , a Notary Public, do hereby certify
that , personally known to me to be the
president of Continental Bank N.A., a national banking association, and
personally known to me to be the same person whose name is subscribed to the
foregoing document, appeared before me this day in person and acknowledged that
as such president he/she signed and delivered the said document
as president of said corporation, pursuant to authority given by
the Board of Directors of said corporation as his/her free and voluntary act,
as the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
Given under my hand and notarial seal, this day of May, 1994.
Notary Public
Type or
Print Name:
My commission expires:
<PAGE> 1
EXHIBIT 10.11(a)
CREDIT AGREEMENT
dated as of May 6, 1994
among
MANCHESTER PLASTICS, LTD.,
VARIOUS FINANCIAL INSTITUTIONS
and
CONTINENTAL BANK N.A.,
individually and as Agent
<PAGE> 2
|| TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; BORROWING AND CONVERSION PROCEDURES . . . . . . . . . . . . . . 18
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Various Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.4 Conversion Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6 Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.8 Commitments Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3 NOTES EVIDENCING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Setting and Notice of Eurodollar Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.1 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1.2 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Application of Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Changes in Law Rendering Eurodollar Loans
</TABLE>
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<TABLE>
<S> <C>
Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Right of Banks to Fund through Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Discretion of Banks as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Mitigation of Circumstances; Replacement of Affected Bank . . . . . . . . . . . . . . . . . . . . . . . . 29
8.8 Conclusiveness of Statements; Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.6 Litigation and Suretyship Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 Ownership of Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12 Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.14 Solvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.16 Contracts; Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.17 Environmental and Safety and Health Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.19 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.20 Places of Business and Location of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 10 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Reports, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.1 Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.2 Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1.3 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.4 Reports to SEC and to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1.5 Notice of Default, Litigation and Pension and Welfare Plan Matters . . . . . . . . . . . . . . . . 37
10.1.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.7 Management Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.8 Projections, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.1.9 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Compliance with Laws; Maintenance of Property;
Payment of Taxes and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.1 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.2 Accounts Payable to Inventory Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
ii
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<TABLE>
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10.6.3 Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.6.4 Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.7 Limitations on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.9 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.11 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.12 Mergers, Consolidations, Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.16.1 Environmental Response Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.16.2 Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.16.3 Environmental Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.17 Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.18 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.19 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.20 Limitations on Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.21 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1 Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.2 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.3 Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.4 Incumbency and Signature Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.5 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.1.6 Opinions of Counsel for the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.8 Debt to be Repaid, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.1.9 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1.10 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 Loans and Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2.1 No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.2.2 Confirmatory Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.1 Non-Payment of the Loans, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1.2 Non-Payment of Other Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.3 Other Material Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.4 Bankruptcy, Insolvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.1.5 Non-Compliance with Provisions of This Agreement . . . . . . . . . . . . . . . . . . . . . . 50
12.1.6 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.7 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.8 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.9 Invalidity of Collateral Documents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1.10 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 13 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.3 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.4 Credit Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.5 Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.6 Action on Instructions of the Required Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.7 Funding Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.8 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
13.9 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.2 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.4 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.5 Regulations G, T, U, and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.6 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.7 Subsidiary References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
14.9 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.9.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.9.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
14.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.13 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.15 Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.17 Currency Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
iv
<PAGE> 6
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate
(Section 10.1.3)
EXHIBIT C Form of General Security Agreement
(Section 11.1.5)
EXHIBIT D Form of Debenture (Section 11.1.5)
EXHIBIT E Form of Debenture Pledge Agreement
(Section 11.1.5)
EXHIBIT F Form of Opinions of Counsel for the
Company
(Section 11.1.6)
EXHIBIT G Form of Assignment Agreement
(Section 14.9)
SCHEDULE I Commitment Limits and Percentages
SCHEDULE 9.6 Litigation and Suretyship Liabilities
(Section 9.6)
SCHEDULE 9.8 Subsidiaries (Section 9.8)
SCHEDULE 9.9 Pension and Welfare Plan (Section 9.9)
SCHEDULE 9.15 Insurance (Section 9.15)
SCHEDULE 9.16 Contracts; Labor Matters (Section 9.16)
SCHEDULE 9.17 Environmental Matters (Section 9.17)
SCHEDULE 9.18 Real Property (Section 9.18)
SCHEDULE 9.20 Places of Business, Location of Assets,
and Account Debtors (Section 9.20)
SCHEDULE 10.7 Debt (Section 10.7)
SCHEDULE 10.8 Liens (Section 10.8)
SCHEDULE 10.11 Investments (Section 10.11)
SCHEDULE 10.14 Transactions with Affiliates (Section 10.14)
||
v
<PAGE> 7
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of May 6, 1994 (as amended, supplemented
or otherwise modified from time to time, this "Agreement"), is entered into
among MANCHESTER PLASTICS, LTD., an Ontario corporation (the "Company"), the
undersigned financial institutions (together with their respective successors
and assigns, collectively the "Banks" and individually each a "Bank") and
CONTINENTAL BANK N.A. (in its individual capacity, "Continental"), as agent for
the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS. When used herein the following terms shall have
the following meaning (such definitions to be applicable to both the singular
and plural forms of such terms):
Accounts Payable to Inventory Ratio means, as of the end of any Fiscal
Quarter, the ratio of (a) the accounts payable of the Company to (b) the
Inventory of the Company.
Affected Bank means any Bank that has given notice to the Company (which
has not been rescinded) of (i) any obligation by the Company to pay any amount
pursuant to Section 7.6 or 8.1 or (ii) the occurrence of any circumstances of
the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
Agent means Continental in its capacity as agent for the Banks hereunder
and any successor thereto in such capacity.
Agreement - see the Preamble.
Alternate Reference Rate means at any time the greater of (a) the Federal
Funds Rate plus 1/2 of 1% and (b) the rate per annum then most recently
announced by Continental as its reference rate at Chicago, Illinois.
Asset Sale means (a) any sale, lease, transfer or other disposition
(including by way of amalgamation, merger or consolidation) by the Company or
any Subsidiary of any asset (including the sale of capital stock of any
Subsidiary) outside
<PAGE> 8
the ordinary course of business, or (b) any sale or
assignment with or without recourse of accounts receivable of the Company or
any Subsidiary other than (i) sales, transfers or other dispositions by the
Company to Larizza provided (x) the net cash proceeds thereof do not exceed
$500,000 in the aggregate in any Fiscal Year it being agreed that sales between
the Company and Larizza shall be netted in determining said $500,000 and (y) if
such net cash proceeds exceed $200,000 in the aggregate in any Fiscal Year,
such assets have been identified to the Agent 30 days after such sale, transfer
or other disposition exceeding $200,000 and the Company has taken all necessary
steps to ensure that the Liens of the Agent under this Agreement or under the
Credit Agreement of even date herewith between the Agent and Larizza, as
applicable, will be first priority perfected Liens (it being agreed that in
connection with Asset Sales by the Company permitted under this clause (i), the
Lien of the Agent under the Collateral Documents shall be released with respect
to such assets), and (ii) the transfer of Manchester/Williamston/Homer from
the Company to Larizza on or before the Effective Date.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
Bank - see the Preamble.
Bank Party - see Section 14.13.
Business Day means any day on which commercial banks are open for
commercial banking business in Chicago and, in the case of a Business Day which
relates to a Eurodollar Loan, on which dealings are carried on in the interbank
eurodollar market.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property, property
by such Person which, in conformity with generally accepted accounting
principles, is accounted for as a capital lease on the balance sheet of such
Person.
Cash Equivalent Investment means, at any time:
(a) any evidence of Debt, maturing not more than one year after
such time, issued, insured or guaranteed by the United States Government
or the Government of Canada;
(b) commercial paper, maturing not more than one year from the
date of issue, which is issued by
(i) a corporation (except an Affiliate) organized under the
laws of any State of the United States of
2
<PAGE> 9
America or of the District of Columbia or under the laws of
Canada or any Province of Canada and rated at least A-1 by Standard
& Poor's Corporation or P-1 by Moody's Investors Service, Inc. (or,
in the case of Canadian corporations, the equivalent rating by the
Canadian Bond Rating Service, the Dominion Bond Rating Service or
Dunn & Bradstreet), at the time of investment, or
(ii) any Bank (or its holding company);
(c) any certificate of deposit or bankers' acceptance or
eurodollar time deposit, maturing not more than one year after the date
of issue, which is issued by either
(i) a financial institution that is a member of the Federal
Reserve System and has a combined capital and surplus and undivided
profits of not less than $250,000,000, or
(ii) any Bank; or
(d) any repurchase agreement with a term of one year or less which
(i) is entered into with
(A) any Bank, or
(B) any other commercial banking institution of the
stature referred to in clause (c)(i),
(ii) is secured by a fully perfected Lien in any obligation
of the type described in any of clauses (a) through (c), and
(iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase
obligation of such Bank (or other commercial banking institution)
thereunder;
(e) investments in money market funds that invest substantially
all of their assets in Cash Equivalent Investments described in clauses
(a) through (d); or
(f) investments in short-term asset management accounts offered by
any Bank, Bank One Cleveland or The Toronto-Dominion Bank for the purpose
of investing in loans to any corporation (other than an Affiliate)
organized under the laws of any State of the United States or of the
3
<PAGE> 10
District of Columbia or under the laws of Canada or any Province of
Canada and rated at least A-1 by Standard & Poor's corporation or P-1 by
Moody's Investor Services, Inc. (or, in the case of Canadian
corporations, the equivalent rating by the Canadian Bond Rating Service,
the Dominion Bond Rating Service or Dunn & Bradstreet).
Change in Control means the occurrence of any of the following: (a) a
failure by Larizza at all times to own directly, free and clear of Liens
(except the Lien of the Agent), 100% of the issued and outstanding capital
stock of the Company for any reason, (b) any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable) other than Ronald T. Larizza is or becomes the "beneficial
owner", directly or indirectly, of more than 25% (38% if Ronald T. Larizza
controls more voting power than such "person" or "group") of the total voting
power in the aggregate of all classes of capital stock of Larizza then
outstanding normally entitled to vote in elections of directors, or (c) during
any period of 12 consecutive months after the Effective Date, individuals who
at the beginning of any such 12-month period constituted the Board of Directors
of Larizza (together with any new directors whose election or appointment was
approved by such Board or whose nomination for election by the shareholders of
Larizza was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election, appointment or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of the
Company then in office.
Code means the Income Tax Act (Canada), as amended.
Collateral means, collectively, all of the property and assets that are
from time to time subject to the Collateral Documents.
Collateral Documents means the Debenture, the Debenture Pledge Agreement
and the Security Agreement and each Mortgage.
Commitment means (a) as to any Bank, such Bank's commitment to make Loans
pursuant to Section 2.1 and (b) in the case of all Banks, the aggregate
Commitments of the Banks to make Loans pursuant to Section 2.1. The amounts of
the initial Commitments of each Bank are set forth on Schedule I.
Company - see the Preamble.
Computation Period means a Fiscal Quarter.
4
<PAGE> 11
Consolidated Capital Expenditures means all expenditures which, in
accordance with generally accepted accounting principles, would be required to
be capitalized and shown on the consolidated balance sheet of the Company and
its Subsidiaries, but excluding (a) expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed from
insurance proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being replaced or restored or with awards of
compensation arising from the taking by eminent domain or expropriation or
condemnation of the assets being replaced and (b) prepaid expenses, inventory
and tooling expenditures which would otherwise be treated as Capital
Expenditures.
Consolidated EBITDA means, for any Computation Period, the sum, without
duplication, of
(a) Consolidated Net Income for such Computation Period,
plus
(b) the Consolidated Interest Expense for such Computation Period,
plus
(c) all depreciation and amortization of assets (including
goodwill and other intangible assets) of the Company and its Subsidiaries
deducted in determining Consolidated Net Income for such Computation
Period,
plus
(d) all federal, provincial, local and foreign income taxes
(whether paid or deferred) of the Company and its Subsidiaries deducted
in determining Consolidated Net Income for such Computation Period.
Consolidated Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of
(a) the sum, without duplication, of
(i) Consolidated EBITDA for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period,
5
<PAGE> 12
minus
(iii) Consolidated Capital Expenditures for such Computation
Period,
minus
(iv) dividends paid by the Company during such Computation Period
to
(b) the sum, without duplication, of
(i) Consolidated Interest Expense for such Computation Period,
plus
(ii) Consolidated Lease Expense for such Computation Period.
Consolidated Interest Expense means for any period the consolidated
interest expense of the Company and its Subsidiaries for such period
(including, without limitation, all imputed interest expense on Capital
Leases).
Consolidated Lease Expense means for any period the aggregate payments by
the Company and its Subsidiaries as lessee under Operating Leases.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period.
Continental - see the Preamble.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee
under Capital Leases which have been recorded as liabilities on a balance sheet
of such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than prepaid interest and trade accounts
payable and accrued liabilities in the ordinary course of business), (d) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person (it being understood
that if such Person has not assumed or otherwise become personally liable for
any such indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such
6
<PAGE> 13
indebtedness or the fair market value of all property of such Person securing
such indebtedness), (e) all obligations, contingent or otherwise, with respect
to the face amount of all letters of credit (whether or not drawn) and banker's
acceptances issued for the account of such Person, (f) net liabilities of such
Person under all Hedging Agreements, and (g) all Suretyship Liabilities of such
Person.
Debenture - see Section 11.1.5.
Debenture Pledge Agreement - see Section 11.1.5.
Debt to be Repaid means all Debt listed on Schedule 10.7 under the
heading "Debt to be Repaid".
Dollar and the sign "$" mean lawful money of the United States of America.
Effective Date - see Section 11.1.
Environmental Laws means the Environmental Protection Act (Canada), the
Transportation of Dangerous Goods Act (Canada), the Hazardous Products Act
(Canada), the Environmental Protection Act (Ontario), the Water Resources Act
(Ontario), the Gasoline Handling Act (Ontario), and any other applicable
federal, provincial or local statute, law, ordinance, code, rule, regulation,
order, decree, policy or guidelines relating to clean up of contaminated real
property, or other requirement regulating, relating to, or imposing liability
or standards of conduct (including, but not limited to, permit requirements and
emission or effluent restrictions) concerning any Hazardous Materials, as now
or at any time hereafter in effect.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to
the daily average during such Interest Period of the percentage in effect on
each day of such Interest Period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor), for determining the aggregate
maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant
to Regulation D or any other then applicable regulation of such Board of
Governors which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate determined
by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Bank the office or offices of
such Bank which shall be making or maintaining the
7
<PAGE> 14
Eurodollar Loans of such Bank hereunder or such other office or offices through
which such Bank determines its Eurodollar Rate. A Eurodollar Office of any
Bank may be, at the option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of Continental two
Business Days prior to the beginning of such Interest Period by major banks in
the interbank eurodollar market as at or about 10:00 a.m. Chicago time of such
Eurodollar Office, for delivery on the first day of such Interest Period, for
the number of days comprised therein and in an amount equal or comparable to
the amount of the Eurodollar Loan of Continental for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) -------------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section 12.1.
Exchange Act means the Securities Exchange Act of 1934 (United States),
as amended.
Excluded Taxes means, in the case of each Bank and the Agent, taxes
imposed on or measured by its gross or net income or receipts (other than
Withholding Taxes) or capital, and franchise taxes imposed on it by the
jurisdiction under which such Bank or the Agent is organized or any political
subdivision thereof.
Federal Funds Rate means, for any day, the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m., New York City time, on such day by each of three leading
brokers of Federal funds transactions in New York City, selected by the Agent.
The rate for any day which is not a Business Day shall be the rate for the
immediately preceding Business Day.
8
<PAGE> 15
Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1993") refer to the Fiscal Year ending on December 31 of
such calendar year.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Floating Rate Loan means any Loan which bears interest at or by reference
to the Alternate Reference Rate.
Group - see Section 2.2.
Hazardous Material means any hazardous, toxic or dangerous substance or
material in fact or defined as such in (or for purposes of) any Environmental
Laws or any other Federal, provincial or local statute, law, ordinance, code,
regulation or order, or any other requirement of any governmental authority
regulating, relating to, or imposing liability for, or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material as
now or any time hereafter in effect and applicable to any real property owned
by or leased to the Company or any Subsidiary or on which the Company or any
Subsidiary carries on any of its operations (provided that no such province or
local statute, law, ordinance, code, regulation, order or other requirement
shall be deemed to have extraterritorial application).
Hedging Agreements means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity prices.
Interest Act means the Interest Act (Canada), R.S.C. 1985, c. I-15, as
amended.
Interest Period - see Section 4.3.
Inventory means any and all of the goods of the Company (including,
without limitation, goods in transit) wheresoever located, which are or may at
any time be held for sale, furnished under any contract of service, or held as
raw materials, work in process, finished goods or supplies or materials used or
consumed in business of the Company, or which are held for use in connection
with the manufacture, packing, shipping, advertising, selling or finishing of
such goods.
9
<PAGE> 16
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any other Person
(excluding (i) commission, travel and similar advances to officers and
employees made in the ordinary course of business and (ii) advances to,
and deposits with, contractors and suppliers in the ordinary course of
business, but solely to the extent consistent with the past practice of
the Company and its Subsidiaries); and
(b) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
Larizza means Larizza Industries, Inc., an Ohio corporation.
Lien means, when used with respect to any Person, any interest granted by
such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, title
retention document, charge, hypothecation or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial process or
otherwise.
Loans - see Section 2.1.
Loan Documents means this Agreement, the Notes and the Collateral
Documents.
Manchester/Williamston/Homer means the facilities and related assets in
Manchester, Williamston and Homer, Michigan owned by the Company as of March
31, 1994.
Margin means (a) initially, 1.75% in the case of any Floating Rate Loan,
and 3.50% in the case of any Eurodollar Loan, and (b) on and after any date
specified below on which the Margin is to be adjusted, the rate per annum set
forth in the table below for the applicable type of Loan opposite the
applicable Level:
10
<PAGE> 17
<TABLE>
<CAPTION>
Margin for Euro- Margin for Floating
Net Worth dollar Loans Rate Loans
--------- --------------- -------------------
<S> <C> <C>
<$10MM 3.50% 1.75%
$10 - $25MM 2.50% .75%
>$25MM 1.50% .00%
</TABLE>
If any Compliance Certificate delivered by the Company pursuant to Section
10.1.3 shall give rise to any adjustment in the Margin, such adjustment shall
be effective for all Loans (including any then-outstanding Loans) on the Margin
Determination Date.
Notwithstanding the foregoing, if the Company fails to deliver a
Compliance Certificate on or before such Margin Determination Date, "Margin"
shall mean the Margin currently in effect until the date on which the Company
delivers such Compliance Certificate, at which time (i) if such Compliance
Certificate results in a smaller Margin, such smaller Margin shall become
effective on the date on which the Company delivers such Compliance
Certificate, and (ii) if such report results in a larger Margin, such larger
Margin shall become effective as of the Margin Determination Date on or before
which such Compliance Certificate should have been delivered, and the Company
shall pay to the Agent for the pro rata accounts of the Banks the amount
determined to be owing by the Company to the Banks as a result of the
retroactive application of such larger Margin (such payment to be made (x) in
the case of any Eurodollar Loan on which interest has not been paid since the
most recent Margin Determination Date, on the next date on which interest is
payable on such Eurodollar Loan pursuant to Section 4.2, and (y) in the case of
any Eurodollar Loan which was outstanding on the Margin Determination Date and
(A) which is no longer outstanding on the date on which such Compliance
Certificate is delivered or (B) on which interest has been paid since the most
recent Margin Determination Date, immediately).
Margin Determination Date means the first day of the next succeeding
Fiscal Quarter after the date as of which the applicable Compliance Certificate
is prepared (i.e., if Compliance Certificate is prepared for 12/31/94, Margin
Determination Date is April 1, 1995).
Margin Stock means any "margin stock" as defined in any of Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System.
Material Adverse Effect means, relative to any event or occurrence of
whatever nature (including, without limitation, any adverse determination in
any litigation, arbitration or governmental proceeding), a material adverse
effect on (a) the
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<PAGE> 18
financial condition, operations, business, revenues, assets or properties or
prospects of the Company and its Subsidiaries taken as a whole or (b) the
ability of the Company to timely and fully perform any of its payment or other
material obligations under this Agreement or any other Loan Document to which
it is a party.
Mortgage means a mortgage, charge/mortgage, debenture, leasehold
mortgage, assignment of lease by way of mortgage, deed of trust or similar
document granting a Lien on real property or interest therein in appropriate
form for filing or recording in the applicable jurisdiction and otherwise
reasonably satisfactory to the Agent.
Net Worth means the stockholder's equity of the Company.
Non-Indemnifiable Taxes means, in the case of each Bank and the Agent,
any Taxes imposed by Canada or any political subdivision thereof by reason
solely of any connection between any Bank or the Agent, as the case may be, and
Canada, other than the mere making of Loans hereunder or the entering into of
and the transactions contemplated by the Loan Documents, including such Bank or
the Agent having been engaged in a trade or business in Canada or having had a
permanent establishment in Canada.
Note - see Section 3.1.
Occupational Safety and Health Law means the Occupational Health and
Safety Act (Ontario) and any other federal, provincial or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to on
imposing liability or standards of conduct concerning employee health and/or
safety.
Operating Lease means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary,
as lessee, other than a Capital Lease.
OSC means the Ontario Securities Commission.
Participant - see Section 14.9
Pension Plan means a "pension plan", as such term is defined in the
Pension Benefits Act (Ontario) or under other applicable pension laws, and to
which the Company or any Subsidiary or any trade or business of any of them may
have any actual, contingent or potential liability at any time during the
preceding five years.
Percentage means as to any Bank the percentage which (a) the amount of
such Bank's Commitment is of (b) the aggregate amount of Commitments of all
Banks; provided that after the Commitments have been terminated, "Percentage"
shall mean as to any Bank the
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<PAGE> 19
percentage which the aggregate principal amount of such Bank's Loans is of the
aggregate principal amount of all Loans. The initial Percentage for each Bank
is set forth opposite such Bank's name on Schedule I.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, unincorporated association or any
other entity, whether acting in an individual, fiduciary or other capacity.
Required Banks means Banks having an aggregate Percentage of 51% or
more.
SEC means the Securities and Exchange Commission.
Security Agreement - see Section 11.1.5.
Stated Maturity Date means May 7, 1999.
Subsidiary means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting power
for the election of directors. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of the
Company.
Suretyship Liability means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to or otherwise to
invest in a debtor, or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts payable) of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's obligation under
any Suretyship Liability shall (subject to any limitation set forth therein) be
deemed to be the principal amount of the debt, obligation or other liability
guaranteed thereby.
Tax or Taxes means any foreign, Canadian federal, provincial,
municipal or local tax, duty, fee, royalty, levy, impost, assessment,
deduction, charge or withholding, and all liabilities with respect thereto
including any liability to make installments in respect thereto, and including
without limitation, any penalty and interest payable with respect thereto, and
shall include, without limitation, all stamp, documentary, property, ad
valorem, severance, gross income, gross receipt, gross profits, occupation,
excise, sales, goods and
13
<PAGE> 20
services, withholding, payroll, employment, custom, land transfer, franchise,
income, business, capital and other taxes and assessments of any kind
whatsoever imposed on or assessed with respect to or charged against or
attributable to any person.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.
Welfare Plan means any employee benefit plan or arrangement in respect
of which or in connection with which a Lien may arise pertaining to any
contribution obligation or other obligation thereunder as a matter of statute
or by operation of law, other than a Pension Plan, to which the Company or any
Subsidiary or any trade or business of any of them may have any actual,
contingent or potential liability at any time during the preceding five years.
Wholly-Owned Subsidiary means a Subsidiary of which the Company and/or
its Subsidiaries own, directly or indirectly, all of the outstanding shares of
capital stock (other than directors' qualifying shares).
Withholding Taxes - see Section 7.6.
