1
EXHIBIT 10.5
================================================================================
REVOLVING CREDIT AGREEMENT
between
LEADING EDGE EARTH PRODUCTS, INC.,
and
ROTHSCHILD GROUP, S.A., AS AGENT,
for
THE LENDING INSTITUTIONS LISTED HEREIN
-------------------------
$550,000
USD
-------------------------
Dated as of July 1, 1997
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit ......................................... 5
1.01 Commitments ........................................................ 5
1.02 Minimum Amount of Each Borrowing ................................... 6
1.03 Notice of Borrowings ............................................... 6
1.04 Disbursement of Funds .............................................. 6
1.05 Notes .............................................................. 6
1.06 Pro Rata Borrowings ................................................ 7
1.07 Interest ........................................................... 7
1.08 Capital Requirements ............................................... 7
1.09 Total Revolving Credit Facility; Limitations on Loan Amounts ....... 7
SECTION 2. Commitments and Liquidation ........................................ 7
2.01 Adjustments of Total Credit and Base Amounts ....................... 7
2.02 Liquidation Limitations ............................................ 7
SECTION 3. Payments ........................................................... 8
3.01 Method and Place of Payment ........................................ 8
3.02 Net Payments ....................................................... 8
3.03 Repayment Invoice Procedures ....................................... 9
3.04 Representations of Agent ........................................... 9
SECTION 4. Conditions Precedent to All Loans .................................. 11
SECTION 5. Representations, Warranties and Agreements ......................... 12
5.01 Corporate Status ................................................... 12
5.02 Corporate Power and Authority ...................................... 12
5.03 No Violation ....................................................... 12
5.04 Litigation ......................................................... 13
5.05 Use of Proceeds .................................................... 13
5.06 Governmental Approvals, etc ........................................ 13
5.07 True and Complete Disclosure ....................................... 13
5.08 Compliance with Laws, etc........................................... 14
5.09 Securities.......................................................... 14
SECTION 6. Affirmative Covenants............................................... 14
6.01 Information Covenants............................................... 14
6.02 Books, Records and Inspections...................................... 15
6.03 Performance of Obligations ......................................... 15
2
3
SECTION 7. Negative Covenants.................................................. 15
7.01 Changes in Business................................................. 15
7.02 Merger and Consolidations........................................... 15
7.03 Immediate Credit Facility Revision.................................. 15
SECTION 8. Events of Default .................................................. 15
8.01 Payments............................................................ 15
8.02 Representations, etc................................................ 15
8.10 Ownership........................................................... 16
SECTION 9. Definitions ........................................................ 16
SECTION 10. The Agent .......................................................... 24
10.01 Appointment......................................................... 24
10.02 Delegation of Duties................................................ 24
10.03 Exculpatory Provisions.............................................. 24
10.04 Reliance by the Agent .............................................. 25
10.05 Notice of Default................................................... 25
10.06 Non-Reliance on Agent............................................... 25
10.07 Indemnification..................................................... 26
10.08 Successor Agents.................................................... 26
10.09 Resignation, Transfer by Agent...................................... 26
SECTION 11. Miscellaneous ...................................................... 27
11.01 Payment of Expenses, etc............................................ 27
11.02 Right of Setoff..................................................... 27
11.03 Notices............................................................. 28
11.04 Benefit of Agreement................................................ 28
11.05 No Waiver; Remedies Cumulative...................................... 29
11.06 Calculations; Computations.......................................... 29
11.07 Governing Law; Submission to Jurisdiction; Venue.................... 29
11.08 Counterparts ....................................................... 30
11.09 Effectiveness ...................................................... 30
11.10 Headings Descriptive ............................................... 30
11.11 Amendment or Waiver ................................................ 30
11.12 Survival ........................................................... 31
11.13 Domicile of Loans .................................................. 31
11.14 Waiver of Jury Trial ............................................... 31
11.15 Independence of Covenants .......................................... 31
11.16 No Representation Tax Treatment .................................... 31
11.17 Third Party Beneficiary ............................................ 31
11.18 Termination ........................................................ 31
3
4
ANNEX I - List of Lenders
EXHIBIT A - Notice of Borrowing Request
EXHIBIT B - Repayment Invoice (example)
4
5
REVOLVING CREDIT AGREEMENT, dated as of July 1, 1997, between LEADING
EDGE EARTH PRODUCTS, INC., a Oregon corporation (the "Borrower"), and the
lending institutions listed in Annex I (each a "Lender" and, collectively, the
"Lenders") and ROTHSCHILD GROUP, S.A. ("Rothschild"), as agent for the Lenders
(the "Agent"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 9 are used herein as so defined.
WITNESSETH:
WHEREAS, the Borrower and the Lenders desire to enter into a Credit
Facility Agreement (the "Agreement") and provide for the amount of available
Revolving Loan Commitments to the Company thereunder as described herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and conditions herein
set forth, the Lenders agree, at any time and from time to time to make a Loan
or Loans to the Borrower, under the Loan Facility (each a "Revolving Loan" and,
collectively, the "Revolving Loans") which (i) shall be made to the Borrower at
any time and from time to time on and after the Commencement date set forth
herein, provided that all Revolving Loans made by all Lenders pursuant to the
same Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, (iv) shall not exceed for any Lender at
any time outstanding the Revolving Loan Commitment of such Lender at such time
and (v) shall not be made if the aggregate principal amount of Revolving Loans
then outstanding, after giving effect to the Revolving Loan requested by the
relevant Notice of Borrowing, would exceed the lesser of the Borrowing Allowable
Base as shown in the Borrowing Allowable Base Notice and or that will be
required to be delivered.
(a) The initial total Credit Facility Amount shall be equal to the
product of 1,200,000 times $0.458 or $550,000.00 USD. The initial
Borrowing Allowable Base will equal $137,500.00 USD. The Borrowing
Allowable Base will always equal twenty-five percent of the total Credit
Facility. Each "90 Day Revision Date" will use the last 20 trading days
average closing bid price to prospectively revise the total Credit
Facility and the Borrowing Allowable Base utilizing the formulas stated
herein section 1.01 (a)
5
6
1.02 Minimum Amount of Each Borrowing. The minimum aggregate principal
amount of a Borrowing of Loans shall be the Minimum Borrowing Amount of
$25,000,00 (twenty-five thousand USD) and Borrowings in excess thereof shall be
in integral multiples of $25,000.00 USD.
