EXHIBIT 4.13
AMENDED, RESTATED AND CONSOLIDATED
LOAN AGREEMENT
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THIS AMENDED, RESTATED AND CONSOLIDATED LOAN AGREEMENT (this
"Agreement") is made as of March 18, 2004, by and among WACHOVIA BANK, NATIONAL
ASSOCIATION, formerly known as First Union National Bank, with an office at
Broad and Walnut Streets, Philadelphia, Pennsylvania 19109 (the "Lender"), SELAS
CORPORATION OF AMERICA, a Pennsylvania business corporation with offices located
at c/o 0000 Xxx Xxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxx 00000 (the "Borrower),
RESISTANCE TECHNOLOGY, INC., a Minnesota business corporation with offices
located at 0000 Xxx Xxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxx 00000 ("RTI"), and RTI
ELECTRONICS, INC., a Delaware corporation with offices located at 0000 Xxx
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 ("RTI Electronics").
BACKGROUND
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A. The Lender, the Borrower, RTI, RTI Electronics, RTI Export, Inc., a
corporation organized under the laws of Barbados and a former subsidiary of the
Borrower ("RTIE"), and Deuer Manufacturing, Inc., a corporation organized under
the laws of Ohio and a former subsidiary of the Borrower ("Deuer" and together
with RTI, RTI Electronics and RTIE, the "U.S. Guarantors"), entered into that
certain Amended and Restated Credit Agreement dated as of July 31, 1998, as
amended by an Amendment dated as of June 30, 1999, a Second Amendment dated as
of July 7, 2000 and a Third Amendment dated as of January 19, 2001 (as amended,
the "Existing Credit Agreement"), pursuant to which the Lender (i) made certain
term loans to the Borrower described therein and designated as Term Loan D
("Existing Term Loan D"), Term Loan E ("Existing Term Loan E") and Term Loan F
("Existing Term Loan F;" and collectively with Existing Term Loan D and Existing
Term Loan E, the "Existing Term Loans"); and (ii) agreed to make available to
the Borrower a revolving credit facility in the principal amount of Four Million
Five Hundred Thousand Dollars ($4,500,000) (the "Existing Revolving Credit
Facility").
B. The U.S. Guarantors jointly and severally guaranteed and became
surety for all loans, advances, debts, liabilities, obligations, covenants and
duties of the Borrower to the Lender pursuant to the following agreements
(collectively, the "Existing Borrower Surety Agreements"): (i) that certain
Guaranty and Suretyship Agreement of Deuer dated as of October 20, 1993 and
amended as of July 31, 1998 (as amended, the "Deuer Surety Agreement"), (ii)
that certain Guaranty and Suretyship Agreement of RTI dated as of October 20,
1993 and amended as of July 31, 1998 (as amended, the "RTI Surety Agreement"),
(iii) that certain Guaranty and Suretyship Agreement of RTIE dated as of October
20, 1993 and amended as of July 31, 1998 (as amended, the "RTIE Surety
Agreement"), and (iv) that certain Guaranty and Suretyship Agreement of RTI
Electronics dated as of February 20, 1997, as amended July 31, 1998 (as amended,
the "RTI Electronics Surety Agreement"). The Lender has released Deuer from its
obligations under the Deuer Surety Agreement as a result of the sale of
Deuer in August 2003. RTIE was dissolved by Certificate of Dissolution dated
July 25, 2003.
C. The Existing Term Loans are evidenced by, inter alia, the following
promissory notes executed by the Borrower in favor of the Lender, which are
outstanding as of the date hereof: (i) Term Note D dated as of June 30, 1999 in
the original principal amount of Nine Hundred Thousand Dollars ($900,000) ("Term
Note D"), (ii) Term Note E dated as of January 19, 2001 in the original
principal amount of Two Million Dollars ($2,000,000) ("Term Note E"), and (iii)
Term Note F dated as of January 19, 2001 in the original principal amount of Xxx
Xxxxxxx Xxxxx Xxxxxxx Xxxxxxxx Xxxxxxxxx Dollars (Singapore $1,700,000) ("Term
Note F"; and together with Term Note D and Term Note E, the "Existing Term
Notes"). The Existing Revolving Credit Facility is evidenced by, inter alia, an
Amended and Restated Revolving Credit Note dated as of January 19, 2001 in the
principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000)
executed by the Borrower in favor of the Lender (the "Existing Revolving Credit
Note"). The Existing Term Notes, the Existing Revolving Credit Note and the
Existing Supplemental Credit Facility Note (as hereinafter defined) are
collectively referred to hereinafter as the "Existing Notes."
D. The Lender, through the Lender's London Branch ("London Branch"),
and Selas SAS (formerly known as Selas S.A.), a corporation organized under the
laws of France and a subsidiary of the Borrower ("Selas SAS"), entered into that
certain Facility Agreement dated as of February 2, 2001, amended and restated in
its entirety pursuant to that certain Amended and Restated Facility Agreement
dated as of April 15, 2002, and amended by that certain First Amendment to
Amended and Restated Facility Agreement dated as of January 16, 2003, that
certain Second Amendment to Amended and Restated Facility Agreement dated as of
February 27, 2003, and that certain Third Amendment to Amended and Restated
Facility Agreement dated as of March 14, 2003 (as amended, the "Existing Selas
SAS Facility Agreement"), pursuant to which the Lender provided to Selas SAS (i)
a discretionary line of credit facility in the aggregate amount of Sixteen
Million Euros (E16,000,000) on an "on demand" basis, expiring on April 30, 2001
(the "Selas SAS Line of Credit Facility") for the purposes of providing
discretionary advance payment guarantees on behalf of Selas SAS; and (ii) a
discretionary overdraft facility for general working capital purposes with a
sub-limit amount of Two Million Euros (E2,000,000) that was later increased (the
"Existing Overdraft Facility"). The Selas SAS Line of Credit Facility has been
paid and/or expired as of the date of this Agreement.
E. The Lender, through its London Branch, and Selas SAS also entered
into certain term loan agreements, as follows: (i) an agreement dated February
26, 1998, amended and restated in its entirety by that certain agreement dated
as of April 15, 2002, and amended by that certain First Amendment to Selas SAS
1998 Term Loan Agreement dated as of January 16, 2003 (as amended, the "Selas
SAS 1998 Term Loan Agreement") pursuant to which the Lender made a term loan to
Selas SAS in the original principal amount of Fifteen Million French Francs (FF
15,000,000); and (ii) an agreement dated January 2000, amended and restated in
its entirety by that certain agreement dated as of April 15, 2002, and amended
by that certain First Amendment to Selas SAS 2000 Term Loan Agreement dated as
of January 16, 2003, that certain Second
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Amendment to Selas SAS 2000 Term Loan Agreement dated as of February 27, 2003,
and that certain Third Amendment to Selas SAS 2000 Term Loan Agreement dated as
of March 14, 2003 (as amended, the "Existing Selas SAS 2000 Term Loan
Agreement"), pursuant to which the Lender made a term loan to Selas SAS in the
original principal amount of One Million Seven Hundred and Fifty-Three Thousand
One Hundred and Fifty-Eight and 30/100 Euros (E1,753,158.30) (the "Existing
Selas SAS 2000 Term Loan"). The Selas SAS 1998 Term Loan Agreement has been paid
and/or expired as of the date of this Agreement.
F. The Borrower and the U.S. Guarantors jointly and severally
guaranteed and became surety for all loans, advances, debts, liabilities,
obligations, covenants and duties of Selas SAS to the Lender, pursuant to the
following agreements (collectively, the "Existing Selas SAS Surety Agreements"):
(i) that certain Unconditional Guaranty of Borrower dated as of January 10, 2000
(the "Borrower Guaranty"), (ii) that certain Unconditional Guaranty of Deuer
dated as of January 10, 2000 (the "Deuer Guaranty"), (iii) that certain
Unconditional Guaranty of RTI dated as of January 10, 2000 (the "RTI Guaranty"),
(iv) that certain Unconditional Guaranty of RTIE dated as of January 10, 2000
(the "RTIE Guaranty"), and (v) that certain Unconditional Guaranty of RTI
Electronics dated as of January 10, 2000 (the "RTI Electronics Guaranty"). The
Lender has released Deuer from its obligations under the Deuer Guaranty as a
result of the sale of Deuer in August 2003. RTIE was dissolved by Certificate of
Dissolution dated July 25, 2003.
G. As security for any and all indebtedness, liabilities and
obligations of the Borrower to the Lender, then existing or thereafter arising,
the Borrower, inter alia: (i) pursuant to that certain Security Agreement
between the Borrower and the Lender dated as of October 20, 1993 and amended as
of July 31, 1998 (as amended, the "Existing Borrower Security Agreement"),
granted to the Lender a security interest in and lien on: (a) all of the
Borrower's assets, then owned or thereafter acquired, including, without
limitation, all accounts, contract rights, inventory, fixtures, machinery,
equipment and general intangibles, and (b) all of the Borrower's rights under a
certain contract with Production Machinery Corporation in Talcahuano, Chile for
the sale of and the proceeds of a Five Million Twenty-Five Thousand Dollars
($5,025,000) documentary letter of credit issued by Bank One, Columbus, Ohio;
(ii) pursuant to that certain Second Amended and Restated Pledge Agreement dated
as of July 31, 1998 (the "Existing Borrower Pledge Agreement"), assigned,
pledged and granted to Lender a security interest in all of the issued and
outstanding stock of Deuer, RTI, RTIE and RTI Electronics; and (iii) pursuant to
that certain First Mortgage and Security Agreement dated as of October 20, 1993,
as amended on July 21, 1995, February 20, 1997, July 31, 1998, January 10, 2000
and April 15, 2002 (as amended, the "Existing Borrower Mortgage and Security
Agreement"), granted to the Lender a first mortgage lien on certain real
property of the Borrower and improvements thereon located in Dresher, Upper
Dublin Township, Xxxxxxxxxx County, Pennsylvania (the "Pennsylvania Property").
H. As security for any and all indebtedness, liabilities and
obligations of Deuer to the Lender, then existing or thereafter arising, Deuer:
(i) pursuant to that certain Security Agreement between Deuer and the Lender
dated as of October 20, 1993 and amended as of July 31, 1998 (as
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amended, the "Deuer Security Agreement"), granted to the Lender a security
interest in and lien on all of Deuer's assets, then owned or thereafter
acquired, including, without limitation, all accounts, contract rights,
inventory, fixtures, machinery, equipment and general intangibles; and (ii)
pursuant to that certain First Mortgage and Security Agreement dated as of
October 20, 1993, as amended July 21, 1995, February 20, 1997, July 31, 1998,
January 10, 2000 and April 15, 2002 (as amended, the "Deuer Mortgage and
Security Agreement"), granted to the Lender a first mortgage lien on certain
real property of Deuer and improvements thereon located in Moraine, Xxxxxxxxxx
County, Ohio (the "Ohio Property"). The Lender has released its security
interest in and liens upon the Deuer collateral, including the Ohio Property, as
a result of the sale of Deuer in August 2003.
I. As security for any and all indebtedness, liabilities and
obligations of RTI to the Lender, then existing or thereafter arising, RTI: (i)
pursuant to that certain Security Agreement between RTI and the Lender dated as
of October 20, 1993 and as amended July 31, 1998 (as amended, the "Existing RTI
Security Agreement"), granted to the Lender a security interest in and lien on
all of RTI's assets, then owned or thereafter acquired, including, without
limitation, all accounts, contract rights, inventory, fixtures, machinery,
equipment and general intangibles; (ii) pursuant to that certain Patent and
Trademark Security Agreement between RTI and the Lender dated as of October 20,
1993 and amended as of July 31, 1998 (the "Existing RTI Patent and Trademark
Security Agreement"), granted to the Lender a security interest in and lien on
certain patents and trademarks and other intellectual property; and (iii)
pursuant to that certain Mortgage, Security Agreement and Fixture Financing
Statement dated as of June 30, 1999, as amended January 10, 2000, November 20,
2001 and April 15, 2002 (as amended, the "Existing RTI Mortgage and Security
Agreement") granted to the Lender a first mortgage lien on certain real property
of RTI and improvements thereon located in Xxxxxx County, Minnesota (the
"Minnesota Property").
J. As security for any and all indebtedness, liabilities and
obligations of RTIE to the Lender, then existing or thereafter arising, RTIE
granted to the Lender a security interest in all of RTIE's assets, then owned or
thereafter acquired, including, without limitation, all accounts, contract
rights, inventory, fixtures, machinery, equipment and general intangibles,
pursuant to that certain Security Agreement between RTIE and the Lender dated as
of October 20, 1993 and amended as of July 31, 1998 (as amended, the "Existing
RTIE Security Agreement"). RTIE was dissolved by Certificate of Dissolution
dated July 25, 2003.