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make a
term loan (each a "Loan" and collectively the "Loans") to the Company on the
Effective Date in such Bank's Percentage of such amount as the Company may
request from all Banks under the Commitment; provided that the aggregate
principal amount of all Loans which all Banks shall be committed to make shall
not exceed $15,000,000. The Commitment shall expire on the Effective Date
concurrently with the making of such Loans.
2.2 Various Types of Loans. Each Loan shall be either a Floating
Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall
specify in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4. Eurodollar Loans having the same Interest Period are sometimes
called a "Group" or collectively "Groups". Floating Rate Loans and Eurodollar
Loans may be outstanding at the same time, provided that (a) not more than five
different Groups of Loans shall be outstanding at any
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<PAGE> 21
one time and (b) the aggregate principal amount of each Group of Eurodollar
Loans shall at all times be at least $1,000,000 and an integral multiple of
$100,000.
2.3 Borrowing Procedures. The Company shall give written or
telephonic notice to the Agent of the proposed borrowing not later than (a) in
the case of a Floating Rate borrowing, 10:00 A.M., Chicago time, on the
proposed date of such borrowing, and (b) in the case of a Eurodollar borrowing,
11:00 A.M., Chicago time, at least three Business Days prior to the proposed
date of such borrowing. Such notice shall be effective upon receipt by the
Agent and shall specify the date (which shall be a Business Day), amount and
type of borrowing and, in the case of a Eurodollar borrowing, the initial
Interest Period therefor. Promptly upon receipt of such notice, the Agent
shall advise each Bank thereof. Not later than 1:00 p.m., Chicago time, on the
date of the borrowing, each Bank shall provide the Agent at the principal
office of the Agent in Chicago with immediately available funds covering such
Bank's Percentage of such borrowing and, subject to the satisfaction of the
conditions precedent set forth in Section 11 with respect to such borrowing,
the Agent shall pay over the requested amount to the Company on the requested
borrowing date.
2.4 Conversion Procedures. Subject to the provisions of Section 2.2,
the Company may convert all or any part of any outstanding Loan into a Loan of
a different type by giving written or telephonic notice to the Agent not later
than (a) in the case of conversion into a Floating Rate Loan, 10:00 A.M.,
Chicago time, on the proposed date of such conversion, and (b) in the case of a
conversion into a Eurodollar Loan, 11:00 A.M., Chicago time, at least three
Business Days prior to the proposed date of such conversion. Each such notice
shall be effective upon receipt by the Agent and shall specify the date and
amount of such conversion, the Loan to be so converted, the type of Loan to be
converted into and, in the case of a conversion into a Eurodollar Loan, the
initial Interest Period therefor. Promptly upon receipt of such notice, the
Agent shall advise each Bank thereof. Subject to Sections 2.6 and 2.7, such
Loan shall be so converted on the requested date of conversion. Each
conversion shall be on a Business Day and, after giving effect to any
conversion, the aggregate principal amount of each Group of Eurodollar Loans
shall be at least $1,000,000 and an integral multiple of $100,000.
2.5 Pro Rata Treatment. All borrowings, conversions and repayments
shall be effected so that after giving effect thereto each Bank will have a pro
rata share (according to its Percentage) of all types and Groups of Loans.
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<PAGE> 22
2.6 Warranty. Each notice of borrowing or conversion pursuant to
Section 2.3 or 2.4 shall automatically constitute a warranty by the Company to
the Agent and each Bank to the effect that on the date of such requested
borrowing or conversion (other than any conversion from a Eurodollar Loan to a
Floating Rate Loan required by Section 8.3) (a) the warranties of the Company
contained in Section 9 (excluding Sections 9.4, 9.6, 9.8 9.15 through 9.18 and
except to the extent changes in facts or conditions are expressly permitted or
required hereunder) of this Agreement shall be true and correct as of such
requested date as though made on the date thereof and (b) no Event of Default
or Unmatured Event of Default shall have then occurred and be continuing or
will result therefrom.
2.7 Conditions. Notwithstanding any other provision of this
Agreement, (a) no Bank shall be obligated to make any Loan and (b) no Bank
shall be obligated to convert into or permit the continuation at the end of the
applicable Interest Period of any Eurodollar Loan if, in any such case, an
Event of Default or Unmatured Event of Default exists or would result
therefrom.
2.8 Commitments Several. The failure of any Bank to make a requested
Loan on the Effective Date shall not relieve any other Bank of its obligation
to make a Loan on such date, but no Bank shall be responsible for the failure
of any other Bank to make any Loan to be made by such other Bank.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
note (as amended, supplemented, replaced or otherwise modified from time to
time, individually each a "Note" and collectively for all Banks the "Notes")
substantially in the form of Exhibit A, with appropriate insertions, dated the
Effective Date (or such earlier date as shall be satisfactory to the Agent),
payable to the order of such Bank in an amount equal to such Bank's Percentage
of the Commitment (or, if less, in the aggregate unpaid principal amount of
such Bank's Loans).
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of each Loan
made by such Bank, each repayment or conversion thereof and, in the case of
each Eurodollar Loan, the dates on which each Interest Period for such Loan
shall begin and end. The aggregate unpaid principal amount so recorded shall
be rebuttable presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under any Note to repay the principal
amount of the
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<PAGE> 23
Loans evidenced by such Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on the date of
such Loan until such Loan is paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at
a rate per annum equal to the sum of the Alternate Reference Rate from
time to time in effect plus the applicable Margin; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
applicable Margin;
provided, however, that at any time an Event of Default exists, the interest
rate applicable to each Loan shall be increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Floating Rate
Loan shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of each Eurodollar
Loan with an Interest Period in excess of three months, on each three-month
anniversary of such Loan) and at maturity. After maturity, accrued interest on
all Loans shall be payable on demand.
4.3 Interest Periods. Each Interest Period for a Eurodollar Loan
shall commence on the date such Eurodollar Loan is made or converted from a
Floating Rate Loan, or on the expiration of the immediately preceding Interest
Period for such Eurodollar Loan, and shall end on the date which is one, two,
three or six months thereafter, as the Company may specify:
(a) in the case of an Interest Period which commences on the
date a Eurodollar Loan is made or converted from a Floating Rate Loan,
in the related notice of borrowing or conversion pursuant to Section
2.3 or 2.4, or
(b) in the case of a succeeding Interest Period with respect
to any Eurodollar Loan, by written or telephonic notice to the Agent
not later than 11:00 A.M., Chicago time, at least three Business Days
prior to the first day of such
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<PAGE> 24
succeeding Interest Period, it being understood that (i) each such
notice shall be effective upon receipt by the Agent and (ii) if the
Company fails to give such notice, such Loan shall automatically
become a Floating Rate Loan at the end of its then-current Interest
Period.
Each Interest Period for a Eurodollar Loan which would otherwise end on a day
which is not a Business Day shall end on the immediately succeeding Business
Day (unless such immediately succeeding Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day). The Company may not select any Interest
Period which would (a) end after the Stated Maturity Date or (b) if, after
giving effect to such selection, the Company would have to prepay a Eurodollar
Loan in order to make any scheduled prepayment pursuant to Section 6.1.1.
4.4 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing the
computations used by the Agent in determining any applicable Eurodollar Rate
hereunder.
4.5 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Floating Rate Loan shall change
simultaneously with each change in the Alternate Reference Rate. Whenever
interest is calculated in any of the Loan Documents on the basis of a year of
360 days, then, for the purposes of the Interest Act, the annual rate of
interest to which any such rate of interest is equivalent, is such rate
multiplied by the number of days in the calendar year in which the same is to
be ascertained and divided by 360. The parties further agree that for the
purposes of the Interest Act, (i) the principle of deemed reinvestment of
interest shall not apply to any interest calculation under this Agreement, and
(ii) the rates of interest stipulated in this Agreement are intended to be
nominal rates and not effective rates or yields.
SECTION 5 INTENTIONALLY OMITTED.
SECTION 6 PREPAYMENTS.
6.1 Prepayments.
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<PAGE> 25
6.1.1 Mandatory Prepayments. On each of June 30, 1994, September 30,
1994, December 31, 1994 and March 31, 1995, the Company shall make a prepayment
of the Loans in the amount of $937,500.
6.1.2 Voluntary Prepayments. The Company may from time to time
prepay the Loans in whole or in part, provided that (a) the Company shall give
the Agent (which shall promptly advise each Bank) not less than one Business
Day's prior written notice thereof, specifying the date and amount of
prepayment, (b) any prepayment of a Eurodollar Loan prior to the end of an
Interest Period therefor shall be subject to Section 8.4, (c) each partial
prepayment shall be in a principal amount of at least $500,000 and an integral
multiple of $100,000, (d) any prepayment of a Eurodollar Loan shall include
accrued interest to the date of prepayment on the principal amount being repaid
and (e) all Loans shall be prepaid on a pro rata basis.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on
the Notes shall be made by the Company to the Agent in immediately available
Dollars at its office in Chicago not later than 1:00 P.M., Chicago time, on the
date due; and funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The Company hereby
authorizes the Agent to charge the Company's demand deposit account no.
75-06848 maintained with Continental for the amount of any such payment on the
due date therefor, but the Agent's failure to so charge such account shall in
no way affect the obligation of the Company to make any such payment. The
Agent shall promptly remit to each Bank or other holder of a Note its share of
all such payments received in collected funds by the Agent for the account of
such Bank or holder.
All payments under Sections 8.1 and 8.4 shall be made by the Company
directly to the Bank or Banks entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall
be applied to such Loans as the Company shall direct by notice to be received
by the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion; provided, however, that
each mandatory prepayment referred to in Section 6.1.1 shall be deemed to be a
prepayment of all Loans on a pro rata basis. Concurrently with each remittance
to any Bank of its share of any such payment, the Agent shall advise such Bank
as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Notes falls due on a day
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<PAGE> 26
which is not a Business Day, then such due date shall be extended to the next
following Business Day (unless, in the case of a Eurodollar Loan and with
respect to any payment other than the payment of principal due on the Stated
Maturity Date, such next following Business Day is the first Business Day of a
calendar month, in which case such due date shall be the immediately preceding
Business Day) and, in the case of principal, additional interest shall accrue
and be payable for the period of any such extension.
7.4 Setoff. The Company agrees that the Agent, each Bank and each
other holder of a Note have all rights of set-off and bankers' lien provided by
applicable law, and in addition thereto, the Company agrees that at any time
(a) any payment or other amount owing by the Company under this Agreement is
then due to the Agent, any Bank or any such holder or (b) any Event of Default
exists, the Agent, each Bank and each such holder may apply to the payment of
such payment or other amount (or, in the case of clause (b), to any obligations
of the Company hereunder, whether or not then due) any and all balances,
credits, deposits, accounts or moneys of the Company then or thereafter with
the Agent, such Bank or such holder.
7.5 Proration of Payments. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Note in excess of its
pro rata share of payments and other recoveries obtained by all Banks on
account of principal of and interest on Notes then held by them (other than in
respect of an Affected Loan or as a result of replacement of a Bank pursuant to
Section 8.7), such Bank shall purchase from the other Banks such participation
in the Notes held by them as shall be necessary to cause such purchasing Bank
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery.
7.6 Taxes. (a) All payments by the Company hereunder and under
the other Loan Documents (including, without limitation, all payments of
principal of and interest on the Loans) and additional amounts payable under
Section 8.1 shall be made free and clear of and without deduction for any
present or future Taxes, but excluding Excluded Taxes (all non-excluded items
being called "Withholding Taxes"). If any deduction or withholding from any
payment to be made by the Company hereunder or under any other Loan Document is
required in respect of any Withholding Taxes then the Company will
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<PAGE> 27
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(iii) pay such additional amounts as may be necessary in
order that the net amount received by the Agent and the Banks after
such deduction or withholding (including any required deduction or
withholding on such additional amounts) shall equal the amount the
Agent and the Banks would have received had no such deduction or
withholding been made.
Moreover, if any Withholding Taxes are directly asserted against the Agent or
any Bank with respect to any payment received by the Agent or such Bank
hereunder, the Agent or such Bank may pay such Withholding Taxes and the
Company will promptly pay such additional amount (including any penalty,
interest and expense) as is necessary in order that the net amount received by
the Agent and the Banks after the payment of such Withholding Taxes (including
any Taxes on such additional amount) shall equal the amount the Agent and the
Banks would have received had such Withholding Taxes not been asserted. For
purposes of this Section 7.6, a distribution hereunder by the Agent or any Bank
to or for the account of any Bank shall be deemed a payment by the Company.
(b) The Company will also indemnify the Agent and each Bank
for the full amount of any Taxes imposed by any jurisdiction on amounts payable
by the Company under this Section 7.6; provided that such indemnification
obligation shall not apply to any Non-Indemnifiable Taxes. This
indemnification shall be made within 30 days from the date the Agent or such
Bank make written demand therefor.
(c) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of the
Company contained in this Section 7.6 shall survive indefinitely the
termination of this Agreement and the payment in full of principal and interest
hereunder and under the Notes.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If 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 (including,
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<PAGE> 28
without limitation, the Bank of Canada) or comparable agency charged with the
interpretation or administration thereof (including, without limitation, the
Superintendent of Financial Institutions for Canada), or compliance by any Bank
(or any Eurodollar Office of such Bank) 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 any Bank (or any Eurodollar Office of such
Bank) to any tax (other than any tax referred to in Section 7.6), duty
or other charge with respect to its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans, or shall change the basis of taxation of payments to
any Bank of the principal of or interest on its Eurodollar Loans or
any other amounts due under this Agreement in respect of its
Eurodollar Loans or its obligation to make Eurodollar Loans (except
for changes in the rate of tax on the overall net income of such Bank
or its Eurodollar Office imposed by the jurisdiction in which such
Bank's principal executive office or Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
4), special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by any Bank (or any
Eurodollar Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note (to the
extent relating to Eurodollar Loans) or its obligation to make
Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System,
to impose a cost on) such Bank (or any Eurodollar Office of such Bank) of
making or maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Eurodollar Office) under this
Agreement or under its Note with respect thereto, then within 10 days after
demand by such Bank (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for and a calculation of the amount of
such demand, a copy of which shall be furnished to the Agent), the Company
shall pay directly to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or such reduction; provided that
the Company shall not be liable for any increased cost or reduced amount as to
which such Bank became aware and failed to
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<PAGE> 29
notify the Company promptly if and to the extent that prompt notice could have
avoided or materially decreased the amount of payment by the Company hereunder.
(b) If any Bank shall reasonably determine that the adoption or
phase-in of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank (including, without
limitation, the Bank of Canada) or comparable agency charged with the
interpretation or administration thereof (including, without limitation, the
Superintendent of Financial Institutions for Canada), or compliance by any Bank
(or its Eurodollar Office) or any Person controlling such Bank with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Bank's or such
controlling Person's capital as a consequence of such Bank's obligations
hereunder (including, without limitation, such Bank's obligations under the
Commitment) to a level below that which such Bank or such controlling Person
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Bank or such controlling Person
to be material, then from time to time, within 10 days after demand by such
Bank (which demand shall be accompanied by a statement setting forth in
reasonable detail the basis for and a calculation of the amount of such demand,
a copy of which shall be furnished to the Agent), the Company shall pay to such
Bank such additional amount or amounts as will compensate such Bank or such
controlling Person for such reduction; provided that in determining any
reduction in rate of return on capital, each Bank shall act reasonably and in
good faith and will, to the extent any reduction relates to such Bank's loans
and commitments in general and is not specifically attributable to the Loans
and the Commitments hereunder, use averaging and attribution methods which are
reasonable and which cover all loans and commitments made by such Bank which
are similar to the Loans and Commitments whether or not the loan documentation
for such other loans and commitments permits such Bank to receive increased
costs of the type described in this clause (b).
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the relevant market for such Interest Period, or the
Agent otherwise reasonably determines (which determination shall be binding and
conclusive on the Company) that by reason of circumstances affecting the
interbank
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eurodollar market adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate; or
(b) Banks having an aggregate Percentage of 30% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of maintaining or
funding such Loans for such Interest Period (taking into account any amount to
which such Banks may be entitled under Section 8.1), or that the making or
funding of Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of such Banks
materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make, or convert any Floating Rate Loan into, Eurodollar Loans and (ii) on the
last day of the current Interest Period for each Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically convert to a Floating Rate
Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the event
that any change in (including the adoption of any new) applicable laws, rules,
or regulations, or any change in the interpretation of applicable laws, rules,
or regulations by any governmental or other regulatory body charged with the
administration thereof (including, without limitation, the Superintendent of
Financial Institutions for Canada), should make it (or in the good faith
judgment of any Bank cause a substantial question as to whether it is) unlawful
for any Bank to make, maintain or fund Eurodollar Loans, then such Bank shall
promptly notify each of the other parties hereto and, so long as such
circumstances shall continue, (a) such Bank shall have no obligation to make,
or convert any Floating Rate Loan into, Eurodollar Loans (but shall make
Floating Rate Loans concurrently with the making of or conversion into
Eurodollar Loans by the Banks which are not so affected, in each case in an
amount equal to such Bank's Percentage of all Eurodollar Loans which would be
made or converted into at such time in the absence of such circumstances) and
(b) on the last day of the current Interest Period for each Eurodollar Loan of
such Bank (or, in any event, if such Bank so requests, on such earlier date as
may be required by the relevant law, rule, regulation or interpretation), such
Eurodollar Loan shall, unless then repaid in full, automatically convert to a
Floating Rate Loan. Each Floating Rate Loan made by a Bank which, but for the
circumstances described in the foregoing sentence, would be a Eurodollar Loan
(an "Affected Loan") shall, notwithstanding any other provision of this
Agreement, remain outstanding for the same period as the Group of Eurodollar
Loans of which such Affected Loan would be a part absent such circumstances.
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8.4 Funding Losses. The Company hereby agrees that upon demand by
any Bank from time to time (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed, a
copy of which shall be furnished to the Agent) the Company will indemnify such
Bank against any net loss or expense which such Bank may sustain or incur
(including, without limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain any Eurodollar Loan), as reasonably determined by such
Bank, as a result of (a) any payment or prepayment or conversion of any
Eurodollar Loan of such Bank on a date other than the last day of an Interest
Period for such Loan (including, without limitation, any conversion pursuant to
Section 8.3) or (b) any failure of the Company to borrow or convert any Loans
on a date specified therefor in a notice of borrowing or conversion pursuant to
this Agreement. For this purpose, all notices to the Agent pursuant to this
Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if
it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch of such Bank to make such Loan, provided that in such event for
the purposes of this Agreement such Loan shall be deemed to have been made by
such Bank and the obligation of the Company to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank 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 such Bank had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank. (a)
Each Bank shall promptly notify the Company and the Agent of any event of which
it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence
of any circumstances of the nature described in Section 8.2 or 8.3 (and, if any
Bank has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Bank shall
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promptly so notify the Company and the Agent). Without limiting the foregoing,
each Bank will designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described in clause (i)
or (ii) of the preceding sentence and such designation will not, in such Bank's
sole judgment, be otherwise disadvantageous to such Bank.
(b) At any time any Bank is an Affected Bank, the Company may replace
such Affected Bank as a party to this Agreement with one or more other bank(s)
or financial institution(s) reasonably satisfactory to the Agent, such bank(s)
or financial institution(s) to have Commitments in such amounts as shall be
reasonably satisfactory to the Agent (and upon notice from the Company such
Affected Bank shall assign pursuant to an Assignment Agreement, and without
recourse or warranty, its Commitments, its Loans, its Note, and all of its
other rights and obligations hereunder to such replacement bank(s) or other
financial institution(s) for a purchase price equal to the sum of the principal
amount of the Loans so assigned, all accrued and unpaid interest thereon, any
amounts payable under Section 8.4 as a result of such Bank receiving payment of
any Eurodollar Loan prior to the end of an Interest Period therefor and all
other obligations owed to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under Sections
8.1 and 8.4, and the provisions of such Sections shall survive repayment of the
Loans, cancellation of the Notes, and any termination of this Agreement.
SECTION 9 REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans hereunder, the Company represents and warrants
to the Agent and the Banks, upon each of which representations and warranties
the Agent and the Banks specifically rely, that:
9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the Province of
Ontario; each Subsidiary is a corporation duly organized, validly existing and
in good standing under the jurisdiction of its incorporation; the Company and
each Subsidiary is duly authorized and licensed to own its properties and to do
business in each jurisdiction where the nature of its business or property
makes such authorization and licensing necessary, except where the failure to
be so authorized and licensed would not have a Material Adverse Effect; and the
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Company and each Subsidiary has full corporate power and authority to own its
property and conduct its business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party
and the borrowings hereunder and the performance by each of the Company of its
obligations under each Loan Document to which it is a party are within the
corporate powers of the Company, have been duly authorized by all necessary
corporate action on the part of the Company (including any necessary
shareholder action), have received all necessary governmental approvals,
licenses, and permits (if any shall be required), and do not and will not (a)
violate any provision of law, rule or regulation or any order, decree or
judgment of any court or other government agency which is binding on the
Company, (b) contravene or conflict with, or result in a breach of, any
provision of the Certificate or Articles of Incorporation, By-Laws or other
organizational documents of the Company or of any material agreement,
indenture, instrument or other document, or any material judgment, order or
decree, which is binding on the Company or any Subsidiary or (c) result in, or
require, the creation or imposition of any Lien on any property of the Company
or any Subsidiary (other than Liens arising under the Loan Documents).
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which the Company is
a party will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
9.4 Financial Information. The audited consolidated financial
statements of the Company and its Subsidiaries at December 31, 1993, copies of
which have been delivered to each Bank, have been prepared in accordance with
generally accepted accounting principles and present fairly the consolidated
financial condition of the Company and its Subsidiaries taken as a whole as at
such date and the results of their operations for the Fiscal Year then ended.
9.5 No Material Adverse Change. Since the date of the audited
consolidated financial statements described in Section 9.4, no event or events
have occurred which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
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9.6 Litigation and Suretyship Liabilities. No actions, suits or
other proceedings (including, without limitation, derivative actions),
arbitration proceeding or governmental proceeding is pending or, to the
Company's knowledge, threatened against the Company or any Subsidiary at law or
in equity which is reasonably likely to have a Material Adverse Effect except
as set forth in Schedule 9.6. Other than any liability incident to such
litigation or proceedings, neither the Company nor any Subsidiary has any
material contingent liabilities not provided for or disclosed in the financial
statements referred to in Section 9.4 or listed in Schedule 9.6.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary has good and marketable title to, or a valid leasehold interest in,
all of its properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including, without limitation, patents, trademarks,
trade names, service marks, copyrights, industrial designs, technology and
other intellectual property), free and clear of all Liens, charges and claims
(including infringement claims with respect to patents, trademarks, copyrights
and the like) except as permitted pursuant to Section 10.8.
9.8 Subsidiaries. The Company has no Subsidiaries except those
listed in Schedule 9.8.
9.9 Pension and Welfare Plans. Except as disclosed to the Banks in
writing prior to the date of this Agreement, during the twelve-
consecutive-month period prior to the date of the execution and delivery of
this Agreement or the making of any Loan hereunder, (a) no steps have been
taken to terminate or amend, in whole or in part, any Pension Plan or Welfare
Plan which would be reasonably likely to result in the Company being required
to make a contribution to such Pension Plan or Welfare Plan, or incurring a
liability or obligation to such Pension Plan or Welfare Plan, in excess of
$250,000, and (b) no contribution failure has occurred with respect to any
Pension Plan or Welfare Plan sufficient to give rise to a Lien under applicable
laws. Except to the extent the following would not have a Material Adverse
Effect, all obligations (including fiduciary obligations) regarding the Pension
Plans and the Welfare Plans have been satisfied and there are no outstanding
defaults or violations by any party thereto, and no penalties, taxes or fines
are owing or exigible under the Pension Plans and the Welfare Plans. Each
Pension Plan and each Welfare Plan is registered where required by and is in
good standing under applicable laws and no event has occurred which would
jeopardize such status. Except to the extent the following would not have a
Material Adverse Effect, none of the Pension Plans or Welfare Plans is subject
to any pending investigation, examination or other proceeding, action or claim
initiated by any governmental agency or instrumentality and
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there exists no state of facts which after notice or lapse of time or both
could reasonably be expected to give rise to any such investigation,
examination or other proceeding, action or claim or to affect the registration
of any of the Pension or Welfare Plans. Except as set forth on Schedule 9.9,
the Company has no actual or contingent liability with respect to any
post-retirement benefit under a Welfare Plan.
