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EXHIBIT 10.7
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LOAN AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 29, 2000
AMONG
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
EDAC TECHNOLOGIES CORPORATION
AND
APEX MACHINE TOOL COMPANY, INC.
AS BORROWERS
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INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrowers' Addresses for Notices
Schedule C - Letters of Credit (Not Used)
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Schedule H - Projections
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.3) - Defaults
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.9) - Taxes
Disclosure Schedule (3.11) - ERISA
Disclosure Schedule (3.12) - Litigation
Disclosure Schedule (3.13) - Intellectual Property
Disclosure Schedule (3.15) - Environmental Matters
Disclosure Schedule (3.16) - Insurance
Disclosure Schedule (3.18) - Contracts (Offset Risk)
Disclosure Schedule (5(b)) - Indebtedness
Disclosure Schedule (5(e)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Disclosure Schedule (6.1(a)) - Excluded Real Property
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit C-1 - Inventory Rollforward and Reconciliation
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G-1 - Form of Term Note A-1
Exhibit G-2 - Form of Term Note A-2
Exhibit G-3 - Form of Term Note B
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
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GE Capital
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
REVOLVING CREDIT LOAN
Maximum Amount: $8,000,000
Term: 3 years
Revolving Credit Rate: Index Rate plus 3.75%, subject to adjustment
Letter of Credit Subfacility: n/a
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Borrowing Base: 85% of the value (as determined by Lender) of each
Borrower's Eligible Accounts; provided, that Lender shall
reduce the foregoing percentage by one percentage point for
each percentage point that the dilution of such Borrower's
Accounts (calculated by Lender as the average dilution over
the most recent three months) exceeds 5% plus the lesser of
(i) $ 4,000,000, (ii) the sum of (A) 50% of the value of
each Borrower's Eligible Inventory consisting of finished
goods and raw materials and (B) the lesser of (1) $1,000,000
or (2) 50% of the value of each Borrower's Eligible
Inventory consisting of work in progress or (iii) 85% of the
orderly liquidation value of each Borrower's Eligible
Inventory as set forth in the most recent appraisal prepared
by an independent appraisal firm acceptable to Lender, in
each case (except as otherwise provided) as determined by
Lender, valued on a first-in, first-out basis (at the lower
of cost or market).
TERM LOAN A-1
Original Principal Amount: $4,279,000
Term: 3 years
Amortization: Equal monthly principal installments of $71,317 payable
on the first day of each month, with a Balloon Payment
on the Commitment Termination Date.
Term Loan A Rate: Index Rate plus 4.00%, subject to adjustment
TERM LOAN A-2
Original Principal Amount: $3,085,000
Term: 3 years
Amortization: Equal monthly principal installments of $51,417 payable
on the first day of each month, with a Balloon Payment
on the Commitment Termination Date.
Term Loan A Rate: Index Rate plus 4.00%, subject to adjustment
TERM LOAN B
Original Principal Amount: $2,000,000 to be funded upon satisfaction of
the Mortgage Conditions
Term: Co-terminus with Revolving Credit Loan and
Term Loan A
Amortization: Equal monthly principal installments of $16,667 payable
on the first day of each month, with a Balloon Payment
on the Commitment Termination Date.
Term Loan B Rate: Index Rate plus 4.25%, subject to adjustment
FEES
Commitment Fee: $94,500
Closing Fee: $62,000
Collateral Monitoring Fee: $20,000 per annum
Unused Line Fee: 0.25% per annum
Letter of Credit Fee: 2% per annum
Prepayment Fee: 3% in year one; 2% in year two; and 1% in
year three.
THE LOANS DESCRIBED GENERALLY HERE ARE ESTABLISHED AND GOVERNED BY THE TERMS AND
CONDITIONS SET FORTH BELOW IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND
IF THERE IS ANY CONFLICT BETWEEN THIS GENERAL DESCRIPTION AND THE EXPRESS TERMS
AND CONDITIONS BELOW OR ELSEWHERE IN THE LOAN DOCUMENTS, SUCH OTHER EXPRESS
TERMS AND CONDITIONS SHALL CONTROL.
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This LOAN AND SECURITY AGREEMENT is dated as of September 29, 2000, and agreed
to by and among EDAC Technologies Corporation, a Wisconsin corporation ("Leading
Borrower"), and Apex Machine Tool Company, Inc., a Connecticut corporation
("Second Borrower"), (Leading Borrower and Second Borrower being collectively
referred to as "Borrowers" and each a "Borrower"), any other Credit Party
executing this Agreement, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("Lender").
RECITALS
A. Borrowers desire to obtain the Loans and other financial accommodations
from Lender and Lender is willing to provide the Loans and accommodations all in
accordance with the terms of this Agreement.
B. Capitalized terms used herein shall have the meanings assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of construction set forth in Schedule A shall govern. All schedules,
attachments, addenda and exhibits hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, constitute but a single agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1. Loans. (a) Subject to the terms and conditions of this Agreement, from
the Closing Date and until the Commitment Termination Date (i) Lender agrees (A)
to make available advances (each, a "Revolving Credit Advance") and (B) to incur
Letter of Credit Obligations, in an aggregate outstanding amount for any
Borrower not to exceed the Borrowing Availability of such Borrower, and (ii) any
Borrower may at the request of Leading Borrower as agent for such Borrower from
time to time borrow, repay and reborrow, and may cause Lender to incur Letter of
Credit Obligations, under this Section 1.1.
(b) Leading Borrower, as agent for each Borrower, shall request each
Revolving Credit Advance by written notice to Lender substantially in the form
of Exhibit A (each a "Notice of Revolving Credit Advance") given no later than
11:00 A.M. (New York City time) on the Business Day of the proposed advance.
Lender shall be fully protected under this Agreement in relying upon, and shall
be entitled to rely upon, (i) any Notice of Revolving Credit Advance believed by
Lender to be genuine, and (ii) the assumption that the Persons making electronic
requests or executing and delivering a Notice of Revolving Credit Advance were
duly authorized, unless the responsible individual acting thereon for Lender
shall have actual knowledge to the contrary. As an accommodation to Borrowers,
Lender may permit telephonic, electronic, or facsimile requests for a Revolving
Credit Advance and electronic or facsimile transmittal of instructions,
authorizations, agreements or reports to Lender by any Borrower. Unless
Borrowers specifically direct Lender in writing not to accept or act upon
telephonic, facsimile or electronic communications from any Borrower, Lender
shall have no liability to any Borrower for any loss or damage suffered by any
Borrower as a result of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically, by facsimile or electronically and purporting
to have been sent to Lender by any Borrower and Lender shall have no duty to
verify the origin of any such communication or the identity or authority of the
Person sending it. The Revolving Credit Loan shall be evidenced by, and be
repayable in accordance with the terms of, the Revolving Credit Note and this
Agreement
(c) In making any Loan hereunder Lender shall be entitled to rely upon
the most recent Borrowing Base Certificate delivered to Lender by such Borrower
and other information available to Lender. Lender shall be under no obligation
to make any further Revolving Credit Advance to any Borrower or incur any other
Obligation if any Borrower shall have failed to deliver a Borrowing Base
Certificate to Lender by the time specified in Section 4.1(b).
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(d) Subject to the terms and conditions of this Agreement, Lender
agrees to make the Term Loan A-1 to Leading Borrower on the Closing Date in the
original principal amount specified in the Term Note A-1. The Term Loan A-1
shall be evidenced by, and be repayable in accordance with the terms of, the
Term Note A-1 and this Agreement.
(e) Subject to the terms and conditions of this Agreement, Lender
agrees to make Term Loan A-2 to Second Borrower on the Closing Date in the
original principal amount specified in the Term Note A-2. The Term Loan A-2
shall be evidenced by and be repayable in accordance with the terms of Term Note
A-2 and this Agreement.
(f) Subject to the terms and conditions of this Agreement and
satisfaction of the Mortgage Conditions, Lender agrees to make the Term Loan B
to Leading Borrower on the Closing Date in the original principal amount
specified in the Term Note B. The Term Loan B shall be evidenced by, and be
repayable in accordance with the terms of the Term Note B and this Agreement.
(g) Notwithstanding anything to the contrary contained in this
Agreement, including Schedule C, Lender shall have no obligations to incur
Letter of Credit Obligations for the account of Borrower.
1.2. Term and Prepayment. (a) Upon the Commitment Termination Date the
obligation of Lender to make Revolving Credit Advances and extend other credit
hereunder shall immediately terminate and Borrowers shall pay to Lender in full,
in cash: (i) all outstanding Revolving Credit Advances and all accrued but
unpaid interest thereon; (ii) an amount sufficient to enable Lender to hold cash
collateral as specified in Schedule C; (iii) all principal and accrued but
unpaid interest on the Term Loans; and (iv) all other non-contingent Obligations
due to or incurred by Lender.
(b) If the Revolving Credit Loan attributable to any Borrower shall at
any time exceed such Borrower's Borrowing Availability, then such Borrower shall
immediately repay the Revolving Credit Loan in the amount of such excess.
(c) Each Borrower shall have the right, at any time upon 30 days prior
written notice to Lender to (i) terminate voluntarily Borrowers' right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations, (ii) prepay all or a portion
of any Term Loan, provided that any prepayment of less than all of the
outstanding balance of any Term Loan shall be applied to the remaining
installments of such Term Loan in the inverse order of their maturity, and (iii)
prepay all of the Obligations. The effective date of termination of the
Revolving Credit Loan and any Term Loan specified in such notice shall be the
Commitment Termination Date. If any Borrower exercises the right of termination
and prepayment, or if Lender's obligation to make Loans is terminated for any
reason prior to the Stated Expiry Date then in effect (including as a result of
the occurrence of a Default), Borrowers shall pay to Lender the applicable
Prepayment Fee.
1.3. Use of Proceeds. Borrowers shall use the proceeds of the Loans to
refinance on the Closing Date certain outstanding Indebtedness as provided in
Section 2.1(b) and for working capital and other general corporate purposes.
1.4. Single Loan. The Loans and all of the other Obligations of any Borrower
to Lender shall constitute one general obligation of such Borrower secured by
all of the Collateral.
1.5. Interest (a) Each Borrower shall pay interest to Lender on the aggregate
outstanding Revolving Credit Advances attributable to such Borrower at a
floating rate equal to the Index Rate plus the Applicable Margin for Revolving
Credit Advances (the "Revolving Credit Rate") and (ii) on the outstanding
balance of the Term Loan A attributable to such Borrower at a floating rate
equal to the Index Rate plus the Applicable Margin for Term Loan A (the "Term
Loan A Rate"). Leading Borrower shall pay interest to Lender on the outstanding
balance of the Term Loan B at a floating rate equal to the Index Rate plus the
Applicable Margin for Term Loan B (the "Term Loan B Rate"). All computations of
interest, and all calculations of the Letter of Credit Fee, shall be made by
Lender on the basis of a three hundred sixty (360) day year, in each case for
the actual number of days occurring in the period for which such interest or fee
is payable. Each determination by Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error. In no event will
Lender charge interest at a rate that
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exceeds the highest rate of interest permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
(b) Interest shall be payable on the outstanding Revolving Credit
Advances and balance of the Term Loans (i) in arrears for the preceding calendar
month on the first day of each calendar month, (ii) on the Commitment
Termination Date, and (iii) if any interest accrues or remains payable after the
Commitment Termination Date, upon demand by Lender.
(c) Effective upon the occurrence of any Event of Default and for so
long as any Event of Default shall be continuing, the Revolving Credit Rate, the
Term Loan Rates and the Letter of Credit Fee shall automatically be increased by
two percentage points (2%) per annum (such increased rate, the "Default Rate"),
and all outstanding Obligations, including unpaid interest and Letter of Credit
Fees, shall continue to accrue interest from the date of such Event of Default
at the Default Rate applicable to such Obligations.
(d) If any interest or any other payment (including Unused Line Fees
and Collateral Monitoring Fees) to Lender under this Agreement becomes due and
payable on a day other than a Business Day, such payment date shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
then applicable rate during such extension.
1.6. Cash Management System. On or prior to the Closing Date and until the
Termination Date, each Borrower will establish and maintain the cash management
system described in Schedule D. All payments in respect of the Collateral shall
be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.
1.7. Fees. Each Borrower agrees to pay to Lender the Fees set forth in
Schedule E.
1.8. Receipt of Payments. Each Borrower shall make each payment under this
Agreement (not otherwise made pursuant to Section 1.9) without set-off,
counterclaim or deduction and free and clear of all Taxes not later than 11:00
A.M. (New York City time) on the day when due in lawful money of the United
States of America in immediately available funds to the Collection Account. If
any Borrower shall be required by law to deduct any Taxes from any payment to
Lender under any Loan Document, then the amount payable to Lender shall be
increased so that, after making all required deductions, Lender receives an
amount equal to that which it would have received had no such deductions been
made. For purposes of computing interest and Fees, all payments shall be deemed
received by Lender 1 Business Day following receipt of immediately available
funds in the Collection Account. For purposes of determining the Borrowing
Availability, payments shall be deemed received by Lender upon receipt of
immediately available funds in the Collection Account
1.9. Application and Allocation of Payments. Each Borrower irrevocably agrees
that Lender shall have the continuing and exclusive right to apply any and all
payments against the then due and payable Obligations in such order as Lender
may deem advisable. Lender is authorized to, and at its option may (without
prior notice or precondition and at any time or times), but shall not be
obligated to, make or cause to be made Revolving Credit Advances on behalf of
any Borrower for: (a) payment of all Fees, expenses, indemnities, charges,
costs, principal, interest, or other Obligations owing by such Borrower under
this Agreement or any of the other Loan Documents, (b) the payment, performance
or satisfaction of any of such Borrower's obligations with respect to
preservation of the Collateral, or (c) any premium in whole or in part required
in respect of any of the policies of insurance required by this Agreement, even
if the making of any such Revolving Credit Advance causes the outstanding
balance of the Revolving Credit Loan attributable to any Borrower to exceed such
Borrower's Borrowing Availability, and each Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan attributable
to such Borrower exceeds its Borrowing Availability.
1.10. Accounting. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrowers on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to any Borrower shall not in
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any manner affect the obligation of any Borrower to repay any of the
Obligations. Except to the extent that any Borrower shall, within 30 days after
such statement and accounting is sent, notify Lender in writing of any objection
such Borrower may have thereto (stating with particularity the basis for such
objection), such statement and accounting shall be deemed final, binding and
conclusive upon such Borrower, absent manifest error.
1.11. Indemnity. Each Borrower and each other Credit Party executing this
Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities, Taxes and
legal costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Loan Documents (collectively,
"Indemnified Liabilities"), except to the extent that any such Indemnified
Liability is finally determined by a court of competent jurisdiction to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY CREDIT
PARTY, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT
UNDER ANY POWER OF ATTORNEY FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.12. Borrowing Base; Reserves. The Borrowing Base of each Borrower shall be
determined by Lender (including the eligibility of Accounts and Inventory) based
on the most recent Borrowing Base Certificate delivered to Lender in accordance
with Section 4.1(b) and such other information available to Lender. The
Revolving Credit Loan shall be subject to Lender's continuing right to withhold
from any Borrower's Borrowing Availability reserves, including the Tax Liability
Reserve, and to increase and decrease such reserves from time to time, if and to
the extent that in Lender's good faith credit judgment such reserves are
necessary, including to protect Lender's interest in the Collateral or to
protect Lender against possible non-payment of Accounts for any reason by
Account Debtors or possible diminution of the value of any Collateral or
possible non-payment of any of the Obligations or for any Taxes or in respect of
any state of facts which could constitute a Default. Lender may, at its option,
implement reserves, including the Tax Liability Reserve, by designating as
ineligible a sufficient amount of Accounts or Inventory which would otherwise be
Eligible Accounts or Eligible Inventory, as the case may be, so as to reduce any
Borrower's Borrowing Base by the amount of the intended reserves.
2. CONDITIONS PRECEDENT
2.1. Conditions to the Initial Loans. Lender shall not be obligated to make
any of the Loans or to perform any other action hereunder, until the following
conditions have been satisfied in a manner satisfactory to Lender in its sole
discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate parties, all as
set forth in the Schedule of Documents (Schedule F);
(b) except for the Indebtedness evidenced by the Fleet Note, all of the
obligations of Borrowers to Fleet and The CIT Group under their financing
documentation as in effect immediately prior to the Closing Date will be
performed and paid in full from the proceeds of the initial Loans and all Liens
upon any of the property of any Borrower or any other Credit Party in respect
thereof shall have been
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terminated or subordinated on terms and conditions and pursuant to agreements
satisfactory to Lender immediately upon such payment;
(c) the insurance policies provided for in Section 3.16 are in full
force and effect, together with appropriate evidence showing loss payable or
additional insured clauses or endorsements in favor of Lender as required under
such Section;
(d) as of the Closing Date Net Borrowing Availability for all Borrowers
combined shall be not less than $1,000,000 after giving effect to the initial
Revolving Credit Advance and Letter of Credit Obligations (on a pro forma basis,
with trade payables being paid currently, and expenses and liabilities being
paid in the ordinary course of business and without acceleration of sales);
(e) Lender shall have received opinions of counsel to the Borrowers with
respect to the Loan Documents in form and substance satisfactory to Lender;
(f) Lender shall have received an opinion of counsel to Guarantor with
respect to the Guaranty and any other Loan Documents executed by the Guarantor
in connection with this Agreement, which opinion of counsel shall be in form and
substance satisfactory to Lender;
(g) Lender shall have received a copy of the Fleet Documents in form
and substance satisfactory to Lender;
(h) The liabilities (contingent or otherwise) of each Credit
Party relating to the Pegos Guaranty shall have been subordinated on terms
satisfactory to Lender pursuant to documentation in form and substance
satisfactory to Lender;
(i) The Liens granted to the State of Connecticut by each Credit Party
relating to the grant in the amount of $200,000 from the State of Connecticut
shall secure an amount not to exceed the principal amount of $200,000 and shall
be subordinate to the Liens in favor of Lender; and
(j) Lender shall be satisfied with the corporate structure, capital
structure, terms and amounts of other Indebtedness, material Contracts and
organizational documents of each Credit Party.
2.2. Further Conditions to the Loans. Lender shall not be obligated to fund
any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any of the other Loan Documents shall be untrue or incorrect as of such
date, except to the extent that any such representation or warranty is expressly
stated to relate to a specific earlier date, in which case, such representation
and warranty shall be true and correct as of such earlier date; or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would result
after giving effect to such Loan; or
(d) after giving effect to such Loan, the Revolving Credit Loan
attributable to any Borrower would exceed the Borrowing Availability of such
Borrower.
2.3. Agent. The request and acceptance by Leading Borrower, as agent for each
Borrower, of the proceeds of any Loan, and the request by Leading Borrower, as
agent for each Borrower, for the incurrence by Lender of any Letter of Credit
Obligations, as the case may be, shall be deemed to constitute, as of the date
of such request and the date of such acceptance, (i) a representation and
warranty by each Borrower that the conditions in Section 2.2 have been satisfied
and (ii) a restatement by each Borrower of each of the representations and
warranties made by such Borrower in any Loan Document and a reaffirmation by
each Borrower of the granting and continuance of Lender's Liens pursuant to the
Loan Documents.
3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, each
Borrower and each other Credit Party executing this Agreement represent and
warrant to Lender (each of which representations and warranties shall survive
the execution and delivery of this Agreement), and promise to and agree with
Lender until the Termination Date as follows:
3.1. Corporate Existence; Compliance with Law. Each Corporate Credit Party:
(a) is, as of the Closing Date, and will continue to be (i) a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the
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conduct of its business requires such qualification, except where the failure to
be so qualified could not reasonably be expected to have a Material Adverse
Effect, and (iii) in compliance with all Requirements of Law and Contractual
Obligations, except to the extent failure to comply therewith could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and (b) has and will continue to have (i) the requisite
corporate power and authority and the legal right to execute, deliver and
perform its obligations under the Loan Documents, and to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the property it
operates under lease, and to conduct its business as now, heretofore or proposed
to be conducted, and (ii) all licenses, permits, franchises, rights, powers,
consents or approvals from or by all Persons or Governmental Authorities having
jurisdiction over such Corporate Credit Party which are necessary or appropriate
for the conduct of its business.
3.2. Executive Offices; Corporate or Other Names. The location of each
Corporate Credit Party's chief executive office, corporate offices, warehouses,
other locations of Collateral and locations where records with respect to
Collateral are kept (including in each case the county of such locations) are as
set forth in Disclosure Schedule (3.2) and, except as set forth in such
Disclosure Schedule, such locations have not changed during the preceding twelve
months. As of the Closing Date, during the prior five years, except as set forth
in Disclosure Schedule (3.2), no Corporate Credit Party has been known as or
conducted business in any other name (including trade names).
3.3. Corporate Power; Authorization; Enforceable Obligations. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party except as set forth on Disclosure
Schedule (3.3); (d) do not and will not result in the creation or imposition of
any Lien (other than Permitted Encumbrances) upon any of the Collateral; and (e)
do not and will not require the consent or approval of any Governmental
Authority or any other Person other than those consents and approvals obtained
prior to the Closing Date. As of the Closing Date, each Loan Document shall have
been duly executed and delivered on behalf of each Credit Party party thereto,
and each such Loan Document upon such execution and delivery shall be and will
continue to be a legal, valid and binding obligation of such Credit Party,
enforceable against it in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
3.4. Financial Statements and Projections; Books and Records. (a) The
Financial Statements delivered by each Borrower to Lender for its most recently
ended Fiscal Year and Fiscal Month, are true, correct and complete and reflect
fairly and accurately the financial condition of such Borrower as of the date of
each such Financial Statement in accordance with GAAP. The Projections attached
to this Agreement as Schedule H and the Projections most recently delivered by
each Borrower to Lender after the Closing Date have been prepared in good faith,
with care and diligence and use assumptions that are reasonable under the
circumstances at the time such Projections were prepared and as of the date
delivered to Lender and all such assumptions are disclosed in the Projections.
