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EXHIBIT 10.24
REVOLVING CREDIT AND SECURITY AGREEMENT
between
ADVANCED LIGHTING TECHNOLOGIES, INC. et al.
and
BNY FINANCIAL CORPORATION
March 25, 1996
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REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated March 25, 1996 between
ADVANCED LIGHTING TECHNOLOGIES, INC. ("ADLT") and the corporations which are
additional signatories hereto, all corporations organized under the laws of the
States now or hereafter listed on Schedule A hereto (individually and
collectively referred to as "BORROWER") and BNY FINANCIAL CORPORATION
("LENDER"), a corporation organized under the laws of the State of New York.
The liability of each Borrower is joint and several hereunder.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrower and Lender hereby agree as follows:
DEFINITIONS.
1.
1.1 ACCOUNTING TERMS. As used in this Agreement or any certificate,
report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP.
1.2 GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"ADVANCES" shall mean and include the Working Capital Advances, the Capex
Advances and Letters of Credit under Article II hereof.
"ADVANCE RATES" shall have the meaning set forth in Section 2.1(a) hereof.
"AFFILIATE" of any Person shall mean (a) any person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii)
of any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 6% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum equal to
the higher of (i) the Prime Rate in effect on such day or (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"ALTERNATE BASE RATE ADVANCES" shall mean the Advances or any portion
thereof bearing interest at a rate of interest determined by reference to the
Alternate Base Rate.
"AUTHORITY" shall have the meaning set forth in Section 4.19(d).
"BANK" shall mean The Bank of New York.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section 4.15(h).
"BORROWER" shall mean jointly and severally, Advanced Lighting
Technologies, Inc. ("ADLT"), APL Engineered Materials, Inc., Bio Light,
Inc., Bright Ideas Advertising and Design, Inc., Energy Efficient Products,
Inc., Energy-Wise Lighting, Inc., HID Direct, Inc., HID Recycling, Inc., High
Intensity Technologies, Inc., The Light Source, Inc., Lighting Resources
International, Inc., Metal Halide Controls, Inc., Metal Halide Technologies,
Inc., MICROSUN Technologies, Inc., Specialty Discharge Lighting, Inc., Venture
Lighting International, Inc., all additional Persons becoming parties hereto
pursuant to Section 2.12 hereof, and all permitted successors and assigns of
each, each individually and collectively hereunder.
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"BORROWING PERIOD" shall have the meaning set forth in Section 2.1(b)
hereof.
"BUSINESS DAY" shall mean any day other than a day on which commercial
banks in New York are authorized or required by law to close.
"CAPEX ADVANCES" shall have the meaning set forth in Section 2.1 (b)
hereof.
"CAPEX ADVANCE RATE" shall have the meaning set forth in Section 2.1 (b)
hereof.
"CAPEX INTEREST RATE" shall mean an interest rate per annum equal to (i)
Alternate Base plus (ii) one half of one percent (1/2%).
"CASH FLOW" for any period, and determined on a consolidated basis, shall
mean the sum of (i) Earnings Before Interest and Taxes for such period plus
(ii) ADLT's consolidated depreciation and amortization and all other non-cash
charges which were deducted in determining net income for such period, minus
(iii) non cash credits which were taken into account in determining Earnings
Before Interest and Taxes for such period.
"CASH FLOW COVERAGE" shall mean, for any period, and determined on a
consolidated basis, (a) Net Cash Flow divided by (b) scheduled payments on
Indebtedness for such period (other than principal payments made from time to
time with respect to Working Capital Advances).
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq.
"CHANGE OF OWNERSHIP" shall mean (a) 20% or more of the common stock of
the Borrower having voting rights is no longer owned or controlled by the
Original Owner, or (b) any merger, consolidation or sale of substantially all of
the property or assets of the Borrower, or (c) the occurrence of any event
which results in the transfer of the power to direct or cause the direction, by
contract or otherwise of the management and policies of any Borrower to a
Person who is not an Original Owner. For the purposes of the calculation of
percentage ownership, any shares of common stock into which any capital stock
of the Borrower held by any of the Original Owners is convertible or for which
any such shares of the capital stock of the Borrower or of any other Person may
be exchanged and any shares of common stock of the Borrower held by any of the
Original Owners is convertible or for which any such share of the capital stock
of the Borrower or of any other Person may be exchanged and any shares of
common stock issuable to such Original Owners upon exercise of any warrants,
options or similar rights which may at the time of calculation be held by such
Original Owners shall be included.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, Liens, Claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, the Borrower or
any of its Affiliates.
"CLAIMS" shall mean all security interests, Liens, claims or encumbrances
held or asserted by any Person against any or all of the Collateral, other
than (A) Charges and (B) Permitted Encumbrances.
"CLOSING DATE" shall mean March 25, 1996 or such other date as may be
agreed to by the parties hereto.
"COLLATERAL" shall mean and include:
(a) all Receivables;
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(b) all General Intangibles;
(c) all Inventory;
(d) all Equipment, the purchase of which was financed with Capex
Advances;
(e) all of the Borrower's right, title and interest in and to (i) its
goods and other property including, but not limited to all merchandise returned
or rejected by customers, relating to or securing any of the Receivables; (ii)
all of the Borrower's rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, set off,
detinue, replevin, reclamation and repurchase; (iii) all additional amounts due
to the Borrower from any customer relating to the Receivables; (iv) other
property, including warranty claims relating to any goods securing this
Agreement; (v) if and when obtained by the Borrower, all real and personal
property of third parties in which Borrower has been granted a lien or security
interest as security for the payment or enforcement of Receivables; and (vi) any
other goods or personal property now owned or hereafter acquired in which the
Borrower has expressly granted a security interest or may in the future grant a
security interest to the Lender hereunder, or in any amendment or supplement
hereto, or under any other agreement between the Lender and the Borrower;
(f) all of the Borrower's ledger sheets, ledger cards, files,
correspondence, records, books or account, business papers, computers, computer
software (owned by the Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d) and (e) of
this Paragraph; and
(g) all proceeds and products of (a), (b), (c), (d) and (e) in
whatever form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposits, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements or documents.
"CURRENT ASSETS" at a particular date, and determined on a consolidated
basis, shall mean all cash, cash equivalents, accounts and inventory of ADLT
and all other items which would, in conformity with GAAP, be included under
current assets on a balance sheet of ADLT as at such date; provided, however,
that such amounts shall not include (a) any amounts for any Indebtedness owing
by an Affiliate to ADLT, unless such Indebtedness arose in connection with the
sale of goods or rendition of services in the ordinary course of business and
would otherwise constitute current assets in conformity with GAAP, (b) any
shares of stock issued by an Affiliate of the Borrower, or (c) the cash
surrender value of any life insurance policy.
"CURRENT LIABILITIES" at a particular date, shall mean all amounts which
would, in conformity with GAAP, and on a consolidated basis, be included under
current liabilities on a balance sheet of ADLT, but in any event including,
without limitation, the amounts of (a) all Indebtedness of any such Person
payable on demand, or at the option of the Person to whom such indebtedness
is owed, not more than twelve (12) months after such date, (b) any payments in
respect of any Indebtedness of such Person (whether installment, serial
maturity, sinking fund payment or otherwise) required to be made not more than
twelve (12) months after such date and (c) all reserves in respect of
liabilities or indebtedness payable on demand or, at the option of the Person
to whom such indebtedness is owed, not more than twelve (12) months after such
date, the validity of which is contested at such date, and (d) all accruals for
federal or other taxes measured by income payable within a twelve (12) month
period, and (e) the amount of outstanding indebtedness under this Agreement at
the time of calculation, except with respect to that portion of the debt,
except with respect to that portion of the Indebtedness that is appropriately
classified as a non-current liability (it being understood that for purpose of
this definition, Capex Advances are non-current liabilities).
"CUSTOMER" shall mean and include the account debtor with respect to any
of the Receivables and/or the prospective purchaser of goods, services or both
with respect to any contract or other arrangement with the Borrower, pursuant
to which the Borrower is to deliver any personal property or perform any
services.
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"DEFAULT RATE" shall mean a rate equal to two (2%) percent per annum in
excess of the applicable Working Capital Interest Rate or Capex Interest Rate
or Capex Interest Rate or Overadvance Rate, as the case may be.
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in Section 4.15(h)
hereof.
"DOCUMENTS" shall have the meaning set forth in Section 8.1(c) hereof.
"DOLLAR" and the sign "$" shall mean lawful money of the United States of
America.
"EARNINGS BEFORE INTEREST AND TAXES" shall mean ADLT's net income before
interest and taxes exclusive of depreciation, amortization, extraordinary gains
and losses and all other non-cash charges, determined on a consolidated basis.
"ELIGIBLE INVENTORY" shall mean and include raw materials and finished
goods inventory located in the United States and Canada, valued at the lower of
cost or market value, determined on a first-in-first-out method, which is not,
in Lender's reasonable opinion, obsolete, slow moving or unmerchantable and
which Lender shall not deem eligible inventory, based on such considerations
as Lender may from time to time deem appropriate including, without limitation,
whether the inventory is subject to a perfected, first priority security
interest in favor of Lender and whether the inventory conforms to all standards
imposed by any governmental agency, division or department thereof which has
regulatory authority over such goods or the use or sale thereof.
"ELIGIBLE RECEIVABLES" shall mean each Receivable arising in the ordinary
course of Borrower's business, and which Lender, in its sole credit judgment
exercised reasonably, shall deem to be an Eligible Receivable, based on such
considerations as Lender may from time to time deem appropriate. In general, a
Receivable shall not be deemed eligible unless such Receivable is subject to
Lender's perfected security interest and no other Lien other than Permitted
Encumbrances, and is evidenced by an invoice or other documentary evidence
reasonably satisfactory to Lender. In addition, no Receivable shall be an
Eligible Receivable if:
(a) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower;
(b) it is due or unpaid more than one hundred and twenty (120) days
after the original invoice date;
(c) it is unpaid more than sixty (60) days after its due date;
(d) fifty percent (50%) or more of the Receivables from the account
debtor are not deemed Eligible Receivables hereunder. Such percentage may, in
Lender's reasonable discretion, be increased or decreased from time to time;
(e) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(f) the account debtor is also Borrower's creditor or supplier, or
the account debtor has disputed liability, or the account debtor has made any
claim with respect to any other Receivable due from such account debtor to
borrower, or the Receivable otherwise is or may become subject to any right of
setoff by the account debtor (but in any case, only to the extent of the
maximum amount of such liability, claim or setoff with respect to such account
debtor);
(g) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief has
been entered by a court having jurisdiction in the premises in respect of the
account debtor in an involuntary case under any state or federal bankruptcy
laws, as now constituted or hereafter amended, or if any other petition or
other application for relief under any state or
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federal bankruptcy law has been filed against the account debtor, or if the
account debtor has failed, suspended business, ceased to be solvent, called a
meeting of its creditors, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs;
(h) the sale is to an account debtor outside the continental
United States or Canada, unless the sale is on letter of credit, guaranty or
acceptance terms, or is insured by a foreign credit insurance policy in each
case acceptable to Lender in its sole discretion;
(i) the sale to the account debtor is on a ▇▇▇▇-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper;
(j) Lender believes, in its sole and reasonable judgment,
that collection of such Receivable is insecure or that such Receivable may not
be paid by reason of the account debtor's financial inability to pay;
(k) the account debtor is the United States of America, any
state or any department, agency or instrumentality of any of them, unless
Borrower assigns its right to payment of such Receivable to Lender pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 203
et set.) or has otherwise complied with other applicable statutes or ordinances;
(l) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the account debtor or the services
giving rise to such receivable have not been performed by Borrower and accepted
by the account debtor of the Receivable otherwise does not represent a final
sale;
(m) the Receivable is subject to any offset, deduction,
defense, dispute, or counterclaim or if the Receivable is contingent in any
respect or for any reason (but in any case, only to the extent of the maximum
amount of such offset, deduction, defense, dispute, counterclaim or
contingency);
(n) Borrower has made any agreement with any account debtor
for any deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(o) shipment of the merchandise or the rendition of services
has not been completed;
(p) any return, rejection or repossession of the merchandise
has occurred;
(q) such Receivable is not payable to the Borrower; or
(r) such Receivable is not otherwise satisfactory to the
Lender as determined in good faith by the Lender in the exercise of its
discretion in a reasonable manner.
"ENVIRONMENT COMPLAINT" shall have the meaning set forth in
Section 4.19(d) hereof.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"EQUIPMENT" shall mean and include all of the Borrower's goods
(excluding inventory) whether now owned or hereafter acquired or constructed and
wherever located including, without
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limitation, all equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories and all replacements and
substitutions therefor or accessions thereto.
"EQUIPMENT CONTRACT RECEIVABLES" shall mean Receivables arising from
the sale of lamp manufacturing equipment with respect to which either (i) a
cash deposit of not less than 10% of the purchase price has been remitted to
Borrower or (ii) in the case of non-creditworthy Customers, a letter of credit
has been issued in the amount of the purchase price in favor of the Borrower.
"EQUIPMENT CONTRACT RECEIVABLE ADVANCE RATE" shall have the meaning
set forth in Section 2.1(a) hereof.
"EVENT OF DEFAULT" shall mean the occurrence of any of the events set
forth in Article X hereof.
"FEDERAL FUNDS RATE" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
"FORMULA AMOUNT" shall have the meaning set forth in Section 2.1(a).
"GAAP" shall mean accounting principles generally accepted in the
United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include all of the Borrower's
general intangibles, whether now owned or hereafter acquired including, without
limitation, all choices in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refunds, tax refund claims, computer programs, all claims
under guaranties, security interests or other security held by or granted to
Borrower to secure payment of any of the Receivables by an account debtor, all
rights of indemnification and all other intangible property of every kind and
nature (other than Receivables).
"HAZARDOUS DISCHARGE" shall have the meaning set forth in
Section 4.19(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated byphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances
or related materials as defined in CERCLA, the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA,
Articles 15 and 27 of the New York State Environmental Conversation [sic]
Law or any other applicable Environmental Law and in the regulations adopted
pursuant hereto.
"HAZARDOUS WASTES" includes all waste materials subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"INCIPIENT EVENT OF DEFAULT" shall mean an event which, with the giving
of notice or passage of time or both, would constitute an Event of Default.
"INDEBTEDNESS" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon ADLT's consolidated balance sheet as liabilities (except trade accounts
payable and accrued expenses and other liabilities arising from the normal and
ordinary course of business capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary
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obligations of such Person whether direct or guaranteed, and all premiums, if
any, due at the required prepayment dates of such indebtedness, and all
indebtedness secured by a Lien on assets owned by such Person, whether or not
such indebtedness actually shall have been created, assumed or incurred by such
Person. Any indebtedness of such Person resulting from the acquisition by such
Person of any assets subject to any Lien shall be deemed, for the purposes
hereof, to be the equivalent of the creation, assumption and incurring of the
indebtedness secured thereby, whether or not actually so created, assumed or
incurred.
"INVENTORY" shall mean all of Borrower's now owned or hereafter
acquired goods, merchandise and other personal property, wherever located, to
be furnished under any contract of service or held for sale or lease, all raw
materials, work in progress, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in
Borrower's business or used in selling or furnishing such goods, merchandise
and other personal property, and all documents of title or other documents
representing them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a) hereof.
"LETTERS OF CREDIT" shall have the meaning set forth in Section 2.8.
"LETTER OF CREDIT FEES" shall have the meaning set forth in
Section 3.2.
