Financing Agreement - CIT Group/Business Credit Inc., Rock of Ages Corp., Royalty Granite Corp., Carolina Quarries Inc., Pennsylvania Granite Corp., Childs & Childs Granite Co. Inc., Southern Mausoleums Inc. and Rock of Ages Memorials LLC
FINANCING AGREEMENT
The CIT Group/Business Credit, Inc.
(as Lender and as Agent)
And
ROCK OF AGES CORPORATION
(as Borrower)
ROYALTY GRANITE CORPORATION
(as Borrower)
CAROLINA QUARRIES, INC.
(as Borrower)
PENNSYLVANIA GRANITE CORP.
(as Borrower)
CHILDS & CHILDS GRANITE COMPANY, INC.
(as Borrower)
SOUTHERN MAUSOLEUMS, INC.
(as Borrower)
ROCK OF AGES MEMORIALS LLC
(as Borrower)
Dated: December 17, 1997
TABLE OF CONTENTS
Page
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. Conditions Precedent . . . . . . . . . . . . . . . . . . . 12
SECTION 3. Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4. Acquisition Term Loans . . . . . . . . . . . . . . . . . . 18
SECTION 5. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. Collateral . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7. Representations, Warranties and Covenants . . . . . . . . . 24
SECTION 8. Interest, Fees and Expenses . . . . . . . . . . . . . . . . 30
SECTION 9. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10. Events of Default and Remedies . . . . . . . . . . . . . . 34
SECTION 11. Termination . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 12. Agreement between the Lenders . . . . . . . . . . . . . . 37
SECTION 13. Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 44
EXHIBIT
EXHIBIT A - Form of Promissory Note
EXHIBIT B - Assignment and Transfer Agreement
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
(hereinafter "CITBC"), with offices located at 1211 Avenue of the Americas,
New York, NY 10036, the other lenders that may, on or subsequent to the
date hereof, purchase from CITBC or from another Lender a portion of
CITBC's or such other Lender's rights and obligations under this Financing
Agreement (CITBC and such other lenders each sometimes referred to
individually as a "Lender" and sometimes collectively as the "Lenders") and
CITBC as agent for the Lenders (herein the ' Agent"), are pleased to
confirm the terms and conditions under which CITBC shall make term loans
and revolving loans, advances and other financial accommodations to ROCK OF
AGES CORPORATION (herein "ROA"), a Delaware corporation with a principal
place of business at 772 Granitville Road, Barre, Vermont 05654; ROYALTY
GRANITE CORPORATION (herein "Royalty"), a Georgia corporation with a
principal place of business at SR 294, Berkley Quarry Road, Carlton,
Georgia 30627; CAROLINA QUARRIES, INC. (herein "Carolina"), a Georgia
corporation with a principal place of business at 805 Harris Granite Road,
Salisbury, North Carolina 28146; PENNSYLVANIA GRANITE CORP. (herein
"Pennsylvania"), a Pennsylvania corporation with a principal place of
business at 410 Tryhall Road, Elverson, Pennsylvania 19520; CHILDS & CHILDS
GRANITE COMPANY, INC. ("Childs"), a Georgia corporation with a principal
place of business at 1130 Hartwell Highway, Elberton, Georgia 30635;
SOUTHERN MAUSOLEUMS, INC. ("Mausoleums"), a Georgia corporation with a
principal place of business at 1167 Bowman Highway, Elberton, Georgia
30635; ROCK OF AGES MEMORIALS LLC ("Memorials"), a limited liability
company formed under the laws of Delaware with a principal place of
business at 1024 North Dixie, Elizabethtown, Kentucky 42701; and such other
subsidiaries or affiliates of the foregoing as the Lenders, by unanimous
consent, permit to become a party hereto (ROA, Royalty, Carolina,
Pennsylvania, Childs, Mausoleums and Memorials and such other permitted
parties are hereinafter sometimes referred to individually as a "Company"
and sometimes collectively referred to as the "Companies").
SECTION 1. Definitions
ACCOUNTS shall mean all of each Company's now existing and future: (a)
accounts receivable, (whether or not specifically listed on schedules
furnished to the Agent), and any and all instruments, documents, contract
rights, chattel paper, general intangibles, including, without limitation,
all accounts created by or arising from each Company's sales of goods or
rendition of services to its customers, and all accounts arising from sales
or rendition of services made under any Company's trade names or styles, or
through any of a Company's divisions; (b) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any
of the foregoing, including rights to returned or repossessed goods; (d)
reserves and credit balances arising hereunder; (e) guarantees or
collateral for any of the foregoing; (f) insurance policies or rights
relating to any of the foregoing; and (g) cash and non-cash proceeds of any
and all the foregoing.
ACQUISITION TERM LOANS shall mean those term loans made to ROA pursuant to
the provisions of Section 4 of this Financing Agreement.
ACQUISITION TERM LOAN LINE OF CREDIT shall mean the sum of $25,000,000.00.
ANNIVERSARY DATE shall mean the date occurring one (1) year from the date
hereof and the same date in every year thereafter.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and Transfer
Agreement in the form of Exhibit B hereto.
AVAILABILITY shall mean at any time the excess of the sum of a) Eligible
Accounts Receivable multiplied by the percentage provided for in clause (a)
of paragraph 1 of Section 3 of this Financing Agreement and b) Eligible
Inventory multiplied by the percentage provided for in clause (b) of
paragraph 1 of Section 3 of this Financing Agreement over the sum of x) the
outstanding aggregate amount of all Obligations (other than the Acquisition
Term Loans) of the Company and y) the Availability Reserve.
AVAILABILITY RESERVE shall mean at any time of determination, the then
outstanding amount of all Letters of Credit.
BUSINESS DAY shall mean any day on which all of the Agent, CITBC and Chase
Manhattan Bank are open for business.
CAPITAL EXPENDITURES for any period shall mean the aggregate of all
expenditures of the Companies during such period that in conformity with
GAAP are required to be included in or reflected by the property, plant or
equipment or similar fixed asset account reflected in the balance sheet of
the Companies.
CAPITAL LEASE shall mean any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capital lease
or a Capital Expenditure on the balance sheets of the Companies.
CHASE BANK RATE shall mean the rate of interest per annum announced by
Chase Manhattan Bank from time to time as its prime rate in effect at its
principal office in the City of New York. (The prime rate is not intended
to be the lowest rate of interest charged by Chase Manhattan Bank to its
borrowers).
COLLATERAL shall mean all present and future Accounts, Equipment,
Inventory, Documents of Title, General Intangibles and Real Estate of each
Company.
COLLATERAL MANAGEMENT FEE shall mean the sum which shall be paid to the
Agent, solely for the benefit of the Agent, in accordance with Section 8
hereof to offset the expenses and costs of the Agent in connection with
record keeping, periodic examinations, analyzing and evaluating the
Collateral.
CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet for the
Companies and their consolidated subsidiaries eliminating all inter-company
transactions and prepared in accordance with GAAP.
CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
individual balance sheets for the Companies and their subsidiaries showing
all eliminations of inter-company transactions and prepared in accordance
with GAAP and including a balance sheet for each Company exclusively.
CURRENT ASSETS shall mean, whenever used throughout this Financing
Agreement, those assets of the Companies which, in accordance with GAAP,
are classified as "current".
CURRENT LIABILITIES shall mean, wherever used through out this Financing
Agreement, those liabilities of the Companies which, in accordance with
GAAP, are classified as "current", provided, however, that notwithstanding
GAAP, the Revolving Loans and the current portion of Permitted Indebtedness
shall be considered "current liabilities".
CUSTOMARILY PERMITTED LIENS shall mean
(a) liens of local or state authorities for franchise or other like
taxes provided the aggregate amounts of such liens shall not exceed
$500,000.00 in the aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created
in the ordinary course of business and for amounts not yet due (or
which are being contested in good faith by appropriate proceedings or
other appropriate actions which are sufficient to prevent imminent
foreclosure of such liens) and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of
business (including, without limitation, security deposits for
leases, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other
similar obligations arising as a result of progress payments under
government contracts; and
(d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and
which are listed in Schedule B of the title insurance policies
delivered to the Agent herewith.
DEFAULT shall mean any event specified in Section 10 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both,
or any other condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to
the sum of: a) two and one-half percent (2-1/2%) and b) the Chase Bank
Rate, which the Agent shall be entitled to charge the Companies on all
Obligations to the extent provided in paragraph 2 of Section 10 of this
Financing Agreement.
DEPOSITORY ACCOUNTS shall mean those accounts owned by the Agent and
designated for the deposit of proceeds of Collateral.
DOCUMENTATION FEE shall mean i) the sum of $25,000.00 intended to
compensate the Agent for the use of the Agent's in-house Legal Department
and facilities in documenting, in whole or in part, the initial
transaction, exclusive of Out-of-Pocket Expenses, and ii) the Agent's
standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing
Agreement, the Collateral and/or the Obligations.
DOCUMENTS OF TITLE shall mean all present and future warehouse receipts,
bills of lading, shipping documents, chattel paper, instruments and similar
documents, all whether negotiable or not and all goods and Inventory
relating thereto and all cash and non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which ROA terminates this
Financing Agreement or the Line of Credit which date is prior to the fifth
Anniversary Date.
EARLY TERMINATION FEE shall: i) mean the fee the Agent, on behalf of the
Lenders, is entitled to charge the Companies in the event ROA terminates
the Line of Credit or this Financing Agreement on a date prior to the
fifth Anniversary Date; and ii) be determined by calculating the average
daily loan balance under the Revolving Loan for the period from the date
of this Financing Agreement to the Early Termination Date and multiplying
that number by x) one percent (1%) per annum for the number of days from
the Early Termination Date to the fifth Anniversary Date if the Early
Termination Date is prior to the first Anniversary Date; y) one half of
one percent (.50%) per annum for the number of days from the Early
Termination Date to the fifth Anniversary Date if the Early Termination
Date is on or after the first Anniversary Date but prior to the second
Anniversary Date; and z) one quarter of one percent (.25%) per annum for
the number of days from the Early Termination Date to the fifth
Anniversary Date if the Early Termination Date is on or after the second
Anniversary Date but prior to the fifth Anniversary Date.
EBITDA shall mean, in any period, all earnings of the Companies before all
interest, depreciation, amortization of general intangibles, and tax
obligations of the Company for said period, determined in accordance with
GAAP.
EBITDA to Fixed Charge Ratio shall mean, at any time of determination, the
ratio determined by dividing EBITDA by Fixed Charge.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of
this Financing Agreement.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of each Company's
accounts receivable that conform to the warranties contained herein and at
all times continue to be acceptable to the Agent in the exercise of its
reasonable business judgment, less, without duplication, the sum of a) any
returns, discounts, claims, credits and allowances of any nature (whether
issued, owing, granted or outstanding) and b) reserves for: i) sales to the
United States of America or to any agency, department or division thereof;
ii) foreign sales other than sales x) secured by stand-by letters of credit
(in form and substance satisfactory to the Agent) issued or confirmed by,
and payable at, banks having a place of business in the United States of
America and payable in United States currency, or y) to customers residing
in Canada provided such sales otherwise comply with all of the other
criteria for eligibility hereunder, are payable in United States currency
and such sales do not exceed $500,000 in the aggregate at any one time;
iii) accounts that remain unpaid more than the greater of a) ninety (90)
days from invoice date or b) sixty (60) days from due date but in no event
more than one hundred and eight (180) days from invoice date; iv) contras;
v) sales to any subsidiary, or to any Company or to any company affiliated
with a Company in any way; vi) bill and hold (deferred shipment) or
consignment sales; vii) sales to any customer which is a) insolvent, b) the
debtor in any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or state law, c)
negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts or d) financially unacceptable to
the Agent or has a credit rating unacceptable to the Agent; viii) all sales
to any customer if fifty percent (50%) or more of either x) all outstanding
invoices or y) the aggregate dollar amount of all outstanding invoices, are
unpaid more than the greater of a) ninety (90) days from invoice date or b)
sixty (60) days from due date but in no event more than one hundred and
eighty (180) days from invoice date; ix) any other reasons deemed necessary
by the Agent in its reasonable business judgment and which are customary
either in the commercial finance industry or in the lending practices of
the Agent; and x) an amount representing historically, returns, discounts,
claims, credits and allowances.
ELIGIBLE INVENTORY shall mean the gross amount of each Company's inventory
that conform to the warranties contained herein and which at all times
continue to be acceptable to the Agent in the exercise of its reasonable
business judgment less any work-in-process, supplies (other than raw
material), goods not present in the United States of America, goods
returned or rejected by a Company's customers other than goods that are
undamaged and resaleable in the normal course of business, goods to be
returned to a Company's suppliers, goods in transit to third parties (other
than a Company's agents or warehouses) and less any reserves required by
the Agent in its reasonable discretion for special order goods, market
value declines and bill and hold (deferred shipment) or consignment sales.
EQUIPMENT shall mean all present and hereafter acquired machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto and all proceeds of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as
amended from time to time and the rules and regulations promulgated
thereunder from time to time.
FIXED CHARGE COVERAGE RATIO shall mean, for the relevant period, the ratio
determined by dividing (a) EBITDA for such period by (b) the sum of (i) all
interest on Indebtedness, (ii) the amount of principal repaid on the
Acquisition Term Loans, (iii) capital expenditures, determined in
accordance with GAAP, and (iv) all federal, state and local income tax paid
or due and payable.
FUNDED DEBT shall mean, at any time of determination, Permitted
Indebtedness other than the Indebtedness referred to in clauses i and v of
the definition of Permitted Indebtedness.
FUNDED DEBT TO NET WORTH RATIO shall mean, at any time of determination,
the ratio determined by dividing Funded Debt by Net Worth, all as
determined in accordance with GAAP.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to
which such accounting principles are to apply.
GENERAL INTANGIBLES shall have the meaning set forth in the Uniform
Commercial Code as in effect in the State of New York and shall include,
without limitation, all present and future right, title and interest in and
to all tradenames, trademarks (together with the goodwill associated
therewith), patents, licenses, customer lists, distribution agreements,
supply agreements and tax refunds, together with all monies and claims for
monies now or hereafter due and payable in connection with any of the
foregoing or otherwise, and all cash and non-cash proceeds thereof.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent
or otherwise, which are any of the following: (a) obligations in respect of
money (borrowed or otherwise) or for the deferred purchase price of
property, services or assets, other than Inventory, or (b) lease
obligations which, in accordance with GAAP, have been, or which should be
capitalized.
INTEREST COVERAGE RATIO shall mean a ratio determined as of the relevant
calculation date by dividing EBITDA by Interest Expense for the relevant
period.
INTEREST EXPENSE shall mean total interest obligations (paid or accrued) of
the Companies, determined in accordance with GAAP on a basis consistent
with the latest audited statements of the Companies.