(b) Each Borrower and each other Corporate Credit Party shall keep
adequate Books and Records with respect to the Collateral and its business
activities in which proper entries, reflecting all consolidated and
consolidating financial transactions, and payments and credits received on, and
all other dealings with, the Collateral, will be made in accordance with GAAP
and all Requirements of Law and on a basis consistent with the Financial
Statements.
3.5. Material Adverse Change. Between the date of each Borrower's most
recently audited Financial Statements delivered to Lender and the Closing Date:
(a) no Corporate Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred which alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect except for the financial result indicated on
the most recent interim Financial Statements delivered to Lender. No Requirement
of Law or Contractual Obligation of any Credit Party has or have had or could
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reasonably be expected to have a Material Adverse Effect. No Credit Party is in
default, and to such Credit Party's knowledge no third party is in default,
under or with respect to any of its Contractual Obligations, which alone or in
the aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
3.6. Real Estate; Property. The real estate listed in Disclosure
Schedule (3.6) constitutes all of the real property owned, leased, or used by
each Corporate Credit Party in its business, and such Credit Party will not
execute any material agreement or contract in respect of such real estate after
the date of this Agreement without giving Lender prompt prior written notice
thereof. Each Corporate Credit Party holds and will continue to hold good and
marketable fee simple title to all of its owned real estate, and good and
marketable title to all of its other properties and assets, and valid and
insurable leasehold interests in all of its leases (both as lessor and lessee,
sublessee or assignee), and none of the properties and assets of any Corporate
Credit Party are or will be subject to any Liens, except Permitted Encumbrances.
With respect to each of the premises identified in Disclosure Schedule (3.2) on
or prior to the Closing Date a bailee, landlord or mortgagee agreement
acceptable to Lender has been obtained unless Lender has waived such requirement
with respect to such premises.
3.7. Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.7), as of the
Closing Date no Corporate Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and outstanding Stock of each Corporate Credit
Party (other than Leading Borrower) (including all rights to purchase, options,
warrants or similar rights or agreements pursuant to which any Corporate Credit
Party may be required to issue, sell, repurchase or redeem any of its Stock) as
of the Closing Date is owned by each of the Stockholders (and in the amounts)
set forth on Disclosure Schedule (3.7). All outstanding Indebtedness of each
Corporate Credit Party as of the Closing Date is described in Disclosure
Schedule (5(b)).
3.8. Government Regulation; Margin Regulations. No Corporate Credit Party is
subject to or regulated under any Federal or state statute, rule or regulation
that restricts or limits such Person's ability to incur Indebtedness, pledge its
assets, or to perform its obligations under the Loan Documents. The making of
the Loans, the application of the proceeds and repayment thereof, and the
consummation of the transactions contemplated by the Loan Documents do not and
will not violate any Requirement of Law. No Corporate Credit Party is engaged,
nor will it engage in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin security" as such terms are defined in
Regulation U of the Federal Reserve Board as now and hereafter in effect (such
securities being referred to herein as "Margin Stock"). No Corporate Credit
Party owns any Margin Stock, and none of the proceeds of the Loans or other
extensions of credit under this Agreement will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock or reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
Margin Stock. No Corporate Credit Party will take or permit to be taken any
action which might cause any Loan Document to violate any regulation of the
Federal Reserve Board.
3.9. Taxes; Charges. Except as disclosed on Disclosure Schedule (3.9) all tax
returns, reports and statements required by any Governmental Authority to be
filed by Borrower or any other Credit Party have, as of the Closing Date, been
filed and will, until the Termination Date, be filed with the appropriate
Governmental Authority and no tax Lien has been filed against any Credit Party
or any Credit Party's property. Proper and accurate amounts have been and will
be withheld by Borrower and each other Credit Party from their respective
employees for all periods in complete compliance with all Requirements of Law
and such withholdings have and will be timely paid to the appropriate
Governmental Authorities. Disclosure Schedule (3.9) sets forth as of the Closing
Date those taxable years for which any Credit Party's tax returns are currently
being audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Disclosure Schedule
(3.9), none of the Credit Parties and their respective predecessors are liable
for any Charges: (a) under any agreement (including any tax sharing agreements
or agreement extending the period of assessment of any Charges) or (b) to each
Credit Party's knowledge, as a transferee. As of the Closing Date, no Credit
Party has agreed or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise, which could
reasonably be expected to have a Material Adverse Effect.
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3.10. Payment of Obligations. Each Credit Party will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all of its Charges and other obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of such Credit Party and none of the
Collateral is or could reasonably be expected to become subject to any Lien or
forfeiture or loss as a result of such contest.
3.11. ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other existing ERISA Events, could reasonably
be expected to result in a liability of any Credit Party of more than the
Minimum Actionable Amount. The present value of all accumulated benefit
obligations of the Credit Parties under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent Financial Statements reflecting such amounts,
exceed the fair market value of the assets of such Plan by more than the Minimum
Actionable Amount, and the present value of all accumulated benefit obligations
of all underfunded Plans (based on the assumptions used for purposes of
Statement of Financial Account Standards No. 87) did not, as of the date of the
most recent Financial Statements reflecting such amounts, exceed the fair market
value of the assets of such underfunded Plans by more than the Minimum
Actionable Amount. No Credit Party or ERISA Affiliate has incurred or reasonably
expects to incur any Withdrawal Liability in excess of the Minimum Actionable
Amount.
3.12. Litigation. No Litigation is pending or, to the knowledge of any Credit
Party, threatened by or against any Credit Party or against any Credit Party's
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could reasonably
be expected to have a Material Adverse Effect. Except as set forth on Disclosure
Schedule (3.12), as of the Closing Date there is no Litigation pending or
threatened against any Credit Party which seeks damages in excess of $50,000 or
injunctive relief or alleges criminal misconduct of any Credit Party. Each
Credit Party shall notify Lender promptly in writing upon learning of the
existence, threat or commencement of any Litigation against any Credit Party,
any ERISA Affiliate or any Plan or any allegation of criminal misconduct against
any Credit Party.
3.13. Intellectual Property. As of the Closing Date, all material Intellectual
Property owned or used by any Corporate Credit Party is listed, together with
application or registration numbers, where applicable, in Disclosure Schedule
(3.13). Each Corporate Credit Party owns, or is licensed to use, all
Intellectual Property necessary to conduct its business as currently conducted
except for such Intellectual Property the failure of which to own or license
could not reasonably be expected to have a Material Adverse Effect. Each
Corporate Credit Party will maintain the patenting and registration of all
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or other appropriate Governmental Authority and
each Corporate Credit Party will promptly patent or register, as the case may
be, all new Intellectual Property and notify Lender in writing five (5) Business
Days prior to filing any such new patent or registration.
3.14. Full Disclosure. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of any
Credit Party under any Loan Document, or to induce Lender to execute the Loan
Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
3.15. Hazardous Materials. Except as set forth on Disclosure Schedule (3.15),
as of the Closing Date, (a) to the best of each Corporate Credit Party's
knowledge following due inquiry, each real property location owned, leased or
occupied by each Corporate Credit Party (the "Real Property") is maintained free
of contamination from any Hazardous Material, (b) no Corporate Credit Party is
subject to any Environmental Liabilities or, to any Credit Party's knowledge,
potential Environmental Liabilities, in excess of $50,000 in the aggregate, (c)
no notice has been received by any Corporate Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in any Corporate Credit Party
being identified as a "potentially responsible party" under CERCLA or analogous
state statutes; and (d) each Corporate Credit Party has provided to Lender
copies of all
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existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Corporate Credit Party. Each Corporate Credit Party: (i) shall
comply in all material respects with all applicable Environmental Laws and
environmental permits; (ii) shall notify Lender in writing within seven days if
and when it becomes aware of any Release, on, at, in, under, above, to, from or
about any of its Real Property; and (iii) shall promptly forward to Lender a
copy of any order, notice, permit, application, or any communication or report
received by it or any other Credit Party in connection with any such Release.
3.16. Insurance. As of the Closing Date, Disclosure Schedule (3.16) lists all
insurance of any nature maintained for current occurrences by Borrowers and each
other Corporate Credit Party, as well as a summary of the terms of such
insurance. Each Corporate Credit Party shall deliver to Lender certified copies
and endorsements to all of its and those of its Subsidiaries (a) "All Risk" and
business interruption insurance policies naming Lender loss payee, and (b)
general liability and other liability policies naming Lender as an additional
insured. All policies of insurance on real and personal property will contain an
endorsement, in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or equivalent) and extra expense and business interruption
endorsements. Such endorsement, or an independent instrument furnished to
Lender, will provide that the insurance companies will give Lender at least 30
days prior written notice before any such policy or policies of insurance shall
be altered or canceled and that no act or default of any Borrower or any other
Person shall affect the right of Lender to recover under such policy or policies
of insurance in case of loss or damage. Each Corporate Credit Party shall direct
all present and future insurers under its "All Risk" policies of insurance to
pay all proceeds payable thereunder directly to Lender. If any insurance
proceeds are paid by check, draft or other instrument payable to any Credit
Party and Lender jointly, Lender may endorse such Credit Party's name thereon
and do such other things as Lender may deem advisable to reduce the same to
cash. Lender reserves the right at any time, upon review of each Credit Party's
risk profile, to require additional forms and limits of insurance. Each
Corporate Credit Party shall, on each anniversary of the Closing Date and from
time to time at Lender's request, deliver to Lender a report by a reputable
insurance broker, satisfactory to Lender, with respect to such Person's
insurance policies. Notwithstanding the foregoing and provided that no Default
shall have occurred and be continuing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $25,000 in the aggregate,
Lender shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property subject to the casualty; provided that if such Credit Party
has not completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 60 days of such casualty,
Lender may apply such insurance proceeds to the Obligations in accordance with
the terms of this Agreement. All insurance proceeds that are to be made
available to replace, repair, restore or rebuild the Collateral shall be applied
by Lender to reduce the outstanding principal balance of the Revolving Credit
Loan and upon such application, Lender shall establish a reserve against the
Borrowing Base in an amount equal to the amount of such proceeds so applied.
Thereafter, such funds shall be made available to such Credit Party to provide
funds to replace, repair, restore or rebuild the Collateral as follows: (i)
Leading Borrower shall request a Revolving Credit Advance be made to such Credit
Party in the amount requested to be released; (ii) so long as the conditions set
forth in Section 2.2 have been met, Lender shall make such Revolving Credit
Advance; and (iii) in the case of insurance proceeds applied against the
Revolving Credit Loan, the reserve established with respect to such insurance
proceeds shall be reduced by the amount of such Revolving Credit Advance.
3.17. Deposit and Disbursement Accounts. Attachment I to Schedule D lists all
banks and other financial institutions at which any Borrower or any other
Corporate Credit Party, maintains deposits and/or other accounts, including the
Disbursement Accounts, and such Attachment correctly identifies the name,
address and telephone number of each such depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
3.18. Accounts and Inventory. As of the date of each Borrowing Base Certificate
delivered to Lender, each Account listed thereon as an Eligible Account shall be
an Eligible Account and all Inventory listed thereon as Eligible Inventory shall
be Eligible Inventory. No Borrower has made, nor will any Borrower make, any
agreement with any Account Debtor for any extension of time for the payment of
any Account, any compromise or settlement for less than the full amount thereof,
any release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance for prompt or early
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payment allowed by Borrower in the ordinary course of its business consistent
with historical practice and as previously disclosed to Lender in writing.
Disclosure Schedule (3.18) sets forth each Contract of any Borrower with any
Account Debtor which gives such Account Debtor the right (under such Contract,
under common law or otherwise) to offset any Accounts for such Borrower's
failure to perform under such Contract and such Borrower has obtained an offset
waiver for each such contract in form and substance satisfactory to Lender. With
respect to the Accounts pledged as collateral pursuant to any Loan Document (a)
the amounts shown on all invoices, statements and reports which may be delivered
to the Lender with respect thereto are actually and absolutely owing to the
relevant Credit Party as indicated thereon and are not in any way contingent;
(b) no payments have been or shall be made thereon except payments immediately
delivered to the applicable accounts described in paragraph 1 to Schedule D or
the Lender as required hereunder; and (c) to each Borrower's knowledge all
Account Debtors have the capacity to contract. Each Borrower shall notify Lender
promptly of any event or circumstance which to such Borrower's knowledge would
cause Lender to consider any then existing Account or Inventory as no longer
constituting an Eligible Account or Eligible Inventory, as the case may be.
3.19. Conduct of Business. Each Corporate Credit Party (a) shall conduct its
business substantially as now conducted or as otherwise permitted hereunder, and
(b) shall at all times maintain, preserve and protect all of the Collateral and
such Credit Party's other property, used or useful in the conduct of its
business and keep the same in good repair, working order and condition and make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices.
3.20. Further Assurances. At any time and from time to time, upon the written
request of Lender and at the sole expense of Borrowers, Borrowers and each other
Credit Party shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable (a) to obtain the full benefits of this Agreement and
the other Loan Documents, (b) to protect, preserve and maintain Lender's rights
in any Collateral, or (c) to enable Lender to exercise all or any of the rights
and powers herein granted.
4. FINANCIAL MATTERS; REPORTS
4.1. Reports and Notices. From the Closing Date until the Termination Date,
each Borrower shall deliver to Lender:
(a) within 15 days following the end of each Fiscal Month, an aged
trial balance by Account Debtor and an Inventory Perpetual or Physical other
than with respect to work in progress (as requested by Lender) and as soon as
available but in no event later than 30 days following the end of each Fiscal
Month, an Inventory Perpetual or Physical with respect to work in progress and a
reconciliation of the aged trial balance and the Inventory Perpetual or Physical
(as the case may be) to such Borrower's general ledger and from the general
ledger to the Financial Statements for such Fiscal Month accompanied by
supporting detail and documentation as Lender may request;
(b) as frequently as Lender may request and in any event no later than
15 days following the end of each Fiscal Month, a Borrowing Base Certificate in
the form of Exhibit C as of the last day of the previous Fiscal Month detailing
ineligible Accounts and Inventory for adjustment to the Borrowing Base,
certified as true and correct by the Chief Financial Officer of such Borrower or
such other officer as is acceptable to Lender;
(c) within 15 days following the end of each Fiscal Month, an Accounts
Payable Analysis in the Form of Exhibit D (together with an accounts payable
aging) and an Accounts Receivable Roll Forward Analysis in the Form of Exhibit
E, each certified as true and correct by the Chief Financial Officer of such
Borrower or such other officer as is acceptable to Lender;
(d) within 30 days following the end of each Fiscal Month and Fiscal
Quarter, the Financial Statements for such Fiscal Month or Fiscal Quarter, as
applicable, which shall provide comparisons to budget and actual results for the
corresponding period during the prior Fiscal Year, both on a monthly or
quarterly, as applicable, and year-to-date basis, and accompanied by a
certification in the form of Exhibit J by the Chief Executive Officer or Chief
Financial Officer of such Borrower that such Financial
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Statements are complete and correct, that there was no Default (or specifying
those Defaults of which he or she was aware), and showing in reasonable detail
the calculations used in determining compliance with the financial covenants
hereunder;
(e) within 90 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by an
independent certified accounting firm acceptable to Lender, which shall provide
comparisons to the prior Fiscal Year, and shall be accompanied by (i) a
statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants hereunder, (ii) a report from such
Borrower's accountants to the effect that in connection with their audit
examination nothing has come to their attention to cause them to believe that a
Default has occurred or specifying those Defaults of which they are aware, and
(iii) any management letter that may be issued;
(f) not less than 30 days prior to the close of each Fiscal Year, the
Projections, which will be prepared by such Borrower in good faith, with care
and diligence, and using assumptions which are reasonable under the
circumstances at the time such Projections are delivered to Lender and disclosed
therein when delivered;
(g) upon request by Lender, provide Lender with an appraisal of the
Inventory of each Borrower prepared by an independent appraisal firm acceptable
to Lender; provided that absent the occurrence of a Default, Borrowers shall not
be required to pay for such appraisal more than once each year during the term
of this Agreement; and
(h) all the reports and other information set forth on Exhibit B in the
time frames set forth therein.
4.2. Financial Covenants. Each Borrower shall not breach any of the financial
covenants set forth in Schedule G.
4.3. Other Reports and Information. Each Borrower shall advise Lender
promptly, in reasonable detail, of: (a) any Lien, other than Permitted
Encumbrances, attaching to or asserted against any of the Collateral or any
occurrence causing a material loss or decline in value of any Collateral and the
estimated (or actual, if available) amount of such loss or decline; (b) any
material change in the composition of the Collateral; and (c) the occurrence of
any Default or other event which has had or could reasonably be expected to have
a Material Adverse Effect. Each Borrower shall, upon request of Lender, furnish
to Lender such other reports and information in connection with the affairs,
business, financial condition, operations, prospects or management of such
Borrower or any other Credit Party or the Collateral as Lender may request, all
in reasonable detail.
5. NEGATIVE COVENANTS
Each Borrower and each Credit Party executing this Agreement covenants and
agrees (for itself and each other Credit Party) that, without Lender's prior
written consent, from the Closing Date until the Termination Date, neither any
Borrower nor any other Corporate Credit Party shall, directly or indirectly, by
operation of law or otherwise:
(a) form any Subsidiary or merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with
or make any investment in or, except as provided in clause 5(c) below, loan or
advance to, any Person;
(b) cancel any debt owing to it or create, incur, assume or permit to
exist any Indebtedness, except: (i) the Obligations, (ii) Indebtedness existing
as of the Closing Date set forth on Disclosure Schedule 5(b), (iii) deferred
taxes, (iv) by endorsement of instruments or items of payment for deposit to the
general account of such Credit Party, (v) for Guaranteed Indebtedness incurred
for the benefit of a Borrower if the primary obligation is permitted by this
Agreement; (vi) the Indebtedness evidenced by the Fleet Documents as in effect
on the Closing Date; (vii) the Guaranteed Indebtedness evidenced by the Pegos
Guaranty; (viii) the Indebtedness evidenced by the Assistance Agreement not to
exceed the principal amount of $200,000; (ix) the Indebtedness evidenced by the
Seller Note as in effect on the
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Closing Date; (x) in the event Lender does not make Term Loan B available to
Leading Borrower, Indebtedness to a Person providing financing to Leading
Borrower secured solely by a Lien on the Mortgaged Property in the principal
amount not to exceed $2,000,00; and (xi) additional Indebtedness for Purchase
Money Indebtedness incurred after the Closing Date in an aggregate amount not to
exceed $500,000 for all Corporate Credit Parties combined and additional
Indebtedness for Capital Expenditures financed other than through the Revolving
Credit Loan incurred after the Closing Date in an aggregate amount not to exceed
$500,000 for all Corporate Credit Parties combined provided that the aggregate
amount of all such Indebtedness for Purchase Money Indebtedness and Capital
Expenditures shall not at any time outstanding exceed $500,000 for all Corporate
Credit Parties combined;
(c) enter into any lending, borrowing or other commercial transaction
with any of its employees, directors, Affiliates or any other Credit Party
(including upstreaming and downstreaming of cash and intercompany advances and
payments by a Credit Party on behalf of another Credit Party which are not
otherwise permitted hereunder) other than (i) loans or advances to employees in
the ordinary course of business in an aggregate outstanding amount not exceeding
$50,000; (ii) payments made to Leading Borrower by another Credit Party for
reasonable changes for administrative and overhead expenses incurred by Leading
Borrower on behalf of such Credit Party in an aggregate amount during any Fiscal
Year not to exceed $100,000; and (iii) loans and advances made by a Borrower to
another Borrower, provided that (A) the Borrower receiving such loans or
advances shall have executed and delivered to the other Borrower a demand note
(collectively, the "Intercompany Notes") to evidence any such intercompany loans
and advances owing at any time by a Borrower to another Borrower which
Intercompany Notes shall be in form and substance satisfactory to Lender and
shall be pledged and delivered to Lender pursuant to the applicable Pledge
Agreement or Security Agreement as additional collateral security for the
Obligations; (B) each Borrower shall record all intercompany transactions on its
books and records in a manner satisfactory to Lender; (C) at the time any such
intercompany loan or advance is made by a Borrower to another Borrower and after
giving effect thereto, such Borrower shall be Solvent; (D) no Default would
occur and be continuing after giving effect to any such proposed intercompany
loan; and (E) the aggregate amount of such intercompany loans owing by a
Borrower to another Borrower shall not exceed $500,000 at any one time
outstanding;
(d) make any changes in any of its business objectives, purposes, or
operations which could reasonably be expected to adversely affect repayment of
the Obligations or could reasonably be expected to have a Material Adverse
Effect or engage in any business other than that presently engaged in or
proposed to be engaged in the Projections delivered to Lender on the Closing
Date or amend its charter or by-laws or other organizational documents;
(e) create or permit any Lien on any of its properties or assets, except
for Permitted Encumbrances;
(f) [*] sell, transfer, issue, convey, assign or otherwise dispose of any
of its assets or properties, including its Accounts or any shares of its Stock
or engage in any sale-leaseback, synthetic lease or similar transaction
(provided, that the foregoing shall not prohibit the sale of inventory or
obsolete or unnecessary Equipment in the ordinary course of its business);
(g) change its name, chief executive office, corporate offices,
warehouses or other Collateral locations, or location of its records concerning
the Collateral, or acquire, lease or use any real estate after the Closing Date
without such Person, in each instance, giving thirty (30) days prior written
notice thereof to Lender and taking all actions deemed necessary or appropriate
by Lender to continuously protect and perfect Lender's Liens upon the
Collateral;
(h) establish any depository or other bank account of any kind with any
financial institution (other than the accounts set forth on Attachment 1 to
Schedule D) without Lender's prior written consent; or
(i) make or permit any Restricted Payment.