K. As security for any and all indebtedness, liabilities and
obligations of RTI Electronics to the Lender, then existing or thereafter
arising, RTI Electronics granted the Lender a security interest in all of RTI
Electronic's assets, then owned or thereafter acquired, including, without
limitation, all accounts, contract rights, inventory, fixtures, machinery,
equipment and general intangibles, pursuant to that certain Security Agreement
between RTI Electronics and the Lender dated as of October 20, 1993, as amended
February 20, 1997 and July 31, 1998 (as amended, the "Existing RTI Electronics
Security Agreement").
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L. The Borrower, the U.S. Guarantors, Selas SAS and CFR-CECF Fofumi
Ripoche, a corporation organized under the laws of France and a subsidiary of
the Borrower ("CFR"), entered into that certain Waiver and Amendment Agreement
dated as of November 20, 2001, as amended by that certain First Amendment to
Waiver and Amendment Agreement dated as of February 28, 2002 and that certain
Second Amendment to Waiver and Amendment Agreement dated as of March 20, 2002
(as amended, the "First Waiver Agreement"), pursuant to which the Lender agreed,
inter alia, to waive certain financial covenant defaults and provide a new
credit facility under which the Lender's London Branch would issue certain
advance payment guarantees. In consideration of the agreement by the Lender's
London Branch to issue certain advance payment guarantees on their behalf, Selas
SAS and CFR each executed a General Counter Indemnity in favor of the Lender
(collectively, the "Existing General Counter Indemnities").
M. The Borrower, the U.S. Guarantors, Selas SAS and CFR entered into
that certain Second Waiver and Amendment Agreement dated as of April 15, 2002,
as amended by that certain First Amendment to Second Waiver and Amendment
Agreement dated as of June 24, 2002, that certain Second Amendment to Second
Waiver and Amendment Agreement dated as of July 30, 2002, that certain Third
Amendment to Second Waiver and Amendment Agreement dated as of November 14,
2002, that certain Fourth Amendment to Second Waiver and Amendment Agreement
dated as of January 16, 2003, that certain Fifth Amendment to Second Waiver and
Amendment Agreement dated as of February 21, 2003, that certain Sixth Amendment
to Second Waiver and Amendment Agreement dated as of February 27, 2003, and that
certain Seventh Amendment to Second Waiver and Amendment Agreement dated as of
March 7, 2003 (as amended, the "Second Waiver Agreement"), pursuant to which the
Lender agreed, inter alia, to provide the Borrower with a new supplemental
credit facility (the "Existing Supplemental Credit Facility") evidenced by that
certain Supplemental Credit Facility Note dated as of April 15, 2002 in the
original principal amount of Five Million Dollars ($5,000,000) (the "Existing
Supplemental Credit Facility Note"). In connection therewith, Selas SAS
guaranteed and became surety for all loans, advances, credit or other financial
accommodations made for the benefit of the Borrower, CFR, and/or one or more
U.S. Guarantors (the "Existing Selas SAS Guaranty"), and CFR guaranteed and
became surety for all loans, advances, credits or other financial accommodations
made for the benefit of the Borrower, Selas SAS, and/or one or more U.S.
Guarantors (the "Existing CFR Guaranty").
N. The Borrower, the U.S. Guarantors, Selas SAS and CFR entered into
that certain Third Waiver and Amendment Agreement dated as of March 14, 2003, as
amended by that certain First Amendment to Third Waiver and Amendment Agreement
dated as of March 31, 2003, that certain Second Amendment to Third Waiver and
Amendment Agreement dated as of May 15, 2003, that certain Third Amendment to
Third Waiver and Amendment Agreement dated as of March 14, 2003, that certain
Fourth Amendment to Third Waiver and Amendment Agreement dated as of November
10, 2003, that certain Fifth Amendment to Third Waiver and Amendment Agreement
dated as of January 26, 2004, that certain Sixth Amendment to Third Waiver and
Amendment Agreement dated as of February 26, 2004, and that certain Seventh
Amendment to Third Waiver and Amendment Agreement dated as of March 12, 2004
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(as amended, the "Third Waiver Agreement"), pursuant to which the Lender agreed,
inter alia, to extend the maturity of certain existing credit facilities and
provide a contingent credit facility for the issuance of advance payment
guarantees on behalf of Selas SAS and CFR.
O. The First Waiver Agreement, the Second Waiver Agreement, the Third
Waiver Agreement, the Existing Credit Agreement, the Existing Notes, the
Existing Borrower Surety Agreements, the Existing Selas SAS Facility Agreement,
the Existing Selas SAS 2000 Term Loan Agreement, the Existing Selas SAS Surety
Agreements, the Existing Selas SAS Guaranty, the Existing CFR Guaranty, the
Existing General Counter Indemnities, the Existing Borrower Security Agreement,
the Existing Borrower Pledge Agreement, the Existing Borrower Mortgage and
Security Agreement, the Existing RTI Security Agreement, the Existing RTI Patent
and Trademark Security Agreement, the Existing RTI Mortgage and Security
Agreement, the Existing RTIE Security Agreement, the Existing RTI Electronics
Security Agreement, together with the various agreements, instruments and other
documents executed in connection therewith and all amendments and modifications
thereto, now or hereafter in effect, shall be referred to hereinafter as the
"Existing Loan Documents."
P. The Borrower, RTI and RTI Electronics have requested that the Lender
restructure the payment obligations under the Existing Loan Documents and, in
connection therewith, the Lender, the Borrower, RTI and RTI Electronics wish to
amend, restate and consolidate the terms and conditions of the Existing Loan
Documents pursuant to the terms hereof. Due to the commencement of insolvency
proceedings by Selas SAS in France, neither Selas SAS not CFR is able to be a
party to this Agreement. The Borrower, RTI and RTI Electronics have requested
that the Lender restructure the obligations under the Existing Loan Documents
notwithstanding the absence of Selas SAS and CFR as parties or signatories
hereto.
Q. Accordingly, the Lender, the Borrower, RTI and RTI Electronics, each
intending to be legally bound, hereby agree as follows:
ARTICLE 1
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DEFINITIONS
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1.1 The following terms shall have the following meanings in this
Agreement:
"Actual Leverage Ratio After Sale" shall have the meaning specified in
Section 7.2(b)(ii) of this Agreement.
"Affiliate" shall mean any Subsidiary of the Borrower and/or any Person
or entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with the Borrower or such Person. For purposes of this definition, the
terms "control," "controls" and "controlled" shall refer to the power to
determine the management or policies of a Person, whether resulting from an
official
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position or capacity with such Person, direct or indirect beneficial ownership
of at least twenty percent (20%) of the voting securities or other equity
interests of such Person, or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, modifications and supplements hereto as may be in effect from time
to time.
"Appraisal" shall mean the appraisal prepared for the Lender and
completed in December, 2001.
"Auditors" shall have the meaning specified in Section 7.1(e) of this
Agreement.
"Base Rate" shall mean the rate of interest established by the Lender
from time to time as its reference rate in making loans generally and does not
reflect the rate of interest charged to any particular borrower or class of
borrowers. The Borrower acknowledges that the Base Rate is not tied to any
external rate of interest and that the rate of interest charged hereunder, when
determined with reference to the Base Rate, shall change automatically and
immediately as of the date of any change in the Base Rate, without notice to the
Borrower.
"Borrower" shall have the meaning specified in the initial paragraph of
this Agreement, together with its heirs, personal representatives,
administrators and assigns.
"Borrowing Base" shall mean at any time, a dollar amount equal to the
sum of the following amounts as they exist at that time: (a) eighty percent
(80%) of the market value of the Pennsylvania Property as stated in the
Appraisal; (b) eighty percent (80%) of the market value of the Minnesota
Property as stated in the Appraisal; (c) seventy-five percent (75%) of the
orderly liquidation value of machinery and equipment as stated in the Appraisal;
(d) seventy-five (75%) of Eligible Accounts; and (e) forty percent (40%) of
Eligible Inventory.
"Borrowing Base Certificate" shall have the meaning specified in
Section 7.1(a) of this Agreement.
"Borrowing Base Limit" shall have the meaning specified in Section 3.3
of this Agreement.
"Business Day" shall mean any day upon which the Lender is open for
business at its main office in Philadelphia, Pennsylvania.
"Capital Expenditure" shall mean an expenditure for a fixed asset, or
any improvements or additions thereto, in each case having a useful life of more
than one (1) year and including any obligations to pay rent or other amounts
under a Capital Lease.
"Capital Lease" shall mean any lease or sublease of property which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
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"Claims" shall have the meaning specified in Section 2.6 of this
Agreement.
"Closing" shall mean the execution and delivery to the Lender of all of
the documents and instruments required by the terms of this Agreement and the
closing of the transactions contemplated by this Agreement and satisfaction of
all of the conditions precedent set forth in Article VI.
"Closing Date" shall mean the date on which the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment Fee" shall have the meaning specified in Section 3.4 of
this Agreement.
"Consolidated Subsidiary" shall mean individually, and "Consolidated
Subsidiaries" shall mean collectively, any and all Subsidiaries of the Borrower
existing as of the Closing Date as well as any Subsidiaries hereafter created or
acquired whose accounts, financial results or position, for either federal
income tax or financial accounting purposes, are consolidated with those of the
Borrower.
"Consolidated Tangible Capital Funds" shall mean, as of the date of
determination, Tangible Capital Funds on a consolidated basis for the Borrower
and its Consolidated Subsidiaries.
"Consolidated Total Liabilities" shall mean, as of the date of
determination, Total Liabilities on a consolidated basis for the Borrower and
its Consolidated Subsidiaries.
"Contingent Liabilities" shall mean, as to any Person, any guarantee of
payment or performance by such Person of any Indebtedness or other obligation of
any other Person, or any agreement to provide financial assurance with respect
to the financial condition, or the payment of the obligations of, such other
Person (including, without limitation, purchase or repurchase agreements,
reimbursement agreements with respect to letters of credit or acceptances,
indemnity arrangements, grants of security interests to support the obligations
of another Person, keepwell agreements and take-or-pay or through-put
arrangements) which has the effect of assuring or holding harmless any third
Person against loss with respect to one or more obligations of such third
Person; provided, however, the term Contingent Liabilities shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Liability of any Person shall be deemed
to be the lower of (a) an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Liability is made and
(b) the maximum amount for which such contingently liable Person may be liable
pursuant to the terms of the instrument embodying such Contingent Liability,
unless such primary obligation and the maximum amount for which such applicable
contingently liable Person may be liable are not stated or determinable, in
which case the amount of such Contingent Liability shall be such contingently
liable Person's maximum reasonably anticipated
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liability in respect thereof as determined by it in good faith.
"Covenant Compliance Certificate" shall have the meaning specified in
Section 7.1(d) of this Agreement.
"Credit Facilities" shall mean the Term Loan and the Revolving Loan.
"Current Assets" shall mean, as of the date of determination, all
assets which would, in accordance with GAAP, be classified as current assets,
provided that such term shall not include any Intangible Assets or restricted
cash.
"Current Defaults" shall have the meaning specified in Section 2.3 of
this Agreement.
"Current Liabilities" shall mean, as of the date of determination, all
liabilities (including tax and other proper accruals) which would, in accordance
with GAAP, be classified as current liabilities, but in any event including all
such liabilities, whether secured or unsecured, payable on demand or maturing
not more than one (1) year after such date.
"Current Ratio" shall mean the ratio of Current Assets to Current
Liabilities.
"EBITDA" means, for any period, determined on a consolidated basis in
accordance with GAAP, net income of the applicable entity or entities for such
period (i) plus the deductions for interest expense, tax expense, depreciation,
amortization, and other non-cash expenses, (ii) less other non-cash income,
including net gain on asset sales.
"Eligible Account" means a domestic account receivable not more than
ninety (90) days from the date of the original invoice that arises in the
ordinary course of business, and meets the following eligibility requirements:
(a) the sale of goods or services reflected in such account is final and such
goods and services have been delivered or provided and accepted by the account
debtor and payment for such goods or services is owing; (b) the invoices
comprising such account are not subject to any claims, returns or disputes of
any kind; (c) the account debtor is not insolvent; (d) the account debtor has
its principal place of business in the United States; (e) the account debtor is
not an Affiliate of the Borrower or a supplier of the Borrower and the account
is not otherwise exposed to risk of set-off; (f) not more than thirty percent
(30%) of the outstanding invoices owing by the account debtor are more than
ninety (90) days after the date of the original invoice; and (g) the account is
not subject to any security interest, lien or claim which is senior in priority
to the security interest, lien and claim of the Lender.
"Eligible Inventory" means domestic inventory of raw material and
finished goods in Borrower's possession that (a) is held for use or sale in the
ordinary course of Borrower's business; (b) is not unmerchantable or obsolete;
and (c) is subject to a first priority perfected security interest in favor of
the Lender. The value of such domestic inventory will be fixed at the lower of
cost or market on a first-in, first-out basis, all determined by the Lender in
its sole discretion.
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"Encumbrance" shall mean, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender to, or other secured party of
the Person under any conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset of the Person.
