EXHIBIT 10.30
MASTER SECURITY AGREEMENT
This Master Security Agreement provides a set of terms and conditions that the
parties hereto intend to be applicable to various loan transactions secured by
personal property. Each such loan and security agreement shall be evidenced by a
schedule of indebtedness and collateral ("Schedule") executed by Secured Party
and Debtor that explicitly incorporates the provisions of this Master Security
Agreement and that sets forth specific terms of that particular loan and
security contract. Where the provisions of a Schedule conflict with the terms
hereof, the provisions of the Schedule shall prevail. Each Schedule shall
constitute a complete and separate loan and security agreement, independent of
all other Schedules, and without any requirement of being accompanied by an
originally executed copy of this Master Security Agreement.
One originally executed copy of the Schedule shall be denominated "Originally
Executed Copy No. 1 of 2 originally executed copies" and such copy shall be
retained by Secured Party. If more than one copy of the Schedule is executed by
Secured Party and Debtor, all such other copies shall be numbered consecutively
with numbers greater than 1. Only transfer of possession by Secured Party of
Originally Executed Copy No. 1 shall be effective for purposes of perfecting an
interest in such Schedule by possession.
1. GRANT OF SECURITY INTEREST; DESCRIPTION OF COLLATERAL.
Debtor grants to Secured Party a security interest in the property described in
the Schedules now or hereafter executed by or pursuant to the authority of the
Debtor and accepted by Secured Party in writing, along with all present and
future attachments and accessories thereto and replacements and proceeds
thereof, including amounts payable under any insurance policy, all hereinafter
referred to collectively as "Collateral." Each Schedule shall be serially
numbered. Unless and only to the extent otherwise expressly provided in a
Schedule, no Schedule shall replace any previous Schedule but shall be
supplementary to all previous Schedules.
2. WHAT OBLIGATIONS THE COLLATERAL SECURES.
EACH ITEM OF COLLATERAL SHALL SECURE THE SPECIFIC AMOUNT IDENTIFIED IN THE
SCHEDULE IN WHICH SUCH ITEM IS INCLUDED AS BEING SECURED BY SUCH ITEM.
3. PROMISE TO PAY; TERMS AND PLACE OF PAYMENT.
Debtor promises to pay Secured Party the amounts set forth on each Schedule at
the rate and upon such terms as provided therein.
4. USE AND LOCATION OF COLLATERAL.
Debtor warrants and agrees that the Collateral (a) is to be used primarily for
business or commercial purposes (other than agricultural), and (b) shall be
maintained and located at all times at either the Alexander City Plant, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at the Coosa
Plant, Hwy. 231 North, Rockford, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Debtor and Secured Party agree that regardless of the manner of affixation, it
is the intent of the parties that the Collateral shall remain personal property
and not become part of the real estate. Debtor agrees to keep the Collateral at
the location set forth above, and will notify Secured Party promptly in writing
of any change in the location of the Collateral within such State, but will not
remove the collateral from such State without the prior written consent of
Secured Party.
5. LATE CHARGES AND OTHER FEES.
Any payment not made when due shall, at the option of Secured Party, bear late
charges thereon calculated at a per annum rate equal to the sum of (i) the rate
of interest then being charged under the applicable Schedule, and (ii) an
additional 2%, but in no event greater than the highest rate permitted by
relevant law. Debtor shall be responsible for and pay to Secured Party a
returned check fee, not to exceed the maximum permitted by law, which fee will
be equal to the sum of (i) the actual bank charges incurred by Secured Party
plus (ii) all other actual costs and expenses incurred by Secured Party. The
returned check fee is payable upon demand as indebtedness secured by the
Collateral under the applicable Schedule.
6. DEBTOR'S WARRANTIES AND REPRESENTATIONS.
Debtor warrants and represents:
(a) that Debtor is justly indebted to Secured Party for the full amount of
the indebtedness set forth on each Schedule as of the date of funding
of such indebtedness;
(b) that except for the security interest granted hereby and the security
interests described on Annex 1 attached hereto, the Collateral is free
from and will be kept free from all liens, claims, security interests
and encumbrances, other than statutory liens, claims and encumbrances
(i) for taxes, assessments and other charges imposed by governmental
authorities, and (ii) in favor of mechanics, materialmen, carriers, and
others providing materials or services relating to the Collateral, in
any case in respect of amounts not yet due and payable or being
Properly Contested (as hereafter defined). For purposes hereof the term
"Properly Contested" shall mean, in the case of any indebtedness of
Debtor (including indebtedness for any taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of
whatever nature) that is not paid as and when due or payable by reason
of Debtor's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such indebtedness is being properly
contested in good faith by appropriate proceedings promptly instituted
and diligently conducted; (ii) Debtor has established appropriate
reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such indebtedness will not result in a
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forfeiture of any material assets of Debtor; (iv) no lien, claim,
encumbrance or security interest is imposed upon any of Debtor's assets
with respect to such indebtedness unless such liens are at all times
junior and subordinate in priority to the security interest in favor of
Secured Party (except only with respect to any such amounts that have
priority as a matter of applicable law) and enforcement of such liens
is stayed during the period prior to the final resolution or
disposition of such dispute; (v) if the indebtedness results from, or
is determined by the entry, rendition or issuance against Debtor or any
of its assets of a judgment, writ, order or decree, enforcement of such
judgment, writ, order or decree is stayed pending a timely appeal or
other judicial review; and (vi) if such contest is abandoned, settled
or determined adversely (in whole or in part) to Debtor, Debtor
forthwith pays such indebtedness and all penalties, interest and other
amounts due in connection therewith.
(c) that no financing statement covering the Collateral or any proceeds
thereof is on file in favor of anyone other than Secured Party and
those creditors described on Annex 1 attached hereto;
(d) that all information supplied to Secured Party and statements made by
Debtor in any financial, credit or accounting statement or application
for credit submitted to Secured Party with respect to this transaction
prior to, contemporaneously with or pursuant to the requirements of
this Master Security Agreement are and shall be true, correct, valid
and genuine in all material respects;
(e) that Debtor has full authority to enter into this agreement and in so
doing it is not violating its charter or by-laws, any law or regulation
or material agreement with third parties, and it has taken all such
action as may be necessary or appropriate to make this Master Security
Agreement and any Schedule binding upon it; and
(f) that Debtor (a) is the type of organization, (b) is organized under the
laws of the jurisdiction, (c) has its chief executive office, and (d)
if it is a "registered organization" as defined in Article 9 of the
Uniform Commercial Code (i.e. organized solely under the laws of a
single State and as to which the State must maintain a public record
showing the organization to have been organized), has the
organizational identification number (or, if none, has been assigned no
such number by the State of organization), all as set forth under
Debtor's name (which is its exact and complete legal name) at the
signature line of this Master Security Agreement. If Debtor is an
individual, Debtor's exact and complete legal name and principal
residence are set forth at and under your name at the signature line of
this Master Security Agreement. Debtor agrees to notify Secured Party
within 30 days after a change in any of the foregoing facts and
information.
