EXHIBIT 10.14
STILLWATER NTIONAL BANK AND TRUST COMPANY
OF STILLWATER, OKLAHOMA,
LOAN AGREEMENT
Dated August 13, 1999
LOAN AGREEMENT
THIS AGREEMENT, made and entered into the 13th day of August, 1999, by and
between STILLWATER NATIONAL BANK AND TRUST COMPANY OF STILLWATER, OKLAHOMA, a
National Banking Corporation (hereinafter referred to as "Bank"), WESTWOOD
CORPORATION, a Nevada Corporation (hereinafter referred to as "Westwood"), TANO
CORP., a Louisiana corporation (hereinafter referred to as "TANO"), NMP CORP.,
an Oklahoma corporation (hereinafter referred to as "NMP"), and MC II ELECTRIC
COMPANY, a Texas corporation (hereinafter referred to as "MC II") (collectively
Westwood, TANO, NMP and MC II are hereinafter referred to as "Debtor").
In consideration of the mutual promises herein contained, the parties
hereby agree as follows:
I. TERM LOAN
1.1 Subject to the terms and conditions of this Agreement, Bank to loan,
and the Debtor agrees to borrow Two Million and NO/100 Dollars ($2,000,000.00)
for the purpose of refinancing the Corporation's existing equipment (hereinafter
referred to as "Term Loan").
1.2 The Term Loan shall be evidenced by and payable with interest on the
terms set forth in a Promissory Note of the Debtor (hereinafter referred to as
"Term Note"), payable to the order of the Bank with interest in the form and
with the provisions set forth in Exhibit "A" attached hereto.
1.3 All of the proceeds of the Term Note will be advanced to Debtor in
cash at Closing, which proceeds will be used by the Debtor to pay off its
existing loan on the Debtor's equipment at NationsBank, N.A.
1.4 The Debtor may prepay the Term Note at any time without premium or
penalty.
II. THE REVOLVING LOAN
2.1 Subject to the terms and conditions of this Agreement, Debtor shall
have the right from time to time, prior to the Termination Date, to borrow and,
upon repayment, reborrow from the Bank amounts not at any one time in the
aggregate principal balance exceeding the lesser of (i) the Borrowing Base
determined as of the date of borrowing, or (ii) Two Million and No/100 Dollars
($2,000,000.00) (hereinafter referred to as "Revolving Loan"). For these
purposes:
(a) "Termination Date" means August 13, 2000.
(b) "Borrowing Base" means, as of any given date, the sum of the following
factors: (1) eighty percent (80%), or at the Bank's sole discretion any
lesser percentage designated upon forty five (45) days notice, of Eligible
Trade Accounts Receivable of TANO, MC II and NMP; plus (2) eighty percent
(80%) of the government progress payments being held by TANO, MC II and
NMP, up to a maximum amount of Three Hundred Thousand Dollars
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($300,000.00); and plus (3) fifty percent (50%) of the value of the
inventory of TANO, MC II and NMP.
(c) "Trade Accounts Receivable" means, as of any given date, all accounts
receivable of TANO, MC II and NMP for goods sold and delivered and services
rendered by TANO, MC II and NMP in the ordinary course of the business
presently conducted by each of them and representing amounts then invoiced
and due and owing, and a Trade Account Receivable shall be an "Eligible
Trade Account Receivable", and shall be included in the Borrowing Base,
only if and so long as it meets each and all of the following requirements:
(1) It is a valid, genuine and legally enforceable obligation,
subject to no defense, set off or counter-claim, of the account debtor
or other obligor named herein or in the TANO, MC II and/or NMP's
records pertaining thereto, and that neither TANO, MC II nor NMP has
received from the account debtor or other obligor any notification
repudiating such obligation or asserting that such obligation is
subject to any defense, set off or counterclaim; and
(2) It is owned by the either TANO, MC II or NMP free and clear of
all interests, liens, attachments, encumbrances and security interests
except the security interest granted to the Bank pursuant to this
Agreement; and
(3) The Account debtor or other obligor is located in the United
States or Canada; and
(4) Not more than ninety (90) days have expired since the date of
invoice; or, if the Bank in its sole discretion accepts as Eligible a
Trade Account Receivable which is due on a date stated in the invoice,
not more than thirty (30) days have expired since the date stated; and
(5) Neither TANO, MC II nor NMP has received notice from the Bank
that the credit of the account debtor is not satisfactory to the Bank
for any reason; and
(6) The account debtor is not an entity in which the any of the
Debtors have a controlling interest; and
(7) Eligible Trade Accounts Receivable shall not include any account
receivable of the same account debtor to any of the Debtors in excess
of twenty five percent (25%) of the then Eligible Trade Accounts
Receivable calculated after excluding this debtor's Eligible Trade
Accounts Receivable; and
(8) The entire receivable of one account debtor becomes ineligible if
more than ten percent (10%) of the total due is over ninety (90) days
past due, unless the ten percent (10%) over ninety (90) days is
attributable to an isolated dispute over a specific invoice.
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(d) The value of Inventory used in determining the Borrowing Base shall
equal the value of raw material plus the value of finished product and
shall not include the value of any work in progress.
In addition to the eligibility requirements set forth in clause (c) of this
Section 2.1, the Bank shall have the right (acting at its sole discretion with
or without the consent of the Debtor) from time to time by written notice to
Debtor to establish additional or further eligibility requirements and to change
in any manner the eligibility requirements set forth in said clauses or so
established, and if at any time any Receivables fail to meet all the eligibility
requirements set forth in clause (c) of this Section 2.1 or established or
changed from time to time by the Bank, they shall immediately be excluded from
the Borrowing Base. Pursuant to this Agreement, the Bank is granted collateral
security in addition to Eligible Trade Accounts Receivable and Inventory.
Notwithstanding any apportionment or segregation of collateral made by the Bank
for purposes of determining the Borrowing Base, all collateral granted to the
Bank pursuant to this Agreement and all other collateral rights, interests and
properties now or at any time hereafter available to the Bank, shall secure and
may be applied to pay any or all indebtedness of the Debtor secured thereby, in
any manner or order of application and without regard to any such apportionment
or segregation.
2.2 All loans made by the Bank under this Agreement for the Revolving Loan
shall be evidenced by and payable with interest on the xxxxx set forth in a
Promissory Note of Debtor ("Revolving Note") payable to the order of the Bank
with interest in the form and with the provisions set forth in Exhibit "B"
attached hereto. The Bank is hereby authorized, but shall not be required, to
make notations of advances by it to the Debtor and payments to it by the Debtor
on the reverse side of the Note. Such notations, or the entries on any liability
ledger records maintained by or for the Bank as to indebtedness of Debtor, shall
be presumed correct until the contrary is established by Debtor. Upon demand by
the Bank at any time or from time to time, the Debtor will confirm and admit by
signed writing the exact amount of indebtedness for principal and interest then
outstanding under this Agreement. Any billing statement or accounting rendered
by or for the Bank shall be conclusive and fully binding on Debtor unless
specific written notice of exception is given to the Bank by Debtor within
thirty (30) days thereafter.
2.3 Advances under the Revolving Note will be limited to the Borrowing
Base. A request for advance shall be submitted upon a signed "Borrowing Base
Calculation/No Default Certification/Draw Request in form as is shown on Exhibit
"C" attached hereto. Each request for advance will be supported by a current
accounts receivable aging, and such other documentation that may reasonably
required by the Bank to determine the Borrowing Base.
2.4 The Debtor may prepay the Revolving Note at any time, without premium
or penalty. If at any time the aggregate outstanding principal balance of all
loans under this Agreement exceeds the then amount of the Borrowing Base, the
Debtor shall immediately, without notice or demand, prepay the Note in an amount
equal to the excess.
2.5 The Bank may make loans in any amount and in any manner requested
orally or in writing by any officer or agent of the Debtor or by any person
reasonably believed by the Bank to be
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an officer or agent of the Debtor. Loan proceeds may be disbursed by deposit in
any deposit account of the Debtor, by an instrument payable to Borrower.
2.6 The Debtor will use the proceeds of all loans under this Agreement
solely for lawful and authorized corporate purposes in furtherance of the
business presently conducted by the Debtor.
III. INTEREST
3.1 The Term Note and the Revolving Note shall be collectively referred to
as the "SNB Notes."
3.2 Each of the SNB Notes shall bear interest at the "Contract Rate",
which is defined as the "Base Rate" plus the "Applicable Margin."
