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Exhibit 10.5
REVOLVING LINE OF CREDIT
CREDIT AGREEMENT
entered into by and between
US Bank of UTAH
a Utah banking association
and
DAW TECHNOLOGIES, INC.
a Utah corporation
Effective as of July 25, ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
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REVOLVING LINE OF CREDIT
CREDIT AGREEMENT
TABLE OF CONTENTS
Page
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Recitals ............................................................... 1
Agreement............................................................... 1
ARTICLE 1
DEFINITION OF TERMS..................................................... 1
1.01 "Accounts Payable"........................................... 1
1.02 "Accounts Receivable"........................................ 1
1.03 "Advance".................................................... 1
1.04 "Authorized Officer"......................................... 2
1.05 "Borrower"................................................... 2
1.06 "Borrowing Base"............................................. 2
1.07 "Borrowing Base Certificate"................................. 2
1.08 "Business Day"............................................... 2
1.09 "Change in Control".......................................... 2
1.10 "Closing Date"............................................... 3
1.11 "Code"....................................................... 3
1.12 "Collateral"................................................. 3
1.13 "Commitment"................................................. 3
1.14 "Concentrations"............................................. 3
1.15 "Control".................................................... 3
1.16 "Controlled Group"........................................... 3
1.17 "Current Assets"............................................. 3
1.18 "Current Liabilities"........................................ 3
1.19 "Current Ratio".............................................. 4
1.20 "Debt/Tangible Net Worth Ratio".............................. 4
1.21 "Default Rate"............................................... 4
1.22 "Dollars".................................................... 4
1.23 "DSC"........................................................ 4
1.24 "ERISA"...................................................... 4
1.25 "ESOP"....................................................... 5
1.26 "Event of Default"........................................... 5
1.27 "Exchange Act"............................................... 5
1.28 "Financial Covenants"........................................ 5
1.29 "Foreign Currency Contracts"................................. 5
1.30 "GAAP"....................................................... 5
1.31 "Governmental Authority"..................................... 5
1.32 "Indebtedness"............................................... 5
1.33 "Lender"..................................................... 5
1.34 "Letters of Credit".......................................... 5
Exhibit 10.5
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1.35 "Lien"....................................................... 6
1.36 "Loan"....................................................... 6
1.37 "Loan Documents"............................................. 6
1.38 "Loan Fees".................................................. 6
1.39 "Material Adverse Effect".................................... 6
1.40 "Maturity Date".............................................. 6
1.41 "Net Domestic Underbillings Less Domestic Overbillings"...... 6
1.42 "Net Income"................................................. 6
1.43 "Note"....................................................... 6
1.44 "PBGC"....................................................... 6
1.45 "Permitted Liens"............................................ 6
1.46 "Person"..................................................... 7
1.47 "Plan"....................................................... 7
1.48 "Regulation U"............................................... 7
1.49 "Regulatory Change".......................................... 7
1.50 "Reportable Event"........................................... 7
1.51 "Retention".................................................. 7
1.52 "SEC"........................................................ 7
1.53 "Security Agreement"......................................... 7
1.54 "Security Documents"......................................... 7
1.55 "Significant Debt Agreement"................................. 7
1.56 "Subsidiaries"............................................... 8
1.57 "Tangible Net Worth"......................................... 8
1.58 "WOBRR"...................................................... 8
1.59 "Working Capital"............................................ 8
ARTICLE 2
THE LOAN................................................................ 8
2.01 Loan Commitment.............................................. 8
2.02 Revolving Line of Credit..................................... 8
2.03 Note......................................................... 8
2.04 Letters of Credit............................................ 9
2.05 Excess Balance Repayment..................................... 10
2.06 Prepayments.................................................. 10
2.07 Method of Payment............................................ 10
2.08 Conditions................................................... 10
2.09 Other Advances by Lender..................................... 10
2.10 Assignment................................................... 10
ARTICLE 3
FEES.................................................................... 10
3.01 Non-Usage Fee................................................ 11
3.02 Letter of Credit Fees........................................ 11
ARTICLE 4
SECURITY................................................................ 11
4.01 Security..................................................... 11
4.02 Financing Statements......................................... 11
4.03 Security Documents........................................... 11
4.04 Assignment of Particular Contracts........................... 12
Exhibit 10.5
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ARTICLE 5
AFFIRMATIVE COVENANTS...................................................... 12
5.01 Financial Statements, Reports and Documents...................... 12
5.01.01 Consolidated Monthly Statements of Borrower............ 12
5.01.02 Consolidated Quarterly Statements of Borrower.......... 12
5.01.03 Consolidated Annual Statements of Borrower............. 12
5.01.04 Quarterly Certificate Respecting Financial Covenants... 13
5.01.05 Borrowing Base Certificate............................. 13
5.01.06 Compliance Certificate of Borrower..................... 13
5.01.07 Management Letters..................................... 13
5.01.08 Other Information...................................... 14
5.02 Payment of Taxes and Other Indebtedness.......................... 14
5.03 Maintenance of Existence and Rights; Conduct of Business......... 14
5.04 Notice of Default................................................ 14
5.05 Other Notices.................................................... 14
5.06 Compliance with Loan Documents................................... 14
5.07 Compliance with Significant Debt Agreements...................... 14
5.08 Operations and Properties........................................ 14
5.09 Books and Records; Access........................................ 15
5.10 Compliance with Law.............................................. 15
5.11 Authorizations and Approvals..................................... 15
5.12 ERISA Compliance................................................. 15
5.13 Further Assurances............................................... 15
5.14 News Releases.................................................... 15
5.15 Insurance........................................................ 16
5.16 Change in Control................................................ 16
ARTICLE 6
NEGATIVE COVENANTS......................................................... 16
6.01 Amendments to Organizational Documents........................... 16
6.02 Margin Stock..................................................... 16
6.03 Fiscal Year...................................................... 17
6.04 Liens............................................................ 17
6.05 Dividends........................................................ 17
6.06 Insider Loans.................................................... 17
6.07 Stock Buy Backs.................................................. 17
6.08 Transfer Collateral.............................................. 17
6.09 Financial Covenants.............................................. 17
6.10 Fiscal 1995 Capital Expenditures................................. 18
6.11 Fiscal 1996 Capital Expenditures................................. 18
ARTICLE 7
CONDITIONS PRECEDENT....................................................... 18
7.01 Initial Advance.................................................. 18
7.01.01 This Agreement......................................... 18
7.01.02 The Note............................................... 18
7.01.03 Officer's Certificate.................................. 18
7.01.04 Organizational Documents............................... 18
7.01.05 Secretary's Certificate................................ 19
Exhhibit 10.5
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7.01.06 Security Agreement .................................. 19
7.01.07 Filings.............................................. 19
7.01.08 Borrowing Base Certificate........................... 19
7.01.09 Insurance............................................ 19
7.01.10 Additional Information............................... 19
7.02 Inspection..................................................... 19
7.03 Subsequent Advances............................................ 19
7.04 No Event of Default............................................ 20
7.05 No Material Adverse Change..................................... 20
7.06 Representations and Warranties................................. 20
ARTICLE 8
REPRESENTATIONS AND WARRANTIES............................................. 20
8.01 Organization and Good Standing................................. 20
8.02 Authorization and Power........................................ 20
8.03 No Conflicts or Consents....................................... 20
8.04 Enforceable Obligations........................................ 21
8.05 Financial Condition............................................ 21
8.06 Full Disclosure................................................ 21
8.07 No Default..................................................... 21
8.08 Significant Debt Agreements.................................... 21
8.09 No Litigation.................................................. 21
8.10 Taxes.......................................................... 21
8.11 ERISA.......................................................... 22
8.12 Compliance with Law............................................ 22
8.13 Survival of Representations, Etc .............................. 22
8.14 Recitals....................................................... 22
8.15 No Stock Purchase.............................................. 22
8.16 Solvent........................................................ 22
8.17 Advances....................................................... 22
8.18 Title to Collateral............................................ 23
8.19 Security Documents............................................. 23
ARTICLE 9
EVENTS OF DEFAULT.......................................................... 23
9.01 Events of Default.............................................. 23
9.02 Remedies Upon Event of Default................................. 25
9.03 Right of Set Off............................................... 26
9.04 Performance by Lender.......................................... 26
ARTICLE 10
MISCELLANEOUS.............................................................. 26
10.01 Modification................................................... 26
10.02 Waiver......................................................... 26
10.03 Payment of Expenses............................................ 26
10.04 Notices........................................................ 27
10.05 Governing Law.................................................. 27
10.06 Invalid Provisions............................................. 28
10.07 Binding Effect................................................. 28
10.08 Entirety....................................................... 28
Exhibit 10.5
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10.09 Headings....................................................... 28
10.10 Survival....................................................... 28
10.11 No Third Party Beneficiary..................................... 28
10.12 Schedules and Exhibits Incorporated............................ 28
10.13 Counterparts................................................... 29
Exhibit 10.5
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REVOLVING LINE OF CREDIT
LOAN AGREEMENT
This REVOLVING LINE OF CREDIT LOAN AGREEMENT (this "Agreement"), dated
as of July 25, 1996, is entered into by and between DAW TECHNOLOGIES, INC., a
Utah corporation ("Borrower"), and US Bank of UTAH, a Utah banking
association ("Lender"). Borrower and Lender are referred to collectively
herein as the "Parties" and sometimes individually herein as a "Party."
RECITALS
A. Borrower has applied to Lender for a revolving line of credit
facility in the principal amount of Eight Million and No/100 Dollars
($8,000,000.00) for the purpose of providing working capital financing for
Borrower's business operations.
B. As a condition for extending such financial accommodations, Lender
has required that Borrower enter into this Agreement establishing the terms
and conditions thereof.
AGREEMENT
THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereby
agree as follows.
ARTICLE 1
DEFINITION OF TERMS
For purposes of this Agreement, unless otherwise defined herein, the
following terms have the meanings assigned to them below.
1.1 "ACCOUNTS PAYABLE" means, as of any date, accounts payable of
Borrower on a GAAP consolidated basis.
1.2 "ACCOUNTS RECEIVABLE" means, as of any date, accounts receivable of
Borrower on a GAAP consolidated basis.
1.3 "ADVANCE" means an advance and loan of funds to Borrower by Lender
under and subject to the terms of this Agreement and all related documents
contemplated herein. An Advance is made hereunder when cash is loaned
directly to Borrower as provided herein. An Advance is also made hereunder
whenever there is a drawing by the beneficiary thereof of a Letter of Credit
that is issued by Lender as provided herein. (The face amount of issued but
undrawn Letters of Credit reduces Borrower's Borrowing Base, as provided in
ABorrowing Base," below, but the amount of a Letter of Credit does not become
an Advance until the Letter of Credit is actually drawn.)
1.4 "AUTHORIZED OFFICER" means one or more officers of Borrower who are
duly authorized (and who are so certified to Lender by the corporate
secretary of Borrower pursuant to a certificate of authority and incumbency
obtained by Lender from time to time) to request Advances under
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Exhibit 10.5
the provisions of this Agreement and execute and deliver documents,
instruments, agreements, reports, statements and certificates in connection
herewith.
1.5 "BORROWER": See the Preamble hereto.
1.6 "BORROWING BASE" means, on any particular date, the amount that is
equal to: (a) seventy-five percent (75%) of the net total of the following
amounts, added and subtracted as follows using financial information as of
the date of calculation of Borrowing Base: the amount of Borrower's Accounts
Receivable from customers that are physically located within the United
States, less the amount of such Accounts Receivable that are more than 90
days past due, less Concentrations, less the amount of Borrower's Accounts
Receivable that are from government customers, less any Retention, less the
amount of contra accounts to Borrower's Accounts Receivable, plus (b) fifty
percent (50%) of the net total of the following amounts, added and subtracted
as follows: Retentions, plus Net Domestic Underbillings less Domestic
Overbillings (provided that fifty percent of such net amount shall in no
event exceed $2,000,000); less (c) the amount of all outstanding Letters of
Credit of Borrower issued under the terms of this Agreement; less (e) any
required margins for Foreign Currency Contracts.