"Environmental Laws" shall mean the Federal Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.ss.ss.9601, et. seq., the
Federal Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.6901 et. seq.,
the Hazardous Materials Transportation Act, 49 U.S.C.ss.ss.1801, et. seq., all
other federal, state and local environmental or health laws applicable to the
Borrower or its business, operations or assets now or hereafter enacted, and all
rules, regulations, orders and publications adopted or promulgated pursuant
thereto from time to time.
"ERISA" shall mean the federal Employee Retirement Income Security Act
of 1974, as amended, and all rules, regulations, orders and publications adopted
or promulgated pursuant thereto from time to time.
"Event of Default" shall have the meaning set forth in Article IX of
this Agreement.
"Existing Facilities" shall mean the Existing Term Loans, the Existing
Revolving Credit Facility, the Existing Supplemental Credit Facility, the
Existing Overdraft Facility and the Existing Selas SAS 2000 Term Loan.
"Existing Interest Obligations" shall have the meaning specified in
Section 2.4(b) of this Agreement.
"Existing Loan Documents" shall have the meaning specified in paragraph
O of the Background section of this Agreement.
"Existing Notes" shall have the meaning specified in paragraph C of the
Background section of this Agreement.
"Existing Obligations" shall have the meaning specified in Section
2.4(b) of this Agreement.
"Existing Principal Obligations" shall have the meaning specified in
Section 2.4(a) of this Agreement.
"Existing Selas SAS Obligations" shall have the meaning specified in
Section 2.1 of this Agreement.
"Existing Selas SAS Loan Documents" shall have the meaning specified in
Section 2.1 of this Agreement.
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"Fixed Charge Coverage Ratio" shall mean, as of the date of
determination, with respect to the most recently ended fiscal quarter of the
applicable entity, the ratio of (a) the sum of EBITDA for such period, to (b)
the sum of principal and interest payments made on Funded Debt and dividends
paid during such period, in each case as defined in accordance with GAAP.
"Funded Debt" shall mean, as of the date of determination, the
aggregate principal amount of all Indebtedness for (i) borrowed money, other
than trade indebtedness incurred in the normal and ordinary course of business
for value received; (ii) installment purchases of real or personal property;
(iii) Capital Leases; and (iv) guaranties of Funded Debt of others, without
duplication.
"GAAP" shall mean generally accepted accounting principles in the
United States, as in effect at the time of application to the provisions hereof,
and consistently applied.
"Guaranty" shall mean any guaranty or agreement to be a surety or other
contingent liability (other than any endorsement for collection or deposit in
the ordinary course of business), direct or indirect, with respect to any
obligation of another Person.
"Guaranteed Contingent Liabilities" shall have the meaning specified in
Section 7.2(b)(i) of this Agreement.
"Hazardous Materials" shall mean all materials of any kind which are
flammable, explosive, toxic, radioactive or otherwise hazardous to animal or
plant life or the environment, including, without limitation, "hazardous
wastes," "hazardous substances" and "contaminants," as such terms are defined by
Environmental Laws.
"Indebtedness" as applied to a Person means, without duplication
(a) all indebtedness of such Person for borrowed money;
(b) all obligations of such Person for the deferred purchase
price of property and services (other than current trade payables incurred in
the ordinary course of such Person's business);
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments;
(d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person;
(e) all Capital Lease obligations of such Person;
(f) all obligations of such Person, contingent or otherwise,
as an account party
11
under acceptable letter of credit or similar facilities; and
(g) all guarantee obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (f) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any lien on property (including, without
limitation, accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligations.
"Intangible Assets" shall mean, for any entity, all assets of such
entity which would be classified in accordance with GAAP as intangible assets,
including without limitation, all franchises, licenses, permits, patents, patent
applications, copyrights, trademarks, trade-names, goodwill, experimental or
organization expenses and other like intangibles, treasury stock and unamortized
debt discount.
"Judgment" shall have the meaning specified in Section 9.7 of this
Agreement.
"Landlord Waivers" shall have the meaning specified in Section 6.3 of
this Agreement.
"Lender Releasees" shall have the meaning specified in Section 2.6 of
this Agreement.
"Loan Documents" shall mean all of the Restructuring Documents and all
agreements, amendments, certificates, financing statements, schedules, reports,
notices, and exhibits now or hereafter executed or delivered in connection with
any of the foregoing, as may be in effect from time to time, but shall
specifically exclude the Existing Loan Documents.
"Net B&CB Proceeds" shall have the meaning specified in Section 3.7(b)
of this Agreement.
"Net Pennsylvania Property Proceeds" shall have the meaning specified
in Section 3.7(a) of this Agreement.
"Net Worth" shall mean as of the date of determination, the excess of
the Total Assets of the applicable entity over its Total Liabilities at such
date.
"Notes" shall mean the Term Note and the Revolving Credit Facility
Note.
"Obligations" shall mean the obligations of the Borrower to:
(a) pay the principal, interest, commitment fees and any other
liabilities of the Borrower to the Lender under this Agreement and the other
Loan Documents in accordance with the terms thereof;
12
(b) satisfy all of the other direct or indirect liabilities,
advances, debts, obligations, covenants and duties of the Borrower to the
Lender, whether hereunder or otherwise, whether now existing or hereafter
incurred, whether or not evidenced by any note or other instrument, matured or
unmatured, direct, absolute or contingent, joint or several, primary or
secondary, due or to become due, including any extensions, modifications,
renewals thereof and substitutions therefor;
(c) repay the Lender all amounts advanced by the Lender
hereunder or otherwise on behalf of the Borrower, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any collateral; and
(d) reimburse the Lender, on demand, for all of the Lender's
expenses and costs, including the fees and expenses of its counsel, in
connection with the negotiation, preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required
hereunder, including all amounts payable under Section 11.3 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Refund" shall have the meaning specified in Section 3.7(c) of this
Agreement.
"Releasors" shall have the meaning specified in Section 2.6 of this
Agreement.
"Restricted Payments" shall mean redemptions, repurchases, dividends
and distributions of any kind in respect of the Borrower's capital stock and
payments of principal and interest on Subordinated Debt.
"Restructuring Documents" shall have the meaning specified in Section
6.1 of this Agreement.
"Revolving Credit Facility Note" shall mean the Revolving Credit
Facility Note as defined, and more specifically set forth, in Section 3.2(d) of
this Agreement, together with all amendments, modifications, replacements,
extensions and renewals thereof as may be in effect from time to time.
"Revolving Commitment" shall mean $4,500,000.
"Revolving Loan" shall mean the Revolving Loan as defined, and more
specifically set forth, in Section 3.2(a) of this Agreement, together with all
supplements, amendments and renewals thereof.
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"Revolving Loan Termination Date" shall mean April 1, 2005.
"Rolling Period" shall mean, as of any date, the fiscal quarters
included in the current fiscal year.
"Security Agreements" shall have the meaning specified in Section 7.6
of this Agreement.
"Short Term Financing" shall have the meaning specified in Section
3.7(c) of this Agreement.
"Subsidiary" shall mean, as to any designated corporation or limited
liability company, any corporation or limited liability company, the outstanding
shares or membership interests of which have sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of the
members of its board of directors or managing members, and are, at the time,
owned by the designated corporation or limited liability company.
"Subordinated Debt" shall mean Indebtedness of the Borrower
subordinated to the Credit Facilities with subordination provisions in form and
substance satisfactory to the Lender.
"Tangible Capital Funds" shall mean, as of the date of determination:
(i) the sum of Net Worth plus Subordinated Debt of the applicable entity, (ii)
less the Intangible Assets of the applicable entity.
"Term Loan" shall mean the Term Loan as defined, and more specifically
set forth, in Section 3.1(a) of this Agreement, together with all supplements,
amendments and renewals thereof.
"Term Note" shall mean the Term Note as defined, and more specifically
set forth, in Section 3.1(c) of this Agreement, together with all amendments,
modifications, replacements, extensions and renewals thereof as may be in effect
from time to time.
"Total Assets" shall mean, at any time, all assets of an entity, as
defined in accordance with GAAP.
"Total Liabilities" shall mean, at any time, all liabilities of an
entity, as defined in accordance with GAAP.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
enacted in the Commonwealth of Pennsylvania.
14
"U.S. Guarantors" shall have the meaning specified in paragraph A of
the Background section of this Agreement, together with each such U.S.
Guarantor's respective heirs, personal representatives, administrators and
assigns.
"Working Capital Funds" shall have the meaning specified in Section
3.7(c) of this Agreement.
1.2 Other Definitional Provisions. Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
the other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto. The meanings given to terms defined in this
Agreement shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE 2
---------
ACKNOWLEDGMENTS
---------------
To induce the Lender to enter into this Agreement, the Borrower, RTI
and RTI Electronics acknowledge, agree, warrant, and represent that:
2.1 Assumption of Obligations of Selas SAS. The Borrower, by its
execution of this Agreement, has agreed to assume the obligations of Selas SAS
to the Lender under the Overdraft Facility and the Selas SAS 2000 Term Loan (the
"Existing Selas SAS Obligations"). By so doing, the Borrower is and shall remain
jointly and severally liable with Selas SAS for the Existing Selas SAS
Obligations, as amended and restated by this Agreement and the other Loan
Documents, for all purposes, as if it had executed the documents evidencing the
Selas SAS Obligations (the "Existing Selas SAS Loan Documents"). The Borrower
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Existing Selas SAS Loan
Documents, as amended and restated by this Agreement and the other Restructuring
Documents. Notwithstanding the foregoing, the parties hereto agree that it is
their intention to restructure the Existing Selas SAS Obligations such that the
Borrower's assumption thereof shall hereafter be evidenced and governed by the
provisions, terms and conditions of this Agreement and the other Restructuring
Documents, which are intended to restate, evidence and substitute for the
Existing Selas SAS Obligations as assumed by the Borrower, but which shall not
constitute payment, satisfaction, cancellation or novation thereof.
2.2 Acknowledgment and Reaffirmation of Loan Documents and Liens. All
of the Existing Loan Documents, and all of the security interests, liens and
assignments granted or pledged to the Lender under the Existing Loan Documents,
are valid, legal and binding obligations upon the Borrower and/or the U.S.
Guarantors and are enforceable against the Borrower and/or the U.S. Guarantors
in accordance with their respective terms, as amended and restated by this
Agreement and the other Restructuring Documents. The Borrower, RTI and RTI
Electronics hereby ratify, affirm, reaffirm and confirm in all respects their
obligations under the Existing Loan Documents, and all terms, conditions,
representations and covenants in the
15
Existing Loan Documents, as amended and restated by this Agreement and the other
Restructuring Documents. To the extent that the Borrower, RTI or RTI Electronics
has any defenses, setoffs, claims, or counterclaims to repayment of the Existing
Obligations (as hereinafter defined) or against the Lender, such defenses,
setoffs, claims, and counterclaims have been and are hereby waived.
Notwithstanding the foregoing, the parties hereto agree that it is their
intention to restructure the Existing Loan Documents such that this Agreement
and the other Restructuring Documents shall completely amend, restate, and be
substituted for the Existing Loan Documents, including, without limitation, the
Existing Credit Agreement, the First Waiver Agreement, the Second Waiver
Agreement, the Third Waiver Agreement and the Existing Notes, and such that the
Existing Obligations (as defined herein) shall hereafter be evidenced and
governed by the provisions, terms and conditions of this Agreement and the other
Restructuring Documents, provided that none of the Restructuring Documents is
intended to or shall constitute payment, satisfaction, cancellation or novation
thereof.
2.3 Waiver of Defaults. The Borrower has informed the Lender that, in
the absence of the waiver provided herein, Events of Default would occur under
the Existing Loan Documents as a result of (i) the Borrower's failure to
maintain the minimum Consolidated Tangible Capital Funds as of December 31, 2003
as required under the Existing Loan Documents; (ii) the Borrower's failure to
maintain the Fixed Charge Coverage Ratio as of December 31, 2003 as required
under the Existing Loan Documents; (iii) the Borrower's failure to obtain the
prior written consent of the Lender for, or otherwise inform the Lender of, the
dissolution of RTIE; and (iv) the making of any false representation or
warranty, or the violation of any covenant, by the Borrower and/or RTI and/or
RTI Electronics directly related to the dissolution of RTIE (collectively, the
"Current Defaults"). Subject to the provisions hereof, the Lender hereby waives
the Current Defaults. The Lender's waiver of the Current Defaults, or any
communication between the Lender, the Borrower, RTI, RTI Electronics or each of
their respective officers, agents, employees or representatives, shall not be
deemed to constitute a waiver of (i) any other default or Event of Default under
the Existing Loan Documents (prior to their amendment and restatement hereby and
by the other Restructuring Documents) which arises from any event or condition
which occurred or existed prior to the date of this Agreement; (ii) the ongoing
obligation of the Borrower, RTI and RTI Electronics to comply with the Existing
Credit Agreement and the other Existing Loan Documents (as amended and restated
by this Agreement and the other Restructuring Documents); or (iii) any rights or
remedies which the Lender has against the Borrower, RTI or RTI Electronics under
applicable law and/or the Existing Loan Documents (prior to their amendment and
restatement hereby and by the other Restructuring Documents) with respect to
Events of Default which arise from any event or condition which occurred or
existed prior to the date of this Agreement, other than rights and remedies
resulting directly from the occurrence and existence of the Current Defaults.
