1
Exhibit 10.1
FINANCING AND SECURITY AGREEMENT
between
NATIONSBANK, N.A.
and
GLASSTECH, INC.
July 2, 1997
2
FINANCING AND SECURITY AGREEMENT
--------------------------------
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made as of
the 2nd day of July, 1997, by and between GLASSTECH, INC., a corporation
organized under the laws of Delaware (the "Borrower") and NATIONSBANK, N.A., a
national banking association (the "Lender").
RECITALS
--------
A. The Borrower has applied to the Lender for a revolving credit
facility in the maximum principal amount of $10,000,000 to be used by the
Borrower for the Permitted Uses described in this Agreement.
B. The Lender is willing to make the credit facilities available to the
Borrower upon the terms and subject to the conditions set forth in this
Agreement.
AGREEMENTS
----------
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the terms
defined in the Preamble and Recitals hereto shall have the respective meanings
specified therein, and the following terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean with
respect to the Borrower all presently existing or hereafter acquired or created
accounts, accounts receivable, contract rights, notes, drafts, instruments,
acceptances, chattel paper, leases and writings evidencing a monetary obligation
or a security interest in, or a lease of, goods, all rights to receive the
payment of money or other consideration under present or future contracts
(including, without limitation, all rights to receive payments under presently
existing or hereafter acquired or created letters of credit), or by virtue of
merchandise sold or leased, services rendered, loans and advances made or other
considerations given, by or set forth in or arising out of any present or future
chattel paper, note, draft, lease, acceptance, writing, bond, insurance policy,
instrument, document or general intangible, and all extensions and renewals of
any thereof, all rights under or arising
3
out of present or future contracts, agreements or general interest in
merchandise which gave rise to any or all of the foregoing, including all goods,
all claims or causes of action now existing or hereafter arising in connection
with or under any agreement or document or by operation of law or otherwise, all
collateral security of any kind (including, without limitation, real property
mortgages and deeds of trust) and letters of credit given by any Person with
respect to any of the foregoing, all books and records in whatever media (paper,
electronic or otherwise) recorded or stored, with respect to any or all of the
foregoing and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all proceeds (cash and non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a
Receivable and "Account Debtors" means all Persons who are obligated on the
Receivables.
"Affiliate" means, with respect to a Person designated, any
other Person, directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, as the case may be, PROVIDED that the term "Affiliate" shall not
include any portfolio company of either Key Equity Partners 97 or any of its
sister partnerships or Key Equity Capital Corporation so long as such portfolio
company does not own or control any shares of capital stock of Borrower and the
Borrower does not own or control any share of the capital stock of such
portfolio company.
"Agreement" means this Financing and Security Agreement, as
amended, restated, supplemented or otherwise modified in writing in accordance
with the provisions of Section 8.2 of this Agreement.
"Applicable Interest Rate" means (i) the LIBOR Rate, or
(ii) the Base Rate.
"Applicable Margin" means the applicable rate per annum added,
as set forth in Section 2.3.1, to the LIBOR Base Rate or the Prime Rate.
"Asset Disposition" means the disposition of any or all of the
Assets of the Borrower or any Subsidiary of the Borrower, whether by sale,
lease, transfer or other disposition (including any such disposition effected by
way of merger or consolidation).
"Assets" means at any date all assets that, in accordance with
GAAP consistently applied, should be classified as assets on a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Assignment of Patents" means that certain collateral
assignment of patents as security dated the date hereof from the Borrower for
the benefit of the Lender, as amended, restated,
-2-
4
supplemented or otherwise modified in writing at any time and from
time to time.
"Bankruptcy Code" means the United States Bankruptcy Code, as
amended from time to time.
"Base Rate" means the sum of (i) the Prime Rate PLUS (ii)
the Applicable Margin.
"Base Rate Loan" means any Loan for which interest is to be
computed with reference to the Base Rate.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State are authorized or required to
close.
"Capital Expenditure" means an expenditure for Fixed or
Capital Assets including, without limitation, the entering into of a Capital
Lease, but does not include (i) expenditures to purchase Fixed or Capital Assets
as part of an acquisition of an on-going business which acquisition is subject
to the restrictions and is in compliance with Section 6.1.11, (ii) an
expenditure made to replace Fixed or Capital Assets which are the subject of a
Casualty, provided that such expenditure is funded from Net Proceeds resulting
from such Casualty and (iii) an expenditure made to purchase Fixed or Capital
Assets, provided that such expenditure is funded solely from cash proceeds of a
Permitted Asset Disposition.
"Capital Lease" means any lease of real or personal property,
for which the related Lease Obligations have been or should be, in accordance
with GAAP consistently applied, capitalized on the balance sheet.
"Cash Equivalents" means "Temporary Cash Investments" as that
term and its constituent definitions are defined in the Indenture on the Closing
Date.
"Casualty" means any act or occurrence of any kind or nature
that results in material damage, loss or destruction to any of the Equipment or
other Fixed or Capital Assets.
"Chattel Paper" means a writing or writings which evidence
both a monetary obligation and a security interest in or lease of specific
goods; any returned, rejected or repossessed goods covered by any such writing
or writings and all proceeds (in any form including, without limitation,
accounts, contract rights, documents, chattel paper, instruments and general
intangibles) of such returned, rejected or repossessed goods; and all proceeds
(cash and non-cash) of the foregoing.
"Closing Date" means the date of this Agreement.
-3-
5
"Collateral" means all property of the Borrower subject from
time to time to the Liens of this Agreement, the Security Documents and the
other Financing Documents, together with any and all cash and non-cash proceeds
and products thereof.
"Collateral Account" has the meaning described in Section
(The Collateral Account).
"Collateral Disclosure List" has the meaning described
in Section (Collateral Disclosure List).
"Commitment" means the Revolving Credit Commitment.
"Committed Amount" means the Revolving Credit Committed
Amount.
"Compliance Certificate" means a periodic Compliance
Certificate described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or (c) of the Internal Revenue Code.
"Condemnation" means any taking of title, of use, or of any
other property interest under the exercise of the power of eminent domain,
whether temporarily or permanently, partial or complete, by any Governmental
Authority or by any Person acting under Governmental Authority.
"Condemnation Awards" means any and all judgments, awards of
damages (including, but not limited to, severance and consequential damages),
payments, proceeds, settlements, amounts paid for a taking in lieu of
Condemnation, or other compensation heretofore or hereafter made, including
interest thereon, and the right to receive the same, as a result of, or in
connection with, any Condemnation or threatened Condemnation.
"Contingent Indemnification Obligations" means Obligations for
the indemnification of the Lender arising under Section 2.3.4 (Indemnity),
Section 6.1.13 (Hazardous Materials), Section 6.1.17 (Assignment of
Receivables) or under similar substantive provisions of this Agreement or any
of the Financing Documents, with respect to which there is no claim pending or
threatened and which expressly survive the termination of this Agreement.
"Copyrights" means and includes, in each case whether now
existing or hereafter arising, all of the Borrower's rights, title and interest
in and to (a) all copyrights, rights and interests in copyrights, works
protectable by copyright, copyright registrations, copyright applications, and
all renewals of any of
-4-
6
the foregoing, (b) all income, royalties, damages and payments now or hereafter
due and/or payable under any of the foregoing, including, without limitation,
damages or payments for past, current or future infringements of any of the
foregoing, (c) the right to ▇▇▇ for past, present and future infringements of
any of the foregoing, and (d) all rights corresponding to any of the foregoing
throughout the world.
"Credit Facility" means the Revolving Credit Facility and the
Letter of Credit Facility, and "Credit Facilities" means collectively the
Revolving Credit Facility, the Letter of Credit Facility and any and all other
credit facilities now or hereafter extended under or secured by this Agreement.
"Default" means an event which, with the giving of notice or
lapse of time, or both, could or would constitute an Event of Default under the
provisions of this Agreement.
"Documents" means with respect to the Borrower all documents
of title, whether now existing or hereafter acquired or created, and all
proceeds (cash and non-cash) of the foregoing.
"Early Termination Fee" has the meaning described in
Section 2.1.6 (Early Termination Fee).
"EBITDA" means as to the Borrower for any period of
determination thereof, the sum of (a) the net profit (or loss) determined in
accordance with GAAP consistently applied for such period (but excluding the
effect of a write-up of the value of purchased assets as required by GAAP), plus
(b) interest expense (including, without limitation, interest rate protection
agreements entered into in the ordinary course of business and not for
speculative purposes) and income tax provisions for such period, plus (c)
depreciation and amortization (including, without limitation, amortization of
deferred financing costs) and other non-cash charges of assets for such period.
"Enforcement Costs" means all reasonable expenses, charges,
costs and fees whatsoever (including, without limitation, reasonable outside and
reasonably allocated in-house counsel attorney's fees and expenses) of any
nature whatsoever paid or incurred by or on behalf of the Lender in connection
with (a) any or all of the Obligations, this Agreement and/or any of the other
Financing Documents, (b) the creation, perfection, collection, maintenance,
preservation, defense, protection, realization upon, disposition, sale or
enforcement of all or any part of the Collateral, this Agreement or any of the
other Financing Documents, including, without limitation, those costs and
expenses more specifically enumerated in Section 3.7 (Costs) and/or Section
8.10 (Enforcement Costs), and (c) the monitoring and/or servicing of any or
all of the Obligations, the Financing Documents, and/or the Collateral.
-5-
7
"Equipment" means all equipment, machinery, computers,
chattels, tools, parts, machine tools, furniture, furnishings, fixtures and
supplies of every nature, presently existing or hereafter acquired or created
and wherever located, whether or not the same shall be deemed to be affixed to
real property, together with all accessions, additions, fittings, accessories,
special tools, and improvements thereto and substitutions therefor and all parts
and equipment which may be attached to or which are necessary or beneficial for
the operation, use and/or disposition of such personal property, all licenses,
warranties, franchises and general intangibles related thereto or necessary or
beneficial for the operation, use and/or disposition of the same, together with
all Accounts, Chattel Paper, Instruments and other consideration received by the
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all proceeds
(cash and non-cash) of the foregoing.
"Equity" means capital stock (except treasury stock and net of
any note receivable received upon the issuance of any shares of capital stock)
and contributed capital, as determined on a consolidated basis in accordance
with GAAP consistently applied, after eliminating all intercompany items.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Business Day" means any Business Day on which
dealings in United States Dollar deposits are carried out on the London
interbank market and on which commercial banks are open for domestic and
international business (including dealings in Dollar deposits) in London,
England.
"Eurodollar Lending Office" means with respect to the Lender
such branch or office of the Lender designated by the Lender, as applicable,
from time to time as the branch or office at which the LIBOR Loans are to be
made or maintained.
"Event of Default" has the meaning described in Article
7.
"Facilities" means the collective reference to the loan,
letter of credit, interest rate protection, foreign exchange risk, cash
management, and other credit facilities now or hereafter provided to the
Borrower by the Lender whether under this Agreement or otherwise.
"Fees" means the collective reference to each fee payable
to the Lender under the terms of this Agreement or under the terms
of any of the other Financing Documents, including, without
limitation, the following: Revolving Credit Unused Line Fees, the
-6-
8
Early Termination Fee, Letter of Credit Fees, the Origination Fee,
and Servicing Fees.
"Financial Institution" means bank, finance company or other
Person or other Governmental Authority which is incorporated, organized or
formed under the Laws of the United States of America or a state thereof and
which in the ordinary course of business makes or purchases interests in
commercial credit facilities.
"Financing Documents" means at any time collectively this
Agreement, the Notes, the Security Documents, the Letter of Credit Documents and
any other instrument, agreement or document previously, simultaneously or
hereafter executed and delivered by the Borrower and/or any other Person, singly
or jointly with another Person or Persons, evidencing, securing, guarantying or
in connection with this Agreement, any Note, any of the Security Documents, any
of the Facilities, and/or any of the Obligations.
"Fixed or Capital Assets" of a Person at any date means all
assets which would, in accordance with GAAP consistently applied, be classified
on the balance sheet of such Person as property, plant or equipment at such
date.
"Fixed Charges" means for any period of determination, the
scheduled payments (including, without limitation, principal and interest, but
excluding prepayments) on all Indebtedness for Borrowed Money (other than under
item (d) (to the extent the applicable Lien is a security interest is in favor
of the Borrower's customers to secure amounts which the customer paid to
Borrower as a deposit or progress payment for the manufacture of identified
equipment), item (f) or item (g) of that term) of the Borrower and Holding, plus
Capital Expenditures not financed, plus cash Taxes paid by the Borrower and
Holding plus dividends declared or paid by the Borrower and Holding.
"Fixed Charge Coverage Ratio" means for the period of any
determination thereof the ratio of (a) EBITDA to (b) Fixed Charges.
"GAAP" means, subject to the provisions of Section 1.2,
generally accepted accounting principles in the United States of America in
effect from time to time.
"General Intangibles" means all general intangibles of every
nature, whether presently existing or hereafter acquired or created, and without
implying any limitation of the foregoing, further means all books and records,
claims (including without limitation all claims for income tax and other
refunds), choses in action, claims, causes of action in tort or equity, contract
rights, judgments, customer lists, Patents, Trademarks, licensing agreements,
rights in intellectual property, goodwill (including goodwill of the Borrower's
business symbolized by and associated with any and all trademarks, trademark
licenses, Copyrights and/or
-7-
9
service marks), royalty payments, licenses, contractual rights, rights as lessee
under any lease of real or personal property, literary rights, Copyrights,
service names, service marks, logos, trade secrets, amounts received as an award
in or settlement of a suit in damages, deposit accounts, interests in joint
ventures, general or limited partnerships, or limited liability companies or
partnerships, rights in applications for any of the foregoing, books and records
in whatever media (paper, electronic or otherwise) recorded or stored, with
respect to any or all of the foregoing and all equipment and general intangibles
necessary or beneficial to retain, access and/or process the information
contained in those books and records, and all proceeds (cash and non-cash) of
the foregoing.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any department, agency or instrumentality thereof.
"Hazardous Materials" means (a) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976, as amended from
time to time, and regulations promulgated thereunder; (b) any "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time, and regulations
promulgated thereunder; (c) any substance the presence of which on any property
now or hereafter owned, acquired or operated by the Borrower is prohibited by
any Law similar to those set forth in this definition; and (d) any other
substance which by Law requires special handling in its collection, storage,
treatment or disposal.
"Hazardous Materials Contamination" means the contamination
(whether presently existing or occurring after the date of this Agreement) by
Hazardous Materials of any property owned, operated or controlled by the
Borrower or for which the Borrower has responsibility, including, without
limitation, improvements, facilities, soil, ground water, air or other elements
on, or of, any property now or hereafter owned, acquired or operated by the
Borrower, and any other contamination by Hazardous Materials for which the
Borrower is, or is claimed to be, responsible.
"Holding" means Glasstech Holding Co., a corporation organized
under the Laws of Delaware.
"Indebtedness" of a Person means at any date the total
liabilities of such Person at such time determined in accordance with GAAP
consistently applied.
"Indebtedness for Borrowed Money" of a Person means at any
time, without duplication, the sum at such time of (a) indebtedness of such
Person for borrowed money or for the deferred
-8-
10
purchase price of property or services, (b) any obligations of such Person in
respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person under a employee stock ownership plan or other similar employee benefit
plan; and (g) any obligation of such Person or a Commonly Controlled Entity to a
Multiemployer Plan; but excluding trade and other accounts payable in the
ordinary course of business in accordance with customary trade terms and which
are not overdue (as determined in accordance with customary trade practices) or
which are being disputed in good faith by such Person and for which adequate
reserves are being provided on the books of such Person in accordance with GAAP.
"Indenture" means that certain Indenture dated as of July 1,
1997 (as amended, supplemented or otherwise modified from time to time), between
Merger Company and the Trustee, to which the Borrower is a party as successor by
merger to the Merger Company, a copy of which is attached to this Agreement as
EXHIBIT D.
"Interest Payment Date" means each date for the payment of
interest provided under Section 2.3.5.
"Interest Period" means as to any LIBOR Loan, the period
commencing on and including the date such LIBOR Loan is made (or on the
effective date of the Borrower's election to convert any Base Rate Loan to a
LIBOR Loan in accordance with the provisions of this Agreement) and ending on
and including the day which is 30, 60, 90, 180, or 360 days thereafter, as
selected by the Borrower in accordance with the provisions of this Agreement,
and thereafter, each period commencing on the last day of the then preceding
Interest Period for such LIBOR Loan and ending on and including the day which is
30, 60, 90, 180 or 360 days thereafter, as selected by the Borrower in
accordance with the provisions of this Agreement; provided, however that:
(a) the first day of any Interest Period shall be a
Eurodollar Business Day;
(b) if any Interest Period would end on a day that shall not
be a Eurodollar Business Day, such Interest Period shall be extended to
the next succeeding Eurodollar Business Day unless such next succeeding
Eurodollar Business Day would fall in the next calendar month, in which
case, such Interest
-9-
11
Period shall end on the next preceding Eurodollar Business
Day; and
(c) no Interest Period shall extend beyond the Revolving
Credit Expiration Date.
"Interest Rate Election Notice" has the meaning described
in Section 2.3.2(e).
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the Income Tax Regulations issued and
proposed to be issued thereunder.
"Instrument" means with respect to the Borrower a negotiable
instrument (as defined under Article 3 of the applicable Uniform Commercial
Code), a "certificated security" (as defined under Article 8 of the applicable
Uniform Commercial Code), or any other writing which evidences a right to
payment of money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any necessary indorsement.
"Inventory" means all inventory of the Borrower and all right,
title and interest of the Borrower in and to all of its now owned and hereafter
acquired goods, merchandise and other personal property furnished under any
contract of service or intended for sale or lease, including, without
limitation, all raw materials, work-in-progress, finished goods and materials
and supplies of any kind, nature or description which are used or consumed in
the Borrower's business or are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise and other licenses, warranties, franchises, general
intangibles,personal property and all documents of title or documents relating
to the same and all proceeds (cash and non-cash) of the foregoing.
"Item of Payment" means with respect to the Borrower each
check, draft, cash, money, instrument, item, and other remittance in payment or
on account of payment of the Receivables or otherwise with respect to any
Collateral, including, without limitation, cash proceeds of any returned,
rejected or repossessed goods, the sale or lease of which gave rise to a
Receivable, and other proceeds of Collateral; and "Items of Payment" means the
collective reference to all of the foregoing.
"Key Entity" shall have the meaning set forth in Section
7.1.12.
"Laws" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs, or decrees of any Governmental Authority with
applicable jurisdiction.
-10-
12
"Lease Obligations" of a Person means for any period the
rental commitments of such Person for such period under leases for real and/or
personal property (net of rent from subleases thereof, but including taxes,
insurance, maintenance and similar expenses which the lessee, is obligated to
pay under the terms of said leases, except to the extent that such taxes,
insurance, maintenance and similar expenses are payable by sublessees),
including rental commitments under Capital Leases.
"Letter of Credit" and "Letters of Credit" shall have the
meanings described in Section 2.2.1 hereof.
"Letter of Credit Agreement" means the collective reference to
each letter of credit application and agreement substantially in the form of the
Lender's then standard form of application for letter of credit or such other
form as may be approved by the Lender, executed and delivered by the Borrower in
connection with the issuance of a Letter of Credit, as the same may from time to
time be amended, restated, supplemented or modified and "Letter of Credit
Agreements" means all of the foregoing in effect at any time and from time to
time.
"Letter of Credit Documents" means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit Agreement, and
any other instrument, document or agreement executed and/or delivered by the
Borrower or any other Person under, pursuant to or in connection with a Letter
of Credit or any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by
the Lender pursuant to Section 2.2 (Letter of Credit Facility) of this
Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" have the
meanings described in Section 2.2.2 hereof.
"Letter of Credit Obligations" means all Obligations of the
Borrower with respect to the Letters of Credit and the Letter of Credit
Agreements.
"Liabilities" means at any date all liabilities that in
accordance with GAAP consistently applied should be classified as liabilities on
a consolidated balance sheet of the Borrower and its Subsidiaries.
"LIBOR Base Rate" means for any Interest Period with respect
to any LIBOR Loan, the rate per annum (rounded upward, if necessary, to the
nearest next 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in United States Dollars
at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period for a term comparable to such
-11-
13
Interest Period. If for any reason such rate is not available, the term "LIBOR
Base Rate" shall mean, for any LIBOR Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in United States Dollars for a term comparable to the Interest Period
at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates. For purposes of this definition, Telerate
Page 3750 refers to the British Bankers Association Libor Rates (determined at
approximately 11:00 a.m (London time)) that are published by Dow ▇▇▇▇▇ Telerate,
Inc.
"LIBOR Loan" means any Loan for which interest is to be
computed with reference to the LIBOR Rate.
"LIBOR Rate" means for any Interest Period with respect to any
LIBOR Loan, (i) the Applicable Margin, PLUS (ii) the per annum rate of interest
calculated pursuant to the following formula:
LIBOR Base Rate
-------------------------
1.00 - Reserve Percentage
"Lien" means any mortgage, deed of trust, deed to secure debt,
grant, pledge, security interest, assignment, encumbrance, judgment, lien,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any ▇▇▇▇▇▇ in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the agreement to give any financing statement by any lessee
in a true lease transaction, by any bailee in a true bailment transaction or by
any consignee in a true consignment transaction.
"Loan" means each of the Revolving Loan, as the case may be,
and "Loans" means the collective reference to the advances under the Revolving
Loan.
"Loan Notice" has the meaning described in Section 2.1.2
(Procedure for Making Advances).
-12-
14
"Lockbox" has the meaning described in Section 7.2.4 (The
Collateral Account).
"Material Adverse Effect" means an effect, either in any case
or in the aggregate, which would result in a material adverse change for the
Borrower (w) in the business, condition, or operations of the Borrower, (x) to
any of the material properties or Assets of the Borrower, (y) in the right or
ability of the Borrower to carry on a substantial portion of its operations, or
(z) to the value of, or the ability of the Lender to realize upon, the
Collateral in any material respect.
"Merger Agreement" means that certain agreement and plan of
merger dated June 5, 1997 by and among Holding, the Borrower and the Merger
Company.
"Merger Agreement Documents" means collectively the Merger
Agreement and any and all other agreements, documents or instruments (together
with any and all amendments, modifications, and supplements thereto,
restatements thereof, and substitutes therefor) previously, now or hereafter
executed and delivered by Holding, the Borrower, the Merger Company, or any
other Person in connection with the Merger Agreement Transaction.
"Merger Agreement Transaction" means the merger transaction
contemplated by the provisions of the Merger Agreement under which the Merger
Company and the Borrower merge, with the Borrower being the survivor.
"Merger Company" means Glasstech Sub Co., a corporation
organized under the laws of the State of Delaware.
"Mortgage" means that certain mortgage dated the date hereof
from the Borrower to the Lender, as the same may from time to time be amended,
restated, supplemented or modified.
"Mortgaged Property" means the real property covered by
the Mortgage.
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means when used with respect to any
Condemnation Awards, insurance proceeds resulting from any Casualty, or from
Asset Dispositions other than Permitted Asset Dispositions, the gross proceeds
(other than Unrestricted Proceeds) from any Casualty, Condemnation or Asset
Disposition remaining after payment of all reasonable expenses (including
reasonable attorneys' fees) incurred in the collection of such gross proceeds.
"Net Worth" means as to the Borrower its shareholders equity,
as determined in accordance with GAAP.
-13-
15
"Note" means the Revolving Credit Note, and "Notes" means
collectively the Revolving Credit Note and any other promissory note which may
from time to time evidence all or any portion of the Obligations.
"Obligations" means all present and future indebtedness,
duties, obligations, and liabilities, whether now existing or contemplated or
hereafter arising, of the Borrower to the Lender under, arising pursuant to, in
connection with and/or on account of the provisions of this Agreement, each
Note, each Security Document, and/or any of the other Financing Documents, the
Loans, and/or any of the Facilities including, without limitation, the principal
of, and interest on, each Note, late charges, the Fees, Enforcement Costs, and
prepayment fees (if any), letter of credit fees or fees charged with respect to
any guaranty of any letter of credit; also means all other present and future
indebtedness, liabilities and obligations, whether now existing or contemplated
or hereafter arising, of the Borrower to the Lender of any nature whatsoever
regardless of whether such indebtedness, obligations and liabilities be direct,
indirect, primary, secondary, joint, several, joint and several, fixed or
contingent; and also means any and all renewals, extensions, substitutions,
amendments, restatements and rearrangements of any such indebtedness,
obligations and liabilities.
