EXHIBIT 10.118
FINANCING AND SECURITY AGREEMENT
Dated
August 29, 2002
By and Between
SPACEHAB, INC., ET AL.
And
▇▇▇▇▇ BANK N.A.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 6
Section 1.1 Certain Defined Terms. 6
Section 1.2 Accounting Terms and Other Definitional Provisions. 24
ARTICLE II THE CREDIT FACILITIES 25
Section 2.1 The Revolving Credit Facility. 25
2.1.1 Revolving Credit Facility. 25
2.1.2 Procedure for Making Advances Under the Revolving Credit; Lender Protection Loans. 25
2.1.3 Borrowing Base. 26
2.1.4 Borrowing Base Report. 26
2.1.5 Revolving Credit Note. 27
2.1.6 Mandatory Prepayments of Revolving Credit. 27
2.1.7 Optional Prepayments of Revolving Credit. 27
2.1.8 The Collateral Account. 28
2.1.9 Revolving Loan Account. 29
2.1.10 Revolving Credit Unused Line Fee. 29
Section 2.2 The Letter of Credit Facility. 29
2.2.1 Letters of Credit. 29
2.2.2 Letter of Credit Fees. 30
2.2.3 Terms of Letters of Credit; Post-Expiration Date Letters of Credit. 30
2.2.4 Procedures for Letters of Credit. 31
2.2.5 Payments of Letters of Credit. 31
2.2.6 Change in Law; Increased Cost. 32
2.2.7 General Letter of Credit Provisions. 33
Section 2.3 General Financing Provisions. 34
2.3.1 Borrowers' Representatives. 34
2.3.2 Use of Proceeds of the Revolving Credit. 36
2.3.3 Origination Fee. 36
2.3.4 Monitoring Fees. 36
2.3.5 Computation of Interest and Fees. 36
2.3.6 Maximum Interest Rate. 36
2.3.7 Payments. 37
2.3.8 Liens; Setoff. 37
2.3.9 Requirements of Law. 37
2.3.10 ACH Transactions. 38
2.3.11 Guaranty. 38
ARTICLE III THE COLLATERAL 41
Section 3.1 Debt and Obligations Secured. 41
Section 3.2 Grant of Liens. 41
Section 3.3 Collateral Disclosure List. 42
Section 3.4 Personal Property. 42
Section 3.5 Record Searches. 42
Section 3.6 Costs. 42
Section 3.7 Release. 42
Section 3.8 Inconsistent Provisions. 43
ARTICLE IV REPRESENTATIONS AND WARRANTIES 43
Section 4.1 Representations and Warranties. 43
2
4.1.1 Subsidiaries. 43
4.1.2 Existence. 43
4.1.3 Power and Authority. 43
4.1.4 Binding Agreements. 43
4.1.5 No Conflicts. 44
4.1.6 No Defaults, Violations. 44
4.1.7 Compliance with Laws. 44
4.1.8 Margin Stock. 44
4.1.9 Investment Company Act; Margin Stock. 44
4.1.10 Litigation. 45
4.1.11 Financial Condition. 45
4.1.12 Full Disclosure. 45
4.1.13 Indebtedness for Borrowed Money. 45
4.1.14 Convertible Debt. 46
4.1.15 Taxes. 46
4.1.16 ERISA. 46
4.1.17 Title to Properties. 47
4.1.18 Patents, Trademarks, Etc. 47
4.1.19 Employee Relations. 47
4.1.20 Presence of Hazardous Materials or Hazardous Materials Contamination. 47
4.1.21 Perfection and Priority of Collateral. 48
4.1.22 Collateral Disclosure List. 48
4.1.23 Business Names and Addresses. 48
4.1.24 No Suspension or Debarment. 48
4.1.25 Equipment. 48
4.1.26 Accounts. 48
4.1.27 Compliance with Eligibility Standards. 49
Section 4.2 Survival; Updates of Representations and Warranties. 49
ARTICLE V CONDITIONS PRECEDENT 49
Section 5.1 Conditions to the Initial Advance and Initial Letter of Credit. 49
5.1.1 Organizational Documents. 49
5.1.2 Opinion of Borrowers' Counsel. 50
5.1.3 Consents, Licenses, Approvals, Etc. 50
5.1.4 Note. 50
5.1.5 Financing Documents and Collateral. 51
5.1.6 Other Financing Documents. 51
5.1.7 Other Documents, Etc. 51
5.1.8 Payment of Fees. 51
5.1.9 Collateral Disclosure List. 51
5.1.10 Recordings and Filings. 51
5.1.11 Insurance Certificate. 51
5.1.12 Field Examination. 51
5.1.13 Landlord's Waivers. 52
5.1.14 Stock Certificates and Stock Powers. 52
5.1.15 Pledge of Membership Interests in Space Station. 52
5.1.16 Required Availability under the Revolving Credit Facility. 52
Section 5.2 Conditions to all Extensions of Credit and Issuance of Letters of Credit. 52
5.2.1 Compliance. 52
5.2.2 Borrowing Base. 52
5.2.3 Default. 53
5.2.4 Representations and Warranties. 53
5.2.5 Adverse Change. 53
5.2.6 Legal Matters. 53
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ARTICLE VI COVENANTS OF THE BORROWERS 53
Section 6.1 Affirmative Covenants. 53
6.1.1 Financial Statements. 53
6.1.2 Reports to SEC and to Stockholders. 55
6.1.3 Recordkeeping, Rights of Inspection, Field Examination, Etc. 55
6.1.4 Existence. 56
6.1.5 Compliance with Laws. 56
6.1.6 Preservation of Properties. 56
6.1.7 Line of Business. 56
6.1.8 Insurance. 56
6.1.9 Taxes. 57
6.1.10 ERISA. 57
6.1.11 Government Contracts. 57
6.1.12 Notification of Events of Default and Adverse Developments. 58
6.1.13 Hazardous Materials; Contamination. 59
6.1.14 Disclosure of Significant Transactions. 60
6.1.15 Financial Covenants. 60
6.1.16 Collection of Receivables. 61
6.1.17 Assignments of Receivables. 61
6.1.18 Insurance With Respect to Equipment. 62
6.1.19 Maintenance of the Collateral. 62
6.1.20 Equipment. 62
6.1.21 Defense of Title and Further Assurances. 63
6.1.22 Business Names; Locations. 63
6.1.23 Use of Premises and Equipment. 63
6.1.24 Protection of Collateral. 64
Section 6.2 Negative Covenants. 64
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets. 64
6.2.2 Subsidiaries. 65
6.2.3 Issuance of Stock. 65
6.2.4 Purchase or Redemption of Stock, Dividend Restrictions. 65
6.2.5 Indebtedness. 66
6.2.6 Investments, Loans and Other Transactions. 66
6.2.7 Stock of Subsidiaries. 67
6.2.8 Subordinated Indebtedness. 67
6.2.9 Liens. 68
6.2.10 Transactions with Affiliates. 68
6.2.11 Debenture. 68
6.2.12 ERISA Compliance. 69
6.2.13 Prohibition on Hazardous Materials. 69
6.2.14 Method of Accounting; Fiscal Year. 69
6.2.15 Compensation. 69
6.2.16 Transfer of Collateral. 69
6.2.17 Disposition of Collateral. 70
ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES 70
Section 7.1 Events of Default. 70
7.1.1 Failure to Pay. 70
7.1.2 Breach of Representations and Warranties. 70
7.1.3 Failure to Comply with Specific Covenants. 70
7.1.4 Other Covenants 70
7.1.5 Default Under Other Financing Documents or Obligations. 71
7.1.6 Receiver; Bankruptcy. 71
7.1.7 Involuntary Bankruptcy, etc. 71
7.1.8 Judgment. 71
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7.1.9 Execution; Attachment. 72
7.1.10 Default Under Other Borrowings. 72
7.1.11 Challenge to Agreements. 72
7.1.12 Material Adverse Effect. 72
7.1.13 Liquidation, Termination, Dissolution, Change in Management, etc. 72
7.1.14 Contract Default, Debarment or Suspension. 72
Section 7.2 Remedies. 73
7.2.1 Acceleration. 73
7.2.2 Further Advances. 73
7.2.3 Uniform Commercial Code. 73
7.2.4 Specific Rights With Regard to Collateral. 74
7.2.5 Application of Proceeds. 75
7.2.6 Performance by Lender. 75
7.2.7 Other Remedies. 76
ARTICLE VIII MISCELLANEOUS 76
Section 8.1 Notices. 76
Section 8.2 Amendments; Waivers. 76
8.2.1 In General. 76
Section 8.3 Cumulative Remedies. 77
Section 8.4 Severability. 77
Section 8.5 Assignments by Lender. 77
Section 8.6 Participations by Lender. 78
Section 8.7 Disclosure of Information by Lender. 78
Section 8.8 Successors and Assigns. 78
Section 8.9 Continuing Agreements. 78
Section 8.10 Enforcement Costs. 79
Section 8.11 Applicable Law; Jurisdiction. 79
8.11.1 Applicable Law. 79
8.11.2 Submission to Jurisdiction. 79
8.11.3 Appointment of Agent for Service of Process. 79
8.11.4 Service of Process. 80
Section 8.12 Duplicate Originals and Counterparts. 80
Section 8.13 Headings. 80
Section 8.14 No Agency. 80
Section 8.15 Date of Payment. 80
Section 8.16 Entire Agreement. 80
Section 8.17 Waiver of Trial by Jury. 81
Section 8.18 Liability of the Lender. 81
Section 8.19 Indemnification. 81
Section 8.20 Joinder of Additional Borrowers. 82
5
FINANCING AND SECURITY AGREEMENT
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made this 29th
day of August, 2002, by and among SPACEHAB, INCORPORATED, a corporation
organized under the laws of the State of Washington (the "Company"), ▇▇▇▇▇▇▇
ENGINEERING CORPORATION, a corporation organized under the laws of the State of
Colorado ("▇▇▇▇▇▇▇ Engineering"), ASTROTECH SPACE OPERATIONS, INC., a
corporation organized under the laws of the State of Delaware ("Astrotech"),
jointly and severally (each of Company, ▇▇▇▇▇▇▇ Engineering and Astrotech, a
"Borrower"; Company, ▇▇▇▇▇▇▇ Engineering and Astrotech, collectively, the
"Borrowers"); and ▇▇▇▇▇ BANK N.A., a national banking association ("Lender").
RECITALS
A. The Borrowers have applied to the Lender for a revolving credit
facility in the maximum principal amount of Five Million Dollars ($5,000,000), a
letter of credit facility in the maximum principal amount of One Million Dollars
($1,000,000), as part of that revolving credit facility to be used by the
Borrowers for the Permitted Uses described in this Agreement.
B. The Lender is willing to make these credit facilities available
jointly and severally to the Borrowers upon the terms and subject to the
conditions set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.
As used in this Agreement, the terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
health-care insurance receivables, contract rights (other than accounts,
accounts receivable and contract rights arising under the Astrotech Excluded
Contracts), notes, drafts, instruments, acceptances, chattel paper, leases and
writings evidencing a monetary obligation or a security interest in, or a lease
of, goods, all rights to payment of a monetary obligation or other consideration
under present or future contracts (including, without limitation, all rights
(whether or not earned by performance) to receive payments under presently
existing or hereafter acquired or created letters of credit), or by virtue of
property that has been sold, leased, licensed, assigned or otherwise disposed
of, services rendered or to be rendered, loans and advances made or other
considerations given, by or set
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forth in or arising out of any present or future chattel paper, note, draft,
lease, acceptance, writing, bond, insurance policy, instrument, document or
general intangible, and all extensions and renewals of any thereof, all rights
under or arising out of present or future contracts, agreements or general
interest in goods which gave rise to any or all of the foregoing, including all
commercial tort claims, other claims or causes of action now existing or
hereafter arising in connection with or under any agreement or document or by
operation of law or otherwise, all collateral security of any kind (including,
without limitation, real property mortgages and deeds of trust) Supporting
Obligations, letter-of-credit rights and letters of credit given by any Person
with respect to any of the foregoing, all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing and all equipment and general intangibles necessary or
beneficial to retain, access and/or process the information contained in those
books and records, and all -Proceeds of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Lender for the
account of any of the Borrowers pursuant to agreement or overdrafts.
"Additional Borrower" means each Person that has executed and
delivered an Additional Borrower Joinder Supplement that has been accepted and
approved by the Lender.
"Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with
the blanks appropriately completed and executed and delivered by the Additional
Borrower and accepted by the Company on behalf of the Borrowers.
"Adjustment Date" has the meaning described in Section 8.5
(Assignments by Lender).
"Affiliate" means, with respect to any designated Person, any other
Person (other than a natural person), (a) directly or indirectly controlling,
directly or indirectly controlled by, or under direct or indirect common control
with the Person designated, (b) directly or indirectly owning or holding five
percent (5%) or more of any equity interest in such designated Person, or (c)
five percent (5%) or more of whose stock or other equity interest is directly or
indirectly owned or held by such designated Person. For purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other equity interests or by contract or otherwise.
"Agreement" means this Financing and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in accordance with the
provisions of Section 8.2 (Amendments; Waivers).
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrowers and their respective Subsidiaries.
7
"Assignee" means any Person to which the Lender assigns all or any
portion of its interests under this Agreement, any Revolving Credit Commitment,
and any Loan, in accordance with the provisions of Section 8.5 (Assignments by
Lender), together with any and all successors and assigns of such Person;
"Assignees" means the collective reference to all Assignees.
"Astrotech Excluded Contracts" means CLIN 1 payments under (i) the
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation ( subcontract 99797075 as amended) and (ii) the
Lockheed ▇▇▇▇▇▇ Commercial Launch Services, Inc. ( subcontract no. 48801, as
amended).
"Astrotech Loan" means that certain credit agreement between Astrotech
Florida Holdings, Inc. a Florida Corporation and wholly owned subsidiary of
Astrotech Space Operations, Inc. and SouthTrust Bank in the original principal
amount of $20,000,000.
"Astrotech Loan Collateral" means (i) the real property which is the
subject of the Astrotech Loan located in Titusville, Florida and having the
addresses of ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and (ii) all monies due
under the Astrotech Excluded Contracts.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time, and any successor Laws.
"Base Rate" means the higher of (a) the Federal Funds Rate plus 1/2 of
1%; or (ii) The Wall Street Journal Prime Rate. The "Federal Funds Rate" is a
fluctuating rate of interest equal to the Federal Funds Rate as published in the
"Money Rates" Section of The Wall Street Journal. "The Wall Street Journal Prime
Rate" is a fluctuating rate of interest equal to the highest quoted annual rate
of interest which is published from time to time in the "Money Rates" Section of
The Wall Street Journal as the Prime Rate (or, if such source is not available,
such alternate source as determined by the Lender), as adjusted from time to
time in the Lender's sole discretion for reserve requirements, deposit insurance
assessment rates and other regulatory costs.
"Borrower" means each Person defined as a "Borrower" in the preamble
of this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrowers" in the preamble to this
Agreement and all Additional Borrowers.
"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing
Base).
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State are authorized or required to close.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
8
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into of a Capital Lease.
"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or should
be, in accordance with GAAP consistently applied, capitalized on the balance
sheet of that Person.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Lender, any Affiliate of the Lender, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Lender and (c) commercial paper of a domestic issuer rated at
least either A-1 by Standard & Poor's Corporation (or its successor) or P-1 by
▇▇▇▇▇'▇ Investors Service, Inc. (or its successor) with maturities of six (6)
months or less from the date of acquisition.
"Chattel Paper" means a record or records (including, without
limitation, electronic chattel paper) that evidence both a monetary obligation
and a security interest in specific goods, a security interest in specific goods
and software used in the goods, or a lease of specific goods; all Supporting
Obligations with respect thereto; any returned, rejected or repossessed goods
and software covered by any such record or records and all proceeds (in any form
including, without limitation, accounts, contract rights, documents, chattel
paper, instruments and general intangibles) of such returned, rejected or
repossessed goods; and all -Proceeds of the foregoing.
"CIT Collateral" means all equipment and inventory and other tangible
personal property of the Company, Astrotech and ▇▇▇▇▇▇▇ Engineering (other than
Flight Assets) presently existing or hereafter acquired or created and wherever
located, together with all accessions thereto, substitutions and replacements
therefor, and Proceeds thereof, including all accounts, chattel paper,
instruments and general intangibles constituting Proceeds of such equipment,
together with all insurance proceeds of the foregoing, and all books and records
of the foregoing, which secure the CIT Loan Obligations.
"CIT Loan Obligations" means the loans and other obligations described
in that certain Loan and Security Agreement dated July 14, 1997 by and between
Astrotech, as Borrower, and CIT Group/Equipment Financing, Inc., as Lender, as
the same has been amended prior to the Closing Date, to among other things, add
▇▇▇▇▇▇▇ Engineering as a party thereto, and as the same may be amended from time
to time in accordance with this Agreement and all obligations of the Company
described in that certain Continuing Guaranty Agreement and that certain
Security Agreement, each dated July 14, 1997 from the Company in favor of CIT
Group/Equipment Financing, Inc., in each case as the same has been amended prior
to the date of this Agreement, and as the same may be amended from time to time
in accordance with this Agreement.
9
"Closing Date" means the Business Day, in any event not later than
August ___, 2002 on which the Lender shall be satisfied that the conditions
precedent set forth in Section 5.1 (Conditions to Initial Advance) have been
fulfilled or otherwise waived by the Lender.
"Collateral" means all property of each and every Borrower subject
from time to time to the Liens of this Agreement, any of the Security Documents
and/or any of the other Financing Documents, together with any and Proceeds
thereof.
"Collateral Account" has the meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Compliance Certificate" means a periodic Compliance Certificate
described in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with any Borrower within the meaning
of Section 414(b) or (c) of the Internal Revenue Code.
"Convertible Debt Loan Documents" means any of the documents now or
hereafter evidencing or securing the Debentures.
"Credit Facility" means the Revolving Credit Facility or the Letter of
Credit Facility, as the case may be, and "Credit Facilities" means collectively
the Revolving Credit Facility, the Letter of Credit Facility and any and all
other credit facilities now or hereafter extended under or secured by this
Agreement.
"Current Letter of Credit Obligations" has the meaning described in
Section 2.2.5 (Payments of Letters of Credit).
"Debentures" means the Company's 8% Convertible Subordinated Notes due
2007 in the aggregate principal amount of $63,250,000 issued pursuant to the
Purchase Agreement dated as of October 15, 1997, by and among the Company, and
Credit Suisse First Boston Corporation, CIBC Wood Gundy Securities Corp. and
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc
"Debt Service" means as to each Borrower and its Subsidiaries for any
period of determination thereof an amount equal to the total of the aggregate
amount of all payments of principal and interest with respect to Indebtedness
for Borrowed Money of each Borrower and its Subsidiaries scheduled to be due and
payable during such period, minus non-cash amortized interest costs for such
period; provided, however, interest payments shall be calculated on an accrual
basis.
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"Debt Service Coverage Ratio" means as to each Borrower and its
Subsidiaries for the period of any determination the ratio of (a) EBITDA minus
cash dividends paid by the Company to (b) Debt Service.
"Debt to Worth Ratio" means as to each Borrower and its Subsidiaries for
the date of any determination thereof the ratio of (a) Liabilities to (b) the
Tangible Net Worth.
"Default" means an event which, with the giving of notice or lapse of time,
or both, could or would constitute an Event of Default under the provisions of
this Agreement.
"Documents" means all documents of title or receipts, whether now existing
or hereafter acquired or created, and all Proceeds of the foregoing.
"EBITDA" means as to each Borrower and its Subsidiaries for any period of
determination thereof, the sum of (a) the net profit (or loss) determined in
accordance with GAAP consistently applied, plus (b) interest expense and income
tax provisions for such period, plus (c) depreciation and amortization of assets
for such period, plus (d) non-cash amortized interest costs for such period,
plus (e) cash tax refunds, and, minus (e) cash taxes paid for such period. All
net profits and losses from Space Media shall be excluded from the calculation
of EBITDA.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each Account (excluding any and all
Accounts that are Excluded Assets) (net of any returns, discounts, claims,
credits, charges, accrued rebates or other allowances, offsets, deductions,
counterclaims, disputes or other defenses and reduced by the aggregate amount of
all reserves, limits and deductions provided for in this definition and
elsewhere in this Agreement) in United States Dollars of a Borrower, provided
such Account conforms and continues to conform to the following criteria to the
satisfaction of the Lender:
(a) the Account arose in the ordinary course of a Borrower's
business from services performed or products delivered by such Borrower;
(b) the Account is a valid, legally enforceable obligation of the
Account Debtor and requires no further act on the part of any Person under
any circumstances to make the Account payable by the Account Debtor;
(c) the Account is based upon an enforceable order or contract,
written or oral, for services performed or products delivered, and the same
were performed in accordance with such order or contract;
(d) if the Account arises from the performance of services, such
services have been fully rendered and do not relate to any warranty claim
or obligation;
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(e) the Account is evidenced by an invoice or other documentation
in form acceptable to the Lender, dated no later than the date of shipment
or performance;
(f) the amount shown on the books of a Borrower and on any
invoice, certificate, schedule or statement delivered to the Lender is
owing to such Borrower and no partial payment has been received unless
reflected with that delivery;
(g) the Account is not outstanding more than ninety (90) days
from the date of the invoice therefor or past due more than sixty (60) days
after its due date, which shall not be later than thirty (30) days after
the invoice date;
(h) the Account is not owing by any Account Debtor for which the
Lender has deemed fifty percent (50%) or more of such Account Debtor's
other Accounts (or any portion thereof) due to a Borrower, individually, or
all of the Borrowers collectively to be non-Eligible Receivables;
(i) the Account is not owing by an Account Debtor (other than
where a Governmental Authority is the Account Debtor) or a group of
affiliated Account Debtors (other than Governmental Authorities) to any
Borrower whose then existing Accounts owing to that Borrower individually
exceed in aggregate face amount fifteen percent (15%) of that Borrower's
total Eligible Receivables;
(j) the Account Debtor has not returned, rejected or refused to
retain, or otherwise notified the Borrower of any dispute concerning, or
claimed nonconformity of, any goods or services from the furnishing or
delivery of which the Account arose;
(k) other than customary offsets and claims which may arise under
Government Contracts, the Account is not subject to any present or
contingent (and no facts exist which are known to the Borrower to be the
basis for any future) offset, claim, deduction or counterclaim, dispute or
defense in law or equity on the part of such Account Debtor, or any claim
for credits, allowances, or adjustments by the Account Debtor because of
unsatisfactory services, or for any other reason including, without
limitation, those arising on account of a breach of any express or implied
representation or warranty;
(l) the Account Debtor is not a Subsidiary or Affiliate of any
Borrower or an employee, officer, director or shareholder of any Borrower
or any Subsidiary or Affiliate of any Borrower;
(m) the Account Debtor is not incorporated or primarily
conducting business or otherwise located in any jurisdiction outside of the
United States of America, unless the Account Debtor's obligations with
respect to such Account are secured by a letter of credit, guaranty or
banker's acceptance having
12
terms and from such issuers and confirmation banks as are acceptable to the
Lender in its sole and absolute discretion (which letter of credit,
guaranty or banker's acceptance is subject to the perfected Lien of the
Lender);
(n) as to which none of the following events has occurred and is
continuing with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in effect;
the making of any general assignment by the Account Debtor for the benefit
of creditors; the appointment of a receiver or trustee for the Account
Debtor or for any of the assets of the Account Debtor, including, without
limitation, the appointment of or taking possession by a "custodian," as
defined in the Bankruptcy Code; the institution by or against the Account
Debtor of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the Account Debtor; the sale,
assignment, or transfer of all or any material part of the assets of the
Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor
as a going concern;
(o) no Borrower is indebted in any manner to the Account Debtor
(as creditor, lessor, supplier or otherwise), with the exception of
customary offsets and claims which may arise under Government Contracts and
customary credits, adjustments and/or discounts given to an Account Debtor
by a Borrower in the ordinary course of its business;
(p) the Account does not arise from services under or related to
any warranty obligation of a Borrower or out of service charges, finance
charges or other fees for the time value of money;
(q) the Account is not evidenced by chattel paper or an
instrument of any kind and is not secured by any letter of credit, unless
such chattel paper, instrument or letter of credit is assigned to the
Lender pursuant to documents in all respects satisfactory to the Lender;
(r) the Account does not arise from an Excluded Asset;
(s) the title of the respective Borrower to the Account is
absolute and is not subject to any prior assignment, claim, Lien, or
security interest, except Permitted Liens;
13
(t) no bond or other undertaking by a guarantor or surety has
been or is required to be obtained, supporting the Account and any of the
Account Debtor's obligations in respect of the account;
(u) each Borrower has the full and unqualified right and power
to assign and grant a security interest in, and Lien on, the Account to the
Lender as security and collateral for the payment of the Obligations;
(v) the Account does not arise out of a contract with, or order
from, an Account Debtor that, to the extent such terms are enforceable
under applicable law, by its terms, forbids or makes void or unenforceable
the assignment or grant of a security interest by the Borrowers to the
Lender of the Account arising from such contract or order;
(w) the Account is subject to a Lien in favor of the Lender,
which Lien is perfected as to the Account by the filing of financing
statements and which Lien upon such filing constitutes a first priority
security interest and Lien;
(x) no part of the Account represents a retainage;
(y) the Lender in the good faith exercise of its sole and
absolute discretion has not deemed the Account ineligible because of
uncertainty as to the creditworthiness of the Account Debtor or because the
Lender otherwise considers the collateral value of such Account to the
Lender to be impaired or its ability to realize such value to be insecure;
(z) the Account does not constitute a final billing or close out
billing relating to a completed contract; and
(aa) if the Account Debtor is located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order
to permit a Borrower to seek judicial enforcement in such state of payment
of such Account, such Borrower has qualified to do business in such state
or has filed a Notice of Business Activities Report or equivalent report
for the then current year.