INVENTORY shall mean all of each Company's present and hereafter acquired
merchandise, Inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and
materials used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production- from raw materials through
work-in-process to finished goods - and all proceeds thereof of whatever
sort.
ISSUING BANK shall mean the bank issuing Letters of Credit for any Company.
LETTERS OF CREDIT shall mean all letters of credit issued with the
assistance of the Agent by the Issuing Bank for or on behalf of any
Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the Agent to
the Issuing Bank of a Company's reimbursement obligation under the Issuing
Bank's reimbursement agreement, application for letter of credit or other
like document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee the Agent, on behalf of
the Lenders, may charge the Companies under Section 8 of this Financing
Agreement for: i) issuing the Letter of Credit Guaranty or ii) otherwise
aiding in obtaining Letters of Credit.
LEVERAGE RATIO shall mean the ratio determined by dividing Total
Liabilities by Net Worth.
LIBOR shall mean, at any time of determination, and subject to
availability, the London Interbank Offered Rate paid in London by Chase
Manhattan Bank on one month, two month, three month or six month dollar
deposits and if such rates are not otherwise available, then those rates as
published, under "Money Rates", in the New York City edition of the Wall
Street Journal or if there is no such publication or statement therein as
to Libor, then in any publication used in the New York City financial
community.
LIBOR LOAN shall mean the loans for which ROA has elected to use Libor for
interest rate computations.
LIBOR PERIOD shall mean the Libor for one month, two month, three month, or
six month dollar deposits, as selected by ROA.
LIBOR PROCESSING FEE shall mean a fee in the amount of $500.00 payable on
the effective date of the Libor Loan and payable solely to the Agent for
the account of the Agent for processing the Libor Loan.
LINE OF CREDIT shall mean the commitment of the Lenders, acting through the
Agent, to make loans and advances pursuant to Section 3 of this Financing
Agreement, to ROA for the benefit of the Companies in an amount equal to
$25,000,000.00.
LINE OF CREDIT FEE shall: i) mean the fee due the Agent, for the benefit
of the Lenders, at the end of each month for the Acquisition Term Loan
Line of Credit and the Line of Credit, and ii) be determined as set forth
in Section 8 of this Financing Agreement.
LOAN FACILITY FEE shall mean the fee payable to the Agent in accordance
with, and pursuant to, the provisions of Section 8 of this Financing
Agreement.
NET WORTH shall mean assets in excess of liabilities, and determined in
accordance with GAAP, on a consistent basis with the latest audited
statements.
OBLIGATIONS shall mean all loans and advances made or to be made by the
Agent, for the account of the Lenders, to any Company or to others for a
Company's account; any and all indebtedness and obligations which may at
any time be owing by a Company in respect of this Financing Agreement,
howsoever arising, whether now in existence or incurred by a Company from
time to time hereafter; whether secured by pledge, lien upon or security
interest in any of a Company's assets or property or the assets or property
of any other person, firm, entity or corporation; whether such indebtedness
is absolute or contingent, joint or several, matured or unmatured, direct
or indirect and whether a Company is liable for such indebtedness as
principal, surety, endorser, guarantor or otherwise. Obligations shall
also include indebtedness owing by any Company under this Financing
Agreement or under any other agreement or arrangement now or hereafter
entered into between a Company and the Agent on behalf of the Lenders;
indebtedness or obligations incurred by, or imposed on, the Agent or any
Lender as a result of environmental claims (other than as a result of the
Agent's actions or omissions) arising out of any Company's operations,
premises or waste disposal practices or sites; a Company's liability to the
Agent or any Lender as maker or endorser on any promissory note or other
instrument for the payment of money under this Financing Agreement; a
Company's liability to the Agent, for the account of the Lenders, under any
instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which the Agent, on behalf of the Lenders, may
make or issue to others for a Company's account, including any
accommodation extended with respect to applications for Letters of Credit,
the Agent's acceptance of drafts or the Agent's endorsement of notes or
other instruments for a Company's account and benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal
or mixed) other than Capital Leases.
OUT-OF-POCKET EXPENSES shall mean all of the Agent' s present and future
expenses incurred relative to this Financing Agreement, whether incurred
heretofore or hereafter, which expenses shall include, without being
limited to, the cost of record searches, all costs and expenses incurred in
opening bank accounts, depositing checks, receiving and transferring funds,
and any charges imposed on the Agent due to ''insufficient funds" of
deposited checks and the Agent's standard fee relating thereto, any amounts
paid by the Agent, incurred by or charged to the Agent by the Issuing Bank
under the Letter of Credit Guaranty or a Company's reimbursement agreement,
application for letter of credit or other like document which pertain
either directly or indirectly to such Letters of Credit, and the Agent 's
standard fees relating to the Letters of Credit and any drafts thereunder,
local counsel fees, title insurance premiums, real estate survey costs, the
Georgia General Intangible Tax, fees and taxes relative to the filing of
financing statements, costs of preparing and recording mortgages/deeds of
trust against the Real Estate and all expenses, costs and fees set forth in
paragraph 3 of Section 10 of this Financing Agreement.
PERMITTED ENCUMBRANCES shall mean: i) liens expressly permitted, or
consented to, by the Agent; ii) Purchase Money Liens; iii) Customarily
Permitted Liens; iv) liens granted the Agent by the Companies; v) liens of
judgment creditors provided such liens do not exceed, in the aggregate, at
any time, $250,000.00 (other than liens bonded or insured to the reasonable
satisfaction of the Agent); and vi) liens for taxes not yet due and payable
or which are being diligently contested in good faith by a Company by
appropriate proceedings and which liens are not x) other than with respect
to Real Estate, senior to the liens of the Agent or y) for taxes due the
United States of America.
PERMITTED INDEBTEDNESS shall mean: i) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, taxes or labor; ii) the
Indebtedness secured by the Purchase Money Liens; iii) Indebtedness of any
Company which is subordinated to the prior payment and satisfaction of the
Obligations by means of a subordination agreement in form and substance
satisfactory to the Agent; iv) Indebtedness arising under the Letters of
Credit and this Financing Agreement; v) deferred taxes and other expenses
incurred in the ordinary course of business; vi) Indebtedness incurred by
the Companies with the consent of the Agent or the Required Lenders, as the
case may be; and vii) other Indebtedness existing on the date of execution
of this Financing Agreement and either x) listed in the most recent
financial statements delivered to the Agent and the Lenders or y) otherwise
disclosed to the Agent and the Lenders in writing; or z) which is not
material to the financial condition of the Companies as a whole.
PREPAYMENT PREMIUM shall: i) mean the amount due the Agent, for the benefit
of the Lenders, by the Companies upon a prepayment, solely as a result of
ROA's termination of this Financing Agreement, of any Acquisition Term
Loan, prior to the sixth month preceding the fifth Anniversary Date, and
ii) be computed by multiplying the amount so prepaid by one percent (1%).
PROMISSARY NOTE shall mean the note, in the form of Exhibit A attached
hereto, delivered by ROA to the Agent to evidence an Acquisition Term Loan
pursuant to, and repayable in accordance with, the provisions of Section 4
of this Financing Agreement.
PURCHASE MONEY LIENS shall mean liens on any item of equipment acquired
after the date of this Financing Agreement provided that i) each such lien
shall attach only to the property to be acquired, ii) a description of the
property so acquired is furnished to the Agent, iii) the debt incurred in
connection with such acquisitions shall not exceed in the aggregate
$1,000,000 in any fiscal year, and iv) the debt so incurred is not under
this Financing Agreement.
REAL ESTATE shall mean any Company's fee interests in the real property
which has been, or will be, encumbered, mortgaged, pledged or assigned to
the Agent or its designee.
REQUIRED LENDERS shall mean Lenders holding at least fifty-one percent (51
%) of the outstanding loans, advances, extensions of credit to and
commitments to the Company.
REVOLVING LOANS shall mean the loans and advances made, from time to time,
to or for the account of a Company, pursuant to Section 3 of this Financing
Agreement.
SETTLEMENT DATE shall mean the date, weekly, and more frequently, at the
discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans that the Agent and
the Lenders shall settle amongst themselves so that x) the Agent shall not
have, as Agent, any money at risk and y) on such Settlement Date the
Lenders shall have a pro-rata amount of all outstanding Acquisition Term
Loans, Revolving Loans and Letters of Credit, provided that each Settlement
Date shall be a Business Day.
SYNDICATION shall mean the sale by CITBC of at least fifty percent (50%) of
the obligations and commitments hereunder to one or more lenders reasonably
acceptable to CITBC.
SYNDICATION SIDE LETTER shall mean that certain letter agreement between
the Companies, the Agent and CITBC which letter agreement shall not be
given to the Lenders until April 1, 1998 and then only if the Syndication
has not been completed by March 31, 1998.
TOTAL LIABILITIES shall mean total liabilities of the Companies determined
in accordance with GAAP, on a basis consistent with the latest audited
statements of the Company.
WORKING CAPITAL shall mean Current Assets in excess of Current Liabilities.
SECTION 2. Conditions Precedent
The obligation of the Lenders, acting through the Agent, to make
loans hereunder is subject to the satisfaction of, or waiver of,
immediately prior to, or concurrently with, the making of such loans, the
following conditions precedent:
(a) LIEN SEARCHES -The Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent for all
locations presently occupied or used by each Company.
(b) CASUALTY INSURANCE - ROA shall have delivered to the Agent
evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as loss payee or mortgagee, as the case may be, are
in full force and effect, all as set forth in Section 7, paragraph 5
of this Financing Agreement.
(c) MORTGAGES/DEEDS OF TRUST - Each Company shall have executed and
delivered to either the Agent or a designee of the Agent or of a
title insurance company acceptable to the Agent such mortgages and
deeds of trust as the Agent may reasonably require to obtain first
liens on the Real Estate.
(d) UCC FILINGS - Any documents (including without limitation,
financing statements) required to be filed in order to create, in
favor of the Agent, for the benefit of the Lenders, a first and
exclusive perfected security interest in the Collateral with respect
to which a security interest may be perfected by a filing under the
Uniform Commercial Code shall have been properly filed in each office
in each jurisdiction required in order to create in favor of the
Agent a perfected lien on the Collateral. The Agent shall have
received acknowledgment copies of all such filings (or, in lieu
thereof, the Agent shall have received other evidence satisfactory to
the Agent that all such filings have been made); and the Agent shall
have received evidence that all necessary filing fees and all taxes
or other expenses related to such filings have been paid in full.
(e) TITLE INSURANCE POLICIES - The Agent shall have received, in
respect of each mortgage or deed of trust, a mortgagee's title policy
or marked-up unconditional binder for such insurance consistent with
title insurance policies previously delivered by either Royalty or
ROA to CITBC. Each such policy shall (i) be in an amount satisfactory
to the Agent; (ii) insure that the mortgage or deed of trust insured
thereby creates a valid first lien on the property covered by such
mortgage or deed of trust, free and clear of all defects and
encumbrances except those acceptable to the Agent; (iii) name the
Agent as the insured thereunder; and (iv) contain such endorsements
and effective coverage as the Agent may reasonably request, including
without limitation the revolving line of credit endorsement. The
Agent shall also have received evidence that all premiums in respect
of such policies have been paid and that all charges for mortgage
recording taxes, if any, shall have been paid.
(f) SURVEYS - The Agent and the title insurance company issuing each
policy referred to in the immediately preceding paragraph shall have
received copies of the currently existing maps or plats of a
perimeter or boundary of the site of each of the properties covered
by the mortgages or deeds of trust.
(g) EXAMINATION & VERIFICATION- The Agent shall have completed to the
satisfaction of the Agent, and each Lender, an examination and
verification of the Accounts, Inventory, books and records of each
Company.
(h) INTENTIONALLY OMITTED
(i) OPINIONS - Counsel for the Companies shall have delivered to the
Agent, for the benefit of the Lenders, opinions satisfactory to the
Agent opining, inter alia, that, subject to the i) filing, priority
and remedies provisions of the Uniform Commercial Code, ii) the
provisions of the Bankruptcy Code, insolvency statutes or other like
laws, iii) the equity powers of a court of law and iv) such other
matters as may be agreed upon with the Agent, all documents of the
Companies are x) valid, binding and enforceable according to their
terms, y) are duly authorized and z) do not violate any terms,
provisions, representations or covenants in the charter or by-laws of
any Company or, to the best knowledge of such counsel, of any loan
agreement, mortgage, deed of trust, note, security or pledge
agreement or indenture to which any Company is a signatory or by
which any Company or its assets are bound.
(j) PLEDGE AGREEMENT - ROA shall a) execute and deliver to the Agent,
for the benefit of the Lenders, a pledge and security agreement and
stock powers pledging to the Agent as additional collateral for the
Obligations all of the issued and outstanding stock of the Companies
(other than ROA) and, b) deliver to the Agent the stock certificates
of the Companies.
(k) ADDITIONAL DOCUMENTS - Each Company shall have executed and
delivered to the Agent all loan documents necessary to consummate the
lending arrangement contemplated herein.
(l) INTENTIONALLY OMITTED
(m) LIMITED LIABILITY COMPANY - Memorials shall deliver to Agent a
true copy of its Limited Liability Company Agreement.
(n) THE COMMITMENT LETTER - ROA has fully complied, to the reasonable
satisfaction of the Agent, with all of the terms and conditions of
the commitment letter, dated September 18, 1997, issued by CITBC to,
and accepted by, ROA.
(o) ENVIRONMENTAL REPORT - The Agent shall have received
environmental audit reports on i) all of each Company's fee
interests, and ii)each Company's waste disposal practices. The
reports must x) be satisfactory to the Agent and y) not disclose or
indicate any liability (real or potential) stemming from a Company's
premises, its operations, its waste disposal practices or waste
disposal sites used by any Company.
(p) BOARD RESOLUTION - The Agent shall have received a copy of the
resolutions of the Board of Directors of each Company authorizing the
execution, delivery and performance of (i) this Financing Agreement,
and (ii) any related agreements, in each case certified by the
Secretary or Assistant Secretary of each Company as of the date
hereof, together with a certificate of the Secretary or Assistant
Secretary of each Company as to the incumbency and signature of the
officers of the Company executing this Financing Agreement and any
certificate or other documents to be delivered by it pursuant hereto,
together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(q) CORPORATE ORGANIZATION - The Agent shall have received (i) a copy
of the Certificate of Incorporation of each Company (excluding
Memorials) certified by the Secretary of State of its incorporation,
and (ii) a copy of the By-Laws (as amended through the date hereof)
of each Company and certified by the Secretary or Assistant Secretary
of the Company.