1.03 Notice of Borrowings. Whenever the Borrower desires that the
Lenders make Loans under the Loan Facility, it shall give the Agent at the
Agent's Office prior to 12:00 Noon (New York time) (i) at least three Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each requested Borrowing. Each such notice (each a "Notice of Borrowing"),
which shall be substantially in the form of Exhibit A, shall be deemed a
representation by the Borrower that all conditions precedent to such Borrowing
have been satisfied and shall specify (a) the aggregate principal amount in U.S.
dollars of the Loans to be made pursuant to such Borrowing, all of which shall
be specified in such manner as is necessary to comply with all limitations on
Revolving Loans outstanding hereunder, including without limitation.
availability under the Borrowing Allowable Base, (b) the requested date of such
Borrowing (which shall be a USA Business Day). The Agent, if needed shad as
promptly as practicable give each Lender written notice (or telephonic notice
promptly confirmed in writing) of each proposed Borrowing, of such Lender's
proportionate share thereof and of the other matters covered by the Notice of
Borrowing.
1.04 Disbursement of Funds.
(a) under optimal conditions, funds will be available to Borrower
no later than 12:00 noon (New York time) three business days from the
arrival date of each Notice of Borrowing to the Agent and the Agent will
make available to the Borrower the portion of each Borrowing requested
in the manner provided below.
(b) Each Lender, if required shall make available all amounts it is
to fund under any Borrowing on or after the Notice of Borrowing Date in
immediately available funds to the Agent to the account specified
therefor by the Agent or if no account is so specified at the Agent's
Office and the Agent will make such funds available to the Borrower by
depositing to the account specified therefor by the Borrower or if no
account is so specified to its account at the Agent's Office the
aggregate of the amounts so made available in the type of funds
received.
(c) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitment hereunder or to prejudice any
rights which the Borrower or any other Credit Party may have against any
Lender as a result of any default by such Lender hereunder.
1.05 Notes. The Borrower's obligations to pay the principal of and
interest on all the Loans made to it by each Lender she be evidenced by a
Repayment Invoice, annexed hereto as Exhibit B (each, a "Repayment Invoice")
duly executed and delivered to the Borrower by the Agent within three days of
the Borrower receiving proceeds of each Loan.
6
7
1.06 Pro Rata Borrowings. All Borrowings under this Agreement shall be
loaned by the Lenders pro rata on the basis of their Revolving Loan Commitments.
No Lender shall be responsible for any default by any other Lender in its
obligation to make Loans hereunder and each Lender shall be obligated to make
the Loans provided to be made by it hereunder, regardless of the failure of any
other Lender to fulfill its commitments hereunder.
1.07 Interest.
(a) The unpaid principal amount of each Base Rate Loan shall not
bear interest from the date of the Borrowing thereof until maturity
unless unpaid for over 90 days thereafter a 2% penalty shall apply per
month of unpaid balance.
(b) All computations of interest hereunder shall be made in
accordance with Section 3.03 herein.
1.08 Capital Requirements. Lenders shall not require the Company their
subsidiaries or agents to maintain any enforceable capital requirements
associated with the Credit Facility and the adoption or effectiveness of such
will not be a fight of Lenders.
1.09 Total Revolving Loan Commitments; Limitations on Outstanding Loan
Amounts. The original amount of the Total Revolving Loan Commitments is
$550,000. Anything contained in this Agreement to the contrary notwithstanding,
(a) in no event shall the sum of the aggregate principal amount of all Revolving
Loans of any Lender at any time exceed such Lender's portion of the Total
Revolving Loan Commitment, (b) in no event shall the sum of the aggregate
principal amount of all Revolving Loans of all Lenders at any time exceed the
Total Revolving Loan Commitment and (c) in no event shall the aggregate
principal amount of outstanding Revolving Loans exceed the lesser of the Total
Revolving Loan Commitment or the Borrowing Allowable Base.
SECTION 2. COMMITMENTS AND LIQUIDATION.
2.01 Adjustments of Credit Facility and Base Amounts, The total Credit
Facility Amount and Borrowing Allowable Base will be evaluated every ninety days
from the commencement date set forth herein (the "90 Day Revision Date") and
adjustments of both Total Credit Facility and Borrowing Allowable Base will be
delivered by written notice (or telephonic notice promptly confirmed in writing)
to the Company within 14 days from each 90 Day Revision Date. The Total
Revolving Loan Credit Facility shall terminate on the Final Maturity Date.
2.02 Liquidation Limitations. The Lenders holding such securities issued
by the Borrower as repayment of Loans made hereunder shall be limited as to the
open market liquidation as set forth below
7
8
(a) Lenders may only liquidate in the open market up to 10% of their
position of the total amount of Borrowers Securities held in any and all senior
and affiliated subsidiaries accounts in any one 30 day period.
(b) Lenders are not permitted to liquidate any portion of the total
position of Borrowers Securities held by Lenders or any affiliates in the open
market that would have an Materially Adverse Effect on the Borrowers market for
their Common Stock.
SECTION 3. PAYMENTS.
3.01 Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all payments under
this Agreement shall be made to the Agent, for the Lenders entitled thereto, not
later than 1:00 p.m. (New York time) on the date when due and shall be made in
Common Stock described in 3.02 herein or in immediately available funds in
lawful money of the United States of America to the account specified therefor
by the Agent or at the Agent's Office.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 p.m. (New York time) shall be deemed to have been made on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, the due date thereof shall
be extended to the next succeeding Business Day.
3.02 Net Payments.
(a) All payments under this Agreement shall be made without set-off or
counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any governmental authority or any political subdivision or taking
authority thereof, other than any tax on or measured by the net income of a
Lender pursuant to the income tax laws of the jurisdictions where such Lender's
principal or lending office is located (collectively "Taxes") shall not be less
than the amounts otherwise specified to be paid under this Agreement set forth
in the Repayment Invoice. If the Borrower or the Company is required by law to
make any deduction or withholding on account of Taxes from any payment due
hereunder then (i) the Borrower shall timely remit such Taxes to the
governmental authority imposing the same and (ii) the amount payable hereunder
or under the applicable Credit Documents will be increased to such amount which,
after deduction from such increased amount of all amounts required to be
deducted or withheld therefrom, will not be less than the amount otherwise due
and payable.
8
9
3.03 Repayment Invoice, Location and Formula.
(a) Repayment Invoices will be sent to Borrower via overnight courier by
the Agent on the same day funds are sent to Borrowers designated bank account or
designated place of delivery. Each Repayment Invoice shall include the
appropriate amount of common shares required to repay the Loan or the
appropriate amount of United States currency required to satisfy the repayment
of the Loan.