7. DEBTOR'S AGREEMENTS.
Debtor agrees:
(a) to defend at Debtor's own cost any action, proceeding, or claim
affecting the Collateral;
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(b) to pay reasonable attorneys' fees actually incurred by Secured Party
and other reasonable out-of-pocket expenses incurred by Secured Party
in enforcing its rights against Debtor under this Master Security
Agreement or any Schedule;
(c) to pay promptly all taxes, assessments, license fees and other public
or private charges when levied or assessed against the Collateral, this
Master Security Agreement or any Schedule, except (i) liabilities being
contested in good faith and against which, if required, Debtor will set
up reserves in accordance with GAAP; and (ii) taxes measured by net
income and franchise taxes imposed on Secured Party by the jurisdiction
under the laws of which the Secured Party is organized and transacting
business or any political subdivision thereof, and this obligation
shall survive the termination of this Master Security Agreement or any
Schedule;
(d) that if a certificate of title be required or permitted by law, at
Secured Party's request Debtor shall obtain such certificate with
respect to the Collateral, showing the security interest of Secured
Party thereon and in any event do everything reasonably necessary or
expedient to preserve or perfect the security interest of Secured
Party;
(e) that Debtor will not fail to keep in good repair (ordinary wear and
tear excepted), secrete or without the prior written consent of Secured
Party, sell, rent, lend, encumber (other than encumbrances expressly
permitted under the terms of this Master Security Agreement or any
Schedule) or transfer any of the Collateral notwithstanding Secured
Party's rights in proceeds thereof;
(f) that Secured Party may enter upon Debtor's premises or wherever the
Collateral may be located, during normal business hours and following
reasonable prior written notice to Debtor, to inspect the Collateral
and Debtor's books and records pertaining to the Collateral, and Debtor
shall assist Secured Party in making such inspection; provided,
however, that Secured Party hereby agrees that it shall (i) comply with
all safety rules and regulations of Debtor during such inspection while
on Debtor's premises; and (ii) shall indemnify and hold Debtor harmless
from any claim, loss or damage for personal injury or property damage
caused by Secured Party, its agents, representatives, contractors,
employees or invitees in connection with the exercise of any of Secured
Party's rights under this Master Security Agreement or any Schedule;
(g) that the security interest granted by Debtor to Secured Party shall
continue effective irrespective of any retaking or redelivery of any
Collateral and irrespective of the payment of the amount described in
any Schedule so long as there are any obligations of any kind secured
by such Collateral owed by Debtor to Secured Party; and
(h) upon the written request of Secured Party, if any of the Collateral
consists of software, to inform Secured Party of the name of the
licensor of such software and to provide Secured Party with a copy of
the license agreement, but only to the extent such distribution is
permitted under such license agreement.
8. INSURANCE AND RISK OF LOSS.
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All risk of loss, damage to or destruction of the Collateral (other than loss,
damage or destruction caused by Secured Party) shall at all times be on Debtor.
Debtor will maintain at Debtor's expense during the term of the applicable
Schedule insurance on the Collateral in the respective amounts and with the
respective coverages as reflected on the certificates of insurance delivered by
Debtor to Secured Party at or before the time such Schedule becomes effective.
Debtor shall promptly, upon written request, deliver to Secured Party evidence
of such insurance and an endorsement attached thereto showing Secured Party as
loss payee as its interests may appear in respect of the Collateral, and
providing Secured Party with not less than 30 days written notice of
cancellation. Each such policy shall be with financially sound and reputable
insurance companies. Secured Party's acceptance of policies in lesser amounts or
risks shall not be a waiver of Debtor's foregoing obligations. As to Secured
Party's interest in such policy, no act or omission of Debtor or any of its
officers, agents, employees or representatives shall affect the obligations of
the insurer to pay the full amount of any loss.
Debtor hereby assigns to Secured Party any monies which may become payable with
respect to the Collateral under any such policy of insurance and irrevocably
constitutes and appoints Secured Party as Debtor's attorney in fact (a) to make,
settle and adjust claims under each policy of insurance, solely with respect to
the Collateral, (b) to make claims for any monies which may become payable under
such and other insurance on the Collateral, including returned or unearned
premiums, and (c) to endorse Debtor's name on any check, draft or other
instrument received in payment of claims or returned or unearned premiums under
each policy, solely with respect to the Collateral, and to apply the funds to
the payment of the indebtedness owing to Secured Party hereunder and secured by
such Collateral; provided, however, Secured Party is under no obligation to do
any of the foregoing; and provided, further, that if requested by Debtor in
writing within 30 days after Secured Party's receipt of such proceeds and if no
event of default described in Paragraph 9 exists at such time, Debtor may apply
such proceeds to repair or replace the damaged or destroyed Collateral so long
as (1) such repair or replacement is promptly undertaken and pursued to
completion, (2) the repaired or replaced Collateral is at all times free and
clear of liens, claims, security interests and encumbrances, other than
statutory liens, claims, security interests, and encumbrances expressly
permitted under this Master Security Agreement or any applicable Schedule, (3)
Debtor complies with such disbursement procedures for such proceeds as Secured
Party may reasonably impose for repair or replacement, and (4) the amount of
proceeds from any single casualty affecting the Collateral does not exceed
$5,000,000.
Should Debtor fail to maintain such policy in full force or to pay any premium
in whole or in part relating thereto, then Secured Party, without waiving or
releasing any default or obligation by Debtor, may (but shall be under no
obligation to), upon prior written notice to Debtor, obtain and maintain
insurance and pay the premium therefor on behalf of Debtor and charge the
premium to Debtor's indebtedness under the applicable Schedule. The full amount
of any such premium paid by Secured Party shall be payable by Debtor upon
demand, and failure to pay same shall constitute an event of default under this
Master Security Agreement.
9. EVENTS OF DEFAULT; ACCELERATION.
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THE FOLLOWING ARE EVENTS OF DEFAULT UNDER THIS MASTER SECURITY AGREEMENT WHICH
WILL ALLOW SECURED PARTY TO TAKE SUCH ACTION UNDER THIS PARAGRAPH 9 AND UNDER
PARAGRAPH 10 AS IT DEEMS NECESSARY:
(a) any of Debtor's obligations to Secured Party under any Schedule is not
paid promptly when due and such payment default is not cured within 5
business days after the later of (i) the date such payment becomes due,
and (ii) the date Debtor receives a statement thereof;
(b) Debtor shall fail to comply with the financial covenants set forth in
paragraph 2 of the Financial Reports and Covenant Rider attached to
this Master Security Agreement;
(c) Debtor breaches (i) the provisions of paragraphs 6(b) or 7(f), or (ii)
any other covenant or agreement hereof, or of any Schedule, and the
breach of such other covenant or agreement shall not have been cured
within 30 days after the earlier to occur of (A) written notice of such
breach is given by Secured Party to Debtor, and (B) an officer of
Debtor otherwise has actual knowledge of such breach;
(d) any representation or warranty made by Debtor in this Master Security
Agreement, any Schedule, or any financial statements, certificates or
other documents submitted by Debtor to Secured Party pursuant to the
provisions of this Master Security Agreement or any Schedule, or in
connection with Debtor's application for the loans to be made
thereunder, proves to have been false or misleading in any material
respect;
(e) any material portion of the Collateral is lost or destroyed and (i)
such Collateral is not replaced by Debtor with equipment of equal or
greater value, or (ii) the indebtedness secured by the affected
Collateral is not prepaid by an amount equal to the full insurable
value of such Collateral, in either case within 180 days after the
occurrence of any such loss or destruction;
(f) a complaint in bankruptcy or for arrangement or reorganization or for
relief under any insolvency law is filed by or against Debtor, and if
filed against Debtor, remains undismissed and unstayed for 60 days; or
Debtor admits its inability to pay its debts as they mature; or Debtor
ceases to do business as a going concern;
(g) any material portion of the Collateral or of any other property of
Debtor is attached through legal process or a receiver is appointed for
Debtor; or
(h) a third party takes any action to foreclose on, obtain possession or
control of, collect, sell or otherwise dispose of, or exercise any
rights with respect to, any of the Collateral without the express
written consent of Secured Party.