3.3 The Base Rate shall equal the lowest base rate on corporate loans
posted by at least seventy five (75%) of the nation's thirty (30) largest banks
as published in the money rates section of the southwest edition of the Wall
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Street Journal. If the Base Rate becomes unavailable during the term of either
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of the SNB Notes, Bank may designate a substitute index after notifying Debtor.
Bank will inform Debtor what the current Base Rate is at any time during the
term of either of the SNB Notes. The Base Rate will not change more often than
once each day.
3.4 The Applicable Margin shall be determined by the ratio of Debtor's Net
Income plus Depreciation Expense plus Interest on all Debt Service to the
Debtor's "Total Debt Service" (hereinafter referred to as the "Debt Service
Coverage"). Total Debt Service shall include all of the payments due on the SNB
Notes, as well as payments due on the One Million and No/100 Dollars
($1,000,000.00) loan ("Subordinated Debt") which the Debtor is required to
obtain pursuant to the terms of this Agreement.
3.5 The Applicable Margin shall equal:
When Debt Service Coverage is: Applicable Margin is:
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1.5 or less 3/4 of 1%
More than 1.5 but less than 1.75 2 of 1%
More than 1.75 1/4 of 1%
3.6 The Debt Service Coverage will be determined at the end of each of the
Debtor's fiscal year quarters. The Debtor will provide the Bank with information
acceptable ("Margin Information") to the Bank within forty-five (45) days after
the close of each of its fiscal year's quarter which will allow the to determine
the Applicable Margin. The determination of the Applicable Margin shall be
effective with respect to the SNB Notes as of the fifth business day immediately
following delivery of the Margin Information. In the event that the Margin
Information is not delivered in a timely fashion, the Applicable gin shall be
the highest Applicable Margin effective on the fifth day after written notice to
the Bank was due hereunder and continuing until the
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Margin Information is delivered to Bank, whereupon in the latter event any
required change to the Applicable Margin shall be effective with respect to the
SNB Notes commencing as of the fifth day of business immediately following
delivery of such Margin Information.
IV. CONDITIONS PRECEDENT
4.1 The Bank's obligation to make any loan to the Debtor under the SNB
Notes shall be subject to the terms and conditions of this Agreement and the
following conditions precedent:
(a) Each representation and warranty set forth in Section 8.1 shall be
true and correct as of the date of borrowing, except for changes subsequent
to the date of this Agreement caused by transactions permitted under the
terms of this Agreement; and
(b) There shall not exist any Event of Default under section 5.1 of this
Agreement or any event which, with the giving of notice or the lapse of
time (or both) would become an Event of Default thereunder; and
(c) The Debtor shall have delivered to the Bank:
(1) The Term Note duly executed by Debtor.
(2) The Revolving Note duly executed by Debtor.
(3) A Security Agreement, in form and substance satisfactory to the
Bank, granting the Bank security interests in all present and future
equipment, inventory, and accounts receivable of the Debtor.
(4) Copies of resolutions of the directors of each of the Debtors,
authorizing the execution, delivery and performance of this Agreement,
the SNB Notes, and the Security Agreement.
(6) A copy of the Articles of Incorporation of each of the Debtors and
a Certificate of Good Standing as to each of the Debtors, issued by
the Secretary of State of the State of the Debtor's incorporation; a
copy of the Certificate of Good Standing as to the Debtor issued by
the Secretary of State of the State of Oklahoma, and a copy of the By-
laws of the Debtor.
(7) All collateral schedules, financing statements, security interest,
subordination agreements, releases and termination statements which
the Bank may request to assure the creation, perfection and priority
of the security interests created by the Security Agreement.
(8) Lock Box Agreement in form and substance satisfactory to the
Bank, defining how payments of each of the Debtor's accounts
receivable are to be paid and accounted for.
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(9) An appraisal of the Debtor's equipment which is satisfactory to
the Bank.
V. REPRESENTATIONS AND WARRANTIES
5.1 Debtor represents and warrants to the Bank that:
(a) Each Debtor is a corporation duly organized, existing and in good
standing under the laws of the State of its incorporation. It has the
corporate power to own its property and to carry on its business as now
conducted and is duly qualified to do business in all states in which such
qualification is require.
(b) Each Debtor is duly authorized and empowered to execute, deliver and
perform this Agreement, the Note, and the Security Agreement, and to borrow
money from the Bank.
(c) The execution and delivery of this Agreement, the SNB Notes, and the
Security Agreement, and the performance by the Debtor of its obligation
thereunder, do not and will not conflict with any provision of law or the
Articles of Incorporation or By-Laws of any Debtor or of any agreement
binding upon it.
(d) The execution and delivery of this Agreement, the SNB Notes, and
Security Agreement have been duly authorized by all necessary corporate
action of the directors and shareholders of each Debtor; and this
Agreement, the SNB Notes, and the Security Agreement have in fact been duly
executed and delivered by the Debtor and constitute its lawful and binding
obligations, legally enforceable against it in accordance with their
respective terms.
(e) No litigation, tax claims or governmental proceedings are pending or
are threatened against the Debtor, and no judgment or order of any court or
administrative agency is outstanding against the Debtor, which will have a
material adverse affect on the Debtor.
(f) The transaction evidenced by this Agreement does not violate any usury
law or other law relating to the payment of interest on loans.
(g) The authorization, execution, delivery and performance of this
Agreement, the SNB Notes and the Security Agreement are not and will not be
subject to the jurisdiction, approval or consent of, or to any requirement
of registration with or notification to, any federal, state or local
regulatory body or administrative agency.
(h) When the financing statement heretofore signed by the Debtor is filed
in the proper office where the particular collateral is located, the Bank
will have a valid and perfected first security interest in the collateral
described in the Security Agreement, subject to no prior security interest,
assignment, lien or encumbrance (except interests, if any, specifically
approved by the Bank in writing).
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(i) All assets of the Debtor are free and clear of all liens, security
interests and encumbrances, except those specifically permitted by Bank.
(j) Each Debtor has filed all federal and state tax returns which are
required to be filed, and all taxes shown as due thereon have been paid.
(k) Financial statements furnished to the Bank were prepared in accordance
with generally accepted accounting principles consistently maintained,
except as expressly therein set forth. They present fairly the financial
condition of the Debtor as of the dates thereof. The annual reports
disclose fully all liabilities of the Debtor whether or not contingent,
with respect to any pension plan. Since the date of the most recent
financial statement, there has been no material adverse change in the
financial condition of the Debtor.
(l) Each qualified retirement plan of the Debtor presently conforms and is
administered in a manner consistent with the Employee Retirement Income
Security Act of 1974.
(n) All books and records pertaining to the accounts of Debtor will be
located in Tulsa, Oklahoma.
VI. AFFIRMATIVE COVENANTS
6.1 The Debtor covenants and agrees that it will:
(a) Pay all taxes, assessments and governmental charges prior to the time
when any penalties or interest accrue, unless contested in good faith with
an adequate reserve for payment.
(b) Continue the conduct of its business; maintain its corporate existence
in good standing; maintain all rights, licenses and franchises; comply with
all applicable laws and regulations.
(c) Maintain its property in good working order and condition; make all
needful and proper repairs, replacements, additions and improvements
thereto.
(d) Deliver to the Bank and to any participant designated by the Bank:
(1) Beginning September 30,1999, quarterly balance sheet and
income statements to be delivered thirty (30) days after its due
date.
(2) Beginning March 31, 2000, annual audited financial
statements, to be delivered within ninety (90) days after its due
date.
(3) Beginning August 31, 1999, monthly Accounts Receivable
Aging/Listings and Borrowing Base, and inventory listing, to be
delivered fifteen (15) days after the end of each month.
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(4) Debtor's 1999 Federal Income Tax Return and annually
thereafter, to be delivered ten (10) days after its filing..
(e) Within ninety (90) days of the execution of this Agreement, Westwood
will incur the Subordinated Debt, with a Lender of its choice. However,
prior to incurring the Subordinated Debt, Westwood will submit the
instruments to evidence the Subordinated Debt to Bank for its review and
approval, which approval will not be unreasonably withheld.
(f) Within ninety (90) days of the execution of this Agreement, the Debtor
will achieve a "Leverage Ratio" of no greater than 4.0 to 1.0. The Debtor
will provide the Bank within forty-five (45) days after the close of each
of its fiscal year's quarter with information reasonably needed by the Bank
to determine the Leverage Ratio. As used herein, Leverage Ratio shall be
defined as the ratio of the Debtor's total liabilities less the
Subordinated Debt to the Debtor's tangible Net Worth plus the Subordinated
Debt.
