SECURITY AGREEMENT
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This Agreement is made this 25th day of November, 1998, by AMERICAN
TECHNICAL CERAMICS CORP. (the "Borrower"), whose address is 00 Xxxxxx Xxxxx,
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000, in favor of NATIONSBANK, N.A. (the "Bank"),
successor by merger to Xxxxxxx Bank, N.A., whose address is 00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000.
Recitals
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The Borrower and the Bank have executed an Amended and Restated Loan
Agreement (as amended or restated from time to time, the "Loan Agreement") of
even date herewith. The Borrower, pursuant to the Loan Agreement, has executed
and delivered or may from time to time execute and deliver: (a) a Sub-Line
Promissory Note (as amended, extended or renewed from time to time, the
"Sub-Line Note") of even date herewith in the original Principal amount of
$3,500,000 in favor of the Bank; and (b) one or more Term Notes (as defined in
the Loan Agreement). The Sub-Line Note and the Term Notes are collectively
referred to herein as the "Notes". The Borrower has agreed to secure certain
obligations in accordance with the terms hereof.
Now therefore, for good and valuable consideration, the Borrower
agrees as follows:
1. Security Interest. The Borrower hereby gives the Bank a continuing
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and unconditional security interest (the "Security Interest") in, and assigns
to the Bank, the following assets (collectively, the "Collateral"): (a) all
equipment and other assets (collectively, the "Equipment") purchased or
financed with the proceeds of the Equipment Line of Credit (as defined in the
Loan Agreement) (which Equipment shall be described in a separate schedule or
schedules which shall be updated from time to time as appropriate and, if
required by the Bank, attached to this Agreement); and (b) all parts,
accessories, attachments, additions, replacements, accessions, substitutions,
increases, distributions and proceeds to, of and from the Equipment in any form
(including, without limitation, insurance proceeds) together with all records
(including, without limitation, computer tapes, disks and records) relating
thereto.
2. Indebtedness Secured. The Security Interest secures payment when
---------------------
due of all Indebtedness (as defined herein) to the Bank. As used in this
Agreement, the term "Indebtedness" means all principal, interest, costs,
expenses and other amounts now or hereafter due under the Notes (and each of
them) (including, without limitation, all principal amounts advanced thereunder
before, on or after the date hereof).
3. Warranties of Borrower. The Borrower warrants and so long as this
-----------------------
Agreement continues in force shall be deemed continuously to warrant that:
(a) The Borrower is the owner of the Collateral free of all
security interests or other encumbrances, except the Security
Interest.
(b) The Borrower is authorized to enter into the Security
Agreement.
(c) The Collateral is used or bought for use primarily in
business or professional operations.
(d) The Collateral is located at the following address:
_______________________________________
_______________________________________
(e) The chief executive office of the Borrower is at the
address set forth in the introductory paragraph of this Agreement. The
Borrower does not operate under any trade names.
4. Covenants of Borrower. So long as this Agreement has not been
----------------------
terminated as provided hereafter, the Borrower: (a) will defend the Collateral
against the claims of all other persons; (b) will keep the Collateral free from
all security interests or other encumbrances, except the Security Interest; (c)
will not assign, deliver, sell, transfer, lease or otherwise dispose of any of
the Collateral or any interest therein without the prior written consent of the
Bank; (d) will keep in accordance with generally accepted accounting principles
consistently applied, accurate and complete records concerning the Collateral
and upon the Bank's request will xxxx any of such records to give notice of the
Security Interest and will permit the Bank or its agents, upon reasonable
advance notice, to inspect the Collateral during normal business hours and to
audit and make abstracts of such records or any of the Borrower's books,
ledgers, reports, correspondence and other records relating to the Collateral;
(e) upon demand, will deliver to the Bank any documents of title and any
chattel paper representing or relating to the Collateral or any part thereof,
schedules, invoices, shipping or delivery receipts, purchase orders, contracts
or other documents representing or relating to purchases or other acquisitions
or sales or leases or other dispositions of the Collateral and proceeds thereof
and any and all other schedules, documents and statements relating to the
Collateral which the Bank may from time to time reasonably request; (f) without
the Bank's written consent, will not make or agree to make any alteration,
modification or cancellation of or substitution for any Collateral (except,
however, for alterations and modifications made in the ordinary course of
business in a manner consistent with past practices); (g) will keep the
Collateral at the address specified above until the Bank is notified in writing
of any change in its location within the State but the Borrower will not remove
the Collateral from the State nor change the location of the Borrower's chief
executive office without the written consent of the Bank; (h) will permit the
Bank or its agents to inspect the Collateral; (i) will keep the Collateral in
good condition and repair (reasonable wear and tear excepted) and will not use
the Collateral in violation of any provisions of this Agreement, any applicable
statute, regulation or ordinance or any policy of insurance insuring the
Collateral; 6) will execute and deliver to the Bank such financing statements
and other documents requested by the Bank, and take such other action and
provide such further assurances as the Bank may deem advisable to evidence,
perfect or enforce the Security Interest created by this Agreement; (k) will
pay all taxes, assessments and other charges of every nature which may be
levied or assessed against the Collateral (except, however, that the Borrower
shall be entitled to dispute taxes, assessments and other charges in good
faith); (l) will insure the Collateral
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against risks by obtaining policies (none of which shall be cancellable without
at least 30 days prior written notice to the Bank) in coverage, form and amount
and with companies reasonably satisfactory to the Bank, containing a loss payee
provision in favor of the Bank, and at the Bank's request will deliver each
policy or certificate of insurance therefor to the Bank; (m) will prevent any
part of the Collateral from becoming an accession to other goods not covered by
this Agreement; and (n) if any certificate of title may be issued with respect
to any of the Collateral, will cause the Bank's interest under this Agreement
to be noted on the certificate and will deliver the original certificate to the
Bank.
5. Verification. The Bank may verify or audit any Collateral in any
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manner and through any medium which the Bank may deem appropriate, and the
Borrower shall furnish such assistance as the Bank may reasonably require in
connection therewith.
6. Default.
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(a) Each of the following shall constitute an "Event of
Default" hereunder: (i) the occurrence of an Event of Default under
the Loan Agreement; (ii) failure by the Borrower to perform in any
material respect any material obligations of the Borrower under this
Agreement, time being of the essence; (iii) material falsity in any
certificate, statement, representation, warranty or audit at any time
furnished by or on behalf of the Borrower or any endorser or guarantor
or any other party liable for payment of all or part of the
Indebtedness, pursuant to or in connection with this Agreement; or
(iv) any attachment or levy against any material portion of the
Collateral or any other occurrence which inhibits the Bank's free
access to any material portion of the Collateral.
(b) Upon the occurrence of an Event of Default, the Bank may:
(i) declare all or any part of the Indebtedness due without notice to
the Borrower; and (ii) exercise such other remedies and rights as are
available hereunder, under the Loan Agreement or otherwise.
(c) Upon the occurrence of any Event of Default, the Bank's
rights with respect to the Collateral shall be those of a secured
party under the Uniform Commercial Code and any other applicable law
in effect from time to time. The Bank shall also have any additional
rights granted herein and in any other agreement now or hereafter in
effect between the Borrower and the Bank. If requested by the Bank,
the Borrower will assemble the Collateral and make it available to the
Bank at a place to be designated by the Bank.
(d) The Borrower agrees that any notice by the Bank of the
sale or disposition of the Collateral or any other intended action
hereunder, whether required by the Uniform Commercial Code or
otherwise, shall constitute reasonable notice to the Borrower if the
notice is mailed by regular or certified mail, postage prepaid, at
least ten days before the action to the Borrower's address as
specified in this Agreement or to any other address which the Borrower
has specified in writing to the Bank as the address to which notices
shall be given to the Borrower.
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(e) The Borrower shall pay all costs and expenses incurred by
the Bank in enforcing this Agreement, realizing upon any Collateral
and collecting any Indebtedness (including a reasonable attorneys'
fee) whether suit is brought or not and whether incurred in connection
with collection, trial, appeal or otherwise and, to the extent of the
Borrower's liability for repayment of any of the Indebtedness, shall
be liable for any deficiencies in the event the proceeds of
disposition of the Collateral do not satisfy the Indebtedness in full.
7. Miscellaneous.
--------------
(a) The Borrower authorizes the Bank at the Borrower's
expense to file any financing statements relating to the Collateral
(without the Borrower's signature thereon) which the Bank deems
appropriate and the Borrower irrevocably appoints the Bank as the
Borrower's attorney-in-fact to execute any such financing statements
in the Borrower's name and to perform all other acts which the Bank
deems appropriate to perfect and to continue perfection of the
Security Interest.
(b) The Borrower hereby irrevocably consents to any act by
the Bank or its agents in entering upon any premises during the
continuance of any Event of Default for the purposes of either
(i) inspecting the Collateral or (ii) taking possession of the
Collateral after any Event of Default in any commercially reasonable
manner; and the Borrower hereby waives its right to assert against the
Bank or its agents any claim based upon trespass or any similar cause
of action for entering upon any premises where the Collateral may be
located.
(c) The Borrower authorizes the Bank to collect and apply
against the Indebtedness any refund of insurance premiums or any
insurance proceeds payable on account of the loss or damage to any of
the Collateral and appoints the Bank as the Borrower's
attorney-in-fact to endorse any check or draft representing such
proceeds or refund. Notwithstanding the foregoing, the Borrower shall
be entitled, upon written request given to the Bank within 30 days of
any loss or damage to any Equipment, to use all insurance proceeds
payable as the result of such loss or damage to repair or replace any
damaged Equipment if. (i) no Event of Default shall have occurred and
be continuing hereunder as of the date of the payment of such
insurance proceeds; (ii) the insurance proceeds are paid into an
escrow account with the Bank; (iii) all repairs or replacements are
satisfactory to the Bank; and (iv) the proceeds held in escrow are
disbursed solely to repair or replace the damaged Equipment. The Bank
shall have a lien on all funds held in the escrow account pursuant to
the foregoing subparagraph (ii) as further security for the Notes and
the other Indebtedness secured hereby. In addition, the Bank shall
have a lien on all repaired equipment and all replacement equipment
obtained with any such insurance proceeds, and all such equipment
shall be deemed "Equipment" hereunder. The Borrower shall take all
such action as the Bank may reasonably request to confirm and perfect
the Bank's security interest in all such repaired equipment and all
such replacement equipment.