If Debtor shall be in default hereunder, the indebtedness described in each
Schedule and all other indebtedness then owing by Debtor to Secured Party under
this Master Security Agreement (collectively, the "Indebtedness") shall, if
Secured Party shall so elect, become immediately due and payable. After
acceleration, the unpaid principal balance of the indebtedness described in any
Schedule shall bear interest at a rate per annum equal to 2% above the rate then
in effect for such indebtedness until paid in full. In no event shall the
Debtor, upon demand by Secured Party
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for payment of the Indebtedness, by acceleration of the maturity thereof or
otherwise, be obligated to pay any interest in excess of the amount permitted by
law. Any acceleration of the Indebtedness, if elected by Secured Party, shall be
subject to all applicable laws, including laws relating to rebates and refunds
of unearned charges.
10. SECURED PARTY'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES.
UPON AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT DESCRIBED IN PARAGRAPH 9
ABOVE, SECURED PARTY SHALL HAVE ALL THE RIGHTS AND REMEDIES OF A SECURED PARTY
UNDER THE UNIFORM COMMERCIAL CODE AND ANY OTHER APPLICABLE LAWS, INCLUDING THE
RIGHT TO ANY DEFICIENCY REMAINING AFTER DISPOSITION OF THE COLLATERAL FOR WHICH
DEBTOR HEREBY AGREES TO REMAIN FULLY LIABLE. DEBTOR AGREES THAT SECURED PARTY,
BY ITSELF OR ITS AGENT, MAY WITHOUT NOTICE TO ANY PERSON AND WITHOUT JUDICIAL
PROCESS OF ANY KIND, ENTER INTO ANY PREMISES OR UPON ANY LAND OWNED, LEASED OR
OTHERWISE UNDER THE REAL OR APPARENT CONTROL OF DEBTOR OR ANY AGENT OF DEBTOR
WHERE THE COLLATERAL MAY BE OR WHERE SECURED PARTY BELIEVES THE COLLATERAL MAY
BE, AND DISASSEMBLE, RENDER UNUSABLE AND/OR REPOSSESS ALL OR ANY ITEM OF THE
COLLATERAL, DISCONNECTING AND SEPARATING ALL COLLATERAL FROM ANY OTHER PROPERTY
AND USING ALL REASONABLE FORCE NECESSARY. Debtor expressly waives all further
rights to possession of the Collateral and all claims for injuries suffered
through or loss caused by such entering and/or repossession while any event of
default described in Paragraph 9 above exists and remains outstanding, subject
to the provisions of Paragraph 7(f) above. Secured Party may require Debtor to
assemble the Collateral and deliver it to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to both parties.
Upon and during the continuance of an event of default described in Paragraph 9
above, Secured Party may sell or lease the Collateral at a time and location of
its choosing; provided that the Secured Party acts in good faith and in a
commercially reasonable manner. Secured Party will give Debtor reasonable notice
of the time and place of any public sale of the Collateral or of the time after
which any private sale or any other intended disposition of the Collateral is to
be made. Unless otherwise provided by law, the requirement of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the address of Debtor
shown herein at least ten business days before the time of the sale or
disposition. Expenses of retaking, holding, preparing for sale, selling and the
like shall include reasonable attorneys' fees actually incurred by Secured Party
and other reasonable legal expenses. Debtor understands that Secured Party's
rights are cumulative and not alternative.
11. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE.
Secured Party may in its sole discretion waive a default, or cure, at Debtor's
expense, a default. Any such waiver in a particular instance or of a particular
default shall not be a waiver of other defaults or the same kind of default at
another time. No modification or change in this Master Security Agreement or any
related Schedule, instrument or agreement shall bind Secured Party or Debtor
unless in writing signed by Secured Party and Debtor. No oral agreement shall be
binding.
12. FINANCING STATEMENTS; CERTAIN EXPENSES.
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Debtor authorizes Secured Party to file a financing statement with respect to
the Collateral and ratifies the filing by Secured Party of any such financing
statements previously filed. At the request of Secured Party, Debtor will
execute any financing statements, agreements or documents, in form reasonably
satisfactory to Secured Party which Secured Party may deem necessary or
advisable to establish and maintain a perfected security interest in the
Collateral and will pay the cost of filing or recording the same in all public
offices deemed necessary or advisable by Secured Party. Debtor also agrees to
pay all reasonable costs and expenses incurred by Secured Party in conducting
Uniform Commercial Code, tax or other lien searches against the Debtor or the
Collateral; provided, however, that such searches shall be limited to no more
than once per calendar year, unless an event of default described in Paragraph 9
exists and remains outstanding, and such other fees as may be agreed.
13. WAIVER OF DEFENSES ACKNOWLEDGMENT.
If Secured Party assigns this Master Security Agreement or a Schedule to a third
party ("Assignee"), then after receipt by Debtor of written notice of such
assignment:
(a) Debtor will make all payments directly to such Assignee at such place
as Assignee may from time to time designate in writing;
(b) Debtor agrees that it will settle all claims, defenses, setoffs and
counterclaims it may have against Secured Party directly with Secured
Party and will not set up any such claim, defense, setoff or
counterclaim against Assignee, Secured Party hereby agreeing to remain
responsible therefor;
(c) Secured Party shall not be Assignee's agent for any purpose and shall
have no authority to change or modify this Master Security Agreement or
any related document or instrument; and
(d) Assignee shall have all of the rights and remedies of Secured Party
hereunder but none of Secured Party's obligations (other than any
obligations of Secured Party expressly provided in this Master Security
Agreement or any applicable Schedule to the extent first arising or
occurring after the date of such assignment).
14. MISCELLANEOUS.
Secured Party may correct patent errors herein and fill in such blanks as serial
numbers, date of first payment and the like. Any provisions hereof contrary to,
prohibited by or invalid under applicable laws or regulations shall be
inapplicable and deemed omitted herefrom, but shall not invalidate the remaining
provisions hereof.
Debtor and Secured Party each hereby waive any right to a trial by jury in any
action or proceeding with respect to, in connection with, or arising out of this
Master Security Agreement, any Schedule, or any note or document delivered
pursuant to this Master Security Agreement or any Schedule. Except as otherwise
provided herein including, without limitation, the Schedule and Riders attached
hereto, or by applicable law, the Debtor shall have no right to prepay the
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indebtedness described in any Schedule. DEBTOR ACKNOWLEDGES RECEIPT OF A TRUE
COPY HEREOF AND WAIVES ACCEPTANCE HEREOF.
This Master Security Agreement is executed pursuant to authority of Debtor's
Board of Directors. Except where the context otherwise requires, "Debtor" and
"Secured Party" include the successors or assigns of those parties; nothing
herein shall authorize Debtor to assign this Master Security Agreement, any
Schedule or its rights in and to the Collateral.
If at any time this transaction would be usurious under applicable law, then
regardless of any provision contained in this Master Security Agreement, any
Schedule or in any other agreement made in connection with this transaction, it
is agreed that:
(a) the total of all consideration which constitutes interest under
applicable law that is contracted for, charged or received upon this
Master Security Agreement, any Schedule or any such other agreement
shall under no circumstances exceed the maximum rate of interest
authorized by applicable law and any excess shall be credited to the
Debtor; and
(b) If Secured Party elects to accelerate the maturity of, or if Secured
Party permits Debtor to prepay the indebtedness described in Paragraph
3, any amounts which because of such action would constitute interest
may never include more than the maximum rate of interest authorized by
applicable law and any excess interest, if any, provided for in this
Master Security Agreement, any Schedule or otherwise, shall be credited
to Debtor automatically as of the date of acceleration or prepayment.
This Master Security Agreement and each Schedule shall be governed by, and
construed in accordance with, the laws of the State of Georgia (excluding the
choice of law principles thereof).