9.10 Investment Company Act. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
9.12 Regulations G, T, U and X. Neither the Company nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
9.13 Taxes. Each of the Company and each Subsidiary has filed all
tax returns and reports required by law to have been filed by it (except for
such tax returns and reports with respect to which the failure to file on a
timely basis would not have a Material Adverse Effect) and has paid all taxes
and governmental charges shown to be owing on such returns or reports, or any
assessments received by the Company or Subsidiary, except for (a) as disclosed
on Schedule 9.6 and (b) for charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall have been set
aside on its books.
9.14 Solvency, etc. On the Effective Date and immediately prior to
and after giving effect to each borrowing hereunder and the use of the proceeds
thereof, (a) the Company's assets will exceed its liabilities and (b) the
Company will be solvent, will be able to pay its debts as they mature and will
have capital sufficient to carry on its business as then constituted.
9.15 Insurance. Set forth on Schedule 9.15 is a complete and
accurate summary of the property, casualty and business interruption insurance
program carried by the Company and its Subsidiaries on the date of this
Agreement, including the insurer's(s') name(s), policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, the annual premium(s),
endorsed exclusions, deductibles and self-insured
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retention and a description in reasonable detail of (a) any retrospective
rating plan, fronting arrangement or other self-insurance or risk assumption
agreed to by the Company or any Subsidiary or imposed upon the Company or any
Subsidiary by any such insurer and (b) any self-insurance program that is in
effect.
9.16 Contracts; Labor Matters. Except as disclosed on Schedule 9.16:
(a) neither the Company nor any Subsidiary is a party to any contract or
agreement, or is subject to any charge, corporate restriction, judgment, decree
or order, which materially and adversely affects its business, property,
assets, operations or condition, financial or otherwise; (b) no labor contract
to which the Company or any Subsidiary is a party or is otherwise subject is
scheduled to expire prior to the Stated Maturity Date; (c) neither the Company
nor any Subsidiary has, within the two-year period preceding the date of this
Agreement, taken any action which would have constituted or resulted in a
discontinuance of all or part of a business or "mass termination" within the
meaning of the Employment Standards Act (Ontario) or any similar applicable
federal, provincial or local law, and the Company has no reasonable expectation
that any such action is or will be required at any time prior to the Stated
Maturity Date; and (d) on the date of this Agreement there are no strikes or
walkouts relating to any labor contracts to which the Company or any Subsidiary
is a party or is otherwise subject.
9.17 Environmental and Safety and Health Matters. Except as
disclosed on Schedule 9.17 and except to the extent any of the following is not
reasonably expected to have a Material Adverse Effect, the Company and each of
its Subsidiaries and each property, operation and facility that the Company or
any Subsidiary may own, operate or control (i) complies in all material
respects with (A) all applicable Environmental Laws and (B) all applicable
Occupational Safety and Health Laws; (ii) is not subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law or
Occupational Safety and Health Law; (iii) has not received any notice (A) that
it may be in violation of any Environmental Law or Occupational Safety and
Health Law, or (B) threatening the commencement of any proceeding relating to
allegedly unlawful, unsafe or unhealthy conditions or (C) alleging that it is
or may be responsible for any response, cleanup, or corrective action,
including, but not limited to, any remedial investigation/feasibility study,
under any Environmental Law or Occupational Safety and Health Law; (iv) has not
received any notice that it is the subject of federal or provincial
investigation evaluating whether any investigation, remedial action or other
response is needed to respond to (A) a spillage, disposal or release or
threatened release into the environment of any Hazardous Material, or (B) any
alleged violation of any Occupational Safety and Health Law; (v) has not filed
any notice
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under or relating to any Environmental Law or Occupational Safety and Health
Law indicating or reporting (A) any past or present spillage, disposal or
release into the environment of, or treatment, storage or disposal of, any
Hazardous Material in excess of quantities requiring notification under any
Environmental Law, or (B) any violation of any Occupational Safety and Health
Law and (vi) has no material contingent liability in connection with (A) any
actual or potential spillage, disposal or release into the environment of, or
otherwise with respect to, any Hazardous Material, whether on any premises
owned or occupied by the Company or any Subsidiary or on any other premises or
(B) any unsafe or unhealthful condition. Except as disclosed on Schedule 9.17,
there are no Hazardous Materials on, in or under any property or facilities,
owned, operated or controlled by the Company or any Subsidiary (except
Hazardous Materials used in the ordinary course of the business of the Company
and its Subsidiaries and used, stored, handled, treated and disposed of in all
material respects in accordance with all applicable Environmental Laws and
Occupational Safety and Health Laws) that, under applicable Environmental Laws
or Occupational Safety and Health Laws (A) impose or could reasonably be
expected to impose a liability for removal, remediation, or other cleanup or
damage to natural resources, in an amount equal to or greater than $500,000;
(B) could reasonably be expected to have a Material Adverse Effect; or (C)
could reasonably be expected to result in the imposition of a Lien securing
more than $500,000 of liability on the property or other assets of the Company
or its Subsidiaries.
9.18 Real Property. Set forth on Schedule 9.18 is a complete and
accurate list, as of the date of this Agreement, of the address and legal
description of any real property owned or leased by the Company or any
Subsidiary, together with, in the case of leased property, the name and mailing
address of the lessor of such property.
9.19 Information. All written information taken as a whole
heretofore or contemporaneously herewith furnished by or on behalf of the
Company or any Subsidiary to the Agent or any Bank for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and
all written information taken as a whole hereafter furnished by or on behalf of
the Company or any Subsidiary to the Agent or any Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading.
9.20 Places of Business and Location of Assets. The chief executive
office and principal place of business of the Company
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and any Subsidiary are located at the addresses set out in Schedule 9.20 and
all other places of business of the Company and any Subsidiary are as set out
in Schedule 9.20; the Company or any Subsidiary does not have a permanent
business establishment or employ full or part-time employees outside of the
provinces set out in Schedule 9.20; the assets of the Company and any
Subsidiary (other than inventory in transit) are located in the provinces and
at the locations set forth in Schedule 9.20; all of the account debtors of the
Company or any Subsidiary are located in the provinces set out in Schedule 9.20
or in the United States.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full, the Company agrees that, unless at any time the
Required Banks shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each
Bank:
10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year, (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of earnings and cash
flow of the Company and its Subsidiaries for such Fiscal Year, which audit
report shall be without qualification as to going concern or scope and shall be
prepared by KMPG Peat Marwick or other independent auditors who are a firm of
chartered accountants of recognized national standing in Canada selected by the
Company and reasonably acceptable to the Required Banks, together with a
written statement from such auditors to the effect that in making the audit
necessary for the signing of such audit report by such accountants, they have
not become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if they have become aware of any such event,
describing it in reasonable detail; and (b) consolidating balance sheets of the
Company and its Subsidiaries as of the end of such Fiscal Year and
consolidating statements of earnings for the Company and its Subsidiaries for
such Fiscal Year, together with a certificate of the Chief Executive Officer,
the Chief Financial Officer or the Treasurer of the Company certifying that
such financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated.
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10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such Fiscal Quarter,
consolidated and consolidating statements of earnings for such Fiscal Quarter
consolidated and consolidating statements of earnings and consolidated
statements of cash flow and for the period beginning with the first day of such
Fiscal Year and ending on the last day of such Fiscal Quarter, together with a
certificate of the Chief Executive Officer, the Chief Financial Officer or the
Treasurer of the Company, certifying that such financial statements fairly
present the financial condition and results of operations of the Company and
its Subsidiaries as of the dates and periods indicated, subject to changes
resulting from audit and normal year-end adjustments.
10.1.3 Compliance Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report pursuant to Section 10.1.1 and
of each set of quarterly statements pursuant to Section 10.1.2, a duly
completed certificate in the form of Exhibit B, with appropriate insertions,
dated the date of such annual report or such quarterly statements and signed by
the Chief Executive Officer, the Chief Financial Officer or the Treasurer of
the Company, containing a computation of each of the financial ratios and
restrictions set forth in Sections 10.6, 10.7, 10.9 and 10.11 and to the effect
that such officer has not become aware of any Event of Default or Unmatured
Event of Default that has occurred and is continuing or, if there is any such
event, describing it and the steps, if any, being taken to cure it.
10.1.4 Reports to SEC and to Shareholders. Promptly upon the filing
or sending thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed with the SEC or
any securities exchange, including, without limitation, the OSC, and any
report, proxy statement or other communication to the Company's shareholders
generally.
10.1.5 Notice of Default, Litigation and Pension and Welfare Plan
Matters. Promptly (and in any event within one Business Day in the case of
clause (a) and within ten days in the case of clauses (b) through (h)) upon an
executive officer of the Company (which shall include, without limitation, the
Chief Executive Officer, the Chief Financial Officer, the President and the
Treasurer of the Company) becoming aware of any of the following, written
notice describing the same and the steps being taken by the Company or the
Subsidiary affected thereby with respect thereto: (a) the occurrence of an
Event of Default or an Unmatured Event of Default; (b) any actions, suits or
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proceedings, arbitration or governmental investigation or proceeding not
previously disclosed by the Company to the Banks which has been instituted or,
to the knowledge of the Company, is threatened against the Company or any
Subsidiary or to which any of the properties of any thereof is subject which
has had or is reasonably likely to have a Material Adverse Effect; (c) any
material adverse development which occurs in any actions, suits or proceedings,
arbitration or governmental investigation or proceeding previously disclosed
pursuant to clause (b); (d) the institution of any steps by the Company, any of
its Subsidiaries or any other Person to terminate or amend, in whole or in
part, any Pension Plan or Welfare Plan, or the failure to make a required
contribution to any Pension Plan or Welfare Plan or the occurrence of any event
with respect to any Pension Plan or Welfare Plan which could result in the
incurrence by the Company of any material liability, fine or penalty, or any
material increase in the contingent liability of the Company with respect to
any post-retirement Welfare Plan benefit (e) any lapse, cancellation or
termination of, or other material change in, any pollution liability insurance
policy maintained by the Company; (f) the establishment of a place of business
in a jurisdiction not set out in Schedule 9.20 or changing the province or
territory in which the chief executive office or principal place of business of
the Company or any Subsidiary is located; (g) any change in the name of the
Company or any Subsidiary; and (h) the occurrence of any other event or
circumstance which has had or is reasonably likely to have a Material Adverse
Effect.
10.1.6 Subsidiaries. Promptly upon the occurrences thereof, a
written report of any change in the list of its Subsidiaries.
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted to
the Company by independent auditors in connection with each annual or interim
audit made by such auditors of the books of the Company.
10.1.8 Projections, etc. As soon as practicable, and in any event
within 90 days after the commencement of each Fiscal Year, a five-year budget
and projected cash flow, including J.D. Powers Auto Production forecasts.
10.1.9 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as any Bank or the Agent may
reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary
to keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
generally accepted
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accounting principles; permit, and cause each Subsidiary to permit, on
reasonable notice and at reasonable times and intervals (or at any time without
notice during the existence of an Event of Default) any Bank or the Agent or
any representative thereof to inspect the properties and operations of the
Company and of such Subsidiary; and permit, and cause each Subsidiary to
permit, on reasonable notice and at reasonable times and intervals (or at any
time without notice during the existence of an Event of Default) any Bank or
the Agent or any representative thereof to visit any or all of its offices, to
discuss its financial matters with its officers and its independent auditors
(and the Company hereby authorizes such independent auditors to discuss such
financial matters with any Bank or the Agent or any representative thereof),
and to examine (and, at the expense of the Company or the applicable
Subsidiary, photocopy extracts from) any of its books or other corporate
records. The Company agrees to pay the fees of its auditors incurred in
connection with any reasonable exercise of the rights of the Agent and the
Banks pursuant to this Section.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain,
with reputable, financially sound insurance companies (rated at least B+ by A.
M. Best & Co.), insurance to such extent and against such hazards and
liabilities as is customarily maintained by companies similarly situated (and,
in any event, such insurance as may be required by any law or governmental
regulation or any court order or decree); and, upon request of the Agent or any
Bank, furnish to the Agent or such Bank a certificate setting forth in
reasonable detail the nature and extent of all insurance maintained by the
Company and its Subsidiaries.
10.4 Compliance with Laws; Maintenance of Property; Payment of Taxes
and Liabilities. (a) Comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations and orders the
noncompliance with which would be reasonably likely to have a Material Adverse
Effect; (b) maintain or cause to be maintained, and cause each Subsidiary to
maintain or cause to be maintained, in good repair, working order and condition
all material properties used in its business, and make, and cause each
Subsidiary to make, all appropriate repairs, renewals and replacements of such
properties; (c) pay, and cause each Subsidiary to pay, prior to delinquency,
all taxes and other governmental charges against it or any of its property;
provided, however, that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside
on its books adequate reserves with respect thereto; and (d) not, and not
permit any Subsidiary to, file or consent to the filing of any consolidated
income tax
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return with any Person other than the Company and its Subsidiaries.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.12) cause each Subsidiary to maintain and preserve, (a)
its corporate existence and good standing in the jurisdiction of its
incorporation and (b) its qualification and good standing as a foreign
corporation in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing would not (i) if cured, foreclose access to the
courts of such jurisdiction in respect of events occurring prior to such cure
or (ii) in any event, be reasonably likely to result in a Material Adverse
Effect).
10.6 Financial Covenants.
10.6.1 Minimum Net Worth. Not permit Net Worth excluding foreign
currency translation adjustments at any time to be less than (a) $9,400,000
plus the excess (or minus the deficiency) of the selling price of
Manchester/Williamston/Homer over the net book value of
Manchester/Williamston/Homer plus (b) 50% of Consolidated Net Income for the
period beginning with the first full Fiscal Quarter occurring after the
Effective Date and ending on the last day of the most recently ended Fiscal
Quarter (excluding any loss for any Fiscal Quarter in such period).
10.6.2 Accounts Payable to Inventory Ratio. Not permit the Accounts
Payable to Inventory Ratio at the end of any Fiscal Quarter to be less than 1.3
to 1.0.
10.6.3 Consolidated Fixed Charge Coverage Ratio. Not permit the
Consolidated Fixed Charge Coverage Ratio to be less than 5.0 to 1.0.
10.6.4 Operating Leases. Not permit Consolidated Lease Expense to
exceed $2,000,000 in any Fiscal Year.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except (a) obligations
arising under the Loan Documents; (b) current accounts payable and accrued
liabilities arising in the ordinary course of business; (c) Debt in respect of
Capital Leases to the extent permitted by Section 10.9; (d) Debt of
Subsidiaries to the Company or to other Subsidiaries; (e) unsecured Debt of the
Company to Larizza not exceeding $500,000; (f) Hedging Agreements entered into
by the Company or any Subsidiary; (g) Suretyship Liabilities in respect of any
obligation of the Company or any Subsidiary permitted under this Agreement; (h)
Debt in respect of taxes, assessments or governmental charges to the extent
that payment thereof shall not
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at the time be required to be made in accordance with Section 10.4; (i) Debt in
respect of judgments or awards not constituting an Event of Default under
Section 12.1.8; and (j) Debt to be Repaid, other Debt outstanding on the date
hereof and listed in Schedule 10.7 under the heading "Continuing Debt": and
other Debt hereafter incurred in connection with Liens permitted by Sections
10.8(d) and (e), and extensions, renewals and refinancings of any Debt (other
than Debt to be Repaid) described in this clause (j); so long as the principal
amount thereof is not increased.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit
to exist any Lien on any of its real or personal properties, assets or rights
of whatsoever nature (whether now owned or hereafter acquired), except (a)
Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves; (b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics, materialmen, repair, storage and
other similar Liens imposed by law and (ii) Liens incurred in connection with
worker's compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with surety and
appeal bonds, bids, performance bonds, utility deposits and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any advances or borrowed money or the
deferred purchase price of property or services, and, in each case, for which
it maintains adequate reserves (other than those described in subclauses (i)
and (ii) of this clause (b)); (c) Liens identified on Schedule 10.8; (d) Liens
in connection with Capital Leases (to the extent permitted by Section 10.9);
(e) any Lien arising in connection with the acquisition, construction or
improvement of property after the date hereof, and attaching only to the
property being acquired, constructed or improved, if the Debt secured thereby
does not exceed 90% of the fair market value of the property acquired at the
time of acquisition thereof or 90% of the cost of such construction or
improvement, as the case may be, nor $1,000,000 in the aggregate for all such
Debt of the Company and all Subsidiaries at any one time outstanding; (f)
attachments, executions, judgments and other similar Liens, for sums not
exceeding $500,000 arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and claims
secured thereby are being actively contested in good faith and by appropriate
proceedings; (g) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any material
respect with the ordinary conduct of the business of the Company and its
Subsidiaries taken as a whole; (h) Liens in favor of the Agent arising under
the Loan Documents; (i) leases or subleases granted by the Company or any
Subsidiary in
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the ordinary course of its business; (j) the interest or title of the lessor of
any lease with respect to which the Company or a Subsidiary is lessee; and (k)
extensions, renewals or replacements of any Lien permitted by the foregoing
provisions of this Section 10.8, but only if the principal amount of the Debt
secured thereby immediately prior to such extension, renewal or replacement is
not increased and such Lien is not extended to any other property.
10.9 Capital Expenditures. Not, and not permit any Subsidiary to,
make or commit to make any Consolidated Capital Expenditure in any Fiscal Year
unless, after giving effect to such Capital Expenditure, the aggregate amount
of all Consolidated Capital Expenditures made by the Company and its
Subsidiaries during such Fiscal Year shall not exceed $7,500,000.
10.10 Restricted Payments. Not, and not permit any Subsidiary to,
(a) declare or pay any dividends on any of the issued and outstanding shares in
the capital of the Company or Subsidiary, as the case may be (other than stock
dividends and declaration or payment or both by a Subsidiary to the Company or
to any other Wholly-Owned Subsidiary), (b) purchase or redeem any such shares
or any warrants, options or other rights in respect of such shares, (c) make
any other distribution to shareholders (other than the issuance of shares, or
options in respect thereof, to directors, officers and employees), (d) prepay,
purchase or redeem any subordinated Debt or (e) set aside funds for any of the
foregoing.
10.11 Investments. The Company will not, nor will it permit any
Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person, except:
(a) Investments existing on the Effective Date and identified
in Schedule 10.11;
(b) Cash Equivalent Investments provided the total
Investments in Cash Equivalent Investments of any one issuer permitted
under clauses (b) and (e) of the definition of Cash Equivalent
Investments cannot exceed 10% of total Cash Equivalent Investments at
any time;
(c) Investments by the Company in its Subsidiaries or by any
Subsidiary in any other Subsidiary, in the form of contributions to
capital or loans or advances not exceeding $100,000 in the aggregate;
provided that, immediately before and after giving effect to such
Investment, no Unmatured Event of Default or Event of Default shall
have occurred and be continuing;
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(d) Investments by the Company or any Subsidiary in any
Subsidiary, in the form of capital contributions existing on the date
hereof;
(e) loans or advances made by (i) any Subsidiary to the
Company and (ii) the Company to Larizza not to exceed $9,500,000
provided such loans and advances are reasonably expected to be repaid
within one year;
(f) loans or advances to officers and employees of the
Company or of any Subsidiary for travel or other ordinary business
expenses not in excess of $150,000 in the aggregate at any time;
(g) extensions of credit in the nature of Accounts Receivable
or notes receivable arising from the sale of goods and services in the
ordinary course of business or from Asset Sales permitted by this
Agreement; and
(h) shares of stock, obligations or other securities received
in settlement of claims arising in the ordinary course of business.
10.12 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, (a) be a party to any reconstruction, reorganization,
amalgamation, merger or consolidation, (b) purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or (c) be a party
to any Asset Sale, except for (i) any such reconstruction, reorganization,
amalgamation, merger or consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into the Company or into, with
or to any other Wholly-Owned Subsidiary, (ii) Investments permitted by Section
10.11 or (iii) Asset Sales (other than sales or assignments of accounts
receivable or sales of all or substantially all the assets of the Company or
any Subsidiary or sales of stock of any Subsidiary) provided that (x) no Event
of Default or Unmatured Event of Default has occurred and is continuing or
would result therefrom, and (y) the gross proceeds of such Asset Sales do not
exceed $500,000 in the aggregate in any Fiscal Year.
10.13 Use of Proceeds. Use the proceeds of the Loans solely (i) to
repay Debt to be Repaid and (ii) for working capital purposes; and not use or
permit any proceeds of any Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying" any Margin Stock.
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10.14 Transactions with Affiliates. Except as set forth on Schedule
10.14, not, and not permit any Subsidiary to, enter into, or cause, suffer or
permit to exist any transaction, arrangement or contract with any of its other
Affiliates (other than the Company and its Subsidiaries) which is on terms
which are less favorable than are obtainable from any Person which is not one
of its Affiliates. Without limiting the foregoing, except as set forth on
Schedule 10.14, the Company will not, and will not permit any Subsidiary to,
pay any management, consulting or similar fee (other than board fees and
reasonable expense reimbursements) to any Affiliate (other than to the Company
or a Subsidiary).
10.15 Employee Benefit Plans. Maintain, administer and invest, and
cause each Subsidiary to maintain, administer and invest, each Welfare Plan and
each Pension Plan in accordance with all applicable laws, regulations, orders
or other legislative, administrative or judicial promulgations.
10.16 Environmental Covenants.
10.16.1 Environmental Response Obligation. (a) Comply, and cause
each Subsidiary to comply, with any Federal or provincial judicial or
administrative order requiring the performance at any real property owned,
operated or leased by the Company or any Subsidiary of activities in response
to the release or threatened release of a Hazardous Material, except for the
period of time that the Company or such Subsidiary is diligently in good faith
contesting such order; (b) notify the Agent within ten days of the receipt of
any written claim, demand, proceeding, action or notice of liability by any
Person arising out of or relating to the release or threatened release of a
Hazardous Material at any such property; and (c) notify the Agent within ten
days of any release, threat of release, or disposal of Hazardous Material by
the Company or any Subsidiary reported to any governmental or regulatory
authority at any real property owned, operated, or leased by the Company or any
Subsidiary.
10.16.2 Environmental Liabilities. (a) Comply, and cause each
Subsidiary to comply, in all material respects with all material Environmental
Laws; (b) without limiting clause (a), not commence disposal of any Hazardous
Material into or onto any real property owned, operated or leased by the
Company or any Subsidiary; and (c) without limiting clause (a), not allow any
Lien imposed pursuant to any law, regulation or order relating to Hazardous
Materials or the disposal thereof to remain on any real property owned,
operated or leased by the Company or any Subsidiary, except to the extent that
the Company or such Subsidiary is contesting such Lien in good faith by
appropriate proceedings and, in each case, for which no action to enforce such
Lien has been commenced.