"LIBO RATE" shall mean, relative to any day, the rate of interest
equal to the rate per annum listed in the Wall Street Journal on such day as
the LIBO Rate for a period equal to 30 days.
"LIBO RATE ADVANCE" shall mean the Advances or any portion thereof
bearing interest at a rate of interest determined by reference to the LIBO Rate.
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien, charge, Claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement in
respect of any asset of the Borrower or any Subsidiary of the Borrower of any
kind or nature whatsoever including, without limitation, any conditional sale
or other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction.
"MAXIMUM LOAN AMOUNT" shall mean $25,000,000.00 less the current
outstanding amount of Capex Advances.
"MONTHLY ADVANCES" shall have the meaning set forth in Section 3.1
hereof.
"NET CASH FLOW" for any fiscal period shall mean (a) Cash Flow of ADLT
for such period minus (b) capital expenditures (net of indebtedness incurred to
finance such expenditures) in an amount for such period not to exceed the
amount permitted under Section 7.6, all as determined on a consolidated basis
and (c) Permitted Investments (net of Indebtedness and/or capital stock
incurred or issued to finance such Permitted Investment).
"OBLIGATIONS" shall mean and include any and all of the Borrower's
Indebtedness and/or liabilities to the Lender or any corporation that directly
or indirectly controls or is controlled by or is under common control with
Lender of every kind, nature and description, direct or indirect, secured or
unsecured, joint, several, joint and several, absolute or contingent, due or to
become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to, any
and all of the Borrower's Indebtedness and/or liabilities under this Agreement
or under any other agreement between the Lender and the Borrower and all
obligations of the Borrower to the Lender to perform acts or refrain from
taking any action.
"ORIGINAL OWNER" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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"OTHER DOCUMENTS" shall mean the Questionnaire and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by Borrower and/or delivered to Lender in
respect of the transactions contemplated by this Agreement.
"OVERADVANCE RATE" shall mean the interest rate equal to the
applicable Working Capital Interest Rate or Capex Interest Rate plus one half
of one percent (1/2%) per annum.
"PARENT" of any Person shall mean a corporation or other entity
owning, directly or indirectly at least 50% of the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of the Person, or other Persons performing similar functions for any
such Person.
"PAYMENT OFFICE" shall mean initially ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Lender, if any, which it
may designate by notice to the Borrower to be the Payment Office.
"PERMITTED ENCUMBRANCES" shall mean (a) liens in favor of Lender; (b)
liens for taxes, assessments or other governmental charges not delinquent, or,
being contested in good faith and by appropriate proceedings and with respect to
which proper reserves have been taken by Borrower; (c) liens disclosed in the
financial statements referred to in Section 5.5, the existence of which Lender
has consented to in writing; (d) deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of Borrower's business; (f) judgment liens that have been stayed or
bonded and mechanics', workmen's, materialmen's or other like liens arising in
the ordinary course of Borrower's business with respect to obligations which are
not due or which are being contested in good faith by Borrower; (g) liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of the Borrower and (y) the aggregate amount of Indebtedness secured by such
liens incurred as a result of such purchases during any fiscal year shall not
exceed the amount provided for in Section 7.6; (h) liens securing purchase money
security indebtedness other than those set forth in Section 7.6 hereof, provided
that such liens shall attach only to the property financed thereby and the
purchase price of all such property shall not exceed $500,000 in the aggregate
in any one fiscal year; (i) liens securing operating leases in an amount not to
exceed $500,000 in the aggregate in any one fiscal year; (j) liens existing at
the time of the Closing Date or granted from time to time on the assets of any
Borrower, which assets are located outside of the United States or Canada, and
which liens secure loans from a foreign bank or financial institution and do not
exceed $1,000,000 in the aggregate at any one time without our prior written
consent; and (k) liens disclosed on Exhibit 1.2, the existence of which Lender
has consented to in writing.
"PERMITTED INVESTMENTS" shall have the meaning set forth in
Section 7.4 hereof.
"PERSON" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture, a governmental authority or any other entity of whatever nature.
"PRIME RATE" for the purpose of this Agreement means the rate of
interest publicly announced from time to time by the Bank at its principal
office in New York as its prime rate or prime lending rate. The rate of interest
is determined from time to time by the Bank as a means of pricing some loans to
its customers and is neither tied to any external rate of interest or index nor
does it necessarily reflect the lowest rate of interest actually charged by the
Bank to any particular class or category of customers of the Bank.
"QUESTIONNAIRE" shall mean the Questionnaire executed by Borrower and
delivered to Lender.
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"RCRA" shall mean the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., as same may be amended from time to time.
"REAL PROPERTY" shall mean all of Borrower's rights, title and
interest in and to the premises located at the addresses set forth on Schedule
A hereto.
"RECEIVABLES" shall mean and include all of the Borrower's accounts,
contract rights, instruments, documents, chattel paper, general intangibles
relating to accounts, drafts and acceptances, and all other forms of obligations
owing to Borrower arising out of or in connection with the sale or lease of
inventory or the rendition of services, all guarantees and other security
therefor, whether secured or unsecured, now existing or hereafter created.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a) hereof.
"RELEASE" shall have the meaning set forth in Section 5.7(c)(i) hereof.
"REVOLVING CREDIT NOTE" shall mean the promissory note referred to in
Section 2.2. hereof.
"SUBSIDIARY" of any Person shall mean a corporation or other entity of
whose shares of stock or other ownership interests having ordinary voting power
(other than stock or other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"TANGIBLE NET WORTH" at a particular date, and determined on a
consolidated basis, shall mean (a) the aggregate amount of all assets of ADLT
as may properly be classified as such in accordance with GAAP consistently
applied and excluding such other assets as are properly classified as
"INTANGIBLE ASSETS," less (b) the aggregate amount of total liabilities of ADLT.
"TERM" shall mean the Closing Date through March 24, 1999, as same may
be extended in accordance with the provisions of Section 13.1.
"TOXIC SUBSTANCE" shall mean and include any material present on the
Real Property or the leasehold interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. Section 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in
force or hereafter enacted, relating to toxic substances. "TOXIC SUBSTANCE"
includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and
lead-based paints.
"U.S. SUBSIDIARY" shall have the meaning set forth in Section 2.12
hereof.
"WORKING CAPITAL" at a particular date, shall mean the excess, if any,
of Current Assets over Current Liabilities at such date, all as determined on a
consolidated basis.
"WORKING CAPITAL ADVANCES" shall mean Advances made for the purpose of
funding the Borrower's normal course of business.
"WORKING CAPITAL INTEREST RATE" shall mean an interest rate per annum
equal to (i) Alternate Base Rate minus (ii) one half of one percent (1/2%)
provided, however, that if the Advances or a portion thereof are LIBO Rate
Advances, then in such event with respect to such Advance or portion thereof it
shall mean (i) the average of the LIBO Rate in effect for the month for which
such calculation is made plus (ii) two and one-half percent (2.5%).
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1.3 UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
II. ADVANCES, PAYMENT, INTEREST AND FEES.
2.1(a) WORKING CAPITAL ADVANCES. Subject to the terms and conditions
set forth in this Agreement and provided no Event of Default nor any Incipient
Event of Default shall have occurred under this Agreement, Lender shall make
Working Capital Advances to the Borrower in aggregate amounts outstanding at
any time equal to the lesser of (x) the Maximum Loan Amount or (y) an amount
equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(c)
hereof ("RECEIVABLES ADVANCE RATE"), of Eligible Receivables other than
Equipment Contract Receivables, plus
(ii) up to 35%, subject to the provisions of Section 2.1(c)
hereof ("EQUIPMENT CONTRACT RECEIVABLES ADVANCE RATE"), of Equipment Contract
Receivables; plus
(iii) up to the lesser of (A) 50%, subject to the provisions
of Section 2.1(c) hereof ("INVENTORY ADVANCE RATE"), of the value of the
Eligible Inventory or (B) $6,000,000 (the Receivables Advance Rate, the
Equipment Contract Receivables Advance Rate, the Capex Advance Rate and the
Inventory Advance Rate shall be referred to collectively, as the "ADVANCE
RATES"); minus
(iv) such reserves as Lender may reasonably deem proper and
necessary from time to time.
The sum of the amounts derived from Section 2.1(a)(i) (ii) and (iii)
minus (iv) at any time and from time to time shall be referred to as the
"FORMULA AMOUNT."
(b) CAPEX ADVANCES. Subject to the terms and conditions set forth in
this Agreement and provided no Event of Default nor any incipient Event of
Default shall have occurred and shall be continuing under this Agreement,
Lender shall make Capex Advances to the Borrower in a sum equal to up to Five
Million Dollars ($5,000,000.00) in the aggregate to permit Borrower to finance
permitted capital expenditures. Such financing will be in an amount up to fifty
percent (50%) of the net invoice cost of such Equipment (exclusive of shipping,
handling, taxes, installation and all other "SOFT" costs) or with respect to
self-constructed assets, the market value of such assets pursuant to an
appraisal acceptable to Lender, subject to the provisions of Section 2.1(c)
hereof ("Capex Advance Rate") (collectively, "CAPEX ADVANCES"). Once repaid, a
Capex Advance may not be reborrowed. Capex Advances shall bear interest at the
Capex Interest Rate.
Capex Advances shall be accumulated until the earlier of (i) the first
anniversary of the Closing Date or (ii) the date on which the aggregate amount
of Capex Advances outstanding equals $5,000,000.00 (the "BORROWING PERIOD"). At
the end of the Borrowing Period, the sum of all Capex Advances will be amortized
on the basis of a six year amortization schedule. Monthly payments will be
determined for the Capex Advances made during the Borrowing Period. The Capex
Advances shall be, with respect to principal, payable in equal monthly
installments commencing on the first Business Day following the end of the
Borrowing Period, and on the last Business Day of each month thereafter, with a
final installment in an amount equal to the entire outstanding balance thereof
payable on the last day of the Term, subject to acceleration upon the occurrence
of an Event of Default under this Agreement or termination of this Agreement,
and in accordance with, the terms of that certain secured promissory note, (the
"CAPEX PROMISSORY NOTE"), in the form attached hereto as Exhibit 2.1(b).
(c) Discretionary Rights The Advance Rates may be increased or
decreased by Lender at any time and from time to time in the exercise of its
reasonable discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates may limit or restrict Advances
requested by Borrower.
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2.2 REVOLVING CREDIT NOTE ADVANCES. The Working Capital Advances shall
otherwise be evidenced by the secured promissory note ("REVOLVING CREDIT NOTE")
attached hereto as Exhibit 2.2.
2.3 PROCEDURE FOR WORKING CAPITAL ADVANCES BORROWING. (a) ADLT, as
agent for Borrower may notify the Lender prior to 11:00 a.m. on a Business Day
of its request to incur, on that day, a Working Capital Advance hereunder.
Should any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Lender, or with respect
to any other Obligation, become due, same shall be deemed a request for a
Working Capital Advance as of the date such payment is due, in the amount
required to pay in full such interest, fee, charge or Obligation under this
Agreement or any other agreement with Lender, and such request shall be
irrevocable.
(b) Each Borrower agrees that ADLT is granted an irrevocable power of
attorney to execute any documents, reports, convey any security interests or
title and issue all requests and directives on behalf of each of all other
Borrowers and ADLT to Lender, including without limitation all requests for
Advances, the proceeds of which if made, shall be remitted in Lender's
discretion to ADLT and shall be distributed to the extent necessary and
appropriate to the other Borrowers by ADLT who in addition is irrevocably
appointed as agent for such purposes. Each Borrower shall be jointly and
severally liable for all of the Obligations.
(c) At the time of Borrower's request for an initial Working Capital
Advance hereunder or any subsequent Working Capital Advance ADLT shall request
that such Advance be an Alternate Base Rate Advance or a LIBO Rate Advance. If
not notice is received to make such Advance as a LIBO Rate Advance, then any
such Advance shall be made as an Alternate Base Rate Advance.
(d) At its option and upon three (3) Business Days' prior written
notice, Borrower may prepay any Advances in whole at any time, with accrued
interest on the principal being prepaid to the date of such repayment.
2.4 DISBURSEMENT OF ADVANCE PROCEEDS. All Advances shall be disbursed
from whichever office or other place the Lender may designate from time to time
and, together with any and all other Obligations of Borrower to Lender, shall
be charged to the Borrower's account on the Lender's books. During the Term,
Borrower may use the Working Capital Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Working Capital Advance requested by ADLT or deemed to have
been requested by ADLT under Section 2.3(a) hereof shall, with respect to
requested Working Capital Advances to the extent the Lender makes such Working
Capital Advances, be made available to the Borrower by way of credit to the
ADLT operating account at such bank as ADLT may designate following
notification to Lender, in immediately available federal or other immediately
available funds or, with respect to Working Capital Advances deemed to have
been requested, be disbursed to the Lender in payment of outstanding
Obligations. Each Borrower hereby appoints ADLT as its agent for requesting
Advances hereunder and hereby agrees that ADLT shall be solely responsible for
distributing the proceeds of any such Advance to the appropriate Borrower.
Accordingly, Borrower hereby indemnifies Lender and holds Lender harmless from
and against all liability, loss, cost and expense in connection with the paper
application or distribution of the proceeds of Advances hereunder, except those
caused by the Lender's gross negligence or willful misconduct.
2.5 REPAYMENT OF ADVANCES.
(a) The Advances shall be due and payable in full on the last day of
the Term subject to earlier prepayment as herein provided.
(b) The Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by the Lender on the date received. In
consideration of the Lender's agreement to conditionally credit the Borrower's
account as of the Business Day on which the Lender receives those items of
payment, the Borrower agrees that, in computing the charges under this
Agreement, all items of payment shall be deemed applied by Lender on account of
the Obligations three (3) days after confirmation to Lender by the Blocked
Account
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bank or the Depository Account bank as provided for in Section 4.15(h), that
such items of payment have been collected in good funds and finally credited to
Lender's account. The Lender is not, however, required to credit the Borrower's
account for the amount of any item of payment which is unsatisfactory to the
Lender and the Lender may charge the Borrower's account for the amount of any
item of payment which is returned to the Lender unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to the Lender
at the Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in Federal or other
funds immediately available to the Lender. Lender shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging the Borrower's account or by making Advances as provided in Section
2.4 hereof.
(d) The Borrower shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.6 REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum Advances permitted under
Section 2.1 hereof shall be immediately due and payable without the necessity
of any demand, at the place designated by Lender, whether or not an Incipient
Event of Default or Event of Default has occurred.
2.7 STATEMENT OF ACCOUNT. Lender shall maintain, in accordance with
its customary procedures, a loan account in the name of the Borrower in which
shall be recorded the date and amount of each Advance made by Lender and the
date and amount of each payment in respect thereof; provided, however, the
failure by Lender to record the date and amount of any Advance shall not
adversely affect Lender. For each month, Lender shall send to ADLT a statement
showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Lender and the Borrower, during
such month. The monthly statements shall be deemed correct and binding upon the
Borrower in the absence of manifest error and shall constitute an account
stated between Lender and the Borrower unless Lender receives a written
statement of ADLT's specific exceptions thereto within thirty (30) days after
such statement is received by ADLT. The records of Lender with respect to the
loan account shall be prima facie evidence of the amounts of Advances and other
charges thereto and of payments applicable thereto, absent manifest error.
