Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 78 466K
2: EX-3.1.1 Certificate of Incorporation 7 33K
3: EX-3.2.1 By-Laws of the Registrant 16 66K
4: EX-10.1.1 1996 Stock Option Plan 13 38K
5: EX-10.2.1 Lease Agreement Dated March 1, 1989 29 134K
6: EX-10.2.2 Lease Agreement Dated November 1, 1992 8± 30K
7: EX-10.2.3 Lease Agreement Dated January 3, 1991 39± 146K
8: EX-10.2.4 Lease Agreement Dated Dated December 1994 25 109K
9: EX-10.2.5 Lease Agreement Dated March 1993 11± 48K
10: EX-10.3.1 Revolving Loan & Security Agreement 46 142K
11: EX-22 List of Subsidiaries 1 5K
12: EX-23.2 Consent of Grant Thornton 1 7K
13: EX-27 ƒ Financial Data Schedule 1 10K
EXHIBIT 10.3.1
REVOLVING LOAN AND SECURITY AGREEMENT
THIS LOAN AGREEMENT made this 13 day of October, 1995, by and between
Q.E.P. CO., INC., a New York corporation with its chief executive office and
principal place office at 575 Corporate Drive, Suite 410, Mahwah, New Jersey
07430, Q.E.P. - O'TOOL, INC., a California corporation with its chief executive
office and principal place of business at 20535 Belshaw Avenue, Carson, CA
90746, AMERICAN TROWEL AND FLOAT COMPANY, INC., a Florida corporation with its
chief executive office and principal place of business at 2511 N.E. 4th Avenue,
Pompano Beach, Florida 33064, MARION TOOL CORPORATION, an Indiana corporation
with its chief executive office and principal place of business at 11th Street
and Miller Avenue, Marion, Indiana 46952, WESTPOINT FOUNDRY, INC., an Indiana
corporation with its chief executive office and principal place of business at
11th Street and Miller Avenue, Marion, Indiana 46953 and Q.E.P. ANDREWS, INC., a
Nevada corporation with its chief executive office and principal place of
business at 35 Stokes Drives, Carson City, Nevada (all of the foregoing
hereinafter collectively called the "BORROWER" unless otherwise specifically
indicated) and SHAWMUT BANK CONNECTICUT, N.A., a national banking association
with offices at 850 Main Street, Bridgeport, Connecticut 06604 (hereinafter
called the "LENDER") The Borrower and the Lender hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein:
1.1 OBLIGATIONS - means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender
of every kind and description (whether or notvidenced by any note or
other instrument and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, whether or not such obligations are related to
the transaction described in this Loan Agreement, by class, or kind, or
whether or not contemplated by the parties at the time
of the granting of this security interest, including without
limitation, all interest, fees, charges, expenses and attorneys' fees
chargeable to the Borrower or incurred by the Lender in connection with
the Borrower's account whether provided for herein or in any
Supplemental Agreement.
1.2 COLLATERAL - means Receivables, Inventory, Equipment, Patents,
Trademarks and Additional Collateral, as hereinafter defined.
1.3 RECEIVABLES - means (a) all of the Borrower's now owned and hereafter
acquired, present and future, accounts, contract rights, chattel paper,
documents, and instruments, including without limitation all
obligations to the Borrower for the payment of money, whether arising
out of the Borrower's sale of goods or rendition of services or
otherwise (all hereinafter called "ACCOUNTS, ETC."), and all proceeds
of the foregoing and all proceeds of any insurance on the foregoing;
(b) all of the Borrower's rights, remedies, security and liens, in, to
and in respect of the Accounts, Etc., present and future, including
without limitation, rights of stoppage in transit, replevin,
repossession and reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, guaranties or other contracts
of suretyship with respect to the Accounts, Etc., deposits or other
security for the obligation of any debtor or obligor in any way
obligated on or in connection with any Accounts, Etc., and credit and
other insurance, and all proceeds of the foregoing and all proceeds of
any insurance on the foregoing; and (c) all of the Borrower's right,
title and interest, present and future, in, to and in respect of all
goods relating to, or which by sale have resulted in, Accounts, Etc.,
including without limitation all goods described in invoices or other
documents or instruments with respect to, or otherwise representing or
evidencing any Accounts, Etc., and all returned, reclaimed or
repossessed goods, and all proceeds of the foregoing and all proceeds
of any insurance on the foregoing.
1.4 ELIGIBLE RECEIVABLES - means the net amount of those Receivables of
Q.E.P. Co., Inc., Q.E.P.-O'Tool, Inc. and American Trowel and Float
Company, Inc. which continually meet the following requirements:
a. The account is due and payable not more than thirty (30) days
from the date of the invoice evidencing the account and is not
more than sixty (60) days past due;
b. The account arose from the performance of services by the
Borrower which have been fully and satisfactorily performed or
from the absolute sale of goods by the Borrower in which the
Borrower had the sole and complete ownership and the goods
have been shipped or delivered to the account debtor
evidencing which the Borrower or the Lender has the possession
of shipping and delivery receipts;
C. The account is not subject to any prior or subsequent
assignment, claim, lien or security interest other than that
of the Lender;
d. To the best of the Borrower's knowledge, the account is not
subject to setoff, counterclaim, defense, allowance or
adjustment other than discounts for prompt payment shown on
the invoice, or to dispute, objection or complaint by the
account debtor concerning his liability on the account, and
the goods, the sale of which gave rise to the account, have
not been returned, rejected, lost or damaged;
e. The account arose in the ordinary course of business;
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f. To the best of the Borrower's knowledge, no petition or other
application for relief under the Bankruptcy Code or other
insolvency law has been filed with respect to the customer or
account debtor; and the customer or account debtor has not
made an assignment for the benefit of creditors, become
insolvent, or suspended or terminated business; and the
account debtor is generally paying its debts as they become
due; and
g. The Lender has not notified the Borrower that, in the Lender's
sole discretion, the account or account debtor is not
acceptable to the Lender.
1.5 INVENTORY - means all inventory of whatsoever name, nature, kind or
description now owned and hereafter acquired, present and future, by
the Borrower, wherever located, including without limitation all
contract rights with respect thereto and documents representing the
same, all goods held for sale or lease or to be furnished under
contracts of service, finished goods, work in process, raw materials,
materials used or consumed by the Borrower, parts, supplies, and all
wrapping, packaging, advertising and shipping materials and any
documents relating thereto, and all labels and other devices, names
and marks affixed or to be affixed thereto for purposes of selling or
of identifying the same or the seller or manufacturer thereof, and all
right, title and interest of the Borrower therein and thereto, and all
products and proceeds of the foregoing and all proceeds of any
insurance on the foregoing.
1.6 ELIGIBLE INVENTORY - means that Inventory of Q. E. P. Co., Inc. and
Q.E.P.-O'Tool, Inc. (valued at the lesser of cost to the Borrower or
market value) which continually meets the following requirements:
a. It is in first-class condition and is saleable through normal
trade channels;
b. It is new and unused;
c. It is owned by the Borrower and is not subject to any lien or
security interest whatsoever other than that of the Lender;
and
d. It is not of any class, type or category which the Lender,
acting in the Lender's sole discretion, shall have notified
the Borrower, is not deemed to constitute Inventory eligible
for the purposes of this SECTION "1.6"
Eligible Inventory shall include finished goods Inventory
only.
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1.7 EQUIPMENT - means all machinery, equipment, furniture, fixtures, tools,
parts, supplies and motor vehicles, now owned and hereafter acquired,
present and future, by the Borrower of whatsoever name, nature, kind
or description, wherever located, and all additions and accessions
thereto and replacements or substitutions therefor, and all products
and proceeds thereof and all proceeds of any insurance thereon.
1.8 PATENTS - means all of the Borrower's right, title and interest,
present and future, in and to (a) all letters patent of the United
States or any other country, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including
without limitation applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or
agency of the United States and State thereof or any other country or
any political subdivision thereof, all whether now owned or hereafter
acquired by the Borrower; and (b) all reissues, continuations,
continuations-in-part or extensions thereof and all licenses thereof;
and all proceeds of the foregoing and all proceeds of any insurance on
the foregoing.
1.9 TRADEMARKS - means all of the Borrower's right, title and interest,
present and future, in and to (a) all trademarks, trade names, trade
styles, service marks, prints and labels on which said trademarks,
trade names, trade styles and service marks have appeared or appear,
designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all right, title and interest therein
and thereto, and all registrations and recordings thereof, including
without limitation applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof, or any other country
or any political subdivision thereof, all whether now owned or
hereafter acquired by the Borrower; (b) all reissues, extensions or
renewals thereof and all licenses thereof; and (c) the goodwill of the
business symbolized by each of the Trade marks, and all customer lists
and other records of the Borrower relating to the distribution of
products bearing the Trademarks; and all proceeds of the foregoing and
all proceeds of any insurance on the foregoing.
1.10 ADDITION COLLATERAL - means (a) all other general intangibles of every
kind and description of the Borrower, including without limitation
Federal, State and local tax refund claims of all kinds, and any
present or future right of the Borrower to or in its employee or other
pension, retirement or similar plans and any assets thereof, or any
portion thereof, including but not limited to refunds for overpayment,
distributions upon termination, reversion of any
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surplus assets or otherwise, whether now existing or hereafter
arising; (b) all of the Borrower's deposit accounts, whether now owned
or hereafter created, wherever located; (c) all monies, securities,
instruments, cash and other property of the Borrower and the proceeds
thereof, now or hereafter held or received by, or in transit to, the
Lender from or for the Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of the
Borrower's deposits (general or special, balances, sums, proceeds and
credits of the Borrower with the Lender at any time existing); and (d)
all books, records, customer lists, ledger cards, computer programs,
computer tapes, disks, printouts and records, and other property and
general intangibles at any time evidencing or relating to any of the
foregoing, whether now in existence or hereafter created; and all
proceeds of the foregoing and all proceeds of any insurance on the
foregoing.
1.11 LOAN AGREEMENT - means this Revolving Loan and Security Agreement, as
the same may hereafter be supplemented, modified or amended.
1.12 SUPPLEMENTAL AGREEMENTS - means any and all agreements, instruments,
documents, security agreements, mortgages, financing statements, and
supplements thereto granting or intending to grant to the Lender any
lien, security interest, pledge, assignment or indemnification to
secure the obligations, or entered into between the Borrower and the
Lender, at any time, for any purpose.
1.13 EFFECTIVE DATE - means the date of execution of this Loan Agreement.
1.14 GUARANTOR - means any person, firm or corporation which has guaranteed
or endorsed or has agreed to act as surety for any of the Obligations.
1.15 ADDITIONAL DEFINITIONS. Unless otherwise specifically defined herein,
all terms used in this Loan Agreement and in all documents referred to
herein and which have been defined in Articles 1, 2 or 9, Uniform
Commercial Code, shall be interpreted and construed in light of the
sections, the definitions, the "official comment", and the
definitional and substantive cross-references of the Uniform
Commercial Code.
SECTION 2. TERMS OF BORROWING.