1.7 "BORROWING BASE CERTIFICATE" means a certificate of an Authorized
Officer setting forth a detailed reconciliation of the outstanding balance of
the Loan against the definitional components of the Borrowing Base, in
substantially the form attached hereto as Exhibit A. The form of Borrowing
Base Certificate used by Borrower under this Agreement may be modified from
time to time by Lender in its reasonable discretion.
1.8 "BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in Salt Lake City, Utah.
1.9 "CHANGE IN CONTROL" means the occurrence or existence of either of
the following events or conditions without the prior written consent of
Lender, if different than the state of affairs as of the Closing Date:
1.9.1 the Acquisition by any Person or two or more Persons "Acting
in concert of "beneficial ownership" (within the meaning of Rule 13d-3
promulgated by the SEC under the Exchange Act or as otherwise specified under
the provisions of this Agreement) of securities of Borrower having more than
50% of the ordinary voting power for the election of directors; or
1.9.2 the Acquisition by any Person or two or more Persons acting
in concert of Control of Borrower.
1.10 "CLOSING DATE" means the date of execution and delivery of this
Agreement by the Parties.
1.11 "CODE" means the Internal Revenue Code of 1986, as amended.
1.12 "COLLATERAL" means all property of Borrower subject to the Security
Documents.
1.13 "COMMITMENT" means the sum of EIGHT MILLION AND NO/100 DOLLARS
($8,000,000.00).
1.14 "CONCENTRATIONS" means, unless otherwise agreed by Lender in
Lender's sole
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Exhibit 10.5
discretion, that portion of accounts Receivable that are either (a)
attributable to a single customer of Borrower and which comprise twenty-five
percent (25%) or more of Borrower's total accounts Receivable, or (b) that
are accounts Receivable from a customer of Borrower whose total accounts
Receivable owed Borrower are more than twenty percent (20%) attributable to
accounts Receivable that are more than 90 days past due, or (c) both of the
above. (For example, if Borrower's total accounts Receivable were $100, and
if $30 of Borrower's total accounts Receivable were from customer A, the $30
owed Borrower by customer A would be a Concentration because $30 is more than
25% of $100. Continuing the example, if, of the remaining $70 of Borrower's
accounts Receivable, $10 were attributable to customer B, and if $3 of
customer B's total $10 accounts Receivable owed to Borrower were more than 90
days past due, then all of customer B's $10 accounts Receivable would be a
Concentration because more than 20% of customer B's total accounts Receivable
owed to Borrower would be more than 90 days past due, leaving Borrower with
accounts Receivable net of Concentrations of $60.)
1.15 "CONTROL" when used with respect to any Person means the power,
directly or indirectly, to direct the management policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "Controlling" and "Controlled" have meanings correlative to the
foregoing.
1.16 "CONTROLLED GROUP" means, severally and collectively, the members
of the group controlling, controlled by and/or in common control of Borrower,
within the meaning of Section 4001(b) of ERISA.
1.17 "CURRENT ASSETS" means all assets of Borrower classified as current
assets under GAAP, determined on a consolidated basis.
1.18 "CURRENT LIABILITIES" means all liabilities of Borrower classified
as current liabilities under GAAP, determined on a consolidated basis for the
purpose of this definition, any amount which is outstanding under the Loan
regardless of whether it would be characterized as a current liability in
accordance with GAAP.
1.19 "CURRENT RATIO" means as of any date the ratio of Current Assets as
of such date to Current Liabilities as of such date.
1.20 "DEBT/TANGIBLE NET WORTH RATIO" means the amount of Borrower's
current plus long term debt divided by Borrower's Tangible Net Worth, based
on amounts shown on Borrower's balance sheet.
1.21 "DEFAULT RATE" means an interest rate per annum equal to four
percent (4%) above the rate that would otherwise be payable under the terms
of the respective Notes.
1.22 "DOLLARS" and the sign A$" mean lawful currency of the United
States of America.
1.23 "DSC" means Borrower's debt service coverage ratio. DSC will be
measured on and as of the last day of Borrower's fiscal year end, December
31, 1996. On such dates, DSC will be calculated based on financial statement
information for Borrower from the fiscal year ending. DSC for such fiscal
year ending will be calculated as a fr"Ction, the numerator of which is
Borrower's net income after taxes for the fiscal year ending,
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Exhibit 10.5
plus Borrower's depreciation expense for the fiscal year ending, plus
Borrower's interest expense for the fiscal year ending, minus Borrower's
dividends for the fiscal year ending, and the denominator of which is
Borrower's current maturity of long term debt as stated on Borrower's
financial statements for the fisical year ending, plus Borrower's interest
expense for the fiscal year ending.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, together with all final and permanent regulations issued pursuant
thereto. References herein to sections and subsections of ERISA are deemed to
refer to any successor or substitute provisions therefor.
1.25 "ESOP" means any Employee Stock Ownership Plan, as it may be
amended from time to time, adopted by Borrower.
1.26 "EVENT OF DEFAULT": See Article 9.
1.27 "EXCHANGE ACT" means the Securities Exchange Act of 1934.
1.28 "FINANCIAL COVENANTS": See Section 6.09 hereof.
1.29 "FOREIGN CURRENCY CONTRACTS" means contracts entered into by and
between Lender and Borrower for the purpose of protecting Borrower against
losses from unfavorable changes in foreign currency rates of exchange with
currency of the United States. Such contracts require that Borrower reserve
cash to cover Borrower's possible liabilities under such contracts; the total
amount of such cash reserves is referred to herein as the "margin for Foreign
Currency Contracts."
1.30 "GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public accountants acting through its accounting Principles Board or by the
Financial accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial condition, and the
results of operations and changes in the financial position, of Borrower,
including without limitation accounting rules promulgated pursuant to
Regulations SX and SK, except that any accounting principle or practice
required to be changed by the said accounting Principles Board or Financial
accounting Standards Board (or other appropriate board or committee of the
said Boards) in order to continue as a generally accepted accounting
principle or practice may be so changed.
1.31 "GOVERNMENTAL AUTHORITY" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its
business, operations or properties.
1.32 "INDEBTEDNESS" means, with respect to any Person, all of its
monetary obligations and liabilities.
1.33 "LENDER": See the Preamble hereto.
1.34 "LETTERS OF CREDIT" mean a letters of credit issued by Lender for
the benefit of Borrower's customers under the terms of this Agreement.
1.35 "LIEN" means any lien, mortgage, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other interest in property designed to
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Exhibit 10.5
secure the repayment of Indebtedness whether arising by agreement or under
any statute or law, or otherwise.
1.36 "LOAN" means the Loan as defined in Section 2.01 below.
1.37 "LOAN DOCUMENTS" means this Agreement, the Note (including any
renewals, extensions and refundings thereof), the Security Agreement, and any
and all other written agreements, certificates or documents (and with respect
to this Agreement and such other written agreements and documents, any
amendments or supplements thereto or modifications thereof) that are executed
or delivered or contemplated in or pursuant to the terms of this Agreement.
1.38 "LOAN FEES": See Sections 3.01 and 3.02 hereof.
1.39 "MATERIAL ADVERSE EFFECT" means any circumstance or event which
(i) has any material adverse effect upon the validity or enforceability of
any Loan Document, (ii) materially impairs the ability of Borrower to fulfill
its obligations under the Loan Documents, or (iii) causes an Event of Default.
1.40 "MATURITY DATE" means June 30, 1997.
1.41 "NET DOMESTIC UNDERBILLINGS LESS DOMESTIC OVERBILLINGS" means the
net amount of Borrower's underbillings and overbillings to customers located
within the United States, as reported by Borrower in its job in process or
work in processing accounting, prepared in accordance with GAAP.
1.42 "NET INCOME" means for any period the net income of Borrower for
such period in "Ccordance with GAAP, determined on a consolidated basis.
1.43 "NOTE" means the Revolving Promissory Note of even date herewith in
the amount of the Loan, executed by Borrower and delivered pursuant to the
terms of this Agreement, together with any renewals, extensions,
modifications or repl"Cements thereof.
1.44 "PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or substantially all of the Pension Benefit Guaranty
Corporation's functions under ERISA.
1.45 "PERMITTED LIENS" means those Liens to which the Collateral is
subject that are prior to the Liens of the Security Documents, and which
consist of the following:
1.45.1 Liens for taxes, assessments or governmental charges not
yet due and payable; and
1.45.2 Liens to which Lender shall consent in writing, in its sole
and absolute discretion.
1.46 "PERSON" includes an individual, a corporation, a joint venture, a
partnership, a trust, a limited liability company, an unincorporated
organization or a government or any agency or political subdivision thereof.
1.47 "PLAN" means an employee defined benefit plan or other plan
maintained by
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Exhibit 10.5
Borrower for employees of Borrower and covered by Title IV of ERISA, or
subject to the minimum funding standards under Section 412 of the Code.
1.48 "REGULATION U" means Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
1.49 "REGULATORY CHANGE" means any change effective after the date of
this Note in United States federal, state, or foreign law, regulations, or
rules or the adoption or making after such date of any interpretation,
directive, or request applying to a class of banks including Lender, of or
under any United States federal, state, or foreign law, regulation or rule
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
1.50 "REPORTABLE EVENT" means any "reportable event" as described in
Section 4043(b) of ERISA with respect to which the thirty (30) day notice
requirement has not been waived by the PBGC.
1.51 "RETENTION" means amounts otherwise payable to Borrower for work
performed or equipment provided or delivered, when such amounts are withheld
by Borrower's customers as security or pursuant to contractual provisions
until particular projects or jobs are complete. "Retainage" is a synonym for
Retention under this Agreement.
1.52 "SEC" means the Securities and Exchange Commission.
1.53 "SECURITY AGREEMENT": See Section 4.01 hereof; together with any
"additional security agreement delivered to Lender to secure amounts owed as
a result of issuance by Lender of a Letter of Credit, together with any other
security agreement signed by Borrower to secure amounts owed Lender under
this Agreement.
1.54 "SECURITY DOCUMENTS": See Section 4.03 hereof.
1.55 "SIGNIFICANT DEBT AGREEMENT" means all documents, instruments and
agreements executed by Borrower, evidencing, securing or ensuring any
Indebtedness of Borrower or any guaranty in excess of $100,000 in outstanding
principal (or principal equivalent) amount.
1.56 "SUBSIDIARIES" means all business associations directly or
indirectly controlled by Borrower.
1.57 "TANGIBLE NET WORTH" means Borrower's tangible net worth,
determined based on Borrower's balance sheet prepared on a consolidated basis
in accordance with GAAP. Tangible Net Worth equal Borrower's total assets
less total liabilities and less general intangible assets such as, without
limitation, goodwill, patent rights, etc.
1.58 "WOBRR" means Lender's West One Bank, Utah Reference Rate, an
internally prepared and defined index which may or may not be the same as
that quoted by other financial institutions. WOBRR also refers to any
repl"Cement index or interest rate that is used by any successor in interest
to Lender.
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Exhibit 10.5
1.59 "WORKING CAPITAL" means the excess of Current Assets over Current
Liabilities.
ARTICLE 2
THE LOAN
2.1 LOAN COMMITMENT. Lender agrees to make Advances to Borrower, and
Borrower agrees to accept Advances from Lender, in the manner and upon the
terms and conditions contained in this Agreement. The total amount of
Advances made to Borrower under this Agreement at any particular time shall
not exceed the lesser of the Commitment or the Borrowing Base. The aggregate
of all Advances made to Borrower by Lender as contemplated in this Agreement
is referred to herein as the "Loan."
2.2 REVOLVING LINE OF CREDIT. Subject to the terms and conditions set
forth in this Agreement, the Loan shall be a revolving line of credit,
against which Advances may be made to Borrower, repaid by Borrower, and new
Advances made to Borrower, as Borrower may request, provided that (i) no
Advance shall be made if an Event of Default shall be continuing, (ii) no
Advance shall be made that would cause the outstanding principal balance of
the Loan to exceed the lesser of the Commitment or the Borrowing Base, (iii)
no Advance shall be made on or after the Maturity Date, and (iv) all other
provisions of this Agreement shall apply to Borrower's activities and
borrowings hereunder.
2.3 NOTE. The Loan shall be evidenced by the Note, and shall bear
interest and be payable to Lender upon the terms and conditions contained
therein, which include the following provisions. (In the event of any
conflict between any provision of this Agreement and the Note, the provisions
of this Agreement shall govern.)