The Lender hereby reserves and preserves all of its rights and remedies against
the Borrower, RTI and RTI Electronics under the Existing Loan Documents (prior
to their amendment and restatement hereby and by the other Restructuring
Documents) and applicable law, with respect to any event or condition which
occurred or existed prior to the date of this Agreement, other than the right to
declare an Event of Default or exercise its rights and remedies with respect to
the Current Defaults.
16
2.4 Acknowledgment of Indebtedness.
(a) Principal Amounts. As of the Closing Date, the following
principal amounts are due and owing by the Borrower under the Existing Loan
Documents, which amounts include the principal amounts under the Existing Selas
SAS Obligations and which amounts are without offset, counterclaims, or other
defenses of any kind (the "Existing Principal Obligations"):
Term Loan D $495,000.00
Term Loan E $833,333.45
Term Loan F SGD1,011,904.77
Revolving Credit Facility $3,533,252.86
Supplemental Credit Facility $1,360,000.00
Overdraft Facility E709,207.96
Selas SAS 2000 Term Loan E438,289.65
(b) Interest Amounts. As of the Closing Date, the following
interest amounts are due and owing by the Borrower under the Existing Loan
Documents, which amounts include the interest amounts under the Existing Selas
SAS Obligations and which amounts are without offset, counterclaims, or other
defenses of any kind (the "Existing Interest Obligations;" together with the
Existing Principal Obligations, the "Existing Obligations"):
Term Loan D $840.56
Term Loan E $1,415.07
Term Loan F SGD1,472.71
Revolving Credit Facility $5,549.39
Supplemental Credit Facility $3,295.03
Overdraft Facility E1,418.42
Selas SAS 2000 Term Loan E8,089.30
2.5 Acknowledgment of Restructuring Agreement. The parties hereto agree
that it is the intention of the parties to restructure the Existing Obligations
such that, inter alia, (i) the Existing Principal Obligations of the Borrower to
the Lender shall be restructured into two (2) separate credit facilities as more
specifically set forth in Sections 3.1 and 3.2 and will be evidenced by the
Notes; and (ii) the Borrower shall pay the Existing Interest Obligations in full
on the Closing Date. The parties acknowledge and agree that nothing contained
herein shall alter, amend, modify or extinguish the obligation of the Borrower
to repay the Existing Obligations. Neither shall anything contained in this
Agreement, or in any Restructuring Document, constitute a satisfaction or
novation of any Existing Obligation except as otherwise expressly set forth
herein or therein and all Existing Obligations are hereby acknowledged and
reaffirmed.
17
2.6 WAIVER AND RELEASE. THE BORROWER, RTI AND RTI ELECTRONICS, ON
BEHALF OF THEMSELVES AND ANY PERSON OR ENTITY CLAIMING BY OR THROUGH THEM
(COLLECTIVELY REFERRED TO AS THE "RELEASORS"), HEREBY UNCONDITIONALLY REMISE,
RELEASE AND FOREVER DISCHARGE THE LENDER, ITS PAST AND PRESENT OFFICERS,
DIRECTORS, SHAREHOLDERS, AGENTS, PARENT CORPORATION, SUBSIDIARIES, AFFILIATES,
TRUSTEES, ADMINISTRATORS, ATTORNEYS, PREDECESSORS, SUCCESSORS AND ASSIGNS AND
THE HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS AND ASSIGNS OF ANY SUCH PERSON
OR ENTITY, AS RELEASEES (COLLECTIVELY REFERRED TO AS THE "LENDER RELEASEES"), OF
AND FROM ANY AND ALL MANNER OF ACTIONS, CAUSES OF ACTION, SUITS, DEBTS, DUES,
ACCOUNTS, BONDS, COVENANTS, CONTRACTS, AGREEMENTS, PROMISES, WARRANTIES,
GUARANTIES, REPRESENTATIONS, LIENS, MECHANICS' LIENS, JUDGMENTS, CLAIMS,
COUNTERCLAIMS, CROSSCLAIMS, DEFENSES AND/OR DEMANDS WHATSOEVER, INCLUDING CLAIMS
FOR CONTRIBUTION AND/OR INDEMNITY, WHETHER NOW KNOWN OR UNKNOWN, PAST OR
PRESENT, ASSERTED OR UNASSERTED, CONTINGENT OR LIQUIDATED, AT LAW OR IN EQUITY,
OR RESULTING FROM ANY ASSIGNMENT, IF ANY (COLLECTIVELY REFERRED TO AS "CLAIMS"),
WHICH ANY OF THE RELEASORS EVER HAD, HAVE AND/OR HEREAFTER CAN, SHALL OR MAY
CLAIM TO HAVE AGAINST ANY OF THE LENDER RELEASEES, FOR OR BY REASON OF ANY
CAUSE, MATTER OR THING WHATSOEVER, FROM THE BEGINNING OF TIME TO THE DATE OF
EXECUTION OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL CLAIMS
RELATING TO OR ARISING FROM THE LENDING RELATIONSHIP OF THE LENDER AND THE
BORROWER. THE BORROWER, RTI AND RTI ELECTRONICS WARRANT AND REPRESENT THAT THEY
HAVE NOT ASSIGNED, PLEDGED, HYPOTHECATED AND/OR OTHERWISE DIVESTED THEMSELVES
AND/OR ENCUMBERED ALL OR ANY PART OF THE CLAIMS BEING RELEASED HEREBY AND THAT
THEY HEREBY AGREE TO INDEMNIFY AND HOLD HARMLESS ANY AND ALL OF THE LENDER
RELEASEES AGAINST WHOM ANY CLAIM SO ASSIGNED, PLEDGED, HYPOTHECATED, DIVESTED
AND/OR ENCUMBERED IS ASSERTED.
2.7 Comprehension of Agreement. The Borrower, RTI and RTI Electronics
are fully aware of the terms contained in this Agreement and have voluntarily,
without coercion or duress of any kind, entered into this Agreement and all
documents and agreements executed in connection with this Agreement.
18
ARTICLE 3
---------
CREDIT ACCOMMODATIONS
---------------------
3.1 Term Loan Facility.
(a) Principal and Repayment. On the Closing Date, the Lender
will make a term loan in the principal amount of Five Million Five Hundred Eight
Thousand Four Hundred Sixty-Nine and 92/100 Dollars ($5,508,469.92) (the "Term
Loan") for the purpose of (i) refinancing the principal and accrued interest
outstanding under the Existing Term Notes, the Existing Supplemental Credit
Facility Note, the Overdraft Facility and the Selas SAS 2000 Term Loan; and (ii)
providing an additional $800,000 of credit to the Borrower. The Borrower shall
repay the principal amount of the Term Loan by making quarterly principal
payments of $300,000 each on the last day of each quarter, commencing on June
30, 2004. The entire principal balance of the Term Loan and all accrued and
unpaid interest thereon shall be due and payable on April 1, 2005.
(b) Interest Rate. Interest shall accrue on the outstanding
principal balance of the Term Loan at an annual rate equal to the Base Rate plus
three percent (3%) and shall be payable on the first Business Day of each month.
Notwithstanding the foregoing, subsequent to maturity or upon the occurrence of
any Event of Default hereunder, interest shall accrue at an annual rate equal to
the Base Rate plus five percent (5%) and shall be payable on demand.
(c) Term Note. The obligations of the Borrower to repay the
outstanding balance of the Term Loan shall be evidenced by that certain Amended,
Restated and Consolidated Term Note issued in favor of the Lender in the amount
of $5,508,469.92 (the "Term Note") and executed by the Borrower
contemporaneously with the execution of this Agreement. The obligations of the
Borrower under the Existing Term Notes, the Existing Supplemental Credit
Facility Note, the Overdraft Facility and the Selas SAS 2000 Term Loan are
intended to be restated, replaced and substituted by (but not paid, satisfied,
cancelled or novated by) the obligations of the Borrower under the Term Note.
3.2 Revolving Credit Facility.
(a) Availability. Subject to the terms and condition of this
Agreement, the Lender agrees to make a revolving credit loan (the "Revolving
Loan") to the Borrower to finance the Borrower's working capital needs from time
to time from the Closing Date through, but not including, the Revolving Loan
Termination Date, in the maximum amount of the Revolving Commitment.
(b) Use of Revolving Loan. The Borrower may borrow such
amounts up to the aggregate amount of the Revolving Commitment, repay such
amounts, and reborrow
19
such amounts up to the aggregate amount of the Revolving Commitment, from time
to time; provided, however, that the aggregate principal amount of all
outstanding Revolving Loans (after giving effect to any amount requested), shall
not at any time exceed the Revolving Commitment. Upon the Revolving Loan
Termination Date, unless the same has been extended by written agreement between
the Lender and the Borrower, the Lender's commitment to make Revolving Loans
shall terminate, all Revolving Loans shall immediately mature and all
Obligations of the Borrower under the Revolving Loans shall be immediately due
and payable in full.
(c) Interest Rate. Interest shall accrue on the outstanding
principal of each Revolving Loan at the Base Rate plus three percent (3%) and
shall be payable on the first Business Day of each month. Notwithstanding the
foregoing, subsequent to maturity or upon the occurrence of any Event of Default
hereunder, interest shall accrue at an annual rate equal to the Base Rate plus
five percent (5%) and shall be payable on demand.
(d) Revolving Credit Facility Note. The obligations of the
Borrower to repay the outstanding balance of the Revolving Note shall be
evidenced by an Amended and Restated Revolving Credit Note issued in favor of
the Lender in the maximum principal amount of Four Million Five Hundred Thousand
Dollars ($4,500,000) (the "Revolving Credit Facility Note") and executed by the
Borrower contemporaneously with the execution of this Agreement. The obligations
of the Borrower under the Existing Revolving Credit Note are intended to be
restated, replaced and substituted by (but not paid, satisfied, cancelled or
novated by) the obligations of the Borrower under the Revolving Credit Facility
Note.
(e) Maturity Date. All principal, interest and other amounts
owing under the Revolving Loan shall be payable in full on the Revolving Loan
Termination Date.
3.3 Borrowing Base Limit. The sum of all outstanding amounts due and
owing under the Credit Facilities (after giving effect to any amount requested
under the Revolving Loan) shall not exceed the Borrowing Base (the "Borrowing
Base Limit"). If, at any time, the Borrower exceeds the Borrowing Base Limit,
then, without any requirement of demand or notice from the Lender, the Borrower
shall immediately pay to the Lender the amount of such excess.
3.4 Commitment Fee. The Borrower shall pay to the Lender a
non-refundable Commitment Fee in the aggregate amount of Seventy-Five Thousand
Dollars ($75,000) on the Closing Date. The Borrower hereby acknowledges and
agrees that the Commitment Fee payable hereunder is fully earned on the date
hereof, is non-refundable and constitutes a part of the Obligations, and is in
addition to any other fees payable by the Borrower under the Loan Documents.
3.5 Unused Facility Fee. The Borrower shall pay to the Lender a
non-refundable facility fee of 25 basis points (0.25%) per annum on the unused
portion of the Revolving Loan, from the date of this Agreement through the
Revolving Loan Termination Date, which facility fee shall be due and payable at
the offices of the Lender, quarterly in arrears, on the first Business Day of
each January, April, July, and October, as billed by the Lender. The Borrower
20
hereby acknowledges and agrees that the facility fee payable under this
subsection is fully earned on the date such fee is due and payable, is
non-refundable, constitutes a part of the Obligations and is in addition to any
other fees payable by the Borrower under the Loan Documents. The fee
contemplated by this subsection shall be calculated based on the average unused
portion of the Revolving Loan during each respective quarter.
3.6 Application of Payments. Unless otherwise provided for herein, all
payments under the Notes and this Agreement shall be applied first, to the
payment of any unpaid fees or other charges, second, to interest due and payable
on the Notes, and third, to the reduction of the outstanding principal balance
thereof.
3.7 Mandatory Prepayments.
(a) The Borrower shall remit any and all proceeds from the
sale, transfer or other disposition of the Pennsylvania Property, after
deduction for costs of sale and payment in full of any and all liens of record
against the Pennsylvania Property other than the Existing Borrower Mortgage and
Security Agreement (the "Net Pennsylvania Property Proceeds"), to the Lender.
The Net Pennsylvania Property Proceeds shall be applied by the Lender (i) first,
to permanently reduce the outstanding principal balance on the Term Loan; and
(ii) second, to permanently reduce the Revolving Credit Commitment.
(b) The Borrower shall remit all of the proceeds from the
sale, transfer or other disposition of the Borrower's business line known as the
"Burners & Components Business," after deduction for costs of sale (the "Net
B&CB Proceeds"), to the Lender. The Net B&CB Proceeds shall be applied by the
Lender (i) first, to permanently reduce the outstanding principal balance on the
Term Loan; and (ii) second, to permanently reduce the Revolving Credit
Commitment.