2.1 REVOLVING LOAN. The Lender may loan to the Borrower, at its
discretion, and the Borrower may borrow, repay, and reborrow from the
Lender, from time to time (the "REVOLVING LOAN"), up to that amount
(hereinafter referred to as the "BORROWING BASE") which is the lesser
of:
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a. The sum of:
(1) EIGHTY PERCENT (80%) of the Borrower's Eligible
Receivables; AND
(2) FIFTY PERCENT (50%) of the Borrower's Eligible
Inventory, but in any event not to exceed ONE MILLION
THREE HUNDRED THOUSAND DOLLARS ($1,300,000); OR
b. THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($3,250,000).
Nothing herein shall be construed to require the Lender to lend up to
the Borrowing Base, and nothing shall prohibit the Lender from lending
in excess of the Borrowing Base, all loans to be at the discretion of
the Lender.
2.2 BORROWING BASE REPORTS, ETC. For purposes of computing the Borrowing
Base, the Borrower shall furnish to the Lender information-adequate to
identify Receivables and Inventory at times and in form and substance
as may be required by the Lender (the "BORROWING BASE CERTIFICATE"), a
copy of which is annexed hereto as EXHIBIT E, together with such
certificates as the Lender may require from the Borrower representing
that no Event of Default has occurred and that the Borrower knows of no
event which, but for the passage of time or the giving of notice, would
create an Event of Default. From time to time, upon request of Lender,
the Borrower shall provide the Lender with schedules describing all
Receivables created or acquired by the Borrower and shall execute and
deliver written assignments of such Receivables to the Lender;
provided, however, that the Borrower's failure to execute and deliver
such schedules and/or assignments shall not affect or limit the
Lender's security interest or other rights in and to any Collateral.
Together with each schedule, the Borrower shall, upon request of the
Lender, furnish copies Of customers' invoices or the equivalent, and
original shipping or delivery receipts for all merchandise sold, and
the Borrower warrants the genuineness thereof. The Borrower further
warrants that all Receivables are and will be bona fide existing
obligations created by the sale and delivery of merchandise or the
rendition of services to customers in the ordinary course of business,
free of liens, encumbrances and security interests (other than to
Lender) and unconditionally owed to the Borrower and, to the best of
the Borrower's knowledge, without defense, offset or counterclaim.
2.3 REPAYMENT OF THE REVOLVING LOAN. The Revolving Loan shall be payable
June 30, 1998 without requiring the Lender first to resort to any
other right, remedy or security. In the event the Revolving Loan at
any time exceeds the Borrowing Base,
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the Borrower will immediately, upon notification thereof from the
Lender, repay to the Lender the amount by which the Revolving Loan
exceeds the Borrowing Base. At the time of each advance under the
Revolving Loan, the Borrower will, upon request of the Lender, execute
a promissory note evidencing the Revolving Loan, such note to be in
such form and to contain such provisions as the Lender shall deem
desirable. If the Lender shall elect not to have the Borrower execute
notes, each advance shall be recorded in an account on the Lender's
books in which shall also be recorded accrued interest on advances,
payments on such advances, and other appropriate debits and credits as
herein provided, and such account shall constitute prima facie
evidence of the information contained therein.
2.4 INTEREST ON THE REVOLVING LOAN.
Interest on the Revolving Loan shall be payable monthly (except as
otherwise stated with respect to a LIBOR Based Rate Loan being a loan
made at the LIBOR Based Rate) in arrears on the first day of each
month and at maturity.
The Revolving Loan shall bear interest on the unpaid principal amount
thereof outstanding from time to time at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360
days) equal to:
a. the sum of
i. 1/2 of 1 percent (.5%) plus
ii. The Bank's base rate
(the "BASE RATE OPTION") or
b.
i. the LIBOR Rate plus
ii. 225 basis points, all as hereinafter set forth
(the "LIBOR BASED RATE")
but in no event higher than the maximum rate of interest permitted to
be collected by the holder of the Revolving Note under applicable law.
As to the Base Rate Option, in the event the Bank's base rate
prevailing on the effective date hereof is subsequently increased or
decreased, then, as of the date of said increase or decrease, an
increase or decrease will be made in the rate of interest which will
be charged to Borrower in respect of the Revolving Loan so that the
interest rate shall at all times be equal to the sum of one-half of
one percent (.5%) plus the Bank's base rate, subject to the aforesaid
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limitation based on applicable law. The Bank's "BASE RATE" shall mean
the interest rate announced from time to time by the Lender as its
base rate. The Base Rate is not necessarily the lowest rate available.
The Bank shall not be obligated to notify the Borrower of any change
in the base rate or the interest rate payable in respect of the
Revolving Loan, and a failure to so notify shall not affect the
effectiveness of the change in rate.
The LIBOR Rate shall mean an annual rate of interest determined by
Lender as being the rate available to Lender at approximately 11:00
a.m.- London time in the London Interbank Market, as referenced by
Reuters Screen "LIBO", in accordance with the usual practice in such
market, for the LIBOR Interest Period elected by Borrower, in effect
two Good Business Days prior to the funding date for a requested LIBOR
Based Rate Loan (including those requested in connection with the
conversion of a portion of the Revolving Credit subject to the Base
Rate Option to a LIBOR Based Rate Loan in accordance with this
Section, or for a LIBOR Based Rate Loan which Borrower has elected to
continue as a LIBOR Based Rate Loan beyond the expiration of the then
current LIBOR Interest Period with respect thereto, for deposits of
dollars in amounts equal (as nearly as may be estimated) to the amount
of the LIBOR Based Rate Loan which shall then be loaned by the Lender
to Borrower as of the time of such determination, as such rate may be
adjusted by the reserve percentage applicable during the LIBOR
Interest Period in effect (or if more than one such percentage shall
be applicable, the daily average of such percentages for those days in
such LIBOR Interest Period during which any such percentage shall be
so applicable) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without
limitation, any emergency, supplemental or other marginal reserve
requirement) for the Lender with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" as such term is
defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time, having a term equal to
such LIBOR Interest Period ("Eurocurrency Reserve Requirement"). Such
adjustment shall be effectuated by calculating, and the LIBOR Rate
shall be equal to, the quotient of (i) the offered rate divided by
(ii) one minus the Eurocurrency Reserve Requirement.
(i) The unpaid principal balance under the Revolving Loan or a portion
thereof may, at Borrower's option, bear interest at the LIBOR Based
Rate ("LIBOR RATE OPTION") provided that in no event may a LIBOR Based
Rate Loan be less than FIVE HUNDRED THOUSAND ($500,000) DOLLARS.
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(ii) LIBOR Based Rate Loans shall be selected (by notice to Lender
not less than 2 days prior to commencement of the proposed LIBOR
Interest Period) for a period of either a one (1), two (2), three (3)
or six (6) months, duration, as the Borrower may elect, during which
the LIBOR Based Rate is applicable ("LIBOR Interest Period"); provided,
however, that (a) if the LIBOR Interest Period would otherwise end on a
day which shall not be a Good Business Day, such LIBOR Interest period
shall be extended to the next succeeding Good Business Day, unless such
Good Business Day falls in another calendar month, in which case such
LIBOR Interest Period shall end on the next preceding Good Business Day
subject to clause (c) below; (b) interest shall accrue from and
including the first DAY of each LIBOR Interest Period to, but excluding
the day on which any LIBOR Interest Period expires; and (c) with
respect to any LIBOR Interest Period which begins on the last Good
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Interest Period), the LIBOR Interest Period shall end on the last
Good Business Day of a calendar month. Interest on a LIBOR Based Rate
Loan shall be due and payable in arrears at the end of the LIBOR
Interest Period. No LIBOR Interest Period may end after any renewal or
maturity date of the Revolving Note. Subject to all of the terms and
conditions applicable to a request that a new Advance be a LIBOR Based
Rate Loan, Borrower may extend a LIBOR Based Rate Loan as of the last
day of the LIBOR Interest Period to a new LIBOR Based Rate Loan or may
convert all of a portion of the loans subject to the Base Rate Option
to a LIBOR Based Rate Loan. If the Borrower fails to notify the Lender
of the Libor Interest Period for a subsequent LIBOR Based Rate Loan at
least two (2) Good Business Days prior to the last day of the then
current LIBOR Interest Period of an outstanding LIBOR Based Rate Loan,
then such outstanding LIBOR Based Rate Loan shall become a loan subject
to the Base Rate Option at the end of the current LIBOR Interest Period
for such outstanding LIBOR Based Rate Loan and shall accrue interest in
accordance with Section 2.4 (a) above.
(iii) The LIBOR Rate may be automatically adjusted by Lender on a
prospective basis to take into account the additional or increased
cost of maintaining any necessary reserves for Eurodollar deposits or
increased costs due to changes in applicable law or regulation or the
interpretation thereof occurring subsequent to the commencement of the
then applicable LIBOR Interest Period, including but not limited to
changes in tax laws (except changes of general applicability in
corporate income tax laws as they affect financial institutions) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), that increase the
cost to
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Lenders of funding the LIBOR Based Rate Loan. Lender shall promptly
give the Borrower notice of such a determination and adjustment, which
determination shall be conclusive as to the correctness of the fact
and the amount of such adjustment. The Borrower may, by written notice
to Lender, (A) request Lender to furnish to the Borrower a statement
setting forth the basis for adjusting such LIBOR Based Rate and the
method for determining the amount of such adjustment; and/or (B)
prepay the LIBOR Based Rate Loan with respect to which such adjustment
is made, subject to the requirements of this Section.
(iv) In the event that the Borrower shall have requested the
LIBOR Rate Option in accordance with this paragraph and Lender shall
have reasonably determined that Eurodollar deposits equal to the amount
of the principal of the requested LIBOR Based Rate Loan and for the
LIBOR Interest Period specified are unavailable, impractical or
unlawful, or that the rate based on the LIBOR Rate will not adequately
and fairly reflect the cost of the LIBOR Based Rate applicable to the
specified LIBOR Interest Period, of making or maintaining the principal
amount of the requested LIBOR Based Rate Loan specified by the Borrower
during the LIBOR Interest Period specified, or that by reason of
circumstances affecting Eurodollar markets, adequate and reasonable
means do not exist for ascertaining the rate based on the LIBOR Rate
applicable to the specified LIBOR Interest Period, Lender shall
promptly give notice of such determination to the Borrower that the
rate based on the LIBOR Rate is not available. A determination by
Lender hereunder shall be prima facie evidence of the correctness of
the fact and amount of such additional costs or unavailability. Upon
such a determination, (i) the right of Borrower to select, convert to,
or maintain a LIBOR Based Rate Loan at the rate based on the LIBOR Rate
shall be suspended until Lender shall have notified the Borrower that
such conditions shall have ceased to exist, and (ii) the Loans subject
to the requested LIBOR Rate Option shall accrue interest in accordance
with Section 2.4 (a) above.
(v) In the event that, as a result of any changes in applicable
law or regulation or the interpretation thereof, it becomes unlawful
for Lender to maintain Eurodollar liabilities sufficient to fund any
LIBOR Based Rate Loan subject to the LIBOR Based Rate, then Lender
shall immediately notify Borrower thereof and Lender's obligations to
make, convert to, or maintain a LIBOR Based Rate Loan at the LIBOR
Based Rate shall be suspended until such time as such Lender may again
cause the LIBOR Based Rate to be applicable. Promptly after becoming
aware that it is no longer unlawful for Lender to maintain such
Eurodollar
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liabilities, Lender shall notify Borrower thereof and such suspension
shall cease to exist.
(vi) Upon the occurrence and continuance of an Event of Default
and following written notice from Lender to Borrower, Lender may in its
sole discretion, eliminate the availability of LIBOR Based Rate Loans.
