Exhibit 10.84
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LOAN AND SECURITY AGREEMENT
by and between
▇▇▇▇▇▇▇▇ TECHNOLOGIES OF MINNESOTA, INC.,
a Minnesota corporation,
▇▇▇▇▇▇▇▇ TECHNOLOGIES OF GEORGIA, INC.,
a Georgia corporation
and
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
Dated as of January 31, 2001
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TABLE OF CONTENTS
Page
1. DEFINITIONS...............................................................1
"Abatement Contract Receivables"..........................................1
"Account Debtor"..........................................................1
"Affiliate"...............................................................1
"Audit"...................................................................1
"Borrower"................................................................1
"Borrower's Address"......................................................1
"Business Day"............................................................1
"Change of Control".......................................................1
"Closing Date"............................................................2
"Coast"...................................................................2
"Code"....................................................................2
"Collateral"..............................................................2
"Credit Limit"............................................................2
"Cryopolymers Note".......................................................2
"Current Generation Receivables"..........................................2
"Default".................................................................2
"Debt Service Coverage Ratio".............................................2
"Deposit Account".........................................................2
"Dollars or $"............................................................2
"Early Termination Fee"...................................................2
"EBIT"....................................................................2
"EBITDA"..................................................................2
"Eligible Abatement Contract Receivables".................................2
"Eligible Canadian Current Generation Receivables"........................3
"Eligible Domestic Current Generation Receivables"........................4
"Equipment"...............................................................5
"Equipment Acquisition Loan"..............................................5
"Equipment Term Loan".....................................................5
"Event of Default"........................................................5
"Fiscal Quarter"..........................................................5
"Fiscal Year".............................................................5
"GAAP"....................................................................5
"General Intangibles".....................................................5
"Georgia Real Property"...................................................5
"Georgia Real Property Term Loan".........................................5
"Inventory"...............................................................5
"Investment Property".....................................................5
"Loan Documents"..........................................................5
"Loans"...................................................................5
"Material Adverse Effect".................................................6
"Maturity Date"...........................................................6
"Maximum Dollar Amount"...................................................6
"Minimum Monthly Interest"................................................6
"Minnesota Real Property".................................................6
"Minnesota Real Property Term Loan".......................................6
"Obligations".............................................................6
"Parent"..................................................................6
"Permitted Liens".........................................................6
"Person"..................................................................6
"Prime Rate"..............................................................6
"Receivable Loans"........................................................6
"Receivables".............................................................6
"Renewal Date"............................................................7
"Renewal Fee".............................................................7
"Side Collateral".........................................................7
"Solvent".................................................................7
"Tangible Net Worth"......................................................7
"Unbilled Abatement Contract Receivables".................................7
"Unvouchered Abatement Contract Receivables"..............................7
"Vouchered Abatement Contract Receivables"................................7
Other Terms...............................................................7
2. CREDIT FACILITIES.........................................................7
2.1. Loans............................................................7
3. INTEREST AND FEES.........................................................7
3.1. Interest.........................................................7
3.2. Fees.............................................................8
4. SECURITY INTEREST.........................................................8
5. CONDITIONS PRECEDENT......................................................8
5.1. Status of Accounts at Closing....................................8
5.2. Minimum Availability.............................................8
5.3. Intentionally Omitted............................................8
5.4. Real Property....................................................8
5.5. Executed Agreement...............................................8
5.6. Opinions of Borrower's and Parent's Counsel......................8
5.7. Priority of Coast's Liens........................................8
5.8. Insurance........................................................8
5.9. Borrower's Existence.............................................8
5.10. Organizational Documents.........................................8
5.11. Taxes............................................................8
5.12. Due Diligence....................................................8
5.13. Other Documents and Agreements...................................8
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.................9
6.1. Existence and Authority..........................................9
6.2. Name; Trade Names and Styles.....................................9
6.3. Place of Business; Location of Collateral........................9
6.4. Title to Collateral; Permitted Liens.............................9
6.5. Maintenance of Collateral........................................9
6.6. Books and Records................................................9
6.7. Financial Condition, Statements and Reports......................9
6.8. Tax Returns and Payments; Pension Contributions..................9
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6.9. Compliance with Law.............................................10
6.10. Litigation......................................................10
6.11. Use of Proceeds.................................................10
6.12. Intellectual Property...........................................10
7. RECEIVABLES..............................................................10
7.1. Representations Relating to Receivables.........................10
7.2. Representations Relating to Documents and Legal Compliance......10
7.3. Schedules and Documents relating to Receivables.................10
7.4. Collection of Receivables.......................................11
7.5. Disputes........................................................11
7.6. Returns.........................................................11
7.7. Verification....................................................11
7.8. No Liability....................................................11
8. ADDITIONAL DUTIES OF THE BORROWER........................................11
8.1. Financial and Other Covenants...................................11
8.2. Insurance.......................................................11
8.3. Reports.........................................................11
8.4. Access to Collateral, Books and Records.........................12
8.5. Negative Covenants..............................................12
8.6. Remittance of Proceeds..........................................12
8.7. Litigation Cooperation..........................................12
8.8. Mandatory Prepayment of the Equipment Term Loan.................13
8.9. Lockbox Agreement...............................................13
8.10. Further Assurances..............................................13
9. TERM.....................................................................13
9.1. Maturity Date...................................................13
9.2. Early Termination...............................................13
9.3. Payment of Obligations..........................................13
10. EVENTS OF DEFAULT AND REMEDIES...........................................13
10.1. Events of Default...............................................13
10.2. Remedies........................................................14
10.3. Standards for Determining Commercial Reasonableness.............15
10.4. Power of Attorney...............................................16
10.5. Application of Proceeds.........................................16
10.6. Remedies Cumulative.............................................17
11. GENERAL PROVISIONS.......................................................17
11.1. Interest Computation............................................17
11.2. Application of Payments.........................................17
11.3. Charges to Accounts.............................................17
11.4. Monthly Accountings.............................................17
11.5. Notices.........................................................17
11.6. Severability....................................................17
11.7. Integration.....................................................17
11.8. Waivers.........................................................17
11.9. No Liability for Ordinary Negligence............................18
11.10. Amendment.......................................................18
11.11. Time of Essence.................................................18
11.12. Attorneys' Fees, Costs and Charges..............................18
11.13. Benefit of Agreement............................................18
11.14. Publicity.......................................................18
11.15. Paragraph Headings Construction.................................18
11.16. Governing Law; Jurisdiction; Venue..............................18
11.17. Mutual Waiver of Jury Trial.....................................19
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Coast
Loan and Security Agreement
Borrower: ▇▇▇▇▇▇▇▇ Technologies of Minnesota, Inc.,
a Minnesota corporation
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Borrower: ▇▇▇▇▇▇▇▇ Technologies of Georgia, Inc.,
a Georgia corporation
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Date: January 31, 2001
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between COAST
BUSINESS CREDIT, a division of Southern Pacific Bank ("Coast"), a California
corporation, with offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the borrowers named above (jointly and severally,
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address"). The Schedule to this Agreement (the "Schedule") shall
for all purposes be deemed to be a part of this Agreement, and the same is an
integral part of this Agreement.
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Abatement Contract Receivables" means Borrower's now owned or hereafter
acquired (i) Unbilled Abatement Contract Receivables, (ii) Unvouchered Abatement
Contract Receivables, and (iii) Vouchered Abatement Contract Receivables.
"Account Debtor" means the obligor on a Receivable or General Intangible.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Audit" means to inspect, audit and copy Borrower's books and records and
the Collateral.
"Borrower" has the meaning set forth in the introduction to this
Agreement.
"Borrower's Address" has the meaning set forth in the introduction to this
Agreement.
"Business Day" means a day on which Coast is open for business.
"Change of Control" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) (other than the current holders of the
ownership interests in any Borrower) becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, as a result of any single transaction, of more than twenty percent
(20%) of the total voting power of all classes of stock or other ownership
interests then outstanding of any Borrower
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normally entitled to vote in the election of directors or analogous governing
body.
"Closing Date" date of the initial funding under this Agreement.
"Coast" has the meaning set forth in the introduction to this Agreement.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 4 hereof.
"Credit Limit" means the maximum amount of Loans that Coast may make to
Borrower pursuant to the amounts and percentages shown on the Schedule.
"Cryopolymers Note" means that certain Promissory Note, dated May 14,
1999, in the initial principal amount of $1,100,000, executed by Parent in favor
of Cryopolymers Leasing, Inc.
"Current Generation Receivables" means Borrower's now owned or hereafter
acquired Receivables arising in connection with the collecting and transporting
of scrap tires from local, regional and national tire stores, the processing of
such scrap tires into tire-derived fuel/product and the sale of such goods to
cement kilns, pulp and paper producers, electric utilities and other buyers.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Debt Service Coverage Ratio" means, as at the end of any Fiscal Quarter,
for the two Fiscal Quarters ending on such date, for Borrower determined on a
consolidated basis, the ratio whose numerator is EBITDA, minus non-financed
capital expenditures, minus cash taxes, and whose denominator is interest
payments, plus the current maturities of long-term debt, plus the current
portion of capital leases.
"Deposit Account" has the meaning set forth in Division 9 of the Code.
"Dollars or $" means United States dollars.
"Early Termination Fee" means the amount set forth on the Schedule that
Borrower must pay Coast if this Agreement is terminated by Borrower or Coast
pursuant to Section 9.2 hereof.
"EBIT" means, in any fiscal period, Borrower's consolidated net income
(other than extraordinary or non-recurring items of Borrower for such period),
plus (i) the amount of all interest expense and income tax expense of Borrower
for such period, on a consolidated basis, and plus or minus (as the case may be)
(ii) any other non-cash charges which have been added or subtracted, as the case
may be, in calculating Borrower's consolidated net income for such period.