(b) The formula for repayment in Common Stock or United States currency
are set forth below:
(i) Payment in Common Stock: 108% of Loan amount, using the
previous five days average closing bid price on the day the Loan
proceeds are sent to the Borrower. Stock must be free trading or
acceptable by the Lenders, its counsel and the Company transfer agent
under Regulation S with all required materials for such, or other
acceptable conditions of the Lenders,
(ii) Payment in cash: 103% in United States currency.
3.04 Representations of Agent.
As an inducement to, and to obtain the reliance of LEEP in connection
with the Credit Facility, Agent represents and warrants as follows:
(a) Agent is a corporation organized under the jurisdiction of the
Bahamas.
(b) AU corporate and other proceedings required to be taken by or on
part of Agent to authorize Agent to enter into and carry out this Agreement and
to purchase the shares of Common Stock hereunder have been or, prior to the
Closing will be, duly authorized and properly taken. This Agreement has been
duly executed and delivered by Agent and is valid and enforceable against it in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law governing
specific performance, injunctive relief and other equitable remedies. Agent has
the capacity in all respects to carry out the services provided herein which are
the consideration for shares; the services provided for said shares shall be at
equivalent fair market value for the shares to be exchanged at $.40/share for
current services, and for such valuation as may be mutually agreed for services
in addition to those agreed.
(c) Agent is not a "U.S. Person" as defined in Regulation S promulgated
under the Securities Act of 1933, as amended, by the Securities and Exchange
Commission in that Agent is not:
9
10
(i) a natural person resident in the United States;
(ii) a partnership or corporation organized or incorporated
laws of the United States;
(iii) an estate of which any executor or administrator is a
U.S. Person;
(iv) a trust of which any trustee is a U.S. Person;
(v) an agency or branch of a foreign entity located in the
United States;
(vi) a non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other
fiduciary organized or incorporated in the United
States; and
(vii) a partnership or corporation organized or incorporate
under the laws of any foreign jurisdiction formed by a
U.S. Person principally for the purpose of investing in
securities not registered under the Securities Act.
(d) At all relevant times related to the negotiation, offer and
transfer, if any, of the shares of Common Stock, Agent was outside the
United States.
(e) Agent acknowledges that the Common Stock is subject to a
"restricted period" during which the Common Stock may not offered or
resold to or for the benefit of any U.S. Person, and that after the
expiration of the restricted period the Common Stock may be resold in
the United States or to U.S. persons without other restrictions,
providing an exemption from the registration requirements of the
Securities Act is available.
(f) Agent agrees that any offer or transfer of the Common Stock
prior to the expiration of the "restricted period" will be made in
accordance with the provisions of Regulation S; and all offering
materials and documents used in connection with offers and transfers of
the Common Stock prior to the expiration of the restricted period must
include statements to the effect that the Common Stock has not been
registered under the Securities Act and may not be sold in the United
States or to U.S. Persons unless the securities are registered under the
Securities Act, or an exemption from the registration requirements of
the Securities Act is available.
10
11
(g) Agent agrees that it is acting as a principal and that it or
its affiliates are not acquiring the shares hereunder with a purpose to
distributing said shares without registration or in an attempt to avoid
the registration requirements of the U.S. Securities laws or any other
applicable jurisdictions.
(h) Agent represents that it is a sophisticated corporation with
respect to investment transactions, and has had the opportunity to
review all Reports of the Borrower which are required to be filed under
the Exchange Act of 1934, and to ask questions with respect thereof, in
addition, Agent represents that it is an "accredited investor" as
defined by Regulation D promulgated under the Securities Act of 1933.
Agent further represents that it became aware of this investment
opportunity through a private introduction by related persons and that
it did not become aware of said opportunity through a general
solicitation of any form whatsoever.
SECTION 4. CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of the Lenders to make all Loans is subject, at the time
of each such Loan, to the satisfaction of the following conditions:
(a) Effectiveness. This Amendment shall have become effective.
(b) No Default; Representations and Warranties. At the time of
the making of each Loan and also after giving effect thereto (i) there
shall exist and be continuing no Default or Event of Default and (ii)
all representations and warranties contained herein in effect at such
time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on
and as of the date of the making of such Loan, unless such
representation and warranty expressly indicates that it is being made as
of any other specific date in which case on and as of such other date.
(c) Adverse Change, etc. Since the Commencement Date nothing
shall have occurred or become known which the Lenders or the Agent could
reasonably expect to have a Materially Adverse Effect on the Company;
such determination shall be made both before and after giving effect to
the making of the Loans hereunder.
(d) Margin Rules. On the date of each Borrowing of Loans,
neither the making of any Loan nor the use of the proceeds thereof will
violate the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System of the United States of America.
(e) Borrowing Allowable Base Certificate. The Agent shall have
received and the Lenders shall be reasonably satisfied (both as to form
and substance) with the Borrowing Allowable Base Certificate last
delivered to the Lenders.
11
12
(f) All of the stock certificates, legal opinions and other
documents and papers referred to in this document, unless otherwise
specified, shall be delivered to the Agent at its Office (or such other
location as may be specified by the Agent) and shall be satisfactory in
form and substance to the Lenders.
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Lenders to enter into this Amendment and to make
the Loans provided for herein, the Borrower on behalf of itself makes the
following representations and warranties to, and agreements with, the Lenders,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the execution and delivery of this Agreement and the
making of each Loan thereafter being deemed to constitute a representation and
warranty that the matters specified in this Section 5 are true and correct in
all material respects as of the date of each such Loan unless such
representation and warranty expressly indicates that it is being made as of any
specific date). It is understood by all parties to this Agreement that all
Schedules referred to herein set forth information as known to the Borrower only
as of the Commencement Date.
5.01 Corporate Status. Except as set forth on Schedule 5.01, the
Borrower (i)is a duly organized and validly existing corporation company in
good standing under the laws of the jurisdiction of its incorporation or
organization; (ii) has the corporate or other organizational power and authority
and has obtained all requisite governmental licenses, authorizations, consents
and approvals to own and operate its property and assets and to transact the
business in which it is engaged and presently proposes to engage, including,
without limitation, those in compliance with or required by the Environmental
Laws, except for those governmental licenses, authorizations, consents or
approvals the failure of which to be so obtained could not reasonably be
expected to have a Materially Adverse Effect; and (iii) is duly qualified and
authorized to do business and is in good standing in all jurisdictions where it
is required to be so qualified, except where the failure to be so qualified
could not be reasonably be expected to have a Materially Adverse Effect.