(g) Within ninety (90) days of the execution of this Agreement, the Debtor
will achieve a "Liquidity Ratio" of 1.25 to 1.0. The Debtor will provide
the Bank with within forty-five (45) days after the close of each of its
fiscal year's quarter information reasonably needed by the Bank to
determine the Liquidity Ratio. As used herein, Liquidity Ratio shall be
defined as the ratio of the Debtor's current assets to the Debtor's current
liabilities.
(h) Permit any officer, employee, attorney or accountant for the Bank or
for any participant designated by the Bank, to review, make extracts from,
or copy any and all of its corporate and financial books, records and
properties of the Debtor at all times during ordinary business hours.
(i) Maintain property, liability, xxxxxxx'x compensation and other forms
of insurance in amounts designated at any time or from time to time by the
Bank.
(j) Not change any of the Debtor's senior management without the Bank's
prior approval.
(k) Do, make, procure, execute and deliver at its expense all acts,
things, writings and assurances which the Bank may at any time reasonably
request in order to protect, assure, or enforce the interests, rights and
remedies of the Bank created by, provided in or emanating from this
Agreement, and the Security Agreement.
6.2 The Debtor further covenants and agrees that it will notify the Bank
in writing promptly, and in any event within five (5) business days, in the
event of the occurrence of any Event of Default defined or described in Section
8.1 or the occurrence of any event which, with the giving of notice or lapse of
time (or both), would become such an Event of Default.
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VII. NEGATIVE COVENANTS
7.1 The Debtor covenants and agrees that it will not without the express
written consent of the Bank:
(a) Become or remain liable in any manner in respect of any indebtedness
or contractual liability (including, without limitation, notes, bonds,
debentures, loans, guaranties, and pension liabilities, whether or not
contingent and whether or not subordinated), except:
(1) Indebtedness arising under this Agreement;
(2) Indebtedness arising under the Subordinated Debt;
(3) Presently outstanding unsecured indebtedness, if any, to the
extent disclosed in the financial statements identified in Section
4.1(1);
(4) Unsecured indebtedness, other than for money borrowed or for
the purchase of a capital asset, incurred in the ordinary course of
its business, which becomes due and must be fully satisfied within
twelve (12) months after the date on which it is incurred;
(5) Unsecured indebtedness subordinated in right of payment to all
indebtedness owed to the Bank pursuant to a debt subordination
agreement accepted or approved in writing by the Bank;
(b) Create, incur or cause to exist any mortgage, security interest,
encumbrance, lien or other charge of any kind upon any of its property or
assets, whether now owned or hereafter acquired, except:
(1) The security interests created by the Security Agreement;
(2) Security interests created by the Subordinated Debt;
(3) Liens for taxes or assessments not yet due or contested in
good faith by appropriate proceedings;
(4) Security interest approved by the Bank in writing, at its sole
discretion; and
(5) Other liens, charges and encumbrances incidental to the
conduct of its business or the ownership of its property which were
not incurred in connection with the borrowing of money or the
purchase of property on credit and which do not in the aggregate
materially detract from the value of its property or materially
impair the use thereof in its business.
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(c) Expend or contract to expend funds for the purchase or lease of any
property, whether real, personal or mixed, except current assets purchased
in the ordinary course of business.
(d) Sell, lease or otherwise dispose of all or any substantial part of its
property.
(e) Consolidate or merge with, or acquire assets of, any other corporation
or business.
(f) Substantially alter the nature of the business in which it is engaged,
or enter into a new business.
(g) Declare or pay any dividends (except dividends payable solely in its
capital stock, or dividends needed to pay current federal and state income
tax liability as long as Debtor remains sub-S corporation), or purchase or
redeem any of its capital stock, or otherwise distribute any property on
account of its capital stock.
(h) Purchase stock or securities of, extend credit to or make investments
in, become liable as surety for, or guarantee or endorse any obligation of,
any person, firm or corporation, except direct obligations of the United
States and commercial bank deposits.
(i) In any manner transfer any property without prior or present receipt
of full and adequate consideration.
(j) Permit funds to be owing to the Debtor by the directors or
shareholders of Debtor, or members of their families, on account of any
loan, credit sale or other transaction or event.
(k) Pay excessive or unreasonable salaries, bonuses, fees, commissions or
other compensation.
(l) Permit any default or event of default to occur under any note, loan
agreement, lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon Debtor.
VIII. EVENTS OF DEFAULT
8.1 Each of the following occurrences shall constitute an Event of
Default:
(a) The Debtor shall fail to pay any installment of interest due on the
Revolving Note or any installment of interest and principal due on the Term
Note, and such failure shall continue for five (5) calendar days.
(b) The Debtor shall fail to perform or observe any of the covenants
contained in Sections VI and VII of this Agreement, and such failure shall
continue for a period often (10) calendar days.
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(c) Any representation or warranty contained in Section V shall prove to
have been materially false or misleading as of this date or (except to the
extent of changes caused by transactions permitted under this Agreement) as
of any date on which a loan is made to the Debtor under this Agreement; or
any other representation or warranty made by or on behalf of the Debtor to
the Bank (whether made in this Agreement, in any financial statement,
report or certificate famished pursuant to this Agreement, or otherwise in
any manner) shall prove to have been false or materially misleading as of
the time as of which such representation or warranty was made.
(d) The Debtor shall fail to pay when due any substantial liability or
liabilities other than the SNB Notes; or the maturity of any such liability
or liabilities shall be accelerated; or any breach, default or event of
default shall occur under any indenture, loan agreement, note or agreement
pertaining to any such liability, entitling a creditor or representative of
creditors of the Debtor, acting with or without the consent or concurrence
of other creditors and with or without notice or a period of grace, to
accelerate the maturity of or demand payment of any such liability, whether
such breach, default or event of default is waived by the creditor so
entitled. "Substantial" for these purposes, means in excess of Twenty Five
Thousand and No/100 Dollars ($25,000).
(e) Any breach, default or event of default shall occur under the Security
Agreement, or under any other agreement, conveyance or instrument now in
effect or hereafter made for the benefit of the Bank in connection with or
as security for indebtedness arising under this Agreement.
(f) The Debtor shall have procured, permitted or suffered, voluntarily or
involuntarily, any creditor to obtain a lien not permitted herein upon all
or any substantial part of its property by operation of law or the
appointment by any court or public authority (other than a bankruptcy
court) of any receiver or trustee to take charge of, or the sequestration
of, all or any substantial part of its property; or shall commit an act of
bankruptcy under the United States Bankruptcy Act (as now or hereafter
amended); or shall file or have filed against it, voluntarily or
involuntarily, a petition in bankruptcy or for reorganization or the
adoption of an arrangement under the United States Bankruptcy Act (as now
or hereafter amended); or shall initiate or have initiated against it,
voluntarily or involuntarily, any act, process or proceeding for
liquidation, dissolution, arrangement, composition or reorganization or
under any insolvency law or other statute or law providing for a
modification or adjustment of the rights of creditors.
(g) Any event or reportable event which the Bank in good faith determines
to constitute potential grounds for the termination of any employee benefit
plan or other plan maintained for employees of the Debtor, or for the
appointment of a trustee to administer any such plan, shall have occurred
and be continuing thirty (30) calendar days after written notice to such
effect shall have been given by the Bank to the Debtor, or any such plan
shall be terminated, or a trustee shall be appointed to administer any such
plan; or the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any such plan or to appoint a trustee to
administer any such plan.
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8.2 Upon the occurrence of an Event of Default or at any time thereafter
until such Event of Default is waived in writing, if capable of being cured, is
cured to the written satisfaction of the Bank, the Bank at its option may
exercise one or more of all of the following rights and remedies:
(a) Terminate the obligations of the Bank under this Agreement; and
(b) Declare the indebtedness evidenced by the SNB Notes to be immediately
due and payable, and the same shall thereupon be immediately due and
payable, without notice or presentment or other demand, and the Bank
thereupon may exercise and enforce all rights and remedies available to it
to collect the indebtedness evidenced by the SNB Notes; and
(c) Exercise and enforce all rights and remedies accorded upon default to
a secured party; and
(d) Without notice to or demand upon the Debtor or any other person, off
set any indebtedness then owed to the Bank by the Debtor, whether or not
such indebtedness is then due, against the indebtedness evidenced by the
SNB Notes (including, without limitation, indebtedness transferred by the
Bank to a third party by participation, negotiation, assignment, succession
or otherwise) and any other indebtedness then owed by the Debtor to
the Bank, whether or not then due, and exercise any and all other rights of
set off, application or banker's lien available to the Bank by law or
agreement.