"EBITDA" means, in any fiscal period, Borrower's consolidated net income
or net loss (other than extraordinary or non-recurring gains of Borrower for
such period), plus (i) the amount of all interest expense, income tax expense,
depreciation expense and amortization expense of Borrower for such period, on a
consolidated basis, and plus or minus (as the case may be) (ii) any other
non-cash charges which have been added or subtracted, as the case may be, in
calculating Borrower's consolidated net income for such period.
"Eligible Abatement Contract Receivables" means Abatement Contract
Receivables arising in the ordinary course of Borrower's business from the sale
of goods or rendition of services, which Coast, in its sole business judgment
exercised in good faith, shall deem eligible for borrowing, based on such
considerations as Coast may from time to time deem appropriate. Eligible
Abatement Contract Receivables shall not include the following:
(a) Unbilled Abatement Contract Receivables that have not been
submitted to the Account Debtor within 30 days of invoice date;
(b) Unvouchered Abatement Contract Receivables that the Account
Debtor has failed to pay within 90 days of invoice date;
(c) Vouchered Abatement Contract Receivables that the Account Debtor
has failed to pay within 90 days of invoice date;
(d) Abatement Contract Receivables owed by an Account Debtor or its
Affiliates where twenty-five percent (25%) or more of all Receivables owed by
that Account Debtor (or its Affiliates) are deemed ineligible under clause (a),
(b) or (c) above;
(e) Abatement Contract Receivables with respect to which the Account
Debtor is an employee, Affiliate, or agent of Borrower;
(f) Abatement Contract Receivables with respect to which goods are
placed on consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇
and hold, or other terms by reason of which the payment by the Account Debtor
may be conditional;
(g) Abatement Contract Receivables that are not payable in Dollars
or with respect to which the Account Debtor: (i) does not maintain its chief
executive office in the United States, or (ii) is not organized under the laws
of the United States or any State thereof, or (iii) is the government of any
foreign country or sovereign state;
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(h) Abatement Contract Receivables with respect to which the Account
Debtor is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Receivables with
respect to which Borrower has complied, to the satisfaction of Coast, with the
Assignment of Claims Act, 31 U.S.C. ss. 3727), or (ii) any State of the United
States or political subdivision thereof (exclusive, however, of (a) any State or
political subdivision thereof which has entered into an abatement contract with
Borrower and which State does not have a statutory counterpart to the Assignment
of Claims Act);
(i) Abatement Contract Receivables with respect to which the Account
Debtor is a creditor of Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to the Receivables
(collectively, "Contra Claims"); provided however, that Receivables excluded
from Eligible Abatement Contract Receivables solely by reason of the existence
of Contra Claims shall nevertheless be considered Eligible Abatement Contract
Receivables to the extent of the obligations owing by such Account Debtor in
excess of such Contra Claims;
(j) Abatement Contract Receivables with respect to an Account Debtor
whose total obligations owing to Borrower exceed twenty-five percent (25%) of
all Eligible Receivables, to the extent of the obligations owing by such Account
Debtor in excess of such percentage;
(k) Abatement Contract Receivables with respect to which the Account
Debtor is subject to any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation proceeding, or becomes
insolvent, or goes out of business;
(l) Abatement Contract Receivables the collection of which Coast, in
its reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(m) Abatement Contract Receivables with respect to which the goods
giving rise to such Receivable have not been shipped and billed to the Account
Debtor, the services giving rise to such Receivable have not been performed and
accepted by the Account Debtor, or the Receivable otherwise does not represent a
final sale;
(n) Abatement Contract Receivables with respect to which the Account
Debtor is located in the states of New Jersey, Minnesota, Indiana, or West
Virginia (or any other state that requires a creditor to file a Business
Activity Report or similar document in order to bring suit or otherwise enforce
its remedies against such Account Debtor in the courts or through any judicial
process of such state), unless Borrower has qualified to do business in New
Jersey, Minnesota, Indiana, West Virginia, or such other states, or has filed a
Notice of Business Activities Report with the applicable division of taxation,
the department of revenue, or with such other state offices, as appropriate, for
the then-current year, or is exempt from such filing requirement; and
(o) Abatement Contract Receivables that represent progress payments
or other advance ▇▇▇▇▇▇▇▇ that are due prior to Borrower's completion of
performance with respect to the goods or services which are the subject of such
progress payment or other advance billing.
(p) Abatement Contract Receivables with respect to which the surety
that has provided or will provide a performance and payment bond or other form
of surety bond on behalf of Borrower has not executed and delivered to Coast an
intercreditor and subordination agreement in form and substance acceptable to
Coast in its sole and absolute discretion.
"Eligible Canadian Current Generation Receivables" means Current
Generation Receivables arising in the ordinary course of Borrower's business
from the sale of goods or rendition of services to Borrower's customers located
in Canada, which Coast, in its sole business judgment exercised in good faith,
shall deem eligible for borrowing, based on such considerations as Coast may
from time to time deem appropriate. Eligible Canadian Current Generation
Receivables shall not include the following:
(a) Current Generation Receivables that the Account Debtor has
failed to pay within 90 days of invoice date;
(b) Current Generation Receivables owed by an Account Debtor or its
Affiliates where twenty-five percent (25%) or more of all Receivables owed by
that Account Debtor (or its Affiliates) are deemed ineligible under clause (a)
above;
(c) Current Generation Receivables with respect to which the Account
Debtor is an employee, Affiliate, or agent of Borrower;
(d) Current Generation Receivables with respect to which goods are
placed on consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇
and hold, or other terms by reason of which the payment by the Account Debtor
may be conditional;
(e) Current Generation Receivables that are not payable in Dollars
or with respect to which the Account Debtor: (i) does not maintain its chief
executive office in Canada, or (ii) is the government of Canada or any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof;
(f) Current Generation Receivables with respect to which the Account
Debtor is a creditor of Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to the
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Receivables (collectively, "Contra Claims"); provided, however, that Receivables
excluded from Eligible Canadian Current Generation Receivables solely by reason
of the existence of Contra Claims shall nevertheless be considered Eligible
Canadian Current Generation Receivables to the extent of the obligations owing
by such Account Debtor in excess of such Contra Claims;
(g) Current Generation Receivables with respect to an Account Debtor
whose total obligations owing to Borrower exceed twenty-five percent (25%) of
all Eligible Canadian Current Generation Receivables, to the extent of the
obligations owing by such Account Debtor in excess of such percentage;
(h) Current Generation Receivables with respect to which the Account
Debtor is subject to any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation proceeding, or becomes
insolvent, or goes out of business;
(i) Current Generation Receivables the collection of which Coast, in
its reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(j) Current Generation Receivables with respect to which the goods
giving rise to such Receivables have not been shipped and billed to the Account
Debtor, the services giving rise to such Receivables have not been performed and
accepted by the Account Debtor, or the Receivables otherwise do not represent a
final sale; and
(k) Current Generation Receivables that represent progress payments
or other advance ▇▇▇▇▇▇▇▇ that are due prior to Borrower's completion of
performance with respect to the goods or services which are the subject of such
progress payment or other advance billing.
"Eligible Domestic Current Generation Receivables" means Current
Generation Receivables arising in the ordinary course of Borrower's business
from the sale of goods or rendition of services to Borrower's customers located
in the United States of America, which Coast, in its sole business judgment
exercised in good faith, shall deem eligible for borrowing, based on such
considerations as Coast may from time to time deem appropriate. Eligible Current
Generation Receivables shall not include the following:
(a) Current Generation Receivables that the Account Debtor has
failed to pay within 90 days of invoice date;
(b) Current Generation Receivables owed by an Account Debtor or its
Affiliates where twenty-five percent (25%) or more of all Receivables owed by
that Account Debtor (or its Affiliates) are deemed ineligible under clause (a)
above;
(c) 50% of the Current Generation Receivables owed by ABR, Inc.;
(d) Current Generation Receivables with respect to which the Account
Debtor is an employee, Affiliate, or agent of Borrower;
(e) Current Generation Receivables with respect to which goods are
placed on consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇
and hold, or other terms by reason of which the payment by the Account Debtor
may be conditional;
(f) Current Generation Receivables that are not payable in Dollars
or with respect to which the Account Debtor: (i) does not maintain its chief
executive office in the United States, or (ii) is not organized under the laws
of the United States, or any State thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof;
(g) Current Generation Receivables with respect to which the Account
Debtor is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Receivables with
respect to which Borrower has complied, to the satisfaction of Coast, with the
Assignment of Claims Act, 31 U.S.C. ss. 3727), or (ii) any State of the United
States or political subdivision thereof (exclusive, however, of Receivables owed
by any State that does not have a statutory counterpart to the Assignment of
Claims Act);
(h) Current Generation Receivables with respect to which the Account
Debtor is a creditor of Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to the Receivables
(collectively, "Contra Claims"); provided however, that Receivables excluded
from Eligible Current Generation Receivables solely by reason of the existence
of Contra Claims shall nevertheless be considered Eligible Current Generation
Receivables to the extent of the obligations owing by such Account Debtor in
excess of such Contra Claims;
(i) Current Generation Receivables with respect to an Account Debtor
whose total obligations owing to Borrower exceed twenty-five percent (25%) of
all Eligible Current Generation Receivables, to the extent of the obligations
owing by such Account Debtor in excess of such percentage;
(j) Current Generation Receivables with respect to which the Account
Debtor is subject to any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation proceeding, or becomes
insolvent, or goes out of business;
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(k) Current Generation Receivables the collection of which Coast, in
its reasonable credit judgment, believes to be doubtful by reason of the Account
Debtor's financial condition;
(l) Current Generation Receivables with respect to which the goods
giving rise to such Receivables have not been shipped and billed to the Account
Debtor, the services giving rise to such Receivables have not been performed and
accepted by the Account Debtor, or the Receivables otherwise do not represent a
final sale;
(m) Current Generation Receivables with respect to which the Account
Debtor is located in the states of New Jersey, Minnesota, Indiana, or West
Virginia (or any other state that requires a creditor to file a Business
Activity Report or similar document in order to bring suit or otherwise enforce
its remedies against such Account Debtor in the courts or through any judicial
process of such state), unless Borrower has qualified to do business in New
Jersey, Minnesota, Indiana, West Virginia, or such other states, or has filed a
Notice of Business Activities Report with the applicable division of taxation,
the department of revenue, or with such other state offices, as appropriate, for
the then-current year, or is exempt from such filing requirement; and
(n) Current Generation Receivables that represent progress payments
or other advance ▇▇▇▇▇▇▇▇ that are due prior to Borrower's completion of
performance with respect to the goods or services which are the subject of such
progress payment or other advance billing.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dies, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"Equipment Acquisition Loan" means the Loan described in Section 2.1(e) of
the Schedule.