In the event of any dispute, under the foregoing criteria, as to whether an
account is, or has ceased to be, an Eligible Receivable, the decision of the
Lender in the good faith exercise of its sole and absolute discretion shall
control.
"Enforcement Costs" means all expenses, charges, costs and fees whatsoever
(including, without limitation, reasonable outside and allocated in-house
counsel attorney's fees and expenses) of any nature whatsoever paid or incurred
by or on behalf of the Lender in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, this Agreement or any of the other Financing Documents,
including, without limitation, those costs and expenses more specifically
enumerated in Section 3.6 (Costs) and/or Section 8.10
14
(Enforcement Costs), and further including, without limitation, amounts paid to
lessors, processors, bailees, warehousemen, sureties, judgment creditors and
others in possession of or with a Lien against or claimed against the
Collateral, and (c) the monitoring, administration, processing and/or servicing
of any or all of the Obligations, the Financing Documents, and/or the
Collateral.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature (other than Excluded Assets), presently existing or hereafter acquired or
created and wherever located, whether or not the same shall be deemed to be
affixed to real property and all of such types of property leased by any of the
Borrowers and all of the Borrowers' rights and interests with respect thereto
under such leases (including, without limitation, options to purchase), together
with all accessions, additions, fittings, accessories, special tools, and
improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property, all licenses, warranties,
franchises and General Intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by any
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all Proceeds of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" has the meaning described in ARTICLE VII (Default and
Rights and Remedies).
"Excluded Assets" means (i) all Flight Assets, (ii) the CIT Collateral, and
(iii) the Astrotech Loan Collateral.
"Facilities" means the collective reference to the loan, letter of credit,
interest rate protection, foreign exchange risk, cash management, and other
credit facilities now or hereafter provided to any one or more of the Borrowers
by the Lender or any of its Affiliates.
"Fees" means the collective reference to each fee payable to the Lender
under the terms of this Agreement or under the terms of any of the other
Financing Documents.
"Financing Documents" means at any time collectively this Agreement, the
Notes, the Security Documents, the Letter of Credit Documents, and any other
instrument, agreement or document previously, simultaneously or hereafter
executed and delivered by any Borrower and/or any other Person, singly or
jointly with another Person or Persons, evidencing, securing, guarantying or in
connection with this Agreement, any Note, any of the Security Documents, any of
the Facilities, and/or any of the Obligations.
"Fixed or Capital Assets" of a Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.
15
"Flight Assets" shall mean all hardware and subsystems owned or leased by
the Company which are designed or acquired for space flight (including, but not
limited, to flight modules, adapter rings, tunnel segments, multi-layer
insulation blankets, cargo pallets and associated piece parts) and non-flight
equipment supporting such hardware and subsystems (including, but not limited
to, mechanical and electrical ground support, and flight training modules and
equipment), together with all computer hardware and software and copyrights,
patents, trademarks and other intellectual property directly arising or created
with respect to such assets.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"General Intangibles" means all general intangibles of every nature,
whether presently existing or hereafter acquired or created, and without
implying any limitation of the foregoing, further means all books and records,
commercial tort claims, other claims (including without limitation all claims
for income tax and other refunds), payment intangibles, Supporting Obligations,
choses in action, claims, causes of action in tort or equity, contract rights,
judgments, customer lists, software, patents, trademarks, licensing agreements,
goodwill (including goodwill of any Borrower's business symbolized by and
associated with any and all trademarks, trademark licenses, copyrights and/or
service marks), royalty payments, licenses, letter-of-credit rights, letters of
credit, contractual rights, the right to receive refunds of unearned insurance
premiums, rights as lessee under any lease of real or personal property,
literary rights, amounts received as an award in or settlement of a suit in
damages, deposit accounts, interests in joint ventures, general or limited
partnerships, limited liability companies or partnerships, rights in
applications for any of the foregoing, books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing, all Supporting Obligations with respect to any of the
foregoing, and all Equipment and General Intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all -Proceeds of the foregoing.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any department, agency or instrumentality thereof.
"Government Contracts" means any contract with the United States or with
any state or political subdivision thereof or any department, agency or
instrumentality of the United States, or any state or political subdivision
thereof.
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated thereunder; (b) any "hazardous substance" as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any substance the presence of which on any property now or hereafter owned,
acquired or operated by any of the Borrowers is prohibited by any Law similar to
those set forth in this definition; and (d) any other substance which by Law
requires special handling in its collection, storage, treatment or disposal.
16
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any of the Borrowers
or for which any of the Borrowers has responsibility, including, without
limitation, improvements, facilities, soil, ground water, air or other elements
on, or of, any property now or hereafter owned, acquired or operated by any of
the Borrowers, and any other contamination by Hazardous Materials for which any
of the Borrowers is, or is claimed to be, responsible.
"Indebtedness" of a Person means at any date the total liabilities of such
Person at such time determined in accordance with GAAP consistently applied.
"Indebtedness for Borrowed Money" of a Person means at any time the sum at
such time of (a) Indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person under an employee stock ownership plan or other similar employee benefit
plan which is in excess of amounts incurred by such Person in the ordinary
course of business; and (g) any obligation of such Person or a Commonly
Controlled Entity to a Multi-employer Plan, which is in excess of amounts
incurred by such Person in the ordinary course of business; but excluding trade
and other accounts payable in the ordinary course of business in accordance with
customary trade terms and which are not overdue (as determined in accordance
with customary trade practices) or which are being disputed in good faith by
such Person and for which adequate reserves are being provided on the books of
such Person in accordance with GAAP.
"Indemnified Parties" has the meaning set forth in Section 8.19
(Indemnification).
"Instrument" means a negotiable instrument or any other writing which
evidences a right to payment of a monetary obligation and is not itself a
security agreement or lease and is of a type that in the ordinary course of
business is transferred by delivery with any necessary endorsement or
assignment, and all Supporting Obligations with respect to any of the foregoing
and all Proceeds with respect to any of the foregoing.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the Income Tax Regulations issued and proposed to be
issued thereunder.
"Inventory" means all goods of each Borrower (other than Excluded Assets)
and all right, title and interest of each Borrower in and to all of its now
owned and hereafter acquired goods, merchandise and other personal property
furnished under any contract of service or intended for sale or lease,
including, without limitation, all raw materials, work-in-process, finished
goods and materials and supplies of any kind, nature or description which are
used or consumed in any Borrower's business or are or could be expected to be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of such goods, merchandise and other
17
licenses, warranties, franchises, general intangibles, personal property and all
documents of title or documents relating to the same and all Proceeds of the
foregoing.
"Investment Property" means a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract or
commodity account and all Proceeds of, and Supporting Obligations with respect
to, the foregoing.
"Item of Payment" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Receivables or
otherwise with respect to any Collateral (other than remittances on the Excluded
Assets), including, without limitation, cash proceeds of any returned, rejected
or repossessed goods, the sale or lease of which gave rise to a Receivable, and
other proceeds of Collateral; and "Items of Payment" means the collective
reference to all of the foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a Person means for any period the rental commitments
of such Person for such period under leases for real and/or personal property
(net of rent from subleases thereof, but including taxes, insurance, maintenance
and similar expenses which such Person, as the lessee, is obligated to pay under
the terms of said leases, except to the extent that such taxes, insurance,
maintenance and similar expenses are payable by sublessees), including rental
commitments under Capital Leases.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
"Letter of Credit Agreement" means the collective reference to each letter
of credit application and agreement substantially in the form of the Lender's
then standard form of application for letter of credit or such other form as may
be approved by the Lender, executed and delivered by any one or more of the
Borrowers in connection with the issuance of a Letter of Credit, as the same may
from time to time be amended, restated, supplemented or modified and "Letter of
Credit Agreements" means all of the foregoing in effect at any time and from
time to time.
"Letter of Credit Cash Collateral Account" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by any one or more
of the Borrowers or any other Person under, pursuant to or in connection with a
Letter of Credit or any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by the Lender
pursuant to Section 2.2 (Letter of Credit Facility).
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
18
"Letter of Credit Obligations" means all Obligations of any one or more of
the Borrowers with respect to the Letters of Credit and the Letter of Credit
Agreements.
"Letter-of-credit right" means a right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is at the time
entitled to demand payment or performance.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a consolidated
balance sheet of the Borrowers and their respective Subsidiaries.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien, financing
statement, hypothecation, provision in any instrument or other document for
confession of judgment, cognovit or other similar right or other remedy, claim,
charge, control over or interest of any kind in real or personal property
securing any indebtedness, duties, obligations, and liabilities owed to, or
claimed to be owed to, a Person, all whether perfected or unperfected, avoidable
or unavoidable, based on the common law, statute or contract or otherwise,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction, excluding the precautionary filing of any financing statement by
any lessor in a true lease transaction, by any ▇▇▇▇▇▇ in a true bailment
transaction or by any consignor in a true consignment transaction under the
Uniform Commercial Code of any jurisdiction or the agreement to give any
financing statement by any lessee in a true lease transaction, by any bailee in
a true bailment transaction or by any consignee in a true consignment
transaction.
"Loan" means any advance of the Revolving Credit; "Loans" means multiple
advances of the Revolving Credit.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
"Material Adverse Effect" means the occurrence of any event which in the
Lender's sole, but reasonable discretion (i) could be expected to be materially
adverse to the business, operations, property or financial condition of the
Borrowers taken as a whole, (ii) could be expected to materially and adversely
affect the ability of the Borrowers taken as a whole to perform their
obligations under this Agreement or the other Financing Documents, to which any
Borrower is a party, (iii) could be expected to materially and adversely affect
the ability of the Borrowers taken as a whole to perform the Obligations, (iv)
could be expected to materially and adversely affect the value of, or the
ability of the Lender to realize upon, the Collateral.
"Maximum Rate" has the meaning described in Section 2.3.6 (Maximum Interest
Rate).
"Member Interest Pledge Agreement" means that certain pledge, assignment
and security agreement dated the date hereof from the Company for the benefit of
the Lender, as the same may
19
from time to time be amended, restated, supplemented or otherwise modified,
pledging the Company's membership interests in Space Station as collateral for
the Obligations.
"Monitoring Fee" and "Monitoring Fees" have the meanings described in
Section 2.3.4 (Monitoring Fees).
"Multi-employer Plan" means a Plan that is a Multi-employer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Worth" means the consolidated shareholders' equity, defined in
accordance with GAAP, of the Borrower and its Subsidiaries.
"Note" means any Revolving Credit Note, and "Notes" means collectively the
Revolving Credit Note and any other promissory note which may from time to time
evidence all or any portion of the Obligations.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of any one or more of the Borrowers to the Lender under, arising
pursuant to, in connection with and/or on account of the provisions of this
Agreement, each Note, each Security Document, and/or any of the other Financing
Documents, the Loans, and/or any of the Facilities including, without
limitation, the principal of, and interest on, each Note, late charges, the
Fees, Enforcement Costs, and prepayment fees (if any), Outstanding Letter of
Credit Obligations, Letter of Credit Fees or fees charged with respect to any
guaranty of any Letter of Credit; also means all other present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Borrowers to the
Lender or its Affiliates of any nature whatsoever including, without limitation,
any indebtedness, duties, obligations, and liabilities under or in connection
with, any cash management agreements, regardless of whether such indebtedness,
duties, obligations, and liabilities be direct, indirect, primary, secondary,
joint, several, joint and several, fixed or contingent; and also means any and
all renewals, extensions, substitutions, amendments, restatements and
rearrangements of any such indebtedness, duties, obligations, and liabilities.
"Origination Fee" has the meaning described in Section 2.3.3 (Origination
Fee).
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or
which the Lender has determined in the good faith exercise of its sole and
absolute discretion (i) are being diligently contested in good faith and by
appropriate proceedings, and such contest operates to suspend collection of the
contested Taxes and enforcement of a Lien, (ii) the respective Borrower or
Subsidiary has the financial ability to pay, with all penalties and interest, at
all times without a Material Adverse Effect, and (iii) are not, and will not be
with appropriate filing, the giving of notice and/or the passage of time,
entitled to priority over any Lien of the Lender; (b) deposits or pledges to
secure obligations under workers' compensation, social security or similar
20
laws, or under unemployment insurance in the ordinary course of business; (c)
Liens securing the Obligations; (d) judgment Liens to the extent the entry of
such judgment does not constitute a Default or an Event of Default under the
terms of this Agreement or result in the sale or levy of, or execution on, any
of the Collateral; (e) Liens on the Excluded Assets; (f) Purchase Money Liens in
an aggregate amount at any time, not exceeding Two Hundred Fifty Thousand
Dollars ($250,000); (g) materialmen and landlord Liens incurred in the ordinary
course of the business of a Borrower, provided such claims are not and will not
be with appropriate filings, the giving of notice and/or the passage of time,
entitled to priority over any Lien of the Lender; (h) Liens incurred or deposits
made in the ordinary course of business to secure the performance of tenders,
bids, leases, contracts (other than the repayment of Indebtedness for Borrowed
Money), provided that, to the extent any such Liens attach to any of the
Collateral, such Liens are at all times subordinated and junior to the Liens in
such Collateral in favor of the Lender; and (i) such other Liens, if any, as are
set forth on Schedule 4.1.21 attached hereto and made a part hereof.
"Permitted Uses" means the payment of expenses incurred in the ordinary
course of any Borrower's business, including, the payment of costs, fees and
other expenses in connection with this Agreement, and to support the issuance of
Letters of Credit.
"Person" means and includes an individual, a corporation, a partnership, a
joint venture, a limited liability company or partnership, a trust, an
unincorporated association, a Governmental Authority, or any other organization
or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and in
respect of which any Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3 of ERISA.
"Proceeds" has the meaning described in the Uniform Commercial Code as in
effect from time to time.
"Post-Default Rate" means the Base Rate in effect from time to time, plus
four percent (4%) per annum.
"Post-Expiration Date Letter of Credit" and "Post-Expiration Date Letters
of Credit" have the meanings described in Section 2.2.3 (Terms of Letters of
Credit).
"Prepayment" means a Revolving Credit Mandatory Prepayment or a Revolving
Credit Optional Prepayment, as the case may be, and "Prepayments" mean
collectively all Revolving Credit Mandatory Prepayments and all Revolving Credit
Optional Prepayments.
"Purchase Money Lien" means Liens (a) on Equipment acquired or held by a
Borrower incurred for financing the acquisition of the specific equipment, or
(b) existing on Equipment when acquired, provided that in all cases such Lien is
confined to the Proceeds of such Equipment.
"Receivable" means one of each Borrower's now owned and hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments, other than Receivables arising from the sale of the CIT Collateral;
and "Receivables" means all of each Borrower's now or hereafter owned, acquired
or created Accounts, Chattel Paper, General Intangibles and
21
Instruments, other than Receivables arising from the sale of the CIT Collateral;
together with all Proceeds thereof.
"Registered Organization" means an organization organized solely under the
law of a single state or the United States and as to which the state or the
United States must maintain a public record showing the organization to have
been organized.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder.
"Responsible Officer" means for each Borrower, its chief executive officer
or president or, with respect to financial matters, its chief financial officer.
"Revolving Credit" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Credit Commitment" means the agreement of the Lender relating to
making the Revolving Credit and advances thereunder subject to and in accordance
with the provisions of this Agreement.
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means August __, 2005.
"Revolving Credit Facility" means the facility established by the Lender
pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Mandatory Prepayment" and "Revolving Credit Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory Prepayments
of Revolving Credit).
"Revolving Credit Note" has the meaning described in Section 2.1.5
(Revolving Credit Note).
"Revolving Credit Optional Prepayment" and "Revolving Credit Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional Prepayment
of Revolving Credit).
"Revolving Credit Termination Date" means the earlier of (a) the Revolving
Credit Expiration Date, or (b) the date on which the Revolving Credit Commitment
is terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line Fees"
have the meanings described in Section 2.1.10 (Revolving Credit Unused Line
Fee).
22
"Revolving Credit" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
"Security Documents" means collectively any assignment, pledge agreement,
security agreement, mortgage, deed of trust, deed to secure debt, financing
statement and any similar instrument, document or agreement under or pursuant to
which a Lien is now or hereafter granted to, or for the benefit of, the Lender
on any real or personal property of any Person to secure all or any portion of
the Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Space Media" means Space Media, Inc., a Delaware corporation, its
successors and assigns.
"Space Station" means Space Station Enterprise, LLC, a limited liability
company organized under the laws of the State of Delaware, its successors and
assigns.
"State" means the Commonwealth of Virginia.
"Stock Pledge Agreement" means that certain pledge, assignment and security
agreement dated the date hereof from the Company for the benefit of the Lender,
as the same may from time to time be amended, restated, supplemented or
otherwise modified, pledging the stock owned by the Company in Space Media as
collateral for the Obligations.
"Subordinated Indebtedness" means all Indebtedness, incurred at any time by
any one or more of the Borrowers, which is in amounts, subject to repayment
terms, and subordinated to the Obligations, as set forth in one or more written
agreements, all in form and substance satisfactory to the Lender in its sole and
absolute discretion.
"Subsidiary" means any operating corporation with principal offices in the
United States where fifty one percent (51%) or more of the voting shares of
which at the time are owned directly by any Borrower and/or by one or more
Subsidiaries of any Borrower.
"Supporting Obligation" means a Letter-of-credit right, secondary
obligation or obligation of a secondary obligor or that supports the payment or
performance of an account, chattel paper, a document, a general intangible, an
instrument or investment property.
"Tangible Net Worth" means as to each Borrower and its Subsidiaries at any
date of determination thereof, the sum at such time of: the Net Worth, less the
total of (a) all Assets which would be classified as intangible assets under
GAAP consistently applied, (b) applicable reserves, allowances and other similar
properly deductible items to the extent such reserves, allowances and other
similar properly deductible items have not been previously deducted by the
Lender in the calculation of Net Worth, and (c) any revaluation or other
write-up in book value of assets subsequent to the date of the most recent
financial statements delivered to the Lender.
23
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any or
all of the Borrowers or any of its or their properties or assets or any part
thereof or in respect of any of its or their franchises, businesses, income or
profits.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
"United States" means the United States of America and any territory or
insular possession of the United States of America.
"Wholly Owned Subsidiary" means any domestic United States corporation all
the shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by a Borrower and/or by one
or more Wholly Owned Subsidiaries of a Borrower.
Section 1.2 Accounting Terms and Other Definitional Provisions.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP, as consistently applied to the applicable Person on a
basis consistent with that used in preparing such Person's audited financial
statements for prior years. All terms used herein which are defined by the
Uniform Commercial Code shall have the same meanings as assigned to them by the
Uniform Commercial Code unless and to the extent varied by this Agreement. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified. As used herein, the singular number shall include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender shall include all genders, as the context may require. Reference
to any one or more of the Financing Documents shall mean the same as the
foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified. Reference in this Agreement and the
other Financing Documents to the "Borrower", the "Borrowers", "each Borrower" or
otherwise with respect to any one or more of the Borrowers shall mean each and
every Borrower and any one or more of the Borrowers, jointly and severally,
unless a specific Borrower is expressly identified.
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ARTICLE II
THE CREDIT FACILITIES
Section 2.1 The Revolving Credit Facility.
2.1.1 Revolving Credit Facility.
Subject to and upon the provisions of this Agreement, the Lender
establishes a revolving credit facility in favor of the Borrowers. The aggregate
of all advances under the Revolving Credit Facility is sometimes referred to in
this Agreement collectively as the "Revolving Credit". The principal amount of
Five Million Dollars ($5,000,000) is the "Revolving Credit Committed Amount".