(r) OFFICER'S CERTIFICATE - The Agent shall have received an executed
Officer's Certificate from each Company, satisfactory in form and
substance to the Agent, certifying that (i) the representations and
warranties contained herein are true and correct in all material
respects on and as of the date hereof; (ii) the Company is in
compliance with all of the terms and provisions set forth herein; and
(iii) no Event of Default has occurred.
(s) ABSENCE OF DEFAULT - No Default, Event of Default or material
adverse change in the financial condition, business, prospects,
profits, operations or assets of any Company shall have occurred.
(t) LEGAL RESTRAINTS/LITIGATION - At the date of execution of this
Financing Agreement, there shall be no (x) litigation, investigation
or proceeding (judicial or administrative) pending or threatened
against the Company or its assets, by any agency, division or
department of any county, city, state or federal government, (y)
injunction, writ or restraining order restraining or prohibiting
consummation of the financing arrangements contemplated under this
Financing Agreement or (z), suit, action, investigation or proceeding
(judicial or administrative) pending or threatened against the
Company or its assets, which, in the opinion of the Agent, if
adversely determined could have a material adverse effect on the
business, operation, assets, financial condition or Collateral of the
Company.
(u) DISBURSEMENT AUTHORIZATION - ROA shall have delivered to the
Agent all information necessary for the Agent to issue wire transfer
instructions on behalf of the Companies for the initial and
subsequent loans and/or advances to be made under this Agreement
including, but not limited to, disbursement authorizations in form
acceptable to the Agent.
Upon the execution of this Financing Agreement and the initial disbursement
of loans hereunder, all of the above Conditions Precedent shall have been
deemed satisfied except as the Companies, the Agent and the Lenders shall
otherwise agree herein or in a separate writing.
SECTION 3. Revolving Loans
1. The Lenders, acting through the Agent, agree, subject to the terms
and conditions of this Financing Agreement from time to time, and within x)
the Availability and y) the Line of Credit, but subject to the Agent's and
the Lenders' (acting through the Agent) right to make "overadvances", to
make loans and advances to ROA, to and for the benefit of the Companies, on
a revolving basis (i.e. subject to the limitations set forth herein, the
Companies, through ROA, may borrow, repay and re-borrow Revolving Loans).
Such loans and advances shall be in amounts up to: a) seventy-five percent
(75%) of the outstanding Eligible Accounts Receivable of the Companies, and
b) fifty percent (50%) of the aggregate value of Eligible Inventory of the
Companies as determined at the lower of cost or market but in no event may
the amount of all outstanding advances under this clause b exceed
$12,500,000.00 in the aggregate at anyone time. All requests for loans and
advances must be received by an officer of the Agent no later than 1:00
p.m., New York time, of the Business Day on which such loans and advances
are required. Should the Agent for any reason honor requests for advances
in excess of the limitations set forth herein, such advances shall be
considered "overadvances" and shall be made in the Agent's sole discretion,
subject to any additional terms the Agent deems necessary.
2. In furtherance of the continuing assignment and security interest
in each Company's Accounts, each Company will, upon the creation of
Accounts, execute and deliver to the Agent in such form and manner as the
Agent may reasonably require, solely for the Agent's convenience in
maintaining records of collateral, such confirmatory schedules of Accounts
as the Agent may reasonably request, and such other appropriate reports
designating, identifying and describing the Accounts as the Agent may
reasonably require. In addition, upon the Agent's request each Company
shall provide the Agent with copies of agreements with, or purchase orders
from, the Company's customers, and copies of invoices to customers, proof
of shipment or delivery and such other documentation and information
relating to said Accounts and other collateral as the Agent may reasonably
require. Failure to provide the Agent with any of the foregoing shall in no
way affect, diminish, modify or otherwise limit the security interests
granted herein. Each Company hereby authorizes the Agent to regard that
Company's printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by one of the Company's
authorized officers or agents.
3. Each Company hereby represents and warrants that: each Account is
based on an actual and bona fide sale and delivery of goods or rendition of
services to customers, made by a Company in the ordinary course of its
business; the goods and inventory being sold and the Accounts created are
the exclusive property of such Company and are not and shall not be subject
to any lien, consignment arrangement, encumbrance, security interest or
financing statement whatsoever, other than the Permitted Encumbrances; the
invoices evidencing such Accounts are in the name of the Company so selling
the Inventory; and the customers of that Company have accepted the goods or
services, owe and are obligated to pay the full amounts stated in the
invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, except for disputes and other matters arising in
the ordinary course of business of which the Company has advised the Agent
pursuant to paragraph 5 of this Section 3. Each Company confirms to the
Agent that any and all taxes or fees relating to its business, its sales,
the Accounts or goods relating thereto, are its sole responsibility and
that same will be paid by such Company when due and that none of said taxes
or fees represent a lien on or claim against the Accounts. Each Company
also warrants and represents that it is a duly and validly existing
corporation and is qualified in all states where the failure to so qualify
would have an adverse effect on the business of the Company or the ability
of the Company to enforce collection of Accounts due from customers
residing in that state. Each Company agrees to maintain such books and
records regarding Accounts as the Agent may reasonably require and agrees
that its books and records will reflect the Lenders' (acting through the
Agent) interest in the Accounts. All of the books and records of each
Company will be available to the Agent at normal business hours, including
any records handled or maintained for any Company by any other company or
entity.
4. Each Company may and will enforce, collect and receive all amounts
owing on the Accounts at the Company's expense; such privilege shall
terminate automatically upon the institution by or against any Company of
any proceeding under any bankruptcy or insolvency law or, at the election
of the Agent, upon the occurrence of any other Event of Default and until
such Event of Default is waived. Any checks, cash, notes or other
instruments or property received by a Company with respect to any Accounts
shall be held by such Company in trust for the Lenders, separate from the
Company's own property and funds, and immediately turned over to the Agent
with proper assignments or endorsements by deposit to the Depository
Accounts in the Agent's name designated for such purposes. Notwithstanding
anything herein contained to the contrary, if x) there is then no Default
or Event of Default and y) the outstanding Revolving Loans are less than
$12,500,000.00 and z) Availability is at least $8,000,000.00 for five (5)
or more consecutive Business Days, then the Agent, at the request of ROA,
will advise the banks holding the Depository Accounts to remit all proceeds
of Collateral to ROA. The Agent may immediately rescind these instructions
unilaterally a) upon the occurrence of a Default or Event of Default, or b)
if the outstanding Revolving Loans aggregate $12,500,000.00 or more; or c)
if Availability is less than $8,000,000.00. All amounts received by the
Agent in payment of Accounts will be credited to the loan account upon the
Agent's receipt of "collected funds" at the Agent's bank account in New
York, New York on the Business Day of receipt if received no later than
1:00 p.m. or on the next succeeding business day if received after 1:00
p.m. No checks, drafts or other instrument received by the Agent shall
constitute final payment unless and until such instruments have actually
been collected.
5. Each Company agrees to notify the Agent promptly of any matters
materially affecting the value, enforceability or collectibility of any
material Account and of all material customer disputes, offsets, defenses,
counterclaims, returns, rejections and all reclaimed or repossessed
merchandise or goods. Each Company agrees to issue credit memoranda
promptly (with duplicates to the Agent upon request after the occurrence of
an Event of Default) upon accepting returns or granting allowances.
6. In order to utilize the collective borrowing powers of the
Companies in the most efficient and economical manner, and in order to
facilitate the handling of the accounts of the Companies on the Agent's
books, the Companies have requested the Agent, and the Agent has agreed, to
handle the accounts of all Companies on the Agent's books on a combined
basis, in accordance with the following provisions: (i) in lieu of
maintaining separate accounts on the Agent's books in the name of each of
the Companies, the Agent shall maintain a single account under the name:
Rock of Ages Corporation (herein the "Collective Loan Account"); (ii) loans
and advances made by the Agent to, or for, any of the Companies will be
charged to the Collective Loan account, along with all charges and expenses
under this Financing Agreement; (iii) the Collective Loan account will be
credited with all amounts received by the Agent from any of the Companies
or from others for the account of any Company including all amounts
received by the Agent in accordance with the terms of paragraph 4 hereof
and as provided in this Financing Agreement; (iv) each month the Agent will
render to ROA for the benefit of the Companies one extract of the combined
Collective Loan Account, which shall be deemed to be an account stated as
to each of the Companies and which will be deemed correct and accepted by
all of the Companies unless ROA has forwarded to the Agent a written
statement of exceptions within thirty (30) days after such extract, or any
corrected extract; (v) its is expressly understood and agreed by each of
the Companies that the Agent shall have no obligation to account separately
to any of the Companies; (vi) requests for loans and advances may be made
by any of the Companies and the Agent is hereby authorized and directed to
accept, honor and rely on such instructions and requests, subject to the
limitation and provisions set forth in this Financing Agreement; (vii) it
is expressly understood and agreed by each of the Companies that the Agent
shall have no responsibility to inquire into the correctness of the
apportionment, allocation, or disposition of (A) any loans and advances
made to any of the Companies or (B) any of the Agent's expenses and charges
relating thereto; (viii) all loans and advances are made for the collective
benefit of the Companies; (ix) the Companies jointly and severally
unconditionally guarantee to the Agent the prompt payment in full of (A)
all loans and advances made and to be made to any of them under this
Financing Agreement, as well as (B) all other Obligations of the Companies
hereunder; (x) all Collateral assigned by any of the Companies and any
other collateral security now or hereafter given to the Agent by any of the
Companies, shall secure all loans and advances made by the Agent to, or
for, any Company, and shall be deemed to be pledged as security for any and
all other Obligations of the Companies as set forth under this Financing
Agreement, or any other agreements between the Agent and any Company; and
(xi) it is understood that the handling of the account of the Companies in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Companies and at their request, and that neither the
Agent nor any Lender shall incur liability to the Companies as a result of
such combination. To induce the Agent and the Lenders to do so, and in
consideration thereof, each Company hereby agrees to indemnify the Agent
and each Lender and hold them harmless against any and all liability,
expense, loss or claim of damage or injury, except for any liability,
injury, expense, loss or claim of damages arising by reason of the Agent's
negligence or misconduct, made against the Agent by any Company or by any
third party whosoever, arising from or incurred by reason of (A) the Agent
handling the accounts of the Companies as herein provided, (B) the Agent
relying on any instructions of any of the Companies, or (C) any other
reasonable action taken by the Agent in accordance with this paragraph 6 of
Section 3 of this Financing Agreement. In no event shall prior recourse to
any Accounts or other security granted to or by any Company be a
prerequisite to the Agent's right to demand payment of any Obligation.
Further, it is understood that neither the Agent nor any Lender shall have
any obligation whatsoever to perform in any respect any Company's contracts
or obligations relating to the Accounts. The foregoing request was made
because the Companies are engaged in an integrated operation that requires
financing on a basis permitting the availability of credit from time to
time to each of the Companies as required by the continued successful
operation of each Company and the integrated operation. Each Company
expects to derive benefit, directly or indirectly, from such availability
since the successful operation of each Company is dependent on the
continued successful performance of the functions of the integrated group.
SECTION 4. Acquisition Term Loans
1. Within the Acquisition Term Loan Line of Credit and upon receipt
of a Promissory Note, in the form of Exhibit A attached hereto, from the
Companies, in the amount of the Acquisition Term Loan, the Lenders, acting
through the Agent, will extend to ROA an Acquisition Term Loan, provided a)
there is then no outstanding Default under this Financing Agreement and b)
all of the conditions listed below are fulfilled to the sole but reasonable
satisfaction of the Agent and the Lenders. The conditions are as follows:
(a) Acquisition Term Loan proceeds: i) are to be used exclusively to pay
for, or reimburse a Company for, the acquisition by a Company of
distributors of granite memorials, operators of granite quarries, and
manufacturers, wholesalers and/or retailers of granite products; and ii)
will be disbursed concurrent with, or immediately after, such
acquisition, provided, however, that ROA may combine several
acquisitions into one Acquisition Term Loan.
(b) ROA must give the Agent thirty (30) days prior written notice of its
intention to enter into an Acquisition Term Loan;
(c) the Agent's and the Lenders' receipt of, and satisfaction with, a
study or review of the business so acquired;
(d) the assets acquired with the proceeds of such Acquisition Term Loan
are free and clear of all liens and encumbrances except as otherwise
permitted by the Agent;
(e) the structure of the acquisition must be reasonably satisfactory to
the Agent and the Lenders;
(f) the Agent's and the Lenders' receipt of, and satisfaction with,
appraisals and/or environmental reviews;
(g) no more than two (2) and only two (2) Acquisition Term Loans per
calendar quarter;
(h) no Acquisition Term Loan may be less than $1,000,000.00; and
(i) the Companies shall give to the Agent, for the benefit of the
Lenders, first and exclusive liens on, and security interests in, the
assets so acquired, subject only to the Permitted Encumbrances.
2. Each Acquisition Term Loan will be repaid to the Agent in equal
quarterly installments of principal computed on a seven (7) year
amortization schedule which installments shall commence on the last day of
the first full calendar quarter occurring after the quarter in which the
closing of that Acquisition Term Loan occurred and thereafter on the last
day of each calendar quarter thereafter, provided, however, that a) ROA,
upon written notice to the Agent, may elect, on or before the making of an
Acquisition Term Loan, to forego all amortization of such Acquisition Term
Loan, but further provided that the aggregate amount of all such
Acquisition Term Loans with deferred amortization may not exceed
$12,500,000.00; and b) all Acquisition Term Loans shall be due and payable
in full on the fifth Anniversary Date. To the extent repaid, Acquisition
Term Loans may not be reborrowed under this Section 4 of the Financing
Agreement.
3. In the event this Financing Agreement or the Line of Credit is
terminated by either the Agent or ROA for any reason whatsoever, the
Acquisition Term Loans shall become due and payable on the effective date
of such termination notwithstanding any provision to the contrary in the
Promissory Note or this Financing Agreement.
4. The Companies may prepay at any time, at its option, in whole or
in part, any Acquisition Term Loan, provided that on each such prepayment,
the Companies shall pay: i) accrued interest on the principal so prepaid to
the date of such prepayment and ii) the Prepayment Premium, if any.
5. Each prepayment shall be applied to the then last maturing
installments of principal of an Acquisition Term Loan designated by ROA and
if not so designated, then as the Agent may elect.
6. The Companies hereby authorizes the Agent to charge the Collective
Loan account with the amount of all amounts due under this Section 4 as
such amounts become due. Each Company confirms that any charges which the
Agent may so make to its account as herein provided will be made as an
accommodation to the Company and solely at the Agent's discretion.
SECTION 5. Letters of Credit
In order to assist the Companies in establishing or opening Letters
of Credit with an Issuing Bank to cover i) the purchase of inventory or
equipment or ii) such other business purposes as a Company may so elect,
the Companies have requested the Lenders, acting through the Agent, to join
in the applications for such Letters of Credit, and/or guarantee payment or
performance of such Letters of Credit and any drafts or acceptances
thereunder through the issuance of the Letters of Credit Guaranty, thereby
lending the Lenders', acting through the Agent, credit to the Companies and
the Lenders, acting through the Agent, have agreed to do so. These
arrangements shall be handled by the Agent subject to the terms and
conditions set forth below.