"Equipment Term Loan" means the Loan described in Section 2.1(b) of the
Schedule.
"Event of Default" means any of the events set forth in Section 10.1 of
this Agreement.
"Fiscal Quarter" means, with respect to Parent and Borrower, any
three-month period ending approximately on the last day of September, December,
March and June.
"Fiscal Year" means the fiscal year of Parent and Borrower ending on
September 30.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, investment property, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks and the goodwill of the
business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security and
other deposits, rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments now
or hereafter arising therefrom, rights to purchase or sell real or personal
property, rights as a licensor or licensee of any kind, royalties, telephone
numbers, proprietary information, purchase orders, and all insurance policies
and claims (including without limitation life insurance, key man insurance,
credit insurance, liability insurance, property insurance and other insurance),
tax refunds and claims, computer programs, discs, tapes and tape files, claims
under guaranties, security interests or other security held by or granted to
Borrower, all rights to indemnification and all other intangible property of
every kind and nature (other than Receivables).
"Georgia Real Property" means the real property located at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and owned by ▇▇▇▇▇▇▇▇ Technologies of Georgia, Inc.
"Georgia Real Property Term Loan" means the Loan described in Section
2.1(d) of the Schedule.
"Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including without
limitation all raw materials, work in process, finished goods and goods in
transit, and including without limitation all farm products), and all materials
and supplies of every kind, nature and description which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"Investment Property" has the meaning set forth in Division 9 of the Code.
"Loan Documents" means this Agreement, the agreements and documents listed
on Section 5 of the Schedule, and any other agreement, instrument or document
executed in connection herewith or therewith.
"Loans" has the meaning set forth in Section 2.1 hereof.
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Coast Business Credit Loan and Security Agreement
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"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of operations of
Borrower or any subsidiary of Borrower or any guarantor of any of the
Obligations, (ii) the ability of Borrower or any guarantor of any of the
Obligations to perform its obligations under this Agreement (including, without
limitation, repayment of the Obligations as they come due) or (iii) the validity
or enforceability of this Agreement or any other agreement or document entered
into by any party in connection herewith, or the rights or remedies of Coast
hereunder or thereunder.
"Maturity Date" means the date that this Agreement shall cease to be
effective, as set forth on the Schedule, subject to the provisions of Section
9.1 and 9.2 hereof.
"Maximum Dollar Amount" has the meaning set forth in Section 2.1 of the
Schedule.
"Minimum Monthly Interest" has the meaning set forth in Section 3 of the
Schedule.
"Minnesota Real Property" means the real property located at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and owned by ▇▇▇▇▇▇▇▇ Technologies of Minnesota,
Inc.
"Minnesota Real Property Term Loan" means the Loan described in Section
2.1(c) of the Schedule.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Coast, whether evidenced by this Agreement or any note
or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Coast in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees (including attorneys' fees and expenses incurred in bankruptcy), expert
witness fees, audit fees, letter of credit fees, collateral monitoring fees,
closing fees, facility fees, termination fees, minimum interest charges and any
other sums chargeable to Borrower under this Agreement or under any other
present or future instrument or agreement between Borrower and Coast.
"Parent" means ▇▇▇▇▇▇▇▇ Technologies, Inc., a Delaware corporation.
"Permitted Liens" means the following:
(a) purchase money security interests in specific items of Equipment;
(b) leases of specific items of Equipment;
(c) liens for taxes not yet payable;
(d) additional security interests and liens consented to in writing by
Coast, which consent shall not be unreasonably withheld;
(e) security interests being terminated substantially concurrently with
this Agreement;
(f) liens of material-men, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent;
(g) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above in
clauses (a) or (b) above, provided that any extension, renewal or replacement
lien is limited to the property encumbered by the existing lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; or
(h) liens in favor of customs and revenue authorities which secure payment
of customs duties in connection with the importation of goods.
Coast will have the right to require, as a condition to its consent under clause
(d) above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Coast's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Coast, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, general partnership,
limited partnership, limited liability partnership, limited liability company,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Prime Rate" means the actual "Reference Rate" or the substitute therefor
of the Bank of America, N.A., whether or not that rate is the lowest interest
rate charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime
Rate" shall mean the highest of the prime rates published in the Wall Street
Journal on the first business day of the applicable month, as the base rate on
corporate loans at large U.S. money center commercial banks.
"Receivable Loans" means the Loans described in Section 2.1(a) of the
Schedule.
"Receivables" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents, securities accounts,
security entitlements, commodity contracts, commodity
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Coast Business Credit Loan and Security Agreement
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accounts, investment property and all other forms of obligations at any time
owing to Borrower, all guaranties and other security therefor, all merchandise
returned to or repossessed by Borrower, and all rights of stoppage in transit
and all other rights or remedies of an unpaid vendor, lienor or secured party.
"Renewal Date" means the Maturity Date if this Agreement is renewed
pursuant to Section 9.1 hereof, and each anniversary thereafter that this
Agreement is renewed pursuant to Section 9.1 hereof.
"Renewal Fee" means the fee that Borrower must pay Coast upon renewal of
this Agreement pursuant to Section 9.1 hereof, in the amount set forth on the
Schedule.
"Side Collateral" means those items of equipment, including without
limitation, a 1992 Columbus ▇▇▇▇▇▇▇▇ shredder and Michigan cryogenic crumb
rubber equipment, owned by Borrower or Parent and held for sale or other
disposition by various brokers.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and 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 is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Tangible Net Worth" means, on a consolidated basis, owner's equity, plus
subordinated debt otherwise permitted hereunder, less, goodwill, patents,
trademarks, copyrights, franchises, formulas, leasehold interests, leasehold
improvements, non-compete agreements, engineering plans, deferred tax benefits,
organization costs, prepaid items, and any other assets that would be treated as
intangible assets on Borrower's consolidated balance sheet prepared in
accordance with GAAP.
"Unbilled Abatement Contract Receivables" means Borrower's now owned or
hereafter acquired Receivables arising in connection with abatement contracts
entered into between Borrower and any State of the United States or political
subdivision thereof, in order to dispose of abandoned tires, for which
Receivables invoices have been prepared by Borrower but not yet submitted to the
applicable state governmental entity.
"Unvouchered Abatement Contract Receivables" means Borrower's now owned or
hereafter acquired Receivables arising in connection with abatement contracts
entered into between Borrower and any State of the United States or political
subdivision thereof, in order to dispose of abandoned tires, for which invoices
have been prepared and submitted to the applicable state governmental entity but
a claim voucher from the state governmental entity acknowledging such Receivable
has not yet been received by Borrower.
"Vouchered Abatement Contract Receivables" means Borrower's now owned or
hereafter acquired Receivables arising in connection with abatement contracts
entered into between Borrower and any State of the United States or political
subdivision thereof, in order to dispose of abandoned tires, with respect to
which Borrower has received a claim voucher from the state governmental entity
acknowledging such Receivable.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP.
Except as otherwise provided, all references to Borrower's financial performance
and financial statements shall mean the financial performance and financial
statements of Parent, Borrower and Parent's other subsidiaries determined on a
consolidated basis. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.
2. CREDIT FACILITIES.
2.1. Loans. Coast will make loans to Borrower (the "Loans"), in amounts
and in percentages to be determined by Coast in its good faith discretion, up to
the Credit Limit, provided no Default or Event of Default has occurred and is
continuing, and provided further that no overadvances shall be approved by
Coast. In addition, Coast may create reserves against or reduce its advance
rates based upon Eligible Domestic Current Generation Receivables, Eligible
Canadian Current Generation Receivables, or Eligible Abatement Contract
Receivables without declaring a Default or an Event of Default if it determines
that there has occurred a Material Adverse Effect.
3. INTEREST AND FEES
3.1. Interest. All Loans and all other monetary Obligations shall bear
interest at the applicable rate shown on the Schedule, except where expressly
set forth to the contrary
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Coast Business Credit Loan and Security Agreement
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in this Agreement. Interest shall be payable monthly, on the last day of the
month. Interest may, in Coast's discretion, be charged to Borrower's loan
account, and the same shall thereafter bear interest at the same rate as the
applicable Loan. Regardless of the amount of Obligations that may be outstanding
from time to time, Borrower shall pay Coast Minimum Monthly Interest during the
term of this Agreement with respect to the Receivable Loans in the amount set
forth on the Schedule.
3.2. Fees. Borrower shall pay Coast the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Coast and are
deemed fully earned and are nonrefundable.
4. SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when due,
Borrower hereby grants to Coast a security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and wherever
located: All Receivables, Inventory, Equipment, Investment Property, and General
Intangibles, including, without limitation, all of Borrower's Deposit Accounts,
and all money, and all property now or at any time in the future in Coast's
possession (including claims and credit balances), and all proceeds of any of
the foregoing (including proceeds of any insurance policies, proceeds of
proceeds, and claims against third parties), all products of any of the
foregoing, and all books and records related to any of the foregoing (all of the
foregoing, together with all other property in which Coast may now or in the
future be granted a lien or security interest, is referred to herein,
collectively, as the "Collateral")
5. CONDITIONS PRECEDENT.
The obligation of Coast to make the Loans is subject to the satisfaction,
in the sole business judgment of Coast exercised in good faith, at or prior to
the first advance of funds hereunder, of each, every and all of the following
conditions:
5.1. Status of Accounts at Closing. No accounts payable shall be due and
unpaid ninety (90) days past its due date except for such accounts payable being
contested in good faith in appropriate proceedings and for which adequate
reserves have been provided.
5.2. Minimum Availability. Borrower shall have minimum availability
immediately following the initial funding in the amount set forth on the
Schedule.
5.3. Intentionally Omitted.
5.4. Real Property. Coast shall have received duly executed mortgages
and/or deeds of trust in form and substance satisfactory to Coast, in Coast's
reasonable discretion, in form for recording in the appropriate recording
office, with respect to the Georgia Real Property and the Minnesota Real
Property.
5.5. Executed Agreement. Coast shall have received this Agreement duly
executed and in form and substance satisfactory to Coast in its reasonable
discretion.
5.6. Opinions of Borrower's and Parent's Counsel. Coast shall have
received opinions of Borrower's and Parent's counsel, in form and substance
satisfactory to Coast in its reasonable discretion.
5.7. Priority of Coast's Liens. Coast shall have received the results of
"of record" searches satisfactory to Coast in its reasonable discretion,
reflecting its Uniform Commercial Code filings against Borrower indicating that
Coast has a perfected, first priority lien in and upon all of the Collateral,
subject only to Permitted Liens.
5.8. Insurance. Coast shall have received copies of the insurance binders
or certificates evidencing Borrower's compliance with Section 8.2 hereof,
including lender's loss payee endorsements.
5.9. Borrower's Existence. Coast shall have received copies of Borrower's
articles of incorporation and all amendments thereto, and a Certificate of Good
Standing, each certified by the Secretary of State of the state of Borrower's
organization, and dated a recent date prior to the Closing Date, and Coast shall
have received Certificates of Foreign Qualification for Borrower from the
Secretary of State of each state wherein the failure to be so qualified could
have a Material Adverse Effect.
5.10. Organizational Documents. Coast shall have received copies of
Borrower's By-laws and all amendments thereto, and Coast shall have received
copies of the resolutions of the board of directors of Borrower, authorizing the
execution and delivery of this Agreement and the other documents contemplated
hereby, and authorizing the transactions contemplated hereunder and thereunder,
and authorizing specific officers of Borrower to execute the same on behalf of
Borrower, in each case certified by the Secretary or other acceptable officer of
Borrower as of the Closing Date.
5.11. Taxes. Coast shall have received evidence from Borrower that
Borrower has complied with all tax withholding and Internal Revenue Service
regulations, in form and substance satisfactory to Coast in its reasonable
discretion.
5.12. Due Diligence. Coast shall have completed its due diligence with
respect to Borrower.
5.13. Other Documents and Agreements. Coast shall have received such other
agreements, instruments and documents as Coast may require in connection with
the transactions contemplated hereby, all in form and substance
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Coast Business Credit Loan and Security Agreement
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satisfactory to Coast in Coast's reasonable discretion, and in form for filing
in the appropriate filing office, including, but not limited to, those documents
listed in Section 5 of the Schedule.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Coast to enter into this Agreement and to make Loans,
Borrower represents and warrants to Coast as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
6.1. Existence and Authority. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would have a Material Adverse Effect. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (a) have
been duly and validly authorized, (b) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally), and (c) do not violate Borrower's
articles of incorporation, or Borrower's by-laws, or any law or any material
agreement or instrument which is binding upon Borrower or its property, and (d)
do not constitute grounds for acceleration of any material indebtedness or
obligation under any material agreement or instrument which is binding upon
Borrower or its property.
6.2. Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Coast thirty (30) days' prior written notice before changing
its name or doing business under any other name. Borrower has complied, and will
in the future comply, with all laws relating to the conduct of business under a
fictitious business name.
6.3. Place of Business; Location of Collateral. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Coast at least thirty (30) days'
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth on the Schedule.
6.4. Title to Collateral; Permitted Liens. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased by Borrower. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Coast now has, and
will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Coast and the Collateral against all claims of
others. None of the Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a fixture. Borrower is not and
will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral
is located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Coast, use its best efforts to cause such
third party to execute and deliver to Coast, in form acceptable to Coast, such
waivers and subordinations as Coast shall specify, so as to ensure that Coast's
rights in the Collateral are, and will continue to be, superior to the rights of
any such third party. Borrower will keep in full force and effect, and will
comply with all the terms of, any lease of real property where any of the
Collateral now or in the future may be located.
6.5. Maintenance of Collateral. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Coast in writing of any
material loss or damage to the Collateral.
6.6. Books and Records. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
6.7. Financial Condition, Statements and Reports. All financial statements
now or in the future delivered to Coast have been, and will be, prepared in
conformity with GAAP (except, in the case of unaudited financial statements, for
the absence of footnotes and subject to normal year-end adjustments) and now and
in the future will fairly reflect the financial condition of Borrower, at the
times and for the periods therein stated. Between the last date covered by any
such statement provided to Coast and the date hereof, there has been no Material
Adverse Effect. Borrower is now and will continue to be Solvent.
6.8. Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (a) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted
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Coast Business Credit Loan and Security Agreement
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and conducted, (b) notifies Coast in writing of the commencement of, and any
material development in, the proceedings, and (c) posts bonds or takes any other
steps required to keep the contested taxes from becoming a lien upon any of the
Collateral. As of the date hereof, Borrower is unaware of any claims or
adjustments proposed for any of Borrower's prior tax years which could result in
additional taxes becoming due and payable by Borrower. Borrower has paid, and
shall continue to pay all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with their
terms, and Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency. Borrower shall, at all times,
utilize the services of an outside payroll service providing for the automatic
deposit of all payroll taxes payable by Borrower.
6.9. Compliance with Law. Borrower has complied, and will comply, in all
material respects, with all provisions of all material foreign, federal, state
and local laws and regulations relating to Borrower, including, but not limited
to, the Fair Labor Standards Act, and those relating to Borrower's ownership of
real or personal property, the conduct and licensing of Borrower's business, and
environmental matters.
6.10. Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in a Material Adverse Effect.
Borrower will promptly inform Coast in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
Borrower involving an amount set forth on the Schedule.
6.11. Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
6.12. Intellectual Property. Borrower has no federal or state copyrights,
copyright registrations, federal or state trademarks, trademark registrations,
or patents or patent applications owned or controlled by Borrower or licensed to
Borrower.
7. RECEIVABLES
7.1. Representations Relating to Receivables. Borrower represents and
warrants to Coast as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made,
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business.
7.2. Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Coast as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's books and records are and
shall be genuine and in all respects what they purport to be. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
7.3. Schedules and Documents relating to Receivables. Borrower shall
deliver to Coast via facsimile, unless otherwise directed by Coast, at such
locations and at such intervals as Coast may request, transaction reports and
loan requests, schedules of Receivables, and schedules of collections, all on
Coast's standard forms; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit Coast's security interest and
other rights in all of Borrower's Receivables, nor shall Coast's failure to
advance or lend against a specific Receivable affect or limit Coast's security
interest and other rights therein. Loan requests received after 10:30 A.M. Los
Angeles, California time, will not be considered by Coast until the next
Business Day. Together with each such schedule, or later if requested by Coast,
Borrower shall furnish Coast with copies (or, at Coast's request, originals) of
all contracts, orders, invoices, and other similar documents, and all original
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to Coast an aged accounts receivable trial balance
in such form and at such intervals as Coast shall request. In addition, Borrower
shall deliver to Coast the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Receivables, upon receipt thereof and in the same form as received, with all
necessary endorsements, all of which shall be with recourse. Borrower shall also
provide Coast with copies of all credit memos as and when requested by Coast.
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7.4. Collection of Receivables. Subject to the provisions of Section 8.9,
Borrower shall have the right to collect all Receivables, unless and until an
Event of Default has occurred. All proceeds of Collateral shall be deposited by
Borrower in the original form received, duly endorsed, within one (1) Business
Day after receipt by Borrower into a "blocked account" specified by Coast
pursuant to a blocked account agreement in such form as Coast may specify. All
such proceeds of Collateral shall be applied to the Obligations in such order as
Coast shall determine. Coast or its designee may, at any time, notify Account
Debtors that Coast has been granted a security interest in the Receivables.
7.5. Disputes. Borrower shall notify Coast promptly of all disputes or
claims relating to Receivables. Borrower hereby acknowledges that unless and
until Borrower informs Coast, in writing, of a dispute and/or return relating to
Receivables, Coast is entitled to and will rely on the Receivables for the
entirety of the Obligations, regardless of the timing of any advance(s) on the
Loans. Borrower shall not forgive (completely or partially), compromise or
settle any Receivable for less than payment in full, or agree to do any of the
foregoing, except that Borrower may do so, provided that: (a) Borrower does so
in good faith, in a commercially reasonable manner, in the ordinary course of
business, and in arm's length transactions, which are reported to Coast on the
regular reports provided to Coast; (b) no Default or Event of Default has
occurred and is continuing; and (c) taking into account all such discounts
settlements and forgiveness, the total outstanding Loans will not exceed the
Credit Limit. Coast may, at any time after the occurrence of an Event of
Default, settle or adjust disputes or claims directly with Account Debtors for
amounts and upon terms which Coast considers advisable in its reasonable credit
judgment and, in all cases, Coast shall credit Borrower's Loan account with only
the net amounts received by Coast in payment of any Receivables.