2.3.1 Simple interest shall accrue on all Loan amounts that are
unpaid, at the Prime, calculated monthly in arrears.
2.3.2 All accrued interest shall be due and payable on all Loan
amounts monthly, with the first payment due on August 5, 1996, and with
subsequent monthly payments due on the 5th day of each month thereafter. All
outstanding Loan principal shall be due and payable on the Maturity Date.
2.3.3 The entire unpaid principal balance, all accrued and unpaid
interest, and all late charges and other amounts that are payable under the
Note shall be due and payable in full on the Maturity Date.
2.3.4 Each Advance made hereunder shall not exceed the maximum
available under Borrower's most recent Borrowing Base Certificate provided to
Lender.
2.3.5 Notwithstanding any provision of the Loan Documents, if
Lender shall notify Borrower that as a result of a Regulatory Change it is
unlawful for Lender to make, fund or maintain Advances at Prime, the
obligations of Lender to make additional Advances at Prime, shall be
suspended until Lender shall notify Borrower that the circumstances causing
such suspension no longer exist. All other obligations of Borrower hereunder
shall continue, however, to the fullest extent allowed by applicable law.
2.3.6 If any payment required under the Note is not paid within
ten (10) days after the date such payment is due, then, at the option of
Lender, Borrower shall pay a "late charge"
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Exhibit 10.5
equal to four percent (4%) of the amount of that payment to compensate Lender
for administrative expenses and other costs of delinquent payments. This late
charge may be assessed without notice, shall be immediately due and payable
and shall be in addition to all other rights and remedies available to Lender.
2.3.7 After maturity, including maturity upon acceleration, the
unpaid principal balance, all accrued and unpaid interest and all other
amounts payable under the Note shall bear interest at the Default Rate.
2.4 LETTERS OF CREDIT. Letters of Credit issued by Lender as provided
in this Agreement will have a maturity date of not more than twelve months
beyond the Maturity Date. Amounts drawn under each Letter of Credit will be
treated as Advances under this Agreement and the Note. In addition to and
without limiting the foregoing, if Lender so elects, amounts drawn under any
Letter of Credit may be reimbursable to the Lender as provided in a separate
promissory note in form substantially similar to the Note, and amounts owed
Lender as a result of drawings under such Letters of Credit may be secured by
a security interest in favor of Lender in a specific Account Receivable of
Borrower. Such security interest may, if Lender so elects, be created under a
security agreement that is separate from the Security Agreement or, if Lender
so elects, such security interest may be the security interest created by the
Security Agreement. In the absence of any written agreement of Lender and
Borrower to the contrary, such security interest shall be the security
interest created by the Security Agreement.
2.5 EXCESS BALANCE REPAYMENT. There shall be due and payable from
Borrower to Lender, and Borrower shall immediately repay to Lender, without
notice or demand, from time to time, any amount by which the outstanding
principal balance of the Loan exceeds the lesser of the Commitment or the
Borrowing Base.
2.6 PREPAYMENTS. Borrower may prepay the outstanding principal balance
of the Loan in whole or in part at any time prior to the Maturity Date,
without penalty or premium and without prior notice to Lender, provided that
such prepayment also includes accrued interest to the date of such prepayment
on the principal amount prepaid.
2.7 METHOD OF PAYMENT. All payments of principal of, and interest
payable under, the Note shall be made to Lender at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, before 2:00 p.m. (Salt Lake City, Utah time) in
immediately available funds. All payments made on the Note shall be applied,
to the extent of the amount thereof, in the following order: (i) first, to
the payment of costs, fees or other charges incurred in connection with the
Loan; (ii) second, to the payment of accrued interest on the Loan; and (iii)
third, to the reduction of the principal balance of the Loan.
2.8 CONDITIONS. Lender shall have no obligation to make any Advance
unless and until all of the conditions and requirements of this Agreement are
fully satisfied. However, Lender in its sole discretion may elect to make one
or more Advances prior to full satisfaction of one or more such conditions
and/or requirements. Notwithstanding that such an Advance or Advances are
made, such unsatisfied conditions and/or requirements shall not be waived or
released thereby. Borrower shall be and continue to be obligated to fully
satisfy such conditions and requirements, and Lender, at any time, in
Lender's sole discretion, may stop making Advances until all conditions and
requirements are fully satisfied.
2.9 OTHER ADVANCES BY LENDER. Lender, after giving ten (10) days
written notice to
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Exhibit 10.5
Borrower, from time to time, may make Advances in any amount in payment of
(i) interest accrued and payable upon the Loan, (ii) any charges and expenses
that are the obligation of Borrower under this Agreement or any Security
Document, and (iii) any charges or matters necessary to preserve the property
encumbered by the Security Documents or to cure any Event of Default.
2.10 ASSIGNMENT. Borrower shall have no right to any Advance other than
to have the same disbursed by Lender in accordance with the disbursement
provisions contained in this Agreement. Any assignment or transfer by
Borrower, whether voluntary or involuntary, of this Agreement or of any right
of Borrower under this Agreement shall not be binding upon or in any way
affect Lender without Lender's prior written consent; Lender may make
Advances under the disbursement provisions herein, notwithstanding any such
purported assignment or transfer that is or may be made without Lender's
prior written consent.
ARTICLE 3
FEES
3.1 NON-USAGE FEE. Borrower shall pay to Lender a non-usage fee in the
amount of 0.25 percent (0.25%) of the amount of the Commitment that is not
used by Borrower hereunder. The non-usage fee shall be paid quarterly in
arrears, and shall be calculated as 0.25% of the amount of unused Commitment
on the date that is the last day of each calendar quarter during the term of
this Agreement. Any non-usage fees owed under this Agreement shall be due and
payable within ten Business Days after the date that Borrower receives an
invoice therefor from Lender. The first non-usage fee under this Agreement
will be calculated on and as of September 30, 1996, and on the last day of
every calendar quarter thereafter during the term of this Agreement.
3.2 LETTER OF CREDIT FEES. Borrower shall also pay to Lender, in
addition to the non-usage fee described in the preceding Section, a letter of
credit fee in the amount of 1.5 percent (1.5%) per annum of the total face
amount of Letters of Credit that are issued and outstanding under this
Agreement. The letter of credit fees described in the preceding sentence
shall be paid at time of letter of credit issuance.
ARTICLE 4
SECURITY
4.1 SECURITY. So long as any Loan amount, principal, interest or any
other amount owed Lender under this Agreement remains unpaid, and until the
Note is paid in full, Borrower shall cause the Loans and all of Borrower's
obligations under this Agreement to be secured at all times by a valid and
effective security agreement (the "Security Agreement"), duly executed and
delivered by or on behalf of Borrower, granting Lender a valid and
enforceable security interest in all of the kinds and categories of personal
property described in the Security Agreement, including without limitation
Borrower's Accounts Receivable and inventory, wherever located, in, to, or
under which Borrower now has or hereafter acquires any right, title, or
interest, whether present, future, or contingent, and in Borrower's
expectancy to acquire such property, subject to no prior Liens except for
Permitted Liens.
4.2 FINANCING STATEMENTS. Borrower shall execute and deliver to Lender
for filing UCC-1 statements that will allow Lender to perfect its security
interest as provided in the Security Agreement.
4.3 SECURITY DOCUMENTS. All of the documents required by this Article 4
shall be in
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Exhibit 10.5
form satisfactory to Lender and Lender's counsel, and, together with any UCC
financing statements for filing and/or recording, and any other items
required by Lender to fully perfect and effectuate the liens and security
interests of Lender contemplated by the Security Agreement and this
Agreement, may heretofore or hereinafter be referred to as the ASecurity
Documents."
4.4 ASSIGNMENT OF PARTICULAR CONTRACTS. From time to time Lender may
wish to obtain a security interest in amounts that Borrower expects to
receive from completion of a particular contract for a customer, and/or in
benefits that Borrower expects to receive from performing Borrower's
obligations under such a contract, even before Borrower has completed work
under the contract sufficiently for such amounts or benefits to be considered
an Account Receivable of Borrower. In such event Lender shall be entitled to
inform Borrower of Lender's wish to receive a security interest in such
amounts, and Borrower shall immediately furnish Lender and Lender's counsel
with copies of all documents pertaining to such amounts and a report of work
currently completed and an estimate, to the best of Borrower's knowledge, of
the amount of Account Receivable that Borrower should record attributable to
the particular contract and the date when Borrower expects to be able to
record such amount as an Account Receivable of Borrower in Borrower's
financial statements. Lender shall then be entitled to prepare for Borrower's
execution and delivery any and all documents, agreements, financings
statements and other documents as Lender determines in its sole discretion
are necessary or proper to permit Lender to acquire a first priority security
interest in amounts that will be payable to Borrower under the particular
contract, and to perfect such security interest. When requested to do so by
Lender, Borrower shall provide Lender with information about all contracts to
which Borrower is a party that might be of interest to Lender for the
purposes described in this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Note is paid in full, Borrower agrees that:
5.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. Borrower shall
deliver, or cause to be delivered, to Lender each of the following:
5.1.1 CONSOLIDATED MONTHLY STATEMENTS OF BORROWER. As soon as
available, and in any event within thirty (30) days after the end of each
month, copies prepared by Borrower of the consolidated balance sheet of
Borrower as of the end of such month and consolidated statements of income of
Borrower for that month and for the portion of the fiscal year ending with
such month, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable
detail and fairly stated and prepared in accordance with GAAP, subject to
normal year end adjustments. Each set of financial statements supplied Lender
under this Section shall include a schedule of Borrower's "jobs in process."
5.1.2 CONSOLIDATED QUARTERLY STATEMENTS OF BORROWER. As soon as
available, and in any event within forty-five (45) days after the end of each
fiscal quarter, copies prepared by Borrower of Borrower's SEC form 10-Q with
notes and supporting schedules.
5.1.3 CONSOLIDATED ANNUAL STATEMENTS OF BORROWER. As soon as
available and in any event within ninety (90) days after the close of each
fiscal year of Borrower, consolidated financial statements of Borrower,
audited and prepared by independent certified public accountants of
recognized national standing and reputation, including Borrower's
consolidated balance sheet as of the close of such fiscal year and
consolidated statements of income of Borrower for such fiscal year, in each
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Exhibit 10.5
case setting forth in comparative form the figures for the preceding fiscal
year, all in reasonable detail and accompanied by an unqualified opinion
thereon of independent public accountants of recognized national standing
selected by Borrower and acceptable to Lender, to the effect that such
financial statements have been prepared in accordance with GAAP and that the
examination of such accounts in connection with such financial statements has
been made in accordance with generally accepted auditing standards and,
accordingly, includes such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances,
together with copies of Borrower's SEC form 10-K with notes and supporting
schedules.
5.1.4 QUARTERLY CERTIFICATE RESPECTING FINANCIAL COVENANTS. As
soon as available but in any event within thirty (30) days after the end of
each calendar quarter during the term of this Agreement, a certificate signed
by the chief financial officer of Borrower, or any other financial officer of
Borrower acceptable to Lender, setting forth in such level of detail as
Lender shall reasonably require a calculation of the Financial Covenants as
of the end of that calendar quarter and certifying as to Borrower's
compliance therewith. The first such certificate shall be delivered to Lender
by Borrower on or before April 30, 1996.
5.1.5 BORROWING BASE CERTIFICATE. Within fifteen (15) days after
the end of each month, the Borrowing Base Certificate for that month,
together with appropriate schedules of Accounts Receivable aging and other
supporting schedules and information.
5.1.6 COMPLIANCE CERTIFICATE OF BORROWER. Within fifteen (15) days
after the end of each month (except the last) and within ninety (90) days
after the end of each fiscal year of Borrower hereafter, a certificate in
substantially the form attached as Exhibit B, signed by an Authorized Officer
of Borrower, stating that a review of the activities of Borrower during such
month or year has been made under his supervision, that, as of such date,
Borrower has observed, performed and fulfilled each and every obligation and
covenant contained in this Agreement and no Event of Default exists under any
of the same or, if any Event of Default shall have occurred, specifying the
nature and status thereof, and stating that all financial statements of
Borrower delivered to Lender during the respective period pursuant to Section
5.01.01 and 5.01.03 hereof, to such officer's knowledge after due inquiry,
fairly present in all material respects the financial position of the
Borrower and the results of its operations at the dates and for the periods
indicated, and have been prepared in accordance with GAAP, subject to year
end audit and adjustments.