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(d) Upon the Borrower's failure to perform any of its duties
hereunder, the Bank may, but it shall not be obligated to, perform any
of the duties and the Borrower shall forthwith upon demand reimburse
the Bank for any expenses incurred by the Bank in so doing.
(e) No delay or omission by the Bank in exercising any right
hereunder or with respect to any Indebtedness shall operate as a
waiver of that or any other right, and no single or partial exercise
of any right shall preclude the Bank from any other or further
exercise of the right or the exercise of any other right or remedy.
The Bank may cure any Event of Default by the Borrower in any
reasonable manner without waiving the Event of Default so cured and
without waiving any other prior or subsequent Event of Default by the
Borrower. All rights and remedies of the Bank under this Agreement and
under the Uniform Commercial Code shall be deemed cumulative.
(f) The Bank shall exercise reasonable care in the custody
and preservation of the Collateral to the extent required by law and
it shall be deemed to have exercised reasonable care if it takes such
action for that purpose as the Borrower shall reasonably request in
writing; however, no omission to do any act not requested by the
Borrower shall be deemed a failure to exercise reasonable care and no
omission to comply with any requests by the Borrower shall of itself
be deemed a failure to exercise reasonable care. The Bank shall have
no obligation to take and the Borrower shall have the sole
responsibility for taking any steps to preserve rights against all
prior parties to any instrument or chattel paper in the Bank's
possession as Collateral or as proceeds of the Collateral. The
Borrower waives notice of dishonor and protest of any instrument
constituting Collateral at any time held by the Bank on which the
Borrower is in any way liable and waives notice of any other action
taken by the Bank.
(g) The Borrower authorizes the Bank without affecting the
Borrower's obligations hereunder from time to time: (i) to take from
any party (other than the Borrower) and hold collateral (other than
the Collateral) for the payment of the Indebtedness or any part
thereof, and to exchange, enforce or release such collateral or any
part thereof-, (ii) to accept and hold the endorsement or guaranty of
payment of the Indebtedness or any part thereof and to release or
substitute any such endorser or guarantor or any party who has given
any security interest in any collateral as security for the payment of
the Indebtedness or any part thereof or any party in any way obligated
to pay the Indebtedness or any part thereof; and (iii) upon the
occurrence of any Event of Default to direct the manner of the
disposition of the Collateral and any other collateral and the
enforcement of any endorsements or guaranties relating to the
Indebtedness or any part thereof as the Bank in its sole discretion
may determine.
(h) During the continuance of an Event of Default, the Bank
may demand, collect and xxx for all proceeds (either in the Borrower's
name or the Bank's name at the Bank's option), with the right to
enforce, compromise, settle or discharge any proceeds.
5
The Borrower irrevocably appoints the Bank as the Borrower's
attorney-in-fact to endorse the Borrower's name on all checks,
commercial paper and other instruments pertaining to the proceeds
before or after the occurrence of an Event of Default.
(i) The rights and benefits of the Bank under this Agreement
shall, if the Bank agrees, inure to any party acquiring an interest in
the Indebtedness or any part thereof
(j) The terms "Bank" and "Borrower" as used in this Agreement
include the heirs, personal representatives and successors or assigns
of those parties.
(k) If more than one Borrower executes this Agreement, the
term "Borrower" includes each of the Borrowers as well as all of them,
and their obligations under this Agreement shall be joint and several.
(1) This Agreement may not be modified or arif6nded nor shall
any provision of it be waived except in writing signed by the Borrower
and by an authorized officer of the Bank.
(m) This Agreement shall be construed under the Florida
Uniform Commercial Code and any other applicable laws in effect from
time to time.
(n) This Agreement is a continuing agreement which shall
remain in force until the Bank shall actually receive written notice
of its termination and thereafter until all of the Indebtedness
contracted for or created before receipt of the notice and any
extensions or renewals of that Indebtedness (whether made before or
after receipt of the notice) including without limitation all interest
thereon both before and after receipt of the notice shall be paid in
full.
DATED the day and year first above written.
AMERICAN TECHNICAL CERAMICS CORP.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Its: President
----------------------------
(CORPORATE SEAL)
6
RENEWAL PROMISSORY NOTE
-----------------------
$2,000,000.00 November 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, American Technical Ceramics Corp.
(the "Borrower"), hereby promises to pay to the order of NationsBank, N.A. (the
"Bank"), successor by merger to Xxxxxxx Bank, N.A., whose address is 00 X.
Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, the principal sum of Two Million and
No/100 Dollars ($2,000,000), together with interest on the outstanding
principal balance hereof from the date of disbursement until payment in full at
the rate provided herein. This Note shall be governed by the following
provisions:
1 . Loan Agreement. The Borrower and the Bank have executed an Amended
---------------
and Restated Loan Agreement (as amended or restated from time to time, the
"Loan Agreement") of even date herewith. The loan evidenced by this Note shall
be a revolving loan during the Revolving Period (as defined in the Loan
Agreement), and the Borrower may borrow, repay and re-borrow principal amounts
hereunder during the Revolving Period subject to the terms contained herein and
in the Loan Agreement. Notwithstanding the foregoing: (a) the outstanding
principal balance hereof shall not exceed $2,000,000 at any one time (or such
lesser amount as may be set forth in the Loan Agreement); and (b) the Borrower
shall not in any event be entitled to obtain further advances hereunder on or
after the expiration of the Revolving Period. This Note is the Revolving Note
described in the Loan Agreement.
2. Payments.
---------
(a) The Borrower shall pay all accrued interest hereunder on
each January 1, April 1, July 1 and October 1 during the term hereof,
commencing on January 1, 1999.
(b) The Borrower shall pay principal hereunder in equal
quarterly installments on the first day of each January, April, July
and October after the expiration of the Revolving Period (commencing
on the first such date after the expiration of the Revolving Period).
The amount of each installment shall equal 1/8 of the outstanding
principal balance hereof as of the expiration of the Revolving Period.
(c) The Borrower shall pay all remaining outstanding
principal hereunder two years after the expiration of the Revolving
Period.
3. Interest.
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(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 7.25% per annum. The rate
of interest shall be adjusted on each Interest Rate
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THIS NOTE RENEWS AND MODIFIES THAT CERTAIN PROMISSORY NOTE DATED SEPTEMBER 25,
1996, EXECUTED BY THE BORROWER IN FAVOR OF THE BANK.
Adjustment Date (as defined herein) so that interest shall accrue at the
Adjusted Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes of this
paragraph, the following terms shall have the following meanings:
(i) "Adjusted Libor Rate" for each Interest Period shall mean
a rate that is equal to the applicable Libor Rate plus 2.0% per annum.
The Libor Rate for each Interest Period shall mean the offered rate
for deposits in United States dollars in the London Interbank market
for a three month period which appears on the Libor Rate Reference
Page (as defined herein) as of 11:00 a.m. (London time) on the day
that is two London Banking Days (as defined herein) preceding the
first Banking Business Day (as defined herein) of the Interest Period.
If at least two such offered rates appear on the Libor Rate Reference
Page, the rate will be the arithmetic mean of such offered rates. The
Bank may, in its discretion, use rate quotations for daily periods in
lieu of quotations for substantially equivalent monthly periods.
(ii) "Banking Business Day" shall mean each day other than a
Saturday, a Sunday or any holiday on which commercial banks in
Jacksonville, Florida are closed for business.
(iii) "Interest Period" shall mean each period commencing on
each Interest Rate Adjustment Date and continuing through the day
immediately preceding the next Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean the first day
of January, 1999, and the first day of each April, July, October and
January thereafter.
(v) "Libor Rate Reference Page" shall mean any of the
following reference pages or sources (as selected from time to time by
the Bank in its discretion): (aa) the Reuters Screen LIBO Page; (bb)
the Dow Xxxxx Telerate Page 3750; or (cc) such other index or source
as the Bank may in its sole discretion select showing rates offered
for United States dollar deposits in the London Interbank market.
(vi) "London Banking Day" shall mean each day other than a
Saturday, a Sunday or any holiday on which commercial banks in London,
England are closed for business.
(b) Interest shall be calculated on the basis of a 360 day year
(based upon the actual number of days elapsed).
(c) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any limitations
imposed on the payment of interest by applicable usury laws. If any interest is
received or charged by any holder hereof in excess of that amount, the Borrower
shall be entitled to an immediate refund of the excess.
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(d) Upon the occurrence of an Event of Default hereunder, interest
shall accrue at the Default Rate hereinafter set forth notwithstanding the
provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
-----------
whole or in part at any time without penalty. Prepayments of principal made
after the expiration of the Revolving Period shall be applied in the inverse
order of principal payments required hereunder.
5. Application of Payments. All payments hereunder shall be applied
------------------------
first to the Bank's costs and expenses payable under the Loan Agreement or
hereunder, then to- fees authorized hereunder or under the Loan Agreement, then
to interest and then to principal.
6. Default. Any Event of Default under the Loan Agreement shall be
--------
considered an "Event of Default" hereunder. If any Default (as defined in the
Loan Agreement) shall occur, any obligation of the Bank to make advances
hereunder shall be terminated without notice to the Borrower. In addition, if
any Event of Default shall occur, the outstanding principal of this Note, all
accrued and unpaid interest hereunder and all other amounts payable under this
Note shall be and become, in the manner and as provided in the Loan Agreement,
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Upon the occurrence of any Event of Default, the outstanding principal of this
Note, and any accrued and unpaid interest, shall bear interest at a rate of
either four percent (40/o) per annum above the Prime Rate after default until
paid or, if such rate is usurious under the laws of Florida, then at the
highest legal rate permissible thereunder (the "Default Rate"). For purposes
hereof, the "Prime Rate" shall mean the rate of interest announced from time to
time by the Bank (or any successor thereto) as its prime rate. The Default Rate
shall change on each day that the Prime Rate changes.