6. SECURITY INTEREST
--------------
* Certain confidential information on this page has been omitted and filed
separately with the Securities and Exchange Commission.
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6.1. Grant of Security Interest. (a) As collateral security for the prompt
and complete payment and performance of the Obligations, each of the Borrowers
and each other Credit Party executing this Agreement hereby grants to the Lender
a security interest in and Lien upon all of its property and assets, whether
real or personal, tangible or intangible, and whether now owned or hereafter
acquired, or in which it now has or at any time in the future may acquire any
right, title, or interest, including all of the following property in which it
now has or at any time in the future may acquire any right, title or interest:
all Accounts; all bank and deposit accounts and all funds on deposit therein;
all cash and cash equivalents; all commodity contracts; all investments, Stock
and Investment Property; all Inventory and Equipment; all Goods; all Chattel
Paper, Documents and Instruments; all Books and Records; all General
Intangibles; and to the extent not otherwise included, all Proceeds and products
of all and any of the foregoing and all collateral security and guarantees given
by any Person with respect to any of the foregoing, but excluding in all events
Hazardous Waste and the real property listed on Disclosure Schedule 6.1(a) (all
of the foregoing, together with any other collateral pledged to the Lender
pursuant to any other Loan Document, collectively, the "Collateral").
(b) Each Borrower, Lender and each other Credit Party executing this
Agreement agree that this Agreement creates, and is intended to create, valid
and continuing Liens upon the Collateral in favor of Lender. Each Borrower and
each other Credit Party executing this Agreement represents, warrants and
promises to Lender that: (i) each Borrower and each other Credit Party granting
a Lien in Collateral is the sole owner of each item of the Collateral upon which
it purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to the Loan Documents, and has good and
marketable title thereto free and clear of any and all Liens or claims of
others, other than Permitted Encumbrances; (ii) the security interests granted
pursuant to this Agreement, upon completion of the filings and other actions
listed on Disclosure Schedule 6.1 (which, in the case of all filings and other
documents referred to in said Schedule, have been delivered to the Lender in
duly executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Lender as security for the prompt and complete
payment and performance of the Obligations, enforceable in accordance with the
terms hereof against any and all creditors of and purchasers from any Credit
Party (other than purchasers of Inventory in the ordinary course of business)
and such security interests are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Encumbrances which have
priority by operation of law; and (iii) no effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Encumbrances.
Each Borrower and each other Credit Party executing this Agreement promise to
defend the right, title and interest of Lender in and to the Collateral against
the claims and demands of all Persons whomsoever, and each shall take such
actions, including (x) the prompt delivery of all original Instruments, Chattel
Paper and certificated Stock owned by such Borrower and each other Credit Party
granting a Lien on Collateral to Lender, (y) notification of Lender's interest
in Collateral at Lender's request, and (z) the institution of litigation against
third parties as shall be prudent in order to protect and preserve each Credit
Party's and Lender's respective and several interests in the Collateral. Each
Borrower (and any other Credit Party granting a Lien in Collateral) shall ▇▇▇▇
its Books and Records pertaining to the Collateral to evidence the Loan
Documents and the Liens granted under the Loan Documents. All Chattel Paper
shall be marked with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of General
Electric Capital Corporation."
6.2. Lender's Rights. (a) Lender may, (i) at any time in Lender's own name or
in the name of any Borrower, communicate with Account Debtors, parties to
Contracts, and obligors in respect of Instruments, Chattel Paper or other
Collateral to verify to Lender's satisfaction, the existence, amount and terms
of any such Accounts, Contracts, Instruments or Chattel Paper or other
Collateral, and (ii) at any time and without prior notice to any Borrower or any
other Credit Party, notify Account Debtors, parties to Contracts, and obligors
in respect of Chattel Paper, Instruments, or other Collateral that the
Collateral has been assigned to Lender and that payments shall be made directly
to Lender. Upon the request of Lender, each Borrower shall so notify such
Account Debtors, parties to Contracts, and obligors in respect of Instruments,
Chattel Paper or other Collateral. Each Borrower hereby constitutes Lender or
Lender's designee as such Borrower's attorney with power to endorse such
Borrower's name upon any notes, acceptance drafts, money orders or other
evidences of payment or Collateral.
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(b) Each Borrower shall remain liable under each Contract, Instrument
and License to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, and Lender shall have no obligation or
liability whatsoever to any Person under any Contract, Instrument or License
(between any Borrower or any other Credit Party and any Person other than
Lender) by reason of or arising out of the execution, delivery or performance of
this Agreement, and Lender shall not be required or obligated in any manner (i)
to perform or fulfill any of the obligations of any Borrower, (ii) to make any
payment or inquiry, or (iii) to take any action of any kind to collect,
compromise or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times
under or pursuant to any Contract, Instrument or License.
(c) Each Borrower and each other Credit Party shall, with respect to
each owned, leased, or controlled property, during normal business hours and
upon reasonable advance notice (unless a Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times): (i) provide access to such property to Lender and
any of its officers, employees and agents, as frequently as Lender determines to
be appropriate; (ii) permit Lender and any of its officers, employees and agents
to inspect, audit and make extracts and copies (or take originals if reasonably
necessary) from all of such Borrower's and such Credit Party's Books and
Records; and (iii) permit Lender to inspect, review, evaluate and make physical
verifications and appraisals of the Inventory and other Collateral in any manner
and through any medium that Lender considers advisable, and each Borrower and
such Credit Party agree to render to Lender, at such Borrower's and such Credit
Party's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.
(d) After the occurrence and during the continuance of a Default, each
Borrower at its own expense, shall cause the certified public accountant then
engaged by such Borrower to prepare and deliver to Lender at any time and from
time to time, promptly upon Lender's request, the following reports: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) test verifications of such Accounts as Lender may request.
Each Borrower, at its own expense, shall cause its certified independent public
accountants to deliver to Lender the results of any physical verifications of
all or any portion of the Inventory made or observed by such accountants when
and if such verification is conducted. Lender shall be permitted to observe and
consult with each Borrower's accountants in the performance of these tasks.
6.3. Lender's Appointment as Attorney-in-fact. On the Closing Date, each
Borrower and each other Credit Party executing this Agreement shall execute and
deliver a Power of Attorney in the form attached as Exhibit I. The power of
attorney granted pursuant to the Power of Attorney and all powers granted under
any Loan Document are powers coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Lender under the Power of
Attorney are solely to protect Lender's interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. Lender agrees not to
exercise any power or authority granted under the Power of Attorney unless an
Event of Default has occurred and is continuing. Each Borrower and each other
Credit Party executing this Agreement authorizes Lender to file any financing or
continuation statement without the signature of such Borrower or such Credit
Party to the extent permitted by applicable law.
6.4. Grant of License to Use Intellectual Property Collateral. Each Borrower
and each other Credit Party executing this Agreement hereby grants to Lender an
irrevocable, non-exclusive license (exercisable upon the occurrence and during
the continuance of an Event of Default without payment of royalty or other
compensation to any Borrower or such Credit Party) to use, transfer, license or
sublicense any Intellectual Property now owned, licensed to, or hereafter
acquired by such Borrower or such Credit Party, and wherever the same may be
located, and including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof, and represents, promises
and agrees that any such license or sublicense is not and will not be in
conflict with the contractual or commercial rights of any third Person;
provided, that such license (a) will terminate on the Termination Date and (b)
shall not include any rights or interest of any Credit Party if and to the
extent such licensing agreement prohibits the grant of a license therein
provided that each Credit Party represents to Lender that those licensing
agreement which prohibit such grant are not material.
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7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1. Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder which shall be deemed to be continuing until waived in
writing by Lender in accordance with Section 10.3:
(a) any Borrower shall fail to make any payment in respect of any
Obligations when due and payable or declared due and payable; or
(b) (b) (i) any Borrower or any other Credit Party shall fail or
neglect to perform, keep or observe any of the covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in Section 1,
Sections 3.1, 3.2, 3.17, 3.18, 3.19, 3.20, 4.1(b), 4.2 or Section 5 of this
Agreement; or (ii) Borrower or any other Credit Party shall fail or neglect to
perform, keep or observe any of the other covenants, promises, agreements,
requirements, conditions or other terms or provisions contained in this
Agreement (other than those set forth in the Sections referred to in clause (i)
immediately above) or any of the other Loan Documents, regardless of whether
such breach involves a covenant, promise, agreement, condition, requirement,
term or provision with respect to a Credit Party that has not signed this
Agreement, and such breach is not remediable or, if remediable, continues
unremedied for a period of five (5) Business Days after the earlier to occur of
(x) the date on which such breach is known or reasonably should have become
known to any officer of such Borrower or such Credit Party and (y) the date on
which Lender shall have notified such Borrower or such other Credit Party of
such breach; or
(c) an event of default shall occur under any Contractual Obligation of
any Borrower or any other Credit Party (other than this Agreement and the other
Loan Documents), and such event of default (i) involves the failure to make any
payment (whether or not such payment is blocked pursuant to the terms of an
intercreditor agreement or otherwise), whether of principal, interest or
otherwise, and whether due by scheduled maturity, required prepayment,
acceleration, demand or otherwise, in respect of any Indebtedness (other than
the Obligations) of such Person in an aggregate amount exceeding the Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness or
a trustee to cause) such Indebtedness, or a portion thereof, in an aggregate
amount exceeding the Minimum Actionable Amount to become due prior to its stated
maturity or prior to its regularly scheduled date of payment; or
(d) any representation or warranty in this Agreement or any other Loan
Document, or in any written statement pursuant hereto or thereto, or in any
report, financial statement or certificate made or delivered to Lender by any
Borrower or any other Credit Party shall be untrue or incorrect in any material
respect as of the date when made or deemed made, regardless of whether such
breach involves a representation or warranty with respect to a Credit Party that
has not signed this Agreement; or
(e) there shall be commenced against any Borrower or any other Credit
Party any Litigation seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which remains
unstayed or undismissed for thirty (30) consecutive days; or any Borrower or any
other Credit Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property with intent to hinder, delay or defraud any of
its creditors or made or suffered a transfer of any of its property or the
incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent transfer or other similar law; or
(f) a case or proceeding shall have been commenced involuntarily
against any Borrower or any other Credit Party in a court having competent
jurisdiction seeking a decree or order: (i) under the United States Bankruptcy
Code or any other applicable Federal, state or foreign bankruptcy or other
similar law, and seeking either (x) the appointment of a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Person or of any substantial part of its properties, or (y) the reorganization
or winding up or liquidation of the affairs of any such Person, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) consecutive days
or such court shall enter a decree or order granting the relief sought in such
case or proceeding; or (ii) invalidating or denying any Person's right, power,
or competence to enter into or perform any of its obligations under any Loan
Document or invalidating or denying the validity or enforceability of this
Agreement or any other Loan Document or any action taken hereunder or
thereunder; or
(g) any Borrower or any other Credit Party shall (i) commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order for relief
entered
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with respect to it or seeking appointment of a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for it or any
substantial part of its properties, (ii) make a general assignment for the
benefit of creditors, (iii) consent to or take any action in furtherance of, or,
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in paragraphs (e) or (f) of this Section 7.1 or clauses (i) and (ii) of
this paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in excess of
the Minimum Actionable Amount in the aggregate shall be rendered against any
Borrower or any other Credit Party, unless the same shall be (i) fully covered
by insurance and the issuer(s) of the applicable policies shall have
acknowledged full coverage in writing within fifteen (15) days of judgment, or
(ii) vacated, stayed, bonded, paid or discharged within a period of thirty (30)
days from the date of such judgment; or
(i) any other event shall have occurred which has had or could reasonably
be expected to have a Material Adverse Effect; or
(j) any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms, or any Lien
granted, or intended by the Loan Documents to be granted, to Lender shall cease
to be a valid and perfected Lien having the first priority (or a lesser priority
if expressly permitted in the Loan Documents) in any of the Collateral (or any
Credit Party shall so assert any of the foregoing) other than by reason of any
action or omission on the part of the Lender which constitutes gross negligence
or willful misconduct in connection with the perfection or maintenance of
perfection of Lender's Lien; or
(k) a Change of Control shall have occurred with respect to any Corporate
Credit Party; or
(l) an ERISA Event shall have occurred that, in the opinion of the
Lender, when taken together with all other ERISA Events that have occurred and
are then continuing, could reasonably be expected to result in liability of any
Credit Party in an aggregate amount exceeding the Minimum Actionable Amount.
7.2. Remedies. (a) If any Default shall have occurred and be continuing, then
Lender may terminate or suspend its obligation to make further Revolving Credit
Advances and to incur additional Letter of Credit Obligations. In addition, if
any Event of Default shall have occurred and be continuing, Lender may, without
notice, take any one or more of the following actions: (i) declare all or any
portion of the Obligations to be forthwith due and payable, including contingent
liabilities with respect to Letter of Credit Obligations, whereupon such
Obligations shall become and be due and payable; (ii) require that all Letter of
Credit Obligations be fully cash collateralized pursuant to Schedule C; or (iii)
exercise any rights and remedies provided to Lender under the Loan Documents or
at law or equity, including all remedies provided under the Code; provided, that
upon the occurrence of any Event of Default specified in Sections 7.1 (e), (f)
or (g), the Obligations shall become immediately due and payable (and any
obligation of Lender to make further Loans, if not previously terminated, shall
immediately be terminated) without declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, each Borrower and
each other Credit Party executing this Agreement expressly agrees that upon the
occurrence of any Event of Default, Lender may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right upon
any such public sale, to the extent permitted by law, to purchase for the
benefit of Lender the whole or any part of said Collateral so sold, free of any
right of equity of redemption, which right each Borrower and each other Credit
Party executing this Agreement hereby releases. Such sales may be adjourned, or
continued from time to time with or without notice. Lender shall have the right
to conduct such sales on any Credit Party's premises or elsewhere and shall have
the right to use any Credit Party's premises without rent or other charge for
such sales or other action with respect to the Collateral for such time as
Lender deems necessary or advisable.
(c) Upon the occurrence and during the continuance of an Event of
Default and at Lender's request, each Borrower and each other Credit Party
executing this Agreement agrees to assemble the Collateral and make it available
to Lender at places which Lender shall reasonably select, whether at its
premises or elsewhere. Until Lender is able to effect a sale, lease, or other
disposition of the Collateral, Lender shall have the right to complete,
assemble, use or operate the Collateral or any part thereof, to the
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extent that Lender deems appropriate, for the purpose of preserving such
Collateral or its value or for any other purpose. Lender shall have no
obligation to any Credit Party to maintain or preserve the rights of such Credit
Party as against third parties with respect to any Collateral while such
Collateral is in the possession of Lender. Lender may, if it so elects, seek the
appointment of a receiver or keeper to take possession of any Collateral and to
enforce any of Lender's remedies with respect thereto without prior notice or
hearing. To the maximum extent permitted by applicable law, each Borrower and
each other Credit Party executing this Agreement waives all claims, damages, and
demands against Lender, its Affiliates, agents, and the officers and employees
of any of them arising out of the repossession, retention or sale of any
Collateral except such as are determined in a final judgment by a court of
competent jurisdiction to have arisen solely out of the gross negligence or
willful misconduct of such Person. Each Borrower and each other Credit Party
executing this Agreement agrees that ten (10) days prior notice by Lender to
such Credit Party of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.
Each Borrower and each other Credit Party shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are insufficient to
pay all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the Collateral
shall not be required. All provisions of this Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited, to the extent necessary, so that they do not render this
Agreement invalid or unenforceable, in whole or in part.
7.3. Waivers by Credit Parties. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, each Borrower
and each other Credit Party executing this Agreement waives: (a) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Loan Documents, the Notes or any
other notes, commercial paper, Accounts, Contracts, Documents, Instruments,
Chattel Paper and guaranties at any time held by Lender on which such Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Lender
may do in this regard; (b) all rights to notice and a hearing prior to Lender's
taking possession or control of, or to Lender's replevy, attachment or levy
upon, any Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws. Each Borrower and each
other Credit Party executing this Agreement acknowledges that it has been
advised by counsel of its choices and decisions with respect to this Agreement,
the other Loan Documents and the transactions evidenced hereby and thereby.
7.4. Proceeds. The Proceeds of any sale, disposition or other realization upon
any Collateral shall be applied by Lender upon receipt to the Obligations in
such order as Lender may deem advisable in its sole discretion (including the
cash collateralization of any Letter of Credit Obligations), and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law, including Section 9-504(1)(c) of the Code (but only after Lender has
received what Lender considers reasonable proof of a subordinate party's
security interest), the surplus, if any, shall be paid to Borrowers or their
representatives or to whomsoever may be lawfully entitled to receive the same,
or as a court of competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of each
Borrower and each other Credit Party executing such Loan Document, Lender, and
their respective successors and assigns, except as otherwise provided herein or
therein. Neither any Borrower nor any other Credit Party may assign, transfer,
hypothecate, delegate or otherwise convey its rights, benefits, obligations or
duties under any Loan Document without the prior express written consent of
Lender. Any such purported conveyance by such Borrower or such Credit Party
without the prior express written consent of Lender shall be void. There shall
be no third party beneficiaries of any of the terms and provisions of any of the
Loan Documents. Lender reserves the right at any time to create and sell
participations in the Loans and the Loan Documents and to sell, transfer or
assign any or all of its rights in the Loans and under the Loan Documents.
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9. GUARANTOR WAIVERS BY BORROWERS
IF AND TO THE EXTENT THAT ANY OBLIGATION OF ANY BORROWER TO LENDER SHALL BE
CONSIDERED AN OBLIGATION OF GUARANTY OR SURETYSHIP, THEN THE FOLLOWING
PROVISIONS OF THIS SECTION 9 SHALL APPLY WITH RESPECT TO EACH SUCH BORROWER
SOLELY TO THE EXTENT THAT SUCH BORROWER IS DEEMED TO ACT IN THE CAPACITY OF A
GUARANTOR AND SHALL NOT EFFECT A WAIVER OF RIGHTS IN SUCH PERSON'S CAPACITY AS A
BORROWER:
(A) SUCH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE LENDER FIRST TO
PURSUE ANY OTHER PERSON, THE COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY THAT
MAY BE HELD FOR THE OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR GUARANTY TO
THE OBLIGATIONS BEFORE SEEKING FROM SUCH BORROWER PAYMENT IN FULL OF ITS
LIABILITIES TO LENDER OR PROCEEDING AGAINST SUCH BORROWER FOR SAME.
(B) SUCH BORROWER ACKNOWLEDGES THAT IF LENDER MAY, UNDER APPLICABLE
LAW, PROCEED TO REALIZE ITS BENEFITS UNDER ANY OF THE LOAN DOCUMENTS GIVING
LENDER A LIEN UPON ANY COLLATERAL, WHETHER OWNED BY ANY BORROWER OR BY ANY OTHER
PERSON, EITHER BY JUDICIAL FORECLOSURE OR BY NON-JUDICIAL SALE OR ENFORCEMENT,
LENDER MAY, AT ITS SOLE OPTION, DETERMINE WHICH OF ITS REMEDIES OR RIGHTS IT MAY
PURSUE WITHOUT AFFECTING ANY OF ITS RIGHTS AND REMEDIES. IF, IN THE EXERCISE OF
ANY OF ITS RIGHTS AND REMEDIES, LENDER SHALL FORFEIT ANY OF ITS RIGHTS OR
REMEDIES, INCLUDING ITS RIGHT TO ENTER A DEFICIENCY JUDGMENT AGAINST ANY
BORROWER OR ANY OTHER PERSON, WHETHER BECAUSE OF ANY APPLICABLE LAWS PERTAINING
TO "ELECTION OF REMEDIES" OR THE LIKE, SUCH BORROWER HEREBY CONSENTS TO SUCH
ACTION BY LENDER AND WAIVES ANY CLAIM BASED UPON SUCH ACTION, EVEN IF SUCH
ACTION BY LENDER SHALL RESULT IN A FULL OR PARTIAL LOSS OF ANY RIGHTS OF
SUBROGATION WHICH SUCH BORROWER MIGHT OTHERWISE HAVE HAD BUT FOR SUCH ACTION BY
LENDER. ANY ELECTION OF REMEDIES WHICH RESULTS IN THE DENIAL OR IMPAIRMENT OF
THE RIGHT OF LENDER TO SEEK A DEFICIENCY JUDGMENT AGAINST ANY BORROWER SHALL NOT
IMPAIR ANY OTHER BORROWER'S OBLIGATION TO PAY THE FULL AMOUNT OF THE
OBLIGATIONS. IN THE EVENT LENDER SHALL BID AT ANY FORECLOSURE OR TRUSTEE'S SALE
OR AT ANY PRIVATE SALE PERMITTED BY LAW OR THE LOAN DOCUMENTS, LENDER MAY BID
ALL OR LESS THAN THE AMOUNT OF THE OBLIGATIONS AND THE AMOUNT OF SUCH BID NEED
NOT BE PAID BY LENDER BUT SHALL BE CREDITED AGAINST THE OBLIGATIONS. THE AMOUNT
OF THE SUCCESSFUL BID AT ANY SUCH SALE, WHETHER LENDER OR ANY OTHER PARTY IS THE
SUCCESSFUL BIDDER, SHALL BE CONCLUSIVELY DEEMED TO BE THE FAIR MARKET VALUE OF
THE COLLATERAL AND THE DIFFERENCE BETWEEN SUCH BID AMOUNT AND THE REMAINING
BALANCE OF THE OBLIGATIONS SHALL BE CONCLUSIVELY DEEMED TO BE THE AMOUNT OF THE
OBLIGATIONS GUARANTEED BY SUCH BORROWER, NOTWITHSTANDING THAT ANY PRESENT OR
FUTURE LAW OR COURT DECISION OR RULING MAY HAVE THE EFFECT OF REDUCING THE
AMOUNT OF ANY DEFICIENCY CLAIM TO WHICH LENDER MIGHT OTHERWISE BE ENTITLED BUT
FOR SUCH BIDDING AT ANY SUCH SALE.