8.3 Any Event of Default may be waived in writing by the Bank, but not
otherwise; and the failure to exercise the rights and remedies referred to in
Paragraph 8.2 shall not operate as a waiver or otherwise preclude enforcement of
such rights and remedies. A waiver shall be effective only in the specific
instance and for the specific purpose given. The rights and remedies of the Bank
shall be cumulative and the exercise or enforcement of any one right or remedy
shall neither be a condition to nor bar the exercise and enforcement of any
other.
8.4 The Debtor agrees to pay the Bank, on demand, the amount of all out-
of-pocket expenses, including the reasonable fees and disbursements of legal
counsel for the Bank, incurred or paid by the Bank in connection with or as a
result of the exercise or enforcement of any right or remedy referred to in
Section 5.2, except to the extent payment of the same by the Debtor may be
prohibited by law.
IV. MISCELLANEOUS
9.1 All notices to be given to the Debtor hereunder shall be sufficiently
given if sent in writing by certified or registered mail, addressed to the
Debtor at 0000 Xxxxx Xxxx, Xxxxx 0000 Xxxxx, XX 00000, Attention: CFO, and to
the Bank at X.X. Xxx 000000, Xxxxx, XX 00000, Attention: President, or addressed
to such other address or to the attention of such other person as any party may
from time to time designate in written notice to the other party.
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9.2 The Debtor shall pay to the Bank, upon the funding of the Term Note a
loan fee of 1/4 of 1% of the principal amount of the Revolving Note ($5,000.00)
and the amount of all reasonable out-of-pocket expenses, including the fees, and
disbursements of legal counsel for the Bank paid or incurred by the Bank in
connection with the preparation, execution, delivery and performance of this
Agreement, the Term Note, the Revolving Note, the Security Agreement, the
Guaranties and all documents deemed necessary by the Bank. The Debtor agrees to
indemnify and hold harmless the Bank from and against any and all taxes
(including documentary taxes), assessments and other charges (except net income
taxes) levied or based upon or payable in connection with the execution,
delivery and performance of this Agreement or the Note, the Security Agreement,
or levied or based upon payable in connection with, or measured by the
indebtedness evidenced by the Note.
9.3 This Agreement shall inure to the benefit of, extend to and be binding
upon the respective successors and assigns of the Debtor and the Bank, including
any participant of the Bank. The term "Bank", as used herein, includes any
subsequent holder of the Term Note or the Revolving Note. This Agreement cannot
be modified, amended, waived, canceled, terminated or otherwise changed orally.
This Agreement is made and the Note will be issued under, and each shall be
governed and construed by the substantive laws of, the State of Oklahoma. If any
provision of this Agreement is held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect other
provisions which can be given effect, and this Agreement shall be given effect,
and shall be construed as if such invalid or illegal or unenforceable provision
had never been contained herein. All representations and warranties contained in
this Agreement shall survive the execution and delivery of this Agreement and
the issuance of the Note.
IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written.
"DEBTOR"
Westwood Corporation,
a Nevada corporation
By: /s/ Xxxxxx X. XxXxx
-----------------------------
Xxxxxx X. XxXxx, President
TANO Corp.,
a Louisiana corporation
By: /s/ Xxxxxx X. XxXxx
-----------------------------
Xxxxxx X. XxXxx, President
NMP Corp.,
an Oklahoma corporation,
By: /s/ Xxxxxx X. XxXxx
-----------------------------
Xxxxxx X. XxXxx, President
13
MC II Electric Company,
a Texas corporation
By: /s/ Xxxxxx X. XxXxx
-----------------------------
Xxxxxx X. XxXxx, President
"Bank"
Stillwater National Bank and Trust Company,
Stillwater, Oklahoma,
By: /s/ Xxx X. Stairs
-----------------------------
Xxx X. Xxxxxxx, Senior Vice-President
14
EXHIBIT A
TERM
PROMISSORY NOTE
---------------
$2,000,000.00 August 13, 1999
FOR VALUE RECEIVED, WESTWOOD CORPORATION, a Nevada corporation, TANO CORP.,
a Louisiana corporation, MC II ELECTRIC COMPANY, a Texas corporation, and NMP
CORP., an Oklahoma corporation, (hereinafter collectively called the "Maker"),
promises to pay to the order of STILLWATER NATIONAL BANK AND TRUST COMPANY,
STILLWATER, OKLAHOMA, (hereinafter called the "Holder") at X.X. Xxx 000000,
Xxxxx, Xxxxxxxx 00000, or such other place as Holder may from time to time
direct Maker in writing, on or before August ___, 2004, (hereinafter called the
"Maturity Date") the principal sum of TWO MILLION and NO/100 DOLLARS
($2,000,000.00), together with interest from the date hereof on unpaid principal
as more specifically set forth herein below.
The interest rate on this Note is the Contract Rate as that term is defined
in that certain Loan Agreement of even date herewith by and between Maker and
Holder.
This Note shall be paid in fifty-nine (59) monthly installments of
principal and interest beginning on September 13, 1999, and on the 13th day of
every month thereafter until the Maturity Date, at which time all accrued but
unpaid interest and the unpaid principal balance thereof shall be due and
payable in full.
Any principal and/or interest not paid when due shall bear interest at a
rate six percent (6%) per annum greater than the per annum interest rate
prevailing on the Note at the time the unpaid amount became due, but in no event
at a rate less than fifteen percent (15%) per annum. In addition to, or in the
alternative to, the interest rate provided for in this paragraph, Lender may
assess a charge of ten dollars ($10) times the number of days late to cover cost
of past due notices and other expenses.
Interest on this Note is calculated on the actual number of days elapsed on
a basis of a 360 day year. For purposes of computing interest and determining
the date principal and interest payments are received, all payments made will
not be deemed to have been made until such payments are received in collected
funds.
This Note and all amounts due hereunder are secured by the collateral,
which is more particularly described in the Security Agreement and the Loan
Agreement of even date herewith, and the "Security Instruments" (as defined in
the Loan Agreement).
This Note may be prepaid in part or in full at any time without penalty.
Upon the occurrence of an Event of Default as defined in any Security
Instrument, or default in any obligation secured by or set forth in the Security
Instruments, the entire indebtedness secured
1
by said Security Instruments shall, at the option of the Holder hereof, after
any applicable notice or grace period as may be provided in the Security
Instruments, and without necessity of any other notice or demand of any kind, be
immediately due and payable. Except as specifically otherwise provided in this
Note, the Security Agreement, or any guaranty agreement, or any security
agreement, all makers, endorser, guarantors and sureties hereof jointly and
severally waive presentment, protest, notice of protest, notice of dishonor,
diligence in collection, and any and all other notices and matters of a like
nature. All makers, endorser, guarantors and sureties consent to: (i) any
renewal, extension or modification (whether one or more) of the terms of the
Security Instruments, including the terms or time of payment under this Note;
(ii) the release or surrender, exchange or substitution of all or any part of
the security, whether real or personal, direct or indirect, for the payment
hereof; (iii) the granting of any other indulgences to Maker, and (iv) the
taking or releasing of other or additional parties primarily or contingently
liable hereunder. Any such renewal, extension, modification, release, surrender,
exchange or substitution may be made without notice to Maker and any endorser,
guarantors and sureties hereof and without affecting the liability of said
parties hereunder. If an attorney be employed to collect or otherwise enforce
payment of this Note, or any judicial foreclosure proceeding or proceeding
pursuant to a power of sale be commenced, or action be taken under any of the
other instruments securing this Note, all costs of collection, including
reasonable attorney's fees, in addition to court fees and costs, shall be paid
by Maker.
The Loan Agreement, this Note, the Guaranties, and the Security Instruments
described in the Loan Agreement are of even date herewith and constitute the
agreement between Maker and Holder with respect to the indebtedness evidenced by
this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of Oklahoma and is intended to be performed in accordance with, and
only to the extent permitted by, such laws. If any provision of this Note or the
application hereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of this Note nor
the application of such provision to any other person or circumstance shall be
affected thereby, but rather same shall be enforced to the greatest extent
permitted by law.
All amounts payable hereunder are payable by check or legal tender of the
United States of America.