2.8 LETTERS OF CREDIT. Subject to the terms and conditions hereof,
Lender shall issue or cause the issuance of Letters of Credit ("LETTERS OF
CREDIT"); provided, however, that Lender will not be required to issue or cause
to be issued any Letters of Credit to the extent that the face amount of such
Letters of Credit would then cause the sum of the outstanding Working Capital
Advances plus outstanding Letters of Credit to exceed the Maximum Loan Amount.
Letters of Credit shall not exceed $5,000,000.00 in the aggregate at any time.
All disbursements or payments related to Letters of Credit shall be deemed to
be Advances and shall bear interest at the Working Capital Interest Rate;
Letters of Credit that have not been drawn upon shall not bear interest.
Letters of Credit shall be subject to the terms and conditions set forth in the
Letter of Credit and Security Agreement attached hereto as Exhibit 2.8.
2.9 ISSUANCE OF LETTERS OF CREDIT
(a) Borrower may request Lender to issue or cause the issuance of a
Letter of Credit by delivering to Lender at the Payment Office, Lender's
standard form of Letter of Credit and Security Agreement together with Bank's
standard form of Letter of Credit Application (collectively, the "LETTER OF
CREDIT APPLICATION") and completed to the satisfaction of Lender; and, such
other certificates, documents and other papers and information as Lender may
reasonably request.
(b) Each Letter of Credit shall, among other things, (i) provide for
the payment of sight drafts when presented for honor thereunder in accordance
with the terms thereof and when accompanied by the documents described therein
and (ii) have an expiry date not later than six months after such Letter of
Credit's date of issuance and in no event later than the last day of the Term.
Each Letter of Credit
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Application and each Letter of Credit shall be subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments or revisions thereof and, to
the extent not inconsistent therewith, the laws of the State of New York.
2.10 REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.
(a) In connection with the issuance or creation of any Letter of
Credit Borrower shall indemnify, save and hold Lender harmless from any loss,
cost, expense or liability, including, without limitation, payments made by
Lender, and expenses and reasonable attorneys' fees incurred by Lender arising
out of, or in connection with, any Letter of Credit to be issued or any
acceptances created for Borrower. Borrower shall be bound by Lender's or any
issuing or accepting bank's regulations and good faith interpretations of any
Letter of Credit issued or acceptance created for Borrower's account, although
this interpretation may be different from Borrower's own; and, neither Lender,
nor any of its correspondents shall be liable for any error, negligence, or
mistakes, whether by omission or commission, in following Borrower's
instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in creating or paying any
Letter of Credit or acceptance, except for Lender's or such correspondents'
gross negligence or willful misconduct.
(b) Borrower shall authorize and direct any bank which issues a Letter
of Credit to name Borrower as the "ACCOUNT PARTY" therein and to deliver to
Lender all instruments, documents, and other writings and property received by
the bank pursuant to the Letter of Credit or in connection with any acceptance
and to accept and rely upon Lender's instructions and agreements with respect
to all matters arising in connection with the Letter of Credit, the application
therefor or any acceptance therefor.
(c) In connection with all Letters of Credit issued or created by
Lender under this Agreement, upon an Event of Default or failure to repay by
Borrower under any reimbursement agreement, Borrower hereby appoints Lender, or
its designee, as its attorney, with full power and authority (a) to sign and/or
endorse Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances; (b) to sign Borrower's name on bills of lading;
(c) to clear inventory through Customs in the name of Borrower or Lender or
Lender's designee, and to sign and deliver to Customs Officials powers of
attorney in the name of Borrower for such purpose; and (d) to complete in
Borrower's name or Lender's, or in the name of Lender's designee, any order,
sale or transaction, obtain the necessary documents in connection therewith,
and collect the proceeds thereof. Neither Lender nor its attorneys will be
liable for any acts or omissions nor for any error of judgment or mistakes of
fact or law, except for Lender's or its attorney's gross negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
2.11 ADDITIONAL PAYMENTS. Any sums expended by Lender due to the
Borrower's failure to perform or comply with its obligations under this
Agreement including, without limitation, Borrower's obligations under Sections
4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to the Borrower's
account as a Working Capital Advance and added to the Obligations.
2.12 NEWLY ACQUIRED SUBSIDIARIES BECOMING A BORROWER.
(a) Borrower may, from time to time, after the Closing Date, with the
consent of Lender (except as provided in Section 2.12(iii) and as provided in
Section 7.12 hereof, form or acquire additional Subsidiaries, and those
Subsidiaries which are located in the United States and Canada (collectively,
the "U.S. SUBSIDIARY") shall become a Borrower hereunder.
(b) Borrower shall cause each new U.S. Subsidiary to satisfy or obtain
the waiver by Lender of the following conditions precedent:
(i) Execute a counterpart of this Agreement and assume the
Obligations of the Borrowers under this Agreement and each of the Documents
required by this Agreement;
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(ii) Fully comply with each of the conditions precedent set
forth in Article VIII of this Agreement including but not limited to
Sections 8.1(a) through (g), 8.1(j) and 8.2;
(iii) provide to Lender access for the audit of the new U.S.
Subsidiary's assets of the type and nature reasonably required by Lender to
underwrite and obtain loan approval for the new U.S. Subsidiary provided,
however, that with respect to any such U.S. Subsidiary, the cash portion of the
purchase price of which is less than $500,000, the Borrower may form or acquire
such U.S. Subsidiary without the consent of Lender and Lender shall review the
transaction and perform an audit only if Lender deems it reasonably necessary;
and;
(iv) Such other conditions as Lender may reasonably require.
III. INTEREST AND FEES.
3.1 INTEREST. Interest on Advances shall be payable in arrears on the
last day of each month. Interest charges shall be computed on the actual
average of such daily Advances outstanding during the month (the "MONTHLY
ADVANCES") at a rate per annum equal to (i) with respect to Working Capital
Advances, the applicable Working Capital Interest Rate; and (ii) with respect
to each Capex Advance, the Capex Interest Rate. Whenever, subsequent to the
date of this Agreement, the Alternate Base Rate is increased or decreased, the
applicable interest rate with respect to Advances other than LIBO Rate Advances
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect. In the event that Lender, in its sole
and absolute discretion, permits Advances in excess of the Formula Amount to
remain outstanding for a total of five (5) days or more during any month, then
Borrower shall pay interest on all Monthly Advances for such month at a rate
equal to the Overadvance Rate. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the Obligations shall bear
interest at the Default Rate.
3.2 LETTER OF CREDIT FEES. Borrower shall pay Lender (i) (A) for
issuing or causing the issuance of or an amendment to a standby Letter of
Credit, a fee computed at a rate per annum of one quarter of one percent (.25%)
per month on the outstanding face amount thereof from time to time for the
entire term of said Letter of Credit, (B) for issuing or causing the issuance
of a Letter of Credit that is not a standby Letter of Credit, a fee equal to
1.0% of the original and each increase in the face amount thereof for each 120
days or part thereof of its term (the fees set forth in (A) and (B) referred to
as "LETTER OF CREDIT FEES"), and (ii) Bank's other customary charges payable in
connection with Letters of Credit, as the case may be, as in effect from time
to time (which charges shall be furnished to Borrower by Lender upon request).
Such fees and charges shall be payable (i) in the case of any Letter of Credit,
on its opening (ii) in the case of a standby Letter of Credit, (A) monthly
thereafter in advance and (B) upon each increase in the outstanding amount
thereof and (iii) in the case of any Letter of Credit that is not a standby
Letter of Credit, at the time of each increase in face amount thereof. Any such
charge in effect at the time of a particular transaction shall be the charge
for that transaction, notwithstanding any subsequent change in the Bank's
prevailing charges for that type of transaction. All Letter of Credit Fees
payable hereunder shall be deemed earned in full on the date when the same are
due and payable hereunder and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason.
On demand, Borrower will cause cash to be deposited and maintained in
an account with Lender, as cash collateral, in an amount equal to outstanding
Letters of Credit, and Borrower hereby irrevocably authorizes Lender, in its
discretion, on Borrower's behalf and in Borrower's name, to open such an
account and to make and maintain deposits therein, or in an account opened by
Borrower, in the amounts required to be made by Borrower, out of the proceeds
of Receivables or other Collateral or out of any other funds of Borrower coming
into Lender's possession at any time. Lender will invest such cash collateral
(less applicable reserves) in such short-term money-market items as to which
Lender and Borrower mutually agree and the net return on such investments shall
be credited to such account and constitute additional cash collateral. Borrower
may not withdraw amounts credited to any such account except upon payment and
performance in full of all Obligations and termination of this Agreement.
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3.3 CLOSING FEE. Upon the execution of this Agreement, Borrower shall
pay to Lender a facility fee of $250,000.00.
3.4 COLLATERAL MONITORING FEE. Borrower shall pay to Lender on the
date of execution of this Agreement and on each anniversary of such date, a
collateral monitoring fee in the amount of $50,000.00 for collateral analysis
or other business analysis, the need for which is to be reasonably determined
by Lender and which monitoring is undertaken by Lender for Lender's benefit.
3.5 UNUSED FEE. Borrower shall pay to Lender on the first day of each
month, in arrears, an unused fee equal to one quarter of one percent (.25%) per
annum on the difference between the Maximum Loan Amount and the Monthly
Advances for the immediately preceding month.
3.6 COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder shall
be computed on the basis of a year of 360 days and for the actual number of
days elapsed. If any payment to be made hereunder becomes due and payable on a
day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable interest rate during such extension.
3.7 MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that a court determines that Lender has
received interest and other charges hereunder in excess of the highest rate
applicable hereto, such excess interest shall be first applied to any unpaid
principal balance owed by Borrower, and if the then remaining excess interest
is greater than the previously unpaid principal balance, the Lender shall
promptly refund such excess amount to Borrower and the provisions hereof shall
be deemed amended to provide for such permissible rate.
3.8 INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority, shall:
(a) subject the Lender to any tax of any kind whatsoever with respect to
this Agreement or change the basis of taxation of payments to the Lender of
principal, fees, interest or any other amount payable hereunder or under any
Other Documents (except for changes in the rate of tax on the overall net income
of the Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office
of the Lender, including (without limitation) pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or
(c) impose on the Lender or the London interbank Eurodollar market any
other condition with respect to this Agreement or any Other Documents and the
result of any of the foregoing is to increase the cost to the Lender of making,
renewing or maintaining the loans hereunder by an amount of any payment
(whether of principal, interest or otherwise) in respect of any of the loans by
an amount that the Lender deems to be material, then, in any case the Borrower
shall promptly pay the Lender, upon its demand, such additional amount as will
compensate the Lender for such additional cost or such reduction, as the case
may be. The Lender shall certify the amount of such additional cost or reduced
amount to the Borrower, and such certification shall be conclusive absent
manifest error.
3.9 CAPITAL ADEQUACY.
(a) In the event that the Lender shall have reasonably determined that
any applicable law, rule, regulation or guideline regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Lender
(for purposes of this
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Section 3.9, the term "Lender" shall include Lender or any corporation or bank
controlling Lender and the office or branch where Lender (as so defined) makes
or maintains any Eurodollar Loans with any request or directive regarding
capital adequacy (whether or not having the force of law)) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Lender's capital as a consequence of its
obligations hereunder to a level below that which the Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Lender's policies with respect to capital adequacy) by an amount reasonably
deemed by the Lender to be material, then, from time to time, the Borrower
shall pay upon demand to the Lender such additional amount or amounts as will
compensate the Lender for such reduction. In determining such amount or
amounts, the Lender may use any reasonable averaging attribution methods. The
protection of this Section 3.9 shall be available to the Lender regardless of
any possible contention of invalidity or inapplicability of the law, regulation
or condition which shall have been imposed.
(b) A certificate of the Lender setting forth such amounts as shall be
necessary to compensate the Lender as specified in Section 3.9 hereof shall be
delivered to the Borrower and shall be conclusive absent manifest error.
3.10 SURVIVAL. The obligations of the Borrower under Sections 3.8 and
3.9, shall survive termination of this Agreement.
IV. COLLATERAL: GENERAL TERMS
4.1 SECURITY INTEREST IN THE COLLATERAL. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby assigns, pledges
and grants to Lender a continuing security interest in and to all of the
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Borrower shall ▇▇▇▇ its books and records as may be
necessary or appropriate to evidence, protect and perfect Lender's security
interest and shall cause its financial statements to reflect such security
interest.
4.2 PERFECTION OF SECURITY INTEREST. Borrower shall take all action
that may be necessary or desirable, or that Lender may reasonably request, so
as at all time to maintain the validity, perfection, enforceability and
priority of Lender's security interest in the Collateral or to enable Lender to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than
Permitted Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers,
(iii) delivering to Lender, endorsed or accompanied by such instruments of
assignment as Lender may specify, and stamping or marking, in such manner as
Lender may specify, any and all chattel paper, instruments, letters of credits
and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) entering into warehousing, lockbox and other custodial
arrangements reasonably satisfactory to Lender, and (v) executing and
delivering financing statements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Lender,
relating to the creation, validity, perfection, maintenance or continuation of
Lender's security interest under the Uniform Commercial Code or other
applicable law. All charges, expenses and fees the Lender may incur in doing
any of the foregoing, and any local taxes relating thereto, shall be charged to
the Borrower's account and added to the Obligations, or at the Lender's option,
shall be paid to the Lender immediately upon demand.
4.3 DISPOSITION OF COLLATERAL. The Borrower will safeguard and protect
all Collateral for the Lender's general account and make no disposition thereof
whether by sale, lease or otherwise except the sale of Inventory in the
ordinary course of business and the sale or disposition of obsolete assets
other than Equipment which is Collateral hereunder.
4.4 PRESERVATION OF COLLATERAL. Following the occurrence of an
Incipient Event of Default or Event of Default in addition to the rights and
remedies set forth in Section 11.1 hereof, the Lender: (a) may at any time take
such steps as the Lender deems necessary to protect the Lender's interest in
and to preserve the Collateral, including the hiring of such security guards
for the placing of such security protection measures as the Lender may deem
appropriate; (b) may employ and maintain at any of the
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Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect the Lender's interests in the Collateral; (c) may lease
warehouse facilities to which the Lender may move all or part of the
Collateral; (d) 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 (e) 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. The Borrower shall
cooperate fully with all of the Lender's efforts to preserve the Collateral and
will take such actions to preserve the Collateral as the Lender may direct. All
of the Lender's expenses of preserving the Collateral, including any expenses
relating to the bonding of a custodian, shall be charged to the Borrower's
account and added to the Obligations.
4.5 OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to the Lender's security interest: (a) the
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first security interest in each an every item of
the Collateral to the Lender; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens, Claims, Charges and
encumbrances whatsoever; (b) each document and agreement executed by Borrower or
delivered to Lender in connection with this Agreement shall be true and correct
in all material respects; (c) all signatures and endorsements of Borrower that
appear on such documents and agreements shall be genuine and Borrower shall
have full capacity to execute same; and (d) Borrower's Equipment and Inventory
is located as set forth on Exhibit 4.5 and shall not be removed from such
location(s) without the prior written consent of the Lender except with respect
to the sale of Inventory in the ordinary course of business and the sale or
disposal of obsolete assets other than Equipment which is collateral hereunder.