(C) SUCH BORROWER AGREES THAT LENDER SHALL BE UNDER NO OBLIGATION TO
(I) MARSHAL ANY ASSETS IN FAVOR OF SUCH BORROWER, (II) PROCEED FIRST AGAINST ANY
OTHER BORROWER OR PERSON OR ANY PROPERTY OF ANY OTHER BORROWER OR PERSON OR
AGAINST ANY COLLATERAL, (III) ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS WITH
RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS, OR (IV) PURSUE ANY OTHER REMEDY IN
LENDER'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO PURSUE ITSELF AND THAT MAY
LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH SUCH BORROWER HEREBY
EXPRESSLY WAIVES.
(D) EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH SUCH BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
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EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
10. MISCELLANEOUS
10.1. Complete Agreement; Modification of Agreement. This Agreement and the
other Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and thereof, supersede all prior
agreements, commitments, understandings or inducements (oral or written,
expressed or implied). No Loan Document may be modified, altered or amended
except by a written agreement signed by Lender, and each other Credit Party a
party to such Loan Document. Each Borrower and each other Credit Party executing
this Agreement or any other Loan Document shall have all duties and obligations
under this Agreement and such other Loan Document from the date of its execution
and delivery, regardless of whether the initial Loan has been funded at that
time.
10.2. Expenses. Borrower agrees to pay or reimburse Lender for all costs and
expenses (including the fees and expenses of all counsel, advisors, consultants
(including environmental and management consultants) and auditors retained in
connection therewith), incurred in connection with: (a) the preparation,
negotiation, execution, delivery, performance and enforcement of the Loan
Documents and the preservation of any rights thereunder; (b) collection,
including deficiency collections; (c) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of the proceeds of any Loan (including a
wire transfer fee of $25 per wire transfer); (d) any amendment, waiver or other
modification with respect to any Loan Document or advice in connection with the
administration of the Loans or the rights thereunder; (e) any litigation,
dispute, suit, proceeding or action (whether instituted by or between any
combination of Lender, Borrower or any other Person), and an appeal or review
thereof, in any way relating to the Collateral, any Loan Document, or any action
taken or any other agreements to be executed or delivered in connection
therewith, whether as a party, witness or otherwise; and (f) any effort (i) to
monitor the Loans, (ii) to evaluate, observe or assess Borrower or any other
Credit Party or the affairs of such Person, and (iii) to verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral.
10.3. No Waiver. Neither Lender's failure, at any time, to require strict
performance by any Borrower or any other Credit Party of any provision of any
Loan Document, nor Lender's failure to exercise, nor any delay in exercising,
any right, power or privilege hereunder, shall operate as a waiver thereof or
waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. Any suspension
or waiver of a Default or other provision under the Loan Documents shall not
suspend, waive or affect any other Default or other provision under any Loan
Document, and shall not be construed as a bar to any right or remedy which
Lender would otherwise have had on any future occasion. None of the
undertakings, indemnities, agreements, warranties, covenants and representations
of any Borrower or any other Credit Party to Lender contained in any Loan
Document and no Default by any Borrower or any other Credit Party under any Loan
Document shall be deemed to have been suspended or waived by Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer or
other authorized employee of Lender and directed to such Borrower specifying
such suspension or waiver (and then such waiver shall be effective only to the
extent therein expressly set forth), and Lender shall not, by any act (other
than execution of a formal written waiver), delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder.
10.4. Severability; Section Titles. Wherever possible, each provision of the
Loan Documents shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of any Loan Document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of such
Loan Document. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under the Loan Documents shall in any way affect or impair
the Obligations, duties, covenants, representations and warranties, indemnities,
and liabilities of any Borrower or any other Credit Party or the rights of
Lender relating to any unpaid Obligation (due or not due, liquidated, contingent
or unliquidated), or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is not
required until after the Commitment Termination Date, all of which shall
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not terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that all indemnity obligations of the Credit Parties under the
Loan Documents shall survive the Termination Date. The Section titles contained
in any Loan Document are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
10.5. Authorized Signature. Until Lender shall be notified in writing by any
Borrower or any other Credit Party to the contrary, the signature upon any
document or instrument delivered pursuant hereto and believed by Lender or any
of Lender's officers, agents, or employees to be that of an officer of such
Borrower or such other Credit Party shall bind such Borrower and such other
Credit Party and be deemed to be the act of such Borrower or such other Credit
Party affixed pursuant to and in accordance with resolutions duly adopted by
such Borrower's or such other Credit Party's Board of Directors, and Lender
shall be entitled to assume the authority of each signature and authority of the
person whose signature it is or appears to be unless the person acting in
reliance thereon shall have actual knowledge to the contrary.
10.6. Notices. Except as otherwise provided herein, whenever any notice,
demand, request or other communication shall or may be given to or served upon
any party by any other party, or whenever any party desires to give or serve
upon any other party any communication with respect to this Agreement, each such
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
days after deposit in the United States Mail, registered or certified mail,
return receipt requested, with proper postage prepaid, (b) upon transmission,
when sent by telecopy or other similar facsimile transmission (with such
telecopy or facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this Section 10.6), (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid or (d) when hand-delivered, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Schedule B or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. Failure or delay in delivering
copies of any communication to any Person (other than any Borrower or Lender)
designated in Schedule B to receive copies shall in no way adversely affect the
effectiveness of such communication.
10.7. Counterparts. Any Loan Document may be executed in any number of separate
counterparts by one or more of the parties thereto, and all of said counterparts
taken together shall constitute one and the same instrument.
10.8. Time of the Essence. Time is of the essence for performance of the
Obligations under the Loan Documents.
10.9. GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICTS OF LAWS.
10.10. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) EACH BORROWER AND
EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE THAT
THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH BORROWER
AND SUCH CREDIT PARTY AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER, SUCH
BORROWER AND SUCH CREDIT PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
LENDER. SUCH BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
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JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND SUCH
BORROWER AND SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT
HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
BORROWER OR SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN SCHEDULE B OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH BORROWER'S OR SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN LENDER, ANY BORROWER AND ANY CREDIT PARTY ARISING OUT
OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.
10.11. Press Releases. Neither any Credit Party nor any of its Affiliates will
in the future issue any press release or other public disclosure using the name
of General Electric Capital Corporation or its affiliates or referring to this
Agreement or the other Loan Documents without at least two (2) Business Days'
prior notice to Lender and without the prior written consent of Lender unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with Lender before issuing such press release or other public disclosure.
10.12. Reinstatement. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations is rescinded or must otherwise be returned or restored by Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or any other Credit Party, or otherwise, all as though such
payments had not been made.
11. CROSS-GUARANTY
11.1. Cross-Guaranty. Each Borrower hereby absolutely and unconditionally
guarantees to Lender and its successors and assigns the full and prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of
all Obligations owed or hereafter owing to Lender by each other Borrower,
including that portion of the Revolving Credit Loan and the Term Loans
attributable to each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, and that its obligations under this Section 11 shall be absolute
and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document or any other
agreement, document or instrument to which any Borrower is or may become a
party;
(b) the absence of any action to enforce this Agreement (including this
Section 11) or any other Loan Document or the waiver or consent by Lender with
respect to any of the provisions hereof or thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Lender in respect thereof (including the release of any such
security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor,
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it being agreed by each Borrower that its obligations under this Section 11
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded, and shall be in the
same position, as principal debtor with respect to the Obligations guaranteed
hereunder.
11.2. Waivers by Borrowers. Each Borrower expressly waives all rights it may
have now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Lender to ▇▇▇▇▇▇▇▇ assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit Party,
any other party or against any security for the payment and performance of the
Obligations before proceeding against, or as a condition to proceeding against,
such Borrower. It is agreed among each Borrower and Lender that the foregoing
waivers are of the essence of the transactions contemplated by this Agreement
and the other Loan Documents and that, but for the provisions of this Section 11
and such waivers, Lender would decline to enter into this Agreement.
11.3. Benefit of Guaranty. Each Borrower agrees that the provisions of this
Section 11 are for the benefit of Lender and its successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
other Borrower and Lender, the obligations of such other Borrower under the Loan
Documents.
11.4. Subordination of Subrogation. Notwithstanding anything to the contrary in
this Agreement or in any other Loan Document, and except as set forth in Section
11.7, each Borrower hereby expressly and irrevocably subordinates to payment of
the Obligations any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and any and
all defenses available to a surety, guarantor or accommodation co-obligor until
the Obligations are indefeasibly paid in full in cash. Each Borrower
acknowledges and agrees that this waiver is intended to benefit Lender and shall
not limit or otherwise affect such Borrower's liability hereunder or the
enforceability of this Section 11, and that Lender and its successors and
assigns are intended third party beneficiaries of the waivers and agreements set
forth in this Section 11.4.
11.5. Election of Remedies. If Lender may, under applicable law, proceed to
realize its benefits under any of the Loan Documents giving Lender a Lien upon
any Collateral, whether owned by any Borrower or by any other Person, either by
judicial foreclosure or by non-judicial sale or enforcement, Lender may, at its
sole option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 11. If, in the
exercise of any of its rights and remedies, Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
any Borrower or any other Person, whether because of any applicable laws
pertaining to "election of remedies" or the like, each Borrower hereby consents
to such action by Lender and waives any claim based upon such action, even if
such action by Lender shall result in a full or partial loss of any rights of
subrogation which such Borrower might otherwise have had but for such action by
Lender. Any election of remedies which results in the denial or impairment of
the right of Lender to seek a deficiency judgment against any Borrower shall not
impair any other Borrower's obligation to pay the full amount of the
Obligations. In the event Lender shall bid at any foreclosure or trustee's sale
or at any private sale permitted by law or the Loan Documents, Lender may bid
all or less than the amount of the Obligations and the amount of such bid need
not be paid by Lender but may be credited against the Obligations. The amount of
the successful bid at any such sale, whether Lender or any other party is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 11, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Lender might otherwise be entitled but
for such bidding at any such sale.
11.6. Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 11 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under this
Agreement and then re-loaned or otherwise transferred to, or for the benefit of,
such Borrower; and
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(b) the amount which could be claimed by Lender from such Borrower
under this Section 11 without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the United States Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 11.7.
11.7. Contribution with Respect to Guaranty Obligations. (a) To the extent that
any Borrower shall make a payment under this Section 11 of all or any of the
Obligations (other than Loans made to that Borrower for which it is primarily
liable) (a "Guarantor Payment") which, taking into account all other Guarantor
Payments then previously or concurrently made by any other Borrower, exceeds the
amount which such Borrower would otherwise have paid if each Borrower had paid
the aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Borrower's "Allocable Amount" (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to
the making of such Guarantor Payment, then, following indefeasible payment in
full in cash of the Obligations and termination of the Commitments, such
Borrower shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Borrower for the amount of such excess,
pro rata based upon their respective Allocable Amounts in effect immediately
prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Borrower shall be equal to the maximum amount of the claim which could then be
recovered from such Borrower under this Section 11 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the United States
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 11.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 11.7 is intended to or shall
impair the obligations of each Borrower to pay any amounts as and when the same
shall become due and payable in accordance with the terms of this Agreement,
including Section 11.1. Nothing contained in this Section 11.7 shall limit the
liability of any Borrower to pay the Loans made directly or indirectly to that
Borrower and accrued interest, Fees and expenses with respect thereto for which
such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 11.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of Lender's
obligation to extend any credit under this Agreement.
11.8. Liability Cumulative. The liability of Borrowers under this Section 11 is
in addition to and shall be cumulative with all liabilities of each Borrower to
Lender under this Agreement and the other Loan Documents to which such Borrower
is a party or in respect of any Obligations or obligation of the other Borrower,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.
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IN WITNESS WHEREOF, this Loan and Security Agreement has been duly executed as
of the date first written above.
EDAC TECHNOLOGIES CORPORATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name:
Title:
APEX MACHINE TOOL COMPANY, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name:
Title:
GROS-ITE INDUSTRIES, INC., as Credit Party
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Duly Authorized Signatory
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SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated with
respect to, or on account of, an Account.
"Accounts" shall mean all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the Code); (ii) all of such Person's rights in,
to and under all purchase orders or receipts for goods or services; (iii) all of
such Person's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit D
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the form
of Exhibit E.
"Affiliate" shall mean, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Agreement including all appendices, exhibits or
schedules attached or otherwise identified thereto, restatements and
modifications and supplements thereto, and any appendices, exhibits or schedules
to any of the foregoing, each as in effect at the time such reference becomes
operative; provided, that except as specifically set forth in this Agreement,
any reference to the Disclosure Schedules to this Agreement shall be deemed a
reference to the Disclosure Schedules as in effect on the Closing Date or in a
written amendment thereto executed by Borrower and Lender.
"Applicable Margin" shall mean, for each type of Loan, the rate per annum set
forth under the relevant column heading below:
Type of Loan Rate per Annum
---------------------- --------------
Revolving Credit Loans 3.75%
Term Loan A 4.0%
Term Loan B 4.25%
provided, that commencing after the delivery to Lender of Borrower's audited
Financial Statements for each Fiscal Year pursuant to Section 4.1(e) hereof, the
Applicable Margin shall be adjusted (up or down) prospectively on an annual
basis as set forth below as determined with respect to the calculation of the
Fixed Charge Coverage Ratio for the Fiscal Year ending the last Saturday of 2000
by the Fixed Charge Coverage Ratio for the Fiscal Quarter ending last Saturday
of 2000 and with respect to the calculation of
30
the Fixed Charge Coverage Ratio for each Fiscal Year ending on or after the last
Saturday of December 2001, the Fixed Charge Coverage Ratio for the twelve month
period ending on such Fiscal Year end:
Revolving Applicable Margin
Fixed Charge Coverage for Prior Fiscal Year Credit Loans Term Loan A Term Loan B
------------------------------------------- ------------ ----------------- -----------
< 0.50 to 1.00 4.00% 4.25% 4.50%
-
> 0.50 to 1.00 but (1.00 to 1.00 3.75% 4.00% 4.25%
> 1.00 to 1.00 but (1.50 to 1.00 3.00% 3.25% 3.50%
> 1.50 to 1.00< 2.75% 3.00% 3.25%
Each adjustment in the Applicable Margin shall occur on the first day of the
first calendar month that occurs after delivery of the audited annual Financial
Statements for such Fiscal Year evidencing the need for an adjustment.
Concurrently with the delivery of the audited Financial Statements for each
Fiscal Year, Borrower shall deliver to Lender a certificate, signed by its Chief
Financial Officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margin. Failure to timely
deliver such Financial Statements shall result in an increase in the Applicable
Margin to the highest rate set forth above, until the delivery to Lender of
those Financial Statements demonstrating that such an increase is not required.
Such increase in the Applicable Margin shall be in addition to any other remedy
provided for in this Agreement, including Lender's right to charge the Default
Rate. If a Default has occurred and is continuing at such time any reduction in
the Applicable Margin is to be implemented, that reduction shall be deferred
until the date on which such Default is cured or waived.
"Assistance Agreement" shall mean the Assistance Agreement between the State of
Connecticut acting by the Department of Economic Development and Second
Borrower.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or any Borrower's business.
"Borrower" and "Borrowers" shall have the meanings assigned to them in the
preamble of this Agreement.
"Borrowing Availability" shall mean, at any time with respect to any Borrower,
the lesser of (i) the Maximum Amount less the sum of the aggregate Revolving
Credit Loans attributable to the other Borrowers or (ii) such Borrower's
Borrowing Base, in each case less reserves established by Lender from time to
time.
"Borrowing Base" shall mean at any time with respect to any Borrower, an amount
equal to the sum at such time of:
(a) eighty five percent (85%) of the value (as determined by Lender) of
such Borrower's Eligible Accounts; provided that Lender shall reduce the
foregoing percentage by one percentage point for each percentage point that the
dilution of such Borrower's Accounts (calculated by Lender as the average
dilution over the most recent 3 months) exceeds 5%; plus
(b) the lesser of (i) $4,000,000, (ii) the sum of (A) fifty percent (50%)
of the value of such Borrower's Eligible Inventory consisting of finished goods
and raw materials and (B) the lesser of (1) $1,000,000 or (2) fifty percent
(50%) of the value of such Borrower's Eligible Inventory consisting of work in
progress, or (iii) eighty-five percent (85%) of the orderly liquidation value of
such Borrower's Eligible Inventory as set forth in the most recent appraisal
prepared by an independent appraisal firm acceptable to Lender, in each case
(except as otherwise provided) as determined by Lender, valued on a first-in,
first-out basis (at the lower of cost or market).
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"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit C.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would be
disclosed as such in a note to such balance sheet, other than, in the case of
any Borrower, any such lease under which such Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in Schedule C.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date, that any change in the composition of such Person's stockholders
as of the Closing Date shall occur which would result in any stockholder or
group acquiring 49.9% or more of any class of Stock of such Person, or that any
Person (or group of Persons acting in concert) shall otherwise acquire, directly
or indirectly (including through Affiliates), the power to elect a majority of
the Board of Directors of such Person or otherwise direct the management or
affairs of such Person by obtaining proxies, entering into voting agreements or
trusts, acquiring securities or otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to PBGC at the time due and
payable), levies, customs or other duties, assessments, charges, liens, and all
additional charges, interest, penalties, expenses, claims or encumbrances upon
or relating to (i) the Collateral, (ii) the Obligations, (iii) the employees,
payroll, income or gross receipts of any Credit Party, (iv) the ownership or use
of any assets by any Credit Party, or (v) any other aspect of any Credit Party's
business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent set
forth in Section 2 have been satisfied or specifically waived in writing by
Lender, and the initial Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
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"Collection Account" shall mean that certain account of Lender, account number
▇▇-▇▇▇-▇▇▇ in the name of GECC CAF Depository at Bankers Trust Company, ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ number ▇▇▇-▇▇▇-▇▇▇.
"Commitment Termination Date" shall mean the earliest of (i) the Stated Expiry
Date, (ii) the date Lender's obligation to advance funds is terminated pursuant
to Section 7.2, and (iii) the date of indefeasible prepayment in full by
Borrowers of the Obligations in accordance with the provisions of Section
1.2(c).
[*]
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting the right to use any Copyright or
Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all copyrights in any original work of authorship fixed in any
tangible medium of expression, now known or later developed, all registrations
and applications for registration of any such copyrights in the United States or
any other country, including registrations, recordings and applications, and
supplemental registrations, recordings, and applications in the United States
Copyright Office; and (ii) all Proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to ▇▇▇ for past, present
and future infringements, all rights corresponding thereto throughout the world
and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation,
partnership or limited liability company.
"Credit Party" shall mean each Borrower, and each other Person (other than
Lender) that is or may become a party to this Agreement or any other Loan
Document.
"DED Security Agreement" shall mean Security Agreement dated January 4, 1995
between the State of Connecticut acting through its Department of Economic
Development and Second Borrower.
"Default" shall mean any Event of Default or any event which, with the passage
of time or notice or both, would, unless cured or waived, become an Event of
Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(c).
"Determined Tax Liability Amount" shall mean the amount of tax liability of
Credit Parties arising out of the debt forgiveness by Fleet as determined by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or another independent certified public accounting firm selected
by Credit Parties and acceptable to Lender.
"Documents" shall mean all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.
---------
* Certain confidential information on this page has been omitted and filed
separately with the Securities and Exchange Commission.