The Holder hereof shall not be liable for failure to collect or for lack of
diligence in bringing suit on this Note or on any renewal or extension hereof or
upon or with respect to any security or to foreclose the mortgage given to
secure the payment hereof or for failure to make demand or presentment for
payment or to protest or give notice of protest, dishonor or non-payment or any
other notice, or generally for any act of omission or commission. The failure of
the Holder hereof to exercise any of the remedies or options set forth in this
Note, the mortgage or any other security instrument, upon the occurrence of one
or more of the Events of Default, including, without limitation, the right to
exercise its option of acceleration, shall not constitute a waiver of the right
to exercise the same or any other remedy at any subsequent time in respect to
the same or any other Event of Default. The acceptance by Holder of payment
hereunder that is less than payment in full of all amounts due and payable at
the time of such payment shall not constitute a waiver of the right to
2
exercise any of the foregoing options at that time or at any subsequent time, or
nullify any prior exercise of any such option without the express written
consent of the Holder.
All agreements between the Maker and the Holder are expressly limited so
that in no event whatsoever, whether by reason of disbursement of the proceeds
hereof or otherwise, shall the amount of interest or finance charge (as defined
by the laws of the State of Oklahoma) paid or agreed to be paid by the Maker to
the Holder hereof exceed the highest lawful contractual rate of interest or the
maximum finance charge permissible under the law which a court of competent
jurisdiction, by final non-appealable order, determines to be applicable hereto.
If fulfillment of any agreement between the Maker and the Holder hereof, at the
time the performance of such agreement becomes due, involves exceeding such
highest lawful contractual rate or such maximum permissible finance charge, then
the obligation to fulfill the same shall be reduced automatically so that such
obligation does not exceed such highest lawful contractual rate or such maximum
permissible finance charge. If by any circumstance the Holder shall ever receive
as interest or finance charge an amount which would exceed the amount allowed by
applicable law, the amount which may be deemed excessive shall be deemed applied
to the principal of the indebtedness evidenced hereby and not to interest. All
sums received or agreed to be paid to Holder hereunder for the use, forbearance
or detention of the indebtedness under this Note shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of this Note. The terms and provisions of this paragraph shall control
all other terms and provisions contained herein and in any of the other
instruments executed in connection herewith.
This Note is given for an actual lending transaction for business purposes
and not for personal, residential or agricultural purposes.
IN WITNESS WHEREOF, this Note has been executed by Maker as of the date set
forth above.
"Maker"
Westwood Corporation
By:________________________________
Xxxxxx XxXxx, President
TANO Corp.
By:________________________________
Xxxxxx X. XxXxx, President
MC II Electric Company
By:________________________________
Xxxxxx X. XxXxx, President
3
NMP Corp.
By:___________________________________
Xxxxxx X. XxXxx, President
4
EXHIBIT B
REVOLVING
---------
PROMISSORY NOTE
---------------
$2,000,000.00 Tulsa, Oklahoma
August 13, 1999
KNOW ALL MEN BY THESE PRESENTS, THAT:
FOR VALUE RECEIVED, the undersigned, WESTWOOD CORPORATION, a Nevada
corporation, TANO CORP., a Louisiana corporation, MC II ELECTRIC COMPANY, a
Texas corporation and NMP CORP., an Oklahoma corporation (hereinafter
collectively called the "Maker"), promises to pay to the order of STILLWATER
NATIONAL BANK AND TRUST COMPANY, STILLWATER, OKLAHOMA, a National Banking
Corporation ("SNB" or the "Holder"), on or before August 13, 2000, (hereinafter
called the "Maturity Date") the principal sum of Two Million and 00/100 Dollars
($2,000,000.00) (hereinafter called the "Face Amount"), or so much thereof which
is actually outstanding from time to time, in lawful money of the United States
of America, together with all costs herein provided and interest at the
"Contract Rate" (defined below) on the principal balance outstanding hereof and
thereon from the date hereof until said amounts shall have been paid in full as
more specifically provided below.
1. REVOLVING CREDIT. This Note will evidence a revolving line of credit to
----------------
Maker. Subject to the terms and conditions of the "Loan Agreement" pertaining to
the loan evidenced by this Note, which is of even date herewith between Maker
and Holder, Maker shall have the right from time to time during the term of this
Note to borrow and, upon repayment, re-borrow from the Holder amounts having the
aggregate principal balance at any one time not exceeding the lesser of (i) the
"Borrowing Base" (defined below) determined as of the date of any borrowing or
reborrowing, or (ii) the Face Amount. Advances under this Note shall be made in
accordance with Paragraphs 2.1,2.2 and 2.3 of the Loan Agreement. Maker agree to
be liable for all sums advanced in accordance with Paragraphs 2.1, 2.2 and 2.3
of the Loan Agreement. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Holder's internal
records, including daily computer print-outs. Holder will have no obligation to
advance funds under this Note if (i) Maker or any guarantor is in default under
the terms of this Note, the Loan Agreement, the "Security Agreement" (defined
below) or any agreement that Maker or any guarantor has with Holder, including
any agreement made in connection with the signing of the Note; (ii) Maker or any
guarantor ceases doing business or is insolvent; (iii) and any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Note or any other loan with Holder; (iv) Maker have applied
funds provided pursuant to this Note for purposes other than those authorized by
Holder; or (v) Holder in good xxxxx xxxxx itself insecure under this Note or any
other agreement between Holder and Maker. For these purposes Borrowing Base,
Trade Accounts Receivable and Eligible Trade Accounts Receivable will have the
meaning as defined in the Loan Agreement.
1
2. INTEREST ONLY. Maker shall pay the Holder monthly payments of interest
-------------
only, to-wit: Beginning on September 13, 1999, and on the same day of each month
thereafter until the Maturity Date, monthly payments of interest only shall be
paid in arrears on the outstanding principal balance. At the Maturity Date all
accrued but unpaid interest and the unpaid principal balance shall be due and
payable. PROVIDED, HOWEVER, so often as the principal balance of this Note shall
ever exceed the Borrowing Base, Maker shall immediately notify Holder of such
event and Maker shall immediately, without the necessity of Holder making a
demand or giving notice to Maker or to any person obligated to pay the
indebtedness of this Note, pay Holder so much of the outstanding principal so
that the then remaining principal balance shall equal or be less than the
Borrowing Base.
3. VARIABLE INTEREST RATE. The interest rate on this Note is the Contract
----------------------
Rate, as defined in the Loan Agreement.
4. DAILY INTEREST. Interest shall be calculated on the daily principal
--------------
balance based on the actual number of days elapsed in the interest payment
period over a year of three hundred sixty (360) days. All payments which are due
on a Saturday, Sunday or national bank holidays shall be deemed to be payable on
the next bank business day.
5. COLLATERAL. This Note and all amounts due hereunder are secured by the
----------
account receivables of and inventory of the Maker as described and set forth in
that certain SECURITY AGREEMENT of even date herewith (hereinafter called the
"Security Agreement"), given by Maker.
6. PREPAYMENT. Maker shall have the right to prepay this Note, in whole
----------
or in part, at any time without penalty or premium.
7. ACCELERATION UPON DEFAULT. It is agreed that time is of the essence in
-------------------------
the performance of all obligations hereunder and under the Security Instruments.
Maker and each surety, endorser and guarantor hereof, jointly and severally,
covenant and agree that upon the occurrence of any Event of Default as defined
in the Security Agreement or any other Security Instrument, then and in any of
such events the Holder hereof may, at its option and without notice or demand,
declare this Note and all unpaid principal and accrued interest hereunder
immediately due and payable. The Holder hereof shall not be liable for failure
to collect or for lack of diligence in bringing suit on this Note or on any
renewal or extension hereof or upon or with respect to any security or to
foreclose the Mortgage given to secure the payment hereof or for failure to make
demand or presentment for payment or to protest or give notice of protest,
dishonor or non-payment or any other notice, or generally for any act of
omission or commission. The failure of the Holder hereof to exercise any of the
remedies or options set forth in this Note, the Security Agreement or any other
Security Instrument, upon the occurrence of one or more of the Events of
Default, including without limitation the right to exercise its option of
acceleration, shall not constitute a waiver of the right to exercise the same or
any other remedy at any subsequent time in respect to the same or any other
Event of Default.
2
8. DEFAULT INTEREST RATE. Upon the occurrence of any Event of Default
---------------------
hereunder, or upon maturity hereof (by acceleration or otherwise), the entire
unpaid principal sum and then accrued and unpaid interest, at the option of
Holder, shall bear interest at the rate of six percent (6%) in excess of the
Base Rate.