7. Expenses. The Borrower agrees to pay the Bank all costs incurred by
---------
it in connection with the collection of this Note. Such costs include, without
limitation, reasonable fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. The
Borrower further agrees to indemnify and hold the Bank harmless against
liability for the payment of state documentary stamp taxes, intangible taxes or
other taxes (including interest and penalties, if any), excluding income or
service taxes of the Bank, which may be determined to be payable with respect
to this transaction.
8. Late Charge. A late charge of five percent (5.0%) of any payment
------------
required hereunder shall be imposed on each and every payment not received by
the Bank within ten (10) days after it is due. However, the late charge shall
not in any event exceed $250 with respect to any delinquent installment. The
late charge is not a penalty, but liquidated damages to defray administrative
and related expenses due to such late payment. The late charge shall be
3
immediately due and payable and shall be paid by the Borrower to the Bank
without notice or demand. This provision for a late charge is not and shall not
be deemed a grace period, and the Bank has no obligation to accept a late
payment. Further, the acceptance of a late payment shall not constitute a
waiver of any default then existing or thereafter arising under this Note.
9. Setoffs. The Borrower hereby grants to the Bank a continuing first
--------
lien security interest in any and all money, general or specific deposits, or
property of the Borrower now or hereafter in the possession of the Bank. The
Borrower authorizes and empowers the Bank, in its sole discretion, at any time
after the occurrence of a default hereunder to appropriate and, in such order
as the Bank may elect, apply any such money, deposits or property to the
payment hereof or to the payment of any and all indebtedness, liabilities and
obligations of the Borrower to the Bank or any of the Bank's affiliates,
whether now existing or hereafter created or arising or now owned or howsoever
after acquired by the Bank or any of the Bank's affiliates (whether such
indebtedness, liabilities and obligations are or will be joint or several,
direct or indirect, absolute or contingent, liquidated or unliquidated, matured
or unmatured, including, but not limited to, any letter of credit issued by the
Bank for the account of the Borrower).
10. Miscellaneous. The Borrower and all sureties, endorsers and
--------------
guarantors of this Note shall make all payments hereunder in lawful money of
the United States at the Bank's address set forth herein or at such other place
as the Bank may designate in writing. The remedies of the Bank as provided
herein shall be cumulative and concurrent, and may be pursued singly,
successively or together, at the sole discretion of the Bank and may be
exercised as often as occasion therefor shall arise. No act of omission or
commission of the Bank, including specifically any failure to exercise any
right, remedy or recourse, shall be effective, unless set forth in a written
document executed by the Bank, and then only to the extent specifically recited
therein. A waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of any subsequent right,
remedy or recourse as to any subsequent event. This Note shall be construed and
enforced in accordance with Florida law and shall be binding on the successors
and assigns of the parties hereto. The term "Bank" as used herein shall mean
NationsBank, N.A. and its successors and permitted assignees under the Loan
Agreement. The Bank may, at its option, round any or all fractional interest
rates under paragraph 3 upwards to the next higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand, presentment
for payment, notice of nonpayment or dishonor, protest, notice of protest and
all other notice, filing of suit and diligence in collecting this Note, or in
the Bank's enforcing any of its rights under any guaranties securing the
repayment hereof; (ii) agrees to any substitution, addition or release of or
any party or person primarily or secondarily liable hereon; (iii) agrees that
the Bank shall not be required first to institute any suit, or to exhaust its
remedies against the Borrower or any other person or party to become liable
hereunder, or against any collateral in order to enforce payment of this Note;
and (iv) agrees that, notwithstanding the occurrence of any of the foregoing
(except with the express written release by the Bank of the Borrower), the
Borrower shall be and remain directly and primarily, liable for all sums due
under this Note.
4
AMERICAN TECHNICAL CERAMICS CORP.
BY: /s/ Xxxxxx Xxxxxxx
---------------------------
Its: President
---------------------------
(CORPORATE SEAL)
STATE OF GEORGIA
COUNTY OF CAMDEN
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of November, 1998,by Xxxxxx Xxxxxxx the President of
-------------- ---------
American Technical Ceramics Corp., on behalf of the corporation, in Camden
County Georgia.
/s/ Xxxxxx Xxxxxxx
------------------
Notary Public, State and County Aforesaid
Print Name: V. XXXXXX XXXXXXXX
My commission expires: Notary Public, Camden County, Georgia
Jan. 16, 2000
(NOTARIAL SEAL)
5
SUB-LINE PROMISSORY NOTE
------------------------
$3,500,000.00
November 25, 1998
Camden County, Georgia
FOR VALUE RECEIVED, the undersigned, American Technical Ceramics Corp.
(the "Borrower"), hereby promises to pay to the order of NationsBank, N.A. (the
"Bank"), successor by merger to Xxxxxxx Bank, N.A., whose address is 00 X.
Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, the principal sum of Three Million
Five Hundred Thousand and No/100 Dollars ($3,500,000.00), together with
interest on the outstanding principal balance hereof from the date of
disbursement until payment in full at the rate provided herein. This Note shall
be governed by the following provisions:
1 . Loan Agreement. The Borrower and the Bank have executed an Amended
---------------
and Restated Loan Agreement (as amended or restated from time to time, the
"Loan Agreement") of even date herewith. The loan evidenced by this Note shall
be a revolving loan, and the Borrower may borrow, repay and reborrow principal
amounts hereunder subject to the terms contained herein and in the Loan
Agreement. Notwithstanding the foregoing: (a) the outstanding principal balance
hereof shall not exceed $3,500,000 at any one time (or such lesser amount as
may be set forth in the Loan Agreement); and (b) the Borrower shall not in any
event be entitled to obtain further advances hereunder on or after October 1,
2000. This Note is the Sub-Line Note described in the Loan Agreement.
2. Payments.
---------
(a) The Borrower shall pay all accrued interest hereunder on
each January 1, April 1, July 1 and October 1 during the term hereof
commencing on January 1, 1999.
(b) The Borrower shall pay all outstanding principal
hereunder, together with all then accrued and unpaid interest
hereunder, on October 1, 2000.
3. Interest.
---------
(a) Interest shall initially accrue on the outstanding
principal balance of this Note at a rate of 7.25% per annum. The rate
of interest shall be adjusted on each Interest Rate Adjustment Date
(as defined herein) so that interest shall accrue at the Adjusted
Libor Rate (as defined herein) for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For purposes
of this paragraph, the following terms shall have the following
meanings:
(i) "Adjusted Libor Rate" for each Interest Period
shall mean a rate that is equal to the applicable Libor Rate
plus 2.0% per annum. The Libor Rate for each Interest Period
shall mean the offered rate for deposits in United States
dollars in the London Interbank market for a three month
period which appears on the Libor Rate Reference Page (as
defined herein) as of 11:00 a.m. (London time) on the day
that is two London Banking Days (as defined herein) preceding
the first Banking
Business Day (as defined herein) of the Interest Period. If
at least two such offered rates appear on the Libor Rate
Reference Page, the rate will be the arithmetic mean of
such offered rates. The Bank may, in its discretion, use
rate quotations for daily periods in lieu of quotations for
substantially equivalent monthly periods.
(ii) "Banking Business Day" shall mean each day
other than a Saturday, a Sunday or any holiday on which
commercial banks in Jacksonville, Florida are closed for
business.
(iii) "Interest Period" shall mean each period
commencing on each Interest Rate Adjustment Date and
continuing through the day immediately preceding the next
Interest Rate Adjustment Date.
(iv) "Interest Rate Adjustment Date" shall mean
the first day of January, 1999, and the first day of each
April, July, October and January thereafter.
(v) "Libor Rate Reference Page" shall mean any of
the following reference pages or sources (as selected from
time to time by the Bank in its discretion): (aa) the
Reuters Screen LIBO Page; (bb) the Dow Xxxxx Telerate Page
3750; or (cc) such other index or source as the Bank may in
its sole discretion select showing rates offered for United
States dollar deposits in the London Interbank market.
(vi) "London Banking Day" shall mean each day
other than a Saturday, a Sunday or any holiday on which
commercial banks in London, England are closed for
business.
(b) Interest shall be calculated on the basis of a 360 day
year (based upon the actual number of days elapsed).
(c) The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable usury
laws. If any interest is received or charged by any holder hereof in
excess of that amount, the Borrower shall be entitled to an immediate
refund of the excess.
(d) Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth
notwithstanding the provisions of this section.
4. Prepayment. The Borrower shall be entitled to prepay this Note in
-----------
whole or in part at any time without penalty.
2
5. Application of Payments. All payments hereunder shall be applied
------------------------
first to the Bank's costs and expenses payable under the Loan Agreement or
hereunder, then to fees authorized hereunder or under the Loan Agreement, then
to interest and then to principal.
6. Default. Any Event of Default under the Loan Agreement shall be
--------
considered an "Event of Default" hereunder. If any Default (as defined in the
Loan Agreement) shall occur, any obligation of the Bank to make advances
hereunder shall be terminated without notice to the Borrower. In addition, if
any Event of Default shall occur, the outstanding principal of this Note, all
accrued and unpaid interest hereunder and all other amounts payable under this
Note shall be and become, in the manner and as provided in the Loan Agreement,
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Upon the occurrence of any Event of Default, the outstanding principal of this
Note, and any accrued and unpaid interest, shall bear interest at a rate of
either four percent (4%) per annum above the Prime Rate after default until
paid or, if such rate is usurious under the laws of Florida, then at the
highest legal rate permissible thereunder (the "Default Rate"). For purposes
hereof, the "Prime Rate" shall mean the rate of interest announced from time to
time by the Bank (or any successor thereto) as its prime rate. The Default Rate
shall change on each day that the Prime Rate changes.