4
33
"Eligible Accounts" shall mean as at the date of determination with respect to
any Borrower, all Accounts of such Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of such
Borrower's business;
(b) upon which (i) such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) such Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process;
(c) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted or which is a "contra"
Account;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise
sold or services performed and accepted by the Account Debtor
obligated upon such Account;
(e) with respect to which an invoice, acceptable to Lender in form
and substance, has not been sent;
(f) that is not owned by such Borrower or is subject to any right,
claim, or interest of another Person, other than the Lien in favor
of Lender or a Encumbrances;
(g) that is not subject to a first priority perfected Lien in favor of
Lender;
(h) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of any Borrower or
any other Credit Party, or an entity which has common officers or
directors with any Borrower or any other Credit Party;
(i) that is the obligation of an Account Debtor that is the Federal
(or local) government or a political subdivision thereof, unless
Lender has agreed to the contrary in writing and such Borrower has
complied with the Federal Assignment of Claims Act of 1940 (or the
state equivalent thereof, if any) with respect to such obligation;
(j) that is the obligation of an Account Debtor located in a foreign
country other than ▇▇▇▇▇ & Whitney Canada unless such Account is
supported by a letter of credit in which Lender has a first
priority perfected security interest by possession or credit
insurance acceptable to Lender (and naming Lender as loss payee);
(k) that is the obligation of an Account Debtor to whom any Borrower
is or may become liable for goods sold or services rendered by the
Account Debtor to any Borrower unless such Account Debtor has
agreed not to set off any liabilities of any Borrower against such
Accounts pursuant to an agreement in form and substance
satisfactory to Lender, to the extent of any Borrower's liability
to such Account Debtor;
(l) that arises with respect to goods which are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account
Debtor may be conditional;
(m) that is an obligation for which the total unpaid Accounts of the
Account Debtor (other than ▇▇▇▇▇ & ▇▇▇▇▇▇▇) owing to such Borrower
exceed 30% of the aggregate of all Accounts, to the extent of such
excess;
(n) that is an obligation for which the total unpaid Accounts of ▇▇▇▇▇
& Whitney owing to such Borrower exceed 60% of the aggregate all
of all Accounts, to the extent of such excess;
(o) that is an obligation for which the total unpaid Accounts of the
Account Debtor (other than ▇▇▇▇▇ & ▇▇▇▇▇▇▇) to all Borrowers
exceed 20% of the aggregate of all Accounts of Borrowers, to the
extent of such excess;
(p) that is an obligation for which the total unpaid Accounts of ▇▇▇▇▇
& Whitney to all Borrowers exceed 40% of the aggregate of all
Accounts of Borrowers, to the extent of such excess;
(q) that is not paid within 60 days from its due date or 90 days from
its invoice date or that are Accounts of an Account Debtor if 50%
or more of the Accounts owing from such Account Debtor remain
unpaid within such time periods;
(r) is an obligation of an Account Debtor that has suspended business,
made a general assignment for the benefit of creditors, is unable
to pay its debts as they become due or as to which a petition has
been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;
(s) that arises from any ▇▇▇▇-and-hold or other sale of goods which
remain in any Borrower's possession or under any Borrower's
control, unless Lender has received an agreement from the owner of
such goods in form and substance satisfactory to Lender;
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34
(t) as to which Lender's interest therein is not a first priority
perfected security interest;
(u) to the extent that such Account exceeds any credit limit
established by Lender in Lender's good faith credit judgment;
(v) as to which any of such Borrower's representations or warranties
pertaining to Accounts are untrue; (w) that represents interest
payments, late or finance charges, or service charges owing to
such Borrower;
(x) that arises out of progress ▇▇▇▇▇▇▇▇ prior to completion of an
order;
(y) that represents a retainage; or
(z) that is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and
adjust eligibility standards and related reserves from time to
time in its good faith credit judgment.
"Eligible Inventory" shall mean as at the date of determination as to any
Borrower, all Inventory of such Borrower, except any Inventory that:
(a) is not subject to a first priority perfected security interest of
Lender or is not owned by such Borrower free and clear of all
Liens and rights of others (except the Liens in favor of Lender
and Permitted Encumbrances);
(b) is not located on premises owned or operated by such Borrower and
referenced in Disclosure Schedule (3.2) unless such Inventory is
located at a processor referenced in Disclosure Schedule (3.2) and
Lender has received an agreement from such processor in form and
substance satisfactory to Lender;
(c) is not located on premises where the aggregate amount of all
Inventory (valued at cost) of such Borrower located thereon is
greater than $100,000;
(d) is located on premises with respect to which Lender has not
received a landlord or mortgagee letter acceptable in form and
substance to Lender;
(e) is in transit;
(f) is covered by a negotiable document of title, unless such document
and evidence of acceptable insurance covering such Inventory has
been delivered to Lender,
(g) in Lender's good faith credit judgment, is obsolete, unsalable,
shopworn, damaged, unfit for further processing, is of substandard
quality or is not of good and merchantable quality, free from any
defects;
(h) consists of (i) discontinued items, (ii) slow-moving or excess
items held in inventory, or (iii) used items held for resale;
(i) does not consist of raw materials, work in progress or finished
goods;
(j) does not meet all standards imposed by any Governmental Authority,
including with respect to its production, acquisition or
importation (as the case may be);
(k) is placed by such Borrower on consignment or held by such Borrower
on consignment from another Person;
(l) is held for rental or lease by or on behalf of such Borrower;
(m) is produced in violation of the Fair Labor Standards Act and
subject to the "hot goods" provisions contained in 29
U.S.C. S 215 or any successor statute or section;
(n) in any way fails to meet or violates any warranty, representation
or covenant contained in this Agreement or any other Loan
Document;
(o) is subject to any licensing, patent, royalty, trademark, trade
name or copyright agreement with any third parties;
(p) requires the consent of any Person for the completion of
manufacture, sale or other disposition of such Inventory by
Lender following an Event of Default and such completion,
manufacture or sale constitutes a breach or default under any
contract or agreement to which such Borrower is a party or to
which such Inventory is or may become subject;
(q) is not the subject of firm purchase orders; or
(r) is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and
adjust eligibility standards and related reserves from time to
time in its good faith credit judgment.
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any
6
35
applicable judicial or administrative interpretation thereof relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of whatever
nature, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person and
which relate to any health or safety condition regulated under any Environmental
Law, environmental permits or in connection with any Release, threatened
Release, or the presence of a Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including any and
all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description which may be now or hereafter used in such Person's
operations or which are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any
successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not incorporated)
that, together with any Credit Party, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the IRC, or, solely for the purposes of
Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer
under Section 414 of the IRC.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any ERISA Affiliate of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to an intention to terminate any Plan
or to appoint a trustee to administer any Plan; (f) the incurrence by any Credit
Party or any ERISA Affiliate of any liability with respect to any withdrawal or
partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
any Credit Party or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of each Borrower and its
Subsidiaries, internally prepared for each Fiscal Month or Fiscal Quarter, and
audited for each Fiscal Year, prepared in accordance with GAAP.
"Fiscal Month" shall mean any of the monthly accounting periods of Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers.
"Fiscal Year" shall mean the 12 month period of Borrowers ending on the last
Saturday of each calendar year. Subsequent changes of the fiscal year of
Borrowers shall not change the term "Fiscal Year" unless Lender shall consent in
writing to such change.
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"Fixed Charge Coverage Ratio" will have the meaning ascribed to it in Schedule
G.
"Fleet" shall mean Fleet National Bank.
"Fleet Documents" shall mean collectively, the Fleet Original Notes, the Fleet
Note, the Fleet Escrow Agreement, the Fleet Security Agreement, the Fleet
Guarantees and the Fleet Mortgage.
"Fleet Escrow Agreement" shall mean the Forbearance and Escrow Agreement dated
September 29, 2000 among Fleet, Leading Borrower, Second Borrower, Gros-Ite and
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
"Fleet Guarantees" shall mean collectively, the Unlimited Continuing Guaranty
Agreements dated as of September 29, 2000 executed by each of Second Borrower
and Gros-Ite in favor of Fleet.
"Fleet Intercreditor and Subordination Agreement" shall mean that certain
Intercreditor and Subordination Agreement dated of even date herewith executed
by Credit Parties, Fleet and Lender.
"Fleet Loan Agreement" shall mean the Revolving Loan and Security Agreement
dated October 3, 1985 between Fleet and Leading Borrower which has been amended
and restated from time to time, and in its entirety by a certain Fifth Amended
and Restated Revolving Loan, Term Loan, Equipment Loan and Security Agreement
dated February 28, 1995, as amended by a certain Sixth Amendment to Revolving
Loan, Term Loan, Equipment Loan and Security Agreement dated July 31, 1995, as
further amended by a certain Seventh Amendment to Revolving Loan, Term Loan,
Equipment Loan and Security Agreement and Reaffirmation of Guaranties dated as
of January 26, 1996, as further amended by a certain Eighth Amendment to
Revolving Loan, Term Loan, Equipment Loan and Security Agreement and
Reaffirmation of Guaranties dated as of April 10, 1996, as further amended by a
certain Ninth Amendment to Revolving Loan, Term Loan, Equipment Loan, Security
Agreement, Modification of Notes and Reaffirmation of Guaranties dated May 27,
1997 between Leading Borrower and Fleet, as further amended by a certain Tenth
Amendment to Revolving Loan, Term Loan, Equipment Loan and Security Agreement
and Reaffirmation of Guaranties dated May 22, 1998, as further amended by a
certain Eleventh Amendment to Loan and Security Agreement, Modification of Notes
and Reaffirmation of Guaranties dated as of June 30, 1998 and as further amended
by a certain Twelfth Amendment to Loans and Security Agreement Modification of
Notes and Reaffirmation of Guaranties dated as of November 25, 1998, as the same
may be amended, modified or otherwise supplemented from time to time.
"Fleet Mortgage" shall mean the Mortgage dated May 12, 1989 executed by Leading
Borrower in favor of Fleet covering the Mortgaged Property as amended and
modified from time to time.
"Fleet Note" shall mean the Amended and Restated Term Note dated September 29,
2000 in the original principal amount of $7,000,000 executed by Leading Borrower
in favor of Fleet.
"Fleet Original Notes" shall mean the Second Amended and Restated Revolving
Promissory Note in the original principal amount of $13,000,000 dated as of June
30, 1998, the Term Promissory Note in the original principal amount of
$14,000,000 dated June 30, 1998, the Amended and Restated Promissory Note in the
principal amount of $541,153.34 dated March 27, 1997, the Term Promissory Note
in the principal amount of $4,000,000 dated March 22, 1993, the Construction to
Permanent Loan Promissory Note in the original principal amount of $1,000,000
dated July 31, 1995, the Equipment Promissory Note III in the original principal
amount of $3,000,000 dated as of March 27, 1997, the Equipment Promissory Note
IV in the original principal amount of $3,000,000 dated as of May 22, 1998, each
executed by Leading Borrower in favor of Fleet.
"Fleet Security Agreement" shall mean collectively, the Security Agreements
dated as of September 29, 2000 executed by each of Leading Borrower, Second
Borrower and Gros-Ite in favor of Fleet.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time, consistently applied.
8
37
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in or
under any Contract, Intellectual Property, interests in partnerships, joint
ventures and other business associations, permits, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials,
Books and Records, Goodwill (including the Goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key-person, and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, deposit
accounts, rights to receive tax refunds and other payments and rights of
indemnification.
"Goods" shall mean all "goods," as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.
"Governmental Authority" shall mean any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Gros-Ite" shall mean Gros-Ite Industries, Inc., a Connecticut corporation.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such
Person guaranteeing any indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, including any obligation or arrangement of such guaranteeing Person
(whether or not contingent): (i) to purchase or repurchase any such primary
obligation; (ii) to advance or supply funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor; (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Guarantor" shall mean each Person which executes a guaranty or a support, put
or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and in
form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as the
same may be in effect at the time such reference becomes operative.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the Resource
Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901 et. seq.).
9
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"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured, but not
including obligations to trade creditors incurred in the ordinary course of
business and not more than 45 days past due); (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments; (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (iv) all Capital Lease Obligations;
(v) all Guaranteed Indebtedness; (vi) all Indebtedness referred to in clauses
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; (vii) the Obligations; and (viii) all liabilities
under Title IV of ERISA.
"Indemnified Liabilities" and "Indemnified Person" shall have the meaning
assigned to such terms in Section 1.11.
"Index Rate" shall mean the latest rate for 30-day dealer placed commercial
paper (which for purposes hereof shall mean high grade unsecured notes sold
through dealers by major corporations in multiples of $1,000), which normally is
published in the "Money Rates" section of The Wall Street Journal (or if such
rate ceases to be so published, as quoted from such other generally available
and recognizable source as Lender may select). The Index Rate shall be
determined (i) on the first Business Day immediately prior to the Closing Date
and (ii) thereafter, on the last Business Day of each calendar month for
calculation of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean any and all Licenses, Patents, Copyrights,
Trademarks, trade secrets and customer lists.
"Inventory" shall mean all "inventory," as such term is defined in the Code, now
or hereafter owned or acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property which are held by or
on behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in such Person's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter acquired by an Person, wherever located.
"IRC" and "IRS" shall mean respectively, the Internal Revenue Code of 1986 and
the Internal Revenue Service, and any successor thereto.
"Lender" shall mean General Electric Capital Corporation and, if at any time
Lender shall decide to assign or syndicate all or any of the Obligations, such
term shall include such assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of any Borrower for which
Lender has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations (including
all duty, freight, taxes, costs, insurance and any other charges and expenses)
incurred by Lender, whether direct or indirect,
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39
contingent or otherwise, due or not due, in connection with the issuance or
guarantee, by Lender or another, of Letters of Credit, all as further set forth
in Schedule C.
"License" shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Notes, the Financial Statements,
each Guaranty, the Power of Attorney, the Lock Box Account Agreements, the Fleet
Intercreditor and Subordination Agreement, the Stock Pledge Agreement and the
other documents and instruments listed in Schedule F, and all security
agreements, mortgages and all other documents, instruments, certificates, and
notices at any time delivered by any Person (other than Lender) in connection
with any of the foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations, and the Term Loans.
"Lock Box Account" and "Lock Box Account Agreement" shall have the meanings
assigned to such terms in Schedule D.
"Material Adverse Effect" shall mean: a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of any
Borrower or any other Credit Party or the industry within which such Borrower or
any other Credit Party operates, (b) any Borrower's or any other Credit Party's
ability to pay or perform the Obligations under the Loan Documents to which such
Credit Party is a party in accordance with the terms thereof, (c) the Collateral
or Lender's Liens on the Collateral or the priority of any such Lien other than
by reason of any action or omission on the part of Lender which constitutes
gross negligence or willful misconduct in connection with the perfection or
maintenance of such Lien, or (d) Lender's rights and remedies under this
Agreement and the other Loan Documents.
"Maximum Amount" shall mean $8,000,000 .
"Mortgage Conditions" shall mean the satisfaction of each of the following
conditions:
(a) Lender shall have received (i) a Phase I Environmental Site
Assessment Report, consistent with American Society for Testing
and Materials (ASCM) Standard E 1527-94 and applicable state
requirements, on the Mortgaged Property, dated no more than 6
months prior to the Closing Date, prepared by environmental
engineers satisfactory to Lender, in form and substance
satisfactory to Lender and such other environmental review and
audit reports, including Phase II reports, with respect to the
Mortgaged Property as Lender shall have requested, and Lender
shall be satisfied, in its sole discretion, with the contents of
all such environmental reports and (ii) letters executed by the
environmental firms preparing such environmental reports, in form
and substance satisfactory to Lender, authorizing Lender to rely
on such reports;
(b) Lender shall have received (i) evidence of insurance with respect
to the Mortgaged Property in form and amounts and with insurers
acceptable to Lender and (ii) Lender shall be named as additional
insured and loss payee with respect to such policies pursuant to
documentation acceptable to Lender;
(c) Lender shall have received title insurance policies insuring
Leader's Lien on the Mortgage Property as a first Lien on the
Mortgaged Property, current as-built surveys, zoning letters
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40
and certificates of occupancy, with respect to the Mortgaged
Property in each case satisfactory in form and substance to
Lender;
(d) Lender shall have received a mortgage and fixture filings, each in
form and substance satisfactory to Lender executed by the
appropriate parties;
(e) Lender shall have received evidence that counterparts of the
mortgage covering the Mortgaged Property has been recorded in all
places to the extent necessary or desirable, in the judgment of
Lender, to create a valid and enforceable first priority Lien
(subject to Permitted Encumbrances) on the Mortgaged Property in
favor of Lender;
(f) Lender shall have received a Subordination Agreement in form and
substance satisfactory to Lender executed by Fleet with respect to
Fleet's mortgage lien on the Mortgaged Property; and
(g) Lender shall have received an Opinion of Counsel to Leading
Borrower with respect to the mortgage covering the Mortgaged
Property executed by Leading Borrower in form and substance
satisfactory to Lender.
"Mortgaged Property" shall mean the real property of Leading Borrower located at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, 1798 New Britain Avenue,
Farmington Connecticut, and ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇.
"Minimum Actionable Amount" shall mean $50,000.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001(a) (3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean at any time with respect to any
Borrower, such Borrower's Borrowing Availability less the Revolving Credit Loan
attributable to such Borrower.
"Notes" shall mean the Revolving Credit Notes and the Term Notes.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing by
any Borrower and any other Credit Party to Lender, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, whether arising under any of the Loan Documents or under any other
agreement between such Borrower, such Credit Party and Lender, and all covenants
and duties regarding such amounts. This term includes all principal, interest
(including interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), Fees, Charges, expenses, attorneys' fees and any
other sum chargeable to any Borrower under any of the Loan Documents, and all
principal and interest due in respect of the Loans and all obligations and
liabilities of any Guarantor under any Guaranty.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) all letters patent of the United States or
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office
12
41
or agency of the United States, any State or Territory thereof, or any other
country; and (ii) all reissues, continuations, continuations-in-part or
extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pegos" shall mean Pegos Machine Corporation, a Connecticut corporation.
"Pegos Guaranty" shall mean the Guaranty dated August 20, 1997 executed by
Leading Borrower in favor of Fleet.
"Pegos Sale" shall mean the sale by Leading Borrower of its interest in Pegos
provided that in connection with such sale Leading Borrower is released from its
obligations under the Pegos Guaranty.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of Section 3.10; (ii) pledges or deposits securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of any Credit Party; (v)
inchoate and unperfected workers', mechanics', or similar liens arising in the
ordinary course of business so long as such Liens attach only to Equipment,
fixtures or real estate; (vi) carriers', warehousemen's, suppliers' or other
similar possessory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable in an outstanding aggregate amount not in
excess of $25,000 at any time so long as such Liens attach only to Inventory;
(vii) deposits of money securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (viii) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or rent)
to the extent permitted under Section 5(b)(vi); (x) Liens in existence on the
Closing Date as disclosed on Disclosure Schedule 5(e) provided that no such Lien
is spread to cover additional property after the Closing Date and the amount of
Indebtedness secured thereby is not increased; (xi) in the event Lender does not
make Term Loan B available to Leading Borrower, Liens on the Mortgaged Property
provided that the holder of such Liens shall have entered into a mortgagee
agreement in form and substance satisfactory to Lender; and (xi) Liens in favor
of Lender securing the Obligations.
[*]
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or
-------------
* Certain confidential information on this page has been omitted and filed
separately with the Securities and Exchange Commission.
13
42
otherwise, including any instrumentality, division, agency, body or department
thereof), and shall include such Person's successors and assigns.
"Plan" shall mean any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the IRC
or Section 302 of ERISA, and in respect of which any Credit Party or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"▇▇▇▇▇ & ▇▇▇▇▇▇▇" shall mean the ▇▇▇▇▇ & Whitney division of United Technologies
Corporation.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to any Borrower or any other Credit Party from time
to time with respect to any Collateral; (ii) any and all payments (in any form
whatsoever) made or due and payable to any Borrower or any other Credit Party
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of any Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority); (iii) any claim of any Borrower or any other Credit Party against
third parties (a) for past, present or future infringement of any Intellectual
Property or (b) for past, present or future infringement or dilution of any
Trademark or Trademark License or for injury to the goodwill associated with any
Trademark, Trademark registration or Trademark licensed under any Trademark
License; (iv) any recoveries by any Borrower or any other Credit Party against
third parties with respect to any litigation or dispute concerning any
Collateral; and (v) any and all other amounts from time to time paid or payable
under or in connection with any Collateral, upon disposition or otherwise.
"Projections" shall mean as of the Closing Date those projections attached to
this Agreement as Schedule H and as of any date thereafter the consolidated and
consolidating balance sheet, statements of income and cash flow for each
Borrower and its Subsidiaries (including forecasted Capital Expenditures and Net
Borrowing Availability) (i) by month for the next Fiscal Year, and (ii) by year
for the following three Fiscal Years, in each case prepared in a manner
consistent with GAAP and accompanied by senior management's discussion and
analysis of such plan.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, (ii) any
Indebtedness incurred for the sole purpose of financing or refinancing all or
any part of the purchase price of any fixed asset, and (iii) any renewals,
extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall at
all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.
"Real Property" shall have the meaning assigned to it in Section 3.15.
"Release" shall mean, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
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43
"Restricted Payment" shall mean: (i) the declaration or payment of any dividend
or the incurrence of any liability to make any other payment or distribution of
cash or other property or assets on or in respect of any Borrower's or any other
Credit Party's Stock; (ii) any payment or distribution made in respect of any
subordinated Indebtedness of any Borrower or any other Credit Party in violation
of any subordination or other agreement made in favor of Lender; (iii) any
payment on account of the purchase, redemption, defeasance or other retirement
of any Borrower's or any other Credit Party's Stock or Indebtedness or any other
payment or distribution made in respect of any thereof, either directly or
indirectly; other than (a) that arising under this Agreement {or}, (b) interest
and principal, when due without acceleration or modification of the amortization
as in effect on the Closing Date, under Indebtedness (not including subordinated
Indebtedness, payments of which shall be permitted only in accordance with the
terms of the relevant subordination agreement made in favor of Lender) described
in Disclosure Schedule (5(b)) or otherwise permitted under Section 5(b)(vi) or
(c) intercompany Indebtedness to the extent permitted by this Agreement; or (iv)
any payment, loan, contribution, or other transfer of funds or other property to
any Stockholder of such Person except for payments that are made as a result of
such Person's status other than as a Stockholder of such Person which is not
expressly and specifically permitted in this Agreement; provided, that no
payment to Lender shall constitute a Restricted Payment.