9. JOINT AND SEVERAL LIABILITY; ATTORNEY'S FEES. This Note shall be the
--------------------------------------------
joint and several obligation of all makers, and it shall be the joint and
several obligation of all endorsers, guarantors and sureties, and shall be
binding on all parties hereto and their successors and assigns. All makers,
endorser, guarantors and sureties hereof agree jointly and severally that if,
and as often as, this Note is placed in the hands of any attorneys for
collection or to defend or enforce any of the Holder's rights hereunder, Maker
shall pay to the Holder on demand its reasonable attorney's fees, together with
all court costs and other expenses paid by such Holder.
10. WAIVERS. Except as specifically otherwise provided in this Note, the
-------
Security Agreement, or any guaranty agreement, or any Security Agreement, all
makers, endorsers, guarantors and sureties hereof jointly and severally waive
presentment, protest, notice of protest, notice of dishonor, diligence in
collection, and any and all other notices and matters of alike nature. All
makers, endorsers, guarantors and sureties consent to: (i) any renewal,
extension or modification (whether one or more) of the terms of the Security
Instruments, including the terms or time of payment under this Note; (ii) the
release or surrender, exchange or substitution of all or any part of the
security, whether real or personal or direct or indirect, for the payment
hereof; (iii) the granting of any other indulgences to Maker, including, without
limitation, the advancement of additional principal and extension of additional
credit so that the principal balance remaining is above the Face Amount hereof,
and (iv) the taking or releasing of other or additional parties primarily or
contingently liable hereunder. Any such renewal, extension, modification,
release, surrender, exchange or substitution may be made without notice to Maker
and any endorsers, guarantors and sureties hereof and without affecting the
liability of said parties hereunder:
11. ONE INSTRUMENT: OKLAHOMA LAW. This Note and the Security Instruments
----------------------------
are to be construed as one contract and each hereby referred to and made a part
of the other. This Note is being executed and delivered and is intended to be
performed in the State of Oklahoma and shall be construed and enforced in
accordance with and governed by the laws of the State of Oklahoma.
12. MODIFICATIONS, FORBEARANCE. This Note may not be modified or
--------------------------
terminated orally but only by agreement or discharge in writing and signed by
Holder. Any forbearance of Holder in exercising any right or remedy hereunder or
under the Security Instruments, or otherwise afforded by applicable law, shall
not be a waiver of or preclude the exercise of any right or remedy. The
acceptance by Holder of payment of any sum payable hereunder after the due date
of such payment shall not be a waiver of Holder's right to require prompt
payment when due of all other sums payable hereunder and shall not constitute an
implied or tacit approval for the late or delinquent payment of any other
installment due hereunder.
13. SUCCESSORS OF HOLDER. Whenever the term "Holder" is referred to in
--------------------
this Note, such reference shall be deemed to include the successors and assigns
of Holder, including,
3
without limitation, any subsequent assignee or holder of this Note, and all
covenants, provisions and agreements by or on behalf of Maker and any endorsers,
guarantors and sureties hereof which are contained herein shall inure to the
benefit of the successors and assigns of Holder.
14. CURATIVE INTEREST RATE. All agreements between the Maker and the
----------------------
Holder are expressly limited so that in no event whatsoever, whether by reason
of disbursement of the proceeds hereof or otherwise, shall the amount of
interest or finance charge (as defined by the laws of the State of Oklahoma)
paid or agreed to be paid by the Maker to the Holder hereof exceed the highest
lawful contractual rate of interest or the maximum finance charge permissible
under the law which a court of competent jurisdiction, by final non-appealable
order, determines to be applicable hereto. If fulfillment of any agreement
between the Maker and the Holder hereof, at the time the performance of such
agreement becomes due, involves exceeding such highest lawful contractual rate
or such maximum permissible finance charge, then the obligation to fulfill the
same shall be reduced automatically so that such obligation does not exceed such
highest lawful contractual rate or such maximum permissible finance charge. If
by any circumstance the Holder shall ever receive as interest or finance charge
an amount which would exceed the amount allowed by applicable law, the amount
which may be deemed excessive shall be deemed applied to the principal of the
indebtedness evidenced hereby and not to interest. All interest and finance
charges paid or agreed to be paid to the Holder hereof shall be prorated,
allocated and spread throughout the full period of this Note. The terms and
provisions of this paragraph shall control all other terms and provisions
contained-herein and in any of the other Security Instruments executed in
connection herewith.
15. NOTICES. Any notice, report, demand or other instrument authorized or
-------
required to be given or furnished under this Note to the Maker or the Holder
shall be deemed given, received and furnished: (i) when personally delivered; or
(ii) three (3) days after the same is deposited in the United States mail as
first class certified mail, return receipt requested, postage prepaid; or (iii)
the day after such notice is deposited with an overnight delivery service, such
as Federal Express, Airborne, etc.; or (iv) via confirmed telecopy or facsimile,
to the address as follows:
Addresses for such Notices are as follows:
IF TO HOLDER:
------------
STILLWATER NATIONAL BANK
Attn: President
X.X. Xxx 000000
Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
IF TO Maker:
-----------
Westwood Corporation, et al.
Attn: CFO
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Either party may change the address to which any such notice, report,
demand or other instrument is to be delivered or mailed by furnishing written
notice of such change to the other party, but no such notice of change shall be
effective unless and until received by such other party. Copies of notices given
to the specified persons are for information only and notice shall not be
effected by giving notice solely to said persons. The above addresses shall also
constitute the addresses of the parties for the purposes of (S) 9-402 of the
Oklahoma Uniform Commercial Code and any similar provision of the Uniform
Commercial Code of any other state where the Mortgaged Property is located, and
for such purposes the Maker shall be the debtor and the Holder shall be the
secured party.
16. UNENFORCEABLE TERMS. If any provision of this Note or the application
-------------------
thereof to any party or encumbrance is held invalid or unenforceable, the
remainder of this Note and the application of such provision to other parties or
circumstances shall not be affected thereby, the provisions of this Note being
severable in any such instance.
17. BUSINESS PURPOSES. This Note is given for an actual loan of money for
-----------------
business purposes and not for personal, residential or agricultural purposes.
18. EVIDENCE OF DEBT. The records of the Holder of this Note shall be
----------------
prima facie evidence of the amount owing on this Note.
IN WITNESS WHEREOF, the undersigned has executed this Note this day of
August, 1999.
"Maker"
Westwood Corporation
By:_______________________________
Xxxxxx X. XxXxx, President
5
TANO Corp.
By:_______________________________
Xxxxxx X. XxXxx, President
MC II Electric Company
By:_______________________________
Xxxxxx X. XxXxx, President
NMP Corp.
By:_______________________________
Xxxxxx X. XxXxx, President
6
"EXHIBIT C"
BORROWING BASE CERTIFICATE AND COMPLIANCE STATEMENT
This Borrowing Base Certificate is delivered under the terms and compliance
with a LOAN AGREEMENT by and between the STILLWATER NATIONAL BANK AND TRUST
COMPANY OF STILLWATER, OKLAHOMA, and BORROWER therein named for is Note No.
41554.