1. The amount, purpose and extent of the Letters of Credit and
changes or modifications thereof by the Companies and/or the Issuing Bank
of the terms and conditions thereof shall in all respects be subject to the
prior approval of the Agent in the exercise of its reasonable discretion
provided however, that: a) in no event may the aggregate amount of all such
outstanding Letters of Credit exceed, in the aggregate, at any one time
$3,000,000.00, and b) the Letter of Credit and all documentation in
connection therewith shall be in form and substance satisfactory to the
Companies, the Agent and the Issuing Bank.
2. The Agent shall have the right, without notice to any Company, to
charge the Collective Loan Account on the Agent's books with the amount of
any and all indebtedness, liability or obligation of any kind incurred by
the Agent or any Lender under the Letters of Credit Guaranty at the earlier
of a) payment under the Letters of Credit Guaranty or b) the occurrence of
an Event of Default. Any amount charged to the Collective Loan Account
shall be deemed a Revolving Loan hereunder and shall incur interest at the
rate provided in Section 8, paragraph l of this Financing Agreement.
3. Each Company unconditionally indemnifies the Agent and each Lender
and holds the Agent and each Lender harmless from any and all loss, claim
or liability incurred by the Agent and each Lender arising from any
transactions or occurrences relating to Letters of Credit established or
opened for any Company, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such
loss or claim due to any action taken by any Issuing Bank, other than for
any such loss, claim or liability arising out of the negligence or
misconduct by the Agent and each Lender under the Letters of Credit
Guaranty. Each Company further agrees to hold the Agent and each Lender
harmless from any errors or omission, negligence or misconduct by the
Issuing Bank. Each Company's unconditional obligation to the Agent and each
Lender hereunder shall not be modified or diminished for any reason or in
any manner whatsoever, other than as a result of the Agent's and each
Lender's negligence or misconduct. Each Company agrees that any charges
incurred by the Agent and each Lender by the Issuing Bank shall be
conclusive on the Agent and each Lender and may be charged to the
Collective Loan Account.
4. Neither the Agent nor any Lender shall be responsible for: the
existence, character, quality, quantity, condition, packing, value or
delivery of the goods purporting to be represented by any documents; any
difference or variation in the character, quality, quantity, condition,
packing, value or delivery of the goods from that expressed in the
documents; the validity, sufficiency or genuineness of any documents or of
any endorsements thereon, even if such documents should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged; the
time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and any Company.
5. Each Company agrees that any action taken by the Agent or any
Lender, if taken in good faith, or any action taken by any Issuing Bank,
under or in connection with the Letters of Credit, the guarantees, the
drafts or acceptances, or the Collateral, shall be binding on the Companies
and shall not put the Agent or any Lender in any resulting liability to the
Companies. In furtherance thereof, but subject to the provisions of
paragraph 6 below, the Agent shall have the full right and authority to
clear and resolve any questions of non-compliance of documents; to give any
instructions as to acceptance or rejection of any documents or goods; to
execute any and all steamship or airways guaranties (and applications
therefore), indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or
acceptances; all in the Agent's sole name, and the Issuing Bank shall be
entitled to comply with and honor any and all such documents or instruments
executed by or received solely from the Agent, all without any notice to or
any consent from any Company.
6. Without the Agent's express consent and endorsement in writing,
each Company agrees: a) not to execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders; to grant
any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents; or to agree to any
amendments, renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the applications, Letters of
Credit, drafts or acceptances; and b) after the occurrence of an Event of
Default which is not waived by the Agent and/or the Required Lenders, not
to i) clear and resolve any questions of non-compliance of documents, or
ii) give any instructions as to acceptances or rejection of any documents
or good.
7. Each Company agrees that any necessary import, export or other
licenses or certificates for the import or handling of the Collateral will
have been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or
the financing thereof will have been promptly and full complied with; and
any certificates in that regard that the Agent may at any time request will
be promptly furnished. In this connection, each Company warrants and
represents that it has no knowledge that any shipments made under any such
Letters of Credit are not in accordance with the laws and regulations of
the countries in which the shipments originate and terminate, and are not
prohibited by any such laws and regulations. The Companies assume all risk,
liability and responsibility for, and agree to pay and discharge, all
present and future local, state, federal or foreign taxes, duties, or
levies. Any embargo, restriction, laws, customs or regulations of any
country, state, city, or other political subdivision, where the Collateral
is or may be located, or wherein payments are to be made, or wherein drafts
may be drawn, negotiated, accepted, or paid, shall be solely the risk,
liability and responsibility of the Companies.
8. Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent shall acquire by subrogation, any rights,
remedies, duties or obligations granted or undertaken by any Company to the
Issuing Bank in any application for Letters of Credit, any standing
agreement relating to Letters of Credit or otherwise, all of which shall be
deemed to have been granted to the Agent and apply in all respects to the
Agent and shall be in addition to any rights, remedies, duties or
obligations contained herein.
SECTION 6. Collateral
1. As security for the prompt payment in full of all loans and
advances made and to be made to, or for the benefit of, the Companies, from
time to time by the Lenders, acting through the Agent, pursuant hereto, as
well as to secure the payment in full of the other Obligations, each
Company hereby pledges and grants to the Agent, for the benefit of the
Lenders, a continuing general lien upon and security interest in all of
its:
(a) present and hereafter acquired Inventory;
(b) present and hereafter acquired Equipment;
(c) present and future Accounts;
(d) present and future Documents of Title;
(e) present and future General Intangibles; and
(f) Real Estate.
2. The security interests granted hereunder shall extend and attach
to:
(a) All Collateral which is presently in existence and which is owned by
any Company or in which any Company has any interest, whether held by a
Company or others for its account, and, if any Collateral is Equipment,
whether a Company's interest in such Equipment is as owner, finance
lessee or conditional vendee:
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the
foregoing, all dies, jigs, tools, benches, tables, accretions, component
parts thereof and additions thereto, as well as all accessories, motors,
engines and auxiliary parts used in connection with or attached to the
Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or any Company
from a Company's customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which
contribute to the finished goods or products manufactured or processed
by any Company, or to the sale, promotion or shipment thereof.
3. Each Company agrees to safeguard, protect and hold all Inventory
for the Lenders' account and make no disposition thereof except in the
regular course of the business of the Company as herein provided. Each
Company will only sell Inventory to its customers in the ordinary course of
the Company's business, on open account and on terms currently being
extended by the Company to its customers, provided that all proceeds of all
sales (including cash, accounts receivable, checks, notes, instruments for
the payment of money and similar proceeds) are forthwith transferred,
endorsed, and turned over and delivered to the Agent in accordance with
paragraph 4 of Section 3 of this Financing Agreement. Cash sales or sales
of Inventory in which a lien upon, or security interest in, Inventory is
retained by any Company shall be made by the Company only with the approval
of the Agent, and the proceeds of such sales or sales of Inventory for cash
shall not be commingled with such Company's other property, but shall be
segregated, held by the Company in trust for the Agent, and shall be
delivered immediately by the Company to the Agent in the identical form
received by the Company by deposit to the Depository Accounts. Upon the
sale, exchange, or other disposition of Inventory, as herein provided, the
security interest in any Company's Inventory provided for herein shall,
without break in continuity and without further formality or act, continue
in, and attach to, all proceeds, including any instruments for the payment
of money, accounts receivable, contract rights, documents of title,
shipping documents, chattel paper and all other cash and non-cash proceeds
of such sale, exchange or disposition. As to any such sale, exchange or
other disposition, the Agent shall have all of the rights of an unpaid
seller, including stoppage in transit, replevin, rescission and
reclamation.
4. Each Company agrees at its own cost and expense to keep the
Equipment in as good and substantial repair and condition as the same is
now or at the time the lien and security interest granted herein shall
attach thereto, reasonable wear and tear excepted, making any and all
repairs and replacements when and where necessary. Each Company also agrees
to safeguard, protect and hold all Equipment for the Lenders' account and
make no disposition thereof unless the Company first obtains the prior
written approval of the Agent. Any sale, exchange or other disposition of
any Equipment shall only be made by a Company with the prior written
approval of the Agent, and the proceeds of any such sales shall not be
commingled with the Company's other property, but shall be segregated, held
by the Company in trust for the Agent, and shall be delivered immediately
by the Company to the Agent in the identical form received by the Company
by deposit to the Depository Accounts. Upon the sale, exchange, or other
disposition of the Equipment, as herein provided, the security interest
provided for herein shall, without break in continuity and without further
formality or act, continue in, and attach to, all proceeds, including any
instruments for the payment of money, accounts receivable, contract rights,
documents of title, shipping documents, chattel paper and all other cash
and non-cash proceeds of such sales, exchange or disposition. As to any
such sale, exchange or other disposition, the Agent shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin,
rescission and reclamation. Notwithstanding anything herein above contained
to the contrary, the Companies may sell, exchange or otherwise dispose of
obsolete Equipment or Equipment no longer needed in a Company's operations,
provided, however, that (a) the then book value of all such Equipment so
disposed of does not exceed $1,000,000.00 in the aggregate in any fiscal
year and (b) the proceeds of such sales or dispositions are delivered to
the Agent in accordance with the foregoing provisions of this paragraph,
except that a Company may retain and use such proceeds to purchase
forthwith replacement Equipment which the Company determines in its
reasonable business judgment to have a collateral value at least equal to
the Equipment so disposed of or sold, provided, however, that the aforesaid
right shall automatically cease upon the occurrence of an Event of Default
which is not waived.
5. The rights and security interests granted hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Collective Loan Account maintained
on the books of the Agent may from time to time be temporarily in a credit
position, until the final payment in full of all Obligations and the
termination of this Financing Agreement. Any delay or omission by the Agent
to exercise any right hereunder, shall not be deemed a waiver thereof, or
be deemed a waiver of any other right, unless such waiver be in writing and
signed by the Agent and/or the Required Lenders, as the case may be. A
waiver on any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion.
6. To the extent that the Obligations are now or hereafter secured by
any assets or property other than the Collateral or by the guarantee,
endorsement, assets or property of any other person, then the Agent shall
have the right in its sole discretion to determine which rights, security,
liens, security interests or remedies the Agent shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action
with respect to, without in any way modifying or affecting any of them, or
any of the Agent's rights hereunder.
7. Any reserves or balances to the credit of any Company and any
other property or assets of any Company in the possession of the Agent or
any Lender may be held as security for any Obligations and applied in whole
or partial satisfaction of such Obligations when due but shall be returned
to the applicable Company on request unless there is then an uncured
Default or unwaived Event of Default. The liens and security interests
granted herein and any other lien or security interest the Agent or any
Lender may have in any other assets of any Company, shall secure payment
and performance of all now existing and future Obligations. The Agent may
in its discretion charge any or all of the Obligations to the Collective
Loan Account of the Company when due.
8. This Financing Agreement and the obligation of the Companies to
perform all of their covenants and obligations hereunder are further
secured by a mortgage, deed of trust or assignment on the Real Estate.
9. Each Company shall give to the Agent from time to time such
mortgage, Uniform Commercial Code security interest, deed of trust, UCC
financing statement, or assignment on the Real Estate or the assets
acquired with the proceeds of any Revolving Loan or Acquisition Term Loan
the as the Agent shall require to obtain a valid first lien thereon subject
only to the Permitted Encumbrances.
10. Each Company shall give to the Agent, and/or shall cause the
appropriate party to give to the Agent, from time to time such pledge or
security agreements with respect to the capital stock of any subsidiary of
a Company as the Agent shall require to obtain valid first liens thereon.
SECTION 7. Representations, Warranties and Covenants
1. The Companies hereby warrant and represent and/or covenant that,
on a consolidated basis: i) the fair value of the Companies' assets exceeds
the book value of the Companies' liabilities; ii) the Companies are
[generally able to pay their debts as they become due and payable; and iii)
the Companies do not have unreasonably small capital to carry on their
businesses as they are currently conducted absent extraordinary and
unforeseen circumstances. Each Company further warrants and represents
that, except for the Permitted Encumbrances, the security interests granted
herein constitute and shall at all times constitute the first and only
liens on the Collateral; that, except for the Permitted Encumbrances, the
Company is or will be at the time additional Collateral is acquired by it,
the absolute owner of the Collateral with full right to pledge, sell,
consign, transfer and create a security interest therein, free and clear of
any and all claims or liens in favor of others; that the Company will at
its expense forever warrant and, at the Agent's request, defend the same
from any and all claims and demands of any other person other than the
Permitted Encumbrances; that the Company will not grant, create or permit
to exist, any lien upon or security interest in the Collateral, or any
proceeds thereof, in favor of any other person other than the holders of
the Permitted Encumbrances; and that the Equipment does not comprise a part
of the Inventory of the Company and that the Equipment is and will only be
used by the Company in its business and will not be held for sale or lease,
or removed from its premises, or otherwise disposed of by the Company
without the prior written approval of the Agent except as otherwise
permitted in paragraph 4 of Section 6 of this Financing Agreement.
2. Each Company agrees to maintain books and records pertaining to
the Collateral in such detail, form and scope as the Agent shall reasonably
require. Each Company agrees that the Agent or its agents may enter upon a
Company's premises at any time during normal business hours, and from time
to time, for the purpose of inspecting the Collateral, and any and all
records pertaining thereto. Each Company agrees to afford the Agent prior
written notice of any change in the location of any Collateral, other than
to locations, that as of the date hereof, are known to the Agent and at
which the Agent has filed financing statements and otherwise fully
perfected its liens thereon. Each Company is also to advise the Agent
promptly, in sufficient detail, of any material adverse change relating to
the type, quantity or quality of the Collateral or on the security
interests granted therein.
3. Each Company agrees to: execute and deliver to the Agent, from
time to time, solely for the Agent's convenience in maintaining a record of
the Collateral, such written statements, and schedules as the Agent may
reasonably require, designating, identifying or describing the Collateral
pledged hereunder. Any Company's failure, however, to promptly give such
statements or schedules shall not affect, diminish, modify or otherwise
limit the Agent's security interests in the Collateral.
4. Each Company agrees to comply with the requirements of all state
and federal laws in order to grant to the Agent, for the benefit of the
Lenders, valid and perfected first security interests in the Collateral,
subject only to the Permitted Encumbrances. The Agent is hereby authorized
by each Company to file any financing statements covering the Collateral
whether or not a Company's signature appears thereon. Each Company agrees
to do whatever the Agent may reasonably request, from time to time, by way
of: filing notices of liens, financing statements, amendments, renewals and
continuations thereof; cooperating with the Agent's employees and agents;
keeping Inventory records; transferring proceeds of Collateral to the
Agent's possession; and performing such further acts as the Agent may
reasonably require in order to effect the purposes of this Financing
Agreement.