5.1.7 MANAGEMENT LETTERS. With the audited fiscal year-end
statements submitted under Section 5.01.03 above, the management letter, if
any, of Borrower's certified public accountants issued in connection with
such audit.
5.1.8 OTHER INFORMATION. Such other information concerning the
business, properties or financial condition of Borrower as Lender shall
reasonably request.
5.2 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrower will pay and
discharge (i) all income taxes and payroll taxes, (ii) all taxes,
assessments, fees and other governmental charges imposed upon it or upon its
income or profits, or upon any property belonging to it, before delinquent,
which become due and payable, (iii) all lawful claims (including claims for
labor, materials and supplies), which, if unpaid, might become a Lien upon
any of its property and (iv) all of its Indebtedness as it becomes due and
payable, except as prohibited hereunder; provided, however, that it shall not
be required to pay any such tax, assessment, charge, levy, claims or
Indebtedness if and so long as the amount, applicability or validity thereof
shall currently be contested in good faith by appropriate actions
Domestic
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Exhibit 10.5
and appropriate accruals and reserves therefor have been established in
accordance with GAAP.
5.3 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS. Borrower
will preserve and maintain its corporate existence and all of its rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, and conduct its business in an orderly and efficient manner
consistent with good business practices.
5.4 NOTICE OF DEFAULT. Borrower will furnish to Lender immediately upon
becoming actually aware of the existence of any event or condition that
constitutes an Event of Default, a written notice specifying the nature and
period of existence thereof and the action which Borrower is taking or
proposes to take with respect thereto.
5.5 OTHER NOTICES. Borrower will promptly notify Lender of (a) any
Material Adverse Effect, (b) any waiver, release or default under any
Significant Debt Agreement, (c) except as to any claim in an amount less than
$50,000, not covered as a result of an insurance deductible provision, any
claim not covered by insurance against Borrower or any of Borrower's
properties, and (d) the commencement of, and any material determination in,
any litigation with any third party or any proceeding before any Governmental
Authority affecting it, except litigation or proceedings which, if adversely
determined, would not have a Material Adverse Effect.
5.6 COMPLIANCE WITH LOAN DOCUMENTS. Borrower will comply with any and
all covenants and provisions of this Agreement, the Note and all other Loan
Documents.
5.7 COMPLIANCE WITH SIGNIFICANT DEBT AGREEMENTS. Borrower will comply
in all material respects with all Significant Debt Agreements.
5.8 OPERATIONS AND PROPERTIES. Borrower will keep in good working order
and condition, ordinary wear and tear excepted, all of its assets and
properties which are necessary to the conduct of its business.
5.9 BOOKS AND RECORDS; ACCESS. Borrower will give any authorized
representative of Lender access during normal business hours to, and permit
such representative to examine, copy or make excerpts from, any and all
books, records and documents in its possession of and relating to the Loan,
and to inspect any of its properties. Borrower will maintain complete and
accurate books and records of its transactions in accordance with good
accounting practices. Examinations of Borrower's books, records and documents
as provided in this Section shall be at Lender's expense so long as no Event
of Default has occurred hereunder, and shall be at Borrower's expense if and
for as long as any Event of Default has occurred and is continuing hereunder.
The provisions of this Section shall not limit the provisions of Section 7.02
of this Agreement, which provide that quarterly inspections of Borrower's
business operations shall always be at Borrower's expense.
5.10 COMPLIANCE WITH LAW. Borrower will comply with all applicable laws,
rules, regulations, and all final, nonappealable orders of any Governmental
Authority applicable to it or any of its property, business operations or
transactions, a breach of which could result in a Material Adverse Effect.
5.11 AUTHORIZATIONS AND APPROVALS. Borrower will promptly obtain, from
time to time at its own expense, all such governmental licenses,
authorizations, consents, permits and approvals as may be required to enable
it to comply with its obligations hereunder and under the other Loan
Domestic
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Exhibit 10.5
Documents and to operate its businesses as presently or hereafter duly
conducted.
5.12 ERISA COMPLIANCE. With respect to its Plans, Borrower shall (a) at
all times comply with the minimum funding standards set forth in Section 302
of ERISA and Section 412 of the Code or shall have duly obtained a formal
waiver of such compliance from the proper authority; (b) at Lender's request,
within thirty (30) days after the filing thereof, furnish to Lender copies of
each annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, in connection with each of its
Plans for each year of the plan; (c) notify Lender within a reasonable time
of any fact, including, but not limited to, any Reportable Event arising in
connection with any of its Plans, which constitutes grounds for termination
thereof by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan, together with a
statement, if requested by Lender, as to the reason therefor and the action,
if any, proposed to be taken with respect thereto; and (d) furnish to Lender
within a reasonable time, upon Lender's request, such additional information
concerning any of its Plans as may be reasonably requested.
5.13 FURTHER ASSURANCES. Borrower will make, execute or endorse, and
acknowledge and deliver or file or cause the same to be done, all such
notices, certifications and additional agreements, undertakings or other
assurances, and take any and all such other action, as Lender may, from time
to time, deem reasonably necessary or proper to fully evidence the Loan.
5.14 NEWS RELEASES. Borrower shall promptly forward to Lender copies of
all news releases made by it to the news media as to anything of material
significance with respect to its financial status.
5.15 INSURANCE. Borrower shall maintain in full force and effect at all
times all insurance coverages required under the terms of this Agreement
and/or the Security Documents to which it is a party. In addition, it shall
maintain in full force and effect at all times:
5.15.1 Policies of insurance evidencing personal liability and
property damage liability coverages in amounts not less than $2,000,000.00
(combined single limit for bodily injury and property damage), and an
umbrella excess liability coverage in an amount not less than $20,000,000.00
shall be in effect with respect to Borrower.
5.15.2 Policies of workers' compensation insurance in amounts and
with coverages as legally required.
5.15.3 Without limiting the foregoing, Borrower shall at all times
maintain insurance coverages in scope and amount not less than, and not less
extensive than, the scope and amount of insurance coverages customary in the
trades or businesses in which it is from time to time engaged. All of the
aforesaid insurance coverages shall be issued by insurers reasonably
acceptable to Lender. Copies of all policies of insurance evidencing such
coverages in effect from time to time shall be delivered to Lender prior to
the initial Advance under this Agreement and upon reasonable notice upon
issuance of new policies thereafter. From time to time, promptly upon
Lender's request, Borrower shall provide evidence satisfactory to Lender (i)
that required coverage in required amounts is in effect, and (ii) that Lender
is shown as an additional insured and loss payee with respect to all such
coverages, as Lender's interest may appear, by standard (non-attribution)
loss payable endorsement, additional insured endorsement, insurer's
certificate or other means acceptable to Lender in its reasonable discretion.
At Lender's option, Borrower shall deliver to Lender certified copies of all
such policies of insurance in
Domestic
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Exhibit 10.5
effect from time to time, to be retained by Lender so long as Lender shall
have any commitment to lend hereunder and so long as any amounts remain
unpaid under the Note. All such insurance policies shall provide for at least
thirty (30) days prior written notice of the cancellation or modification
thereof to Lender.
5.16 CHANGE IN CONTROL. Should there be a Change in Control as to
Borrower, the Loans and all amounts owed under the Note shall be immediately
due and payable.
ARTICLE 6
NEGATIVE COVENANTS
Until the Note is paid in full, Borrower agrees that:
6.1 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Borrower will not amend its
organizational documents if the result thereof could result in the occurrence
directly or indirectly of a Material Adverse Effect.
6.2 MARGIN STOCK. Borrower shall not use any proceeds of the Loans, or
any proceeds of any other or future financial accommodation from Lender for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any "margin stock", as that term is defined in Regulation U or to
reduce or retire any indebtedness undertaken for such purposes within the
meaning of said Regulation U, and will not use such proceeds in a manner that
would involve Borrower in a violation of Regulation U or of any other
Regulation of the Board of Governors of its Federal Reserve System, nor use
such proceeds for any purpose not permitted by Section 7 of the Securities
Exchange Act of 1934, as amended, or any of the rules or regulations
respecting the extensions of credit promulgated thereunder.
6.3 FISCAL YEAR. Except with prior notice to Lender, Borrower will not
change the times of commencement or termination of its fiscal year or other
accounting periods; or change its methods of accounting other than to conform
to GAAP applied on a consistent basis. After any such changes, its method of
accounting shall conform to GAAP.
6.4 LIENS. On and after the date hereof, it will not create or suffer
to exist Liens upon the Collateral, except (i) Liens, if any, for the benefit
of Lender, and (ii) Permitted Liens.
6.5 DIVIDENDS. It will not declare or pay cash dividends.
6.6 INSIDER LOANS. Borrower will not make loans, receivables or
investments, on a consolidated basis, to officers of Borrower or any other
companies of said officers, except for normal advances for travel and
entertainment.
6.7 STOCK BUY BACKS. Unless pursuant to and as required by any
qualified employee stock purchase plan, Borrower will not buy back any of
Borrower's stock from any shareholder of Borrower.
6.8 TRANSFER COLLATERAL. It will not assign, transfer or convey any of
its right, title and interest in the Collateral encumbered by the Security
Documents except in the ordinary course of Borrower's business and for good
and full consideration.
6.9 FINANCIAL COVENANTS. Borrower will not permit:
Domestic
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Exhibit 10.5
6.9.1 Its Current Ratio to be less than 1.30 at the end of any
fiscal quarter;
6.9.2 Its Debt/Tangible Net Worth Ratio to be more than 1.25 at
the end of any fiscal quarter;
6.9.3 Its Tangible Net Worth to be less than $19,000,000.00 at the
end of any fiscal quarter; and
6.9.4 Its DSC to be less than 1.5 at the end of any fiscal quarter.
6.10 FISCAL 1996 CAPITAL EXPENDITURES. Borrower shall not make
expenditures for capital investment in equipment or property for Borrower's
fiscal year 1996 in excess of $3,000,000.
ARTICLE 7
CONDITIONS PRECEDENT
The obligation of Lender to make the Loans and to make the initial
Advance hereunder is subject to the full and prior satisfaction of each of
the following conditions precedent and, as to each future Advance, to the
full prior satisfaction at each such time of each of the conditions precedent
in Sections 7.04 and 7.05 hereof:
7.1 INITIAL ADVANCE. Prior to its making the initial Advance, Lender
shall have received original copies of all of the following, each in form and
substance satisfactory to Lender:
7.1.1 THIS AGREEMENT. This Agreement, duly executed and delivered
to Lender by Borrower.
7.1.2 THE NOTE. The Note, duly executed, drawn to the order of
Lender and otherwise as provided herein.
7.1.3 OFFICER'S CERTIFICATE. A certificate signed by an Authorized
Officer of Borrower, stating that (to the best knowledge and belief of
Borrower, after reasonable inquiry and review of matters pertinent to the
subject matter of such certificate): (i) all of the representations and
warranties contained in this Agreement and in the other Loan Documents are,
in all material respects, true and correct as of the date hereof (other than
those of such representations which by their express terms speak to a date
prior to such date, which representations are, in all material respects, true
and correct as of such respective dates); (ii) no event has occurred and is
continuing, or would result from the advance of the proceeds of the Loans,
which would constitute an Event of Default, and (iii) no change or changes
having a Material Adverse Effect have occurred in the business or financial
condition of Borrower since the date of the last financial statements of
Borrower heretofore delivered to Lender.
7.1.4 ORGANIZATIONAL DOCUMENTS. A copy of the current Certificate
of Incorporation (or other charter documents, however named) of Borrower,
including all amendments thereto, certified as current and complete by the
appropriate authority of the state of said corporation's incorporation,
together with evidence of said corporation's good standing in said
corporation's state of incorporation and in every other state in which it is
doing business or the conduct of said corporation's business requires such
standing for the enforcement of material contracts.
