CREDIT FACILITY AND
SECURITY AGREEMENT
THIS AGREEMENT is made by and between the Company (as herein defined) and
the Bank (as herein defined).
In consideration of the covenants and agreements contained herein, the
Company and the Bank hereby mutually agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1 GENERAL. Any accounting term used but not specifically defined
herein shall be construed in accordance with GAAP. The definition of each
agreement, document, and instrument set forth in Section 1.2 hereof shall be
deemed to mean and include such agreement, document, or instrument as amended,
restated, or modified from time to time.
SECTION 1.2 DEFINED TERMS. As used in this Agreement:
"ACCOUNT" shall mean (a) any account as defined in the UCC, and (b) any
right to payment for Goods sold or leased or for services rendered which is not
evidenced by an Instrument or Chattel Paper, whether or not it has been earned.
"ACCOUNT DEBTOR" shall mean the Person who is obligated on an Account
Receivable.
"ACCOUNT RECEIVABLE" shall mean:
(a) any account receivable, Account, Chattel Paper, Contract Right,
General Intangible Document, or Instrument owned, acquired, or
received by a Person,
(b) any other indebtedness owed to or receivable owned, acquired, or
received by a Person of whatever kind and however evidenced, and
(c) any right, title, and interest in a Person's Goods which were sold,
leased, or furnished by that Person and gave rise to either (a) or
(b) above, or both of them. This includes, without limitation:
(1) any rights of stoppage in transit of a Person's sold,
leased, or furnished Goods,
(2) any rights to reclaim a Person's sold, leased, or furnished
Goods, and
(3) any rights a Person has in such sold, leased, or furnished
Goods that have been returned
"AFFILIATE" shall mean, with respect to a specified Person, any other
Person: (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with such Person,
(b)which beneficially owns or holds with power to vote five percent (5 %) or
more of any class of the voting stock of such Person, (c) five percent (5 %) or
more
of the voting stock of which other Person is beneficially owned or held by such
Person, or (d) who is an officer or director of such Person.
"BANK" shall mean KeyBank National Association, a national banking
association, and its successors and assigns.
"BUSINESS CONDITION" shall mean the financial condition, business and
assets of a Person.
"BUSINESS DAY" shall mean a day of the year on which banks are not
required or authorized to close in Denver, Colorado and, if the applicable
Business Day relates to any LIBOR Rate Loan, on which dealings are carried on in
the London interbank eurodollar market.
"CAPITAL EXPENDITURES" shall mean any and all amounts invested, expended
or incurred by a Person in respect of the purchase, improvement, renovation or
expansion of any land and depreciable or amortizable property of such Person
(including expenditures required to be capitalized in accordance with GAAP).
"CASH COLLATERAL ACCOUNT" shall mean a commercial Deposit Account
designated "cash collateral account" and maintained by the Company with Bank,
without liability by Bank to pay interest thereon, from which account Bank shall
have the exclusive right to withdraw funds until all Obligations are paid,
performed, satisfied, enforced, and observed in full.
"CASH SECURITY" shall mean all cash, Instruments, Deposit Accounts, and
other cash equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which Company presently has or may hereafter
have any claim, that are presently or may hereafter be existing or maintained
with, issued by, drawn upon, or in the possession of Bank.
"CHATTEL PAPER" shall mean "chattel paper" as defined in the UCC.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" shall have the meaning described in Section 3.1 below.
"COLLECTIONS" shall have the meaning described in Section 4. 1(a) of this
Agreement.
"COMMONLY CONTROLLED ENTITY" shall mean a Person, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 414(b) or (c) of the Code.
"COMPANY" shall mean Dynamic Materials Corporation, a Delaware
corporation, with its principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and its successors.
"COMPANY'S LOCATION" shall mean the location of: (a) Company's place of
business, if there is only one such place of business; or (b) if there is more
than one place of business, the place
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(1) from which Company manages the main part of its business operations, and (2)
where persons dealing with Company would normally look for credit information.
"CONTRACT RIGHT" shall mean (a) any contract right, and (b) any right to
payment under a contract not yet earned by performance and not evidenced by an
Instrument or Chattel Paper.
"CONTRACT YEAR" shall mean the twelve (12) month period which commences on
each anniversary of the execution of the Agreement.
"CREDIT LOAN" shall mean the revolving Loan described in Section 2.1(a)(i)
of this Agreement.
"CURRENT ASSETS" and "CURRENT LIABILITIES" shall mean the amounts as
determined in accordance with GAAP not inconsistent with present accounting
procedures.
"DEPOSIT ACCOUNT" shall mean (a) any deposit account, and (b) any demand,
time, savings, passbook, or a similar account maintained with a bank, savings
and loan association, credit union, or similar organization, other than an
account evidenced by a certificate of deposit.
"DOCUMENT" shall mean (a) any document, (b) any document of title,
including a ▇▇▇▇ of lading, dock warrant, dock receipt, warehouse receipt or
order for the delivery of Goods, and any other document which in the regular
course of business or financing is treated as adequately evidencing that the
Person in possession of it is entitled to receive, hold, and dispose of the
document and the Goods it covers, and (c) any receipt covering Goods stored
under a statute requiring a bond against withdrawal or a license for the
issuance of receipts in the nature of warehouse receipts even though issued by a
Person who is the owner of the Goods and is not a warehouseman.
"ENVIRONMENTAL LAW" shall mean any federal, state, or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability upon a Person in connection with the use, release or disposal
of any hazardous toxic or dangerous substance, waste or material.
"EQUIPMENT" shall mean "equipment " (as defined in the UCC) and fixtures
(as defined in the UCC) including, without limitation, all machinery, equipment,
furniture, furnishings, fixtures, and packaging production equipment, parts,
material handling, supplies, and motor vehicles (titled or untitled) of every
kind and description, now or hereafter owned by the Company.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" shall mean any one or more of the occurrences described
in ARTICLE IX hereof.
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"FEDERAL FUNDS RATE" shall mean, during any period, a fluctuating interest
rate per annum for each day during such period, that is the rate determined by
Bank to be the opening rate per annum paid or payable by it on the day in
question in its region market for federal funds purchased overnight from other
banking institutions.
"FEDERAL FUNDS RATE LOAN" shall mean any Loan that bears interest with
reference to the Federal Funds Rate.
"FINAL MATURITY DATE" shall mean the fifth annual anniversary date of this
Agreement.
"FUNDED DEBT" shall mean all Indebtedness which matures more than one year
after the date such Indebtedness was incurred, less any portion thereof that is
payable within twelve (12) months following the date as of which the calculation
is made.
"FUNDS FROM OPERATIONS" shall mean the aggregate of the Company's profit
before taxes and extraordinary items plus depreciation, plus amortization, plus
deferred income taxes.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
"GENERAL INTANGIBLE" shall mean (a) any "general intangible" (as defined
in the UCC), and (b) any personal property (including things in action) other
than Goods, Accounts, Contract Rights, Chattel Paper, Documents, Instruments,
and money.
"GOODS" shall mean (a) any "goods" (as defined in the UCC), and (b) all
things which are movable at the time the security interest granted Bank under
the Agreement attaches or which are fixtures but does not include money,
Instruments, Documents, Accounts, Chattel Paper, General Intangibles, or
Contract Rights.
"HAZARDOUS MATERIALS" shall mean any substance or material defined or
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any United States federal, state
or local environmental statute, regulation or ordinance.
"INDEBTEDNESS" shall mean for any Person (i) all obligations to repay
borrowed money, direct or indirect, incurred, assumed, or guaranteed, (ii) all
obligations for the deferred purchase price of capital assets excluding trade
payables, (iii) all obligations under conditional sales or other title retention
agreements, and (iv) all lease obligations which have been or should be
capitalized on the books of such Person.
"INSTRUMENT" shall mean "instruments" (as defined in the UCC).
"INTEREST PERIOD" means, with respect to any LIBOR Rate Loan, the period
commencing on the date such Loan is made, continued, or converted and ending on
the last day of such period as
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selected by the Company pursuant to the provisions below and, thereafter,
each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of such period as selected by the
Company pursuant to the provisions below. The duration for any LIBOR Rate Loan
which is a Credit Loan shall be 1 month, 2 months, or 3 months, as selected by
the Company; and the duration for any LIBOR Rate Loan which is a Term Loan shall
be 3 months; provided, however, that whenever the last day of any Interest
Period would otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall occur on the next succeeding Business Day, and;
provided, further, however, that if such extension of time would cause the last
day of such Interest Period for a LIBOR Rate Loan to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day.
"INVENTORY" shall mean all "inventory" (as defined in the UCC) now owned
or hereafter acquired by the Company, including, without limitation, all Goods,
merchandise, work-in-process, raw materials, finished Goods, and inventory held
for lease to other Persons; all other materials, supplies, and tangible personal
property of any kind, nature, or description held for sale or lease or for
display or demonstration; and all documents of title or other Documents
pertaining thereto, and all proceeds of the foregoing.
"LETTER OF CREDIT LOAN" shall mean the $6,000,000 loan to Company from
Bank, evidenced by the issuance of a Letter of Credit to provide a credit
enhancement for bond financing and which loan shall be secured by a lien on
certain property, plant and equipment of the Company located in Mount ▇▇▇▇▇▇▇▇,
Pennsylvania.
"LIBOR RATE" means, for any Interest Period for any LIBOR Rate Loan, an
interest rate per annum (rounded upwards to the next higher whole multiple of
1/16% if such rate is not such a multiple) equal at all times during such
Interest Period to the quotient of (a) the rate per annum (rounded upwards to
the next higher whole multiple of 1/16 % if such rate is not such a multiple) at
which deposits in United States dollars are offered at 11:00 a.m. (London,
England time) (or as soon thereafter as is reasonably practicable) by prime
banks in the London interbank eurodollar market two Business Days prior to the
first day of such Interest Period in an amount and maturity of such LIBOR Rate
Loan, divided by (b) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of the LIBOR Reserve
Requirements current on the date two Business Days prior to the first day of
such Interest Period.
"LIBOR RATE LOAN" shall mean any Loan that bears interest with reference
to the LIBOR Rate.
"LIBOR RATE MARGIN" shall mean: (i) for the period commencing on the date
of this Agreement and ending on June 30, 1998, 100 basis points, and (ii)
thereafter, such Margin as is adjusted pursuant to Section 2.3(b)(ii) of this
Agreement.
"LIBOR RESERVE REQUIREMENTS" means, for any Interest Period for any LIBOR
Rate Loan, the maximum reserves (whether basic, supplemental, marginal,
emergency, or otherwise) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) with respect to
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liabilities or assets consisting of or including "Eurocurrency liabilities" (as
defined in Regulation D of the Board of Governors of the Federal Reserve System)
having a term equal to such Interest Period.
"LIEN" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property or asset.
"LOAN" or "LOANS" shall mean any of the loan advances to the Company
extended by the Bank in accordance with Section 2.1(a).
"LOAN DOCUMENTS" shall mean this Agreement, the Note and any other
documents relating thereto.
"MARGIN ADJUSTMENT DATE" shall have the meaning specified in Section
2.3(b) of this Agreement.
"MARGIN STOCK" shall have the meaning given to it under Regulation U of
the Board of Governors of the Federal Reserve System, as amended from time to
time.
"MATERIAL ADVERSE EFFECT" shall mean material adverse effect on (i) the
ability of the Company and any Subsidiaries taken as a whole to fulfill their
obligations under any of the Loan Documents or (ii) the Business Condition of
the Company and any Subsidiaries taken as a whole.
"MATERIAL AGREEMENTS" shall mean (a) any agreement to which the Company is
a party which provides for the receipt or expenditure by the Company or any
Subsidiary of more than $500,000.00 in any 12-month period other than sales
orders in the ordinary course of business, and (b) any other agreement to which
the Company is a party which is material to the business of the Company.
"MULTIEMPLOYER PLAN" shall mean a Plan described in ERISA which covers
employees of the Company and employees of any other Person, which together would
be treated as a single employer for purposes of ERISA.
"NOTE" shall mean the promissory note of Company in the form of Exhibit A
attached hereto evidencing the Loan.
"OBLIGATIONS" shall mean any and all indebtedness, obligations,
liabilities, contracts, indentures, agreements, warranties, covenants,
guaranties, representations, provisions, terms, and conditions of whatever kind,
now existing or hereafter arising, and however evidenced, that are now or
hereafter owed, incurred, or executed by Company to, in favor of, or with Bank
or any Affiliate Bank.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to subtitle A of Title IV or ERISA.