(c) The Borrower may be entitled to receive a refund for
income taxes paid by the Borrower in 2003 (the "Refund"). To the extent the
Borrower receives a Refund, the Borrower shall use the Refund as provided
herein. First, the Borrower may use up to $500,000 of the Refund to secure or
collateralize financing from one or more third parties for the sole purpose of
funding the Borrower's current cashflow shortfall (the "Short Term Financing").
Second, the Borrower may retain up to $250,000 of the Refund to support the
Borrower's working capital needs (the "Working Capital Funds"). Third, to the
extent that any proceeds of the Refund remain after the Borrower secures the
Short Term Financing and retains the Working Capital Funds, the Borrower shall
remit such proceeds to the Lender, to be applied by the Lender (i) first, to
permanently reduce the outstanding principal balance on the Term Loan; and (ii)
second, to permanently reduce the Revolving Credit Commitment. Notwithstanding
the foregoing, at such time when the Short Term Financing has been repaid in
full by the Borrower, any proceeds remaining from the Refund after such
repayment shall be remitted by the Borrower to the Lender, to be applied by the
Lender (i) first, to permanently reduce the outstanding principal balance on the
Term Loan; and (ii) second, to permanently reduce the Revolving Credit
Commitment.
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3.8 Prepayment and Repayment. The Borrower may make payments and
prepayments under either of the Notes, in whole or in part, at any time and from
time to time without penalty or premium.
3.9 Payments and Computations. All amounts of principal and interest
payable by the Borrower to the Lender under the Notes and this Agreement shall
be automatically deducted by the Lender from the Borrower's account
#2000049311761, which the Borrower maintains with the Lender. Any amounts of
principal and interest or any other such sums payable by the Borrower to the
Lender under the Notes and this Agreement which are not so automatically
deducted shall be paid by the Borrower in immediately available funds at the
address of the Lender set forth in Section 11.2 hereof or at such other address
of which the Lender shall give notice to the Borrower pursuant to Section 11.2
hereof. All computations of interest hereunder shall be made by the Lender on
the basis of a year of 360 days and the actual number of days elapsed.
3.10 Late Fees. The Borrower shall pay to the Lender a monthly late
charge imposed by the Lender for any payment of principal and/or interest not
received by the Lender when due in an amount equal to five percent (5%) of any
overdue amount.
3.11 Requirements of Law. In the event that after the date hereof, any change in
any law, regulation or treaty or in the interpretation or application thereof or
compliance therewith, or in the event that compliance by the Lender with any
request or directive (whether or not having the force of law) from any
governmental authority, agency or instrumentality:
(a) subjects or shall subject the Lender to any tax of any
kind whatsoever with respect to this Agreement, or the Credit Facilities, or
changes the basis of taxation of payments to the Lender of principal, interest,
any fees or any other amount payable hereunder (except for changes in the rate
of tax on the overall net income of the Lender);
(b) imposes, modifies or holds or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of advances, loans, or other credit extended by, or any other acquisition of
funds by, the Lender, which reserve, special deposit, compulsory loan or similar
requirement is not otherwise included in determination of the interest rate
hereunder;
(c) imposes or shall impose on the Lender any other condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to the Lender of making, renewing or maintaining advances or extensions
of credit or to reduce any amount receivable thereunder then, in any such case,
the Borrower shall promptly pay to the Lender, upon its demand, any additional
amounts necessary to compensate the Lender for such additional cost or reduced
amount receivable. If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower of
the event by reason of which it has become so entitled. The good faith
determination as to any additional
22
amounts payable pursuant to the foregoing sentence by the Lender shall be
conclusive in the absence of manifest error.
ARTICLE 4
---------
SECURITY
--------
4.1 Security Documents. As security for the prompt payment,
performance, satisfaction and discharge when due of all of the Obligations, the
Borrower shall execute and deliver or shall cause to be executed and delivered
to the Lender, concurrently with the execution of this Agreement, the following
documents:
(a) that certain Amended, Restated and Consolidated Guaranty
by RTI and RTI Electronics in favor of the Lender;
(b) that certain Amended and Restated Security Agreement by
the Borrower in favor of the Lender;
(c) that certain Amended, Restated and Consolidated Security
Agreement by RTI and RTI Electronics in favor of the Lender;
(d) that certain Amended and Restated Pledge Agreement by the
Borrower in favor of the Lender;
(e) that certain Amended and Restated Patent and Trademark
Security Agreement by RTI in favor of the Lender;
(f) that certain Seventh Amendment to First Mortgage and
Security Agreement by the Borrower in favor of the Lender with respect to the
Pennsylvania Property;
(g) that certain Fourth Amendment to Mortgage, Security
Agreement and Fixture Financing Statement by RTI in favor of the Lender with
respect to the Minnesota Property; and
(h) such other documents as the Lender determines, in its sole
and absolute discretion, are necessary to effectuate the terms of this
Agreement.
23
ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Lender to execute and deliver this
Agreement, the Borrower, RTI and RTI Electronics each represent and warrant to
the Lender that, as of the date hereof:
5.1 Authorization and Capacity. Each is duly incorporated and existing
and in good standing in its respective state of incorporation, has the corporate
power to own its properties and to carry on its business as now conducted, and
the execution, delivery and performance of this Agreement, and the other Loan
Documents, as appropriate, has been duly authorized by all necessary corporate
proceedings.
5.2 Compliance with Laws and Other Agreements. Each is in compliance
with all laws, rules, regulations, judgments, decrees, orders, agreements and
requirements which affect it, its assets or the operation of its respective
business and has not received, and has no knowledge of, any order or notice of
any governmental investigation or of any violation or claim of violation of any
law, regulation, judgment, decree, order, agreement, or other governmental
requirement.
5.3 No Conflict; Governmental Approvals. The execution, delivery, and
performance of this Agreement and each of the Loan Documents will not (i)
conflict with, violate, constitute a default under, or result in a breach of any
provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other agreement of the Borrower, RTI or RTI Electronics; or (ii)
conflict with or result in a breach of any provision of the certificate of
incorporation or the bylaws or articles of organization of the Borrower, RTI or
RTI Electronics. No authorization, permit, consent or approval of or other
action by, and no filing, registration or declaration with, any governmental
authority or regulatory body is required to be obtained or made by the Borrower,
RTI or RTI Electronics for the due execution, delivery and performance of this
Agreement or any of the Loan Documents, except such as have been duly obtained
or made prior to the Closing Date and are in full force and effect as of the
Closing Date (copies of which have been delivered to the Lender on or before the
Closing Date).
5.4 Taxes. Each is not delinquent in payment of any income, property or
other tax, except for any delinquency in the payment of a tax which is contested
in good faith and for which appropriate reserves have been established in
accordance with GAAP.
5.5 Encumbrances and Guaranties.
(a) Each owns all of its properties and assets free and clear
of all Encumbrances except (i) those by the Lender; (ii) those for taxes or
other government charges either not yet delinquent or the nonpayment of which is
permitted by Section 5.4 of this Agreement; (iii) those not arising in
connection with Indebtedness that does not materially
24
impair the use or value of the properties or assets of the Borrower, RTI or RTI
Electronics in the conduct of their businesses; (iv) Encumbrances whose release
and termination is evidenced by delivery of appropriate documents to the Lender
on the Closing Date; and (v) Encumbrances disclosed in any financial statements
provided by the Borrower, RTI or RTI Electronics to the Lender.
(b) Each is not obligated under any Guaranty, other than any
Guaranty in the Existing Loan Documents or any Guaranty executed in connection
with this Agreement.
5.6 Material Adverse Changes. Each knows of no fact (other than matters
of a general economic or political nature) which materially adversely affects,
or, so far as each can now reasonably foresee, will materially adversely affect,
the businesses, operations, properties or financial position of the Borrower,
RTI or RTI Electronics or the performance by the Borrower, RTI or RTI
Electronics of its or their obligations under this Agreement and the other Loan
Documents.
5.7 ERISA. The provisions of every employee benefit plan as defined in
Section 3(3) of ERISA ("Plan") maintained by the Borrower, RTI and RTI
Electronics complies with all applicable requirements of ERISA and of the Code,
and with all applicable rulings and regulations issued under the provisions of
ERISA and the Code setting forth those requirements. No reportable event, as
defined in Section 4043 of ERISA, has occurred with respect to any Plan; no Plan
to which Section 4021 of ERISA applies has been terminated; no Plan has incurred
any liability to PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no
Plan has been involved in any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code; and there are no unfunded
liabilities with respect to any Plan.
5.8 Pending Litigation. There are no actions, suits, proceedings or
investigations pending, or, to the knowledge of the Borrower, RTI or RTI
Electronics, threatened against or affecting the Borrower, RTI or RTI
Electronics before any court, arbitrator or administrative or governmental body
which, in the aggregate, might adversely affect any action taken or to be taken
by the Borrower, RTI or RTI Electronics under this Agreement and the other Loan
Documents or which, in the aggregate, might materially adversely affect the
business, operations, properties or financial position of the Borrower, RTI or
RTI Electronics, or the ability of the Borrower, RTI or RTI Electronics to
perform its obligations under this Agreement and the other Loan Documents.
5.9 Valid, Binding and Enforceable. This Agreement and the Loan
Documents have been duly and validly executed and delivered by the Borrower, RTI
and RTI Electronics and constitute the valid and legally binding obligations of
the Borrower, RTI and RTI Electronics enforceable against each of them in
accordance with their respective terms, except as enforcement of this Agreement
and the other Loan Documents may be limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors' rights and except as enforcement is subject to general equitable
principles.
25
5.10 Environmental Matters.
(a) Each has performed all of its obligations under, have
obtained all necessary approvals, permits, authorizations and other consents
required by, and is not in material violation of, any Environmental Laws.
(b) Each has not received any notice, citation, summons,
directive, order or other communication, written or oral, from, and each has no
knowledge of the filing or giving of any such notice, citation, summons,
directive, order or other communication by, any governmental or
quasi-governmental authority or agency or any other Person concerning the
presence, generation, treatment, storage, transportation, transfer, disposal,
release or other handling of any Hazardous Materials within, on, from, related
to, or affecting any real property owned or occupied by the Borrower, RTI or RTI
Electronics.
(c) No real property owned or occupied by the Borrower, RTI or
RTI Electronics has ever been used, either by the Borrower, RTI, RTI Electronics
or any of their predecessors in interest, to generate, treat, store, transport,
transfer, dispose of, release or otherwise handle any Hazardous Material in
violation of any applicable Environmental Laws.
(d) There are no Hazardous Materials within, on or under any
real property owned or occupied by the Borrower, RTI or RTI Electronics in
violation of any applicable Environmental Laws.
5.11 No Untrue Statements. Neither this Agreement, the Loan Documents
nor any other document, certificate or statement furnished or to be furnished by
the Borrower, RTI, RTI Electronics or by any other party to the Lender in
connection herewith contains, or at the time of delivery will contain, any
untrue statement of a material fact or omits or will omit a material fact
necessary in order to make the statements contained herein and therein not
misleading.
5.12 No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement and the other
Loan Documents or Borrower's performance hereunder or thereunder, constitute a
default or an Event of Default.
ARTICLE 6
---------
CONDITIONS PRECEDENT TO THE LENDER OBLIGATIONS
----------------------------------------------
The Lender's obligations hereunder are conditioned upon the
satisfaction by the Borrower of the following conditions precedent:
6.1 Documents to be Delivered by the Borrower at Closing. The Borrower
shall deliver, or cause to be delivered to the Lender at the Closing, the
following (collectively, the "Restructuring Documents"):
26
(a) this Agreement duly executed by the Borrower, RTI and RTI
Electronics;
(b) the Notes, each duly executed by the Borrower;
(c) that certain Amended, Restated and Consolidated Guaranty
by RTI and RTI Electronics;
(d) that certain Amended and Restated Security Agreement by
the Borrower;
(e) that certain Amended, Restated and Consolidated Security
Agreement by RTI and RTI Electronics;
(f) that certain Amended and Restated Pledge Agreement by the
Borrower;
(g) that certain Amended and Restated Patent and Trademark
Security Agreement by RTI;
(h) that certain Seventh Amendment to First Mortgage and
Security Agreement by the Borrower with respect to the Pennsylvania Property;
(i) that certain Fourth Amendment to Mortgage, Security
Agreement and Fixture Financing Statement by RTI with respect to the Minnesota
Property;
(j) such Uniform Commercial Code financing statements and
other documents as the Lender may require to be executed by the Borrower, RTI
and/or RTI Electronics;
(k) evidence of the Borrower's compliance with the covenants
contained in this Agreement and the other Loan Documents as the Lender may
require; and
(l) a certificate of the Secretary of each of the Borrower,
RTI and RTI Electronics, dated the Closing Date, attaching (i) duly adopted
board resolutions authorizing the transactions under the Loan Documents; (ii) a
copy of the Articles and Certificate of Incorporation and bylaws of each party;
and (iii) evidence of the incumbency and signature of the officers executing on
each such party's behalf any of the Loan Documents and any other document to be
delivered pursuant to any such documents, together with evidence of the
incumbency of such Secretary.