TO: STILLWATER NATIONAL BANK AND TRUST COMPANY OF STILLWATER, OKLAHOMA
The undersigned is ________________ of BORROWER as defined in the LOAN
AGREEMENT referred to above. The undersigned reaffirms all representations and
warrants made by BORROWER in the LOAN AGREEMENT referred to above and certifies
and warrants that it holds, subject to the security interest of LENDER, the
collateral described in the Borrowing Base calculation below:
Total Accounts as shown in the attached Accounts Receivable
Aging Report as of the end of_________________________, _______ $________________ (a)
(Includes TANO, NMP and MC II)
Less:
Accounts of Subsidiaries and Affiliates $________________ (b)
Accounts outstanding more than ninety (90) days
from the date of the invoice $________________ (c)
Account debtors not located in the United States
of America or Canada $________________ (d)
Accounts of Account debtor previously disapproved by BANK $________________ (e)
Amount of Accounts representing retainage $________________ (f)
Total Accounts of account debtor when more than ninety (90) days
have expired from the date of the invoice of more than ten
percent (10%) (in dollars) of the debtor's Accounts Receivable $________________ (g)
Total Accounts of account debtors to whom Borrower is indebted $________________ (h)
Total Ineligible Account [Total of (b) through (h)] $________________ (i)
Potential Total Eligible Trade Accounts Receivable (a) less (i) $________________ (j)
Less Concentration - the amount of Account debtors' accounts in
excess of 15% and total Eligible Accounts Receivable calculated
without this Deduction $________________ (k)
Less Government Progress Payments in excess of $300,000 $________________ (l)
Total Eligible Trade Accounts Receivable (j) less (k and l) $________________ (m)
Receivable Portion of BORROWING BASE (80% of) (m) $________________ (n)
1
Eligible Inventory $________ (the lesser of 50% of the cost of raw materials
and finished products and 50% of the fair market value of raw material and
furnished products) as of the end of _______________,
(Includes TANO, NMP and MC II) $_____________ (o)
BORROWING BASE (n) plus (o) $_____________ (p)
Total Loan Amount $_____________ (q)
Less: Principal Balance of Loan as of _________________, _____
(Same date as Accounts Receivable Aging Report) $_____________ (r)
Principal balance of Loan not advanced [(q) - (r)] $_____________ (s)
Principal Amount of Loan subject to being advanced (the
lesser of (p) or (q) minus (r) $_____________ (t)
If (p) minus (r) is a negative number, attached you will find a check payable to
LENDER in the amount of $ _______________the amount (p) exceeds (r) to reduce
the principal of the loan.
Unless and until a new subsequent Borrowing Base Certificate and Compliance
Statement is received by LENDER, the maximum principal balance outstanding shall
not exceed the lesser of (p) and (r).
--------------------------------------------------------------------------------
ADVANCE REQUEST
AMOUNT OF ADVANCE REQUEST: $__________________
DEPOSIT TO ACCOUNT $__________________
________________________________________________________________________________
BORROWER
Date:__________________ By:____________________________________
2
"EXHIBIT 1"
TO LOAN AGREEMENT BETWEEN THE
STILLWATER NATIONAL BANK AND TRUST COMPANY, AS LENDER,
AND WESTWOOD CORPORATION, AS BORROWER
DATED AUGUST 13, 1999
Subject to the terms and conditions of the LOAN AGREEMENT, BORROWER shall
have the right, from time to time, prior to the maturity of the loan, to
borrower and, upon repayment, reborrow from the LENDER an amount not at any time
exceeding the lesser of (i) $2,000,000.00 or (ii) the Borrowing Base determined
as of the date of borrowings following the procedures attached hereto as
"EXHIBITS A and B" to this "EXHIBIT 1".
If, at any time, the outstanding principal balance of the loan exceeds the
Borrowing Base, BORROWER shall immediately reduce the principal balance of the
loan to an amount not to exceed the Borrowing Base.
Pursuant to the LOAN AGREEMENT, LENDER is granted a security interest in
and BORROWER shall sign a Security Agreement granting LENDER a security interest
in all BORROWER'S Accounts, including Eligible Accounts Receivable, as
hereinafter defined, inventory and general intangibles. Notwithstanding any
apportionment or segregation of the collateral made by LENDER for the purpose of
determining the Borrowing Base, all collateral granted to LENDER pursuant to
this LOAN AGREEMENT and all other collateral rights, interest in properties now
or at anytime hereafter available to LENDER, shall secure and may be applied to
pay any or all indebtedness of BORROWER in any manner or order of application
and without regard to any such apportionment or segregation. LENDER shall have
the right to audit or to have a third party, as agent for the LENDER, audit the
books and records of BORROWER, including, but not limited to the Accounts
Receivable of BORROWER, at any reasonable time and from time to time. Included
in the right to audit is the right to confirm with customers of BORROWER the
accuracy of the Accounts, so long as such confirmation is done in a businesslike
manner. The cost of one such audit per year shall be paid by BORROWER.
Prior to the 15/th/ day of each month and as a condition precedent to any
borrowing or advances under the Loan, BORROWER will provide LENDER a complete
Account Receivable aging report in a form satisfactory to LENDER and a completed
Borrowing Base Certificate. The Account Receivable aging report shall be as of
the close of business for the previous month-end and certified to by BORROWER or
an appropriate officer of BORROWER. The Borrowing Base Certificate (attached
hereto as "EXHIBIT B to EXHIBIT 1") will be singed by BORROWER or an appropriate
officer of BORROWER. The Borrowing Base Certificate will be provided to the
LENDER monthly, at the same time the Accounts Receivable aging report is
furnished. BORROWER will furnish LENDER a list of persons authorized to certify
the Account Receivable aging report and a list of persons authorized to request
advances or borrowings. "EXHIBIT 3" is a list with the title and specimen
signature of the persons currently authorized to request advances or
1
borrowings. The persons on the list may be changed, from time to time, by
written notice to LENDER and after BORROWER provides a new list.
As a condition precedent to any borrowing or advances under this Loan,
BORROWER will provide LENDER, from time to time as requested by LENDER and in
any event by the 15/th/ day of every month, a complete listing of its inventory
as of the previous month end.
2
"EXHIBIT A to EXHIBIT 1"
PROCEDURE FOR REVOLVING LINES OF CREDIT
This "EXHIBIT A" sets forth the procedures for a revolving line of credit
using a Borrowing Base Certificate.
For the purpose of this "EXHIBIT A" and this Loan, the terms hereinafter
set forth have the following definitions:
(a) "Borrowing Base" means, as of any given date, 80% percent of Eligible
Accounts Receivable plus 50% of the value of raw materials and finished goods,
valued at the lesser of cost and fair market value. Work in progress is not
eligible to be a part of the Borrowing Base calculation.
(b) "Accounts Receivable" and "Accounts" means, as of any given date: (a)
all accounts of BORROWER for goods sold and delivered; (b) all accounts of
BORROWER for, services rendered; and (c) the value of construction completed
under contracts which have invoiced by BORROWER to the owner of property and, if
necessary, approved for payment by an architect, engineer or any other required
third party. All Accounts must be generated in the ordinary course of the
business of BORROWER as presently conducted by it and represent accounts then
invoiced and due and owing as an Account Receivable.
(c) "Eligible Account Receivable" means an Account Receivable of BORROWER
which meets each of the following requirements:
(1) it is a valid, genuine and legally enforceable obligation, subject to
no defense, set-off or counterclaim, of [lie account debtor or other obligor
named therein or in BORROWER'S records pertaining thereto, and BORROWER has not
received from the account debtor or other obligor any notification repudiating
such obligation or asserting that such obligation is subject to any defense,
set-off or counterclaim, or in whole or in part;
(2) it is owned by BORROWER free and clear of all interest, liens,
attachments, encumbrances and security interests, except the security interest
grunted to the LENDER pursuant to this LOAN AGREEMENT;
(3) no more than ninety (90) days have expired since the date of the
invoice or invoices of not less than ninety percent (90%) in amount of all
Accounts Receivable of the same Account Receivable debtor. If more than ninety
(90) days have expired since the date of the invoices of ten percent (10%) or
more in amount of all Accounts Receivable of the Account debtor, none of the
Accounts Receivable of that debtor shall be an Eligible Account Receivable and
all of the Accounts Receivable of the same account debtor shall be treated as a
tainted Account Receivable;
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(4) BORROWER has not received notice from the LENDER that the credit of
the account debtor is not satisfactory to the bank for any reason;
(5) the account debtor is not a subsidiary or affiliate of company;
(6) the account debtor is located in the United States of America;
(7) Eligible Account Receivables shall not include any Account Receivable
of the same account debtor to BORROWER in excess of fifteen percent (15%) of the
then total Eligible Accounts Receivable of BORROWER determined after excluding
the Account Receivable of the account debtor;
(8) any and all retainage held by an account debtor of BORROWER shall not
be included as a part of the balance of an Account Receivable in calculating the
Borrowing Base and will be excluded from the Borrowing Base;
(9) no Account Receivable of the account debtor is subject to any set off
or off set by the account debtor for monies owed by BORROWER to the third party
account debtor; and
(10) not more than 90 days has elapsed since the date of the original
invoice.
In addition to the eligibility requirements set forth herein, LENDER shall
have the right (in its sole discretion) with or without the consent of BORROWER
(from time to time by written notice to BORROWER), to establish additional or
further eligibility requirements and to change in any manner the eligibility
requirements set forth herein or otherwise established. If at any time any
Eligible Account Receivable ceases to meet all of the eligibility requirements
set forth herein or otherwise established or changed from time to time by the
LENDER, such Account Receivable shall be immediately excluded from Eligible
Accounts Receivable and the Borrowing Base will be re-determined any payment
required of BORROWER to reduce the unpaid principal balance below the Borrowing
Base will be immediately made.