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"PERMITTED INVESTMENT" shall mean the Company's:
(a) investments existing on March 18, 1998 as disclosed in the
Schedule on Exhibit C hereto;
(b) extensions of credit in the nature of Accounts Receivable, or
notes receivable arising from the Company's sale or lease of
goods or services in the ordinary course of business;
(c) investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business;
(d) investments (excluding debt obligations) received in connection
with the bankruptcy or reorganization of the Company's customers
or suppliers and in settlement of delinquent obligations of, and
other disputes with, such customers or suppliers arising, form
transactions in the ordinary course of business;
(e) investments consisting of (i) compensation of Company employees,
officers or directors so long as the Company's Board of Directors
lawfully determines that such compensation is in the Company's
best interest, (ii) travel advances, employee relocation loans
and other employee loans and advances lawfully made in the
ordinary course of business, and (iii) loans lawfully made to
Company's employees, officers or directors relating to the
purchase of equity securities of Company;
(f) investments in marketable U.S. Treasury and Agency obligations;
(g) investments in certificates of deposit and bankers' acceptances
issued or created by any domestic commercial bank;
(h) investments in instruments issued or enhanced by a member bank of
the Federal Reserve System;
(i) investments in debt obligations issued by a corporation, or state
or municipal entity rated Bb or better in accordance with a
rating system employed by either Moody's Investor's Service, Inc.
or Standard & Poor's Corporation; or
(j) investments of other types aggregating not in excess of
$200,000.00.
"PERMITTED LIEN" shall mean the following, subject to the limitation set
forth in Section 8.19 hereto:
(a) Liens existing as of the date of this Agreement and disclosed in
the Schedule on Exhibit C hereto;
(b) Liens for taxes or governmental assessments. charges, or levies
the payment of which is not at the time required by any provision
of this Agreement or any other Loan Document unless such Liens
are not delinquent or are being contested in good faith by
appropriate proceedings;
(c) Liens that secure the Company's Indebtedness for the purchase
price of any real or personal property and that only encumber the
property purchased, improvements or accessions thereto, and
proceeds thereof,
(d) Liens securing capital lease obligations;
(e) Liens on Equipment leased by the Company pursuant to an operating
lease in the ordinary course of business (including proceeds
thereof and accessions thereto)
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incurred solely for the purpose of financing the lease of such
Equipment (including Liens arising from UCC financing statements
regarding leases permitted by this provision);
(f) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar Liens
affecting real property not interfering in any material respect
with the ordinary conduct of the business of the Company;
(g) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection
with the importation of Goods;
(h) Liens imposed by law, such as Liens of landlords, carriers,
warehousemen, mechanics, and materialmen arising in the ordinary
course of business for sums not yet due or being contested by
appropriate proceedings promptly initiated and diligently
conducted, provided the Company has set aside proper amounts,
determined in accordance with GAAP, for the pavement of all such
Liens;
(i) Liens incurred or deposits made in the ordinary course of
business in conjunction with worker's compensation, unemployment
insurance, and other types of social security, or to secure the
performance of tenders, statutory obligations, and surety and
appeal bonds, or to secure the performance and return of money
bonds and other similar obligations, but excluding Indebtedness;
(j) Liens in respect of judgments or awards with respect to which the
Company shall, in good faith, be prosecuting an appeal or
proceeding for review and with respect to which a stay of
execution upon such appeal or proceeding for review shall have
been obtained;
(k) Liens in favor of the Bank or any Affiliate Bank; and
(l) Liens incurred in connection with the extension, renewal,
refunding, refinancing, modification, amendment or restatement of
Indebtedness secured by Liens of the type described in clauses
(a), (c), (d) and (k) above, provided that any extension, renewal
or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase.
"PERSON" shall mean any natural person, corporation (which shall be deemed
to include business trust), association, limited liability company, partnership,
joint venture, political entity, or political subdivision thereof.
"PLAN" shall mean any plan (other than a Multiemployer Plan) defined in
ERISA in which the Company or any Subsidiary is, or has been at any time during
the preceding two (2) years, an employer" or a "substantial employer" as such
terms are defined in ERISA.
"PRIOR AGREEMENT" means that certain Credit Facility and Security
Agreement dated July 19, 1996 executed by and between Bank and Company.
"PROCEEDS" means any "proceeds" (as defined in the UCC).
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"RELATED EXPENSES" means any and all reasonable costs, liabilities, and
expenses (including without limitation, losses, damages, penalties, claims,
actions, reasonable attorney's fees, legal expenses, judgments, suits, and
disbursements) incurred by, imposed upon, or asserted against, Bank in any
attempt by Bank:
(a) to obtain, preserve, perfect, or enforce any security interest
evidenced by (i) the Agreement, or (ii) any other pledge
agreement, mortgage deed, deed of trust, hypothecation agreement,
guaranty, security agreement, assignment, or security instrument
executed or given by Company to or in favor of Bank,
(b) to obtain payment, performance, and observance of any and all of
the Obligations,
(c) to maintain, insure, audit, collect, preserve, repossess, and
dispose of any of the Collateral, or
(d) incidental or related to (a) through (c) above.
"REMITTANCES" shall have the meaning described in Section 4. 1 (a) of this
Agreement.
"REPORTABLE EVENT" shall have the meaning assigned to that term in Section
4043 of ERISA for which the requirement of 30 days' notice to the PBGC has not
been waived by the PBGC.
"SINGLE EMPLOYER PLAN" shall mean any Plan as defined in Section
4001(a)(15) of ERISA.
"SPIN FORGE ASSETS" shall mean the assets of Spin Forge LLC, a California
limited liability company ("Spin Forge"), acquired by Company with the proceeds
of the Credit Loan described in Article II hereof .
"SUBORDINATED DEBT" shall mean Indebtedness of a Person which is
subordinated, in a manner satisfactory to the Bank, to all Indebtedness owing to
the Bank.
"SUBSIDIARY" shall mean any Person of which more than fifty percent (50%)
of (i) the voting stock entitling the holders thereof to elect a majority of the
Board of Directors, managers, or trustees thereof, or (ii) the interest in the
capital or profits of such Person, which at the time is owned or controlled,
directly or indirectly, by the Company or one or more other Subsidiaries.
"TANGIBLE NET WORTH" shall mean the total assets of a Person less (i) such
Person's Total Indebtedness, and (ii) the aggregate amount of all of such
Person's intangible assets.
"TERM LOAN" shall mean any of the term loans described in Section
2.1(a)(ii) of this Agreement.
"TOTAL INDEBTEDNESS" shall mean the total of all items of indebtedness or
liability which in accordance with GAAP would be included in determining total
liabilities on the liability side of the balance sheet as of the date of
determination.
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"UCC" shall mean the Uniform Commercial Code in effect in the State of
Colorado from time to time.
The foregoing definitions shall be applicable to the singulars and plurals
of the foregoing defined terms. All accounting and financial terms used in this
Section and in this Agreement and not otherwise defined shall be determined in
accordance with GAAP consistently applied.
ARTICLE II. CREDIT FACILITY
SECTION 2.1(A). AMOUNT OF CREDIT. The Bank hereby agrees, subject to
the terms and conditions of this Agreement, to make a Credit Loan to the Company
as follows:
(i) Subject to the annual principal reductions set forth below, the Bank hereby
makes a revolving Credit Loan to the Company from time to time on and after
the date of this Agreement through and including the Final Maturity Date,
in an aggregate principal amount not to exceed Five Million and no/100
Dollars ($5,000,000.00). Until the Final Maturity Date, the Company may
borrow, repay, and reborrow such Credit Loan up to the maximum amount
thereof. Commencing with the first anniversary of this Agreement and on
each Contract Year thereafter, the aggregate principal amount available
under the Credit Loan shall be permanently reduced by the amount of
$1,000,000.00, provided that the Company shall immediately pay to the Bank
the amount, if any, by which the aggregate principal amount outstanding on
the Loan exceeds such reduced commitment of the Bank at that time. If,
however, after giving effect to any such payment any LIBOR Rate Loan would
be prepaid prior to the end of its respective Interest Period, the
permanent reduction in the commitment of the Bank shall be deemed to be
effective on the last day of such Interest Period.
(ii) If no Event of Default shall have occurred and be continuing, the Company
may elect to convert all or a portion of the Credit Loan outstanding to a
Term Loan; whereupon the amount of the Credit Loan available to be borrowed
under Section 2.1(a)(i) above shall be permanently and automatically
reduced by the amount of such Credit Loan converted to Term Loan. The
Company shall make such election by written notice delivered to Bank not
less than fifteen (15) days prior to the effective date of the Term Loan,
specifying the principal amount of the Term Loan and the initial interest
rate applicable thereto (i.e. whether the Term Loan is to be a LIBOR Rate
Loan or a Federal Funds Rate Loan). Each Term Loan shall be in an amount of
$50,000.00 or an integral multiple thereof. The Company shall repay each
Term Loan on a fully amortized basis over a period commencing on the date
of each Term Loan and ending on a date not later than the Final Maturity
Date. The principal amount of each Term Loan shall be payable in
consecutive and equal quarterly installments on the last day of each March,
June, September and December (commencing with the first such date following
the fixing of the Term Loan) until the maturity date of such Term Loan or
the earlier acceleration of the maturity of the Term Loan in accordance
with ARTICLE XI hereof, when any remaining principal balance shall be due
and payable. Each principal installment shall be an amount equal to the
original principal amount of the Term Loan divided by the
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number of calendar quarters occurring between the date of the making of
the Term Loan and the maturity date of such Term Loan.
(iii) Each Credit Loan or Term Loan shall be either a LIBOR Rate Loan or a
Federal Funds Rate Loan, subject to the following conditions:
(A) Each Loan that is made or continued as or converted into a LIBOR Rate
Loan shall be made, continued, or converted on such Business Day, in
such amount (equal to $10,000.00 or an integral multiple thereto), and
with such an Interest Period as the Company shall request by written
notice given to the Bank no later than 11:00 a.m. (Denver, Colorado
time) on the third Business Day prior to the date of disbursement or
continuation of or conversion into the requested LIBOR Rate Loan. Each
written notice of any LIBOR Rate Loan shall be irrevocable and binding
on the Company and the Company shall indemnify the Bank against any
loss or expense incurred by the Bank as a result of any failure by the
Company to consummate such LIBOR Rate Loan, including, without
limitation, any loss (including loss of anticipated profits) or
expense incurred by reason of liquidation or reemployment of deposits
or other funds acquired by the Bank to fund the LIBOR Rate Loan. A
certificate as to the amount of such loss or expense submitted by the
Bank to the Company shall be conclusive and binding for all purposes,
absent manifest error. In the event that the Company fails to provide
the Bank with the required written notice, the Company shall be deemed
to have given a written notice that such LIBOR Rate Loan shall be
converted to a Federal Funds Rate Loan on the last day of the
applicable Interest Period. In no event shall the Company be permitted
to select a LIBOR Rate Loan having an Interest Period ending after the
Final Maturity Date;
(B) Each Loan that is made as or converted into a Federal Funds Loan shall
be made or converted on such Business Day and in such amount (equal to
$10,000.00 or any integral multiple thereof) as the Company shall
request by written notice given to the Bank no later than 11:00 a.m.
(Denver, Colorado time) on the date of disbursement of or conversion
into the requested Federal Funds Loan;
(C) Each LIBOR Rate Loan that is a Term Loan shall have an Interest Period
of three (3) months.
SECTION 2.2 LOAN EVIDENCED BY PROMISSORY NOTE. All Loans shall be
evidenced by the Note, dated the date hereof. The Note shall be a master note,
and the principal amount of all Loans outstanding shall be evidenced by the Note
or any ledger or other record of the Bank, which shall be presumptive evidence
of the principal owing and unpaid on the Note.
SECTION 2.3 INTEREST RATES. The Company shall pay interest on the unpaid
principal amount of each Credit Loan and Term Loan made by the Bank from the
date of such Credit Loan or Term Loan, as the case may be, until such principal
amount shall be paid in full as follows:
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(a) (i) During such periods as any LIBOR Rate Loan comprising a Credit Loan or
Term Loan is outstanding, at a rate per annum equal to the sum of the
LIBOR Rate and the LIBOR Rate Margin (as described in subpart (b)
below) in effect from time to time from and after each Margin
Adjustment Date occurring, on or prior to the date of the making, the
conversion or the continuation of such Loan, as the case may be, in
accordance with this Agreement.
(ii) During such periods as any Federal Funds Rate Loan comprising a
Credit Loan or Term Loan is outstanding, at a rate per annum equal at all
times to the sum of the Federal Funds Rate plus two hundred (200) basis
points.