5.02 Corporate Power and Authority. The Borrower has the corporate power
and authority to execute, deliver and carry out the terms and provisions of the
Documents to which it is a party and has taken all the necessary corporate or
other actions to authorize the execution, delivery and performance of the
Documents to which it is a party. The Borrower has duly executed and delivered
each Document to which it is a party and each such Document constitutes the
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, except as such enforceability may be
limited by Bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally or by general principles of equity or the discretion
of the court before which any proceeding therefor may be brought.
5.03 No Violation. Neither the execution, delivery or performance by the
Borrower, of the Documents which it is a party nor compliance with the terms and
provisions thereof nor the
12
13
consummation of the transactions contemplated therein (i) will violate any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental authority, (ii) conflicts or
will conflict or be inconsistent with, results or will result in any breach or
violation of any of the terms, covenants, conditions or provisions of, results
in the creation or imposition of (or the obligation to create or impose) where
such contravention, conflict, inconsistency, breach, default, creation,
imposition, obligation or violation could not reasonably be expected to have a
Materially Adverse Effect.
5.04 Litigation. Except as disclosed within Borrower's most recent form
10Q or 10K filing with the SEC, there are no actions, judgments. suits,
investigations or proceedings by any administrative, governmental or other
public authority or other Person pending or, to the Borrower's knowledge,
threatened against or with respect to the Borrower or any of their respective
assets that (a) challenges the transactions contemplated thereby, including the
making of any Loans, or (b) could reasonably be expected to have a Materially
Adverse Effect.
5.05 Use of Proceeds. The proceeds of all Revolving Loans to be made to
the Borrower hereunder shall be utilized for working capital and other general
corporate purposes. Neither the making of any Loan hereunder, nor the use of the
proceeds therefrom, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
5.06 Governmental Approvals, etc. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption or other action by or notice to, any third party or any foreign or
domestic, administrative, governmental or public body or authority, or by any
subdivision thereof (other than those orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, could not
reasonably be expected to have a Materially Adverse Effect or which have
previously been obtained or made, all of which will be accomplished on or prior
to the Commencement Date), is necessary or required to authorize or is required
in connection with (i) the execution, delivery and performance of any Document
or the transactions contemplated therein or (ii) the legality, validity, binding
effect or enforceability of any Document. At the time of the making of the
Initial Loans, there does not exist any judgment, order, injunction or other
restraint issued or filed against or with respect to the making of Loans or the
performance by the Borrower of its respective obligations under the Documents.
5.07 True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by the Borrower in writing to
the Agent or any Lender and all information furnished in writing by the Borrower
in writing to the Agent and which is furnished to any Lender by the Agent on
behalf of the Borrower for purposes of or in connection with this Agreement or
any transaction contemplated herein is (or was, on the date of making the
Initial Loans), and all other such factual information (taken as a whole)
hereafter furnished by any such Person in writing to any Lender (or furnished by
such Person in writing to the Agent and which is furnished to any Lender by the
Agent on behalf of such Person) will be, true and accurate in all material
respects on the date as of which such information is dated or certified.
13
14
5.08 Compliance with Laws, etc. Except as set forth in this document,
the Borrower is in material compliance with all applicable laws and regulations,
including without limitation those relating to pollution and environmental
control, equal employment opportunity and employee safety, in all jurisdictions
in which it is presently doing business, and the Borrower will and the Borrower
if and when applicable will cause each of its Subsidiaries to comply with all
such material laws and regulations which may be imposed in the future in
jurisdictions in which it or such Subsidiary may then be doing business other
than those the non-compliance with which could not reasonably be expected to
have a Materially Adverse Effect.
5.09 Securities. The outstanding capital stock of the Borrower is duly
authorized, issued, delivered and is fully paid.
SECTION 6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that on the Commencement Date and
thereafter for so long as this Agreement is in effect and until the Revolving
Loan Commitments have terminated and the Loans together with interest, fees and
all other Obligations incurred hereunder are paid in full.
6.01 Information Covenants, The Borrower will furnish or cause to be
furnished to the Agent:
(a) As soon as available and in any event within 90 days after
the close of each fiscal year of the Borrower, the audited consolidated
balance sheets of the Borrower at the end of such fiscal year and the
related consolidated statements of operations, of cash flows and of
stockholders' equity for such fiscal year, setting forth comparative
consolidated figures for the preceding fiscal year by independent
public accountants of nationally recognized standing that is
satisfactory to the Agent, which report shall not be qualified as to the
scope of audit or as to the status of the Borrower and its Subsidiaries
as a going concern and shall state that such consolidated financial
statements present fairly the consolidated financial position of the
Borrower if applicable its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated in conformity with GAAP applied on a basis consistent with
prior years (except for such changes with which the independent
certified public accountants concur) and the examination by such
accountants was conducted in accordance with generally accepted auditing
standards.
(b) As soon as available and in any event within 45 days after
the close of each of the first three quarterly accounting periods in
each fiscal year of the Borrower, commencing with the first fiscal
quarter following the Commencement Date, the unaudited consolidated
balance sheet of the Borrower and if applicable its Subsidiaries as at
the end of such quarterly period and the related unaudited consolidated
statements of operations, of cash flows and of stockholders' equity for
such quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each case
14
15
setting forth comparative consolidated figures for the related periods
in the prior fiscal year, subject to normal year-end audit adjustments.
6.02 Performance of Obligations. The Borrower will, and if applicable
cause each of its Subsidiaries to, perform in all material respects all of its
obligations under the terms of each mortgage, indenture, security agreement,
other debt instrument and material contract by which it is bound or to which it
is a party, except where such nonperformance could not reasonably be expected to
have a Materially Adverse Effect.
6.03 Use of Proceeds. All proceeds of the Loans shall be used as
provided in Section 5.05.
SECTION 7. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that as of the Commencement Date and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated and until the Loans together with interest, fees and all other
Obligations incurred hereunder are paid in full
7.01 Changes in Business. The Borrower will not materially alter the
character of its business from that conducted by the Borrower at the
Commencement Date.
7.02 Merger and Consolidations. In the event the Borrower should merge
or consolidate with or into any other entity other than the merger into of one
or more Subsidiaries with and into the Subsidiaries of the Borrower this Credit
Facility would terminate.
7.03 Immediate Revision. Should the Company's Common Stock price drop
35% from the Closing Price of $0.43 on July 1, 1997 and remain trading at the
reduced level for seven consecutive trading days, this Credit Facility may be
revised by the Lenders taking into effect such drop by the formula described in
1.01 (a) herein.
SECTION 8. EVENTS OF DEFAULT.