"Offering Memorandum" means the Borrower's Offering Memorandum
dated June 27, 1997, pursuant to which the Senior Notes were offered.
"Offering Transaction" means the sale of the Senior Notes
as described in the Offering Memorandum.
"Outstanding Letter of Credit Obligations" has the
meaning described in Section 2.2.3 hereof.
"Origination Fee" has the meaning described in Section
(Origination Fee).
"Patent and Trademark Security Agreement" means that certain
patent and trademark security agreement dated the date hereof from the Borrower
for the benefit of the Lender, as the same may from time to time be amended,
restated, supplemented or otherwise modified.
"Patents" means and includes, in each case whether now
existing or hereafter arising, all of the Borrower's rights, title and interest
in and to (a) any and all patents and patent applications, (b) any and all
inventions and improvements described and claimed in such patents and patent
applications, (c) reissues, divisions, continuations, renewals, extensions and
continuations- in-part of any patents and patent applications, (d) income,
royalties, damages, claims and payments now or hereafter due and/or
-14-
16
payable under and with respect to any patents or patent applications, including,
without limitation, damages and payments for past and future infringements, (e)
rights to ▇▇▇ for past, present and future infringements of patents, and (f) all
rights corresponding to any of the foregoing throughout the world.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" means an acquisition involving all or
substantially all of the assets, or all of the capital stock, of a Person in the
line of business of the Borrower described in Section 6.1.6, with respect to
which the Borrower has complied with Section 6.1.11 and upon the consummation
of which the Lender obtains a Lien on the assets acquired or, if applicable,
the assets of the Subsidiary so acquired, subject only to Permitted Liens and
securing the Obligations.
"Permitted Asset Disposition" means any one or more of the
following Asset Dispositions provided that unless otherwise expressly provided
in this definition, each such Asset Disposition shall be made in the ordinary
course of business:
(a) sales of Inventory,
(b) licensing of Patents, Trademarks, Copyrights and/or other
intellectual property,
(c) dispositions of worn, used, surplus or obsolete Equipment
or intellectual property deemed uneconomical or obsolete,
(d) leases of real property to the extent not otherwise
prohibited by the provisions of this Agreement,
(e) intercompany sales, leases or other Asset Dispositions
among and between the Borrower and its Subsidiaries, provided, that any such
Assets sold, leased or otherwise disposed of as between the Borrower and its
Subsidiaries shall continuously remain subject to the then existing first
priority Liens of the Lender, under this Agreement and under the other Financing
Documents, and shall be subject only to Permitted Liens,
(f) usual and customary write-downs and other reductions of
Accounts in connection with the compromise and collection of Accounts,
(g) Asset Dispositions which are the subject of a Casualty or
Condemnation, provided, that the Net Proceeds of any such Casualty or
Condemnation are used by the Borrower in accordance with the provisions of this
Agreement and the other Financing Documents; and
-15-
17
(h) any other Asset Disposition; provided that the aggregate
net proceeds from all such other Asset Dispositions during any fiscal year shall
not exceed $250,000.
"Permitted Liens" means: (a) Liens for Taxes which are not
delinquent or which the Lender has determined in the exercise of its reasonable
discretion (i) are being diligently contested in good faith and by appropriate
proceedings, and such contest operates to suspend collection of the contested
Taxes and enforcement of a Lien, (ii) the Borrower has the financial ability to
pay, with all penalties and interest, at all times without materially and
adversely affecting the Borrower, and (iii) are not, and will not be with
appropriate filing, the giving of notice and/or the passage of time, entitled to
priority over any Lien of the Lender; (b) deposits or pledges to secure
obligations under workers' compensation, social security or similar laws, or
under unemployment insurance in the ordinary course of business; (c) Liens in
favor of the Lender; (d) judgment Liens to the extent the entry of such judgment
does not constitute a Default or an Event of Default under the terms of this
Agreement or result in the sale or levy of, or execution on, any of the
Collateral; (e) Purchase Money Security Interests and Capital Leases not
exceeding $500,000 in the aggregate; (f) liens imposed by law, such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations not more
than 30 days past due for warehousemans' liens or 60 days for other such liens
or which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books; (g) easements,
zoning or deed restrictions and such other encumbrances or charges (other than
liens or security interests) against real property which do not in any material
way affect the marketability or value of the same or interfere with the
ownership or use thereof in the business of the Borrower or its Subsidiaries;
(h) any transfer of a check or other medium of payment for deposit or collection
through normal banking channels or any similar transaction in the normal course
of business; (i) any Lien or cash or cash equivalents securing or given in the
ordinary course of the Borrower's business to secure surety or performance
bonds, or securing performance of contracts or bids (other than contracts for
the payment of money borrowed) or deposits required by Law or as a condition to
the transaction of business or the exercise of any right, privilege or license;
(j) other consensual liens not exceeding $500,000 in the aggregate; (k) security
interests in favor of the Borrower's customers to secure amounts which the
customer paid to Borrower as a deposit or progress payment for the manufacture
of identified equipment, but only to the extent such security interests cover
only the identified equipment, secure only those amounts, and do not have
priority over the security interests of the Lender arising under this Agreement;
(l) Liens in favor of the Borrower or any of its Subsidiaries which do not
encumber the Collateral, (m) Liens securing reimbursement obligations with
respect to commercial
-16-
18
letters of credit that encumber only the documents and, as a result thereof,
other property relating to such letters of credit; (n) Liens on property or
assets of a Person existing at the time such Person becomes a Subsidiary of the
Borrower or merges into the Borrower, but only to the extent such Liens are not
incurred in connection with, or in contemplation of, such Person's becoming a
Subsidiary or merging into the Borrower; (o) such other Liens, if any, as are
set forth on SCHEDULE 4.1.20 attached hereto and made a part hereof; and (p) any
extensions, substitutions, replacements or renewals of the foregoing, to the
extent such extensions, substitutions, replacements and renewals, to the extent
the Lien does not cover any additional property or secure any additional debt.
"Permitted Uses" means the payment of expenses incurred in the
ordinary course of the Borrower's business and the general corporate purposes of
the Borrower which do not violate this Agreement.
"Person" means and includes an individual, a corporation, a
partnership, a joint venture, a limited liability company or partnership, a
trust, an unincorporated association, a Governmental Authority, or any other
organization or entity.
"Plan" means any pension plan which is covered by Title IV of
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is an
"employer" as defined in Section 3 of ERISA.
"Post-Default Rate" means the Applicable Interest Rate in
effect from time to time plus 200 basis points.
"Prime Rate" means the floating and fluctuating per annum
prime commercial lending rate of interest of the Lender, as established and
declared by the Lender at any time or from time to time. The Prime Rate shall be
adjusted automatically, without notice, as of the effective date of any change
in such prime commercial lending rate. The Prime Rate does not necessarily
represent the lowest rate of interest charged by the Lender to borrowers.
"Proforma Financial Projections" has the meaning
described in Section 4.1.12 (Proforma Financial Statements) below.
"Proforma Financial Statements" has the meaning described
in Section 4.1.12 (Proforma Financial Statements) below.
"Purchase Money Security Interest" means the interest of the
lessor under a Capital Lease and also means a purchase money security interest,
attaching at the time of acquisition, in Equipment, or construction or
improvement of any real or personal property, acquired after the date of this
Agreement; provided,
-17-
19
however, that (i) the indebtedness secured by any such security interest shall
not exceed 100% of the cost of the property covered plus finance charges, fees,
costs and expenses (including attorneys fees) of documentation, perfection,
collection and enforcement, (ii) each such security interest shall attach only
to the property so acquired for the purchase money for the property so acquired,
constructed or improved, and (iii) the acquisition to which any such security
interest relates shall not result in a Default or Event of Default under this
Agreement.
"Receivable" means one of the Borrower's now owned and
hereafter owned, acquired or created Accounts, Chattel Paper, General
Intangibles and Instruments; and "Receivables" means all of the Borrower's now
or hereafter owned, acquired or created Accounts, Chattel Paper, General
Intangibles and Instruments, and all cash and non-cash proceeds and products
thereof.
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder.
"Reserve Percentage" means, at any time, the then current
maximum rate for which reserves (including any basic, supplemental, marginal and
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System under Regulation D of the Board of Governors of the Federal
Reserve System against "Eurocurrency liabilities", as that term is defined in
Regulation D. The LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Percentage.
"Responsible Officer" means the chief executive officer, the
chief financial officer, any senior vice president or the president of the
Borrower.
"Restricted Payment" shall have the meaning given that term
and its constituent definitions in the Indenture on the Closing Date.
"Revolving Credit Commitment" means the agreement of the
Lender relating to the making of the Revolving Loan and advances thereunder
subject to and in accordance with the provisions of this Agreement.
"Revolving Credit Commitment Period" means the period of time
from the Closing Date to the Business Day preceding the Revolving Credit
Termination Date.
"Revolving Credit Committed Amount" has the meaning
described in Section 2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means June 30, 2002,
extending automatically for successive periods of one (1) year (but in no event
later than June 30, 2007) unless the Lender in the
-18-
20
exercise of its sole and absolute discretion has notified the Borrower, or the
Borrower in the exercise of its sole and absolute discretion has notified the
Lender, no later than the April 30, immediately preceding the next scheduled
Revolving Credit Expiration Date of its intention to terminate the Revolving
Credit Facility as of the next scheduled Revolving Credit Expiration Date.
"Revolving Credit Facility" means the facility established by
the Lender pursuant to Section 2.1 (Revolving Credit Facility) of this
Agreement.
"Revolving Credit Note" has the meaning described in
Section 2.1.3 (Revolving Credit Note).
"Revolving Credit Termination Date" means the earlier of (a)
the Revolving Credit Expiration Date, or (b) the date on which the Revolving
Credit Commitment is terminated pursuant to Section 7.2 or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit
Unused Line Fees" have the meanings described in Section 2.1.5 (Revolving Credit
Unused Line Fee).
"Revolving Loan" has the meaning described in Section 2.1.1
(Revolving Credit Facility).
"Revolving Loan Account" has the meaning described in
Section 2.1.4 (Revolving Loan Account).
"Securities" means the collective reference to each and every
certificated or uncertificated security which constitutes a "security" under the
provisions of Title 8 of the Uniform Commercial Code and to each and every
"investment property" under the provisions of Title 9 of the Uniform Commercial
Code (if that definition is included in that Title), and all proceeds (cash and
non-cash) of the foregoing.
"Security Documents" means collectively any assignment, pledge
agreement, security agreement, mortgage, deed of trust, deed to secure debt,
financing statement and any similar instrument, document or agreement under or
pursuant to which a Lien is now or hereafter granted to, or for the benefit of,
the Lender on any real or personal property of any Person to secure all or any
portion of the Obligations, all as the same may from time to time be amended,
restated, supplemented or otherwise modified, including, without limitation,
this Agreement, the Mortgage, and the Assignment of Patents.
"Security Procedures" means the rules, policies and procedures
adopted and implemented by the Lender and its Affiliates at any time and from
time to time with respect to security procedures and measures relating to
electronic funds transfers, all
-19-
21
as the same may be amended, restated, supplemented, terminated, or otherwise
modified at any time and from time to time by the Lender in its sole and
absolute discretion.
"Senior Notes" means any and all 12-3/4% Senior Notes due 2007
to be issued from time to time under the Indenture, in the original principal
amount of $70,000,000.
"Senior Notes Documents" means, collectively, the
Offering Memorandum, the Indenture and the Senior Notes.
"Servicing Fee" and "Servicing Fees" have the meanings
described in Section 2.4.4 (Servicing Fees).
"State" means the State of Maryland.
"Stir Melter" shall have the meaning set forth in Section
3.4.1(b).
"Subordinated Indebtedness" means all Indebtedness incurred at
any time by the Borrower, which is in amounts, subject to repayment terms, and
subordinated to the Obligations, as set forth in one or more written agreements,
all in form and substance satisfactory to the Lender in its sole and absolute
discretion.
"Subsidiary" means any corporation the majority of the voting
shares of which at the time are owned directly by the Borrower and/or by one or
more Subsidiaries of the Borrower.
"Taxes" means all taxes and assessments whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all penalties or interest thereon), which at any time may
be assessed, levied, confirmed or imposed by any Governmental Authority on the
Borrower or any of its properties or assets or any part thereof or in respect of
any of its franchises, businesses, income or profits.
"Trademarks" means and includes in each case whether now
existing or hereafter arising, all of the Borrower's rights, title and interest
in and to (a) any and all trademarks (including service marks), trade names and
trade styles, and applications for registration thereof and the goodwill of the
business symbolized by any of the foregoing, (b) any and all licenses of
trademarks, service marks, trade names and/or trade styles, whether as licensor
or licensee, (c) any renewals of any and all trademarks, service marks, trade
names, trade styles and/or licenses of any of the foregoing, (d) income,
royalties, damages and payments now or hereafter due and/or payable with respect
thereto, including, without limitation, damages, claims, and payments for past,
present and future infringements thereof, (e) rights to ▇▇▇ for past, present
and future infringements of any of the foregoing, including the right to settle
suits involving claims and demands for
-20-
22
royalties owing, and (f) all rights corresponding to any of the
foregoing throughout the world.
"Trustee" means United States Trust Company of New York and
its successor and assigns as Trustee under the Indenture.
"Uniform Commercial Code" means, unless otherwise provided in
this Agreement, the Uniform Commercial Code as adopted by and in effect from
time to time in the State or in any other jurisdiction, as applicable.
"Unrestricted Proceeds" means $200,000 in the aggregate in any
year for any event or any group of related event.
"Wholly Owned Subsidiary" means any domestic United States
corporation all the shares of stock of all classes of which (other than
directors' qualifying shares) at the time are owned directly or indirectly by
the Borrower and/or by one or more Wholly Owned Subsidiaries of the Borrower.
"Wire Transfer Procedures" means the rules, policies and
procedures adopted and implemented by the Lender and its Affiliates at any time
and from time to time with respect to electronic funds transfers, including,
without limitation, the Security Procedures, all as the same may be amended,
restated, supplemented, terminated or otherwise modified at any time and from
time to time by the Lender in its sole and absolute discretion.
SECTION 1.2 ACCOUNTING TERMS AND OTHER DEFINITIONAL
PROVISIONS.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP. All computations determining compliance with financial
covenants, including definitions used therein and calculations made after the
Closing Date, shall be made giving effect to GAAP as in effect on the Closing
Date in determining the financial covenants contained in this Agreement. Unless
otherwise defined herein, all terms used herein which are defined by the Uniform
Commercial Code shall have the same meanings as assigned to them by the Uniform
Commercial Code unless and to the extent varied by this Agreement. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, subsection, schedule and
exhibit references are references to articles, sections or subsections of, or
schedules or exhibits to, as the case may be, this Agreement unless otherwise
specified. As used herein, the singular number shall include the plural, the
plural the singular and the use of the masculine,
-21-
23
feminine or neuter gender shall include all genders, as the context may require.
Reference to any one or more of the Financing Documents shall mean the same as
the foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified.
ARTICLE 2
THE CREDIT FACILITIES
SECTION 2.1 THE REVOLVING CREDIT FACILITY.
2.1.1 REVOLVING CREDIT FACILITY. Subject to and
upon the provisions of this Agreement, the Lender establishes a revolving credit
facility in favor of the Borrower. The aggregate of all advances under the
Revolving Credit Facility are sometimes referred to in this Agreement
collectively as the "Revolving Loan".
The principal amount of Ten Million Dollars ($10,000,000) is the
"Revolving Credit Committed Amount". If at any time the unpaid principal balance
of the Revolving Loan and of the Letter of Credit Obligations exceed the
Revolving Credit Committed Amount in effect from time to time, the Borrower
shall pay such excess to the Lender ON DEMAND.
During the Revolving Credit Commitment Period, the Lender agrees to
make advances under the Revolving Loan requested by the Borrower from time to
time.
Unless sooner paid, the unpaid Revolving Loan, together with interest
accrued and unpaid thereon, and all other Obligations shall be due and payable
in full on the Revolving Credit Expiration Date.
2.1.2 PROCEDURE FOR MAKING ADVANCES UNDER THE
REVOLVING LOAN; LENDER PROTECTION LOANS.
The Borrower may borrow, prepay and reborrow under the Revolving Credit
Commitment on any Business Day. Advances under the Revolving Loan shall be
deposited to a demand deposit account of the Borrower with the Lender (or an
Affiliate of the Lender) or shall be otherwise applied as directed by the
Borrower, which direction the Lender may require to be in writing. No later than
noon (Baltimore time) on the date of the requested borrowing, the Borrower shall
give the Lender oral or written notice (a "Loan Notice") of the amount and (if
requested by the Lender) the purpose of the requested borrowing. Any oral Loan
Notice shall be confirmed in writing by the Borrower within three (3) Business
Days after the making of the requested Revolving Loan. In addition, the Borrower
hereby irrevocably authorizes the Lender at any time and from time to time,
without further request from or notice to the Borrower, to make advances under
the Revolving Loan which the
-22-
24
Lender, in its reasonable discretion, deems necessary or appropriate to protect
the Lender's interests under this Agreement, including, without limitation,
advances under the Revolving Loan made to cover debit balances in the Revolving
Loan Account, principal of, and/or interest on, any Loan, any of the
Obligations, and/or Enforcement Costs, prior to, on, or after the termination of
other advances under this Agreement, regardless of whether the outstanding
principal amount of the Revolving Loan which the Lender may make hereunder
exceeds the Revolving Credit Committed Amount.
2.1.3 REVOLVING CREDIT NOTE. The obligation of the Borrower
to pay the Revolving Loan, with interest, shall be evidenced by a promissory
note (as from time to time extended, amended, restated, supplemented or
otherwise modified, the "Revolving Credit Note") substantially in the form of
EXHIBIT "A-1" attached hereto and made a part hereof, with appropriate
insertions. The Revolving Credit Note shall be dated as of the Closing Date,
shall be payable to the order of the Lender at the times provided in the
Revolving Credit Note, and shall be in the principal amount of the Revolving
Credit Committed Amount. The Borrower acknowledges and agrees that, if the
outstanding principal balance of the Revolving Loan outstanding from time to
time exceeds the face amount of the Revolving Credit Note, the excess shall bear
interest at the Base Rate for the Revolving Loan and shall be payable, with
accrued interest, ON DEMAND. The Revolving Credit Note shall not operate as a
novation of any of the Obligations or nullify, discharge, or release any such
Obligations or the continuing contractual relationship of the parties hereto in
accordance with the provisions of this Agreement. On the first day of each
month, the Borrower shall pay the Lender as part of the Obligations an amount
equal to the additional interest which would have accrued on the Revolving Loan
during the preceding month if prepayments of the Revolving Loan during the
preceding month had been received one (1) Business Day subsequent to their
actual receipt.
2.1.4 REVOLVING LOAN ACCOUNT. The Lender will establish and
maintain a loan account on its books (the "Revolving Loan Account") to which the
Lender will (a) DEBIT (i) the principal amount of each advance of the Revolving
Loan made by the Lender hereunder as of the date made, (ii) the amount of any
interest accrued on the Revolving Loan as and when due, and (iii) any other
amounts due and payable by the Borrower to the Lender from time to time under
the provisions of this Agreement in connection with the Revolving Loan,
including, without limitation, Enforcement Costs, Fees, late charges, and
service, collection and audit fees, as and when due and payable, and (b) CREDIT
all payments made by the Borrower to the Lender on account of the Revolving Loan
as of the date made including, without limitation, funds credited to the
Revolving Loan Account from the Collateral Account. The Lender may debit the
Revolving Loan Account for the amount of any Item of Payment which is returned
to the Lender unpaid. All credit entries
-23-
25
to the Revolving Loan Account are conditional and shall be readjusted as of the
date made if final and indefeasible payment is not received by the Lender in
cash or solvent credits. Any and all periodic or other statements or
reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be examined by the Borrower
within ninety (90) days after receipt. If following that examination the
Borrower believes those statements or reconciliations to be incorrect, the
Borrower shall within five (5) Business Days after completion of its
examination, notify the Lender of the Borrower's beliefs and the reasons
therefor.
2.1.5 REVOLVING CREDIT UNUSED LINE FEE. The Borrower shall
pay to the Lender a quarterly revolving credit facility fee (collectively, the
"Revolving Credit Unused Line Fees" and individually, a "Revolving Credit Unused
Line Fee") in an amount equal to one-quarter percent (0.25%) per annum of the
average daily unused and undisbursed portion of the Revolving Credit Committed
Amount in effect from time to time accruing during each calendar quarter in
arrears. The accrued and unpaid portion of the Revolving Credit Unused Line Fee
shall be paid by the Borrower to the Lender on the first day of each month,
commencing on the first such date following the date hereof, and on the
Revolving Credit Termination Date.
2.1.6 EARLY TERMINATION FEE. In the event of the termination
by, or on behalf of, the Borrower, of the Revolving Credit Commitment, the
Borrower shall pay a fee (the "Early Termination Fee") equal to following amount
at the following times:
PERIOD EARLY TERMINATION FEE
------ ---------------------
Closing Date through and
including June 30, 1998 $75,000.00
July 1, 1998 through and
including June 30, 1999 $50,000.00
July 1, 1999 through and
including June 30, 2000 $35,000.00
Thereafter No Early Termination Fee
Payment of the Revolving Loan in whole or in part by or on behalf of the
Borrower, by court order or otherwise, following and as a result of the
institution of any bankruptcy proceeding by or against the Borrower, shall be
deemed to be a prepayment of the Revolving Loan subject to the Early Termination
Fee provided in this subsection, except that there shall not, however, be an
Early Termination Fee due if the termination of the Revolving Credit Commitment
and repayment of the Revolving Credit Facility is made solely as a result of (i)
the closing and consummation of an
-24-
26
initial public offering of Securities by Holding which generates sufficient
proceeds and is in fact used to repay all Obligations in full, (ii) acceleration
of the Obligations by the Lender or demand for payment under Section 7.2.1,
(iii) the sale by the Borrower of all or substantially all of its Assets which
generates sufficient proceeds and is in fact used to repay all Obligations in
full, (iv) a simultaneous initial public offering of Borrower's common stock
with net proceeds to the Parent and/or the Borrower of $25,000,000 or more, (v)
the sale by Holdings of its securities or of all of the securities issued by the
Borrower to Holding which generates sufficient proceeds and is in fact used to
repay all Obligations in full, or (vi) the generation and retention of excess
cash flow sufficient to have maintained the outstanding principal balance of the
Revolving Loan at zero for at least one fiscal quarter and the Lender's
reasonable satisfaction based on projections provided by the Borrower that there
is no use, need for, or contemplation of senior debt (other than that evidenced
by the Senior Notes) for the then next four (4) fiscal quarters.
SECTION 2.2 THE LETTER OF CREDIT FACILITY.
-----------------------------
2.2.1 LETTERS OF CREDIT. Subject to and upon the provisions
of this Agreement, and as a part of the Revolving Credit Commitment, the
Borrower may, upon the prior approval of the Lender, obtain standby letters of
credit (as the same may from time to time be amended, supplemented or otherwise
modified, each a "Letter of Credit" and collectively the "Letters of Credit")
from the Lender from time to time from the Closing Date until the Business Day
preceding the Revolving Credit Termination Date. The Borrower will not be
entitled to obtain a Letter of Credit hereunder unless (a) after giving effect
to the request, the outstanding principal balance of the Revolving Loan and of
the Letter of Credit Obligations would not exceed the Revolving Credit Committed
Amount, and (b) the sum of the aggregate face amount of the then outstanding
Letters of Credit (including the face amount of the requested Letter of Credit)
does not exceed Five Million Dollars ($5,000,000).