4.6 DEFENSE OF LENDER'S INTERESTS. Until (a) payment and performance
in full of all of Obligations and (b) termination of this Agreement, the
Lender's interests in the Collateral hereby granted to the Lender shall
continue in full force and effect. During such period the borrower shall not,
without the Lender's prior written consent, pledge, sell (except Inventory in
the ordinary course of business and the sale or disposal of obsolete assets
other than Equipment which is Collateral hereunder), assign, transfer, create
or suffer to exist a security interest in, Lien, Claim or Charge upon or
encumber or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. The Borrower shall defend the
Lender's interests in the Collateral against any and all persons whatsoever. At
any time following an Event of Default, Lender shall have the right to take
possession of the indicia of the Collateral and Collateral in whatever physical
form contained, including without limitation: labels, stationery, documents,
instruments and advertising materials. If Lender exercises this right to take
possession of the collateral, Borrower shall, upon demand, assemble it in the
best manner possible and make it available to Lender at a place reasonably
convenient to Lender. In addition, with respect to all Collateral, Lender shall
be entitled to all of the rights and remedies set forth herein and further
provided by the Uniform Commercial Code or other applicable law. At any time
following an Event of Default, Borrower shall, and Lender may, at its option,
instruct all suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which Lender holds
a security interest to deliver same to Lender and/or subject to Lender's order
and if they shall come into Borrower's possession, they, and each of them,
shall be held by Borrower in trust as Lender's trustee, and Borrower will
immediately deliver them to Lender in their original form together with any
necessary endorsement.
4.7 BOOKS AND RECORDS. The Borrower shall keep proper books of record
and account in which full, true and correct entries will be make of all
dealings or transactions of or in relation to is business ad affairs pursuant
to and in accordance with, or as required by GAAP and by Regulation SX as
promulgated from time to time by the Securities and Exchange Commission of the
government of the United States of America.
4.8 FINANCIAL DISCLOSURE. The Borrower hereby irrevocably authorizes
and directs ADLT's independent auditors employed by the Borrower at any time
during the term of this Agreement to exhibit and deliver to Lender copies of
any of the Borrower's financial statements, trial balances or other accounting
records of any sort in the accountant's or auditor's possession, and to
disclose to Lender any information such accountants may have concerning the
Borrower's financial status and business operations. The Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Lender
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copies of reports or examinations relating to the Borrower, whether made by the
Borrower or otherwise; however, Lender will attempt to obtain such information
or materials directly from the Borrower prior to obtaining such information or
materials from such accountants.
4.9 COMPLIANCE WITH LAWS. The Borrower shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to the Collateral or any part thereof or to the
operation of the Borrower's business the non-compliance with which would have
a material adverse effect on the Collateral, or the operations, business or
condition (financial or otherwise) of the Borrower.
4.10 INSPECTION OF PREMISES. At all reasonable times Lender shall
have full access to and the right to audit, check, inspect and make abstracts
and copies from the Borrower's books, records, audits, correspondence and all
other papers relating to the Collateral and the operation of Borrower's
business. Lender and its agents may enter upon any of the Borrower's premises
at any time during regular business hours and at any other reasonable time, and
from time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrower's business. Lender may
charge Borrower's account for all reasonable costs and expenses incurred by
Lender in connection with such audits and inspections, including without
limitation, Lender's customary per-diem charges for all employees or
contractors involved in such audits or inspections.
4.11 INSURANCE. Borrower shall bear the full risk of loss from any
loss of any nature whatsoever with respect to the Collateral. At the Borrower's
own cost and expense in amounts and with carriers reasonably acceptable to
Lender, the Borrower shall (a) keep all of its insurable properties and
properties in which the Borrower has an interest insured against the hazards of
fire, flood (if necessary,) sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance: (b) maintain a bond in
such amounts as is customary in the case of companies engaged in business
similar to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such workmen's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; (e) furnish Lender with (i) copies of all
policies and evidence of the maintenance of such policies by the renewal thereof
at least thirty (30) days before an expiration date, and (ii) appropriate loss
payable endorsements in form and substance reasonably satisfactory to the
Lender, naming the Lender as loss payee as its interests may appear with respect
to all insurance coverage referred to in clauses (a) and (b) above, and
providing (A) that all proceeds thereunder shall be payable to the Lender, (B)
no such insurance shall be affected by any act or neglect of the insured or
owner of the property described in such policy, and (C) that such policy and
loss payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days prior written notice is given to the Lender. In the event of
any loss thereunder, the carriers named therein hereby are directed by the
Lender and Borrower to make payment for such loss with respect to the Collateral
to the Lender and not to the Borrower and the Lender jointly. If any insurance
losses are paid by check, draft or other instrument payable to the Borrower and
the Lender jointly, the Lender may endorse the Borrower's name thereon and do
such other things as the Lender may deem advisable to reduce the same to cash.
The lender is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a), and (b) above. All loss recoveries received
by lender upon any such insurance may be applied to the Obligations, in such
order as Lender in his sole discretion shall determine. Any surplus shall be
paid by the Lender to the Borrower or applied as may be otherwise required by
law. Any deficiency thereon shall be paid by the Borrower to the Lender, on
demand.
4.12 FAILURE TO PAY INSURANCE. If the Borrower fails to
obtain insurance as hereinabove provided, or to keep the same in force, the
Lender, if the Lender so elects, may obtain such insurance and pay the premium
thereof for the Borrower's account, and charge the Borrower's account
therefore and such expenses so paid shall be part of the Obligations.
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4.13 PAYMENT OF TAXES. The Borrower will pay, when due, all taxes,
assessments and other Charges or Claims lawfully levied or assessed upon
Borrower or any of the Collateral including, without limitation, real and
personal property taxes, assessments and charges and all franchise, income,
employment, old age benefits, withholding, and sales taxes, provided, however,
that the Borrower shall not be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the Borrower shall, to the extent required by GAAP on a
consistent basis, have set aside on its books adequate reserves with respect
thereto. If any tax by any governmental authority is or may be imposed on or as
a result of any transaction between Borrower and Lender which Lender may be
required to withhold or pay or if any taxes, assessments, or other Charges
remain unpaid after the date fixed for their payment, or if any Claim shall
be made which, in the Lender's reasonable opinion, may possibly create a valid
Lien, Charge or Claim on the Collateral, the Lender may without notice to
Borrower pay the taxes, assessments, Liens, Charges or Claims and Borrower
hereby indemnifies and holds Lender harmless in respect thereof. The amount of
any payment by Lender under this Section 4.13 shall be charged to the
Borrower's account as a Working Capital Advance and added to the Obligations
and, until Borrower shall furnish Lender with an indemnity therefore (or supply
Lender with evidence satisfactory to Lender that due provision for the payment
thereof has been made), Lender may hold without interest any balance standing
to Borrower's credit and Lender shall retain its security interest in any and
all Collateral held by Lender.
4.14 PAYMENT OF LEASEHOLD OBLIGATIONS. The Borrower shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at the
lender's request will provide evidence of having done so.
4.15 RECEIVABLES
(a) Nature of Receivables. Each of the Receivables shall be a bona
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery
of goods upon stated terms of the Borrower, or work, labor or services
theretofore rendered by the Borrower and as of the date each Receivable is
created, same shall be due and owing in accordance with Borrower's standard
terms of sale without dispute, setoff or counterclaim except as may be stated
on the accounts receivable schedules delivered by the Borrower to the Lender.
(b) Solvency of Customers. Each Customer, to the best of the
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due. With respect to such Customers of Borrower who are not solvent
the Borrower has set up on its books and in its financial records bad debt
reserves adequate to cover such Receivables.
(c) Location of Borrower. The Borrower's chief executive office is
located at the addresses listed on Schedule A hereto. Until written notice is
given to the Lender by Borrower of any other office at which it keeps its
records pertaining to Receivables, all such records shall be kept at such
executive office.
(d) Collection of Receivables. Until the Borrower's authority to do
so is terminated by the Lender (which notice the Lender may give at any time
following the occurrence of an Event of Default) the Borrower will, at the
Borrower's sole cost and expense, but on the Lender's behalf and for the
Lender's account, collect as the Lender's property and in trust for the Lender
all amounts received on Receivables, and shall not commingle such collections
with the Borrower's funds or use the same except to pay Obligations. The
Borrower shall, upon request, deliver to the Lender in original form and on the
date of receipt thereof, all checks, drafts, notes, money orders, acceptances,
cash and other evidences of Indebtedness.
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(e) Notification of Assignment of Receivables. At any time following
the occurrence of an Event of Default hereunder, the Lender shall have the
right to send notice of the assignment of, and the Lender's security interest
in, the Receivables to any and all Customers or any third party holding or
otherwise concerned with any of the Collateral. Thereafter, the Lender shall
have the sole right to collect the Receivables, take possession of the
Collateral, or both. Lender's actual collection expenses, including but not
limited to stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to the Borrower's account and added to the
Obligations.
(f) Power of Lender to Act on Borrower's Behalf. The lender shall have
the right to receive, endorse, assign and/or deliver in the name of the Lender
or the Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and the Borrower hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed.
The Borrower hereby constitutes the Lender or the Lender's designee as the
Borrower's attorney with power (i) to endorse the Borrower's name upon any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or Collateral; (ii) to sign the Borrower's name on any invoice or ▇▇▇▇ of lading
relating to any of the Receivables; (iii) to send verifications of Receivables,
drafts against Customers, assignments and verifications of Receivables; (iv) to
send verifications of Receivables to any Customer; (v) to sign the Borrower's
name on all financing statements or any other documents or instruments deemed
necessary or appropriate by the Lender to preserve, protect, or perfect the
Lender's interest in the Collateral and to file same; (vi) to demand payment of
the Receivables; (vii) to enforce payment of the Receivables by legal
proceedings or otherwise; (viii) to exercise all of Borrower's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (ix) to settle, adjust, compromise, extend or renew the
Receivables; (x) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (xi) to prepare, file and sign Borrower's name on a
proof of claim in bankruptcy or similar document against any account debtor;
(xii) to prepare, file and sign Borrower's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Receivables; and (xiii) to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross negligence; this power being coupled
with an interest is irrevocable while any of the Obligations remain unpaid. The
Lender shall have the right at any time, after the occurrence of an Event of
Default, to change the address for delivery of mail addressed to the Borrower
to such address as the Lender may designate.
(g) No Liability. The Lender shall not, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for any damage
resulting therefrom, except those due to its gross negligence or willful
misconduct. Following the occurrence of an Event of Default, the Lender may,
without notice or consent from the Borrower, ▇▇▇ upon or otherwise collect,
extend the time of payment of, compromise or settle for cash, credit or upon
any terms any of the Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor thereof. The Lender is
authorized and empowered to accept, following the occurrence of an Event of
Default, the return of the goods represented by any of the Receivables, without
notice to or consent by the Borrower, all without discharging or in any way
affecting the Borrower's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All proceeds
of Receivables shall, at the direction of Lender, be deposited by the Borrower
into a lockbox account, Dominion account or such other "BLOCKED ACCOUNT"
("BLOCKED ACCOUNTS") as Lender may require pursuant to an arrangement with Bank
One, Akron, N.A., in Akron, Ohio and Bank Illinois, in Urbana, Illinois, or
such other banks reasonably acceptable to Borrower and Lender. The Borrower
shall issue to any such banks, an irrevocable letter of instruction directing
said bank to transfer such funds so deposited to the Lender, either to any
account maintained by the Lender at said banks or by wire transfer to
appropriate account(s) of the Lender. All funds deposited in such "BLOCKED
ACCOUNTS" shall immediately become the property of the Lender and the Borrower
shall obtain the agreement by such banks to waive any offset rights against the
fund so deposited. Lender assumes no responsibility for such "BLOCKED ACCOUNTS"
arrangement, including without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any
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bank thereunder. Alternatively, in the event that Lender or Borrower is
unable for any reason, to so maintain such Blocked Accounts or Lender reasonably
believes that such Blocked Accounts are not being used or operated properly, or
upon the occurrence of an Event of Default hereunder Lender may establish
depository accounts ("DEPOSITORY ACCOUNTS") in the name of Lender at a bank or
banks for the deposit for such funds and Borrower shall deposit all proceeds of
Receivables or cause same to be deposited, in kind, in such Depository Accounts
of Lender in lieu of depositing same to the Blocked Accounts.
4.16 INVENTORY. All Inventory has been, and will be produced by
Borrower in accordance with Federal Fair Labor Standards ▇▇▇ ▇▇▇▇, as amended,
and all rules, regulations and orders thereunder.
4.17 MAINTENANCE OF EQUIPMENT. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved in
all material respects.
4.18 EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute the Lender as the Borrower's agent for any purpose
whatsoever, nor shall the Lender be responsible or 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, except when caused
by the gross negligence or willful misconduct of Lender. The Lender does not,
whether by anything herein or in any assignment 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.
4.19 ENVIRONMENTAL MATTERS. (a) Borrower will ensure that the Real
Property remains in substantial compliance with all material Environmental Laws
and it will not place or permit to be placed any Hazardous Substances on any
Real Property except as not prohibited by applicable law and appropriate
governmental authorities.
(b) Borrower will establish and maintain a system to monitor continued
compliance with all material applicable Environmental Laws which system shall
include periodic review of such compliance.
(c) Borrower will (i) employ in connection with its use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable material Environmental Laws in Borrower's reasonable opinion, and
(ii) dispose of any and all Hazardous Waste generated at the Real Property only
at facilities and with carriers that maintain valid permits under RCRA and any
other applicable Environmental Laws to the extent Borrower is required to do so
under applicable Environmental Laws. Borrower shall use its reasonable efforts
to obtain certificates of disposal, such as hazardous waste manifest receipts,
from all treatment, transport, storage or disposal facilities or operators
employed by the Borrower in connection with the transport or disposal of any
such Hazardous Waste generated at the Real Property.
(d) In the event the Borrower obtains, gives or receives notice of any
non-permitted Release of a reportable quantity in a 24-hour period of any
Hazardous Substances at the Real Property (any such even being hereinafter
referred to as a "HAZARDOUS DISCHARGE") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with
regard to any Hazardous Discharge or violation of Environmental Laws affecting
the Real Property or Borrower's interest therein (any of the foregoing is
referred to herein as an "ENVIRONMENTAL COMPLAINT") from any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "AUTHORITY"), then the
Borrower shall, within five (5) Business Days, give written notice of same to
the Lender detailing non-privileged and non-confidential facts and
circumstances of which the Borrower is aware giving rise to the Hazardous
Discharge or Environmental Complaint. Such information is to be provided to
allow the Lender to protect its security
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interest in the Real Property and is not intended to create nor shall it create
any obligation upon the Lender with respect thereto.
(e) Borrower shall promptly forward to the Lender copies of any
notification of potential liability, demand letter from any Authority relating
to potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by Borrower to
dispose of Hazardous Substances and shall continue to forward copies of
correspondence between the Borrower and the Authority regarding such claims to
the Lender until the claim is settled. The Borrower shall promptly forward to
the Lender copies of all documents and reports concerning a Hazardous Discharge
at the Real Property that the Borrower is required to file under any
Environmental Laws, except for routine reports filed with Authorities in the
ordinary course of Borrower's conduct of operations at the Real Property. Such
information is to be provided solely to allow the Lender to protect Lender's
security interest in the Real Property and the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all material action reasonably necessary in
order to safeguard the health of any Person and to avoid subjecting the
Collateral or Real Property to any Lien. If Borrower shall so fail to respond
promptly to any such Hazardous Discharge or Environmental Complaint or Borrower
shall fail to comply with any of the material requirements of any material
Environmental Laws which threaten the health of any Person or subjects the
Collateral or Real Property to any material lien, the Lender may, but without
the obligation to do so, for the sole purpose of protecting the Lender's
interest in Collateral: (A) give such notices or (B) enter into the Real
Property (or authorize third parties to enter into the Real Property) and take
such actions as the Lender (or such third parties as directed by the Lender)
deems reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint as
required by applicable Environmental Laws. All reasonable costs and expenses
incurred by the Lender (or such third parties) in the exercise of any such
rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Working Capital
Advances shall be paid upon demand by the Borrower, and until paid shall be
added to and become a part of the Obligations secured by the Liens created by
the terms of this Agreement or any other agreement between Lender and Borrower.