During the Revolving Credit Commitment Period, the Lender agrees
to make advances under the Revolving Credit requested by the Company from time
to time provided that after giving effect to the Company's request, the sum of
(a) the outstanding principal balance of the Revolving Credit and (b) the Letter
of Credit Obligations would not exceed the lesser of (y) the Revolving Credit
Committed Amount, or (z) the then most current Borrowing Base.
Unless sooner paid, the unpaid Revolving Loan, together with
interest accrued and unpaid thereon, and all other Obligations shall be due and
payable in full on the Revolving Credit Expiration Date.
2.1.2 Procedure for Making Advances Under the Revolving Credit;
Lender Protection Loans.
The Borrowers may borrow under the Revolving Credit Facility on
any Business Day. Advances under the Revolving Credit shall be deposited to a
demand deposit account of the Company with the Lender or shall be otherwise
applied as directed by the Company, which direction the Lender may require to be
in writing. Not later than 11:00 a.m. (Eastern Time) on the date of the
requested borrowing, the Company shall give the Lender oral or written notice (a
"Loan Notice") of the amount and (if requested by the Lender) the purpose of the
requested borrowing. Any oral Loan Notice shall be confirmed in writing by the
Company within three (3) Business Days after the making of the requested advance
under the Revolving Credit. Each Loan Notice shall be irrevocable.
In addition, each of the Borrowers hereby irrevocably authorizes
the Lender at any time and from time to time, without further request from or
notice to the Borrowers, to make advances under the Revolving Credit, and to
establish, without duplication, reserves against the Borrowing Base, which the
Lender, in its sole and absolute discretion, deems necessary or appropriate to
protect the interests of the Lender, including, without limitation, advances and
reserves under the Revolving Credit made to cover debit balances in the
Revolving Loan Account, principal of, and/or interest on, any Loan, the
Obligations (including, without limitation, any Letter of Credit Obligations),
and/or Enforcement Costs, prior to, on, or after the termination of other
advances under this Agreement, regardless of whether the outstanding principal
amount of the Revolving Credit that the Lender may advance or reserve hereunder
exceeds the Revolving Credit Committed Amount or the Borrowing Base; provided,
however, that the Lender agrees to give the Company two (2) Business Days prior
notice of any such
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advances, other than advances for the purposes of covering debit balances in the
Revolving Loan Account, principal of, and/or interest on, any Loan, and the
payment of any Fees, unless the Lender in its exercise of its reasonable
discretion determines that the failure to provide such notice could result in a
Material Adverse Effect.
2.1.3 Borrowing Base.
As used in this Agreement, the term "Borrowing Base" means at any
time, an amount equal to the aggregate of (a) eighty percent (80%) of the amount
of Eligible Receivables derived from Government Contracts, plus (b) eighty
percent (80%) of Eligible Receivables derived from contracts other than
Government Contracts.
The Borrowing Base shall be computed based on the Borrowing Base
Report most recently delivered to and accepted by the Lender in its sole and
absolute discretion. In the event the Borrowers fail to furnish a Borrowing Base
Report required by Section 2.1.4 (Borrowing Base Report), or in the event the
Lender believes that a Borrowing Base Report is no longer accurate, the Lender
may, in its sole and absolute discretion exercised from time to time and without
limiting other rights and remedies under this Agreement, suspend the making of
or limit advances under the Revolving Credit. The Borrowing Base shall be
subject to reduction by amounts credited to the Collateral Account since the
date of the most recent Borrowing Base Report and by the amount of any
Receivable which was included in the Borrowing Base but which the Lender
determines fails to meet the respective criteria applicable from time to time
for Eligible Receivables.
If at any time the total of the aggregate principal amount of the
Revolving Credit and Outstanding Letter of Credit Obligations exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall
exist. Each time a Borrowing Base Deficiency exists, the Borrowers, at the sole
and absolute discretion of the Lender exercised from time to time, shall pay the
Borrowing Base Deficiency within two Business Days of DEMAND to the Lender.
Without implying any limitation on the Lender's discretion with
respect to the Borrowing Base, the criteria for Eligible Receivables contained
in the definition of Eligible Receivables are in part based upon the business
operations of the Borrowers existing on or about the Closing Date and upon
information and records furnished to the Lender by the Borrowers. If at any time
or from time to time hereafter, the business operations of the Borrowers change
or such information and records furnished to the Lender is incorrect or
misleading, the Lender in its discretion, may at any time and from time to time
during the duration of this Agreement change such criteria or add new criteria.
The Lender may communicate such changed or additional criteria to the Borrowers
from time to time either orally or in writing.
2.1.4 Borrowing Base Report.
At all times as any Obligations are outstanding under this
Agreement or under any of the Financing Documents, the Borrowers will furnish to
the Lender no less frequently than the tenth (10/th/) day of each month and at
such other times as may be requested by the Lender a report of the Borrowing
Base (each a "Borrowing Base Report"; collectively, the "Borrowing Base
Reports") in the form required from time to time by the Lender, appropriately
26
completed and duly signed. The Borrowers acknowledge that the Lender has no
obligation to make any advance of the Revolving Credit Facility until a current
Borrowing Base Certificate has been received and approved by the Lender and that
the failure to provide a Borrowing Base Certificate on a regular basis may
result in a delay in funding any requested advances to the Revolving Credit
Facility. The Borrowing Base Report shall be dated as of the last day of the
preceding month and shall contain a detailed aging schedule of all Receivables
by Account Debtor as of the date of the Borrowing Base Report, the amount and
payments on the Receivables, and the calculations of the Borrowing Base, all in
such detail, and accompanied by such supporting and other information, as the
Lender may from time to time request, including, but not limited to, a report
containing a detailed aging of all accounts payable by supplier, in such detail,
and accompanied by such supporting information, as the Lender may from time to
time reasonably request. Upon the Lender's request and upon the creation of any
Receivables, or at such intervals as the Lender may require, the Borrowers will
provide the Lender with (a) confirmatory assignment schedules; (b) copies of
Account Debtor invoices; and (c) such further schedules, documents and/or
information regarding the Receivables as the Lender may reasonably require. The
items to be provided under this subsection shall be in form satisfactory to the
Lender, and certified as true and correct by a Responsible Officer, and
delivered to the Lender from time to time solely for the Lender's convenience in
maintaining records of the Collateral. Any Borrower's failure to deliver any of
such items to the Lender shall not affect, terminate, modify, or otherwise limit
the Liens of the Lender in the Collateral.
2.1.5 Revolving Credit Note.
The obligation of the Borrowers to pay the Revolving Credit, with
interest, shall be evidenced by a promissory note (as from time to time
extended, amended, restated, supplemented or otherwise modified, the "Revolving
Credit Note") substantially in the form of EXHIBIT B attached hereto and made a
part hereof, with appropriate insertions. The Revolving Credit Note shall be
dated as of the Closing Date, shall be payable to the order of the Lender at the
times provided in the Revolving Credit Note, and shall be in the principal
amount of the Revolving Credit Committed Amount. Each of the Borrowers
acknowledges and agrees that, if the outstanding principal balance of the
Revolving Credit outstanding from time to time exceeds the face amount of the
Revolving Credit Note, the excess shall bear interest at the Post-Default Rate
and shall be payable, with accrued interest, within two Business Days of DEMAND.
The Revolving Credit Note shall not operate as a novation of any of the
Obligations or nullify, discharge, or release any such Obligations or the
continuing contractual relationship of the parties hereto in accordance with the
provisions of this Agreement.
2.1.6 Mandatory Prepayments of Revolving Credit.
The Borrowers shall make the mandatory prepayments (each a
"Revolving Credit Mandatory Prepayment" and collectively, the "Revolving Credit
Mandatory Prepayments") of the Revolving Credit at any time and from time to
time in such amounts requested by the Lender pursuant to Section 2.1.3
(Borrowing Base) in order to cover any Borrowing Base Deficiency.
2.1.7 Optional Prepayments of Revolving Credit.
The Borrowers shall have the option at any time and from time to
time to prepay (each a "Revolving Credit Optional Prepayment" and collectively
the "Revolving Credit
27
Optional Prepayments") advances under the Revolving Credit, in whole or in part
without premium or penalty.
2.1.8 The Collateral Account.
The Borrowers will deposit, or cause to be deposited, all Items
of Payment to a bank account designated by the Lender and from which the Lender
alone has power of access and withdrawal (the "Collateral Account"). Each
deposit shall be made not later than two (2) Business Days after the date of
receipt of the Items of Payment. The Items of Payment shall be deposited in
precisely the form received, except for the endorsements of the Borrowers where
necessary to permit the collection of any such Items of Payment, each Borrower
hereby agreeing to make such endorsement. In the event any Borrower shall fail
to do so, the Lender is hereby authorized by each Borrower to make the
endorsement in the name of such Borrower. Prior to such a deposit, none of the
Borrowers will not commingle any Items of Payment with any of the other funds or
property of any other Borrower, but will hold them separate and apart in trust
and for the account of the Lender.
In addition, if so directed by the Lender, each of the Borrowers
shall direct the mailing of all Items of Payment from its Account Debtors to a
post-office box designated by the Lender, or to such other additional or
replacement post-office boxes pursuant to the request of the Lender from time to
time (collectively, the "Lockbox"). The Lender shall have unrestricted and
exclusive access to the Lockbox.
Each Borrower hereby authorizes the Lender to inspect all Items
of Payment, endorse all Items of Payment in the name of each Borrower, and
deposit Items of Payment in the Collateral Account. The Lender reserves the
right, exercised in its sole and absolute discretion from time to time, to
provide to the Collateral Account credit prior to final collection of an Item of
Payment and to disallow credit for any Item of Payment which is unsatisfactory
to the Lender. However, if the Lender disallows credit for any Item of Payment,
the Lender will give the Company notice to that effect and will, upon request,
release such Item of Payment to the Company. In the event Items of Payment are
returned to the Lender for any reason whatsoever, the Lender may, in the
exercise of its discretion from time to time, forward such Items of Payment a
second time. Any returned Items of Payment shall be charged back to the
Collateral Account, the Revolving Loan Account, or other account, as
appropriate.
The Lender will apply the whole or any part of the collected
funds credited to the Collateral Account against the Revolving Credit (or with
respect to Items of Payment which are not proceeds of Accounts or after a
Default or Event of Default, against any of the Obligations) or credit such
collected funds to the depository account of the Borrowers with the Lender (or
an Affiliate of the Lender), the order and method of such application to be in
the sole discretion of the Lender, provided, however, that if any collected
funds are credited to the Collateral Account at a time when there are no
outstanding and unpaid Obligations, the Lender will, on the day the funds are so
credited, credit them to the depository account of a Borrower with the Lender
(or an Affiliate of the Lender) or to such other account as the Company has
specified for the purpose.
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2.1.9 Revolving Loan Account.
The Lender will establish and maintain a loan account on its
books (the "Revolving Loan Account") to which the Lender will (a) debit (i) the
principal amount of each advance under the Revolving Credit made by the Lender
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Credit as and when due, and (iii) any other amounts due and payable by
the Borrowers to the Lender from time to time under the provisions of this
Agreement in connection with the Revolving Credit, including, without
limitation, Enforcement Costs, Fees, late charges, and service, collection and
audit fees, as and when due and payable, and (b) credit all payments made by the
Borrowers to the Lender on account of the Revolving Credit as of the date made
including, without limitation, funds credited to the Revolving Loan Account from
the Collateral Account. The Lender may debit the Revolving Loan Account for the
amount of any Item of Payment that is returned to the Lender unpaid. All credit
entries to the Revolving Loan Account are conditional and shall be readjusted as
of the date made if final and indefeasible payment is not received by the Lender
in cash or solvent credits. The Borrowers hereby promise to pay to the order of
the Lender, within two (2) Business Days after DEMAND, an amount equal to the
excess, if any, of all debit entries over all credit entries recorded in the
Revolving Loan Account under the provisions of this Agreement. Any and all
periodic or other statements or reconciliations, and the information contained
in those statements or reconciliations, of the Revolving Loan Account shall be
final, binding and conclusive upon the Borrowers in all respects, absent
manifest error, unless the Lender receives specific written objection thereto
from the Borrowers within thirty (30) Business Days after such statement or
reconciliation shall have been sent by the Lender.
2.1.10 Revolving Credit Unused Line Fee.
The Borrowers shall pay to the Lender a monthly revolving credit
facility fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount equal to twenty
five basis points (.25%) per annum on the average daily unused and undisbursed
portion of the Revolving Credit Committed Amount in effect from time to time
accruing during each calendar month. The accrued and unpaid portion of the
Revolving Credit Unused Line Fee shall be paid by the Borrowers to the Lender in
arrears on the first day of each month, commencing on the first such date
following the date hereof, and on the Revolving Credit Termination Date.
Section 2.2 The Letter of Credit Facility.
2.2.1 Letters of Credit.
Subject to and upon the provisions of this Agreement, and as a
part of the Revolving Credit Commitment, any of the Borrowers may, upon the
prior approval of the Lender, obtain standby or documentary letters of credit
(as the same may from time to time be amended, supplemented or otherwise
modified, each a "Letter of Credit" and collectively the "Letters of Credit")
from the Lender from time to time from the Closing Date until the Business Day
preceding the Revolving Credit Termination Date. None of the Borrowers will be
entitled to obtain a Letter of Credit hereunder unless (a) after giving effect
to the request, the outstanding principal balance of the Revolving Credit and
the Letter of Credit Obligations would not exceed the lesser of (i) the
Revolving Credit Committed Amount, or (ii) the most current Borrowing Base and
(b) the sum of the aggregate face amount of the then outstanding Letters of
Credit
29
(including the face amount of the requested Letter of Credit) does not exceed
One Million Dollars ($1,000,000).
2.2.2 Letter of Credit Fees.
The Borrowers shall pay to the Lender, a letter of credit fee
(each a "Letter of Credit Fee" and collectively the "Letter of Credit Fees") in
an amount equal to two percent (2%) per annum of the amount of the Letter of
Credit. Such Letter of Credit Fees shall be paid monthly in arrears on the first
day of the first month after the opening of the Letter of Credit and on the
first day of each month thereafter. In addition, the Borrower shall pay to the
Lender any and all additional issuance, negotiation, processing, transfer or
other fees to the extent and as and when required by the provisions of any
Letter of Credit Agreement; such additional fees are included in and a part of
the "Fees" payable by the Borrower under the provisions of this Agreement.
Subsequent to an Event of Default, the Letter of Credit Fee shall be increased
to the Post-Default Rate on the face amount of each Letter of Credit.
2.2.3 Terms of Letters of Credit; Post-Expiration Date Letters of
Credit.
Each Letter of Credit shall (a) be opened pursuant to a Letter of
Credit Agreement and (b) expire on a date that is the earlier of (i) one (1)
year from the date of issuance if a standby letter of credit or one hundred
eighty (180) days from the date of issuance if a documentary letter of credit or
(ii) the Business Day preceding the Revolving Credit Expiration Date; provided,
however, if any Letter of Credit does have an expiration date later than the
Business Day preceding the Revolving Credit Termination Date (each a
"Post-Expiration Date Letter of Credit" and collectively, the "Post-Expiration
Date Letters of Credit"), effective as of the Business Day preceding the
Revolving Credit Termination Date and without prior notice to or the consent of
the Borrowers, the Lender shall make advances under the Revolving Loan for the
account of the Borrowers in the aggregate face amount of all such Letters of
Credit. The Lender shall deposit the proceeds of such advances into one or more
non-interest bearing accounts with and in the name of the Lender and over which
the Lender alone shall have exclusive power of access and withdrawal
(collectively, the "Letter of Credit Cash Collateral Account"). The Letter of
Credit Cash Collateral Account is to be held by the Lender as additional
collateral and security for any Letter of Credit Obligations relating to the
Post-Expiration Date Letters of Credit. The Borrowers hereby assign, pledge,
grant and set over to the Lender a first priority security interest in, and Lien
on, all of the funds on deposit in the Letter of Credit Cash Collateral Account,
together with any and all Proceeds and products thereof as additional collateral
and security for the Letter of Credit Obligations relating to the
Post-Expiration Date Letters of Credit. The Borrowers acknowledge and agree that
the Lender shall be entitled to fund any draw or draft on any Post-Expiration
Date Letter of Credit from the monies on deposit in the Letter of Credit Cash
Collateral Account without notice to or consent of the Borrowers or the Lender.
The Borrowers further acknowledge and agree that the Lender's election to fund
any draw or draft on any Post-Expiration Date Letter of Credit from the Letter
of Credit Cash Collateral shall in no way limit, impair, lessen, reduce, release
or otherwise adversely affect the Borrowers' obligation to pay any Letter of
Credit Obligations under or relating to the Post-Expiration Date Letters of
Credit. At such time as all Post-Expiration Date Letters of Credit have expired
and all Letter of Credit Obligations relating to the Post-Expiration Date
Letters of Credit have been paid in full, the Lender agrees to apply the amount
of any remaining funds on deposit in the Letter of Credit Cash Collateral
Account to the then unpaid
30
balance of the Obligations under the Revolving Credit Facility in such order and
manner as the Lender shall determine in its sole and absolute discretion in
accordance with the provisions of this Agreement, and thereafter to the Company.
The aggregate face amount of all Letters of Credit at any one time
outstanding and issued by the Lender pursuant to the provisions of this
Agreement, including, without limitation, any and all Post-Expiration Date
Letters of Credit, plus the amount of any unpaid Letter of Credit Fees accrued
or scheduled to accrue thereon, and less the aggregate amount of all drafts
issued under or purporting to have been issued under such Letters of Credit that
have been paid by the Lender and for which the Lender has been reimbursed by the
Borrowers in full in accordance with Section 2.2.5 (Payments of Letters of
Credit) and the Letter of Credit Agreements, and for which the Lender has no
further obligation or commitment to restore all or any portion of the amounts
drawn and reimbursed, is herein called the "Outstanding Letter of Credit
Obligations".
2.2.4 Procedures for Letters of Credit.
The Borrowers shall give the Lender written notice at least five (5)
Business Days prior to the date on which the Borrowers desire the Lender to
issue a Letter of Credit. Such notice shall be accompanied by a duly executed
Letter of Credit Agreement specifying, among other things: (a) the name and
address of the intended beneficiary of the Letter of Credit, (b) the requested
face amount of the Letter of Credit, (c) whether the Letter of Credit is to be
revocable or irrevocable, (d) the Business Day on which the Letter of Credit is
to be opened and the date on which the Letter of Credit is to expire, (e) the
terms of payment of any draft or drafts which may be drawn under the Letter of
Credit, and (f) any other terms or provisions the Borrowers desire to be
contained in the Letter of Credit. Such notice shall also be accompanied by such
other information, certificates, confirmations, and other items as the Lender
may require to assure that the Letter of Credit is to be issued in accordance
with the provisions of this Agreement and a Letter of Credit Agreement. In the
event of any conflict between the provisions of this Agreement and the
provisions of a Letter of Credit Agreement, the provisions of this Agreement
shall prevail and control unless otherwise expressly provided in the Letter of
Credit Agreement. Upon (x) receipt of such notice, (y) payment of all Letter of
Credit Fees and all other Fees payable in connection with the issuance of such
Letter of Credit, and (z) receipt of a duly executed Letter of Credit Agreement,
the Lender shall process such notice and Letter of Credit Agreement in
accordance with its customary procedures and open such Letter of Credit on the
Business Day specified in such notice.
2.2.5 Payments of Letters of Credit.
The Borrowers hereby promise to pay to the Lender, ON DEMAND and in
United States Dollars, the following which are herein collectively referred to
as the "Current Letter of Credit Obligations":
(a) the amount which the Lender has paid or will be required to
pay under each draft or draw on a Letter of Credit, whether such demand be
in advance of the Lender's payment or for reimbursement for such payment;
31
(b) any and all reasonable charges and expenses which the Lender
may pay or incur relative to the Letter of Credit and/or such draws or
drafts; and
(c) interest on the amounts described in (a) and (b) not paid by
the Borrowers as and when due and payable under the provisions of (a) (when
paid by the Lender) and (b) above from the day the same are due and payable
until paid in full at a rate per annum equal to the then current highest
rate of interest on the Revolving Loan.
In addition, the Borrowers hereby promise to pay any and all other
Letter of Credit Obligations as and when due and payable in accordance with the
provisions of this Agreement and the Letter of Credit Agreements. The obligation
of the Borrowers to pay Current Letter of Credit Obligations and all other
Letter of Credit Obligations shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrowers or any other account party may have or have had
against the beneficiary of such Letter of Credit, the Lender, or any other
Person, including, without limitation, any defense based on the failure of any
draft or draw to conform to the terms of such Letter of Credit, any draft or
other document proving to be forged, fraudulent or invalid, or the legality,
validity, regularity or enforceability of such Letter of Credit, any draft or
other documents presented with any draft, any Letter of Credit Agreement, this
Agreement, or any of the other Financing Documents, all whether or not the
Lender had actual or constructive knowledge of the same, and irrespective of any
Collateral, security or guarantee therefore or right of offset with respect
thereto and irrespective of any other circumstances whatsoever which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrowers for any Letter of Credit Obligations, in bankruptcy
or otherwise; provided, however, that the Borrowers shall not be obligated to
reimburse the Lender for any wrongful payment under such Letter of Credit made
as a result of the Lender's willful misconduct or gross negligence. The
obligation of the Borrowers to pay the Letter of Credit Obligations shall not be
conditioned or contingent upon the pursuit by the Lender or any other Person at
any time of any right or remedy against any Person which may be or become liable
in respect of all or any part of such obligation or against any Collateral,
security or guarantee therefore or right of offset with respect thereto.
The Letter of Credit Obligations shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any portion of
the Letter of Credit Obligations is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Person, or upon or as a result of the appointment of a
receiver, intervenor, or conservator of, or trustee or similar officer for, any
Person, or any substantial part of such Person's property, all as though such
payments had not been made.
2.2.6 Change in Law; Increased Cost.
If any change in any law or regulation or in the interpretation
thereof by any court or other Governmental Authority charged with the
administration thereof shall either (a) impose, modify or deem applicable any
reserve, special deposit or similar requirement against Letters of Credit issued
by the Lender, or (b) impose on the Lender any other condition regarding this
Agreement or any Letter of Credit, and the result of any event referred to in
32
clauses (a) or (b) above shall be to increase the cost to the Lender of issuing,
maintaining or extending the Letter of Credit or the cost to the Lender of
funding any obligation under or in connection with the Letter of Credit, then,
upon demand by the Lender, accompanied by a statement in reasonable detail
explaining the nature and calculation of the increased cost, the Borrowers shall
immediately pay to the Lender from time to time as specified by the Lender,
additional amounts which shall be sufficient to compensate the Lender for such
increased cost, together with interest on each such amount from the date
demanded until payment in full thereof at a rate per annum equal to the then
highest current rate of interest on the Revolving Credit. A certificate as to
such increased cost incurred by the Lender, submitted by the Lender to the
Borrowers, shall be conclusive, absent manifest error.