(b) (i) Except as otherwise provided herein, the LIBOR Rate Margin in
effect shall be adjusted as of the first day of each calendar quarter,
beginning with July 1, 1998 (each a "Margin Adjustment Date"), in
accordance with Section 2.3(b)(ii) below. The LIBOR Rate Margin in
effect shall be applicable to new advances for Credit or Term Loans as
of the date of such advances, and to a converted or continued Loan as
of the date of conversion or continuation, occurring within the
calendar quarter in which such LIBOR Rate Margin is in effect. With
respect to any LIBOR Rate Loan for which the last day of the Interest
Period is a date subsequent to the Margin Adjustment Date, such LIBOR
Rate Margin shall not be applicable until the continuation date of
such LIBOR Rate Loan, if applicable, subsequent to the Margin
Adjustment Date.
(ii) As of any Margin Adjustment Date, the LIBOR Rate Margin shall be
adjusted to be the percentage indicated in the following table
corresponding to the Company's Indebtedness to Tangible Net Worth Ratio,
which shall be calculated from the balance sheet provided by the Company
to the Bank under Section 8. l(a) of this Agreement immediately preceding
the Margin Adjustment Date.
INDEBTEDNESS TO TANGIBLE NET
WORTH RATIO LIBOR RATE MARGIN
>=2.00 to 1.00 150 Basis Points
<=1.99 to 1.00 but >1.00 to 1.00 125 Basis Points
< = 1.00 to 1.00 100 Basis Points
(iii) Any such adjustment to the LIBOR Rate Margin shall only remain
effective until the earlier of the next Margin Adjustment Date or the date
on which an Event of Default shall occur (excepting therefrom an Event of
Default created by the Company's Indebtedness to Tangible Net Worth
exceeding 1.99:1.00 as required under Section 8.18 of this Agreement in
which case the LIBOR Rate Margin shall be one hundred fifty (150) basis
points). The LIBOR Rate Margin to be effective from such earlier date and
from time to time thereafter shall be the LIBOR Rate Margin as adjusted
pursuant to this Agreement, PROVIDED, HOWEVER, that: (i) if the Company
shall not deliver the financial statements in accordance with Section 8.1
of this Agreement, the LIBOR Rate Margin shall be two hundred (200) basis
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points per annum and (ii) if an Event of Default (excepting therefrom an
Event of Default created by the Company's Indebtedness to Tangible Net
Worth exceeding 1.99:1.00 as required under Section 8.18 of this Agreement)
shall occur which has not been waived in writing by the Bank, the interest
rate shall be the interest rate applicable pursuant to subsection (c)
below.
(c) Upon the occurrence of any Event of Default and so long as such Event of
Default is continuing (excepting therefrom an Event of Default created by
the Company's Indebtedness to Tangible Net Worth exceeding 1.99:1.00 as
required under Section 8.18 of this Agreement, or an Event of Default
created by the Company's failure to deliver the financial statements in
accordance with Section 8.1 of this Agreement), the unpaid principal amount
of the Loan, and accrued interest thereon, or any fees or any and other sum
payable hereunder, shall thereafter until paid in full bear interest at a
rate per annum equal to six hundred (600) basis points in excess of the
Federal Funds Rate in effect from time to time.
SECTION 2.4 INTEREST PAYMENTS. The Company shall pay to the Bank interest
on the unpaid principal balance of each Federal Funds Rate Loan on either (i)
the date such Loan is converted to a LIBOR Rate Loan, or (ii) the last date of
each March, June, September and December. The Company shall pay to the Bank
interest on the unpaid principal balance of each LIBOR Rate Loan on (i) the date
such Loan is converted to a Federal Funds Rate Loan, or (ii) the last day of the
applicable Interest Period of such Loan, whichever is earlier.
SECTION 2.5 PREPAYMENT. The Company may prepay any Federal Funds Rate Loan
in whole, or in part, at any time or times. The Company may prepay any LIBOR
Rate Loan, in whole or in part, only on the last day of the Interest Period
applicable to such LIBOR Rate Loan upon not less than three (3) Business Days'
prior written notice given to the Bank. Each prepayment of a Term Loan shall be
applied to the principal installments in the inverse order of their respective
maturities.
SECTION 2.6 FEES. The Company shall pay to the Bank:
(a) A commitment fee of $25,000.00 payable upon the execution of this
Agreement;
(b) An annual administrative fee of $5,000.00, payable on the first
anniversary of this Agreement and on each anniversary thereafter through
the Final Maturity Date; and
(c) Prior to maturity (whether by acceleration or otherwise), for each payment
of principal or interest not paid when due, a late fee equal to five
percent (5.00%) of such payment, not to exceed $100.00.
SECTION 2.7 COMPUTATION OF INTEREST AND FEES. Interest on Loans and unpaid
fees, if any, shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed.
SECTION 2.8 ADDITIONAL COSTS.
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(a) If, due to either (i) the introduction of, or any change in, or in the
interpretation of, any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in
the cost to the Bank of making, funding or maintaining LIBOR Rate Loans,
then the Company shall from time to time, upon demand by the Bank pay to
the Bank additional amounts sufficient to reimburse the Bank for any such
additional costs. A certificate of the Bank submitted to the Company as to
the amount of such additional costs, shall be conclusive and binding for
all purposes, absent manifest error. Notwithstanding anything to the
contrary contained in this Section 2.8(a), the Company shall not be
obligated to indemnify or reimburse the Bank for any additional costs which
arose or were incurred during, or is otherwise attributable to, any period
of time more than 180 days prior to the date on which the Bank delivered
its written certificate for indemnification or reimbursement for such
additional costs and such costs shall be nondiscriminatory in nature and
will apply without exception to all Bank clients of equal standing. Upon
notice from the Company to the Bank within five (5) Business Days after the
Bank notifies the Company of any such additional costs pursuant to this
Section 2.8(a), the Company may either prepay in full all LIBOR Rate Loans
so affected then outstanding, together with interest accrued thereon to the
date of such prepayment, or (ii) convert such LIBOR Rate Loans so affected
then outstanding into Federal Funds Rate Loans upon not less than four (4)
Business Days' notice to the Bank. If any such prepayment or conversion of
any LIBOR Rate Loan occurs on any day other than the last day of the
applicable Interest Period for such Loan, the Company also shall pay to the
Bank such additional amounts sufficient to indemnify the Bank against any
loss, cost, or expense incurred by the Bank as a result of such prepayment
or conversion, including, without limitation, any loss (including loss of
anticipated profits), cost, or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Bank
to fund any such Loan, and a certificate as to the amount of any such loss,
cost, or expense submitted by the Bank to the Company shall be conclusive
and binding for all purposes, absent manifest error.
(b) If either (i) the introduction of, or any change in, or in the
interpretation of, any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and the Bank determines that the amount of
such capital is increased by or based upon the existence of the Loan (or
commitment to make the Loan) and other extensions of credit (or commitments
to extend credit) of similar type, then, upon demand by the Bank, the
Company shall pay to the Bank from time to time as specified by the Bank
additional amounts sufficient to compensate the Bank in the light of such
circumstances, to the extent that the Bank reasonably determines such
increase in capital to be allocable to the existence of the Bank's Loan (or
commitment to make the Loan). A certificate of the Bank submitted to the
Company as to such amounts shall be conclusive and binding for all
purposes, absent manifest error. Notwithstanding anything to the contrary
contained in this Section 2.8(b), the Company shall not be obligated to
indemnify or reimburse the Bank for any such additional amounts which arose
or were incurred during, or is otherwise attributable
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to, any period of time more than 180 days prior to the date on which the
Bank delivered its written certificate for indemnification or reimbursement
for such additional amounts and such amounts shall be nondiscriminatory in
nature and will apply without exception to all Bank clients of equal
standing. Upon notice from the Company to the Bank within five (5) Business
Days after the Bank notifies the Company of any such additional costs
pursuant to this Section 2.8(b), the Company may either (A) prepay in full
the Loan if so affected, together with interest accrued thereon to the date
of such prepayment, or (B) convert the Loan if so affected into a Loan of
any other type not so affected upon not less than four (4) Business Days'
notice to the Bank. If any such prepayment or conversion of any LIBOR Rate
Loan occurs on any day other than the last day of the applicable Interest
Period for such Loan, the Company also shall pay to the Bank such
additional amounts sufficient to indemnify the Bank against any loss, cost,
or expense incurred by the Bank as a result of such prepayment or
conversion, including, without limitation, any loss (including loss of
anticipated profits), cost, or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Bank
to fund any such Loan, and a certificate as to the amount of any such loss,
cost, or expense submitted by the Bank to the Company shall be conclusive
and binding for all purposes, absent manifest error.
SECTION 2.9 ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
governmental authority shall assert that it is unlawful, for the Bank to perform
its obligations hereunder to make, continue, or convert LIBOR Rate Loans
hereunder, then, (a) on notice thereof by the Bank to the Company, the
obligation of the Bank to make or continue a LIBOR Rate Loan or to convert any
Federal Funds Rate Loan into a LIBOR Rate Loan shall terminate and the Bank
shall thereafter be obligated to make only Federal Funds Rate Loans whenever any
written notice requests for any type LIBOR Rate Loan is received, and (b) upon
demand therefor by the Bank to the Company, the Company shall either (i)
forthwith prepay in full any LIBOR Rate Loan then outstanding, together with
interest accrued thereon, or request that the Bank, upon four (4) Business Days'
notice, convert any LIBOR Rate Loan then outstanding into a Federal Funds Rate
Loan. If any such prepayment or conversion of any LIBOR Rate Loan occurs on any
day other than the last day of the applicable Interest Period for such Loan, the
Company also shall pay to the Bank such additional amounts sufficient to
indemnify the Bank against any loss, cost, or expense incurred by the Bank as a
result of such prepayment or conversion, including, without limitation, any loss
(including loss of anticipated profits), cost, or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund any such Loan, and a certificate as to the amount of any such loss,
cost, or expense submitted by the Bank to the Company shall be conclusive and
binding, for all purposes, absent manifest error.
SECTION 2.10 INTEREST RATE SWAP CONTRACTS. The Company shall have the
option at any time and from time to time to enter into one or more interest rate
swap contracts with Key Capital Markets, Inc. on any portion of the Loans
outstanding, on terms and conditions mutually agreeable to the Company and Key
Capital Markets, Inc. Such interest rate swaps may be entered into for periods
up to, but not extending beyond the Final Maturity Date.
-15-
ARTICLE III. SECURITY AGREEMENT
SECTION 3.1 GRANT OF SECURITY INTEREST. To secure the prompt payment and
performance of the Obligations, and in addition to any other collateral or Lien
securing the Obligations, the Company hereby grants to the Bank a continuing
security interest in and to and a pledge of all of the tangible and intangible
personal property and assets of the Company, together with any other collateral
securing the obligations of Company under the Prior Agreement and/or under the
Letter of Credit Loan and in and to the Spin Forge Assets (the "Collateral"),
whether now owned or existing or hereafter acquired or arising and wheresoever
located including, without limitations (a) all Accounts Receivable, (b) all
Inventory, (c) all Equipment, (d) all General Intangibles (excluding patents),
(e) any and all deposits or other sums at any time credited by or due from the
Bank to the Company, whether in the Cash Collateral Account, another Depository
Account, or other account, (f) all Cash Security, (g) all Instruments,
Documents, documents of title, policies and certificates of insurance,
securities, Goods, choses in action, Chattel Paper, cash or other property, to
the extent owned by the Company or in which the Company has an interest, (h) all
Collateral which now or hereafter is at any time in the possession or control of
the Bank or in transit by mail or carrier to or from the Bank or in the
possession of any Person acting in the Bank's behalf, without regard to whether
the Bank received the same in pledge, for safekeeping, as agent for collection
or transmission or otherwise or whether the Bank had conditionally released the
same, and any and all balances, sums, proceeds and credits of the Company with,
and any claims of the Company against, the Bank, (i) all accessions to,
substitutions for, and all replacements, products and Proceeds, profits and
rents of the herein above-referenced property of the Company described in this
Section including, but not limited to, proceeds of insurance policies insuring
such property, (j) all books, records, and other property including, but not
limited to, credit files, programs, printouts, computer software (to the extent
not disallowed by any agreement between the Company and third parties),
programs, and disks, magnetic tape and other magnetic media, and other materials
and records) of the Company pertaining to any such above-referenced property of
the Company, (k) all real property, improvements, fixtures, appurtenances,
leasehold interests and any other property of similar kind or character, and (l)
all "investment property" (as defined in the UCC). Notwithstanding the
foregoing, the Collateral shall not include that certain sublease (the
"Sublease") dated July 22, 1996 between the Company and ▇.▇. ▇▇▇▇▇▇ de Nemours
and Company ("DuPont") and those assets located on the property covered by the
Sublease or those assets used directly or indirectly in connection with the
services provided by the Company to DuPont under that certain Tolling/Services
Agreement for Industrial Diamonds dated July 22, 1996, all of which assets are
located at the Company's facility in Dunbar, Pennsylvania.