(g) In the event the Lender has reasonable grounds to believe that
there has been a Hazardous Discharge at the Real Property, then promptly upon
the written request of the Lender, Borrower shall provide Lender, at the
Borrower's expense, with an Environmental site assessment or environmental
audit report prepared by an environmental engineering firm acceptable in the
reasonable opinion of the Lender, to assess with a reasonable degree of
certainty the existence of a Hazardous Discharge and the potential costs in
connection with abatement, cleanup and removal of any Hazardous Substances
found on, under, at or within the Real Property. Any report or investigation of
such Hazardous Discharge proposed and acceptable to an appropriate Authority
that is charged to oversee the clean-up of such Hazardous Discharge shall be
acceptable to the Lender. If such estimates, individually or in the aggregate,
exceed $250,000, the Lender shall have the right to require the Borrower to
post a bond, letter of credit or other security reasonably satisfactory to the
Lender to secure payment of these costs and expenses.
(h) Borrower shall defend and indemnify the Lender and hold the Lender
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including reasonable attorney's fees, suffered or
incurred by the Lender under or on account of any Environmental Laws, including
without limitation, the assertion of any lien thereunder, with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the
Real Property, whether or not the same originates or engages from the Real
Property or any contiguous real estate, except to the extent such loss,
liability, damage and expenses is attributable to any Hazardous Discharge
resulting from actions on the part of the Lender. The Borrower's obligations
under this Section 4.19 shall arise upon the discovery of the presence of any
Hazardous Substances at the Real Property, whether or not any federal, state,
or local environmental agency has taken or threatened any action in connection
with the presence of any Hazardous Substances. The Borrower's obligation and
the indemnifications hereunder shall survive the termination of this agreement.
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(i) For purposes of this section 4.19, all references to Real Property
shall be deemed to include all of Borrower's right, title and interest in and
to leased premises.
V. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
5.1 AUTHORITY. The Borrower has full power, authority and legal
right to enter into this Agreement and the Other Documents and perform all
obligations hereunder. The execution, delivery and performance
hereof and of the Other Documents are within the Borrower's corporate powers,
have been duly authorized, are not in contravention of law or the terms of the
Borrower's by-laws, certificate of incorporation or other applicable documents
relating to the Borrower's formation or to the conduct of the Borrower's
business or of any material agreement or undertaking to which the Borrower is
a party or by which the Borrower is bound, and will not conflict with nor
result in any breach in any of the provisions of or constitute a default under
or result in the creation of any Lien except Permitted Encumbrances upon any
asset of the Borrower under the provisions of any agreement, charge,
instrument, by-law of other instrument to which the Borrower is a party or by
which it may be bound.
5.2 FORMATION AND QUALIFICATION. Each Borrower is duly incorporated
and in good standing under the laws of the State listed on Schedule A hereto as
its state of incorporation and each is qualified to do business and is in good
standing in the states listed on Exhibit 5.2 which constitute all states in
which qualification and good standing are necessary for the Borrower to conduct
its business and own its property and where the failure to so qualify would have
a material adverse effect on Borrower or its business. Borrower has delivered to
Lender true and complete copies of its certificate of incorporation and by-laws
and will promptly notify Lender of any amendment or changes thereto.
5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Borrower contained in this Agreement and the Other Documents
shall be true at the time of Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
5.4 TAX RETURNS. Borrower's federal tax identification number is set
forth in Exhibit 5.4. Borrower has filed all federal, state and local tax
returns and other material reports it is required by law to file and has paid
all taxes, assessments, fees and other governmental charges that are due and
payable. The consolidated provisions for taxes on the books of ADLT are
adequate for all years not closed by applicable statutes, and for its current
fiscal year, and Borrower has no knowledge of any deficiency or additional
assessment in connection therewith not provided for on ADLT's consolidated
financial statements.
5.5 FINANCIAL STATEMENTS. The combined balance sheet of the Borrower,
its Subsidiaries and such other Persons described therein (including the
accounts of all Subsidiaries for the respective periods during which a
subsidiary relationship existed) as of June 30, 1995, and the related statements
of income, changes in shareholder's equity, and cash flow for the period ended
on such date, accompanied by a report thereon containing an opinion without
qualification by independent certified public accountants, copies of which have
been delivered to Lender, have been prepared in accordance with GAAP,
consistently applied and present fairly the financial position of ADLT and its
Subsidiaries at such date and the results of their operations for such period.
Since June 30, 1995 there has been no material change in the consolidated
condition, financial or otherwise, of ADLT and its Subsidiaries as shown on the
consolidated balance sheet as of such date and no material change in the
aggregate value of machinery, equipment and Real Property owned by the Borrower
and its Subsidiaries, except as disclosed in ADLT's consolidated financial
statements included in ADLT's Form 10-Q report for the Quarter ended December
31, 1995.
5.6 CORPORATE NAME. The Borrower has not been known by any other
corporate name in the past five years and does not sell Inventory under any
other name except as set forth on Exhibit 5.6, nor has Borrower been the
surviving corporation of a merger or consolidation or acquired all or
substantially all
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of the assets of any person during the preceding five (5) years except as
Borrower has previously disclosed to Lender.
5.7 O.S.H.A AND ENVIRONMENT COMPLIANCE.
(a) Borrower has duly complied with, and, its facilities, business
assets, property, leaseholds and equipment are in substantial compliance in all
material respects with, the provisions, of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws where failure to so comply would have a material adverse effect on the
business, financial condition or affairs of Borrower in each case. There are no
outstanding citations, notices or orders of non-compliance issued to Borrower or
relating to its business, assets, property, leaseholds or equipment under any
such laws, rules or regulations.
(b) Borrower has been issued all required federal, state and local
licenses, certificates or permits relating to and material to Borrower and its
facilities, businesses, assets, property, leaseholds and equipment are in
compliance in all material respects with, all applicable Environmental Laws
where failure to so comply would have a material adverse effect on the
business, financial condition or affairs of Borrower, in each case.
(c)(i) There are no visible signs of releases, spills, discharges, leaks
or disposal (collectively referred to as "RELEASES") of Hazardous Substances
at, upon, under or within any Real Property or any premises leased by Borrower;
(ii) there are no underground storage tanks or polychlorinated biphenyls on the
Real Property or any premises leased by Borrower; (iii) neither the Real
Property nor any premises leased by Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; (iv) no Hazardous
Substances are present on the Real Property or any premises leased by Borrower,
excepting such substances as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business
of the Borrower or of its tenants.
(d) Borrower hereby indemnifies and holds Lender harmless from and
against any liability, loss, damage, suit, action or proceeding pertaining to
Hazardous Wastes or Toxic Substances, including, but not limited to, claims of
any federal, state or municipal government or quasi-governmental agency or any
third person, whether arising under CERCLA, RCRA, or any other federal, state
or municipal law or regulation, or tort, contract or common law.
5.8 SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) Borrower is solvent after giving effect to the Indebtedness and:
(i) the assets of Borrower, at a fair valuation, exceed the
total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities of the Borrower);
(ii) current projections which are based on underlying
assumptions which provide a reasonable basis for the projections and which
reflect Borrower's judgment based on present circumstances, the most likely set
of conditions and Borrower's most likely course of action for the period
projected, demonstrate that Borrower will have sufficient cash flow to enable it
to pay its debts as they mature; and
(iii) Borrower does not have an unreasonably small capital base
with which to engage in its anticipated business.
For purposes of this subsection (a), the "FAIR VALUATION" of the assets of
Borrower shall be determined on the basis of the amount which may be realized
within a reasonable time, whether through collection or sale of such assets at
market value, conceiving the latter as the amount which could be obtained for
the property in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions.
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(b) Except as disclosed in Exhibit 5.8(b), the Borrower has (i) no
pending or threatened litigations, actions or proceedings which involve the
possibility of materially and adversely affecting its business, assets,
operations, condition or prospects, financial or otherwise, or the Collateral,
or the ability of Borrower to perform this Agreement, and (ii) no liabilities
nor indebtedness other than the Obligations.
(c) The Borrower is not aware of any violation of any applicable
statute, regulation or ordinance in any respect materially and adversely
affecting the Collateral or its business, assets, operations or condition or
prospects, financial or otherwise, nor is Borrower in violation of any order of
any court, governmental authority or arbitration board or tribunal.
(d) The Borrower has received no notice that it is not in full
compliance with any of the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and its regulations and, (i) it has
not engaged in any Prohibited Transactions as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code as amended, (ii) it has met all
applicable minimum funding requirements under Section 302 of ERISA in respect
of their plans and no funding requirements have been postponed or delayed,
(iii) it has no knowledge of any event or occurrence which would cause the
Pension Benefit Guaranty Corporation to institute proceedings under Title IV of
ERISA to terminate any of the employee benefit plans, (iv) there exists no
event described in Section 4043 of ERISA, excluding subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
CFR Section 2615.3 has not been waived, (v) it does not have any fiduciary
responsibility for investments with respect to any plan existing for the
benefit of persons other than its employees or former employees, and (vi) it
has not withdrawn, completely or partially, from any multi-employer pension
plans so as to incur liability under the Multi-Employer Pension Plan Amendments
of 1980.
5.9 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, copyrights, copyright
applications, tradenames, and licenses owned or utilized and material to the
business of the Borrower are set forth on Exhibit 5.9, are valid and certain of
them have been duly registered or filed with an appropriate governmental
authority as shown on said Exhibit 5.9; there is no objection or pending
challenge to the validity of any such material patent, trademark, copyright,
tradename, or license and Borrower is not aware of any grounds for any
challenge, except as set forth in Exhibit 5.9 hereto.
5.10 LICENSES AND PERMITS. Except as set forth in Exhibit 5.10,
Borrower (a) is in material compliance with and (b) has procured and is now in
possession of, all material licenses or permits required by any applicable
federal, state or local law or regulation for the operation of its business in
each jurisdiction wherein it is now conducting or proposes to conduct business
and where the failure to procure such licenses or permits would have a material
adverse effect on the business, properties, condition (financial or otherwise)
or operations, present or prospective of the Borrower.
5.11 DEFAULT OF INDEBTEDNESS. Borrower is not in default in the
payment of the principal of or interest on any indebtedness or under any
instrument or agreement under or subject to which any indebtedness has been
issued, the result of which would have a material adverse effect on the
Borrower, and no event has occurred under the provisions of any such instrument
or agreement which with or without the lapse of time or the giving of notice,
or both, constitutes or would constitute an event of default thereunder.
5.12 NO DEFAULT. Borrower is not in default in the payment or
performance of any of its material contractual obligations and no incipient
Event of Default has occurred.
5.13 NO BURDENSOME RESTRICTIONS. Borrower is not party to any contract
or agreement the performance of which would materially adversely affect the
business, assets, operations, condition or prospects (financial or otherwise)
of the Borrower. Borrower has not agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its Property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
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5.14 NO LABOR DISPUTES. Borrower is not involved in any labor dispute;
there are no strikes or walkouts or union organization of any of Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Exhibit 5.14 hereto.
5.15 MARGIN REGULATIONS. The Borrower is not engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "PURCHASING" or "CARRYING" any "MARGIN
STOCK" within the respective meanings of each of the quoted terms under
Regulation U or Regulation G of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the
proceeds of any Advance will be used for "PURCHASING" or "CARRYING" "MARGIN
STOCK" as defined in Regulation U of such Board of Governors.
5.16 INVESTMENT COMPANY ACT. The Borrower is not an "INVESTMENT
COMPANY" registered or required to be registered under the Investment Company
Act of 1940, as amended, nor is it controlled by such a company.
5.17 DISCLOSURE. No representation or warranty made by the Borrower in
this Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Borrower or which reasonably should be known to the Borrower which the Borrower
has not disclosed to Lender in writing with respect to the transactions
contemplated by this Agreement which materially and adversely affects the
condition (financial or otherwise), results of operations, business, or assets
of the Borrower.
VI. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that it shall, until payment in full
of the Obligations and termination of this Agreement:
6.1 PAYMENT OF FEES. Pay to Lender on demand all usual and customary
fees and expenses which Lender reasonably incurs in connection with (a) the
forwarding of Advance proceeds and (b) the establishment and maintenance of any
Blocked Accounts or Depository Accounts as provided for in Section 4.15(h).
Lender may, without making demand, charge the account of Borrower for all such
fees and expenses.
6.2 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in
its business in good working order and condition (reasonable wear and tear
excepted and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
tradenames, trade secrets and trademarks material to its business; (b) keep in
full force and effect its existence and comply in all material respects with
the laws and regulations governing the conduct of its business; and (c) make
all such reports and pay all such franchise and other taxes and license fees
and do all such other acts and things as may be lawfully required to maintain
its rights, licenses, leases, powers and franchises under the laws of the
United States or any political subdivision thereof, the failure of which would
materially and adversely effect its business or the Collateral.
6.3 VIOLATIONS. Promptly notify the Lender in writing of any violation
of any law, statute, regulation or ordinance of any governmental entity, or of
any agency thereof, applicable to the Borrower which may materially adversely
affect the Collateral or the Borrower's business, assets, operations, condition
or prospectus (financial or otherwise).
6.4 GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Lender's interest in the Collateral under the Federal Assignment of Claims Act
or other applicable state or local statutes or ordinances and deliver to the
Lender appropriately endorsed, any instrument or chattel paper connected with
any Eligible Receivable arising out of contracts between Borrower and the United
States, any state or any department, agency or instrumentality of any of them.
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6.5 TANGIBLE NET WORTH. Cause to be maintained at the end of each
fiscal quarter of ADLT, (a) a consolidated Tangible Net Worth in the following
amounts on the following dates and (b) a consolidated Tangible Net Worth with
respect to Borrower and only its Subsidiaries located in the United States and
Canada in the following amounts on the following dates:
As of the Closing Date $20,000,000
As of June 30, 1996 21,500,000
As of September 30, 1996 21,500,000
As of December 31, 1996 21,500,000
As of March 31, 1997 21,500,000
As of June 30, 1997 26,500,000
As of September 30, 1997 26,500,000
As of December 31, 1997 26,500,000
As of March 31, 1998 26,500,000
As of June 30, 1998 30,500,000
As of September 30, 1998 30,500,000
As of December 31, 1998 30,500,000
As of March 31, 1999 30,500,000
As of June 30, 1999 and thereafter 33,500,000
6.6 CURRENT RATIO. Cause to be maintained as of the end of each fiscal
quarter of ADLT a ratio of Current Assets to Current Liabilities of not less
than 1.2 to 1.0.
6.7 CASH FLOW COVERAGE RATIO. Cause to be maintained as of the end of
each fiscal quarter of ADLT beginning with the fiscal quarter ending June,
1996, a Cash Flow Coverage Ratio equal to or greater than 2.0 to 1.0.
6.8 WORKING CAPITAL. Cause to be maintained as of the end of each
fiscal quarter. Working Capital in an amount not less than the following
amounts for the following periods:
As of the March 31, 1996 $8,000,000
As of June 30, 1996 and thereafter 5,000,000
6.9 LEVERAGE RATIO. Cause to be maintained, as of the end of each
fiscal quarter of ADLT a ratio of total liabilities to Tangible Net Worth of
not greater than 1.5 to 1.0.