7.6. Returns. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount. In the event any attempted return occurs after the occurrence of any
Event of Default, Borrower shall (a) hold the returned Inventory in trust for
Coast, (b) segregate all returned Inventory from all of Borrower's other
property, (c) conspicuously label the returned Inventory as subject to Coast's
security interest, and (d) immediately notify Coast of the return of any
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory, and on Coast's request deliver such returned Inventory
to Coast.
7.7. Verification. Coast may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Coast or such other name as Coast may choose.
7.8. No Liability. Coast shall not under any circumstances be responsible
or liable for any shortage or discrepancy in, damage to, or loss or destruction
of, any goods, the sale or other disposition of which gives rise to a
Receivable, or for any error, act, omission or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Coast be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Coast from liability for its
own gross negligence or willful misconduct.
8. ADDITIONAL DUTIES OF THE BORROWER
8.1. Financial and Other Covenants. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
8.2. Insurance. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Coast, in such form and amounts as Coast may
reasonably require, and Borrower shall provide evidence of such insurance to
Coast, so that Coast is satisfied that such insurance is, at all times, in full
force and effect. All liability insurance policies of Borrower shall name Coast
as an additional insured, and all property casualty and related insurance
policies of Borrower shall name Coast as a loss payee thereon and Borrower shall
cause a lender's loss payee endorsement in form reasonably acceptable to Coast.
Upon receipt of the proceeds of any such insurance, Coast shall apply such
proceeds in reduction of the Obligations as Coast shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, Coast shall release to Borrower insurance proceeds with
respect to Equipment totaling less than the amount set forth in Section 8 of the
Schedule, which shall be utilized by Borrower for the replacement of the
Equipment with respect to which the insurance proceeds were paid. Coast may
require reasonable assurance that the insurance proceeds so released will be so
used. If Borrower fails to provide or pay for any insurance, Coast may, but is
not obligated to, obtain the same at Borrower's expense. Borrower shall promptly
deliver to Coast copies of all reports made to insurance companies.
8.3. Reports. Borrower, at its expense, shall provide Coast with the
written reports set forth in Section 8 of the Schedule, and such other written
reports with respect to Borrower (including budgets, sales projections,
operating plans and other financial documentation), as Coast shall from time to
time reasonably specify.
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8.4. Access to Collateral, Books and Records. At reasonable times but not
less frequently than quarterly and on one (1) Business Day's notice, Coast, or
its agents, shall have the right to perform Audits. Coast shall take reasonable
steps to keep confidential all confidential information obtained in any Audit,
but Coast shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process. The Audits shall be at Borrower's expense and the charge for the Audits
shall be Seven Hundred Fifty Dollars ($750) per person per day (or such higher
amount as shall represent Coast's then current standard charge for the same),
plus reasonable out-of-pocket expenses. Borrower will not enter into any
agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address,
without first notifying Coast of the same and obtaining the written agreement
from such accounting firm, service bureau or other third party to give Coast the
same rights with respect to access to books and records and related rights as
Coast has under this Loan Agreement.
8.5. Negative Covenants. Borrower shall not, without Coast's prior written
consent, do any of the following:
(a) merge or consolidate with another entity, except in a
transaction in which (i) the owners of Borrower hold at least fifty percent
(50%) of the ownership interest in the surviving entity immediately after such
merger or consolidation, and (ii) Borrower is the surviving entity;
(b) acquire any assets, except (i) in the ordinary course of
business for the sole purpose of replacing existing Equipment, or (ii) in a
transaction or a series of transactions not involving the payment of an
aggregate amount in excess of the amount set forth in Section 8 of the Schedule;
(c) commence or take any action to commence the wire separation
project or a project of a similar nature;
(d) create, incur, assume or suffer to exist any indebtedness or
other obligation for borrowed money with any creditor in order to finance the
"wire separation program" or a project of a similar nature;
(e) enter into any other transaction outside the ordinary course of
business;
(f) sell or transfer any Collateral, except for (ii) the sale of
finished Inventory in the ordinary course of Borrower's business, (ii) the sale
or trade-in of obsolete or unneeded Equipment in the ordinary course of
business, and (iii) the sale or other disposition of the Side Collateral in
accordance with Section 8.8;
(g) store any Inventory or other Collateral with any warehouseman or
other third party;
(h) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis;
(i) make any loans of any money or other assets, including
intercompany loans, except (i) advances to customers or suppliers in the
ordinary course of business, (ii) travel advances, employee relocation loans and
other employee loans and advances in the ordinary course of business, (iii)
loans to employees, officers and directors for the purpose of purchasing equity
securities of the Borrower, and (iv) loans to Parent evidenced by a promissory
note(s) which promissory note(s) shall be assigned and promptly delivered to
Coast upon its (their) execution; provided however, that such loans to Parent by
Borrower shall not exceed in the aggregate (i) $1,320,000 each Fiscal Year, and
(ii) $110,000 each month;
(j) incur any debts, outside the ordinary course of business, which
would have a Material Adverse Effect;
(k) guarantee or otherwise become liable with respect to the
obligations of another party or entity;
(l) pay or declare any dividends or distributions on the ownership
interests in Borrower (except for dividends or distributions payable solely in
stock form of ownership interests in Borrower);
(m) make any change in Borrower's capital structure which would have
a Material Adverse Effect; or
(n) dissolve or elect to dissolve.
Transactions permitted by the foregoing provisions of this Section are
only permitted if no Default or Event of Default is continuing or would occur as
a result of such transaction.
8.6. Remittance of Proceeds. All proceeds of any Collateral shall be
delivered to Coast within one (1) Business Day after receipt by Borrower, in
their original form, duly endorsed to Coast, to be applied to the Obligations in
such order as Coast shall determine. Borrower agrees that it will not commingle
proceeds of Collateral with any of Borrower's other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in
an express trust for Coast. Nothing in this Section limits the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.
8.7. Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Coast with
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respect to any Collateral or relating to Borrower, Borrower shall, without
expense to Coast, make available Borrower and its officers, employees and agents
and Borrower's books and records, to the extent that Coast may reasonably deem
them necessary in order to prosecute or defend any such suit or proceeding.
8.8. Mandatory Prepayment of the Equipment Term Loan. Borrower shall make
mandatory principal prepayments of the Equipment Term Loan in amounts equal to
one hundred percent (100%) of the net proceeds obtained from the sale or other
disposition of the Side Collateral. Borrower shall give Coast prompt written
notice of the occurrence of any sale or other disposition of the Side
Collateral, and each prepayment shall be made no later than ten (10) days after
the date of the applicable sale or other disposition. Each mandatory prepayment
under this Section 8.8 shall be applied to reduce the remaining scheduled
principal installments of the Equipment Term Loan in inverse order of maturity.
8.9. Lockbox Agreement. Borrower agrees to execute and deliver, no later
than 90 days after the Closing Date, a lockbox agreement in form and substance
acceptable to Coast and with a bank acceptable to Coast, to replace the Blocked
Account Agreement with Marquette Bank in effect on the Closing Date. Borrower
further agrees to execute all other documents and take all actions Coast may
deem necessary in order to accomplish the purposes of the lockbox agreement.
8.10. Further Assurances. Borrower agrees, at its expense, on request by
Coast, to execute all documents and take all actions, as Coast, may reasonably
deem necessary or useful in order to perfect and maintain Coast's perfected
security interest in the Collateral, and in order to fully consummate the
transactions contemplated by this Agreement.
9. TERM
9.1. Maturity Date. This Agreement shall continue in effect until the
Maturity Date; provided that the Maturity Date shall automatically be extended,
and this Agreement shall automatically and continuously renew, for successive
additional terms of one year each, unless one party gives written notice to the
other, not less than one hundred twenty (120) days prior to the Maturity Date or
the next Renewal Date, that such party elects to terminate this Agreement
effective on the Maturity Date or such next Renewal Date. If this Agreement is
renewed under this Section 9.1, Borrower shall pay to Coast a Renewal Fee in the
amount shown in Section 3 of the Schedule. The Renewal Fee shall be due and
payable on the Renewal Date and thereafter shall bear interest at a rate equal
to the rate applicable to the Receivable Loans.
9.2. Early Termination. This Agreement may be terminated prior to the
Maturity Date as follows: (a) by Borrower, effective three (3) Business Days
after written notice of termination is given to Coast; or (b) by Coast at any
time after the occurrence of an Event of Default, without notice, effective
immediately. If this Agreement is terminated by Borrower or by Coast under this
Section 9.2, Borrower shall pay to Coast an Early Termination Fee in the amount
shown in Section 3 of the Schedule. The Early Termination Fee shall be due and
payable on the effective date of termination and thereafter shall bear interest
at a rate equal to the rate applicable to the Receivable Loans.
9.3. Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Notwithstanding any termination of this Agreement, all of Coast's security
interests in all of the Collateral and all of the terms and provisions of this
Agreement shall continue in full force and effect until all Obligations have
been paid and performed in full; provided that, without limiting the fact that
Loans are subject to the discretion of Coast, Coast may, in its sole discretion,
refuse to make any further Loans after termination. No termination shall in any
way affect or impair any right or remedy of Coast, nor shall any such
termination relieve Borrower of any Obligation to Coast, until all of the
Obligations have been paid and performed in full. Upon payment and performance
in full of all the Obligations and termination of this Agreement, Coast shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be required to fully terminate Coast's security
interests.