SECTION 3.2 GRANT OF LICENSE. The Company hereby grants to the Bank a
fully-paid, royalty-free, worldwide right and license to, upon the occurrence of
an Event of Default, (a) use, or sell or otherwise transfer, any and all of the
Company's Inventory; (b) use or sell any such work-in-process, raw materials or
completed or finished products, and (c) accept any and all orders or shipments
of products ordered by the Company from manufacturers and use or sell any such
products.
SECTION 3.3 PERFECTION. The Company shall execute such financing
statements provided for by applicable law, and otherwise take such other action
and execute such assignments or other instruments or documents, in each case as
the Bank may reasonably request, to evidence, perfect, or
-16-
record the Bank's security interest in the Collateral or to enable the Bank to
exercise and enforce its rights and remedies under this Agreement with respect
to any Collateral. The Company hereby authorizes the Bank to execute and file
any such financing statement or continuation statement on the Company's behalf.
The parties acknowledge that a carbon, photographic, or other reproduction of
this Agreement shall be sufficient as a financing statement to the extent
permitted by law.
SECTION 3.4 GENERAL REPRESENTATIONS AS TO COLLATERAL. The Company
represents that the Schedule attached as Exhibit C hereto sets forth: (a) the
principal place of business of the Company and the office where its chief
executive offices and accounting offices are located, (b) the office where
Company keeps its records concerning the Accounts Receivable and General
Intangibles, (c) the location of the Company's registered office, (d) each
location at which is located any Inventory, Equipment or other tangible
Collateral of the Company, including, without limitation, the location of any
warehouse, bailee or consignee at which Collateral is located, and (e) all trade
names, assumed names, fictitious names and other names used by the Company
during the five (5) years prior to the date hereof.
SECTION 3.5 TITLE TO COLLATERAL; LIENS; TRANSFERS. The Company has good,
clear and merchantable title to and ownership of the Collateral, free and clear
of all Liens, except for Permitted Liens. Except as otherwise provided herein or
in any other Loan Document, and except as to Permitted Liens and sale of
Inventory in the ordinary course of business, the Company shall not encumber,
pledge, mortgage, grant a security interest in, assign, sell, lease or otherwise
dispose of or transfer, whether by sale, merger, consolidation, liquidation,
dissolution or otherwise, any of the Collateral.
SECTION 3.6 CHANGES AFFECTING PERFECTION. The Company shall not, without
giving the Bank thirty (30) days prior notice thereof: (a) make any change in
any location where Company's Equipment or material amounts of Company's
Inventory is maintained or locate any of the Company's Equipment or material
amounts of the Company's Inventory at any new locations, (b) make any change in
the location of its chief executive office, principal place of business or the
office where Company's records pertaining to its Accounts and General
Intangibles are kept, (c) add any new places of business or close any of its
existing places of business, (d) make any change in Company's name or adopt any
trade names, assumed names or fictitious names or otherwise add any name under
which the Company does business, or (e) make any other change (other than sales
of Inventory in the ordinary course of business) which might affect the
perfection or priority of the Bank's Lien in the Collateral.
SECTION 3.7 POWER OF ATTORNEY FOR INSURANCE. Upon request of the Bank, the
Company shall promptly deliver to the Bank true copies of all reports made to
insurance companies. The Company hereby irrevocably makes, constitutes, and
appoints the Bank (and all officers, employees, or agents designated by the
Bank) as its true and lawful attorney-in-fact and agent, with full power of
substitution, such that the Bank shall have the right and authority, upon the
occurrence and during the continuance of an Event of Default which has not been
waived in writing by the Bank as required by this Agreement, to make and adjust
claims under such policies of insurance, receive and endorse the name of the
Company on, any check, draft, instrument or other item of payment for the
proceeds
-17-
of such policies of insurance and make all determinations and decisions with
respect to such policies of insurance. The Company hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and shall be irrevocable. Without
waiving or releasing any obligation, Potential Default or Event of Default by
the Company under this Agreement, the Bank may (but shall not be required to) at
any time or times thereafter maintain such action with respect thereto as the
Bank deems advisable. All sums disbursed by the Bank in connection therewith
(including, but not limited to, reasonable attorneys' and paralegals' fees and
disbursements, court costs, expenses and other charges relating thereto) shall
be payable on demand, and until paid by the Company to the Bank, with interest
thereon at the then applicable Federal Funds Rate plus four hundred basis
points, and shall be additional Obligations under this Agreement secured by the
Collateral.
SECTION 3.8 PROTECTION OF COLLATERAL; REIMBURSEMENT. All insurance
expenses and all expenses of protecting, storing, warehousing, insuring,
handling, maintaining, and shipping any Collateral, any and all excise,
property, sales, use, or other taxes imposed by any state, Federal, or local
authority on any of the Collateral, or in respect of the sale thereof, or
otherwise in respect of the Company's business operations which, if unpaid,
could result in the imposition of any Lien upon the Collateral, shall be borne
and paid by the Company. If the Company fails to promptly pay any portion
thereof when due, except as may otherwise be permitted under this Agreement or
under any of the other Loan Documents, the Bank, at its option, may, but shall
not be required to, pay the same. All sums so paid or incurred by the Bank for
any of the foregoing and any and all other sums for which the Company may become
liable under this Agreement and all reasonable costs and expenses (including
reasonable attorneys' fees and paralegals' fees, legal expenses, and court
costs, expenses and other charges related thereto) which the Bank may incur in
enforcing or protecting its Liens on or rights and interests in the Collateral
or any of its rights or remedies under this Agreement or any other agreement
between the parties to this Agreement or in respect of any of the transactions
to be had under this Agreement shall be repayable within five (5) Business Days
of demand and if not paid within said five (5) Business Day period, which amount
shall also accrue interest, until paid by the Company to the Bank with interest
thereon at a rate per annum equal to the Federal Funds Rate plus four hundred
basis points, shall be additional Obligations under this Agreement secured by
the Collateral. Unless otherwise provided by law, neither the Bank nor any
Affiliate Bank shall be liable or responsible in any way for the safekeeping of
any of the Collateral or for any loss or damage thereto or for any diminution in
the value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other Person whomsoever.
SECTION 3.9 INSPECTION; VERIFICATION. During regular business hours and
with prior notice and after reasonable notice, to the Company, the Bank (by any
of its officers, employees, agents, representatives, or designees) shall have
the right to inspect the Company's Collateral and to inspect and audit, all
books, records, journals, orders, receipts, or other correspondence related
thereto (and to make extracts or copies thereof as the Bank may desire) and to
inspect the premises upon which any of the Collateral is located for the purpose
of verifying the amount, quality, quantity, value, and condition of, or any
other matter relating to, the Collateral, provided, however, that upon the
occurrence and during the continuance of an Event of Default, the Bank may
exercise such access and other rights at any time the Bank deems such action
necessary or desirable. In addition to inspections
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as outlined above, the Bank or its designee shall have the right to make test
verifications of the Accounts Receivable and other Collateral and physical
verifications of the Inventory and other tangible items of the Collateral in any
manner and through any commercially reasonable medium that the Bank considers
advisable, and the Company agrees to furnish all such assistance and information
as the Bank may require in connection therewith. The Company shall pay the costs
for each of one such inspection and one such verification in each 12-month
period; provided that if an Event of Default has occurred and is continuing, the
Company shall pay the costs of all such inspections and verifications.
SECTION 3.10 ASSIGNMENTS, RECORDS AND SCHEDULES OF ACCOUNTS. On or before
the fifteenth (15th) calendar day of each month from and after the date of this
Agreement, the Company shall deliver to the Bank, in form and substance
acceptable to the Bank, a summary aged trial balance of the Company's Accounts
Receivable dated as of the last day of the preceding month (and upon the Bank's
request, a detailed aged trial balance, of all then existing Accounts Receivable
specifying the names, face value and dates of invoices for each Account Debtor
obligated on an Account Receivable so listed). In addition, upon the Bank's
request, the Company shall furnish the Bank with copies of proof of delivery and
the original copy, if available, of all documents relating to the Accounts
Receivable including, but not limited to, repayment histories and present status
reports, and such other matters and information relating to the status of then
existing Accounts Receivable as the Bank shall reasonably request. If, upon the
occurrence of an Event of Default, the Bank so requests, the Company shall
execute and deliver to the Bank, on forms supplied by the Bank and at such
intervals as the Bank may from time to time require, written assignments of all
of its Accounts after shipment of the subject goods, together with copies of
invoices and/or invoice registers related thereto.
SECTION 3.11 REPORTING REGARDING INVENTORY. The Company shall report
inventory figures no later than fifteen (15) days after the end of each month
based upon month-end balances reconciled to the period end balance sheet. The
Company's Inventory shall be reported based upon reconciliation of the financial
statements to the perpetual inventory system or a regular physical count as the
case may be, and: (a) the values shown on reports of Inventory shall be at the
lower of cost or market value determined in accordance with the Company's usual
cost accounting system, consistently applied, and (b) no later than fifteen (15)
days after the end of each month, or more frequently, if the Bank shall so
request, the Company shall submit to the Bank an inventory report, the Company's
perpetual inventory records and its general ledger, broken down into such detail
and with such categories as the Bank shall require.
SECTION 3.12 OTHER COLLATERAL REPORTS. The Company shall furnish the Bank
with, on or before the fifteenth (15th) day of each month from and after the
date of this Agreement, a report listing the schedule of backlog of orders being
processed by the Company, and such other reports regarding other Collateral as
the Bank from time to time reasonably may request.
ARTICLE IV. COLLECTION OF ACCOUNTS
SECTION 4.1 CASH COLLATERAL ACCOUNT:
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(a) All collections from Account Debtors ("Collections") shall be deposited
into the Cash Collateral Account established pursuant to Section 4.2 below.
The Company will promptly deposit all remittances from Account Debtors
submitted to the Company ("Remittances"), in the identical form in which
such Remittances were made (except for any necessary endorsements), whether
by cash or check, into the Cash Collateral Account. All funds in the Cash
Collateral Account shall be deemed to be the property of the Bank and shall
be subject only to the signing authority designated from time to time by
the Bank. The Company shall have no control over such funds. The Bank shall
have sole access to the Cash Collateral Account, and the Company shall have
no access thereto. The Company hereby grants to the Bank a security
interest in all funds held in the Cash Collateral Account as security for
the Obligations. The Cash Collateral Account shall not be subject to any
deduction, set-off, banker's lien or any other right in favor of any person
or entity other than the Bank. Prior to the occurrence of an Event of
Default which is continuing, deposits to the Cash Collateral Account shall
be: (1) applied immediately against the principal and/or interest of the
Loans and/or other Obligations of the Company to the Bank under this
Agreement all in such order and method of application as may be elected by
the Bank in its sole discretion; provided, however, the Bank will use
reasonable efforts to avoid applications that would cause early prepayment
of a LIBOR Rate Loan prior to the expiration of its applicable Interest
Period, or (ii) to the extent not so applied by the Bank, released to the
Company for use in the Company's business.
SECTION 4.2 CREDITING OF COLLECTIONS AND REMITTANCES. For the purpose of
calculating interest and determining the aggregate Loans outstanding and
resulting loan availability hereunder, all Collections and Remittances shall be
credited to the Company on the Business Day or on the next Business Day after
which the Bank receives notice of the deposit of the proceeds of such
Collections and Remittances into the Cash Collateral Account, and is in good
funds with respect thereto, prior to 2:00 p.m. (Denver, Colorado time). From
time to time, upon advance written notice to the Company, the Bank may adopt
such additional or modified regulations and procedures as it may deem reasonable
and appropriate with respect to the operation of the Cash Collateral Account and
the services to be provided by the Bank under this Agreement.
SECTION 4.3 COST OF COLLECTION. All reasonable costs of collection of the
Company's Accounts Receivable, including out-of-pocket expenses, administrative
and record-keeping costs, reasonable attorney's fees, and all service charges
and costs related to the establishment and maintenance of the Cash Collateral
Account, shall be the sole responsibility of the Company, whether the same are
incurred by the Bank or the Company, and the Bank, in its sole discretion, may
charge the same against the Company and/or any account maintained by the Company
with the Bank and the same shall be deemed part of the Obligations hereunder.