2.2.2 LETTER OF CREDIT FEES. Prior to or simultaneously with
the opening of each Letter of Credit, the Borrower shall pay to the Lender, a
letter of credit fee (each a "Letter of Credit Fee" and collectively the "Letter
of Credit Fees") in an amount equal to 200 basis points per annum of the amount
of the Letter of Credit, based on a term beginning with the date of issuance and
ending on the expiration date of the Letter of Credit. Such Letter of Credit
Fees shall be paid upon the opening of the Letter of Credit and upon each
anniversary thereof, if any. In addition, the Borrower shall pay to the Lender
any and all additional issuance, negotiation, processing, transfer or other fees
to the extent and as and when required by the provisions of any Letter of Credit
Agreement, which shall be no greater than the fees therefor customarily charged
by the Lender; such additional
-25-
27
fees are included in and a part of the "Fees" payable by the Borrower under the
provisions of this Agreement.
2.2.3 TERMS OF LETTERS OF CREDIT. Each Letter of Credit shall
(a) be opened pursuant to a Letter of Credit Agreement, and (b) expire on a date
not later than the Business Day preceding the Revolving Credit Expiration Date;
provided, however, if any Letter of Credit does have an expiration date later
than the Business Day preceding the Revolving Credit Termination Date, as of the
Business Day preceding the Revolving Credit Termination Date an advance of the
Revolving Credit Facility shall be made by the Lender in the face amount of such
Letter of Credit (or Letters of Credit) and the proceeds thereof shall be
deposited in an interest bearing account selected by the Lender titled in the
name of the Lender as trustee for the Borrower. The proceeds of the trustee
account referred to in the immediately preceding sentence shall be held as
collateral for the Letter of Credit (or Letters of Credit) and in the event of a
draw under the Letter of Credit (or Letters of Credit), used to pay any such
draw. The aggregate face amount of all Letters of Credit at any one time
outstanding and issued by the Lender pursuant to the provisions of this
Agreement, plus the amount of any unpaid Letter of Credit Fees accrued or
scheduled to accrue thereon, and less the aggregate amount of all drafts issued
under or purporting to have been issued under such Letters of Credit that have
been paid by the Lender, is herein called the "Outstanding Letter of Credit
Obligations".
2.2.4 PROCEDURE FOR LETTERS OF CREDIT. The Borrower shall
give the Lender written notice at least three (3) Business Days prior to the
date on which a Letter of Credit is requested to be opened of their request for
a Letter of Credit. Such notice shall be accompanied by a duly executed and
delivered Letter of Credit Agreement. Upon receipt of the Letter of Credit
Agreement and the Letter of Credit Fee, the Lender shall process such Letter of
Credit Agreement in accordance with its customary procedures and open such
Letter of Credit on the Business Day specified in such notice.
2.2.5 CHANGE IN LAW; INCREASED COST. If any change in any law
or regulation or in the interpretation thereof by any court or other
Governmental Authority charged with the administration thereof shall either (a)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against Letters of Credit issued by the Lender, or (b) impose on the
Lender any other condition regarding this Agreement or any Letter of Credit, and
the result of any event referred to in clauses (a) or (b) above shall be to
increase the cost to the Lender of issuing, maintaining or extending the Letter
of Credit or the cost to the Lender of funding any obligation under or in
connection with the Letter of Credit, then, upon the earlier of thirty (30) days
after demand therefor by the Lender or the Revolving Credit Termination Date,
the Borrower shall immediately
-26-
28
pay to the Lender from time to time as specified by the Lender, additional
amounts which shall be sufficient to compensate the Lender for such increased
cost, together with interest on each such amount from the date demanded until
payment in full thereof at a rate per annum equal to the then highest current
rate of interest on the Revolving Loan. A certificate as to such increased cost
incurred by the Lender, submitted by the Lender to the Borrower, shall be
conclusive, absent manifest error.
SECTION 2.3 INTEREST.
2.3.1 APPLICABLE INTEREST RATES.
(a) Each Loan shall bear interest until maturity (whether by
acceleration, declaration, extension or otherwise) at either the Base Rate or
the LIBOR Rate, as selected and specified by the Borrower in an Interest Rate
Election Notice furnished to the Lender in accordance with the provisions of
Section 2.3.2(e), or as otherwise determined in accordance with the provisions
of this Section 2.3, and as may be adjusted from time to time in accordance
with the provisions of Section 2.3.3.
(b) Notwithstanding the foregoing, following the occurrence
and during the continuance of an Event of Default, at the option of the Lender,
all Loans and all other Obligations shall bear interest at the Post-Default
Rate.
(c) The Applicable Margin for (i) LIBOR Loans shall be 200
basis points per annum, and (ii) Base Rate Loans shall be zero basis points per
annum.
2.3.2 SELECTION OF INTEREST RATES.
(a) The Borrower may select the initial Applicable Interest
Rate or Applicable Interest Rates to be charged on the Loans.
(b) From time to time after the date of this Agreement as
provided in this Section, by a proper and timely Interest Rate Election Notice
furnished to the Lender in accordance with the provisions of Section 2.3.2(e),
the Borrower may select an initial Applicable Interest Rate or Applicable
Interest Rates for any Loans or may convert the Applicable Interest Rate and,
when applicable, the Interest Period, for any existing Loan to any other
Applicable Interest Rate or, when applicable, any other Interest Period.
(c) The Borrower's selection of an Applicable Interest Rate
and/or an Interest Period, the Borrower's election to convert an Applicable
Interest Rate and/or an Interest Period to another Applicable Interest Rate or
Interest Period, and any other
-27-
29
adjustments in an interest rate are subject to the following
limitations:
(i) the Borrower shall not at any time select or change to an
Interest Period that extends beyond the Revolving Credit Expiration
Date in the case of the Revolving Loan,
(ii) except as otherwise provided in Section 2.3.4, no change
from the LIBOR Rate to the Base Rate shall become effective on a day
other than a Business Day and on a day which is the last day of the
then current Interest Period, no change of an Interest Period shall
become effective on a day other than the last day of the then current
Interest Period, and no change from the Base Rate to the LIBOR Rate
shall become effective on a day other than a day which is a
Eurodollar Business Day.
(iii) any Applicable Interest Rate change for any Loan to be
effective on a date on which any principal payment on account of such
Loan is scheduled to be paid shall be made only after such payment
shall have been made,
(iv) no more than three (3) different LIBOR Rates may be
outstanding at any time and from time to time with respect to the
Revolving Loan,
(v) the first day of each Interest Period shall be a
Eurodollar Business Day,
(vi) as of the effective date of a selection, there shall not
exist a Default or an Event of Default, and
(vii) the minimum principal amount of a LIBOR Loan shall be
Five Hundred Dollars ($500,000).
(d) If a request for an advance under the Loans is not
accompanied by an Interest Rate Election Notice or does not otherwise include a
selection of an Applicable Interest Rate and, if applicable, an Interest Period,
or if, after having made a selection of an Applicable Interest Rate and, if
applicable, an Interest Period, the Borrower fails or is not otherwise entitled
under the provisions of this Agreement to continue such Applicable Interest Rate
or Interest Period, the Borrower shall be deemed to have selected the Base Rate
as the Applicable Interest Rate until such time as the Borrower has selected a
different Applicable Interest Rate and specified an Interest Period in
accordance with, and subject to, the provisions of this Section.
(e) The Lender will not be obligated to make Loans, to
convert the Applicable Interest Rate on Loans to another
-28-
30
Applicable Interest Rate, or to change Interest Periods, unless the Lender shall
have received an irrevocable written or telephonic notice (an "Interest Rate
Election Notice") from the Borrower specifying the following information:
(i) the amount to be borrowed or converted,
(ii) a selection of the Base Rate or the LIBOR Rate,
(iii) the length of the Interest Period if the Applicable
Interest Rate selected is the LIBOR Rate, and
(iv) the requested date on which such election is to be
effective.
Any telephonic notice must be confirmed in writing within three (3) Business
Days. Each Interest Rate Election Notice must be received by the Lender not
later than noon (Baltimore City time) on the Business Day of any requested
borrowing or conversion in the case of a selection of the Base Rate and not
later than noon (Baltimore City time) on the third Business Day before the
effective date of any requested borrowing or conversion in the case of a
selection of the LIBOR Rate.
2.3.3 INABILITY TO DETERMINE LIBOR BASE RATE. In the event
that (i) the Lender shall have determined that, by reason of circumstances
affecting the London interbank eurodollar market, adequate and reasonable means
do not exist for ascertaining the LIBOR Base Rate for any requested Interest
Period with respect to a Loan the Borrower has requested to be made as or to be
converted to a LIBOR Loan or (ii) the Lender shall determine that the LIBOR Base
Rate for any requested Interest Period with respect to a Loan the Borrower has
requested to be made as or to be converted to a LIBOR Loan does not adequately
and fairly reflect the cost to the Lender of funding or converting such Loan,
the Lender shall give telephonic or written notice of such determination to the
Borrower at least one (1) day prior to the proposed date for funding or
converting such Loan. If such notice is given, any request for a LIBOR Loan
shall be made as or converted to a Base Rate Loan. Until such notice has been
withdrawn by the Lender, the Borrower will not request that any Loan be made as
or converted to a LIBOR Loan.
2.3.4 INDEMNITY. The Borrower agrees to indemnify and
reimburse the Lender and to hold the Lender harmless from any loss, cost
(including administrative costs) or expense which the Lender may sustain or
incur as a consequence of (a) a default by the Borrower in payment when due of
the principal amount of or interest on any LIBOR Loan, (b) the failure of the
Borrower to make, or convert the Applicable Interest Rate of, a Loan after
-29-
31
the Borrower has given a Loan Notice or an Interest Rate Election Notice, (c)
the failure of the Borrower to make any prepayment of a LIBOR Loan after the
Borrower has given notice of such intention to make such a prepayment, and/or
(d) the making by the Borrower of a prepayment of a LIBOR Loan on a day which is
not the last day of the Interest Period for such LIBOR Loan, including, without
limitation, any such loss or expense arising from the reemployment of funds
obtained by the Lender to maintain any LIBOR Loan or from fees payable to
terminate the deposits from which such funds were obtained. This agreement and
covenant of the Borrower shall survive termination or expiration of this
Agreement and payment of the other Obligations.
2.3.5 PAYMENT OF INTEREST.
(a) Unpaid and accrued interest on any advance of the
Revolving Loan which consists of a Base Rate Loan shall be paid monthly, in
arrears, on the first day of each calendar month, commencing on the first such
date after the date of this Agreement, and on the first day of each calendar
month thereafter, and at maturity (whether by acceleration, declaration,
extension or otherwise).
(b) Notwithstanding the foregoing, any and all unpaid
and accrued interest on any Base Rate Loan converted to a Eurodollar Loan or
prepaid shall be paid immediately upon such conversion and/or prepayment, as
appropriate.
(c) Unpaid and accrued interest on any LIBOR Loan shall
be paid on the last Business Day of each Interest Period for such LIBOR Loan
(and, in addition, for an Interest Period of 180 days, on the first Business Day
after the 89th day after the commencement of the Interest Period and for an
Interest Period of 360 days, on the first Business Day after the 89th day, on
the first Business Day after 179th day and on the on the first Business Day
after the 269th day after the commencement of the Interest Period) and at
maturity (whether by acceleration, declaration, extension or otherwise);
provided, however that any and all unpaid and accrued interest on any LIBOR Loan
prepaid prior to expiration of the then current Interest Period for such LIBOR
Loan shall be paid immediately upon prepayment.
SECTION 2.4 GENERAL FINANCING PROVISIONS.
2.4.1 BORROWER'S REPRESENTATIVES. The Lender is
hereby irrevocably authorized by the Borrower to make advances under the Loans
to the Borrower pursuant to the provisions of this Agreement upon the written,
oral or telephone request of any one of the Persons who is from time to time a
Responsible Officer of the Borrower under the provisions of the most recent
"Certificate" of corporate resolutions of the Borrower on file with the Lender
or who is an officer or employee of the Borrower whom a Responsible
-30-
32
Officer from time to time authorizes in writing to do so. The Lender does not
and shall not assume any responsibility or liability for any errors, mistakes,
and/or discrepancies in the oral, telephonic, written or other transmissions of
any instructions, orders, requests and confirmations between the Lender and the
Borrower in connection with the Credit Facilities, any Loan or any other
transaction in connection with the provisions of this Agreement.
2.4.2 USE OF PROCEEDS OF THE LOANS. The proceeds of each
advance under the Loans shall be used by the Borrower for Permitted Uses, and
for no other purposes except as may otherwise be agreed by the Lender in
writing. The Borrower shall use the proceeds of the Loans promptly.
2.4.3 ORIGINATION FEE. The Borrower shall pay to the Lender
on or before the Closing Date a loan origination fee (the "Origination Fee") in
the amount of Fifty Thousand Dollars ($50,000), which fee has been fully earned
and is non-refundable.
2.4.4 SERVICING FEES. The Borrower shall pay to the Lender an
annual servicing fee (collectively, the "Servicing Fees" and individually a
"Servicing Fee") in the amount of $10,000 which shall be deemed earned on the
Closing Date and on each anniversary of the Closing Date, and which shall be
payable in installments of $2,500 each, the first installment being due on the
Closing Date and subsequent installments being due on the first day of each
September, December, March and June thereafter, with any unpaid installments
being due and payable on the Revolving Credit Termination Date.
2.4.5 COMPUTATION OF INTEREST AND FEES. All applicable Fees
and interest shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed. Any change in the interest rate on any of the
Obligations resulting from a change in the Base Rate shall become effective as
of the opening of business on the day on which such change in the Base Rate is
announced.
2.4.6 PAYMENTS. All payments of the Obligations, including,
without limitation, principal, interest, prepayments, and Fees, shall be paid by
the Borrower without setoff, recoupment or counterclaim to the Lender in
immediately available funds not later than 12:00 noon, Baltimore, Maryland time
on the due date of such payment. All such payments shall be made to the Lender's
principal office in Baltimore, Maryland or at such other location as the Lender
may at any time and from time to time notify the Borrower. Alternatively, at its
sole discretion, the Lender may charge any deposit account of the Borrower at
the Lender or any Affiliate of the Lender with all or any part of any amount due
to the Lender under this Agreement or any of the other Financing Documents to
the extent that the Borrower shall have not
-31-
33
otherwise tendered payment to the Lender. All payments shall be applied first to
any unpaid Fees, second to any and all accrued and unpaid late charges and
Enforcement Costs, third to any and all accrued and unpaid interest on the
Obligations, and then to the then unpaid principal balance of the Obligations,
all in such order and manner as shall be determined by the Lender in its sole
and absolute discretion.
2.4.7 LIENS; SETOFF. In addition to the Liens set forth in
ARTICLE 3, the Borrower hereby grants to the Lender as additional collateral and
security for all of the Obligations, a continuing Lien on any and all monies,
Securities, and other personal property of the Borrower and any and all proceeds
thereof, now or hereafter held or received by, or in transit to, the Lender or
any Affiliate of the Lender from, or for the account of, the Borrower, and also
upon any and all depository accounts (whether general or special) and credits of
the Borrower, if any, with the Lender or any Affiliate of the Lender, at any
time existing, excluding any depository accounts held by the Borrower in its
capacity as trustee for Persons who are not Affiliates of the Borrower. Without
implying any limitation on any other rights the Lender may have under the
Financing Documents or applicable Laws, during the continuance of an Event of
Default, the Lender is hereby authorized by the Borrower at any time and from
time to time at the Lender's option, without notice to, or consent of, the
Borrower, to set off, appropriate, seize, freeze and apply any or all items
hereinabove referred to against all Obligations then outstanding (whether or not
then due), all in such order and manner as shall be determined by the Lender in
its sole and absolute discretion. The Lender shall promptly after taking such
action give the Borrower notice thereof by fax or telephone advice or overnight
messenger.
2.4.8 REQUIREMENTS OF LAW. In the event that the Lender shall
have determined in good faith that (a) the adoption of any Laws regarding
capital adequacy, or (b) any change in such Laws or in the interpretation or
application thereof or (c) compliance by the Lender or any corporation
controlling the Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority or
central bank, does or shall have the effect of reducing the rate of return on
the capital of the Lender or such controlling corporation as a consequence of
the Lender's obligations under this Agreement to a level below that which the
Lender or such corporation would have achieved but for such adoption, change or
compliance (taking into consideration the policies of the Lender and its
controlling corporation with respect to capital adequacy) by an amount deemed by
the Lender, in its discretion, to be material, then from time to time, after
submission by the Lender to the Borrower of a written request therefor and a
statement of the basis for the Lender's determination, the Borrower shall pay to
the Lender, upon the earlier of thirty (30) days after demand by the Lender
therefor or the Revolving Credit Termination Date, such additional amount or
-32-
34
amounts in order to compensate the Lender or its controlling
corporation for any such reduction.
2.4.9 FUNDS TRANSFER SERVICES.
(a) The Borrower has requested that the Lender and its
Affiliates make available to the Borrower electronic funds transfer services and
related security measures in connection with the Obligations. A copy of the
Lender's current Wire Transfer Procedures, including the Security Procedures, is
attached to this Agreement as EXHIBIT B. The Borrower acknowledges and agrees
that all electronic funds transfers made by the Lender or any Affiliate of the
Lender to, or for the account of, the Borrower shall be governed by, and subject
to, the Wire Transfer Procedures and the Security Procedures in effect from time
to time. The Borrower and the Lender agree that the current Wire Transfer
Procedures and the Security Procedures are commercially reasonable. The Borrower
further acknowledges and agrees, however, that the full scope of the Security
Procedures which the Lender and its Affiliates offer and strongly recommend for
electronic funds transfers is available only if the Borrower communicates
directly with the Lender or its Affiliate, as applicable, in accordance with and
as required by the Wire Transfer Procedures and the Security Procedures. If the
Borrower attempts to communicate with the Lender or any Affiliate of the Lender
by any other method or otherwise does not communicate with the Lender and/or its
Affiliate, as appropriate, in accordance with the Wire Transfer Procedures and
the Security Procedures, the Lender and/or its Affiliate, as applicable, shall
not be required to execute the instructions of the Borrower, but if the Lender
or such Affiliate, as applicable, does so, the Borrower will be deemed to have
refused and waived the Security Procedures that the Lender or its Affiliate, as
applicable, offers and strongly recommends, and the Borrower will be bound by
any funds transfer, whether or not authorized, which is issued in the Borrower's
name and accepted by the Lender or any Affiliate, as applicable, in good faith.
The Lender or its Affiliate, as applicable, may modify the Wire Transfer
Procedures including, without limitation, the Security Procedures at such time
or times and in such manner as the Lender and/or any Affiliate of the Lender, as
applicable, in its or their sole and absolute discretion, deems appropriate to
meet then prevailing standards of good banking practice. The Lender shall notify
the Borrower of any material change or modification to the Wire Transfer
Procedures and/or the Security Procedures. By continuing to use the wire
transfer services of the Lender and/or any Affiliate of the Lender following
notice to the Borrower of any such change or modification to the Wire Transfer
Procedures and/or the Security Procedures, the Borrower shall be deemed
automatically to have agreed to the Wire Transfer Procedures and the Security
Procedures, as changed and/or modified and to have further agreed that the Wire
Transfer Procedures and the Security Procedures, as changed and/or modified, are
likewise commercially reasonable. The Borrower further agrees to establish and
maintain procedures to
-33-
35
safeguard the Security Procedures and any information related thereto. Neither
the Lender nor any Affiliate of the Lender is responsible for detecting any
error in any payment order sent by the Borrower to the Lender or any Affiliate
of the Lender.
(b) The Lender and its Affiliates, as applicable, will
generally use the Fedwire funds transfer system for domestic funds transfers,
and the funds transfer system operated by the Society for Worldwide
International Financial Telecommunication (SWIFT) for international funds
transfers. International funds transfers may also be initiated through the
Clearing House InterBank Payment System (CHIPs) or international cable. However,
the Lender and/or its Affiliates, as applicable, may use any means and routes
that the Lender or any such Affiliate, as applicable, in its sole discretion,
may consider suitable for the transmission of funds. Each payment order, or
cancellation thereof, carried out through a funds transfer system or a
clearinghouse will be governed by all applicable funds transfer system rules and
clearing house rules and clearing arrangements, whether or not the Lender or any
Affiliate, as applicable, is a member of the system, clearinghouse or
arrangement and the Borrower acknowledges that the right of the Lender or any
Affiliate, as applicable, to reverse, adjust, stop payment or delay posting of
an executed payment order is subject to the Laws, regulations, rules, circulars
and arrangements described herein.
ARTICLE 3
THE COLLATERAL
SECTION 3.1 DEBT AND OBLIGATIONS SECURED. All property and Liens
assigned, pledged or otherwise granted under or in connection with this
Agreement (including, without limitation, those under Section 3.2 (Grant of
Liens) below) or any of the Financing Documents shall secure (a) the payment of
all of the Obligations, and (b) the performance, compliance with and observance
by the Borrower of the provisions of this Agreement and all of the other
Financing Documents or otherwise under the Obligations.
SECTION 3.2 GRANT OF LIENS. The Borrower hereby assigns, pledges and
grants to the Lender, and agrees that the Lender shall have a perfected and
continuing security interest in, and Lien on, (a) all of the Borrower's
Accounts, Inventory, Chattel Paper, Documents, Instruments, Equipment,
Securities, and General Intangibles, whether now owned or existing or hereafter
acquired or arising, (b) all returned, rejected or repossessed goods, the sale
or lease of which shall have given or shall give rise to an Account or Chattel
Paper, (c) all insurance policies relating to the foregoing, (d) all books and
records in whatever media (paper, electronic or otherwise) recorded or stored,
with respect to the foregoing and all Equipment and General Intangibles
necessary or beneficial to retain, access and/or process the information
-34-
36
contained in those books and records, and (e) all cash and non-cash proceeds and
products of the foregoing. The Borrower further agrees that the Lender shall
have in respect thereof all of the rights and remedies of a secured party under
the Uniform Commercial Code as well as those provided in this Agreement, under
each of the other Financing Documents and under applicable Laws.
Notwithstanding any other provision of this Agreement and the other
Security Documents, the Lender agrees that it will not record the Assignment of
Patents except during the continuance of an Event of Default and that the
failure of the Lender to have a perfected security interest in the Patents and
Trademarks until such recording shall not be breach of any provision of this
Agreement or the other Financing Documents.
SECTION 3.3 COLLATERAL DISCLOSURE LIST. On or prior to the Closing
Date, the Borrower shall deliver to the Lender a list (the "Collateral
Disclosure List") which shall contain such information with respect to the
Borrower's business and real and personal property as the Lender may require and
shall be certified by a Responsible Officer of the Borrower, all in the form
provided to the Borrower by the Lender. Promptly after demand by the Lender, the
Borrower shall furnish to the Lender an update of the information contained in
the Collateral Disclosure List at any time and from time to time as may be
requested by the Lender.
SECTION 3.4 PERSONAL PROPERTY. The Borrower acknowledges and agrees
that it is the intention of the parties to this Agreement that the Lender shall
have a first priority, perfected Lien, in form and substance satisfactory to the
Lender and its counsel, on all of the Borrower's personal property of any kind
and nature whatsoever, whether now owned or hereafter acquired, subject only to
the Permitted Liens, if any. In furtherance of the foregoing:
3.4.1 SECURITIES, CHATTEL PAPER, PROMISSORY NOTES, ETC.
(a) On the Closing Date and without implying
any limitation on the scope of Section 3.2 (Grant of Liens) above, the Borrower
shall deliver to the Lender all originals of all of the Borrower's letters of
credit, stock certificates, Chattel Paper, Documents and Instruments and, if the
Lender so requires, shall execute and deliver to the Lender separate pledges,
assignments and security agreements in form and content acceptable to the
Lender, which pledges, assignments and security agreements shall assign, pledge
and ▇▇▇▇▇ ▇ ▇▇▇▇ to the Lender on all letters of credit, stock certificates,
Chattel Paper, Documents, and Instruments.