10. EVENTS OF DEFAULT AND REMEDIES
10.1. Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Coast immediate written notice thereof:
(a) Any warranty, representation, statement, report or certificate
made or delivered to Coast by Borrower or any of Borrower's officers, employees
or agents, now or in the future, shall be untrue or misleading and results in a
Material Adverse Effect; or
(b) Borrower shall fail to pay when due any Loan or any interest
thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time
shall exceed the Credit Limit; or
(d) Borrower shall fail to deliver the proceeds of Collateral to
Coast as provided in Sections 7.4 and 8.6 above, or shall fail to give Coast
access to its books and records or Collateral as provided in Section 8.4 above,
or shall breach any negative covenant set forth in Section 8.5 above; or
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(e) Borrower shall fail to comply with the financial covenants (if
any) set forth in the Schedule or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured; or
(f) Borrower shall fail to perform any other non-monetary
Obligation, which failure is not cured within five (5) Business Days after the
date due; or
(g) Any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which
is not cured within ten (10) Business Days after the occurrence of the same; or
(h) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or
(i) Borrower breaches any material contract or obligation, which has
or may reasonably be expected to have a Material Adverse Effect; or
(j) Dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or appointment
of a receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or
(k) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is (i) not
timely controverted, or (ii) not cured by the dismissal thereof within
forty-five (45) days after the date commenced; or
(l) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations or any attempt to do any of the
foregoing, or commencement of proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or
(m) any guarantor shall fail to comply with or otherwise breach the
terms, provisions or covenants of any guaranty of the Obligations or any
security agreement securing the obligations of such guarantor under the
guaranty; or
(n) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or
(o) Borrower or any guarantor of any of the Obligations makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations, other than as permitted in the applicable subordination
agreement, or if any Person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or
(p) Except as permitted under Section 8.5(a), Borrower shall suffer
or experience any Change of Control without Coast's prior written consent, which
consent shall be in the discretion of Coast in the exercise of its reasonable
business judgment; or
(q) Borrower shall generally not pay its debts as they become due,
or Borrower shall conceal, remove or transfer any part of its property, with
intent to hinder, delay or defraud its creditors, or make or suffer any transfer
of any of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or
(r) there shall be any Material Adverse Effect.
Coast may cease making any Loans or extending any credit hereunder during any of
the above cure periods.
10.2. Remedies. Upon the occurrence, and during the continuance, of any
Event of Default, Coast, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following:
(a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation;
(c) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Borrower hereby authorizes Coast without judicial
process to enter onto any of Borrower's premises without interference to search
for, take possession of, keep, store or remove any of the Collateral, and remain
on the premises or cause a custodian to remain on the premises in exclusive
control thereof, without charge for so long as Coast deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Coast seek to
take possession
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of any of the Collateral by Court process, Borrower hereby irrevocably waives:
any bond and any surety or security relating thereto required by any statute,
court rule or otherwise as an incident to such possession;
(i) any demand for possession prior to the commencement of any
suit or action to recover possession thereof; and
(ii) any requirement that Coast retain possession of, and not
dispose of, any such Collateral until after trial or final judgment;
(d) Require Borrower to assemble any or all of the Collateral and
make it available to Coast at places designated by Coast which are reasonably
convenient to Coast and Borrower, and to remove the Collateral to such locations
as Coast may deem advisable;
(e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Coast shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge. Coast is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to Coast's
benefit;
(f) Sell, lease or otherwise dispose of any of the Collateral, in
its condition at the time Coast obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Coast shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Coast deems reasonable, or on Coast's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Coast may directly
or through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General
Intangibles comprising Collateral and, in connection therewith, Borrower
irrevocably authorizes Coast to endorse or sign Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Coast's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Receivables and the like for less than face value; and
(h) Demand and receive possession of any of Borrower's federal and
state income tax returns and the books and records utilized in the preparation
thereof or referring thereto.
All attorneys' fees, expenses, costs, liabilities and obligations incurred
by Coast (including attorneys' fees and expenses incurred in connection with
bankruptcy) with respect to the foregoing shall be due from the Borrower to
Coast on demand. Coast may charge the same to Borrower's loan account, and the
same shall thereafter bear interest at the same rate as is applicable to the
Receivable Loans. Without limiting any of Coast's rights and remedies, from and
after the occurrence of any Event of Default, the interest rate applicable to
the Obligations shall be increased by an additional three percent per annum.
10.3. Standards for Determining Commercial Reasonableness. Borrower and
Coast agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable:
(a) Notice of the sale is given to Borrower at least seven (7) days
prior to the sale, and, in the case of a public sale, notice of the sale is
published at least seven (7) days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted;
(b) Notice of the sale describes the collateral in general,
non-specific terms;
(c) The sale is conducted at a place designated by Coast, with or
without the Collateral being present;
(d) The sale commences at any time between 8:00 a.m. and 6:00 p.m.
Los Angeles, California time;
(e) Payment of the purchase price in cash or by cashier's check or
wire transfer is required; and
(f) With respect to any sale of any of the Collateral, Coast may
(but is not obligated to) direct any prospective purchaser to ascertain directly
from Borrower any and all information concerning the same.
Coast shall be free to employ other methods of noticing and selling the
Collateral, in its discretion, if they are commercially reasonable.
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10.4. Power of Attorney. Borrower grants to Coast an irrevocable power of
attorney coupled with an interest, authorizing and permitting Coast (acting
through any of its employees, attorneys or agents) at any time, at its option,
but without obligation, with or without notice to Borrower, and at Borrower's
expense, to do any or all of the following, in Borrower's name or otherwise, but
Coast agrees to exercise the following powers in a commercially reasonable
manner:
(a) Execute on behalf of Borrower any documents that Coast may, in
its sole discretion, deem advisable in order to perfect and maintain Coast's
security interest in the Collateral, or in order to exercise a right of Borrower
or Coast, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements;
(b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
Coast's Collateral or in which Coast has an interest;
(c) Execute on behalf of Borrower, any invoices relating to any
Receivable, any draft against any Account Debtor and any notice to any Account
Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Coast's possession;
(e) Endorse all checks and other forms of remittances received by
Coast;
(f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same;
(g) Grant extensions of time to pay, compromise claims and settle
Receivables and General Intangibles for less than face value and execute all
releases and other documents in connection therewith;
(h) Pay any sums required on account of Borrower's taxes or to
secure the release of any liens therefor, or both;
(i) Settle and adjust, and give releases of, any insurance claim
that relates to any of the Collateral and obtain payment therefor;
(j) Instruct any third party having custody or control of any books
or records belonging to, or relating to, Borrower to give Coast the same rights
of access and other rights with respect thereto as Coast has under this
Agreement; and
(k) Take any action or pay any sum required of Borrower pursuant to
this Agreement and any other present or future agreements.
Any and all sums paid and any and all costs, expenses, liabilities, obligations
and attorneys' fees incurred by Coast (including attorneys' fees and expenses
incurred pursuant to bankruptcy) with respect to the foregoing shall be added to
and become part of the Obligations, and shall be payable on demand. Coast may
charge the foregoing to Borrower's loan account and the foregoing shall
thereafter bear interest at the same rate applicable to the Receivable Loans. In
no event shall Coast's rights under the foregoing power of attorney or any of
Coast's other rights under this Agreement be deemed to indicate that Coast is in
control of the business, management or properties of Borrower. Borrower shall
pay, indemnify, defend, and hold Coast and each of its officers, directors,
employees, counsel, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or related
to the execution, delivery, enforcement, performance, and administration of this
Agreement and any other Loan Documents or the transactions contemplated herein,
and with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities").
Borrower shall have no obligation to any Indemnified Person hereunder with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations.
10.5. Application of Proceeds. All proceeds realized as the result
of any sale of the Collateral shall be applied by Coast first to the
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Coast in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of
the Obligations, in such order as Coast shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other persons legally
entitled thereto; Borrower shall remain liable to Coast for any
deficiency. If, Coast, in
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its sole discretion, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Coast
shall have the option, exercisable at any time, in its sole discretion, of
either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Coast of
the cash therefor.
10.6. Remedies Cumulative. In addition to the rights and remedies set
forth in this Agreement, Coast shall have all the other rights and remedies
accorded a secured party in equity, under the Code, and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Coast and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Coast of one or more of its rights or remedies shall not be deemed an election,
nor bar Coast from subsequent exercise or partial exercise of any other rights
or remedies. The failure or delay of Coast to exercise any rights or remedies
shall not operate as a waiver thereof, but all rights and remedies shall
continue in full force and effect until all of the Obligations have been
indefeasibly paid and performed.
11. GENERAL PROVISIONS
11.1. Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Coast (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Coast on account of the Obligations three (3) Business Days after
receipt by Coast of immediately available funds, and, for purposes of the
foregoing, any such funds received after 10:30 AM Los Angeles, California time,
on any day shall be deemed received on the next Business Day. Coast shall be
entitled to charge Borrower's account for such three (3) Business Days of
"clearance" or "float" at the rate(s) set forth in Section 3 of the Schedule on
all checks, wire transfers and other items received by Coast, regardless of
whether such three (3) Business Days of "clearance" or "float" actually occur,
and shall be deemed to be the equivalent of charging three (3) Business Days of
interest on such collections. This across-the-board three (3) Business Day
clearance or float charge on all collections is acknowledged by the parties to
constitute an integral aspect of the pricing of Coast's financing of Borrower.