Notwithstanding anything to the contrary contained herein, Debtor shall be
entitled to replace any items of Collateral at the respective Collateral
locations indicated in Paragraph 4 hereof, so long as (i) such items shall be
replaced by items of equal or greater value, (ii) the operations performed by
the Collateral are not impaired as a result of such replacement, (iii) no event
of default as described in Paragraph 9 has occurred and is then continuing, and
(iv) Secured Party shall have received 10 days' prior written notice of any such
replacement, shall have received evidence of Debtor's ownership thereof and
shall have obtained a first-priority perfected security interest in all such
replacement items. Upon receipt of evidence to Secured Party as to the
satisfaction of each of the foregoing, Secured Party shall execute and deliver
such partial releases of security interests and other documents as Debtor may
reasonably request to evidence the release of Secured Party's interests in any
such items being so replaced.
15. SPECIAL PROVISIONS.
See the special provisions riders attached hereto and made a part hereof as
follows:
(a) The Financial Reports and Covenant Rider (including exhibits)
consisting of ten (10) pages attached hereto and made a part hereof.
(b) The Cross Default Rider consisting of one (1) page attached hereto and
made a part hereof.
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Dated: July 30, 2002
Debtor:
Avondale ▇▇▇▇▇, Inc.
By:
------------------------------------------
Title:
---------------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If an organization, type of organization: corporation.
Jurisdiction of organization: Alabama.
Organizational identification number: ▇▇-▇▇▇▇▇▇▇.
Location of chief executive office: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
SECURED PARTY:
The CIT Group/Equipment Financing, Inc.
By:
------------------------------------------
Title:
---------------------------------------
Address:
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Annex 1
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Secured Party Collateral
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1. Wachovia Bank, National Association Blanket lien
2. Val Tech Computer Systems Specific equipment
3. Val Tech Computer Systems Specific equipment
4. Forklift Systems, Inc. Specific equipment
5. Lease Corporation of America Specific equipment
6. Bankers/SofTech Division of EAB Leasing Leased and financed
equipment, securing
indebtedness not to
exceed $210,000.
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CERTIFICATE REGARDING EQUIPMENT
The undersigned hereby certifies to The CIT Group/Equipment Financing,
Inc. ("Lender") that:
1. He is the Vice Chairman of Avondale ▇▇▇▇▇, Inc. ("Borrower"),
an Alabama corporation, and in such capacities, are authorized and empowered to
issue this Certificate for and on behalf of Borrower.
2. He acknowledges that Lender is relying on the statements made
in this Certificate in consummating certain financial accommodations with
Borrower pursuant to the terms of that certain Master Security Agreement (the
"Agreement"), dated July 30, 2002, between Lender and Borrower.
3. Attached hereto as Exhibit "A" and by reference made a part
hereof is a true, correct and complete list of all "Collateral" (as that term is
defined in the Agreement) owned by Borrower and located at the Alexander City
Plant, 520 ▇▇▇▇▇ Street, Alexander City, Tallapoosa, County, Alabama.
4. Attached hereto as Exhibit "B" and by reference made a part
hereof is a true, correct and complete list of all Collateral owned by Borrower
and located at the Coosa Plant, Hwy. 231 North, Rockford, Coosa County, Alabama.
5. The property described herein constitutes a true, correct and
complete list of all material items of Collateral of Borrower as of the date
hereof, wherever located.
WITNESS our hands and the corporate seal of Borrower, this 30th day of
July, 2002.
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Vice Chairman
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CROSS DEFAULT RIDER
This Cross-Default Rider (the "Rider") to the Master Security Agreement
(the "Agreement"), dated July 30, 2002, between AVONDALE ▇▇▇▇▇, INC., as Debtor,
and THE CIT GROUP/EQUIPMENT FINANCING, INC., as Secured Party, shall by this
reference be deemed incorporated into and from a part of the Agreement.
Debtor covenants and agrees that during the term of the loans made
pursuant to the Agreement, as they may be extended or renewed from time to time,
the acceleration of the indebtedness of Debtor outstanding under that certain
Second Amended and Restated Credit Agreement dated as of September 28, 2000, as
amended, among Debtor, the banks listed therein (the "Banks") and Wachovia Bank,
National Association, as agent for itself and the other Banks, as a result of
the occurrence of any event of default thereunder, shall be an event of default
under Paragraph 9 of the Agreement, entitling Secured Party to exercise any and
all available remedies as provided by the terms of the Agreement.
The CIT Group/Equipment Avondale ▇▇▇▇▇, Inc.
Financing, Inc.
By: By:
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Title: Title:
---------------------- -----------------------
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AVONDALE ▇▇▇▇▇, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
July 30, 2002
DISBURSEMENT LETTER
The CIT Group/Equipment Financing, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇. ▇▇▇▇▇▇▇
Gentlemen:
From the proceeds of the term loan made by you to the undersigned on
this date, under that certain Master Security Agreement, dated July 30, 2002,
you are hereby irrevocably authorized to make payment of the sums indicated to
the following persons:
1. Parker, Hudson, Rainer & ▇▇▇▇▇, LLP $ 30,000
▇/▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
ABA No. ▇▇▇-▇▇▇▇-▇▇
Account No. ▇▇▇▇▇-▇▇▇-▇▇▇▇
Bank Contact: ▇▇▇▇ ▇▇▇▇▇▇ @▇▇▇-▇▇▇-▇▇▇▇
(Alabama documentary taxes)
2. Wachovia Bank of Georgia $19,970,000
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #▇▇▇▇▇▇▇▇▇
Account Name: Avondale ▇▇▇▇▇, Inc.
Acct. #▇▇-▇▇▇-▇▇▇
TOTAL DISBURSEMENTS $20,000,000
Very truly yours,
AVONDALE ▇▇▇▇▇, INC.
By:
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Vice Chairman
GUARANTY
14
To: The CIT Group/Equipment Financing, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The undersigned requests you to extend credit to Avondale ▇▇▇▇▇, Inc., an
Alabama corporation (the "Company"), pursuant to the terms of a certain Master
Security Agreement dated as of July 30, 2002, between the Company and you,
together with Schedule No. 1 (Schedule of Indebtedness and Collateral) attached
to such Master Security Agreement, and the Negotiable Promissory Note made
payable by the Company to you, dated July 30, 2002, in the original principal
sum of $20,000,000 (the foregoing Master Security Agreement, Schedule, and
Negotiable Promissory Note, as the same may be amended, restated, and
supplemented from time to time, being herein collectively referred to as the
"paper"), and to induce you to do so and in consideration thereof and of
benefits to accrue to the undersigned therefrom, the undersigned, as a primary
obligor, jointly and severally and unconditionally guarantees to you that the
Company will fully and promptly pay and perform all its present and future
obligations to you arising under the paper, whether direct or indirect, joint or
several, absolute or contingent, secured or unsecured, matured or unmatured,
irrespective of any invalidity or enforceability of any such obligation or the
insufficiency, invalidity or unenforceability of any security therefor; and
agrees, without your first having to proceed against the Company or to liquidate
paper or any security therefor, to pay on demand all sums due and to become due
to you from the Company and all losses, costs, attorneys' fees or expenses which
may be suffered by you by reason of the Company's default or default of the
undersigned hereunder; and agrees to be bound by and on demand to pay any
deficiency established by a sale of paper and/or security held, with or without
notice to us. This guaranty is an unconditional guarantee of payment and
performance. No guarantor shall be released or discharged, either in whole or in
part, by your failure or delay to perfect or continue the perfection of any
security interest in any property which secures the obligations of the Company
or any of us to you, or to protect the property covered by such security
interest.