(b) The Borrower acknowledges and agrees that
its Securities include, without limitation, one hundred percent
-35-
37
(100%) of the equity interests of Stir-Melter, Inc., a corporation organized
under the Laws of the State of Delaware ("Stir Melter"). During the continuance
of an Event of Default, the Borrower shall receive no dividend or distribution
or other benefit with respect to Stir Melter without the Lender's prior written
consent, and shall not vote, consent, waive or ratify any action taken, which
would violate or be inconsistent with any of the terms and provisions of this
Agreement or any of the other Financing Documents or which would materially
impair the position or interest of the Lender in the such Securities or dilute
the percentage of the ownership interests of Stir Melter pledged to the Lender
hereunder, except as expressly permitted by this Agreement.
(c) In the event that the Borrower shall acquire after
the Closing Date any letters of credit, Securities, Chattel Paper, Documents, or
Instruments, the Borrower shall promptly so notify the Lender and deliver the
originals of all of the foregoing to the Lender promptly and in any event within
ten (10) days of each acquisition.
(d) All letters of credit, stock certificates, Chattel
Paper, Documents and Instruments shall be delivered to the Lender endorsed
and/or assigned as required by any pledge, assignment and security agreement
and/or as the Lender may require and, if applicable, shall be accompanied by
blank irrevocable and unconditional stock or bond powers and/or notices as the
Lender may require.
3.4.2 PATENTS, COPYRIGHTS AND OTHER PROPERTY REQUIRING
ADDITIONAL STEPS TO PERFECT.
On the Closing Date and without implying any limitation on the scope of
Section 3.2 above, the Borrower shall execute and deliver all Financing
Documents and take all actions requested by the Lender in order to perfect a
first priority assignment of Patents, Copyrights, Trademarks or any other type
or kind of intellectual property acquired by the Borrower after the Closing
Date.
SECTION 3.5 RECORD SEARCHES. As of the Closing Date and thereafter at
the time any Financing Document is executed and delivered by the Borrower
pursuant to this Section, the Lender shall have received, in form and substance
satisfactory to the Lender, such Lien or record searches with respect to the
Borrower and/or any other Person, as appropriate, and the property covered by
such Financing Document showing that the Lien of such Financing Document will be
a perfected first priority Lien on the property covered by such Financing
Document subject only to Permitted Liens or to such other matters as the Lender
may approve.
SECTION 3.6 REAL PROPERTY. The Borrower acknowledges and agrees that it
is the intention of the parties to this Agreement that the Lender shall have a
first priority, perfected Lien, in
-36-
38
form and substance satisfactory to the Lender and its counsel, on all of the
Borrower's real property of any kind and nature whatsoever, whether now owned or
hereafter acquired, subject only to the Permitted Liens, if any. In furtherance
of the foregoing:
With respect to each parcel of real property now owned by the
Borrower, the Borrower shall on the Closing Date execute and deliver a deed of
trust or a mortgage or other document, as appropriate, which deed of trust,
mortgage and/or other document shall be included among the Financing Documents.
With respect to real property acquired by the Borrower after
the Closing Date, the Borrower shall, promptly after acquisition thereof, ▇▇▇▇▇
▇ ▇▇▇▇ covering such real property to the Lender under the provisions of a
mortgage, deed of trust or other document, as appropriate. Each Financing
Document to be executed and delivered pursuant hereto shall:
(a) be in form and substance reasonably satisfactory to the
Lender;
(b) create a first priority Lien in such real property in
favor of the Lender subject only to Permitted Liens, zoning ordinances,
and such other matters as the Lender may approve;
(c) except for the Mortgaged Property, be accompanied by a
current appraisal of the fair market value of the subject real property
prepared by appraisers reasonably satisfactory to the Lender;
(d) be accompanied by a current survey reasonably satisfactory
in all respects to the Lender of the subject real property, prepared by
a registered land surveyor or engineer reasonably satisfactory to the
Lender;
(e) be accompanied by evidence reasonably satisfactory to the
Lender regarding the current and past pollution control practices at
such real property in connection with the discharge, emission,
handling, disposal or existence of Hazardous Materials, which may
include, at the Lender's request, an environmental audit of such real
property prepared by a person or firm acceptable to the Lender;
(f) be accompanied by a mortgagee's title insurance policy or
marked-up unconditional commitment or binder for such insurance in form
and substance reasonably satisfactory to the Lender and issued by a
title insurance company reasonably satisfactory to the Lender; and
(g) upon request of the Lender, be accompanied by a signed
opinion of counsel, in form and substance
-37-
39
reasonably satisfactory to the Lender, and from counsel, satisfactory
to the Lender, licensed to practice in the state where the subject real
property is located.
SECTION 3.7 COSTS. The Borrower agrees to pay, as part of the
Enforcement Costs and to the fullest extent permitted by applicable Laws, on
demand all reasonable costs, fees and expenses incurred by the Lender in
connection with the taking, perfection, preservation, protection and/or release
of a Lien on the Collateral, including, without limitation:
(a) customary fees and expenses incurred in preparing
Financing Documents from time to time (including, without limitation,
reasonable attorneys' fees incurred in connection with preparing the
Financing Documents);
(b) all filing and/or recording taxes or fees;
(c) all title insurance premiums and costs;
(d) all costs of Lien and record searches;
(e) reasonable attorneys' fees in connection with all legal
opinions required;
(f) appraisal and/or survey costs; and
(g) all related costs, fees and expenses.
SECTION 3.8 RELEASE. Upon the indefeasible repayment in full in cash of
the Obligations and performance of all Obligations of the Borrower (other than
Contingent Indemnification Obligations) under this Agreement and all other
Financing Documents, the termination and/or expiration of the Commitment and all
Letter of Credit Obligations, upon the Borrower's request and at the Borrower's
sole cost and expense, the Lender shall release and/or terminate any Financing
Document but only if and provided that there is no commitment or obligation
(whether or not conditional) of the Lender to re-advance amounts which would be
secured thereby.
SECTION 3.9 INCONSISTENT PROVISIONS. In the event that the provisions
of any Financing Document directly conflict with any provision of this
Agreement, the provisions of this Agreement govern.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Lender, as follows:
-38-
40
4.1.1 SUBSIDIARIES. Except as acquired or created as
permitted by this Agreement, the Borrower has the Subsidiaries listed on the
Collateral Disclosure List attached hereto and made a part hereof and no others.
As of the Closing Date, each of the Subsidiaries is a Wholly Owned Subsidiary
except as shown on the Collateral Disclosure List, which correctly indicates the
nature and amount of the Borrower's ownership interests therein.
4.1.2 GOOD STANDING. Each of the Borrower and its
Subsidiaries (a) is a corporation duly organized, existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power to own its property and to carry on its business as now being conducted,
and (c) is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary and in
which the failure to qualify would materially adversely affect the business,
operations or properties of the Borrower and/or their Subsidiaries.
4.1.3 POWER AND AUTHORITY. The Borrower has full corporate
power and authority to execute and deliver this Agreement, the other Financing
Documents to which it is a party, to make the borrowings under this Agreement,
and to incur and perform the Obligations whether under this Agreement, the other
Financing Documents or otherwise, all of which have been duly authorized by all
proper and necessary corporate action. No consent or approval of shareholders or
any creditors of the Borrower, and no consent, approval, filing or registration
with or notice to any Governmental Authority on the part of the Borrower, is
required as a condition to the execution, delivery, validity or enforceability
of this Agreement, the other Financing Documents, the performance by the
Borrower of the Obligations.
4.1.4 BINDING AGREEMENTS. This Agreement and the other
Financing Documents executed and delivered by the Borrower have been properly
executed and delivered and constitute the valid and legally binding obligations
of the Borrower and are fully enforceable against the Borrower in accordance
with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties, and general principles of equity
regardless of whether applied in a proceeding in equity or at law.
4.1.5 NO CONFLICTS. Neither the execution, delivery and
performance of the terms of this Agreement or of any of the other Financing
Documents executed and delivered by the Borrower nor the consummation of the
transactions contemplated by this Agreement will conflict with, violate or be
prevented by (a) the Borrower's charter or bylaws, (b) any existing mortgage,
-39-
41
indenture, contract or agreement binding on the Borrower or
affecting its property, or (c) any Laws.
4.1.6 NO DEFAULTS, VIOLATIONS.
(a) No Default or Event of Default has occurred and is
continuing.
(b) Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any obligation under any existing mortgage,
indenture, contract or agreement binding on it or affecting its property in any
respect which could be materially adverse to the business, operations, property
or financial condition of the Borrower, or which could materially adversely
affect the ability of the Borrower to perform its obligations under this
Agreement or the other Financing Documents, to which the Borrower is a party.
4.1.7 COMPLIANCE WITH LAWS. Neither the Borrower nor any of
its Subsidiaries is in violation of any applicable Laws (including, without
limitation, any Laws relating to employment practices, to environmental,
occupational and health standards and controls) or order, writ, injunction,
decree or demand of any court, arbitrator, or any Governmental Authority
affecting the Borrower or any of its properties, the violation of which,
considered in the aggregate, could materially adversely affect the business,
operations or properties of the Borrower and/or its Subsidiaries, the violation
of which, considered in the aggregate would materially adversely affect the
business, operations or properties of the Borrower and/or their Subsidiaries.
4.1.8 MARGIN STOCK. None of the proceeds of the Loans will be
used, directly or indirectly, by the Borrower or any Subsidiary for the purpose
of purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry, any "margin
security" within the meaning of Regulation G (12 CFR Part 207), or "margin
stock" within the meaning of Regulation U (12 CFR Part 221), of the Board of
Governors of the Federal Reserve System or for any other purpose which might
make the transactions contemplated in this Agreement a "purpose credit" within
the meaning of said Regulation G or Regulation U, or cause this Agreement to
violate any other regulation of the Board of Governors of the Federal Reserve
System or the Securities Exchange Act of 1934 or the Small Business Investment
Act of 1958, as amended, or any rules or regulations promulgated under any of
such statutes.
4.1.9 INVESTMENT COMPANY ACT; MARGIN SECURITIES.
Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company
-40-
42
Act of 1940, as amended, nor is it, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company within the meaning
of said Act. Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin security" within the
meaning of Regulation G (12 CFR Part 207), or "margin stock" within the meaning
of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal
Reserve System.
4.1.10 LITIGATION. Except as otherwise disclosed to the
Lender on SCHEDULE 4.1.10 attached to and made a part of this Agreement, there
are no proceedings, actions or investigations pending or, so far as the
Borrower knows, threatened before or by any court, arbitrator or any
Governmental Authority which, in any one case or in the aggregate, if
determined adversely to the interests of the Borrower or any Subsidiary, would
have a material adverse effect on the business, properties, condition
(financial or otherwise) or operations, present or prospective, of the
Borrower.
4.1.11 FINANCIAL CONDITION. The consolidated financial
statements of the Borrower dated March 31, 1997, fairly present in all material
respects the financial position of the Borrower and its Subsidiaries and the
results of their operations and transactions in their surplus accounts as of the
date and for the period referred to and have been prepared in accordance with
GAAP applied on a consistent basis throughout the period involved, subject to
year-end adjustments and footnotes. There are no liabilities, direct or
indirect, fixed or contingent, of the Borrower or its Subsidiaries as of the
date of such financial statements which are not reflected therein or in the
notes thereto. There has been no material adverse change in the financial
condition or operations of the Borrower or its Subsidiaries since the date of
such financial statements and to the Borrower's knowledge no such adverse change
is pending or threatened. Neither the Borrower nor any Subsidiary has guaranteed
the obligations of, or made any investment in or advances to, any Person, except
as disclosed in such financial statements. The representations and warranties
contained in this Section shall also cover financial statements of the Borrower
furnished from time to time to the Lender pursuant to Section 6.1.1 (Financial
Statements) of this Agreement.
4.1.12 PROFORMA FINANCIAL STATEMENTS. The Offering Memorandum
contains a proforma consolidated and consolidating balance sheet of Holding and
its Subsidiaries as of immediately after consummation of the Merger Agreement
Transactions and the transactions incident thereto (the "Proforma Balance
Sheet"). The Borrower has furnished to the Lender proforma financial projections
for the five (5) year period subsequent to the closing of the Merger Agreement
Transactions (the "Proforma Financial Projections"). The Proforma Balance Sheet
has been
-41-
43
prepared substantially in accordance with GAAP, and fairly presents the
consolidated financial condition of the Borrower and its Subsidiaries as of
immediately after consummation of the Merger Agreement Transactions, this
Agreement and the transactions incident thereto. The Proforma Financial
Projections represent the Borrower's good faith estimate of the future
operations of the Borrower and are based on reasonable and conservative
assumptions of the Borrower.
4.1.13 FULL DISCLOSURE. The financial statements referred to
in Section 4.1.11 (Financial Condition) of this Agreement, the Financing
Documents (including, without limitation, this Agreement), and the written
statements, reports or certificates furnished by the Borrower in connection
with the Financing Documents (a) do not contain any untrue statement of a
material fact and (b) when taken in their entirety, do not omit any material
fact necessary to make the statements contained therein not misleading. The
budgets and projections under Section 6.1.1(f) represent the Borrower's good
faith estimate of the future operations of the Borrower.
4.1.14 INDEBTEDNESS FOR BORROWED MONEY. Except for the
Obligations and the indebtedness under the Senior Notes, and except as set
forth in SCHEDULE 4.1.14 attached to and made a part of this Agreement, the
Borrower has no Indebtedness for Borrowed Money. The Lender has received
photocopies of all promissory notes evidencing any Indebtedness for Borrowed
Money set forth in SCHEDULE 4.1.14, together with any and all subordination
agreements, other agreements, documents, or instruments securing, evidencing,
guarantying or otherwise executed and delivered in connection therewith.
4.1.15 TAXES. Each of the Borrower and its Subsidiaries has
filed all returns, reports and forms for Taxes which, to the knowledge of the
Borrower, are required to be filed, and has paid all Taxes as shown on such
returns or on any assessment received by it, to the extent that such Taxes have
become due, unless and to the extent only that such Taxes, assessments and
governmental charges are currently contested in good faith and by appropriate
proceedings by the Borrower, such Taxes are not the subject of any Liens other
than Permitted Liens, and adequate reserves therefor have been established as
required under GAAP. All tax liabilities of the Borrower were as of the date of
audited financial statements referred to in Section 4.1.11 (Financial
Condition) above, and are now, adequately provided for on the books of the
Borrower or its Subsidiaries, as appropriate. As of the Closing Date, no tax
liability has been asserted by the Internal Revenue Service or any state or
local authority against the Borrower for Taxes in excess of those already paid.
4.1.16 ERISA. With respect to any "pension plan" as defined
in SECTION 3(2) of ERISA, which plan is now or
-42-
44
previously has been maintained or contributed to by the Borrower and/or by any
commonly controlled entity: (a) no "accumulated funding deficiency" as defined
in Code Section 412 or ERISA Section 302 in a material amount has occurred,
whether or not that accumulated funding deficiency has been waived; (b) no
Reportable Event has occurred that will have Material Adverse Effect; (c) no
termination of any plan subject to Title IV of ERISA has occurred that will
have Material Adverse Effect; (d) neither the Borrower nor any commonly
controlled entity (as defined under ERISA) has incurred a "complete withdrawal"
within the meaning of ERISA Section 4203 from any Multiemployer Plan that will
have Material Adverse Effect; (e) neither the Borrower nor any commonly
controlled entity has incurred a "partial withdrawal" within the meaning of
ERISA Section 4205 with respect to any Multiemployer Plan; (f) no Multiemployer
Plan to which the Borrower or any commonly controlled entity has an obligation
to contribute is in "reorganization" within the meaning of ERISA Section 4241
nor has notice been received by the Borrower or any commonly controlled entity
that such a Multiemployer Plan will be placed in "reorganization," if such
reorganization would reasonably be expected to have a Material Adverse Effect.
4.1.17 TITLE TO PROPERTIES. Subject to the Permitted Liens,
the Borrower has good and marketable title to all of its properties, including,
without limitation, the Collateral and the properties and assets reflected in
the balance sheets described in Section 4.1.11 (Financial Condition) above.
Subject to the Permitted Liens, the Borrower has legal, enforceable and
uncontested rights to use freely such property and assets. All of such
properties, including, without limitation, the Collateral which were purchased,
were purchased for fair consideration and reasonably equivalent value in the
ordinary course of business.
4.1.18 PATENTS, TRADEMARKS, ETC. Each of the Borrower and its
Subsidiaries owns, possesses, or has the right to use all necessary Patents,
licenses, Trademarks, Copyrights, permits and franchises to own its properties
and to conduct its business as now conducted, without known conflict with the
rights of any other Person.
4.1.19 PRESENCE OF HAZARDOUS MATERIALS OR HAZARDOUS MATERIALS
CONTAMINATION.
To the Borrower's knowledge, (a) no Hazardous Materials are located on
any real property owned, controlled or operated by of the Borrower or for which
the Borrower is, or is claimed to be, responsible, except for reasonable
quantities of necessary supplies for use by the Borrower in the ordinary course
of its current line of business and stored, used and disposed in accordance with
applicable Laws; and (b) no property owned, controlled or operated by the
Borrower or for which the Borrower has, or is claimed to have, responsibility
has ever been used as a manufacturing,
-43-
45
storage, or dump site for Hazardous Materials nor is affected by Hazardous
Materials Contamination at any other property.
4.1.20 PERFECTION AND PRIORITY OF COLLATERAL. The Lender has,
or upon execution and recording of this Agreement and the Security Documents
will have, and will continue to have as security for the Obligations, a valid
and perfected Lien on and security interest in all Collateral, free of all other
Liens, claims and rights of third parties whatsoever except Permitted Liens.
4.1.21 PLACES OF BUSINESS AND LOCATION OF COLLATERAL.
The information contained in the Collateral Disclosure List is complete
and correct as of the Closing Date in all material respects.
4.1.22 MERGER AGREEMENT TRANSACTION.
(a) The Lender has received true and correct
photocopies of the Merger Agreement and each of the other Merger Agreement
Documents, executed, delivered and/or furnished on or before the Closing Date in
connection with the Merger Agreement Transaction. Neither the Merger Agreement
nor any of the other Merger Agreement Documents have been modified, changed,
supplemented, canceled, amended or otherwise altered or affected, except as
otherwise disclosed to the Lender in writing on or before the Closing Date.
(b) The Merger Agreement Transaction has been effected,
closed and consummated pursuant to, and in accordance with, the terms and
conditions of the Merger Agreement and with all applicable Laws.
(c) As part of the closing of the Merger Agreement
Transaction, the Merger Company received paid-in cash Equity aggregating not
less than Fifteen Million Dollars ($15,000,000), which Equity was paid to the
Merger Company at such times, by such purchasers, and on such terms and
conditions as shall have been disclosed to, and approved by, the Lender in
writing on or before the Closing Date and in accordance with all applicable
Laws.
(d) The Lender has received true and correct
photocopies of the Indenture, the Offering Memorandum, and each of the Senior
Notes Documents, executed, delivered and/or furnished on or before the Closing
Date in connection with the transactions contemplated by the Senior Notes
Documents. Neither the Indenture, the Offering Memorandum nor any of the Senior
Notes Documents have been modified, changed, supplemented, canceled, amended or
-44-
46
otherwise altered or affected, except as otherwise disclosed to the Lender in
writing on or before the Closing Date.
(e) As part of the closing of the Merger Agreement
Transaction, the Offering Transaction has been effected, closed and consummated
pursuant to, and in accordance with, the terms and conditions of the Indenture
and all applicable Laws and the Merger Company received proceeds from the sale
of the Senior Notes aggregating not less than Seventy Million Dollars
($70,000,000).
4.1.23 SECURITIES ACTS. The Borrower has not issued any
unregistered securities in violation of the registration requirements of Section
5 of the Securities Act of 1933, as amended, or any other Law, and is not in
violation of any rule, regulation, or requirement under the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as amended. The
Borrower is not required to qualify any indenture under the Trust Indenture Act
of 1939, as amended, in connection with the execution and delivery of any of the
Notes.
4.1.24 GOVERNMENTAL REGULATION. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Interstate Commerce Act or to
any Federal or state Laws limiting its ability to incur Indebtedness for
Borrowed Money.
SECTION 4.2 SURVIVAL; UPDATES OF REPRESENTATIONS AND
WARRANTIES.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loans and extension of
credit made hereunder, and the incurring of any other Obligations and shall be
deemed to have been made at the time of each request for, and again at the time
the making of, each advance under the Loans and each the issuance of each Letter
of Credit except that the representations and warranties which relate to
financial statements which are referred to in Section 4.1.11, shall also be
deemed to cover financial statements furnished from time to time to the Lender
pursuant to Section 6.1.1 (Financial Statements) of this Agreement.
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1 CONDITIONS TO THE INITIAL ADVANCE.
The making of the initial advance under the Loans or, if sooner, the
issuance of the initial Letter of Credit is subject to the fulfillment on or
before the Closing Date of the following
-45-
47
conditions precedent in a manner satisfactory in form and substance
to the Lender and its counsel:
5.1.1 ORGANIZATIONAL DOCUMENTS - BORROWER. The Lender shall
have received:
(a) a certificate of good standing for the Borrower certified
by the Secretary of State, or other appropriate Governmental Authority,
of the state of incorporation for the Borrower;
(b) a certificate of qualification to do business for the
Borrower certified by the Secretary of State or other Governmental
Authority of each state in which the Borrower conducts business and
where the failure to qualify would have a Material Adverse Effect;
(c) a certificate dated as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower covering:
(i) true and complete copies of the Borrower's
corporate charter, bylaws, and all amendments thereto;
(ii) true and complete copies of the resolutions of
its Board of Directors authorizing (i) the execution, delivery
and performance of the Financing Documents, the Senior Notes
Documents and the Merger Agreement Documents to which the
Borrower is a party, (ii) the borrowings by the Borrower
hereunder, (iii) the granting of the Liens contemplated by
this Agreement and the Financing Documents to which the
Borrower is a party, and (iv) the Merger Agreement
Transaction;
(iii) the incumbency, authority and signatures of the
officers of the Borrower authorized to sign this Agreement and
the other Financing Documents to which the Borrower is a
party; and
(iv) the identity of the Borrower's current
directors, common stock holders and other equity holders, as
well as their respective percentage ownership interests.
5.1.2 OPINION OF BORROWER'S COUNSEL. The Lender shall have
received the favorable opinion of counsel for the Borrower addressed to the
Lender.
-46-
48
5.1.3 CONSENTS, LICENSES, APPROVALS, ETC. The Lender shall
have received copies of all consents, licenses and approvals, required in
connection with the execution, delivery, performance, validity and
enforceability of the Financing Documents, the Senior Notes Documents and the
Merger Agreement Documents, and such consents, licenses and approvals shall be
in full force and effect.
5.1.4 NOTES. The Lender shall have received the Revolving
Credit Note, each conforming to the requirements hereof and executed by a
Responsible Officer of the Borrower and attested by a duly authorized
representative of the Borrower.
5.1.5 FINANCING DOCUMENTS AND COLLATERAL. The Borrower shall
have executed and delivered the Financing Documents to be executed by it, and
shall have delivered original Chattel Paper, Instruments, Securities, and
related Collateral and all opinions, title insurance, and other documents
contemplated by Article 3 hereof, including, without limitation, that each
original stock certificate of Stir Melter and blank stock powers with respect
thereto.
5.1.6 OTHER FINANCING DOCUMENTS. In addition to the Financing
Documents to be delivered by the Borrower, the Lender shall have received the
Financing Documents duly executed and delivered by Persons other than the
Borrower.
5.1.7 OTHER DOCUMENTS, ETC. The Lender shall have received
such other certificates, opinions, documents and instruments confirmatory of or
otherwise relating to the transactions contemplated hereby as may have been
reasonably requested by the Lender.
5.1.8 PAYMENT OF FEES. The Lender shall have received payment
of any Fees due on or before the Closing Date.
5.1.9 COLLATERAL DISCLOSURE LIST. The Borrower shall have
delivered the Collateral Disclosure List required under the provisions of
Section (Collateral Disclosure List) hereof duly executed by a Responsible
Officer of the Borrower.