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10.16.3 Environmental Assessments. Without limiting any other
provision of this Agreement, permit, and cause each Subsidiary to permit, the
Agent to investigate the environmental aspects of the properties, facilities
and operations of the Company or such Subsidiary (including taking samples and
conducting such other activities as the Agent deems appropriate). If the Agent
decides to cause such an environmental assessment of any property to be
conducted because of (a) the Agent's considering taking possession of or title
to such property after the occurrence of an Event of Default or (b) a material
change in the use of the property which, in the opinion of the Required Banks,
materially increases the risk of non-compliance with Environmental Laws or
materially increases the risk of cost or liabilities thereunder, then the
Company shall pay upon demand all reasonable costs and expenses (including
reasonable attorney's fees) connected with such assessment. Nothing in this
Section 10.16.3, and no actions taken by the Agent or any Bank pursuant hereto,
shall give, or be construed as giving, to the Agent or any Bank the right or
obligation to direct or control the conduct or action or inaction of the
Company or any Subsidiary with respect to any environmental matters, including
but not limited to those pertaining to compliance with any Environmental Law.
10.17 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any material contract for the
purchase of materials, supplies or other property or services, if such contract
requires that payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or services.
10.18 Inconsistent Agreements. Not, and not permit any Subsidiary
to, enter into any material agreement containing any provision which would be
violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of any of its obligations
hereunder or under any other Loan Document.
10.19 Further Assurances. Take such actions as the Agent may
reasonably request from time to time (including, without limitation, the
execution and delivery of guaranties, security agreements, pledge agreements,
mortgages, charge/mortgages, debentures, stock powers, financing statements and
other documents, the filing or recording of any of the foregoing, and the
delivery of share certificates and other collateral with respect to which
perfection is obtained by possession) to ensure that the obligations of the
Company hereunder and under the other Loan Documents are secured by
substantially all assets of the Company subject to such exceptions as the Agent
or the Required Banks from time to time may permit.
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10.20 Limitations on Sale and Leaseback Transactions. Not, and not
permit any Subsidiary to, enter into any arrangement with any Person providing
for the leasing by the Company or any Subsidiary of any real or tangible
personal property, which property has been or is to be sold or transferred by
the Company or such Subsidiary to such Person in contemplation of such leasing.
10.21 Business. The Company will not, and will not permit any
Subsidiary to, enter into any business which differs in any material respect
from the business in which the Company, or any Subsidiary of the Company, is
engaged on the date of this Agreement.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Bank to make its Loans is subject to the
following conditions precedent:
11.1 Loan. The obligation of each Bank to make its Loan, is, in
addition to the conditions precedent specified in Section 11.2, subject to the
conditions precedent (and the date on which all such conditions precedent have
been satisfied or waived in writing by the Banks is called the "Effective
Date") that the Agent shall have received all of the following, each duly
executed and dated the Effective Date (or such earlier date as shall be
satisfactory to the Agent), in form and substance satisfactory to the Agent,
and each (except for the Notes, of which only the originals shall be signed) in
sufficient number of signed counterparts to provide one for each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Agreement, the Notes and the other Loan
Documents to which the Company is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance of the Loan Documents by
the Company.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company certifying the names of the
officer or officers of such entity authorized to sign the Loan Documents to
which such entity is a party, together with a sample of the true signature of
each such officer (it being understood that the Agent and each Bank
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may conclusively rely on each such certificate until formally advised by a like
certificate of any changes therein).
11.1.5 Collateral Documents. The Company shall have executed the
Collateral Documents and other documentation set out below and such Collateral
Documents shall have been filed or registered in all offices in which, in the
opinion of the Agent, filing or registration is necessary or of advantage to
perfect or preserve the priority of the Liens intended to be created thereby,
and duplicate copies of such registered security instruments or financing
statements bearing or accompanied by appropriate endorsements, file stamps or
certificates of registration shall have been delivered to the Agent, together
with evidence, satisfactory to the Agent, that substantially all registrations
or filings referred to in this Section 11.1.5 have been duly made and are in
full force and effect (subject to such exceptions as the Agent may approve):
(a) Security Agreement. A general security agreement,
substantially in the form of Exhibit C, issued by the Company (as amended,
supplemented or otherwise modified from time to time, the "Security
Agreement");
(b) Debenture. A $20,000,000 demand debenture, substantially
in the form of Exhibit D, issued by the Company (as amended, supplemented or
otherwise modified from time to time, the "Debenture") containing a fixed
charge on certain property and assets of the Company designated by the Agent
and a floating charge on the undertaking and remaining property and assets of
the Company;
(c) Debenture Pledge Agreement. A debenture pledge
agreement, substantially in the form of Exhibit E, issued by the Company (as
amended, supplemented or otherwise modified from time to time, the "Debenture
Pledge Agreement"), pursuant to which the Debenture will be pledged to the
Agent and the Banks;
(d) Real Estate Documentation. With respect to each parcel
of real property owned or leased by the Company or any Subsidiary (other than
any parcel designated with an asterisk on Schedule 9.18), (a) a duly executed
Mortgage; (b) an opinion of Canadian counsel in respect of such Mortgage
satisfactory to the Agent; (c) if such real property is owned, a survey
acceptable to the Agent; and (d) if such real property is leased (i) a
landlord's consent in form and substance satisfactory to the Agent, (ii) a
certified copy of the lease subject to such Mortgage, and (iii) evidence
satisfactory to the Agent that the lease subject to such Mortgage is either
prior to any mortgages on the underlying fee parcel or such fee mortgagee has
entered into a satisfactory non-disturbance agreement with the applicable
Mortgagor.
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11.1.6 Opinions of Counsel for the Company. The opinions of Wilson,
Walker, Hochberg, Slopen substantially in the form of Exhibit F.
11.1.7 Insurance. Copies of insurance binders or Certificates of
insurance as required pursuant to Section 10.3 and the Loan Documents
satisfactory to the Agent along with evidence that the Agent and Banks are
named as loss payee and additional insured.
11.1.8 Debt to be Repaid, etc. The Agent shall have
received evidence, reasonably satisfactory to the Agent, that (a) all Debt to
be Repaid has been, or concurrently with the making of such Loan will be, paid
in full; and (b) all commitments under the agreements relating to such Debt,
and all Liens securing such Debt, have been or concurrently with the making of
such Loan will be, terminated.
11.1.9 Fees. The Company shall have paid (or shall have made
arrangements to pay with the proceeds of the initial Loan) all fees and
expenses then due and payable to the Agents or any Bank (including, to the
extent then billed, all amounts payable pursuant to Section 14.6).
11.1.10 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 Loans and Conversions. The obligation of each Bank to make its
Loan and to convert such Loan is subject to the following further conditions
precedent that:
11.2.1 No Default, etc. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the making of
such Loan and (b) the warranties of the Company contained in Section 9
(excluding, in the case of conversions of Loans pursuant to Section 2.4,
Sections 9.4, 9.6, 9.8 and 9.15 through 9.18) are true and correct in all
material respects as of the date of such requested Loan or conversion with the
same effect as though made on such date.
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank, the Agent shall have received (in sufficient counterparts to provide one
to each Bank) a certificate dated the date of such requested Loan or conversion
and signed by a duly authorized representative of the Company as to the matters
set out in Section 11.2.1 (it being understood that each request by the Company
for the making of a Loan or conversion shall be deemed to constitute a warranty
by the Company that the conditions precedent set forth in Section 11.2.1 will
be satisfied at the time of the making or conversion of such Loan),
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together with such other documents as the Agent or any Bank may reasonably
request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of the principal of any Loan; or default, and continuance thereof for five
days, in the payment when due of any interest, fees, or other amounts payable
by the Company hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of Larizza, the Company or any Subsidiary in an
aggregate amount (for all Debt so affected) exceeding $500,000 and such default
shall (a) consist of the failure to pay such Debt when due (subject to any
applicable grace period), whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof,
or any trustee or agent for such holder or holders, to cause such Debt to
become due and payable prior to its expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due
of more than $500,000 in the aggregate, or in the performance or observance of,
any material obligation of, or condition agreed to by, the Company or any
Subsidiary with respect to any material purchase or lease of goods or services
(except only to the extent that the existence of any such default is being
contested by the Company or such Subsidiary in good faith and by appropriate
proceedings and appropriate reserves have been made in respect of such
default).
12.1.4 Bankruptcy, Insolvency, etc. Larizza, the Company or any
Subsidiary becomes insolvent or generally fails to pay, or admits in writing
its inability or refusal to pay, debts as they become due, or a proceeding is
instituted for seeking an order adjudging Larizza, the Company or any
Subsidiary insolvent; or Larizza, the Company or any Subsidiary applies for,
consents to, or acquiesces in the appointment of a trustee, receiver,
liquidator or other custodian for Larizza, the Company or such Subsidiary or
any property thereof, or makes an assignment for the benefit of creditors; or,
in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for Larizza, the Company or any
Subsidiary or for a substantial part of the property of any thereof and is not
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
composition or other case, proceeding, petition or similar relief under any
bankruptcy or insolvency law
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(including, without limitation, the Companies' Creditors Arrangement Act
(Canada), or any dissolution, liquidation or winding-up proceeding (except the
voluntary dissolution, not under any bankruptcy or insolvency law, of a
Subsidiary), is commenced, in respect of Larizza, the Company or any
Subsidiary, and if such case, proceeding or petition is not commenced or filed
by Larizza, the Company or such Subsidiary, it is consented to or acquiesced
in, by Larizza, the Company or such Subsidiary, or remains for 60 days
undismissed; Larizza, the Company or any Subsidiary takes any action pursuant
to the Bankruptcy Code or the Winding-Up Act (Canada); or Larizza, the Company
or any Subsidiary voluntarily suspends transaction of its usual business or
takes any corporate action to authorize, or in furtherance of, any of the
foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any covenant set forth in Sections
10.6 through 10.14 or Section 10.19; or failure by the Company to comply with
or to perform any other provision of this Agreement (and not constituting an
Event of Default under any of the other provisions of this Section 12) and
continuance of such failure for 30 days (or, in the case of Section 10.15, five
Business Days) after notice thereof to the Company from the Agent, any Bank or
the holder of any Note.
12.1.6 Representations and Warranties. Any representation or
warranty made by the Company herein or in any Loan Document is breached or is
false or misleading in any material respect, or any schedule, certificate,
financial statement, report, notice or other writing furnished by the Company
to the Agent or any Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified.
12.1.7 Pension and Welfare Plans. (i) Institution of any steps by
the Company or any other Person to terminate or amend a Pension Plan or a
Welfare Plan, in whole or in part, if as a result of such termination or
amendment the Company could be required to make a contribution to such Pension
Plan or Welfare Plan, or could incur a liability or obligation to such Pension
Plan or Welfare Plan, in excess of $500,000, or (ii) a contribution failure
occurs with respect to any Pension Plan or Welfare Plan sufficient to give rise
to a Lien under the Pension Benefits Act (Ontario) or other applicable law.
12.1.8 Judgments. Final judgments which exceed an aggregate of
$500,000 shall be rendered against the Company, or any Subsidiary and shall not
have been discharged or vacated or had execution thereof stayed pending appeal
within 30 days after entry or filing of such judgments.
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12.1.9 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect with respect to the
Company, the Company shall fail to comply with or to perform any material
applicable provision of any Collateral Document and such failure shall continue
for 30 days after notice thereof from the Agent, any Bank or any holder of any
Note, or the Company (or any Person by, through or on behalf of the Company)
shall contest in any manner the validity, binding nature or enforceability of
any Collateral Document.
12.1.10 Change in Control. A Change in Control shall occur.
12.2 Effect of Event of Default. If any Event of Default described
in Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable, all without notice or
demand of any kind, and the Company and any Subsidiaries expressly waive
presentation, protest or other notice of any kind; and, in the case of any
other Event of Default, the Agent may (and upon written request of the Required
Banks shall) declare the Commitments (if they have not theretofore terminated)
to be terminated and/or declare all Notes and all other obligations hereunder
to be due and payable, whereupon the Commitments (if they have not theretofore
terminated) shall immediately terminate and/or all Notes and all other
obligations hereunder shall become immediately due and payable, all without
notice or demand, of any kind, and the Company and any Subsidiaries expressly
waive presentation, protest or notice of any kind. The Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks,
and the effect as an Event of Default of any other event described in this
Section 12 may be waived by the written concurrence of the Required Banks.
12.3 Legal Proceedings. If an Event of Default has occurred and is
continuing, the Agent shall, if so directed by the Required Banks, commence
such legal action or other proceedings as it deems expedient to realize upon
the collateral charged by the Liens constituted by the Collateral Documents or
any part thereof, all without any additional notice, presentation, demand or
protest, all of which the Company or any Subsidiary hereby expressly waive.
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SECTION 13 THE AGENT.
13.1 Authorization. Each Bank and the holder of each Note authorizes
the Agent to act on behalf of such Bank or holder to the extent provided herein
or in any other Loan Document or any other document or instrument delivered
hereunder or in connection herewith, and to take such other action as may be
reasonably incidental thereto.
13.2 Indemnification. Each Bank and the holder of each Note agrees
to reimburse and indemnify the Agent for, and hold the Agent harmless against,
a share (determined in accordance with its respective Percentage) of any loss,
damages, penalty, action, judgment, obligation, cost, disbursement, liability
or expense (including attorneys' and solicitors' fees on a solicitor and his
own client basis) incurred without gross negligence or willful misconduct on
the part of the Agent arising out of or in connection with the performance of
its obligations or the exercise of its powers hereunder or under any other Loan
Document or any other document or instrument delivered hereunder or in
connection herewith, as well as the costs and expenses of defending against any
claim against the Agent arising hereunder or thereunder.
13.3 Exculpation. The Agent shall be entitled to rely upon advice of
counsel concerning legal matters, and upon this Agreement, any other Loan
Document and any schedule, certificate, statement, report, notice or other
writing which it believes to be genuine or to have been presented by a proper
person. Neither the Agent nor any of its directors, officers, employees or
agents shall (i) be responsible for any recitals, representations or warranties
contained in, or for the execution, validity, legality, genuineness,
effectiveness or enforceability of, this Agreement, any other Loan Document or
any other instrument or document delivered hereunder or in connection herewith,
(ii) be responsible for the legality, validity, genuineness, perfection,
effectiveness, enforceability, existence, value or enforcement of any
collateral security, (iii) be under any duty to inquire into or pass upon any
of the foregoing matters, or to make any inquiry concerning the performance by
the Company or any other obligor of its obligations, or (iv) in any event, be
liable as such for any action taken or omitted by it or them, except for its or
their own gross negligence or willful misconduct. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, the Agent in its individual capacity.
13.4 Credit Investigation. Each Bank acknowledges that it has made
such inquiries and taken such care on its own behalf as would have been the
case had such Bank's Commitments been granted and such Bank's Loans been made
directly by such Bank to the
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Company without the intervention of the Agent or any other Bank. Each Bank
agrees and acknowledges that the Agent makes no representations or warranties
about the creditworthiness of the Company or any other party to this Agreement
or any other Loan Document or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any other Loan Document or
the value of any security therefor.
13.5 Agent and Affiliates. The Agent in its individual capacity
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent,
and the Agent and its Affiliates may accept deposits from and generally engage
in any kind of business with the Company or any Affiliate thereof as if the
Agent were not the Agent hereunder.
13.6 Action on Instructions of the Required Banks. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement of any Loan Document or collection of the Loans), the Agent shall
not be required to exercise any discretion or take any action, but the Agent
shall in all cases be fully protected in acting or refraining from acting upon
the written instructions from (i) the Required Banks, except for instructions
which under the express provisions hereof must be received by the Agent from
all Banks, and (ii) in the case of such instructions, from all Banks. In no
event will the Agent be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement, any other Loan
Document or applicable law. The relationship between the Agent and the Banks
is and shall be that of agent and principal only and nothing herein contained
shall be construed to constitute the Agent a trustee for any holder of a Note
or of a participation therein nor to impose on the Agent duties and obligations
other than those expressly provided for herein.
13.7 Funding Reliance. (a) Unless the Agent receives notice from a
Bank by 11:00 a.m., Chicago time, on the day of a proposed borrowing that such
Bank will not make available to the Agent the amount which would constitute its
Percentage of such borrowing in accordance with Section 2.3, the Agent may
assume that such Bank has made such amount available to the Agent and, in
reliance upon such assumption, make a corresponding amount available to the
Company. If and to the extent such Bank has not made any such amount available
to the Agent, such Bank agrees to pay such amount to the Agent forthwith,
together with interest thereon at the interest rate applicable to Loans
comprising such borrowing. Nothing set forth in this clause (a) shall relieve
any Bank of any obligation it may have to make any Loan hereunder.
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(b) Unless the Agent receives notice from the Company prior to the
due date for any payment hereunder that the Company does not intend to make
such payment, the Agent may assume that the Company has made such payment and,
in reliance upon such assumption, make available to each Bank its share of such
payment. If and to the extent that the Company has not made any such payment
to the Agent, each Bank which received a share of such payment shall repay such
share (or the relevant portion thereof) to the Agent forthwith on demand,
together with interest thereon at the Alternate Reference Rate. Nothing set
forth in this clause (b) shall relieve the Company of any obligation it may
have to make any payment hereunder.
13.8 Collateral Matters. The Banks irrevocably authorize the Agent,
at its option and in its discretion, to release any Lien granted to or held by
the Agent upon any Collateral (i) upon termination of the Commitments and any
Hedging Agreements with any Bank and payment in full of all Loans and all other
obligations of the Company under this Agreement and under any other Loan
Document and any Hedging Agreements with any Bank; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company or any Subsidiary owned no interest at the time the Lien was granted or
at any time thereafter; (iv) constituting property leased to the Company or any
Subsidiary under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been,
and is not intended by the Company or such Subsidiary to be, renewed or
extended; or (v) subject to the penultimate sentence of Section 14.1, if
approved, authorized or ratified in writing by the Required Banks. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
Section 13.8.
13.9 Resignation. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Company and the Banks. In the event of any
such resignation, the Required Banks shall as promptly as practicable appoint a
successor Agent. If no successor shall have been so appointed, and shall have
accepted such appointment, within 30 days after the giving of notice of such
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America having a combined capital, surplus and undivided
profits of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations under this Agreement. After any resignation pursuant to
this
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Section 13.9, the provisions of this Section 13 shall inure to the benefit of
the retiring Agent as to any actions taken or omitted to be taken by it while
it was Agent hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of any Agent or any
Bank in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by the Company and by Banks having an aggregate Percentage of not
less than the aggregate Percentage expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement or the Notes, by the Required Banks, and then any such amendment,
modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (a) shall amend, modify or waive any condition
precedent to any Loan without the consent of Banks holding 100% of the
Commitments or (b) shall (i) extend or increase the amount of any Commitment,
(ii) extend the date for payment of any principal of or interest on the Loans
or any fees payable hereunder, (iii) reduce the principal amount of any Loan,
the rate of interest thereon or any fees payable hereunder, (iv) release any
substantial part of the Collateral granted under the Collateral Documents
except Collateral having a fair market value of less than $5,000,000 in the
aggregate or as otherwise permitted under this Agreement or the Collateral
Documents or (v) change the aggregate Percentage required to effect an
amendment, modification, waiver or consent or amend this Section 14.1 without,
in each case, the consent of all Banks. No provisions of Section 13 shall be
amended, modified or waived without the consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such
Note.
14.3 Notices. Except as otherwise provided in Sections 2.3, 2.4 and
4.3, all notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and shall be sent to the applicable party at its
address shown below its signature hereto or at such other address as such party
may, by written notice received by the other party, have
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designated as its address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given three Business Days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery shall be deemed to have been given when received. For purposes of
Sections 2.3, 2.4 and 4.3, the Agent shall be entitled to rely on telephonic
instructions from any person that the Agent in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Agent and each Bank harmless from any loss, cost or expense resulting from any
such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for the
purpose of this Agreement, such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be made
in accordance with generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the Company's audited
financial statements for the 1993 Fiscal Year.
14.5 Regulations G, T, U, And X. Each Bank represents that it in
good faith is not relying, either directly or indirectly, upon any Margin Stock
as collateral security for the extension or maintenance by it of any credit
provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent (including the
fees and charges (on a solicitor and his own client basis) of counsel for the
Agent and of local counsel, if any, who may be retained by said counsel) in
connection with the preparation, execution, delivery and administration of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including,
without limitation, any amendments, supplements or waivers to any Loan
Documents), and all reasonable out-of-pocket costs and expenses (including
reasonable attorneys' and solicitors' fees on a solicitor and his own client
basis, court costs and other legal expenses) incurred by the Agent and each
Bank after an Event of Default in connection with the enforcement of this
Agreement, the other Loan Documents or any such other documents. Each Bank
agrees to reimburse the Agent for such Bank's pro rata share (based on its
respective Percentage) of any such costs and expenses of the Agent not paid by
the Company. In addition, the Company agrees to pay, and to save the Agent and
the Banks harmless from all liability for, any stamp or other taxes (excluding
income taxes but including Withholding Taxes) which may be payable in
connection with the execution and delivery of this Agreement, the
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borrowings hereunder, the issuance of the Notes or the execution and delivery
of any other Loan Document or any other document provided for herein or
delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this Section 14.6 shall survive repayment of the
Loans, cancellation of the Notes and any termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Company has
one or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Company and the Agent (which consents shall not be unreasonably delayed or
withheld), at any time assign and delegate to one or more commercial banks or
other Persons (any Person to whom such an assignment and delegation is to be
made being herein called an "Assignee"), all or any fraction of such Bank's
Loans and Commitments (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Bank's Loans and
Commitments) in a minimum aggregate amount equal to the lesser of (i) the
assigning Bank's remaining aggregate Commitments and (ii) $5,000,000; provided,
however, that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be obligated to
pay any greater amount under Section 7.6 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Bank under such Sections and
(b) the Company and the Agent shall be entitled to continue to deal solely and
directly with such Bank in connection with the interests so assigned and
delegated to an Assignee until the date when all of the following conditions
shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect
to such Assignee, shall have been given to the Company and the Agent
by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed
and delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents
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required to be delivered thereunder, which Assignment Agreement shall
have been accepted by the Agent, and
(z) the assigning Bank or the Assignee shall have paid the
Agent a processing fee of $3,000.
From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have
the rights and obligations of a Bank hereunder, and (y) the assigning Bank, to
the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder. Within five Business Days after effectiveness of
any assignment and delegation, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a new Note
in the principal amount of the Assignee's Commitment and, if the assigning Bank
has retained a Commitment hereunder, a replacement Note in the principal amount
of the Commitment retained by the assigning Bank (such Note to be in exchange
for, but not in payment of, the predecessor Note held by such assigning Bank).
Each such Note shall be dated the effective date of such assignment. The
assigning Bank shall mark the predecessor Note "exchanged" and deliver it to
the Company. Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being assigned shall
be paid to the assigning Bank. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in accordance with
this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, (a) any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder) and
(b) no assignment pursuant to this Section 14.9.1 shall require the Company to
file any registration statement with the SEC, OSC or any other securities
exchange or to apply to qualify any interest herein or in any Note under the
"blue sky" or other securities laws of any jurisdiction.
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons, in each case with whom the Company deals at
arm's length within the meaning of the Income Tax Act (Canada), participating
interests in any Loan owing to such Bank, the Note held by such Bank, the
Commitments
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of such Bank or any other interest of such Bank hereunder (any Person
purchasing any such participating interest being herein called a
"Participant"), provided that such participating interest entitles the
Participant to a pro rata share of principal and interest payments on the Loan.