2.2.7 General Letter of Credit Provisions.
The Borrowers hereby instruct the Lender to pay any draft complying
with the terms of any Letter of Credit irrespective of any instructions of the
Borrowers to the contrary. The Borrowers assume all risks of the acts and
omissions of the beneficiary and other users of any Letter of Credit. The Lender
and its respective branches, Affiliates and/or correspondents shall not be
responsible for and the Borrowers hereby indemnify and hold the Lender and its
branches, Affiliates and/or correspondents harmless from and against all
liability, loss and expense (including reasonable attorney's fees and costs)
incurred by the Lender and/or its respective branches, Affiliates and/or
correspondents relative to and/or as a consequence of (a) any failure by the
Borrowers to perform the agreements hereunder and under any Letter of Credit
Agreement, (b) any Letter of Credit Agreement, this Agreement, any Letter of
Credit and any draft, draw and/or acceptance under or purported to be under any
Letter of Credit, (c) any action taken or omitted by the Lender and/or any of
its respective branches, Affiliates and/or correspondents at the request of the
Borrowers, (d) any failure or inability to perform in accordance with the terms
of any Letter of Credit by reason of any control or restriction rightfully or
wrongfully exercised by any de facto or de jure Governmental Authority, group or
individual asserting or exercising governmental or paramount powers, and/or (e)
any consequences arising from causes beyond the control of the Lender and/or any
of its respective branches, Affiliates and/or correspondents.
Except for willful misconduct, the Lender and its respective branches,
Affiliates and/or correspondents, shall not be liable or responsible in any
respect for any (a) error, omission, interruption or delay in transmission,
dispatch or delivery of any one or more messages or advices in connection with
any Letter of Credit, whether transmitted by cable, telegraph, mail or otherwise
and despite any cipher or code which may be employed, and/or (b) action,
inaction or omission which may be taken or suffered by it or them in good faith
or through inadvertence in identifying or failing to identify any beneficiary or
otherwise in connection with any Letter of Credit.
Any Letter of Credit may be amended, modified or revoked only upon the
receipt by the Lender from the Borrowers and the beneficiary (including any
transferee and/or assignee of the original beneficiary), of a written consent
and request therefore.
If any Laws, order of court and/or ruling or regulation of any
Governmental Authority of the United States (or any state thereof) and/or any
country other than the United States permits a beneficiary under a Letter of
Credit to require the Lender and/or any
33
of its respective branches, Affiliates and/or correspondents to pay drafts under
or purporting to be under a Letter of Credit after the expiration date of the
Letter of Credit, the Borrowers shall reimburse the Lender, as appropriate, for
any such payment pursuant to provisions of Section 2.2.6 (Change in Law;
Increased Cost).
Except as may otherwise be specifically provided in a Letter
of Credit or Letter of Credit Agreement, the laws of the State and the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication No. 500 shall govern the Letters of Credit. The
Laws, rules, provisions and regulations of the Uniform Customs and Practice for
Documentary Credits are hereby incorporated by reference. In the event of a
conflict between the Uniform Customs and Practice for Documentary Credits and
the laws of the State, the Uniform Customs and Practice for Documentary Credits
shall prevail.
Section 2.3 General Financing Provisions.
2.3.1 Borrowers' Representatives.
The Borrowers hereby represent and warrant to the Lender that
each of them will derive benefits, directly and indirectly, from each advance
under the Revolving Credit Facility, both in their separate capacity and as a
member of the integrated group to which each of the Borrowers belong, and
because the successful operation of the integrated group is dependent upon the
continued successful performance of the functions of the integrated group as a
whole, because (a) the terms of the consolidated financing provided under this
Agreement are more favorable than otherwise would be obtainable by the Borrowers
individually, and (b) the Borrowers' additional administrative and other costs
and reduced flexibility associated with individual financing arrangements which
would otherwise be required if obtainable would substantially reduce the value
to the Borrowers of the financing. The Borrowers in the discretion of their
respective managements are to agree among themselves as to the allocation of the
proceeds of each advance made under the Revolving Credit and the benefits of
Letters of Credit, provided, however, that the Borrowers shall be deemed to have
represented and warranted to the Lender at the time of allocation that each
benefit and use of proceeds is a Permitted Use.
For administrative convenience, each Borrower hereby
irrevocably appoints the Company as the Borrower's attorney-in-fact, with power
of substitution (with the prior written consent of the Lender in the exercise of
its sole and absolute discretion), in the name of the Company or in the name of
any Borrower or otherwise to take any and all actions with respect to the this
Agreement, the other Financing Documents, the Obligations and/or the Collateral
(including, without limitation, the Proceeds thereof) as the Company may so
elect from time to time, including, without limitation, actions to (i) request
advances under the Revolving Credit, apply for and direct the benefits of
Letters of Credit, and direct the Lender to disburse or credit the proceeds of
any advance made under the Revolving Credit directly to an account of the
Company, any one or more of the Borrowers or otherwise, which direction shall
evidence the making of such advance under the Revolving Credit and shall
constitute the acknowledgment by each of the Borrowers of the receipt of the
proceeds of such advance under the Revolving Credit and the benefit of such
Letter of Credit, (ii) enter into, execute, deliver, amend, modify, restate,
substitute, extend and/or renew this Agreement, any Additional Borrower Joinder
Supplement, any other Financing Documents, security agreements, mortgages,
deposit account agreements, instruments, certificates, waivers, letter of credit
applications,
34
releases, documents and agreements from time to time, and (iii) endorse any
check or other item of payment in the name of the Borrower or in the name of the
Company. The foregoing appointment is coupled with an interest, cannot be
revoked without the prior written consent of the Lender, and may be exercised
from time to time through the Company's duly authorized officer, officers or
other Person or Persons designated by the Company to act from time to time on
behalf of the Company.
Each of the Borrowers hereby irrevocably authorizes the Lender
(in its sole discretion) to make advances under the Revolving Credit and to
issue or cause to be issued Letters of Credit for the account of any or all of
the Borrowers, to the Company pursuant to the provisions of this Agreement upon
the written, oral or telephone request of any one or more of the Persons who is
from time to time a Responsible Officer of the Company under the provisions of
the most recent certificate of corporate resolutions and/or incumbency of the
Company on file with the Lender.
The Lender assumes no responsibility or liability for any
errors, mistakes, and/or discrepancies (other than those due solely to the
Lender's gross negligence or willful misconduct) in the oral, telephonic,
written or other transmissions of any instructions, orders, requests and
confirmations between the Lender and the Borrowers in connection with the Credit
Facilities, any Loan, any Letter of Credit or any other transaction in
connection with the provisions of this Agreement. Without implying any
limitation on the joint and several nature of the Obligations, the Lender agrees
that, notwithstanding any other provision of this Agreement, the Borrowers may
create reasonable inter-company indebtedness between or among the Borrowers with
respect to the allocation of the benefits and proceeds of the advances and
Credit Facilities under this Agreement. The Borrowers agree among themselves,
and the Lender consents to that agreement, that each Borrower shall have rights
of contribution from all of the other Borrowers to the extent such Borrower
incurs Obligations in excess of the proceeds of the Revolving Credit received
by, or allocated to purposes for the direct benefit of, such Borrower. All such
indebtedness and rights shall be, and are hereby agreed by the Borrowers to be,
subordinate in priority and payment to the indefeasible repayment in full in
cash of the Obligations, and, unless the Lender agrees in writing otherwise,
shall not be exercised or repaid in whole or in part until all of the
Obligations have been indefeasibly paid in full in cash. The Borrowers agree
that all of such inter-company indebtedness and rights of contribution are part
of the Collateral and secure the Obligations. Each Borrower hereby waives all
rights of counterclaim, recoupment and offset between or among the Borrowers
arising on account of that indebtedness and otherwise. Each Borrower shall not
evidence the inter-company indebtedness or rights of contribution by note or
other instrument, and shall not secure such indebtedness or rights of
contribution with any Lien or security. Notwithstanding anything contained in
this Agreement to the contrary, the amount covered by each Borrower under the
Obligations (including, without limitation, Section 2.3.11 (Guaranty)) shall be
limited to an aggregate amount (after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Borrower in respect of the Obligations) which, together with other amounts
owing by such Borrowers to the Lender under the Obligations, is equal to the
largest amount that would not be subject to avoidance under the Bankruptcy Code
or any applicable provisions of any applicable, comparable state or other Laws.
35
2.3.2 Use of Proceeds of the Revolving Credit.
The proceeds of each advance under the Revolving Credit shall be used
by the Borrowers for Permitted Uses, and for no other purposes except as may
otherwise be agreed by the Lender in writing. The Borrowers shall use the
proceeds of the Revolving Credit promptly.
2.3.3 Origination Fee.
The Borrower shall pay to the Lender on or before the Closing Date the
a loan origination fee (the "Origination Fee") in the amount of Thirty Seven
Thousand Five Hundred Dollars ($37,500), which fee has been fully earned and is
non-refundable, Twenty Thousand Dollars ($20,000) of which has been paid prior
to the Closing Date.
2.3.4 Monitoring Fees.
The Borrower shall pay to the Lender a monthly monitoring fee in the
amount of Five Hundred and Fifty Dollars ($550), plus any and all reasonable out
of pocket expenses and travel time incurred by the Lender (collectively, the
"Monitoring Fees" and individually a "Monitoring Fee"), which Monitoring Fees
shall be payable in arrears on the first Business Day of each month commencing
on the first such date following the Closing Date, and continuing until the last
such date prior to which all Obligations arising out of, or under, the Credit
Facilities then outstanding have been paid in full.
2.3.5 Computation of Interest and Fees.
All applicable Fees and interest shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed. Any change in the
interest rate on any of the Obligations resulting from a change in the Base Rate
shall become effective as of the opening of business on the day on which such
change in the Base Rate is announced.
2.3.6 Maximum Interest Rate.
In no event shall any interest rate provided for hereunder exceed the
maximum rate permissible for corporate borrowers under applicable law for loans
of the type provided for hereunder (the "Maximum Rate"). If, in any month, any
interest rate, absent such limitation, would have exceeded the Maximum Rate,
then the interest rate for that month shall be the Maximum Rate, and, if in
future months, that interest rate would otherwise be less than the Maximum Rate,
then that interest rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Obligations, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total amount of
interest which would, but for this Section, have been paid or accrued if the
interest rates otherwise set forth in this Agreement had at all times been in
effect, then the Borrowers shall, to the extent permitted by applicable law, pay
the Lender, an amount equal to the excess of (a) the lesser of (i) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the
interest rates otherwise set forth in this Agreement, at all times, been in
effect over (b) the amount of interest actually paid or accrued under this
Agreement. In the event that a court determines that the Lender has received
interest and other charges hereunder in
36
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Lender shall refund to the Borrowers such excess.
2.3.7 Payments.
All payments of the Obligations, including, without limitation,
principal, interest, Prepayments, and Fees, shall be paid by the Borrowers
without setoff or counterclaim to the Lender (except as otherwise provided
herein) at the Lender's office specified in Section 8.1 (Notices) in immediately
available funds not later than noon (Eastern Time) on the due date of such
payment. All payments received by the Lender after such time shall be deemed to
have been received by the Lender for purposes of computing interest and Fees and
otherwise as of the next Business Day. Payments shall not be considered received
by the Lender until such payments are paid to the Lender in immediately
available funds. At its sole discretion, the Lender may charge any deposit
account of the Borrowers at the Lender or any Affiliate of the Lender with all
or any part of any amount due to the Lender under this Agreement or any of the
other Financing Documents to the extent that the Borrowers shall have not
otherwise tendered payment to the Lender.
2.3.8 Liens; Setoff.
The Borrowers hereby grant to the Lender as additional collateral and
security for all of the Obligations a continuing Lien on any and all monies,
Investment Property, and other property of the Borrowers and the proceeds
thereof, now or hereafter held or received by or in transit to, the Lender,
and/or any Affiliate of the Lender, from or for the Borrowers, and also upon any
and all deposit accounts (general or special) and credits of the Borrowers, if
any, with the Lender or any Affiliate of the Lender, at any time existing,
excluding any deposit accounts held by the Borrowers in their capacity as
trustee for Persons who are not Borrowers or Affiliates of the Borrowers.
Without implying any limitation on any other rights the Lender may have under
the Financing Documents or applicable Laws, during the continuance of an Event
of Default, the Lender is hereby authorized by the Borrowers at any time and
from time to time, without notice to the Borrowers, to set off, appropriate and
apply any or all items hereinabove referred to against all Obligations then
outstanding (whether or not then due), all in such order and manner as shall be
determined by the Lender in its sole and absolute discretion.
2.3.9 Requirements of Law.
In the event that the Lender shall have determined in good faith that
(a) the adoption of any Capital Adequacy Regulation, or (b) any change in any
Capital Adequacy Regulation or application thereof or (c) compliance by the
Lender or any corporation controlling the Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
central bank or Governmental Authority, does or shall have the effect of
reducing the rate of return on the capital of the Lender or any corporation
controlling the Lender, as a consequence of the obligations of the Lender
hereunder to a level below that which the Lender or any corporation controlling
the Lender would have achieved but for such adoption, change or compliance
(taking into consideration the policies of the Lender and the corporation
controlling the Lender, with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, after submission by the
Lender to the Borrowers of a written
37
request therefor and a statement of the basis for such determination, the
Borrowers shall pay to the Lender such additional amount or amounts in order to
compensate for such reduction. However, no such amount shall be payable in
respect of any such adoption, change or compliance occurring more than ninety
(90) days before the request from the Lender and a similar request for similar
payments shall have been made by the Lender to other borrowers having offices in
the United States.
2.3.10 ACH Transactions.
The Company may request and the Lender or its Affiliates may, in their
sole and absolute discretion, provide ACH Transactions although the Company is
not required to do so. In the event the Company requests Lender or its
affiliates to procure ACH Transactions, then the Borrowers agree to jointly and
severally indemnify and hold the Lender or its Affiliates harmless from any and
all obligations now or hereafter owing to the Lender or its Affiliates in
connection with such ACH Transactions. The Borrowers agree to pay the Lender or
its affiliates all amounts owing to the Lender or its Affiliates pursuant to ACH
Transactions. In the event the Borrowers shall not have paid to the Lender or
its Affiliates such amounts, the Lender may cover such amounts by an advance
under the Revolving Credit, which advance shall be deemed to have been requested
by the Borrowers. The Borrowers acknowledge and agree that the obtaining of ACH
Transactions from the Lender or its affiliates (a) is in the sole and absolute
discretion of the Lender or its Affiliates and (b) is subject to all rules and
regulations of the Lender or its Affiliates.
2.3.11 Guaranty.
(a) Each Borrower hereby unconditionally and irrevocably,
guarantees to the Lender:
(i) the due and punctual payment in full (and not merely
the collectibility) by the other Borrowers of the Obligations, including
unpaid and accrued interest thereon, in each case when due and payable,
all according to the terms of this Agreement, the Notes and the other
Financing Documents;
(ii) the due and punctual payment in full (and not merely
the collectibility) by the other Borrowers of all other sums and charges
which may at any time be due and payable in accordance with this
Agreement, the Notes or any of the other Financing Documents;
(iii) the due and punctual performance by the other
Borrowers of all of the other terms, covenants and conditions contained
in the Financing Documents; and
(iv) all the other Obligations of the other Borrowers.
(b) The obligations and liabilities of each Borrower as a
guarantor under this Section 2.3.11 shall be absolute and unconditional and
joint and several, irrespective of the genuineness, validity, priority,
regularity or enforceability of this Agreement,
38
any of the Notes or any of the Financing Documents or any other circumstance
which might otherwise constitute a legal or equitable discharge of a surety or
guarantor. Each Borrower in its capacity as a guarantor expressly agrees that
the Lender may, in its sole and absolute discretion, without notice to or
further assent of such Borrower and without in any way releasing, affecting or
in any way impairing the joint and several obligations and liabilities of such
Borrower as a guarantor hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of the
Financing Documents;
(ii) modify, amend, change or terminate any provisions of
any of the Financing Documents;
(iii) grant extensions or renewals of or with respect to
the Credit Facilities, the Notes or any of the other Financing
Documents;
(iv) effect any release, subordination, compromise or
settlement in connection with this Agreement, any of the Notes or any
of the other Financing Documents;
(v) agree to the substitution, exchange, release or other
disposition of the Collateral or any part thereof, or any other
collateral for the Revolving Credit or to the subordination of any
lien or security interest therein;
(vi) make advances for the purpose of performing any term,
provision or covenant contained in this Agreement, any of the Notes or
any of the other Financing Documents with respect to which the
Borrowers shall then be in default;
(vii) make future advances pursuant to the Financing
Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise transfer the
Revolving Credit Commitment, the Obligations, the Notes, any of the
other Financing Documents or any interest therein, all as and to the
extent permitted by the provisions of this Agreement;
(ix) deal in all respects with the other Borrowers as if
this Section 2.3.11 were not in effect;
(x) effect any release, compromise or settlement with any
of the other Borrowers, whether in their capacity as a Borrower or as
a guarantor under this Section 2.3.11, or any other guarantor; and
39
(xi) provide debtor-in-possession financing or allow use of
cash collateral in proceedings under the Bankruptcy Code, it being
expressly agreed by all Borrowers that any such financing and/or use
would be part of the Obligations.
(c) The obligations and liabilities of each Borrower, as
guarantor under this Section 2.3.11, shall be primary, direct and immediate,
shall not be subject to any counterclaim, recoupment, set off, reduction or
defense based upon any claim that a Borrower may have against any one or more of
the other Borrowers, the Lender, and/or any other guarantor and shall not be
conditional or contingent upon pursuit or enforcement by the Lender of any
remedies it may have against the Borrowers with respect to this Agreement, the
Notes or any of the other Financing Documents, whether pursuant to the terms
thereof or by operation of law. Without limiting the generality of the
foregoing, the Lender shall not be required to make any demand upon any of the
Borrowers, or to sell the Collateral or otherwise pursue, enforce or exhaust its
remedies against the Borrowers or the Collateral either before, concurrently
with or after pursuing or enforcing its rights and remedies hereunder. Any one
or more successive or concurrent actions or proceedings may be brought against
each Borrower under this Section 2.3.11, either in the same action, if any,
brought against any one or more of the Borrowers or in separate actions or
proceedings, as often as the Lender may deem expedient or advisable. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or
more of the Borrowers, any other guarantor or any obligor under any of the
Financing Documents, arising out of, or by virtue of, any bankruptcy,
arrangement, reorganization or similar proceeding for relief of debtors under
federal or state law initiated by or against any one or more of the Borrowers,
in their respective capacities as borrowers and guarantors under this Section
2.3.11, or under any of the Financing Documents shall not modify, limit, lessen,
reduce, impair, discharge, or otherwise affect the liability of each Borrower
under this Section 2.3.11 in any manner whatsoever, and this Section 2.3.11
shall remain and continue in full force and effect. It is the intent and purpose
of this Section 2.3.11 that each Borrower shall and does hereby waive all rights
and benefits which might accrue to any other guarantor by reason of any such
proceeding, and the Borrowers agree that they shall be liable for the full
amount of the obligations and liabilities under this Section 2.3.11, regardless
of, and irrespective to, any modification, limitation or discharge of the
liability of any one or more of the Borrowers, any other guarantor or any
obligor under any of the Financing Documents, that may result from any such
proceedings.
(d) Each Borrower, as guarantor under this Section 2.3.11,
hereby unconditionally, jointly and severally, irrevocably and expressly waives:
(i) presentment and demand for payment of the Obligations
and protest of non-payment;
(ii) notice of acceptance of this Section 2.3.11 and of
presentment, demand and protest thereof;
(iii) notice of any default hereunder or under the Notes or
any of the other Financing Documents and notice of all indulgences;
40
(iv) notice of any increase in the amount
of any of or all of the indebtedness guaranteed by this Section
2.3.11;
(v) demand for observance, performance or
enforcement of any of the terms or provisions of this Section 2.3.11,
the Notes or any of the other Financing Documents;
(vi) all errors and omissions in
connection with the Lender's administration of all indebtedness
guaranteed by this Section 2.3.11, except errors and omissions
resulting from the Lender's acts of willful misconduct or gross
negligence;
(vii) any right or claim of right to cause
a marshalling of the assets of any one or more of the other Borrowers;
(viii) any act or omission of the Lender
which changes the scope of the risk as guarantor hereunder; and
(ix) all other notices and demands
otherwise required by law which the Borrower may lawfully waive.
ARTICLE III
THE COLLATERAL
Section 3.1 Debt and Obligations Secured.
All property and Liens assigned, pledged or otherwise granted under or in
connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens)) or any of the Financing Documents shall secure (a)
the payment of all of the Obligations, including, without limitation, any and
all Outstanding Letter of Credit Obligations, and (b) the performance,
compliance with and observance by the Borrowers of the provisions of this
Agreement and all of the other Financing Documents or otherwise under the
Obligations.
Section 3.2 Grant of Liens.
Each of the Borrowers hereby assigns, pledges and grants to the Lender, and
agrees that the Lender shall have a perfected and continuing security interest
in, and Lien on, all of the Borrowers' Accounts, Inventory, Government
Contracts, Chattel Paper, Documents, Instruments, Equipment, Investment
Property, and General Intangibles, and all of the Borrowers' deposit accounts
with any financial institution with which any of the Borrowers maintains
deposits, whether now owned or existing or hereafter acquired or arising, all
returned, rejected or repossessed goods, the sale or lease of which shall have
given or shall give rise to an Account or Chattel Paper, all insurance policies
relating to the foregoing, all books and records in whatever media (paper,
electronic or otherwise) recorded or stored, with respect to the foregoing and
all Equipment and General Intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and all
Proceeds and products of the foregoing. Each of the Borrowers further agrees
that the Lender shall have in respect thereof all of the rights and remedies of
a secured party under the Uniform Commercial Code as well as
41
those provided in this Agreement, under each of the other Financing Documents
and under applicable Laws.
Section 3.3 Collateral Disclosure List.
On or prior to the Closing Date, the Borrowers shall deliver to the Lender
a list (the "Collateral Disclosure List") which shall contain such information
with respect to each Borrower's business and real and personal property as the
Lender may require and shall be certified by a Responsible Officer of each of
the Borrowers, all in the form provided to the Borrowers by the Lender. Promptly
after demand by the Lender, the Borrowers, as appropriate, shall furnish to the
Lender an update of the information contained in the Collateral Disclosure List
at any time and from time to time as may be requested by the Lender.
Section 3.4 Personal Property.