"Revolving Credit Advance" shall have the meaning assigned to it in Section
1.1(a).
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total Letter
of Credit Obligations incurred by Lender and outstanding at such time, plus
(iii) the amount of accrued but unpaid interest thereon and Letter of Credit
Fees with respect thereto.
"Revolving Credit Note" shall mean each promissory note dated the Closing Date,
executed by a Borrower substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section 1.5(a).
"Seller Mortgage" shall mean the Mortgage Deed , Assignment of Leases and
Security Agreement dated June 30, 1998 executed by Second Borrower in favor of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to secure the Seller
Note covering the real property of Second Borrower located at 17 and ▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇.
"Seller Note" shall mean that certain Promissory Note executed by Apex
Acquisition Corporation in favor of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the original principal amount of $2,710,687.02 dated June
30, 1998.
"Solvent" means, with respect to any Person on a particular date, that on such
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured; (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Stated Expiry Date" shall mean September 29, 2003.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is
15
44
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" shall mean each holder of Stock of any Borrower or any other
Credit Party.
"Stock Pledge Agreement" shall mean that certain Pledge Agreement dated of even
date herewith executed by EDAC with respect to all of the issued and outstanding
common of Second Borrower and Gros-Ite of Borrowers in favor of Lender.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (ii) any partnership or limited liability
company in which such Person or one or more Subsidiaries of such Person has an
equity interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or manager or may exercise the powers of a general partner or manager.
"Tax Liability Reserve" shall mean a reserve that Lender shall establish against
Borrowing Availability for the potential tax liability of Credit Parties arising
out of the debt forgiveness by Fleet which reserve shall be in an amount equal
to (a) to the extent the Determined Tax Liability Amount has been determined,
for the period commencing on January 15, 2001 and thereafter until Lender has
received evidence satisfactory to Lender that such tax liability has been paid
in full, the Determined Tax Liability Reserve Amount divided by 8 (the
"Additional Amount") as increased by the Additional Amount on the 15th day of
each month commencing on February 15, 2001 and on the 15th day thereafter to and
including September 15, 2001, and (b) to the extent the Determined Tax Liability
Amount has not been determined, for the period commencing on January 15, 2001
and thereafter until Lender has received evidence satisfactory to Lender that
such tax liability has been paid in full, an amount determined by Lender in its
sole discretion.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Lender.
"Term Loan A" shall collectively, mean Term Loan A-1 and Term Loan A-2.
"Term Loan A-1" shall mean the loan in the amount specified in and evidenced by
the Term Note A-1, and made to Leading Borrower under the terms of the
Agreement, and any renewals, extensions, revisions, modifications or
replacements therefor or thereof.
"Term Loan A-2" shall mean the loan in the amount specified in and evidenced by
Term Note A-2 and made to Second Borrower under the terms of the Agreement, and
any renewals, extensions, revisions, modifications or replacements therefore or
thereof.
"Term Loan B" shall mean the loan in the amount specified in and evidenced by
the Term Note B and made to Borrowers under the terms of the Agreement, and any
renewals, extensions, revisions, modifications or replacements therefor or
thereof.
"Term Loan" shall mean the Term Loan ▇-▇, ▇▇▇▇ ▇▇▇▇ ▇-▇ or the Term Loan B .
"Term Loans" shall mean, collectively, the Term Loan A and the Term Loan B.
"Term Loan A Rate" shall have the meaning assigned to it in Section 1.5(a).
"Term Loan B Rate" shall have the meaning assigned to it in Section 1.5(a).
16
45
"Term Loan Rate" shall mean the Term Loan A Rate or the Term Loan B Rate. "Term
Loan Rates" shall mean collectively, the Term Loan A Rate and the Term Loan B
Rate.
"Term Notes A" shall mean collectively, the Term Note A-1 and the Term Note A-2
.
"Term Note A-1" shall mean the Term Note A-1 or the Term Note A-2".
"Term Notes A" shall mean collectively, the Term Note A-1
"Term Note A-1" shall mean the promissory note of Leading Borrower dated the
Closing Date, substantially in the form of Exhibit G-1.
"Term Note A-2" shall mean the promissory note of Second Borrower dated the
Closing Date, substantially in the form of Exhibit G-2.
"Term Note B" shall mean the promissory note of Leading Borrower dated the
Closing Date, substantially in the form of Exhibit G-3.
"Term Note" shall mean the Term Note ▇-▇, ▇▇▇▇ ▇▇▇▇ ▇-▇ or the Term Note B.
"Term Notes" shall mean collectively, the Term Note A and the Term Note B.
"Termination Date" shall mean the date on which all Obligations under this
Agreement are indefeasibly paid in full, in cash (other than amounts in respect
of Letter of Credit Obligations if any, then outstanding, provided that
Borrowers shall have funded such amounts in cash in full into the Cash
Collateral Account), and Borrowers shall have no further right to borrow any
moneys or obtain other credit extensions or financial accommodations under this
Agreement.
"Trademark License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right to use any Trademark or
Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter acquired by
any Person: (i) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or Territory thereof, or any other
country or any political subdivision thereof, and (ii) all reissues, extensions
or renewals thereof.
"Unused Line Fee" shall have the meaning assigned to it in Schedule E.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein, in
accordance with GAAP consistently applied; provided, that all financial
covenants and calculations in the Loan Documents shall be made in accordance
with GAAP as in effect on the Closing Date unless Borrower and Lender shall
otherwise specifically agree in writing. That certain items or computations are
explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing. All other undefined terms contained in this
Agreement or the other Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code. The words "herein,"
"hereof" and "hereunder" or other words of similar import refer to this
Agreement as a whole, including the exhibits and schedules thereto, as the same
may from time to time be amended, modified or supplemented, and not to any
particular section, subsection or clause contained in this Agreement.
17
46
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated to
the contrary: (a) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural,; (b) the term "or" is not exclusive; (c) the term "including" (or any
form thereof) shall not be limiting or exclusive; (d) all references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations; and (e) all references to any instruments or
agreements, including references to any of the Loan Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof.
18
47
Schedule B
LENDER'S AND BORROWERS' ADDRESSES FOR NOTICES
Lender's Address:
Name: General Electric Capital Corporation
Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att'n: EDAC Technologies Corporation- Apex Machine Tool Company, Inc.
Account Manager
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Leading Borrower's Address:
Name: EDAC Technologies Corporation
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 860-674-2718
Second Borrower's Address:
Name: Apex Machine Tool Company, Inc.
c/o EDAC Technologies Corporation
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att'n: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
48
SCHEDULE C
LETTERS OF CREDIT
1. Lender agrees, subject to the terms and conditions hereinafter set forth, to
incur Letter of Credit Obligations in respect of the issuance of Letters of
Credit issued on terms acceptable to Lender and supporting obligations of each
Borrower incurred in the ordinary course of such Borrower's business, in order
to support the payment of such Borrower's inventory purchase obligations,
insurance premiums, or utility or other operating expenses and obligations, as
Leading Borrower shall request as agent for such Borrower by written notice to
Lender that is received by Lender not less than five Business Days prior to the
requested date of issuance of any such Letter of Credit; provided, that: (a)
that the aggregate amount of all Letter of Credit Obligations in favor of such
Borrower at any one time outstanding (whether or not then due and payable) shall
not exceed [n/a]; (b) no Letter of Credit shall have an expiry date which is
later than the Stated Expiry Date or one year following the date of issuance
thereof; and (c) Lender shall be under no obligation to incur any Letter of
Credit Obligation if after giving effect to the incurrence of such Letter of
Credit Obligation, the Net Borrowing Availability would be less than zero. The
maximum amount payable in respect of each Letter of Credit requested by any
Borrower will be guaranteed by Lender in favor of the issuing bank under terms
of a separate agreement between Lender and the issuing bank. Each Borrower will
enter into an application and agreement for such Letter of Credit with the
issuing bank selected by Lender (which may be an Affiliate of Lender). The bank
that issues any Letter of Credit pursuant to this Agreement shall be determined
by Lender in its sole discretion.
2. The notice to be provided to Lender requesting that Lender incur Letter of
Credit Obligations shall be in the form of a Letter of Credit application in the
form customarily employed by the issuing bank, together with a written request
by the applicable Borrower and the bank that Lender approve such Borrower's
application. Upon receipt of such notice Lender shall establish a reserve
against such Borrower's Borrowing Availability in the amount of 100% of the face
amount of the Letter of Credit Obligation to be incurred. Approval by Lender in
the written form agreed upon between Lender and the issuing bank (a) will
authorize the bank to issue the requested Letter of Credit, and (b) will
conclusively establish the existence of the Letter of Credit Obligation as of
the date of such approval.
3. In the event that Lender shall make any payment on or pursuant to any Letter
of Credit Obligation, Borrower shall be unconditionally obligated to reimburse
Lender therefor, and such payment shall then be deemed to constitute a Revolving
Credit Advance in favor of such Borrower. For purposes of computing interest
under Section 1.5, a Revolving Credit Advance made in satisfaction of a Letter
of Credit Obligation shall be deemed to have been made as of the date on which
the issuer or endorser makes the related payment under the underlying Letter of
Credit.
4. In the event that any Letter of Credit Obligations, whether or not then due
or payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower will either (a) cause the underlying Letter of Credit to be
returned and canceled and each corresponding Letter of Credit Obligation to be
terminated, or (b) pay to Lender, in immediately available funds, an amount
equal to 105% of the maximum amount then available to be drawn under all Letters
of Credit in favor of such Borrower not so returned and canceled to be held by
Lender as cash collateral in an account under the exclusive dominion and control
of Lender (the "Cash Collateral Account").
5. In the event that Lender shall incur any Letter of Credit Obligations in
favor of any Borrower, such Borrower agrees to pay the Letter of Credit Fee to
Lender as compensation to Lender for incurring such Letter of Credit
Obligations. In addition, such Borrower shall reimburse Lender for all fees and
charges paid by Lender on account of any such Letters of Credit or Letter of
Credit Obligations to the issuing bank.
6. Each Borrower's Obligations to lender with respect to any Letter of Credit or
Letter of Credit Obligation shall be evidenced by Lender's records and shall be
absolute, unconditional and irrevocable and shall not be affected, modified or
impaired by (a) any lack of validity or enforceability of the transactions
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (b) any amendment or waiver of or consent to depart from all or any
of the terms of the transactions
49
contemplated by or related to such Letter of Credit or Letter of Credit
Obligation; (c) the existence of any claim, set-off, defense or other right
which any Borrower or any other Credit Party may have against Lender, the issuer
or beneficiary of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any other Loan Document or such Letter of Credit
or the transactions contemplated thereby or any unrelated transactions; or (d)
the fact that any draft, affidavit, letter, certificate, invoice, ▇▇▇▇ of lading
or other document presented under or delivered in connection with such Letter of
Credit or any other Letter of Credit proves to have been forged, fraudulent,
invalid or insufficient in any respect or any statement therein proves to have
been untrue or incorrect in any respect.
7. In addition to any other indemnity obligations which any Borrower may have to
Lender under this Agreement and without limiting such other indemnification
provisions, Each Borrower hereby agrees to indemnify Lender from and to hold
Lender harmless against any and all claims, liabilities, losses, costs and
expenses (including, attorneys' fees and expenses) which Lender may (other than
as a result of its own gross negligence or willful misconduct) incur or be
subject to as a consequence, directly or indirectly, of (a) the issuance of or
payment of or failure to pay under any Letter of Credit or Letter of Credit
Obligation or (b) any suit, investigation or proceeding as to which Lender is or
may become a party as a consequence, directly or indirectly, of the issuance of
any Letter of Credit, the incurring of any Letter of Credit Obligation or any
payment of or failure to pay under any Letter of Credit or Letter of Credit
Obligation. The obligations of each Borrower under this paragraph shall survive
any termination of this Agreement and the payment in full of the Obligations.
8. Each Borrower hereby assumes all risks of the acts, omissions or misuse of
each Letter of Credit by the beneficiary or issuer thereof and, in connection
therewith, Lender shall not be responsible (a) for the validity, sufficiency,
genuineness or legal effect of any document submitted in connection with any
drawing under any Letter of Credit even if it should in fact prove in any
respect to be invalid, insufficient, inaccurate, untrue, fraudulent or forged;
(b) for the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or any rights or
benefits thereunder or any proceeds thereof, in whole or in part, even if it
should prove to be invalid or ineffective for any reason; (c) for the failure of
any issuer or beneficiary of any Letter of Credit to comply fully with the terms
thereof, including the conditions required in order to effect or pay a drawing
thereunder; (d) for any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, telecopy, telex or otherwise;
(e) for any loss or delay in the transmission or otherwise of any document or
draft required in order to make a drawing under any Letter of Credit; or (f) for
any consequences arising from causes beyond the direct control of Lender.
2
50
Schedule D
CASH MANAGEMENT
Borrowers agree to establish, and to maintain, until the Termination Date, the
cash management system described below:
1. No Corporate Credit Party: (i) shall not (nor shall it permit any of its
Subsidiaries to) open or maintain any deposit, checking, operating or other bank
account, or similar money handling account, with any bank or other financial
institution except for those accounts identified in Attachment I hereto (to
include a ▇▇▇▇▇ cash account not to exceed $5,000 during any Fiscal Month, and a
payroll account not to exceed an amount equal to one regular payroll at any
time); and (ii) shall close or permit to be closed any of the accounts listed in
Attachment I hereto, in each case without Lender's prior written consent, and
then only after such Credit Party has implemented agreements with such bank or
financial institution and Lender acceptable to Lender.
2. Commencing on the Closing Date and until the Termination Date, each Corporate
Credit Party shall cause to be deposited directly all cash, checks, notes,
drafts or other similar items relating to or constituting proceeds of or
payments made in respect of any and all Collateral into lock boxes or lock box
accounts in such Credit Party's name (collectively, the "Lock Box Accounts") set
forth in paragraph 1 of Attachment I hereto.
3. On or before the Closing Date, each bank at which the Lock Box Accounts are
held shall have entered into tri-party lock box agreements (the "Lock Box
Account Agreements") with Lender and the applicable Credit Party, in form and
substance acceptable to Lender. Each such Lock Box Account Agreement shall
provide, among other things, that (a) such bank executing such agreement has no
rights of setoff or recoupment or any other claim against such Lock Box Account,
other than for payment of its service fees and other charges directly related to
the administration of such account, and (b) such bank agrees to sweep on a daily
basis all amounts in the Lock Box Account to the Collection Account.
4. On the Closing Date, (a) the lock box and blocked account arrangements shall
immediately become operative at the banks at which the Lock Box Accounts are
maintained, and (b) amounts outstanding under the Revolving Credit Loan (for
purposes of the Borrowing Availability) shall be reduced through daily sweeps,
by wire transfer, of the Lock Box Accounts into the Collection Account.
Borrowers acknowledge that they shall have no right to gain access to any of the
moneys in the Lock Box Accounts until after the Termination Date.
5. Each Borrower may maintain, in its name, accounts (the "Disbursement
Accounts") at a bank or banks acceptable to Lender into which Lender shall, from
time to time, deposit proceeds of Revolving Credit Advances made pursuant to
Section 1.1 for use solely in accordance with the provisions of Section 1.3. All
of the Disbursement Accounts as of the Closing Date are listed in paragraph 2 of
Attachment I hereto.
6. Upon the request of Lender, each Corporate Credit Party shall forward to
Lender, on a daily basis, evidence of the deposit of all items of payment
received by such Credit Party into the Lock Box Accounts and copies of all such
checks and other items, together with a statement showing the application of
those items relating to payments on Accounts to outstanding Accounts and a
collection report with regard thereto in form and substance satisfactory to
Lender.
51
ATTACHMENT I to SCHEDULE D
[*]
---------------
* Confidential information on this page has been omitted and filed separately
with the Securities and exchange Commission.
2
52
SCHEDULE E - FEES
1. UNUSED LINE FEE: For each day from the Closing Date, and through and
including the Termination Date, an amount equal to the Maximum Amount less the
Revolving Credit Loan for such day multiplied by .25%, the product of which is
then divided by 360. The Unused Line Fee for each month (except for the month in
which the Termination Date occurs) is payable on the first day of each calendar
month following the Closing Date; the final monthly installment of the Unused
Line Fee is payable on the Termination Date. Notwithstanding the foregoing, any
unpaid Unused Line Fee is immediately due and payable on the Commitment
Termination Date.
2. LETTER OF CREDIT FEE: For each day for which Lender maintains Letter of
Credit Obligations outstanding, an amount equal to the amount of the Letter of
Credit Obligations outstanding on such day, multiplied by 2.00%, the product of
which is then divided by 360. The Letter of Credit Fee incurred for each month
is payable at the same time each payment of the Unused Line Fee is due.
Notwithstanding the foregoing, any unpaid Letter of Credit Fee is immediately
due and payable on the Commitment Termination Date.
3. CLOSING FEE; COLLATERAL MONITORING FEE: A non-refundable closing fee of
$62,000, payable and fully earned at closing (the "Closing Fee"). A fully earned
and non-refundable collateral monitoring fee of $20,000 per annum, payable in
advance on the Closing Date and on each anniversary thereof.
4. PREPAYMENT FEE:
An amount equal to the sum of (x) each Borrower's Maximum Amount and (y) the
principal amount outstanding under the Term Loan on the date of prepayment and
termination, multiplied by:
3% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrowers, upon Default or otherwise) on or after the Closing Date and on or
before the first anniversary of the Closing Date, payable on the Commitment
Termination Date;
2% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrowers, upon Default or otherwise) after the first anniversary of the Closing
Date and on or before the second anniversary of the Closing Date, payable on the
Commitment Termination Date; or
1% if Lender's obligation to make further Revolving Credit Advances or
incur additional Letter of Credit Obligations is terminated (voluntarily by
Borrowers, upon Default or otherwise) after the second anniversary of the
Closing Date and on or before the Stated Expiry Date then in effect, payable on
the Commitment Termination Date.
Each Borrower acknowledges and agrees that (i) it would be difficult or
impractical to calculate Lender's actual damages from early termination of
Lender's obligation to make further Revolving Credit Advances and incur
additional Letter of Credit Obligations for any reason pursuant to Section
1.2(c) or Section 7.2, (ii) the Prepayment Fees provided above are intended to
be fair and reasonable approximations of such damages, and (iii) the Prepayment
Fees are not intended to be penalties.
5. AUDIT FEES: Borrowers jointly and severally agree to reimburse Lender at the
rate of $750 per person per day, plus out of pocket expenses, for the audit
reviews, field examinations and collateral examinations conducted by Lender.
6. COMMITMENT FEE: Borrowers, to the extent not paid in connection with the
execution of the Commitment Letter dated September 19, 2000, a fully earned and
nonrefundable commitment fee of $94,500 payable on the Closing Date.
53
Schedule F
SCHEDULE OF DOCUMENTS
The obligation of Lender to make the initial Revolving Credit Advances and
extended other credit is subject to satisfaction of the condition precedent that
Lender shall have received the following, each, unless otherwise specified below
or the context otherwise requires, dated the Closing Date, in form and substance
satisfactory to Lender and its counsel:
PRINCIPAL LOAN DOCUMENTS
1. Agreement. The Loan and Security Agreement duly executed by Borrower(s).
2. Note(s). Duly executed Note(s) to the order of Lender evidencing the
Loan(s).
3. Borrowing Base Certificate. An original Borrowing Base Certificate duly
executed by a responsible officer of Borrower(s).
4. Notice of Revolving Credit Advance. An original Notice of Revolving Credit
Advance duly executed by a responsible officer of Borrower(s).
COLLATERAL DOCUMENTS.
1. Acknowledgment Copies of Financing Statements. Acknowledgment copies of
proper Financing Statements (Form UCC-l) (the "Financing Statements") duly
filed under the Code in all jurisdictions as may be necessary or, in the
opinion of Lender, desirable to perfect Lender's Lien on the Collateral.
2. UCC Searches. Certified copies of UCC Searches, or other evidence
satisfactory to Lender, listing all effective financing statements which
name Borrowers or any Credit Party (under present name, any previous name
or any trade or doing business name) as debtor and covering all
jurisdictions referred to in paragraph (1) immediately above, together with
copies of such other financing statements.
3. Intellectual Property Documents. Agreements relating to the granting to
Lender of a security interest in Intellectual Property of Borrowers and
each other Credit Party to the extent applicable in a form suitable for
filing with the appropriate Federal filing office.
4. Other Recordings and Filings. Evidence of the completion of all other
recordings and filings (including UCC-3 termination statements and other
Lien release documentation) as may be necessary or, in the opinion of and
at the request of Lender, desirable to perfect Lender's Lien on the
Collateral and ensure such Collateral is free and clear of other Liens..
5. Power of Attorney. Powers of Attorney duly executed by each Credit Party
executing the Agreement.
6. Stock Pledge Agreement. Stock Pledge Agreement duly executed by Leading
Borrower of all of the issued and outstanding common stock of Second
Borrower and Gros-Ite together with the originals of stock certificates
evidencing the common stock pledged thereby and related stock powers
executed in blank.
THIRD PARTY AGREEMENTS.
1. Landlord and Mortgagee Consents. Unless otherwise agreed to in writing by
Lender, duly executed landlord and mortgagee waivers and consents from the
landlords and mortgagees of all of each Credit Party's leased or owned
locations where Collateral is held except that no landlord waiver shall be
required for the leased premises located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇.