7. Expenses. The Borrower agrees to pay the Bank all costs incurred by
---------
it in connection with the collection of this Note. Such costs include, without
limitation, reasonable fees for the services of counsel and legal assistants
employed to collect this Note, whether or not suit be brought, and whether
incurred in connection with collection, trial, appeal or otherwise. The
Borrower further agrees to indemnify and hold the Bank harmless against
liability for the payment of state documentary stamp taxes, intangible taxes or
other taxes (including interest and penalties, if any), excluding income or
service taxes of the Bank, which may be determined to be payable with respect
to this transaction.
8. Late Charge. A late charge of five percent (5.0%) of any payment
------------
required hereunder shall be imposed on each and every payment not received by
the Bank within ten (10) days after it is due. However, the late charge shall
not in any event exceed $250 with respect to any delinquent installment. The
late charge is not a penalty, but liquidated damages to defray administrative
and related expenses due to such late payment. The late charge shall be
immediately due and payable and shall be paid by the Borrower to the Bank
without notice or demand. This provision for a late charge is not and shall not
be deemed a grace period, and the Bank has no obligation to accept a late
payment. Further, the acceptance of a late payment shall not constitute a
waiver of any default then existing or thereafter arising under this Note.
9. Setoffs. The Borrower hereby grants to the Bank a continuing first
--------
lien security interest in any and all money, general or specific deposits, or
property of the Borrower now or hereafter in the possession of the Bank. The
Borrower authorizes and empowers the Bank, in its sole discretion, at any time
after the occurrence of a default hereunder to appropriate and, in such order
as the Bank may elect, apply any such money, deposits or property to the
payment hereof or to the
3
payment of any and all indebtedness, liabilities and obligations of the
Borrower to the Bank or any of the Bank's affiliates, whether now existing or
hereafter created or arising or now owned or howsoever after acquired by the
Bank or any of the Bank's affiliates (whether such indebtedness, liabilities
and obligations are or will be joint or several, direct or indirect, absolute
or contingent, liquidated or unliquidated, matured or unmatured, including, but
not limited to, any letter of credit issued by the Bank for the account of the
Borrower).
10. Miscellaneous. The Borrower and all sureties, endorsers and
--------------
guarantors of this Note shall make all payments hereunder in lawful money of
the United States at the Bank's address set forth herein or at such other place
as the Bank may designate in writing. The remedies of the Bank as provided
herein shall be cumulative and concurrent, and may be pursued singly,
successively or together, at the sole discretion of the Bank and may be
exercised as often as occasion therefor shall arise. No act of omission or
commission of the Bank, including specifically any failure to exercise any
right, remedy or recourse, shall be effective, unless set forth in a written
document executed by the Bank, and then only to the extent specifically recited
therein. A-waiver or release with reference to one event shall not be construed
as continuing, as a bar to, or as a waiver or release of any subsequent right,
remedy or recourse as to any subsequent event. This Note shall be construed and
enforced in accordance with Florida law and shall be binding on the successors
and assigns of the parties hereto. The term "Bank" as used herein shall mean
NationsBank, N.A. and its successors and permitted assignees under the Loan
Agreement. The Bank may, at its option, round any or all fractional interest
rates under paragraph 3 upwards to the next higher 1/100 of 1%.
The Borrower hereby: (i) waives demand, notice of demand, presentment
for payment, notice of nonpayment or dishonor, protest, notice of protest and
all other notice, filing of suit and diligence in collecting this Note, or in
the Bank's enforcing any of its rights under any guaranties securing the
repayment hereof, (ii) agrees to any substitution, addition or release of or
any party or person primarily or secondarily liable hereon; (iii) agrees that
the Bank shall not be required first to institute any suit, or to exhaust its
remedies against the Borrower or any other person or party to become liable
hereunder, or against any collateral in order to enforce payment of this Note;
and (iv) agrees that, notwithstanding the occurrence of any of the foregoing
(except with the express written release by the Bank of the Borrower), the
Borrower shall be and remain directly and primarily, liable for all sums due
under this Note.
AMERICAN TECHNICAL CERAMICS CORP.
BY: /s/ Xxxxxx Xxxxxxx
------------------
Its: President
---------
(CORPORATE SEAL)
0
XXXXX XX XXXXXXX
XXXXXX XX XXXXXX
The foregoing instrument was executed, acknowledged and delivered
before me this 25th day of November, 1998, by Xxxxxx Xxxxxxx, the President of
--------------- ---------
American Technical Ceramics Corp., on behalf of the corporation, in Camden
County Georgia.
/s/ V.T. Fountain
----------------------------------------
Notary Public, State and County Aforesaid
Print Name:
My commission expires:
(NOTARIAL SEAL)
5
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AGREEMENT is made this 25th day of November, 1998, between
AMERICAN TECHNICAL CERAMICS CORP. (the "Borrower"), a Delaware corporation, and
NATIONSBANK, N.A. (the "Bank"), successor by merger to Xxxxxxx Bank, N.A.
Recitals
--------
The Borrower wishes to obtain credit from the Bank on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
ARTICLE I
BORROWING AND PAYMENT
---------------------
1.01 Revolving Credit Advances.
--------------------------
(a) The Bank hereby establishes in favor of the Borrower a
revolving line of credit. The Borrower shall be entitled to borrow,
repay and reborrow funds from the Bank in accordance with the terms
hereof so long as the total principal amount owed to the Bank under
the revolving line of credit does not exceed $2,000,000 (or such
lesser amount as is set forth herein) from the date hereof through the
end of the Revolving Period (as defined below). The Bank's obligation
to make advances under this revolving line of credit shall terminate
on the last day of the Revolving Period or such earlier date as is set
forth herein. This indebtedness shall be evidenced by a Renewal
Promissory Note (as amended, extended or renewed from time to time,
the "Revolving Note") of even date herewith executed by the Borrower
in favor of the Bank in the original principal amount of $2,000,000.
The Revolving Note shall bear interest at the rate set forth therein
and shall be payable as set forth therein.
(b) The Bank shall make each advance under the Revolving Note
upon notice from the Borrower to the Bank specifying the date and
amount of such advance. The Bank will make each requested advance
available to the Borrower not later than the close of business on the
business day following the day of the request by crediting the
Borrower's account maintained with the Bank in the amount of the
advance if as of such time: (i) the Bank's obligation to make advances
hereunder has not terminated or expired; (ii) a Default or Event of
Default (as hereinafter defined) has not occurred; and (iii) all
conditions to the advance set forth herein or in any other Loan
Documents (as hereinafter defined) have been satisfied.
(c) For purposes hereof, the "Revolving Period" shall mean a
period commencing on the date hereof and ending on June 30, 1999.
Notwithstanding the foregoing, the Revolving Period shall be extended
on June 30, 1999, and each June 30 thereafter (each such date,
including June 30, 1999, an "Extension Date") for a one-year period
foregoing, the Revolving Period shall be extended on June 30, 1999,
and each June 30 thereafter (each such date, including June 30, 1999,
an "Extension Date") for a one-year period commencing on each such
Extension Date and continuing until the next June 30 thereafter unless
the Bank in its sole discretion elects not to extend the Revolving
Period in accordance with the terms hereof. If the Bank elects not to
extend the Revolving Period, it shall provide written notice of such
election to the Borrower at least 45 days prior to the next scheduled
Extension Date. If the Bank provides such notice, then: (i) the
Revolving Period shall terminate on the next scheduled Extension Date;
and (ii) the Revolving Period shall not be further extended beyond
such Extension Date. The Bank's election shall be final and binding,
and the Bank may elect not to extend the Revolving Period whether or
not a Default or Event of Default (as defined herein) has occurred.
The Bank may condition any extension of the Revolving Period on such
terms as it may deem appropriate.
(d) The Borrower shall pay the Bank a facility fee on the
daily average unused amount of the Revolving Note during the Revolving
Period at the rate of one-quarter percent (1/4%) per annum (calculated
on the basis of a 360 day year for the actual number of days elapsed).
The Borrower shall pay the fee quarterly in arrears within 15 days
after each October 1, January 1, April 1 and July 1, commencing
January 1, 1999, and on the termination or expiration of the Revolving
Period.
1.02 Equipment Line of Credit.
-------------------------
(a) The Bank hereby establishes in favor of the Borrower a
line of credit (the "Equipment Line of Credit") pursuant to which the
Borrower may obtain advances through September 30, 2000, on a
revolving basis in accordance with the terms hereof to finance
equipment (collectively, the "Equipment") purchased by the Borrower
for use by it in the ordinary course of business. The Borrower may
borrow, repay and reborrow:funds under the Equipment Line of Credit
in accordance with the terms hereof for so long as the aggregate
outstanding principal amount under the Equipment Line of Credit does
not exceed $3,500,000.00 at any time. The Equipment Line of Credit
shall be evidenced by the following promissory notes: (i) promissory
note executed by the Borrower in favor of the Bank in the principal
amount of $3,500,000.00 (as amended, extended or renewed from time to
time, the "Sub-Line Note"); and (ii) such other fully amortizing
notes (as amended, extended or renewed from time to time, the "Term
Notes") as the balance of the Sub-Line Note may be rolled into from
time to time in accordance with the terms hereof. The Equipment Line
of Credit (including, without limitation, all amounts outstanding
under the Sub-Line Note and the Term Notes) shall be secured by a
first priority security interest in, and lien upon, all Equipment
financed with advances thereunder pursuant to a security agreement
(as amended or restated from time to time, the "Security Agreement")
substantially in the form attached hereto as Exhibit "A".