5.1.10 RECORDINGS AND FILINGS. The Borrower shall have: (a)
executed and delivered all Financing Documents (including, without limitation,
UCC-1 and UCC-3 statements) required to be filed, registered or recorded in
order to create, in favor of the Lender, a perfected Lien in the Collateral
(subject only to the Permitted Liens) in form and in sufficient number for
filing, registration, and recording in each office in each jurisdiction in which
such filings, registrations and recordations are required, and (b) delivered
such evidence as the Lender require that all necessary filing fees and all
recording and other similar
-47-
49
fees, and all Taxes and other expenses related to such filings, registrations
and recordings will be or have been paid in full.
5.1.11 INSURANCE CERTIFICATE. The Lender shall have received
an insurance certificate in accordance with the provisions of Section 6.1.7
(Insurance) and Section 6.1.8 (Insurance With Respect to Equipment, the
Inventory and the Mortgaged Property) of this Agreement.
5.1.12 LANDLORD'S WAIVERS. The Lender shall have received a
waiver from each landlord of each and every business premise leased by the
Borrower and on which any of the Collateral is or may hereafter be located,
which landlords' waivers must be reasonably acceptable to the Lender and its
counsel.
5.1.13 BAILEE ACKNOWLEDGEMENTS. The Lender shall have
received an agreement acknowledging the Lender's Liens from each bailee,
warehouseman, consignee or similar third party which has possession of any of
the Collateral with a fair market value in excess of $500,000, which agreements
must be reasonably acceptable to the Lender and its counsel in their reasonable
discretion.
5.1.14 FIELD EXAMINATION. The Lender shall have completed a
field examination and audit of the Borrower's business, operations and income,
the results of which field examination and audit shall be in all respects
reasonably acceptable to the Lender in its sole but reasonable discretion and
shall include reference discussions with key customers and vendors.
5.1.15 PROFORMA BALANCE SHEET AND PROJECTIONS. The Lender
shall have received and approved the Borrower's Proforma Balance Sheet and
Proforma Financial Projections, which Proforma Balance Sheet and Proforma
Financial Projections must be in form and content acceptable to the Lender in
its sole but reasonable discretion.
5.1.16 OFFERING. The Lender shall have received a certificate
signed by a Responsible Officer of the Borrower, certifying to the Lender that
the Merger Company (a) received the proceeds from the sale of the Senior Notes,
in accordance with, and pursuant to, the terms and conditions of the Offering
Memorandum, the Indenture, and the Senior Notes Documents, and applied the same
to such purposes as has been previously disclosed to, and approved by, the
Lender, and (b) has delivered to the Lender true and correct photocopies of all
Senior Notes Documents. The Borrower shall have delivered such evidence of the
receipt of such proceeds as may be requested by the Lender. The Lender must be
satisfied that such proceeds have been paid to the Merger Company on such terms
and conditions as shall have been previously disclosed to, and approved by, the
Lender.
-48-
50
5.1.17 CAPITAL FUNDS. The Lender shall have received a
certificate signed by a Responsible Officer of the Borrower, certifying to the
Lender that the Merger Company received paid-in cash Equity aggregating not less
than Fifteen Million Dollars ($15,000,000), which Equity was paid to the Merger
Company at such times, by such purchasers, and on such terms and conditions as
shall have been disclosed to, and approved by, the Lender in writing on or
before the Closing Date and in accordance with all applicable Laws. The Borrower
shall have delivered such evidence of the Equity as may be requested by the
Lender. The Lender must be satisfied that such Equity has been paid to the
Merger Company on such terms and conditions as shall have been previously
disclosed to, and approved by, the Lender.
5.1.18 MERGER AGREEMENT TRANSACTION.
(a) The Lender shall be satisfied that the Merger
Agreement Transaction shall have been completed and closed in accordance with
the Merger Agreement and applicable Laws.
(b) The Lender shall have received photocopies of all
Merger Agreement Documents executed, delivered and/or furnished in connection
with the Merger Agreement Transaction, together with a certificate signed by a
Responsible Officer of the Borrower certifying that (i) the Merger Agreement and
the other Merger Agreement Documents furnished to the Lender are true, correct,
in full force and effect and the provisions thereof have not been in any way
modified, amended or waived, and (ii) the Merger Agreement Transaction has been
closed and completed in accordance with the Merger Agreement and the other
Merger Agreement Documents furnished to the Lender and in accordance with all
applicable Laws.
SECTION 5.2. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The making of all
advances under the Loans and the issuance of all Letters of Credit is subject to
the fulfillment of the following conditions precedent:
5.2.1 COMPLIANCE. The Borrower shall have complied and shall
then be in compliance with all terms, covenants, conditions and provisions of
this Agreement and the other Financing Documents which are binding upon it.
5.2.2 DEFAULT. There shall exist no Event of Default or
Default hereunder.
5.2.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrower contained among the provisions of this Agreement
shall be true in all material respects and with the same effect as though such
representations and warranties had been made at the time of the making of, and
of the request for, each advance under the Loans, and the issuance of each
-49-
51
Letter of Credit except that the representation and warranty pertaining to
balance sheets, financial statements and other financial condition information
or data shall refer to the latest balance sheets, financial statements, and
financial condition information and data furnished to the Lender pursuant to the
provisions of this Agreement.
5.2.4 LEGAL MATTERS. All legal documents incident to each
advance under the Loans and each of the Letters of Credit shall be reasonably
satisfactory to counsel for the Lender.
ARTICLE 6
COVENANTS OF THE BORROWER
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as any of the
Obligations (other than Contingent Indemnification Obligations) or the
Commitment shall be outstanding hereunder, the Borrower agrees with the Lender
as follows:
6.1.1 FINANCIAL STATEMENTS. The Borrower shall furnish to the
Lender:
(a) ANNUAL STATEMENTS AND CERTIFICATES. The Borrower
shall furnish to the Lender as soon as available, but in no event more than one
hundred twenty (120) days after the close of each fiscal year of the Borrower,
(i) a copy of the annual financial statement in reasonable detail reasonably
satisfactory to the Lender relating to the Borrower and its Subsidiaries,
prepared in accordance with GAAP and examined and certified by independent
certified public accountants reasonably satisfactory to the Lender, which
financial statement shall include a consolidated balance sheet of the Borrower
and its Subsidiaries, as of the end of such fiscal year and consolidated
statements of income, cash flows and changes in shareholders equity of the
Borrower and its Subsidiaries, for such fiscal year, (ii) a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT C,
as may be amended by the Lender and the Borrower from time to time, containing a
detailed computation of each financial covenant which is applicable for the
period reported, a certification that no material change has occurred to the
information contained in the Collateral Disclosure List (except as set forth in
a schedule attached to the certification), and a cash flow projection report,
each prepared by a Responsible Officer of the Borrower in a format reasonably
acceptable to the Lender, and (iii) a management letter in the form prepared by
the Borrower's independent certified public accountants.
(b) ANNUAL OPINION OF ACCOUNTANT. The Borrower shall
furnish to the Lender as soon as available, but in no event more than one
hundred twenty (120) days after the close of the Borrower's fiscal years, a
letter or opinion of the accountant
-50-
52
who examined and certified the annual financial statement relating to the
Borrower and its Subsidiaries stating whether anything in such accountant's
examination has revealed the occurrence of a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto.
(c) QUARTERLY STATEMENTS AND CERTIFICATES. The Borrower
shall furnish to the Lender as soon as available, but in no event more than
thirty (30) days after the end of each fiscal quarter, a financial statement in
reasonable detail satisfactory to the Lender relating to the Borrower and its
Subsidiaries, prepared in accordance with GAAP, which financial statement shall
include a consolidated balance sheet of the Borrower and its Subsidiaries, as of
the end of such fiscal quarter and consolidated statements of income, cash flows
and changes in shareholders equity of the Borrower and its Subsidiaries for such
fiscal quarter, and (ii) a Compliance Certificate, in substantially the form
attached to this Agreement as EXHIBIT C, containing a detailed computation of
each financial covenant which is applicable for the period reported and a
certification that no change has occurred to the information contained in the
Collateral Disclosure List (except as set forth on any schedule attached to the
certification), all as prepared and certified by a Responsible Officer of the
Borrower and accompanied by a certificate of that officer stating whether any
event has occurred which constitutes a Default or an Event of Default hereunder,
and, if so, stating the facts with respect thereto.
(d) OTHER QUARTERLY REPORTS. The Borrower shall furnish
to the Lender within thirty (30) days after the end of each fiscal quarter, a
report containing the following information:
(i) a summary aging schedule of all Receivables by
Account Debtor;
(ii) a summary aging of all accounts payable; and
(iii) such other information as the Lender may
reasonably request.
(e) ANNUAL BUDGET AND PROJECTIONS. The Borrower shall furnish
to the Lender as soon as available, but in no event later than the 30th day
after the end of each fiscal year a consolidated budget and pro forma financial
statements on a quarterly basis for the following fiscal year.
(f) ADDITIONAL REPORTS AND INFORMATION. The Borrower shall
furnish to the Lender promptly, such additional information, reports or
statements as the Lender may from time to time reasonably request.
-51-
53
(g) CERTAIN INFORMATION FURNISHED TO SENIOR
NOTE HOLDERS.
Unless otherwise furnished to the Lender, the Borrower will furnish to
the Lender, at the same time sent to the Trustee and/or the holders of the
Senior Notes, at least one (l) copy of all financial statements, reports, and
other information sent by the Borrower to the Trustee and/or holders of the
Senior Notes.
6.1.2 RECORDKEEPING, RIGHTS OF INSPECTION,
FIELD EXAMINATION, ETC.
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.
(b) The Borrower shall, and shall cause each of its
Subsidiaries to, permit authorized representatives of the Lender to visit and
inspect the properties of the Borrower and its Subsidiaries, to review, audit,
check and inspect the Collateral at any time to review, audit, check and inspect
the Borrower's other books of record at any time with or without notice and to
make abstracts and photocopies thereof, and to discuss the affairs, finances and
accounts of the Borrower and its Subsidiaries, with the officers, directors,
employees and other representatives of the Borrower and its Subsidiaries and
their respective accountants, all at such times during normal business hours and
other reasonable times and as often as the Lender may reasonably request;
provided, however, that prior to initiating discussions with the Borrower's
employees, the Lender shall advise an officer of the Borrower of the Lender's
intention to do so and shall allow the Borrower's officers to be present during
such discussion. The Lender shall give the Borrower reasonable notice of visits
and inspections, which the Lender agrees will be no less than two (2) Business
Days, unless special circumstances exist, provided, however, the Borrower
acknowledges and agrees that (i) no notice need be given if there exists an
Event of Default or if the Lender has information which the Lender believes is
consistent with a conclusion that information provided by or at the direction of
the Borrower regarding the Collateral or the Borrower's financial condition has
been intentionally misstated; and (ii) the Borrower shall not prevent any visit
or inspection if the Lender or a representative thereof advises (which advice
may be oral) the Borrower that no notice is required because the inspection is
being made pursuant to Section 6.1.2(b)(ii) of this Agreement. For the purpose
of the foregoing, the Lender shall have, and are hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any of the Borrower's owned or leased property.
-52-
54
(c) Any and all reasonable costs and expenses incurred
by, or on behalf of, the Lender in connection with the conduct of any of the
foregoing shall be part of the Enforcement Costs and shall be payable to the
Lender upon demand. The Borrower acknowledges and agrees that such expenses may
include, but shall not be limited to, any and all reasonable out-of-pocket costs
and expenses of the Lender's employees and agents in, and when, travel- ling to
the Borrower's facilities.
6.1.3 CORPORATE EXISTENCE. The Borrower shall maintain, and
cause each of its Subsidiaries to maintain, its corporate existence in good
standing in the jurisdiction in which it is incorporated and in each other
jurisdiction where it is required to register or qualify to do business if the
failure to do so in such other jurisdiction would reasonably be expected to have
a Material Adverse Effect.
6.1.4 COMPLIANCE WITH LAWS. The Borrower shall comply, and
cause each of its Subsidiaries to comply, with all applicable Laws and observe
the valid requirements of Governmental Authorities, the noncompliance with or
the nonobservance of which would reasonably be expected to have a Material
Adverse Effect.
6.1.5 PRESERVATION OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, at all times (a) maintain, preserve, protect
and keep its properties, whether owned or leased, in good operating condition,
working order and repair (ordinary wear and tear and Casualty excepted), and
from time to time will make all proper repairs, maintenance, replacements,
additions and improvements thereto needed to maintain such properties in good
operating condition, working order and repair, and (b) do or cause to be done
all things necessary to preserve and to keep in full force and effect its
material franchises, leases of real and personal property, trade names, Patents,
Trademarks, Copyrights and permits which are necessary for the orderly
continuance of its business.
6.1.6 LINE OF BUSINESS. The Borrower will continue to engage
substantially only in the business of design and assembly of glass bending and
tempering systems used by glass manufacturers and processors in the conversion
of flat glass into safety glass and the sale of new and aftermarket related
products and services and related businesses and services.
6.1.7 INSURANCE. Without implying any limitation to the
provisions of Section , the Borrower will, and will cause each of its
Subsidiaries to, at all times maintain with A- or better rated insurance
companies such insurance as is required by applicable Laws and such other
insurance, all in such amounts, of such types and against such risks, hazards,
liabilities, casualties and contingencies as are usually insured against in the
same geographic areas by business entities engaged in the
-53-
55
same or similar business. Without limiting the generality of the foregoing, the
Borrower will, and will cause each of its Subsidiaries to, keep adequately
insured all of its property against loss or damage resulting from fire or other
risks insured against by extended coverage and maintain public liability
insurance against claims for personal injury, death or property damage occurring
upon, in or about any properties occupied or controlled by it, or arising in any
manner out of the businesses carried on by it. The Borrower shall deliver to the
Lender on the Closing Date (and thereafter on each date there is a material
change in the insurance coverage) a certificate of a Responsible Officer of the
Borrower containing a detailed list of the insurance then in effect and stating
the names of the insurance companies, the types, the amounts and rates of the
insurance, dates of the expiration thereof and the properties and risks covered
thereby.
6.1.8 INSURANCE WITH RESPECT TO EQUIPMENT,
INVENTORY AND MORTGAGED PROPERTY.
The Borrower will maintain and cause each of its Subsidiaries to
maintain hazard insurance with fire and extended coverage and naming the Lender
as an additional insured (or mortgagee, in the case of the Mortgaged Property)
with loss payable to the Lender as its interest may appear on the Equipment, the
Inventory and the Mortgaged Property in an amount at least equal to the lesser
amount of the outstanding principal amount of the Obligations or the fair market
value of Equipment, the Inventory and the Mortgaged Property (but in any event
sufficient to avoid any co-insurance obligations) and with a specific
endorsement to each such insurance policy pursuant to which the insurer agrees
to give the Lender at least thirty (30) days written notice before any
alteration or cancellation of such insurance policy and agrees to pay any loss
to the Lender as its interest may appear and that no act or default of the
Borrower shall affect the right of the Lender to recover under such policy in
the event of loss or damage. If there exists no Event of Default and the
insurance proceeds from a casualty is $500,000 or the less, such proceeds shall
be applied at the election of the Borrower promptly to replace or restore the
Equipment, the Inventory and the Mortgaged Property or the Obligations. The
Lender agrees that if the cost to repair or restore the Equipment, the Inventory
and the Mortgaged Property exceeds $500,000, and so long as there exists no
Event of Default at the time such proceeds are paid to the Lender or at any time
thereafter during which proceeds are held by the Lender, the proceeds shall be
held in an interest bearing escrow account and shall be available for the
replacement of such Equipment, the Inventory and the Mortgaged Property,
promptly, but in no event more than one (1) year after the Lender's receipt of
the proceeds. The Borrower hereby assigns to the Lender, and grants the Lender a
security interest in, such escrow account and the funds therein to secure the
payment and performance of the Obligations. Immediately upon the occurrence and
during the continuance of any Event of
-54-
56
Default, or on the sooner expiration of the replacement period provided in this
Section, the Lender may apply such proceeds and other sums so deposited with the
Lender to the repayment of the Obligations in such order as the Lender may
elect.
6.1.9 TAXES. Except to the extent that the validity or amount
thereof is being contested in good faith and by appropriate proceedings, the
Borrower will, and will cause each of its Subsidiaries to, pay and discharge all
Taxes prior to the date when any interest or penalty would accrue for the
nonpayment thereof. The Borrower shall furnish to the Lender at such times as
the Lender may require proof satisfactory to the Lender of the making of
payments or deposits required by applicable Laws including, without limitation,
payments or deposits with respect to amounts withheld by the Borrower from wages
and salaries of employees and amounts contributed by the Borrower on account of
federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act, as amended.
6.1.10 ERISA. The Borrower will, and will cause each of its
Subsidiaries and Affiliates to, comply with the funding requirements of ERISA
with respect to employee pension benefit plans for its respective employees. The
Borrower will not permit with respect to any employee benefit plan or plans
covered by Title IV of ERISA (a) any prohibited transaction or transactions
under ERISA or the Internal Revenue Code, which results, or may result, in any
material liability of the Borrower and/or any Subsidiary and/or Affiliate, or
(b) any Reportable Event if, upon termination of the plan or plans with respect
to which one or more such Reportable Events shall have occurred, there is or
would be any material liability of the Borrower and/or any Subsidiary and/or
Affiliate to the PBGC. Upon the Lender's request, the Borrower will deliver to
the Lender a copy of the most recent actuarial report, financial statements and
annual report completed with respect to any "defined benefit plan", as defined
in ERISA.
6.1.11 NOTIFICATION OF MERGERS AND ACQUISITIONS
AND OWNERSHIP CHANGES.
(a) The Borrower will notify and cause each of the
Subsidiaries to notify the Lender not less than twenty (20) days prior to
entering into any agreement of merger or agreement to acquire all or
substantially all of the assets as part of an acquisition of an on-going
business of any Person and will at the time of such notification provide the
Lender with the following, in form and substance reasonably acceptable to the
Lender:
(i) a proforma balance sheet of the
Borrower as of immediately after consummation of the
proposed merger or acquisition;
-55-
57
(ii) proforma financial projections for the three (3)
year period subsequent to the consummation of the proposed
merger or acquisition;
(iii) a detailed calculation by a Responsible Officer
of the Borrower of the financial covenants contained in this
Agreement based on the balance sheet described in item (A) and
the projections described in item (B), which calculations
shall not show that a Default or an Event of Default on
account of a failure to comply with Section shall arise at the
time of or after the proposed merger or acquisition; and
(iv) a certificate from that Responsible Officer that
(A) the statements proforma balance sheet described in item
(i) has been prepared in a manner consistent with GAAP, and
fairly presents in all material respects the financial
condition of the Borrower as of immediately after the
consummation of the proposed merger or acquisition and that
the proforma financial projections described in item (ii)
represent the Borrower's good faith estimate of the future
operations of the Borrower and (B) no Default or Event of
Default results on account of the proposed merger or
acquisition.
(b) The Borrower will notify and cause each of the
Subsidiaries to notify the Lender not less than twenty (20) days prior to any
change in the ownership of Holding such that a Key Entity ceases to own
collectively at least seventy-five percent (75%) of the voting power of Holding
(determined as if all equity securities held by a Person and convertible into
voting securities were so converted) entitled to vote in the election of members
of the board of directors of Holding.
6.1.12 NOTIFICATION OF EVENTS OF DEFAULT AND
ADVERSE DEVELOPMENTS.
The Borrower shall promptly notify the Lender upon obtaining knowledge
of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened
against the Borrower or its Subsidiaries and of the entry of any
judgment or Lien (other than any Permitted Liens) against any of the
assets or properties of the Borrower or any Subsidiary where the claims
against the Borrower or any of its Subsidiaries exceed One Million Five
Hundred Thousand Dollars ($1,500,000) and are not covered by insurance;
-56-
58
(d) any event, development or circumstance whereby the
financial statements furnished hereunder fail in any material respect
to present fairly, in accordance with GAAP, the financial condition and
operational results of the Borrower or any of its Subsidiaries;
(e) any judicial, administrative or arbitral proceeding
pending against the Borrower or any of its Subsidiaries and any
judicial or administrative proceeding known by the Borrower to be
threatened against it or any of its Subsidiaries which, if adversely
decided, could materially adversely affect its financial condition or
operations (present or prospective);
(f) the receipt by the Borrower or any of its Subsidiaries of
any notice, claim or demand from any Governmental Authority which
alleges that the Borrower or any Subsidiary is in violation of any of
the terms of, or has failed to comply with any applicable Laws
regulating its operation and business, including, but not limited to,
the Occupational Safety and Health Act and the Environmental Protection
Act; and
(g) any other development in the business or affairs of the
Borrower and any of its Subsidiaries which may be materially adverse;
in each case describing in detail reasonably satisfactory to the Lender
the nature thereof and the action the Borrower proposes to take with
respect thereto.
6.1.13 HAZARDOUS MATERIALS; CONTAMINATION. The Borrower
agrees to:
(a) give notice to the Lender immediately upon the Borrower's
acquiring knowledge of the presence of any Hazardous Materials and of
any Hazardous Materials Contamination on any property owned or
controlled by the Borrower or for which the Borrower is, or is claimed
to be, responsible (provided that such notice shall not be required for
Hazardous Materials placed or stored on such property in accordance in
all material respects with applicable Laws in the ordinary course
(including, without limitation, quantity) of the Borrower's line of
business expressly described in this Agreement) or of any Hazardous
Materials Contamination, with a full description thereof;
(b) promptly comply in all material respects with any Laws
requiring the removal, treatment or disposal of Hazardous Materials or
Hazardous Materials
-57-
59
Contamination and provide the Lender with reasonably
satisfactory evidence of such compliance; and
(c) as part of the Obligations, defend,
indemnify and hold harmless the Lender and its agents, employees,
trustees, successors and assigns from any and all claims (except for
those arising because of their own gross negligence or wilful
misconduct) which may now or in the future (whether before or after the
termination of this Agreement) be asserted as a result of the presence
of any Hazardous Materials or of any Hazardous Materials Contamination
on any property owned or controlled by the Borrower or for which the
Borrower is, or is claimed to be, responsible. The Borrower
acknowledges and agrees that this indemnification shall survive the
termination of this Agreement and the Commitment and the payment and
performance of all of the other Obligations.
6.1.14 DISCLOSURE OF SIGNIFICANT TRANSACTIONS. The Borrower
shall deliver to the Lender a written notice describing in detail each
transaction by it involving the purchase, sale, lease, or other acquisition or
Casualty to or disposition or Condemnation of an interest in Fixed or Capital
Assets which exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), said
notices to be delivered to the Lender within thirty (30) days of the occurrence
of each such transaction.
6.1.15 FINANCIAL COVENANTS.
(a) Fixed Charge Coverage Ratio. The Borrower will
maintain, tested for each four (4) quarter period ending as of the last day of
each of the Borrower's fiscal quarters commencing September 30, 1997, a Fixed
Charge Coverage Ratio of not less than 1.0 to 1.0.
(b) Net Worth. The Borrower will at all times maintain,
tested on the Closing Date and as of the end of each of the Borrower's fiscal
quarters commencing September 30, 1997, a Net Worth of not less than the
following:
-58-
60
----------------------------------------------------------------
Period Amount
----------------------------------------------------------------
Closing Date $15,000,000
----------------------------------------------------------------
The day next following the $14,500,000
Closing Date through and
including June 29, 1999
----------------------------------------------------------------
June 30, 1999 through and $16,500,000
including June 29, 2000
----------------------------------------------------------------
June 30, 2000 through and $14,500,000
including June 29, 2001
----------------------------------------------------------------
June 30, 2001 and thereafter $16,000,000
----------------------------------------------------------------
6.1.16 COLLECTION OF RECEIVABLES. Until such time that the
Lender shall notify the Borrower of the revocation of such privilege following
and during the continuance of an Event of Default, the Borrower and each of the
Subsidiaries shall at its own expense have the privilege for the account of, and
in trust for, the Lender of collecting its Receivables and receiving in respect
thereto all Items of Payment and shall otherwise completely service all of the
Receivables including (a) the billing, posting and maintaining of complete
records applicable thereto, (b) the taking of such action with respect to the
Receivables as the Lender may request or in the absence of such request, as the
Borrower and each of the Subsidiaries may deem advisable; and (c) the granting,
in the ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may accept,
in connection therewith, the return of goods, the sale or lease of which shall
have given rise to a Receivable and may take such other actions relating to the
settling of any Account Debtor's claim as may be commercially reasonable. The
Lender may, at its option, at any time or from time to time after and during the
continuance of an Event of Default hereunder, revoke the collection privilege
given in this Agreement to the Borrower and any one or more of the Subsidiaries
by either giving notice of its assignment of, and lien on the Collateral to the
Account Debtors or giving notice of such revocation to the Borrower. The Lender
shall not have any duty to, and the Borrower hereby releases the Lender from all
claims of loss or damage caused by the delay or failure to collect or enforce
any of the Receivables or to preserve any rights against any other party with an
interest in the Collateral, except to the extent caused by the Lender's gross
negligence or wilful misconduct of the Lender. The Lender shall be entitled at
any time and from time to time to confirm and verify Receivables.