Coast shall not, however, be required to credit Borrower's account for the
amount of any item of payment which is unsatisfactory to Coast in its sole
discretion, and Coast may charge Borrower's loan account for the amount of any
item of payment which is returned to Coast unpaid.
11.2. Application of Payments. Subject to Section 10.5 hereof, all
payments with respect to the obligations may be applied, and in Coast's sole
discretion reversed and re-applied, to the Obligations, in such order and manner
as Coast shall determine in its sole discretion.
11.3. Charges to Accounts. Coast may, in its discretion, require that
Borrower pay monetary Obligations in cash to Coast, or charge them to Borrower's
Loan account, in which event they will bear interest from the date due to the
date paid at the same rate applicable to the Loans.
11.4. Monthly Accountings. Coast shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Coast), unless Borrower
notifies Coast in writing to the contrary within thirty (30) days after each
account is rendered, describing the nature of any alleged errors or omissions.
11.5. Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, facsimile or certified mail return
receipt requested, addressed to Coast or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Coast shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, faxed (at time of confirmation of
transmission), or at the expiration of one (1) Business Day following delivery
to the private delivery service, or two (2) Business Days following the deposit
thereof in the United States mail, with postage prepaid.
11.6. Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
11.7. Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Coast and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.
11.8. Waivers. The failure of Coast at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Coast shall not waive or
diminish any right of Coast later to demand and receive strict compliance
therewith. Any waiver of any Default shall not waive or affect any other
Default, whether
17
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
prior or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to Coast shall be deemed to have been waived by any act or knowledge
of Coast or its agents or employees, but only by a specific written waiver
signed by an authorized officer of Coast and delivered to Borrower. Borrower
waives demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement, extension or
renewal of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by Coast on which Borrower is or may in
any way be liable, and notice of any action taken by Coast, unless expressly
required by this Agreement.
11.9. No Liability for Ordinary Negligence. Neither Coast, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Coast shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Coast, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Coast, but nothing herein shall relieve Coast from
liability for its own gross negligence or willful misconduct.
11.10. Amendment. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Coast.
11.11. Time of Essence. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
11.12. Attorneys' Fees, Costs and Charges. Borrower shall reimburse Coast
for all attorneys' fees (including attorneys' fees and expenses incurred
pursuant to bankruptcy) and all filing, recording, search, title insurance,
appraisal, audit, and other costs incurred by Coast, pursuant to, or in
connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any attorneys' fees and costs (including
attorneys' fees and expenses incurred pursuant to bankruptcy) Coast incurs in
order to do the following: prepare and negotiate this Agreement and the
documents relating to this Agreement; obtain legal advice in connection with
this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books and records;
protect, obtain possession of, lease, dispose of, or otherwise enforce Coast's
security interest in, the Collateral; and otherwise represent Coast in any
litigation relating to Borrower. If either Coast or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its costs and attorneys' fees
(including attorneys' fees and expenses incurred pursuant to bankruptcy),
including (but not limited to) attorneys' fees and costs incurred in the
enforcement of, execution upon or defense of any order, decree, award or
judgment. Borrower shall also pay Coast's standard charges for returned checks
and for wire transfers, in effect from time to time. All attorneys' fees, costs
and charges (including attorneys' fees and expenses incurred pursuant to
bankruptcy) and other fees, costs and charges to which Coast may be entitled
pursuant to this Agreement may be charged by Coast to Borrower's loan account
and shall thereafter bear interest at the same rate as the Georgia Real Property
Term Loan.
11.13. Benefit of Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Coast; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Coast, and any prohibited
assignment shall be void. No consent by Coast to any assignment shall release
Borrower from its liability for the Obligations. Coast may assign its rights and
delegate its duties hereunder without the consent of Borrower. Coast reserves
the right to syndicate all or a portion of the transaction created herein or
sell, assign, transfer, negotiate, or grant participations in all or any part
of, or any interest in Coast's rights and benefits hereunder. In connection with
any such syndication, assignment or participation, Coast may disclose all
documents and information which Coast now or hereafter may have relating to
Borrower or Borrower's business. To the extent that Coast assigns its rights and
obligations hereunder to a third Person, Coast thereafter shall be released from
such assigned obligations to Borrower.
11.14. Publicity. Coast is hereby authorized, at its expense, to issue
appropriate press releases and to cause a tombstone to be published announcing
the consummation of this transaction and the aggregate amount thereof.
11.15. Paragraph Headings Construction. Paragraph headings are only used
in this Agreement for convenience. Borrower and Coast acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Coast or Borrower under any rule
of construction or otherwise.
11.16. Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all
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Coast Business Credit Loan and Security Agreement
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rights and obligations of Coast and Borrower shall be governed by the internal
laws of the State of California, without regard to its conflicts of law
principles. As a material part of the consideration to Coast to enter into this
Agreement, Borrower (a) agrees that all actions and proceedings relating
directly or indirectly to this Agreement shall, at Coast's option, be litigated
in courts located within California, and that the exclusive venue therefor shall
be Los Angeles County; (b) consents to the jurisdiction and venue of any such
court and consents to service of process in any such action or proceeding by
personal delivery or any other method permitted by law; and (c) waives any and
all rights Borrower may have to object to the jurisdiction of any such court, or
to transfer or change the venue of any such action or proceeding.
11.17. Mutual Waiver of Jury Trial. BORROWER AND COAST EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
▇▇▇▇▇▇▇▇ TECHNOLOGIES OF MINNESOTA, INC.,
a Minnesota corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
President or Vice President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
Secretary or Ass't Secretary
▇▇▇▇▇▇▇▇ TECHNOLOGIES OF GEORGIA, INC.,
a Georgia corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
President or Vice President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
Secretary or Ass't Secretary
COAST:
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------------------
Title: VP - Underwriting
--------------------------------------------------
19
--------------------------------------------------------------------------------
Coast
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: ▇▇▇▇▇▇▇▇ Technologies of Minnesota, Inc.,
a Minnesota corporation
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Borrower: ▇▇▇▇▇▇▇▇ Technologies of Georgia, Inc.,
a Georgia corporation
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Date: January 31, 2001
This Schedule forms an integral part of the Loan and Security Agreement between
Coast Business Credit, a division of Southern Pacific Bank, a California
corporation and the above-borrowers of even date.
--------------------------------------------------------------------------------
SECTION 2 - CREDIT FACILITIES
Section 2.1 - Credit Limit:
Loans in a total amount at any time outstanding not to exceed the lesser
of a total of Seven Million Dollars ($7,000,000) at any one time
outstanding (the "Maximum Dollar Amount"), or the sum of (a), (b), (c),
(d) and (e) below:
(a) Receivable Loans in an amount not to exceed:
(i) Eligible Domestic Current Generation Receivables:
85% of the amount of Borrower's Eligible Domestic Current
Generation Receivables; plus
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Coast Business Credit Schedule to Loan and Security Agreement
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(ii) Eligible Canadian Current Generation Receivables:
80% of the amount of Borrower's Eligible Canadian Current
Generation Receivables; plus ----
(iii) Eligible Abatement Contract Receivables:
1. 50% of the amount of Borrower's Eligible Abatement
Contract Receivables arising out of Unbilled Abatement
Contract Receivables; plus
2. 50% of the amount of Borrower's Eligible Abatement
Contract Receivables arising out of Unvouchered
Abatement Contract Receivables, less the amount advanced
for the same Eligible Abatement Contract Receivables
under Section 2.1(a)(iii)(1); plus
3. 85% of the amount of Borrower's Eligible Abatement
Contract Receivables arising out of Vouchered Abatement
Contract Receivables, less the amount advanced for the
same Eligible Abatement Contract Receivables under
Section 2.1(a)(iii)(1) or (2); plus
(b) An Equipment Term Loan in the original principal amount of Two
Million Forty-Four Thousand Dollars ($2,044,000) (an amount equal to
80% of the forced liquidation value of Borrower's existing
Equipment). The Equipment Term Loan will be repayable in sixty (60)
equal monthly principal installments of Thirty-Four Thousand
Sixty-Six and 67/100 Dollars ($34,066.67), plus interest, commencing
on February 28th and continuing on the last day of each succeeding
month; provided that all amounts outstanding under the Equipment
Term Loan shall be due and payable on the Maturity Date, and
provided further that the Equipment Term Loan shall be subject to
mandatory prepayment as provided in Section 8.8; plus
(c) A Minnesota Real Property Term Loan in the original principal amount
of Eight Hundred Twenty-Two Thousand Two Hundred Fifty Dollars
($822,250), an amount equal to 65% of the appraised fair market
value of the Minnesota Real Property, with said appraised fair
market value to be determined by an appraiser acceptable to Coast in
its sole and absolute discretion.
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Coast Business Credit Schedule to Loan and Security Agreement
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Interest only shall be payable on the Minnesota Real Property Term
Loan on the last day of each month, commencing February 28th and
continuing on the last day of each succeeding month thereafter,
provided that all principal and interest outstanding under the
Minnesota Real Property Term Loan shall be due and payable in full
on April 30, 2001.
The principal outstanding under the Minnesota Real Property Term
Loan may be prepaid, in whole or in part, at any time, without
premium or penalty. All prepayments shall include interest on the
amount prepaid to the date of prepayment.
(d) A Georgia Real Property Term Loan in the original principal amount
of Eight Hundred Twelve Thousand Five Hundred Dollars ($812,500), an
amount equal to 65% of the appraised fair market value of the
Georgia Real Property, with said appraised fair market value to be
determined by an appraiser acceptable to Coast in its sole and
absolute discretion.
Interest only shall be payable on the Georgia Real Property Term
Loan on the last day of each month, commencing February 28th and
continuing on the last day of each succeeding month thereafter,
provided that all principal and interest outstanding under the
Georgia Real Property Term Loan shall be due and payable in full on
April 30, 2001.