6.10 PLEDGE OF CREDIT. Not now or hereafter pledge the Lender's credit
on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than the Borrower's business as conducted
on the date of this Agreement or as set forth in the Prospectus filed by ADLT
with the Securities and Exchange Commission, which became effective December
11, 1995.
6.11 EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to the
Lender from time to time, upon demand, such supplemental agreements,
statements, assignments and transfers, or instructions or documents relating to
the Collateral, and such other instruments as the Lender may reasonably
request, in order that the full intent of this Agreement may be carried into
effect.
6.12 PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its material
obligations and liabilities of whatsoever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Lender may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lender.
6.13 STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Section 9.7, 9.8 and 9.9 to be complete and correct in all
material respects (subject, in the case of interim statements, to normal
year-end audit adjustments) and to be prepared in reasonable detail and in
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accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as the
case may be, and disclosed therein).
VII. NEGATIVE COVENANTS.
The Borrower covenants and agrees that it shall not without
the prior written consent of Lender, until satisfaction in full of the
Obligations and termination of this Agreement:
7.1 MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Without our prior written consent enter into any merger,
consolidation or other reorganization with or into any other Person or acquire
all or a substantial portion of the assets or stock of any Person or permit any
other Person to consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets, except (i) inventory in the ordinary course of its
business, and (ii) property or assets which do not exceed in the aggregate
$50,000.00 per fiscal year or an aggregate of $200,000.00 during the Term of
this Agreement.
7.2 CREATION OF LIENS. Create or suffer to exist any Lien,
Charge, Claim or transfer upon or against any of its property or assets now
owned or hereafter acquired, except Permitted Encumbrances.
7.3 GUARANTEES. Become liable upon the obligations of any
person, firm or corporation by assumption, endorsement or guaranty thereof or
otherwise (other than to Lender) except the endorsement of checks in the
ordinary course of business.
7.4 INVESTMENTS. Purchase or acquire obligations or stock of,
or any other interest in, any Person, except for the following "Permitted
Investments": (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers' acceptances
having maturities of not more than 180 days and repurchase agreements backed by
United States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof, and (e) joint ventures, partnerships or similar arrangements
(collectively hereinafter referred to as "joint ventures") (i) in which
investments by ADLT are made solely by the exchange of any of its common or
preferred stock for an interest in such joint venture, or (ii) in which Borrower
has made an equity investment in cash in amount not to exceed $500,000 in each
instance or $l,500,000 in the aggregate on an annual basis; provided, however,
that the cash equity investment in a joint venture by a Borrower outside the
United States or Canada may exceed Five Hundred Thousand Dollars ($500,000)
provided that the amount by which such cash investment exceeds $500,000 (A) does
not exceed one hundred percent (100%) of the aggregate net after tax profits
derived from the sale of the Equipment or Inventory of a Borrower that is
constructed, delivered, installed and accepted by the joint venture and (B) the
net proceeds from such sale have not been repatriated in the jurisdiction of the
United States; and (f) as otherwise permitted in Section 7.12 hereof. The Lender
hereby acknowledges that the acquisition by ADLT of the equity and senior
secured debt of Spectro Electric, Inc. preceded the execution and delivery of
this Agreement.
7.5 LOANS. Make advances, loans or extensions of credit to any
Person, including without limitation, any Parent, Subsidiary or Affiliate,
except with respect to (a) advances made by ADLT as agent under this Agreement
or intercompany loans and transfers between Subsidiaries that are Borrowers, and
(b) the extension of commercial trade credit in connection with the sale of
inventory in the ordinary course of its business.
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7.6 CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an amount in excess of:
(a) $4,500,000.00 as of the Borrower's fiscal year ending June
30, 1996;
(b) $12,000,000.00 during the Borrower's fiscal year ending
June 30, 1997;
(c) $10,000,000.00 as of the Borrower's fiscal year ending
June 30, 1998 and each fiscal year thereafter,
provided any such expenditure or commitment does not result in the occurrence of
an Event of Default or an Incipient Event of Default hereunder.
7.7 PERMITTED INVESTMENTS AND CAPITAL EXPENDITURES. Allow the
sum of capital expenditures permitted in Section 7.6 plus Permitted Investments
to exceed:
(a) $5,500,000.00 as of the Borrower's fiscal year ending June
30, 1996;
(b) $13,000,000.00 during the Borrower's fiscal year ending
June 30, 1997;
(c) $11,000,000.00 as of the Borrower's fiscal year ending
June 30, 1998 and each fiscal year thereafter;
7.8 DIVIDENDS. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred stock of Borrower or
apply any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock, or of any options to purchase or
acquire any such shares of common or preferred stock of Borrower without the
prior written consent of Lender, which consent shall not be unreasonably
withheld.
7.9 INDEBTEDNESS. Create, incur, assume or suffer to exist
any indebtedness of Borrower except in respect of (i) Indebtedness to Lender and
(ii) Indebtedness incurred for asset purchases permitted under Section 7.6
hereof.
7.10 NATURE OF BUSINESS. Substantially change the nature of
the business in which it is presently engaged, and as specifically set forth in
the Prospectus filed by ADLT with the Securities and Exchange Commission, which
became effective on December 11, 1995, nor except as specifically permitted in
this Agreement, purchase or invest, directly or indirectly, in any assets or
property other than in the ordinary course of business for assets or property
which are useful in, necessary for and are to be used in its business as
presently conducted.
7.11 TRANSACTIONS WITH AFFILIATES. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, any Affiliate not identified in this
Agreement, except disclosed transactions in the ordinary course of business, on
an arm's-length basis on terms no less favorable than terms which would have
been obtainable from a Person other than an Affiliate;
7.12 SUBSIDIARIES.
(a) Form any Subsidiary unless in compliance with Section 2.12
hereof; provided however, that irrespective of the requirements of Section 2.12
hereof, (i) ADLT may form any Subsidiary in which the investment by ADLT is made
solely by the exchange of any of its common or preferred stock without the prior
consent of Lender and (ii) any Borrower may form or acquire a Subsidiary
provided that its cash investment therein is less than $500,000 without the
consent of Lender.
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(b) Except as permitted in Section 7.4, enter into any
partnership, joint venture or similar arrangement.
7.13 FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal
year end from June 30 or make any change (i) in accounting treatment and
reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by law.
7.14 PREPAYMENT OF INDEBTEDNESS. At any time, directly or
indirectly, prepay any Indebtedness (other than to Lender) or repurchase,
redeem, retire or otherwise acquire any Indebtedness of Borrower.
VIII. CONDITIONS PRECEDENT.
8.1 CONDITIONS TO INITIAL ADVANCES. The agreement of Lender to
make the initial Advances requested to be made on the Closing Date is subject to
the satisfaction, or waiver by Lender, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Revolving Credit Note. The Lender shall have received the
Revolving Credit Note duly executed and delivered by an authorized officer of
the Borrower;
(b) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Lender to be filed, registered or recorded in order to create,
in favor of the Lender, a perfected security interest in or lien upon the
Collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and the Lender shall have received an acknowledgment
copy, or other evidence reasonably satisfactory to it of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of the Borrower. The Lender shall
have receives a copy of the resolutions in form and substance reasonably
satisfactory to Lender, of the Board of Directors of the Borrower authorizing
(i) the execution, delivery and performance of this Agreement, the Revolving
Credit Note and each of the agreements or documents executed and delivered in
connection therewith (collectively the "DOCUMENTS") and (ii) the granting by
Borrower of the security interests in and liens upon the Collateral in each case
certified by the Secretary or an Assistant Secretary of the Borrower as of the
Closing Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;
(d) Incumbency Certificates of the Borrower. The Lender shall
have received a certificate of the Secretary or any Assistant Secretary of the
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of the Borrower executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Legal Opinion. The Lender shall have received the executed
legal opinion of Borrower's counsel in form and substance reasonably
satisfactory to the Lender which shall cover such matters incident to the
transactions contemplated by this Agreement, the Revolving Credit Note and
Documents as the Lender may reasonably require;
(f) No Litigation. (i) No litigation, investigation or
proceeding before or by any arbitrator or governmental authority shall be
continuing or threatened against the Borrower or against the officers or
directors of the Borrower (A) in connection with the Documents or any of the
transactions contemplated thereby and which, in the reasonable opinion of the
Lender, is deemed material or (B) which if adversely determined, would, in the
reasonable opinion of the Lender, have a material adverse effect on the
business, assets, operations or condition (financial or otherwise) of the
Borrower; and (iii) no injunction, writ,
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restraining order or other order of any nature materially adverse to the
Borrower or the conduct of its business shall have been issued by any
governmental authority;
(g) Collateral Examination. The Lender shall have completed
Collateral examinations and received appraisals, the results of which shall be
reasonably satisfactory in form and substance to the Lender, of the Receivables,
Inventory, General Intangibles of the Borrower and all books and records in
connection therewith;
(h) Fees. The Lender shall have received all fees payable to
the Lender on or prior to the Closing Date pursuant to Article III hereof;
(i) Availability. After giving effect to the initial Advance
hereunder (and not to any subsequent Advances), the then outstanding Advances
shall not exceed an amount equal to the Formula Amount minus $1,800,000.00.
(j) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to the Lender and its counsel.
8.2 CONDITIONS TO EACH ADVANCE. The agreement of Lender to
make any Advance requested to be made on any date (including, without
limitation, its initial Advance), is subject to the satisfaction of the
following conditions precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower in or pursuant to this
Agreement, and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;
(b) No Default. No event of Default or Incipient Event of
Default shall have occurred and be continuing on such date, or would exist after
giving effect to the Advances requested to be made, on such date; provided,
however that Lender in its sole discretion, may continue to make Advances
notwithstanding the existence of an event of Default or Incipient Event of
Default; and
(c) Maximum Advances. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum Advances permitted under Section 2.1 hereof.
8.3. CONDITIONS TO EACH CAPEX ADVANCE. The agreement of Lender
to make any Capex Advance is subject to satisfaction of the following conditions
precedent: (a) receipt by Lender of (i) a copy of the invoices relating to the
Equipment being purchased or with respect to self-constructed assets, workpaper
documentation supporting the amount to be capitalized, such invoices and/or
workpaper documentation to be in an amount which would permit a Capex Advance
equal to at least $250,000 for each Capex Advance requested, (ii) evidence that
such Equipment has been shipped and is accepted by Borrower and is in good
operational condition and (iii) such other documentation and evidence that
Lender may request; and (b) after giving effect thereto, the aggregate Capex
Advances shall not exceed $5,000,000.00.
Each request for an Advance by the Borrower hereunder shall
constitute a representation and warranty by the Borrower as of the date of such
Advance that the conditions contained in this subsection 8.3 shall have been
satisfied.
IX. INFORMATION AS TO BORROWER.
The Borrower covenants and agrees that it shall, until
satisfaction in full of the Obligations and the termination of this Agreement:
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9.1 DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning
thereof, report to the Lender all matters materially affecting the value,
enforceability or collectability of any portion of the Collateral including,
without limitation, the Borrower's reclamation of repossession of, or the return
to the Borrower of a material amount of goods or claims or disputes asserted by
any Customer or other obligor. The Borrower will not, without the Lender's
consent, compromise or adjust any Receivables (or extend the time for payment
thereof) or accept any returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of the Borrower.
9.2 SCHEDULES. Deliver to the Lender on or before the
fifteenth (15th) day of each month as and for the prior month (a) accounts
receivable aging, (b) accounts payable schedules and (c) Inventory reports. In
addition, Borrower will deliver to Lender at such intervals as the Lender may
reasonably require: (i) confirmatory assignment schedules, (ii) copies of
Customer's invoices, (iii) evidence of shipment or delivery, and (iv) such
further schedules, documents and/or information regarding the Collateral as the
Lender may reasonably require including, without limitation, trial balances and
test verifications. The Lender shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary to protect its interests hereunder.
The items to be provided under this Section are to be in form reasonably
satisfactory to the Lender and executed by the Borrower and delivered to the
Lender from time to time solely for the Lender's convenience in maintaining
records of the Collateral, and the Borrower's failure to deliver any of such
items to the Lender shall not affect, terminate, modify or otherwise limit the
Lender's lien on or security interest in the Collateral.
9.3 ENVIRONMENTAL REPORTS. Furnish Lender, concurrently with
the delivery of the financial statements referred to in Sections 9.7 and 9.8,
accompanied by a certificate of Borrower signed by the President of Borrower
stating, to the best of his knowledge, that Borrower is in compliance in all
material respects with all federal, state and local laws relating to
environmental protection and control and occupational safety and health. To the
extent Borrower is not in material compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action Borrower will implement in order to achieve full compliance.
9.4 LITIGATION. Promptly notify the Lender in writing of any
litigation affecting the Borrower, whether or not the claim is covered by
insurance, and of any suit or administrative proceeding, which may materially or
adversely affect the Collateral or the Borrower's business, assets, operations,
condition or prospects (financial or otherwise).
9.5 OCCURRENCE OF DEFAULTS, ETC. Promptly notify the Lender in
writing upon the occurrence of (a) any Event of Default or Incipient Event of
Default; (b) any event, development or circumstance whereby the consolidated
financial statements most recently furnished to the Lender fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition and operating results of the Borrower as of the date of such
consolidated financial statements; (c) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Internal Revenue Code; (d) each and
every default by Borrower which might result in the acceleration of the maturity
of any Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness, the result of which would have a material adverse effect
on the Borrower; and (e) any other development in the business or affairs of
Borrower which would reasonably be expected to be materially adverse; in each
case describing the nature thereof and in the case of notification under clause
(a), (b) or (c) the action Borrower proposes to take with respect thereto.
9.6 GOVERNMENT RECEIVABLES. Notify the Lender immediately if
any of its Receivables arise out of contracts between the Borrower and the
United States, any state, or any department, agency or instrumentally of any of
them.
9.7 ANNUAL FINANCIAL STATEMENTS. Furnish the Lender within
ninety (90) days after the end of each fiscal year of ADLT, financial statements
of ADLT on a consolidated basis including statements
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of operating income, shareholder's equity, and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the
balance sheet at the end of such fiscal year, all prepared in accordance with
GAAP, and reported upon by an independent public accounting firm selected by
ADLT and reasonably satisfactory to Lender (the "ACCOUNTANTS"). The report of
such accounting firm shall be accompanied by a special report of such
accounting firm certifying that in making the examination of ADLT's
consolidated financial statements upon which such report was based either no
information came to their attention which to their knowledge constituted an
Event of Default or an Incipient Event of Default under this Agreement or, if
such information came to their attention, specifying any such default, and such
special report shall contain or have appended thereto calculations which set
forth ADLT's compliance with the requirements or restrictions imposed by
Sections 6.5, 6.6, 6.7, 6.8 and 6.9. In addition to ADLT's consolidated
financial statements, the underlying details of consolidation setting forth the
balance sheet, income statement and statement of cash flow of each entity in
the consolidated financial statements shall be provided to the Lender.