6.1.17 ASSIGNMENTS OF RECEIVABLES. Following and during the
continuance of an Event of Default, the Borrower will promptly, upon request,
execute and deliver to the Lender written
-59-
61
assignments, in form and content acceptable to the Lender, of specific
Receivables or groups of Receivables; provided, however, the Lien and/or
security interest granted to the Lender under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Lender whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute. The
Borrower agrees that neither any assignment to the Lender nor any other
provision contained in this Agreement or any of the other Financing Documents
shall impose on the Lender any obligation or liability of the Borrower with
respect to that which is assigned and the Borrower hereby agrees to indemnify
the Lender and hold the Lender harmless from any and all claims, actions, suits,
losses, damages, costs, expenses, fees, obligations and liabilities (except
those arising with respect to the Lender's own gross negligence or wilful
misconduct) which may be incurred by or imposed upon the Lender by virtue of the
assignment of and Lien on the Borrower's rights, title and interest in, to, and
under the Collateral.
6.1.18 GOVERNMENT ACCOUNTS. At the request of the Lender, the
Borrower will immediately notify the Lender if any of the Receivables arise out
of contracts with the United States or with any other Governmental Authority,
and execute any instruments and take any steps reasonably required by the Lender
in order that all moneys due and to become due under such contracts shall be
assigned to the Lender and notice thereof given to the Governmental Authority
under the Federal Assignment of Claims Act or any other applicable Laws.
6.1.19 DEFENSE OF TITLE AND FURTHER ASSURANCES. At its
expense the Borrower will defend the title to the Collateral (and any part
thereof), and will immediately execute, acknowledge and deliver any financing
statement, renewal, affidavit, deed, assignment, continuation statement,
security agreement, certificate or other document which the Lender may
reasonably require in order to perfect, preserve, maintain, continue, protect
and/or extend the Lien granted to the Lender under this Agreement or under any
of the other Financing Documents and the first priority of that Lien subject
only to the Permitted Liens. The Borrower will from time to time do whatever the
Lender may reasonably require by way of obtaining, executing, delivering, and/or
filing financing statements, landlords', mortgagees' or bailees' waivers,
notices of assignment and other notices and amendments and renewals thereof and
the Borrower will take any and all steps and observe such formalities as the
Lender may require, in order to create and maintain a valid Lien upon, pledge
of, or paramount security interest in, the Collateral, subject to the Permitted
Liens; provided, however, that the Lender agrees that the Borrower shall not be
deemed to be in default under this sentence if, despite its continuing best
reasonable efforts, a third party (such as a landlord) refuses to execute and
deliver a required document;
-60-
62
provided further, however, that, by so agreeing, the Lender is not waiving any
rights or remedies or limiting the affect of any other provision of this
Agreement (including, by way of illustration and not limitation, the existence
of Liens which are not Permitted Liens). The Borrower shall pay to the Lender,
upon the earlier of thirty (30) days after demand by the Lender therefor or the
Revolving Credit Termination Date, all taxes, costs and expenses incurred by the
Lender in connection with the preparation, execution, recording and filing of
any such document or instrument. To the extent that the proceeds of any of the
Accounts or Receivables of the Borrower are expected to become subject to the
control of, or in the possession of, a party other than the Borrower or the
Lender, the Borrower shall cause all such parties to execute and deliver on the
Closing Date security documents, financing statements or other documents as
requested by the Lender and as may be necessary to evidence and/or perfect the
security interest of the Lender in those proceeds. The Borrower agrees that a
copy of a fully executed security agreement and/or financing statement shall be
sufficient to satisfy for all purposes the requirements of a financing statement
as set forth in Article 9 of the applicable Uniform Commercial Code. The
Borrower hereby irrevocably appoints the Lender as the Borrower's
attorney-in-fact, with power of substitution, in the name of the Lender or in
the name of the Borrower or otherwise, for the use and benefit of the Lender,
but at the cost and expense of the Borrower and without notice to the Borrower,
to execute and deliver any and all of the financing statements and other
instruments which the Lender may require pursuant the foregoing provisions of
this Section 6.1.19 in order to perfect or to continue the perfection of the
Lender's security interests in all or any part of the Collateral.
6.1.20 BUSINESS NAMES; LOCATIONS. The Borrower will notify
and cause each of the Subsidiaries to notify the Lender not less than thirty
(30) days prior to (a) any change in the name under which the Borrower or the
applicable Subsidiary conducts its business, (b) any change of the location of
the chief executive office of the Borrower or the applicable Subsidiary, and (c)
the opening of any new place of business or the closing of any existing place of
business, in either case, in which the book value of the Assets located therein
exceed in the aggregate $100,000, and any change in the location of the places
where the Collateral, or any part thereof, or the books and records, or any part
thereof, are kept.
6.1.21 SUBSEQUENT OPINION OF COUNSEL AS TO
RECORDING REQUIREMENTS.
In the event that the Borrower or any Subsidiary shall transfer its
principal place of business or the office where it keeps its records pertaining
to the Collateral, upon the Lender's request, the Borrower will provide to the
Lender a subsequent opinion of counsel as to the filing, recording and other
require-
-61-
63
ments with which the Borrower and the Subsidiaries have complied to maintain the
Lien and security interest in favor of the Lender in the Collateral.
6.1.22 USE OF PREMISES AND EQUIPMENT. The Borrower agrees
that until the Obligations (other than Contingent Indemnification Obligations)
are fully paid and this Agreement has been terminated, the Lender (a) after and
during the continuance of a Default or an Event of Default, may use any of the
Borrower's owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (b) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of the Borrower's owned or
leased property.
6.1.23 PROTECTION OF COLLATERAL. The Borrower agrees that the
Lender may at any time following the occurrence and during the continuance of an
Event of Default take such steps as the Lender deems reasonably necessary to
protect the Lender's interest in, and to preserve the Collateral, including, the
hiring of such security guards or the placing of other security protection
measures as the Lender deems appropriate, may employ and maintain at any of the
Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect the Lender's interests in the Collateral and may lease
warehouse facilities to which the Lender may move all or any part of the
Collateral to the extent commercially reasonable. The Borrower agrees to
cooperate fully with the Lender's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as the Lender may reasonably
direct. All of the Lender's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall be part of the Enforcement Costs.
6.1.24 SENIOR MANAGEMENT. The Borrower will promptly notify
the Lender of changes in the Borrower's senior management.
6.1.25 APPRAISALS. On or before August 1, 1997, the Lender
shall be provided with an appraisal (made on a fair market value basis) by an
appraiser chosen by the Lender with respect to the Mortgaged Property and of
▇▇▇▇▇▇ ▇▇▇▇ Company (made on an orderly liquidation value basis) with respect to
the Equipment located at the Mortgaged Property. The basis of the appraisal
calculations shown on such appraisal report and all other aspects of the
appraisal report must be reasonably satisfactory to the Lender in all respects.
6.1.26 Application of Net Proceeds.
(a) Net Proceeds must be applied to either the payment
of the Obligations or to the restoration, repair or
-62-
64
replacement of the Equipment or other Fixed or Capital Asset which gave rise to
the Net Proceeds.
(b) In the event that, and to the extent that, Net
Proceeds are to be applied to the restoration or repair of a Fixed or Capital
Asset subject to the Lien of the Mortgage or other Financing Document
encumbering real property, the Borrower shall so notify the Lender and the
restoration or repair shall be subject to the conditions contained in Section
4.4 of the Mortgage.
(c) In the event that, and to the extent that, Net
Proceeds are to be applied to the replacement, restoration or repair of
Equipment or other Fixed or Capital Assets, or the replacement of Equipment or
other Fixed or Capital Assets, the Borrower shall so notify the Lender, such
replacement, restoration or repair shall be promptly undertaken, diligently
pursued and, to the extent reasonably practicable, completed no later than one
(1) year following a Borrower's receipt of such Net Proceeds. Until so used,
such Net Proceeds shall be applied to and reserved against future advances
under, the Revolving Loan.
(d) In the event that, and to the extent that, Net
Proceeds are not used as provided in subparagraphs (b) or (c) above, such unused
Net Proceeds shall be paid to the Lender and applied by the Lender to, or held
as additional security for, the Obligations.
(e) Notwithstanding the foregoing, in the event the
Lender reasonably determines that a Casualty or Condemnation could reasonably be
expected to result in an Event of Default under Section 6.1.15 of this
Agreement, the Lender shall so notify the Borrower and five (5) Business Days
thereafter Net Proceeds shall be applied to, or held as additional security
for, the Obligations in such order and manner of application as the Lender may
from time to time in its sole and absolute discretion determine.
SECTION 6.2 NEGATIVE COVENANTS. So long as any of the Obligations
(other than Contingent Indemnification Obligations) or the Commitment shall be
outstanding hereunder, the Borrower agrees with the Lender as follows:
6.2.1 MERGER, ACQUISITION OR SALE OF ASSETS.
The Borrower will not enter into any merger or consolidation or
amalgamation, windup or dissolve itself (or suffer any liquidation or
dissolution) or acquire all or substantially all the assets of any Person
(unless in the case of a merger or acquisition, other than a Permitted
Acquisition with respect to which the Borrower has complied with Section
6.1.11(a) and is the survivor in the case of a merger), or make any Asset
Disposition other than Permitted Asset Dispositions made at time when no Event
of Default is continuing.
-63-
65
Any required consent to an Asset Disposition other than a Permitted Asset
Disposition may be conditioned on a specified use of the Net Proceeds generated
by such Asset Disposition.
6.2.2 PURCHASE OR REDEMPTION OF SECURITIES,
DIVIDEND RESTRICTIONS.
The Borrower will not make any payment or take any action which would
be a Restricted Payment, other than those which are permitted under Section 4.09
of the Indenture on the Closing Date, except that payments or actions which
would result in a Default or an Event of Default under any provision of this
Agreement (other than this Section) or under any of the other Financing
Documents, shall not be permitted notwithstanding any provision of Section 4.09
of the Indenture.
6.2.3 INDEBTEDNESS. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money, or permit any Subsidiary so to do, except:
(a) the Obligations;
(b) Indebtedness of a Subsidiary to a Borrower;
(c) Indebtedness represented by the Senior Notes;
(d) Indebtedness secured by Permitted Liens;
(e) Subordinated Indebtedness;
(f) Indebtedness of the Borrower existing on the
date hereof and reflected on the financial statements furnished
pursuant to Section 4.1.11 (Financial Condition); and
(g) other Indebtedness not exceeding $500,000 in
the aggregate and not secured by any Lien.
6.2.4 INVESTMENTS, LOANS AND OTHER
TRANSACTIONS.
Except as otherwise provided in this Agreement, the Borrower will not,
and will not permit any of its Subsidiaries to, (a) make, assume, acquire or
continue to hold any investment in any realproperty (unless used in connection
with its business and treated as a Fixed or Capital Asset of the Borrower or the
Subsidiary) or any Person, whether by stock purchase, capital contribution,
acquisition of indebtedness of such Person or otherwise (including, without
limitation, investments in any joint venture or partnership), (b) guaranty or
otherwise become contingently liable for the indebtedness or obligations of any
-64-
66
Person, or (c) make any loans or advances, or otherwise extend credit to any
Person, except:
(a) any advance to an officer of the Borrower or of any
Subsidiary for travel or other business expenses in the ordinary course
of business, provided that the aggregate amount of all such advances by
the Borrower and its Subsidiaries (taken as a whole) outstanding at any
time shall not exceed Two Hundred Fifty Thousand Dollars ($250,000);
(b) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business;
(c) any investment in Cash Equivalents in the ordinary course
of business;
(d) trade credit extended to customers in the ordinary course
of business;
(e) those investments, if any, more particularly set forth in
SCHEDULE 6.2.4 attached hereto and made a part hereof;
(f) Unsecured letters of credit, bankers' acceptances and/or
unsecured interest rate protection agreements between a Borrower and
any other financial institution reasonably acceptable to the Lender,
providing for the transfer or mitigation of foreign exchange risks or
interest rate risks either generally or under specific contingencies;
(g) advances and loans to officers and employees of any
Borrower to enable such officers and employees to purchase stock issued
by one or more of the Borrowers in the ordinary course of business,
provided that the aggregate amount of all such advances and loans by
all of the Borrowers (taken as a whole) outstanding at any time shall
not exceed Five Hundred Thousand Dollars ($500,000);
(h) deposits or pledges to secure obligations under leases in
the ordinary course of business;
(i) Securities acquired by and issued to the Borrower in
connection with the reorganization or bankruptcy of any of its Account
Debtors or suppliers; provided that the Lender is granted a first
priority perfected Lien on and security interest in such Securities;
(j) Securities acquired by and issued to the Borrower as part
of the closing and consummation of a Permitted Asset Disposition;
provided that the Lender is
-65-
67
granted a first priority perfected Lien on and security
interest in such Securities;
(k) loans by the Borrower, not to exceed $700,000 in the
aggregate, to Holding to be paid by Holding to cover a portion of the
income tax liability of the holders of Holding's Class C shares as a
result of those holders' election under Section 83(b) of the Internal
Revenue Code with respect to those shares; and
(l) Permitted Acquisitions in an aggregate amount not to
exceed at any time One Million Five Hundred Thousand Dollars
($1,500,000).
6.2.5 SUBORDINATED INDEBTEDNESS. The Borrower will not, and
will not permit any Subsidiary to make:
(a) any payment of principal of, or interest on, any of the
Subordinated Indebtedness, if a Default or an Event of Default then
exists hereunder or would result from such payment;
(b) any payment of the principal or interest due on the
Subordinated Indebtedness as a result of acceleration thereunder or a
mandatory prepayment thereunder;
(c) any material amendment or modification of or supplement to
the documents evidencing or securing the Subordinated Indebtedness; or
(d) payment of principal or interest on the Subordinated
Indebtedness other than when due (without giving effect to any
acceleration of maturity or mandatory prepayment).
6.2.6 LIENS; CONFESSED JUDGMENT. The Borrower agrees that it
(a) will not create, incur, assume or suffer to exist any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, or permit any
Subsidiary so to do, except for Liens securing the Obligations and Permitted
Liens, (b) will not agree to, assume or suffer to exist any provision in any
instrument or other document for confession of judgment, cognovit or other
similar right or remedy, except that, with respect to the items covered in the
definition of Permitted Liens, a Lien superior to the Liens securing all or any
part of the Obligations may exist (i) under item (a) of that definition, only
for Liens for real and personal property taxes, items (b), (c), (e), (g), (h),
(i), (j), (k), (m) and (ii) for no Liens under items (d) or (l) of that
definition, (iii) only for possessory Liens arising under item (f) of that
definition, and (iv) to no Liens under item (n) of that definition except to the
extent the same is expressly identified as superior on Schedule 1.1 (Permitted
Liens), provided, however, by
-66-
68
agreeing that a Lien may have priority, the Lender shall not be deemed to have
conceded that such Lien in fact is entitled to or has priority or to have waived
or subordinated, or to be estopped from asserting, the priority of the Lender's
Liens, (d) will not enter into any contracts for the consignment of goods to the
Borrower, (e) will not execute or suffer the filing of any financing statements
or the posting of any signs giving notice of consignments to the Borrower, (f)
will not, as a material part of its business, engage in the sale of goods
belonging to others, and (g) will not allow or suffer to exist the failure of
any Lien described in the Security Documents to attach to, and/or remain at all
times perfected on, any of the property described in the Security Documents.
6.2.7 TRANSACTIONS WITH AFFILIATES. The Borrower and its
Subsidiaries will not enter into or participate in any transaction with any
Affiliate other than (a) an advisory fee payable to Key Equity Capital
Corporation, which will not exceed $250,000 in any twelve-month period and which
shall not be paid at any time during which there shall exist a Default or Event
of Default under Section 7.1.1, or under Section 7.1.3 on account of the
Borrower's failure to comply with Section 6.1.1 or 6.1.15; or (b) transactions
(other than transactions which involve Indebtedness for Borrowed Money or which
would constitute a Default or an Event of Default under this Agreement) in the
ordinary course of business of the Borrower and such Affiliate upon terms no
less favorable to the Borrower than the Borrower could obtain in a comparable
arm's-length transaction; (c) provided there shall exist and there shall be
caused no Default or Event of Default, payment to Holding to cover the
reasonable and necessary expenses incurred by Holding on account of the
Borrower (for example, accounting fees incurred in the preparation of Holding's
consolidated financial statements); and (d) payment to Holding to cover cash
Taxes to be paid immediately by Holding on account of the Borrower's income
being reported by Holding on a consolidated basis.
6.2.8 PROHIBITION ON HAZARDOUS MATERIALS. The Borrower shall
not place, manufacture or store or permit to be placed, manufactured or stored
any Hazardous Materials on any property owned, operated or controlled by the
Borrower or for which the Borrower is responsible other than Hazardous Materials
placed or stored on such property in accordance with applicable Laws in the
ordinary course, the violation of which would reasonably be expected to have a
Material Adverse Effect.
6.2.9 METHOD OF ACCOUNTING; FISCAL YEAR.
(a) The Borrower shall not change the method of
accounting employed in the preparation of any financial statements furnished to
the Lender under the provisions of Section (Financial Statements) of this
Agreement, unless required to conform to GAAP and on the condition that the
Borrower's
-67-
69
accountants shall furnish such information as the Lender may request to
reconcile the changes with the Borrower's prior financial statements.
(b) The Borrower will not change its fiscal year from
a year ending on June 30.
6.2.10 COMPENSATION. Except as permitted by Section 6.2.7,
neither the Borrower nor any of its Subsidiaries will pay any bonuses, fees,
compensation, commissions, salaries, drawing accounts, or other payments (cash
and non-cash), whether direct or indirect, to any stockholders of the Borrower
or its Subsidiaries, or any Affiliate of the Borrower or its Subsidiaries, other
than reasonable compensation for actual services rendered by stockholders in
their capacity as officers or employees of the Borrower.
6.2.11 TRANSFER OF COLLATERAL. Unless the Borrower has
complied with Section 6.1.19 and Section 6.1.20, the Borrower and the
Subsidiaries will not transfer, or permit the transfer, to another location of
any of the Collateral or the books and records related to any of the Collateral.
6.2.12 INVENTORY. With respect to the Inventory with an
aggregate fair market value of greater than $500,000, the Borrower and the
Subsidiaries will not store any of its Inventory with a consignee, bailee,
warehouseman or similar Person without prior written notice to the Lender.
ARTICLE 7
DEFAULT AND RIGHTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" under the provisions of
this Agreement:
7.1.1 FAILURE TO PAY. The failure of the Borrower to pay any
of the Obligations as and when due and payable in accordance with the provisions
of this Agreement, the Notes and/or any of the other Financing Documents and,
except in the case of the failure make any payment of principal and in the case
of the failure to pay any Obligation at its maturity (whether by acceleration or
otherwise) or when due on demand, such failure continues uncured for a period of
five (5) Business Days.
7.1.2 BREACH OF REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in this Agreement or in any report,
statement, schedule, certificate, financial statement or other document
furnished in connection with this Agreement, any of the other Financing
Documents, or the Obligations, shall prove
-68-
70
to have been false or misleading when made (or, if applicable, when reaffirmed)
in any material respect.
7.1.3 FAILURE TO COMPLY WITH COVENANTS. The failure of the
Borrower to perform, observe or comply with any covenant, condition or agreement
contained in this Agreement and, (i) only with respect to a failure under
Section (a) through (e), such failure continues uncured for a period of five (5)
days after notice thereof from the Lender to the Borrower, or (ii) only with
respect to a failure under Sections 6.1.2(a) (Recordkeeping), 6.1.3 (Corporate
Existence), 6.1.5(a) (Preservation of Properties), or Section 6.1.9 (Taxes)
which does not relate to Taxes due or claimed to be due in excess of $250,000
in the aggregate, if the Borrower after discovering such failure, fails to
diligently and continuously pursue the cure of such failure or such failure
continues uncured thirty (30) days after discovery.
7.1.4 DEFAULT UNDER OTHER FINANCING DOCUMENTS
OR OBLIGATIONS.
A default shall occur under any of the other Financing Documents or
under any other Obligations, and such default is not cured within any applicable
grace period provided therein.
7.1.5 RECEIVER; BANKRUPTCY. The Borrower or any Subsidiary
shall (a) apply for or consent to the appointment of a receiver, trustee or
liquidator of itself or any of its property, (b) admit in writing its inability
to pay its debts as they mature, (c) make a general assignment for the benefit
of creditors, (d) be adjudicated a bankrupt or insolvent, (e) file a voluntary
petition in bankruptcy or a petition or an answer seeking or consenting to
reorganization or an arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or take
corporate action for the purposes of effecting any of the foregoing, or (f) by
any act indicate its consent to, approval of or acquiescence in any such
proceeding or the appointment of any receiver of or trustee for any of its
property, or suffer any such receivership, trusteeship or proceeding to continue
undischarged for a period of sixty (60) days, or (g) by any act indicate its
consent to, approval of or acquiescence in any order, judgment or decree by any
court of competent jurisdiction or any Governmental Authority enjoining or
otherwise prohibiting the operation of a material portion of the Borrower's or
any Subsidiary's business or the use or disposition of a material portion of the
Borrower's or any Subsidiary's assets.
7.1.6 INVOLUNTARY BANKRUPTCY, ETC. (a) An order for relief
shall be entered in any involuntary case brought against the Borrower or any
Subsidiary under the Bankruptcy Code, or (b)
-69-
71
any such case shall be commenced against the Borrower or any Subsidiary and
shall not be dismissed within sixty (60) days after the filing of the petition,
or (c) an order, judgment or decree under any other Law is entered by any court
of competent jurisdiction or by any other Governmental Authority on the
application of a Governmental Authority or of a Person other than the Borrower
or any Subsidiary (i) adjudicating the Borrower, or any Subsidiary bankrupt or
insolvent, or (ii) appointing a receiver, trustee or liquidator of the Borrower
or of any Subsidiary, or of a material portion of the Borrower's or any
Subsidiary's assets, or (iii) enjoining, prohibiting or otherwise limiting the
operation of a material portion of the Borrower's or any Subsidiary's business
or the use or disposition of a material portion of the Borrower's or any
Subsidiary's assets, and such order, judgment or decree continues unstayed and
in effect for a period of thirty (30) days from the date entered.
7.1.7 JUDGMENT. Unless adequately insured in the opinion of
the Lender, the entry of a final judgment for the payment of money involving
more than $1,500,000 against the Borrower or any Subsidiary, and the failure by
the Borrower or such Subsidiary to discharge the same, or cause it to be
discharged, within thirty (30) days from the date of the order, decree or
process under which or pursuant to which such judgment was entered, or to secure
a stay of execution pending appeal of such judgment.
7.1.8 EXECUTION; ATTACHMENT. Any execution or attachment, if
together with all other existing executions or attachments aggregates more than
$1,500,000, shall be levied against the Collateral, or any part thereof, and
such execution or attachment shall not be set aside, discharged or stayed within
thirty (30) days after the same shall have been levied.