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
8.01 Payments. The Borrower shall (i) default in the payment when due of
any principal of the Loans, (ii) default, and such default shall continue for
two or more Business Days, in the payment when due of any interest on the Loans
or (iii) fail to pay any other amounts owing hereunder for five days after
receiving notice thereof, or
8.02 Representations, etc. Any representation, warranty or statement
made or deemed made by any Credit Party herein or in any statement or
certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
15
16
8.03 Ownership. (i) ▇▇. ▇▇▇▇▇ Record, the Chairman and Chief Executive
Officer, respectively, of the Borrower, (a) ceases to remain in the employ of
the Borrower in his current capacity or in some other executive capacity or (ii)
individuals who constituted the Board of Directors of Borrower on the Closing
Date (together with any new directors whose proposal for election by the
shareholders of Borrower was approved by a vote of 51% of the directors of
Borrower then still in office who either were directors on the Commencement Date
or whose election or nomination for election was previously so approved) shall
cease for any reason to constitute a majority of the members of the Board of
Directors of Borrower stiff in office; -(iii) the approval by stockholders of
Borrower of any plan or proposal for the liquidation, dissolution or winding up
of Borrower;
Then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent shall upon the written request of
the Lenders, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Agent or any Lender to enforce
its claims against the Borrower, except as otherwise specifically provided for
in this Agreement (i) declare the Total Revolving Credit Facility terminated,
whereupon; (ii) declare the principal of and accrued interest In respect of all
Loans and all Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower.
SECTION 9. DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular:
"Account" means all of the Borrower's "accounts" whether or not
such Account has been earned by performance, whether now existing or
existing in the future.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all directors and executive officers of such Person), controlled by, or
under direct or indirect common control with such Person; provided that
neither Rothschild nor any Affiliate of Rothschild shall be deemed to
-be an Affiliate of any Credit Party. A Person shall be deemed to
control a corporation for the purposes of this definition if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of
the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction
of the management and policies of such corporation, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall mean Rothschild, or any successor thereto
appointed in accordance herewith in its capacity as agent for the
Lenders
16
17
"Agreement" shall mean this Agreement amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof, including the
Amendment.
"Commencement Date" means the effective date of this Total Revolving
Credit Facility Agreement.
"Authorized Officer" shall mean any senior officer of the Borrower,
designated as such in writing to the Agent by the Borrower, to the extent
acceptable to the Agent.
"Lender" shall have the meaning provided in the first paragraph of this
Agreement and in EXHIBIT 1.
"Borrower" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Borrowing" shall mean the incurrence pursuant to a Notice of Borrowing
and to the Loan Facility of one Type of Loan by the Borrower from all of the
Lenders.
"Borrowing Allowable Base" means an amount equal to the Total Revolving
Credit Facility available every thirty days to the Borrower announced by the
Agent.
"Borrowing allowable base Certificate" shall mean the certificate
delivered to the Borrower from the Agent at the Commencement Date and at the 90
day Adjustment Date, if applicable stating the maximum drawdown available to the
Company.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York a legal holiday or a day on which Lending institutions
are authorized by law or other governmental actions to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on any day which is a Business Day described in clause
(i) and which is also a day for trading by and between Lenders in U.S. dollar
deposits in the interLender Eurodollar market.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Closing Date" shall mean June 20, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collective Bargaining Agreement" shall mean each Collective Bargaining
Agreement set forth in Section 5.
17
18
"Contingent Obligations" shall mean, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation. or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof,
provided, however, that the term Contingent Obligation shall not. include
endorsements of instruments for deposit or collection in the ordinary course of
business, The amount of any Contingent Obligation shall be deemed to be an
amount equal to the maximum amount that such Person may be obligated to expend
pursuant to the terms of such Contingent Obligation or, if such Contingent
Obligation is not so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Credit Documents" shall mean (i) this Agreement, (ii) each Repayment
Invoice, (iii) each Security Document.
"Credit Party" shall mean the Borrower (other than the Lenders and their
respective Affiliates) party to the Credit Documents or the Security Documents.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or like
account with a Lender, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Documents" shall mean each Credit Document.
"Dollars" or "$" means United States Dollars.
"Environmental Laws" means the common law and all federal, state, local
and foreign laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or
18
19
hazardous constituents, substances or wastes, including, without limitation,
petroleum, including crude oil or any fraction thereof, or any petroleum product
(collectively referred to as "Hazardous Materials"), into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground and aboveground storage tanks, and
related piping, and emissions, discharges, releases or threatened releases
therefrom,
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" shall have the meaning provided in Section 8.
"Financing Proceeds" means the cash (other than Net Cash Proceeds)
received by the Borrower.
"Foreign Pension Plan" shall mean any Pension Plan or other deferred
compensation plan, program or arrangement maintained by any Subsidiary of the
Borrower organized under the laws of a jurisdiction other than the United States
of America or any state thereof which, under applicable law, is required to be
funded through a trust or other funding vehicle.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section I 1.
"Governmental Authority" means any federal, state, local, foreign or
other governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body including, without limitation, those governing the regulation and
protection of the environment, whether now or hereafter in existence, or any
officer or official thereof
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such Indebtedness has been assumed by such first Person (but the amount
of such Indebtedness, for all calculations hereunder, will not exceed the lesser
of (i) the amount of Indebtedness of such second Person so secured and (ii) the
fair market value of the
19
20
property of such first Person securing such Indebtedness), (v) all Capitalized
Lease Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or services whether or not delivered or
accepted, i.e., take-or-pay and similar obligations, and (vii) all obligations
of such Person under Interest Rate Agreements; provided that Indebtedness shall
not include trade payables, accrued expenses, accrued dividends, accrued income
taxes and other similar current liabilities, in each case arising in the
ordinary course of business.
"Lenders" shall mean at any time Lenders holding at least 51% of the
Total Revolving Loan Commitments held by the Lenders; provided that for the
purposes of Section 4, the requirement that any document, agreement, certificate
or other writing is to be satisfactory to the Lenders shall be satisfied if (x)
such document, agreement, certificate or other writing was delivered in its
final form to the Lenders prior to the Amendment Date (or if amended or modified
thereafter, the Agent has reasonably determined such amendment or modification
not to be material), (y) such document, agreement, certificate or other writing
is satisfactory to the Agent and (z) Lenders holding more than 51% of the
Total Revolving Loan Commitments held by Lenders have not objected in writing to
such document, agreement, certificate or other writing to the Agent and the
Borrower prior to the Amendment Date.
"Liquidation Rights" shall mean the definitive right granted herein to
the Lenders for the Securities of the Borrower.
"Liquidation Covenants" shall mean the time and volume restraints
Lenders are held by under this Agreement herein referenced in Section 2.