9.8 MONTHLY FINANCIAL STATEMENTS. Except as of the fiscal year
end of ADLT, furnish the Lender within forty-five (45) days after the end of
each month, an unaudited consolidated balance sheet of ADLT and unaudited
statements of income, and cash flow of ADLT on a consolidated basis reflecting
results of operations from the beginning of the fiscal year to the end of such
month and for such month, prepared in accordance with GAAP for interim financial
information and correct in all material respects, subject to normal year end
adjustments. The reports shall be accompanied by a certificate of ADLT, signed
by the President and/or Chief Financial Officer of Borrower, which shall state
whether an Event of Default as specified in Article X hereof or an Incipient
Event of Default has occurred. In addition to ADLT's unaudited consolidated
financial statements, the underlying details of consolidation setting forth the
balance sheet, income statement and statements of cash flow of each entity in
the consolidated financial statement shall be provided to Lender.
9.9 FINANCIAL AND CASH FLOW PROJECTIONS. ADLT will provide
Lender with Financial Cash Flow Protections in form and detail and at intervals
requested by Lender.
9.10 OTHER REPORTS. Furnish the Lender as soon as available,
but in any event within ten (10) days after the issuance thereof, with copies of
such financial statements and reports as ADLT shall file with the SEC.
9.11 ADDITIONAL INFORMATION. Furnish the Lender with
additional information as the Lender shall reasonably request in order
to enable Lender to determine whether the terms, covenants, provisions and
conditions of this Agreement and the Revolving Credit Note have been complied
with by Borrower including, without limitation and without the necessity of any
request by Lender, (a) copies of all environmental audits and reviews, (b) at
least thirty (30) days prior thereto, of Borrower's opening of any new office
or place of business or Borrower's closing of any existing office or place of
business, and (c) promptly upon Borrower's learning thereof, of any labor
dispute to which Borrower may become a party, any strikes or walkouts relating
to any of its plants or other facilities, and the expiration of any labor
contract to which Borrower is a party or by which Borrower is bound.
9.12 PROJECTED OPERATING BUDGET. Furnish Lender, no less than
thirty (30) days prior to the beginning of each of ADLT's fiscal years beginning
July, 1996, a month by month projected consolidated operating budget and
consolidated cash flow of ADLT for such fiscal year (including an income
statement for each month and a consolidated balance sheet as at the end of the
last month in each fiscal quarter), such projections to be accompanied by a
certificate signed by ADLT's President or Chief Financial Officer to the effect
that such projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial statements and that
such officer has no reason to question the reasonableness of any material
assumptions on which such projections were prepared.
9.13 ADDITIONAL DOCUMENTS. Execute and deliver to Lender, upon
request, such documents and agreements as Lender may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
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X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) failure by Borrower to pay any principal or interest on
the Obligations to the Lender when due, whether at maturity or by reason of
acceleration pursuant to the terms of this Agreement or by notice of intention
to prepay, or by required prepayment or failure to pay any other liabilities to
the Lender hereunder or make any other payment, fee or charge for herein when
due;
(b) any representation or warrant made or deemed made by the
Borrower is this Agreement or any Document or in any certificate, document of
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
(c) failure by Borrower no later than seven (7) days after the
date required herein, to (i) furnish financial information, or (ii) permit the
inspection of its books or records;
(d) issuance of a notice of Lien, Charge, Claim, levy
assessment, injunction or attachment against a material portion of the
Borrower's property, other than Permitted Liens, which are not released by
Borrower within thirty (30) days of its notice thereof;
(e) failure or neglect of the Borrower to perform, keep or
observe any term, provision, condition, convenant herein contained, or contained
in any other agreement or arrangement, now or hereafter entered into between
the Borrower and the Lender, other than any payment obligation or a failure or
neglect of Borrower to perform, keep or observe any term provision, condition or
convenant contained in Section 6.5, 6.6, 6.7, 6.8, 6.9, 7.6, and 7.7, which is
not cured within fifteen (15) days from the occurrence of such failure or
neglect.
(f) any judgment is rendered or judgment liens filed against
the Borrower for an amount in excess of $250,000.00, individually or in the
aggregate, which within (30) days of such rendering or filing is not either
satisfied, staying or discharged of record;
(g) Borrower or any Affiliate or any Subsidiary shall (i)
apply for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts, as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, within sixty (60) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (viii) take any action for the purpose of effecting any of the
foregoing;
(h) a default of the obligations of Borrower under any other
agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
(i) any Change of Ownership;
(j) intentionally deleted;
(k) any material provision of this Agreement shall, for any
reason, cease to be valid and binding on Borrower, or the Borrower shall so
claim in writing to Lender; or
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(l) any change in the management of Borrower the result of
which is that the day to day affairs of Borrower are no longer managed by the
Original Owner.
XI. LENDER'S RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default pursuant to Article X(g) all Obligations shall be immediately due and
payable and this Agreement shall be deemed terminated; and, upon the occurrence
of any of the other Events of Default and at any time thereafter (such default
not having previously been cured), at the option of Lender all Obligations shall
be immediately due and payable and the Lender shall have the right to terminate
this Agreement. In any such event, the Lender shall have the right to exercise
any and all other rights and remedies provided for herein, under the Uniform
Commercial Code and at law or equity generally, including, without limitation,
the right to foreclose the security interests granted herein and to realize upon
any Collateral by any available judicial procedure and/or to take possession of
and sell any or all of the Collateral with or without judicial process. The
Lender may enter any of the Borrower's premises or other premises without legal
process and without incurring liability to the Borrower therefore, and the
Lender may thereupon, or at any time thereafter, in its discretion without
notice or demand, take the Collateral and remove the same to such place as the
Lender may deem advisable and the Lender may require the Borrower to make the
Collateral available to the Lender at a convenient place. With or without having
the Collateral at the time or place of sale, the Lender may sell the Collateral,
or any part thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as the Lender may elect. Except as to that part of
the Collateral which is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Lender shall give the
Borrower reasonable notification of such sale or sales, it being agreed that in
all events written notice mailed to the Borrower at least five (5) days prior to
such sale or sales is reasonable notification. At any public sale the Lender may
bid for and become the purchaser, and Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and such right and
equity are hereby expressly waived and released by the Borrower. In connection
with the exercise of the foregoing remedies, the Lender is granted permission to
use all the Borrower's trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied
first to the reasonable costs, expenses and attorneys' fees and expenses
incurred by Lender for collection and for acquisition, completion, protection,
removal, storage, sale and delivery of the Collateral; secondly to interest due
upon any of the Obligations; and thirdly to the principal of the Obligations. If
any deficiency shall arise, Borrower shall remain liable to Lender therefor.
11.2 LENDER'S DISCRETION. The Lender shall have the right in
its sole discretion to determine which rights, Liens, security interests or
remedies the Lender may at any time pursue, relinquish, subordinate, or modify
or to take any other action with respect thereto and such determination will not
in any way modify or affect any of the Lender's rights hereunder.
11.3 SETOFF. In addition to any other rights which the Lender
may have under applicable law, upon the occurrence of any Event of Default
hereunder, the Lender shall have a right to apply any of the Borrower's property
held by the Lender or by the Bank to reduce the Obligations.
11.4 RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies, all of which shall be cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 WAIVER OF NOTICE. The Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments,
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notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
expressly provided for herein.
12.2 DELAY. No delay or omission on the Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE: AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 TERM. This Agreement, which shall inure to the benefit of
and shall be binding upon the respective successors and permitted assigns of
each of the Borrower and the Lender, shall become effective on the date hereof
and shall continue in full force and effect until the anniversary of this
Agreement in the year 1999 (the "TERM") unless sooner terminated as herein
provided. The Term shall be automatically extended for successive periods of one
(1) year each unless terminated by either party at the end of such initial Term
or any successive Term by giving the other party ninety (90) days prior written
notice. The Borrower may terminate this Agreement at any time upon ninety (90)
days' prior written notice ("TERMINATION DATE") upon payment in full of the
Obligations; provided however that Borrower pays an early termination fee in an
amount equal to one quarter of one (.25%) percent of the product of (a)
$25,000,000.00 times (b) the number of years (including partial years) remaining
in the Term.
13.2 TERMINATION. The termination of the Agreement shall not
affect any of the Borrower's or the Lender's rights, or any of the Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to the Lender hereunder and the financing statements filed hereunder
shall continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that the Borrower's account may from time to time be
temporarily in a zero or credit position, until all of the Obligations of the
Borrower have been paid or performed in full after the termination of this
Agreement or the Borrower has furnished the Lender with an indemnification
satisfactory to the Lender with respect thereto. Accordingly, Borrower waives
any rights which it may have under Section 9-404(1) of the Uniform Commercial
Code to demand the filing of termination statement with respect to the
Collateral, and Lender shall not be required to send such termination statements
to Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated and accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are repaid or performed in full
otherwise provided.
XIV. MISCELLANEOUS.
14.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to its conflict of laws rules). Any judicial
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proceeding brought by or against the Borrower with respect to any of the
Obligations, this Agreement or any related agreement may be brought in any court
of competent jurisdiction in the State of New York, United States of America,
and, by execution and delivery of this Agreement, the Borrower accepts for
itself and in connection with its properties, generally and unconditionally the
non-exclusive jurisdiction of he aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of the Lender to bring proceedings against the
Borrower in the courts of any other jurisdiction. Borrower waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum
non convenience. Any judicial proceedings by the Borrower against the Lender
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in a federal or state court located in the City of New York,
State of New York.
14.2 ENTIRE UNDERSTANDING. This Agreement and the documents
executed concurrently herewith contain the entire understanding between the
Borrower and the Lender and supersedes all prior agreements and understandings,
if any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no
force and effect unless in writing, signed by the Borrower's and Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Borrower
acknowledges that it has been advised by counsel in connection the execution of
this Agreement and Other Documents and is not relying upon oral representations
or statements inconsistent with the terms and provisions of this Agreement.
14.3 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lender, all future holders of the Revolving Credit
Note and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Lender.
(b) Lender may sell, assign or transfer any part of its rights
under this Agreement and the Revolving Credit Note and all related agreements,
instruments and documents provided Borrower is given notice of such sale as soon
as practicable and the transferee agrees to perform the obligations of the
transferor; provided, that Lender shall be and remain the Agent bank under any
participation; provided, further, that the Lender may sell, assign or transfer
all of its rights hereunder as a result of a change of control or a merger or
combination with its parent. In addition to, and subject to, the foregoing,
Borrower acknowledges that in the regular course of commercial banking business
the Lender may at any time and from time to time sell participating interests in
the Advances to other financial institutions (each such transferee or purchaser
of a participating interest, a "TRANSFEREE"). Each Transferee may exercise all
rights of payment (including without limitation rights of set-off) with respect
to the portion of such Advances held by it or other Obligations payable
hereunder as fully as if such Transferee were the direct holder thereof.
Borrower hereby grants to any Transferee a continuing security interest in any
deposits, Moneys or other property actually or constructively held by such
Transferee as security for the Transferee's interest in the Advances.
14.4 APPLICATION OF PAYMENTS. Lender shall have the continuing
and exclusive right to apply or reverse and reapply any and all proceeds of
Collateral to any portion of the Obligations. To the extend that Borrower makes
a payment or Lender receives any payment or proceeds of the Collateral for
Borrower's benefit, which are subsequently invalidated, declared to the
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Lender.
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14.5 INDEMNITY. Borrower shall indemnify Lender from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Lender in any
litigation, fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Lender in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or instrumentality or any
other Person with respect to any aspect of, or any transaction contemplated by,
or referred to in, or any matter related to, this Agreement, whether or not the
Lender is a party thereto, except to the extent that any of the foregoing arises
out of the gross negligence or willful misconduct of Lender.
14.6 NOTICE. Any notice or request hereunder may be given to
Borrower to Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice or request hereunder shall
be given by (a) hand delivery, (b) registered or certified mail, return receipt
requested, (c) telex or telegram, subsequently confirmed by registered or
certified mail, or (d) telefax to the number set out below (or such other number
as may hereafter be specified in a notice designated as a notice of change of
address) with telephone communication to a duly authorized officer of the
recipient confirming its receipt as subsequently confirmed by registered or
certified mail. Notices and requests shall, in the case of those by mail or
telegram be deemed to have been given when deposited in the mail, or delivered
to the telegraph office addresses as provided in this Section.
(A) If to Lender, at: BNY Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, V.P.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(6) If to Borrower. at: Advanced Lighting Technologies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Phone: 216/▇▇▇-▇▇▇▇
FAX: 216/▇▇▇-▇▇▇▇
14.7 SURVIVABILITY. If any or part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable laws or
regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited or invalid, but the remainder hereof shall not be
invalidated thereby and shall be given effect so far as possible.
14.8 EXPENSES. All costs and expenses including, without
limitation reasonable attorneys' fees incurred (a) by the Lender in all efforts
made to enforce payment of any Obligation or effect collection of any
Collateral, or (b) incurred in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, or (c)
the instituting, maintaining, preserving, enforcing and foreclosing of or on the
Lender's security interest or Lien in any of the Collateral, whether through
judicial proceedings or otherwise, or (d) in defending or prosecuting any
actions or proceedings arising out of or relating to the Lender's transactions
with the Borrower, or (e) any advice given to Lender with respect to its rights
and obligations under this Agreement and all related agreements, may be charged
to the Borrower's account and shall be part of the Obligations.
14.9 INJUNCTIVE RELIEF. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lender; therefore, Lender if Lender so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.
-39-
40
14.10 CAPTIONS. The captions at various places in this
Agreement are intended for convenience only and do not constitute and shall not
be interpreted as part of this Agreement.
14.11 COUNTERPARTS. The Agreement may be executed in one or
more counterparts, each of which taken together shall constitute one and the
same instrument.
Each of the parties has signed this Agreement as of the 25th
day of March, 1996.
ADVANCED LIGHTING TECHNOLOGIES, INC. BNY FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------- ----------------------------
Its: Sec. Its: President
---------------------------------- ----------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
APL ENGINEERED MATERIALS, INC. BNY FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------- ----------------------------
Its: Sec. Its: Vice President
---------------------------------- ----------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BIO LIGHT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BRIGHT IDEAS ADVERTISING AND DESIGN, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ENERGY EFFICIENT PRODUCTS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-40-
41
ENERGY-WISE LIGHTING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HID DIRECT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HID RECYCLING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HIGH INTENSITY TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE LIGHT SOURCE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
42
LIGHTING RESOURCES INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
METAL HALIDE CONTROLS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
METAL HALIDE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MICROSUN TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPECIALTY DISCHARGE LIGHTING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
43
VENTURE LIGHTING INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Its: Sec.
----------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
44
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
212-408-7000
February 7, 1997
Advanced Lighting Technologies, Inc.,
As Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen/Ladies:
Reference is made to the Revolving Credit and Security Agreement between us
dated March 25, 1996, as supplemented and amended (the "Credit Agreement").
As you are aware, we had not completed a UCC search as of today's date when
we funded the $8,400,000 Term Loan. The Term Loan was funded with the
understanding that if our searches revealed facts which would disclose that the
equipment subject to our first priority security interest, is valued less than
$10,557,640.00 (the amount of the appraisal as stated in the equipment appraisal
dated July 29, 1996 by ▇▇▇▇▇ & Company), you will agree to provide us with
additional collateral acceptable in all respects to us, as determined in our
sole discretion, in an amount of at least equal to the amount of the short fall
as disclosed by the search. In the event you shall not provide us with such
additional collateral, we will reduce the amount of your Working Capital
Advances under the Credit Agreement.
This will also confirm that the term loan which we funded as of today's
date will replace in its entirety the "Capex Advances" (as such term is defined
in the Credit Agreement).