The Borrowers acknowledge and agree that it is the intention of the parties
to this Agreement that the Lender shall have a first priority, perfected Lien,
in form and substance satisfactory to the Lender and its counsel, on all of the
Borrowers' personal property of any kind and nature whatsoever, whether now
owned or hereafter acquired, subject only to the Permitted Liens, if any and
excluding the Excluded Assets.
Section 3.5 Record Searches.
As of the Closing Date and thereafter at the time any Financing Document is
executed and delivered by the Borrowers pursuant to this Section, the Lender
shall have received, in form and substance satisfactory to the Lender, such Lien
or record searches with respect to all of the Borrowers and/or any other Person,
as appropriate, and the property covered by such Financing Document showing that
the Lien of such Financing Document will be a perfected first priority Lien on
the property covered by such Financing Document subject only to Permitted Liens
or to such other matters as the Lender may approve.
Section 3.6 Costs.
The Borrowers agree to pay, as part of the Enforcement Costs and to the
fullest extent permitted by applicable Laws, on demand all costs, fees and
expenses incurred by the Lender in connection with the taking, perfection,
preservation, protection and/or release of a Lien on the Collateral.
Section 3.7 Release.
Upon the indefeasible repayment in full in cash of the Obligations and
performance of all Obligations of the Borrowers and all obligations and
liabilities of each other Person, other than the Lender, under this Agreement
and all other Financing Documents, the termination and/or expiration of the
Revolving Credit Commitment and Outstanding Letter of Credit Obligations, upon
the Borrowers' request and at the Borrowers' sole cost and expense, the Lender
shall release and/or terminate any Financing Document but only if and provided
that there is no commitment or obligation (whether or not conditional) of the
Lender to re-advance amounts which would be secured thereby and/or no commitment
or obligation of the Lender to issue any Letter of Credit or return or restore
any payment of any Current Letter of Credit Obligations.
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Section 3.8 Inconsistent Provisions.
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
The Borrowers, for themselves and for each other, represent and warrant to
the Lender, as follows:
4.1.1 Subsidiaries.
The Borrowers have the Subsidiaries listed on the EXHIBIT C
attached hereto and made a part hereof and any Additional Borrowers who are
parties to this Agreement, and no others, unless such Subsidiaries have been
released from liability under this Agreement pursuant to a written agreement by
and between the Company and the Lender. Each of the Subsidiaries is a Wholly
Owned Subsidiary except as shown on EXHIBIT C, which correctly indicates the
nature and amount of each Borrower's ownership interests therein.
4.1.2 Existence.
Each Borrower (a) is a Registered Organization under the
laws of the jurisdiction stated in the Preamble of this Agreement, (b) is in
good standing under the laws of the jurisdiction in which it is organized, (c)
has the power to own its property and to carry on its business as now being
conducted, and (d) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned by it therein
or in which the transaction of its business makes such qualification necessary.
Each Borrower is organized under the laws of only one (1) jurisdiction.
4.1.3 Power and Authority.
Each Borrower has full power and authority to execute and
deliver this Agreement, and the other Financing Documents to which it is a
party, to make the borrowings under this Agreement and to incur and perform the
Obligations whether under this Agreement, the other Financing Documents, all of
which have been duly authorized by all proper and necessary action. No consent
or approval of shareholders or any creditors of any Borrower, and no consent,
approval, filing or registration with or notice to any Governmental Authority on
the part of any Borrower, is required as a condition to the execution, delivery,
validity or enforceability of this Agreement, or any of the other Financing
Documents, the performance by any Borrower of the Obligations.
4.1.4 Binding Agreements.
This Agreement and the other Financing Documents executed
and delivered by the Borrowers have been properly executed and delivered and
constitute the valid and legally binding obligations of the Borrowers and are
fully enforceable against each of the Borrowers in accordance with their
respective terms, subject to bankruptcy, insolvency,
43
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties, and general principles of
equity regardless of whether applied in a proceeding in equity or at law.
4.1.5 No Conflicts.
Neither the execution, delivery and performance of the terms
of this Agreement or of any of the other Financing Documents executed and
delivered by any Borrower nor the consummation of the transactions contemplated
by this Agreement will conflict with, violate or be prevented by (a) any
Borrower's organizational or governing documents, (b) any existing mortgage,
indenture, contract or agreement binding on any Borrower or affecting its
property, or (c) any Laws.
4.1.6 No Defaults, Violations.
(a) No Default or Event of Default has occurred
and is continuing.
(b) None of the Borrowers nor any of their
respective Subsidiaries is in default under or with respect to any obligation
under any existing mortgage, indenture, contract or agreement binding on it or
affecting its property in any respect which could result in a Material Adverse
Effect.
4.1.7 Compliance with Laws.
None of the Borrowers nor any of their respective
Subsidiaries is in violation of any applicable Laws (including, without
limitation, any Laws relating to employment practices, to environmental,
occupational and health standards and controls) or order, writ, injunction,
decree or demand of any court, arbitrator, or any Governmental Authority
affecting any Borrower or any of its properties, the violation of which,
considered in the aggregate, could result in a Material Adverse Effect.
4.1.8 Margin Stock.
None of the proceeds of the Revolving Credit will be used,
directly or indirectly, by any Borrower or any Subsidiary for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry, any "margin
stock" within the meaning of Regulation U (12 CFR Part 221), of the Board of
Governors of the Federal Reserve System or for any other purpose which might
make the transactions contemplated in this Agreement a "purpose credit" within
the meaning of Regulation U, or cause this Agreement to violate any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934 or the Small Business Investment Act of 1958, as
amended, or any rules or regulations promulgated under any of such statutes.
4.1.9 Investment Company Act; Margin Stock.
None of the Borrowers nor any of their respective
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, nor is it, directly or indirectly, controlled
by or acting on behalf of any Person which is an
44
investment company within the meaning of said Act. None of the Borrowers nor any
of their respective Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin stock" within the meaning of Regulation U (12 CFR
Part 221), of the Board of Governors of the Federal Reserve System.
4.1.10 Litigation.
Except as otherwise disclosed on Schedule 4.1.10 attached
hereto and made a part hereof, there are no proceedings, actions or
investigations pending or, so far as any Borrower knows, threatened before or by
any court, arbitrator or any Governmental Authority which, in any one case or in
the aggregate, if determined adversely to the interests of any Borrower or any
Subsidiary, would have a Material Adverse Effect.
4.1.11 Financial Condition.
The consolidated financial statements of the Borrowers dated
March 31, 2002, are complete and correct and fairly present the financial
position of each of the Borrowers and its Subsidiaries and the results of their
operations and transactions in their surplus accounts as of the date and for the
period referred to therein and have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved. There are no
liabilities, direct or indirect, fixed or contingent, of any Borrower or any
Subsidiary as of the date of such financial statements that are not reflected
therein or in the notes thereto. To the best of each Borrower's knowledge, there
has been no material adverse change in the financial condition or operations of
any Borrower or any Subsidiary since the date of such financial statements and
to the best of each Borrower's knowledge no such adverse change is pending. None
of the Borrowers nor any Subsidiary has guaranteed the obligations of, or made
any investment in or advances to, any Person, except as permitted under this
Agreement or as disclosed in the most recent financial statements delivered by
the Company to the Lender.
4.1.12 Full Disclosure.
The financial statements referred to in Section 4.1.11
(Financial Condition), the Financing Documents (including, without limitation,
this Agreement), and the statements, reports or certificates furnished by any
Borrower in connection with the Financing Documents (a) do not contain any
untrue statement of a material fact and (b) when taken in their entirety, do not
omit any material fact necessary to make the statements contained therein not
misleading. There is no fact known to any Borrower which such Borrower has not
disclosed to the Lender in writing prior to the date of this Agreement with
respect to the transactions contemplated by the Financing Documents which
constitutes or could constitute a Material Adverse Effect.
4.1.13 Indebtedness for Borrowed Money.
Except for the Obligations and except as set forth in
Schedule 4.1.13 attached hereto and made a part hereof, the Borrowers have no
Indebtedness for Borrowed Money. The Lender has received photocopies of all
promissory notes evidencing any Indebtedness for Borrowed Money set forth in
Schedule 4.1.13, together with any and all
45
subordination agreements, other agreements, documents, or instruments securing,
evidencing, guarantying or otherwise executed and delivered in connection
therewith.
4.1.14 Convertible Debt.
None of the Convertible Debt Loan Documents has been amended,
supplemented, restated or otherwise modified except as otherwise disclosed to
the Lender in writing on or before the effective date of any such amendment,
supplement, restatement or other modification. In addition, there does not exist
any default or any event which upon notice or lapse of time or both would
constitute a default under the terms of any of the Convertible Debt Loan
Documents.
4.1.15 Taxes.
Each of the Borrowers and its Subsidiaries has filed all returns,
reports and forms for Taxes which, to the knowledge of the Borrowers, are
required to be filed, and has paid all Taxes as shown on such returns or on any
assessment received by it, to the extent that such Taxes have become due, unless
and to the extent only that such Taxes, assessments and governmental charges are
currently contested in good faith and by appropriate proceedings by a Borrower,
such Taxes are not the subject of any Liens other than Permitted Liens, and
adequate reserves therefor have been established as required under GAAP. All tax
liabilities of the Borrowers were as of the date of audited financial statements
referred to in Section 4.1.11 (Financial Condition), and are now, adequately
provided for on the books of the Borrowers and its Subsidiaries, as appropriate.
To the best of each Borrower's knowledge, no tax liability has been asserted by
the Internal Revenue Service or any state or local authority against any
Borrower for Taxes in excess of those already paid.
4.1.16 ERISA.
With respect to any Plan that is maintained or contributed to by any
Borrower and/or by any Commonly Controlled Entity or as to which any of the
Borrowers retains material liability: (a) no "accumulated funding deficiency" as
defined in Code (S) 412 or ERISA (S) 302 has occurred, whether or not that
accumulated funding deficiency has been waived; (b) no Reportable Event has
occurred other than events for which reporting has been waived or that are
unlikely to result in material liability for any of the Borrowers; (c) no
termination of any plan subject to Title IV of ERISA has occurred; (d) neither
any Borrower nor any Commonly Controlled Entity has incurred a "complete
withdrawal" within the meaning of ERISA (S) 4203 from any Multi-employer Plan
that is likely to result in material liability for one or more of the Borrowers;
(e) neither any Borrower nor any Commonly Controlled Entity has incurred a
"partial withdrawal" within the meaning of ERISA (S) 4205 with respect to any
Multi-employer Plan that is likely to result in material liability for one or
more of the Borrowers; (f) no Multi-employer Plan to which any Borrower or any
Commonly Controlled Entity has an obligation to contribute is to the knowledge
of the Borrowers, in "reorganization" within the meaning of ERISA (S) 4241 nor
has notice been received by any Borrower or any Commonly Controlled Entity that
such a Multi-employer Plan will be placed in "reorganization."
46
4.1.17 Title to Properties.
The Borrowers have good and marketable title to all of their
respective properties, including, without limitation, the Collateral and the
properties and assets reflected in the balance sheets described in Section
4.1.11 (Financial Condition). The Borrowers have legal, enforceable and
uncontested rights to use freely such property and assets, subject to Permitted
Liens. All of such properties, including, without limitation, the Collateral
which were purchased, were in each Borrower's good faith belief purchased for
fair consideration and reasonably equivalent value in the ordinary course of
business of both the seller and the Borrowers and not, by way of example only,
as part of a bulk sale.
4.1.18 Patents, Trademarks, Etc.
Each of the Borrowers and its Subsidiaries owns, possesses, or has the
right to use all patents, licenses, trademarks, copyrights, permits and
franchises necessary to conduct its business as now conducted, without known
conflict with the rights of any other Person. Any and all obligations to pay
royalties or other charges with respect to such properties and assets are
properly reflected on the financial statements described in Section 4.1.11
(Financial Condition).
4.1.19 Employee Relations.
Except as disclosed on Schedule 4.1.19 attached hereto and made a part
hereof, (a) no Borrower nor any Subsidiary thereof nor any of the Borrower's or
Subsidiary's employees is subject to any collective bargaining agreement, (b) no
petition for certification or union election is pending with respect to the
employees of any Borrower or any Subsidiary and no union or collective
bargaining unit has sought such certification or recognition with respect to the
employees of a Borrower, (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrowers after due
inquiry, threatened between any Borrower and its employees, and (d) no Borrower
nor any Subsidiary is subject to an employment contract, severance agreement,
commission contract or bonus agreement. Hours worked and payments made to the
employees of any one or more of the Borrowers have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters.
All payments due from any one or more of the Borrowers or for which any claim
may be made against a Borrower, on account of wages and employee and retiree
health and welfare insurance and other benefits have been paid or accrued as a
liability on its books. The consummation of the transactions contemplated by the
Financing Agreement or any of the other Financing Documents, will not give rise
to a right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which any Borrower is a party or by
which it is bound.
4.1.20 Presence of Hazardous Materials or Hazardous Materials
Contamination.
Except as described on Schedule 4.1.20 and to the best of each
Borrower's knowledge, (a) no Hazardous Materials are located on any real
property owned, controlled or operated by any Borrower or for which any Borrower
is, or is claimed to be, responsible, except for reasonable quantities of
Hazardous Materials Used or generated by a Borrower in the ordinary course of
its business and stored, used and disposed in accordance with applicable
47
Laws; and (b) no property owned, controlled or operated by any Borrower or for
which any Borrower has, or is claimed to have, responsibility has ever been used
as a manufacturing, storage, disposal, or dump site for Hazardous Materials nor
is affected by Hazardous Materials Contamination at any other property.
4.1.21 Perfection and Priority of Collateral.
The Lender has, or upon execution and recording of this Agreement and
the Security Documents will have, and will continue to have as security for the
Obligations, a valid and perfected Lien on and security interest in all
Collateral, free of all other Liens, claims and rights of third parties
whatsoever except Permitted Liens, including, without limitation, those
described on Schedule 4.1.21 attached hereto and made a part hereof.
4.1.22 Collateral Disclosure List.
The information contained in the Collateral Disclosure List is
complete and correct. The Collateral Disclosure List completely and accurately
identifies (a) the type of entity, the state of its organization and the chief
executive office of each Borrower, (b) any and each other place of business of
each Borrower, (c) the location of all books and records pertaining to the
Collateral, and (d) each location, other than the foregoing, where any of the
Collateral is located.
4.1.23 Business Names and Addresses.
In the five (5) years preceding the date hereof, no Borrower has
changed its name, identity or corporate structure, has conducted business under
any name other than its current name, and has conducted its business in any
jurisdiction other than those disclosed on the Collateral Disclosure List.
4.1.24 No Suspension or Debarment.
Neither any Borrower nor any of their respective directors, officers
or employees has received any notice of, or information concerning, any
proposed, contemplated or initiated suspension or debarment, be it temporary or
permanent, due to an administrative or a statutory basis, of any Borrower by any
Governmental Authority. Each Borrower further warrants and represents that no
Borrower has defaulted under any Government Contract which default would be a
basis of terminating such Government Contract.
4.1.25 Equipment.
All Equipment is personalty and no equipment is held by any Borrower
on a sale on approval basis.
4.1.26 Accounts.
With respect to all Accounts (other than Accounts which are considered
part of the Excluded Assets) and to the best of each Borrower's knowledge (a)
they are genuine, and in all respects what they purport to be, and are not
evidenced by a judgment, an Instrument, or Chattel Paper (unless such judgment
has been assigned and such Instrument or Chattel Paper has been endorsed and
delivered to the Lender); (b) they represent bona fide transactions completed in
accordance with the terms and provisions contained in the invoices, purchase
48
orders and other contracts relating thereto, and the underlying transaction
therefor is in accordance with all applicable Laws; (c) the amounts shown on the
respective Borrower's books and records, with respect thereto are actually and
absolutely owing to that Borrower and are not contingent or subject to reduction
for any reason other than regular discounts, credits or adjustments allowed by
that Borrower in the ordinary course of its business; (d) no payments have been
or shall be made thereon except payments turned over to the Lender by the
Borrowers; (e) all Account Debtors thereon have the capacity to contract; and
(f) the goods sold, leased or transferred or the services furnished giving rise
thereto are not subject to any Liens except the security interest granted to the
Lender by this Agreement and Permitted Liens.
4.1.27 Compliance with Eligibility Standards.
Each Account included in the calculation of the Borrowing Base as of
the date of the applicable Borrowing Base Certificate meets and complies with
all of the standards for Eligible Receivables. With respect to those Accounts
which the Lender has deemed Eligible Receivables (a) there are no facts, events
or occurrences known to the Borrower which in any way impair the validity,
collectibility or enforceability thereof or tend to reduce the amount payable
thereunder; and (b) there are no proceedings or actions known to any Borrower
which are threatened or pending against any Account Debtor which could be
expected to result in any material adverse change in the Borrowing Base, in
either case not previously disclosed to the Lender.
Section 4.2 Survival; Updates of Representations and Warranties.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Revolving Credit and
extension of credit made hereunder or the issuance of each Letter of Credit, and
the incurring of any other Obligations and shall be deemed to have been made at
the time of each request for, and again at the time of the making of, each
advance under the Revolving Credit, except that the representations and
warranties which relate to the financial statements which are referred to in
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Lender pursuant to Section 6.1.1
(Financial Statements).
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to the Initial Advance and Initial Letter of
Credit.
The making of the initial advance under the Revolving Credit and the
issuance of the initial Letter of Credit is subject to the fulfillment on or
before the Closing Date of the following conditions precedent in a manner
satisfactory in form and substance to the Lender and its counsel:
5.1.1 Organizational Documents.
The Lender shall have received for each Borrower:
49
(a) a certificate of good standing certified by the Secretary of
State, or other appropriate Governmental Authority, of the state of
organization of such Borrower;
(b) a complete copy of the Borrower's organizational documents;
(c) a certificate of qualification to do business for such
Borrower certified by the Secretary of State or other Governmental
Authority of each jurisdiction in which such Borrower conducts
business;
(d) a certificate dated as of the Closing Date by the Secretary
or an Assistant Secretary of such Borrower covering:
(i) true and complete copies of that Borrower's
organizational documents and all amendments thereto;
(ii) true and complete copies of the resolutions of its
Board of Directors authorizing (A) the execution, delivery and performance
of the Financing Documents to which it is a party, (B) the borrowings
hereunder, and (C) the granting of the Liens contemplated by this Agreement
and the Financing Documents to which that Borrower is a party;
(iii) the incumbency, authority and signatures of the
officers of such Borrower authorized to sign this Agreement and the other
Financing Documents to which such Borrower is a party; and
(iv) the identity of such Borrower's current directors,
common stock holders and other equity holders, as well as their respective
percentage ownership interests.
5.1.2 Opinion of Borrowers' Counsel.
The Lender shall have received the favorable opinion of counsel for
the Borrowers addressed to the Lender in form satisfactory to the Lender.
5.1.3 Consents, Licenses, Approvals, Etc.
The Lender shall have received copies of all consents, licenses and
approvals, required in connection with the execution, delivery, performance,
validity and enforceability of the Financing Documents, and such consents,
licenses and approvals shall be in full force and effect.
5.1.4 Note.
The Lender shall have received the Revolving Credit Note, conforming
to the requirements hereof and executed by a Responsible Officer of each
Borrower and attested by a duly authorized representative of each Borrower.
50
5.1.5 Financing Documents and Collateral.
Each Borrower shall have executed and delivered the
Financing Documents to be executed by it, and shall have delivered original
Chattel Paper, Instruments, Investment Property, and related Collateral and all
opinions, title insurance, and other documents contemplated by ARTICLE III (The
Collateral).
5.1.6 Other Financing Documents.
In addition to the Financing Documents to be delivered by
the Borrowers, the Lender shall have received the Financing Documents duly
executed and delivered by Persons other than the Borrowers.
5.1.7 Other Documents, Etc.
The Lender shall have received such other certificates,
opinions, documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Lender.
5.1.8 Payment of Fees.
The Lender shall have received payment of any Fees due on or
before the Closing Date.
5.1.9 Collateral Disclosure List.
The Company shall have delivered the Collateral Disclosure
List required under the provisions of Section 3.3 (Collateral Disclosure List)
duly executed by a Responsible Officer of the Company.
5.1.10 Recordings and Filings.
Each Borrower shall have: (a) executed and delivered all
Financing Documents required to be filed, registered or recorded in order to
create, in favor of the Lender, a perfected Lien in the Collateral (subject only
to the Permitted Liens) in form and in sufficient number for filing,
registration, and recording in each office in each jurisdiction in which such
filings, registrations and recordations are required, and (b) delivered such
evidence as the Lender deems satisfactory that all necessary filing fees and all
recording and other similar fees, and all Taxes and other expenses related to
such filings, registrations and recordings will be or have been paid in full.
5.1.11 Insurance Certificate.
The Lender shall have received an insurance certificate in
accordance with the provisions of Section 6.1.8 (Insurance) and Section 6.1.18
(Insurance With Respect to Equipment and Inventory).
5.1.12 Field Examination.
The Lender shall have completed a field examination of each
Borrower's business, operations and income, the results of which field
examination shall be in all respects acceptable to the Lender in its sole and
absolute discretion.
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5.1.13 Landlord's Waivers.
The Lender shall have received a waiver from each landlord
of each and every business premise leased by each Borrower and on which (a) any
of the Collateral comprised of books and records or (b) any of the Collateral
which has a book value in excess of Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate is or may hereafter be located, which landlords'
waivers must be reasonably acceptable to the Lender and its counsel in their
sole and absolute discretion.
5.1.14 Stock Certificates and Stock Powers.
The Lender shall have received all of the original stock
certificates of Space Media owned by the Company and fully executed irrevocable
stock powers from the Company of all such stock certificates.
5.1.15 Pledge of Membership Interests in Space Station.
The Lender shall have received a fully executed pledge,
assignment and security interest in the ownership interests of Space Station
owned by the Company.
5.1.16 Required Availability under the Revolving Credit
Facility.
On the Closing Date, the aggregate outstanding principal
amount of the Revolving Loan and Outstanding Letter of Credit Obligations shall
not exceed an amount equal to (a) the lesser of the Borrowing Base or the
Revolving Credit Committed Amount, minus (b) the sum of the amount of the
Permitted Uses of the Revolving Loan required to be made on the Closing Date,
the amount of the costs relating to the closing of this Agreement (including,
without limitation, applicable Fees, recording costs, recording taxes, and the
fees and expenses of the Borrowers' and the Lender's professionals), the amount
of the Borrowers' trade payables more than thirty (30) days past due, and the
amount of One Million Dollars ($1,000,000).
Section 5.2 Conditions to all Extensions of Credit and Issuance of
Letters of Credit.