5.(a) Each Company agrees to maintain insurance on the Real Estate,
Equipment and Inventory under such policies of insurance, with such
insurance companies, in such reasonable amounts and covering such insurable
risks as are at all times reasonably satisfactory to the Agent. All
policies covering the Real Estate, Equipment and Inventory are, subject to
the rights of any holders of Permitted Encumbrances holding claims senior
to the Agent, to be made payable to the Agent, in case of loss, under a
standard non-contributory "mortgagee", "lender" or "secured party" clause
and are to contain such other provisions as the Agent may require to fully
protect the Agent's interest in the Real Estate, Inventory and Equipment
and to any payments to be made under such policies. All original policies
or true copies thereof are to be delivered to the Agent, premium prepaid,
with the loss payable endorsement in the Agent's favor, and shall provide
for not less than thirty (30) days prior written notice to the Agent of the
exercise of any right of cancellation. At any Company's request, or if the
Companies fail to maintain such insurance, the Agent may arrange for such
insurance, but at the Companies' expense and without any responsibility on
the Agent's part for: obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of
claims. Upon the occurrence of an Event of Default which is not waived, the
Agent shall, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to the Agent, have the sole right, in the name of the
Agent or any Company, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to
effect the collection, compromise or settlement of any claims under any
such insurance policies.
(b)(i) In the event of any loss or damage by fire or other casualty,
insurance proceeds relating to Inventory shall first reduce the Revolving
Loan and then any Acquisition Term Loan designated by the Agent;
(ii) In the event any part of a Company's Real Estate or Equipment is
damaged by fire or other casualty and the insurance proceeds for such
damage or other casualty (the "Proceeds") is less than or equal to
$100,000.00, the Agent shall promptly apply such Proceeds to reduce the
outstanding balances under the Revolving Loan.
(iii) As long as an Event of Default has not occurred (which is not
waived), and the Proceeds are in excess of $100,000.00, the Companies may
elect (by delivering written notice to the Agent) to replace, repair or
restore such Real Estate or Equipment to substantially the equivalent
condition prior to such fire or other casualty as set forth herein. If the
Companies do not, or cannot, elect to use the Proceeds as set forth above,
the Agent may, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to the Agent, apply the Proceeds to the
payment of the Obligations in such manner and in such order as the Agent
may reasonably elect.
(iv) If the Companies elect to use the Proceeds for the repair,
replacement or restoration of any Real Estate or Equipment, and there is
then no Event of Default, i) proceeds of insurance on Equipment and Real
Estate in excess of $100,000.00 will be applied to the reduction of the
Revolving Loans and ii)the Agent may set up a reserve against Availability
for an amount equal to the proceeds referred to in clause i) hereof. The
reserve will be reduced dollar-for-dollar upon receipt of non-cancellable
executed purchase orders, delivery receipts or contracts for the
replacement, repair or restoration of Equipment or the Real Estate and
disbursements in connection therewith. Prior to the commencement of any
restoration, repair or replacement of Real Estate, the Companies shall
provide the Agent with a restoration plan and a total budget therefor. If
there are insufficient Proceeds to cover the cost of restoration as so
determined, the Companies shall be responsible for the amount of any such
insuff1ciency, prior to the commencement of restoration and shall
demonstrate evidence of such before the reserve will be reduced.
Completion of restoration shall be evidenced by a final, unqualified
certification of the design architect employed, if any; an unconditional
Certificate of Occupancy, if applicable; such other certification as may be
required by law; or if none of the above is applicable, a written good
faith determination of completion by the Company (herein collectively the
"Completion"). Upon Completion, any remaining reserve as established
hereunder will be automatically released.
6. Each Company agrees to pay, when due, all taxes, assessments,
claims and other charges (herein "taxes") lawfully levied or assessed upon
any Company or the Collateral unless such taxes are being diligently
contested in good faith by a Company by appropriate proceedings.
Notwithstanding the foregoing, if any lien shall be claimed thereunder x)
for taxes due the United States of America or y) which in the Agent's
opinion might create a valid obligation having priority over the rights
granted to the Agent herein, such lien shall not be a Permitted Encumbrance
and the Companies shall immediately pay such tax and remove the lien of
record. If the Companies fail to do so, then the Agent may pay such taxes,
and the amount thereof shall be an Obligation secured hereby and due on
demand.
7. Each Company: (a) agrees to comply with all material acts, rules,
regulations and orders of any legislative, administrative or judicial body
or official, which the failure to comply with would have a material and
adverse impact on the Collateral, or any material part thereof, or on the
operation of a Company's business; provided that a Company may contest any
acts, rules, regulations, orders and directions of such bodies or officials
in any reasonable manner which will not, in the Agent's reasonable opinion,
materially and adversely effect the Agent's rights or priority in the
Collateral; (b) agrees to comply with all environmental statutes, acts,
rules, regulations or orders as presently existing or as adopted or amended
in the future, applicable to the ownership and/or use of its real property
and operation of its business, which the failure to comply with would have
a material and adverse impact on the Collateral, or any material part
thereof, or on the operation of the business of the Company. Each Company
hereby indemnifies the Agent and each Lender and agrees to defend and hold
the Agent and each Lender harmless from and against any and all loss,
damage, claim, liability, injury or expense which the Agent or any Lender
may sustain or incur in connection with: any claim or expense asserted
against the Agent or any Lender as a result of any environmental pollution,
hazardous material or environmental clean-up of any Company's real
property; or any claim or expense which results from any Company's
operations (including, but not limited to, a Company's off-site disposal
practices) and each Company further agrees that this indemnification shall
survive termination of this Financing Agreement as well as the payment of
all Obligations or amounts payable hereunder; and (c) shall not be deemed
to have breached any provision of this paragraph 7 if (i) the failure to
comply with the requirements of this paragraph 7 resulted from good faith
error or innocent omission and (ii) a Company promptly commences and
diligently pursues a cure of such breach and such cure is eventually,
within a reasonable time frame based upon the circumstances and amount of
work required, completed.
8. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that,
unless the Agent, or the Required Lenders, as the case may be, shall have
otherwise consented in writing, ROA will, and if it does not do so, than
any Company will furnish to the Agent and each Lender, within ninety (90)
days after the end of each fiscal year of the Companies, an audited
Consolidated Balance Sheet and an audited Consolidating Balance Sheet as at
the close of such year, and statements of profit and loss, cash flow and
reconciliation of surplus of the Companies and all subsidiaries for such
year, audited by independent public accountants selected by ROA and
satisfactory to the Agent and in such form as is then required by the
Securities and Exchange Commission; within sixty (60) days after the end of
each fiscal quarter a Consolidated Balance Sheet and Consolidating Balance
Sheet as at the end of such period and statements of profit and loss, cash
flow and surplus of the Companies and all subsidiaries, certified by an
authorized financial or accounting officer of ROA; and within thirty (30)
days after the end of each month a Consolidated Balance Sheet as at the end
of such period and statements of profit and loss, cash flow and surplus of
the Companies and all subsidiaries for such period, certified by an
authorized financial or accounting officer of ROA; and from time to time,
such further information regarding the business affairs and financial
condition of the Companies as the Agent may reasonably request, including,
without limitation, annual cash flow projections in form satisfactory to
the Agent and the management letter from the public accountants at fiscal
year end. Each financial statement required hereunder must be accompanied
by an officer's certificate, signed by the President, Vice President,
Controller, or Treasurer, pursuant to which any one such officer must
certify that during the particular accounting period: (i) there has been no
Default or Event of Default under this Financing Agreement, provided,
however, that if any such officer has knowledge that any such Default or
Event of Default has occurred during such period, the existence of and a
detailed description of same shall be set forth in such officer's
certificate; and (ii)no Company has received any notice of cancellation
with respect to its property insurance policies.
9. Intentionally Omitted.
10. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each Company agrees that,
without the prior written consent of the Agent or the Required Lenders, as
the case may be, except as otherwise herein provided, the Companies, or any
one of them, will not:
A. Mortgage, assign, pledge, transfer or otherwise permit any
lien, charge, security interest, encumbrance or judgment,
(whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to
exist on any of its assets or goods, whether real, personal or
mixed, whether now owned or hereafter acquired, except for the
Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted
Indebtedness;
C. Borrow any money on the security of the Collateral from
sources other than the Lenders acting through the Agent;
D. Sell, lease, assign, transfer or otherwise dispose of i)
Collateral, except as otherwise specifically permitted by this
Financing Agreement, or ii) either all or substantially all of
a Company's assets, which do not constitute Collateral;
E. Merge, consolidate or otherwise alter or modify its corporate
name, principal place of business, structure or existence, or
enter into or engage in any operation or activity materially
different from that presently being conducted by a Company,
provided, however, that any Company, on ten (10) Business Days
prior notice to the Agent, may merge with i) any other Company
or ii) any subsidiary of a Company provided a Company is a
survivor of such merger;
F. Assume, guarantee, endorse, or otherwise become liable upon
the obligation of any person, firm, entity or corporation,
except by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business;
G. Declare or pay any cash dividend of any kind on, or purchase,
acquire redeem or retire, for cash, any of the capital stock
or equity interest, of any class whatsoever, whether now or
hereafter outstanding, except that any Company may declare and
pay, to ROA, dividends on its capital stock to facilitate
payment of income taxes due as a result of the filing of a
unitary or consolidated tax return on which the Company income
is included;
H. Make any advance or loan to, or any investment in, any firm,
entity, person or corporation provided, however, that i) any
Company may make an advance or loan to, or an investment in,
any other Company; and ii) any Company may make an advance or
loan to, or an investment in, any affiliate or subsidiary of
any Company provided the aggregate outstanding amount of all
such loans, investments and advances under this clause ii
shall not exceed $2,500,000.00 in the aggregate at any one
time.
11. Without the prior written consent of the Required Lenders, or the
Agent, as the case may be, the Companies, or any one of them, will not
enter into any Operating Lease if after giving effect thereto the aggregate
obligations with respect to Operating Leases of the Companies during any
fiscal year would exceed $1,000,000.00.
12. Intentionally Omitted
13. Intentionally Omitted
14. The Companies shall maintain at all times, on a consolidated
basis, a Fixed Charge Coverage Ratio of 1 to 1.
15. The Companies shall maintain at all times, on a consolidated
basis, a Leverage Ratio of not more than 2 to 1.
16. Intentionally Omitted
17. Intentionally Omitted
18. Each Company agrees to advise the Agent in writing of: a) all
expenditures (actual or anticipated) in excess of $150,000.00 for x)
environmental clean-up, y) environmental compliance or z) environmental
testing and the impact of said expenses on the Companies' Working Capital;
and b) any notices a Company receives from any local, state or federal
authority advising the Company of any material environmental liability
(real or potential) stemming from a Company's operations, its premises, its
waste disposal practices, or waste disposal sites used by a Company and to
provide the Agent with copies of all such notices if so required.
19. Without the prior written consent of the Agent or the Required
Lenders, as the case may be, each Company agrees that it will not enter
into any transaction, including, without limitation, any purchase, sale,
lease, loan or exchange of property with any subsidiary or affiliate except
for transactions conducted on an arm's length basis and on terms not
materially different than the terms the Company could have obtained from an
entity unrelated to the Company.
SECTION 8. Interest, Fees and Expenses
1. Interest on the Revolving Loan and all Acquisition Term Loans
shall be payable monthly as of the end of each month and shall be an amount
equal to: a) the then Chase Bank Rate less a quarter of one percent, or, at
ROA's election, the sum of two and one-quarter percent (2 1/4%) and the
Libor, or b) subject to paragraph 3 below, if the Companies' Funded Debt to
Net Worth Ratio for the preceding fiscal quarter was less than one to one
(1 to 1), the then Chase Bank Rate less one half of one percent, or, at
ROA' s election, the sum of one and three-quarters percent ( 1 3/4 /O) and
the Libor. Interest shall be computed on a per annum basis on the average
of the net balances owing by the Companies at the close of each day during
such month. In the event of any change in said Chase Bank Rate, the rate
hereunder shall change as of the first of the month following any change;
ROA may elect to use Libor as to any new or then outstanding Revolving
Loans or Acquisition Term Loans provided x) there is then no Default or
unwaived Event of Default and y)ROA has advised the Agent of its election
to use Libor and the Libor Period selected no later than three (3) Business
Days prior to the proposed borrowing or, in the case of a Libor election
with respect to a then outstanding Revolving Loan or Acquisition Term Loan,
three (3) Business Days prior to the conversion of any then outstanding
Revolving Loans or Acquisition Term Loan to Libor Loans and z) the election
and Libor shall be effective, provided there is then no Default or unwaived
Event of Default, on the fourth Business Day following said notice. The
Libor elections must be for $1,000,000.00 or whole multiples thereof. No
more than four (4) Libor elections may be in effect at any one time. The
Agent shall be entitled to charge the Collective Loan Account i) at the
rate provided for herein when due until all Obligations have been paid in
full; ii) the Libor Processing Fee on the effective date of the Libor
Election. All rates hereunder shall be calculated based on a 360 day year.
2. Intentionally Omitted
3. At the end of each fiscal quarter ROA, and if ROA shall fail to do
so, than a Company shall deliver to the Agent and each Lender a copy of the
Companies' i) Consolidated Balance Sheet for the fiscal quarter then ended
or ii)if the fiscal year is then over, Consolidated Balance Sheet for the
fiscal year then ended. If the Companies had, on a consolidated basis, for
the preceding fiscal quarter, a Funded Debt to Net Worth Ratio that
pursuant to paragraph 1 above entitles the Companies (but subject to the
provisions of paragraph 2 of Section 10 of this Financing Agreement) to the
lower spread over the Chase Bank Rate and Libor the reduction shall be
effective provided there is no Default or Event of Default then in
existence on both i) the date of delivery to the Agent of such Consolidated
Balance Sheet and ii) the date of effectiveness of such lower spreads. The
lower spread over x) the Chase Bank Rate shall be effective on the first
day of the month following the Agent's receipt of the aforesaid
Consolidated Balance Sheet; y) Libor as to all loans which are not Libor
Loans shall be effective on the first day of the month following the
Agent's receipt of the aforesaid Consolidated Balance Sheet; and z) Libor
as to all then Libor Loans shall be effective on the day after the
expiration of a Libor Period and such the lower spread over the Chase Bank
Rate and Libor shall be prospective only and shall not be retroactive.