Domestic
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Exhibit 10.5
7.1.5 SECRETARY'S CERTIFICATE. A certificate of the corporate
secretary of Borrower, signed by the duly appointed secretary thereof and
issued as of the Closing Date, certifying that (i) attached thereto is a true
and complete copy of the corporate by-laws of said corporation in effect on
the date of passage of the corporate resolutions described immediately below
and at all subsequent times to and including the date of the certificate,
(ii) attached thereto is a true and complete copy of the resolutions adopted
by the Board of Directors of said corporation authorizing the Loans, the
execution, delivery, and performance of this Agreement, the Note, the Loan
Documents, and all advances of credit hereunder, and that such resolutions
have not been modified, rescinded, or amended and are in full force and
effect, (iii) no change has been made to said corporation's charter documents
other than as reflected in the certified copies submitted in connection with
the delivery of this Agreement or as approved in writing by Lender, and (iv)
set forth therein and appropriately identified are the names, current
official titles, and signatures of the officers of said corporation
authorized to sign this Agreement and other documents to be delivered
hereunder and/or to act as Authorized Officers hereunder.
7.1.6 SECURITY AGREEMENT. The Security Agreement, duly executed
and delivered to Lender by Borrower.
7.1.7 FILINGS. Completion of all filings necessary to perfect
Lender's Liens with respect to the Collateral.
7.1.8 BORROWING BASE CERTIFICATE. An initial Borrowing Base
Certificate, dated as of the Closing Date.
7.1.9 INSURANCE. Original copies of policies of insurance and
certificates of insurance in compliance with Section 5.15 hereof.
7.1.10 ADDITIONAL INFORMATION. Such other information and documents
as may reasonably be required by Lender or Lender's counsel.
7.2 INSPECTION. Also prior to its making the initial Advance, Lender
shall have satisfactorily completed a pre-loan credit quality inspection of
Borrower's business operations in Salt Lake City, Utah. After the first such
inspection, Lender shall be entitled to conduct, at Borrower's expense,
credit quality inspections of Borrower's business operations in Salt Lake
City, Utah on a quarterly basis. Satisfactory completion of each such future
inspection shall be a condition precedent to Lender's obligation to make any
Advance after the initial Advance hereunder.
7.3 SUBSEQUENT ADVANCES. Prior to its making any Advance after the
initial Advance, Lender shall have received from Borrower a Borrowing Base
Certificate that is less than thirty (30) days old and that shows, by proper
calculations, that Borrower is entitled to receive an additional Advance
under the terms of this Agreement. Borrower shall be entitled to submit a new
Borrowing Base Certificate justifying an additional Advance at any time.
7.4 NO EVENT OF DEFAULT. It shall be a condition precedent to Lender's
obligation to make any Advance under this Agreement that no Event of Default
known to Borrower shall have occurred and be continuing, or result from
Lender's making of the Advance.
7.5 NO MATERIAL ADVERSE CHANGE. It shall be a condition precedent to
Lender's obligation to make any Advance under this Agreement that since the
date of the most recent financial statements provided to Lender by Borrower,
no change shall have occurred in the business or financial
Domestic
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Exhibit 10.5
condition of Borrower that could have a Material Adverse Effect.
7.6 REPRESENTATIONS AND WARRANTIES. It shall be a condition precedent
to Lender's obligation to make any Advance under this Agreement that the
representations and warranties of Borrower contained in this Agreement shall
be true and correct in all material respects, with the same force and effect
as though made on the date of the requested Advance, (other than those of
such representations which by their express terms speak to a date prior to
that date, which representations shall, in all material respects, be true and
correct as of such respective date).
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans, Borrower represents and warrants to
Lender that:
8.1 ORGANIZATION AND GOOD STANDING. Borrower is duly organized in the
State of Utah, and is validly existing and in good standing under the laws of
the State of Utah. Borrower has the legal power and authority to own its
properties and assets and to transact the business in which Borrower is
engaged and is or will be qualified in those states or foreign countries
wherein the nature of Borrower's proposed business and property will make
such qualifications necessary or appropriate in the future.
8.2 AUTHORIZATION AND POWER. Borrower has the corporate power and
requisite authority to execute, deliver and perform this Agreement, the Note
and the other Loan Documents to be executed by Borrower; Borrower is duly
authorized to, and has taken all action, corporate or otherwise, necessary to
authorize Borrower to, execute, deliver and perform this Agreement, the Note
and all other Loan Documents to which Borrower is a party and Borrower is and
will continue to be duly authorized to perform its obligations under this
Agreement, the Note and such other Loan Documents.
8.3 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of
this Agreement, the Note or the other Loan Documents to which Borrower is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, (a) will materially contravene or conflict
with: (i) any provision of law, statute or regulation to which Borrower is
subject, (ii) any judgment, license, order or permit applicable to Borrower,
(iii) any indenture, agreement, mortgage, deed of trust, or other agreement
or instrument to which Borrower is a party or by which it may be bound, or to
which Borrower may be subject, the violation of which would cause or result
in a Material Adverse Effect, or (b) will violate any provision of Borrower's
Certificate of Incorporation. No consent, approval, authorization or order of
any court or Governmental Authority or other Person is required in connection
with the execution and delivery by Borrower of the Loan Documents or to
consummate the transactions contemplated hereby or thereby, or if required,
such consent, approval, authorization or order shall have been obtained.
8.4 ENFORCEABLE OBLIGATIONS. This Agreement, the Note and the other
Loan Documents are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms,
except as limited by bankruptcy, insolvency or other laws or equitable
principles of general application relating to the enforcement of creditors=
rights.
8.5 FINANCIAL CONDITION. Borrower has delivered to Lender copies of the
Borrower's audited consolidated financial statements as of December 31, 1995,
and unaudited quarterly financial statements as of March 31, 1996. Such
financial statements, in all material respects, fairly present the
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Exhibit 10.5
financial position of Borrower as of such date and have been prepared in
accordance with GAAP subject, in the case of unaudited financial statements,
to normal year end adjustments. Since the date thereof, Borrower has not
discovered any obligations, liabilities or indebtedness (including contingent
and indirect liabilities and obligations or unusual forward or long-term
commitments) which in the aggregate are material and adverse to the financial
position or business of Borrower that should have been but were not reflected
in such financial statements. All changes having a Material Adverse Effect
that have occurred since January 1, 1995 have been disclosed to Lender in
writing by Borrower.
8.6 FULL DISCLOSURE. There is no material fact that Borrower has not
disclosed to Lender that would have a Material Adverse Effect. No certificate
or statement delivered herewith or heretofore by Borrower to Lender in
connection with negotiations of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary to keep the
statements contained herein or therein from being misleading.
8.7 NO DEFAULT. No event or condition has occurred and is continuing
that constitutes an Event of Default.
8.8 SIGNIFICANT DEBT AGREEMENTS. Borrower is not in default in any
material respect under any Significant Debt Agreement.
8.9 NO LITIGATION. There are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to Borrower's actual
knowledge overtly threatened, against Borrower that would, if adversely
determined, have a Material Adverse Effect.
8.10 TAXES. Borrower has filed or caused to be filed all returns and
reports which are required to be filed by any jurisdiction, and has paid or
made provision for the payment of all taxes, assessments, fees or other
governmental charges imposed upon Borrower's properties, income or
franchises, as to which the failure to file or pay would have a Material
Adverse Effect, except such assessments or taxes, if any, which are being
contested in good faith by appropriate proceedings.
8.11 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) PBGC has not instituted proceedings to terminate any
Plan; (c) neither the Borrower, any member of the Controlled Group, nor any
duly-appointed administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or payable or
(ii) has instituted or intends to institute proceedings to terminate any Plan
under Section 4041 or 4041A of ERISA; and (d) each Plan of Borrower has been
maintained and funded in all material respects in accordance with the Plan's
terms and in all material respects in accordance with all provisions of ERISA
applicable thereto. Neither the Borrower nor any of its Subsidiaries
participates in, or is required to make contributions to, any Multi-employer
Plan (as that term is defined in Section 3(37) of ERISA).
8.12 COMPLIANCE WITH LAW. Borrower is in compliance with all laws,
rules, regulations, orders and decrees that are applicable to Borrower, or
its properties, noncompliance with which would have a Material Adverse Effect.
8.13 SURVIVAL OF REPRESENTATIONS, ETC. All representations and
warranties by Borrower herein shall survive the making of the Loans and the
execution and delivery of the Note; any investigation at any time made by or
on behalf of Lender shall not diminish Lender's right to rely on the
representations and warranties herein.
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Exhibit 10.5
8.14 RECITALS. The recitals and statements of intent appearing in this
Agreement are true and correct.
8.15 NO STOCK PURCHASE. No part of the proceeds of any financial
accommodation made by Lender in connection with this Agreement will be used
to purchase or carry Amargin stock," as that term is defined in Regulation U,
or to extend credit to others for the purpose of purchasing or carrying such
margin stock.
8.16 SOLVENT. Borrower (both before and after giving effect to the Loan
contemplated hereby) is solvent, has assets having a fair value in excess of
the amount required to pay its probable liabilities on Borrower's existing
debts as they become absolute and matured, and has, and will have, access to
adequate capital for the conduct of Borrower's business and the ability to
pay Borrower's debts from time to time incurred in connection therewith as
such debts mature.
8.17 ADVANCES. Each request for an Advance or for the extension of any
financial accommodation by Lender whatsoever shall constitute an affirmation
that the representations and warranties contained herein are, true and
correct as of the time of such request. All representations and warranties
made herein shall survive the execution of this Agreement, all advances of
proceeds of the Loans and the execution and delivery of all other documents
and instruments in connection with the Loans and/or this Agreement, so long
as Lender has any commitment to lend hereunder and until the Loans have been
paid in full and all of Borrower's obligations under this Agreement, the Note
and all Security Documents have been fully discharged.
8.18 TITLE TO COLLATERAL. Borrower has good and marketable title to the
Collateral, free of any Liens except for Permitted Liens, if any.
8.19 SECURITY DOCUMENTS. The liens, security interests and assignments
created by the Security Documents will, when granted, be valid, effective and
enforceable first priority liens, security interests and assignments, except
to the extent (if any) otherwise agreed in writing by Lender.