No termination shall be effective except by notice sent to you by certified mail
return receipt requested naming a termination date effective not less than 90
days after the receipt of such notice by you; or or affect any transaction
effected prior to the effective date of termination.
The undersigned waives: notice of acceptance hereof; presentment, demand,
protest and notice of nonpayment or protest as to any note or obligation signed,
accepted, endorsed or assigned to you by the Company; any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which the undersigned may now or hereafter have against the Company or any
other person directly or contingently liable for the obligations guaranteed
hereunder, or against or with respect to the Company's property (including,
without limitation, property collateralizing its obligations to you), arising
from the existence or performance of this guaranty; all exemptions and homestead
laws and any other demands and notices required by law; all setoffs and
counterclaims; any and all defenses based on suretyship or any other applicable
law, including without limitation all rights and defenses arising out of (i) an
election of remedies by you even though that election of remedies may have
destroyed rights of subrogation and reimbursement against the Company by
operation of law or otherwise, (ii)
15
protections afforded to the Company pursuant to antideficiency or similar laws
limiting or discharging the Company's obligations to you, (iii) the invalidity
or unenforceability of this guaranty, (iv) the failure to notify any of us of
the disposition of any property securing the obligations of the Company, (v) the
commercial reasonableness of such disposition or the impairment, however caused,
of the value of such property, and (vi) any duty on your part (should such duty
exist) to disclose to the undersigned any matter, fact or thing related to the
business operations or condition (financial or otherwise) of the Company or its
affiliates or property, whether now or hereafter known by you.
You may at any time and from time to time, without the undersigned's consent,
without notice to the undersigned and without affecting or impairing the
obligation of the undersigned, do any of the following:
(a) renew, extend (including extensions beyond the original term of the
respective item of paper), modify (including changes in interest
rates), release or discharge any obligations of the Company, of its
customers, of co-guarantors (whether hereunder or under a separate
instrument) or of any other party at any time directly or contingently
liable for the payment of any of said obligations;
(b) accept partial payments of said obligations;
(c) accept new or additional documents, instruments or agreements relating
to or in substitution of said obligations;
(d) settle, release (by operation of law or otherwise), compound,
compromise, collect or liquidate any of said obligations and the
security therefor in any manner;
(e) consent to the transfer or return of the security, take and hold
additional security or guaranties for said obligations;
(f) amend, exchange, release or waive any security or guaranty; or
(g) bid and purchase at any sale of paper or security and apply any
proceeds or security, and direct the order and manner of sale.
If a claim is made upon you at any time for repayment or recovery of any
amount(s) or other value received by you, from any source, in payment of or on
account of any of the obligations of the Company guaranteed hereunder and you
repay or otherwise become liable for all or any part of such claim by reason of:
(a) any judgment, decree or order of any court or administrative body
having competent jurisdiction; or
(b) any settlement or compromise of any such claim,
16
the undersigned shall remain liable to you hereunder for the amount so repaid or
for which you are otherwise liable to the same extent as if such amount(s) had
never been received by you, notwithstanding any termination hereof or the
cancellation of any note or other agreement evidencing any of the obligations of
the Company. This guaranty shall bind the undersigned, its successors, and
assigns, and shall inure to your successors and assigns, including, but not
limited to, any party to whom you may assign any item or items of paper, we
hereby waiving notice of any such assignment. All of your rights are cumulative
and not alternative.
BY EXECUTION OF THIS GUARANTY THE UNDERSIGNED AGREES TO WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ON ANY MATTER
WHATSOEVER ARISING OUT OF, IN CONNECTION WITH, OR RELATED TO THIS GUARANTY.
Dated: July 30, 2002
Avondale Incorporated
By
------------------------------------------
Title:
------------------------------------
CORPORATE SEAL
------------------------------
Attest:________________, Secretary
17
STATE OF GEORGIA)
COUNTY OF ▇▇▇▇▇▇)
AFFIDAVIT
Before me, the undersigned Notary Public in and for said county and
said state, personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., as Vice Chairman of
Avondale ▇▇▇▇▇, Inc., an Alabama corporation (the "Company"), who is known to
me, and being first duly sworn by me, deposes and says as follows:
1. That the Company is the Debtor under that certain Master
Security Agreement and the related UCC-1 financing statements (collectively the
"Security Documents") from Debtor in favor of The CIT Group/Equipment Financing,
Inc. (the "Secured Party") which are to be recorded as fixture filings in the
Office of the Judge of Probate of Coosa County, Alabama and in the Office of the
Judge of Probate of Tallapoosa County, Alabama.
2. That the collateral described in the Security Documents is
located at two (2) of Debtor's facilities, one of which is located in Coosa
County, Alabama and the other of which is located in Tallapoosa County, Alabama.
3. That the value of all property given as security by the Debtor
to the Secured Party under the Security Documents is $40,587,000.
4. That the value of the property located in Coosa County,
Alabama is $13,100,000, or 32.2% of the total value of all of the property, and
the value of the property located in Tallapoosa County, Alabama is $27,487,000,
or 67.8% of the total value of all of the property.
5. The Security Documents do not constitute an open-end mortgage
that secures future advances, and the debt is not a revolving loan; therefore,
no bond or annual report is required to be filed pursuant to ss.40-22-2(2), CODE
OF ALABAMA 1975.
6. That the undersigned has executed this Affidavit in his
capacity as Vice Chairman of the Debtor for the purpose of assisting the Judges
of Probate of Coosa and Tallapoosa Counties in apportioning the amount of the
recording tax to be collected for the recording of the Security Documents.
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Affiant
Sworn to and subscribed before me
this ___ day of July, 2002.
----------------------------------
Notary Public
[NOTARIAL SEAL]
My commission expires:
-----------------------
STATE OF GEORGIA)
COUNTY OF ▇▇▇▇▇▇)
18
AFFIDAVIT
Before me, the undersigned Notary Public in and for said county and
said state, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as Vice President of The CIT
Group/Equipment Financing, Inc., a Delaware corporation (the "Secured Party"),
who is known to me, and being first duly sworn by me, deposes and says as
follows:
1. That Avondale ▇▇▇▇▇, Inc. (the "Company") is the Debtor under
that certain Master Security Agreement and the related UCC-1 financing
statements from Debtor in favor of Secured Party (collectively the "Security
Documents") which are to be recorded as fixture filings in the Office of the
Judge of Probate of Coosa County, Alabama and in the Office of the Judge of
Probate of Tallapoosa County, Alabama.
2. That the collateral described in the Security Documents is
located at two (2) of Debtor's facilities, one of which is located in Coosa
County, Alabama and the other of which is located in Tallapoosa County, Alabama.
3. That the value of all property given as security by the Debtor
to the Secured Party under the Security Documents is $40,587,000.
4. That the value of the property located in Coosa County,
Alabama is $13,100,000, or 32.2% of the total value of all of the property, and
the value of the property located in Tallapoosa County, Alabama is $27,487,000,
or 67.8% of the total value of all of the property.
5. The Security Documents do not constitute an open-end mortgage
that secures future advances, and the debt is not a revolving loan; therefore,
no bond or annual report is required to be filed pursuant to ss.40-22-2(2), CODE
OF ALABAMA 1975.
6. That the undersigned has executed this Affidavit in his
capacity as Vice President of the Secured Party for the purpose of assisting the
Judges of Probate of Coosa and Tallapoosa Counties in apportioning the amount of
the recording tax to be collected for the recording of the Security Documents.
--------------------------------
Affiant
Sworn to and subscribed before me
this ___ day of July, 2002.