Failure to deliver, within sixty (60) days of the end of a fiscal quarter
or within one hundred and twenty (120) days of the end of a fiscal year,
the aforesaid Consolidated Balance Sheet shall constitute a forfeiture by
the Companies of any right to a rate reduction for the next succeeding
quarter and the Agent may charge the highest spread permitted over Libor or
the Chase Bank Rate, as applicable.
4. The Companies shall pay to the Agent, for the account of the
Lenders, such amount or amounts as shall compensate the Lenders for any
loss, costs or expense incurred by the Agent and/or the Lenders as a result
of: (i) any payment or prepayment on a date other than the last day of a
Libor Period for such Libor Loan, or (ii) any failure to borrow a Libor
Loan on the date for such borrowing specified in the relevant notice; such
compensation to include, without limitation, an amount equal to any loss or
expense suffered by the Agent and/or the Lenders during the period from the
date of receipt of such payment or prepayment or the date of such failure
to borrow to the last day of such Libor Period if the rate of interest
obtained by the Agent and/or the Lenders upon the reemployment of an amount
of funds equal to the amount of such payment, prepayment or failure to
borrow is less than the rate of interest applicable to such Libor Loan for
such Libor Period. The determination by the Agent and/or the Lenders of the
amount of any such loss or expense, when set forth in a written notice to
the Companies, containing the calculations thereof in reasonable detail,
shall be conclusive, in the absence of manifest error.
5. The Companies shall pay the Agent, for the account of the Lenders,
in consideration of the Letter of Credit Guaranty, the Letter of Credit
Guaranty Fee, payable on date of issuance of the Letter of Credit, of one
and one-quarter percent (1 1/4%) of the face amount of such Letter of
Credit, provided, however, that if the Companies' Funded Debt to Net Worth
for the preceding fiscal quarter was less than one to one (1 to 1) then the
Letter of Credit Guaranty Fee shall be 1.125% of the face amount of such
Letter of Credit.
6. Intentionally Omitted
7. Any charges, fees, commissions, costs and expenses charged to the
Agent for any Company's account by any Issuing Bank in connection with or
arising out of Letters of Credit issued pursuant to this Financing
Agreement or out of transactions relating thereto will be charged to the
Collective Loan Account in full when charged to, or paid by, the Agent and
when made by any such Issuing Bank shall be conclusive on the Agent.
8. The Companies shall reimburse or pay the Agent, as the case may
be, for: i) all Out-of-Pocket Expenses of the Agent and b) any applicable
Documentation Fee.
9. Upon the last Business Day of each month, the Companies shall pay
the Agent, for the account of the Lenders, a Line of Credit Fee in the
amount of $4,167.00.
10. To induce the Lenders, other than CITBC, to enter into this
Financing Agreement and to extend to the Company the Revolving Loan and the
Acquisition Term Loans, the Companies shall pay to the Agent, for the
account of the Lenders, other than CITBC, a Loan Facility Fee in the amount
of $75,000.00 payable at the earlier of i) April 1, 1998 or ii) the date
the Syndication is completed or iii) the sale by CITBC of a portion of the
facilities provided for herein.
11. Upon the first Business Day of each month, commencing with
December 31, 1997, the Companies shall pay to the Agent, solely for the
account of the Agent, a Collateral Management Fee of $1,000.00 a month
provided, however, that the fee for such month is waived if a) the
Syndication has been completed and b) the Companies' Funded Debt to Net
Worth for the preceding fiscal quarter is less than 1.50 to 1.
12. At the end of each fiscal quarter, ROA and if ROA shall fail to
do so than a Company shall deliver to the Agent and each Lender a copy of
the Companies' i) Consolidated Balance Sheet for the fiscal quarter then
ended or ii) if the fiscal year is then over, Consolidated Balance Sheet
for the fiscal year then ended. If the Companies had, for the preceding
fiscal quarters, a Funded Debt to Net Worth Ratio that pursuant to
paragraphs 5, 6, 9 and 11 above, or the Syndication Side Letter, entitles
the Companies to lower fees the reduction shall be effective provided each
of the following conditions are met: a) there is no Default or Event of
Default then in existence on both i) the date of delivery to the Agent of
such Consolidated Balance Sheet and ii) the date of effectiveness of such
lower fees and b) the lower fees shall be prospective only and shall not be
retroactive. Failure to deliver, within sixty (60) days of the end of a
fiscal quarter or within one hundred and twenty (120) days of the end of a
fiscal year, the aforesaid Consolidated Balance Sheet shall constitute a
forfeiture by the Companies of any right to a fee reduction for the next
succeeding quarter and the Agent may charge the highest fee permitted.
13. The Companies shall pay the Agent's standard charges for, and the
fees and expenses of, the Agent's personnel for reviewing the books and
records of the Companies, or any one or more of them, and for verifying,
testing, protecting, safeguarding, preserving or disposing of all or any
part of the Collateral provided, however, that the foregoing shall not be
payable if the Companies are paying a Collateral Management Fee. If the
Companies are not paying a Collateral Management Fee and there is then no
Default or Event of Default, such fees and expenses shall not exceed
$6,000.00 in any calendar year, provided, however, that whether or not the
Companies are paying a Collateral Management Fee, if there is a then
Default or Event of Default then there shall be no dollar limitation on the
amount of such fees and expenses.
14. Each Company hereby authorizes the Agent to charge the Collective
Loan Account with the Agent with the amount of all payments due hereunder
as such payments become due. Each Company confirms that any charges which
the Agent may so make to the Collective Loan Account as herein provided
will be made as an accommodation to the Companies and solely at the Agent's
discretion.
SECTION 9. Powers
Each Company hereby constitutes the Agent on behalf of the Lenders or
any person or agent the Agent may designate as its attorney-in-fact, at
each Company's cost and expense, to exercise all of the following powers,
which being coupled with an interest, shall be irrevocable until all of the
Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name
of the Agent or any Company, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to any Company
and to notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate;
(c) To request from customers indebted on Accounts at any time, in the
name of the Agent or the applicable Company or that of the Agent's
designee, information concerning the amounts owing on the Account;
(d) To transmit to customers indebted on Accounts notice of the Agent's
interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent for the Collective Loan Account; and
(e) To take or bring, in the name of the Agent or any Company, all
steps, actions, suits or proceedings deemed by the Agent necessary or
desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the
powers set forth in (b), (d) and (e) above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of
Default is waived.
SECTION 10. Events of Default and Remedies
1. Notwithstanding anything hereinabove to the contrary, the Agent,
acting for the Lenders, may terminate this Financing Agreement immediately
upon the occurrence of any of the following (herein "Events of Default"):
(a) cessation of the business of a Company or the calling of a
meeting of the creditors of any Company for purposes of
compromising the debts and obligations of any Company;
(b) the failure of any Company to generally meet debts as they
mature;
(c) the commencement by any Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar
proceedings under any federal or state law;
(d) the commencement against any Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or
similar proceedings under any federal or state law, provided,
however, that such Default shall not constitute an Event of
Default if the proceeding, case, petition or arrangement is
dismissed within sixty (60) days of such filing or
commencement;
(e) material breach by any Company of any warranty, representation
or covenant contained herein (other than those referred to in
sub-paragraph f below) or in any other written agreement
between the Agent and/or the Lenders and any Company,
provided that such Default by any Company of any of the
warranties, representations or covenants referred in this
clause e shall not be deemed to be an Event of Default unless
and until such Default shall remain unremedied to the Agent's
satisfaction for a period of thirty (30) days from the date
of such breach;
(f) breach by any Company of any warranty, representation or
covenant of Section 3, Paragraphs 3 (other than the third
sentence of paragraph 3) and 4; Section 6, Paragraphs 3 and 4
(other than the first sentence of paragraph 4); Section 7,
Paragraphs 1,5,6, and 9 through 15;
(g) failure of any Company to pay any of the Obligations within
five (5) Business Days of the due date thereof, provided that
nothing contained herein shall prohibit the Agent from
charging such amounts to the Collective Loan Account on the
due date thereof;
(h) the Companies, on a consolidated basis, sustain a loss in any
fiscal year as determined in accordance with GAAP; and
(i) any Company shall i) engage in any "prohibited transaction" as
defined in ERISA, ii) have any "accumulated funding
deficiency" as defined in ERISA, iii) have any Reportable
Event as defined in ERISA, iv) terminate any underfunded Plan,
as defined in ERISA or v) be engaged in any proceeding in
which the Pension Benefit Guaranty Corporation shall seek
appointment, or is appointed, as trustee or administrator of
any Plan, as defined in ERISA, and with respect to this
sub-paragraph i such event or condition x) remains uncured for
a period of ninety (90) days from date of occurrence and y)
could, in the reasonable opinion of the Agent, subject any
Company to any tax, penalty or other liability material to the
business, operations or financial condition of any Company.
2. Upon the occurrence of a Default and/or an Event of Default, at
the option of the Agent, all loans and advances provided for in paragraph 1
of Section 3 of this Financing Agreement shall be thereafter in the Agent's
sole discretion and the obligation of the Lenders, acting through the
Agent, to make revolving loans, Acquisition Term Loans, and/or open Letters
of Credit shall cease unless such Default is cured to the Agent's
satisfaction or such Event of Default is waived, and at the option of the
Agent, or at the direction of the Required Lenders, upon the occurrence of
an Event of Default: i) all Obligations shall become immediately due and
payable; ii) the Agent may charge the Default Rate of Interest on all then
outstanding or thereafter incurred Obligations in lieu of the interest
provided for in Section 8 of this Financing Agreement provided a) the Agent
has given the Companies written notice of the Event of Default, provided,
however, that no notice is required if the Event of Default is the event
listed in paragraph l(c) or l(d) of this Section 10 and b) the Companies
have failed to cure the Event of Default within ten (10) days after x) the
Agent deposited such notice in the United States mail or y) the occurrence
of the Event of Default listed in paragraph l(c) or l(d) of this Section
10; and iii) the Agent may immediately terminate this Financing Agreement
upon notice to ROA, provided, however, that no notice of termination is
required if the Event of Default is the event listed in paragraph 1 (c) or
1 (d) of this Section 10. The exercise of any option is not exclusive of
any other option which may be exercised at any time by the Agent. A Default
Rate of Interest shall cease as soon as the Event of Default giving rise to
the Default Rate of Interest is waived. In the event the Default Rate of
Interest is charged as a result of a breach or violation of paragraphsl4 or
15 of Section 7 of this Financing Agreement, the Default Rate of Interest
shall cease as soon as the Companies demonstrate on the next succeeding
test date that they have not breached or violated the covenants applicable
for said test date and that there is not another outstanding Event of
Default.
3. Immediately upon the occurrence of any Event of Default, the Agent
may to the extent permitted by law: (a) remove from any premises where same
may be located any and all documents, instruments, files and records, and
any receptacles or cabinets containing same, relating to the Accounts, or
the Agent may use, at any Company's expense, such of a Company's personnel,
supplies or space at any Company's places of business or otherwise, as may
be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the
name of any Company or the Agent, and generally shall have all other rights
respecting said Accounts, including without limitation the right to:
accelerate or extend the time of payment, settle, compromise, release in
whole or in part any amounts owing on any Accounts and issue credits in the
name of the applicable Company or the Agent; (c) sell, assign and deliver
the Collateral and any returned, reclaimed or repossessed merchandise, with
or without advertisement, at public or private sale, for cash, on credit or
otherwise, at the Agent's sole option and discretion, and the Agent may bid
or become a purchaser at any such sale, free from any right of redemption,
which right is hereby expressly waived by the Companies; (d) foreclose the
security interests created herein by any available judicial procedure, or
to take possession of any or all of the Inventory and Equipment without
judicial process, and to enter any premises where any Inventory and
Equipment may be located for the purpose of taking possession of or
removing the same and (e) exercise any other rights and remedies provided
in law, in equity, by contract or otherwise. The Agent shall have the
right, without notice or advertisement, to sell, lease, or otherwise
dispose of all or any part of the Collateral whether in its then condition
or after further preparation or processing, in the name of any Company or
the Agent, or in the name of such other party as the Agent may designate,
either at public or private sale or at any broker's board, in lots or in
bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Agent in
its sole discretion may deem advisable, and the Agent shall have the right
to purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, the Agent shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as the
Agent shall deem appropriate. Each Company agrees, at the request of the
Agent, to assemble the Inventory and Equipment and to make it available to
the Agent at premises of any Company where then located and to make
available to the Agent the premises and facilities of any Company for the
purpose of the Agent's taking possession of, removing or putting the
Inventory located there and Equipment located there in saleable form.
However, if notice of intended disposition of any Collateral is required by
law, it is agreed that ten (10) days notice shall constitute reasonable
notification and full compliance with the law. The net cash proceeds
resulting from the Agent's exercise of any of the foregoing rights, (after
deducting all charges, costs and expenses, including reasonable attorneys'
fees) shall be applied by the Agent to the payment of the Obligations,
whether due or to become due, in such order as the Agent may elect, and
each Company shall remain liable to the Agent for any deficiencies, and the
Agent in turn agrees to remit to ROA or its successors or assigns, any
surplus resulting therefrom. The enumeration of the foregoing rights is not
intended to be exhaustive and the exercise of any right shall not preclude
the exercise of any other rights, all of which shall be cumulative. The
mortgage, deed of trust or assignment on the Real Estate shall govern the
rights and remedies of the Agent thereto.
SECTION 11. Termination
Except as otherwise permitted herein, the Agent may, and shall at the
request of the Required Lenders, terminate this Financing Agreement and the
Line of Credit only as of the fifth or any subsequent Anniversary Date and
then only by giving ROA at least sixty (60) days prior written notice of
termination. Notwithstanding the foregoing, the Agent may, and shall at the
request of the Required Lenders, terminate the Financing Agreement
immediately upon the occurrence of an Event of Default, provided, however,
that if the Event of Default is an event listed in paragraph 1 (c) or 1 (d)
of Section 10 of this Financing Agreement, the Agent may regard the
Financing Agreement as terminated and notice to that effect is not
required. This Financing Agreement, unless terminated as herein provided,
shall automatically continue from Anniversary Date to Anniversary Date.
Notwithstanding the foregoing, ROA may terminate this Financing Agreement
and the Line of Credit at any time upon sixty (60) days' prior written
notice to the Agent, provided that the Companies pay to the Agent, for the
account of the Lenders, immediately on demand, an Early Termination Fee and
the Prepayment Premium, if applicable, provided, however, that in the event
CITBC, or an affiliate or subsidiary of CITBC, ceases to be either a Lender
or the Agent, ROA may, within sixty (60) days from the date such cessation
occurs, terminate this Financing Agreement and the Line of Credit upon
sixty (60) days prior notice to the Agent without payment of an Early
Termination Fee and/or the Prepayment Premium. All Obligations shall become
due and payable as of any termination hereunder or under Section 10 hereof
and, pending a final accounting, the Agent may withhold any balances in the
Collective Loan Account (unless supplied with an indemnity satisfactory to
the Agent) to cover all of the Obligations, whether absolute or contingent.