ARTICLE 9
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
9.1.1 Failure by Borrower to pay any principal of, or interest on,
the Note when the same shall become due or payable and such failure continues
for five (5) days after notice thereof to Borrower;
9.1.2 Any failure or neglect by Borrower to perform or observe any
of the covenants, conditions, provisions or agreements of Borrower contained
herein, or in any of the other Loan Documents (other than a failure or
neglect described in one or more provisions of this Section 9.01) and such
failure or neglect continues unremedied for a period of thirty (30) days
after notice thereof from Lender to Borrower;
9.1.3 Any material warranty, representation or statement contained
in this Agreement or any of the other Loan Documents, or which is contained
in any certificate or statement furnished or made to Lender pursuant hereto
or in connection herewith or with the Loans, shall be or
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Exhibit 10.5
shall prove to have been false when made or furnished;
9.1.4 The occurrence of any material Aevent of default" or
Adefault" by Borrower under any agreement, now or hereafter existing, to
which Lender and Borrower are a party;
9.1.5 Borrower shall (i) fail to pay any Indebtedness of Borrower
due under any Significant Debt Agreement, or any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) or within any applicable grace period, (ii) fail to
perform or observe any term, covenant, or condition on its part to be
performed or observed under any agreement or instrument relating to such
Indebtedness, within any applicable grace period when required to be
performed or observed, if the effect of such failure to perform or observe is
to accelerate the maturity of such Indebtedness, or any such Indebtedness
shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled prepayment), prior to the stated maturity
thereof, or (iii) allow the occurrence of any materially adverse event of
default with respect to such Indebtedness;
9.1.6 Any one or more of the Loan Documents shall have been
determined to be invalid or unenforceable against Borrower executing the same
in accordance with the respective terms thereof, or shall in any way be
terminated or become or be declared ineffective or inoperative, so as to deny
Lender the substantial benefits contemplated by such Loan Document or Loan
Documents;
9.1.7 Borrower shall (i) apply for or consent to the appointment
of a receiver, trustee, custodian, intervenor or liquidator of itself or of
all or a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy or admit in writing that it is unable to pay its debts as they
become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization of an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws, (v) file
an answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing;
9.1.8 An involuntary petition or complaint shall be filed against
Borrower, seeking bankruptcy or reorganization of Borrower, or the
appointment of a receiver, custodian, trustee, intervenor or liquidator of
Borrower, or all or substantially all of its assets, and such petition or
complaint shall not have been dismissed or stayed within sixty (60) days of
the filing thereof; or an order, order for relief, judgment or decree shall
be entered by any court of competent jurisdiction or other competent
authority approving a petition or complaint seeking reorganization of
Borrower, appointing a receiver, custodian, trustee, intervenor or liquidator
of Borrower, or all or substantially all of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of
sixty (60) days;
9.1.9 Any final judgment(s) (excluding those the enforcement of
which is suspended pending appeal) for the payment of money in excess of the
sum of $50,000.00 in the aggregate (other than any judgment covered by
insurance where coverage has been acknowledged by the insurer) shall be
rendered against Borrower, and such judgment or judgments shall not be
satisfied, settled, bonded or discharged at least ten (10) days prior to the
date on which any of its assets could be lawfully sold to satisfy such
judgment;
9.1.10 Either (i) proceedings shall have been instituted to
terminate, or a notice of termination shall have been filed with respect to,
any Plans (other than a Multi-Employer Pension Plan as that term is defined
in Section 4001(a)(3) of ERISA) by Borrower, any member of the Controlled
Domestic
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Exhibit 10.5
Group, PBGC or any representative of any thereof, or any such Plan shall be
terminated, in each case under Section 4041 or 4042 of ERISA, and such
termination shall give rise to a liability of the Borrower or the Controlled
Group to the PBGC or the Plan under ERISA having an effect in excess of
$50,000.00 or (ii) a Reportable Event, the occurrence of which would cause
the imposition of a lien in excess of $50,000.00 under Section 4062 of ERISA,
shall have occurred with respect to any Plan (other than a Multi-Employer
Pension Plan as that term is defined in Section 4001(a)(3) of ERISA) and be
continuing for a period of sixty (60) days;
9.1.11 Any of the following events shall occur with respect to any
Multi-Employer Pension Plan (as that term is defined in Section 4001(a)(3) of
ERISA) to which Borrower contributes or contributed on behalf of its
employees and Lender determines in good faith that the aggregate liability
likely to be incurred by Borrower, as a result of any of the events specified
in Subsections (i), (ii) and (iii) below, will have an effect in excess of
$50,000.00; (i) Borrower incurs a withdrawal liability under Section 4201 of
ERISA; (ii) any such plan is Ain reorganization" as that term is defined in
Section 4241 of ERISA; or (iii) any such Plan is terminated under Section
4041A of ERISA;
9.1.12 The occurrence of a Change in Control without the written
consent of Lender;
9.1.13 The dissolution, liquidation, sale, transfer, lease or
other disposal of all or substantially all of the assets or business of
Borrower; or
9.1.14 Any levy or execution upon, or judicial seizure of, any
property of Borrower that has a fair market value in excess of $50,000.00
that is not bonded or released within thirty (30) days.
9.2 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
occurred and be continuing, then Lender may, at its sole option, exercise any
one or more of the following rights and remedies, and any other remedies
provided in any of the Loan Documents, as Lender in its sole discretion may
deem necessary or appropriate, all of which remedies shall be deemed
cumulative, and not alternative: (i) cease making Advances or extensions of
financial accommodations in any form to or for the benefit of Borrower and
declare the principal of, and all interest then accrued on, the Note and any
other liabilities hereunder to be forthwith due and payable, whereupon the
same shall become immediately due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of intention to
accelerate or other notice of any kind all of which Borrower hereby expressly
waives, anything contained herein or in the Note to the contrary
notwithstanding, (ii) reduce any claim to judgment, and/or (iii) without
notice of default or demand, pursue and enforce any of Lender= rights and
remedies under the Loan Documents, or otherwise provided under or pursuant to
any applicable law or agreement; provided, however, that if any Event of
Default specified in Sections 9.01.07 or 9.01.08 shall occur, the principal
of, and all interest on, the Note and other liabilities hereunder shall
thereupon become due and payable concurrently therewith, without any further
action by Lender and without presentment, demand, protest, notice of default,
notice of acceleration or of intention to accelerate or other notice of any
kind, all of which Borrower hereby expressly waives.
9.3 RIGHT OF SET OFF. Upon the occurrence and during the continuance of
any Event of Default, Lender is hereby authorized at any time and from time
to time, without notice to Borrower (any such notice being expressly waived
by Borrower), to set off and apply any and all moneys, securities or other
property of Borrower and the proceeds therefrom, now or hereafter held or
received by or in transit to Lender or its agents, from or for the account of
Borrower, whether for safe keeping, custody,
Domestic
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Exhibit 10.5
pledge, transmission, collection or otherwise, and also upon any and all
deposits (general or special) and credits of Borrower, and any and all claims
of Borrower against Lender at any time existing. Lender agrees promptly to
notify Borrower after any such set off and application, provided that the
failure to give such notice shall not affect the validity of such set off and
application. The rights of Lender under this Section 9.03 are in addition to
other rights and remedies (including, without limitation, other rights of set
off) which Lender may have.
9.4 PERFORMANCE BY LENDER. Should Borrower fail to perform any
covenant, duty or agreement with respect to the payment of taxes, obtaining
licenses or permits, or any other requirement contained herein or in any of
the Loan Documents within the period provided herein, if any, for correction
of such failure, Lender may, at its option, perform or attempt to perform
such covenant, duty or agreement on behalf of Borrower. In such event,
Borrower shall, at the request of Lender, promptly pay any amount expended by
Lender in such performance or attempted performance to Lender at its main
office in Salt Lake City, Utah together with interest thereon at the Default
Rate, from the date of such expenditure until paid. Notwithstanding the
foregoing, it is expressly understood that Lender does not assume any
liability or responsibility for the performance of any duties of Borrower
hereunder or under any of the Loan Documents or other control over the
management and affairs of Borrower.
ARTICLE 10
MISCELLANEOUS
10.1 MODIFICATION. All modifications, consents, amendments or waivers
of any provision of any Loan Document, or consent to any departure by
Borrower therefrom, shall be effective only if the same shall be in writing
and accepted by Lender.
10.2 WAIVER. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other further
exercise thereof or the exercise of any other right. The rights of Lender
hereunder and under the Loan Documents shall be in addition to all other
rights provided by law. No modification or waiver of any provision of this
Agreement, the Note or any Loan Documents, nor consent to departure
therefrom, shall be effective unless in writing and no such consent or waiver
shall extend beyond the particular case and purpose involved. No notice or
demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.
10.3 PAYMENT OF EXPENSES. Borrower shall pay all costs and expenses of
Lender (including, without limitation, the attorneys= fees of Lender's legal
counsel) incurred by Lender in connection with the documentation of the
Loan, and the preservation and enforcement of Lender's rights under this
Agreement, the Note, and/or the other Loan Documents, and any filing and
recording fees; provided, however, that notwithstanding the aforesaid,
with respect to any legal action between the parties hereto that is pursued
to judgment the prevailing party only shall be reimbursed by the other party
for all costs and expenses (including, without limitation, reasonable
attorneys= fees and costs) incurred in connection with the preservation and
enforcement of its rights under this Agreement, the Note and/or other Loan
Documents. In addition, Borrower shall pay all costs and expenses of Lender
in connection with the negotiation, preparation, execution and delivery of
any and all amendments, modifications and supplements of or to this
Agreement, the Note or any other Loan Document.
10.4 NOTICES. Except for telephonic notices permitted herein, any
notices or other communications required or permitted to be given by this
Agreement or any other documents and
Domestic
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Exhibit 10.5
instruments referred to herein must be (i) given in writing and
personally delivered or mailed by prepaid certified or registered
mail, or (ii) made by facsimile delivered or transmitted, to the
party to whom such notice or communication is directed, to the
address of such party as follows:
Borrower: Chief Financial Officer
DAW Technologies
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Lender: Corporate Banking Department
US Bank of Utah
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Any notice to be personally delivered may be delivered to the principal
offices (determined as of the date of such delivery) of the party to whom
such notice is directed. Any such notice or other communication shall be
deemed to have been given (whether actually received or not) on the day it is
personally delivered as aforesaid; or, if mailed, on the third day after it
is mailed as aforesaid; or, if transmitted by telefacsimile, on the day that
such notice is transmitted as aforesaid if such day is a Business Day, and
otherwise in the case of any notice transmitted by telefacsimile on other
than a Business Day, on the next Business Day. Any party may change its
address for purposes of this Agreement by giving notice of such change to the
other parties pursuant to this Section 10.04.
10.5 GOVERNING LAW. This Agreement has been prepared, is being executed
and delivered, and is intended to be performed in the State of Utah. The
substantive laws of the State of Utah and the applicable federal laws of the
United States of America shall govern the validity, construction,
enforcement and interpretation of this Agreement and all of the other Loan
Documents, without regard to Utah conflicts of law rules.
10.6 INVALID PROVISIONS. If any provision of any Loan Document is held
to be illegal, invalid or unenforceable under present or future laws during
the term of this Agreement, such provision shall be fully severable; such
Loan Document shall be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part of such Loan Document;
and the remaining provisions of such Loan Document shall remain in full force
and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from such Loan Document. Furthermore, in lieu
of each such illegal, invalid or unenforceable provision there shall be added
as part of such Loan Document a provision mutually agreeable to Borrower and
Lender as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
10.7 BINDING EFFECT. The Loan Documents shall be binding upon and inure
to the benefit of Borrower and Lender and their respective successors,
assigns and legal representatives; provided, however, that Borrower may not,
without the prior written consent of Lender, assign any rights, powers,
duties or obligations thereunder.
10.8 ENTIRETY. The Loan Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and
Domestic
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Exhibit 10.5
thereof.
10.9 HEADINGS. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Agreement.
10.10 SURVIVAL. All representations and warranties made by Borrower
herein shall survive delivery of the Note and the making of the Loans.
10.11 NO THIRD PARTY BENEFICIARY. The parties do not intend the
benefits of this Agreement to inure to any third party, nor shall this
Agreement be construed to make or render Lender liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property
owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Note,
or in any other Loan Document, or any conduct or course of conduct by any or
all of the parties hereto, before or after signing this Agreement or any of
the other Loan Documents, neither this Agreement nor any other Loan Document
shall be construed as creating any right, claim or cause of action against
Lender, or any of its officers, directors, agents or employees, in favor of
any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by Borrower, nor to any other person or entity other than
Borrower.
10.12 SCHEDULES AND EXHIBITS INCORPORATED. All schedules and exhibits
attached hereto are hereby incorporated into this Agreement by each reference
thereto as if fully set forth at each such reference.
10.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which, when so executed, shall be deemed an original
but all such counterparts shall constitute but one and the same agreement.
Domestic
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Exhibit 10.5
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on the dates set forth below, to be effective as of the day and
year first above written.
US Bank of UTAH
Date: July 25, 1996 By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------- ----------------------------------
Name: Same
---------------------------
Title: Vice President
---------------------------
DAW TECHNOLOGIES, INC.
Date: July 25, 1996 By: /s/ ▇▇▇▇▇ ▇. Grow
-------------------- ----------------------------------
Name: Same
---------------------------
Title: Executive Vice President/CFO
---------------------------
Date: July 25, 1996 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-------------------- ----------------------------------
Name: Same
---------------------------
Title: President/CEO
---------------------------
-25-
LOAN AGREEMENT
Borrower: DAW TECHNOLOGIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇(▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: U.S. Bank to Utah
International Banking
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ U111
THIS LOAN AGREEMENT between DAW TECHNOLOGIES INC. ("Borrower") and U.S. Bank
to Utah ("Lender") Is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations Including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations together with all future loans and financial accommodations
from Lender to Borrower, are referred to In this Agreement Individually as
the "Loan" and collectively as the "Loans." Borrower understands and agrees
that: (a) In granting, renewing, or extending any Loan, Lender Is retying
upon Borrower's representations, warranties, and agreements, as set forth In
this Agreement. (b) the granting, renewing, or extending of any Loan by
Lender d all times shall be subject to Lender's sole judgment and discretion;
and (c) all such Loans shall be and shall remain subject to the following
terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of November 12,1996, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined In this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to fume.
Account. The word "Account" means a trade account, account receivable, or
other right to payment for goods sold or services rendered owing to Borrower
(or to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity
obligated upon an Account.