2. Cash Management System. Duly executed Lock Box Account Agreements and, if
required by Lender, pledged account agreements in respect of the
Disbursement Accounts as contemplated by Schedule D.
3. Guarantees. Guarantees executed by Gros-Ite.
4. Fleet Intercreditor Agreements. Fleet Intercreditor and Subordination
Agreements executed on behalf of each Credit Party and Fleet.
5. Off-Set Waiver. A Off Set Waiver executed by ▇▇▇▇▇ & ▇▇▇▇▇▇▇.
6. Processor Waivers. Duly executed waivers from third party processors at
each location where Inventory is processed in form and substance
satisfactory to Lender except for those processors for which Lender has
waived such requirement; provided, that the failure to obtain such
processor letter for any particular processor shall result in such
Inventory not being Eligible Inventory.
OTHER DOCUMENTS.
1. Secretary Certificate. A Secretary Certificate in the form of Exhibit H to
the Agreement duly completed and executed by the Secretary of each Credit
Party executing the Agreement, together with all attachments thereto.
54
2. Environmental Audit. Copies of all existing environmental reviews and
audits and other information pertaining to actual or potential
environmental claims relating to the Collateral and the Credit Parties,
as Lender may require.
3. Financial Statements and Projections. Copies of the Financial Statements
and Projections, which Projections shall include a capital expenditures
budget for Borrower(s) in form and substance satisfactory to Lender.
4. Insurance Policies. Certified copies of insurance policies described in
Section 3.16, together with evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender.
5. Existing Lease Agreements. Copies of any existing real property leases and
equipment leases to which each Credit Party is a party and any other
document or instrument evidencing or relating to existing Indebtedness of
each Credit Party, together with all certificates, opinions, instruments,
security documents and other documents relating thereto, all of which shall
be satisfactory in form and substance to Lender, certified by an authorized
officer of such Credit Party as true, correct and complete copies thereof.
6. Account Notification Letters. Notification Letters to the Account Debtors
of the Credit Parties on such Credit Parities letterhead duly executed on
behalf of such Credit Party.
7. Post Office Change of Address Cards. Post Office Change of Address Cards
executed on behalf of each Credit Party.
2
55
Schedule G
FINANCIAL COVENANTS
1. Fixed Charge Coverage Ratio. Leading Borrower and its Subsidiaries on a
consolidated basis shall have at the end of each Fiscal Quarter for the fiscal
period set forth below a Fixed Charge Coverage Ratio of not less than 1.1 to
1.0 set forth below:
Fiscal Period
October 1, 2000 to and including the last Saturday in
December 2000
October 1, 2000 to and including March 31, 2001
October 1, 2000 to and including June 30, 2001
October 1, 2000 to and including September 30, 2001 and for
each rolling twelve month period ending on and after the
last Saturday in December 2001
As used in this Agreement (including this Schedule G covenant), the following
terms shall have the following meanings:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Leading Borrower
and their Subsidiaries on a consolidated basis for such period, plus interest
expense, income tax expense, amortization expense, depreciation expense and
extraordinary losses and minus extraordinary gains (including forgiveness of
Indebtedness), in each case, of Leading Borrower and their Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP to the
extent included in the determination of such Net Income (Loss).
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of the
following for Leading Borrower and their Subsidiaries on a consolidated basis
determined in accordance with GAAP: (a) EBITDA for such period less Capital
Expenditures for such period which are not financed through the incurrence of
any Indebtedness (excluding the Revolving Credit Loan) to (b) the sum of (i)
interest expense paid (except to the extent the payment thereof had been accrued
for in a prior fiscal period) or accrued (except for interest accrued on the
potential discount on the Fleet Indebtedness as set forth in the Escrow
Agreement but only for the Fiscal Period ending December 31, 2000) in respect of
any Indebtedness during such period, plus (ii) taxes to the extent accrued or
otherwise payable with respect to such period plus (iii) regularly scheduled
payments of principal paid or that were required to be paid on Funded Debt
(excluding the Revolving Credit Loan) during such period.
"Funded Debt" shall mean, for any Person, all of such Person's Indebtedness
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one year from, or is directly or indirectly
renewable or extendible at the option of such Person under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof, including
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of such Person.
"Net Income (Loss)" shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such period,
determined in accordance with GAAP.
▇.▇▇▇▇▇▇▇ Expenditures. Leading Borrower and their Subsidiaries on a
consolidated basis shall not make aggregate Capital Expenditures, other than
Capital Expenditures financed through the incurrence of Indebtedness (excluding
the Revolving Credit Loan) in any Fiscal Year in excess of $ 250,000.
56
Exhibit B
GE Capital
Required Reports and Other Information
Daily Weekly Monthly
1. Exhibit "A" Notice of Revolving Credit Advances
2. Sales Journal
3. Cash Receipts Journal
4. Credit Memo Journal
5. Copies of Sales Invoices Over $________ with Bills of Lading Attached
6. Accounts Receivable Detailed Aging
7. Accounts Payable Detailed Aging
8. Inventory Mix / Item Listing compared to Prior Period
9. Inventory Listing by Location compared to Prior Period
10. Inventory Aging
11. Inventory Composition Analysis by Type (Raw, WIP and Finished Goods)
12. Excess / Obsolete Analysis with Supporting Documentation
13. Copies of Lockbox Statements and Operating Account Statements
14. Other Reports as Set Forth in Section 4.1 of the Loan Agreement, including,
without limitation:
(i) Inventory Perpetual Listing (excel spreadsheet)
(ii) Accounts Receivable Aging Reconciled to the General Ledger to the
Financial Statements
(iii) Inventory Perpetual Reconciled to the General Ledger to the
Financial Statements
(iv) Accounts Payable Aging Reconciled to the General Ledger to the
Financial Statements
(v) Exhibit "C and C-1" Borrowing Base and Inventory Rollforward and
Reconciliation
(vi) Exhibit "D" Accounts Payable Analysis
(vii) Exhibit "E" Daily Accounts Receivable Rollforward
(viii) Exhibit "J" Compliance Certificate
(ix) Interim Financial Statements (as described in section 4.1(d))
(x) Audited Financial Statements (as described in section 4.1(e))
Any Items Due Monthly are due by the 15th day of the following
month.
Any Items Due Weekly are due by the 2nd business day of the
following week All Reporting is As Requested by the Lender from
Time to Time
57
Exhibit C
GE Capital
Form of Borrowing Base Certificate
DATE CERTIFICATE NUMBER:
BORROWER NAME: PREVIOUSLY FAXED: Yes No (circle one)
1. Period end Accounts as of: $
-------------------- -------
Ineligible Accounts as of: $
-------------------- --------
Accounts over days from due date or days $
from invoice date --------
Intercompany and Affiliate Accounts $
--------
Government Accounts $
--------
Contra Accounts $
--------
COD Accounts $
--------
Foreign Accounts $
--------
Credits in prior $
--------
% concentration exclusion $
----- --------
% cross aging exclusion $
----- --------
▇▇▇▇ and Hold invoices $
--------
Finance/Service/Late Charges $
--------
Other $
--------------------- --------
2. Total ineligibles $
-------
3. Eligible Accounts (Line 1 minus Line 2) $
-------
4. Eligible Accounts advance rate ( % ) %
-------
5. Eligible Accounts availability (Line 3 multiplied by Line 4) $
-------
6. Lesser of Eligible Inventory availability or Inventory cap
($ ) as of: $
---------- -------- -------
Type Gross Amount Ineligible Advance Rate Available (or cap)
----------- --------------- ------------ -------------- ---------------------
----------- --------------- ------------ -------------- ---------------------
----------- --------------- ------------ -------------- ---------------------
Explain ineligible Inventory:
(a) WIP/slow moving/obsolete $ (d) Subject to Intellectual $
------- Prpty. Licensing Agmt. ------
(b) In-transit $ (e) Not subject to Landlord/ $
------- Mortgagee Waiver ------
(c) On-Consignment $ (f) Other $
------- ------
7. Borrowing Availability (lesser of sum of lines 5 + 6 ($ )) $
or the Maximum Amount -------
8. Revolving Credit Loan balance $
-------
9. Letter of Credit Obligations $
-------
10. Reserves (explain) $
-------
11. Net Borrowing Availability (Line 7 minus the total of $
Lines 8, 9 and 10) -------
The undersigned hereby certifies that (a) all of the foregoing information
regarding the Eligible Accounts is true and correct on the date hereof and all
such Accounts listed as Eligible Accounts are Eligible Accounts within the
meaning given such term in the Loan and Security Agreement dated
September , 2000 among the Borrowers, General Electric Capital Corporation
and the other parties thereto, if any (as from time to time amended,
supplemented, restated or otherwise modified, the "Loan Agreement"), and (b) all
of the foregoing information regarding the Eligible Inventory is true and
correct on the date hereof and all such Inventory listed as Eligible Inventory
is Eligible Inventory within the meaning given such term in the Loan and
Security Agreement.
By: Title:
---------------------- ----------------------------
Must be CFO [or ]
------------------
58
Exhibit C-1
GE Capital
Inventory Rollforward and Reconciliation
BORROWER NAME: PREVIOUSLY FAXED: YES NO (Circle one)
DATE:
For the Month Ending:
---------------
1. Beginning of the month inventory balance $
--------------
2. Purchases $
--------------
3. Cost of goods sold $
--------------
4. Other adjustments $
--------------
5. Rollforward of Inventory (Line 1 + Line 2 + Line 3 +/- Line 4) $
--------------
6. End of period accounts payable per Inventory perpetual (attach aging) $
--------------
7. Variance between Line 5 and Line 6 (Explain:) $
--------------
8. End of period Inventory balance per general ledger $
--------------
9. Variance between Line 6 and Line 8 (Explain:) $
10. End of period Inventory balance per financial statements $
--------------
11. Variance between Line 8 and Line 10 (Explain:) $
--------------
The undersigned hereby certifies that all of the information shown above is true
and correct on the date hereof.
By: Title:
---------------------- ----------------------------
Must be CFO [or ]
--------------
59
Exhibit D
GE Capital
Form of Accounts Payable Analysis
BORROWER NAME: PREVIOUSLY FAXED: YES NO (Circle one)
DATE:
For the Month Ending:
---------------
1. Beginning of the month Accounts Payable balance $
--------------
2. Purchases $
--------------
3. Disbursements $
--------------
4. Other adjustments $
--------------
5. Rollforward of Accounts Payable (Line 1 + Line 2 + Line 3 +/- Line 4) $
--------------
6. End of period Accounts Payable per Accounts Payable aging (attach aging) $
--------------
7. Variance between Line 5 and Line 6 (Explain:) $
--------------
8. End of period Accounts Payable balance per general ledger $
--------------
9. Variance between Line 6 and Line 8 (Explain:) $
--------------
10. End of period Accounts Payable balance per financial statements $
--------------
11. Variance between Line 8 and Line 10 (Explain:) $
--------------
12. Book overdraft $
--------------
13. Held Checks at the end of the month $
--------------
14. Adjusted end of month Accounts Payable balance $
--------------
The undersigned hereby certifies that all of the information shown above is true
and correct on the date hereof.
By: Title:
---------------------- ----------------------------
Must be CFO [or ]
--------------
60
Exhibit E
GE Capital
Daily Accounts Receivable Rollforward
BORROWER NAME: PREVIOUSLY FAXED: YES NO
DATE:
Date: A/R Balance
--------------- ---------------
CASH DETAIL
-----------------------------------------------------------------------------------------------------------------------------------
NCRA Date Sent Debit Credit Gross Cash Term/Cash Non- A/R Gross A/R A/R
Ref. # to Lender Sales Memos Memos Deposited (+) Discounts (+) Deductions (+) Cash (-) Cash Reduction Balance
--------- --------- ----- ----- ------ ------------- ------------- -------------- --------- -------------- -------
Month Total
Note: Attach Accounts Receivable Detailed Aging
The undersigned hereby certifies that all of the information shown
above is true and correct on the date hereof.
Signed: Title:
------------------------- ---------------------------
Must be CFO [or ]
------------------
61
EXHIBIT F-1
FORM OF LEADING BORROWER'S REVOLVING CREDIT NOTE
$8,000,000 New York, NY
September __, 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, EDAC Technologies Corporation, a Wisconsin corporation ("Leading
Borrower"), as one of the Borrowers under and as defined in that certain Loan
and Security Agreement (as the same may be amended, restated or supplemented
from time to time, the "Agreement") of even date herewith among this Borrower,
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender"), and the
other parties signatory thereto, hereby promises to pay to the order of Lender
the sum of $8,000,000 or such greater or lesser amount as shall be advanced by
Lender to this Borrower from time to time, together with interest on the unpaid
balance of such amount from the date of the initial Revolving Credit Advance
made to this Borrower. This Note is one of the Revolving Credit Notes issued
under the Agreement to which a reference is made for a statement of all of the
terms and conditions of the Loan evidenced hereby. Capitalized terms not defined
in this Note shall have the respective meanings assigned to them in the
Agreement. This Note is secured by the Agreement, the other Loan Documents and
the Collateral, and is entitled to the benefit of the rights and security
provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Revolving Credit Rate, or, under the circumstances contemplated by the
Agreement, at the Default Rate, in immediately available United States Dollars
at the time and in the manner specified in the Agreement. The outstanding
principal and interest under this Note shall be immediately due and payable on
the Commitment Termination Date. Payments received by Lender shall be applied
against principal and interest as provided for in the Agreement. Borrower
acknowledges that (a) Lender is authorized under the Agreement to charge to the
Revolving Credit Loan unpaid Obligations of Borrower to Lender, (b) the
principal amount of the Revolving Credit Loan will be increased by such amounts,
and (c) the principal, as so increased, will bear interest as provided for
herein and in the Agreement.
To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligation,
the Loan Documents or this Note; (b) all rights to notice and a hearing prior to
Lender's taking possession or control of, or to Lender's replevy, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable, all as provided therein.
Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
BORROWER ACKNOWLEDGES THAT BORROWER HAS WAIVED THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE STATE
OF NEW YORK.
EDAC TECHNOLOGIES CORPORATION
("Leading Borrower")
By:__________________________
Name:
Title:
62
EXHIBIT F-2
FORM OF SECOND BORROWER'S REVOLVING CREDIT NOTE
$8,000,000 New York, NY
September __, 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, Apex Machine Tool Company, Inc., a Connecticut corporation
("Second Borrower"), as one of the Borrowers under and as defined in that
certain Loan and Security Agreement (as the same may be amended, restated or
supplemented from time to time, the "Agreement") of even date herewith among
this Borrower, GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender"), and the other parties signatory thereto, hereby promises to pay to
the order of Lender the sum of $8,000,000 or such greater or lesser amount as
shall be advanced by Lender to Borrower from time to time, together with
interest on the unpaid balance of such amount from the date of the initial
Revolving Credit Advance made to this Borrower. This Note is one of the
Revolving Credit Notes issued under the Agreement to which a reference is made
for a statement of all of the terms and conditions of the Loan evidenced hereby.
Capitalized terms not defined in this Note shall have the respective meanings
assigned to them in the Agreement. This Note is secured by the Agreement, the
other Loan Documents and the Collateral, and is entitled to the benefit of the
rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Revolving Credit Rate, or, under the circumstances contemplated by the
Agreement, at the Default Rate, in immediately available United States Dollars
at the time and in the manner specified in the Agreement. The outstanding
principal and interest under this Note shall be immediately due and payable on
the Commitment Termination Date. Payments received by Lender shall be applied
against principal and interest as provided for in the Agreement. Borrower
acknowledges that (a) Lender is authorized under the Agreement to charge to the
Revolving Credit Loan unpaid Obligations of Borrower to Lender, (b) the
principal amount of the Revolving Credit Loan will be increased by such amounts,
and (c) the principal, as so increased, will bear interest as provided for
herein and in the Agreement.
To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent to
accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligations,
the Loan Documents or this Note; (b) all rights to notice and a hearing prior to
Lender's taking possession or control of, or to Lender's replevy, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Lender to exercise any of its remedies; and (c) the
benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be, immediately due and payable, all as provided therein.
Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
BORROWER ACKNOWLEDGES THAT BORROWER HAS WAIVED THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE STATE
OF NEW YORK.
Apex Machine Tool Company, Inc.
("Second Borrower")
By:__________________________
Name:
Title:
63
EXHIBIT G-1
FORM OF TERM NOTE A-1
$4,279,000 New York, NY
September __, 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, EDAC Technologies Corporation, a Wisconsin corporation ("Leading
Borrower"), hereby promise to pay to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("Lender"), $4,279,000 together with
interest on the unpaid balance of such amount from the date of this Note. This
Note is the Term Note A-1 issued under the Loan and Security Agreement among
Leading Borrower, Apex Machine Tool Company, Inc., a Connecticut corporation and
Lender of even date herewith (said agreement, as the same may be amended,
restated or supplemented from time to time, being herein called the "Agreement")
to which a reference is made for a statement of all of the terms and conditions
of the Loan evidenced hereby. Capitalized terms not defined in this Note shall
have the respective meanings assigned to them in the Agreement. This Note is
secured by the Agreement, the other Loan Documents and the Collateral, and is
entitled to the benefit of the rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Term Loan A Rate or, under the circumstances contemplated by the Agreement, at
the Default Rate, in immediately available United States Dollars at the time and
in the manner specified in the Agreement. The outstanding principal and interest
under this Note shall be immediately due and payable on the Commitment
Termination Date, and prior to the Commitment Termination Date, the outstanding
principal shall be due and payable in accordance with the schedule attached as
Schedule G-1 hereto and incorporated herein by reference.
Payments received by Lender shall be applied against principal and interest as
provided for in the Agreement. To the fullest extent permitted by applicable
law, Leading Borrower waives: (a) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all of the Obligations, the Loan Documents or this Note; (b) all rights
to notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws.
Leading Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Leading Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become or may be
declared to be, immediately due and payable, all as provided therein.
LEADING BORROWER ACKNOWLEDGES THAT IT HAS WAIVED THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
EDAC TECHNOLOGIES CORPORATION
By:__________________________
Name:
Title:
64
SCHEDULE G-1 TO TERM NOTE A-1 DATED SEPTEMBER __, 2000
IN THE ORIGINAL PRINCIPAL AMOUNT OF $4,279,000
MADE BY EDAC TECHNOLOGIES CORPORATION
Amortization Schedule
The Term Loan A-1 shall amortize in equal monthly principal
installments of $71,317 payable on the first day of each month, with a
Balloon Payment of the remaining outstanding balance on the Commitment
Termination Date.
2
65
EXHIBIT G-2
FORM OF TERM NOTE A-2
$3,085,000 New York, NY
September __, 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, Apex Machine Tool Company, Inc., a Connecticut corporation
("Second Borrower"), hereby promise to pay to the order of GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation ("Lender"), $3,085,000 together with
interest on the unpaid balance of such amount from the date of this Note. This
Note is the Term Note A-2 issued under the Loan and Security Agreement among
Second Borrower, EDAC Technologies Corporation, a Wisconsin corporation and
Lender of even date herewith (said agreement, as the same may be amended,
restated or supplemented from time to time, being herein called the "Agreement")
to which a reference is made for a statement of all of the terms and conditions
of the Loan evidenced hereby. Capitalized terms not defined in this Note shall
have the respective meanings assigned to them in the Agreement. This Note is
secured by the Agreement, the other Loan Documents and the Collateral, and is
entitled to the benefit of the rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Term Loan A Rate or, under the circumstances contemplated by the Agreement, at
the Default Rate, in immediately available United States Dollars at the time and
in the manner specified in the Agreement. The outstanding principal and interest
under this Note shall be immediately due and payable on the Commitment
Termination Date, and prior to the Commitment Termination Date, the outstanding
principal shall be due and payable in accordance with the schedule attached as
Schedule G-1 hereto and incorporated herein by reference.
Payments received by Lender shall be applied against principal and interest as
provided for in the Agreement. To the fullest extent permitted by applicable
law, Second Borrower waives: (a) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all of the Obligations, the Loan Documents or this Note; (b) all rights
to notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws.
Second Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Second Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become or may be
declared to be, immediately due and payable, all as provided therein.
SECOND BORROWER ACKNOWLEDGES THAT IT HAS WAIVED THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
APEX MACHINE TOOL COMPANY, INC.
By:__________________________
Name:
Title:
66
SCHEDULE G-1 TO TERM NOTE A-2 DATED SEPTEMBER __, 2000
IN THE ORIGINAL PRINCIPAL AMOUNT OF $3,085,000
MADE BY APEX MACHINE TOOL COMPANY, INC.
Amortization Schedule
The Term Loan A-2 shall amortize in equal monthly principal
installments of $51,417 payable on the first day of each month, with a
Balloon Payment of the remaining outstanding balance on the Commitment
Termination Date.