----------------------------------
Notary Public
[NOTARIAL SEAL]
My commission expires:
-----------------------
LOAN PREPAYMENT RIDER TO
SCHEDULE NO. 1 OF INDEBTEDNESS AND COLLATERAL
(the "Schedule")
DATED JULY ___, 2002 BETWEEN
AVONDALE ▇▇▇▇▇, INC., DEBTOR AND
19
THE CIT GROUP/EQUIPMENT FINANCING, INC., SECURED PARTY
1. The Debtor shall not have the right to prepay the indebtedness due
under the Schedule, in whole or in part, at any time during the first
loan year.
2. The Debtor shall thereafter have the right to prepay the indebtedness
due under the Schedule, in whole or in part, provided that Debtor gives
Secured Party at least 30 days prior written notice of its intention to
prepay and in addition to the payment of such principal amount and all
accrued interest thereon, together with any late charges and other
amounts due under the Schedule, Debtor pays a prepayment fee equal to:
1% of the principal amount prepaid on or prior to the last day
of the second loan year, 1/2% of the principal amount prepaid
any time after the second loan year and on or prior to the
last day of the third loan year, and 0% thereafter.
3. The term "loan year" as used herein, shall mean a period of twelve (12)
consecutive calendar months. The first loan year shall commence on July
__, 2002 (the "Closing Date"). Subsequent loan years shall run
consecutively, each commencing on the anniversary of the first loan
year.
Avondale ▇▇▇▇▇, Inc. ("Debtor")
By:
-------------------------
Title:
----------------------
The CIT Group/Equipment Financing, Inc. ("Secured Party")
By:
-------------------------
Title:
----------------------
20
FIXED RATE RIDER
This Fixed Rate Rider (the "Rider") to the Schedule of Indebtedness and
Collateral No.1 (the "Schedule"), dated July 30, 2002, to Master Security
Agreement dated July 30, 2002, between AVONDALE MILL, INC., as Debtor, and THE
CIT GROUP/EQUIPMENT FINANCING, INC., as Secured Party, shall by this reference
be deemed incorporated into and form a part of the Schedule.
Debtor shall have a one time option, exercisable upon not less than 15
days prior written notice to Secured Party, to fix the rate of interest due
under the Negotiable Promissory Note referenced in the Schedule (the "Note").
Upon Secured Party 's receipt of such notice (which notice shall specify the
effective date of the fixed interest rate (the "Effective Date")), the fixed
interest rate shall be determined by reference to the H15 report of the Federal
Reserve available at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇/▇▇▇/▇▇▇▇▇▇▇ on the
business day immediately preceding the date such written notice was given by
Debtor. The fixed interest rate shall equal three hundred twenty five (325)
basis points plus the two, three, four or five year rate (as of the third
business day prior to the Effective Date) indicated therein under the "Interest
Rate Swap" heading which is closest to the remaining term of the Note as of the
Effective Date. By way of example only, if there are 20 months remaining until
the maturity date of the Note as of the Effective Date, the applicable rate
under the "Interest Rate Swap" heading will be the two year rate; if there are
47 months remaining until the maturity date of the Note, then the applicable
rate under the "Interest Rate Swap" heading will be the four year rate. In the
event that the Effective Date falls equidistant between two of the annual
measurement periods, the higher of the two rates shall apply.
This Rider may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Rider to produce or account
for more than one such counterpart.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Rider to be duly executed and delivered as of the date first
above written.
The CIT Group/Equipment Avondale ▇▇▇▇▇, Inc.
Financing, Inc.
By: By:
------------------------- -------------------------
Title: Title:
----------------------- ----------------------
21
SCHEDULE NO. 1
Schedule of Indebtedness and Collateral
This Schedule No. 1 (the "Schedule"), dated July 30, 2002, to Master
Security Agreement (the "Agreement"), dated July 30, 2002, between AVONDALE
MILL, INC., as Debtor, and THE CIT GROUP/EQUIPMENT FINANCING, INC., as Secured
Party, shall by this reference be deemed incorporated into and from a part of
the Agreement.
This Schedule incorporates the terms and conditions of the Agreement.
This is Originally Executed Copy No. 1 of 2 originally executed copies.
Only transfer of possession by Secured Party of Originally Executed Copy No. 1
shall be effective for purposes of perfecting an interest in this Schedule by
possession.
Debtor grants to Secured Party a security interest in the machinery,
furniture, fixtures (to the extent removable without doing irreparable damage to
the premises to which they are affixed), tools and equipment described on Annex
A attached hereto, along with all present and future attachments and accessories
thereto and replacements and proceeds thereof, whether now or hereafter owned by
the Debtor or in which the Debtor may have or may hereafter acquire any
interest, including amounts payable in respect thereof under any insurance
policy, all hereinafter referred to collectively as "Collateral".
The Collateral will be located at all times at:
(1) Alexander City Plant, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇;
or
(2) Coosa ▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
The security interest granted hereby is to secure the payment and
performance of all indebtedness, liabilities and obligations of Debtor to
Secured Party of every kind and description arising under the Note (as hereafter
defined), whether direct or indirect, joint or several, absolute or contingent,
due or to become due, now existing or hereafter arising, including, without
limitation, all indebtedness, liabilities and obligations now or hereafter owing
by Debtor to Secured Party under this Schedule.
Concurrently herewith, Debtor shall execute and deliver to Secured
Party a Negotiable Promissory Note (the "Note") in substantially the form of
Exhibit A attached hereto to evidence a term loan made on or about the date
hereof by Secured Party to Debtor. The terms and provisions of the Note are
hereby incorporated herein and made a part hereof.
22
Special Provisions:
See Loan Prepayment Rider consisting of one (1) page attached
hereto and made a part hereof.
See Fixed Rate Rider consisting of one (1) page attached
hereto and made a part hereof.
This Schedule may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Schedule to produce or
account for more than one such counterpart.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Schedule to be duly executed and delivered as of the date first
above written.
The CIT Group/Equipment Avondale ▇▇▇▇▇, Inc.
Financing, Inc.
By: By:
------------------------- -------------------------
Title: Title:
----------------------- ----------------------
23
Annex 1
See Exhibit A attached hereto.
24
FINANCIAL REPORTS AND COVENANT RIDER
This Financial Reports and Covenant Rider (the "Rider") to the Master
Security Agreement (the "Agreement"), dated July 30, 2002, between AVONDALE
▇▇▇▇▇, INC., as Debtor, and THE CIT GROUP/EQUIPMENT FINANCING, INC., as Secured
Party, shall by this reference be deemed incorporated into and form a part of
the Agreement.