"Loan" shall mean each and every Revolving Loan.
"Loan Facility" shall mean the credit facility evidenced by the Total
Revolving Loan Commitment.
"Materially Adverse Effect" means (i) with respect to the Borrower, any
materially adverse effect (both before and after giving effect to the financing
contemplated hereby and by the other Documents) with respect to the operations,
business, properties, assets, liabilities (contingent or otherwise) or financial
condition or prospects of the Borrower, or (ii) any fact or circumstance
(whether or not the result thereof would be covered by insurance) as to which
singly or in the aggregate there is a reasonable likelihood of (w) a materially
adverse change described in clause (i) with respect to the Borrower or (x) the
inability of the Borrower to perform in any material respect its Obligations
hereunder or under any of the other Documents or the inability of the Lenders to
enforce in any material respect their rights purported to be granted hereunder
(y) a materially adverse effect on the ability to effect (including hindering
or unduly delaying) the transactions contemplated hereby and by the Documents on
the terms contemplated hereby and thereby.
"Minimum Borrowing Amount" shall mean $25,000
20
21
"Net Financing Proceeds" means Financing Proceeds, net of direct
expenses (including income taxes), of the transaction.
"Notes" shall mean any Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agent or any Lender pursuant to the terms of this Agreement or any other Credit
Document or secured by any of the Security Documents.
"Office" shall mean the office of the Agent referenced herein or such
other office as the Agent may hereafter designate in writing as such to the
other parties hereto.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"Revolving Loans" shall have the meaning provided in Section 1.
"Revolving Note" shall have the meaning provided in Section 1.
"Rothschild" shall mean Rothschild Group, S.A.
21
22
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
" SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act, as the same may be in effect from time to time.
"Securities" shall mean any stock, shares, voting trust certificates,
bonds, debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Documents" shall mean each of the Notes, the Pledge Agreements
and any other documents utilized as such documents may after their execution be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof and thereof
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time.
"Termination Event" means (i) a "reportable event" described in Section
4043 of ERISA or in the regulations thereunder (excluding events for which the
requirement for notice of such reportable event has been waived by regulation by
the PBGC) with respect to a Title IV Plan, or (ii) the withdrawal of the
Borrower or any of its ERISA Affiliates from a Title IV Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (iii) the filing of a notice of intent to terminate a Title IV Plan or
the treatment of a Title IV Plan amendment as a termination under Section 4041
of ERISA, or (iv) the institution of proceedings by the PBGC to terminate a
Title IV Plan or to appoint a trustee to administer a Title IV Plan, or (v) any
other event or condition which might constitute reasonable grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan, or (vi) the complete or partial withdrawal
(within the meaning of Sections 4203 and 4205, respectively, of ERISA) of the
Borrower or any of its ERISA Affiliates from a Multiemployer Plan, or (vii)
the insolvency or reorganization (within the meaning of Section 4245 and 4241,
respectively, of ERISA) or termination of any Multiemployer
22
23
plan, or (viii) the failure to make any payment or contribution to any Pension
Plan or Multiemployer Plan or the making of any amendment to any Pension Plan
which could result in the imposition of a lien or the posting of a bond or other
security.
"Test Period" means the shorter of (i) the six consecutive complete
months from the Commencement date forward and the final six month of the Term of
the Total Revolving Credit Facility.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving
Loan Commitment of each of the Lenders.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
"Voting Stock" means all classes of capital stock of a corporation then
outstanding and normally entitled to vote in the election of directors.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' or nominees' qualifying shares, is
owned directly or indirectly by such Person.
"Written" or "In Writing" shall mean any form of written communication
or a communication by means of telex, telecopier device, telegraph or cable.
"90 Day Evaluation Date" shall mean the ninety (90)-day evaluation date
and period as described in Section 2.
23
24
SECTION 10. The Agent.
10.01 Appointment. Each Lender hereby irrevocably designates and
appoints Rothschild Group, S.A. as Agent of such Lender to act as specified
herein and each such Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and to exercise such
powers and perform such duties as are expressly delegated to such agent by the
terms of this Agreement, together with such other power as are reasonably
incidental thereto. The Agent agrees to act as such upon the express conditions
contained in this Section 10. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the. Agent shall not have any duties or
responsibilities, except those set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against such Agent. The provisions of this Section 10 are solely for the benefit
of such Agent and the Lenders, and no Credit Party shall have any rights as a
third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement, the Agent shall act solely as an
Agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation or relationship of agency or trust with or for any Credit Party.
The Lender hereby agrees to pay the Agent an annual agency fee of $5,000
payable quarterly in arrears.
10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
No agent shall be responsible for the negligence or Misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 10.03.
10.03 Exculpatory Provisions. The Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement (except for its or such
Person's own gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties by the Borrower, any Subsidiary of the Borrower or any of their
respective officers contained in this Agreement, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by such agent under or in connection with, this Agreement or any
other Document or for any failure of the Borrower or any of their respective
officers to perform its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Agreement or for any representations, warranties, recitals
or statements made herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by such
agent to the Lenders or by or on behalf of the Borrower, any of its Subsidiaries
or any Guarantor. to such agent or any Lender or be required to ascertain or
inquire as to the performance or observance of
24
25
any of the terms, conditions, provisions, covenants or agreements contained
herein or as to the use of the proceeds of the Loans or of the existence or
possible existence of any Default or Event of Default.
10.04 Reliance by the Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
them to be genuine and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal opinion from independent
accountants and other experts selected by such agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
they shall first receive such advice or concurrence of the Lenders as they deem
appropriate or they shall first be indemnified to their satisfaction by the
Lenders against any and all liability and expense which may be incurred by them
by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting or in refraining from acting, under this
Agreement in accordance with a request of the Lenders (or to the extent
specifically provided in Section 11.12, all the Lenders), and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
the Lenders.