No portion of the LIBOR Base Rate Loans may be prepaid at any time
except if Borrower first satisfies in full its obligations under this
paragraph arising from such prepayment.
(vii) Borrower shall indemnify, defend and hold harmless Lender
against any and all loss, liability, cost or expense which Lender may
sustain or incur as a consequence of (a) any failure of Borrower to
obtain, convert or extend any LIBOR Based Rate Loan after notice
thereof has been given to Lender or (b) any payment, prepayment,
termination of conversion of a LIBOR Based Rate Loan made for any
reason on a date other than the last day of the applicable LIBOR
Interest Period, or (c) any foreign taxes or other foreign governmental
charges, levies or costs paid by Lender specifically resulting from any
LIBOR Based Rate Loans, but excluding Lender's normal operating costs.
Borrower shall pay the full amount thereof to Lender, on demand by
Lender.
"GOOD BUSINESS DAYS" shall mean any Business Day when banks in
New York, New York and London, England are open for business.
The Borrower agrees to pay the Lender a late charge fee equal
to four percent (4%) of any payment due to the Lender which is not
received before the expiration of ten (10) days after the payment is
due. It is further agreed that upon an Event of Default and at any
time thereafter, the Borrower shall pay interest to the Lender at the
variable rate set forth herein plus two (2) points until the
Obligations are paid in full.
2.5 COLLECTION OF RECEIVABLES. The Lender or its designee may notify
customers or account debtors at any time, after the occurrence of an
Event of Default, that Receivables have been assigned to the Lender or
of the Lender's security interest therein and collect them directly
and charge the collection costs and expenses to the Borrower's
account; but, unless and until the Lender does so or gives the
Borrower other instructions, the Borrower shall make collection of all
Receivables for the Lender, receive all payments thereon as the
Lender's trustee and immediately deliver them to the
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Lender in their original form. All such payments will be placed by the
Lender into a cash collateral account and, until credited to the
Borrower's account as hereinafter set forth, shall be held by the
Lender as collateral for payment and/or performance of the Borrower's
Obligations to the Lender. After allowing two (2) day(s) for
collection of checks and other instruments, the Lender will credit
(conditional upon final collection) all such payments, or those made
on account thereof, to the Borrower's account. Upon request of Lender,
Borrower will enter into a lock box agreement satisfactory to Lender
and will comply with all provisions thereof.
2.6 RETURNS, CREDITS, ETC. Any merchandise which is returned by a customer
or account debtor or otherwise recovered shall remain part of the
Lender's security. The Borrower shall notify the Lender promptly of
all returns and recoveries and, on request, deliver the merchandise to
the Lender. The Borrower shall also notify the Lender promptly of all
disputes and claims and settle or adjust them at no expense to the
Lender, but no discount, credit or allowance (other than in the
ordinary course of the Borrower's business) shall be granted to any
customer or account debtor, and no returns of merchandise (other than
in the ordinary course of the Borrower's business) shall be accepted
by the Borrower without the Lender's consent. The Lender may, at all
times, settle or adjust disputes and claims directly with customers or
account debtors for amounts and upon terms which the Lender considers
advisable, and in all cases the Lender will credit the Borrower's
account with only the net amounts received by the Lender in payment of
Receivables.
2.7 FURTHER ASSURANCE. Upon the Lender's request, the Borrower shall
perform all other steps requested by the Lender to create and maintain
in the Lender's favor a valid first priority security interest,
assignment or lien in, of or on all Receivables and all other security
held by or for the Lender.
2.8 POWER OF ATTORNEY. The Borrower appoints the Lender, or any person
whom the Lender may designate, as its attorney, with power: to endorse
the Borrower's name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into the
Lender's possession; to sign the Borrower's name on any invoice or
bill of lading relating to any Receivables, on notices of assignment,
financing statements, and other public records, on verifications of
accounts and on notices to customers; to notify the post office
authorities to change the address for delivery of the Borrower's mail
to an address designated by the Lender; to send requests for
verification of Receivables to customers or account debtors; and to do
all things
12
necessary to carry out this Loan Agreement. The Borrower ratifies and
approves all acts of the attorney. Neither the Lender nor the
attorney will be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law. This power, being coupled with an
interest, is irrevocable so long as any Receivables assigned to the
Lender or in which the Lender has a security interest remain unpaid or
until the Obligations have been fully satisfied. The Lender may file
one or more financing statements disclosing the Lender's security
interest without the Borrower's signature appearing thereon.
2.9 TERMINATION. The Loan Agreement shall terminate on June 30, 1998
(the "Termination Date") and may be renewed by the Lender, in its sole
and absolute discretion, only upon written notification by the Lender
to the Borrower, which notification will contain the terms and
conditions of the renewal. Notwithstanding the foregoing, shall either
the Lender or the Borrower become insolvent or go out of business, the
other party shall have the right to terminate the Loan Agreement at
any time without notice. Upon the Termination Date, all the
obligations, whether or not incurred under the Loan Agreement or any
Supplemental Agreement or otherwise, shall become immediately due and
payable without notice or demand. Notwithstanding termination, until
all the obligations to the Lender have been fully satisfied, the
Lender shall retain its security interests in all existing collateral
and that arising thereafter; the Borrower shall continue to assign
accounts receivables to the Lender and turn over all collections to
the Lender; and, except for those specific covenants and conditions
dealing with the making of advances, all terms and conditions of all
agreements between the Borrower and the Lender shall remain in full
force and effect.
2.10 ADDITIONAL PAYMENTS. If the Lender shall deem applicable to this Loan
Agreement (including the borrowed and the unused portion thereof) any
requirement of any law of the United States of America, any
regulation, order, interpretation, ruling, official directive or
guideline (whether or not having the force of law) of the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation or any other board
or governmental or administrative agency of the United States of
America which shall impose, increase, modify or make applicable
thereto or cause to be included in, any reserve, special deposit,
calculation used in the computation of regulatory capital standards,
assessment or other requirement which imposes on the Lender any cost
that is attributable to the maintenance thereof, then, and in each
such event, the Borrower shall promptly pay the Lender, upon its
demand, such amount as will compensate the Lender for any such cost,
which
13
determination may be based upon the Lender's reasonable allocation of
the aggregate of such costs resulting from such events. In the event
any such cost is a continuing cost, a fee payable to the Lender may be
imposed upon the Borrower periodically for so long as any such cost is
deemed applicable to the Lender, in an amount determined by the
Lender to be necessary to compensate the Lender for any such cost. The
determination by the Lender of the existence and amount of any such
cost shall, in the absence of manifest error, be conclusive.
SECTION 3. COLLATERAL.
3.1 SECURITY INTEREST. As security for payment and performance of the
Obligations, the Borrower hereby assigns and grants to the Lender a
continuing security interest in the Collateral. The Lender shall
retain its security interest in all Collateral, eligible and
ineligible, until all Obligations have been fully satisfied.
3.2 POSSESSION OF COLLATERAL. Upon an Event of Default and at any time
thereafter, the Lender will have the right: (a) to take physical
possession of the Collateral and to maintain such possession on the
Borrower's premises; and/or (b) to remove the Collateral or any part
thereof to such other places as the Lender may desire; and/or (c)
without removal, to render the Equipment unusable and to dispose of
the Collateral on the Borrower's premises. Upon an Event of Default
and at any time thereafter, the Borrower shall, upon the Lender's
demand, assemble the Collateral and make it available to the Lender at
a place reasonably convenient to the Lender.
3.3 LOCATION OF COLLATERAL. The Collateral is and will be owned by the
Borrower, free of all other liens and encumbrances (except as set
forth in EXHIBIT "A" annexed hereto), and shall be kept by the
Borrower at those locations listed in EXHIBIT "A" annexed hereto and
the Borrower will not (without the Lender's prior written approval)
remove the Collateral therefrom, except for the purposes of sale in
the regular course of business.
3.4 LIMITATION ON DISPOSITION OF COLLATERAL. The Borrower will not sell,
exchange or otherwise dispose of the Collateral, other than finished
goods Inventory in the ordinary course of business, or any part
thereof, or any interest therein without the express written
authorization of the Lender; in the event of the sale, exchange or
other disposition of the Collateral or any part thereof or any
interest therein (and no such sale, exchange or other disposition is
hereby otherwise authorized or consented to), the security interest of
the Lender shall nevertheless continue in said Collateral
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(including all proceeds, cash and non-cash) notwithstanding said sale,
exchange or other disposition; all of said proceeds shall remain
Collateral hereunder and shall be transferred and paid over to the
Lender immediately following said sale, exchange or other disposition,
and shall be applied at the option of the Lender to the payment of the
Obligations; and the receipt by the Lender of all or any of said
proceeds shall not be deemed or construed to be an authorization or
consent of the Lender to such sale, exchange or other disposition of
said Collateral.
3.5 FURTHER ASSURANCES RE INVENTORY. The Borrower shall perform any and
all steps requested by the Lender to perfect the Lender's security
interest in the Inventory, such as leasing warehouses to the Lender or
the Lender's designee, placing and maintaining signs, appointing
custodians, executing and filing financing or continuation statements
in form and substance satisfactory to the Lender, maintaining stock
records and transferring Inventory to warehouses. If any Inventory is
in the possession or control of any of the Borrower's agents or
processors, the Borrower shall notify such agents or processors of the
Lender's security interest therein, and, upon request, instruct them
to hold all such Inventory for the Lender's account and subject to the
Lender's instructions. A physical listing of all Inventory, wherever
located, shall be taken by the Borrower at least annually and whenever
requested by the Lender, and a copy of each such physical listing
shall be supplied to the Lender. The Lender may examine and inspect
the Inventory at any time.
3.6 COMPLIANCE. The Borrower has complied with and will continue to comply
with all applicable statutes and regulations of the United States of
America, and all states, counties, municipalities and agencies of any
thereof with respect to:
a. Any restrictions, specifications or other
requirements pertaining to products which the Borrower manufactures
and sells, or to the services it performs;
b. The conduct of its business operations;
c. The use, maintenance and operation of the real and
personal properties owned or leased by it in the operation of its
business; and
d. The issued and outstanding capital stock of the
Borrower and the disclosure of material facts and information to
stockholders.
The Borrower shall indemnify the Lender and hold the Lender harmless
from and against all loss, liability, damage and expense, including
attorney's fees, suffered or incurred by
15
the Lender, with respect to any discharge, spillage, uncontrolled
loss, seepage or filtration of oil or petroleum or chemical, liquids
or solid, liquid or gaseous products or hazardous waste which, if
contained or removed or mitigated would give rights to a lien
affecting any real or personal property owned or leased by the
Borrower, including any loss of value of any such property as a result
of such spill; and with respect to any other matter affecting the real
or personal property owned or leased by the Borrower and governed by
the provisions of the Act or related regulations or any similar
applicable federal or state laws or regulations.
3.7 DISCHARGE OF LIENS. The Lender may, at its option, discharge any
taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral, and the Lender may pay insurance
premiums or procure insurance and otherwise pay for the maintenance
and preservation of the Collateral and the Borrower will reimburse the
Lender on demand for any payment made or expense incurred by the
Lender pursuant to the foregoing authority, with interest at the
highest rate provided in this Loan Agreement.