Kindly indicate your agreement to the foregoing by
45
signing a copy of this letter and returning it to our office as soon as
possible.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: AVP
ACCEPTED AND AGREED TO:
ADVANCED LIGHTING TECHNOLOGIES, INC., AS
AGENT FOR THE BORROWERS UNDER THE CREDIT
AGREEMENT
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Title: Executive Vice President
46
TERM NOTE
---------
$8,400,000 New York, New York
February 6,1997
-------
FOR VALUE RECEIVED, Advanced Lighting Technologies, Inc. ("ALT"), APL
Engineered Materials, Inc., Bio Light, Inc., Bright Ideas Advertising and
Design, Inc., Energy Efficient Products, Inc., Energy-Wise Lighting, Inc., HID
Direct, Inc., HID Recycling, Inc., High Intensity Technologies, Inc., The Light
Source, Inc., Lighting Resources International, Inc., Metal Halide Controls,
Inc., Metal Halide Technologies, Inc., MICROSUN Technologies, Inc., Specialty
Discharge Lighting, Inc., Venture Lighting International, Inc. and Advanced
Cable Lite Corporation (each individually and collectively hereinafter referred
to as the "Borrower") jointly and severally hereby promise to pay to the order
of BNY FINANCIAL CORPORATION (the "Lender"), at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or such other place as the Lender may from time to time
designate), the principal sum of Eight Million Four Hundred Thousand Dollars
($8,400,000), in lawful money of the United States, in twenty-five (25)
consecutive equal monthly installments, each in the amount of $100,000.00
commencing March 1, 1997 and a twenty-sixth and final installment of
$5,900,000.00 which shall be due on March 24, 1999. The entire unpaid principal
balance hereof, and accrued interest thereon, shall be payable on March 24,
1999. The Lender's computation of amounts outstanding hereunder from time to
time shall be, as between the Lender and the Borrower, final, conclusive and
binding for all purposes, absent manifest error.
The Borrower agrees to pay interest on the first day of each month
hereafter occurring, at the same place, on the principal amount of this Note
from time to time outstanding, at the Alternate Base Rate in effect during the
previous month, as such term is defined in the Revolving Credit and Security
Agreement between the Borrower and the Lender, bearing the effective
date of March 25, 1996, which Agreement, together with all amendments thereof
and supplements thereto, is hereinafter called the "Agreement." All payments
received hereunder shall be applied first to interest due and the remainder to
principal. Notwithstanding anything to the contrary contained herein, in no
event shall the Borrower be required to pay interest hereunder at a rate in
excess of the maximum rate permitted by applicable law.
The Borrower shall have the right to prepay this Note, at any time, in
whole or in part, without premium or penalty, upon ten (10) business days prior
written notice. Each partial prepayment shall be applied first to accrued
interest and thereafter to installments of principal in the inverse order of
their maturity.
The entire unpaid principal balance hereof together with all interest
accrued thereon shall immediately become due and payable in full, without notice
or demand, in the event of: (i) default in the payment of any installment of
principal or of interest hereunder, or any renewal or extension hereof; or (ii)
default by the Borrower under the Agreement, or under any other agreement
between the Borrower and the Lender or executed by the Borrower in favor of the
Lender; or (iii) default by the Borrower or any other signatory under any
additional instruments or documents evidencing or granting collateral security
for, or guaranteeing any of the Obligations (as defined in the Agreement) of the
Borrower to the Lender (all such additional instruments and documents being
hereinafter collectively referred to as the "Collateral Documents"); or (iv)
termination of the Agreement for any reason or termination of any of the
Collateral Documents without the consent of the Lender; or (v) default by any
endorser hereof under any agreement between the Lender and such endorser; or
(vi) any action being taken by or against any endorser hereof or any guarantor
of the Obligations, which, if taken by or against the Borrower, would constitute
a default under the Agreement. The failure to assert this right shall not be
deemed a waiver thereof.
After maturity (by acceleration or otherwise), this Note shall continue to
bear interest at the rate provided for herein until it is paid in full. If this
Note is placed with an attorney for collection, the
47
Borrower agrees to pay all costs and expenses of collection, including
reasonable attorneys' fees, which shall be added to the principal amount due
hereunder.
The holder may extend the time of payment of this Note, postpone the
enforcement hereof, grant any other indulgences and/or add or release any
collateral for the Obligations of any party primarily or secondarily liable
hereon without affecting or diminishing the holder's right or recourse against
the Borrower and endorsers of this Note, which right is hereby expressly
reserved.
This Note evidences an Obligation and is secured by, among other things,
the security interests and liens granted to the Lender under the Agreement and
the Collateral Documents, including, without limitation, the security interests
granted to the Lender pursuant to the Agreement.
The Note evidences a borrowing under the Agreement and under the Collateral
Documents and, subject to the specific terms hereof, is entitled to the benefits
of the Agreement and the Collateral Documents and is subject to all of the terms
and conditions thereof provided, however, that no payments on, or other proceeds
of, accounts receivable of the Borrower shall be applied to reduction of the
indebtedness evidenced by this Note until all other Obligations have been paid
in full.
The Borrower hereby waives diligence, demand, presentment, protest and
notice of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance or other indulgence,
without notice. The Borrower agrees to pay all amounts of principal, interest
and fees under this Note without offset, deduction, claim, counterclaim, defense
or recoupment, all of which, are hereby waived by the Borrower.
Borrower and Lender hereby expressly waive any right to trial by jury of
any claim, demand, action or cause of action (a) arising under this Note or any
other instrument, document or agreement executed or delivered in connection
herewith, or (b) in any way connected with or related or incidental to the
dealings of the parties hereto or any of them with respect to this Note or any
other instrument, document or agreement executed or delivered in connection
herewith, or the transactions related hereto or thereto in each case whether now
existing or hereafter arising, and whether sounding in contract or tort or
otherwise; and each party hereby agrees and consents that any such claim,
demand, action or cause of action shall be decided by court trial without a
jury, and that any party to this agreement may file an original counterpart or a
copy of this section with any court as written evidence of the consents of the
parties hereto to the waiver of their right to trial by jury.
This Note may not be changed, modified or terminated orally, but only by an
agreement in writing signed by the Borrower or any successor or assign of the
Borrower, and the Lender or any holder hereof.
In the event the Lender or any holder hereof shall retain or engage an
attorney to collect, enforce or protect its interests with respect to this Note,
the Borrower shall pay all of the reasonable costs and expenses of such
collection, enforcement or protection, including reasonable attorneys' fees,
whether or not suit is instituted.
This Note shall be governed by and construed in accordance with the laws of
the State of New York, and shall be binding upon the successors and assigns of
the Borrower and inure to the benefit of the Lender and its successors,
endorsees and assigns. If any term or provision of this Note shall be held
48
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary
--------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
APL ENGINEERED MATERIALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary
--------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BIO LIGHT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BRIGHT IDEAS ADVERTISING AND DESIGN, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ENERGY EFFICIENT PRODUCTS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary
--------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
49
ENERGY-WISE LIGHTING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HID DIRECT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HID RECYCLING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HIGH INTENSITY TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary
--------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE LIGHT SOURCE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
50
LIGHTING RESOURCES INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary
--------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
METAL HALIDE CONTROLS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
METAL HALIDE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MICROSUN TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
---------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPECIALTY DISCHARGE LIGHTING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
51
VENTURE LIGHTING INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVANCED CABLE LITE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Its: Secretary/Treasurer
--------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
52
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
, 1997
-------------------
Advanced Lighting Technologies, Inc.,
as Agent
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen/Ladies:
Reference is made to the Revolving Credit and Security Agreement between us
dated March 25, 1996, as supplemented and amended (the "Credit Agreement").
It is hereby agreed that the Credit Agreement shall be amended so that
clause (d) of the definition of "Collateral" shall read in its entirety as
"(d) all Equipment;".
Except as hereinabove set forth, the Credit Agreement shall remain in full
force and effect in accordance with its terms.
If you are in agreement with the foregoing, please so indicate by signing
and returning the enclosed copy of this letter.
Very truly yours,
BNY FINANCIAL CORPORATION
By:
--------------------------------
Title:
AGREED:
ADVANCED LIGHTING TECHNOLOGIES, INC.
As Agent for the Borrowers under the
Credit Agreement
By: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Title: Secretary
53
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
770-698-5100
February 4, 1997
Advanced Lighting Technologies, Inc.
as Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
This letter shall confirm that pursuant to your request, we consent to
the following actions being taken by you:
1. The acquisition by you or your newly formed affiliate(s) of the stock
and assets of Ballastronix, Inc., a Nova Scotia corporation located at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ pursuant to the terms outlined in the
Memorandum dated January 22, 1997; and
2. The guaranty by Advanced Lighting Technologies, Inc. of the obligations
of its affiliate, Lighting Resources Holdings Limited ("LRHL"), in connection
with a a contract by and between LRHL and Asian Lighting Resources (India)
Limited with regard to the sale of lamp manufacturing equipment, which
guaranty will extend for a period of twelve months after receipt by the parties
of the necessary governmental consents and approvals regarding such sale. The
guaranty has been required by the Industrial Development Bank of India.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/
--------------------------
Title Vice President
54
ASSUMPTION AGREEMENT
WHEREAS, BNY Financial Corporation a New York corporation with its
principal office located at 1290 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ ("Lender") presently provides financing to Advanced Lighting
Technologies, Inc. ("ADLT") as agent for the Borrowers under the Credit
Agreement, pursuant to among other documents a Revolving Credit and Security
Agreement dated March 25, 1996, as supplemented and amended ("Credit
Agreement"); (All capitalized terms not otherwise defined herein shall have
such meaning as are ascribed to them the Credit Agreement.) and
WHEREAS, Advanced Cable Lite Corporation, an Ohio corporation, (the "New
Borrower") is a newly formed subsidiary of ADLT and desires to become a
borrower under the Credit Agreement and assume the benefits and obligations now
or hereafter existing thereunder; and
WHEREAS, ADLT is desirous of and consents to the New Borrower being made a
part of the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
here acknowledged the Lender, ADLT and the New Borrower each hereby agree as
follows:
-1-
55
1. The New Borrower hereby assumes all of the now owed and hereafter
arising Obligations, and hereby assumes all of the rights and duties, grants to
Lender the security interest in all of the Collateral, affirms each and every
representation and warranty, under the Credit Agreement and the Other
Documents, in the same manner and to the same extent as if it were an original
signatory with each of the borrowers of each such document; the New Borrower
confirms that ADLT shall act as its agent in the same manner and to the same
extent as set forth in the Credit Agreement including without limitation as set
forth in Section 2.3 thereof.
2. The New Borrower assumes all existing Obligations and shall be jointly
and severally liable with ADLT and each of the Borrowers therefor, and the New
Borrower and ADLT and each of the Borrowers shall be fully and jointly and
severally obligated and liable for all hereafter arising Obligations.
This Agreement shall be interpreted under the laws of the State of New York
and each of the undersigned waive any of the rights they may have to a jury
trial in any judicial proceedings hereunder.
IN WITNESS WHEREOF, ADLT and the New Borrower have
-2-
56
executed this Agreement this 30th day of January, 1997.
ADVANCED LIGHTING TECHNOLOGIES, INC., as
Agent for the Borrowers under the Credit
Agreement
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Title:
NEW BORROWER:
ADVANCED CABLE LITE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Title:
-3-
57
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
212-408-7000
January 30, 1997
Advanced Lighting Technologies, Inc.,
as Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Reference is made to the Revolving Credit and Security Agreement between us
dated March 25, 1996 (the "Agreement"). All capitalized terms not otherwise
defined herein shall have such meaning as set forth in the Agreement.
This letter shall serve to confirm that the Agreement is amended in the
following manner:
1. Upon the execution of the Assumption Agreement executed
contemporaneously herewith Advanced Cable Lite Corporation shall be
added as a Borrower under the Agreement and its name shall be inserted
as such in the first paragraph of the Agreement and likewise inserted
in the definition of "Borrower" appearing on page 2 of the Agreement.
2. The following shall be added to Exhibit 4.5 of the Agreement:
Advanced Cable Lite Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. Exhibit 5.2 of the Agreement shall be amended to reflect that Advanced
Cable Lite Corporation is qualified to do business in the State of
Ohio.
4. Exhibit 5.4 of the Agreement shall be amended to reflect that Advanced
Cable Lite Corporation's Federal Tax I.D. number is ▇▇-▇▇▇▇▇▇▇ LF.
5. Section 5.6 of the Agreement shall be amended to add the name Advanced
Cable Lite Corporation.
58
This letter shall also serve to confirm that pursuant to your request we
consent to the acquisition by Advanced Cable Lite Corporation of the assets of
Cable Lite Corporation pursuant to the Cable Lite Corporation Agreement and
Plan of Reorganization dated December 23, 1996.
Except as hereby or heretofore specifically modified or amended all of the
terms and provisions of the Agreement shall continue to remain in full force and
effect in accordance with the original terms.
If the foregoing correctly sets forth the Agreement between us, please
execute a copy of this letter in the space provided below and return a copy to
our office.
Very truly yours,
BNY FINANCIAL CORPORATION
By:
-----------------------
Title:
READ & AGREED TO:
ADVANCED LIGHTING TECHNOLOGIES
INC., AS AGENT FOR THE BORROWERS
UNDER THE AGREEMENT
By: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Title:
READ & AGREED TO:
ADVANCED CABLE LITE CORPORATION
By: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Title:
59
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
212-408-7000
May 29, 1997
Advanced Lighting Technologies, Inc., as Agent
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
Reference is made to the Revolving Credit and Security Agreement between us
dated March 25, 1996 as supplemented and amended (the "Credit Agreement"). All
capitalized terms not otherwise defined herein shall have such meaning as are
set forth in the Credit Agreement.
Without in any way limiting any discretionary rights we may have under the
Credit Agreement we pursuant to your request we hereby agree to provide you with
a discretionary over-formula Advance in excess of the Advance Rates under the
Credit Agreement in an amount of up to $7,400,000.00 for a period of 90 days
from the date hereof, for the purpose of providing you with the necessary
financing on a short term basis to acquire ▇.▇. ▇▇▇▇▇ & Co., Ltd. a United
Kingdom corporation.
In consideration of our providing you with the accommodation described
above, you agree to pay us a facility fee of $100,000.00, which fee shall be in
addition to any interest (including without limitation the Overadvance Rate),
fees or charges, otherwise payable by you to us under the Credit Agreement.
Furthermore, you hereby agree that you shall cause us to be provided with
the unconditional guarantees of Venture Lighting UK and ▇.▇. ▇▇▇▇▇ & Co., Ltd.,
and we shall be provided with a first and prior security interest and
60
pledge of the assets of such companies to secure your Obligations. Such
guarantees and pledge of assets shall be provided to us in form and substance
satisfactory to us as promptly as possible.
If the foregoing correctly sets forth the agreement between us, please
execute a copy of this letter in the space provided below and return a fully
executed copy of this letter to our offices.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/
---------------------------------
Title: SEVP
READ & AGREED TO:
Advanced Lighting Technologies, Inc.
APL Engineered Materials, Inc.
BIO Light, Inc.
Bright Ideas Advertising and Design, Inc.
Energy Efficient Products, Inc.
Energy-Wise Lighting, Inc.
HID Direct, Inc.
HID Recycling, Inc.
High Intensity Technologies, Inc.
The Light Source, Inc.
Lighting Resources International, Inc.
Metal Halide Controls, Inc.
Metal Halide Technologies, Inc.
MICROSUN Technologies
Specialty Discharge Lighting, Inc.
Venture Lighting International, Inc.
Advanced Cable Lite Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
EVP
▇▇▇▇▇ ▇. ▇▇▇▇