6.2 Additional Conditions Precedent. On the Closing Date, the Borrower
shall pay the following amounts in full:
27
(a) the Commitment Fee;
(b) the Existing Interest Obligations; and
(c) the costs and expenses incurred by the Lender, including
all attorneys' fees and costs, in connection with (i) the review, negotiation,
enforcement or protection of the Lender's interests under the Existing Loan
Documents; and (ii) the review, preparation, negotiation, execution, delivery
and closing of the Loan Documents.
6.3 Documents to be Delivered by the Borrower after Closing. As soon as
possible after the Closing Date, but in no event later than April 30, 2004, the
Borrower shall deliver or cause to be delivered to the Lender landlord waiver
agreements, in form and substance satisfactory to the Lender in its sole and
absolute discretion, from each landlord owning and/or operating the following
properties (collectively, the "Landlord Waivers"): (a) the corporate offices and
manufacturing facility of RTI located at 0000 Xxx Xxx Xxxx, Xxxxx Xxxxx,
Xxxxxxxxx 00000; (b) the tool shop of RTI located at 0000 Xxxxxxx Xxxx, #000,
Xxxxx Xxxx, Xxxxxxxxx 00000; and (c) the corporate offices and manufacturing
facility of RTI Electronics located at 0000 Xxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000.
ARTICLE 7
---------
AFFIRMATIVE COVENANTS OF THE BORROWER
-------------------------------------
The Borrower hereby covenants and agrees that from the date hereof
and until satisfaction in full of the Obligations, unless the Lender shall
otherwise consent in writing, the Borrower shall do or cause to be done the
following:
7.1 Financial Statements/Information. Furnish the following to the
Lender:
(a) Within thirty (30) days after the end of each month,
commencing on the first full month after the date of this Agreement, the
Borrower shall provide to the Lender a certificate stating the Borrowing Base (a
"Borrowing Base Certificate") as of the last day of the previous month, which
Borrowing Base Certificate shall be certified as true and correct by the chief
executive and chief financial officers of the Borrower, in form and substance
acceptable to the Lender in its sole and absolute discretion.
(b) Within thirty (30) days after the end of each month,
commencing on the first full month after the date of this Agreement, the
Borrower shall provide to the Lender an aging of the Eligible Accounts and a
report identifying Eligible Inventory as of the last day of the previous month,
as to the Borrower and each of its Subsidiaries.
(c) Within thirty (30) days after the end of each month,
commencing on the first full month after the date of this Agreement, the
Borrower shall provide to the Lender a detailed consolidated and consolidating
statement of actual cash flows for the applicable fiscal
28
year through the end of each such month, together with a comparison of such
actual cash flows to the Borrower's consolidated and consolidating statement of
projected cash flows which was previously provided to the Lender.
(d) Within forty-five (45) days after the end of each fiscal
quarter, the Borrower shall provide to the Lender unaudited quarterly
consolidated and consolidating financial statements for the Borrower and its
Subsidiaries, in form and substance acceptable to the Lender in its sole and
absolute discretion, including (i) a consolidated and consolidating balance
sheet; (ii) a consolidated and consolidating statement of income; (iii) a
consolidated and consolidating statement of cash flows; and (iv) a certificate
showing the calculation of the covenants set forth in Section 7.2 hereof, all
prepared in accordance with GAAP consistently applied, and in each case together
with a certificate from the chief executive and chief financial officers of the
Borrower (a "Covenant Compliance Certificate") certifying that (i) such
financial statements fairly present in all material respects the consolidated
and consolidating financial position of the Borrower and its Subsidiaries as of
the date and for the periods covered; and (ii) as of the date of such
certificate there exists no Event of Default under any of the Loan Documents or
any fact, condition or event which with the giving of notice or lapse of time,
or both, would be an Event of Default under any of the Loan Documents.
(e) Within ninety (90) days after the close of each fiscal
year, the Borrower shall provide to the Lender (i) audited consolidated and
consolidating annual financial statements for the Borrower and its Subsidiaries,
in form and substance acceptable to the Lender in its sole and absolute
discretion, which financial statements shall include all of the financial
statements required under Section 7.1(d) hereof and which shall be prepared in
accordance with GAAP and certified without qualification by KPMG Peat Marwick or
another independent certified public accounting firm satisfactory to the Lender
(the "Auditors"); (ii) management prepared consolidated and consolidating annual
financial statements for the Borrower and its Subsidiaries, which financial
statements shall include all of the financial statements required under Section
7.1(d) hereof and which shall be prepared in accordance with GAAP consistently
applied; (iii) a Covenant Compliance Certificate; and (iv) a certificate from
the Auditors certifying that to the best of their knowledge, with respect to the
matters covered in their audit, there exists no Event of Default under any of
the Loan Documents or any fact, condition or event which with the giving of
notice or lapse of time, or both, would be an Event of Default under any of the
Loan Documents.
7.2 Financial Covenants. Maintain the following:
(a) Consolidated Tangible Capital Funds
(i) Maintain, at all times from December 31, 2003
through March 30, 2004, Consolidated Tangible Capital Funds of not less than Six
Million Five Hundred Thousand Dollars ($6,500,000);
29
(ii) Maintain, at all times from March 31, 2004
through June 29, 2004, Consolidated Tangible Capital Funds of not less than Six
Million Five Hundred Thousand Dollars ($6,500,000), plus one hundred percent
(100%) of net earnings for the fiscal quarter ended March 31, 2004 (with no
reduction thereof for a net loss for such quarter);
(iii) Maintain, at all times from June 30, 2004
through September 29, 2004, Consolidated Tangible Capital Funds of not less than
the actual Consolidated Tangible Capital Funds at March 31, 2004, plus one
hundred percent (100%) of net earnings for the fiscal quarter ended June 30,
2004 (with no reduction thereof for a net loss for such quarter);
(iv) Maintain, at all times from September 30, 2004
through December 30, 2004, Consolidated Tangible Capital Funds of not less than
the actual Consolidated Tangible Capital Funds at June 30, 2004, plus one
hundred percent (100%) of net earnings for the fiscal quarter ended September
30, 2004 (with no reduction thereof for a net loss for such quarter); and
(v) Maintain, at all times from December 31, 2004
through March 31, 2005, Consolidated Tangible Capital Funds of not less than the
actual Consolidated Tangible Capital Funds at September 30, 2004, plus one
hundred percent (100%) of net earnings for the fiscal quarter ended December 31,
2004 (with no reduction thereof for a net loss for such quarter).
(vi) The minimum required level of Consolidated
Tangible Capital Funds as stated in Sections 7.2(a)(i) thru (v) above shall be
increased by (i) one hundred percent (100%) of any contributions to capital on
or after January 1, 2004; and (ii) one hundred percent (100%) of any
Subordinated Debt on or after January 1, 2004.
(b) Consolidated Total Liabilities and Contingent Liabilities
to Consolidated Tangible Capital Funds
(i) Maintain, for the fiscal year ended December 31,
2003 and at all times thereafter, a ratio of (A) Consolidated Total Liabilities
plus the Contingent Liabilities of Selas SAS and CFR which are guaranteed by the
Borrower (the "Guaranteed Contingent Liabilities"), to (B) Consolidated Tangible
Capital Funds, of not more than 3.50 to 1.0.
(ii) Immediately following the sale of the
Pennsylvania Property, the maximum level permitted by Section 7.2(b)(i) above
shall be adjusted to require the Borrower to maintain on a going forward basis,
a ratio that is no greater than (A) the actual ratio of Consolidated Total
Liabilities plus the Guaranteed Contingent Liabilities, to Consolidated Tangible
Capital Funds, as of the end of the fiscal quarter in which such sale occurs
(the "Actual Leverage Ratio After Sale"), plus (B) ten percent (10%) of the
Actual Leverage Ratio After Sale. Notwithstanding the foregoing, in no event
shall the maximum level permitted by this Section 7.2(b)(ii) after the sale of
the Pennsylvania Property exceed 3.50 to 1.0.
30
(c) Consolidated Current Ratio - Maintain, as of the last day
of each fiscal quarter, a Current Ratio on a consolidated basis for the Borrower
and its Consolidated Subsidiaries, of not less than 1.0 to 1.0.
(d) Consolidated Fixed Charge Coverage Ratio - Maintain, as of
the last day of each fiscal quarter, a Fixed Charge Coverage Ratio on a
consolidated basis for the Borrower and its Consolidated Subsidiaries, of not
less than 1.25 to 1.00 for the Rolling Period.
7.3 Use of Sale Proceeds.
Other than the sale of the Pennsylvania Property, the sale,
transfer or other disposition of any asset or interest owned or held by the
Borrower must be approved in writing by the Lender prior to any such sale.
Unless otherwise stated herein, the Borrower shall remit all of the proceeds
from the sale, transfer or other disposition of any asset or interest owned or
held by the Borrower to the Lender, to be applied by the Lender as follows: (i)
first, to permanently reduce the outstanding principal balance on the Term Loan;
and (ii) second, to permanently reduce the Revolving Credit Commitment.
7.4 Ordinary Course of Business; Records. Conduct its business only in
the ordinary course and keep accurate and complete books and records of its
assets, liabilities and operations consistent with sound business practices and
in accordance with GAAP.
7.5 Information for the Lender. Make available during normal business
hours for inspection by the Lender or its designated representatives any of the
Borrower's books and records when reasonably requested by the Lender to do so,
and furnish the Lender any information reasonably requested regarding any of the
Borrower's operations, business affairs and financial condition within a
reasonable time after the Lender gives notice of its request therefor. In
particular, and without limiting the foregoing, the Borrower shall permit,
during normal business hours, representatives of the Lender to make such
periodic inspections of the Borrower's books, records and assets as the Lender
or such representatives deem necessary and proper.
7.6 Insurance. Carry at all times such insurance as the Lender may from
time to time reasonably require in financially sound and reputable insurers,
including, without limitation: (a) all workers' compensation or similar
insurance as may be required under the laws of any jurisdiction; (b) public
liability insurance against claims for personal injury, death or property damage
suffered upon, in or about any premises occupied by them or occurring as a
result of the ownership, maintenance or operation by them of any automobile,
truck or other vehicle or as a result of services rendered by them; (c) hazard
insurance against such other hazards as are usually insured against by business
entities of established reputation engaged in like businesses and similarly
situated, including, without limitation, fire (flood, if applicable) and
extended coverage including business interruption insurance; and the Borrower
shall pay all premiums on the policies for all such insurance when and as they
become due and take all other actions
31
necessary to maintain such policies in full force and effect at all times. The
insurance specified in subsections (b) and (c) (if required) shall be maintained
in such amounts, and with co-insurance and deductibles, as such insurance is
usually carried by business entities of established reputation engaged in the
same or similar business and similarly situated. The Borrower shall from time to
time, upon request by the Lender, promptly furnish or cause to be furnished to
the Lender evidence, in form and substance satisfactory to the Lender, of the
maintenance of all insurance required to be maintained hereby, including,
without limitation, such originals or copies as the Lender may request of
policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments. The Borrower shall cause each hazard
insurance policy to provide, and the insurer issuing each such policy to certify
to the Lender, that (a) if such insurance be proposed to be canceled or
materially changed for any reason whatsoever, such insurer will promptly notify
the Lender and such cancellation or change shall not be effective for thirty
(30) days after receipt by the Lender of such notice, unless the effect of such
change is to extend or increase coverage under the policy; (b) the Lender shall
be named as lender loss payee with respect to personal property and mortgagee
with respect to real property; and (c) the Lender will have the right, at its
election, to remedy any default in the payment of premiums within thirty (30)
days of notice from the insurer of such default. The foregoing covenants
regarding insurance are in addition to, and not intended to supersede, any and
all covenants regarding insurance set forth in (i) the Amended and Restated
Security Agreement executed by the Borrower in connection herewith; or (ii) the
Amended, Restated and Consolidated Security Agreement executed by RTI and RTI
Electronics in connection herewith (collectively, the "Security Agreements"). In
the event and to the extent of any conflict between the provisions of this
Agreement and the provisions of the Security Agreements regarding the insuring
of collateral, the provisions of the Security Agreements with respect thereto
shall govern.
7.7 Maintenance. Maintain all equipment, real property and other
properties in good condition and repair (normal wear and tear excepted) and pay
and discharge the cost of repairs thereto or maintenance thereof.
7.8 Taxes. Pay all taxes, assessments, charges and levies imposed upon
it or on any of its property, or which it is required to withhold and pay over,
and provide evidence of payment thereto to the Lender if the Lender so requests,
except where contested in good faith by lawful and appropriate proceedings and
where adequate reserves therefor have been set aside on its books; provided,
however, that the Borrower shall pay all such taxes, assessments, charges and
levies forthwith whenever foreclosure on any lien which attaches or security
therefor appears imminent.