3.8 CORPORATE EXISTENCE, PROPERTIES, INSURANCE. The Borrower will at all
times maintain, preserve and protect all franchises, patents, and trade
names and preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good condition and
repair (normal wear and tear and obsolescence excepted), and from time
to time make, or cause to be made, all needful and proper repairs,
renewals, replacements, betterments and improvements thereto, and will
pay or cause to be paid, except when the same may be contested in good
faith, all rent due on premises where any property is held or may be
held, so that the business carried on in connection therewith may be
continuously conducted. The Borrower will have and maintain insurance
at all times with respect to all Collateral against risks of fire
(including so-called extended coverage), theft and such risks as the
Lender may require containing such terms, in such form, and for such
periods, and written by such companies as may be satisfactory to the
Lender, such insurance to be payable to the Lender and the Borrower as
their interests may appear; each policy of liability insurance shall
name the Lender as an additional insured; each policy of property
casualty and business interruption insurance shall have a loss payee
endorsement providing:
a. That loss or damage, if any under the policy, shall be payable
to the Lender, as mortgagee and/or secured party, as its
interests may appear;
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b. That the insurance as to the interest of the Lender shall not
be invalidated by any act or neglect of the insured or owner
of the property described in said policy, nor by any
foreclosure, or other proceeding, nor by any change in the
title of ownership of said property, nor by the occupation of
the premises where the property is located for purposes more
hazardous than are permitted by said policy;
c. That, if the policy is cancelled at any time by the insurance
carrier, in such case the policy shall continue in force for
the benefit of the Lender for not less than thirty (30) days
after written notice of cancellation to the Lender from the
insurance carrier; and
d. That the policy will not be reduced, or cancelled at the
request of the insured nor will said loss payee endorsement be
amended or deleted without thirty (30) days' prior written
notice to the Lender from the insurance carrier.
The Borrower will furnish the Lender with certificates or other
evidence satisfactory to the Lender of compliance with the foregoing
insurance provisions, and the Lender may act as attorney for the
Borrower in obtaining, adjusting and settling, such insurance and
receiving and endorsing any drafts. The Borrower hereby assigns to the
Lender any and all monies which may become due and payable under any
policies of property casualty insurance insuring the Collateral and
business interruption insurance, including return of unearned
premiums, and hereby directs any insurance company issuing any such
policy to make payment directly to the Lender and authorizes the
Lender, at its option: (i) to apply such monies in payment on account
of any of the Obligations, whether or not due, and remit any surplus
to the Borrower; or (ii) to return said funds to the Borrower for the
purpose of replacement of the Collateral. The Borrower will also at
all times maintain necessary workmen's compensation insurance and such
other insurance as may be required by law or as may be reasonably
required by the Lender.
SECTION 4. MISCELLANEOUS WARRANTIES, REPRESENTATIONS AND COVENANTS.
4.1 AFFIRMATIVE COVENANTS. The Borrower warrants and represents to and
covenants with the Lender that:
a. The Borrower is and shall at all times hereafter be a
corporation duly organized and existing in good standing under
the laws of the state of its incorporation and qualified and
licensed to do business
17
in any other state in which it is required to be so qualified
and/or licensed;
b. The Borrower has the right and power and is duly authorized to
enter into this Loan Agreement and the Supplemental Agreements
executed concurrently with this Loan Agreement;
c. The execution by the Borrower of this Loan Agreement and the
Supplemental Agreements shall not constitute a breach of any
provision contained in the Borrower's Certificate of
Incorporation or By-Laws or contained in any agreement to
which the Borrower is now a party;
d. The performance by the Borrower of all of the terms and
provisions contained in this Loan Agreement and in the
Supplemental Agreements executed concurrently with this Loan
Agreement shall not constitute an event of default under any
agreement to which the Borrower is now or hereafter a party;
e. The Borrower has good and, to the best of knowledge of
Borrower, indefeasible title to the Collateral;
f. All financial statements and information relating to Borrower
which have been or may hereafter be delivered by the Borrower
to the Lender are true and correct and have been and will be
prepared in accordance with generally accepted accounting
principles, and there has been no material adverse change in
the financial condition of the Borrower since the submission
of any such financial information to the Lender;
g. There are no actions or proceedings which are pending or, to
the best of knowledge of Borrower, threatened against the
Borrower which might result in any material adverse change in
the Borrower's financial condition or which might in any way
affect any of the assets of the Borrower;
h. The Borrower has duly filed all federal, state and other
governmental tax returns which it is required by law to file,
and that all taxes and other sums which may be due to the
United States, any state or other governmental authority have
been fully paid and that the Borrower now has and shall
hereafter maintain reserves adequate in amount to fully pay
all such tax liabilities which may hereafter accrue;
i. The Borrower at all times hereafter shall: maintain a standard
and modern system of accounting in accordance with generally
accepted accounting principles; permit
18
the Lender or any of its employees, officers or agents, upon
demand during the Borrower's usual business hours, to have
access to and to examine all of the Borrower's books and
records, and in connection therewith, permit the Lender or any
such employees, officers or agents to copy and make abstracts
therefrom; deliver to the Lender (1) within ninety (90) days
after the end of each of the Borrower's fiscal years, a
balance sheet and a profit and loss statement covering the
Borrower's operations for such fiscal year audited and
certified by an independent certified public accountant
satisfactory to the Lender, (2) within forty-five (45) days
after the end of each of the Borrower's fiscal quarters, a
balance sheet and a profit and loss statement covering the
Borrower's operations for such fiscal quarter, which financial
information may be internally prepared, and may be unaudited,
and (3) upon request, the later of ten (10) days after written
request or forty-five (45) days after the end of each month, a
balance sheet and a profit and loss statement covering the
Borrower's operations for that month, which may be internally
prepared; and within twenty (20) days after written demand by
the Lender, deliver to the Lender copies of any interim
financial report or statement prepared by or for the Borrower,
any other report requested by the Lender relating to the
Collateral and the financial condition of the Borrower. Each
financial report shall be accompanied by a certificate signed
by an authorized officer of the Borrower to the effect that
all reports, statements or documents delivered or caused to be
delivered to the Lender under this subparagraph are complete,
correct and fairly present the financial condition of the
Borrower and that there exists on the date of delivery of said
certificate to the Lender no condition or event which
constitutes an Event of Default and that no events have
occurred which, after notice by the Lender or lapse of time or
both, would constitute an Event of Default. Said certificate
shall contain the calculation of information required by all
financial covenants contained in this Loan Agreement;
j. The Borrower shall promptly supply the Lender with such other
information concerning its affairs as the Lender may
reasonably request from time to time hereafter, and shall
promptly notify the Lender of any material adverse change in
the Borrower's financial or operating condition and of any
condition or event which constitutes an Event of Default;
k. INTENTIONALLY DELETED
19
l. The Borrower is now and shall be at all times hereafter
solvent.
m. The Borrower shall furnish daily Borrowing Base Certificates.
4.2 NEGATIVE COVENANTS. The Borrower warrants and represents to and
covenants with the Lender that the Borrower shall not:
a. Grant a security interest or a mortgage in or permit a lien,
claim or encumbrance upon any of its assets to any person,
association, firm, corporation (except to the Lender), entity
or governmental agency or instrumentality, provided, however,
that, so long as Borrower is not otherwise in default, nothing
herein shall prohibit Marion Tool Corporation from granting a
first mortgage on certain otherwise unencumbered real estate
in Marion, Ohio, so long as it has obtained prior written
consent of Lender;
b. Permit any levy, attachment or restraint to be made affecting
any of its assets;
c. Permit any receiver, trustee or assignee for the benefit of
creditors to be appointed to take possession of any or all of
its assets;
d. Sell, lease or otherwise dispose of or transfer any of its
assets, other than in the ordinary course of its business;
e. Without prior written consent of Lender, merge or consolidate
with any other corporation;
f. Without prior written consent of Lender, acquire any other
corporation;
g. Enter into any transaction not in the ordinary course of its
business;
h. Make any investment in the securities of any person,
association, firm, entity or corporation other than the
securities of the United States of America;
i. Guarantee or otherwise become in any way liable with respect
to the obligations of any person, association, firm entity or
corporation (other than guarantees to Lender) except by
endorsement of instruments or items of payment for deposit to
the general account of the Borrower or which are transmitted
or turned over to the Lender on account of the Borrower's
Obligations;
20
j. Without prior written consent of Lender, pay or declare any
dividends upon the Borrower's capital stock;
k. Except for (1) repurchase of $175,000 per annum of the shares
of Susan Gould over a ten year period (so long as no Event of
Default has occurred prior to said purchase or would occur
subsequent thereto), and (2) repurchase of $65,000 of
preferred stock from T.M. Enterprises (so long as no Event of
Default has occurred prior to said purchase or would occur
subsequent thereto), redeem, retire, purchase or otherwise
acquire directly or indirectly any of the Borrower's capital
stock;
l. Make any distribution of the Borrower's property or assets;
m. Make any change in the Borrower's capital structure or in any
of its business objectives, purposes and operations which
might in any way adversely affect the ability of the Borrower
to repay the Borrower's Obligations;
n. Incur any debts outside of the ordinary course of the
Borrower's business except renewals or extensions of existing
debts and interest thereon;
o. Make any loan, advance, contribution or payment of money or
goods to any subsidiary, affiliated or parent corporation or
other person or entity which is not a Borrower or Guarantor
under this Agreement, or to any officer, director or
stockholder thereof (except compensation for personal services
rendered) without prior written consent of Lender; or
p. Change its corporate name or conduct its business under any
trade name or style other than as disclosed in EXHIBIT "A" or
change its chief executive office, place of business or the
present location of the business assets or records relating
thereto from those addresses disclosed in EXHIBIT "A".
4.3 FURTHER COVENANTS. See EXHIBIT "A" annexed hereto and made a part
hereof.
4.4 WAIVER OF RIGHT TO PREJUDGMENT REMEDY NOTICE AND HEARING. The Borrower
acknowledges its understanding that the Lender may have rights against
the Borrower, now or in the future, in its capacity as secured party,
creditor, or in any other capacities. Such rights may include the
right to deprive the Borrower of or affect the use of or possession or
enjoyment of the Borrower's property; and in the event the Lender
deems
21
it necessary to exercise any of such rights prior to the rendition of
a final judgment against the Borrower, or otherwise, the Borrower may
be entitled to notice and/or hearing under the Constitution of the
United States and/or State of Connecticut, Connecticut statutes (to
determine whether or not the Lender has a probable cause to sustain
the validity of the Lender's claim), or the right to notice and/or
hearing under other applicable state or federal laws pertaining to
prejudgment remedies, prior to the exercise by the Lender of any such
rights. The Borrower expressly waives any such right to prejudgment
remedy notice or hearing to which the Borrower may be entitled;
provided, however, that this waiver shall not include a waiver of such
rights as the Borrower shall have to prior notice of the proposed
disposition of Collateral by the Lender. Specifically and without
limiting the generality of the foregoing, the Borrower recognizes that
the Lender has and shall continue to have an absolute right to effect
collection of any of the Receivables or Collateral with respect to
which the Lender holds a security interest without the necessity of
according to the Borrower any prior notice or hearing. This shall be a
continuing waiver and remain in full force and effect so long as the
Borrower is obligated to the Lender.