In the event of a sale by a Bank of a participating interest to a Participant,
(x) such Bank shall remain the holder of its Note for all purposes of this
Agreement, (y) the Company and the Agent shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Company shall be determined as if
such Bank had not sold such participation and shall be paid directly to such
Bank. No Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events described in the penultimate sentence
of Section 14.1. Each Bank agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Bank enters
into with any Participant. The Company agrees that if amounts outstanding
under this Agreement and the Notes are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of setoff in respect of its participating interest in amounts owing under this
Agreement, any Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or such Note;
provided that such right of setoff shall be subject to the obligation of each
Participant to share with the Banks, and the Banks agree to share with each
Participant, as provided in Section 7.5. The Company also agrees that each
Participant shall be entitled to the benefits of Section 7.6 and Section 8 as
if it were a Bank (provided that no Participant shall receive any greater
compensation pursuant to Section 7.6 or Section 8 than would have been paid to
the participating Bank if no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a
contract made under and governed by the internal laws of the State of Illinois.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. All obligations of the Company and rights of the
Agent, the Banks and any other holder of a Note expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed
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to be an original, but all such counterparts shall together constitute but one
and the same Agreement. When counterparts executed by all of the parties
hereto shall have been lodged with the Agent (or, in the case of any Bank as to
which an executed counterpart shall not have been so lodged, the Agent shall
have received confirmation from such Bank of execution of a counterpart hereof
by such Bank), this Agreement shall become effective as of the date hereof, and
at such time the Agent shall notify the Company and each Bank.
14.12 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and the permitted successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company.
(a) In consideration of the execution and delivery of this Agreement
by the Agent and the Banks and the agreement to extend the Commitments provided
hereunder, the Company hereby agrees to indemnify, exonerate and hold the
Agent, each Bank and each of the officers, directors, employees and agents of
the Agent and each Bank (collectively the "Bank Parties" and individually each
a "Bank Party") free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including, without
limitation, reasonable attorneys' and solicitors' fees and charges (on a
solicitor and his own client basis) (collectively therein called the
"Indemnified Liabilities"), incurred by the Bank Parties or any of them as a
result of, or arising out of, or relating to (i) any tender offer, merger,
purchase of stock, purchase of assets or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans or (ii) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any of the Bank
Parties, except for (a) any such Indemnified Liabilities arising on account of
any such Bank Party's bad faith, gross negligence or willful misconduct and (b)
any taxes for which the Company is not liable pursuant to the provisions of
Section 7.6. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Nothing set forth above
shall be construed to relieve any Bank Party from any obligation it may have
under this Agreement.
(b) Without limiting the provisions of clause (a) above, the Company
agrees to reimburse each Bank Party against any and all losses, claims,
damages, penalties, judgments, liabilities
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and expenses (including reasonable attorneys' and solicitors' fees (on a
solicitor and his own client basis) and consultant's fees) which any Bank Party
may pay, incur or become subject to arising out of or relating to the use,
handling, release, presence, emission, discharge, transportation, storage,
treatment or disposal of any Hazardous Material at any real property owned or
leased by the Company or any Subsidiary or used by the Company or any
Subsidiary in its business or operations, except to the extent caused by the
acts or omissions of any Bank Party.
(c) All obligations provided for in this Section 14.13 shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
14.14 Confidentiality. The Agent and the Banks shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and, in any event, may make
disclosure on the same confidential basis as provided for herein that is
reasonably required by any actual or bona fide potential transferee or
participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that, unless
specifically prohibited by applicable law or court order, each of the Agent and
each Bank shall notify the Company of any request by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of the Agent or such Bank by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information; and further provided that in no event shall the
Agent or any Bank be obligated or required to return any materials furnished by
Company.
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH OF THE COMPANY, THE AGENT AND EACH BANK
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
EACH OF THE COMPANY, THE
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AGENT AND EACH BANK FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF ILLINOIS. THE COMPANY, THE AGENT AND EACH BANK HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE
COMPANY,THE AGENT OR ANY BANK HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY, THE AGENT AND
EACH BANK HEREBY IRREVOCABLY WAIVE SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.16 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
14.17 Currency Indemnity. If, for the purposes of obtaining judgment
in any court in any jurisdiction with respect to any Loan Document, it becomes
necessary to convert into the currency of such jurisdiction (the "Judgment
Currency") any amount due under any Loan Document in any currency other than
the Judgment Currency (the "Currency Due"), then conversion shall be made at
the rate of exchange prevailing on the Business Day before the day on which
judgment is given. For this purpose, "rate of exchange" means the rate at
which the Agent is able, on the relevant date, to purchase the Currency Due
with the Judgment Currency in accordance with its normal practice at its main
branch in Chicago, Illinois. In the event that there is a change in the rate
of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, the Company or any
Subsidiary will, on the date of payment, pay such additional amount, if any, or
be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount paid on such date is the amount in the
Judgment Currency which when converted at the rate of exchange prevailing on
the date of payment is the amount then due under any Loan Document in the
Currency Due. If the amount of the Currency Due which the Agent is so able to
purchase is less than the amount of the Currency Due originally due to it, the
Company or any Subsidiary shall indemnify and save the Agent
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harmless from and against loss or damage arising as a result of such
deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in any Loan Document, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Agent from time to time and shall
continue in full force and effect notwithstanding any judgment or order for a
liquidated sum in respect of an amount due under any Loan Document or under any
judgment or order.
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Delivered at Chicago, Illinois, as of the day and year first above written.
MANCHESTER PLASTICS, LTD.
By /s/ Terence C. Seikel
Title Chief Financial Officer
900 Queen Street
Gananoque, Ontario, Canada K7G 2W7
Attention: President
Facsimile: (810) 524-4996
60
<PAGE> 67
CONTINENTAL BANK N.A., individually
and as Agent
By /s/ Steven Ahrenholz
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Steven K. Ahrenholz
Facsimile: (312) 987-5500
61
<PAGE> 68
SCHEDULE I
COMMITMENT LIMITS AND PERCENTAGES
<TABLE>
<CAPTION>
Amount of
Name of Bank Commitment Percentage
- ------------ ---------- ----------
<S> <C> <C>
Continental Bank $15,000,000 100%
N.A.
----------- -----
TOTAL $15,000,000 100%
</TABLE>
<PAGE> 1
EXHIBIT 10.11(b)
NOTE
$15,000,000 May 6, 1994
Chicago, Illinois
On or before the Stated Maturity Date (as defined in the Credit
Agreement referred to below), the undersigned, for value received, promises to
pay to the order of Continental Bank N.A. at the principal office of
Continental Bank N.A. (the "Agent"), in Chicago, Illinois, Fifteen Million
Dollars ($15,000,000) or, if less, the aggregate unpaid amount of all Loans
made by the payee to the undersigned pursuant to the Credit Agreement (as shown
in the records of the payee or, at the payee's option, on the schedule attached
hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan evidenced hereby from the date of such Loan until
such Loan is paid in full, payable at the rate(s) and at the time(s) set forth
in the Credit Agreement. Payments of both principal and interest are to be
made in lawful money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of May 6, 1994 (herein,
as amended or otherwise modified from time to time, called the "Credit
Agreement"), between the undersigned, certain financial institutions (including
the payee) and the Agent, to which Credit Agreement reference is hereby made
for a statement of the terms and provisions under which this Note may or must
be paid prior to its due date or may have its due date accelerated.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the undersigned further agrees, subject
only to any limitation imposed by applicable law, to pay all reasonable
expenses, including reasonable solicitors' fees (on a solicitor and his own
client basis) and legal expenses, incurred by the holder of this Note in
endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
This Note is made under and governed by the internal laws of the State of
Illinois.
MANCHESTER PLASTICS, LTD.
By /s/ Terence C. Seikel
Title Chief Financial Officer
<PAGE> 2
Schedule Attached to Note dated of May 6, 1994 of MANCHESTER PLASTICS, LTD.
payable to the order of Continental Bank N.A.
Date and Date and
Amount of Amount of
Loan or of Repayment or of
conversion from conversion into Unpaid
another type of another type of Interest Principal Notation
Loan Loan Period Balance Made by
1. FLOATING RATE LOANS
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2. EURODOLLAR LOANS
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 1
EXHIBIT 10.11(c)
GENERAL SECURITY AGREEMENT
TO: NAME OF CREDITOR: CONTINENTAL BANK N.A., as Agent
ADDRESS: 231 South LaSalle Street
Chicago, Illinois
U.S.A. 60697
FACSIMILE: (312) 987-5500
RECITALS:
A. MANCHESTER PLASTICS, LTD. (the "Debtor") has entered into a Credit
Agreement dated as of May 6, 1994 (as amended or otherwise modified from time
to time, the "Credit Agreement") with various financial institutions
(collectively the "Banks" and individually each a "Bank") and CONTINENTAL BANK
N.A., in its capacity as agent for the Banks (in such capacity, the "Agent"),
pursuant to which the Banks have agreed to make loans to the Debtor;
B. To secure the payment and performance of the Liabilities (this term,
and other capitalized terms used in this Agreement, have the meanings set forth
in Section 23), the Debtor has agreed to grant to the Agent the Security
Interests over the Collateral in accordance with the terms of this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the Debtor, the Debtor agrees with the
Agent as follows:
1. GRANT OF SECURITY. As general and continuing collateral security for
the due payment and performance of the Liabilities, the Debtor mortgages,
charges and assigns to the Agent, for the benefit of the Agent and the Banks,
and grants to the Agent, for the benefit of the Agent and the Banks, a security
interest in, the Collateral.
2. LIMITATIONS ON GRANT OF SECURITY. If the assignment by the Debtor to
the Agent of any Contract, Intellectual Property Right or Permit forming part
of the Collateral would result in the termination or breach of such Contract,
Intellectual Property Right or Permit, then the applicable Contract,
Intellectual Property Right or Permit will not be assigned under this Agreement
but will be held in trust by the Debtor for the benefit of the Agent and, on
exercise by the Agent of any of its rights under this Agreement following
Default, the Debtor will assign the same as directed by the Agent. In
addition, the Security Interests do not extend to the last
<PAGE> 2
2
day of the term of any lease or agreement for lease of real property. Such
last day shall be held by the Debtor in trust for the Agent and, on the
exercise by the Agent of any of its rights under this Agreement following
Default, the Debtor will assign such last day as directed by the Agent.
3. ATTACHMENT. The Debtor confirms that value has been given and that the
Debtor and the Agent have not agreed to postpone the time for attachment of the
Security Interests to any of the Collateral.
4. REPRESENTATIONS AND WARRANTIES. The Debtor represents and warrants to
the Agent that:
(a) Places of Business, Name, Location of Collateral. Its
principal place of business and chief executive office, and the principal place
where it keeps its books and records, is at the address specified on the
signature page of this Agreement, and its full legal name is the name specified
on the signature page of this Agreement. The location of all other existing
places where the Debtor carries on business, keeps its books and records or
keeps tangible Personal Property included in the Collateral, the location of
all jurisdictions in which account debtors of the Debtor are located, and the
location of all real property owned by the Debtor and the registered business
names under which it conducts business, are set forth in Schedule A to this
Agreement. No Collateral is in the possession of any bailee, warehouseman,
agent or processor except as specifically described in Schedule A.
(b) Title; No Other Liens. Except for the Permitted Charges, the
Debtor owns (or, with respect to any leased or licensed property forming part
of the Collateral, holds a valid leasehold or licensed interest in) all of the
Collateral free and clear of any and all Charges. This Agreement creates a
valid and, except for the Permitted Charges, first priority security interest
in the Collateral and such security interest is entitled to all rights,
priorities and benefits afforded by the PPSA. No security agreement, financing
statement or other public notice with respect to any or all of the Collateral
is on file or on record in any public office, except for filings in favour of,
or permitted in writing by, the Agent and filings in connection with Permitted
Charges.
(c) Amount of Accounts. The amount represented by the Debtor to
the Agent from time to time as owing by each account debtor or by all account
debtors in respect of the Accounts will at such time be the correct amount so
owing by such account debtor or debtors in all material respects, after giving
effect to the Debtor's allowance for doubtful accounts.
<PAGE> 3
3
(d) Information Furnished. All information with respect to
Collateral and account debtors set forth in any schedule, certificate or other
writing at any time heretofore or hereafter furnished by the Debtor to the
Agent or any Banks, is and will be true and correct in all material respects as
of the date furnished.
(e) No Consumer Goods. The Debtor does not own any Consumer Goods
which are material in value or which are material to the business, operations,
property, condition or prospects (financial or otherwise) of the Debtor.
(f) Intellectual Property Rights. All Intellectual Property
Rights owned by the Debtor are described in Schedule A to this Agreement. To
the best of the Debtor's knowledge, each such Intellectual Property Right is
valid, subsisting, unexpired, enforceable and has not been abandoned. Except
as set forth in such Schedule, none of such Intellectual Property Rights has
been licensed or franchised to any Person.
(g) Name of Debtor. The Debtor is not now known, and during the
five years preceding the date hereof has not previously been known, by any
trade name or business name except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth in
Schedule A). During the five years preceding the date hereof, the Debtor has
not been known by any legal name different from the one set forth on the
signature page of this Agreement except as previously disclosed to the Agent
and the Banks in writing prior to the date hereof (including those set forth in
Schedule A), nor has the Debtor been the subject of any amalgamation or other
corporate reorganization except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth in
Schedule A).
(h) Corporate Authority, Execution, Delivery etc. The execution
and delivery of this Agreement and the performance by the Debtor of its
obligations hereunder are within the Debtor's corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the charter documents of
the Debtor or of any agreement (including, without limitation, any Account or
Contract), indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Debtor. Except for any consent that has been
obtained and is in full force and effect, no consent of any party (other than
the Debtor) to any Contract or any obligor in respect of any Account is
required, or purports to be required, for the execution, delivery and
performance of this Agreement.
(i) Enforceability. This Agreement is a legal, valid and binding
obligation of the Debtor, enforceable in accordance with its terms, except that
the enforceability of this
<PAGE> 4
4
Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(j) Compliance with Laws. The Debtor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which would materially
adversely affect any material portion of the Collateral.
5. COVENANTS. The Debtor covenants and agrees with the Agent that:
(a) Further Documentation. The Debtor will from time to time at
its expense promptly and duly authorize, execute and deliver such further
instruments and documents, and take such further action, as the Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of, and the rights and powers granted by, this Agreement (including the filing
of any financing statements or financing change statements under any applicable
legislation with respect to the Security Interests). The Debtor acknowledges
that this Agreement has been prepared based on the existing laws in the
Province of Ontario and that a change in such laws, or the laws of other
jurisdictions, may require the execution and delivery of different forms of
security documentation. Accordingly, the Debtor agrees that the Agent will
have the right to require that this Agreement be amended or supplemented or
replaced, and that the Debtor will promptly on the reasonable request of the
Agent authorize, execute and deliver any such amendment, supplement or
replacement: (i) to reflect any changes in such laws, whether arising as a
result of statutory amendments, court decisions or otherwise; (ii) to
facilitate the creation and registration of appropriate security in all
appropriate jurisdictions; or (iii) if the Debtor merges or amalgamates with
any other Person or enters into any corporate reorganization, in each case in
order to confer on the Agent Charges similar to, and having the same effect as,
the Security Interests.
(b) Delivery and Pledge of Certain Collateral. Promptly following
demand from time to time by the Agent, the Debtor will deliver and pledge (or
cause to be delivered and pledged) to the Agent, endorsed and/or accompanied by
such instruments of assignment and transfer in such form and substance as the
Agent may reasonably request, any and all Instruments, Securities, Documents of
Title and Chattel Paper included in or relating to the Collateral as the Agent
may specify in its demand.
<PAGE> 5
5
(c) Payment of Expenses; Indemnification. The Debtor agrees to
pay on demand, and to indemnify and save the Agent and any Bank harmless from,
any and all liabilities, costs and expenses (including legal fees and expenses
on a solicitor and his own client basis): (i) incurred by the Agent or any
Bank in the preparation, registration, administration or enforcement of this
Agreement; (ii) with respect to, or resulting from, any failure or delay by the
Debtor in paying any taxes or insurance with respect to any of the Collateral
before they are delinquent; (iii) with respect to, or resulting from, any delay
by the Debtor in complying with any requirement of law applicable to any of the
Collateral; or (iv) incurred by the Agent or any Bank in connection with any of
the transactions contemplated by this Agreement in the absence of its gross
negligence or wilful misconduct.
(d) Maintenance of Records. The Debtor will keep and maintain
accurate and complete records of the Collateral, including a record of all
payments received and all credits granted with respect to the Accounts and
Contracts, in a manner that will enable the Agent or its designees to determine
at any time the status of the Accounts and Contracts. At the written request
of the Agent, the Debtor will mark any Collateral specified by the Agent to
evidence the existence of the Security Interests.
(e) Right of Inspection. The Agent will have access on reasonable
notice and at reasonable times, without charge, during normal business hours
(or at any time without notice during the existence of a Default) to, and may
examine and make copies of, all Books and Records of the Debtor, and may
discuss the affairs, finances and accounts of the Debtor with its officers and
accountants. The Agent will on reasonable notice and at reasonable times (or
at any time without notice during the existence of a Default) also have the
right, without charge, to enter the premises of the Debtor where any of the
Collateral is located for the purpose of inspecting the Collateral, observing
its use or otherwise protecting its interests in the Collateral. The Debtor,
at its expense, will provide the Agent with such clerical and other assistance
as may be reasonably requested by the Agent to exercise any of its rights under
this paragraph.
(f) Limitation on Charges. The Debtor will not create, incur or
permit to exist, and will defend the Collateral against, and will take such
other reasonable action as is necessary to remove, any and all Charges on and
claims in respect of the Collateral other than the Permitted Charges or as is
expressly excluded in the definition of Asset Sale under the Credit Agreement,
and, subject to the foregoing exclusions, the Debtor will defend the right,
title and interest of the Agent in and to the Collateral against the claims and
demands of all Persons.
(g) Limitations on Dispositions of Collateral. The Debtor will
not, without the Agent's prior written consent, except as permitted by the
Credit Agreement or expressly excluded in the definition of Asset Sale under
the Credit Agreement, sell, lease or otherwise
<PAGE> 6
6
dispose of any of the Collateral (other than Inventory, which may be sold,
leased or otherwise disposed of in the ordinary course of the Debtor's
business). Following Default, all Proceeds of the Collateral (including among
other things all amounts received in respect of Accounts), whether or not
arising in the ordinary course of the Debtor's business, will be received by
the Debtor as trustee for the Agent and will be immediately paid to the Agent.
(h) Maintenance of Collateral. The Debtor will maintain all
tangible Collateral in good operating condition, ordinary wear and tear
excepted, and the Debtor will provide all maintenance, service and repairs
necessary for such purpose all to the extent necessary to conduct Debtor's
business in all material respects.
(i) Insurance. The Debtor will keep the tangible Collateral
insured under policies maintained with reputable and financially sound
insurance companies against loss, damage, theft and other risks to such extent
as is customarily maintained by companies similarly situated, and cause all
such policies to provide that the loss thereunder shall be payable to the Agent
as its interests may appear and such policies or certificates thereof shall, if
the Agent so requests, be deposited with or furnished to the Agent.
(j) Further Identification of Collateral. The Debtor will
promptly furnish to the Agent from time to time such statements and schedules
further identifying and describing the Collateral, and such other reports in
connection with the Collateral, as the Agent may reasonably request including
without limitation an updated list of any motor vehicles owned by the Debtor
and classified as Equipment, including vehicle identification numbers.
(k) Notices. The Debtor will advise the Agent promptly, in
reasonable detail, of: (i) any Charge (other than the Permitted Charges) on,
or claim asserted against, any of the Collateral; (ii) the occurrence of any
event, claim or occurrence that could reasonably be expected to have a material
adverse effect on the value of the Collateral or on the Security Interests;
(iii) any change in the location of any place of business or the chief
executive office of the Debtor; (iv) any change in the location of any of the
tangible Collateral (including additional locations), except in connection with
any sales or other dispositions of such Collateral permitted by the Credit
Agreement or this Agreement; (v) any acquisition of real property by the
Debtor; (vi) any change in the name of the Debtor; and (vii) any material loss
of or damage to any of the Collateral. The Debtor agrees not to effect or
permit any of the changes referred to in clauses (iii) to (vi) above unless all
filings have been made that are required in order for the Agent to continue at
all times following such change to have a valid and perfected security interest
in all of the Collateral, except in connection with any sales or other
dispositions of such Collateral permitted by the Credit Agreement or this
Agreement.
<PAGE> 7
7
(l) Delivery of Agreements re Intellectual Property Rights. The
Debtor will promptly following demand from time to time by the Agent,
authorize, execute and deliver any and all agreements, instruments, documents
and papers that the Agent may reasonably request to evidence the Agent's
Security Interests in any Intellectual Property Rights and, where applicable,
the goodwill of the business of the Debtor connected with the use of, and
symbolized by, any such Intellectual Property Rights.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations, warranties and covenants made by the Debtor in this Agreement
are material, will be considered to have been relied on by the Agent and the
Banks and will survive the execution and delivery of this Agreement or any
investigation made at any time by or on behalf of the Agent or any of the Banks
and any disposition or payment of the Liabilities until repayment and
performance in full of the Liabilities and termination of all rights of the
Debtor that, if exercised, would result in the existence of Liabilities.
7. COLLECTIONS ON ACCOUNTS AND CONTRACTS. The Agent hereby authorizes the
Debtor to collect its accounts and payments under its contracts in the normal
course of its business and for the purpose of carrying on the same, subject to
the Agent's direction and control, and the Agent may curtail or terminate said
authority at any time after a Default. If required by the Agent at any time
after a Default, any payments of accounts or under contracts, when collected by
the Debtor, will be forthwith (and, in any event, within two Business Days)
deposited by the Debtor in the exact form received, duly endorsed by the Debtor
to the Agent if required, in a special collateral account maintained by the
Agent, subject to withdrawal by the Agent, as hereinafter provided, and, until
so deposited, will be held by the Debtor in trust for the Agent, segregated
from other funds of the Debtor.
8. RIGHTS ON DEFAULT. On Default, all of the Liabilities shall, at the
option of the Agent, become immediately due and payable and the security
constituted by this Agreement shall become enforceable and the Agent may
personally or by agent at such time or times as the Agent in its discretion may
determine do any one or more of the following:
(a) Rights under PPSA, etc. Exercise all of the rights and
remedies granted to secured parties under the PPSA and any other applicable
statute, or otherwise available to the Agent at law or in equity.
(b) Delivery of Possession. Demand possession of any or all of
the Collateral in which event the Debtor will, at its own expense, immediately
cause the Collateral designated by the Agent to be assembled and made available
and/or delivered to the Agent at any place designated by the Agent.
<PAGE> 8
8
(c) Taking Possession. Enter on any premises where any Collateral
is located and take possession of, disable or remove any Collateral or render
it unusable.
(d) Use of Collateral. Hold, store and keep idle, or operate,
lease or otherwise use or permit the use of, any or all of the Collateral for
such time and on such terms as the Agent may determine, and demand, collect and
retain all earnings and other sums due or to become due in respect of the same
from any Person.
(e) Carry on Business. Carry on, or concur in the carrying on of,
any or all of the business or undertaking of the Debtor and enter on, occupy
and use any of the premises, buildings, plant and undertaking of or occupied or
used by the Debtor.
(f) Enforce Collateral. Seize, collect, receive, enforce or
otherwise deal with any Collateral in such manner, on such terms and conditions
and at such times as the Agent deems advisable.
(g) Dispose of Collateral. Realize on any or all of the
Collateral and sell, lease, assign, give options to purchase, or otherwise
dispose of and deliver any or all of the Collateral (or contract to do any of
the above), in one or more parcels at any public or private sale, at any
exchange, broker's board or office of the Agent or elsewhere, on such terms and
conditions as the Agent may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk.
(h) Court Approved Disposition of Collateral. Apply to a court of
competent jurisdiction for the sale or foreclosure of any or all of the
Collateral.
(i) Purchase by Agent or Banks. At any public sale, and to the
extent permitted by law on any private sale, bid for and purchase any or all of
the Collateral offered for sale and, upon compliance with the terms of such
sale, hold, retain and dispose of such Collateral without any further
accountability to the Debtor or any other Person with respect to such holding,
retention or disposition. In any such sale to the Agent or a Bank, the Agent
or such Bank may, for the purpose of making payment for all or any part of the
Collateral so purchased, use any claim for Liabilities then due and payable to
it as a credit against the purchase price.