All of the Agent's rights, liens and security interests shall continue
after any termination until all Obligations have been paid and satisfied in
full.
SECTION 12. Agreement between the Lenders
1. a) The Agent, for the account of the Lenders, shall disburse all loans
and advances to the Companies and shall handle all collections of
Collateral and repayment of Obligations. It is understood that for
purposes of advances to the Companies and for purposes of this Section 12
the Agent is using the funds of the Agent.
b) Unless the Agent shall have been notified in writing by any Lender
prior to any advance to one or more of the Companies that such Lender will
not make the amount which would constitute its share of the borrowing on
such date available to the Agent, the Agent may assume that such Lender
shall make such amount available to the Agent on a Settlement Date and the
Agent may, in reliance upon such assumption, make available to one or more
of the Companies a corresponding amount. A certificate of the Agent
submitted to any Lender with respect to any amount owing under this
subsection shall be conclusive, absent manifest error. If such Lender's
share of such borrowing is not in fact made available to the Agent by such
Lender on the Settlement Date, the Agent shall be entitled to recover such
amount with interest thereon at the highest rate per annum applicable to
Revolving Loans hereunder, on demand, from the Companies without prejudice
to any rights which the Agent may have against such Lender hereunder.
Nothing contained in this subsection shall relieve any Lender which has
failed to make available its ratable portion of any borrowing hereunder
from its obligation to do so in accordance with the terms hereof. Nothing
contained herein shall be deemed to obligate Agent to make available to any
Company the full amount of a requested advance when the Agent has any
notice (written or otherwise) that any of the Lenders will not advance its
ratable portion thereof.
2. On the Settlement Date, the Agent and the Lenders shall each remit
to the other, in immediately available funds, all amounts necessary so as
to ensure that, as of the Settlement Date, the Lenders shall have their
proportionate share of all outstanding Obligations.
3. The Agent shall forward to each Lender, at the end of each month, a
copy of the account statement rendered by the Agent to ROA.
4. The Agent shall, after receipt of any interest and fees earned under
this Financing Agreement, promptly remit to the Lenders: a) their pro rata
portion of all fees, provided, however, that the Lenders (other than CITBC
in its role as Lender and as Agent) shall x) not share in the Collateral
Management Fee or Documentation Fees; and y) receive their share of the
Loan Facility Fee in accordance with their respective agreements with the
Agent; and b) interest computed at the applicable rate provided for in this
Financing Agreement on all outstanding amounts advanced by the Lenders on
each Settlement Date, prior to adjustment, that are subsequent to the last
remittance by the Agent to the Lenders of the Company's interest.
5. (a) Each Company acknowledges that the Lenders, with the consent of
the Agent, may sell participations in the loans and extensions of credit
made and to be made hereunder (the "Participants").Each Company further
acknowledges that in doing so, the Lenders may grant to such Participants
certain rights which would require the Participant's consent to certain
waivers, amendments and other actions with respect to the provisions of
this Financing Agreement, provided that the consent of any such Participant
shall not be required except for matters requiring the consent of all
Lenders hereunder as set forth in Section 13, Paragraph 10 hereof.
(b) Each Company authorizes each Lender to disclose to any Participant
or purchasing lender (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning
the Companies and their affiliates which has been delivered to such Lender
by or on behalf of any Company pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of any Company in connection with
such Lender's credit evaluation of the Companies and their affiliates prior
to entering into this Agreement.
6. Each Company has made and will, from time to time, make available to
the Agent and/or the Lenders certain financial and other business
information (the "Confidential Information") relating to its business. By
their signatures hereto or to the Assignment and Transfer Agreement, the
Agent and each Lender agree to maintain the confidentiality of all
Confidential Information, and to disclose such information only (a) to
officers, directors or employees of such Agent or Lender and their legal or
financial advisors, in each case to the extent necessary to carry out this
Financing Agreement and in the case of CITBC, to The CIT Group Holdings,
Inc., The CIT Group, Inc., Chase Manhattan Bank Corporation or Dai-Ichi
Kangyo Bank, (b) to any other Person to the extent the disclosure of such
information to such Person is required in connection with the examination
of a Lender's records by appropriate authorities, pursuant to court order,
subpoena or other legal process or otherwise as required by law or
regulation, and (c) to Transferees or potential Transferees. The Lenders,
the Agent, Transferees and potential Transferees shall not be required to
maintain the confidentiality of any portion of the Confidential
Information which (a) is known by such Person or its agents, advisors or
representatives prior to disclosure or (b) becomes generally available to
the public provided that the disclosure of such Confidential Information
does not violate a confidentiality agreement of which the Transferees,
potential Transferees, the Agent or the Lender, as the case may be, has
actual knowledge.
7. Each Company hereby agrees that each Lender is solely responsible
for its portion of the Line of Credit and that neither the Agent nor any
Lender shall be responsible for, nor assume any obligations for, the
failure of any Lender to make available its portion of the Line of Credit.
Further, should any Lender refuse to make available its portion of the Line
of Credit, then another Lender may, but without obligation to do so,
increase, unilaterally, its portion of the Line of Credit in which event
the Companies are so obligated to that other Lender.
8. In the event that the Agent, the Lenders or any one of them is sued
or threatened with suit by any Company, or by any receiver, trustee,
creditor or any committee of creditors on account of any preference,
voidable transfer or lender liability issue, alleged to have occurred or
been received as a result of, or during the transactions contemplated
under, this Financing Agreement, then in such event any money paid in
satisfaction or compromise of such suit, action, claim or demand and any
expenses, costs and attorneys' fees paid or incurred in connection
therewith, whether by the Agent, the Lenders or any one of them, shall be
shared proportionately by the Lenders. In addition, any costs, expenses,
fees or disbursements incurred by outside agencies or attorneys retained by
the Agent to effect collection or enforcement of any rights in the
Collateral, including enforcing, preserving or maintaining rights under
this Financing Agreement shall be shared proportionately between and among
the Lenders to the extent not reimbursed by the Companies or from the
proceeds of Collateral. The provisions of this paragraph shall not apply
to any suits, actions, proceedings or claims that are unrelated, directly
or indirectly, to this Financing Agreement.
9. Each of the Lenders agrees with each other Lender that any money or
assets of any Company held or received by such Lender, no matter how or
when received, shall be applied to the reduction of the Obligations (to the
extent permitted hereunder) after x) the occurrence of an Event of Default
and y) the election by the Required Lenders to accelerate the Obligations.
In addition, each Company authorizes, and the Lenders shall have the right,
without notice, upon any amount becoming due and payable hereunder, to
set-off and apply against any and all property held by, or in the
possession of, such Lender the Obligations due such Lenders.
10. CITBC shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial
institutions all or a portion of its rights and obligations under this
Financing Agreement (including, without limitation, its obligations under
the Line of Credit, the Revolving Loans, the Acquisition Term Loans and its
rights and obligations with respect to Letters of Credit). The initial
assignments by CITBC shall be for amounts not less than $5,000,000.00 each.
Upon execution of an Assignment and Transfer Agreement, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment,
have the rights and obligations of CITBC as the case may be hereunder and
(ii) CITBC shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such assignment, relinquish its rights and
be released from its obligations under this Financing Agreement. Each
Company shall, if necessary, execute any documents reasonably required to
effectuate the assignments. No other Lender may assign its interest, in
whole or in part, in the loans and advances and extensions of credit
hereunder without i) the prior written consent of the Agent and the Agent
will give reasonable and good faith consideration to the opinions of ROA as
to such prospective assignee; ii) the payment to the Agent (solely for the
Agent's account) by the current or prospective Lender of a $5,000.00 fee
for processing the assignment; and (iii) if the Transferee is a Foreign
Lender (as defined in paragraph 11 below) such Foreign Lender first
complies with the provisions of paragraph 11 below. Additionally, no other
Lender shall assign such Lender's interest in the loans and advances and
extensions of credit hereunder (or any portion thereof) unless the interest
to be so assigned is not less than $5,000,000.00 or all of the such
Lender's entire interest in the loans and advances and extensions of credit
hereunder.
11. Any Lender organized under the laws of a jurisdiction outside of
the United States (a "Foreign Lender") shall deliver to Agent and ROA (i)
two valid, duly completed copies of IRS Form 1001 or 4224 or successor
applicable form, as the case may be, and any other required form,
certifying in each case that such Foreign Lender is entitled to receive
payments under this Financing Agreement without deduction or withholding of
any United States federal income taxes, or (ii) if such Foreign Lender is
not a "bank" within the meaning of Section 881 (c) (3) (A) of the Internal
Revenue Code and cannot deliver either IRS Form 1001 or 4224 pursuant to
clause (i) above, (A) a duly completed certificate of non-withholding
acceptable to ROA and the Agent in their reasonable discretion (any such
certificate, a "Tax Certificate") and (B) two valid, duly completed copies
of IRS Form W-8 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax. Each
such Foreign Lender shall also deliver to Agent and ROA two further copies
of said Form 1001 or 4224 or Form W-8 and a Tax Certificate, or successor
applicable forms, or other manner of required certification, as the case
may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to
obtaining an exemption from a required withholding of United States of
America federal income tax or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to ROA and Agent,
and such extensions or renewals thereof as may reasonably be requested by
ROA and Agent, certifying (x) in the case of a Form 1001 or 4224 that such
Foreign Lender is entitled to receive payments under this Financing
Agreement without deduction or withholding of any United States federal
income taxes, or (y) in the case of a Form W-8 and a Tax Certificate,
establishing an exemption from United States backup withholding tax.
SECTION 13. Agency
1. Each Lender hereby irrevocably designates and appoints CITBC as the
Agent for the Lenders under this Financing Agreement and any ancillary loan
documents and irrevocably authorizes CITBC as Agent for such Lender, to
take such action on its behalf under the provisions of the Financing
Agreement and all ancillary documents and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of
this Financing Agreement and all ancillary documents together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Financing Agreement, the Agent
shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Financing Agreement and the ancillary documents or
otherwise exist against the Agent.
2. The Agent may execute any of its duties under this Financing
Agreement and all ancillary documents by or through agents or
attorneys-in-fact and shall be entitled to the advice of counsel concerning
all matters pertaining to such duties.
3. Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (i) liable to any Lender for any
action lawfully taken or omitted to be taken by it or such person under or
in connection with the Financing Agreement and all ancillary documents
(except for its or such person's own negligence or willful misconduct), or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Company or any
officer thereof contained in the Financing Agreement and all ancillary
documents or in any certificate, report, statement or other document
referred to or provided for in, or received by, the Agent under or in
connection with the Financing Agreement and all ancillary documents or for
the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Financing Agreement and all ancillary documents or for
any failure of any Company to perform its obligations thereunder. The
Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, the Financing Agreement and all ancillary
documents or to inspect the properties, books or records of any Company.
4. The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the
proper person or persons and upon advice and statements of legal counsel
(including, without limitation, counsel to ROA), independent accountants
and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Financing
Agreement and all ancillary documents unless it shall first receive such
advice or concurrence from all of the Lenders, or the Required Lenders, as
the case may be, as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Financing Agreement and
all ancillary documents in accordance with a request from all of the
Lenders, or the Required Lenders, as the case may be, and such request and
any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders.
5. The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent
has received notice from a Lender or a Company describing such Default or
Event of Default. In the event that the Agent receives such a notice, the
Agent shall promptly give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that unless and
until the Agent shall have received such direction, the Agent may in the
interim (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable and in the best interests of the Lenders.
6. Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents or attorneys-in-fact has made
any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of any Company,
shall be deemed to constitute any representation or warranty by the Agent
to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made
its own appraisal of, and investigation into, the business, operations,
property, financial and other condition and creditworthiness of the
Companies and made its own decision to enter into this Financing Agreement.
Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under this Financing Agreement and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition or creditworthiness of the Companies. The
Agent, however, shall provide the Lenders with copies of all financial
statements, projections and business plans which come into the possession
of the Agent or any of its officers, employees, agents or
attorneys-in-fact.
7. The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by any Company and without limiting the
obligation of the Companies to do so), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever (including
negligence on the part of the Agent) which may at any time be imposed on,
incurred by or asserted against the Agent in anyway relating to, or arising
out of, this Financing Agreement or any ancillary documents or any
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this paragraph shall survive the payment of
the Obligations.
8. The Agent may make loans to, and generally engage in any kind of
business with, any Company as though the Agent were not the Agent
hereunder. With respect to its loans made or renewed by it or loan
obligations hereunder as Lender, the Agent shall have the same rights and
powers, duties and liabilities under this Financing Agreement as any Lender
and may exercise the same as though it was not the Agent and the terms
"Lender" and "Lenders" shall include the Agent in its individual
capacities.
9. The Agent may resign as Agent upon thirty (30) days' notice to the
Lenders and such resignation shall be effective upon the appointment of a
successor Agent. If the Agent shall resign as Agent, then the Lenders
shall appoint a successor agent for the Lenders whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent and the
term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent
shall be terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Financing Agreement,
provided, however, that the Lenders shall: a) notify ROA of the successor
Agent and b) request the consent of ROA to such successor Agent, which
consent shall not be unreasonably withheld. ROA shall be deemed to have
consented to the successor Agent if the Lenders do not receive from ROA,
within ten (10) days of the Lenders' notice to ROA, a written statement of
ROA's objection to the successor Agent. Should ROA not consent and no
acceptable successor Agent is agreed upon within thirty (30) days of the
date ROA advised the Lenders of its objection to the successor Agent, then
the Lenders may appoint (without ROA's consent) another successor Agent.
After any retiring Agent's resignation hereunder as Agent the provisions of
this Section shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent.
10. Notwithstanding anything contained in this Financing Agreement to
the contrary, the Agent will not, without the prior written consent of all
Lenders: a) amend the Financing Agreement to v) increase the Line of
Credit; w) reduce the interest rates; x) reduce or waive i) any fees in
which the Lenders share hereunder; or ii) the repayment of any Obligations
due the Lenders; y) extend the maturity of the Obligations; or z) alter or
amend 1 ) this Paragraph 10, 2) the definitions of Eligible Accounts
Receivable, Eligible Inventory, Collateral or Required Lenders, or the
Agent's criteria for determining compliance with such definitions of
eligibility; or 3) the rates of advance set forth in Paragraph 1 of Section
3 hereof; b) release Collateral in bulk without a corresponding reduction
in the Obligations to the Lenders, or c) intentionally make any Revolving
Loan or assist in opening any Letter of Credit hereunder if after giving
effect thereto the total of Revolving Loans and Letters of Credit hereunder
would exceed one hundred and ten percent (110%) of the maximum amount
available under Sections 3 and 4 hereof. In all other respects the Agent
is authorized to take such actions or fail to take such actions if the
Agent, in its reasonable discretion, deems such to be advisable and in the
best interest of the Lenders, including, but not limited to, the making of
an overadvance or the termination of the Financing Agreement upon the
occurrence of an Event of Default unless it is specifically instructed to
the contrary by the Required Lenders.