4.5 WAIVER OF RIGHT TO TRIAL BY JURY AND CONSENT TO JURISDICTION.
The Borrower hereby waives the right to trial by jury in any action or
proceeding of any kind or nature in any court in which an action may
be commenced arising out of this Loan Agreement, the Supplemental
Agreements or any assignment thereof or by reason of any other cause
or dispute between the Borrower and the Lender.
The Borrower hereby further agrees that the following courts:
State Court - Any state or local court of the State of Connecticut
Federal Court - United States District Court for the District of
Connecticut
or at the option of the Lender, any court in which the Lender shall
initiate legal or equitable proceedings and which has subject matter
jurisdiction over the matter in controversy, shall have exclusive
jurisdiction to hear and determine any claims or disputes between the
Borrower and the Lender pertaining directly or indirectly to this Loan
Agreement or to any matter arising in connection with this Loan
Agreement. The Borrower expressly submits and consents in advance to
such jurisdiction in any action or proceeding commenced in such
courts, hereby waiving personal service of the summons and complaint,
or other process or papers issued therein, and
22
agreeing that service of such summons and complaint, or other process
or papers, may be made by registered or certified mail addressed to
the Borrower at the address set forth herein. Should the Borrower fail
to appear or answer any summons, complaint, process or papers so
served within thirty (30) days after the mailing thereof, it shall be
deemed in default and an order and/or judgment may be entered against
it as demanded or prayed for in such summons, complaint, process or
papers. The exclusive choice of forum set forth herein shall not be
deemed to preclude the enforcement of any judgement obtained in such
forum or the taking of any action under this Loan Agreement to enforce
the same in any appropriate jurisdiction.
4.6 SETOFF. All sums at any time standing to the Borrower's credit on the
Lender's books and all of the Borrower's property at any time in the
Lender's possession, or upon or in which the Lender has a lien or
security interest shall be security for all Obligations. In addition
to and not in limitation of the above, with respect to any deposits or
property of the Borrower in the Lender's bank, or in the Lender's
possession or control, now or in the future, the Lender shall have the
right to setoff all or any portion thereof, at any time, against any
Obligations hereunder, even though unmatured, without prior notice or
demand to the Borrower.
4.7 TAXES. Upon request of the Lender, the Borrower will furnish the
Lender with proof satisfactory to the Lender of the payment or deposit
of F.I.C.A. and withholding taxes required of the Borrower by
applicable law. Such proof shall be furnished within five (5) days
after the due date established by law for each such payment or
deposit. Should the Borrower fail to make any such payment or deposit
or furnish such proof, the Lender may, in the Lender's sole and
absolute discretion, and without notice to the Borrower: (a) make
payment of the same or any part thereof; or (b) set up such reserves
in the Borrower's account as the Lender may deem necessary to satisfy
the liability therefor. Each amount so deposited or paid by the Lender
shall constitute an advance and shall be secured by all Collateral
held by the Lender. Nothing herein contained shall obligate the Lender
to make such deposit or payment or set up such reserve, nor shall the
making of one or more such deposits or payments or the setting up of
any such reserve constitute: (i) an agreement on the Lender's part to
take any further or similar action; or (ii) a waiver of any default by
the Borrower under the terms hereof or of any other agreements between
the Borrower and the Lender. Upon the expiration or termination of
this Loan Agreement or transactions hereunder, the Lender shall retain
its security interest in all Collateral held by the Lender until the
Borrower shall have paid or discharged all
23
such F.I.C.A. and tax obligations accrued to the date of such
expiration or termination, or shall have supplied the Lender with
evidence satisfactory to the Lender that due provisions have been made
therefor. In addition, the Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of any document
evidencing the Obligations or any document to be delivered in
connection with the Obligations, and agrees to save the Lender
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees.
SECTION 5. DEFAULT.
5.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events or conditions shall constitute an "EVENT OF DEFAULT" under this
Loan Agreement:
a. Failure to make any payment of principal or interest or any
other sums when due on any of the Obligations.
b. Any warranty or representation or other statement made or
furnished to the Lender by or on behalf of the Borrower herein
or in any document or instrument furnished in connection
herewith proves to have been false or misleading in any
material respect when made or furnished.
c. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the
Borrower to be observed or performed pursuant to SECTION "4.2"
hereof.
d. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the
Borrower to be observed or performed pursuant to this Loan
Agreement (other than those to be observed or performed
pursuant to SECTION "4.2" hereof and other than those
specifically listed in this SECTION 5.1), and the failure to
cure (if curable) any such breach or failure within ten (10)
days after receipt of written notice thereof from the Lender
to the Borrower.
e. Breach of or failure in the due observance or performance of
any covenant, condition or agreement on the part of the
Borrower or any Guarantor to be observed or performed pursuant
to any Supplemental Agreement.
f. The occurrence of any material adverse change in the
24
financial and/or operating condition of the Borrower or
Guarantor.
g. Death or incapacity of any Guarantor, or default by any
Guarantor under any agreements between Guarantor and the
Lender, or the termination of any such Guaranty.
h. Dissolution, termination of existence, insolvency, appointment
of a receiver, trustee, custodian or similar fiduciary,
assignment for the benefit of creditors or the commencement of
any proceedings under any bankruptcy and insolvency laws by or
against the Borrower or any Guarantor, or the making by the
Borrower or any Guarantor of any offer of settlement,
extension or composition to their respective unsecured
creditors generally.
i. The issuance, filing or levy against the Borrower or any
Guarantor of an attachment, injunction, execution, tax lien or
judgment for the payment of money.
j. In the event of any change in the voting control of the
Borrower. For purposes of this Loan Agreement, "VOTING
CONTROL" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management
and policies of the Borrower, whether through the ownership of
voting securities, by contract or otherwise.
k. Default in the payment of any sum due under any indebtedness
for borrowed money owed by the Borrower or any Guarantor to
any person, firm or corporation or any other default under
such indebtedness which results in such indebtedness being due
prior to its stated maturity.
l. The loss, revocation or failure to renew any license and/or
permit now held or hereafter acquired by the Borrower which is
necessary for the continued operation of the Borrower's
business.
m. In the event the Lender, in good faith, believes that the
prospect of payment or performance by the Borrower is
impaired.
Nothing in this Loan Agreement shall be construed to modify or limit
the unconditional right of the Lender in its sole discretion to demand
full or partial payment of the principal of, and interest on, any
demand Obligation. The right to make demand on any such Obligation
shall exist whether or not the Borrower is in compliance with the
covenants or
25
conditions contained in this Loan Agreement or in any other agreements
between the Borrower and the Lender.
5.2 RIGHTS OF THE LENDER. In the event demand for payment is made of any
demand Obligation or upon an Event of Default and at any time
thereafter, all the Obligations shall, at the Lender's option,
immediately become due and payable without presentment, protest,
notice of protest or other notice of dishonor of any kind, all of
which are hereby expressly waived by the Borrower; and the Lender
shall have, in addition to all other rights provided herein and in any
Supplemental Agreement, the rights and remedies of a secured party
under the Uniform Commercial Code; and, further, the Lender may sell
and deliver any or all Receivables and any or all other security and
Collateral held by the Lender or for the Lender at public or private
sale, for cash, upon credit or otherwise, at such prices and upon such
terms as the Lender deems advisable, at the Lender's sole discretion.
In addition to all other sums due the Lender, the Borrower will pay to
the Lender all costs and expenses incurred by the Lender, including an
allowance for attorneys' fees, to obtain or enforce payment of
Receivables or Obligations, or in the prosecution or defense of any
action or proceeding either against the Lender or against the Borrower
concerning any matter arising out of or connected with this Loan
Agreement and all Supplemental Agreements. Any requirement of
reasonable notice shall be met if such notice is mailed postage
prepaid to the Borrower at the Borrower's address as set forth herein
at least five (5) days before the time of sale or other disposition.
The Lender may be the purchaser at any such sale, if it is public,
and, in the event the Lender is the purchaser, the Lender shall have
all the rights of a good faith, bona fide purchaser for value from a
secured party after default. The proceeds of sale shall be applied
first to all costs and expenses of sale, including attorneys' fees,
and second to the payment (in whatever order the Lender elects) of all
Obligations, and any remaining proceeds shall be applied in accordance
with the provisions of Part 5 of Article 9 of the Uniform Commercial
Code. The Borrower shall remain liable to the Lender for any
deficiency. Failure by the Lender to exercise any right, remedy or
option under this Loan Agreement or any present or future Supplemental
Agreement or in any other agreement between the Borrower and the
Lender, or delay by the Lender in exercising the same will not operate
as a waiver; no waiver by the Lender will be effective unless it is in
writing and then only to the extent specifically stated. The Lender's
rights and remedies under this Loan Agreement will be cumulative and
not exclusive of any other right or remedy which the Lender may have.
26
SECTION 6. MISCELLANEOUS.
6.1 COUNSEL FEES AND EXPENSES. The Borrower agrees to pay all reasonable
counsel fees and expenses, including recording and filing fees,
incurred by the Lender in connection with the financing being
concluded this day as well as any reasonable counsel fees, consultant
fees, audit fees (subject to the provisions of Exhibit A) and expenses
of any kind and character hereafter incurred by the Lender, whether in
connection with efforts to collect the Obligations, or in the
enforcement or defense of any of the provisions of this Loan
Agreement; or negotiations regarding and consultation concerning this
Loan Agreement or any Supplemental Agreement, or preparation therefor,
or the financing extended thereunder; or the defense of any
proceedings involving any claims made or threatened against or arising
out of this Loan Agreement or any Supplemental Agreement, or the
financing extended thereunder, or which the Lender may hereafter incur
in protecting, enforcing, increasing or releasing any security held by
the Lender or any Obligation or any provision of this Loan Agreement
or any Supplemental Agreement, or the financing extended thereunder,
or otherwise. The Borrower's obligation to pay such counsel fees and
expenses of the Lender shall exist whether or not proceedings are
instituted or legal appearances made in any court of competent
jurisdiction on behalf of the Lender. The Borrower specifically
authorizes the Lender to pay all such fees and expenses and charge the
same to the Borrower's loan account.
6.2 LENDER ADVANCES. The Lender may, in its sole and absolute discretion
and without notice or demand, pay any amount which the Borrower has
failed to pay or perform any act which the Borrower has failed to
perform under this Loan Agreement (including, without limitation, (1)
the payment of taxes and assessments required under SECTION 4.7
hereof; (2) the cost of discharging any liens or encumbrances under
SECTION 3.8 hereof; and (3) the payment of insurance premiums and/or
the furnishing of insurance required under SECTION 3.7 hereof). In
such event the costs, disbursements, expenses and reasonable counsel
fees thereof, together with interest thereon from the date the expense
is paid or incurred, at the highest interest rate allowed under this
Loan Agreement shall be (i) added to the Obligation, (ii) payable on
demand to the Lender and (iii) secured by the Collateral. Nothing
herein contained shall obligate the Lender to make such payments nor
shall the making of one or more such payments constitute; (i) an
agreement on the Lender's part to take any further or similar action;
or (ii) a waiver of any Event of Default under this Loan Agreement.
6.3 FURTHER ASSURANCE. The Borrower agrees that any time, or from time to
time, upon the written request of the Lender,
27
the Borrower will execute and deliver such further documents and do
such other acts and things as the Lender may reasonably request in
order to fully effect the purposes of this Loan Agreement and the
Supplemental Agreements.