1. Debtor represents, warrants and agrees that, for so long as
there is any indebtedness owing by Debtor to Secured Party secured by the
Agreement, Debtor will keep or cause to be kept adequate records and books of
account with respect to the consolidated business activities of Avondale
Incorporated (the "Parent") and its Subsidiaries (including the Debtor) so as to
permit the preparation of the Parent's financial statements in accordance with
GAAP and cause to be prepared and to be furnished to Secured Party the following
(all to be prepared in accordance with GAAP applied on a consistent basis):
(a) as soon as available, and in any event within 120 days after
the close of each Fiscal Year hereafter, audited financial statements of the
Parent and its Consolidated Subsidiaries as of the end of such Fiscal Year, on a
consolidated basis, certified without material qualification by Crisp ▇▇▇▇▇▇
▇▇▇▇▇ LLP or another firm of independent certified public accountants of
recognized standing selected by the Parent but reasonably acceptable to Secured
Party, and setting forth in each case in comparative form the corresponding
consolidated figures for the preceding Fiscal Year;
(b) as soon as available, and in any event within 45 days after
the end of each of the first three Fiscal Quarters hereafter, unaudited interim
financial statements of the Parent and its Consolidated Subsidiaries as of the
end of such Fiscal Quarter and of the portion of the Fiscal Year then elapsed,
on a consolidated basis, certified by the chief financial officer or chief
accounting officer of the Parent as prepared in accordance with GAAP and fairly
presenting in all material respects consolidated financial position and results
of operations of the Parent and its Consolidated Subsidiaries for such Fiscal
Quarter and portion of the Fiscal Year then elapsed, subject to normal year-end
adjustments and the absence of notes thereto;
(c) concurrently with the delivery of the financial statements
described in clauses (a) and (b) above, or more frequently if requested by
Secured Party during any period that an event of default exists under the
Agreement, Debtor shall cause to be prepared and furnished to Secured Party a
Compliance Certificate executed by the chief financial officer or chief
accounting officer of the Parent in substantially the form of Exhibit A attached
hereto;
(d) Debtor shall also provide to Secured Party with such other
data and information (financial and otherwise) as Secured Party, from time to
time, may reasonably request, bearing upon or related to the Collateral or the
Debtor's or the Parent and its Consolidated Subsidiaries' financial condition or
results of operations.
2. Debtor represents, warrants and agrees that, for so long as
there is any indebtedness owing by Debtor to Secured Party secured by the
Agreement, Debtor shall:
25
(a) maintain a Fixed Charge Coverage Ratio of not less than 1.5 to
1.0 as of the last day of each Fiscal Quarter;
(b) maintain a Consolidated Adjusted Tangible Net Worth of not
less than $100,000,000 at all times, plus, commencing August 30, 2003, and as
of the first day of each Fiscal Year thereafter, 50% of Consolidated Net Income
(but in no event less than $-0-) for the immediately preceding Fiscal Year, on
a cumulative basis;
(c) maintain Consolidated Tangible Funds of not less than
$225,000,000 until the earlier of (i) the repayment of the 10.25% Subordinated
Notes, or (ii) the reduction of the aggregate amount of indebtedness owing to
Secured Party to an amount less than $10,000,000;
3. The capitalized terms used in this Rider shall have the
meanings set forth in the Agreement and as follows:
"Capital Stock" means any nonredeemable capital stock of the Parent or
any Consolidated Subsidiary (to the extent issued to a Person other
than the Parent), whether common or preferred..
"Capitalized Leases" mean any lease which is required to be capitalized
on a consolidated balance sheet of the lessee and its subsidiaries in
accordance with GAAP.
"Consolidated Adjusted Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or
reflected on the most recent consolidated balance sheet of the Parent
and its Consolidated Subsidiaries, prepared in accordance with GAAP, of
any of the following, but only to the extent created, incurred or
arising on or after April 29, 1996 (except as specified in clause (A)
below):
(A) Any surplus resulting from any write-up of assets
subsequent to August 25, 1995, other than in connection with the acquisition of
the Graniteville Assets;
(B) All assets which would be treated as intangible
assets for balance sheet presentation purposes under GAAP, including without
limitation goodwill
26
(whether representing the excess of cost over book value of assets acquired, or
otherwise), trademarks, tradenames, copyrights, patents and technologies, and
unamortized debt discount and expense, other than capitalized transaction costs
incurred in connection with the acquisition of the Graniteville Assets; and
(C) To the extent not included in (B) of this definition,
any amount at which shares of Capital Stock of the Parent appear as an asset on
the balance sheet of the Parent and its Consolidated Subsidiaries.
"Consolidated Cash Flow" means for any period, for the Parent and its
Consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP, and calculated for the Fiscal Quarter just ended and the immediately
preceding 3 Fiscal Quarters, Consolidated Net Income, plus (i) Net Interest
Expense (including interest on the Subordinated Debt), plus (ii) income taxes,
plus (iii) depreciation, plus (iv) amortization, plus or minus, as the case may
be, (v) LIFO Adjustments and plus (vi) the amount of any non-cash write-offs of
obsolete or surplus equipment, spare parts or real property, up to but not in
excess of $10,000,000 during any period of 4 consecutive Fiscal Quarters.
"Consolidated Net Income" means, for any period, the Net Income of the
Parent and its Consolidated Subsidiaries determined on a consolidated basis, but
excluding (i) extraordinary items and (ii) any equity interests of the Parent
and Subsidiary in the unremitted earnings of any Person that is not a
Subsidiary. For purposes of clause (i), extraordinary items shall include
termination and severance payments to employees, and costs and expenses incurred
or accrued in connection with the closing of facilities, relating to or as a
result of the acquisition of the Graniteville Assets, but, as to cash items,
only to the extent of such cash items which are paid or incurred prior to the
end of the first Fiscal Quarter of the 1997 Fiscal Year and in an aggregate
amount not exceeding $5,000,000.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Parent in its consolidated financial statements as of such
date.
"Consolidated Tangible Funds" shall mean as of the date of any
determination thereof, the sum of (a) Consolidated Adjusted Tangible Net Worth
and (b) Subordinated Debt.
"Consolidated Total Funded Debt" means at any date the Funded Debt of
the Parent and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Current Maturities of Long Term Debt" means all payments in respect of
Long Term Debt (other than the Obligations and the Debt secured by the
Agreement) that are required to be
27
made within one year from the date of determination, whether or not the
obligation to make such payments would constitute a current liability of the
obligor under GAAP.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capitalized
Leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all obligations
of such Person to reimburse any bank or other Person in respect of amounts paid
or to be paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, (ix) all Debt of others Guaranteed by such Person and
(x) all principal amounts outstanding and owed to parties other than the Debtor
or any Subsidiary under the items described in clause (a) of the definition of
Receivables Program Obligations; provided, however, that the AMGF Distribution
Facility Lease shall not constitute Debt for any purpose under this Rider.
"Dividends" means any dividend or other distribution paid in respect of
any Capital Stock and Redeemable Preferred Stock (other than dividends paid or
payable in the form of additional Capital Stock or Redeemable Preferred Stock).
"Fiscal Quarter" means any fiscal quarter of the Parent.
"Fiscal Year" means any fiscal year of the Parent. Any reference to
Fiscal Year together with a specific year (e.g. "1996 Fiscal Year") refers to
the Fiscal Year ending on the last Friday of August in such specific year.
"Fixed Charge Coverage Ratio" means, on a consolidated basis for the
Parent and its Consolidated Subsidiaries, the ratio of (i) Consolidated Cash
Flow, less Dividends paid, for the Fiscal Quarter just ended and the immediately
preceding 3 Fiscal Quarters, to (ii) the sum of Net Interest Expense for the
Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters and
Current Maturities of Long Term Debt, calculated at the end of the Fiscal
Quarter just ended.
"Funded Debt" of any Person shall mean all Debt of such Person of the
types described in clauses (i) through (vi), inclusive, and clause (x) of the
definition of Debt, regardless of the maturity thereof.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which are to be used in making the calculations for
purposes of determining compliance with the terms of this Rider.
"Graniteville Assets" means the assets acquired by the Debtor from
Graniteville Company pursuant to the Graniteville Asset Purchase Agreement.
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"Graniteville Asset Purchase Agreement" means the Asset Purchase
Agreement dated March 31, 1996, as amended by and among the Debtor, as
Purchaser, the Parent, Graniteville Company, a South Carolina corporation, as
Seller, and Triarc Companies, Inc., a Delaware corporation.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of hereof, the Debtor or any Subsidiary shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement to such asset; provided, however, that the property
leased by Avondale ▇▇▇▇▇ Graniteville Fabrics pursuant to the AMGF Distribution
Facility Lease shall not, solely by virtue of the AMGF Distribution Facility
Lease, constitute property of Avondale ▇▇▇▇▇ Graniteville Fabrics subject to a
Lien for any purpose under the Agreement.