7.9 Leases. Except as agreed to in writing by the Lender, pay all rent
or other sums required by every lease to which the Borrower is a party as the
same becomes due and payable, perform all obligations as tenant or lessee
thereunder except where contested in good faith by lawful and appropriate
proceedings and where adequate reserves therefor have been set aside; and keep
all such leases at all times in full force and effect during the terms thereof.
32
7.10 Corporate Existence; Certain Rights; Laws. Preserve and do all
things necessary to preserve and keep in full force and effect in each
jurisdiction in which it conducts business the business existence, licenses,
permits, rights, patents, trademarks, trade names and franchises and comply with
all present and future laws, ordinances, rules, regulations judgments, orders
and decrees which affect in any material way the Borrower, RTI or RTI
Electronics, their assets or the operation of their businesses.
7.11 Notice of Litigation or Other Proceedings. Give immediate notice
to the Lender of (i) the existence of any dispute, (ii) the institution of any
litigation, administrative proceeding or governmental investigation involving
the Borrower, RTI or RTI Electronics or (iii) the entry of any judgment, decree
or order against or involving the Borrower, RTI or RTI Electronics, any of which
might materially and adversely affect the operation, financial condition,
property or business of the Borrower, RTI or RTI Electronics or affect the
enforceability of this Agreement or any of the other Loan Documents.
7.12 Indebtedness. Pay or cause to be paid when due (or within
applicable grace periods) all Indebtedness of the Borrower.
7.13 Notice of Events of Default. Give immediate notice to the Lender
if the Borrower, RTI or RTI Electronics becomes aware of the occurrence of any
Event of Default, or of any fact, condition or event which with the giving of
notice or lapse of time, or both, would be an Event of Default, or of the
failure of the Borrower, RTI or RTI Electronics to observe or perform any of the
conditions or covenants to be observed or performed by it under this Agreement
or any of the other Loan Documents.
7.14 ERISA. Maintain each Plan in compliance with all applicable
requirements of ERISA and of the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code. As promptly as
practicable (but in any event not later than ten days) after the Borrower, RTI
or RTI Electronics receives from the PBGC a notice of intent to terminate any
Plan or to appoint a trustee to administer any Plan, after the Borrower, RTI or
RTI Electronics has notified the PBGC that any reportable event, as defined in
Section 4043 of ERISA, with respect to any Plan has occurred, or after the
Borrower, RTI or RTI Electronics has provided a notice of intent to terminate to
each affected party (as defined for purposes of Section 4041(a)(2) of ERISA)
with respect to any Plan, a certificate of the Borrower or the chief executive
officer of the Borrower, as appropriate, shall be furnished to the Lender
setting forth the details with respect to the events resulting in such
reportable event, as the case may be, and the action which the Borrower, RTI or
RTI Electronics proposes to take with respect thereto, together with a copy of
the notice of intent to terminate or to appoint a trustee from the PBGC, of the
notice of such reportable event or of the notice of intent to terminate by the
Borrower, RTI or RTI Electronics, as the case may be.
7.15 Deposit Accounts. Use the Lender as its primary depository
institution unless otherwise agreed to in writing by the Lender; and notify the
Lender, in writing and on a
33
continuing basis, of all deposit accounts and certificates of deposit (including
the numbers thereof) maintained with or purchased from other financial
institutions.
7.16 Compliance with Environmental Laws. Comply fully with all
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
7.17 Further Actions. Cooperate and join with the Lender, at the
Borrower's expense, in taking all such further actions as the Lender, in its
sole judgment, shall deem necessary to effectuate the provisions of the Loan
Documents and to perfect or continue the perfected status of all Encumbrances
granted to the Lender pursuant to the Loan Documents, including, without
limitation, the execution, delivery and filing of financing statements,
amendments thereto and continuation statements, the execution and delivery of
chattel paper, and any other documents or instruments to the Lender, including,
without limitation, the Landlord Waivers, and the notation of Encumbrances in
favor of the Lender on certificates of title.
ARTICLE 8
---------
NEGATIVE COVENANTS
------------------
The Borrower hereby covenants and agrees that from the Closing Date
until satisfaction in full of the Obligations, the Borrower will not do or
permit to be done any one or more of the following without first obtaining the
written consent of the Lender:
8.1 Fundamental Corporate Changes.
(a) Change its name or the name of any Subsidiary, or enter
into or effect any merger, consolidation, share exchange, division, conversion,
reclassification, recapitalization, reorganization, dissolution or other
transaction of like effect, as to itself or any Subsidiary;
(b) Sell, transfer, lease or otherwise dispose of all or
(except in the ordinary course of business) any material part of its assets or
any significant product line or process, other than the sale of the Pennsylvania
Property; or
(c) Have any Subsidiary, other than those Subsidiaries
existing as of the date hereof.
8.2 Indebtedness. Incur, create, assume or have any Indebtedness
except:
(a) Indebtedness related to the Credit Facilities, this
Agreement or any other Restructuring Document;
34
(b) Indebtedness related to the Short Term Financing; and
(c) Indebtedness as set forth on Schedule 8.2 attached hereto.
8.3 Encumbrances. Create or allow any Encumbrances to be on or
otherwise affect any of its property or assets except:
(a) Encumbrances in favor of the Lender;
(b) Encumbrances for taxes, assessments and other governmental
charges incurred in the ordinary course of business which are not yet due and
payable;
(c) Pledges or deposits made in the ordinary course of
business to secure payment of workmen's compensation or to participate in any
fund in connection with workmen's compensation, unemployment insurance or other
social security obligations;
(d) Good faith pledges or deposits made in the ordinary course
of business to secure performance of tenders, contracts (other than for the
repayment of Indebtedness) or leases or to secure statutory obligations or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(e) Encumbrances securing the Short Term Financing; and
(f) Encumbrances as set forth on Exhibit A of the Amended,
Restated and Consolidated Security Agreement executed by RTI and RTI Electronics
in favor of the Lender.
8.4 Guaranties. Directly or indirectly make or permit any Guaranty.
8.5 Sales and Lease-Backs. Sell, transfer or otherwise dispose of any
property, real or personal, now owned or hereafter acquired, with the intention
of directly or indirectly taking back a lease on such property.
8.6 Loans, Investments. Purchase, invest in, or make any loan in the
nature of an investment in the stocks, bonds, notes or other securities or
evidence of Indebtedness of any Person, or make any loan or advance to or for
the benefit of any Person.
8.7 Change in Business. Discontinue any substantial part, or change the
nature of, its business, or enter into any new business unrelated to the present
business conducted by the Borrower.
8.8 Sale or Discount of Receivables. Sell any notes receivable or
accounts receivable, with or without recourse.
35
8.9 Prepayment of Indebtedness. Make any voluntary prepayments of
Indebtedness other than with respect to (i) the Credit Facilities; or (ii) the
Short Term Financing.
8.10 ERISA.
(a) Terminate or permit to be terminated any Plan maintained
by the Borrower to which Section 4021 of ERISA applies;
(b) Allow the value of the benefits guaranteed under Title IV
of ERISA to exceed the value of assets allocable to such benefits; and
(c) Incur a withdrawal liability within the meaning of Section
4201 of ERISA.
8.11 Restricted Payments. Make any Restricted Payments, provided,
however, that so long as there exists no Event of Default under this Agreement
or any of the other Loan Documents, and to the extent that following payment
thereof, the Borrower shall remain in compliance with the provisions of Section
7.2 hereof, (a) the Borrower, RTI and RTI Electronics may pay dividends to their
respective shareholders; (b) RTI and RTI Electronics shall pay to the Borrower
dividends (which are otherwise authorized in accordance with applicable law and
the articles of incorporation and bylaws of the payor) in such amounts, if any,
as are necessary to permit the Borrower to make its regularly scheduled payments
on its Funded Debt; and (c) the Borrower may make regularly scheduled payments
of interest and principal on Subordinated Debt, if any.
8.12 Capital Expenditures. Make Capital Expenditures in excess of
$1,500,000 in the aggregate for the Borrower and its Consolidated Subsidiaries
in any fiscal year.
ARTICLE 9
---------
EVENTS OF DEFAULT
-----------------
An event of default ("Event of Default") under this Agreement shall
be deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
9.1 Borrower's Failure to Pay. The Borrower, RTI or RTI Electronics
fails to pay any amount of principal, interest, fees or other sums as and when
due under this Agreement or any of the Loan Documents, or any other Obligations,
whether upon stated maturity, acceleration, or otherwise.
9.2 Breach of Covenants or Conditions. The Borrower, RTI or RTI
Electronics fails to perform or observe any term, covenant, agreement or
condition in this Agreement or any of the other Loan Documents or is in
violation of or non-compliance with any provision of this
36
Agreement or any of the Loan Documents and has not remedied and fully cured such
non-performance, non-observance, violation of or non-compliance within twenty
(20) days after the earlier of (i) the date that such performance, observance or
compliance was due by the Borrower, RTI or RTI Electronics; or (ii) the date on
which the Borrower, RTI or RTI Electronics has knowledge of such
non-performance, non-observance, violation or non-compliance.
9.3 Defaults under any other Loan Documents. The occurrence of any
Event of Default under any of the Loan Documents, or of any fact, condition or
event which with the giving of notice or lapse of time, or both, would be an
Event of Default under any of the Loan Documents.
9.4 Defaults in Other Material Agreements. The Borrower fails to
perform or observe any term, covenant, agreement or condition contained in, or
there shall occur any default under or as defined in, any other agreement
applicable to the Borrower or by which it is bound involving a material
liability and which is not remedied within the period of time (if any) within
which such other agreement permits such default to be remedied, unless such
default is waived by the other party thereto or excused as a matter of law.
9.5 Agreements Invalid. The validity, binding nature of, or
enforceability of any material term or provision of any of the Loan Documents is
disputed by, on behalf of, or in the right or name of the Borrower or any
material term or provision of any such Loan Document is found or declared to be
invalid, avoidable, or non-enforceable by any court of competent jurisdiction.
9.6 False Warranties; Breach of Representations. Any warranty or
representation made by the Borrower, RTI or RTI Electronics in this Agreement or
any other Loan Document or in any certificate or other writing delivered under
or pursuant to this Agreement or any other Loan Document, or in connection with
any provision of this Agreement or related to the transactions contemplated
hereby shall prove to have been false or incorrect or breached in any material
respect on the date as of which made.
9.7 Judgments. A final judgment or judgments is entered, or an order or
orders of any judicial authority or governmental entity is issued against the
Borrower, RTI or RTI Electronics (such judgment(s) and order(s) hereinafter
collectively referred to as "Judgment") (i) for payment of money, which
Judgment, in the aggregate, exceeds One Million Dollars ($1,000,000) outstanding
at any one time; or (ii) for injunctive or declaratory relief which would have a
material adverse effect on the ability of the Borrower, RTI or RTI Electronics
to conduct its business, and such Judgment is not discharged or execution
thereon or enforcement thereof stayed pending appeal, within thirty (30) days
after entry or issuance thereof, or, in the event of such a stay, such Judgment
is not discharged within thirty (30) days after such stay expires.
37
9.8 Bankruptcy or Insolvency.
(a) The Borrower, RTI or RTI Electronics becomes insolvent, or
generally fails to pay, or is generally unable to pay, or admits in writing the
inability to pay, its debts as they become due or applies for, consents to, or
acquiesces in, the appointment of a trustee, receiver or other custodian for the
Borrower, RTI or RTI Electronics or a substantial part of such Person's
property, or makes a general assignment for the benefit of creditors.
(b) The Borrower, RTI or RTI Electronics commences any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under
any state or federal bankruptcy or insolvency law, or any dissolution or
liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any state or federal bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is involuntarily commenced against or
in respect of the Borrower, RTI or RTI Electronics or an order for relief is
entered in any such proceeding.
(d) A trustee, receiver, or other custodian is appointed for
the Borrower, RTI or RTI Electronics or a substantial part of such Person's
property.
ARTICLE 10
----------
REMEDIES
--------
10.1 Acceleration; Setoff.
(a) Automatically upon the occurrence of any Event of Default
described in Section 9.8 of this Agreement, and at the option of the Lender upon
the occurrence of any other Event of Default, the unpaid principal balance of
the Credit Facilities and all interest and fees accrued and unpaid thereon, and
all other amounts and Obligations payable by the Borrower under this Agreement
and the other Loan Documents shall immediately become due and payable in full,
all without protest, presentment, demand, or further notice of any kind to the
Borrower, RTI or RTI Electronics, all of which are expressly waived by the
Borrower, RTI and RTI Electronics.