6.4 NOTICES. Any written notice required or permitted by this Loan
Agreement shall be delivered by depositing it (registered or certified
mail, return receipt requested) in the U.S. mail, postage prepaid, or
by telegraph, charges prepaid, addressed to the Borrower or to the
Lender at the address set forth on page "1" hereof. The date of
receipt of any notice shall be deemed to be, and shall be effective
from, the earlier of (1) the date of the actual receipt of such
notice, or (2) three (3) days after the same is deposited in the
United States mail as provided above, whether or not the same is
actually received by such party. Any party hereto shall have the right
to change the place to which any such notice shall be sent by a
similar notice sent in like manner to all parties hereto.
6.5 CONSTRUCTION. This Loan Agreement and the Supplemental Agreements may
not be amended orally.
6.6 SUCCESSORS. All rights of the Lender hereunder shall inure to the
benefit of its successors and assigns, and all obligations of the
Borrower shall bind the successors and assigns of the Borrower.
6.7 JOINT AND SEVERAL OBLIGATIONS. If the Borrower consists of more than
one party, all of the obligations, covenants, representations and
warranties of the Borrower contained in this Loan Agreement shall be
the joint and several obligations of the parties constituting the
"Borrower".
6.8 DURATION OF LIEN. All the collateral described in this Loan Agreement
shall remain collateral as security for the performance of all the
Obligations of the Borrower under this Loan Agreement until all monies
required to be paid under this Loan Agreement have been paid in full
and all obligations on the part of the Borrower to be paid, kept and
performed under this Loan Agreement have been paid, kept and
performed.
6.9 PAYMENTS. The acceptance of any check, draft or money order tendered in
full or partial payment of any Obligation hereunder is conditioned
upon and subject to the receipt of final payment in cash.
6.10 EXHIBITS. All exhibits referred to herein and annexed hereto are
hereby incorporated into this Loan Agreement and made a part hereof.
28
6.11 OTHER TERMS AND CONDITIONS. See EXHIBIT "A" annexed hereto and made
a part hereof.
6.12 GOVERNING LAW. This Loan Agreement and the rights and obligations of the
parties hereunder and under the Supplemental Agreements shall be
construed in accordance with and be governed by the laws of the State of
Connecticut, including its conflict of laws principles.
6.13 SEVERABILITY. If any provision of this Loan Agreement or application
thereof to any person or circumstance shall to any extent be invalid, the
remainder of this Loan Agreement or the application of such provision to
persons, entities, or circumstances other than those as to which it is
held invalid, shall not be affected thereby and each provision of this
Loan Agreement shall be valid and enforceable to the fullest extent
permitted by law.
6.14 PRIOR AGREEMENTS. It is understood and agreed that this Loan Agreement is
supplemental to and in addition to, and not in substitution for, such
security agreements and other agreements as may exist between the Lender
and the Borrower. The Lender specifically reserves all rights to such
priority of liens and security interests as it may have under any other
security agreements or financing statements filed in connection
therewith. In the event of any conflict between the terms of this Loan
Agreement and said other agreements, this Loan Agreement shall govern.
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
duly executed and delivered by the proper and duly authorized officers as of the
date and year first above written.
WITNESS: BORROWER:
/s/ [ILLEGIBLE] Q.E.P. Co., INC.
------------------------------
/s/ [ILLEGIBLE] BY /s/ [ILLEGIBLE]
------------------------------ ------------------------------
Its
Duly Authorized President
/s/ [ILLEGIBLE]
------------------------------ Q.E.P. O'TOOL, INC.
/s/ [ILLEGIBLE] By /s/ [ILLEGIBLE]
------------------------------ ------------------------------
Its
Duly Authorized President
29
ROBERT DODA AMERICAN TROWEL AND FLOAT
--------------------------------- COMPANY, INC.
MARY ROWLEY BY LEWIS GOULD
--------------------------------- -----------------------------
Its
Duly Authorized President
ROBERT DODA MARION TOOL CORPORATION
---------------------------------
MARY ROWLEY BY LEWIS GOULD
--------------------------------- -----------------------------
Its
Duly Authorized Chairman
ROBERT DODA Q.E.P. ANDREWS
---------------------------------
MARY ROWLEY BY LEWIS GOULD
--------------------------------- -----------------------------
Its
Duly Authorized Chairman
ROBERT DODA WESTPOINT FOUNDRY, INC.
---------------------------------
MARY ROWLEY BY LEWIS GOULD
--------------------------------- -----------------------------
Its
Duly Authorized Chairman
LENDER:
[ILLEGIBLE] SHAWMUT BANK CONNECTICUT, N.A.
---------------------------------
[ILLEGIBLE] BY ROBERT J. SANTIMAYS
--------------------------------- -----------------------------
Robert J. Santimays
Its Vice President
Duly Authorized
30
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 13th day of
October, 1995, by the
of Q.E.P. Co., Inc., a New York corporation, on behalf of the corporation.
JUDITH F. DAVIDOFF JUDITH F. DAVIDOFF
My Commission CC443748 ----------------------------
[SEAL] Expires Mar. 07, 1999 Commissioner of the Superior Court
Bonded by HAI Notary Public
800-422-1555 My Commission Expires: 3-7-99
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 13th day of
October by the
of Q.E.P. -- O'Tool, Inc., a California corporation, on behalf of the
corporation.
JUDITH F. DAVIDOFF
----------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: 3-7-99
JUDITH F. DAVIDOFF
My Commission CC443748
[SEAL] Expires Mar. 07, 1999
Bonded by HAI
800-422-1555
31
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 13th day of
October, 1995, by the
of American Trowel and Float Company, a Florida corporation, on behalf of the
corporation.
JUDITH F. DAVIDOFF JUDITH F. DAVIDOFF
My Commission CC443748 ----------------------------
[SEAL] Expires Mar. 07, 1999 Commissioner of the Superior Court
Bonded by HAI Notary Public
800-422-1555 My Commission Expires: 3-7-99
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 13th day of
October, 1995, by the
of Marion Tool Corporation, an Indiana corporation, on behalf of the
corporation.
JUDITH F. DAVIDOFF JUDITH F. DAVIDOFF
My Commission CC443748 ----------------------------
[SEAL] Expires Mar. 07, 1999 Commissioner of the Superior Court
Bonded by HAI Notary Public
800-422-1555 My Commission Expires: 3-7-99
STATE OF FLORIDA )
) SS.:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this 13th day of
October, 1995, by the
of Q.E.P. Andrews, Inc., a Nevada corporation, on behalf of the corporation.
JUDITH F. DAVIDOFF JUDITH F. DAVIDOFF
My Commission CC443748 ----------------------------
[SEAL] Expires Mar. 07, 1999 Commissioner of the Superior Court
Bonded by HAI Notary Public
800-422-1555 My Commission Expires: 3-7-99
32
STATE OF CONNECTICUT )
) ss.: Bridgeport
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 13th day of
October, 1995, by Robert J. Santimays, Vice President of SHAWMUT BANK
CONNECTICUT, N.A., a national banking association, on behalf of the association.
/s/ PATRICIA WAIKSNIS
---------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: 1/31/97
PATRICIA WAIKSNIS
NOTARY PUBLIC
MY COMMISSION EXPIRES JAN. 31, 1997
33
EXHIBIT "A"
TO REVOLVING LOAN AND SECURITY AGREEMENT
OTHER TERMS AND CONDITIONS
1. USE OF PROCEEDS. The proceeds of the Revolving Loan shall be used by
the Borrower for its working capital needs.
2. GUARANTOR(S). The payment and performance of the Obligations shall be
unconditionally guaranteed by Q.E.P. CO., INC., Q.E.P. - O'TOOL, INC.,
AMERICAN TROWEL AND FLOAT COMPANY, INC., MARION TOOL CORPORATION,
WESTPOINT FOUNDRY, INC. AND Q.E.P. ANDREWS, INC. in substantially the
form of EXHIBIT "C" annexed hereto, and by Lewis Gould (Limited
Guaranty) in substantially the form of EXHIBIT "D" annexed hereto.
3. LENDER'S AUDIT FEE. The Borrower agrees to pay to the Lender, upon
demand, an audit fee (the "AUDIT FEE") of up to FIFTEEN HUNDRED DOLLARS
($1500) per annum. In addition to the Audit Fee, the Borrower shall
reimburse the Lender, upon demand, for any reasonable travel expenses
incurred by the Lender in connection with such audit. Upon the
occurrence of an Event of Default, there shall be no limitation upon
reimbursable Audit Fees.
4. LIENS AND ENCUMBRANCES. The Collateral may be subject to the following
liens and encumbrances:
a.
b.
NOTE: As to the interests listed above, the listing thereof in this
Loan Agreement shall not, in any manner whatsoever, be deemed to be an
acknowledgement by the Lender as to the perfection, priority, validity
or enforceability thereof.
5. LOCATION OF COLLATERAL. The Collateral shall be held at the following
locations:
a.
b.
The Borrower shall immediately furnish written notification to the
Lender of any change or addition of location of any place of the
Borrower's business or location at which any assets of the Borrower are
located or stored.
6. TRADE NAMES. The Borrower presently conducts its business under the
following trade names:
a.
Exhibit A, Page 1
b.
The Borrower shall immediately furnish written notification to the
Lender of any change of corporate name of the Borrower or the use of
any trade name.
7. ACCOUNTING TERMS. All accounting terms not specifically defined in
this Loan Agreement shall be construed in accordance with generally
accepted accounting principles and all financial data submitted
pursuant to this Loan Agreement shall be prepared in accordance with
such principles.
8. MINIMUM TANGIBLE NET WORTH REQUIREMENT. The Borrower shall maintain a
tangible net worth of not less than (1) TWO MILLION SIX HUNDRED
THOUSAND DOLLARS ($2,600,000) as of February 28, 1996 through January
31, 1997 and (2) TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS
($2,700,000) as of February 1, 1997 and thereafter. For purposes of
this paragraph, the term "TANGIBLE NET WORTH" shall mean total assets
less total liabilities, excluding from the determination of total
assets (i) all assets which would be classified as intangible assets,
including, without limitation, goodwill, patents, trademarks, trade
names, copyrights and franchises, (ii) any amounts due to the Borrower
from affiliates, employees, officers or stockholders and (iii)
increases caused by a write-up of assets of the Borrower.
9. INTEREST COVERAGE RATIO. The Borrower shall maintain at all times a
minimum Interest Coverage Ratio at 3.5 to 1.0. For purposes of this
paragraph, "INTEREST COVERAGE RATIO" shall mean earnings (before
interest and taxes) divided by interest expense.
10. LEVERAGE RATIO. The Borrower shall maintain at all times a ratio of
total liabilities divided by Tangible Net Worth of not greater than 2.0
to 1.0.
11. ADVANCE REQUEST. Requests for advances hereunder shall be made by
Q.E.P. Co., Inc. for itself and on behalf of any other Borrower.