"LIFO Adjustments" means adjustments to cost of goods sold attributable
to adjusting the carrying value of inventory under the last-in, first-out method
of accounting.
"Long Term Debt" means at any date any Consolidated Total Funded Debt
which matures (or the maturity of which may at the option of the Parent or any
Consolidated Subsidiary be extended such that it matures) more than one year
after such date.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Net Interest Expense" means, for any period, interest expense
(including capitalized interest, to the extent capitalized interest exceeds
$50,000 in any Fiscal Year, including interest, yield, discount or similar
amounts paid under the Receivables Securitization Program) in respect of Debt,
less interest income.
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"Obligations" means the indebtedness and other obligations of Debtor
outstanding under that certain Second Amended and Restated Credit Agreement
dated as of September 28, 2000, as amended, among Debtor, the banks listed
therein (the "Banks") and Wachovia Bank, National Association, as agent for
itself and the other Banks, as the same may be amended, restated and
supplemented from time to time, together with all replacements, refinancings and
refundings thereof, in whole or in part.
"Parent" means Avondale Incorporated, a Georgia corporation, and its
successors and permitted assigns.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Receivables Program Assets" means (a) all Receivables which are
described as being transferred by the Debtor or its Subsidiaries (including the
Receivables Subsidiary) pursuant to the Receivables Documents; provided,
however, that the term "Receivables" shall not include any Excluded Receivables
Assets, (b) all Receivables Related Assets, and (c) all collections (including
recoveries) and other proceeds of the assets described in the foregoing clauses
(a) and (b).
"Receivables Program Obligations" means (a) notes, trust certificates,
undivided interests, partnership interests or other interests representing the
right to be paid a specified principal amount from the Receivables Program
Assets, and (b) related obligations of the Debtor and/or its Subsidiaries
(including, without limitation, rights in respect of interest or yield, breach
of warranty claims and expense reimbursement and indemnity provisions) and other
Standard Securitization Undertakings.
"Receivables Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of liens securing such Receivables and other credit support in respect of such
Receivables), (ii) any proceeds of such Receivables and any lockboxes or
accounts in which such proceeds are deposited, (iii) spread accounts and other
similar accounts (and any amount on deposit therein) established in connection
with the Receivables Securitization Program, (iv) any warranty, indemnity,
dilution and other intercompany claim arising out of Receivables Documents and
(v) all other property included in the definition of "Specified Assets"
contained in the Receivables Intercreditor Agreement; provided, however, that
the term "Receivables Related Assets" shall not include any Excluded Receivables
Assets.
"Receivables Securitization Program" means any transaction or series of
transactions that may be entered into by the Debtor and its Subsidiaries
pursuant to which the Debtor and/or its Subsidiaries may sell, convey or
otherwise transfer to the Receivables Subsidiary and (in the case of a transfer
by the Receivables Subsidiary) any other Person, or may grant a security
interest in, any Receivables Program Assets (whether now existing or arising in
the future); provided that:
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(a) no portion of the indebtedness or any other obligations
(contingent or otherwise) of a Receivables Subsidiary or Special Purpose Vehicle
(i) is guaranteed by the Debtor or its Subsidiaries (other than the Receivables
Subsidiary and excluding guarantees of obligations pursuant to Standard
Securitization Undertakings), (ii) is recourse to or obligates the Debtor or its
Subsidiaries (other than the Receivables Subsidiary) for payment other than
pursuant to Standard Securitization Undertakings or (iii) subjects any property
or asset of the Debtor or its Subsidiaries (other than the Receivables
Subsidiary), directly or indirectly, contingently or otherwise, to the
satisfaction of obligations incurred in such transactions, other than pursuant
to Standard Securitization Undertakings,
(b) the Debtor and its Subsidiaries (other than the Receivables
Subsidiary) do not have any obligation to maintain or preserve the financial
condition of a Receivables Subsidiary or a Special Purpose Vehicle or cause such
entity to achieve certain levels of operating results, and
(c) the scheduled maturity of any Receivables Program Obligations
of the type described in clause (a) of the definition of "Receivables Program
Obligations" is no earlier than November 15, 2002.
"Receivables Subsidiary" means a special purpose corporation that is a
Wholly Owned Subsidiary of the Debtor, created for the sole purpose of, and
whose only business shall be, acquisition of the Receivables Program Assets
pursuant to the Receivables Securitization Program and those activities
incidental to the Receivables Securitization Program.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is either (i) mandatorily redeemable (by sinking
fund or similar payments or otherwise) or (ii) redeemable at the option of the
holder thereof.
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Parent and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Patent and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Parent or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to (i) the par
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of treasury
stock, (B) valuation allowances, (C) receivables due from an employee stock
ownership plan, (D) employee stock ownership plan debt guarantees, and (E)
translation adjustments for foreign currency transactions.
"Subordinated Debt" means (i) the 10.25% Subordinated Notes and (ii)
any other Debt, the payment of which has been expressly subordinated to payment
of the Obligations and which has a maturity no earlier than February 28, 2004.
"Subsidiary" means any corporation or other entity (other than a
Special Purpose Vehicle) of which securities or other ownership interest having
ordinary voting power to elect a
31
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Parent.
"10.25% Subordinated Notes" means the Senior Subordinated Notes due
2006, issued by the Debtor, as amended, modified, renewed or supplemented from
time to time.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Parent.
Capitalized terms used in the foregoing definitions and not otherwise defined
herein shall have the respective meanings assigned to such capitalized terms
in the Second Amended and Restated Credit Agreement dated as of September 28,
2000, as amended, referred to in the definition of "Obligations" above.
4. This Rider may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and
it shall not be necessary in making proof of this Rider to produce or
account for more than one such counterpart.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Rider to be duly executed and delivered as of the date first above
written.
The CIT Group/Equipment Avondale ▇▇▇▇▇, Inc.
Financing, Inc.
By: By:
------------------------- -------------------------
Title: Title:
----------------------- ----------------------
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EXHIBIT A
COMPLIANCE CERTIFICATE
[Letterhead of Debtor]
__________________, 200__
The CIT Group/Equipment Financing, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇. ▇▇▇▇▇▇▇
The undersigned, the chief financial officer or chief accounting
officer of Avondale ▇▇▇▇▇, Inc., an Alabama corporation ("Debtor"), gives this
certificate to The CIT Group/Equipment Financing, Inc. ("Secured Party") in
accordance with the requirements of the Master Security Agreement, dated July
30, 2002, between Debtor and Secured Party ("Loan Agreement"). Capitalized terms
used in this Certificate, unless otherwise defined herein, shall have the
meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and
statements of income of the Parent and its Consolidated Subsidiaries for the
[Fiscal Year] [quarterly period] ending __________________, 20__, copies of
which are attached hereto, I hereby certify that:
(a) Fixed Charge Coverage Ratio is ____ to 1;
(b) Consolidated Adjusted Tangible Net Worth is $____________;
(c) Consolidated Tangible Funds is $____________;
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2. No event of default as provided in Paragraph 9 of the
Loan Agreement exists on the date hereof, other than _____________________ [if
none, so state].
3. As of the date hereof, Debtor is current in its
payment of all accrued rent and other charges to Persons who own or lease any
premises where any of the Collateral is located, and there are no pending
disputes or claims regarding Debtor's failure to pay or delay in payment of any
such rent or other charges, other than ____________________ [if none, so
state].
Very truly yours,
-------------------------------
Name:
--------------------------
Title:
-------------------------
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