(j) Collect Accounts. Notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to the Agent and direct
such account debtors or obligors to make payment of all amounts due or to
become due to the Debtor in respect of such Accounts directly to the Agent and,
upon such notification and at the expense of the Debtor, enforce collection of
any such Accounts, and adjust, settle or compromise the amount or payment of
<PAGE> 9
9
such Accounts, in such manner and to such extent as the Creditor deems
appropriate in the circumstances.
(k) Transfer of Securities. Transfer any Securities forming part
of the Collateral into the name of the Agent or its nominee, with or without
disclosing that the Securities are subject to the Security Interests.
(l) Exercise of Rights. Exercise any and all rights, privileges,
entitlements and options pertaining to any Securities forming part of the
Collateral as if the Agent were the absolute owner of the Securities.
(m) Payment of Liabilities. Pay any liability secured by any
actual or threatened Charge against any Collateral. The Debtor will
immediately on demand reimburse the Agent for all such payments.
(n) Borrow and Grant Charge. Borrow money for the maintenance,
preservation or protection of any Collateral or for carrying on any of the
business or undertaking of the Debtor and grant Charges on any Collateral (in
priority to the Security Interests or otherwise) as security for the money so
borrowed. The Debtor will immediately on demand reimburse the Agent for all
such borrowings.
(o) Appoint Receiver. Appoint by instrument in writing one or
more Receivers over the Debtor or any or all of the Collateral with such
rights, powers and authority (including any or all of the rights and remedies
provided for in this Section) as may be provided for in the instrument of
appointment or any supplemental instrument and remove and replace any such
Receiver from time to time. To the extent permitted by applicable law, any
Receiver appointed by the Agent will for all purposes (including, without
limitation, for purposes relating to responsibility for the Receiver's acts or
omissions) be considered to be the Debtor's agent and not the agent of the
Agent or the Banks.
(p) Court Appointed Receiver. Apply to a court of competent
jurisdiction for the appointment of a Receiver of the Debtor or of any or all
of the Collateral.
The Agent may take any or all of the above described actions without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except as required by applicable law) to or on the Debtor or any
other Person, and the Debtor hereby waives each such demand, presentment,
protest, advertisement and notice to the extent permitted by applicable law.
None of the above rights shall be exclusive of or dependent on or merge in any
<PAGE> 10
10
other right, and one or more of such rights may be exercised independently or
in combination from time to time.
9. GRANT OF LICENSE. For the purpose of enabling the Agent to exercise
its rights and remedies under Section 7 at such time as the Agent, without
regard to this Section, shall be lawfully entitled to exercise such rights and
remedies and for no other purpose, the Debtor by this Agreement grants to the
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Debtor) to use, assign or sublicense any
or all of the Intellectual Property Rights, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout of the same.
10. SALE OF SECURITIES. The Debtor agrees that in connection with any
offer or sale of any Securities forming part of the Collateral, the Agent is
authorized to comply with any limitation or restriction in connection with any
offer or sale as it may be advised by counsel is necessary in order to avoid
any violation of applicable law, including compliance with procedures that may
restrict the number of prospective bidders and purchasers, requiring that
prospective bidders and purchasers have certain qualifications, and restricting
prospective bidders and purchasers to Persons who will represent and agree that
they are purchasing for their own account or investment and not with a view to
the distribution or resale of Securities. The Debtor further agrees that
compliance with any such sale procedure will not result in a sale being
considered or deemed not to have been made in a commercially reasonable manner,
and the Agent will not be liable or accountable to the Debtor for any discount
allowed by reason of the fact that Securities are sold in compliance with any
such limitation or restriction.
11. APPLICATION OF PROCEEDS. All Proceeds of Collateral received by the
Agent or a Receiver may be applied to discharge or satisfy any expenses
(including among other things the Receiver's remuneration and other expenses of
enforcing the Agent's rights under this Agreement), Charges, borrowings, taxes
and other outgoings affecting the Collateral or which are considered advisable
by the Agent or the Receiver to preserve, repair, process, maintain, operate or
enhance the Collateral or prepare it for sale, lease or other disposition, or
to keep in good standing any Charges on the Collateral ranking in priority to
any of the Security Interests, or to sell, lease or otherwise dispose of the
Collateral. The balance of such Proceeds may, at the sole discretion of the
Agent, be held as collateral security for the Liabilities and/or be applied to
the Liabilities in such manner and at such times as the Agent considers
appropriate and thereafter will be accounted for as required by law.
12. CONTINUING LIABILITY OF DEBTOR. The Debtor will remain liable for any
Liabilities that are outstanding following realization of all or any part of
the Collateral.
<PAGE> 11
11
13. WAIVER. To the extent permitted by applicable law, the Debtor waives
all claims, damages and demands it may acquire against the Agent arising out of
the exercise by the Agent or any Receiver of any rights or remedies under this
Agreement or at law, in the absence of its gross negligence or wilful
misconduct.
14. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. The Debtor irrevocably
constitutes and appoints the Agent and any officer or agent of the Agent, with
full power of substitution, as the Debtor's true and lawful attorney-in-fact
with full irrevocable power and authority in the place of the Debtor and in the
name of the Debtor or in its own name, from time to time in the Agent's
discretion after and during the continued existence of a Default, to take any
and all appropriate action and to execute any and all documents and instruments
as, in the opinion of such attorney, may be necessary or desirable to
accomplish the purposes of this Agreement. Nothing in this Section affects the
right of the Agent as secured party or any other Person on the Agent's behalf,
to sign and file or deliver (as applicable) all such financing statements,
financing change statements, notices, verification agreements and other
documents relating to the Collateral and this Agreement as the Agent or such
other Person considers appropriate.
15. PERFORMANCE BY AGENT OF DEBTOR'S OBLIGATIONS. If the Debtor fails to
perform or comply with any of its agreements contained in this Agreement, the
Agent shall be entitled to, but need not, perform or otherwise cause the
performance or compliance of such agreement, provided that such performance or
compliance shall not constitute a waiver, remedy or satisfaction of such
default, and the expenses of the Agent incurred in connection with any such
performance or compliance will be payable by the Debtor to the Agent on demand.
16. INTEREST. If any amount payable to the Agent under this Agreement in
respect of which no interest payment requirements are expressly specified in
this Agreement or in any of the Loan Documents (as defined in the Credit
Agreement), is not paid when due, the Debtor will pay interest on such amount
from the date due until paid, at a nominal rate per annum equal at all times to
the Alternate Reference Rate (as defined in the Credit Agreement) plus 3.75%,
which rate per annum will change automatically without notice to the Debtor as
and when the Alternate Reference Rate changes and which interest will be
payable on demand. All amounts payable by the Debtor to the Agent under this
Agreement, and all interest on all such amounts, will form part of the
Liabilities, will be secured by the Security Interests and will, unless
otherwise indicated, be payable on demand.
<PAGE> 12
12
17. SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability and shall be
severed from the balance of this Agreement, all without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
18. AGENT NOT LIABLE. Neither the Agent nor any Bank will be liable to the
Debtor or any other Person for any failure or delay in exercising any of its
rights under this Agreement (including among other things any failure to take
possession of, collect, sell, lease or otherwise dispose of any Collateral).
None of the Agent, any Bank, a Receiver or any agent of the Agent or of any
Bank (including, in Alberta, any Sheriff) is required to take, or will have any
liability for any failure to take or delay in taking, any steps necessary or
advisable to preserve rights against other Persons under any Collateral in
possession of the Agent, any Bank, a Receiver or the agent of the Agent or of
any Bank. Neither the Agent, any Bank or any Receiver will be liable for any,
and the Debtor shall bear the full risk of all, loss or damage to any and all
of the Collateral (including without limitation any Collateral in the
possession of the Agent or any Receiver) caused for any reason other than the
gross negligence or wilful misconduct of the Agent, such Bank or such Receiver.
19. DEALINGS BY AGENT. The Agent and the Banks may grant extensions of
time and other indulgences, take and give up security, accept compositions,
grant releases and discharges and otherwise deal with the Debtor and any other
Person, and with any or all of the Collateral, and with other security and
sureties, as the Agent and the Banks may see fit, all without prejudice to the
Liabilities or to the rights of the Agent or the Banks under this Agreement.
20. COMMUNICATION. All communications provided for or permitted hereunder
will be in writing, personally delivered to an officer or other responsible
employee of the addressee or sent by registered or certified mail, charges
prepaid, or by telecopy, telex or telegram or other similar means of recorded
communication, charges prepaid, to the address or facsimile number set forth,
in the case of the Agent, opposite its name on the first page of this Agreement
or, in the case of the Debtor, on the execution page of this Agreement, or to
such other address as the recipient may from time to time designate to the
other in such manner, provided that no communication will be sent by mail
pending any threatened or during any actual postal strike or other disruption
of postal service in Canada or the U.S.A. Any communication so personally
delivered will be deemed to have been validly and effectively given and
received on the date of such delivery. Any communication so sent by telecopy,
telex, telegram or other similar means of recorded communication shall be
deemed to have been validly and effectively given and received on the Business
Day following the day on which it is sent. Any communication so sent
<PAGE> 13
13
by mail will be deemed to have been validly and effectively given and received
on the fifth Business Day following the day on which it is sent.
21. RELEASE OF INFORMATION. The Debtor authorizes the Agent and the Banks
to provide a copy of this Agreement and such other information as may be
requested of the Agent or such Bank by Persons entitled thereto pursuant to any
applicable legislation and otherwise with the consent of the Debtor.
22. WAIVERS. The Debtor so far as it now or in the future may lawfully do
so unconditionally and irrevocably waives all of the rights, benefits and
protections given by the provisions of any present or future statute that
imposes limitations on the rights, powers or remedies of a secured party or on
the methods of, or procedures for, realization of security, including any seize
or sue or anti-deficiency statute or any similar provision of any other
statute.
23. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable in such province and shall be treated, in all respects, as an
Ontario contract. Without prejudice to the ability of the Agent to enforce
this Agreement in any other proper jurisdiction, the Debtor irrevocably submits
and attorns to the jurisdiction of the courts of the Province of Ontario.
24. DEFINED TERMS AND INTERPRETATION. In this Agreement:
"ACCESSIONS", "ACCOUNT", "CHATTEL PAPER", "CONSUMER GOODS", "DOCUMENT
OF TITLE", "EQUIPMENT", "GOODS", "INSTRUMENT", "INTANGIBLE", "INVENTORY" and
"PROCEEDS" have the respective meanings given to them in the PPSA.
"BOOKS AND RECORDS" means all books, records, files, papers, disks,
documents and other repositories of data recording in any form or medium,
evidencing or relating to the Collateral to which the Debtor (or any Person on
the Debtor's behalf) has access.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in the Province of Ontario, on which chartered banks
generally are open for business in Toronto, Ontario.
"CHARGE" means any mortgage, charge, pledge, hypothecation, lien
(statutory or otherwise), assignment, lease (other than an operating lease),
title retention agreement or arrangement, security interest or other
encumbrance of any nature, or any other security agreement or arrangement
creating in favor of any creditor a right in respect of a particular property
that is prior to the right of any other creditor in respect of such property.
<PAGE> 14
14
"COLLATERAL" means all of the present and future undertaking, Personal
Property (including any Personal Property that may be described in any Schedule
to this Agreement or any schedules, documents or listings that the Debtor may
from time to time sign and provide to the Agent in connection with this
Agreement but excluding Consumer Goods) and real property (including any real
or leasehold property that may be described in any Schedule to this Agreement
or any schedules, documents or listings that the Debtor may from time to time
sign and provide to the Agent in connection with this Agreement and including
all fixtures and all buildings placed, installed or erected from time to time
on any such real property) of the Debtor (including all such property now or in
the future owned, leased, licensed, possessed or acquired by the Debtor, or in
which the Debtor now or in the future has any interest or to which the Debtor
is now or may in the future become entitled) and all Accessions to, and all
Proceeds of, all such undertaking and property, in any such case wherever
located.
"CONTRACTS" means all contracts, licenses and agreements to which the
Debtor is now or in the future a party or pursuant to which the Debtor has
acquired or in the future acquires rights, as such contract may from time to
time be amended or restated and includes: (a) all rights of the Debtor to
receive money due and to become due to it in connection with a contract; (b)
all rights of the Debtor to damages arising out of, or for, breach or default
in respect of, a contract; and (c) all rights of the Debtor to perform and
exercise all remedies in connection with a contract.
"AGENT" has the meaning specified in recital A to this Agreement and
shall include all successors and assigns of the Agent.
"DEBTOR" has the meaning specified in recital A to this Agreement and
shall include all successors and assigns of the Debtor.
"DEFAULT" means the occurrence of any Event of Default (as defined in
the Credit Agreement).
"INTELLECTUAL PROPERTY RIGHTS" means all industrial and intellectual
property rights, including copyrights, patents, trade-marks, industrial
designs, know how and trade secrets and all Contracts related to any such
industrial and intellectual property rights, owned by the Debtor.
"LIABILITIES" means all present and future indebtedness, liabilities
and obligations of every kind, nature and description (whether direct or
indirect, joint or several, absolute or contingent, matured or unmatured) of
the Debtor to the Agent and the Banks under or pursuant
<PAGE> 15
15
to the Credit Agreement, other Loan Documents (as defined in the Credit
Agreement) and any Hedging Agreements (as defined in the Credit Agreement).
"MONEY" has the meaning given to it in the PPSA or, if there is no such
definition in the PPSA, means a medium of exchange authorized or adopted by the
Parliament of Canada as part of the currency of Canada, or by a foreign
government as part of its currency.
"PERSON" shall be broadly interpreted and includes an individual, a
partnership, a corporation, a trust, a joint venture, an association, an
unincorporated organization, a government or any department of a government, a
regulatory agency or any other juridical entity and the heirs, executors,
administrators or other legal representatives of an individual.
"PERMITTED CHARGES" means the Security Interests, any Charges permitted
by the Credit Agreement and any other Charges permitted in writing by the
Agent.
"PPSA" means the Personal Property Security Act of the province noted
in Section 22 of this Agreement, as such legislation may be amended, renamed or
replaced from time to time (and includes all regulations from time to time made
under such legislation).
"PERMITS" means all permits, licenses, authorizations, approvals,
franchises, rights-of-way, easements and entitlements that the Debtor has,
requires or is required to have, to own, possess or operate any of its property
or assets or to operate and carry on any part of its business.
"PERSONAL PROPERTY" means personal property and includes without
limitation Inventory, Equipment, Receivables, Books and Records, Chattel Paper,
Goods, Documents of Title, Instruments, Intangibles (including Intellectual
Property Rights and Permits), Money and Securities, and includes all Accessions
to such Property.
"RECEIVABLES" means all debts, claims and choses in action (including
without limitation Accounts and any amounts owing under Chattel Paper) now or
in the future due or owing to or owned by the Debtor.
"RECEIVER" means a receiver, a manager or a receiver and manager.
"SECURITIES" has the meaning given to it in the PPSA, or if there is no
such definition in the PPSA but the PPSA defines "security" instead, it means
the plural of that term.
<PAGE> 16
16
"SECURITY INTERESTS" means the Charges granted by the Debtor to the
Agent under this Agreement.
25. INTERPRETATION. The division of this Agreement into sections and
paragraphs, and the insertion of headings is for convenience of reference only
and does not limit or affect the construction or interpretation of this
Agreement. Unless the context otherwise requires, words importing the singular
include the plural and vice versa, and words importing gender include all
genders. When used in this Agreement the word "including" means "including
without limitation".
26. SUCCESSORS AND ASSIGNS. This Agreement is binding on the Debtor and
its successors and permitted assigns and will enure to the benefit of the Agent
and its successors and assigns. The Debtor may not assign this Agreement, or
any of its rights or obligations under this Agreement, without the prior
written consent of the Agent.
27. ACKNOWLEDGMENT OF RECEIPT. The Debtor acknowledges receipt of an
executed copy of this Agreement.
Dated as of May 6, 1994.
MANCHESTER PLASTICS, LTD.
Address: 900 Queen Street By: /s/ Terence C. Seikel
Gananoque, Ontario Name: Terence C. Seikel c/s
Canada, K7G 2W7 Title: Chief Financial Officer
Facsimile: (613) 382-8687
Attention: President
* * * * *
Schedule A - Locations of Collateral (paragraph 4(a)), Jurisdictions of
Account Debtors (paragraph 4(a)), Locations of Real Property
(paragraph 4(a)), Names of Debtor (paragraph 4(a)),
Intellectual Property Rights (paragraph 4(g)) and Previous
Legal Names of Debtor (paragraph 4(h)).
<PAGE> 1
EXHIBIT 10.11(d)
DEMAND DEBENTURE
DATE: May 6, 1994
PRINCIPAL SUM: U.S. $20,000,000
INTEREST RATE: 20% per annum
CREDITOR'S ADDRESS: CONTINENTAL BANK N.A., as Agent
231 South LaSalle Street
Chicago, Illinois
U.S.A. 60697
(312) 987-5500 (Facsimile)
MANCHESTER PLASTICS, LTD. (the "Debtor") has entered into a
Credit Agreement dated as of May 6, 1994 (as amended or otherwise modified from
time to time, the "Credit Agreement") with various financial institutions
(collectively the "Banks" and individually each a "Bank"), and CONTINENTAL BANK
N.A., in its capacity as agent for the Banks (in such capacity, the "Agent"),
pursuant to which the Banks have agreed to make loans to the Debtor;
FOR VALUABLE CONSIDERATION, the Debtor hereby acknowledges
itself indebted and promises to pay on demand to or to the order of the Agent,
the above-mentioned principal sum on presentation and surrender of this
Debenture at the Agent's address mentioned above, or at such other place as the
Agent may designate by notice in writing to the Debtor, and to pay interest
thereon from the date hereof at the above-mentioned annual rate calculated
daily in like money at the same place on the last day of each month, and,
should the Debtor at any time make default in payment of any principal or
interest, to pay interest on the amount in default, to the extent permitted by
applicable law, both before and after default and judgment at the same rate in
like money at the same place on the same dates.
1. DEFINED TERMS. In this Debenture, the following terms will
have the following meanings:
"BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in the Province of Ontario, on which chartered banks
generally are open for business in Toronto, Ontario;
"CHARGE" means any mortgage, charge, pledge, hypothecation,
lien (statutory or otherwise), assignment, lease (other than an operating
lease), title retention agreement or arrangement, security interest or other
encumbrance of any nature, or any other security agreement or arrangement
creating in favour of any creditor a right in respect of a particular property
that is prior to the right of any other creditor in respect of such property.
"COLLATERAL" means the collateral charged pursuant to this
Debenture and, unless the context otherwise requires, any reference to
"Collateral" includes the Collateral or any part of it;
"DEFAULT" means any default by the Company in the payment of
the principal of or interest on this Debenture or any other amount payable
hereunder;
"LANDS" has the meaning set forth in Section 2(a)(i) of this
Debenture;
"LEASES" means all present and future leases, subleases,
agreements to lease or sublease, offers to lease or sublease, licenses,
concessions or other occupancy agreements, if any, relating to the whole or any
part or parts of the Project made by or on behalf of the
<PAGE> 2
2
Debtor, as landlord, pursuant to which any Person is given the right (other
than an easement or a right in the nature of an easement) to use or occupy the
whole or any part or parts of the Project, in each case for the time being in
effect, and all revisions, alterations, modifications, amendments, changes,
extensions, renewals, replacements or substitutions thereof or therefor which
may hereafter be effected or entered into with the consent of the Agent; and
"Lease" means any one of them;
"OBLIGATIONS" means the principal, interest and other amounts
owing hereunder and any other indebtedness, liabilities and obligations of the
Debtor hereunder;
"PERSON" includes an individual, a partnership, a corporation,
a trust, an unincorporated organization, a government or any department or
agency thereof or any other juridical entity and the heirs, executors,
administrators or other legal representatives of an individual;
"PROCEEDS" means property in any form derived directly or
indirectly from any dealing with any Collateral or the proceeds therefrom, and
includes any payment representing indemnity or compensation for loss or damage
to any Collateral or proceeds therefrom;
"PROJECT" means the Lands and all other property, whether real
or personal, and all rights, interests and benefits now owned or hereafter
acquired by the Debtor in connection with the Lands.
"PROJECT LEASE" means the lease between Ronita Properties
Limited as landlord, Larizza Industries, Inc. and the Debtor as tenant made as
of the 25th day of March, 1993 in respect of the land and premises municipally
known as 165 Milner Avenue, Scarborough, Ontario as the same may be amended
from time to time.
"PROJECT DOCUMENTS" means any present or future agreements
entered into by the Debtor in connection with or pertaining to the development,
leasing and management of the Project and any delivery facilities, including
(without limitation) agreements with the municipality in which the Lands are
situate, government approvals, the Leases, soil tests, a current survey,
agreements with adjoining landowners, easements, rights-of-way, rights of
access, rights of support and other such rights as may be required by the Agent
from time to time, and all revisions, alterations, modifications, amendments,
changes, extensions, renewals, replacements or substitutions thereof or
therefor which may hereafter be effected or entered into with the consent of
the Agent.
"RENTS" means all rent, additional rent, deposits held as
security or otherwise, revenues, other moneys, issues, monetary benefits,
rights and profits, if any, present and future, to be derived by the Debtor
from the Leases and the Project.
"SECURITY INTERESTS" means the Charges granted by the Debtor
to the Agent under this Debenture.
2. GRANT OF SECURITY. As security for the due payment of the
principal of and interest on this Debenture and all other moneys payable
hereunder, the Debtor hereby:
(a) Specific Charge: grants, transfers, assigns, conveys, pledges,
mortgages and charges as and by way of a fixed and specific mortgage,
pledge and charge to and in favour of the Agent, its successors and
assigns and grants to the Agent, its successors and assigns a security
interest in and to:
(i) all of the Debtor's right, title, estate and interest, present
and future, in and to the lands and premises described or
referred to in Schedule I to this debenture (and in any
schedules, debentures, documents or other instruments from
time to
<PAGE> 3
3
time made supplemental to this debenture) together with
all buildings, improvements, fixtures, fixed plant, fixed
machinery and fixed equipment now or hereafter located,
constructed or placed in, under or upon such lands and
premises and all rights of way, easements, licences,
franchises and privileges appurtenant or appertaining to such
lands and premises (collectively, the "Lands");
(ii) the unexpired residue of the term under the Project Lease; and
(iii) all of the Debtor's right, title and interest, present and
future, in and to all machinery, equipment, plant, vehicles,
apparatus, fittings, fixtures, furniture, goods, chattels and
other items of personal property, and all franchises, licences
and permits, of any nature and description whatsoever which
are now or hereafter owned by the Debtor or in which the
Debtor now or hereafter has any interest of any nature
whatsoever or which may be hereafter acquired by the Debtor or
of which the Debtor may hereafter become possessed or obtain
any interest or to which the Debtor may hereafter become
entitled, in any such case wherever located, and including,
without limiting the generality of the foregoing, all
machinery, plant, vehicles, apparatus, fittings, fixtures,
furniture, goods, chattels, and other items of personal
property described or referred to in any schedules,
debentures, documents or other instruments from time to time
made supplemental to this Debenture or which are presently
situate on, or which may at any time hereafter be constructed
or brought or placed on or used in connection with, any of the
lands and premises described or referred to in Schedule I
hereto; provided, however, that if the assignment by the
Debtor to the Agent of any franchise, licence or permit might
result in the termination or breach of such franchise, licence
or permit, then such franchise, licence or permit will not be
assigned hereunder but will be held in trust by the Debtor for
the benefit of the Agent;
(b) Unconditional Assignment: unconditionally assigns, transfers and sets
over to and in favour of the Agent, its successors and assigns, as and
by way of a mortgage and charge all of the right, title and interest
of the Debtor in and to:
(i) all debts, accounts receivable, claims, moneys and choses in
action which are at present or which may at any time hereafter
be due or owing to or owned by the Debtor relating to the
Lands, including without limitation all moneys and other sums
payable to or receivable by the Debtor under or in respect of
any Project Documents; any and all proceeds from any insurance
maintained in respect of the Lands; and realty tax recoveries
with respect to the Lands, and all bills, notes and other
documents now held or owned or which may be hereafter taken,
held or owned by the Debtor or anyone on behalf of the Debtor
in respect of such debts, accounts receivable, claims, moneys
and choses in action or any part thereof, and all books and
papers recording, evidencing or relating to such debts,
accounts receivable, claims, moneys and choses in action or
any part thereof;
(ii) all Leases and all Rents payable thereunder, and all benefit
and advantage to be derived from such Leases and Rents and the
covenants, obligations and agreements of the tenants
thereunder and the benefit of any guarantees of and
indemnities with respect to any such Leases; and
(iii) all Project Documents and all moneys and other sums payable to
or receivable by the Debtor thereunder, and all benefit and
advantage to be derived from such Project Documents and the
covenants, obligations and agreements of the other parties
thereto and the benefit of any guarantees of and indemnities
with respect to any such Project Documents,
<PAGE> 4
4
together with full power and authority to demand, sue for, recover,
receive and give receipts for all rents and other moneys payable
thereunder and otherwise to enforce the rights of the Debtor
thereunder in the name of the Debtor; and
(c) Floating Charge: grants, transfers, assigns, conveys, pledges,
mortgages and charges, as and by way of a floating charge to and in
favour of the Agent, its successors and assigns, all of the present
and future undertaking of the Debtor, and all property, assets,
rights, entitlements, privileges, licenses, permits and benefits of
the Debtor, real and personal, moveable or immoveable, tangible or
intangible, both present and future, of every nature and kind
whatsoever and wherever situate (other than such as are at all times
effectively and validly subjected to the fixed and specific mortgages
and charges hereby created); provided, however, that if the assignment
by the Debtor to the Agent of any contract, intellectual property
right, licence or permit might result in the termination or breach of
such contract, intellectual property right, licence or permit, then
such contract, intellectual property right, licence or permit will not
be assigned hereunder but will be held in trust by the Debtor for the
benefit of the Agent.