11. Each Lender agrees that notwithstanding the provisions of Section
11 of this Financing Agreement, any Lender may terminate this Financing
Agreement or the Line of Credit only as of the fifth or any subsequent
Anniversary Date and then only by giving the Agent ninety (90) days prior
written notice thereof. Within thirty (30) days after receipt of any such
termination notice, the Agent shall, at its option, either (i) give notice
of termination to ROA hereunder or (ii) purchase such Lender's share of the
Obligations hereunder for the full amount thereof plus accrued interest
thereon. Unless so terminated this Financing Agreement and the Line of
Credit shall be automatically extended from Anniversary Date to Anniversary
Date.
SECTION 14. Miscellaneous
1. Each Company hereby waives diligence, demand, presentment and
protest and any notices thereof as well as notice of nonpayment. No delay
or omission of the Agent or any Lender to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default,
shall impair any such right or shall operate as a waiver thereof or as a
waiver of any such Event of Default. No single or partial exercise by the
Agent or any Lender of any right or remedy precludes any other or further
exercise thereof, or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Companies,
the Lenders and the Agent; supersedes any prior agreements; can be changed
only by a writing signed by the Companies, the Agent or the Required
Lenders, as applicable; and shall bind and benefit the parties thereto and
their respective successors and assigns.
3. In the event that any Lender shall have determined in the exercise
of its reasonable business judgement subsequent to the date of execution of
this Financing Agreement that any applicable law, rule, regulation or
guideline regarding capital adequacy, or change therein, or any change in
the interpretation or administration thereof, or compliance by such Lender
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
Lender's capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Lender's policies with
respect to capital adequacy) by an amount reasonably deemed by the Lender
to be material, then, from time to time, ROA shall pay no later than five
(5) Business Days following demand to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. In determining
such amount or amounts, such Lender may use any reasonable averaging or
attribution methods. The protection of this paragraph 3 shall be available
to such Lenders regardless of any possible contention of invalidity or
inapplicability with respect to the applicable law, regulation or
condition. A certificate of any Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender with respect to
this paragraph 3 and the calculation thereof when delivered to ROA shall be
conclusive absent manifest error. Notwithstanding anything in this
paragraph to the contrary, in the event any Lender has exercised its rights
pursuant to this paragraph, and subsequent thereto determines that the
additional amounts paid exceeds the amount which such Lender actually
required pursuant hereto, the excess, if any, shall be returned to ROA by
such Lender.
4. In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject any Lender to any tax of any kind whatsoever with respect to
this Financing Agreement or change the basis of taxation of payments of
principal, fees, interest or any other amount payable hereunder or under
any other documents (except for changes in the rate of tax on the
overall net income of such Lender by the federal government or the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in
or for the account of, advances or loans by, or other credit extended
by, any office of such Lender by reason of or in respect to this
Financing Agreement including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on such Lender any other condition with respect to this
Financing Agreement or any other document, and the result of any of the
foregoing is to increase the cost to the Lender of making, renewing or
maintaining its loans hereunder by an amount that such Lender deems to
be material in the exercise of its reasonable business judgement or to
reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the loans by an amount that such Lender
deems to be material in the exercise of its reasonable business
judgement, then, in any case ROA shall pay such Lender, within five (5)
Business Days following its demand, such additional cost or such
reduction, as the case may be. The Lender shall certify the amount of
such additional cost or reduced amount to ROA and the calculation
thereof and such certification shall be conclusive absent manifest
error. Notwithstanding anything in this paragraph to the contrary, in
the event any Lender has exercised its rights pursuant to this
paragraph, and subsequent thereto determines that the additional amounts
paid exceeds the amount which the Lender actually required pursuant
hereto, the excess, if any, shall be returned to ROA by such Lender.
5. In no event shall any Company, upon demand for payment of any
indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement
made in connection herewith, neither the Agent nor the Lenders shall be
entitled to receive, charge or apply, as interest on any indebtedness
relating hereto, any amount in excess of the maximum amount of interest
permissible under applicable law. If the Agent or any Lender ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in
full, any remaining excess shall be refunded to ROA. This paragraph shall
control every other provision hereof and of any other agreement made in
connection herewith.
6. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be
fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there
shall be added automatically as a part of the applicable agreement a legal
and enforceable provision as similar in terms to the severed provision as
may be possible.
7. The Companies, the Agent and the Lenders acknowledge that the
financial covenants are based on GAAP as in effect on the date of this
Financing Agreement. Furthermore, with respect to the financial covenants,
financial statements and covenant compliance testing, notwithstanding any
changes in GAAP, are to be prepared, or tested, as the case may be, in
accordance with GAAP as in effect on the date of this Financing Agreement.
Should subsequent changes in GAAP impose an undue burden on the Companies
to report and/or test in accordance with GAAP as in effect on the date
hereof, then the Agent and the Companies agree that they will reasonably,
diligently and in good faith attempt to renegotiate the aforesaid
covenants, provided, however, that until such time as the covenants are so
amended, the Companies will report and/or test, as the case may be, in
accordance with GAAP as in effect on the date hereof.
8. EACH COMPANY, EACH LENDER AND THE AGENT EACH HEREBY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS
FINANCING AGREEMENT. EACH COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED.
9. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed
to have been validly served, given or delivered when hand delivered or sent
by facsimile, or three days after deposit in the United State mails, with
proper first class postage prepaid and addressed to the party to be
notified as follows:
(A) if to the Agent or CITBC, at:
The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attn: Regional Credit Manager
(B) if to any Company at:
Rock of Ages Corporation
772 Granitville Road
Barre, Vermont 05654
Attn: Chief Executive Officer
or to such other address as any Party may designate for itself by like
notice.
10. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed and delivered in New York, New York, by their
proper and duly authorized officers as of the date set forth above.
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS AGENT)
By \s\ James
------------------------------------
Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
By \s\ James
-----------------------------------
Vice President
ROCK OF AGES CORPORATION
By \s\ Kurt M. Swenson
-----------------------------------
Title: President
ROYALTY GRANITE CORPORATION
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
CAROLINA QUARRIES, INC.
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
PENNSYLVANIA GRANITE CORP.
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
CHILDS & CHILDS GRANITE COMPANY, INC.
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
SOUTHERN MAUSOLEUMS, INC.
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
ROCK OF AGES MEMORIALS LLC
By \s\ Kurt M. Swenson
-----------------------------------
Title: Chairman and Chief Executive
Officer
EXHIBIT A - ASSIGNMENT AND TRANSFER AGREEMENT
Dated: , 199
Reference is made to the Financing Agreement, dated December , 199 (as
amended, modified, supplemented and in effect from time to time, the
"Financing Agreement"), among ROCK OF AGES CORPORATION (herein "ROA"), a
Delaware corporation with a principal place of business at 772
Granitville Road, Barre, Vermont 05654; ROYALTY GRANITE CORPORATION (herein
"Royalty"), a Georgia corporation with a principal place of business at SR
294, Berkley Quarry Road, Carlton, Georgia 30627; CAROLINA QUARRIES, INC.
(herein "Carolina"), a Georgia corporation with a principal place of
business at 805 Harris Granite Road, Salisbury, North Carolina 28146;
PENNSYLVANIA GRANITE CORP. (herein "Pennsylvania"), a Pennsylvania
corporation with a principal place of business at 410 Tryhall Road,
Elverson, Pennsylvania 19520; CHILDS & CHILDS GRANITE COMPANY, INC.
("Childs"), a Georgia corporation with a principal place of business at
1130 Hartwell Highway, Elberton, Georgia 30635; SOUTHERN MAUSOLEUMS, INC.
(' Mausoleums"), a Georgia corporation with a principal place of business
at 1167 Bowman Highway, Elberton, Georgia 30635; ROCK OF AGES MEMORIALS LLC
("Memorials"), a limited liability company formed under the laws of
Delaware with a principal place of business at 1024 North Dixie,
Elizabethtown, Kentucky 42701; and such other subsidiaries or affiliates of
the foregoing as the Lenders, by unanimous consent, permit to become
parties to the Financing Agreement (herein collectively the "Companies"),
the Lenders named therein, and The CIT Group/Business Credit, Inc., as
Agent (the "Agent"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Financing
Agreement. This Assignment and Transfer Agreement, between the Assignor
(as defined and set forth on Schedule 1 hereto and made a part hereof) and
the Assignee (as defined and set forth on Schedule 1 hereto and made a part
hereof) is dated as of the Effective Date (as set forth on Schedule 1
hereto and made a part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor,
as of the Effective Date, an undivided interest (the "Assigned Interest")
in and to all the Assignor's rights and obligations under the Financing
Agreement respecting those, and only those, financing facilities contained
in the Financing Agreement as are set forth on Schedule 1 (collectively,
the "Assigned Facilities" and individually, an "Assigned Facility"), in a
principal amount for each Assigned Facility as set forth on Schedule 1.
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Financing Agreement or
any other instrument, document or agreement executed in conjunction
therewith (collectively the "Ancillary Documents") or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
the Financing Agreement, any Collateral thereunder or any of the Ancillary
Documents furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim and (ii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Companies or any guarantor or the
performance or observance by the Companies or any guarantor of any of their
respective obligations under the Financing Agreement or any of the
Ancillary Documents furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Transfer Agreement; (ii)
confirms that it has received a copy of the Financing Agreement, together
with the copies of the most recent financial statements of the Companies,
and such other documents and information as it has deemed appropriate to
make its own credit analysis; (iii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Financing Agreement; (iv) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under
the Financing Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will be bound by the provisions of the Financing Agreement and will
perform in accordance with its terms all the obligations which by the terms
of the Financing Agreement are required to be performed by it as Lender;
and (vi) if the Assignee is organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's
exemption from United States withholding taxes with respect to all payments
to be made to the Assignee under the Financing Agreement or such other
documents as are necessary to indicate that all such payments are subject
to such tax at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Transfer Agreement,
such agreement will be delivered to the Agent for acceptance by it and the
Companies, effective as of the Effective Date.
5. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts, except as
otherwise provided in the Financing Agreement) to the Assignee, whether
such amounts have accrued prior to the Effective Date or accrue subsequent
to the Effective Date. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date
made by the Agent or with respect to the making of this assignment directly
between themselves.
6. From and after the Effective Date, (i) the Assignee shall be a party
to the Financing Agreement and, to the extent provided in this Assignment
and Transfer Agreement, have the rights and obligations of a Lender
thereunder, and (ii) the Assignor shall, to the extent provided in this
Assignment and Transfer Agreement, relinquish its rights and be released
from its obligations under the Financing Agreement.
7. THIS ASSIGNMENT AND TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule 1 hereto.
SCHEDULE 1 TO ASSIGNMENT AND TRANSFER AGREEMENT
Name of Assignor:__________________________________________________________
Name of Assignee:__________________________________________________________
Effective Date of Assignment: _____________________________________, 199___
Percentage Assigned of Each
Principal Amount (or, Facility (Shown as a percentage
with respect to of aggregate original principal
Letters of Credit amount [or, with respect to
Assigned Face Amount Letters of Credit, face amount]
Facilities Assigned of all Lenders)
---------- -------------------- -------------------------------
Acquisition Term
Loans $_________________ __________%
Revolving Loans $_________________ __________%
Letter of Credit
participation
interest $_________________ __________%
Total $_________________
Fees:
Rates:
Accepted:
THE CIT GROUP/BUSINESS CREDIT, INC. (NAME OF ASSIGNOR)
AS AGENT AS ASSIGNOR
By: ______________________________ By:____________________________
Title: Vice President Title: ________________________
ROCK OF AGES CORPORATION (NAME OF ASSIGNEE)
(A "COMPANY") as Assignee
By: ______________________________ By:____________________________
Title: Vice President Title: ________________________
ROYALTY GRANITE CORPORATION PENNSYLVANIA GRANITE CORP.
(A "COMPANY") (A "COMPANY")
By:_______________________________ By:____________________________
Title: Chairman and Chief Title: Chairman and Chief
Executive Officer Executive Officer
CAROLINA QUARRIES, INC. CHILDS & CHILDS GRANITE, INC.
(A "COMPANY") (A "COMPANY")
By:_______________________________ By:____________________________
Title: Chairman and Chief Title: Chairman and Chief
Executive Officer Executive Officer
SOUTHERN MAUSOLEUMS, INC. ROCK OF AGES MEMORIALS LLC
(A "COMPANY) (A "COMPANY")
By:_______________________________ By:____________________________
Title: Chairman and Chief Title: Chairman and Chief
Executive Officer Executive Officer
EXHIBIT B
PROMISSORY NOTE
_____________, 199_
$___________.00
FOR VALUE RECEIVED, the undersigned, ROCK OF AGES CORPORATION, a Delaware
corporation, ROYALTY GRANITE CORPORATION, a Georgia corporation, CAROLINA
QUARRIES, INC., a Georgia corporation, PENNSYLVANIA GRANITE CORP., a
Pennsylvania corporation, CHILDS & CHILDS GRANITE COMPANY, INC., a
Pennsylvania corporation, SOUTHERN MAUSOLEUMS, INC., a Georgia corporation,
and ROCK OF AGES MEMORIALS LLC, a limited liability formed under the laws
of Delaware, and such other subsidiaries or affiliates of the foregoing as
the Lenders, by unanimous consent, permit to become parties to the
Financing Agreement (herein the "Companies") jointly and severally, promise
to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC. (herein the
"Agent") as Agent for itself and the other lenders that are, or may be,
pursuant to the terms of the Financing Agreement referred to below, lenders
to the Companies, at its office located at 1211 Avenue of the Americas, New
York, New York 10036, in lawful money of the United States of America and
in immediately available funds, the principal amount of ____________ Dollars
($__________.00) as follows:
____________________________________________________________________________
____________________________________________________________________________
whereof the first such installment shall be due and payable on, ____________
__________________, 199_ and subsequent installments shall be due
and payable on the first Business Day of each _____________, April, July,
October and ____________, thereafter until this Note is paid in full.
Each Company further agrees to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time from the
date hereof on the date and at the rate specified in Section 8 of the
Financing Agreement referred to below (the "Financing Agreement").
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon
shall be payable at the then applicable rate during such extension.
This Note is the Promissory Note referred to in the Financing Agreement,
dated December , 1997, between the Companies, the Agent and the lenders
that are now, or in the future, a party thereto, and is subject to, and
entitled to, all provisions and benefits thereof and is subject to optional
and mandatory prepayment, in whole or in part, as provided therein.