The Company hereby indemnifies and holds the Bank harmless from and against any
loss or damage with respect to any Collection or Remittance deposited in the
Cash Collateral Account which is dishonored or returned for any reason. If any
Collection or Remittance deposited in the Cash Collateral Account is dishonored
or returned unpaid for any reason, the Bank, in its sole discretion, may charge
the amount of such dishonored or returned Collection or Remittance directly
against the Company and/or any account maintained by the Company with the Bank
and such amount shall be deemed part of the Obligations hereunder. The
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Bank shall not be liable for any loss or damage resulting from any error,
omission, failure or negligence on the part of the Bank under this Agreement,
except losses or damages resulting from the Bank's gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction.
SECTION 4.4 RETURN OF FUNDS. Upon the payment in full of all Obligations:
(a) the Bank's security interests and other rights in funds in the Cash
Collateral Account under Section 4.1 of this Agreement shall terminate, (b) all
rights to such funds shall revert to the Company, and (c) the Bank will, at the
Company's expense, take such steps as the Company may reasonably request to
evidence the termination of such security interests and to effect the return to
the Company of such funds.
SECTION 4.5 NOTICE TO ACCOUNT DEBTORS. The Company hereby authorizes the
Bank, upon the occurrence and during the continuance of an Event of Default, in
accordance with the powers conferred upon the Bank pursuant to any applicable
provision of this Agreement, to: (a) notify any or all Account Debtors that the
Accounts Receivable have been assigned to the Bank, for the benefit of the Bank,
and that the Bank has a security interest therein, and (b) direct such Account
Debtors to make all payments due from them to the Company upon the Accounts
Receivable directly to the Bank or to a lock box designed by the Bank; provided,
however, that the Bank shall not exercise any of its rights under this sentence
unless: (i) the Company has failed to so notify or direct any such Account
Debtor following a request from the Bank to the Company for such notification or
direction, or (ii) the Bank reasonably believes that the Company has failed to
so notify or direct any such Account Debtor. The Bank shall promptly furnish the
Company with a copy of any such notice sent. Any such notice, in the Bank's sole
discretion, may be sent on the Company's stationery, in which event the Company
shall co-sign such notice with the Bank.
SECTION 4.6 APPOINTMENT OF ATTORNEY-IN-FACT. The Company hereby
irrevocably appoints the Bank (and all persons designated by the Bank) as the
Company's true and lawful attorney (and agent-in-fact) to: upon the occurrence
and during the continuance of an Event of Default in the Company's or Bank's
name: (i) demand payment of the Accounts Receivable, (ii) enforce payment of the
Accounts Receivable, by legal proceedings or otherwise, (iii) exercise all of
the Company's rights and remedies with respect to the collection of the Accounts
and any other Collateral, (iv) settle, adjust, compromise, extend, or renew the
Accounts Receivable, (v) settle, adjust, or compromise any legal proceedings
brought to collect the Accounts Receivable, (vi) if permitted by applicable law,
sell or assign the Accounts Receivable and other Collateral upon such terms, for
such amounts, and at such time or times as the Bank deems advisable, (vii)
discharge and release the Accounts Receivable and any other Collateral, (viii)
take control, in any manner, of any item of payment or proceeds relating to any
Collateral, (ix) prepare, file, and sign the Company's name on a proof of claim
in bankruptcy or similar document against any Account Debtor, (x) prepare, file,
and sign the Company's name on any notice of Lien, assignment, or satisfaction
of Lien or similar document in connection with the Accounts Receivable, (xi) do
all acts and things necessary, in the Bank's discretion, to fulfill the
Company's obligations under this Agreement, (xii) endorse the name of the
Company upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of the Bank on account of the Obligations,
(xiii) endorse the name of the Company upon any Chattel Paper, document,
Instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading,
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or similar document or agreement relating to the Accounts Receivable, Inventory
and any other Collateral, (xiv) use the Company's stationery and sign the name
of the Company to verifications of the Accounts Receivable and notices thereof
to Account Debtors, (xv) use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Accounts Receivable, Inventory, and any other Collateral to which the Company
has access, and (xvi) notify post office authorities to change the address for
delivery of the Company's mail to an address designated by the Bank, receive and
open all mail addressed to the Company, and, after removing all Collections and
Remittances and other Proceeds of Collateral, forward the mail to the Company.
The Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
ARTICLE V. SPECIFIC REPRESENTATIONS, WARRANTIES
AND COVENANTS RELATING TO COLLATERAL.
SECTION 5.1 DISPUTES AND CLAIMS REGARDING ACCOUNTS. The Company shall
notify the Bank promptly of all material disputes and claims and settle or
adjust them at no expense to the Bank, but no material discount, credit or
allowance outside the ordinary course of business or material adverse extension,
compromise or settlement shall be granted to any customer or Account Debtor in
respect of an Account Receivable and no returns of merchandise outside the
ordinary course of business shall be accepted by the Company in settlement or
satisfaction of an Account Receivable which settlement or satisfaction would
have a Material Adverse Effect, without the Bank's consent which consent shall
not be unreasonably withheld.
SECTION 5.2 DEPOSIT ACCOUNTS. Other than: (a) the Cash Collateral Account,
and (b) those other Deposit Accounts disclosed on the Schedule on Exhibit C
hereto and consented to by the Bank (such disclosed Deposit Accounts being, the
"Permitted Accounts"), neither the Company nor any of its Subsidiaries maintains
a Deposit Account or trust account for the purpose of collecting and depositing
Collections and\or Remittances or otherwise holding monies of the Company.
SECTION 5.3 COMPLIANCE WITH TERMS OF ACCOUNTS; GENERAL INTANGIBLES. The
Company will perform and comply in all material respects with all obligations in
respect of Accounts Receivable, Chattel Paper, General Intangibles and under all
other contracts and agreements to which it is a party or by which it is bound
relating to the Collateral where failure to so comply would result in any
material impairment in the value of the Collateral, unless the validity thereof
is being contested in good faith by appropriate proceedings and such proceedings
do not involve the material danger of the sale, forfeiture or loss of the
Collateral which is the subject of such proceedings or the priority of the lien
in favor of the Bank thereon.
SECTION 5.4 NO WAIVERS, EXTENSIONS, AMENDMENTS. The Company will not,
without the Bank's prior written consent, which consent shall not be
unreasonably withheld or delayed, grant any extension of the time of payment of
any of the Accounts, Chattel Paper or Instruments, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof, or allow any credit or
discount whatsoever thereon, other than in the ordinary course of business.
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SECTION 5.5 LOCATION OF COLLATERAL. All of the locations of the Company
and its Subsidiaries and all locations of the Collateral are set forth in the
Schedule attached hereto as Exhibit C. Other than as otherwise set forth in the
Schedule on Exhibit C hereto, as amended or supplemented by written notice to
the Bank: (a) the Company does not keep, and shall not keep, any Collateral
owned by it on any property not owned in fee simple by the Company, and (b) each
of the Subsidiaries of the Company does not keep, and shall not keep, any
Collateral owned by it on any property not owned in fee simple by the Company
except to the extent permitted by this Agreement.
SECTION 5.6 LIEN PRIORITY. From and after the date of this Agreement, by
reason of the filing of financing statements and termination statements in all
requisite government offices, this Agreement and the Loan Documents will create
and constitute a valid and perfected first priority security interest (except as
permitted by this Agreement and subject to Permitted Liens) in and Lien on that
portion of the Collateral which can be perfected by such filing or delivery,
which security interest will be enforceable against the Company and all third
parties as security for payment of all Obligations.
SECTION 5.7 LIEN WAIVERS; LANDLORD, BAILEE AND CONSIGNEE WAIVERS,
WAREHOUSE RECEIPTS. The Company will not create, permit or suffer to exist and
will defend the Collateral against and take such other action as is necessary to
remove, any Lien, claim or right, in or to the Collateral, other than the
Permitted Liens. The Company shall defend the right, title and interest of the
Bank in and to any of the Company's rights to the Collateral and in and to the
Proceeds and products thereof against the claims and demands of all Persons. In
the event any Collateral of the Company comprising personal property subject to
the security interest or Lien in favor of the Bank is at any time located on any
real property not owned by the Company, the Company will obtain and maintain in
effect at all times while any such Collateral is so located valid and effective
lien waivers, in form and substance reasonably satisfactory to the Bank whereby
each owner, landlord, consignee, bailee and mortgagee having an interest in such
real property shall disclaim any interest in such Collateral, as the case may
be, and shall agree to allow the Bank reasonable access to such real property in
connection with any enforcement of the security interest granted hereunder.
SECTION 5.8 MAINTENANCE OF INSURANCE. The Company will maintain with
financially sound and reputable companies, insurance policies: (a) insuring the
real property portion of the Collateral, the Equipment, the Inventory, and all
equipment subject to any lease, against loss by fire, explosion, theft, flood
(if any such properties are located in a federally designated flood hazard area)
and such other casualties as are usually insured against by companies engaged in
the same or similar businesses, and (b) insuring the Company and the Bank
against liability for personal injury and property damage relating to such real
property, Equipment, Inventory and equipment covered by any equipment lease,
such policies to be in such form and in such amounts and coverage as may be
reasonably satisfactory to the Bank, with losses payable to the Company and the
Bank as their respective interests may appear. All insurance with respect to the
real property, Equipment and Inventory shall: (i) provide that no cancellation,
reduction in amount, change in coverage or expiration thereof, shall be
effective until at least thirty (30) days after written notice to the Bank
thereof. and (ii) be satisfactory in all respects to the Bank.
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SECTION 5.9 MAINTENANCE OF EQUIPMENT. The Company will keep and maintain
each item of Equipment necessary for the operation of the Company's business in
good operating condition, ordinary wear and tear excepted, and the Company will
provide all maintenance and service, and all repairs necessary for such purpose.
SECTION 5.10 LIMITATIONS ON DISPOSITIONS OF INVENTORY AND EQUIPMENT. The
Company will not sell, transfer, lease or otherwise dispose of any of the
Inventory or Equipment, or attempt, offer or contract to do so, except for (a)
dispositions of Inventory in the ordinary course of business, and (b) so long as
no Event of Default has occurred, the disposition of obsolete or worn out
Equipment in the ordinary course of business and other dispositions of Equipment
permitted by this Agreement.
SECTION 5.11 GENERAL APPOINTMENT AS ATTORNEY-IN-FACT. The Company hereby
irrevocably constitutes and appoints the Bank and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Company and
in the name of the Company or in its own name, from time to time following the
occurrence of an Event of Default and for such time as such Event of Default is
continuing, in the Bank's reasonable discretion, for the purpose of carrying out
the terms of this Agreement, without notice (except as specifically provided
herein) to or assent by the Company, to take any and all appropriate action and
to execute any and all documents and instruments which may be necessary or
desirable to effect the terms of this Agreement, including, without limiting the
generality of the foregoing, the power and right, on behalf of the Company, to
do the following, upon notice to the Company: (a) to pay or discharge taxes,
liens, security interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance,
called for by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof, and otherwise to itself perform or
comply with, or otherwise cause performance or compliance with, any of the
covenants or other agreements of the Company contained in this Agreement which
the Company has failed to perform or with which the Company has not complied,
(b) to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of component jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any Collateral; (c) to
defend any suit, action or proceeding brought against the Company with respect
to any Collateral; (d) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such discharges
or releases as the Bank may deem appropriate; (e) to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Bank were the absolute owner thereof for
all purposes; and (f) to do, at the Bank's option and the Company's expense, at
any time, or from time to time, all acts and things which the Bank deems
necessary, to protect, preserve or realize upon the Collateral and the Bank's
security interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as the Company might do. This power of attorney is a
power coupled with an interest and shall be irrevocable.
SECTION 5.12 BANK NOT LIABLE. The powers conferred on the Bank hereunder
are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Bank shall be accountable only for
amounts that it actually receives as a result of the
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exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Company for any act or failure
to act, except for its own gross negligence or willful misconduct.
SECTION 5.13 AUTHORITY TO EXECUTE TRANSFERS. Without limitation of any
authorization granted to the Bank hereunder, the Company also hereby authorizes
the Bank, upon the occurrence of an Event of Default, to execute, in connection
with the exercise by the Bank of its remedies hereunder, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
SECTION 5.14 PERFORMANCE BY BANK OF THE COMPANY'S OBLIGATIONS. If the
Company fails to perform or comply with any of its agreements contained herein
and the Bank shall itself perform or comply, or otherwise cause performance or
compliance, with. such agreement, the expenses of the Bank incurred in
connection with such performance or compliance, together with interest thereon
at the interest rate provided for in Section 2.3(c) hereof in effect from time
to time, shall be payable by the Company to the Bank within five (5) Business
Days following demand. In consideration of and as security for any performance
by the Bank of any of Company's obligations or agreements hereunder, the Company
does hereby (a) grant to the Bank a security interest in the Collateral, and (b)
assign to the Bank all of its right, title, and interest (including, without
limitation, all rights to payment) arising under or with respect to all of
Company's Accounts Receivable, whether now owned or hereafter acquired or
received by Company, but not including any duty, obligation, or liability of
Company with respect thereto.