2
(b) For so long as no Default or Event of Default has
occurred hereunder, the Borrower may obtain advances (each, an
"Advance") from the Bank under the Sub-Line Note so long as the
outstanding principal balance thereunder does not at any time exceed
$3,500,000.00 (or such lesser amount as is set forth herein). In no
event shall the amount of any Advance under the Sub-Line Note exceed
the 100% of the Borrower's cost of the Equipment to be financed with
such Advance. The Borrower shall deliver a request (each, a "Request")
for each Advance to the Bank together with such documents as the Bank
may from time to time request, including, without limitation, each of
the following:
(i) The invoice or other contract relating to the
Borrower's purchase of the Equipment to be financed
therewith;
(ii) A certificate of title for any motor vehicle to
be financed with the Advance (or, at the Bank's option, such
other evidence of title as the Bank may request);
(iii) Evidence satisfactory to the Bank that the
Borrower owns good and marketable title to the Equipment to
be financed free and clear of all liens, claims and
encumbrances;
(iv) If requested by the Bank, UCC financing
statements, assignments of title and such other security
documents as the Bank may require in form satisfactory to
the Bank for all appropriate jurisdictions showing the Bank
as secured party and the Borrower as debtor and encumbering:
(aa) the Equipment to be financed with the Advance; and (bb)
all proceeds thereof; and
(v) Such other instruments or documents as the Bank
shall reasonably require.
(c) Not later than three business days after the Bank's
receipt of the items described in the foregoing subparagraph (b), the
Bank will make the requested Advance available to the Borrower by
crediting an account of the Borrower maintained with the Bank in the
amount of the Advance if as of such time: (i) the Bank's obligation to
make Advances hereunder has not terminated or expired; (ii) a Default
or Event of Default (as hereinafter defined) has not occurred; and
(iii) all conditions to the Advance set forth herein or in any other
Loan Documents (as hereinafter defined) have been satisfied.
(d) For so long as no Default or Event of Default has
occurred, the outstanding principal balance of the Sub-Line Note shall
be rolled over into a fully amortizing Term Note every six months or,
if sooner, when the outstanding principal balance of the Sub-Line Note
reaches $3,500,000.00. If any Default or Event of Default has occurred
under this Agreement, the Sub-Line Note shall not be rolled into a
Term Note but shall instead be fully due and payable in accordance
with the terms hereof. At the time that any amount is rolled
3
from the Sub-Line Note into a Term Note, all accrued and unpaid
interest under the Sub-Line Note shall be paid and brought current. In
no event shall the total combined principal amount outstanding under
the Sub-Line Note and the Term Notes, or otherwise owed under the
Equipment Line of Credit, exceed $3,500,000.00.
(e) The Term Notes shall be subject to the following terms
and conditions:
(i) Each Term Note shall provide for: (aa) payment
of all accrued interest on a quarterly basis commencing three
months from the date of the Term Note; and (bb) payment of
principal in quarterly installments commencing three months
from the date of the Term Note. Each such principal
installment shall equal an amount sufficient to fully
amortize the original principal amount of the Term Note in
equal quarterly installments over the term of the Term Note.
The Borrower shall pay the remaining outstanding principal
amount of each Term Note, if any, at the expiration of the
ten-n thereof. The term of each Term Note shall be determined
by mutual consent of the parties prior to the execution of
the Term Note (but in no event, however, shall the term of
any Term Note be less than four years or more than seven
years).
(ii) Interest shall initially accrue on the
outstanding principal balance of each Term Note at a rate
that is equal to the Adjusted Libor Rate (as defined herein)
in effect as of the date of the Term Note. The rate of
interest shall be adjusted on each Interest Rate Adjustment
Date (as defined herein) so that interest shall accrue at the
Adjusted Libor Rate for the Interest Period (as defined
herein) commencing on such Interest Rate Adjustment Date. For
purposes of this paragraph, the following terms shall have
the following meanings:
(aa) "Adjusted Libor Rate" for each
Interest Period shall mean a rate that is equal to
the applicable Libor Rate plus 2.0% per annum. The
Libor Rate for each Interest Period shall mean the
offered rate for deposits in United States dollars
in the London Interbank market for a three month
period which appears on the Libor Rate Reference
Page (as defined herein) as of 11:00 a.m. (London
time) on the day that is two London Banking Days (as
defined herein) preceding the first Banking Business
Day (as defined herein) of the Interest Period. If
at least two such offered rates appear on the Libor
Rate Reference Page, the rate will be the arithmetic
mean of such offered rates. The Bank may, in its
discretion, use rate quotations for a 90 day period
in lieu of quotations for a substantially equivalent
three month period.
(bb) "Banking Business Day" shall mean each
day other than a Saturday, a Sunday or any holiday
on which commercial banks in Jacksonville, Florida
are closed for business.
4
(cc) "Interest Period" shall mean: (1) an
initial period commencing on the date of each Term
Note and continuing through the day immediately
preceding the first Interest Rate Adjustment Date
during the term of the Term Note; and (2) each
period thereafter commencing on each Interest Rate
Adjustment Date and continuing through the day
immediately preceding the next Interest Rate
Adjustment Date.
(dd) "Interest Rate Adjustment Date" shall
mean the first day of each April, July, October and
January during the term of each Term Note.
(ee) "Libor Rate Reference Page" shall mean
any of the following reference pages or sources
(as selected from time to time by the Bank in its
discretion): (1) the Reuters Screen LIBO Page; (2)
the Dow Xxxxx Telerate Page 3750; or (3) if the
Bank is unable to obtain rates pursuant to the
foregoing clauses (1) or (2), such other index or
source as the Bank may reasonably select showing
rates offered for United States dollar deposits in
the London Interbank market.
(ff) "London Banking Day" shall mean each
day other than a Saturday, a Sunday or any holiday
on which commercial banks in London, England are
closed for business.
(iii) Interest shall be calculated on the basis of a
360 day year (based upon the actual number of days elapsed).
The total liability of the Borrower and any endorsers or
guarantors for payment of interest shall not exceed any
limitations imposed on the payment of interest by applicable
usury laws. If any interest is received or charged by any
holder of any Term Note in excess of that amount, the
Borrower shall be entitled to an immediate refund of the
excess. Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate set forth in each
Term Note notwithstanding the provisions of this section.
(f) The Term Notes shall be in such form as the Bank may
reasonably require.
1.03 Other Documents. The Revolving Note, the Sub-Line Note and each
----------------
Term Note are collectively referred to herein as the "Notes". This Agreement,
the Notes, the Security Agreement and all documents related to the foregoing
documents are referred to herein as the "Loan Documents."
5
ARTICLE II
CONDITIONS
----------
2.01 Conditions to Advances. The obligation of the Bank to make
-----------------------
advances hereunder or under the Notes on or after the date hereof is subject,
without limitation, to satisfaction of the following conditions precedent:
(a) The Borrower's representations and warranties set forth
in this Agreement and in the other Loan Documents shall be true and
correct in all material respects on and as of the date hereof and on
and as of the date of each such advance.
(b) On the date hereof and on the date of each such advance,
the Borrower shall be in compliance in all material respects with all
the terms and provisions set forth in this Agreement on its part to be
observed or performed, and no Default or Event of Default shall have
occurred.
(c) The Bank shall have received on or before the date hereof
and the date of each such advance in form reasonably satisfactory to
it: (i) the duly executed Loan Documents that are applicable to such
advance; (ii) such evidence of corporate authorization from the
Borrower as the Bank may require; (iii) good standing certificates
indicating that the Borrower is in good standing in Florida, Delaware
and in any other state where the Borrower is required to qualify to do
business; and (iv) certified articles of incorporation and bylaws of
the Borrower.
2.02 Other Documents. The Bank shall have received on or before the
----------------
date hereof or the date of any advance hereunder such other documents or
items as the Bank may reasonably request.
ARTICLE III
AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees that from the date hereof as long as
there is any amount outstanding under any Note:
3.01 Financial Statements of the Borrower. The Borrower will deliver
-------------------------------------
to the Bank the following:
(a) Within 45 days after the end of each fiscal quarter of
the Borrower's fiscal years, the Borrower's financial statements as of
the end of and for such period in reasonable detail, setting forth in
comparative form the corresponding figures for that date and period
and for the corresponding date and accounting period in the preceding
fiscal year, certified by the Borrower's principal accounting officer.
6
(b) Within 120 days after the end of each fiscal year of the
Borrower, the Borrower's audited financial statements as of the end of
and for such year of the Borrower in reasonable detail, setting forth
in comparative form the corresponding figures for that date and period
and for the corresponding date and period in the preceding fiscal
year, certified by independent certified public accountants of
recognized standing selected by the Borrower.
(c) Promptly upon receipt thereof, copies of all other
detailed reports (if any) (including, without limitation, any
management letters) submitted to the Borrower by independent certified
public accountants in connection with each annual or interim audit or
review of the books of the Borrower by such accountants.
(d) With each delivery required under subparagraphs (a) and
(b) above, a compliance certificate in form approved by the Bank
executed by an executive officer of the Borrower demonstrating
compliance with the Loan Documents.
(e) Promptly upon the occurrence of any Default or Event of
Default, a notice thereof, specifying the nature thereof, and promptly
upon the occurrence of any event or discovery of any fact which might
affect or indicate a material adverse change in the Borrower's
financial condition, notice thereof specifying the nature thereof.
(f) Promptly upon becoming available, a copy of all:
(i) reports, registration statements and other materials filed by the
Borrower with the Securities and Exchange Commission; and
(ii) notices, proxy statements and other materials mailed or
distributed to the Borrower's shareholders.
(g) Such other material information as the Bank may from time
to time reasonably request.
3.02 Financial Information. All financial information submitted by the
----------------------
Borrower hereunder shall be prepared in accordance with generally accepted
accounting principles on a basis consistently applied. The Borrower will
maintain books of account in accordance with generally accepted accounting
principles as in effect from time to time. The books of account shall disclose
the information necessary for determining whether the Borrower has satisfied
any provisions or requirements of this Agreement.