(b) If any of the Obligations shall be due and payable or any
one or more Events of Default shall have occurred, the Lender shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Borrower, RTI or RTI Electronics, to apply toward and set-off
against and apply to the then unpaid balance of the Notes and the other
Obligations any items or funds held by the Lender, any and all deposits (whether
general or special, time or demand, matured or unmatured, fixed or contingent,
liquidated or unliquidated) now or hereafter maintained by the Borrower, RTI or
RTI Electronics for their own account with the Lender, and any other
indebtedness at any time held or owing by the Lender to or for the credit or the
account of the Borrower, RTI or RTI Electronics. For such purpose, the Lender
38
shall have, and the Borrower, RTI and RTI Electronics each hereby grants to the
Lender, a first lien on all such deposits. The Lender is hereby authorized to
charge any such account or indebtedness for any amounts due to the Lender. Such
right of set-off shall exist whether or not the Lender shall have made any
demand under this Agreement, the Notes or any other Loan Document and whether or
not the Notes or the other Obligations are matured or unmatured. The Borrower,
RTI and RTI Electronics each hereby confirms the Lender's lien on such accounts
and right of set-off, and nothing in this Agreement shall be deemed any waiver
or prohibition of such lien and right of set-off.
10.2 Further Remedies; Confession of Judgment.
(a) Upon the occurrence of any one or more Events of Default,
the Lender may proceed to protect and enforce its rights under this Agreement
and the other Loan Documents by exercising such remedies as are available to the
Lender in respect thereof under applicable law, including, without limitation,
all of the remedies of a secured party under the Uniform Commercial Code, either
by suit in equity or by action at law, or both, whether for specific performance
of any provision contained in this Agreement or any of the other Loan Documents
or in aid of the exercise of any power granted in this Agreement or any of the
other Loan Documents. Expenses of retaking, holding, preparing for sale, selling
or the like shall include the Lender's attorneys' fees and legal expenses
incurred or expended by the Lender to enforce any payment due to it hereunder or
under the Loan Documents, as against the Borrower, RTI or RTI Electronics, or in
the prosecution or defense of any action on, or concerning any matter growing
out of or in connection with the Loan Documents.
(b) THE BORROWER, RTI, AND RTI ELECTRONICS HEREBY IRREVOCABLY
AUTHORIZE AND EMPOWER THE LENDER, BY ITS ATTORNEY, OR BY THE CLERK OR SIMILAR
OFFICER OF ANY COURT OF RECORD IN THE COMMONWEALTH OF PENNSYLVANIA OR IN ANY
JURISDICTION WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
OR AT ANY TIME THEREAFTER, TO APPEAR FOR THE BORROWER, RTI, AND/OR RTI
ELECTRONICS AND CONFESS AND ENTER JUDGMENT AGAINST ANY OF THEM IN FAVOR OF THE
LENDER IN ANY JURISDICTION IN WHICH THE BORROWER, RTI, OR RTI ELECTRONICS OR ANY
OF THEIR PROPERTY IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH
COSTS OF SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING ATTORNEYS' FEES), WITH
OR WITHOUT DECLARATION, WITHOUT STAY OF EXECUTION AND WITH RELEASE OF ALL ERRORS
AND THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO THIS AGREEMENT OR A
COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE BORROWER, RTI, AND
RTI ELECTRONICS HEREBY WAIVE AND RELEASE ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE EXERCISE
THEREOF, AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID, PERFORMED,
DISCHARGED AND SATISFIED.
39
BEING FULLY AWARE OF THEIR RIGHTS TO PRIOR NOTICE AND
HEARING ON THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST THEM BY THE
LENDER UNDER THIS AGREEMENT BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF
THE BORROWER, RTI OR RTI ELECTRONICS CAN BE GARNISHED AND ATTACHED, THE
BORROWER, RTI, AND RTI ELECTRONICS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THESE RIGHTS AND EXPRESSLY AGREE AND CONSENT TO THE LENDER,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING
JUDGMENT AGAINST THE BORROWER, RTI, AND/OR RTI ELECTRONICS BY CONFESSION AND
ATTACHING AND GARNISHING THE BANK ACCOUNTS AND OTHER ASSETS OF THE BORROWER,
RTI, AND/OR RTI ELECTRONICS WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING.
THE BORROWER, RTI, AND RTI ELECTRONICS ACKNOWLEDGE THAT THEY HAVE HAD THE
ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND
FURTHER ACKNOWLEDGE THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS
CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THEM BY SUCH
COUNSEL.
10.3 Payment of Expenses. At its option, the Lender may discharge
taxes, liens, security interests or such other Encumbrances as may attach to the
collateral securing the Obligations, as determined by the Lender to be
necessary. The Borrower, RTI and RTI Electronics will reimburse the Lender on
demand for any payment so made or any expense incurred by the Lender pursuant to
the foregoing authorization, and the collateral securing the Obligations also
will secure any loans or advances or payments so made or expenses so incurred by
the Lender.
10.4 Power of Attorney. The Borrower, RTI and RTI Electronics do hereby
make, constitute and appoint any officer or agent of the Lender as the true and
lawful attorney in fact of the Borrower, RTI and RTI Electronics with power to,
at the Lender's option and at the expense and liability of the Borrower, RTI and
RTI Electronics: (a) sign financing, continuation or amendment statements
pursuant to the Uniform Commercial Code; (b) endorse the name of the Borrower,
RTI or RTI Electronics or any of the respective officers or agents thereof upon
any notes, checks, drafts, money orders, or other instruments of payment that
may come into the Lender's possession in full or partial payment of any of the
Obligations; and (c) after an Event of Default has occurred, xxx for,
compromise, settle and release any and all claims and disputes with respect to
the collateral securing the Obligations. The Borrower, RTI and RTI Electronics
do hereby grant to said attorney full power to do any and all things necessary
to be done as fully and effectually as the Borrower, RTI or RTI Electronics
might or could do. The Borrower, RTI and RTI Electronics hereby ratify all that
said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest, and is irrevocable.
40
ARTICLE 11
----------
MISCELLANEOUS
-------------
11.1 Remedies Cumulative; No Waiver. The rights, powers and remedies of
the Lender provided in this Agreement and the other Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity, and no failure or delay on the part of the Lender in the exercise of any
right, power, or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy.
11.2 Notices. Every notice and communication under this Agreement or
any of the other Loan Documents shall be in writing and shall be given by either
(i) hand-delivery, (ii) first class mail (postage prepaid), (iii) reliable
overnight commercial courier (charges prepaid), or (iv) telecopy or other means
of electronic transmission, if confirmed promptly by any of the methods
specified in clauses (i), (ii) and (iii) of this sentence, to the following
addresses:
------------------------------------------------------------------
To the Borrower, RTI and RTI Electronics:
------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
Selas Corporation of America
c/o RTI
0000 Xxx Xxx Xxxx
Xxxxx Xxxxx, XX 00000
Telecopy Number: 000-000-0000
------------------------------------------------------------------
With a copy to:
------------------------------------------------------------------
Xxxxxxxx X. Xxxxx, XX, Esquire
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy Number: 215-569-5555
------------------------------------------------------------------
To the Lender:
------------------------------------------------------------------
Wachovia Bank, N.A.
000 Xxxxx Xxxxx Xxxxxx-XX0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, VP
Telecopy Number: 000-000-0000
------------------------------------------------------------------
41
------------------------------------------------------------------
With a copy to:
------------------------------------------------------------------
Xxxxx Xxxxxx, LLP
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx Xxxxxx, Esquire
Telecopy Number: 000-000-0000
------------------------------------------------------------------
Notice given by telecopy or other means of electronic
transmission shall be deemed to have been given and received when sent. Notice
by overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery. A party may change its address by giving written notice
to the other party as specified herein.
11.3 Costs, Expenses and Attorneys' Fees. Whether or not the
transactions contemplated by this Agreement and the other Loan Documents are
fully consummated, the Borrower shall promptly pay (or reimburse, as the Lender
may elect) all costs and expenses which the Lender has incurred or may hereafter
incur in connection with the negotiation, preparation, reproduction,
interpretation and enforcement of this Agreement and the other Loan Documents,
the collection of all amounts due hereunder and thereunder, and any amendment,
modification, consent or waiver which may be hereafter requested by the Borrower
or otherwise required. Such costs and expenses shall include, without
limitation, the fees and disbursements of counsel to the Lender, the costs of
appraisal fees, searches of public records, costs of filing and recording
documents with public offices, and similar costs and expenses incurred by the
Lender. Upon the occurrence of an Event of Default, such costs shall also
include the fees of any accountants, consultants or other professionals retained
by the Lender. The Borrower's reimbursement obligations under this Section shall
survive any termination of this Agreement.
11.4 Survival of Covenants. All covenants, agreements, representations
and warranties made herein and in any certificates delivered pursuant hereto
shall survive the execution and delivery of this Agreement and, subject to the
provisions of 11.14 hereof, shall continue in full force and effect until all of
the Obligations have been fully paid, performed, satisfied and discharged.
11.5 Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Lender
has received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
42
11.6 Headings. The headings of sections have been included herein for
convenience only and shall not be considered in interpreting this Agreement.
11.7 Payment Due On A Day Other Than A Business Day. If any payment due
or action to be taken under this Agreement or any Loan Document falls due or is
required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
11.8 Judicial Proceedings. Each party to this Agreement agrees that any
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by any party hereto or any successor or assign of any party, on or with respect
to this Agreement or any of the other Loan Documents or the dealings of the
parties with respect hereto, or thereto, shall be tried only by a court and not
by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each
party waives any right it may have to claim or recover, in any such suit, action
or proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. EACH OF THE BORROWER, RTI
AND RTI ELECTRONICS ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND
MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE LENDER WOULD NOT CONTINUE TO
EXTEND CREDIT TO THE BORROWER OR OTHERWISE ENTER INTO THIS AGREEMENT IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
11.9 Selection of Forum. The Lender, the Borrower, RTI and RTI
Electronics agree that all actions or proceedings arising in connection with the
Loan Documents shall be tried and litigated only in the state or federal courts
located in the Commonwealth of Pennsylvania, provided, however, that any suit,
action or other proceeding seeking enforcement against any collateral securing
the Obligations or other property may be brought, at the Lender's option, in the
courts of any jurisdiction where Lender elects to bring such action or where
such collateral or other property may be found. The Lender, the Borrower, RTI
and RTI Electronics waive, to the extent permitted under applicable law, any
right each may have to assert the doctrine of forum non conveniens or to object
to venue to the extent any suit, action or other proceeding is brought in
accordance with this section.
11.10 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the Commonwealth of Pennsylvania.
11.11 Integration. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject matter
hereof and thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
43
11.12 Amendment and Waiver. No amendment of this Agreement, and no
waiver of any one or more of the provisions hereof shall be effective unless set
forth in writing and signed by the parties hereto.
11.13 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lender, the Borrower, RTI and RTI Electronics and
their respective heirs, personal representatives, administrators, successors and
assigns, provided, however, that the Borrower, RTI and RTI Electronics may not
assign their rights hereunder or any interest herein without the prior written
consent of the Lender, and any such assignment or attempted assignment shall be
void and of no effect with respect to the Lender.
11.14 Severability of Provisions. Any provision in this Agreement that
is held to be inoperative, unenforceable, voidable, or invalid in any
jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void
or invalid without affecting the remaining provisions, and to this end the
provisions of this Agreement are declared to be severable.
11.15 Indemnification.
(a) If, after receipt of any payment of all or any part of the
Obligations, the Lender is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that such
payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrower shall be liable for, and shall indemnify, defend and hold harmless the
Lender with respect to the full amount so surrendered.
(b) The Borrower shall indemnify, defend and hold harmless the
Lender with respect to any and all claims, expenses, demands, losses, costs,
fines or liabilities of any kind, including reasonable attorneys' fees and
costs, arising from or in any way related to (i) acts or conduct of the Borrower
under, pursuant to or related to this Agreement and the other Loan Documents,
(ii) Borrower's breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrower's failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state, or local,
or court or administrative orders or decrees, including, without limitation,
those resulting from any Hazardous Materials or dangerous environmental
condition within, on, from, related to or affecting any real property owned or
occupied by the Borrower, unless resulting from the acts or conduct of the
Lender constituting gross negligence or willful misconduct.
(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents and shall be and
remain effective notwithstanding the payment of the Obligations, the
cancellation of any Note, the release of any Encumbrance securing the
Obligations or any other action which the Lender may have taken in reliance upon
its receipt of such payment. Any cancellation of any Note, release of any
Encumbrance or other
44
such action shall be deemed to have been conditioned upon any payment of the
Obligations having become final and irrevocable.
45
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized officers on the date first above written.
SELAS CORPORATION OF AMERICA
By:
--------------------------- ------------------------------------
Attest Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
RESISTANCE TECHNOLOGY, INC.
By:
--------------------------- ------------------------------------
Attest Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
RTI ELECTRONICS, INC.
By:
--------------------------- ------------------------------------
Attest Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
WACHOVIA BANK, NATIONAL ASSOCIATION, as
successor in interest to First Union
National Bank
By:
--------------------------- ------------------------------------
Witness Name:
----------------------------------
Title:
---------------------------------
46