ARTICLE VI. GENERAL REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank (which representations and
warranties will survive the delivery of the Note and all extensions of credit
under this Agreement) that:
SECTION 6.1 ORGANIZATION; CORPORATE POWER.
(a) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which it is incorporated;
(b) The Company has the corporate power and authority to own its properties
and assets and to carry on its business as now being conducted,
(c) The Company, is qualified to do business in every jurisdiction in which
the ownership or leasing of its property or the doing of business requires
such qualification and the failure of such qualification would have a
Material Adverse Effect: and
(d) The Company has the corporate power to execute, deliver, and perform its
Loan Documents and to borrow hereunder.
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SECTION 6.2 AUTHORIZATION OF LOAN. The execution, delivery, and
performance of the Loan Documents and the Loans by Company have been duly
authorized by all requisite corporate action.
SECTION 6.3 NO CONFLICT. The execution, delivery, and performance of the
Loan Documents will not (a) violate any provision of any law, rule or
regulation, the Articles of Incorporation of Company, or By-Laws of Company, (b)
violate any order of any court or other agency of any federal or state
government or any provision of any material indenture, agreement, or other
instrument to which Company is a party or by which it or any of its properties
or assets are bound, (c) conflict with, result in a breach of, or constitute
(with passage of time or delivery of notice, or both), a default under any such
material indenture, agreement, or other instrument, or (d) result in the
creation or imposition of any Lien, other than a Permitted Lien, or other
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company except in favor of the Bank.
SECTION 6.4 EXECUTION OF LOAN DOCUMENTS. The Loan Documents have been duly
executed and are valid and binding obligations of Company fully enforceable in
accordance with their respective terms.
SECTION 6.5 FINANCIAL CONDITION. The following information with respect to
the Company has heretofore been furnished to the Bank:
(a) Audited annual financial statements of the Company for the periods
ended December 31, 1996 and December 31, 1997; and
(b) The pro forma financial statements of the Company as of December 31,
1997, which pro forma financial statements reflect the Company's
purchase of the Spin Forge Assets and the liabilities incurred by
the Company related to such purchase.
Each of the financial statements referred to above in this Section 6.5 was
prepared in accordance with GAAP (subject in the case of interim statements, to
the absence of footnotes and normal year-end adjustments) applied on a
consistent basis, except as stated therein. Each of the financial statements
referred to above in this Section 6.5 fairly presents the financial condition or
pro forma financial condition, as the case may be, of the Company and is
complete and correct in all material respects and no Material Adverse Effect has
occurred since the date thereof.
SECTION 6.6 LIABILITIES; LIENS. The Company has made no investment in,
advance to, or guarantee of, the obligations of any Person nor are the Company's
assets and properties subject to any claims. liabilities, Liens, or other
encumbrances, except as disclosed in the financial statements and related notes
thereto referred to in Section 6.5 hereof.
SECTION 6.7 LITIGATION. There is no action, suit, examination, review, or
proceeding by or before any governmental instrumentality or agency now pending
(including any claims alleging infringement of intellectual property rights of
others) or, to the knowledge of the Company, threatened against the Company or
against any property or rights of the Company, which, if adversely determined,
would materially impair the right of the Company to carry on business as now
being
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conducted; would materially adversely affect the financial condition of the
Company; or would draw into question the legal existence of the Company or the
validity authorization or enforceability of any of the Loan Documents, except
for the litigation, if any, described in the notes to the financial statements
referred to in Section 6.5 hereof.
SECTION 6.8 PAYMENT OF TAXES. The Company has accurately prepared and
timely filed, or caused to be filed, all Federal, state, local, and foreign tax
returns required to be filed, and has paid, or caused to be paid, all taxes as
are shown on such returns, or on any assessment received by the Company, to the
extent that such taxes become due, except as otherwise contested in good faith.
The Company has set aside proper amounts on its books, determined in accordance
with GAAP, for the payment of all taxes for the years that have not been audited
by the respective tax authorities or for taxes being contested by the Company.
SECTION 6.9 ABSENCE OF ADVERSE AGREEMENTS. The Company is not a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any corporate or partnership restriction which would be
reasonably likely to have a Material Adverse Effect.
SECTION 6.10 REGULATORY STATUS. Neither the making nor the performance of
this Agreement, nor any extension of credit hereunder, requires the consent or
approval of any governmental instrumentality or political subdivision thereof,
any other regulatory or administrative agency, or any court of competent
jurisdiction.
SECTION 6.11 FEDERAL RESERVE REGULATIONS: USE OF LOAN PROCEEDS. The
Company is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
Margin Stock. No part of the proceeds of the Loans will be used, directly or
indirectly, for a purpose which violates any law, rule or regulation of any
governmental body, including without limitation the provisions of Regulations G,
U, or X of the Board of Governors of the Federal Reserve System, as amended. No
part of the proceeds of the Loans will be used, directly or indirectly, to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock.
SECTION 6.12 SUBSIDIARIES. The Company has no Subsidiaries.
SECTION 6.13 ERISA. The Company and any Commonly Controlled Entity do not
maintain or contribute to any Plan which is not in substantial compliance with
ERISA. Neither the Company nor any Commonly Controlled Entity maintains,
contributes to, or is required to make or accrue a contribution or has within
any of the six preceding years maintained, contributed to or been required to
make or accrue a contribution to any Plan subject to regulation under Title IV
of ERISA, any Plan that is subject to the minimum funding requirements of
Section 412 of the Code or Section 302 of ERISA, or any Multiemployer Plan.
SECTION 6.14 SOLVENCY. The Company has received consideration which is the
reasonable equivalent value of the obligations and liabilities that the Company
has incurred to the Bank. The
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Company is not insolvent as defined in any applicable state or federal statute,
nor will the Company be rendered insolvent by the execution and delivery of this
Agreement or the Note to Bank. The Company is not engaged or about to engage in
any business or transaction for which the assets retained by it shall be an
unreasonably small capital, taking into consideration the obligations to Bank
incurred hereunder. The Company does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay them as they mature.
SECTION 6.15 SCHEDULE ON EXHIBIT C. The Schedule on Exhibit C accurately
and completely lists the location of all real property, owned or leased by the
Company. The Company enjoys quiet possession under all material leases of real
property to which it is a party as a lessee, and all of such leases are valid,
subsisting and, in full force and effect. Except as specified in the Schedule in
Exhibit C hereto, none of the real property occupied by the Company or any
Subsidiary is located within any federal, state or municipal flood plain zone.
Except as set forth in the Schedule in Exhibit C, all of the material properties
used in the conduct of the Company's business (i) are in good repair, working
order and condition (reasonable wear and tear excepted) and reasonably suitable
for use in the operation of the Company's business; and (ii) are currently
operated and maintained, in all material respects, in accordance with the
requirements of applicable governmental authorities.
SECTION 6.16 ACCURACY OF REPRESENTATIONS AND WARRANTIES. None of the
Company's representations or warranties set forth in this Agreement or in any
document or certificate furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make any statement
of fact contained herein or therein, in light of the circumstances under which
it was made not misleading.
SECTION 6.17 NO INVESTMENT COMPANY. The Company is not an "investment
company" or a Company "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 19409, as amended, which is required to
register thereunder.
SECTION 6.18 APPROVALS. Except as set forth in the Schedule in Exhibit C
hereto, all approvals required of the Company from all Persons including without
limitation all governmental authorities with respect to the Loan Documents have
been obtained.
SECTION 6.19 LICENSES, REGISTRATIONS, COMPLIANCE WITH LAWS, ETC. The
Schedule in Exhibit C hereto accurately and completely describes all permits,
governmental licenses. registrations and approvals, material to carrying out of
the Company's businesses as presently conducted and required by law or the rules
and regulations of any federal, foreign governmental, state, county or local
association, corporation or governmental agency, body, instrumentality or
commission having jurisdiction over the Company, including but not limited to
the United States Environmental Protection Agency, the United States Department
of Labor, the United States Occupational Safety and Health Administration, the
United States Equal Employment Opportunity Commission, the Federal Trade
Commission and the United States Department of Justice and analogous and related
state and foreign agencies. All existing material authorizations, licenses and
permits are in full force and effect, are duly issued in the name of, or validly
assigned to the Company and the Company has
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full power and authority to operate thereunder. There is no material violation
or material failure of compliance or, to the Company's knowledge, allegation of
such violation or failure of compliance on the part of the Company with any of
the foregoing permits, licenses, registrations, approvals, rules or regulations
and there is no action, proceeding or investigation pending or to the knowledge
of the Company threatened nor has the Company received any notice of such which
might result in the termination or suspension of any such permit, license,
registration or approval which in any case could have a Material Adverse Effect.
SECTION 6.20 COPYRIGHT. The Company has not violated any of the provisions
of the Copyright Revision Act of 1976, 17 U.S.C. ss. 101, ET SEQ. Except as set
forth on the Schedule on Exhibit C hereto, the Company has not filed any
registration statements, notices and statements of account with the United
States Copyright Office. The Schedule on Exhibit C hereto accurately and
completely sets forth all registered copyrights held by the Company and contains
exceptions to the representations contained in this Section 6.20. To the
Company's knowledge no inquiries regarding any such filings have been received
by the Copyright Office.
SECTION 6.21 ENVIRONMENTAL COMPLIANCE. Except as expressly set forth in
the Schedule on Exhibit C hereto, neither the Company, nor, to the knowledge of
management of the Company, any other Person has:
(a) ever caused, permitted, or suffered to exist any Hazardous Material to
be spilled, placed, held, located or disposed of on, under, or about, any of the
premises owned or leased by the Company (the "Premises"), or from the Premises
into the atmosphere, any body of water, any wetlands, or on any other real
property, nor does any Hazardous Material exist on, under or about the Premises,
or in respect of Hazardous Material used or disposed of in compliance with law;
(b) ever used (whether by the Company or by any other Person) as a
treatment, storage or disposal (whether permanent or temporary) site for any
Hazardous Waste as defined in 42 U.S.C.A.
ss. 6901, ET SEQ. (the Resource Recovery and Conservation Act); and
(c) any knowledge of any notice of violation, lien or other notice issued
by any governmental agency with respect to the environmental condition of the
Premises or any other property occupied by the Company.
The Company is in compliance with all Environmental Laws and all other
applicable federal, state and local health and safety laws, regulations,
ordinances or rules, except to the extent that any non compliance will not, in
the aggregate, have a Materially Adverse Effect on the Company or the ability of
the Company to fulfill its obligations under this Agreement or the Note.
SECTION 6.22 MATERIAL AGREEMENTS, ETC. The Schedule on Exhibit C hereto
accurately and completely lists all Material Agreements, all of which are
presently in effect. All of the Material Agreements are legally valid, binding,
and to the Company's knowledge, in full force and effect and neither the Company
nor, to the Company's knowledge, any other parties thereto are in material
default thereunder.
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SECTION 6.23 PATENTS, TRADEMARKS AND OTHER PROPERTY RIGHTS. The Schedule on
Exhibit C hereto contains a complete and accurate schedule of all registered
trademarks, registered copyrights and patents of the Company, and pending
applications therefor, and all other intellectual property in which the Company
has any rights other than "off-the-shelf" software which is generally available
to the general public at retail. Except as set forth in the Schedule on Exhibit
C hereto, the Company owns, possesses, or has licenses to use all the patents,
trademarks, service marks, trade names, copyrights and nongovernmental licenses,
and all rights with respect to the foregoing, necessary for the conduct of its
business as now conducted, without, to the Company's knowledge, any conflict
with the rights or others with respect thereto.