3.03 Taxes and Other Charges. The Borrower will pay and discharge or
------------------------
cause to be paid and discharged all taxes, charges, liabilities or claims of
any type at any time assessed against or incurred by the Borrower, or which
could become a lien against the Borrower or any of its properties. Nothing in
this subsection shall require the payment of any such sum if the Borrower
promptly notifies the Bank and by appropriate proceedings contests the same in
good faith and so long as the Borrower, if so requested by the Bank, creates a
funded reserve equal to the amount so claimed or assessed.
7
3.04 Insurance. The Borrower will maintain adequate insurance with
----------
responsible insurers with coverage normally obtained by businesses similar to
that of the Borrower but covering at least: (i) damage to physical property
from fire and other hazards for the full insurable value of such property;
(ii) liability on account of injury to persons; and (iii) insurance against
theft, forgery or embezzlement or other illegal acts of officers or employees
in reasonable amounts. If requested by the Bank, the Borrower will provide the
Bank, within ninety (90) days after the end of each of its fiscal years, a
certificate of the Borrower specifying the types and amounts of insurance in
force and the insurers of each risk covered by such insurance.
3.05 Maintenance of Corporate Existence. The Borrower will do or cause
-----------------------------------
to be done all things necessary to preserve and keep in full force and effect
its existence, franchises, rights and privileges as a corporation under the
laws of its state of incorporation and any other jurisdiction where the failure
to so qualify would have a material adverse affect on the Borrower's business.
The Borrower will do or cause to be done all things necessary to preserve and
keep in full force and effect its right to own property and to operate its
business as it may-.from time to time be conducted.
3.06 Use of Proceeds. The funds borrowed under the Notes shall be used
----------------
for any bona fide corporate purpose not inconsistent with this Agreement. No
such funds shall be loaned or distributed to the Borrower's shareholders or
other affiliates without the Bank's prior written consent.
3.07 Executive Officers. The Borrower will use its reasonable efforts
-------------------
to cause its current chief executive officer to remain engaged in the active
management of the Borrower and to perform duties substantially similar to those
presently performed by such officer.
3.08 Notice of Litigation. Promptly after the commencement thereof,
---------------------
the Borrower shall furnish the Bank notice of all actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
which are required to be disclosed by the Borrower in a report filed with the
Securities and Exchange Commission.
3.09 Notice of ERISA Requirements. As soon as possible and in any
-----------------------------
event within thirty (30) days after the Borrower knows or has reason to know
that any reportable event, accumulated funding deficiency, prohibited
transaction, disqualification or termination (as such terms are defined in the
Employee Retirement Income Security Act of 1974, as amended) with respect to
any Plan has occurred, the Borrower shall furnish the Bank with the statement
of the principal accounting officer of the Borrower setting forth details as to
such event and the action which the Borrower proposes to take with respect
thereto, together with a copy of the notice of such event to the Pension
Benefit Guaranty Corporation. For purposes of this Agreement, "Plan" shall mean
any employee benefit plan maintained in whole or in part for employees of the
Borrower which is subject to the provisions of Title IV of the Employee
Retirement Income Security Act of 1974, as amended from time to time, or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code of 1986, as amended from time to time.
8
3.10 Other Events. The Borrower shall use its best efforts to promptly
-------------
notify the Bank of any material default under or material violation of any
material agreement, law or regulation to which the Borrower is a party or by
which it is bound. The Borrower shall promptly perform all of its material
obligations under any agreements to which it is a party.
3.11 Compliance with Laws. The Borrower shall comply in all material
---------------------
respects at all times with all statutes, regulations, orders and judgments to
which it is subject if the failure to so comply would have a material adverse
effect on the Borrower's business.
3.12 Access. The Bank (by any of its officers, employees or agents)
-------
shall have the right, at reasonable times and on reasonable advance notice, to
inspect, audit and make extracts from all of the records, files and books of
account of the Borrower. The Borrower shall instruct its banking and other
financial institutions to make available to the Bank such information and
records as the Bank may reasonably request.
3.13 Year 200 Compliance.
--------------------
(a) The Borrower will promptly notify the Bank if the
Borrower discovers or determines that any Material Computer
Application (as defined herein) will not be Year 2000 compliant on a
timely basis, except to the extent that such failure could not
reasonably be expected to have a material adverse effect on the
business, operations, creditworthiness or financial condition of the
Borrower (or any of its subsidiaries). For purposes hereof, the term
"Material Computer Application" shall mean any computer application
that processes date sensitive data that is material to the business or
operations of the Borrower (or any of its subsidiaries).
(b) The Borrower has: (i) initiated a review and assessment
of all aspects of the business and operations of the Borrower and its
Related Entities (as defined herein) that could be adversely affected
by the Year 2000 Problem (as defined herein); (ii) developed a plan
and time line for addressing the Year 2000 Problem on a timely basis;
and (iii) to date, implemented that plan in accordance with such time
line. The Borrower reasonably believes that all computer applications
that process date sensitive data that are material to the business and
operations of the Borrower or any Related Entity will on a timely
basis be able to perform properly date sensitive functions before, on
and after January 1, 2000, except to the extent that a failure to do
so could not reasonably be expected to have a material adverse effect
on the business, operations, creditworthiness or financial condition
of the Borrower or any related entity. For purposes hereof, the
following terms shall have the following meanings: (i) "Related
Entity" shall mean any subsidiary of the Borrower; and (ii) "Year 2000
Problem" shall mean the risk that any computer application used by the
Borrower or any Related Entity may not recognize or perform date
sensitive functions on or after January 1, 2000.
9
ARTICLE IV
NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees, while any portion of the principal
amount of any Note is outstanding, it will comply with the following covenants:
4.01 Obligations.
------------
(a) The Borrower and its consolidated subsidiaries are
not and will not become directly or indirectly obligated in any way
for any obligation for borrowed money except for Permitted
Obligations. For purposes hereof, Permitted Obligations shall mean:
(i) any and all obligations shown on the most recent
financial statements of the Borrower provided by the Borrower
to the Bank on or before the date hereof,
(ii) any and all obligations for borrowed money now
or hereafter owed by the Borrower or any of its consolidated
subsidiaries to the Bank;
(iii) customer deposits in the ordinary course of
business;
(iv) obligations for borrowed money to persons and
entities other than the Bank so long as the aggregate amount
of such obligations, on a combined basis, incurred by the
Borrower and its consolidated subsidiaries in any calendar
year does not exceed $100,000; and
(v) obligations for borrowed money subordinated to
the Indebtedness pursuant to subordination agreements
acceptable to the Bank.
(b) Neither the Borrower nor any of its consolidated
subsidiaries shall:
(i) guarantee or purchase any obligations of any other person or
entity (except, however, that the Borrower shall be entitled to
guarantee obligations of its consolidated subsidiaries); (ii) enter
into any credit support, financial maintenance, credit enhancement or
similar arrangement in favor of any person or entity; or (iii) enter
into any other transaction which is intended to assure performance of
the obligations of any other person or entity.
4.02 Sale of Substantial Assets, Change in Control. The
----------------------------------------------
Borrower will not merge into or with (other than a merger in which the Borrower
is the surviving entity), or sell all or a substantial part of its assets to,
any other person or entity. In addition, Xxxxxx Xxxxxxx shall at all times
maintain legal and beneficial ownership of not less than the Minimum Percentage
(as defined herein) of the outstanding voting stock of the Borrower. For
purposes hereof, the Minimum Percentage shall mean 51% from the date hereof
through December 31, 1999. The Minimum Percentage shall be reduced by: (a) 5%
on January 1, 2000; and (b) an additional 5% on the first day of each January
thereafter.
10
4.03 Nature of Business. The Borrower will not engage in any business
-------------------
if, as a result, the general nature of the business in which it would then be
engaged would be substantially changed from the general nature of the business
engaged in by it on the date of this Agreement.
4.04 Pension Plan Funding Deficiency. The Borrower shall not incur or
--------------------------------
suffer to exist any material accumulated funding deficiency within the meaning
of the Employee Retirement Income Security Act of 1974 or incur any material
liability to the Pension Benefit Guaranty Corporation (or any successor)
established thereunder in connection with any Plan
4.05 Transactions with Affiliates. The Borrower shall not directly or
-----------------------------
indirectly enter into any transaction with any affiliate of the Borrower unless
such transaction is upon fair and reasonable terms and provisions no less
favorable to the Borrower than it could have obtained in a comparable
arm's-length transaction with a person who is not an affiliate of the Borrower.
4.06 Financial Covenants. The Borrower shall comply at all times with
--------------------
the following financial covenants. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles in effect from time to time on a basis consistently
applied.
(a) The Borrower's Debt Service Coverage Ratio shall be the
ratio of. (i) the Borrower's consolidated earnings before interest,
capital lease obligations, income taxes and depreciation for the four
preceding fiscal quarters to (ii) the sum of all principal, interest
and capital lease obligations payable by the Borrower and its
consolidated subsidiaries during such fiscal quarters. The Debt
Service Coverage Ratio shall be computed quarterly, so long as the
indebtedness to the Bank under this Agreement is outstanding,
commencing January 1, 1999, and on each April 1, July 1, October 1 and
January 1 thereafter, and shall not be less than 1.25 to 1.0.
(b) The Borrower shall not allow its ratio of consolidated
Total Liabilities to consolidated Tangible Net Worth to exceed 0.60 to
1.00. The consolidated Tangible Net Worth of the Borrower shall not be
less than $15,000,000. For purposes hereof, "Tangible Net Worth" and
"Total Liabilities" shall have the following meanings:
(i) "Tangible Net Worth" shall mean the aggregate of the
following:
(aa) The gross book value as shown by the books of
the Borrower and its consolidated subsidiaries of all real
and personal property excluding: (1) any property located
outside the United States or its territorial possessions or
Great Britain; (2) all intangible personal property
including, without limitation, licenses, patents, patent
applications, copyrights, trademarks, trade names, goodwill,
going concern value, experimental or organizational expense,
treasury stock and unamortized discount; and (3) all
investments in, loans to or amounts due from any shareholder,
officer, director, employee or other affiliate;
11
less the sum of the following items (bb), (cc) and (dd);
(bb) all reserves for depletion, depreciation and
amortization of properties as shown by the books of the
Borrower and its consolidated subsidiaries and all other
proper reserves which in accordance with generally accepted
accounting principles should be set aside in connection with
the business of the Borrower and its consolidated
subsidiaries;
(cc) all obligations which under generally accepted
accounting principles are shown or should be shown on the
balance sheet of the Borrower and its consolidated
subsidiaries as liabilities; and
(dd) all increases in book value of any real estate
or tangible personal property of the Borrower and its
consolidated subsidiaries attributable to a reappraisal or
other write-up of assets.