TO HAVE AND TO HOLD the rights conferred unto the Agent, its
successors and assigns, subject to the terms and conditions of this Debenture.
3. CONSENTS AND APPROVALS. If any Lease, Project Document,
agreement, account, claims, demand or choses in action may not be assigned,
transferred, subleased, charged or encumbered without the consent or approval
of some other Person, then the Security Interests granted hereunder shall only
apply to such Lease, Project Document, agreement, account, claim, demand or
choses in action upon such consent or approval being obtained.
4. ENFORCEMENT; REMEDIES.
(a) If a Default occurs and is continuing, the Agent may exercise,
in addition to all other rights and remedies granted to it in this Debenture,
all rights and remedies of a secured party provided at law. Without limiting
the generality of the foregoing, the Agent may at any time or from time to time
take any one or more of the following actions:
(i) enter into possession and use of the Collateral,
whether in whole or in part, with full power, among
other things, to exclude the Debtor therefrom, to
carry on and manage the business and operations of
the Debtor, to make such repairs, replacements,
alterations and additions to the whole or any part of
the Collateral that the Agent thinks advisable, to
receive the Rents, incomes and profits of the
Collateral or parts thereof so taken possession of
and of the said business and operations and to pay
therefrom all expenses of the business and operations
of the Debtor and of maintaining, preserving,
protecting and operating the Collateral, including
payments which may be due for insurance, taxes,
assessments, charges or liens prior to the charge of
this Debenture upon the Collateral and for the
services of lawyers (on a solicitor and his own
client basis), agents and other Persons, and all
costs, charges and expenses incurred in connection
with the execution of the powers contained in this
Debenture;
(ii) commence proceedings in any court of competent
jurisdiction for sale or foreclosure of all or any
part of the Collateral;
(iii) file proofs of claim and any other documents to
establish its claims in any proceeding relative to
the Debtor;
<PAGE> 5
5
(iv) take possession of, collect, receive, appropriate and
realize upon the Collateral, and/or sell, lease,
assign, license, give one or more options to
purchase, or otherwise dispose of and deliver the
Collateral (or contract to do any of the foregoing),
in one or more parcels at public or private sale or
sales (including, in the case of motor vehicles, at
auctions for sales of motor vehicles to motor vehicle
dealers), at any exchange, broker's board or office
of the Agent or elsewhere upon such terms and
conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit
risk. The Agent will have the right upon any such
public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase
the Collateral so sold, free of any right or equity
of redemption in the Debtor, which right or equity is
hereby waived and released to the extent permitted by
applicable law. The Debtor agrees, at the Agent's
request, to assemble the Collateral and make it
available to the Agent at places which the Agent will
reasonably select, whether at the Debtor's premises
or elsewhere;
(v) by an instrument in writing appoint a receiver (which
term as used herein will include a receiver and
manager) of the Collateral and may remove or replace
such receiver from time to time or may institute
proceedings in any court of competent jurisdiction
for the appointment of such receiver;
(vi) commence proceedings in any court of competent
jurisdiction for the appointment of a receiver of the
Collateral;
(vii) transfer any securities forming part of the
Collateral into the name of the Agent or its nominee,
with or without disclosing that such securities are
subject to the Charge hereunder;
(viii) exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or
options pertaining to any securities forming part of
the Collateral as if it were the absolute owner
thereof, including the right to exchange at its
discretion any and all securities upon the merger,
consolidation, reorganization, recapitalization or
other readjustment of any issuer thereof or upon the
exercise by any issuer thereof or the Agent of any
right, privilege or option pertaining to any of the
securities, and in connection therewith, to deposit
and deliver any and all securities with any
committee, depositary, transfer agent, registrar or
other designated agency upon such terms and
conditions as the Agent may determine, all without
liability except to account for property actually
received by the Agent; and/or
(ix) exercise any other remedy or proceeding authorized or
permitted hereby or by applicable law.
(b) The Agent may take any or all of the foregoing action without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except as required by law) to or upon the Debtor or any
other Person, and the Debtor hereby waives each such demand, presentment,
protest, advertisement and notice to the extent permitted by applicable law.
(c) The Agent may apply the net proceeds of any collection,
recovery, receipt, appropriation, realization or sale of any Collateral, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent hereunder, including
legal fees and disbursements on a solicitor and his own client basis and the
costs of any receiver,
<PAGE> 6
6
to the payment in whole or in part of the Obligations, in such order as the
Agent may elect, and only after such application and after the payment by the
Agent of any other amount required by applicable law, need the Agent account
for the surplus, if any, to the Debtor.
(d) To the extent permitted by applicable law, the Debtor waives
all claims, damages and demands it may acquire against the Agent arising out of
the exercise by the Agent or any receiver of any rights or remedies hereunder
in the absence of its gross negligence or wilful misconduct. The Debtor will
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay and satisfy the
Obligations.
(e) The Debtor agrees that in connection with any offer or sale of
any securities forming part of the Collateral, the Agent is authorized to
comply with any limitation or restriction in connection with any such offer or
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law, including compliance with such procedures as may
restrict the number of prospective bidders and purchasers, requiring that such
prospective bidders and purchasers have certain qualifications, and restricting
such prospective bidders and purchasers to Persons who will represent and agree
that they are purchasing for their own account or investment and not with a
view to the distribution or resale of such securities. The Debtor further
agrees that such compliance will not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, and the Agent
will not be liable or accountable to the Debtor for any discount allowed by
reason of the fact that such securities are sold in compliance with any such
limitation or restriction.
(f) In addition to the rights of the Agent specified in Section
6(c) hereof with respect to payments of accounts, if a Default has occurred and
is continuing: (i) all Proceeds received by the Debtor consisting of cash,
cheques and other near-cash items will be held by the Debtor in trust for the
Agent, segregated from other funds of the Debtor, and will, forthwith upon
receipt by the Debtor, be turned over to the Agent in the exact form received
by the Debtor (duly endorsed by the Debtor to the Agent, if required); and (ii)
any and all such Proceeds received by the Agent (whether from the Debtor or
otherwise) may, in the sole discretion of the Agent, be held by the Agent as
collateral security for, and/or then or at any time thereafter may be applied
by the Agent against, the Obligations, such application to be in such order as
the Agent will elect. Any balance of such Proceeds remaining after the
Obligations will have been paid in full will be paid over to the Debtor or to
any other Person lawfully entitled to receive the same.
(g) The Agent shall not, nor shall any receiver appointed by it
hereunder, be under any obligation to take any action or exercise any remedy in
collection or recovery of any Rents, moneys or proceeds or to see to or enforce
the performance of the obligations of any party or parties under or in respect
of the Leases, the Project Documents or any other Collateral or any of them.
The Agent shall not, nor shall any receiver appointed by it hereunder, be
responsible or liable for any debts contracted by it for damages to persons or
property, or for salaries or non-fulfilment of contracts during any period
wherein the Agent or such receiver shall manage the Collateral upon or after
entry, as herein provided, nor shall the Agent or the receiver be liable to
account as mortgagee in possession for anything except actual receipts other
than liability resulting directly from the gross negligence or wilful
misconduct of the Agent or such receiver.
(h) This Debenture is for security purposes only and shall not
impair or diminish any obligation of the Debtor or any other party or parties
under the Leases, the Project Documents or any other Collateral given by the
Debtor.
5. POWER OF SALE.
<PAGE> 7
7
Any sale under the Debenture may be by public auction, by
public tender or by private sale, with only such notice as may be required by
law, at such time or times as the Agent may determine and either for cash or
part cash and part credit, and with or without advertisement, and with or
without a reserve bid and otherwise upon such terms and conditions as the Agent
may determine, and the proceeds of any sale may be applied in payment of any
costs, charges and expenses incurred in taking, recovering or keeping
possession of the Collateral or endeavouring to procure payment of the
Obligations Secured. Sales may be made from time to time of portions of the
Collateral or of the equity of redemption in the Lands and the Project Lease
and the Agent may make any stipulations as to title evidence or commencement of
title or otherwise that the Agent may deem proper and may rescind or vary any
contract for sale of any of the Collateral and resell without being answerable
for any loss occasioned thereby. On any sale under this Debenture, the Agent
shall be accountable only for monies actually received by the Agent as and when
so received and for any of the said purposes may make and execute all such
agreements and assurances as it shall think fit.
6. POWERS OF RECEIVER.
(a) Any receiver appointed by the Agent hereunder may be vested
with the rights and powers of the Agent hereunder and after a Default will have
power to take possession of and collect the Collateral and for that purpose, to
take proceedings in the name of the Debtor or otherwise and to make any
arrangement or compromise and to carry on, or concur in carrying on, all or any
part of the business of the Debtor and to use, collect, sell, dispose of,
realize upon, release to third parties and otherwise deal with the Collateral
or any part thereof as to it seems best. The Agent may from time to time fix
the remuneration of the receiver. Without limiting the generality of the
foregoing, any receiver appointed by the Agent hereunder will have power after
a Default to:
(i) from time to time and without any previous notice or
demand and free of charge enter upon or into and
occupy and use all or any of the premises, buildings,
warehouse and undertaking of or occupied or used by
the Debtor;
(ii) borrow or raise money on the security of the
Collateral in priority to this Debenture or otherwise
for such purposes as may be approved by the Agent;
and
(iii) sell or otherwise dispose of or concur in selling or
otherwise disposing of the Collateral without notice,
to the extent permitted by applicable law, and in
such manner as may seem advisable to the receiver,
and to effect such sale or disposition by conveying
in the name and on behalf of the Debtor or otherwise;
and
(iv) exercise any and all rights of the Debtor under any
Project Document or the Project Lease or the Leases
and do or cause to be done any and all acts and
things under any Project Document, the Project Lease
or the Leases and adjust and settle all matters
relating to such performance.
(b) The receiver may be vested with such other rights and powers
of the Agent hereunder and such other discretions and powers after a Default as
are granted in the instrument of appointment and any supplement thereto, to the
extent consistent with this Debenture. The receiver will for all purposes be
deemed to be the agent of the Debtor and not of the Agent, and the Debtor will
be solely responsible for his acts or defaults and for his remuneration, to the
extent permitted by law.
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8
7. RIGHTS OF AGENT; LIMITATIONS ON AGENT'S
OBLIGATIONS
(a) Limitation on Duties Regarding Preservation of Collateral.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of Collateral in its possession or under its control will be to
use reasonable care in the custody and preservation of such Collateral. The
Debtor agrees that the Agent will be deemed to have used reasonable care in the
custody and preservation of Collateral if the Agent deals with such Collateral
in the same manner as the Agent deals with similar property for its own account
and, to the extent permitted by applicable law, the Agent need not take any
steps to preserve rights against any other Person (including prior parties).
Neither the Agent nor any of its directors, officers, employees or agents will
be liable for failure to demand, collect or realize upon the Collateral or for
any delay in doing so or will be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Debtor or otherwise. The
Agent shall not, nor shall any receiver appointed by it be responsible or
liable otherwise than as an agent and trustee for any debts contracted by it
for salaries during any period wherein the Agent or such receiver is managing
the Collateral or any part or parts of it upon or after entry, nor shall the
Agent nor the receiver be liable to account as mortgagee in possession for
anything except actual receipts or be liable for any loss on realization or for
any default or omission for which a mortgagee in possession might be liable.
(b) Notice to Account Debtors and Contracting Parties. The Agent
may, and upon the request of the Agent after a Default has occurred and during
its continuance, the Debtor will, notify account debtors on its accounts and
parties to its contracts that the accounts and the contracts have been assigned
to the Agent and that payments in respect thereof will be made directly to the
Agent. The Agent may in its own name or in the name of others (including the
Debtor) communicate with account debtors on the accounts and parties to the
contracts to verify with them to its satisfaction the existence, status, amount
and terms of any account or any contract.
(c) Collections on Accounts and Contracts. The Agent hereby
authorizes the Debtor to collect its accounts and payments under its contracts
in the normal course of its business and for the purpose of carrying on the
same, subject to the Agent's direction and control, and the Agent may curtail
or terminate said authority at any time after a Default. If required by the
Agent at any time after a Default, any payments of accounts or under contracts,
when collected by the Debtor, will be forthwith (and, in any event, within two
Business Days) deposited by the Debtor in the exact form received, duly
endorsed by the Debtor to the Agent if required, in a special collateral
account maintained by the Agent, subject to withdrawal by the Agent, as
hereinafter provided, and, until so deposited, will be held by the Debtor in
trust for the Agent, segregated from other funds of the Debtor.
(d) Project Documents. Nothing contained in this Debenture shall
render the Agent liable to any Person for the fulfilment or non-fulfilment of
the obligations, covenants and agreements (including, without limitation, the
payment of any monies thereunder or in respect thereof) of the Debtor pursuant
to any of the Project Documents or the Project Lease.
8. COVENANTS. The Debtor covenants and agrees with the Agent
that:
(a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of the Agent, and at the sole
expense of the Debtor, the Debtor will promptly and duly execute and deliver
such further instruments and documents and take such further action as the
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Debenture and of the rights and powers herein granted.
<PAGE> 9
9
(b) Payment of Expenses; Indemnification. The Debtor agrees to
pay, and to indemnify and save the Agent and any Bank harmless from, any and
all liabilities, costs and expenses (including legal fees and expenses on a
solicitor and his own client basis): (i) incurred by the Agent or any Bank in
the preparation, registration, administration or enforcement of this Debenture;
(ii) with respect to, or resulting from, any delay by the Debtor in paying any
and all excise, sales, goods and services or other taxes with respect to any of
the Collateral before they are delinquent; (iii) with respect to, or resulting
from, any delay by the Debtor in complying with any requirement of law
applicable to any of the Collateral; or (iv) incurred by the Agent or any Bank
in connection with any of the transactions contemplated by this Debenture in
the absence of its gross negligence or wilful misconduct. The amount of all
such liabilities, costs and expenses will be deemed to form part of the
Obligations, will be payable on demand by the Agent and the payment of all such
liabilities, costs and expenses will be secured hereby.
(c) Limitation on Charges on Collateral. The Debtor will not
create, incur or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any Charge or claim on or to
the Collateral, other than the Charges created hereby and other than as
permitted in writing by the Agent, and, subject to the foregoing exclusions,
the Debtor will defend the right, title and interest of the Agent in and to any
of the Collateral against the claims and demands of all Persons.
(d) Limitations on Dispositions of Collateral. The Debtor will
not sell, transfer, lease or otherwise dispose of any of the Collateral, except
as permitted in writing by the Agent; provided, however, that the Debtor may
sell, transfer, lease or otherwise dispose of inventory in the ordinary course
of business.
(e) Notices. The Debtor will advise the Agent promptly, in
reasonable detail, of: (i) any Charge (other than the Security Interests or
any Charges permitted in writing by the Agent) on, or claim asserted against,
any of the Collateral; (ii) the existence of any material right of set-off,
counterclaim or other adverse claim in respect of any material portion of the
Collateral; (iii) the occurrence of any other event, claim or occurrence which
could reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the Charges created hereunder; (iv) any change in
the name of the Debtor; and (v) any material loss of or damage to any of the
Collateral.
(f) Insurance. The Debtor will keep the tangible Collateral
insured under policies maintained with reputable and financially sound
insurance companies against loss, damage, theft and other risks to such extent
as is customarily maintained by companies similarly situated, and cause all
such policies to provide that the loss thereunder shall be payable to the Agent
as its interests may appear, and such policies or certificates thereof shall,
if the Agent so requests, be deposited with or furnished to the Agent.
9. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants to the Agent that:
(a) Title; No Other Charges. Except for: (i) the Security
Interests, and (ii) any other Charges permitted in writing by the Agent, the
Debtor owns (or, with respect to any leased or licensed property forming part
of the Collateral, holds a valid leasehold or licensed interest in) all of the
Collateral free and clear of any and all Charges. On Default and enforcement,
the Agent shall have quiet possession of the Lands, the Project Lease and the
Project Documents, free from all encumbrances, subject only to those
encumbrances specifically permitted by the Agent in writing.
(b) Name of Debtor. The Debtor is not now known, and during the
five years preceding the date hereof has not previously been known, by any
trade name or business name except as previously disclosed to the Agent and the
Banks in writing prior to the date hereof (including those set forth in
Schedule II). During the five years preceding the date hereof, the
<PAGE> 10
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Debtor has not been known by any legal name different from the one set forth on
the signature page of this Agreement except as previously disclosed to the
Agent in writing prior to the date hereof (including those set forth in
Schedule II), nor has the Debtor been the subject of any amalgamation or other
corporate reorganization except as previously disclosed to the Agent in writing
prior to the date hereof (including those set forth in Schedule II).
(c) Corporate Authority, Execution, Delivery etc. The execution
and delivery of this Debenture and the performance by the Debtor of its
obligations hereunder are within the Debtor's corporate powers, have been duly
authorized by all necessary corporate action, have received all necessary
governmental approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the charter documents of
the Debtor or of any agreement (including, without limitation, any account or
contract), indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Debtor.
(d) Enforceability. This Debenture is a legal, valid and binding
obligation of the Debtor, enforceable in accordance with its terms, except that
the enforceability of this Debenture may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(e) Compliance with Laws. The Debtor is in compliance with the
requirements of all applicable laws, rules, regulations and orders of every
governmental authority, the non-compliance with which would materially
adversely affect any material portion of the Collateral.
10. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. The Debtor hereby
irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Debtor and in the name of the Debtor or in its own name, from time
to time in the Agent's discretion after and during the continued existence of a
Default, for the purpose of carrying out the terms of this Debenture, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Debenture. The Debtor hereby ratifies all that said attorney will
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and will be irrevocable until the Obligations
have been paid and performed in full. The Debtor also authorizes the Agent, at
any time and from time to time, after and during the continued existence of a
Default to execute any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral in connection with the
sale provided for in Section 4 hereof.
11. PERFORMANCE BY AGENT OF DEBTOR'S OBLIGATIONS. If the Debtor
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Debenture, will itself perform or
comply, or otherwise cause performance or compliance, with any such agreements,
the expenses of the Agent incurred in connection with such performance or
compliance will be payable by the Debtor to the Agent on demand and will be
added to the Obligations.
12. SEVERABILITY. Any provision of this Debenture which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE> 11
11
13. INTERPRETATION. The paragraph headings used in this Debenture
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof. When used
in this Debenture, the word "including" means "including without limitation".
Any reference in this Debenture to any statute will include all regulations
made thereunder from time to time, and will include such statute as the same
may be amended, supplemented or replaced from time to time.
14. NO WAIVER; CUMULATIVE REMEDIES. The Agent will not by any
act, delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any breach of any of the
terms and conditions hereof unless such waiver or acquiescence is specifically
set forth in writing signed by the Agent. No failure to exercise, nor any
delay in exercising, on the part of the Agent, any right, power or privilege
hereunder will operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder will preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Agent of any right or remedy hereunder on any one occasion will
not be construed as a bar to any right or remedy which the Agent would
otherwise have on any future occasion. Without limiting the generality of the
foregoing, this Debenture may not be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Debtor and the Agent.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and in any order and are not exclusive of any rights or
remedies provided by law.
15. DEALINGS BY AGENT. The Agent may grant extensions of time and
other indulgences, take and give up security, accept compositions, grant
releases and discharges and otherwise deal with the Debtor and any third party
having dealings with the Debtor, and with the Collateral or any part thereof,
and with other security and sureties, as the Agent may see fit, all without
prejudice to the Obligations or to the rights of the Agent under this
Debenture. The powers conferred on the Agent hereunder are solely to protect
the interests of the Agent in the Collateral and will not impose any duty upon
the Agent to exercise any such powers. The Agent will be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents will be
responsible to the Debtor for any act or failure to act hereunder, except for
its or their own gross negligence or wilful misconduct.
16. IMPLIED COVENANTS. Certain covenants implied by the Land
Registration Reform Act (Ontario) shall be varied as follows:
(a) the covenants implied by paragraphs 1 and 3 of Section 7(1) of
the said Act (as varied herein) shall be in addition to, and
not in substitution for, the covenants and other provisions
set forth in this Debenture. In the event of any conflict
between any of such implied covenants (as varied herein) and
any other covenant or provision of this Debenture, such other
covenant or provision of this Debenture shall prevail;
(b) the covenant deemed to be included in this Debenture by clause
7(1)1(iii) of the said Act is varied so that such covenant is
as follows: "That the Debtor has not done, omitted or
permitted any thing whereby the Land or the Project Lease is
or may be encumbered, except as provided herein or by those
encumbrances provided and permitted in writing by the Agent or
disclosed by registered title; and
(c) the covenant deemed to be included in this Debenture by clause
7(1)1(v) of the said Act is excluded from this Debenture.
<PAGE> 12
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17. SUCCESSORS AND ASSIGNS. This Debenture will be binding upon
the Debtor and its successors and assigns and will enure to the benefit of the
Agent and its successors and assigns.
18. COMMUNICATION. All communications provided for or permitted
hereunder will be in writing, personally delivered to an officer or other
responsible employee of the addressee or sent by registered or certified mail,
charges prepaid, or by telecopy, telex or telegram or other similar means of
recorded communication, charges prepaid, to the address or facsimile number set
forth, in the case of the Agent, under its name on the first page of this
Debenture or in the case of the Debtor, opposite its name on the execution page
of this Debenture, or to such other address as the recipient may from time to
time designate to the other in such manner, provided that no communication will
be sent by mail pending any threatened or during any actual postal strike or
other disruption of postal service in Canada or the U.S.A. Any communication
so personally delivered will be deemed to have been validly and effectively
given and received on the date of such delivery. Any communication so sent by
telecopy, telex, telegram or other similar means of recorded communication will
be deemed to have been validly and effectively given and received on the
Business Day following the day on which it is sent. Any communication so sent
by mail will be deemed to have been validly and effectively given and received
on the fifth Business Day following the day on which it is sent.