ARTICLE VII. CONDITIONS OF LENDING
SECTION 7.1 FIRST LOAN. The obligation of the Bank to make a Loan shall be
subject to satisfaction of the following conditions, unless waived in writing by
the Bank: (a) all legal matters and Loan Documents incident to the transactions
contemplated hereby shall be reasonably satisfactory, in form and substance, to
Bank's counsel; (b) the Bank shall have received (i) certificates by an
authorized officer of Company, upon which the Bank may conclusively rely until
superseded by similar certificates delivered to the Bank, certifying (1) all
requisite action taken in connection with the transactions contemplated hereby,
and (2) the names, signatures, and authority of Company's authorized signers
executing the Loan Documents, (ii) documentation satisfactory to the Bank
evidencing the acquisition by Company of the Spin Forge Assets, and (iii) such
other documents as the Bank may reasonably require to be executed by, or
delivered on behalf of Company; (c) the Bank shall have received the Note, with
all blanks appropriately completed, executed by an authorized signer of Company;
(d) Company shall have paid to the Bank the fee(s) then due and payable in
accordance with ARTICLE II, of this Agreement, and (e) the Bank shall have
received the written opinion of legal counsel selected by Company and
satisfactory to the Bank, dated the date of this Agreement, in form satisfactory
to the Bank and covering such other matter(s) as the Bank may reasonably
require.
SECTION 7.2 EACH LOAN. The obligation of the Bank to make the Loan shall
be subject to compliance with Section 2.1 herein and also subject to
satisfaction of the following conditions that at the date of making such Loan,
and after giving effect thereto: (a) no Event of Default shall have occurred and
be then continuing, (b) each representation and warranty set forth in this
Agreement and in each of the other Loan Documents is true and correct as if then
made, and (c) no event shall have occurred or failed to occur which has or is
reasonably likely to have a Material Adverse Effect.
ARTICLE VIII. COVENANTS
As long as credit is available hereunder or until all principal of and
interest on the Note have been paid in full:
SECTION 8.1 ACCOUNTING: FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company will maintain a standard system of accounting, established and
administered in accordance with
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GAAP consistently followed throughout the periods involved, and will set aside
on its books for each fiscal month the proper amounts or accruals for
depreciation, obsolescence, amortization, bad debts, current and deferred taxes,
prepaid expenses, and for other purposes as shall be required by GAAP. The
Company will deliver to the Bank:
(a) As soon as practicable after the end of each calendar month in each year
and in any event within fifteen (15) days thereafter, a consolidated and
consolidating balance sheet of the Company and each of its Subsidiaries as
of the end of such month, and statements of income, changes in financial
position, and shareholders' equity of the Company for such month, certified
as complete and correct by the principal financial officer of the Company,
subject to changes resulting from year-end adjustments,
(b) As soon as practicable after the end of each fiscal year, and in any event
within ninety (90) days thereafter, a consolidated and consolidating
balance sheet of the Company and each of its Subsidiaries as of the end of
such year, and statements of income, changes in financial position, and
shareholders' equity of the Company for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a report and an unqualified opinion of
independent certified public accountants of recognized standing, selected
by the Company and satisfactory to the Bank, which report and opinion shall
be prepared in accordance with generally accepted auditing standards,
together with a certificate by such accountants (i) briefly setting forth
the scope of their examination (which shall include a review of the
relevant provisions of this Agreement and stating that in their judgment
such examination is sufficient to enable them to give the certificate, and
(ii) stating whether their examination has disclosed the existence of any
condition or event which constitutes an Event of Default under this
Agreement, and, if their examination has disclosed such a condition or
event, specifying the nature and period of existence thereof;
(c) As soon as practicable, and in any event within fifteen (15) days of the
end of each calendar month in each year, a certificate by the Company
indicating the Total Indebtedness to Tangible Net Worth Ratio as of the end
of such calendar month; and
(d) With reasonable promptness, such other data and information as from time to
time may be reasonably requested by the Bank.
SECTION 8.2 INSURANCE; MAINTENANCE OF PROPERTIES. The Company will
maintain with financially sound and reputable insurers, insurance with coverage
and limits as may be required by law or as may be reasonably required by the
Bank. The Company will, upon request from time to time, furnish to the Bank a
schedule of all insurance carried by it, setting forth in detail the amount and
type of such insurance. The Company will maintain in good repair, working order,
and condition, all properties used or useful in the business of the Company.
SECTION 8.3 EXISTENCE; BUSINESS. The Company will cause to be done all
things necessary to preserve and keep in full force and effect its existence and
rights, to conduct its business in a
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prudent manner, to maintain in full force and effect, and renew from time to
time, its franchises, permits, licenses, patents, and trademarks that are
necessary to operate its business. The Company will comply in all material
respects with all valid laws and regulations now in effect or hereafter
promulgated by any properly constituted governmental authority having
jurisdiction; provided, however, the Company shall not be required to comply
with any law or regulation which it is contesting in good faith by appropriate
proceedings as long as either the effect of such law or regulation is stayed
pending the resolution of such proceedings or the effect of not complying with
such law or regulation is not to jeopardize any franchise, license. permit
patent, or trademark necessary to conduct the Company's business.
SECTION 8.4 PAYMENT OF TAXES. The Company will pay all taxes. assessments,
and other governmental charges levied upon any of its properties or assets or in
respect of its franchises, business, income, or profits before the same become
delinquent, except that no such taxes, assessments, or other charges need be
paid if contested by the Company in good faith and by appropriate proceedings
promptly initiated and diligently conducted and if the Company has set aside
proper amounts, determined in accordance with GAAP, for the payment of all such
taxes, changes, and assessments.
SECTION 8.5 LITIGATION; ADVERSE CHANGES. The Company will promptly notify
the Bank in writing of (a) any future event which, if it had existed on the date
of this Agreement, would have required qualification of any of the
representations and warranties set forth in this Agreement or any of the other
Loan Documents, and (b) any Material Adverse Effect.
SECTION 8.6 NOTICE OF DEFAULT. The Company will promptly notify the Bank
of any Event of Default hereunder and any demands made upon the Company by any
Person for the acceleration and immediate payment of any Indebtedness owed to
such Person.
SECTION 8.7 INSPECTION. The Company will make available for inspection by
duly authorized representatives of the Bank, or its designated agent, the
Company's books, records, and properties when reasonably requested to do so, and
will furnish the Bank such information regarding its business affairs and
financial condition within a reasonable time after written request therefor.
SECTION 8.8 ENVIRONMENTAL MATTERS. The Company and each of its
Subsidiaries:
(a) Shall comply with all Environmental Laws, and
(b) Shall deliver promptly to Bank (i) copies of any documents received from
the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency, and (ii) copies of any documents
submitted by Company or any of its Subsidiaries to the United States
Environmental Protection Agency or any state, county or municipal
environmental or health agency concerning its operations.
SECTION 8.9 SALE OF ASSETS. The Company will not, directly or indirectly
sell, lease, transfer, or otherwise dispose of any plant or any manufacturing
facility or other assets except for (i)
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assets sold for full and adequate consideration which the Board of Directors or
senior management of the Company has determined to be worn out, obsolete, or no
longer needed or useful in its business, and (ii) assets sold in the ordinary
course of business, provided that the Company receives full and adequate
consideration in exchange for such assets sold.
SECTION 8.10 LIENS. The Company will not, directly or indirectly, create,
incur, assume, or permit to exist any Lien with respect to any property or asset
of the Company now owned or hereafter acquired other than Permitted Liens.
SECTION 8.11 INDEBTEDNESS. The Company will not, directly or indirectly,
create, incur, or assume Indebtedness, or otherwise become liable with respect
to, any Indebtedness other than:
(a) Indebtedness now or hereafter payable, directly or indirectly, by the
Company to the Bank or any Affiliate Bank;
(b) Subordinated Debt of the Company;
(c) To the extent permitted by this Agreement, Indebtedness for the lease or
purchase price of any real or personal property, which is secured only by a
Permitted Lien.
(d) Unsecured Indebtedness and deferred liabilities incurred in the ordinary
course of business;
(e) Indebtedness for taxes, assessments, governmental charges, liens, or
similar claims to the extent not yet due and payable;
(f) Indebtedness of the Company existing as of the date of this Agreement,
which is expressly disclosed on the Schedule on Exhibit C hereto;
(g) Other Indebtedness of the Company not exceeding $200,000.00 in the
aggregate outstanding at any time: and
(h) Extensions, renewals, refundings, refinancings, modifications, amendments
and restatements of any of the items listed in items (b) through (g) above,
provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon the Company.
SECTION 8.12 INVESTMENTS; LOANS. Except for Permitted Investments, the
Company will not, directly or indirectly, (a) purchase or otherwise acquire or
own any stock or other securities of any other Person, or (b) make or permit to
be outstanding any loan or advance (other than trade advances in the ordinary
course of business) or enter into any arrangement to provide funds or credit, to
any other Person.
SECTION 8.13 GUARANTIES. The Company will not guarantee, directly or
indirectly, or otherwise become surety (including, without limitation, liability
by way of agreement, contingent or
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otherwise, to purchase, to provide funds for payment, to supply funds to, or
otherwise invest in, any Person, or enter into any working capital maintenance
or similar agreement) in respect of any obligation or Indebtedness of any other
Person, except guaranties by endorsement of negotiable instruments for deposit,
collection, or similar transactions in the ordinary course of business.
SECTION 8.14 MERGERS: CONSOLIDATION. The Company will not merge into or
consolidate with any other Person or permit any other Person to merge into or
consolidate with it, or sell all or substantially all of its assets. except that
the Company may merge into or consolidate with any other Person or permit any
other Person to merge into or consolidate with it; PROVIDED, HOWEVER, that (i)
the Company shall be the corporation which survives such merger or results from
such consolidation; (ii) immediately after the consummation of the transaction,
and after giving effect thereto, the Company would be permitted by the
provisions of this Article VIII to incur additional Indebtedness: and (iii)
before and immediately after the consummation of the transaction, and after
giving effect thereto, no Event of Default, or event which with notice or lapse
of time or both would become an Event of Default, exists or would exist.
SECTION 8.15 CURRENT RATIO. The Company will not permit the ratio by which
its Current Assets exceeds its Current Liabilities, calculated at the same point
in time, to be at any time less than 2.00 to 1.00.
SECTION 8.16 FUNDS FROM OPERATIONS TO TOTAL DEBT. The Company will not
permit the ratio of Funds from Operations to Total Indebtedness, calculated
annually upon the Bank's receipt of the financial statements provided by the
Company under Section 8. l(b) of this Agreement, to be less than twenty five
percent (25.00%)
SECTION 8.17 SUBORDINATED DEBT. The Company will not make any payment upon
any outstanding Subordinated Debt, except in such manner and amounts as may be
expressly authorized in any subordination agreement presently or hereafter held
by the Bank.
SECTION 8.18 RATIO OF TOTAL INDEBTEDNESS TO TANGIBLE NET WORTH. The
Company will not permit the ratio of its Total Indebtedness to the sum of its
Tangible Net Worth, calculated at the same point in time, to be at any time more
than 1.99 to 1.00.
SECTION 8.19 CAPITAL EXPENDITURES. The Company will not make Capital
Expenditures in an aggregate amount in excess of $1,000,000 in any fiscal year
without thirty (30) days' prior written notification to the Bank.
Notwithstanding the foregoing, the Capital Expenditure limitation set forth
herein shall not include expenditures financed by an industrial development bond
to support the development of the Mount ▇▇▇▇▇▇▇▇, Pennsylvania property owned by
the Company.
SECTION 8.20 SENIOR MANAGEMENT. The Company will not replace the President
or Chief Executive Officer of the Company without sixty (60) days prior written
notice to Bank and will not accept the resignation of the President or Chief
Executive Officer of the Company without providing written notice to Bank, which
notice will be given to Bank as soon as reasonably possible after the
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Company has knowledge of the same, but in no event more than three (3) days
following the date that the Company obtains such knowledge.
SECTION 8.21 COMPLIANCE WITH ERISA. With respect to the Company and any
Commonly Controlled Entity, the Company will not permit the occurrence of any of
the following events to the extent that any such events would result in a
material Adverse Effect on the Company, (a) withdraw from or cease to have an
obligation to contribute to, any Multiemployer Plan, (b) engage in any
"prohibited transaction" (as defined in Section 4975 of the Code) involving any
Plan, (c) except for any deficiency caused by a waiver of the minimum funding
requirement under Section 412 of the Code, as described above, incur or suffer
to exist any material "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code) of the Company or any Commonly
Controlled Entity, whether or not waived, involving any Single Employer Plan,
(d) incur or suffer to exist any Reportable Event or the appointment of a
trustee or institution of proceedings for appointment of a trustee for any
Single Employer Plan if, in the case of a Reportable Event, such event continues
unremedied for ten (10) days after notice of such Reportable Event pursuant to
Sections 4043(a), (c) or (d) of ERISA is given, if in the reasonable opinion of
the Bank any of the foregoing is likely to result in a Material Adverse Effect,
(e) allow or suffer to exist any event or condition, which presents a material
risk of incurring a material liability of the Company or any Commonly Controlled
Entity to PBGC by reason of termination of any such Plan or (f) cause or permit
any Plan maintained by the Company and/or any Commonly Controlled Entity to be
out of compliance with ERISA.