If at any time the Borrowing Base is less than the outstanding principal
balance of the Loan, BORROWER shall immediately pay to BANK for credit on the
principal balance, the amount the then unpaid principal balance of the Loan
exceeds the Borrowing Base.
2
"EXHIBIT 2"
LIST OF AFFILIATES AND SUBSIDIARIES
[_] No Subsidiaries or Affiliate.
[_] The following Subsidiaries (S) and/or Affiliates (A)
1.
2.
3.
4.
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"EXHIBIT 3"
PERSONS AUTHORIZED TO REQUEST ADVANCES
NAME TITLE SPECIMEN SIGNATURE
1. _______________________________
2. _______________________________
3. _______________________________
1
"EXHIBIT 1"
TO LOAN AGREEMENT BETWEEN THE
STILLWATER NATIONAL BANK AND TRUST COMPANY, AS LENDER,
AND WESTWOOD CORPORATION, AS BORROWER
DATED AUGUST 13, 1999
Subject to the terms and conditions of the LOAN AGREEMENT, BORROWER shall
have the right, from time to time, prior to the maturity of the loan, to
borrower and, upon repayment, reborrow from the LENDER an amount not at any time
exceeding the lesser of (i) $2,000,000.00 or (ii) the Borrowing Base determined
as of the date of borrowings following the procedures attached hereto as
"EXHIBITS A and B" to this "EXHIBIT 1".
If, at any time, the outstanding principal balance of the loan exceeds the
Borrowing Base, BORROWER shall immediately reduce the principal balance of the
loan to an amount not to exceed the Borrowing Base.
Pursuant to the LOAN AGREEMENT, LENDER is granted a security interest in
and BORROWER shall sign a Security Agreement granting LENDER a security interest
in all BORROWER'S Accounts, including Eligible Accounts Receivable, as
hereinafter defined, inventory and general intangibles. Notwithstanding any
apportionment or segregation of the collateral made by LENDER for the purpose of
determining the Borrowing Base, all collateral granted to LENDER pursuant to
this LOAN AGREEMENT and all other collateral rights, interest in properties now
or at anytime hereafter available to LENDER, shall secure and may be applied to
pay any or all indebtedness of BORROWER in any manner or order of application
and without regard to any such apportionment or segregation. LENDER shall have
the right to audit or to have a third party, as agent for the LENDER, audit the
books and records of BORROWER, including, but not limited to the Accounts
Receivable of BORROWER, at any reasonable time and from time to time. Included
in the right to audit is the right to confirm with customers of BORROWER the
accuracy of the Accounts, so long as such confirmation is done in a businesslike
manner. The cost of one such audit per year shall be paid by BORROWER.
Prior to the 15/th/ day of each month and as a condition precedent to any
borrowing or advances under the Loan, BORROWER will provide LENDER a complete
Account Receivable aging report in a form satisfactory to LENDER and a completed
Borrowing Base Certificate. The Account Receivable aging report shall be as of
the close of business for the previous month-end and certified to by BORROWER or
an appropriate officer of BORROWER. The Borrowing Base Certificate (attached
hereto as "EXHIBIT B to EXHIBIT 1") will be singed by BORROWER or an appropriate
officer of BORROWER. The Borrowing Base Certificate will be provided to the
LENDER monthly, at the same time the Accounts Receivable aging report is
furnished. BORROWER will furnish LENDER a list of persons authorized to certify
the Account Receivable aging report and a list of persons authorized to request
advances or borrowings. "EXHIBIT 3" is a list with the title and specimen
signature of the persons currently authorized to request advances or
1
borrowings. The persons on the list may be changed, from time to time, by
written notice to LENDER and after BORROWER provides a new list.
As a condition precedent to any borrowing or advances under this Loan,
BORROWER will provide LENDER, from time to time as requested by LENDER and in
any event by the 15/th/ day of every month, a complete listing of its inventory
as of the previous month end.
2
"EXHIBIT A to EXHIBIT 1"
PROCEDURE FOR REVOLVING LINES OF CREDIT
This "EXHIBIT A" sets forth the procedures for a revolving line of credit
using a Borrowing Base Certificate.
For the purpose of this "EXHIBIT A" and this Loan, the terms hereinafter
set forth have the following definitions:
(a) "Borrowing Base" means, as of any given date, 80% percent of Eligible
Accounts Receivable plus 50% of the value of raw materials and finished goods,
valued at the lesser of cost and fair market value. Work in progress is not
eligible to be a part of the Borrowing Base calculation.
(b) "Accounts Receivable" and "Accounts" means, as of any given date: (a)
all accounts of BORROWER for goods sold and delivered; (b) all accounts of
BORROWER for, services rendered; and (c) the value of construction completed
under contracts which have invoiced by BORROWER to the owner of property and, if
necessary, approved for payment by an architect, engineer or any other required
third party. All Accounts must be generated in the ordinary course of the
business of BORROWER as presently conducted by it and represent accounts then
invoiced and due and owing as an Account Receivable.
(c) "Eligible Account Receivable" means an Account Receivable of BORROWER
which meets each of the following requirements:
(1) it is a valid, genuine and legally enforceable obligation, subject to
no defense, set-off or counterclaim, of [lie account debtor or other obligor
named therein or in BORROWER'S records pertaining thereto, and BORROWER has not
received from the account debtor or other obligor any notification repudiating
such obligation or asserting that such obligation is subject to any defense,
set-off or counterclaim, or in whole or in part;
(2) it is owned by BORROWER free and clear of all interest, liens,
attachments, encumbrances and security interests, except the security interest
grunted to the LENDER pursuant to this LOAN AGREEMENT;
(3) no more than ninety (90) days have expired since the date of the
invoice or invoices of not less than ninety percent (90%) in amount of all
Accounts Receivable of the same Account Receivable debtor. If more than ninety
(90) days have expired since the date of the invoices of ten percent (10%) or
more in amount of all Accounts Receivable of the Account debtor, none of the
Accounts Receivable of that debtor shall be an Eligible Account Receivable and
all of the Accounts Receivable of the same account debtor shall be treated as a
tainted Account Receivable;
1
(4) BORROWER has not received notice from the LENDER that the credit of
the account debtor is not satisfactory to the bank for any reason;
(5) the account debtor is not a subsidiary or affiliate of company;
(6) the account debtor is located in the United States of America;
(7) Eligible Account Receivables shall not include any Account Receivable
of the same account debtor to BORROWER in excess of fifteen percent (15%) of the
then total Eligible Accounts Receivable of BORROWER determined after excluding
the Account Receivable of the account debtor;
(8) any and all retainage held by an account debtor of BORROWER shall not
be included as a part of the balance of an Account Receivable in calculating the
Borrowing Base and will be excluded from the Borrowing Base;
(9) no Account Receivable of the account debtor is subject to any set off
or off set by the account debtor for monies owed by BORROWER to the third party
account debtor; and
(10) not more than 90 days has elapsed since the date of the original
invoice.
In addition to the eligibility requirements set forth herein, LENDER shall
have the right (in its sole discretion) with or without the consent of BORROWER
(from time to time by written notice to BORROWER), to establish additional or
further eligibility requirements and to change in any manner the eligibility
requirements set forth herein or otherwise established. If at any time any
Eligible Account Receivable ceases to meet all of the eligibility requirements
set forth herein or otherwise established or changed from time to time by the
LENDER, such Account Receivable shall be immediately excluded from Eligible
Accounts Receivable and the Borrowing Base will be re-determined any payment
required of BORROWER to reduce the unpaid principal balance below the Borrowing
Base will be immediately made.
If at any time the Borrowing Base is less than the outstanding principal
balance of the Loan, BORROWER shall immediately pay to BANK for credit on the
principal balance, the amount the then unpaid principal balance of the Loan
exceeds the Borrowing Base.
2
"EXHIBIT 2"
LIST OF AFFILIATES AND SUBSIDIARIES
[_] No Subsidiaries or Affiliate.
[_] The following Subsidiaries (S) and/or Affiliates (A)
1.
2.
3.
4.
1
"EXHIBIT 3"
PERSONS AUTHORIZED TO REQUEST ADVANCES
NAME TITLE SPECIMEN SIGNATURE
1. _______________________________
2. _______________________________
3. _______________________________
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