7.1.9 DEFAULT UNDER OTHER BORROWINGS. Default shall be made
with respect to any Indebtedness for Borrowed Money (other than the Loans) in
the aggregate in excess of $1,500,000 if the effect of such default is to
accelerate the maturity of such Indebtedness for Borrowed Money or to permit the
holder or obligee thereof or other party thereto to cause any such Indebtedness
for Borrowed Money to become due prior to its stated maturity, except that to
the extent Indebtedness for Borrowed Money arises under item (d) of that term
with respect to security interests in favor of the Borrower's customers to
secure amounts which the customer paid to Borrower as a deposit or progress
payment for the manufacture of identified equipment, the Borrower shall not be
deemed to be in default under this Section 7.1.9 so long as such customer's
claims (i) are being diligently contested (by way of assertions of offsets or
otherwise) by the Borrower in good faith and by appropriate proceedings, and
(ii) no Lien (other than a Permitted Lien), injunction or other restraining
order has been obtained by such customer.
-70-
72
7.1.10 CHALLENGE TO AGREEMENTS. The Borrower or any guarantor
of any Obligations shall challenge the validity and binding effect of any
provision of any of the Financing Documents or shall state its intention to make
such a challenge of any of the Financing Documents or any of the Financing
Documents shall for any reason (except to the extent permitted by its express
terms) cease to be effective or to create a valid and perfected first priority
Lien (except for Permitted Liens) on, or security interest in, any of the
Collateral purported to be covered thereby.
7.1.11 MATERIAL ADVERSE CHANGE. If the Lender reasonably
determines that an event which has a Material Adverse Effect has occurred,
notifies the Borrower of that determination and such condition continues
unremedied to the reasonable satisfaction of the Lender for thirty (30) days
after such notice.
7.1.12 CHANGE IN CONTROL. If there shall occur a "change of
control," meaning any event or circumstance upon which (a) Holding ceases to own
one hundred percent (100%) (minus no more than forty-nine percent (49.9%) of the
capital stock granted to management of the Borrower as compensation for
services) of the capital stock of the Borrower, or (b) Key Equity Capital
Corporation, Key Equity Partners 97 or any other Person wholly owned by Key
Corp. (a "Key Entity") ceases to own collectively at least fifty and one-tenth
percent (50.1%) of the voting power of Holding (determined as if all equity
securities convertible into voting securities were so converted) entitled to
vote in the election of members of the board of directors of Holding; PROVIDED,
that a "change of control" shall not be deemed to have occurred hereunder upon
any transfer of all of the debt and equity securities of Holding owned by the
Key Entities to any Person if (i) at least a majority of the voting power and
equity interests in such Person is owned by at least a majority of the officers
(including all members of the Board of Directors of Holding designated by Key
Equity Capital Corporation) of Key Equity Capital Corporation at the time of
such transfer, (ii) such Person has at least $50,000,000 in cash funds available
for investment and (iii) such Person is under no contractual restriction
(whether pursuant to its governing documents or otherwise) to make further
investments in Holding or its subsidiaries.
7.1.13 LIQUIDATION, TERMINATION, DISSOLUTION,
ETC.
The Borrower shall liquidate, dissolve or terminate its existence or
shall suspend or terminate a substantial portion of its business operations.
SECTION 7.2 REMEDIES. Upon the occurrence of and during the continuance
of an Event of Default, the Lender may at any time thereafter exercise any one
or more of the following rights, powers or remedies:
-71-
73
7.2.1 ACCELERATION. The Lender may declare the Obligations to
be immediately due and payable, notwithstanding anything contained in this
Agreement or in any of the other Financing Documents to the contrary, without
presentment, demand, protest, notice of protest or of dishonor, or other notice
of any kind, all of which the Borrower hereby waives.
7.2.2 FURTHER ADVANCES. The Lender may from time to time
without notice to the Borrower suspend, terminate or limit any further loans or
other extensions of credit under this Agreement and under any of the other
Financing Documents. Further, upon the occurrence of an Event of Default or
Default specified in Sections 7.1.5 (Receiver; Bankruptcy) or 7.1.6
(Involuntary Bankruptcy, etc.) above, the Revolving Credit Commitment and any
agreement in any of the Financing Documents to provide additional credit shall
immediately and automatically terminate and the unpaid principal amount of the
Notes (with accrued interest thereon) and all other Obligations then
outstanding, shall immediately become due and payable without further action of
any kind and without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower. Upon termination of the
Revolving Credit Facility, the outstanding principal balance under the
Revolving Loan, and any accrued and unpaid interest thereon, shall be
immediately due and payable, and the Lender shall not make any further advances
under the Revolving Loan, unless it elects to do so in the exercise of its
sole and absolute discretion.
7.2.3 UNIFORM COMMERCIAL CODE. The Lender shall have all of
the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable Laws. Upon demand by the Lender, the
Borrower shall assemble the Collateral and make it available to the Lender, at a
place designated by the Lender. The Lender or its agents may without notice from
time to time enter upon the Borrower's premises to take possession of the
Collateral, to remove it, to render it unusable, to process it or otherwise
prepare it for sale, or to sell or otherwise dispose of it.
Any written notice of the sale, disposition or other intended action by
the Lender with respect to the Collateral which is sent by regular mail, postage
prepaid, to the Borrower at the address set forth in Section 8.1 of this
Agreement, or such other address of the Borrower which may from time to time be
shown on the Lender's records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute commercially reasonable notice to
the Borrower. The Lender may alternatively or additionally give such notice in
any other commercially reasonable manner. Nothing in this Agreement shall
require the Lender to give any notice not required by applicable Laws.
-72-
74
If any consent, approval, or authorization of any state, municipal or
other governmental department, agency or authority or of any person, or any
person, corporation, partnership or other entity having any interest therein,
should be necessary to effectuate any sale or other disposition of the
Collateral, the Borrower agrees to execute all such applications and other
instruments, and to take all other action, as may be required in connection with
securing any such consent, approval or authorization.
The Borrower recognizes that the Lender may be unable to effect a
public sale of all or a part of the Collateral consisting of securities by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and other applicable federal and state Laws. The Lender may, therefore,
in its discretion, take such steps as it may deem appropriate to comply with
such Laws and may, for example, at any sale of the Collateral consisting of
securities restrict the prospective bidders or purchasers as to their number,
nature of business and investment intention, including, without limitation, a
requirement that the Persons making such purchases represent and agree to the
satisfaction of the Lender that they are purchasing such securities for their
account, for investment, and not with a view to the distribution or resale of
any thereof. The Borrower covenants and agrees to do or cause to be done
promptly all such acts and things as the Lender may request from time to time
and as may be necessary to offer and/or sell the securities or any part thereof
in a manner which is valid and binding and in conformance with all applicable
Laws. Upon any such sale or disposition, the Lender shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral consisting
of securities so sold.
7.2.4 THE COLLATERAL ACCOUNT. If the Lender shall direct in
the exercise of its sole and absolute discretion, the Borrower will deposit, or
cause to be deposited, all Items of Payment to a bank account designated by the
Lender and from which the Lender alone has power of access and withdrawal (the
"Collateral Account"). Each deposit shall be made not later than the next
Business Day after the date of receipt of the Items of Payment. The Items of
Payment shall be deposited in precisely the form received, except for the
endorsements of the Borrower where necessary to permit the collection of any
such Items of Payment, the Borrower hereby agreeing to make such endorsement. In
the event the Borrower shall fail to do so, the Lender is hereby authorized by
the Borrower to make the endorsement in the name of the Borrower. Prior to such
a deposit, the Borrower will not commingle any Items of Payment with any of the
other funds or property of the Borrower, but will hold them separate and apart
in trust and for the account of the Lender.
In addition, if so directed by the Lender in the exercise of
its sole and absolute discretion, the Borrower shall direct the
-73-
75
mailing of all Items of Payment from its Account Debtors to a post-office box
designated by the Lender, or to such other additional or replacement post-office
boxes pursuant to the request of the Lender from time to time (collectively, the
"Lockbox"). The Lender shall have unrestricted and exclusive access to the
Lockbox.
The Borrower hereby authorizes the Lender to inspect all Items of
Payment, endorse all Items of Payment in the name of the Borrower, and deposit
Items of Payment in the Collateral Account. The Lender reserves the right,
exercised in its sole and absolute discretion from time to time, to provide to
the Collateral Account credit prior to final collection of an Item of Payment
and to disallow credit for any Item of Payment which is unsatisfactory to the
Lender. In the event Items of Payment are returned to the Lender for any reason
whatsoever, the Lender may, in the exercise of its discretion from time to time,
forward such Items of Payment a second time. Any returned Items of Payment shall
be charged back to the Collateral Account, the Revolving Loan Account, or other
account, as appropriate.
The Lender will apply the whole or any part of the collected funds
credited to the Collateral Account against the Revolving Loan (or with respect
to Items of Payment which are not proceeds of accounts or inventory or after an
Event of Default, against any of the Obligations) or credit such collected funds
to the depository account of the Borrower with the Lender (or an Affiliate of
the Lender), the order and method of such application to be in the sole
discretion of the Lender.
7.2.5 SPECIFIC RIGHTS WITH REGARD TO
COLLATERAL.
In addition to all other rights and remedies provided hereunder or as
shall exist at law or in equity from time to time, the Lender may (but shall be
under no obligation to), without notice to the Borrower, and the Borrower hereby
irrevocably appoints the Lender as its attorney-in-fact, with power of
substitution, in the name of the Lender or in the name of the Borrower or
otherwise, for the use and benefit of the Lender, but at the cost and expense of
the Borrower and without notice to the Borrower:
(a) request any account debtor obligated on any of the
Accounts to make payments thereon directly to the Lender, with the
Lender taking control of the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or deal
with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or any
part of the Collateral;
-74-
76
(d) copy, transcribe, or remove from any place of business of
the Borrower or any Subsidiary all books, records, ledger sheets,
correspondence, invoices and documents, relating to or evidencing any
of the Collateral or without cost or expense to the Lender, make such
use of the Borrower's or any Subsidiary's place(s) of business as may
be reasonably necessary to administer, control and collect the
Collateral;
(e) repair, alter or supply goods if necessary to fulfill in
whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to
enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or
adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(i) endorse or sign the name of the Borrower upon any Items of
Payment, certificates of title, Instruments, Securities, stock powers,
documents, documents of title, financing statements, assignments,
notices, or other writing relating to or part of the Collateral and on
any Proof of Claim in Bankruptcy against an Account Debtor;
(j) notify the Post Office authorities to change the address
for the delivery of mail to the Borrower to such address or Post Office
Box as the Lender may designate and receive and open all mail addressed
to the Borrower; and
(k) take any other action necessary or beneficial to realize
upon or dispose of the Collateral or to carry out the terms of this
Agreement.
7.2.6 APPLICATION OF PROCEEDS. Any proceeds of sale or other
disposition of the Collateral will be applied by the Lender to the payment of
the Enforcement Costs, and any balance of such proceeds will be applied by the
Lender to the payment of the balance of the Obligations in such order and manner
of application as the Lender may from time to time in its sole and absolute
discretion determine. If the sale or other disposition of the Collateral fails
to fully satisfy the Obligations, the Borrower shall remain liable to the Lender
for any deficiency, except as applicable Laws provide otherwise.
-75-
77
7.2.7 PERFORMANCE BY LENDER. Upon the occurrence and
continuation of an Event of Default, the Lender without notice to or demand upon
the Borrower and without waiving or releasing any of the Obligations or any
Default or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of the Borrower, and may enter upon the premises of the Borrower for
that purpose and take all such action thereon as the Lender may consider
necessary or appropriate for such purpose and the Borrower hereby irrevocably
appoints the Lender as its attorney-in-fact to do so, with power of
substitution, in the name of the Lender or in the name of the Borrower or
otherwise, for the use and benefit of the Lender, but at the cost and expense of
the Borrower and without notice to the Borrower. All sums so paid or advanced by
the Lender together with interest thereon from the date of payment, advance or
incurring until paid in full at the Post-Default Rate and all costs and
expenses, shall be deemed part of the Enforcement Costs, shall be paid by the
Borrower to the Lender on demand, and shall constitute and become a part of the
Obligations.
7.2.8 OTHER REMEDIES. The Lender may from time to time
proceed to protect or enforce its rights by an action or actions at law or in
equity or by any other appropriate proceeding, whether for the specific
performance of any of the covenants contained in this Agreement or in any of the
other Financing Documents, or for an injunction against the violation of any of
the terms of this Agreement or any of the other Financing Documents, or in aid
of the exercise or execution of any right, remedy or power granted in this
Agreement, the Financing Documents, and/or applicable Laws. The Lender is
authorized to offset and apply to all or any part of the Obligations all moneys,
credits and other property of any nature whatsoever of the Borrower now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, the Lender.
7.2.9 EXERCISE OF REMEDIES. Notwithstanding any provision of
this Agreement to the contrary, the Lender acknowledges and agrees that the
rights and remedies under SECTION 7.2 may only be exercised upon the occurrence
of and during the continuance of an Event of Default.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 NOTICES. All notices, requests and demands to or upon the
parties to this Agreement shall be in writing and shall be deemed to have been
given or made when delivered by hand on a Business Day, or two (2) days after
the date when deposited in the mail, postage prepaid by registered or certified
mail, return receipt requested, or when sent by overnight courier, on the
-76-
78
Business Day next following the day on which the notice is delivered to such
overnight courier, addressed as follows:
Borrower:
with a copy to:
Key Equity
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
3200 National City Center
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
Lender: NationsBank, N.A.
NationsBank Business Credit
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esquire
Miles & Stockbridge
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
SECTION 8.2 AMENDMENTS; WAIVERS. This Agreement and the other Financing
Documents may not be amended, modified, or changed in any respect except by an
agreement in writing signed by the Lender and the Borrower. No waiver of any
provision of this Agreement or of any of the other Financing Documents, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing. No course of dealing between the
Borrower and the Lender and no act or failure to act from time to time on the
part of the Lender shall constitute a waiver, amendment or modification of any
provision of this
-77-
79
Agreement or any of the other Financing Documents or any right or remedy under
this Agreement, under any of the other Financing Documents or under applicable
Laws.
Without implying any limitation on the foregoing:
(a) Any waiver or consent shall be effective only in the
specific instance, for the terms and purpose for which given, subject to such
conditions as the Lender may specify in any such instrument.
(b) No waiver of any Default or Event of Default shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereto.
(c) No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in the same,
similar or other circumstance.
(d) No failure or delay by the Lender to insist upon the
strict performance of any term, condition, covenant or agreement of this
Agreement or of any of the other Financing Documents, or to exercise any right,
power or remedy consequent upon a breach thereof, shall constitute a waiver,
amendment or modification of any such term, condition, covenant or agreement or
of any such breach or preclude the Lender from exercising any such right, power
or remedy at any time or times.
(e) By accepting payment after the due date of any amount
payable under this Agreement or under any of the other Financing Documents, the
Lender shall not be deemed to waive the right either to require prompt payment
when due of all other amounts payable under this Agreement or under any of the
other Financing Documents, or to declare a default for failure to effect such
prompt payment of any such other amount.
SECTION 8.3 CUMULATIVE REMEDIES. The rights, powers and remedies
provided in this Agreement and in the other Financing Documents are cumulative,
may be exercised concurrently or separately, may be exercised from time to time
and in such order as the Lender shall determine and are in addition to, and not
exclusive of, rights, powers and remedies provided by existing or future
applicable Laws. In order to entitle the Lender to exercise any remedy reserved
to it in this Agreement, it shall not be necessary to give any notice, other
than such notice as may be expressly required in this Agreement. Without
limiting the generality of the foregoing, the Lender may:
(a) proceed against the Borrower with or without proceeding
against any Person who may be liable (by endorsement, guaranty,
indemnity or otherwise) for all or any part of the Obligations;
-78-
80
(b) proceed against the Borrower with or without proceeding
under any of the other Financing Documents or against any Collateral or
other collateral and security for all or any part of the Obligations;
(c) without reducing or impairing the obligation of the
Borrower and without notice, release or compromise with any guarantor
or other Person liable for all or any part of the Obligations under the
Financing Documents or otherwise;
(d) without reducing or impairing the obligations of the
Borrower and without notice thereof: (i) fail to perfect the Lien in
any or all Collateral or to release any or all the Collateral or to
accept substitute Collateral, (ii) approve the making of advances under
the Revolving Loan under this Agreement, (iii) waive any provision of
this Agreement or the other Financing Documents, (iv) exercise or fail
to exercise rights of set-off or other rights, or (v) accept partial
payments or extend from time to time the maturity of all or any part of
the Obligations.
SECTION 8.4 SEVERABILITY. In case one or more provisions, or part
thereof, contained in this Agreement or in the other Financing Documents shall
be invalid, illegal or unenforceable in any respect under any Law, then without
need for any further agreement, notice or action:
(a) the validity, legality and enforceability of the remaining
provisions shall remain effective and binding on the parties thereto
and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the
limit of such validity;
(c) if such provision or part thereof pertains to repayment of
the Obligations, then, at the sole and absolute discretion of the
Lender, all of the Obligations of the Borrower to the Lender shall
become immediately due and payable; and
(d) if the affected provision or part thereof does not pertain
to repayment of the Obligations, but operates or would prospectively
operate to invalidate this Agreement in whole or in part, then such
provision or part thereof only shall be void, and the remainder of this
Agreement shall remain operative and in full force and effect.
SECTION 8.5 ASSIGNMENTS BY LENDER. The Lender may sell, assign or
transfer (x) to any Person at any time with the prior written consent of the
Borrower, which consent shall not be
-79-
81
unreasonably delayed or withheld, or (y) if there shall exist an Event of
Default, to any Person without notice to or the consent of the Borrower, all or
any part of the Obligations, and each such Person or Persons shall have the
right to enforce the provisions of this Agreement and any of the other Financing
Documents as fully as the Lender, provided that the Lender shall continue to
have the unimpaired right to enforce the provisions of this Agreement and any of
the other Financing Documents as to so much of the Obligations that the Lender
has not sold, assigned or transferred.
SECTION 8.6 PARTICIPATIONS BY LENDER. The Lender may at any time sell
participating interests in any of the Lender's Obligations or Commitments;
provided, however, that (a) no such participation shall relieve the Lender from
its obligations under this Agreement or under any of the other Financing
Documents to which it is a party, (b) the Lender shall remain solely responsible
for the performance of its obligations under this Agreement and under all of the
other Financing Documents to which it is a party, (c) the Borrower shall
continue to deal solely and directly with such Lender in connection with the
Lender's rights and obligations under this Agreement and the other Financing
Documents, and (d) unless there shall exist an Event of Default at the time of
sale, the purchaser shall be a Financial Institution or an affiliate of a
Financial Institution.
SECTION 8.7 DISCLOSURE OF INFORMATION BY LENDER. Each of the Lender,
each assignee of and participant in the Commitment hereby (a) acknowledges that
each of the Borrower and its Subsidiaries have trade secrets and financial,
marketing and other data and information the confidentiality of which is
important to its business and (b) agrees to keep confidential (i) any trade
secret of the Borrower and its Subsidiaries and (ii) any financial, marketing
and other data and information of the Borrower or any of its Subsidiaries
designated by it as confidential or that such Lender knows is confidential,
PROVIDED that this Section shall not preclude any Lender from furnishing any
such trade secret, data or information (i) as may be required by order of any
court of competent jurisdiction or requested by any governmental agency having
any regulatory authority over that Lender or its securities, (ii) to any other
party to this Agreement, (iii) to any actual or prospective transferee (so long
as such prospective transferee is a financial institution) of all or part of
that Lender's rights arising out of or in connection with this Agreement so
long as such prospective transferee to whom disclosure is made agrees to be
bound by the provisions of this Section 9.7, (iv) to anyone if it shall have
been already publicly disclosed (other than by that Lender in contravention of
this Section 9.7, (v) to the extent reasonably required in connection with the
exercise of any right or remedy under this Agreement or applicable Laws and
(vi) to that Lender's legal counsel, auditors and accountants.
-80-
82
SECTION 8.8 SUCCESSORS AND ASSIGNS. This Agreement and all other
Financing Documents shall be binding upon and inure to the benefit of the
Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender.
SECTION 8.9 CONTINUING AGREEMENTS. All covenants, agreements,
representations and warranties made by the Borrower in this Agreement, in any of
the other Financing Documents, and in any certificate delivered pursuant hereto
or thereto shall survive the making by the Lender of the Loans and the execution
and delivery of the Notes, shall be binding upon the Borrower regardless of how
long before or after the date hereof any of the Obligations were or are
incurred, and shall continue in full force and effect so long as any of the
Obligations are outstanding and unpaid. From time to time upon the Lender's
request, and as a condition of the release of any one or more of the Security
Documents, the Borrower and other Persons obligated with respect to the
Obligations shall provide the Lender with such acknowledgments and agreements as
the Lender may require to the effect that there exists no defenses, rights of
setoff or recoupment, claims, counterclaims, actions or causes of action of any
kind or nature whatsoever against the Lender, its agents and others, or to the
extent there are, the same are waived and released.
SECTION 8.10 ENFORCEMENT COSTS. The Borrower shall pay to the Lender on
demand all Enforcement Costs, together with interest thereon from the date
incurred or advanced until paid in full at a per annum rate of interest equal at
all times to the Post-Default Rate. Enforcement Costs shall be immediately due
and payable at the time advanced or incurred, whichever is earlier. Without
implying any limitation on the foregoing, the Borrower shall pay, as part of the
Enforcement Costs, upon demand any and all stamp and other Taxes and fees
payable or determined to be payable in connection with the execution and
delivery of this Agreement and the other Financing Documents and to save the
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay any Taxes or fees referred
to in this Section. The provisions of this Section shall survive the execution
and delivery of this Agreement, the repayment of the other Obligations and shall
survive the termination of this Agreement.
SECTION 8.11 APPLICABLE LAW; JURISDICTION.
8.11.1 As a material inducement to the Lender to enter into
this Agreement, the Borrower acknowledges and agrees that the Financing
Documents, including, this Agreement, shall be governed by the Laws of the
State, as if each of the Financing Documents and this Agreement had each been
executed, delivered, administered and performed solely within the State even
though for
-81-
83
the convenience and at the request of the Borrower, one or more of the Financing
Documents may be executed elsewhere. The Lender acknowledges, however, that
remedies under certain of the Financing Documents which relate to property
outside the State may be subject to the laws of the state in which the property
is located.
8.11.2 The Borrower irrevocably submits to the jurisdiction
of any state or federal court sitting in the State over any suit, action or
proceeding arising out of or relating to this Agreement or any of the other
Financing Documents. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon the Borrower and may be enforced in any court in which the Borrower is
subject to jurisdiction, by a suit upon such judgment, PROVIDED that service of
process is effected upon the Borrower in one of the manners specified in this
Section or as otherwise permitted by applicable Laws.
8.11.3 The Borrower hereby irrevocably designates and
appoints The Corporation Trust, Incorporated, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the Borrower's authorized agent to receive on the Borrower's
behalf service of any and all process that may be served in any suit, action or
proceeding of the nature referred to in this Section in any state or federal
court sitting in the State. If such agent shall cease so to act, the Borrower
shall irrevocably designate and appoint without delay another such agent in the
State satisfactory to the Lender and shall promptly deliver to the Lender
evidence in writing of such other agent's acceptance of such appointment and its
agreement that such appointment shall be irrevocable.
8.11.4 The Borrower hereby consents to process being served
in any suit, action or proceeding of the nature referred to in this Section by
(a) the mailing of a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to the Borrower at the Borrower's address
designated in or pursuant to Section hereof, and (b) serving a copy thereof upon
the agent, if any, designated and appointed by the Borrower as the Borrower's
agent for service of process by or pursuant to this Section. The Borrower
irrevocably agrees that such service (y) shall be deemed in every respect
effective service of process upon the Borrower in any such suit, action or
proceeding, and (z) shall, to the fullest extent permitted by law, be taken and
held to be valid personal service upon the Borrower. Nothing in this Section
shall affect the right of the Lender to serve process in any manner otherwise
permitted by law or limit the right of the Lender other-
-82-
84
wise to bring proceedings against the Borrower in the courts of any
jurisdiction or jurisdictions.