The making of all advances under the Revolving Credit and issuance of all
Letters of Credit is subject to the fulfillment of the following conditions
precedent in a manner satisfactory in form and substance to the Lender and its
counsel:
5.2.1 Compliance.
Each Borrower shall have complied and shall then be in
compliance with all terms, covenants, conditions and provisions of this
Agreement and the other Financing Documents that are binding upon it.
5.2.2 Borrowing Base.
The Borrowers shall have furnished all Borrowing Base
Reports required by Section 2.1.4 (Borrowing Base Report), there shall exist no
Borrowing Base Deficiency, and as evidence thereof, the Borrowers shall have
furnished to the Lender such reports, schedules, certificates, records and other
papers as may be requested by the Lender, and the Borrowers shall be in
compliance with the provisions of this Agreement both immediately before and
immediately after the making of the advance requested.
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5.2.3 Default.
There shall exist no Event of Default or Default hereunder.
5.2.4 Representations and Warranties.
The representations and warranties of each of the Borrowers
contained among the provisions of this Agreement shall be true and with the same
effect as though such representations and warranties had been made at the time
of the making of, and of the request for, each advance under the Revolving
Credit or the issuance of each Letter of Credit, except that the representations
and warranties which relate to financial statements which are referred to in
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Lender pursuant to Section 6.1.1
(Financial Statements).
5.2.5 Adverse Change.
No adverse change shall have occurred in the condition
(financial or otherwise), operations or business of any Borrower that would, in
the good faith judgment of the Lender, result in a Material Adverse Effect.
5.2.6 Legal Matters.
All legal documents incident to each advance under the
Revolving Credit and the issuance of each Letter of Credit shall be reasonably
satisfactory to counsel for the Lender.
ARTICLE VI
COVENANTS OF THE BORROWERS
Section 6.1 Affirmative Covenants.
So long as any of the Obligations (or the Revolving Credit Commitment
therefor) shall be outstanding hereunder, the Borrowers agree jointly and
severally with the Lender as follows:
6.1.1 Financial Statements.
The Borrowers shall furnish to the Lender:
(a) Annual Statements and Certificates. The
Borrowers shall furnish to the Lender as soon as available, but in no event more
than ninety (90) days after the close of the Borrowers' fiscal years, (i) a copy
of the Company's 10-K filed with the Securities and Exchange Commission or if
the 10-K is not filed, the Company's annual financial statement in reasonable
detail satisfactory to the Lender relating to the Borrowers and their
Subsidiaries, prepared in accordance with GAAP and examined and certified by
independent certified public accountants satisfactory to the Lender, which
financial statement shall include a consolidated and consolidating balance sheet
of the Borrowers and their Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income, cash flows and changes in
shareholders equity of the Borrowers and their Subsidiaries for such fiscal
year, and (ii) a Compliance Certificate, in substantially the form attached to
this Agreement as EXHIBIT D, containing a detailed computation of each financial
covenant in this Agreement which is
53
applicable for the period reported, a certification that no change has occurred
to the information contained in the Collateral Disclosure List (except as set
forth in any schedule attached to the certification), and a cash flow projection
report, each prepared by a Responsible Officer of the Borrowers in a format
acceptable to the Lender and (iii) a management letter in the form prepared by
the Borrowers' independent certified public accountants.
(b) Annual Opinion of Accountant. The Borrowers
shall furnish to the Lender as soon as available, but in no event more than
ninety (90) days after the close of the Borrowers' fiscal years, an unqualified
opinion of the accountant who examined and certified the annual financial
statement relating to the Borrowers and their Subsidiaries (i) stating whether
anything in such accountant's examination has revealed the occurrence of a
Default or an Event of Default hereunder due to the breach of any of the
financial covenants set forth in Section 6.1.15 (Financial Covenants), and, if
so, stating the facts with respect thereto and (ii) acknowledging that the
Lender will rely on the statement and that the Borrowers know of the intended
reliance by the Lender.
(c) Quarterly Statements and Certificates. The
Borrowers shall furnish to the Lender as soon as available, but in no event more
than forty five (45) days after the close of the Borrowers' fiscal quarters, the
Company's 10-Q as filed with the Securities and Exchange Commission or if such
report is not filed, the Borrowers' consolidated and consolidating balance
sheets of the Borrowers and its Subsidiaries as of the close of such period,
consolidated and consolidating income, cash flows and changes in shareholders
equity statements for such period, projected cash flow on a month to month basis
and projected income statements, and a Compliance Certificate, in substantially
the form attached to this Agreement as EXHIBIT D.
(d) Contract Backlog Report. With the quarterly
financial statements to be delivered hereunder, reports relating to the
Receivables included in any Borrowing Base Report submitted during such quarter
setting forth a description of contracts giving rise to such Receivable, the
percentage of completion of the work to be performed with respect to such
contracts, the amounts billed under such contracts and the amounts remaining to
be billed, in form and detail satisfactory to the Lender.
(e) Monthly Statements and Certificates. The
Borrowers shall furnish to the Lender as soon as available, but in no event more
than thirty (30) days after the close of the Borrowers' fiscal months and forty
five (45) days after the close of the fiscal months that are the conclusion of a
fiscal quarter, (i) consolidated and consolidating balance sheets of the
Borrowers and their Subsidiaries as of the close of such period and consolidated
and consolidating income statements, all as prepared and certified by a
Responsible Officer of the Borrowers and (ii) a detailed computation of each
financial covenant in this Agreement which is applicable for the period
reported, together with a certification that no change has occurred to the
information contained on the Collateral Disclosure List (except as set forth on
any schedule attached to the certification), each prepared by a Responsible
Officer of or on behalf of each Borrower in a format acceptable to the Lender,
and accompanied by a certificate of that officer stating whether any event has
occurred which constitutes a Default or an Event of Default hereunder, and, if
so, stating the facts with respect thereto.
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(f) Annual Budget and Projections. The Borrowers
shall furnish to the Lender as soon as available, but in no event later than
July 31st of each fiscal year a consolidated and consolidating budget and pro
forma financial statements on a month-to-month basis for the following fiscal
year, which financial statements shall include at a minimum, a balance sheet,
income statements and statement of cash flows.
(g) Additional Reports and Information. The
Borrowers shall furnish to the Lender promptly, such additional information,
reports or statements as the Lender may from time to time reasonably request.
6.1.2 Reports to SEC and to Stockholders.
The Borrowers will furnish to the Lender, promptly upon the
filing or making thereof, at least one (l) copy of all financial statements,
reports, notices and proxy statements sent by any Borrower to its stockholders,
and of all regular and other reports filed by any Borrower with any securities
exchange or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Field
Examination, Etc.
(a) Each of the Borrowers shall, and shall cause
each of its Subsidiaries to, maintain (i) a standard system of accounting in
accordance with GAAP, and (ii) proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation
to its properties, business and activities.
(b) Each of the Borrowers shall, and shall cause
each of its Subsidiaries to, permit authorized representatives of the Lender to
visit and inspect the properties of the Borrowers and its Subsidiaries, to
review, audit, check and inspect the Collateral at any time during normal
business hours, with or after a Default without notice, to review, audit, check
and inspect the Borrowers' other books of record at any time with or without
notice and to make abstracts and photocopies thereof, and to discuss the
affairs, finances and accounts of the Borrowers and their Subsidiaries, with the
officers, directors, employees and other representatives of the Borrowers and
their Subsidiaries and their respective accountants, all at such times during
normal business hours and other reasonable times and as often as the Lender may
reasonably request.
(c) Each of the Borrowers hereby irrevocably
authorizes and directs all accountants and auditors employed by any of the
Borrowers and/or any of their Subsidiaries at any time prior to the repayment in
full of the Obligations to exhibit and deliver to the Lender copies of any and
all of the financial statements, trial balances, management letters, or other
accounting records of any nature of any or all of the Borrowers and/or any or
all of their respective Subsidiaries in the accountant's or auditor's
possession, and to disclose to the Lender any information they may have
concerning the financial status and business operations of any or all of the
Borrowers and/or any or all of their respective Subsidiaries. Further, each of
the Borrowers hereby authorizes all Governmental Authorities to furnish to the
Lender copies of reports or examinations relating to any and all of the
Borrowers and/or any or all Subsidiaries, whether made by the Borrowers or
otherwise. The Lender acknowledges and agrees to the extent certain information
is "classified" or the Borrowers are otherwise prohibited by Law from
55
disclosing such information to the Lender, that the Borrowers shall not be
obligated to release such information to the Lender.
(d) Any and all reasonable costs and expenses incurred by, or on
behalf of, the Lender in connection with the conduct of any of the foregoing,
including, without limitation, travel (other than first class air travel),
lodging, meals, and other reasonable expenses for each auditor employed by the
Lender for inspections of the Collateral and the Borrowers' operations, shall be
part of the Enforcement Costs and shall be payable to the Lender upon demand.
The Borrowers acknowledge and agree that such expenses may include, but shall
not be limited to, any and all reasonable out-of-pocket costs and expenses of
the Lender's employees and agents in, and when, traveling to any of the
Borrowers' facilities.
6.1.4 Existence.
Each of the Borrowers shall maintain, and cause each of its
Subsidiaries to maintain, its existence in good standing in the jurisdiction in
which it is organized and in each other jurisdiction where it is required to
register or qualify to do business if the failure to do so in such other
jurisdiction could have a Material Adverse Effect.
6.1.5 Compliance with Laws.
Each of the Borrowers shall comply, and cause each of its Subsidiaries
to comply, with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
could be expected to have a Material Adverse Effect.
6.1.6 Preservation of Properties.
Each of the Borrowers will, and will cause each of its Subsidiaries
to, at all times (a) maintain, preserve, protect and keep its properties,
whether owned or leased, in good operating condition, working order and repair
(ordinary wear and tear excepted), and from time to time will make all proper
repairs, maintenance, replacements, additions and improvements thereto needed to
maintain such properties in good operating condition, working order and repair,
unless such properties are no longer necessary or useful in the conduct of such
Borrower's business as determined by its management, but provided, however that
such Borrower's failure to maintain such property could not give rise to any
material liability, and (b) do or cause to be done all things necessary to
preserve and to keep in full force and effect its material franchises, leases of
real and personal property, trade names, patents, trademarks and permits which
are necessary for the orderly continuance of its business.
6.1.7 Line of Business.
Each of the Borrowers will continue to engage substantially only in
the business of providing commercial space applications and other incidental
businesses.
6.1.8 Insurance.
Each of the Borrowers will, and will cause each of its Subsidiaries
to, at all times maintain with "A" or better rated insurance companies such
insurance as is required by applicable Laws and such other insurance, in such
amounts, of such types and against such risks,
56
hazards, liabilities, casualties and contingencies as are usually insured
against in the same geographic areas by business entities engaged in the same or
similar business. Without limiting the generality of the foregoing, each of the
Borrowers will, and will cause each of its Subsidiaries to, keep adequately
insured all of its property against loss or damage resulting from fire or other
risks insured against by extended coverage and maintain public liability
insurance against claims for personal injury, death or property damage occurring
upon, in or about any properties occupied or controlled by it, or arising in any
manner out of the businesses carried on by it, all in such amounts not less than
the Lender shall reasonably determine from time to time. The Lender agrees that
with respect to any assets of the Borrowers and each of their Subsidiaries which
are Excluded Assets that unless such assets become subject to Liens in favor of
the Lender, the Lender will rely on the determination of any other Person having
a Lien on such assets or if no such Person exists, the Lender will rely on the
Company in the exercise of its reasonable discretion, to determine the
appropriate amount and types of insurance. Each of the Borrowers shall deliver
to the Lender on the Closing Date (and thereafter on each date there is a
material change in the insurance coverage) a certificate of a Responsible
Officer of the Borrowers containing a detailed list of the insurance then in
effect and stating the names of the insurance companies, the types, the amounts
and rates of the insurance, dates of the expiration thereof and the properties
and risks covered thereby. Within thirty (30) days after notice in writing from
the Lender, the Borrowers will obtain such additional insurance as the Lender
may reasonably request.
6.1.9 Taxes.
Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings, each of the Borrowers
will, and will cause each of its Subsidiaries, to pay and discharge all Taxes
prior to the date when any interest or penalty would accrue for the nonpayment
thereof. Each of the Borrowers shall furnish to the Lender at such times as the
Lender may require proof satisfactory to the Lender of the making of payments or
deposits required by applicable Laws including, without limitation, payments or
deposits with respect to amounts withheld by any of the Borrowers from wages and
salaries of employees and amounts contributed by any of the Borrowers on account
of federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act, as amended.
6.1.10 ERISA.
Each Borrower will, and will cause each of its Commonly
Controlled Entities to, comply with the funding requirements of ERISA with
respect to Plans for its respective employees. No Borrower will permit with
respect to any Plan (a) any prohibited transaction or transactions under ERISA
or the Internal Revenue Code, which results, or may result, in any material
liability of the Borrower, or (b) any Reportable Event if, upon termination of
the plan or plans with respect to which one or more such Reportable Events shall
have occurred, there is or would be any material liability of the Borrower to
the PBGC. Upon the Lender's request, each Borrower will deliver to the Lender a
copy of the most recent actuarial report, financial statements and annual report
completed with respect to any Plan.
6.1.11 Government Contracts.
The Company shall promptly notify the Lender of the execution of
any Government Contract with a remaining value in excess of Two Million Dollars
($2,000,000) and
57
shall in accordance with Section 3.2 execute any instruments and take any steps
necessary or prudent in order that all moneys due and to become due under any
Government Contracts with a remaining value in excess of Two Million Dollars
($2,000,000) and a duration in excess of six months shall be assigned to the
Lender and notice thereof given to the Government under the Federal Assignment
of Claims Act of 1940 (31 U.S.C. (S) 3727 and 41 U.S.C. (S) 15) or any other
similar applicable law (the "Act"). In addition, the Lender shall have the right
at any time to require that all monies due or to become due under any Government
Contracts be assigned to the Lender pursuant to the Act.
6.1.12 Notification of Events of Default and Adverse Developments.
Each of the Borrowers shall promptly notify the Lender upon obtaining
knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or, to its knowledge, threatened
against any of the Borrowers or any of their Subsidiaries and of the entry
of any judgment or Lien (other than any Permitted Liens) against any of the
assets or properties of any of the Borrowers or any Subsidiary where the
claims against any Borrower or any Subsidiary exceed One Hundred Thousand
Dollars ($100,000) and are not covered by insurance;
(d) any event, development or circumstance whereby the
financial statements furnished hereunder fail in any material respect to
present fairly, in accordance with GAAP, the financial condition and
operational results of any of the Borrowers or any of their respective
Subsidiaries;
(e) any judicial, administrative or arbitral proceeding pending
against any of the Borrowers or any of their respective Subsidiaries and
any judicial or administrative proceeding known by any of the Borrowers to
be threatened against any Borrower or any Subsidiary which, if adversely
decided, could result in a Material Adverse Effect;
(f) the receipt by any of the Borrowers or any Subsidiary of
any notice, claim or demand from any Governmental Authority which alleges
that any of the Borrowers or any Subsidiary is in violation of any of the
terms of, or has failed to comply with any applicable Laws regulating its
operation and business, including, but not limited to, the Occupational
Safety and Health Act and the Environmental Protection Act;
(g) any default under any Government Contract or any event
which if not corrected could give rise to a default under any Government
Contract or a termination for convenience; and
58
(h) any other development in the business or affairs of any of
the Borrowers or any of their respective Subsidiaries which could be
expected to have a Material Adverse Effect;
in each case describing in detail satisfactory to the Lender the nature thereof
and the action the Borrowers propose to take with respect thereto.
6.1.13 Hazardous Materials; Contamination.
Each of the Borrowers agrees to:
(a) give notice to the Lender immediately upon acquiring
knowledge of the presence of any Hazardous Materials or any Hazardous
Materials Contamination on any property owned, operated or controlled by
any Borrower or for which any Borrower is, or is claimed to be, responsible
(provided that such notice shall not be required for Hazardous Materials
placed or stored on such property in accordance with applicable Laws in the
ordinary course (including, without limitation, quantity) of a Borrower's
line of business expressly described in this Agreement or otherwise
previously disclosed to the Lender in writing), with a full description
thereof;
(b) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Lender with satisfactory evidence of such
compliance; provided, however, that the Borrowers may challenge the
applicability of any such requirement or appeal the imposition of any such
requirement, within the time period allowed under such Laws, provided that
during any such challenge or appeal, the existence of any such Hazardous
Materials or Hazardous Materials Contamination do not and will not with
appropriate filings, the giving of notice and/or the passage of time,
result in any Lien against any of the Collateral or could otherwise result
in a Material Adverse Effect;
(c) provide the Lender, within thirty (30) days after a demand
by the Lender, with a bond, letter of credit or similar financial assurance
evidencing to the Lender's satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging
any Lien which may be established as a result thereof on any property
owned, operated or controlled by any Borrower or for which any Borrower is,
or is claimed to be, responsible; and
(d) as part of the Obligations, defend, indemnify and hold
harmless the Lender and its agents, employees, trustees, successors and
assigns from any and all claims which may now or in the future (whether
before or after the termination of this Agreement) be asserted as a result
of the presence of any Hazardous Materials or any Hazardous Materials
Contamination on any property owned, operated or controlled by any Borrower
for which any Borrower is, or is claimed to be, responsible. Each Borrower
acknowledges and agrees that this indemnification shall survive the
termination of this Agreement and the
59
Revolving Credit Commitment and the payment and performance of all of the
other Obligations.
(e) The Company has advised the Lender of certain photo
processing and other related operations being performed at its location at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, and the Lender agrees that based on such information, it
will not require a bond, letter of credit or similar financial assurance at
this time under section (c) above.
6.1.14 Disclosure of Significant Transactions.
Each of the Borrowers shall deliver to the Lender a written notice
describing in detail each transaction by it involving the purchase, sale, lease,
or other acquisition or loss or casualty to or disposition of an interest in
Fixed or Capital Assets (other than Excluded Assets) which exceeds Two Hundred
Fifty Thousand Dollars ($250,000.00), said notices to be delivered to the Lender
within thirty (30) days of the occurrence of each such transaction.
6.1.15 Financial Covenants.
(a) Tangible Net Worth. The Company and its Subsidiaries, on a
consolidated basis, will at all times maintain, tested as of the end of
each fiscal quarter, a Tangible Net Worth of not less than $63,000,000 as
of June 30, 2002 plus, commencing as of September 30, 2002, an amount equal
to fifty percent (50%) of the consolidated net income (without regard to
any loss) of the Company and its Subsidiaries from the most recently ended
fiscal quarter, rounded down to the nearest $100,000.
(b) Debt to Worth Ratio. The Company and its Subsidiaries, on a
consolidated basis, will at all times maintain, tested as of the end of
each calendar month, a Debt to Worth Ratio so that it is not more than 3.0
to 1.0; provided, however, commencing as of the end of the first calendar
month of fiscal year 2004 and at all times thereafter, the Company and its
Subsidiaries, on a consolidated basis will maintain a Debt to Worth Ratio
of not more than 2.0 to 1.0.
(c) Debt Service Coverage Ratio. The Company and its
Subsidiaries will maintain, on a consolidated basis and tested as of the
last day of each of the Company's fiscal quarters, a ratio of EBITDA to
Debt Service of not less than the following amounts at the following times
(each quarter tested on a stand-alone basis):
60
Period Ratio
------ -----
June 30, 2002 1.25 to 1.0
September 30, 2002 1.00 to 1.0
December 31, 2002 1.10 to 1.0
March 31, 2003 1.25 to 1.0
June 30, 2003 1.50 to 1.0
September 30, 2003 and thereafter 1.75 to 1.0
(d) Internally Funded Capital Expenditures. Capital Expenditures
which are funded by the Company or any Borrower (taken as a whole) will not
exceed the following amounts at the following times:
Period Amount
------ ------
July 31, 2001 through June 30, 2002 $1,300,000
Fiscal Year 2003 and each fiscal year thereafter $1,500,000
6.1.16 Collection of Receivables.
Until such time as the Lender shall notify the Borrowers of the
revocation of such privilege, the Borrowers shall at their own expense have the
privilege for the account of, and in trust for, the Lender of collecting their
Receivables and receiving in respect thereto all Items of Payment and shall
otherwise completely service all of the Receivables including (a) the billing,
posting and maintaining of complete records applicable thereto, (b) the taking
of such action with respect to the Receivables as the Lender may request or in
the absence of such request, as each of the Borrowers may deem advisable; and
(c) the granting, in the ordinary course of business, to any Account Debtor, of
any rebate, refund or adjustment to which the Account Debtor may be lawfully
entitled, and may accept, in connection therewith, the return of goods, the sale
or lease of which shall have given rise to a Receivable and may take such other
actions relating to the settling of any Account Debtor's claim as may be
commercially reasonable. The Lender may, at its option, at any time or from time
to time after and during the continuance of an Event of Default hereunder,
revoke the collection privilege given in this Agreement to any one or more of
the Borrowers by either giving notice of its assignment of, and Lien on the
Collateral to the Account Debtors or giving notice of such revocation to the
Borrowers. The Lender shall not have any duty to, and the Borrowers hereby
release the Lender from all claims of loss or damage caused by the delay or
failure to collect or enforce any of the Receivables or to preserve any rights
against any other party with an interest in the Collateral. The Lender shall be
entitled at any time and from time to time to confirm and verify Receivables.
6.1.17 Assignments of Receivables.
Each Borrower will promptly, upon request, execute and deliver to the
Lender written assignments, in form and content acceptable to the Lender, of
specific Receivables or groups of Receivables; provided, however, the Lien
and/or security interest granted to the Lender under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Lender whether or not any assignment
thereof,
61
which is separate from this Agreement, is in form absolute. The Borrowers agree
that neither any assignment to the Lender nor any other provision contained in
this Agreement or any of the other Financing Documents shall impose on the
Lender any obligation or liability of any of the Borrowers with respect to that
which is assigned and the Borrowers hereby agree jointly and severally to
indemnify the Lender and hold the Lender harmless from any and all claims,
actions, suits, losses, damages, costs, expenses, fees, obligations and
liabilities brought by Persons other than the Borrowers or their Affiliates or
Subsidiaries which may be incurred by or imposed upon the Lender by virtue of
the assignment of and Lien on any Borrower's rights, title and interest in, to,
and under the Collateral.
6.1.18 Insurance With Respect to Equipment.
The Borrowers will (a) maintain hazard insurance with fire and
extended coverage and naming the Lender as an additional insured with loss
payable to the Lender as its respective interest may appear on the Equipment in
an amount at least equal to the lesser amount of the outstanding principal
amount of the Obligations or the fair market value of the Equipment (but in any
event sufficient to avoid any co-insurance obligations) and with a specific
endorsement to each such insurance policy pursuant to which the insurer agrees
to give the Lender at least thirty (30) days written notice before any
alteration or cancellation of such insurance policy and that no act or default
of any of the Borrowers shall affect the right of the Lender to recover under
such policy in the event of loss or damage; (b) file with the Lender, upon its
request, a detailed list of the insurance then in effect and stating the names
of the insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and (c) within
thirty (30) days after notice in writing from the Lender, obtain such additional
insurance as the Lender may reasonably request.