(ii) "Total Liabilities" shall mean: (aa) any indebtedness or
liability for borrowed money and any other indebtedness or liability
evidenced by notes, debentures, bonds or similar obligations of the
Borrower and its consolidated subsidiaries; and (bb) all other
obligations which under generally accepted accounting principles are
shown or should be shown on the balance sheet of the Borrower and its
consolidated subsidiaries as liabilities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants, and so long as this Agreement is
in effect or any part of the indebtedness to the Bank under this Agreement
remains unpaid, shall continue to represent and warrant at all times, that:
5.01 Corporate Status. The Borrower is a corporation duly incorporated
-----------------
and validly existing under and by virtue of its state of incorporation; is duly
licensed and qualified in all other states and jurisdictions wherein the
failure to so qualify would have a material adverse effect on the Borrower's
business; and holds in full force and effect all permits, licenses and
franchises necessary for it to carry out its operations in conformity with all
applicable laws and regulations (other than pen-nits, licenses and franchises
the failure of which to hold or maintain would not have a material adverse
effect on the Borrower's business).
5.02 Authorization, Conflicts and Validity. The execution and delivery
--------------------------------------
of this Agreement and each of the other Loan Documents to which the Borrower is
or will be a party and the performance by the Borrower of all of its
obligations thereunder: (a) have been duly authorized by all requisite
corporate action; (b) will not violate or be in conflict with (i) any provision
of applicable law (including, without limitation, any applicable usury or
similar law); (ii) any order, rule or regulation of any court or other
governmental authority binding upon the Borrower; (iii) any
12
provision of its certificate of incorporation or bylaws, including any
amendments thereto, or any resolution with continuing effect adopted by its
Board of Directors or shareholders; or (iv) any provision of any shareholders'
agreement or trust respecting securities of its issue or related rights;
(c) will not violate, be in conflict with, result in a breach of or constitute
a default (with or without the giving of notice or the passage of time or both)
of a material provision under any material instrument, indenture, agreement or
other obligation to which it is a party or by which it or any of its assets and
properties is or may be bound or subject; and (d) except as specifically
contemplated by this Agreement or any other Loan Documents, will not result in
the creation or imposition of any lien, charge or encumbrance of any nature
upon any of its assets and properties. The Loan Documents to which the Borrower
is or will be a party when executed and delivered will be legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms and provisions, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by equitable
principles.
5.03 Consents. No consent, approval or authorization of, or
---------
registration, declaration or filing with, any governmental authority or other
person (including, without limitation, the shareholders of the Borrower) is
required as a condition precedent, concurrent or subsequent to or in connection
with the due and valid execution, delivery and performance by the Borrower of
this Agreement or any other Loan Document to which it is or will be a party, or
the legality, validity, binding effect or enforceability of any of the
respective representations, warranties, covenants and other terms and
provisions thereof. Each franchise, license, certificate, authorization,
approval or consent from any governmental authority material to the present
conduct of the business and operations of the Borrower or required for the
acquisition, ownership, improvement, operation or maintenance by it of any
material portion of the assets and properties it now owns, operates or
maintains, has been obtained and validly granted, is in fall force and effect
and constitutes valid and sufficient authorization therefor.
5.04 Financial Statements. The Borrower has heretofore made available
---------------------
to the Bank financial statements as of and for its fiscal year ending June 30,
1998, and the nine-month period ending June 30, 1998. Those financial
statements fairly present the financial condition of the Borrower and the
results of its operations as of the dates thereof. Those financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except for the omission
of certain footnote disclosures relating to the financial statements for the
nine-month period ended June 30, 1998, and except for changes, if any, stated
in the related accountants' reports
5.05 Financial Condition. Since June 30, 1998, there has been no
--------------------
material adverse change in the assets or the financial condition of the
Borrower from that set forth or reflected in the financial statements as of
that date. The Borrower has complied in all material respects with all of its
material obligations. There are no actions, suits, investigations or
proceedings by any person or entity pending or threatened against the Borrower
or to which it is a party involving the possibility of any material judgment or
liability not fully covered by insurance or by adequate reserves set up on the
13
books of the Borrower. The Borrower has good, marketable title to all of its
assets reflected in the financial statements dated June 30, 1998, as being
owned by it, and such assets are free and clear of all liens, charges and
encumbrances except as shown on those financial statements. Since the date of
the financial statements already delivered to the Bank, no loss, damage,
destruction or taking of any of the physical properties of the Borrower which
are material to its business has occurred which has not been fully restored or
replaced, or which is not fully covered by insurance, and neither such property
nor business has been adversely affected in any substantial way as the result
of any accident, strike, lockout, combination of workmen, embargo, riot, war,
act of God or public enemy.
5.06 Corporate Restrictions. The Borrower is not a party to any
-----------------------
contract or subject to any charter or other corporate restriction which would
materially and adversely affect its property or business, or its ability to
perform its obligations under the Loan Documents.
5.07 Taxes. The Borrower has filed all federal and state tax returns
------
which are required to be filed, and has paid all taxes as shown on the returns
and on all assessments received by it to the extent that the taxes have become
due. Proper and accurate amounts have been withheld by the Borrower from its
employees for all periods in material compliance with the tax, social security
and unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
governmental agencies.
5.08 Default. There exists as of the date hereof no Default or Event
--------
of Default.
5.09 Other Representations. All warranties and representations of the
----------------------
Borrower contained in any of the other Loan Documents are true and accurate in
all material respects.
5.10 ERISA. No Plan has incurred any material accumulated funding
------
deficiency within the meaning of the Employee Retirement Income Security Act of
1974, and the Borrower has not incurred any material liability to the Pension
Benefit Guaranty Corporation (or any successor) in connection with any Plan.
5.11 Purpose of the Borrower. None of the proceeds of the loan by the
------------------------
Bank to the Borrower made hereunder will be used for the purpose of purchasing
or carrying any "margin security" within the meaning of Regulation U (12 CFR
Part 221) of the Board of Governors of the Federal Reserve System or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry a margin security or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of Regulation
U, as now in effect or as it may hereafter be amended. Neither the Borrower nor
any agent acting on its behalf has taken or will take any action which might
cause this Agreement or any Loan Document to violate Regulation U or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, in each case as in effect now or
as the same may hereafter be amended.
14
5.12 Payment of Loan Proceeds. The Bank is authorized to disburse all
-------------------------
proceeds of any loan to the Borrower hereunder directly to or upon the order of
the President of the Borrower without looking into the use of those proceeds.
The President of the Borrower as of the date hereof is Xxxxxx Xxxxxxx. The Bank
may rely on the fact that he continues to serve in that capacity until the Bank
receives written notice to the contrary.
5.13 Solvency. After giving effect to the full funding of the loan
---------
contemplated herein, the Borrower is solvent. "Solvent" shall mean, when used
with respect to any person or entity, that: (a) such person or entity does not
intend to incur, and does not believe and has no reason to believe that it will
incur, debts beyond its ability to pay as they become due; (b) the sum of such
person's or entity's assets is greater than all of such person's or entity's
liabilities at a fair valuation; (c) such person or entity has sufficient means
to enable it to pay its debts as they become due; and (d) such person or entity
does not have unreasonably small capital to carry on such person's or entity's
business as theretofore operated and all businesses in which such person or
entity is about to engage. "Fair valuation" is intended to mean that value
which can be obtained if the assets are sold within a reasonable time in
arm's-length transactions in an existing and not theoretical market.
ARTICLE VI
EVENTS OF DEFAULT
-----------------
6.01 Events of Default. Each of the following events shall constitute
------------------
an "Event of Default" hereunder:
(a) if the Borrower defaults in the payment of any principal,
interest or other amount under any Note when the same shall become
due, either by the terms thereof or otherwise as provided herein, and
such default continues for ten calendar days; or
(b) if there occurred an Event of Default under and as
defined in that certain Loan Agreement, dated as of September 27,
1994, between the Borrower and the Bank, as amended from time to time
(the "Term Loan Agreement"); or
(c) if the Borrower defaults: (i) in any payment of principal
of or interest on any other material obligation beyond any period of
grace provided with respect thereto, or (ii) in the performance or
observance of any other agreement, term, or condition contained in any
agreement under which any such obligation is created if the effect of
such default is to cause, or permit the holder or holders of such
obligation (or trustee on behalf of such holder or holders) to cause,
such obligation to become due prior to its stated maturity, except for
obligations disputed in good faith if the Bank is promptly notified
thereof and, if requested by the Bank, funded reserves are established
in amounts which in the Bank's opinion are sufficient to pay the total
amount in dispute; or
(d) if any statement, representation or warranty made by the
Borrower herein or in any writing now or hereafter furnished in
connection with or pursuant to the Loan
15
Documents or in connection with any audit shall be false in any
material respect; or if the Borrower omits or fails to disclose
immediately any substantial contingent or liquidated liabilities, or
any material adverse change in facts previously disclosed by any
statement, representation, certificate or warranty to the Bank; or
(e) if there occurs a breach of Section 4.01 hereof; or
(f) if the Borrower makes an assignment for the benefit of
creditors or is generally not paying its debts as they become due; or
(g) if any order, judgment or decree is entered under the
bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction adjudicating the Borrower bankrupt or insolvent; or
(h) if the Borrower petitions or applies to any tribunal for,
or consents to, the appointment of a trustee, receiver, custodian,
liquidator, or similar official, of the Borrower, or of any
substantial part of the assets of the Borrower, or commences a
voluntary case under the Bankruptcy Code of the United States or any
proceedings relating to the Borrower under the bankruptcy, insolvency,
or moratorium law of any other jurisdiction, whether now or hereafter
in effect; or
(i) if any such petition or application is filed, or any such
proceedings are commenced against the Borrower and if the Borrower by
any act indicates its approval thereof, consent thereto, or
acquiescence therein, or an order is entered in an involuntary case
under the Bankruptcy Code of the United States, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator, or similar official, or approving the petition in any
proceedings, and such order remains unstayed and in effect for more
than 60 days; or
(j) if any order is entered in any proceedings against the
Borrower decreeing the dissolution or split-up of the Borrower; or
(k) if the Borrower defaults in the performance or observance
of any other material agreement, covenant, term or condition contained
herein or in any other Loan Document and such default shall not have
been remedied within 30 days after written notice thereof is sent by
the Bank to the Borrower except, however, that an Event of Default
shall not be deemed to have occurred if the Borrower commences to cure
such default within such 30-day period and the Borrower completes such
cure within 60 days after such notice.