ARTICLE IX. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an Event of Default under this Agreement:
SECTION 9.1 PRINCIPAL OR INTEREST. If Company fails to pay any installment
of principal of or interest on the Note, or any other sums of money when due and
payable under this Agreement and such failure continues for forty-eight (48)
hours; or
SECTION 9.2 MISREPRESENTATION. If any representation or warranty made
herein by Company or in any written statement, certificate, report, or financial
statement at any time furnished by, or on behalf of, Company in connection
herewith, is incorrect or misleading in any material respect when made; or
SECTION 9.3 FAILURE OF PERFORMANCE OF THIS AGREEMENT. Except as otherwise
provided herein, if the Company fails to perform or observe any covenant or
agreement contained in this Agreement or any of the other Loan Documents, and
such failure remains unremedied for thirty (30) calendar days after the Bank
shall have given written notice thereof to the Company; or
SECTION 9.4 CROSS-DEFAULT. If the Company (a) fails to pay any
indebtedness or any other sums of money when due and payable under the Prior
Agreement or the Letter of Credit Loan owing by Company and such failure
continues for forty-eight (48) hours, whether at maturity, by
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acceleration, or otherwise, or (b) fails to perform any term, covenant, or
agreement on its part to be performed under any agreement or instrument (other
than the Loan Documents) evidencing, securing, or relating to the Prior
Agreement or the Letter of Credit Loan , and such failure remains unremedied for
thirty (30) calendar days after the Bank shall have given written notice thereof
to the Company, or is otherwise in default thereunder; or
SECTION 9.5 INSOLVENCY. If the Company shall discontinue business or (a)
is adjudicated a bankrupt or insolvent under any law of any existing
jurisdiction, domestic or foreign, or ceases, is unable, or admits in writing
its inability to pay its debts generally as they mature, or makes a general
assignment for the benefit of creditors, (b) applies for, or consents to, the
appointment of any receiver, trustee, or similar officer for it or for any
substantial part of its property, or any such, receiver, trustee, or similar
officer is appointed without the application or consent of the Company, and such
appointment continues thereafter undischarged for a period of thirty (30) days,
(c) institutes, or consents to the institution of any bankruptcy, insolvency,
reorganization, arrangement, readjustment or debt, dissolution, liquidation, or
similar proceeding relating to it under the laws of any jurisdiction, (d) any
such proceeding is instituted against the Company and remains thereafter
undismissed for a period of thirty (30) days, or (e) any judgment, writ, warrant
of attachment or execution, or similar process is issued or levied against a
substantial part of the property of the Company or any Subsidiary and such
judgment, writ, or similar process is not effectively stayed within thirty (30)
days after its issue or levy.
ARTICLE X. REMEDIES UPON DEFAULT
SECTION 10.1 OPTIONAL ACCELERATION. In the event that one or more of the
Events of Default set forth in Sections 9.1 through 9.5 above occurs and
continues and is not waived by the Bank, then, in any such event. and at any
time thereafter, the Bank may, at its option, terminate its commitment to make
any Loan and declare the unpaid principal of, and all accrued interest on any
Note, including any notes executed in connection with the Prior Agreement and
the Letter of Credit Loan, and any other liabilities hereunder, and all other
indebtedness of Company to the Bank forthwith due and payable, whereupon the
same will forthwith become due and payable without presentment, demand, protest,
or other notice of any kind, all of which Company hereby expressly waives,
anything contained herein or in any Note to the contrary notwithstanding.
SECTION 10.2 AUTOMATIC ACCELERATION. Intentionally Deleted.
SECTION 10.3 REMEDIES. The Bank shall have the rights and remedies of a
secured party under the Uniform Commercial Code in addition to the rights and
remedies of a secured party provided elsewhere within the Agreement, the Prior
Agreement, or under the Letter of Credit Loan or in any other writing executed
by Company. The Bank may require the Company to assemble the Collateral and make
it available to the Bank at a reasonably convenient place to be designated by
the Bank. Unless the Collateral is perishable, threatens to decline speedily in
value, or is of a type customarily sold on a recognized market, the Bank will
give the Company reasonable notice of the time and place of any public sale of
the Collateral or of the time after which any private sale or other
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intended disposition thereof is to be made. The requirement of reasonable notice
shall be met if such notice is mailed (deposited for delivery, postage prepaid,
by U.S. mail) to either, at the Bank's option (1) principal office of the
Company as set forth in this Agreement (or as modified by any change therein
which the Company has supplied in writing to the Bank), or (2) the Company's
address at which the Bank customarily communicates with the Company, at least
ten (10) days before the time of the public sale or the time after which any
private sale or other intended disposition thereof is to be made. At any such
public or private sale, the Bank may purchase the Collateral. After deduction
for the Bank's Related Expenses, the residue of any such sale or other
disposition shall be applied in satisfaction of the Obligations in such order of
preference as the Bank may determine. Any excess, to the extent permitted by
law, shall be paid to the Company, and the Company shall remain liable for any
deficiency.
SECTION 10.4 NO WAIVER. The remedies in this ARTICLE X are in addition to,
not in limitation of. any other right, power, privilege, or remedy, either in
law, in equity, or otherwise, to which the Bank may be entitled. No failure or
delay on the part of the Bank in exercising any right, power, or remedy will
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder.
ARTICLE XI. MISCELLANEOUS
SECTION 11.1 AMENDMENTS. No waiver of any provision of this Agreement, the
Note, or consent to departure therefrom, is effective unless in writing and
signed by the Bank. No such consent or waiver extends beyond the particular case
and purpose involved. No amendment to this Agreement is effective unless in
writing, and signed by the Company and the Bank.
SECTION 11.2 EXPENSES; DOCUMENTARY TAXES. The Company shall pay (a) all
out-of-pocket expenses of the Bank, including fees and disbursements of special
counsel for the Bank, in connection with the preparation of this Agreement
(which fees of special counsel shall not exceed $10,000.00), any waiver or
consent hereunder or any amendment hereof or any Event of Default hereunder, and
(b) if an Event of Default occurs, all out-of-pocket expenses incurred by the
Bank, including reasonable fees and disbursements of counsel, in connection with
such Event of Default and collection and other enforcement proceedings resulting
therefrom. The Company shall reimburse the Bank for its payment of all transfer
taxes, documentary taxes, assessments, or charges made by any governmental
authority by reason of the execution and delivery of this Agreement or the Note.
SECTION 11.3 INDEMNIFICATION. The Company shall indemnify and hold the
Bank harmless against any and all liabilities, losses, damages, costs, and
expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel in connection with any investigative, administrative or
judicial proceeding, whether or not the Bank shall be designated a party
thereto) which may be incurred by the Bank relating to or arising out of this
Agreement or any actual or proposed use of proceeds of any Loan hereunder;
provided, that the Bank shall have no right to be indemnified hereunder for its
own negligence, bad faith or willful misconduct as determined by a court of
competent jurisdiction. The Company further agrees to indemnify the Bank against
any loss or expense which the Bank may sustain or incur as a consequence of any
default by the Company in
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payment when due of any amount due hereunder in respect of any LIBOR Rate Loan,
including, but not limited to, any loss of profit, premium, or penalty incurred
by the Bank in respect of funds borrowed by it for the purpose of making or
maintaining any such Loan, as determined by the Bank in the exercise of its sole
but reasonable discretion. A certificate as to any such loss or expense shall be
promptly submitted by the Bank to the Company and shall, in the absence of
manifest error, be conclusive and binding as to the amount thereof.
SECTION 11.4 CONSTRUCTION. This Agreement and the Note will be governed by
and construed in accordance with the laws of the State of Colorado, without
regard to principles of conflict of laws. The several captions to different
Sections of this Agreement are inserted for convenience only and shall be
ignored in interpreting the provisions hereof.
SECTION 11.5 EXTENSION OF TIME. Whenever any payment hereunder or under
the Note becomes due on a date which the Bank is not open for the transaction of
business, such payment will be due on the next succeeding Business Day and such
extension of time will be included in computing interest in connection with such
payment.
SECTION 11.6 NOTICES. All written notices, requests, or other
communications herein provided for must be addressed:
to the Company as follows:
Dynamic Materials Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Santa, Vice President of Finance and Chief
Financial Officer
to the Bank as follows:
KeyBank National Association
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Corporate Banking
or at such other address as either party may designate to the other in writing.
Such communication will be effective (i) if by telex, when such telex is
transmitted and the appropriate answer back is received, (ii) if given by mail,
72 hours after such communication is deposited in the U.S. mail certified mail
return receipt requested, or (iii) if given by other means, when delivered at
the address specified in this Section 11.6.
SECTION 11.7 SURVIVAL OF AGREEMENTS, RELATIONSHIP. All agreements,
representations, and warranties made in this Agreement will survive the making
of the extension of credit hereunder, and will bind and inure to the benefit of
the Company and the Bank, and their respective successors and assigns; PROVIDED,
that no subsequent holder of the Note shall by reason of acquiring that Note, as
the
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case may be, become obligated to make any Loan hereunder and no successor to or
assignee of the Company may borrow hereunder without the Bank's written assent.
The relationship between the Company and the Bank with respect to this
Agreement, the Note, and any other Loan Document is and shall be solely that of
debtor and creditor, respectively, and the Bank has no fiduciary obligation
toward the Company with respect to any such document or the transactions
contemplated thereby.
SECTION 11.8 SEVERABILITY. If any provision of this Agreement or the Note,
or any action taken hereunder, or any application thereof, is for any reason
held to be illegal or invalid, such illegality or invalidity shall not affect
any other provision of this Agreement or the Note, all of which shall be
construed and enforced without reference to such illegal or invalid portion and
shall be deemed to be effective or taken in the manner and to the full extent
permitted by law.
SECTION 11.9 ENTIRE AGREEMENT. This Agreement, the Note, and any other
Loan Document integrate all the terms and conditions mentioned herein or
incidental hereto and supersede all oral representations and negotiations and
prior writings with respect to the subject matter hereof.
SECTION 11.10 JURY TRIAL WAIVER. THE COMPANY AND THE BANK EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, BETWEEN THE BANK' AND THE COMPANY ARISING OUT OF,
IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE,
LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER
INSTRUMENT. DOCUMENT OR AGREEMENT BETWEEN THE BANK AND THE COMPANY.
IN WITNESS WHEREOF, the Company and the Bank have each caused this
Agreement to be executed by their duly authorized officers as of the 18th day of
March, 1998.
REMAINDER OF PAGE INTENTIONALLY DELETED
39
COMPANY: DYNAMIC MATERIALS CORPORATION
By: /s/▇▇▇▇▇▇▇ ▇. Santa
--------------------------------------
Title: Vice President of Finance and
-----------------------------------
Chief Financial Officer
BANK: KEYBANK NATIONAL ASSOCIATION
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Vice President, Corporate Banking
-----------------------------------
EXHIBIT A
PROMISSORY NOTE
$5,000,000.00 March 18, 1998
For value received, DYNAMIC MATERIALS CORPORATION (the "Company") promises
to pay to the order of KEYBANK NATIONAL ASSOCIATION, Denver, Colorado, (the
"Bank"), its successor and assigns, at its main office, on the date or dates and
in the manner specified in Article II of the Credit Agreement (as defined
below), the aggregate principal amount of the Loan as shown on any ledger or
other record of the Bank, which shall be rebuttably presumptive evidence of the
principal amount owing and unpaid on this Note.
The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of each Loan made pursuant to the Credit Agreement from
the date of such Loan until such principal amount is paid in full at such
interest rate(s) and at such times as are specified in Article II of the Credit
Agreement.
This Note is the Note referred to in, and is entitled to the benefits of,
the Credit Facility and Security Agreement ("Credit Agreement") by and between
the Bank and the Company dated March 18,1998, as the same may be hereafter
amended from time to time. This Note may be declared forthwith due and payable
in the manner and with the effect provided in the Credit Agreement, which
contains provisions for acceleration of the maturity hereof upon the happening
of any Event of Default and also for prepayment on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
Each defined term used in this Note shall have the meaning ascribed
thereto in Section 1.2 of the Credit Agreement.
The Company expressly waives presentment, demand, protest, and notice of
dishonor.
The Company acknowledges that this Note was signed in the City of Denver,
in the State of Colorado.
COMPANY: DYNAMIC MATERIALS CORPORATION
By:
-------------------------------------
Title:
----------------------------------
EXHIBIT B
LOAN CERTIFICATE
[INTENTIONALLY DELETED]
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EXHIBIT C
SCHEDULE OF COMPANY
[See Attached]
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