6.1.19 Maintenance of the Collateral.
The Borrowers will cause the Lender to have at all times a valid and
perfected Lien on and security interest in all Collateral, free of all other
Liens, claims and rights of third parties whatsoever except Permitted Liens,
including, without limitation, those described on Schedule 4.1.21 attached
hereto and made a part hereof. In addition, the Borrowers will maintain the
Collateral in good working order, saving and excepting ordinary wear and tear,
and will not permit anything to be done to the Collateral which may materially
impair the value thereof. The Lender, or an agent designated by the Lender,
shall be permitted to enter the premises of each of the Borrowers and their
Subsidiaries and examine, audit and inspect the Collateral at any reasonable
time and from time to time without notice. The Lender shall not have any duty
to, and the Borrowers hereby release the Lender from all claims of loss or
damage caused by the delay or failure to collect or enforce any of the
Receivables or to, preserve any rights against any other party with an interest
in the Collateral.
6.1.20 Equipment.
The Borrowers shall (a) maintain all Equipment as personalty, and (b)
shall hold no Equipment on a sale on approval basis.
62
6.1.21 Defense of Title and Further Assurances.
At their expense, the Borrowers will defend the title to the
Collateral (and any part thereof), and will immediately execute, acknowledge and
deliver any renewal, affidavit, deed, assignment, continuation statement,
security agreement, certificate or other document which the Lender may require
in order to perfect, preserve, maintain, continue, protect and/or extend the
Lien or security interest granted to the Lender under this Agreement, under any
of the other Financing Documents and the first priority of that Lien, subject
only to the Permitted Liens. The Borrowers hereby authorize the filing of any
financing statement or continuation statement required under the Uniform
Commercial Code. The Borrowers will from time to time do whatever the Lender may
require by way of obtaining, executing, delivering, and/or filing financing
statements, landlords' or mortgagees' waivers, notices of assignment and other
notices and amendments and renewals thereof and the Borrowers will take any and
all steps and observe such formalities as the Lender may require, in order to
create and maintain a valid Lien upon, pledge of, or paramount security interest
in, the Collateral, subject to the Permitted Liens. The Borrowers shall pay to
the Lender on demand all taxes, costs and expenses incurred by the Lender in
connection with the preparation, execution, recording and filing of any such
document or instrument. To the extent that the proceeds of any of the Accounts
or Receivables of the Borrowers are expected to become subject to the control
of, or in the possession of, a party other than the Borrowers or the Lender, the
Borrowers shall cause all such parties to execute and deliver on the Closing
Date security documents, or other documents as requested by the Lender and as
may be necessary to evidence and/or perfect the security interest of the Lender
in those proceeds. Each Borrower hereby irrevocably appoints the Lender as the
Borrower's attorney-in-fact, with power of substitution, in the name of the
Lender or in the name of the Borrower or otherwise, for the use and benefit of
the Lender, but at the cost and expense of the Borrowers and without notice to
the Borrowers, to execute and deliver any and all of the instruments and other
documents and take any action which the Lender may require pursuant the
foregoing provisions of this Section 6.1.21.
6.1.22 Business Names; Locations.
Each Borrower will notify and cause each of the Subsidiaries to notify
the Lender not less than thirty (30) days prior to (a) any change in the name
under which the Borrower or the applicable Subsidiary conducts its business, (b)
any change of the location of the chief executive office of the applicable
Borrower or Subsidiary, and (c) the opening of any new place of business or the
closing of any existing place of business, and any change in the location of the
places where the Collateral, or any part thereof, or the books and records, or
any part thereof, are kept (provided that, if any such change or opening is
pending within thirty (30) days at the time an Additional Borrower becomes an
Additional Borrower, such Additional Borrower will instead give such notice to
the Lender at that time).
6.1.23 Use of Premises and Equipment.
The Borrowers agree that until the Obligations are fully paid and the
Revolving Credit Commitment has been terminated or have expired, the Lender (a)
after and during the continuance of an Event of Default, may use any of the
Borrowers' owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (b) shall have, and is
hereby granted, a right of ingress and egress to the places where the
63
Collateral is located, and may proceed over and through any of the Borrowers'
owned or leased property.
6.1.24 Protection of Collateral.
The Borrowers agree that the Lender may at any time following an Event
of Default take such steps as the Lender deems reasonably necessary to protect
the interest of the Lender in, and to preserve the Collateral, including, the
hiring of such security guards or the placing of other security protection
measures as the Lender deems appropriate, may employ and maintain at any of the
Borrowers' premises a custodian who shall have full authority to do all acts
necessary to protect the interests of the Lender in the Collateral and may lease
warehouse facilities to which the Lender may move all or any part of the
Collateral to the extent commercially reasonable. The Borrowers agree to
cooperate fully with the Lender's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as the Lender may reasonably
direct. All of the Lender's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall be part of the Enforcement Costs.
Section 6.2 Negative Covenants.
So long as any of the Obligations or the Revolving Credit Commitment
therefor shall be outstanding hereunder, the Borrowers agree with the Lender
that without the prior written consent of the Lender:
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets.
None of the Borrowers will alter or amend its capital structure,
authorize any additional class of equity, issue any stock or equity of any
class, except as permitted under Sections 6.2.2 (Subsidiaries) 6.2.4 (Purchase
or Redemption of Stock) and 6.2.7 (Stock of Subsidiaries) windup or dissolve
itself (or suffer any liquidation or dissolution) or acquire all or
substantially all the assets of any Person, or sell, lease or otherwise dispose
of any of its assets (except Inventory disposed of in the ordinary course of
business prior to an Event of Default), except that the foregoing shall not
prohibit or require the Lender's consent for (a) any Subsidiary's merger into or
transfer of assets to a Borrower, or consolidation with or transfer of assets to
any other Subsidiary of a Borrower; (b) the disposition prior to a Default of
tangible property included in the Collateral, which, in each case, a Borrower
determines in good faith to be obsolete; (c) the creation of any Subsidiaries to
the extent the new Subsidiary shall have joined this Agreement as an Additional
Borrower pursuant to Section 8.20 (Joinder of Additional Borrowers); (d) the
conversion of the Debentures into common stock in accordance with their terms;
or (e) any Wholly-Owned Subsidiary of any Additional Borrower may be merged into
or consolidated with such Additional Borrower in which such Subsidiary is not
the surviving corporation or entity. None of the Borrowers will enter into any
merger or consolidation or amalgamation without the Lender's prior consent,
which consent will not be unreasonably withheld, but which consent will be based
on such conditions as the Lender deems appropriate in its sole but reasonable
discretion. None of the Borrowers nor any of the Subsidiaries will directly or
indirectly enter into any arrangement to sell or transfer all or any substantial
part of its fixed assets (other than the Flight Assets on terms and conditions
acceptable to the Lender) and thereupon or within one year thereafter rent or
lease the assets so sold or transferred. Any
64
consent of the Lender to the disposition of any assets may be conditioned on a
specified use of the proceeds of disposition.
6.2.2 Subsidiaries.
None of the Borrowers will create or acquire any Subsidiaries other
than the Subsidiaries identified on the Collateral Disclosure List or those
which join this Agreement as an Additional Borrower pursuant to Section 8.20
(Joinder of Additional Borrowers), provided that such Subsidiary and the
Borrowers, as applicable, shall grant and cause to be perfected first priority
Liens to the Lender in the assets held by such Subsidiary, subject only to
Permitted Liens.
6.2.3 Issuance of Stock.
None of the Borrowers will issue, or grant any option or right to
purchase, any of its capital stock, except as permitted under Sections 6.2.1
(Capital Merger, etc.), 6.2.4 (Purchase or Redemption of Stock, etc.) or Section
6.2.6 (Investments, Loans, etc.), and except that the foregoing shall not
prohibit or require the Lender's consent for: (a) the issuance of stock under
any Borrower's employee stock purchase plan as approved by such Borrower's board
of directors; or (b) the issuance of stock options to employees, officers and
directors of any Borrower as approved by such Borrower's board of directors.
6.2.4 Purchase or Redemption of Stock, Dividend Restrictions.
None of the Borrowers will purchase, redeem or otherwise acquire any
shares of its capital stock or warrants now or hereafter outstanding, declare or
pay any dividends thereon (other than stock dividends), apply any of its
property or assets to the purchase, redemption or other retirement of, set apart
any sum for the payment of any dividends on, or for the purchase, redemption, or
other retirement of, make any distribution by reduction of capital or otherwise
in respect of, any shares of any class of capital stock of any Borrower, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, any Borrower, make any distribution
to stockholders or set aside any funds for any such purpose, prepay, purchase or
redeem any Indebtedness for Borrowed Money other than the Obligations, provided,
however, if at the time there is no Default or Event of Default and, after
giving effect to the proposed dividends, no Default or Event of Default will
occur, (a) a Borrower may declare and deliver dividends and make distributions
payable solely in common stock of such Borrower; (b) a Borrower may purchase or
otherwise acquire shares of its capital stock by exchange for or out of the
proceeds received from a substantially concurrent issue of new shares of its
capital stock, and (c) a Borrower may declare and pay cash dividends; provided
that no Borrower shall declare or pay any dividends permitted under this Section
6.2.4 until the Lender has received written notice from such Borrower at least
ten (10) Business Days in advance of declaring or paying any such dividend and
has also received such other information as the Lender may have requested in
order to verify the amount of the proposed dividends and to determine that all
of the conditions precedent to the making of the requested dividends have been
satisfied.
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6.2.5 Indebtedness.
None of the Borrowers will create, incur, assume or suffer
to exist any Indebtedness for Borrowed Money, except:
(a) the Obligations;
(b) current accounts payable arising in the
ordinary course;
(c) Indebtedness secured by Permitted Liens;
(d) Subordinated Indebtedness;
(e) Indebtedness of the Borrowers and their
Subsidiaries existing on the date hereof and reflected on the financial
statements furnished pursuant to Section 4.1.11 (Financial Condition);
(f) the Debentures;
(g) Indebtedness arising through any extension,
renewal or refinancing of any other Indebtedness listed in subsections
(a)-(e) above, provided that no collateral of a class other than that which
currently secures such Indebtedness may be pledged to secure any such
Indebtedness and further provided that the principal amount thereof does
not exceed such Indebtedness being extended, renewed or refinanced;
(h) Indebtedness of any Wholly Owned Subsidiary
to another Wholly Owned Subsidiary or to a Borrower or Indebtedness of any
Borrower to another Borrower;
(i) Indebtedness of Astrotech arising under the
Astrotech Loan; and
(j) Other Indebtedness not otherwise permitted
hereunder, not exceeding Five Hundred Thousand Dollars ($500,000) in the
aggregate outstanding at any time, provided no Default or Event of Defaults
exists at the time or as a result of the incurrence of such Indebtedness.
6.2.6 Investments, Loans and Other Transactions.
Except as otherwise provided in this Agreement, none of the
Borrowers will (a) make, assume, acquire or continue to hold any investment in
any real property (unless used in connection with its business and treated as a
Fixed or Capital Asset of any Borrower) or any Person, whether by stock
purchase, capital contribution, acquisition of indebtedness of such Person or
otherwise (including, without limitation, investments in any joint venture or
partnership), (b) guaranty or otherwise become contingently liable for the
Indebtedness or obligations of any Person, or (c) make any loans or advances, or
otherwise extend credit to any Person, except for:
66
(i) any advance to an officer or employee
of any Borrower or any Subsidiary for travel or other business
expenses in the ordinary course of business, provided that the
aggregate amount of all such advances by all of the Borrowers and
their Subsidiaries (taken as a whole) outstanding at any time shall
not exceed Ten Thousand Dollars ($10,000);
(ii) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business;
(iii) any investment in Cash Equivalents,
which are pledged to the Lender as collateral and security for the
Obligations;
(iv) trade credit extended to customers in
the ordinary course of business;
(v) advances (including sums outstanding
as of the date hereof) in an amount not to exceed $325,000 to Space
Media and advances (including sums outstanding as of the date hereof)
in an amount not to exceed $10,000 to Space Station;
(vi) investments, guaranties and
contingent liabilities existing on the date of this Agreement and set
forth in Schedule 6.2.6 hereof;
(vii) as otherwise permitted in Section
6.2.5 (Indebtedness); and
(viii) investments in membership interests
in Space Station.
6.2.7 Stock of Subsidiaries.
None of the Borrowers will sell or otherwise dispose of any
shares of capital stock of any Subsidiary (except in connection with the merger
or consolidation of a Wholly Owned Subsidiary into any of the Borrowers or
another Wholly Owned Subsidiary of any of the Borrowers or with the dissolution
of any Subsidiary) or permit any Subsidiary to issue any additional shares of
its capital stock except pro rata to its stockholders.
6.2.8 Subordinated Indebtedness.
None of the Borrowers will, or will permit any Subsidiary to
make:
(a) any payment of principal of, or interest on,
any of the Subordinated Indebtedness, if a Default or an Event of Default
then exists hereunder or would result from such payment;
67
(b) any payment of the principal or interest due
on the Subordinated Indebtedness as a result of acceleration thereunder or
a mandatory prepayment thereunder;
(c) any amendment or modification of or
supplement to the documents evidencing or securing the Subordinated
Indebtedness, other than amendments or modifications that change terms
which are not material; and
(d) payment of principal or interest on the
Subordinated Indebtedness other than when due (without giving effect to any
acceleration of maturity or mandatory prepayment).
6.2.9 Liens.
Each Borrower agrees that it (a) will not create, incur,
assume or suffer to exist any Lien upon any of its properties or assets,
including the Flight Assets (other than Liens on any real property owned by any
Borrower), whether now owned or hereafter acquired, or permit any Subsidiary so
to do, except for Liens securing the Obligations and Permitted Liens, (b) will
not agree to, assume or suffer to exist any provision in any instrument or other
document for confession of judgment, cognovit or other similar right or remedy
(except as existing in any instrument or other document as of the Closing Date
or if existing in such instrument or other documents in any extension, renewal
or refinancing of such instrument or other documents as permitted under Section
6.2.5 (Indebtedness), (c) will not allow or suffer to exist any Permitted Liens
to be superior to Liens securing the Obligations, (d) will not enter into any
contracts for the consignment of goods, will not execute or suffer the filing of
any financing statements or the posting of any signs giving notice of
consignments, and will not, as a material part of its business, engage in the
sale of goods belonging to others, and (e) will not allow or suffer to exist the
failure of any Lien described in the Security Documents to attach to, and/or
remain at all times perfected on, any of the property described in the Security
Documents.
6.2.10 Transactions with Affiliates.
None of the Borrowers or any of their Subsidiaries will
enter into or participate in any transaction with any Affiliate or, with the
officers, directors, employees and other representatives of any Borrower and/or
any Subsidiary, except in the ordinary course of business, or as otherwise
permitted in this Agreement.
6.2.11 Debenture.
None of the Borrowers will, or will permit any Subsidiary to
make:
(a) any amendment or modification of or
supplement to the Convertible Debt Loan Documents, other than amendments or
modifications that change terms which are not material; and
(b) payment of principal or interest on the
Debenture other than when due (without giving effect to any acceleration of
maturity or mandatory prepayment).
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6.2.12 ERISA Compliance.
None of the Borrowers or any Commonly Controlled Entity
shall: (a) engage in or permit any "prohibited transaction" (as defined in
ERISA); (b) cause any "accumulated funding deficiency" as defined in ERISA
and/or the Internal Revenue Code; (c) terminate any pension plan in a manner
which could result in the imposition of a lien on the property of any Borrower
pursuant to ERISA; or (d) incur a complete or partial withdrawal with respect to
any Multi-employer Plan.
6.2.13 Prohibition on Hazardous Materials.
None of the Borrowers shall place, manufacture or store or
permit to be placed, manufactured or stored any Hazardous Materials on any
property owned, operated or controlled by any Borrower or for which any Borrower
is responsible other than Hazardous Materials placed or stored on such property
in accordance with applicable Laws in the ordinary course of a Borrower's
business expressly described in this Agreement.
6.2.14 Method of Accounting; Fiscal Year.
Each Borrower agrees that:
(a) it shall not change the method of accounting
employed in the preparation of any financial statements furnished to the Lender
under the provisions of Section 6.1.1 (Financial Statements), unless required to
conform to GAAP or on the advice of the Borrowers' accountants, and on the
condition that the Borrowers' accountants shall furnish such information as the
Lender may request to reconcile the changes with the Borrowers' prior financial
statements
(b) it will not change its fiscal year from a
year ending on June 30/th/.
6.2.15 Compensation.
None of the Borrowers or any Subsidiary will pay any
bonuses, fees, compensation, commissions, salaries, drawing accounts, or other
payments (cash and non-cash), whether direct or indirect, to any stockholders of
any Borrower or any Subsidiary, or any Affiliate of any Borrower or any
Subsidiary, other than (i) reasonable compensation for actual services rendered
by stockholders in their capacity as officers or employees, (ii) dividends
otherwise permitted under this Agreement, (iii) severance arrangements as
provided for in employment contracts in existence as of the Closing Date or
approved in the future by the Lender, (iv) in connection with any
indemnifications provided for in any Borrower's charter documents, (v) any
payments required by law or by court order in settlement of benefits disputes,
or (vi) in any contract permitted under this Agreement.
6.2.16 Transfer of Collateral.
None of the Borrowers nor any of their Subsidiaries will
transfer, or permit the transfer, to another location of any of the Collateral
or the books and records related to any of the Collateral, except in accordance
with Section 6.1.19 (Maintenance of the Collateral).
69
6.2.17 Disposition of Collateral.
None of the Borrowers will sell, discount, allow credits or
allowances, transfer, assign, extend the time for payment on, convey, lease,
assign, transfer or otherwise dispose of the Collateral, except, prior to an
Event of Default, dispositions expressly permitted elsewhere in this Agreement,
the sale of Inventory in the ordinary course of business, and the sale of
unnecessary or obsolete Equipment, but only if the proceeds of the sale of such
Equipment are (a) used to purchase similar Equipment to replace the unnecessary
or obsolete Equipment or (b) immediately turned over to the Lender for
application to the Obligations in accordance with the provisions of this
Agreement.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
Section 7.1 Events of Default.
The occurrence of any one or more of the following events shall constitute
an "Event of Default" under the provisions of this Agreement:
7.1.1 Failure to Pay.
The failure of the Borrowers to pay any of the Obligations
as and when due and payable in accordance with the provisions of this Agreement,
the Notes and/or any of the other Financing Documents and which failure remains
uncured for two (2) Business Days.
7.1.2 Breach of Representations and Warranties.
Any representation or warranty made in this Agreement or in
any report, statement, schedule, certificate, opinion (including any opinion of
counsel for the Borrowers), financial statement or other document furnished in
connection with this Agreement, any of the other Financing Documents, or the
Obligations, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.
7.1.3 Failure to Comply with Specific Covenants.
The failure of the Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in Sections 6.1.1 (Financial
Statements), 6.1.2 (Reports to SEC, etc.), 6.1.3 (Recordkeeping, etc.), 6.1.8
(Insurance), 6.1.9 (Taxes), 6.1.15 (Financial Covenants), 6.1.16 (Collection of
Receivables) or in Section 6.2 (Negative Covenants).
7.1.4 Other Covenants
The failure of the Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in this Agreement, other
than those set forth in Sections 7.1.1 (Failure to Pay), 7.1.2 (Breach of
Representations, etc.), or 7.1.3 (Failure to Comply with Specific Covenants)
provided, that if such failure is capable of cure, then such failure shall
constitute an Event of Default if such failure is not cured within ten (10) days
after notice is given to the Company in accordance with Section 8.1 (Notices),
provided however, that if the Borrowers have commenced and are at all times
diligently seeking a cure of such Default,
70
but is unable to complete such cure within such ten (10) day period, the
Borrower shall have an additional twenty (20) days to complete such cure,
provided the Borrowers are at all times diligently seeking a cure.
7.1.5 Default Under Other Financing Documents or
Obligations.
A default shall occur under any of the Financing Documents
other than this Agreement or under any other Obligations, and such default is
not cured within any applicable grace period provided therein.
7.1.6 Receiver; Bankruptcy.
Any Borrower or any Subsidiary shall (a) apply for or
consent to the appointment of a receiver, trustee or liquidator of itself or any
of its property, (b) admit in writing its inability to pay its debts as they
mature, (c) make a general assignment for the benefit of creditors, (d) be
adjudicated a bankrupt or insolvent, (e) file a voluntary petition in bankruptcy
or a petition or an answer seeking or consenting to reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation law
or statute, or an answer admitting the material allegations of a petition filed
against it in any proceeding under any such law, or take corporate action for
the purposes of effecting any of the foregoing, (f) by any act indicate its
consent to, approval of or acquiescence in any such proceeding or the
appointment of any receiver of or trustee for any of its property, or suffer any
such receivership, trusteeship or proceeding to continue undischarged for a
period of sixty (60) days, or (g) by any act indicate its consent to, approval
of or acquiescence in any order, judgment or decree by any court of competent
jurisdiction or any Governmental Authority enjoining or otherwise prohibiting
the operation of a material portion of any Borrower's or any Subsidiary's
business or the use or disposition of a material portion of any Borrower's or
any Subsidiary's assets.
7.1.7 Involuntary Bankruptcy, etc.
(a) An order for relief shall be entered in any involuntary
case brought against any Borrower or any Subsidiary under the Bankruptcy Code,
or (b) any such case shall be commenced against any Borrower or any Subsidiary
and shall not be dismissed within sixty (60) days after the filing of the
petition, or (c) an order, judgment or decree under any other Law is entered by
any court of competent jurisdiction or by any other Governmental Authority on
the application of a Governmental Authority or of a Person other than any
Borrower or any Subsidiary (i) adjudicating any Borrower, or any Subsidiary
bankrupt or insolvent, or (ii) appointing a receiver, trustee or liquidator of
any Borrower or of any Subsidiary, or of a material portion of any Borrower's or
any Subsidiary's assets, or (iii) enjoining, prohibiting or otherwise limiting
the operation of a material portion of any Borrower's or any Subsidiary's
business or the use or disposition of a material portion of any Borrower's or
any Subsidiary's assets, and such order, judgment or decree continues unstayed
and in effect for a period of thirty (30) days from the date entered.