10.05 Notice of Default. The Agent shall not be deemed to have knowledge
of the occurrence of any Default or Event of Default, other than a default in
the payment of principal or interest on the Loans hereunder unless it has
received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that an agent receives such a notice, such
agent shall give prompt notice thereof to the Lenders. Such agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Lenders, provided that, unless and until such agent
shall have received such directions, such agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
10.06 Non-Reliance on Agent. Each Lender expressly acknowledges that
neither the Agent, officers, directors, employees, agents, attorneys-in-fact or
affiliates of any agent has made any representations or warranties to it and
that no act by any agent hereafter taken, including any review of the affairs of
the Borrower shall be deemed to constitute any representation or warranty by
such agent to any Lender. Each Lender represents to each agent that it has,
independently and without reliance upon any such agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement and the other agreements contemplated hereby. Each Lender also
represents that it will, independently and without reliance upon any agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
25
26
creditworthiness of the Borrower. Except for documents expressly required to be
furnished to the Lenders by any agent hereunder, no agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of the Borrower which may come into
the possession of any such agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
10.07 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such, ratably according to their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against each such agent in its capacity as such in any way relating to or
arising out of this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted to
be taken by any such agent under or in connection with any of the foregoing, but
only to the extent that any of the foregoing is not paid by Borrower, provided
that no Lender shall be liable to the Agent for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from any such agent's
gross negligence or willful misconduct. If any indemnity furnished to an agent
for any purpose shall, in the opinion of such agent, be insufficient or become
impaired, the agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 10.07 shall survive the payment of all
Obligations.
10.08 Successor Agents. Upon the acceptance of any appointment as an
Agent hereunder by a successor Agent by a successor "Agent" as the case may be,
shall include such successor agent effective upon its appointment, and the
resigning Agent's as the case may be, rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former agent or any of the parties to this Agreement. After the retiring Agent's
resignation hereunder as Agent the provisions of this Section 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
10.09 Resignation, Transfer by Agent.
(a) An Agent may resign from the performance of all its
functions and duties hereunder at any time by giving 45 Business Days'
prior written notice to the Borrower and the Lenders. Such resignation
shall take effect upon the acceptance by a successor Agent of
appointment pursuant to subsections B and C below or as otherwise
provided below.
(b) Upon any such notice of resignation of an Agent, the Lenders
shall appoint a successor Agent acceptable to the Borrower and which
shall be an incorporated Lender or trust company or other qualified
financial institution.
26
27
(c) If a successor Agent shall not have been so appointed within
said 45 Business Day period, the resigning Agent with the consent of the
Borrower shall then appoint a successor Agent, who shall serve as a
successor Agent until such time, if any, as the Lenders appoint a
successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
subsection B or C by the 50th Business Day after the date such notice of
resignation was given by the resigning Agent, such Agent's resignation
shall become effective and the Lenders shall thereafter perform all the
duties of Agent hereunder until such time, if any, as the Lenders
appoint a successor agent as provided above.
(e) Notwithstanding anything to the contrary contained in this
Section 10, Rothschild, as Agent, may transfer its rights and
obligations to perform all of its functions and duties hereunder to its
parent company or to any Affiliate of it or its parent company.
SECTION 11. MISCELLANEOUS.
11.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses (anticipated to be zero, and; must be approved
in writing by the Borrower) of the Agent in connection with the negotiation,
preparation, execution and delivery of the Final Credit Documents and
instruments referred to herein and any amendment, waiver or consent relating
thereto (ii) pay and hold the Agent and each of the Lenders harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save the Agent and each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to the Agent
or such Lender) to pay such taxes; (iii) indemnify the Agent and each Lender,
its officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses (including, without limitation, any and all losses, liabilities,
claims, damages or expenses arising under Environmental Laws) incurred by any of
them as a result of, or arising out of, or in any way related to, or by reason
of any investigation, litigation or other proceeding (whether or not the Agent
or any Lender is a party thereto) related to the entering into and/or
performance of any Document or the use of the proceeds of any Loans hereunder or
the consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified); and (iv) pay all reasonable
out-of-pocket costs and expenses of Rothschild in connection with the assignment
to any other Person of all or any portion of Rothschild's interest under this
Agreement pursuant to Section 11.04.
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Lender is hereby authorized at any time or from time
27
28
to time, without presentment, demand, protest or other notice of any kind to any
Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Lender
(including, without limitation, by branches and agencies of such Lender wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Lender
under this Agreement including, without limitation, all interests in Obligations
of such Credit Party purchased by such Lender pursuant to Section 11.06(b), and
all other claims of any nature or description arising out of or connected with
this Agreement irrespective of whether or not such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured; as a courtesy to the Borrower, the
Borrower shall receive notice of such set-off.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, to
Leading Edge Earth Products, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Attention: President and Chief Executive Officer, Telephone
Number: (▇▇▇) ▇▇▇-▇▇▇▇, if to any Lender, through Rothschild Group S.A. at its
address specified on Annex I attached hereto; or, at such other address as shall
be designated by any party in a written notice to the other parties hereto. All
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective two days after
being deposited in the mails, when delivered to the telegraph company, cable
company or overnight courier, as the case may be, or when delivered by telex or
telecopier, except that notices and communications to the Agent or the Borrower
shall not be effective until received by such party.
11.04 Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto, all future holders
of the Notes, and their respective successors and assigns; provided that
no Credit Party may assign or transfer any of its interests hereunder
without the prior written consent of the Lenders; and provided,
further, that the rights of each Lender to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be
limited as set forth below in this Section 11,04; provided that nothing
in this Section 11.04 shall prevent or prohibit any Lender from (i)
granting participations in or assignments of such Lender's Loans, Notes
and/or Revolving Loan Commitments hereunder to its parent company
and/or to any Affiliate of such Lender that is at least 50% owned by
such Lender or its parent company.
(b) Each Lender shall have the right to transfer, assign or
grant participations in all or any part of its remaining Loans, Notes
and/or Commitments hereunder on the basis set forth below in this clause
(b). Each Lender may furnish any information concerning the Borrower in
the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants).
28
29
(i) Participations. Each Lender may transfer, grant or
assign participations in all or any part of such Lender's Loans,
Notes and/or Commitments hereunder pursuant to this clause
(b)(i) to any Person; provided that (i) such Lender shall remain
a "Lender" for all purposes of this Agreement and the transferee
of such participation shall not constitute a Lender hereunder
and (ii) no participant under any such participation shall have
fights to approve any amendment to or waiver of this Agreement
or any other Credit Document except to the extent such amendment
or waiver would (y) change the scheduled final maturity date of
any of the Loans, Notes or Commitments in which such participant
is participating or (z) reduce the principal amount, interest
rate or fees applicable to any of the Loans, Notes or
Commitments in which such participant is participating or
postpone the payment of any interest or fees. In the case of any
such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the
participant's rights against the granting Lender in respect of
such participation to be those set forth in the agreement with
such Lender creating such participation) and all amounts payable
by the Borrower hereunder shall be determined as if such Lender
had not sold such participation; provided that such participant
shall be considered to be a "Lender" for purposes of Sections
11.02 and 11.06(b).