Exhibit A, Page 2
REVOLVING PROMISSORY NOTE
$3,250,000.00 Mahwah, New Jersey
October 13, 1995
Q.E.P. CO., INC., a New York corporation with its chief executive
office and principal place office at 575 Corporate Drive, Suite 410, Mahwah,
New Jersey 07430, Q.E.P. - O'TOOL, INC., a California corporation with its
chief executive office and principal place of business at 20535 Belshaw Avenue,
Carson, California 90746, AMERICAN TROWEL AND FLOAT COMPANY, INC., a Florida
corporation with its chief executive office and principal place of business at
2511 N.E. 4th Avenue, Pompano Beach, Florida 33064, MARION TOOL CORPORATION,
an Indiana corporation with its chief executive office and principal place of
business at 11th Street and Miller Avenue, Marion, Indiana 46952, WESTPOINT
FOUNDRY, INC., an Indiana corporation with its chief executive office and
principal place of business at 11th Street and Miller Avenue, Marion, Indiana
46953 and Q.E.P. ANDREWS, INC., a Nevada corporation with its chief executive
office and principal place of business at 35 Stokes Drives, Carson City,
Nevada (all of the foregoing hereinafter collectively called the "BORROWER"
unless otherwise specifically indicated), for value received, promises to pay
to the order of SHAWMUT BANK CONNECTICUT, N.A., a national banking association
(hereinafter referred to as the "LENDER") at its office at 850 Main Street,
Bridgeport, Connecticut 06604 or at such other place as the holder of this Note
may from time to time designate in writing, on or before June 30, 1998, the
principal sum of THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($3,250,000),
or such lesser amount as has been advanced and remains outstanding under this
Note, with interest computed as set forth in a certain Revolving Loan and
Security Agreement between the Borrower and the Lender dated October 13, 1995,
as amended from time to time (the "LOAN AGREEMENT") from the date hereof until
this Note is fully paid.
All payments will be applied first to the payment of late charges, then
to accrued and unpaid interest and the balance on account of the unpaid
principal of this Note.
All sums due under this Note shall be payable together with all lawful
taxes and assessments levied thereon, or upon this Note, or upon the holder
hereof with respect to the same.
The happening of any of the following events or conditions shall
constitute an "EVENT OF DEFAULT" under this Note:
1. Failure to make when due any payment of principal or interest or
any sum due under this Note when the same shall be due and payable.
2. The occurrence of an Event of Default or notice of termination
under the Loan Agreement.
Upon and after the occurrence of an Event of Default, the whole of said
indebtedness, both principal and interest, and including any other sums which
may become due under this Note, shall, at the option of the holder of this Note,
immediately become due and payable without presentment, demand, protest, notice
of protest, or other notice or notice of dishonor of any kind, all of which are
hereby expressly waived by the Borrower.
The Borrower agrees that no delay or failure on the part of the holder
in exercising any power, privilege, remedy, option or right under this Note
shall operate as a waiver thereof or of any other power, privilege, remedy, or
right; nor shall any single or partial exercise of any power, privilege, remedy,
option or right hereunder preclude any other or future exercise thereof or the
exercise of any other power, privilege, remedy, option or right. The rights and
remedies expressed herein are cumulative, and may be enforced successively,
alternately, or concurrently and are not exclusive of any rights or remedies
which holder may or would otherwise have under the provisions of all applicable
laws, and under the provisions of all agreements between the Borrower and the
Lender.
The Borrower hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assents to any extension or
postponement of the time of payment or any other indulgence and/or to the
addition or release of any party or person primarily or secondarily liable.
The Borrower gives the Lender a lien and right of setoff for all of
Borrower's liabilities upon and against the Borrower's deposits, credits and
property, now or hereafter in the possession or control of the Lender or in
transit to it. The Lender may, at any time, apply the same or any part
thereof, to any of the Borrower's liability, though unmatured, without notice
and without first resorting to any other collateral.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut.
This Note is the Revolving Promissory Note referred to in, entitled to
the benefits of and subject to the terms and conditions of the Loan Agreement.
Q.E.P. CO., INC.
By: /s/ [ILLEGIBLE]
----------------------
Its
Duly Authorized
-2-
Q.E.P. - O'TOOL, INC.
By: /s/ LEWIS GOULD
----------------------
Its
Duly Authorized President
AMERICAN TROWEL AND FLOAT
COMPANY, INC.
By: /s/ LEWIS GOULD
----------------------
Its
Duly Authorized President
MARION TOOL CORPORATION
By: /s/ LEWIS GOULD
----------------------
Its
Duly Authorized Chairman
WESTPOINT FOUNDRY, INC.
By: /s/ LEWIS GOULD
----------------------
Its
Duly Authorized Chairman
Q.E.P. ANDREWS, INC.
By: /s/ LEWIS GOULD
----------------------
Its
Duly Authorized Chairman
- 3 -
LIMITED GUARANTY
To: Shawmut Bank Connecticut
850 Main Street
Bridgeport, CT 06604
To induce Shawmut Bank Connecticut, N.A. (hereinafter referred to as the
"LENDER") to enter into a Loan and Security Agreement bearing the effective date
of October 13, 1995 (hereinafter referred to as the "LOAN AGREEMENT") with
Q.E.P. Co., Inc., Q.E.P. - O'Tool, Inc., American Trowel and Float Company,
Inc., Westpoint Foundry, Inc., Marion Tool Corporation and Q.E.P. Andrews, Inc.
(all of the foregoing hereinafter collectively referred to as the "BORROWER")
and in consideration thereof and of any loans, advances or financial
accommodations heretofore or hereafter granted by the Lender to or for the
account of the Borrower, whether pursuant to the Loan Agreement or otherwise,
the undersigned Guarantor (hereinafter referred to as the "GUARANTOR"), to the
extent hereinafter set forth, unconditionally guarantees by this agreement (the
"GUARANTY") the payment and performance from or by the Borrower of any and all
obligations from the Borrower to the Lender (the "OBLIGATIONS"). "OBLIGATIONS"
shall mean any and all loans and advances made by the Lender prior to, on or
after the date hereof to or for the account of the Borrower, and any and all
interest, commissions, obligations, liabilities, indebtedness, charges and
expenses now or hereafter chargeable against the Borrower by the Lender or owing
by the Borrower to the Lender, whether any of the foregoing are direct or
indirect, joint or several, absolute or contingent, due or to become due, now
existing or hereafter arising, no matter how or when arising and whether under
any present or future agreement or instrument between the Borrower and the
Lender or otherwise, and the performance and fulfillment by the Borrower of all
of the terms, conditions, promises, covenants and provisions contained in the
Loan Agreement or in any note or notes secured thereby or in any present or
future agreement or instrument between the Borrower and the Lender, and
including all costs of collection and expenses, including reasonable attorneys'
fees incurred by the Lender to collect the Obligations from any party liable for
the payment thereof, whether as maker, endorser, guarantor, surety or otherwise,
or in protecting, enforcing or realizing upon the Lender's rights in connection
with any collateral securing the Obligations or any guaranty thereof.
The Guarantor also agrees: to indemnify the Lender and hold the Lender harmless
against all losses in any way suffered, incurred or paid by the Lender as a
result of or in any way arising out of, or following, or consequential to
transactions with the Borrower, whether under the Loan Agreement or otherwise;
that this Guaranty shall not be impaired by any modification, release or other
alteration of any of the Obligations or arrangements whatsoever with the
Borrower or anyone else; that the liability of the Guarantor is
direct and unconditional and may be enforced without requiring the Lender first
to resort to any other right, remedy or security; that no Guarantor shall have
any right of subrogation, reimbursement or indemnity whatsoever, nor any right
of recourse to security for the debts and Obligations of the Borrower to the
Lender and the Guarantor hereby expressly waives any and all of said rights of
subrogation, reimbursement, indemnity and recourse to security; that the
Guarantor shall not be deemed a "creditor" of the Borrower with respect to the
Obligations as said term "creditor" is defined in the U.S. Bankruptcy Code, as
amended; that if there is more than one Guarantor, the liability of the
Guarantors hereunder shall be joint and several; that if the Borrower or any
Guarantor should at any time become insolvent or make a general assignment, or
if any petition in bankruptcy or any insolvency or reorganization proceedings
shall be filed or commenced by, against or in respect of the Borrower or any
Guarantor, any and all Obligations of each Guarantor shall, at the Lender's
option, forthwith become due and payable without notice; that the Lender's books
and records showing the account between the Lender and the Borrower shall be
admissible in any action or proceeding, shall be binding upon each Guarantor for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof; that this Guaranty is, as to each Guarantor, a
continuing Guaranty; that the death of any Guarantor shall not effect the
termination of this Guaranty as to such deceased or as to any other Guarantor;
that nothing shall discharge or satisfy the liability of any Guarantor hereunder
except the full payment and performance of all of the Borrower's said debts and
Obligations to the Lender with interest; that any and all present and future
debts and obligations of the Borrower to each Guarantor are hereby waived and
postponed in favor of and subordinated to the full payment and performance of
the Obligations; and that all sums at any time in the Lender's possession shall
be deemed held by the Lender as security for the Obligations to the Lender and
to the Lender's subsidiaries, no matter how or when arising, whether absolute or
contingent, whether due or to become due and whether under this Guaranty or
otherwise. The Guarantor hereby gives the Lender a lien and right of setoff for
the Obligations upon and against the deposits, credits and property of the
Guarantor now or hereafter in the Lender's possession or control or in transit
to the Lender. The Lender may at any time apply the same or any part thereof to
any of the Obligations, though unmatured, without notice and without first
resorting to any other collateral.
The Guarantor further agrees to furnish to the Lender, (a) on or before March
31st of every year, his annual financial statement in form satisfactory to the
Lender, (b) within thirty (30) days after filing a copy of his federal income
tax return filed with the Internal Revenue Service for the immediately preceding
tax year and (c) promptly after the Lender's request, such other information as
the Lender may, from time to time, reasonably request.
The Guarantor waives: notice of acceptance hereof; presentment and protest of
any instrument, and notice thereof; notice of default;
and all other notices to which such Guarantor might otherwise be entitled.
This Guaranty shall be valid and binding upon the Guarantor, regardless of any
invalidity, irregularity, defect or unenforceability of or in any of the
Obligations. The Guarantor further agrees that this Guaranty shall continue to
be effective or be reinstated, as the case may be, if at any time payment of
all or any part of the Obligations is rescinded or otherwise must be restored
by the Lender to the Borrower or to the creditors of the Borrower or any
representative of the Borrower or representative of his creditors upon the
insolvency, bankruptcy or reorganization of the Borrower, or to any Guarantor
or the creditors of any Guarantor or any representative of any Guarantor or
representative of the creditors of any Guarantor upon the insolvency,
bankruptcy or reorganization of any Guarantor, or otherwise, all as though such
payments had not been made.
The Guarantor acknowledges that the transactions under which this Guaranty is a
part are commercial transactions, and the Guarantor hereby waives such rights
as the Guarantor may have to notice and/or hearing under any applicable federal
or state laws pertaining to the exercise by the Lender of such rights as the
Lender may have, including but not limited to the right to deprive the
Guarantor of or affect the use of or possession or enjoyment of the Guarantor's
property prior to the rendition of a final judgment against the Guarantor.
The Guarantor hereby waives the right to trial by jury in any action proceeding
of any kind or nature in any court in which an action may be commenced arising
out of this Guaranty or any assignment thereof or by reason of any other cause
or dispute between the Guarantor and the Lender.
The Guarantor hereby further agrees that the following courts:
State Court - Any state or local court of the State of
Connecticut.