7.1.8 Judgment.
Unless adequately insured in the opinion of the Lender, the
entry of a final judgment for the payment of money involving more than One
Hundred Thousand ($100,000)
71
against any Borrower or any Subsidiary, and the failure by such Borrower or such
Subsidiary to discharge the same, or cause it to be discharged, within thirty
(30) days from the date of the order, decree or process under which or pursuant
to which such judgment was entered, or to secure a stay of execution pending
appeal of such judgment.
7.1.9 Execution; Attachment.
Any execution or attachment shall be levied against the
Collateral, or any part thereof, and such execution or attachment shall not be
set aside, discharged or stayed within thirty (30) days after the same shall
have been levied.
7.1.10 Default Under Other Borrowings.
Default shall be made by any of the Borrowers with respect
to any Indebtedness for Borrowed Money in connection with an Indebtedness in an
amount in excess of Five Hundred Thousand Dollars ($500,000) (other than the
Revolving Credit) if such Indebtedness for Borrowed Money is accelerated in
consequence of such event of default or if demand for payment of such
Indebtedness for Borrowed Money is made.
7.1.11 Challenge to Agreements.
Any Borrower shall challenge the validity and binding effect
of any provision of any of the Financing Documents or shall state its intention
to make such a challenge of any of the Financing Documents or any of the
Financing Documents shall for any reason (except to the extent permitted by its
express terms) cease to be effective or to create a valid and perfected first
priority Lien (except for Permitted Liens) on, or security interest in, any of
the Collateral purported to be covered thereby.
7.1.12 Material Adverse Effect.
The Lender, in its sole discretion, determines in good faith
that an event has occurred or a condition has arisen that could result in a
Material Adverse Effect and gives the Company notice to that effect
7.1.13 Liquidation, Termination, Dissolution, Change in
Management, etc.
Any Borrower shall liquidate, dissolve or terminate its
existence or any change in the identity of the President, Chief Financial
Officer or Chief Executive Officer of any Borrower or control of any Borrower
without the prior written consent of the Lender.
7.1.14 Contract Default, Debarment or Suspension.
Default shall be made under any Government Contract, or any
Government Contract is terminated for default by any Governmental Authority for
any reason whatsoever, or if the Borrower is debarred or suspended, whether
temporarily or permanently, by any Governmental Authority, unless within fifteen
(15) days of when any Borrower has knowledge or should have knowledge of such
default, debarment, or suspension, the Lender agrees in writing to extend, waive
or suspend the effects of this provision.
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Section 7.2 Remedies.
Upon the occurrence and during the continuance of any Event of Default, the
Lender may, in the exercise of its sole and absolute discretion from time to
time, at any time thereafter exercise any one or more of the following rights,
powers or remedies.
7.2.1 Acceleration.
The Lender may, after oral notice to the Company, declare
any or all of the Obligations to be immediately due and payable, notwithstanding
anything contained in this Agreement or in any of the other Financing Documents
to the contrary, without presentment, demand, protest, notice of protest or of
dishonor, or other notice of any kind, all of which the Borrowers hereby waive.
7.2.2 Further Advances.
The Lender may from time to time without notice to the
Borrowers suspend, terminate or limit any further advances, loans or other
extensions of credit under the Revolving Credit Commitment, under this Agreement
and/or under any of the other Financing Documents. Further, upon the occurrence
of an Event of Default or Default specified in Section 7.1.6 (Receiver;
Bankruptcy) or Section 7.1.7 (Involuntary Bankruptcy, etc.), the Revolving
Credit Commitment and any agreement in any of the Financing Documents to provide
additional credit and/or issue Letters of Credit shall immediately and
automatically terminate and the unpaid principal amount of the Notes (with
accrued interest thereon) and all other Obligations then outstanding, shall
immediately become due and payable without further action of any kind and
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived by the Borrowers.
7.2.3 Uniform Commercial Code.
The Lender shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code and other applicable
Laws. Upon demand by the Lender, the Borrowers shall assemble the Collateral and
make it available to the Lender, at a place designated by the Lender. The Lender
or its agents may without notice from time to time enter upon any Borrower's
premises to take possession of the Collateral, to remove it, to render it
unusable, to process it or otherwise prepare it for sale, or to sell or
otherwise dispose of it.
Any written notice of the sale, disposition or other
intended action by the Lender with respect to the Collateral which is sent by
regular mail, postage prepaid, to the Borrowers at the address set forth in
Section 8.1 (Notices), or such other address of the Borrowers which may from
time to time be shown on the Lender's records, at least ten (10) days prior to
such sale, disposition or other action, shall constitute commercially reasonable
notice to the Borrowers. The Lender may alternatively or additionally give such
notice in any other commercially reasonable manner. Nothing in this Agreement
shall require the Lender to give any notice not required by applicable Laws.
If any consent, approval, or authorization of any state,
municipal or other Governmental Authority or of any other Person or of any
Person having any interest therein, should be necessary to effectuate any sale
or other disposition of the Collateral, the Borrowers
73
agree to execute all such applications and other instruments, and to take all
other action, as may be required in connection with securing any such consent,
approval or authorization.
The Borrowers recognize that the Lender may be unable to
effect a public sale of all or a part of the Collateral consisting of Investment
Property by reason of certain prohibitions contained in the Securities Act of
1933, as amended, and other applicable Federal and state Laws. The Lender may,
therefore, in its discretion, take such steps as it may deem appropriate to
comply with such Laws and may, for example, at any sale of the Collateral
consisting of securities restrict the prospective bidders or purchasers as to
their number, nature of business and investment intention, including, without
limitation, a requirement that the Persons making such purchases represent and
agree to the satisfaction of the Lender that they are purchasing such securities
for their account, for investment, and not with a view to the distribution or
resale of any thereof. The Borrowers covenant and agree to do or cause to be
done promptly all such acts and things as the Lender may request from time to
time and as may be necessary to offer and/or sell the securities or any part
thereof in a manner which is valid and binding and in conformance with all
applicable Laws. Upon any such sale or disposition, the Lender shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral
consisting of securities so sold.
7.2.4 Specific Rights With Regard to Collateral.
In addition to all other rights and remedies provided
hereunder or as shall exist at law or in equity from time to time, the Lender
may (but shall be under no obligation to), without notice to any of the
Borrowers, and each Borrower hereby irrevocably appoints the Lender as its
attorney-in-fact, with power of substitution, in the name of the Lender and/or
in the name of any or all of the Borrowers or otherwise, for the use and benefit
of the Lender, but at the cost and expense of the Borrowers and without notice
to the Borrowers:
(a) request any Account Debtor obligated on any
of the Accounts to make payments thereon directly to the Lender, with the
Lender taking control of the Proceeds thereof;
(b) compromise, extend or renew any of the
Collateral or deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders
of all or any part of the Collateral;
(d) copy, transcribe, or remove from any place
of business of any Borrower or any Subsidiary all books, records, ledger
sheets, correspondence, invoices and documents, relating to or evidencing
any of the Collateral or without cost or expense to the Lender, make such
use of any Borrower's or any Subsidiary's place(s) of business as may be
reasonably necessary to administer, control and collect the Collateral;
(e) demand, collect, receipt for and give
renewals, extensions, discharges and releases of any of the Collateral;
74
(f) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the
Collateral;
(g) settle, renew, extend, compromise, compound,
exchange or adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(h) endorse or sign the name of any Borrower
upon any items of payment, certificates of title, instruments, securities,
stock powers, documents, documents of title, financing statements,
assignments, notices or other writing relating to or part of the Collateral
and on any proof of claim in bankruptcy against an Account Debtor;
(i) notify the Post Office authorities to change
the address for the delivery of mail to the Borrowers to such address or
Post Office Box as the Lender may designate and receive and open all mail
addressed to any of the Borrowers; and
(j) take any other action necessary or
beneficial to realize upon or dispose of the Collateral or to carry out the
terms of this Agreement.
7.2.5 Application of Proceeds.
Any proceeds of sale or other disposition of the Collateral
will be applied by the Lender to the payment of any and all Enforcement Costs,
and any balance of such proceeds will be applied to the Obligations in such
order and manner as the Lender may from time to time in its sole and absolute
discretion determine. If the sale or other disposition of the Collateral fails
to fully satisfy the Obligations, the Borrowers shall remain liable to the
Lender for any deficiency.
7.2.6 Performance by Lender.
If the Borrowers shall fail to pay the Obligations or
otherwise fail to perform, observe or comply with any of the conditions,
covenants, terms, stipulations or agreements contained in this Agreement or any
of the other Financing Documents, the Lender without notice to or demand upon
the Borrowers and without waiving or releasing any of the Obligations or any
Default or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of the Borrowers, and may enter upon the premises of the Borrowers for
that purpose and take all such action thereon as the Lender may consider
necessary or appropriate for such purpose and each of the Borrowers hereby
irrevocably appoints the Lender as its attorney-in-fact to do so, with power of
substitution, in the name of the Lender, in the name of any or all of the
Borrowers or otherwise, for the use and benefit of the Lender, but at the cost
and expense of the Borrowers and without notice to the Borrowers. All sums so
paid or advanced by the Lender together with interest thereon from the date of
payment, advance or incurring until paid in full at the Post-Default Rate and
all costs and expenses, shall be deemed part of the Enforcement Costs, shall be
75
paid by the Borrowers to the Lender on demand, and shall constitute and become a
part of the Obligations.
7.2.7 Other Remedies.
The Lender may from time to time proceed to protect or enforce
the rights of the Lender by an action or actions at law or in equity or by any
other appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of any or all of the Borrowers now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, the Lender or any Affiliate of the
Lender.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices.
All notices, requests and demands to or upon the parties to this Agreement
shall be in writing and shall be deemed to have been given or made when
delivered by hand on a Business Day, or two (2) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Business Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:
Borrowers: c/o Spacehab, Incorporated
Spacehab, Inc.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, D. C. 20024
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Lender: ▇▇▇▇▇ Bank N.A.
▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇, ▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By written notice, each party to this Agreement may change the address to
which notice is given to that party, provided that such changed notice shall
include a street address to which notices may be delivered by overnight courier
in the ordinary course on any Business Day.
Section 8.2 Amendments; Waivers.
8.2.1 In General.
This Agreement and the other Financing Documents may not be
amended, modified, or changed in any respect except by an agreement in writing
signed by the Lender and the Borrowers. No waiver of any provision of this
Agreement or of any of the other Financing
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Documents, nor consent to any departure by the Borrowers therefrom, shall in any
event be effective unless the same shall be in writing signed by the Lender. No
course of dealing between the Borrowers and the Lender and no act or failure to
act from time to time on the part of the Lender shall constitute a waiver,
amendment or modification of any provision of this Agreement or any of the other
Financing Documents or any right or remedy under this Agreement, under any of
the other Financing Documents or under applicable Laws.
Section 8.3 Cumulative Remedies.
The rights, powers and remedies provided in this Agreement and in the other
Financing Documents are cumulative, may be exercised concurrently or separately,
may be exercised from time to time and in such order as the Lender shall
determine, subject to the provisions of this Agreement, and are in addition to,
and not exclusive of, rights, powers and remedies provided by existing or future
applicable Laws. In order to entitle the Lender to exercise any remedy reserved
to it in this Agreement, it shall not be necessary to give any notice, other
than such notice as may be expressly required in this Agreement.
Section 8.4 Severability.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability of the
remaining provisions shall remain effective and binding on the parties
thereto and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the
limit of such validity;
(c) if such provision or part thereof pertains to repayment
of the Obligations, then, at the sole and absolute discretion of the
Lender, all of the Obligations of the Borrowers to the Lender shall become
immediately due and payable; and
(d) if the affected provision or part thereof does not
pertain to repayment of the Obligations, but operates or would
prospectively operate to invalidate this Agreement in whole or in part,
then such provision or part thereof only shall be void, and the remainder
of this Agreement shall remain operative and in full force and effect.
Section 8.5 Assignments by Lender.
The Lender may, without notice to or consent of the Borrowers, assign to
any Person (an "Assignee") all of the Lender's Revolving Credit Commitment. The
Lender and its Assignee shall notify the Borrowers in writing of the date on
which the assignment is to be effective (the "Adjustment Date"). On or before
the Adjustment Date, the assigning Lender, the Borrowers and the respective
Assignee shall execute and deliver a written assignment agreement in a form
acceptable to the Lender, which shall constitute an amendment to this Agreement
to the extent
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necessary to reflect such assignment. Upon the request of any assigning Lender
following an assignment made in accordance with this Section 8.5, the Borrowers
shall issue new Notes to the assigning Lender and its Assignee reflecting such
assignment, in exchange for the existing Notes held by the assigning Lender.
In addition, the Lender may at any time pledge all or any portion of the
Lender's rights under this Agreement, the Revolving Credit Commitment or any of
the Obligations to a Federal Reserve Bank.
Section 8.6 Participations by Lender.
The Lender may at any time sell to one or more financial institutions
participating interests in any of the Lender's Obligations or Revolving Credit
Commitment; provided, however, that (a) no such participation shall relieve the
Lender from its obligations under this Agreement or under any of the other
Financing Documents to which it is a party, (b) the Lender shall remain solely
responsible for the performance of its obligations under this Agreement and
under all of the other Financing Documents to which it is a party, and (c) the
Borrowers shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement and the
other Financing Documents.
Section 8.7 Disclosure of Information by Lender.
In connection with any sale, transfer, assignment or participation by the
Lender in accordance with Section 8.5 (Assignments by Lender) or Section 8.6
(Participations by Lender), the Lender shall have the right to disclose to any
actual or potential purchaser, assignee, transferee or participant, provided the
foregoing agree to maintain the confidentiality of such material, all financial
records, information, reports, financial statements and documents obtained in
connection with this Agreement and/or any of the other Financing Documents or
otherwise.
Section 8.8 Successors and Assigns.
This Agreement and all other Financing Documents shall be binding upon and
inure to the benefit of the Borrowers and the Lender and their respective
successors and assigns, except that the Borrowers shall not have the right to
assign their rights hereunder or any interest herein without the prior written
consent of the Lender.
Section 8.9 Continuing Agreements.
All covenants, agreements, representations and warranties made by the
Borrowers in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lender of the Revolving Credit and the execution and delivery of the Notes,
shall be binding upon the Borrowers regardless of how long before or after the
date hereof any of the Obligations were or are incurred, and shall continue in
full force and effect so long as any of the Obligations are outstanding and
unpaid. From time to time upon the Lender's request, and also as a condition of
the release of any one or more of the Security Documents, the Borrowers and
other Persons obligated with respect to the Obligations shall provide the Lender
with such acknowledgments and agreements as the Lender may require, to the
effect that there exists no defenses, rights of setoff or recoupment, claims,
counterclaims, actions or causes of action of any kind or nature whatsoever
against the Lender and/or any of its
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agents and others, or to the extent there are, the same are waived and released,
including, without limitation, acknowledgements as to all of the matters set
forth in Section 2.3.12 of this Agreement,.
Section 8.10 Enforcement Costs.
The Borrowers agree to pay to the Lender on demand all Enforcement Costs,
together with interest thereon from the date incurred or advanced until paid in
full at a per annum rate of interest equal at all times to the Post-Default
Rate. Enforcement Costs shall be due and payable on demand. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
Section 8.11 Applicable Law; Jurisdiction.
8.11.1 Applicable Law.
Borrowers acknowledge and agree that the Financing Documents,
including, this Agreement, shall be governed by the Laws of the State, as if
each of the Financing Documents and this Agreement had each been executed,
delivered, administered and performed solely within the State even though for
the convenience and at the request of the Borrowers, one or more of the
Financing Documents may be executed elsewhere. The Lender acknowledges, however,
that remedies under certain of the Financing Documents that relate to property
outside the State may be subject to the laws of the state in which the property
is located.
8.11.2 Submission to Jurisdiction.
The Borrowers irrevocably submit to the jurisdiction of any
state or federal court sitting in the State over any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Financing
Documents. Each of the Borrowers irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon the Borrowers and may be enforced in any court in which the Borrowers are
subject to jurisdiction, by a suit upon such judgment, provided that service of
process is effected upon the Borrowers in one of the manners specified in this
Section or as otherwise permitted by applicable Laws.
8.11.3 Appointment of Agent for Service of Process.
The Borrowers hereby irrevocably designate and appoint ▇▇▇▇▇
▇▇▇▇▇▇▇, c/o Spacehab, Incorporated, ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, as the Borrowers' authorized agent to receive on the Borrowers' behalf
service of any and all process that may be served in any suit, action or
proceeding of the nature referred to in this Section in any state or federal
court sitting in the State. If such agent shall cease so to act, the Borrowers
shall irrevocably designate and appoint without delay another such agent in the
State satisfactory to the Lender and shall promptly deliver to the Lender
evidence in writing of such other agent's acceptance of such appointment and its
agreement that such appointment shall be irrevocable.
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8.11.4 Service of Process.
Each of the Borrowers hereby consents to process being served
in any suit, action or proceeding of the nature referred to in this Section by
(a) the mailing of a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to the Borrower at the Borrower's address
designated in or pursuant to Section 8.1 (Notices), and (b) serving a copy
thereof upon the agent, if any, designated and appointed by the Borrower as the
Borrower's agent for service of process by or pursuant to this Section. The
Borrowers irrevocably agree that such service (y) shall be deemed in every
respect effective service of process upon the Borrowers in any such suit, action
or proceeding, and (z) shall, to the fullest extent permitted by law, be taken
and held to be valid personal service upon the Borrowers. Nothing in this
Section shall affect the right of the Lender to serve process in any manner
otherwise permitted by law or limit the right of the Lender otherwise to bring
proceedings against the Borrowers in the courts of any jurisdiction or
jurisdictions.
Section 8.12 Duplicate Originals and Counterparts.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
Section 8.13 Headings.
The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
Section 8.14 No Agency.
Nothing herein contained shall be construed to constitute the Borrowers as
the agent of the Lender for any purpose whatsoever or to permit the Borrowers to
pledge any of the credit of the Lender. The Lender shall not be responsible or
liable for any shortage, discrepancy, damage, loss or destruction of any part of
the Collateral wherever the same may be located and regardless of the cause
thereof other than Collateral in its possession. The Lender shall not, by
anything herein or in any of the Financing Documents or otherwise, assume any of
the Borrowers' obligations under any contract or agreement assigned to the
Lender, and the Lender shall not be responsible in any way for the performance
by the Borrowers of any of the terms and conditions thereof.
Section 8.15 Date of Payment.
Should the principal of or interest on the Notes become due and payable on
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and in the case of principal, interest shall be payable
thereon at the rate per annum specified in the Notes during such extension.
Section 8.16 Entire Agreement.
This Agreement is intended by the Lender and the Borrowers to be a
complete, exclusive and final expression of the agreements contained herein.
Neither the Lender nor the Borrowers shall hereafter have any rights under any
prior agreements pertaining to the matters addressed by
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this Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.
Section 8.17 Waiver of Trial by Jury.
EACH OF THE BORROWERS AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES,
ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE
FINANCING DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF
TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the Borrowers
and the Lender, and the Borrowers and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect. The
Borrowers and the Lender further represent that they have been represented in
the signing of this Agreement and in the making of this waiver by independent
legal counsel, selected of their own free will, and that they have had the
opportunity to discuss this waiver with counsel.
Section 8.18 Liability of the Lender.
The Borrowers hereby agree that the Lender shall not be chargeable for any
negligence, mistake, act or omission of any accountant, examiner, agency or
attorney employed by the Lender in making examinations, investigations or
collections, or otherwise in perfecting, maintaining, protecting or realizing
upon any lien or security interest or any other interest in the Collateral or
other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrowers or by
accepting or approving anything required to be observed, performed or fulfilled
by the Borrowers or to be given to the Lender pursuant to this Agreement or any
of the other Financing Documents, the Lender shall not be deemed to have
warranted or represented the condition, sufficiency, legality, effectiveness or
legal effect of the same, and such acceptance or approval shall not constitute
any warranty or representation with respect thereto by the Lender.
Section 8.19 Indemnification.
The Borrowers agree to indemnify and hold harmless, Lender, the respective
parent and Affiliates of the Lender and the respective parent's and Affiliates'
officers, directors, shareholders, employees and agents (each an "Indemnified
Party," and collectively, the "Indemnified Parties"), from and against any and
all claims, liabilities, losses, damages, costs and expenses (whether or not
such Indemnified Party is a party to any litigation), including without
limitation, reasonable attorney's fees and costs and costs of investigation,
document production, attendance at depositions or other discovery, incurred by
any Indemnified Party with respect to, arising out of or as a consequence of (a)
this Agreement or any of the other Financing Documents, including without
limitation, any failure of the Borrowers to pay when due (at maturity, by
acceleration or otherwise) any principal, interest, fee or any other amount due
under
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this Agreement or the other Financing Documents, or any other Event of Default;
(b) the use by the Borrowers of any proceeds advanced hereunder; (c) the
transactions contemplated hereunder; or (d) any claim, demand, action or cause
of action being asserted against (i) the Borrowers or any of their Affiliates by
any other Person, or (ii) any Indemnified Party by the Borrowers in connection
with the transactions contemplated hereunder. Notwithstanding anything herein or
elsewhere to the contrary, the Borrowers shall not be obligated to indemnify or
hold harmless any Indemnified Party from any liability, loss or damage resulting
from the gross negligence, willful misconduct or unlawful actions of such
Indemnified Party. Any amount payable to the Lender under this Section will bear
interest at the Post- Default Rate from the due date until paid.
Section 8.20 Joinder of Additional Borrowers.
Any Additional Borrower which is required to join this Agreement as an
Additional Borrower pursuant to Section 6.2.2 (Subsidiaries) shall execute and
deliver to the Lender (a) an Additional Borrower Joinder Supplement in
substantially the form attached hereto as EXHIBIT A pursuant to which it shall
join as a Borrower each of the documents to which the Borrowers are parties and
(b) all documents necessary to grant and perfect a first lien security interest
to the Lender in all Collateral held by such Additional Borrower, subject only
to Permitted Liens. The Company shall at its expense deliver such Additional
Borrower Joinder Supplement, and related documents, including, without
limitation, Uniform Commercial Code financing statements, lien searches, and
resolutions, to the Lender within fifteen (15) days after the date of the filing
of such Additional Borrower's articles of incorporation if the Additional
Borrower is a corporation, the date of the filing of its certificate of limited
partnership if it is a limited partnership or the date of its organization if it
is an entity other than a limited partnership or corporation.
IN WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.
WITNESS OR ATTEST: SPACEHAB, INCORPORATED
_________________________ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
WITNESS OR ATTEST ▇▇▇▇▇▇▇ ENGINEERING CORPORATION
_________________________ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
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WITNESS OR ATTEST: ASTROTECH SPACE OPERATIONS, INC.
_________________________ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Seal)
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
WITNESS: ▇▇▇▇▇ BANK N. A.
_________________________ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (Seal)
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Group Vice President
83