19. NON-EXCLUSIVITY OF REMEDIES. This Debenture and the Charges
arising hereunder are in addition to and not in substitution for any other
security now or hereafter held by the Agent in respect of the Debtor, the
Obligations or the Collateral. No remedy for the enforcement of the rights of
the Agent hereunder will be exclusive of or dependent on any other such remedy
but any one or more of such remedies may from time to time be exercised
independently or in combination.
20. RELEASE OF INFORMATION. The Debtor hereby authorizes the
Agent to provide a copy of this Debenture and such other information as may be
requested of the Agent by Persons entitled thereto pursuant to any applicable
legislation and otherwise with the consent of the Debtor.
21. GOVERNING LAW. This Debenture will be governed by and
construed in accordance with the laws of Ontario and the laws of Canada
applicable therein, and without prejudice to the ability of the Agent to
enforce this Debenture in any other proper jurisdiction, the Debtor hereby
irrevocably submits and attorns to the jurisdiction of the courts of the
Province of Ontario for the purposes of this Debenture.
22. MISCELLANEOUS PROVISIONS. Possession of an executed copy of
this Debenture by the Agent constitutes conclusive evidence that this Debenture
was executed and delivered by the Debtor, free of all conditions not set forth
in this Debenture or permitted in writing by Agent. The Debtor confirms that
value has been given, that the Debtor has rights in the Collateral, and that
the parties have not agreed to postpone the time for attachment of the Charge
constituted hereby to any of the Collateral.
23. ACKNOWLEDGMENT OF RECEIPT. The Debtor acknowledges receipt
of an executed copy of this Debenture.
<PAGE> 13
12A
24. AGENT ENTITLED TO PAYMENT. The Agent is entitled to receive
the principal of and interest required under this Debenture and all other
moneys payable hereunder and the Agent is entitled to give a discharge hereof.
25. LAST DAY OF LEASES. The Charge hereof will not extend or
apply to the last day of the term of any lease or agreement therefor under
which the Debtor is the lessee, now held or hereafter acquired by the Debtor
but, upon the enforcement of the Charge hereof, the Debtor will stand possessed
of such last day in trust to assign the same to any Person acquiring such term.
26. PLEDGE OF DEBENTURE. This Debenture may be transferred and
assigned, deposited with and pledged by the Debtor as a general and collateral
security for the payment and performance of its present and future
indebtedness, obligations and liabilities and, when redelivered to the Debtor
or its nominees, will be forthwith cancelled; but this Debenture will not be
deemed to have been redeemed by reason of the account of the Debtor having
ceased to be in debt while this Debenture was so assigned, deposited or pledged
and no payment will reduce the amount secured under this Debenture unless
specifically appropriated to and noted on this Debenture at the time of
payment.
<PAGE> 14
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27. NON-APPORTIONMENT. Every part or lot into which the Lands are
or may hereafter be divided does and shall stand charged with the whole of the
principal and interest and all other amounts payable under this Debenture, and
no Person shall have any right to require the principal or interest or such
other amounts to be apportioned upon or in respect of any such part or lot.
28. SECURITY IN ADDITION. This Debenture is in addition to and
not in substitution for any other in security now or hereafter held by the
Agent and no payment to the Agent shall constitute payment on account of any of
the principal, interest or other monies from time to time owing hereunder
unless specifically so appropriated by the Agent by notation of such payment on
this Debenture at the time of payment.
29. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations, warranties and covenants made by or on behalf of the Debtor
herein are material, will be considered to have been relied upon by the Agent
and will survive the execution and delivery of this Debenture or any
investigation made at any time by or on behalf of the Agent and any disposition
or payment of the Obligations until repayment in full thereof.
IN WITNESS WHEREOF, the Debtor has caused this Debenture to be
duly executed and delivered as of the date first above written.
MANCHESTER PLASTICS, LTD.
Address: 900 Queen Street By: /s/ Terence C. Seikel
Gananoque, Ontario, Canada Name: Terence C. Seikel c/s
K7G 2W7 Title: Chief Financial Officer
Facsimile: (613) 382-8687
Attention: President
Schedule I - Real Property
Schedule II - Names of Debtor
<PAGE> 1
EXHIBIT 10.11(e)
DEBENTURE PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of May 6, 1994, is made by
MANCHESTER PLASTICS, LTD., an Ontario corporation (the "Debtor") in favour of
CONTINENTAL BANK N.A., as agent (in such capacity, the "Agent").
WHEREAS:
A. The Debtor has entered into a Credit Agreement dated as of May
6, 1994 (as amended or otherwise modified from time to time, the "Credit
Agreement") with various financial institutions (collectively the "Banks" and
individually a "Bank") and the Agent, pursuant to which the Banks have agreed
to make loans to the Debtor;
B. In order to secure the payment and performance of the Debtor's
indebtedness, liabilities and obligations incurred or to be incurred in favour
of the Agent and the Banks, the Agent and the Banks have required that the
Debtor create and issue to the Agent a demand debenture, dated as of May 6,
1994, in the principal amount of $20,000,000 and bearing interest at 20% per
annum (such debenture, as it may be amended, modified, supplemented or renewed
from time to time, is herein referred to as the "Debenture"), and that the
Debenture be registered in all appropriate jurisdictions in order to
effectively charge the assets of the Debtor located in such jurisdictions; and
C. The purpose of this Agreement is to set forth the terms and
conditions upon which the Debenture is to be held by the Agent.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Debtor, the
Debtor hereby agrees as follows:
1. PLEDGE. The Debtor hereby transfers and assigns, deposits
with and pledges to the Agent, for the benefit of the Agent and the Banks, and
their successors and assigns, the Debenture to be held by the Agent as a
general and continuing collateral security for the prompt and complete payment
and performance when due (whether at the stated maturity, by acceleration or
otherwise) of all present and future indebtedness, liabilities and obligations
which the Debtor has from time to time incurred or may incur or be under to the
Agent and the Banks under, pursuant to, or in respect of the Credit Agreement
or any other Loan
<PAGE> 2
2
Documents (as defined in the Credit Agreement) including, without limitation,
those that are direct or indirect, absolute or contingent, joint or several,
due or to become due or that arise from dealings between the Debtor and the
Agent or any of the Banks, and any unpaid balance thereof, and whether the
liability of the Debtor is as principal, surety, guarantor, endorser or
otherwise (collectively, the "Obligations").
2. REALIZATION.
(a) Notwithstanding that the Debenture may be expressed to be payable on
demand, no demand shall be made thereunder unless a Default (as
hereinafter defined) has occurred and is continuing. The Agent agrees
that in any realization proceedings in respect of the Debenture, it
shall not claim thereunder nor be entitled thereunder to a greater
amount than the aggregate amount owing by the Debtor in respect of the
Obligations.
(b) For the purposes of this Agreement, "Default" means the occurrence of
any Event of Default (as defined in the Credit Agreement).
(c) After a Default shall have occurred and so long as it shall continue,
the Agent may realize upon the Debenture by selling, transferring,
delivering, exercising or enforcing any or all of the powers, rights
and remedies of a holder of the Debenture as if the Agent were the
absolute owner thereof, without notice to, the consent of, or control
by, the Debtor (except to the extent required by any mandatory
provisions of applicable law) and any such power, right or remedy may
be exercised separately or in combination and shall be in addition to,
and not in substitution for, any other powers, rights or remedies of
the Agent however created; provided, however, that the Agent shall not
be bound to exercise any such power, right or remedy and shall not be
liable for any loss which may be caused by any failure to do so.
3. APPLICATION OF PROCEEDS. The proceeds of such realization of
the Debenture may be applied by the Agent on account of such part of the
Obligations as it chooses without prejudice to the Agent's or any Banks' claim
upon the Debtor for any deficiency balance.
4. EXTENSIONS, ETC. The Agent and the Banks may grant extensions
of time or other indulgences, take and give up securities, accept compositions,
grant releases and discharges and otherwise deal with the Debtor and with other
parties or sureties as the Agent and the Banks see fit, and apply all moneys
received from the Debtor or others or from any security, upon such part of the
Obligations that the Agent and the Banks may think best, without the consent
of, or notice to, the Debtor (except to the extent required by any mandatory
provisions of applicable law) and without prejudice to, or in any way limiting
or
<PAGE> 3
3
lessening the liability of the Debtor under, or the Agent's or the Banks'
rights in respect of, the Debenture.
5. INTEREST PAYMENTS. Notwithstanding any of the provisions of
the Debenture, payment to the Agent and the Banks of interest for any period in
respect of the Obligations shall be deemed payment in satisfaction of the
interest payment for the same period under the Debenture and the Agent in
realizing on the Debenture or the security constituted thereby shall not claim
under the Debenture any greater amount in the aggregate for principal and
interest than the aggregate of all sums then owing by the Debtor on account of
the Obligations.
6. NO MERGER. The Debenture shall not operate by way of merger
of any of the Obligations and no judgment recovered by the Agent or any of the
Banks shall operate by way of merger of, or in any way affect the security of,
the Debenture which is in addition to and not in substitution for any other
security now or hereafter held by the Agent and the Banks.
7. NO WAIVER; CUMULATIVE REMEDIES. The Agent shall not by any
act, delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any breach of any of the
terms and conditions hereof, unless such waiver or acquiescence is specifically
set forth in writing signed by the Agent. No failure to exercise, nor any
delay in exercising, on the part of the Agent, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Agent of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Agent or the Banks
would otherwise have on any future occasion. Without limiting the generality
of the foregoing, this Agreement may not be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Debtor and
the Agent. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and in any order and are not exclusive of any
rights or remedies provided by law.
8. DEALINGS BY AGENT. The Agent and the Banks may grant
extensions of time and other indulgences, take and give up security, accept
compositions, grant releases and discharges and otherwise deal with the Debtor
and any third party having dealings with the Debtor, and with the Collateral
(as defined in the Debenture) or any part thereof, and with other security and
sureties, as the Agent and the Banks may see fit, all without prejudice to the
Obligations or to the rights of the Agent and the Banks under this Agreement.
The powers conferred on the Agent and the Banks hereunder are solely to protect
the interests of
<PAGE> 4
4
the Agent and the Banks in the Collateral and shall not impose any duty upon
the Agent or any Bank to exercise any such powers. The Agent and the Banks
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither the Agent or any Bank nor any of its
officers, directors, employees or agents shall be responsible to the Debtor for
any act or failure to act hereunder, except for its or their own gross
negligence or wilful misconduct.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Debtor and its successors and assigns and shall enure to the benefit of the
Agent and its successors and assigns.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of Ontario and the laws of Canada
applicable therein, and without prejudice to the ability of the Agent to
enforce this Agreement in any other proper jurisdiction, the Debtor hereby
irrevocably submits and attorns to the jurisdiction of the courts of the
Province of Ontario for the purposes of this Agreement.
11. COMMUNICATION. All communications provided for or permitted
hereunder shall be in writing, personally delivered to an officer or other
responsible employee of the addressee or sent by registered or certified mail,
charges prepaid, or by telecopy, telex or telegram or other similar means of
recorded communication, charges prepaid, to the address or facsimile number set
forth, in the case of the Debtor, opposite its name on the execution page of
this Agreement, or in the case of the Agent, to 231 South LaSalle Street,
Chicago, Illinois, U.S.A. 60697, Facsimile No. (312) 987-5500, Attention:
Steven K. Ahrenholz, or to such other address as the recipient may from time to
time designate to the other in such manner, provided that no communication
shall be sent by mail pending any threatened or during any actual postal strike
or other disruption of postal service in Canada or the U.S.A. Any
communication so personally delivered shall be deemed to have been validly and
effectively given and received on the date of such delivery. Any communication
so sent by telecopy, telex, telegram or other similar means of recorded
communication shall be deemed
<PAGE> 5
5
to have been validly and effectively given on the Business Day (as defined in
the Debenture) next following the day on which it is sent. Any communication
so sent by mail shall be deemed to have been validly and effectively given and
received on the fifth Business Day following the day on which it is sent.
Dated as of May 6, 1994.
MANCHESTER PLASTICS, LTD.
Address: 900 Queen Street By: /s/ Terence C. Seikel
Gananoque, Ontario c/s
Canada, K7G 2W7 Name: Terence C. Seikel
Facsimile: (613) 382-8687 Title: Chief financial officer
Attention: President
<PAGE> 1
EXHIBIT 10.11(f)
PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT (this "Agreement"), dated as of May 6,
1994, is between MANCHESTER PLASTICS, LTD. (the "Grantor") and CONTINENTAL
BANK, N.A. in its capacity as agent for the Banks referred to below (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement, dated as of May 6, 1994, (as
amended or otherwise modified from time to time, the "Credit Agreement"), among
the Grantor, various financial institutions (collectively the "Banks" and
individually each a "Bank") and the Agent, the Banks have agreed to make loans
to the Grantor; and
WHEREAS, all obligations of the Grantor under or in connection with
the Credit Agreement are secured pursuant to a General Security Agreement of
even date herewith (as amended or otherwise modified from time to time, the
"Security Agreement"); and
WHEREAS, as a condition precedent to the making of the initial loans
under the Credit Agreement, the Grantor is required to execute and deliver this
Agreement to further confirm the grant to the Agent of a continuing security
interest in all of the Patent Collateral (as defined below) to secure all
obligations (monetary or otherwise) of the Grantor under or in connection with
the Credit Agreement and the other liabilities described in the Security
Agreement (the "Liabilities"); and
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantor agrees, for the benefit of the Agent
and the Banks, as follows:
SECTION 1. Grant of Security Interest. To secure the payment in full
of all Liabilities, the Grantor hereby mortgages, pledges and hypothecates to
the Agent, and grants to the Agent a security interest in, all of the following
property (the "Patent Collateral"), whether now owned or hereafter acquired or
existing:
(a) all letters patent and applications for letters
patent throughout the world, including all patent applications in
preparation for filing anywhere in the world and including each patent
and patent application referred to in Item A of Attachment 1 hereto;
<PAGE> 2
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in the foregoing clause (a);
(c) all proceeds of, and rights associated with, the
foregoing (including license royalties and proceeds of infringement
suits), the right to sue third parties for past, present or future
infringements of any patent or patent application, including any
patent or patent application referred to in Item A of Attachment 1
hereto, and for breach or enforcement of any related patent license
and all rights corresponding thereto throughout the world.
SECTION 2. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest
of the Agent in the Patent Collateral with the United States Patent and
Trademark Office and corresponding offices in other countries of the world.
The security interest granted hereby has been granted as a supplement to, and
not in limitation of, the security interest granted to the Agent under the
Security Agreement. The Security Agreement (and all rights and remedies of the
Agent thereunder) shall remain in full force and effect in accordance with its
terms.
SECTION 3. Release of Security Interest. Upon payment in full of all
Liabilities and the termination of all commitments to create Liabilities, the
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.
SECTION 4. Acknowledgment. The Grantor hereby further acknowledges
and affirms that the rights and remedies of the Agent with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 5. Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
MANCHESTER PLASTICS, LTD.
By: /s/ Terence C. Seikel
Title: Chief Financial Officer
Address: 900 Queen Street
Gananoque, Ontario
K7G 2W7
Attention: President
Facsimile: (810) 524-4996
CONTINENTAL BANK, N.A., as
Agent
By: /s/ Steven Ahrenholz
Title: Vice President
Address: 231 South LaSalle St.
Chicago, IL 60697
Attention: Steven K. Ahrenholz
Facsimile: (312) 987-5500
3
<PAGE> 1
EXHIBIT 10.11(g)(1)
[LOGO]
Province CHARGE/MORTGAGE OF LAND
of
Ontario FORM 2 - LAND REGISTRATION REFORM ACT
(1) REGISTRY /x/ LAND TITLES / / (2) Page 1 of 2
pages
(3) PROPERTY Block Property
IDENTIFIER(S) Additional:
See
Schedule / /
(4) PRINCIPAL AMOUNT
TWENTY MILLION
00/100 Dollars $20,000,000.00
(5) DESCRIPTION
FIRSTLY: Part of Lots 1 and 2, Concession 3,
in the Gore of the Township of Downie, now
in the City of Stratford, County of Perth,
being PARTS 5, 6 and 7 on Reference Plan
44R-1417; and
FOR OFFICE USE ONLY
New Property Identifiers
Additional: SECONDLY: Part of Lots 11 and 12, Concession
See 1, Town of Gananoque, County of Leeds
Schedule / / designated as PARTS 1, 2, 3, 4 and 5 on
Reference Plan 28R-4615; and
EXECUTIONS
Additional: - continued on Schedule annexed
See
Schedule / /
(6) THIS (a) Redescription (b) Schedule for: (7) INTEREST/ESTATE
DOCUMENT New Easement Description /X/ CHARGED Fee Simple
CONTAINS Plan/Sketch / / Additional
Parties / /
Other /X/
(8) STANDARD CHARGE TERMS -- The parties agree to be bound by the provisions in
Standard Charge Terms filed as number N/A and the Chargor(s) hereby
acknowledge(s) receipt of a copy of these terms.
(9) PAYMENT PROVISIONS
(a) Principal (b) Interest (c) Calculation
Amount $20,000,000.00 Rate See attached Period See attached
% per annum
Payment First Y M D
(d) Interest Y M D (e) Date and (f) Payment
Adjustment Period See attached Date
Date See attached
(g) Last (h) Amount
Payment of Each
Date See attached Payment See attached Dollars $
(i) Balance (j) Insurance
Due See attached Dollars $
Date See attached
(10) ADDITIONAL PROVISIONS
Continued on
Schedule /X/
(11) CHARGOR(S) The chargor hereby charges the land to the chargee
The chargor(s) acknowledge(s) receipt Date of Signature
of a true copy of this charge.
Name(s) Signature(s) Y M D
MANCHESTER PLASTICS, LTD. By: /s/ TERENCE C. SEIKEL 1994 5 6
(I have the authority to Name: Terence C. Seikel
bind the corporation.) Office: CFO
(12) SPOUSE(S) OF CHARGOR(S) Date of Signature
I hereby consent to this
transaction.
Name(s) Signature(s) Y M D
(13) CHARGOR(S) ADDRESS
FOR SERVICE 900 Queen Street, Gananoque, Ontario K7G 2W7
(14) CHARGEE(S)
CONTINENTAL BANK N.A., AS AGENT
(15) CHARGEE(S) ADDRESS
FOR SERVICE 231 South La Salle Street, Chicago, Illinois, U.S.A. 60697
(16) ASSESSMENT ROLL NUMBER Cty. Mun. Map Sub. Par.
OF PROPERTY Multiple
(17) MUNICIPAL ADDRESS (18) DOCUMENT PREPARED BY: For Office Use Only
OF PROPERTY BLAKE, CASSELS & GRAYDON Fees
Multiple Barristers and Solicitors Registration Fee
Box 25, Commerce Court West
Toronto, Ontario M5L 1A9
(416) 863-2400
ATTENTION: DFW Total
<PAGE> 2
Page 2
SCHEDULE
Description of Property (5) cont'd
Firstly: - 291 Griffith Road, Stratford
Part of Lots 1 and 2, Concession 3, in the Gore of the Township of Downie, now
in the City of Stratford, County of Perth, being PARTS 5, 6 and 7 on Reference
Plan 44R-1417 and Part of Lot 2, Concession 3, being Part 4, Plan 44R-900 and
Part 8, Plan 44R-495.
SUBJECT TO an easement in favour of the Corporation of the City of Stratford
over PARTS 6 and 7, Reference Plan 44R-1417.
AND FURTHER SUBJECT TO an easement in favour of the Corporation of the City of
Stratford over that part of PART 5, Reference Plan 44R-1417 more particularly
described as PART 1 on Reference Plan 44R-1688.
AND FURTHER SUBJECT TO an easement in favour of the Corporation of the City of
Stratford over Part 8 on Reference Plan 44R-495.
Secondly: - 900 Queen Street, Gananoque
Part of Lots 11 and 12, Concession 1, Town of Gananoque, County of Leeds
designated as PARTS 1, 2, 3, 4 and 5 on Reference Plan 28R-4615.
SUBJECT TO an easement in favour of The Gananoque Light and Water Supply
Company Limited registered as No. 5001.
AND FURTHER SUBJECT TO an easement in favour of the Bell Telephone Company of
Canada, Limited registered as No. 935.
<PAGE> 1
EXHIBIT 10.11(g)(2)
[LOGO]
Province CHARGE/MORTGAGE OF LAND
of
Ontario FORM 2 - LAND REGISTRATION REFORM ACT B
(1) REGISTRY /X/ LAND TITLES / / (2) PAGE 1 of 1 Pages
(3) PROPERTY Block Property Additional
IDENTIFIER(S) See
Schedule / /
(4) PRINCIPAL AMOUNT
TWENTY MILLION
00/100 Dollars $20,000,000.00
(5) DESCRIPTION
Part of Lot 4, Registrar's Compiled Plan No.
10620 designated as PART 2, Reference Plan
64R-8896, City of Scarborough,
Municipality of Metropolitan Toronto
FOR OFFICE USE ONLY
New Property Identifiers
Additional:
See
Schedule / /
Executions
Additional:
See
Schedule / /
(6) THIS (a) Redescription (b) Schedule for: (7) INTEREST/ESTATE
DOCUMENT New Easement Description / / CHARGED
CONTAINS Plan/Sketch / / Additional Leasehold
Parties / /
Other /X/
(8) STANDARD CHARGE TERMS -- The parties agree to be bound by the provisions in
Standard Charge Terms filed as number N/A and the Chargor(s) hereby
acknowledge(s) receipt of a copy of these terms.
(9) PAYMENT PROVISIONS
(a) Principal (b) Interest (c) Calculation
Amount $20,000,000.00 Rate See attached Period
% per annum See attached
Payment First Y M D
(d) Interest Y M D (e) Date and (f) Payment
Adjustment Period See attached Date
Date See attached
(g) Last (h) Amount
Payment of Each
Date See attached Payment See attached Dollars $
(i) Balance (j) Insurance
Due See attached Dollars $
Date See attached
(10) ADDITIONAL PROVISIONS
Continued on
Schedule /X/
(11) CHARGOR(S) The chargor hereby charges the land to the chargee
The chargor(s) acknowledge(s) receipt
of a true copy of this charge. Date of Signature
Name(s) Signature(s) Y M D
MANCHESTER PLASTICS, LTD. By: /s/ Terence C. Seikel 1994 5 6
(I have the authority to Name: Terence C. Seikel
bind the corporation.) Office: CFO
LARIZZA INDUSTRIES, INC. By: /s/ Terence C. Seikel 1994 5 6
(I have the authority to Name: Terence C. Seikel
bind the corporation.) Office: CFO
(12) SPOUSE(S) OF CHARGOR(S) I hereby consent to Date of Signature
this transaction.
Name(s) Signature(s) Y M D
(13) CHARGOR(S) ADDRESS
for Service 900 Queen Street, Gananoque, Ontario K7G 2W7
(14) CHARGEE(S)
CONTINENTAL BANK N.A., AS AGENT
(15) CHARGEE(S) ADDRESS
FOR SERVICE 231 South La Salle Street, Chicago, Illinois, U. S.A. 60697
FOR OFFICE USE ONLY
(16) ASSESSMENT ROLL NUMBER Cty. Mun. Map Sub. Par. Fees
OF PROPERTY Registration Fee
(17) MUNICIPAL ADDRESS (18) DOCUMENT PREPARED BY:
OF PROPERTY BLAKE, CASSELS & GRAYDON
165 Milner Avenue Barristers and Solicitors
Scarborough, Ontario Box 25, Commerce Court West
Toronto, Ontario M5L 1A9
(416) 863-2400
Attention: DFW Total