SECTION 8.12 DUPLICATE ORIGINALS AND COUNTERPARTS. This Agreement may
be executed in any number of duplicate originals or counterparts, each of such
duplicate originals or counterparts shall be deemed to be an original and all
taken together shall constitute but one and the same instrument.
SECTION 8.13 HEADINGS. The headings in this Agreement are included
herein for convenience only, shall not constitute a part of this Agreement for
any other purpose, and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
SECTION 8.14 NO AGENCY. Nothing herein contained shall be construed to
constitute the Borrower as the Lender's agent for any purpose whatsoever or to
permit the Borrower to pledge any of the Lender's credit. The Lender shall not
be responsible nor liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof. The Lender shall not, by anything herein or in
any of the Financing Documents or otherwise, assume any of the Borrower's
obligations under any contract or agreement assigned to the Lender, and the
Lender shall not be responsible in any way for the performance by the Borrower
of any of the terms and conditions thereof.
SECTION 8.15 DATE OF PAYMENT. Should the principal of or interest on
any of the Notes become due and payable on other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and in
the case of principal, interest shall be payable thereon at the rate per annum
specified in the Notes during such extension.
SECTION 8.16 ENTIRE AGREEMENT. This Agreement is intended by the Lender
and the Borrower to be a complete, exclusive and final expression of the
agreements contained herein. Neither the Lender nor the Borrower shall hereafter
have any rights under any prior agreements pertaining to the matters addressed
by this Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.
SECTION 8.17 WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDER
HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
WHICH THE BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY
PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING DOCUMENTS, OR (C) THE
COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST
PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
-83-
85
This waiver is knowingly, willingly and voluntarily made by
the Borrower and the Lender, and the Borrower and the Lender hereby represent
that no representations of fact or opinion have been made by any individual to
induce this waiver of trial by jury or to in any way modify or nullify its
effect. The Borrower and the Lender further represent that they have been
represented in the signing of this Agreement and in the making of this waiver by
independent legal counsel, selected of their own free will, and that they have
had the opportunity to discuss this waiver with counsel.
SECTION 8.18 LIABILITY OF THE LENDER. The Borrower hereby agrees that
the Lender shall not be chargeable for any negligence, mistake, act or omission
of any accountant, examiner, agency or attorney employed by the Lender in making
examinations, investigations or collections, or otherwise in perfecting,
maintaining, protecting or realizing upon any lien or security interest or any
other interest in the Collateral or other security for the Obligations.
By inspecting the Collateral or any other properties of the
Borrower or by accepting or approving anything required to be observed,
performed or fulfilled by the Borrower or to be given to the Lender pursuant to
this Agreement or any of the other Financing Documents, the Lender shall not be
deemed to have warranted or represented the condition, sufficiency, legality,
effectiveness or legal effect of the same, and such acceptance or approval shall
not constitute any warranty or representation with respect thereto by the
Lender.
IN WITNESS WHEREOF, each of the parties hereto have executed and
delivered this Agreement under their respective seals as of the day and year
first written above.
WITNESS: NATIONSBANK, N.A.
/s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
------------------------- ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
WITNESS: GLASSTECH, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (SEAL)
------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
-84-
86
LIST OF EXHIBITS
----------------
A-1. Revolving Credit Note
B. Security Procedures
C. Form of Compliance Certificate
D. Indenture
-85-
87
EXHIBIT B
NATIONSBANK BUSINESS CREDIT
WIRE TRANSFER PROCEDURES
The transfer of funds by means of wire may be made by NationsBank
(lender) at the request of its customer (borrower). Such wire transfers are
categorized by lender as either repetitive or non-repetitive.
Repetitive:
----------
Repetitive wire transfers may vary in amount, but are consistent in terms of the
payee, the location to which funds are wired, the bank name, account number and
the routing transit number.
Either borrower or lender may initiate a repetitive wire transfer. The borrower
may identify the repetitive nature of transfers and request they be established
as such via the "Repetitive Wire Transfer Authorization Form" (copy attached).
Lender, after observing numerous transfers to the same recipient and
destination, may initiate the repetitive process by faxing or mailing the
"Repetitive Wire Authorization Form" to the borrower for completion and return.
Although a first request for a repetitive wire transfer may be honored from a
faxed copy of the "Repetitive Wire Transfer Authorization Form", a copy of the
form containing an original signature must be received from the borrower. All
transfer authorization forms must be approved by and contain the signature of a
person authorized by the borrower to advance funds from borrower's line of
credit with the lender.
After receipt of the original "Repetitive Wire Transfer Authorization Form" by
the lender, subsequent wire transfers to the recipient named thereon may be
initiated by telephone request, provided the requesting party is identified by
the lender as a person authorized by borrower to advance funds from the
borrower's line of credit with lender.
Non-Repetitive:
--------------
Non-Repetitive wire transfers are directed to recipients on a one-time or
infrequent basis or are directed to varied destinations. Non-repetitive wire
transfers require that written notification be provided to lender by borrower,
showing payee, location, account number, routing transit number and name and
location of bank into which funds are to be transferred. Such written
notification may be provided by means of a "Non-Repetitive Wire Transfer
Authorization Form" (copy attached).
-86-
88
Required information may be faxed to lender in order to expedite the transfer;
however, a copy of the transfer authorization form with an original signature(s)
must be received by lender from borrower. The transfer authorization form must
be approved by and contain the signature of a person authorized by the borrower
to advance funds from borrower's line of credit with the lender.
For any non-repetitive wire transfer, Lender may, at its discretion, perform a
telephone verification with an authorized representative (the original signer or
another authorized representative) of borrower prior to initiating the transfer.
-87-
89
NATIONSBANK BUSINESS CREDIT
REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
CUSTOMER NAME: ___________________________ DATE: ___________________________
NAME OF PERSON AUTHORIZING TRANSFER FOR CUSTOMER:_____________________________
NOTE:MUST BE PERSON AUTHORIZED
TO ADVANCE FUNDS
SIGNATURE OF PERSON AUTHORIZING TRANSFER FOR CUSTOMER: ________________________
PAYEE
NAME OF RECIPIENT OF FUNDS: ___________________________________________________
LOCATION: _____________________________________________________________________
ACCOUNT NUMBER INTO WHICH FUNDS ARE TO BE TRANSFERRED: ________________________
DESTINATION OF FUNDS
NAME AND LOCATION OF BANK RECEIVING FUNDS:
BANK NAME: ___________________________________________________________________
ROUTING INFORMATION (ABA NUMBER): ____________________________________________
BANK LOCATION: CITY:_____________________________________________________
STATE: ___________________________________________________
(FOR INTERNATIONAL WIRES) COUNTRY: ___________________________________________
SPECIAL INSTRUCTIONS: ________________________________________________________
________________________________________________________
________________________________________________________
BANK USE ONLY
BUSINESS CREDIT DEPARTMENT
BUSINESS CREDIT AUTHORIZATION:__________________________________________________
PRINT NAME OF PERSON AT BANK APPROVED TO AUTHORIZE
WIRE TRANSFERS
BUSINESS CREDIT AUTHORIZATION: _________________________________________________
SIGNATURE OF PERSON AT BANK APPROVED TO AUTHORIZE
WIRE TRANSFERS
WIRE TRANSFER DEPARTMENT
F.D. NUMBER ASSIGNED: __________________________________________________________
ACCOUNT NUMBER TO DEBIT: _______________________________________________________
-88-
90
NATIONSBANK BUSINESS CREDIT
NON-REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
CUSTOMER NAME: ___________________________ DATE: ___________________________
NAME OF PERSON AUTHORIZING TRANSFER FOR CUSTOMER:_______________________________
NOTE: MUST BE PERSON AUTHORIZED
TO ADVANCE FUNDS
SIGNATURE OF PERSON AUTHORIZING TRANSFER FOR CUSTOMER: _________________________
PAYEE
NAME OF RECIPIENT OF FUNDS: ___________________________________________________
LOCATION: _____________________________________________________________________
ACCOUNT NUMBER INTO WHICH FUNDS ARE TO BE TRANSFERRED: ________________________
DESTINATION OF FUNDS
NAME AND LOCATION OF BANK RECEIVING FUNDS:
BANK NAME: ____________________________________________________________________
ROUTING INFORMATION (ABA NUMBER): _____________________________________________
BANK LOCATION: CITY:___________________________________________________
STATE: _________________________________________________
(FOR INTERNATIONAL WIRES) COUNTRY: ____________________________________________
SPECIAL INSTRUCTIONS: _________________________________________________________
-89-
91
EXHIBIT C
FINANCING AGREEMENT
COMPLIANCE CERTIFICATE
----------------------
THIS CERTIFICATE is made as of __________________, 199_ , by
____________________________________, a ________________ organized under the
laws of the State of ___________________ (the "Borrower"), to
_______________________________, a national banking association (the "Lender"),
pursuant to Section of the Financing and Security Agreement dated
______________, 199_, (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Agreement") by and
between the Borrower and the Lender.
I, ____________________, hereby certify that I am the ______________ of
the Borrower and am a Responsible Officer (as that term is defined in the
Financing Agreement) authorized to certify to the Lender on behalf the Borrower
as follows:
1. This Certificate is given to induce the Lender to make advances to
the Borrower under the Financing Agreement.
2. This Certificate accompanies the _____________ financial statements
for the period ended ___________________, 199__ (the "Current Financials") which
the Borrower is furnishing to the Lender pursuant to Section 6.1.1(__) of the
Financing Agreement. The Current Financials have been prepared in accordance
with GAAP (as that term is defined in the Financing Agreement).
3. As required by Section 6.1.1(__) of the Financing Agreement, I have
set forth on SCHEDULE 1 a detailed computation of each financial covenant in
Financing Agreement and a cash flow projection report.
4. No change has occurred to the information contained in the
Collateral Disclosure List except as set forth on SCHEDULE 2 to this
Certificate. By way of example and not limitation, the Collateral Disclosure
List, together with SCHEDULE 2, contains a listing of all of the Borrower's
Patents, Trademarks, Copyrights (as those terms are defined in the Financing
Agreement), all locations (owned, leased, warehouses or otherwise) where any
Collateral (as that term is defined in the Financing Agreement) is located, all
Subsidiaries (as that term is defined in the Financing Agreement).
5. As of the date hereof, there exists no Default or Event of Default,
as defined in the Article 7 of the Financing Agreement, nor any event which,
upon notice or the lapse of time, or both, would constitute such an Event of
Default.
6. On the date hereof, the representations and warranties contained in
Article 4 of the Financing Agreement are true with the same effect as though
such representations and warranties had been made on the date hereof.
WITNESS my signature this _____ day of ____________, 199_.
-90-
92
------------------------------
Name:
Title:
-91-
93
Schedule 1
----------
-92-
94
Schedule 2
----------
-93-
95
LIST OF SCHEDULES
-----------------
Schedule 4.1.10 Litigation
---------------
Schedule 4.1.14 Other Indebtedness
---------------
Schedule 4.1.20 Permitted Liens
---------------
Schedule 6.2.4 Investments
--------------
-94-
96
LITIGATION
----------
-95-
97
SCHEDULE 4.1.14
OTHER INDEBTEDNESS
------------------
-96-
98
Schedule 4.1.20
--------
LIENS ON COLLATERAL
Unpaid
Principal
Asset Covered Lienholder Balance
------------- ---------- -------
-97-
99
Schedule 6.2.4
--------
Other Investments
-----------------
NONE
-98-
100
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Defined Terms........................................................................ 1
---------------------
ARTICLE 2
THE CREDIT FACILITIES
SECTION 2.1 The Revolving Credit Facility................................................................ 22
-----------------------------
2.1.1 Revolving Credit Facility.................................................................... 22
-------------------------
2.1.2 Procedure for Making Advances Under the Revolving
Loan; Lender Protection Loans................................................................ 22
-----------------------------
2.1.3 Revolving Credit Note........................................................................ 23
---------------------
2.1.4 Revolving Loan Account....................................................................... 23
----------------------
2.1.5 Revolving Credit Unused Line Fee............................................................. 24
--------------------------------
2.1.6 Early Termination Fee........................................................................ 24
---------------------
SECTION 2.2 The Letter of Credit Facility................................................................ 25
-----------------------------
2.2.1 Letters of Credit............................................................................ 25
-----------------
2.2.2 Letter of Credit Fees........................................................................ 25
---------------------
2.2.3 Terms of Letters of Credit................................................................... 26
--------------------------
2.2.4 Procedure for Letters of Credit.............................................................. 26
-------------------------------
2.2.5 Change In Law; Increased Cost................................................................ 26
-----------------------------
SECTION 2.3 Interest..................................................................................... 27
--------
2.3.2 Selection of Interest Rates.................................................................. 27
---------------------------
2.3.3 Inability to Determine LIBOR Base Rate....................................................... 29
--------------------------------------
2.3.4 Indemnity.................................................................................... 29
---------
2.3.5 Payment of Interest.......................................................................... 30
-------------------
SECTION 2.4 General Financing Provisions................................................................. 30
----------------------------
2.4.1 Borrower's Representatives................................................................... 30
--------------------------
2.4.2 Use of Proceeds of the Loans................................................................. 31
----------------------------
2.4.3 Origination Fee.............................................................................. 31
---------------
2.4.4 Servicing Fees............................................................................... 31
--------------
2.4.5 Computation of Interest and Fees............................................................. 31
--------------------------------
2.4.6 Payments..................................................................................... 31
--------
2.4.7 Liens; Setoff................................................................................ 32
-------------
2.4.8 Requirements of Law.......................................................................... 32
-------------------
SECTION 3.1 Debt and Obligations Secured................................................................. 34
----------------------------
SECTION 3.2 Grant of Liens............................................................................... 34
--------------
SECTION 3.3 Collateral Disclosure List................................................................... 35
--------------------------
SECTION 3.4 Personal Property............................................................................ 35
-----------------
3.4.1 Securities, Chattel Paper, Promissory Notes, etc............................................. 35
-------------------------------------------------
3.4.2 Patents, Copyrights and Other Property Requiring
Additional Steps to Perfect.................................................................. 36
---------------------------
SECTION 3.5 Record Searches.............................................................................. 36
---------------
SECTION 3.6 Real Property................................................................................ 36
-------------
SECTION 3.7 Costs........................................................................................ 38
-----
SECTION 3.8 Release...................................................................................... 38
-------
SECTION 3.9 Inconsistent Provisions...................................................................... 38
-----------------------
i
101
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties............................................................... 38
------------------------------
4.1.1 Subsidiaries................................................................................. 39
------------
4.1.2 Good Standing................................................................................ 39
-------------
4.1.3 Power and Authority.......................................................................... 39
-------------------
4.1.4 Binding Agreements........................................................................... 39
------------------
4.1.5 No Conflicts................................................................................. 39
------------
4.1.6 No Defaults, Violations...................................................................... 40
-----------------------
4.1.7 Compliance with Laws......................................................................... 40
--------------------
4.1.8 Margin Stock................................................................................. 40
------------
4.1.9 Investment Company Act; Margin Securities.................................................... 40
-----------------------------------------
4.1.10 Litigation................................................................................... 41
----------
4.1.11 Financial Condition.......................................................................... 41
-------------------
4.1.12 Proforma Financial Statements................................................................ 41
-----------------------------
4.1.13 Full Disclosure.............................................................................. 42
---------------
4.1.14 Indebtedness for Borrowed Money.............................................................. 42
-------------------------------
4.1.15 Taxes........................................................................................ 42
-----
4.1.16 ERISA........................................................................................ 42
-----
4.1.17 Title to Properties.......................................................................... 43
-------------------
4.1.18 Patents, Trademarks, Etc. .................................................................. 43
-------------------------
4.1.19 Presence of Hazardous Materials or Hazardous
--------------------------------------------
Materials Contamination...................................................................... 43
-----------------------
4.1.20 Perfection and Priority of Collateral........................................................ 44
-------------------------------------
4.1.21 Places of Business and Location of Collateral................................................ 44
---------------------------------------------
4.1.22 Merger Agreement Transaction................................................................. 44
----------------------------
4.1.23 Securities Acts.............................................................................. 45
---------------
4.1.24 Governmental Regulation...................................................................... 45
-----------------------
SECTION 4.2 Survival; Updates of Representations and
----------------------------------------
Warranties................................................................................... 45
----------
ARTICLE 5
CONDITIONS PRECEDENT
SECTION 5.1 Conditions to the Initial Advance............................................................ 45
---------------------------------
5.1.1 Organizational Documents - Borrower. ....................................................... 46
-----------------------------------
5.1.2 Opinion of Borrower's Counsel................................................................ 46
-----------------------------
5.1.3 Consents, Licenses, Approvals, Etc. ........................................................ 47
-----------------------------------
5.1.4 Notes........................................................................................ 47
-----
5.1.5 Financing Documents and Collateral........................................................... 47
----------------------------------
5.1.6 Other Financing Documents.................................................................... 47
-------------------------
5.1.7 Other Documents, Etc. ...................................................................... 47
---------------------
5.1.8 Payment Of Fees.............................................................................. 47
---------------
5.1.9 Collateral Disclosure List................................................................... 47
--------------------------
5.1.10 Recordings and Filings....................................................................... 47
----------------------
5.1.11 Insurance Certificate........................................................................ 48
---------------------
5.1.12 Landlord's Waivers........................................................................... 48
------------------
5.1.13 Bailee Acknowledgements...................................................................... 48
-----------------------
5.1.14 Field Examination............................................................................ 48
-----------------
5.1.15 Proforma Balance Sheet and Projections....................................................... 48
--------------------------------------
5.1.16 Offering..................................................................................... 48
--------
5.1.17 Capital Funds................................................................................ 49
-------------
ii
102
5.1.18 Merger Agreement Transaction................................................................. 49
----------------------------
SECTION 5.2. Conditions to all Extensions of Credit....................................................... 49
--------------------------------------
5.2.1 Compliance................................................................................... 49
----------
5.2.2 Default...................................................................................... 49
-------
5.2.3 Representations and Warranties............................................................... 49
------------------------------
5.2.4 Legal Matters................................................................................ 50
-------------
ARTICLE 6
COVENANTS OF THE BORROWER
SECTION 6.1 Affirmative Covenants........................................................................ 50
---------------------
6.1.1 Financial Statements......................................................................... 50
--------------------
6.1.2 Recordkeeping, Rights of Inspection, Field Examination, Etc.................................. 52
-----------------------------------------------------------
6.1.3 Corporate Existence.......................................................................... 53
-------------------
6.1.4 Compliance with Laws......................................................................... 53
--------------------
6.1.5 Preservation of Properties................................................................... 53
--------------------------
6.1.6 Line of Business............................................................................. 53
----------------
6.1.7 Insurance.................................................................................... 53
---------
6.1.8 Insurance with Respect to Equipment, Inventory and
--------------------------------------------------
Mortgaged Property........................................................................... 54
6.1.9 Taxes........................................................................................ 55
-----
6.1.10 ERISA........................................................................................ 55
-----
6.1.11 Notification of Mergers and Acquisitions and
Ownership Changes............................................................................ 55
-----------------
6.1.12 Notification of Events of Default and Adverse
Developments................................................................................. 56
------------
6.1.13 Hazardous Materials; Contamination........................................................... 57
----------------------------------
6.1.14 Disclosure of Significant Transactions....................................................... 58
--------------------------------------
6.1.15 Financial Covenants.......................................................................... 58
-------------------
6.1.16 Collection of Receivables.................................................................... 59
-------------------------
6.1.17 Assignments of Receivables................................................................... 59
--------------------------
6.1.18 Government Accounts.......................................................................... 60
-------------------
6.1.19 Defense of Title and Further Assurances...................................................... 60
---------------------------------------
6.1.20 Business Names; Locations.................................................................... 61
-------------------------
6.1.21 Subsequent Opinion of Counsel as to Recording
---------------------------------------------
Requirements................................................................................. 61
------------
6.1.22 Use of Premises and Equipment................................................................ 62
-----------------------------
6.1.23 Protection of Collateral..................................................................... 62
------------------------
6.1.24 Senior Management............................................................................ 62
-----------------
6.1.25 Appraisals................................................................................... 62
----------
6.1.26 Application of Net Proceeds.................................................................. 62
SECTION 6.2 Negative Covenants........................................................................... 63
------------------
6.2.1 Merger, Acquisition or Sale of Assets........................................................ 63
-------------------------------------
6.2.2 Purchase or Redemption of Securities, Dividend
Restrictions................................................................................. 64
------------
6.2.3 Indebtedness................................................................................. 64
------------
6.2.4 Investments, Loans and Other Transactions.................................................... 64
-----------------------------------------
6.2.5 Subordinated Indebtedness.................................................................... 66
-------------------------
6.2.6 Liens; Confessed Judgment.................................................................... 66
-------------------------
6.2.7 Transactions with Affiliates................................................................. 67
----------------------------
6.2.8 Prohibition on Hazardous Materials........................................................... 67
----------------------------------
6.2.9 Method of Accounting; Fiscal Year............................................................ 67
---------------------------------
6.2.10 Compensation................................................................................. 68
------------
iii
OP
103
6.2.11 Transfer of Collateral....................................................................... 68
----------------------
6.2.12 Inventory.................................................................................... 68
---------
ARTICLE 7
DEFAULT AND RIGHTS AND REMEDIES
SECTION 7.1 Events of Default............................................................................ 68
-----------------
7.1.1 Failure to Pay............................................................................... 68
--------------
7.1.2 Breach of Representations and Warranties..................................................... 68
----------------------------------------
7.1.3 Failure to Comply with Covenants............................................................. 69
--------------------------------
7.1.4 Default Under Other Financing Documents or
Obligations.................................................................................. 69
-----------
7.1.5 Receiver; Bankruptcy......................................................................... 69
--------------------
7.1.6 Involuntary Bankruptcy, etc.................................................................. 69
----------------------------
7.1.7 Judgment..................................................................................... 70
--------
7.1.8 Execution; Attachment........................................................................ 70
---------------------
7.1.9 Default Under Other Borrowings............................................................... 70
------------------------------
7.1.11 Material Adverse Change...................................................................... 71
-----------------------
7.1.12 Change in Control............................................................................ 71
-----------------
7.1.13 Liquidation, Termination, Dissolution, Etc................................................... 71
-------------------------------------------
SECTION 7.2 Remedies..................................................................................... 71
--------
7.2.1 Acceleration................................................................................. 72
------------
7.2.2 Further Advances............................................................................. 72
----------------
7.2.3 Uniform Commercial Code...................................................................... 72
-----------------------
7.2.4 The Collateral Account....................................................................... 73
----------------------
7.2.5 Specific Rights With Regard to Collateral.................................................... 74
-----------------------------------------
7.2.6 Application of Proceeds...................................................................... 75
-----------------------
7.2.7 Performance by Lender........................................................................ 76
---------------------
7.2.8 Other Remedies............................................................................... 76
--------------
7.2.9 Exercise of Remedies......................................................................... 76
--------------------
ARTICLE 8
MISCELLANEOUS
Section 8.1 Notices...................................................................................... 76
-------
Section 8.2 Amendments; Waivers.......................................................................... 77
-------------------
Section 8.3 Cumulative Remedies.......................................................................... 78
-------------------
Section 8.4 Severability................................................................................. 79
------------
Section 8.5 Assignments by Lender........................................................................ 79
---------------------
Section 8.6 Participations by Lender..................................................................... 80
------------------------
Section 8.7 Disclosure of Information by Lender.......................................................... 80
-----------------------------------
Section 8.8 Successors and Assigns....................................................................... 81
----------------------
Section 8.9 Continuing Agreements........................................................................ 81
---------------------
Section 8.10 Enforcement Costs............................................................................ 81
-----------------
Section 8.11 Applicable Law; Jurisdiction................................................................. 81
----------------------------
Section 8.12 Duplicate Originals and Counterparts......................................................... 83
------------------------------------
Section 8.13 Headings..................................................................................... 83
--------
Section 8.14 No Agency.................................................................................... 83
---------
Section 8.15 Date of Payment.............................................................................. 83
---------------
Section 8.16 Entire Agreement............................................................................. 83
----------------
Section 8.17 Waiver of Trial by Jury...................................................................... 83
-----------------------
Section 8.18 Liability of the Lender...................................................................... 84
-----------------------
iv