11.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
any Agent or any Lender in exercising any right, power or privilege hereunder
and no course of dealing between any Credit Party and any Agent or any Lender
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege hereunder or thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which any Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the fights of any Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
11-06 Calculations; Computations. All computations hereunder shall be
made on the actual number of days elapsed over a year of 365 days; provided that
the actual calendar only will include 360 days. AU computations of "Repayment
Invoice's" and interest on such Loans stated therein shall be made on the actual
formulas set forth in Section 3.
11.07 Governing Law; Submission to Jurisdiction; Venue.
(a) This Agreement and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with and be
governed by the laws of the State of New York applicable to contracts
made and to be performed wholly therein. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be
brought in the courts of the State of New York or of the United States
for the Southern District of New York, and by execution and delivery of
this Agreement, each Creadit Party
29
30
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts. Each Credit Party further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the respective Credit Party at its
address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Each Credit Party hereby
irrevocably appoints the Borrower and such other persons as may
hereafter be selected by Borrower irrevocably agreeing in writing to
serve as its agent for service of process in respect of any such action
or proceeding. Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any Credit Party
in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Agreement brought in the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
11.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
11.09 Commencement Date. This Agreement shall become effective (the
"Commencement Date") on July 1 or the date on which each of the Borrower and
each of the Lenders, through the Agent shall have signed a copy hereof (whether
the same or different copies) and shall have delivered the same to the Agent at
its Office or, in the case of the Lenders, shall have given to the Agent
telephonic (confirmed in writing), written, telex or telecopy notice (actually
received) at such office that the same has been signed and mailed to it. The
Agent will give the Borrower and each Lender prompt written notice of the
effectiveness of this Agreement.
11.10 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
11.11 Amendment or Waiver. Neither this Agreement nor any terms hereof
or thereof may be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Lenders; provided
that no such change, waiver, discharge or termination shall, without the consent
of each affected Lender and the Agent, (i) extend the scheduled final maturity
date of any Loan, or any portion thereof, or reduce the rate or extend the time
of payment of interest thereon or fees or reduce the principal amount thereof,
or increase the Total Revolving Credit Facility over the amount thereof then in
effect (it being understood that a
30
31
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Revolving Credit Facility shall not constitute a change in the terms of
any Commitment of any Lender), (ii) amend, modify or waive any provision of this
Section, or other Section herein (iii) reduce any percentage specified in, or
otherwise modify, the definition of Lenders or (iv) consent to the assignment or
transfer by any Credit Party of any of its rights and obligations under this
Agreement. No provision of Section 10 may be amended without the consent of the
Agent.
11.12 Survival. All indemnities set forth herein including, without
limitation shall survive the execution and delivery of this Agreement and the
making of the Loans, the repayment of the Obligations and the termination of the
Total Revolving Credit Facility.
11.13 Domicile of Loans. Each Lender may transfer and carry its Loans
at, to or for the account of any branch office, subsidiary or Affiliate of such
Lender.
11.14 Waiver of Jury Trial. Each of the parties to this agreement hereby
irrevocably waives all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement, the Credit Documents
or the transactions contemplated hereby or thereby.
11.15 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
11.16 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of this
transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting and other tax advisers regarding
treatment of this transaction for federal and state income taxes and no
representation, warranty or assurance from any other party or such other party's
legal, accounting or other adviser.
11.17 Third Party Beneficiary. The Borrower and Agent are the only
parties to this Agreement, and no one else shall be deemed to have any rights
hereunder or be deemed a third party beneficiary.
11.18 Termination. The Credit Facility may be terminated prior to the
termination date of June 30, 1999 by written, agreed to and executed
documentation by both the Lenders and the Borrower delivered to the Agent at the
Agent's address. This Credit Facility may be terminated by the borrower under
non-performance by the Lenders or at the sole option of the Borrower. Should the
Borrower terminate this Credit Facility 1,200,000 shares of the Borrower held
with Rothschild Group, S.A. will be returned to the Borrower as set herein
section 11.18, pursuant to other agreement to which Borrower is party which
authorizes Rothschild to administer such transactions. Such termination must be
presented to the Agent and Lender in writing, with
31
32
supporting documentation and delivered by United States post office certified
mail to the Lenders' and Agent's address of record stated herein.
Borrower terminates the Credit Facility from:
Shares returned
July 1, 1997 to July 31, 1997* - 1,200,000
August 1, 1997* to December 31, 1997 0
January 1, 1998 to June 30, 1998 0
July 1, 1998 to December 31, 1998 600,000 (pro-rated as of termination date)
January 1, 1999 to June 30, 1999 300,000 (pro-rated as of termination date)
*or until Funds have been received by Borrower.
Should this Credit Facility be terminated by the Borrower, all covenants,
sections, items and obligations must be fulfilled completely by both the
Borrower and Lenders prior to the return of shares to the Borrower. Any shares
returned to the Borrower will be sent to the Borrower within 60 days of notice
of termination.
32
33
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Total Revolving Credit Facility Agreement to be duly executed and delivered as
of the date first above written.
LEADING EDGE EARTH PRODUCTS, INC.
By:
--------------------------------
Name: Grant Record
Title: Chief Executive Officer
ROTHSCHILD GROUP, S.A. as Agent.
By:
--------------------------------
Name:
33
34
Revolving Credit Facility
Between
Leading Edge Earth Products, Inc.
And
Rothschild Group, S.A.
July 1, 1997
ANNEX I
List of Lenders:
Rothschild Trust, S.A.
35
Notice of Borrowing Request
DATE:
---------------
Leading Edge Earth Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TO: Rothschild Group, S.A. CC: PRIMEX Capital
Nassau BAHAMAS Houston, Texas
This letter will authorize Rothschild Group, S.A. as Agent for the lenders to
arrange a loan against the Credit Facility issued by the Lenders to and for
Leading Edge Earth Products, Inc. (the "Borrower").
All necessary covenants and requirements have been met by the borrower in regard
to the executed Credit Facility document dated July 1, 1997.
Please wire transfer or send directly to the below coordinates of Leading Edge
Earth Products, Inc. the amount of $____________ (____________________________).
Wire transfer: ▇▇▇▇▇ Fargo Bank
Fourth and ▇▇▇▇▇ ▇▇▇▇▇▇
Seattle, WA
ABA # 121 000 248
Credit Account: Leading Edge Earth Products, Inc.
Account # 0204 - 602858
Send directly to: Leading Edge Earth Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., # ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn:
This authorization represents the _____________ ( ) of 24 drawdown requests that
may be available during the term of the Credit Facility.
This document was prepared by: _________________________________________
Print:___________________________________
Title:___________________________________
Phone Line_______________________________