Federal Court - United States District Court for the District
of Connecticut.
or at the option of the Lender, any court in which the Lender shall initiate
legal or equitable proceedings and which has subject matter jurisdiction over
the matter in controversy, shall have exclusive jurisdiction to hear and
determine any claims or disputes between the Guarantor and the Lender
pertaining directly or indirectly to this Guaranty or to any matter arising
in connection with this Guaranty. The Guarantor expressly submits and consents
in advance to such jurisdiction in any action or proceeding commenced in such
courts, hereby waiving personal service of the summons and complaint, or other
process or papers issued therein, and agreeing that service of such summons and
complaint, or other process or papers, may be made by registered or certified
mail addressed to
the Guarantor at the address set forth herein. Should the Guarantor fail to
appear or answer any summons, complaint, process or papers so served within
thirty (30) days after the mailing thereof, it shall be deemed in default and
an order and/or judgment may be entered against it as demanded or prayed for in
such summons, complaint, process or papers. The exclusive choice of forum set
forth herein shall not be deemed to preclude the enforcement of any judgment
obtained in such forum or the taking of any action under this Guaranty to
enforce the same in any appropriate jurisdiction.
For the purposes of this Guaranty, the "BORROWER" shall mean and include any
successor of the Borrower including the Borrower as Debtor or any
representative of the Borrower under the provisions of any state or federal law
governing bankruptcy, insolvency, receivership or reorganization.
This Guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
according to the laws of the State of Connecticut, shall be binding upon the
heirs, executors, administrators, successors and assigns of each Guarantor and
shall inure to the benefit the Lender's successors and assigns.
Anything herein to the contrary notwithstanding, it is understood and
agreed that the liability of Guarantor hereunder shall not in any event exceed
the sum of $500,000.00. Such liability shall be a continuing liability and
shall not be affected by (nor shall anything herein contained be deemed to be a
limitation upon) the amount of credit which may be extended to Borrower, the
number of transactions with Borrower, repayments by Borrower to Lender, or the
allocation by Lender of repayments by Borrower, it being the understanding of
Guarantor that Guarantor's liability shall continue hereunder so long as there
are any Obligations from Borrower to Lender.
Dated: October 13, 1995.
WITNESS:
/s/ [ILLEGIBLE] /s/ LEWIS GOULD
------------------------- -------------------------
Lewis Gould
/s/ [ILLEGIBLE]
-------------------------
Address:
2916 S. Ocean Blvd.
-------------------------
Highland Beach, FL 33487
-------------------------
GUARANTY
To: Shawmut Bank Connecticut
850 Main Street
Bridgeport, CT 06604
To induce Shawmut Bank Connecticut, N.A. (hereinafter referred to as the
"LENDER") to enter into a Loan and Security Agreement bearing the effective
date of October 13, 1995 (hereinafter referred to as the "LOAN AGREEMENT") with
Q.E.P. Co., Inc., American Trowel and Float Company Inc., Marion Tool
Corporation, Westpoint Foundry, Inc. and Q.E.P. Andrews, Inc. (all of the
foregoing hereinafter collectively referred to as the "BORROWER") and in
consideration thereof and of any loans, advances or financial accommodations
heretofore or hereafter granted by the Lender to or for the account of the
Borrower, whether pursuant to the Loan Agreement or otherwise, the undersigned
Guarantor (hereinafter referred to as the "GUARANTOR") unconditionally
guarantees by this agreement (the "GUARANTY") the payment and performance from
or by the Borrower of any and all obligations from the Borrower to the Lender
(the "OBLIGATIONS"). "OBLIGATIONS" shall mean any and all loans and advances
made by the Lender prior to, on or after the date hereof to or for the account
of the Borrower, and any and all interest, commissions, obligations,
liabilities, indebtedness, charges and expenses now or hereafter chargeable
against the Borrower by the Lender or owing by the Borrower to the Lender,
whether any of the foregoing are direct or indirect, joint or several, absolute
or contingent, due or to become due, now existing or hereafter arising, no
matter how or when arising and whether under any present or future agreement or
instrument between the Borrower and the Lender or otherwise, and the
performance and fulfillment by the Borrower of all of the terms, conditions,
promises, covenants and provisions contained in the Loan Agreement or in any
note or notes secured thereby or in any present or future agreement or
instrument between the Borrower and the Lender, and including all costs of
collection and expenses, including reasonable attorneys' fees incurred by the
Lender to collect the Obligations from any party liable for the payment
thereof, whether as maker, endorser, guarantor, surety or otherwise, or in
protecting, enforcing or realizing upon the Lender's rights in connection with
any collateral securing the Obligations or any guaranty thereof.
The Guarantor also agrees: to indemnify the Lender and hold the Lender harmless
against all losses in any way suffered, incurred or paid by the Lender as a
result of or in any way arising out of, or following, or consequential to
transactions with the Borrower, whether under the Loan Agreement or otherwise;
that this Guaranty shall not be impaired by any modification, release or other
alteration of any of the Obligations or arrangements whatsoever with the
Borrower or anyone else; that the liability of the Guarantor is
1
direct and unconditional and may be enforced without requiring the Lender first
to resort to any other right, remedy or security; that no Guarantor shall have
any right of subrogation, reimbursement or indemnity whatsoever, nor any right
of recourse to security for the debts and Obligations of the Borrower to the
Lender and the Guarantor hereby expressly waives any and all of said rights of
subrogation, reimbursement, indemnity and recourse to security; that the
Guarantor shall not be deemed a "creditor" of the Borrower with respect to the
Obligations as said term "creditor" is defined in the U.S. Bankruptcy Code, as
amended; that if there is more than one Guarantor, the liability of the
Guarantors hereunder shall be joint and several; that if the Borrower or any
Guarantor should at any time become insolvent or make a general assignment, or
if any petition in bankruptcy or any insolvency or reorganization proceedings
shall be filed or commenced by, against or in respect of the Borrower or any
Guarantor, any and all obligations of each Guarantor shall, at the Lender's
option, forthwith become due and payable without notice; that the Lender's
books and records showing the account between the Lender and the Borrower shall
be admissible in any action or proceeding, shall be binding upon each Guarantor
for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof; that this Guaranty is, as to each
Guarantor, a continuing Guaranty; that the death of any Guarantor shall not
effect the termination of this Guaranty as to such deceased or as to any other
Guarantor; that nothing shall discharge or satisfy the liability of any
Guarantor hereunder except the full payment and performance of all of the
Borrower's said debts and Obligations to the Lender with interest; that any and
all present and future debts and obligations of the Borrower to each Guarantor
are hereby waived and postponed in favor of and subordinated to the full
payment and performance of the Obligations; and that all sums at any time in
the Lender's possession shall be deemed held by the Lender as security for the
Obligations to the Lender and to the Lender's subsidiaries, no matter how or
when arising, whether absolute or contingent, whether due or to become due and
whether under this Guaranty or otherwise. The Guarantor hereby gives the Lender
a lien and right of setoff for the Obligation upon and against the deposits,
credits and property of the Guarantor now or hereafter in the Lender's
possession or control or in transit to the Lender. The Lender may at any time
apply the same or any part thereof to any of the Obligations, though
unmatured, without notice and without first resorting to any other collateral.
The Guarantor further agrees to furnish to the Lender, (a) on or before March
31st of every year, its annual financial statement in form satisfactory to the
Lender, (b) within thirty (30) days of filing a copy of its federal income tax
return filed with the Internal Revenue Service for the immediately preceding tax
year and (c) promptly after the Lender's request, such other information as the
Lender may, from time to time, reasonably request.
2
The Guarantor waives: notice of acceptance hereof; presentment and protest of
any instrument, and notice thereof; notice of default; and all other notices to
which such Guarantor might otherwise be entitled.
This Guaranty shall be valid and binding upon the Guarantor, regardless of any
invalidity, irregularity, defect or unenforceability of or in any of the
Obligations. The Guarantor further agrees that this Guaranty shall continue to
be effective or be reinstated, as the case may be, if at any time payment of
all or any part of the Obligations is rescinded or otherwise must be restored
by the Lender to the Borrower or to the creditors of the Borrower or any
representative of the Borrower or representative of its creditors upon the
insolvency, bankruptcy or reorganization of the Borrower, or to any Guarantor
or the creditors of any Guarantor or any representative of any Guarantor or
representative of the creditors of any Guarantor upon the insolvency,
bankruptcy or reorganization of any Guarantor, or otherwise, all as though such
payments had not been made.
The Guarantor acknowledges that the transactions under which this Guaranty is a
part are commercial transactions, and the Guarantor hereby waives such rights as
the Guarantor may have to notice and/or hearing under any applicable federal or
state laws pertaining to the exercise by the Lender of such rights as the Lender
may have, including but not limited to the right to deprive the Guarantor of or
affect the use of or possession or enjoyment of the Guarantor's property prior
to the rendition of a final judgment against the Guarantor.
The Guarantor hereby waives the right to trial by jury in any action or
proceeding of any kind or nature in any court in which an action may be
commenced arising out of this Guaranty or any assignment thereof or by reason
of any other cause or dispute between the Guarantor and the Lender.
The Guarantor hereby further agrees that the following courts:
State Court - Any state or local court of the State of
Connecticut.
Federal Court - United States District Court for the District
of Connecticut.
or at the option of the Lender, any court in which the Lender shall initiate
legal or equitable proceedings and which has subject matter jurisdiction over
the matter in controversy, shall have exclusive jurisdiction to hear and
determine any claims or disputes between the Guarantor and the Lender pertaining
directly or indirectly to this Guaranty or to any matter arising in connection
with this Guaranty. The Guarantor expressly submits and consents in advance to
such jurisdiction in any action or proceeding commenced in such courts, hereby
waiving personal service of the summons and
3
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complaint, or other process or papers issued therein, and agreeing that service
of such summons and complaint, or other process or papers, may be made by
registered or certified mail addressed to the Guarantor at the address set
forth herein. Should the Guarantor fail to appear or answer any summons,
complaint, process or papers so served within thirty (30) days after the
mailing thereof, it shall be deemed in default and an order and/or judgment may
be entered against it as demanded or prayed for in such summons, complaint,
process or papers. The exclusive choice of forum set forth herein shall not be
deemed to preclude the enforcement of any judgment obtained in such forum or
the taking of any action under this Guaranty to enforce the same in any
appropriate jurisdiction.
For the purposes of this Guaranty, the "BORROWER" shall mean and include any
successor of the Borrower including the Borrower as Debtor or any
representative of the Borrower under the provisions of any state or federal law
governing bankruptcy, insolvency, receivership or reorganization.
This Guaranty, all acts and transactions hereunder, and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
according to the laws of the State of Connecticut, shall be binding upon the
heirs, executors, administrators, successors and assigns of each Guarantor and
shall inure to the benefit of the Lender's successors and assigns.
Dated: October 13, 1995.
WITNESS:
[ILLEGIBLE] Q.E.P.--O'TOOL, INC.
-------------------------
[ILLEGIBLE] By: LEWIS GOULD
------------------------- ----------------------
Its
Duly Authorized Chairman
20535 Belshaw Avenue
Carson City, California
4
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 3/7/99 | | 31 | | 32 | | | None on these Dates |
| | 6/30/98 | | 6 | | 36 |
| | 2/1/97 | | 35 |
| | 1/31/97 | | 33 | | 35 |
| Filed on: | | 7/2/96 |
| | 2/28/96 | | 35 |
| | 10/13/95 | | 36 | | 46 |
| List all Filings |
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