The principal outstanding under the Georgia Real Property Term Loan
may be prepaid, in whole or in part, at any time, without premium or
penalty. All prepayments shall include interest on the amount
prepaid to the date of prepayment.
(e) An Equipment Acquisition Loan to be drawn in one or more advances
within one hundred eighty (180) days from the Closing Date, in
minimum advances of One Hundred Thousand Dollars ($100,000), in a
total amount not to exceed the lesser of:
(i) Eighty percent (80%) of the cost of new Equipment (after
subtracting taxes and installation charges); and
(ii) One Million Dollars ($1,000,000).
The Equipment Acquisition Loan will be repayable in monthly
principal installments, plus interest, as set forth in the Secured
Promissory Note (Equipment Acquisition Loan), dated of even date
herewith; provided that all amounts outstanding under the Equipment
Acquisition Loan shall be due and payable on the Maturity Date.
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Coast Business Credit Schedule to Loan and Security Agreement
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Section 2.1 - Reserves:
The following availability reserves are created against the Receivable
Loans:
1. An amount equal to $25,000 shall be reserved each month until the
Cryopolymers Note is paid in full, which aggregate amount shall be
loaned by Borrower to Parent to pay the balloon payment on the
Cryopolymers Note when due.
2. A $12,600 availability reserve shall continue in effect until such
time as Parent has delivered to Coast a Landlord's Waiver and
Agreement, in form and substance acceptable to Coast in its sole and
absolute discretion, executed by Parent's landlord of its corporate
headquarters located at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇. ▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
================================================================================
SECTION 3 - INTEREST AND FEES
Section 3.1 - Interest Rate:
Receivable Loans: A rate equal to the Prime Rate plus 2% per annum
Equipment Term Loan: A rate equal to the Prime Rate plus 2.5% per annum.
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Coast Business Credit Schedule to Loan and Security Agreement
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Minnesota Real Property Term Loan: A rate equal to the Prime Rate plus 2.5% per annum.
Georgia Real Property Term Loan: A rate equal to the Prime Rate plus 2.5% per annum.
Equipment Acquisition Loan: A rate equal to the Prime Rate plus 2.5% per annum.
Each interest rate shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. The interest rate applicable to all
Loans shall be adjusted monthly effective as of the first day of each
month, and the interest to be charged for each month shall be based on the
highest Prime Rate in effect during said month, but in no event shall the
rate of interest charged on any Loans in any month be less than nine
percent (9%) per annum.
Section 3.1 -Minimum Monthly Interest:
An amount equal to the interest that would have accrued had the daily
aggregate outstanding balance of all Loans been equal to fifty percent
(50%) of the Maximum Dollar Amount.
Section 3.2 - Loan Fee:
$70,000, payable concurrently herewith.
Section 3.2 - Facility Fee:
$2,500, per quarter, payable on the Closing Date (prorated for any partial
quarter at the beginning of the term of this Agreement).
Section 9.1 - Renewal Fee:
.5% of the Maximum Dollar Amount per year.
Section 9.2 - Early Termination Fee:
An amount equal to four percent (4%) of the Maximum Dollar Amount (as
defined in the Schedule), if termination occurs on or before the first
anniversary of the effective date of this Agreement; three percent (3%) of
the Maximum Dollar Amount, if termination occurs after the first
anniversary and on or before the second anniversary of the effective date
of this Agreement; and two percent (2%) of the Maximum Dollar Amount, if
termination occurs after the second anniversary and before the Maturity
Date.
================================================================================
SECTION 5 - CONDITIONS PRECEDENT
Section 5.2 - Minimum Availability:
$500,000, excluding the reserves created under Section 2.1 and set forth
in this Schedule.
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Coast Business Credit Schedule to Loan and Security Agreement
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Section 5.13 - Other Documents and Agreements:
1. Joint and Several Borrower Rider;
2. Validity Agreement of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
3. Validity Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
4. Validity Agreement of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
5. Continuing Guaranty of ▇▇▇▇▇▇▇▇ Technologies, Inc.;
6. Security Agreement of ▇▇▇▇▇▇▇▇ Technologies, Inc.;
7. Security Agreement - Stock Pledge of ▇▇▇▇▇▇▇▇ Technologies, Inc.
8. Intellectual Property Security Agreement of ▇▇▇▇▇▇▇▇ Technologies,
Inc.
9. Absolute Assignment of Rights and Remedies executed by Borrower,
Parent and Coast;
10. Notice of Assignment executed by Trans World Equipment Sales, Inc.,
Borrower, Parent and Coast.
11. Estoppel Certificate of Cryopolymers Leasing, Inc.;
12. Amendments to Purchase Agreement between ▇▇▇▇▇▇▇▇ Technologies, Inc.
and Republic Industries;
13. Documentation to confirm the sale of assets from ▇▇▇▇▇▇▇▇
Technologies of South Carolina, Inc. to Borrower, including an
assumption agreement by Borrower with respect to a capital lease of
First Security Leasing;
14. Documents of title (pink slips) with respect to all of Borrower's
rolling stock, duly assigned to Coast as lienholder;
15. UCC-1 financing statements, fixture filings and termination
statements;
16. Secured Promissory Note of Borrower ($2,044,000);
17. Secured Promissory Note of Borrower ($822,250);
25
Coast Business Credit Schedule to Loan and Security Agreement
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18. Secured Promissory Note of Borrower ($812,500);
19. Secured Promissory Note of Borrower ($1,000,000)
20. Deed of Trust (Georgia);
21. Deed of Trust (Minnesota);
22. Hazardous Materials Indemnity Agreement of ▇▇▇▇▇▇▇▇ Technologies,
Inc.;
23. Opinion Letter from ▇▇▇▇▇▇, Hall & ▇▇▇▇▇▇▇, Parent's counsel;
24. Opinion letter from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to ▇▇▇▇▇▇▇▇
Technologies of Minnesota, Inc.;
25. Opinion letter from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, P.C., counsel to ▇▇▇▇▇▇▇▇
Technologies of Georgia, Inc.; and
26. Assignment of Blocked Account Agreement of Marquette Bank.
================================================================================
SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.2 - Prior Names of Borrower:
BFI Tire Recyclers of Georgia, Inc.
BFI Tire Recyclers of Minnesota, Inc.
Section 6.2 - Prior Trade Names of Borrower:
None
Section 6.2 - Existing Trade Names of Borrower:
None
Section 6.3 - Other Locations and Addresses:
None
Section 6.10 - Material Adverse Litigation:
None
Section 6.10 - Future Claims and Litigation:
Borrower will promptly inform Coast in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against Borrower involving any single claim Fifty Thousand Dollars
($50,000) or more, or involving One Hundred Thousand Dollars ($100,000) or
more in the aggregate.
26
Coast Business Credit Schedule to Loan and Security Agreement
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================================================================================
SECTION 8 - ADDITIONAL DUTIES OF BORROWER
Section 8.1 - Other Provisions:
Debt Service Coverage Ratio. Borrower shall not permit, as at the end of
each Fiscal Quarter, the Debt Service Coverage Ratio to be less than 1.25
to 1.00, provided however, that for the period commencing on the date both
the Minnesota Real Property and the Georgia Real Property have been sold
and leased back by Borrower and ending on the 180th day thereafter, the
Debt Service Coverage Ratio, as at the end of each Fiscal Quarter, shall
not be less than 1.1 to 1.00. Thereafter, the Debt Service Coverage Ratio
shall not be less than 1.25 to 1.00 as at the end of each Fiscal Quarter.
Section 8.2 - Insurance:
Subject to the limitations set forth in Section 8.2 of the Agreement,
Coast shall release to Borrower insurance proceeds with respect to
Equipment totaling less than One Hundred Thousand Dollars ($100,000).
Section 8.3 - Reporting:
Borrower shall provide Coast with the following:
1. Monthly Current Generation Receivables agings, aged by invoice date,
within ten (10) days after the end of each month.
2. Monthly Abatement Contract Receivables agings, aged by invoice date,
within ten (10) Business Days after the end of each month.
3. Monthly Vouchered Abatement Contract Receivables agings, aged by
invoice date, within ten (10) days after the end of each month.
4. Monthly schedule of all abatement contracts, specifying the
effective date of the contract, progress to date and remaining back
log on all contracts, within ten (10) days after the end of each
month.
5. Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers within ten (10) days after the
end of each month.
6. Monthly perpetual inventory reports for the Inventory valued on a
first-in, first-out basis at the lower of cost or market (in
accordance with GAAP) or such other inventory reports as are
reasonably requested by Coast, all within ten (10) days after the
end of each month.
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Coast Business Credit Schedule to Loan and Security Agreement
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7. Monthly internally prepared financial statements (consolidated and
consolidating), as soon as available, and in any event within thirty
(30) days after the end of each month.
8. Quarterly, internally prepared financial statements (consolidated
and consolidating), as soon as available, and in any event within
forty-five (45) days after the end of each Fiscal Quarter.
9. Annual financial statements (consolidated and consolidating), as
soon as available, and in any event within ninety (90) days
following the end of Borrower's Fiscal Year, containing the
unqualified opinion of, and certified by, an independent certified
public accountant acceptable to Coast.
Section 8.5 - Negative Covenants (Acquired Assets):
One Hundred Thousand Dollars ($100,000) each Fiscal Year.
================================================================================
SECTION 9 - TERM
Section 9.1 - Maturity Date:
The last Business Day of the month five (5) years from the Closing Date,
subject to automatic renewal as provided in Section 9.1 of the Agreement,
and early termination as provided in Section 9.2 of the Agreement.
28