Advance. The word "Advance", means a disbursement of Loan funds under this
Agreement.
Borrower. The word "Borrower" means DAW TECHNOLOGIES, INC.. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates:
Exim
1
Exhibit 10.5
Borrowing Base. The words Borrowing Base, mean, as determined by Lender from
time to time, the lesser of (a) S3,500,000.00; or (b) 9o.oon% of the
aggregate amount of Eligible Accounts.
Business Day. The words "Business Day, mean a day on which commercial banks
are open for business in the State of Utah.
CERCLA. The word ~CERCLA means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and Income, plus depreciation and amortization.
Collateral. The word "Collateral" means and includes without limitation all
properly end assets granted as collateral security for a Loan, whether real
or personal properly, whether granted directly or indirectly, whether granted
now or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, tease or consignment Intended as a
security device, or any other security or lien interest whatsoever whether
created by law, contract, or otherwise. The word Collateral includes without
limitation all collateral described below in the section titled "COLLATERAL."
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
Eligible Accounts. The words "Eligible Accounts mean, at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable to
Lender. The net amount of any Eligible Account against which Borrower may
borrow shall exclude all returns, discounts, credits, and offsets of any
nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do
not include:
(a) Accounts with respect to which the Account Debtor is an officer, an
employee or agent of Borrower.
(b) Accounts with respect to which the Account Debtor b a subsidiary of, or
affiliated with or related to Borrower or its shareholders, officers, or
directors.
(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the Account
Debtor may be conditional.
(d) Accounts with respect to which Borrower is or may become liable to the
Account Debtor for goods sold or services rendered by the Account Debtor to
Borrower.
(e) Accounts which are subject to dispute, counterclaim, or setoff.
(t) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account Debtor.
(g) Accounts with respect to which Lender, in its safe discretion, deems the
creditworthiness or financial condition of the Account Debtor to be
unsatisfactory.
Exim
2
Exhibit 10.5
(h) Accounts of any Account Debtor who has filed or has had filed against It
a petition in bankruptcy or an application for relief under any provision of
any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who
has had appointed a trustee, custodian, or receiver for the assets of such
Account Debtor, or who has made an assignment for the benefit of creditors or
has become insolvent or fails generally to pay its debts (including its
payrolls) as such debts become due.
(i) Accounts with respect to which the Account Debtor Is the United States
government or any department or agency of the United States.
0) Accounts which have not been paid In full within 60 CALENDAR DAYS from the
due date.
(k) See paragraph titled EXCLUSIONS FROM THE BORROWING BASK' on page #5 of
this Loan Agreement.
ERISA. The word ~ERISA means the Employee Retirement Income tncome Security
Act of 1974, as amended:
Event of Default. The words Event of Default mean and include without
limitation any of the Events of Default set forth below in the section titled
EVENTS OF DEFAULT.
Expiration Date. The words "Expiration Date mean the date of termination of
Lender's commitment to lend under this Agreement.
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any Collateral
for the Indebtedness, including without limitation all Borrowers granting
such a Security Interest.
Guarantor. The word "Guarantor" means and Includes without limitation each
and all of the guarantors, sureties, and accommodation parties In connection
with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without hmita0On all
Loans, together with all other obligations, debt and liabilities of Borrower
to Lender, or any one or more of them, as well as all claims by Lender
against Borrower, or any one or more of them, whether now or hereafter
existing, voluntary or involuntary, due or not due, absolute or contingent,
liquidated or unliquidable; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as a guarantor, surety
or otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether; such Indebtedness
may be or hereafter may become otherwise unenforceable.
Lender. The word "Lender" means U.S. Bank of Utah, its successors and assigns.
Line of Credit. The words "Line of Credit" mean the credit facility described
in the Section titled "LINE OF CREDITA below.
Liquid Assets. The words Liquid Assets mean Borrower's cash on hand plus
Borrower's readily marketable securities.
Exim
3
Exhibit 10.5
Loan. The word "Loan or Loans" means and includes without limitation any and
all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, it any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
Permitted Liens. The words "Permitted Liens, mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (c) liens of materialmen, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (d) purchase money liens
or purchase money security interests upon or in any property acquired or held
by Borrower in the ordinary course of business to secure Indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraph of this Agreement titled "Indebtedness and Liens", (e) liens
and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (t) those liens and
security interests which in the aggregate constitute an immabr41 and
insignificant monetary amount with respect to the net value of Borrower's
assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other investments; agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.
Security interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel Trust, factor's lien, equipment trust, conditional sale, trust
receipt lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
▇▇▇▇. The word ~▇▇▇▇ means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement to
indebtedness owed by Borrower to Lender in form and substance acceptable to
Lender.
Tangible Net Worth. The words Tangible Net Worth mean Borrower's total assets
excluding all intangible assets (i.e., goodwill, trademarks, patents,
copyrights, organizational expenses, and similar intangible items, but
including leaseholds and leasehold improvements) less total Debt.
Exim
4
Exhibit 10.5
Working Capital. The words "Working Capital" mean Borrower's current assets,
excluding prepaid expenses, less Borrower's current liabilities.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the
aggregate amount of such Advances oustanding at any time does not exceed the
Borrowing Base. Within the foregoing limits, Borrower may borrow, partially
or wholly prepay, and reborrow under this Agreement as follows.
Conditions Precedent to Each Advance. Lender's obligation to make any Advance
to or for the account of Borrower under this Agreement is subject to the
following conditions precedent, with all documents, instruments, opinions,
reports, and other items required under this Agreement to be in form and
substance satisfactory to Lender:
(a) Lender shall have received evidence that the Agreement and all Related
Documents have been duly authorized, exected, and delivered by Borrower to
Lender.
(b) Lender shall have received such opinions ot counsel, supplemental
opinions, and documents as Lender may request.
(c) The security interest In the collateral shall have been duly authorized,
created, and perfected with first lien priority and shall be in full force
and effect.
(d) All guaranties required by Lender for the Line of Credit shall have been
executed by each Guarantor, delivered to Lender, and be in full force and
effect.
(e) Lender, at its option and for Its sole benefit, shall have conducted an
audit of Borrower's Accounts, books, records, and operations, and Lender
shall be satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and expenses
specified in the Agreement and the Related Documents as are then due and
payable.
(g) There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement, and Borrower shall have
delivered to Lender the compliance certificate called for In the paragraph
below titled "Compliance Certificate."
Making Loan Advances. Advances under the Line of Credit may be requested
either orally or In writing subject to the limitations set forth below.
Lender may, but need not, require that all oral requests be confirmed In
writing. Each Advance shall be conclusively deemed to have been made at the
request of and for the benefit of Borrower (a) when credited to any deposit
account of Borrower maintained with Lender or (b) when advanced in accordance
with the instructions of an authorized person. Lender, at its option, may set
a cutoff time, after which all requests for Advances will be treated as
having been requested on the next succeeding Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal amount of
the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Exim
2
Exhibit 10.5
Borrower shall pay to Lender in full the aggregate unpaid principal amount of
all Advances then outstanding and all accrued unpaid interest, together with
all other applicable tees, costs and charges, it any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account In which
Lender shall make entries for each Advance and such other debits and credits
as shall be appropriate in connec0On with the credit facility. Lender shall
provide Borrower with periodic statements of Borrower's account, which
statements shall be considered to be correct and conclusively binding on
Borrower unless Borrower notifies Lender to the contrary within thirty (30)
days after Borrower's receipt of any such statement which Borrower deems to
be incorrect.
COLLATERAL. To secure payment of the Line of Credit and performance of all
other Loans, obligations and duties owed by Borrower to Lender, Borrower (and
others, it required) shall grant to Lender Security Interest in such property
and assets as Lender may require (the "Collateral"), including without
limitation Borrower's present and future Accounts and general Intangibles.
Lender's Secure Interests in the Collateral shall be continuing liens and
shall include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral,
Borrower agrees and represents and warrants to Lender:
Perfection of Security Interests. Borrower agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's Security Interests in the Collateral. Upon
request of Lender, Borrower will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Borrower will note
Lender's Interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Contemporaneous with the execution of this
Agreement, Borrower will execute one or more UCC financing statements and any
similar statements as may be required by applicable law, and will file such
financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue any Security Interest. Lender may at any time, and
without further authorization from Borrower, file a carbon, photograph,
facsimile, or other reproduction of any financing statement for use as a
financing statement. Borrower will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of Lender's
security interest in the Collateral. Borrower promptly will notify Lender of
any change in Borrower's name including any change to the assumed business
names of Borrower. Borrower also promptly will notify Lender of any change in
Borrower's Social Security Number or Employer Identification Number. Borrower
further agrees to notify Lender in writing prior to any change in address or
location of Borrower's principal governance office or should Borrower merge
or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall, keep
correct and accurate records of the Collateral, all of which records shall be
available to Lender or Lender's representative upon demand for inspection and
copying at any reasonable time. With respect to the Accounts, Borrower agrees
to keep and maintain such records as Lender may require, including without
limitation information concerning Eligible Accounts and Account balances and
agings.
Collateral Schedules. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender a schedule of
Accounts and Eligible Accounts, in form
Exim
6
Exhibit 10.5
and substance satisfactory to the Lender. Thereafter and at such frequency as
Lender shall require, Borrower shall execute and deliver to Lender such
supplemental schedules of Eligible Accounts and such other matters and
Information relating to Borrower's Accounts as Lender may request.
Representations and Warrantees Concerning Accounts. With respect to the
Accounts, Borrower represents and warrants to Lender: (e) Each Account
represented by Borrower to be an Eligible Account for purposes of tints
Agreement conforms to the requirements of the definition of an Eligible
Account; (b) All Account information listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; and (c) Lender, its
assigns, or agents shall have the right at any time end at Borrower's expense
to Inspect, examine, and audit Borrower's records and to confirm with Account
Debtors the accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES. Borrower represents end warrants to Lender,
as of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any
Loan, and at all limes any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the Stab of Utah and is
validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as a foreign
corporation and is in good standing in all states in which the failure to so
qualify would have a material adverse effect on its businesses or financial
condition.
Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person,
regulatory authority or governmental body; and do not conflict with, result
in a violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other Instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change In
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
Properties. Except for Permitted Liens, Borrower owns and has good title to
all of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste, "hazardous substance,"
"disposal",.
Exim
7
Exhibit 10.5
"release", and threatened release," as used In this Agreement, shall have the
same meanings as set forth in the ~CERCLA,'~▇▇▇▇,' the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1LtO1, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (a) During the period of
Borrower's ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of
any hazardous waste or substance by any person on, under, about or from any
of the properties. (b) Borrower has no knowledge of, or reason to believe
that there has been (i) any use, generation, manufacture, storage, treatment,
disposal, release, or threatened release of any hazardous waste or substance
on, under, about or from the properties by any prior owners or occupants of
any of the properties", or (ii) any actual or threatened litigation or claims
of any kind by any person relating to such matters. (c) Neither Borrower nor
any tenant, contractor, agent or other authorized user of any of the
properties shall use, generate, manufacture, store, treat, dispose of, or
release any hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. Borrower authorizes" Lender and its agent to enter upon the
properties" to make such inspections and tests as Lender may deem appropriate
to determine compliance of the properties with this section of the Agreement.
Any inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purpose" only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any other
person. The representations and warranties combined herein are based on
Borrower's due diligence in investigating the properties for hazardous waste
and hazardous substances. Borrower hereby (a) releases and warrants any
future claims against Lender for indemnity or contribution in the event
Borrower becomes" liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all claims,
loss - , liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring prior
to Borrower's ownership or interest in the properties, whether or not the
same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrating
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and repute of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges" have been paid In full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves have been
provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not
Exim
8
Exhibit 10.5
entered into or granted any Security Agreement, or permitted the filing or
attachment of any security interests on or affecting any of the Collateral
directly or indirectly securing repayment of Borrower's Loa n and Note, that
would be prior or that may in any way be superior to Lender's Security
Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the note, all Security Agreements directly or
indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successor, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies In all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to any
such plan, (ii) Borrower has not withdrawn from any such plan or initiated
steps to do so, (lit) no steps have been taken to terminate any such plan,
and (iv) there are no unfunded liabilities other than those previously
disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business, or
Borrower's Chief executing office, If Borrower has more than one place of
business, is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless
Borrower has designated otherwise in writing this location is also the office
or offices where Borrower keeps its records concerning the collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connect/on with
this Agreement or any transaction contemplated hereby is, and alt information
hereafter furnished by or on behalf of Borrower to Lender will be, true and
accurate in every material respect on the date as of which such information
is dated or certified; and none of such information is or will be incomplete
by omitting to state any material fact necessary to make such information not
misleading.