2
67
EXHIBIT G-3
FORM OF TERM NOTE B
$2,000,000 New York, NY
_____________ __, 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, EDAC Technologies Corporation, a Wisconsin corporation ("Leading
Borrower"), and Apex Machine Tool Company, Inc., a Connecticut corporation
("Second Borrower"), (Leading Borrower and Second Borrower being collectively
referred to as "Borrowers" and each a "Borrower"), hereby jointly and severally
promise to pay to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("Lender"), $2,000,000 together with interest on the unpaid balance
of such amount from the date of this Note. This Note is the Term Note B issued
under the Loan and Security Agreement between Borrowers and Lender of even date
herewith (said agreement, as the same may be amended, restated or supplemented
from time to time, being herein called the "Agreement") to which a reference is
made for a statement of all of the terms and conditions of the Loan evidenced
hereby. Capitalized terms not defined in this Note shall have the respective
meanings assigned to them in the Agreement. This Note is secured by the
Agreement, the other Loan Documents and the Collateral, and is entitled to the
benefit of the rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at the
Term Loan B Rate or, under the circumstances contemplated by the Agreement, at
the Default Rate, in immediately available United States Dollars at the time and
in the manner specified in the Agreement. The outstanding principal and interest
under this Note shall be immediately due and payable on the Commitment
Termination Date, and prior to the Commitment Termination Date, the outstanding
principal shall be due and payable in accordance with the schedule attached as
Schedule G-1 hereto and incorporated herein by reference.
Payments received by Lender shall be applied against principal and interest as
provided for in the Agreement. To the fullest extent permitted by applicable
law, each Borrower waives: (a) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of
any or all of the Obligations, the Loan Documents or this Note; (b) all rights
to notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws.
Leading Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any personal
or consumer purpose.
Leading Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become or may be
declared to be, immediately due and payable, all as provided therein.
LEADING BORROWER ACKNOWLEDGES THAT IT HAS WAIVED THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
EDAC TECHNOLOGIES CORPORATION
By:__________________________
Name:
Title:
68
SCHEDULE G-1 TO TERM NOTE B DATED _____________ __, 2000
IN THE ORIGINAL PRINCIPAL AMOUNT OF $2,000,000
MADE BY EDAC TECHNOLOGIES CORPORATION
Amortization Schedule
The Term Loan B shall amortize in equal monthly principal installments
of $16,667 payable on the first day of each month, with a Balloon
Payment of the remaining outstanding balance on the Commitment
Termination Date.
2
69
EXHIBIT H - SECRETARIAL CERTIFICATE
The undersigned hereby certifies that he or she is the duly elected and acting
Secretary or Assistant Secretary of EDAC Technologies Corporation, a Wisconsin
corporation ("Credit Party"), and as such is the custodian of Credit Party's
Books and Records and is authorized to execute and deliver this Certificate in
connection with the Loans being made to EDAC Technologies Corporation and Apex
Machine Tool Company, Inc. by General Electric Capital Corporation, as Lender
under the Loan and Security Agreement ("Agreement") of even date herewith.
Capitalized terms not defined in this Certificate shall have the meanings
ascribed to them in the Agreement. In order to induce General Electric Capital
Corporation to execute the Agreement and make the Loans, the undersigned
certifies (in his or her secretarial capacity, and on behalf of Credit Party as
follows:
1. Attached as Attachment 1 is a full, complete, and correct copy of Credit
Party's articles or certificate of incorporation or other creating instrument
("Charter") as filed and recorded with the Secretary of State of Wisconsin,
which Charter has not been rescinded or amended and remains in full force and
effect in its entirety.
2. Attached as Attachment 2 is a copy of a written confirmation from the
Secretary of State of Wisconsin, dated September __, 2000, confirming that the
Charter of Credit Party in the form of Attachment I remains on file and that
Credit Party is a corporation in good standing in the State of Wisconsin.
3. Attached as Attachment 3 is a copy of the By-Laws of Credit Party, and as of
the Closing Date the By-Laws are in full force and effect and have not been
amended or rescinded.
4. Attached as Attachment 4 are copies of good standing certificates dated not
more than 30 days prior to the Closing Date for each state or jurisdiction in
which Credit Party does business confirming that Credit Party is qualified to
engage in business in such jurisdiction and such qualification is in good
standing.
5. Attached as Attachment 5 are copies of the Resolutions of the Board of
Directors of Credit Party duly adopted by Credit Party's Board of Directors in a
meeting duly called upon proper notice, or by written consent in conformity with
the corporate and other laws of such Credit Party's state of incorporation and
with Credit Party's Charter and By-Laws, which Resolutions authorize (a) Credit
Party to execute and deliver the Loan Documents to which it is a party and to
borrow the funds intended to be borrowed thereunder, and (b) the officers of
Credit Party to execute and deliver the Loan Documents to which it is a party.
There is no provision of Credit Party's Charter or By-Laws limiting or
contravening the Resolutions attached as Attachment 5, which Resolutions have
not been amended, modified, revoked or rescinded and are in full force and
effect.
6. The undersigned officers and employees of Credit Party have been elected to
the positions set forth opposite their respective names below, are qualified to
act in such capacities and to execute and deliver the Loan Documents on behalf
of Credit Party, and the signature set opposite each name is the authentic
signature of such officer or employee:
NAME OFFICE SIGNATURE
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
IN WITNESS WHEREOF, the undersigned have executed this Certificate on September
__, 2000.
Name:
Secretary of EDAC Technologies Corporation
The Undersigned, the President of Credit Party, hereby certifies that
___________________ is the Secretary of Credit Party and is authorized to
execute and deliver this Certificate.
Name:
Date: September __, 2000
70
EXHIBIT H-1. SECRETARIAL CERTIFICATE
The undersigned hereby certifies that he or she is the duly elected and acting
Secretary or Assistant Secretary of Apex Machine Tool Company, Inc., a
Connecticut corporation ("Credit Party"), and as such is the custodian of Credit
Party's Books and Records and is authorized to execute and deliver this
Certificate in connection with the Loans being made to EDAC Technologies
Corporation and Apex Machine Tool Company, Inc. by General Electric Capital
Corporation, as Lender under the Loan and Security Agreement ("Agreement") of
even date herewith. Capitalized terms not defined in this Certificate shall have
the meanings ascribed to them in the Agreement. In order to induce General
Electric Capital Corporation to execute the Agreement and make the Loans, the
undersigned certifies (in his or her secretarial capacity, and on behalf of
Credit Party as follows:
1. Attached as Attachment 1 is a full, complete, and correct copy of Credit
Party's articles or certificate of incorporation or other creating instrument
("Charter") as filed and recorded with the Secretary of State of Connecticut,
which Charter has not been rescinded or amended and remains in full force and
effect in its entirety.
2. Attached as Attachment 2 is a copy of a written confirmation from the
Secretary of State of Connecticut, dated September __, 2000, confirming that the
Charter of Credit Party in the form of Attachment I remains on file and that
Credit Party is a corporation in good standing in the State of Connecticut.
3. Attached as Attachment 3 is a copy of the By-Laws of Credit Party, and as of
the Closing Date the By-Laws are in full force and effect and have not been
amended or rescinded.
4. Attached as Attachment 4 are copies of good standing certificates dated not
more than 30 days prior to the Closing Date for each state or jurisdiction in
which Credit Party does business confirming that Credit Party is qualified to
engage in business in such jurisdiction and such qualification is in good
standing.
5. Attached as Attachment 5 are copies of the Resolutions of the Board of
Directors of Credit Party duly adopted by Credit Party's Board of Directors in a
meeting duly called upon proper notice, or by written consent in conformity with
the corporate and other laws of such Credit Party's state of incorporation and
with Credit Party's Charter and By-Laws, which Resolutions authorize (a) Credit
Party to execute and deliver the Loan Documents to which it is a party and to
borrow the funds intended to be borrowed thereunder, and (b) the officers of
Credit Party to execute and deliver the Loan Documents to which it is a party.
There is no provision of Credit Party's Charter or By-Laws limiting or
contravening the Resolutions attached as Attachment 5, which Resolutions have
not been amended, modified, revoked or rescinded and are in full force and
effect.
6. The undersigned officers and employees of Credit Party have been elected to
the positions set forth opposite their respective names below, are qualified to
act in such capacities and to execute and deliver the Loan Documents on behalf
of Credit Party, and the signature set opposite each name is the authentic
signature of such officer or employee:
NAME OFFICE SIGNATURE
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
IN WITNESS WHEREOF, the undersigned have executed this Certificate on September
__, 2000.
Name:
Secretary of Apex Machine Tool Company, Inc.
The Undersigned, the President of Credit Party, hereby certifies that
___________________ is the Secretary of Credit Party and is authorized to
execute and deliver this Certificate.
Name:
Date: September __, 2000
71
EXHIBIT H-2. - SECRETARIAL CERTIFICATE
The undersigned hereby certifies that he or she is the duly elected and acting
Secretary or Assistant Secretary of Gros-Ite Industries, Inc., a Connecticut
corporation ("Credit Party"), and as such is the custodian of Credit Party's
Books and Records and is authorized to execute and deliver this Certificate in
connection with the Loans being made to Gros-Ite Industries, Inc. and Apex
Machine Tool Company, Inc. by General Electric Capital Corporation, as Lender
under the Loan and Security Agreement ("Agreement") of even date herewith.
Capitalized terms not defined in this Certificate shall have the meanings
ascribed to them in the Agreement. In order to induce General Electric Capital
Corporation to execute the Agreement and make the Loans, the undersigned
certifies (in his or her secretarial capacity, and on behalf of Credit Party as
follows:
1. Attached as Attachment 1 is a full, complete, and correct copy of Credit
Party's articles or certificate of incorporation or other creating instrument
("Charter") as filed and recorded with the Secretary of State of Connecticut,
which Charter has not been rescinded or amended and remains in full force and
effect in its entirety.
2. Attached as Attachment 2 is a copy of a written confirmation from the
Secretary of State of Connecticut, dated September __, 2000, confirming that the
Charter of Credit Party in the form of Attachment I remains on file and that
Credit Party is a corporation in good standing in the State of Connecticut.
3. Attached as Attachment 3 is a copy of the By-Laws of Credit Party, and as of
the Closing Date the By-Laws are in full force and effect and have not been
amended or rescinded.
4. Attached as Attachment 4 are copies of good standing certificates dated not
more than 30 days prior to the Closing Date for each state or jurisdiction in
which Credit Party does business confirming that Credit Party is qualified to
engage in business in such jurisdiction and such qualification is in good
standing.
5. Attached as Attachment 5 are copies of the Resolutions of the Board of
Directors of Credit Party duly adopted by Credit Party's Board of Directors in a
meeting duly called upon proper notice, or by written consent in conformity with
the corporate and other laws of such Credit Party's state of incorporation and
with Credit Party's Charter and By-Laws, which Resolutions authorize (a) Credit
Party to execute and deliver the Loan Documents to which it is a party and to
borrow the funds intended to be borrowed thereunder, and (b) the officers of
Credit Party to execute and deliver the Loan Documents to which it is a party.
There is no provision of Credit Party's Charter or By-Laws limiting or
contravening the Resolutions attached as Attachment 5, which Resolutions have
not been amended, modified, revoked or rescinded and are in full force and
effect.
6. The undersigned officers and employees of Credit Party have been elected to
the positions set forth opposite their respective names below, are qualified to
act in such capacities and to execute and deliver the Loan Documents on behalf
of Credit Party, and the signature set opposite each name is the authentic
signature of such officer or employee:
NAME OFFICE SIGNATURE
------------------- ------------------- -------------------
------------------- ------------------- -------------------
------------------- ------------------- -------------------
IN WITNESS WHEREOF, the undersigned have executed this Certificate on September
, 2000.
-------------------------------
Name:
Secretary of EDAC Technologies Corporation
The Undersigned, the of Credit Party, hereby certifies that
is the Secretary of Credit Party and is authorized to execute
and deliver this Certificate.
-------------------------------
Name:
Date: September , 2000
72
EXHIBIT I - POWER OF ATTORNEY
This Power of Attorney is executed and delivered by EDAC Technologies
Corporation. ("Credit Party"), to General Electric Capital Corporation
(hereinafter referred to as "Attorney"), as Lender, under a Loan and Security
Agreement dated of even date herewith (the "Agreement"; capitalized terms are
used herein as defined in the Agreement) among EDAC Technologies Corporation and
Apex Machine Tool Company, Inc. and Attorney and may be exercised in accordance
with the terms of the Agreement. No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall inquire into or seek confirmation from Credit Party as to the
authority of Attorney to take any action described below, or as to the existence
of or fulfillment of any condition to this Power of Attorney, which is intended
to grant to Attorney unconditionally the authority to take and perform the
actions contemplated herein, and Credit Party irrevocably waives any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Credit Party without Attorney's
written consent upon payment in full of all Obligations due to Attorney under
the Loan Documents.
Credit Party hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Credit Party's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Credit Party and in
the name of Credit Party or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents and, without limiting the
generality of the foregoing, Credit Party hereby grants to Attorney the power
and right, on behalf of Credit Party, without notice to or assent by Credit
Party, and at any time, to do the following: (a) change the address for delivery
of mail, open mail for Credit Party, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse and receive payment of, any
checks, drafts, notes, acceptances, or other instruments for the payment of
moneys due, and sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Credit Party; (b)
effect any repairs to any asset of Credit Party, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Credit Party or its property; (d) defend any
suit, action or proceeding brought against Credit Party if Credit Party does not
defend such suit, action or proceeding or if Attorney believes that Credit Party
is not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Credit Party
whenever payable and to enforce any other right in respect of Credit Party's
property; (f) sell, transfer, pledge, compromise payment or make any other
agreement with respect to, or otherwise deal with any property of Credit Party,
and execute, in connection with such sale or action, any endorsements,
assignments or other instruments of conveyance or transfer in connection
therewith; and (g) cause the certified public accountants then engaged by Credit
Party to prepare and deliver to Attorney at any time and from time to time,
promptly upon Attorney's request, the following reports: (1) a reconciliation of
all accounts; (2) an aging of all accounts; (3) trial balances; (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory, all as though Attorney were the
absolute owner of the property of Credit Party for all purposes, and to do, at
Attorney's option and Credit Party's expense, at any time or from time to time,
all acts and other things that Attorney reasonably deems necessary to perfect,
preserve, or realize upon Credit Party's property or assets and Attorney's Liens
thereon, all as fully and effectively as Credit Party might do. Credit Party
hereby ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Credit Party, and
Credit Party has caused its seal to be affixed pursuant to the authority of its
Board of Directors on September __, 2000.
EDAC Technologies Corporation
ATTEST:_________________________
By:___________________________ (SEAL)
Name:
Title:
Notarization in appropriate form for the state of execution is required
73
EXHIBIT I-1 - POWER OF ATTORNEY
This Power of Attorney is executed and delivered by Apex Machine Tool Company,
Inc. ("Credit Party"), to General Electric Capital Corporation (hereinafter
referred to as "Attorney"), as Lender, under a Loan and Security Agreement dated
of even date herewith (the "Agreement"; capitalized terms are used herein as
defined in the Agreement) among EDAC Technologies Corporation and Apex Machine
Tool Company, Inc. and Attorney and may be exercised in accordance with the
terms of the Agreement. No person to whom this Power of Attorney is presented,
as authority for Attorney to take any action or actions contemplated hereby,
shall inquire into or seek confirmation from Credit Party as to the authority of
Attorney to take any action described below, or as to the existence of or
fulfillment of any condition to this Power of Attorney, which is intended to
grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and Credit Party irrevocably waives any right to commence
any suit or action, in law or equity, against any person or entity which acts in
reliance upon or acknowledges the authority granted under this Power of
Attorney. The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Credit Party without Attorney's written
consent upon payment in full of all Obligations due to Attorney under the Loan
Documents.
Credit Party hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Credit Party's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Credit Party and in
the name of Credit Party or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents and, without limiting the
generality of the foregoing, Credit Party hereby grants to Attorney the power
and right, on behalf of Credit Party, without notice to or assent by Credit
Party, and at any time, to do the following: (a) change the address for delivery
of mail, open mail for Credit Party, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse and receive payment of, any
checks, drafts, notes, acceptances, or other instruments for the payment of
moneys due, and sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Credit Party; (b)
effect any repairs to any asset of Credit Party, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Credit Party or its property; (d) defend any
suit, action or proceeding brought against Credit Party if Credit Party does not
defend such suit, action or proceeding or if Attorney believes that Credit Party
is not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Credit Party
whenever payable and to enforce any other right in respect of Credit Party's
property; (f) sell, transfer, pledge, compromise payment or make any other
agreement with respect to, or otherwise deal with any property of Credit Party,
and execute, in connection with such sale or action, any endorsements,
assignments or other instruments of conveyance or transfer in connection
therewith; and (g) cause the certified public accountants then engaged by Credit
Party to prepare and deliver to Attorney at any time and from time to time,
promptly upon Attorney's request, the following reports: (1) a reconciliation of
all accounts; (2) an aging of all accounts; (3) trial balances; (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory, all as though Attorney were the
absolute owner of the property of Credit Party for all purposes, and to do, at
Attorney's option and Credit Party's expense, at any time or from time to time,
all acts and other things that Attorney reasonably deems necessary to perfect,
preserve, or realize upon Credit Party's property or assets and Attorney's Liens
thereon, all as fully and effectively as Credit Party might do. Credit Party
hereby ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Credit Party, and
Credit Party has caused its seal to be affixed pursuant to the authority of its
Board of Directors on September __, 2000.
Apex Machine Tool Company, Inc.
ATTEST:_________________________
By:___________________________ (SEAL)
Name:
Title:
Notarization in appropriate form for the state of execution is required
74
EXHIBIT I - 2 - POWER OF ATTORNEY
This Power of Attorney is executed and delivered by Gros-Ite Industries, Inc.
("Credit Party"), to General Electric Capital Corporation (hereinafter referred
to as "Attorney"), as Lender, under a Loan and Security Agreement dated of even
date herewith (the "Agreement"; capitalized terms are used herein as defined in
the Agreement) among EDAC Technologies Corporation and Apex Machine Tool
Company, Inc. and Attorney. No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall inquire into or seek confirmation from Credit Party as to the
authority of Attorney to take any action described below, or as to the existence
of or fulfillment of any condition to this Power of Attorney, which is intended
to grant to Attorney unconditionally the authority to take and perform the
actions contemplated herein, and Credit Party irrevocably waives any right to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled with an
interest, and may not be revoked or canceled by Credit Party without Attorney's
written consent upon payment in full of all Obligations due to Attorney under
the Loan Documents.
Credit Party hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Credit Party's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Credit Party and in
the name of Credit Party or in its own name, from time to time in Attorney's
discretion, to take any and all appropriate action and to execute and deliver
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of the Loan Documents and, without limiting the
generality of the foregoing, Credit Party hereby grants to Attorney the power
and right, on behalf of Credit Party, without notice to or assent by Credit
Party, and at any time, to do the following: (a) change the address for delivery
of mail, open mail for Credit Party, and ask, demand, collect, give acquittances
and receipts for, take possession of, endorse and receive payment of, any
checks, drafts, notes, acceptances, or other instruments for the payment of
moneys due, and sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Credit Party; (b)
effect any repairs to any asset of Credit Party, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Credit Party or its property; (d) defend any
suit, action or proceeding brought against Credit Party if Credit Party does not
defend such suit, action or proceeding or if Attorney believes that Credit Party
is not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or releases
as Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Credit Party
whenever payable and to enforce any other right in respect of Credit Party's
property; (f) sell, transfer, pledge, compromise payment or make any other
agreement with respect to, or otherwise deal with any property of Credit Party,
and execute, in connection with such sale or action, any endorsements,
assignments or other instruments of conveyance or transfer in connection
therewith; and (g) cause the certified public accountants then engaged by Credit
Party to prepare and deliver to Attorney at any time and from time to time,
promptly upon Attorney's request, the following reports: (1) a reconciliation of
all accounts; (2) an aging of all accounts; (3) trial balances; (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory, all as though Attorney were the
absolute owner of the property of Credit Party for all purposes, and to do, at
Attorney's option and Credit Party's expense, at any time or from time to time,
all acts and other things that Attorney reasonably deems necessary to perfect,
preserve, or realize upon Credit Party's property or assets and Attorney's Liens
thereon, all as fully and effectively as Credit Party might do. Credit Party
hereby ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Credit Party, and
Credit Party has caused its seal to be affixed pursuant to the authority of its
Board of Directors on September __, 2000.
Gros-Ite Industries, Inc. ATTEST:_________________________
By:___________________________ (SEAL)
Name:
Title:
Notarization in appropriate form for the state of execution is required
75
EXHIBIT J
FORM OF CERTIFICATE OF COMPLIANCE
[Use This Co-Borrower Letterhead with this Form]
[Date]
To: Account Manager
This is to certify that in accordance with Section 4.1 (d) of the Loan and
Security Agreement dated September __, 2000 (the "Agreement"; capitalized terms
are used herein as defined in the Agreement) that the attached Financial
Statements are complete and true and have been prepared in conformance with
GAAP. In addition there are no Defaults or Events of Default continuing as of
such date [if there are acceptable exceptions, list them].
Also attached are the covenant calculations used in determining compliance with
the financial covenants contained in Schedule G to the Agreement.
Very truly yours,
-------------------
Chief Executive Officer, [This Co-Borrower's Name]
[or Chief Financial Officer, [This Co-Borrower's Name]]
76
Client Name:
FYE:
Covenant:
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CASH
EBITDA CAPEX TOTAL INTEREST TAXES PRINCIPAL
----------------------------------------------------------------------------------------
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month ▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ Quarter
ANNUAL TOTALS
-------------------------------------------------------------------------------------------------
Mo. FIXED Rolling Rolling Rolling
TOTAL CHARGE 3 mo. FCC 6. mo FCC 12 mo. FCC Required
-------------------------------------------------------------------------------------------------
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month ▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ Quarter
ANNUAL TOTALS
Covenant: Minimum Net Worth Covenant: Capital Expenditures
Year Ending Year Ending
Minimum NW Maximum
Actual Actual
In Compliance: VP Portfolio Account Manager
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2