Survival of Representations and Warrantees. Borrower understands and agrees
that Lender, without Independent investigation, Is relying upon the above
representations and warrantees in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing In nature and shall remain in full force and effect until
such time as Borrower's indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever be the
last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
the Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
change" in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
Exim
9
Exhibit 10.5
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon available, but in no event
later than ninety (90) days after the end of each fiscal year, Borrower's
balance sheet and income statement for year ended, audited by a certified
public accountant satisfactory to Lender and, as soon as available, but in no
event later than forty-five days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the period ended,
prepared and certified correct to the best knowledge and belief by Borrower's
chief financial officer or other officer or person acceptable to Lender. All
financial reports required to be provided under this Agreement shall be
prepared in accordance with generally accepted accounting principals,
applied on a consistent basis, and certified by Borrower as being true and
correct.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, aging of receivables and payables, inventory
schedules, budgets, forecasts, tax returns, and other reports with respect to
Borrower's financial condition and business operations as
Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenant and ratios:
Net Worth Ratio. Maintain a ratio of Total Liabilities to Tangible Net Worth
of less than 1.25 to 1.00.
Current Ratio. Maintain a ratio of Current Assets of Current Liabilities" in
excess of 1.30 to 1.00.
Other Ratio. Maintain a ratio of CASH FLOW COVERAGE (to be measured annually
based on Borrower's fiscal year end) of 1.50 to 1.00.
The following provisions shall apply for purposes of determining compliance
with the foregoing financial covenants and ratios: Ratios of Debt to Tangible
Net Worth, and current assets to current liabilities measured quarterly based
on Borrower's fiscal quarter. Except as provided above, all computations
made to determine compliance with the requirements contained in this
paragraph shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by Borrower as being
true and correct.
Insurance. Maintain fire and other risk insurance, public liability
Insurance, and such other Insurance as Lender may require with respect to
Borrower's properties and operations, in form, amount, coverages and with
Insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be canceled or diminished without at
least ten (10) days' prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Borrower
or any other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such loss payable or other endorsements as Lender may
require.
Exim
10
Exhibit 10.5
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy (d) the
properties insured; (e) the then current property values on the basis of
which insurance has been obtained, and the manner of determining those
values and (f) the expiration date of the policy. In addition, upon request
of Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection
with any other such agreements.
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: S52,500.00.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would affect, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income, or
profits. Provided however, Borrower will not be required to pay and discharge
any such assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long as (a) the
legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, levy, lien,
or claim in accordance with generally accepted accounting practices.
Borrower, upon demand of Lender, will furnish to Lender evidence of payment
of the assessments, taxes, charges, levies, liens and claims and will
authorize the appropriate governmental official to deliver to Lender at any
time a written statement of any assessment, taxes, charges, levies, liens and
claims against Borrower's properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in the Agreement and in the Related Documents in a timely manner
and promptly notify Lender if Borrower learns of the or occurrence of any
event which constitutes an Event of Default under this Agreement or uncle;
any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, Including without
limitation, compliance with the Americans With Disabilities Act and with all
minimum funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agent of Lender at any reasonable time to
inspect any and all
Exim
11
Exhibit 10.5
Collateral for the Loan or Loans and Borrower's other properties and to
examine or audit Borrower's books, account, and records and to make copies
and memoranda of Borrower's books, accounts, and records. If Borrower now or
at any time hereafter maintains any records (Including without limitation
computer generated records and computer software programs for the generation
of such records) in the possession of a third party, Borrower, upon request
of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any
records it may request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by Lender, provide Lender at
least annually and at the time of each disbursement of Loan proceeds with a
certificate executed by Borrower's chief financial officer, or other officer
or person acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the date of
the certificate and further certifying that, as of the date of the
certificate, no Event or Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment unless such
environmental activity is pursuant to and in compliance with the conditions
of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy to any notice, summons, lien,
citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional action
or omission on Borrower's part in connection with any environmental activity
whether or not there be damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of Trust, security agreements, financing statements,
instruments, document and other agreements as Lender or its attorneys may
reasonably require to evidence and secure the Loans and to perfect all
Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior Borrower
consent of Lender.
Capital Expenditures. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
S3,000,000.00 or Incur liability for rentals of property (including both real
and personal property) in an amount which, together with capital
expenditures, shall in any fiscal year exceed such sum.
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and Indebtedness to Lender contemplated by this Agreement,
create incur or assume indebtedness for borrowed money, including capital
leases, (b) except as allowed as a Permitted Lien, sell, transfer, mortgage
assign, pledge, lease, grant a security interest In, or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's accounts,
except to Lender.
Continuity of Operations. (a) Engage in any business activity substantially
different than those In which Borrower is primarily engaged, (b) cease
operations, liquidate, merge, transfer, acquire or
Exim
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Exhibit 10.5
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
business, (c) pay any dividends on Borrower's stock (other than dividends
payable in Its stock) provided, however that notwithstanding the foregoing,
but only so long as no Event of Default has occurred and is continuing or
would result from the payment of dividends, if Borrower is a Subchapter S
Corporation' (as defined in the Internal Revenue Code of 1986, as amended),
Borrower may pay cash dividends on its stock to its shareholders from time to
time in amounts necessary to enable the shareholders to pay income taxes and
make estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of share of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares or
alter or amend Borrower's capital structure.
Loans, Acquisitions and Guarantees. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise
or entity, or (c) incur any obligation as surety or guarantee other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement u under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (b) Borrower or any Guarantor
becomes insolvent, files a petition in bankruptcy or similar proceedings, or
is adjudged a bankrupt; (c) there occurs a material adverse change in
Borrower's financial condition, in the financial condition of any Guarantor,
or in the value of any Collateral securing any Loan; (d) any Guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such Guarantor's
guaranty of the Loan or any other loan with Lender; or (e) Lender in good
▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even though no Event of Default shall have
occurred.
CASH FLOW RATIO CALCULATION.
NIAT + Interest Exp. + Depr divided by PPCMLTD + Int. Exp.
ADDITIONAL COVENANTS.
1. Borrowing Base Required monthly current within the past five business days.
2. Monthly Accounts Receivable and Payable aging, and inventory listing
3. A credit qualify exam performed at least once every 6 months, which cost
is paid by Borrower.
EXCLUSIONS FROM THE BORROWING BASE.
1. Any Account Receivable with a term in excess of net one hundred eighty
(180) days.
2. Any Account Receivable which is more than sixty (60) calendar days past
the original due date, unless it is insured through Eximbank export credit
insurance for comprehensive commercial and political risk, or through
Eximbank approved private insurers for comparable coverage, in which case
ninety (90) calendar days shall apply.
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13
Exhibit 10.5
3. Any intra-company Account Receivable or any Account Receivable from a
subsidiary of the Borrower, from a person or entity with a common controlling
interest in the Borrower or from an entity which shares common controlling
ownership with the Borrower.
4. Any Account Receivable evidenced by a Letter of Credit, until the date of
shipment of the Items covered by the subject Letter of Credit.
5. Any Account Receivable which the Lender or Eximbank, in its reasonable
judgment, deems uncollectible for any reason.
6. Any Account Receivable payable in a currency other than Dollars, except as
may be approved in writing by Eximbank.
7. Any Account Receivable from a Military Buyer, except as may be approved in
writing by Eximbank.
8. Any Account Receivable due and collectible outside the United States,
except as may be approved in writing by Eximbank.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrowers right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all
accounts Borrower may open in the future, excluding however all ▇▇▇ and ▇▇▇▇▇
accounts and all Trust accounts for which the grant of a security Interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition contained
in this Agreement or in any of the Related Documents, or failure of Borrower
to comply with or to perform any other term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished
to Lender by or on behalf of Borrower or any Grantor under this Agreement or
the Related Documents Is false or misleading in any material respect at the
time made or furnished, or becomes false or misleading
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Exhibit 10.5
at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and
for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a going
business, the Insolvency of Borrower, the appointment of a receiver for any
part of Borrower's property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower, any creditor of any Grantor
against any collateral securing the Indebtedness, or by any governmental
agency. This includes a garnishment, attachment, or levy on or of any of
Borrower's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement Immediately will terminate (including any
obligation to make loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice
of any kind to Borrower, except that In the case of an Event of Default of
the type described In the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's right and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower or of any Grantor shall
not affect Lender's right to declare a default and to exercise its rights and
remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No
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Exhibit 10.5
alteration of or amendment to the Agreement shall be effective unless given
in writing and signed by the party or parties sought to be charged or bound
by the alteration or amendment.
Applicable Law. This Agreement has been delivered h Lender and accepted by
Lender In the State of Utah. If there Is a lawsuit Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Salt Lake
County, the State of Utah Subject to the provisions on arbitration, this
Agreement shall be governed by and construed in accordance with the laws of
the State of Utah.
Arbitration. Lender and Borrower agree that all disputes, claims and
controversies between them, whether Individual, joint, or class in nature,
arising from this Agreement or otherwise, Including without limitation
contract and ton disputes, shall be arbitrated pursuant to the Rules of the
American Arbitration Association, upon request of either party. No act to
take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable
in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes.
The Federal Arbitration Act shall apply of the construction, interpretation,
and enforcement of this arbitration provision.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Multiple Parties; Corporate Authority. All obligations of Borrower under this
Agreement shall be Joint and several, and all references to Borrower shall
mean each and every Borrower. This means that each of the Borrowers signing
below is responsible for all obligations in this Agreement.
11-12-1996 LOAN AGREEMENT Page 6 (Continued)
Consent to Loan Participation. Borrower agrees and consents to Lender's sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other maker relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all polices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any
Exim
16
Exhibit 10.5
such participation interests will be considered as the absolute owners of
such interests in the loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that It may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under the
Loans irrespective of the failure or insolvency of any holder of any interest
in the Loans. Borrower further agrees that the purchaser of any such
participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, Including without limitation reasonable attorneys' fees, incurred
in connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant to
this Agreement. Lender may pay someone else to help collect the Loans and to
enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, Lender's reasonable attorneys and
Lender's legal expenses, whether or not there is a lawsuit, including
reasonable attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
Notices. Ml notices required to be given under this Agreement shall be given
in writing, may be sent by telefacsimile and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage prepaid,
addressed to the party to whom the notice is to be given at the address shown
above. Any party may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying that the
purpose of the notice is to change the party's address. To the extent
permitted by applicable law, it there is more than one Borrower, notice to
any Borrower will constitute notice to all Borrowers. For notice purposes,
Borrower will keep Lender informed at all times of Borrower's current
address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of This Agreement in
all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, Including without
limitation any representation, warranty or covenant, The word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreement contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the
benefit of Lender, its successors and assigns. Borrower shall not, however,
have the right to assign its rights under this Agreement or any interest
therein, without the prior written consent of Lender.
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Exhibit 10.5
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery to
Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any right under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent in subsequent instances where such consent is required, and in all
cases such consent may be granted or withheld in the sole discretion of Lender.
FINAL AGREEMENT. Borrower understands that this Agreement and the related
loan documents are the final expression of the agreement between Lender and
Borrower and may not be contradicted by evidence of any alleged oral
agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT,
AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF NOVEMBER
12, 1996.
BORROWER:
DAW TECHNOLOGIES INC.
By:
▇▇▇▇▇ ▇. GROW, CFO/EVP/SECRETARY
By:
▇▇▇▇▇▇ ▇. ▇▇▇, PRESIDENT
By:
WlLLIAM ▇▇▇▇▇▇, SR. VICE PRESIDENT OF MANUFACTURING
LENDER:
U.S. Bank of Utah
By : ▇▇▇▇ ▇▇▇▇▇▇▇▇
Authorized Officer
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Exhibit 10.5