6.02 Default. A "Default" shall be deemed to have occurred hereunder
--------
if. (i) any event or condition occurs which would constitute an Event of
Default hereunder upon the satisfaction of
16
any requirement for notice or passage of time in connection with such event or
condition; or (ii) a "Default" occurs under and as defined in the Term Loan
Agreement.
6.03 Remedies. If any Default shall occur, any obligation of the Bank
---------
to make advances hereunder or under any Loan Document shall be terminated
without notice to the Borrower. In addition, if any Event of Default shall
occur, the Bank may by notice to the Borrower, effective upon dispatch, declare
the entire unpaid principal amount then outstanding under the Loan Documents,
all interest accrued and unpaid under the Loan Documents and all other
indebtedness of the Borrower to the Bank under this Agreement or any of the
other Loan Documents to be forthwith due and payable. Thereupon, the then
outstanding principal amount under the Loan Documents, all such accrued
interest and all such other indebtedness shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower, and the Bank may
immediately enforce payment of all such amounts and exercise any or all of the
rights and remedies of the Bank under this Agreement and other Loan Documents.
6.04 Termination of Rights to Advances, Automatic Acceleration.
----------------------------------------------------------
Notwithstanding anything herein to the contrary, (a) the Borrower's right, if
any, to obtain any additional advances under the Loan Documents shall
automatically terminate upon the initiation against the Borrower of any
proceeding under the Federal Bankruptcy Code, or upon the occurrence of any
Event of Default described in subparagraphs (f), (g), (h) or (i) of Section
6.01, and (b) all indebtedness of the Borrower to the Bank under this Agreement
or any of the Loan Documents shall automatically be and become immediately due
and payable upon the occurrence of any Event of Default described in
subparagraphs (f), (g) or (h) of Section 6.01.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Expenses. The Borrower agrees, whether or not the transactions
---------
hereby contemplated shall be consummated, to pay, and save the Bank harmless
against liability for the payment of expenses arising in connection with any
renewals or modifications relating hereto and any state documentary stamp taxes
or other taxes (including interest and penalties, if any) which may be
determined to be payable in respect to the execution and delivery of any Loan
Documents executed in connection with this Agreement or any such renewal or
modification. The Borrower acknowledges that it has participated with the Bank
in establishing the structure of this transaction and that it has independently
determined the amount of documentary stamp and other taxes due in connection
herewith. The Borrower has not relied upon representations of the Bank or its
counsel in calculating the amount of such taxes, and the Borrower shall be
liable for any additional taxes (including interest and penalties) which may be
due in connection with this transaction or any renewals hereof. If an Event of
Default shall occur, the Borrower shall also pay all of the Bank's costs of
collection including court costs and the reasonable fees of attorneys and legal
assistants (whether incurred in connection with trial or appellate
proceedings).
17
7.02 Survival of Representations and Warranties. All representations
-------------------------------------------
and warranties contained herein or made in writing by the Borrower in
connection herewith shall survive the execution and delivery of the Loan
Documents but shall expire upon full and indefeasible repayment of all
principal and interest under the Notes.
7.03 Successors and Assigns. All covenants and agreements in this
-----------------------
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. The Borrower shall not be entitled to
assign its rights hereunder. The Bank may not, without the Borrower's consent,
grant participations in the Loan Documents other than to affiliates of the Bank
(or successors in merger) regularly engaged in the business of making loans
similar to the loan made to the Borrower pursuant to the Loan Documents. The
Bank may disclose to any such participant such information concerning the
Borrower as the Bank deems appropriate.
7.04 Notices. All communications, notices or demands provided for
--------
hereunder or under any other Loan Document to which the Borrower is a party
shall be sent by first class mail, by courier, by hand, or by certified mail as
follows or to such other address with respect to any party as such party shall
notify the others in writing:
To the Bank: NationsBank, N.A.
00 X. Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Corporate Banking Group
To the Borrower: American Technical Ceramics Corp.
00 Xxxxxx Xxxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Vice President,
Administration
Except as otherwise specifically set forth herein, each such communication,
notice or demand shall be deemed given: (i) on the third business day after
deposited in the mail with proper postage affixed if sent by mail; and
(ii) when actually delivered to the appropriate address if sent by courier or
by hand.
7.05 Applicable Law, Etc. This Agreement shall be construed and
--------------------
enforced in accordance with the laws of the State of Florida. The descriptive
section headings herein have been inserted for convenience only and shall not
be deemed to limit or otherwise affect the construction of any provisions
hereof This Agreement may be executed simultaneously in several counterparts.
Each counterpart shall be deemed an original. All rights and remedies of the
Bank hereunder are cumulative and in addition to any rights and remedies which
the Bank may have under the laws of Florida. The Bank's exercise of any one
right or remedy against one party hereto will not deprive the Bank of any right
or remedy against that party or any other parties hereto. No right, power or
18
remedy conferred upon or reserved to the Bank under this Agreement or any other
of the Loan Documents is exclusive of any other right, power or remedy in any
of the Loan Documents, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power
and remedy given hereunder or under any other Loan Documents, or now or
hereafter existing at law, in equity or by statute. No delay or omission of the
Bank to exercise any right, power or remedy under any of the Loan Documents or
accruing upon any Event of Default shall exhaust or impair any such right,
power or remedy or shall be construed to waive any such Event of Default or to
constitute acquiescence therein. Every right, power and remedy given to the
Bank under any of the Loan Documents may be exercised from time to time and as
often as may be deemed expedient by the Bank. No waiver of any Default or Event
of Default hereunder shall extend to or affect any subsequent Default or Event
of Default or any other Default or Event of Default then existing, or impair
any rights, powers or remedies consequent thereon. No term of any Loan Document
may be changed, waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought. If
any portion of any Loan Document is declared void by any court as illegal or
against public policy, the remainder of the Loan Documents in question shall
continue in full effect. Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Note
(the "Lost Note") and of an indemnity agreement reasonably satisfactory to the
Borrower, the Borrower will make and deliver to the Bank a new Note of like
tenor, date and principal amount in lieu of the Lost Note.
7.06 Survival of Obligations Upon Termination of Financing
-----------------------------------------------------
Arrangement. Except as otherwise expressly provided for in the Loan Documents,
------------
no termination or cancellation (regardless of cause or procedure) of the
financing under this Agreement shall in any way affect or impair the
obligations, duties, and liabilities of the Borrower or the rights of the Bank
relating to any transaction or event occurring prior to such termination. This
Agreement supersedes and replaces any commitment letter relating to the loan
extended to the Borrower pursuant to the Loan Documents.
7.07 Amended and Restated Agreement. This Agreement amends and
-------------------------------
restates that certain Loan Agreement dated September 26, 1996, by and between
the Borrower and the Bank.
7.08 Arbitration. The parties agree to the following arbitration
------------
provisions:
(a) ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO, INCLUDING, BUT NOT LIMITED TO, THOSE ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY LOAN DOCUMENT OR OTHER INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, ANY APPLICABLE STATE LAW), THE
RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL
DISPUTES OF JAMS/ENDISPUTE, AND THE SPECIAL RULES SET FORTH IN
SUBPARAGRAPH (b) BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES
19
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN
ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING
AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT
APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(b) THE ARBITRATION SHALL BE CONDUCTED IN XXXXX COUNTY,
FLORIDA, AND ADMINISTERED BY JAMS/ENDISPUTE, WHO WILL APPOINT AN
ARBITRATOR. IF JAMS/ENDISPUTE IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL ADMINISTER THE ARBITRATION. ALL ARBITRATION HEARINGS
WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION. IN
ADDITION, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN
ADDITIONAL 60 DAYS.
(c) NOTHING IN THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION,
THE PROVISIONS OF SUBPARAGRAPHS (a) AND (b) ABOVE) SHALL BE DEEMED TO
(i) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITAT10N OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT; OR (ii) BE A WAIVER BY THE BANK OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (iii) LIMIT THE RIGHT OF THE BANK (A) TO
EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF AND
REPOSSESSION, OR (B) TO FORECLOSE OR EXERCISE ITS RIGHTS AGAINST OR
WITH RESPECT TO ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE
BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY,
EXERCISE SUCH REMEDIES OR OBTAIN SUCH PROVISIONAL OR ANCILLARY
REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT. AT BANKS OPTION, FORECLOSURE UNDER A MORTGAGE MAY BE
ACCOMPLISHED BY ANY OF THE FOLLOWING: (A)THE EXERCISE OF A POWER OF
SALE UNDER THE MORTGAGE, OR (B) BY JUDICIAL SALE UNDER THE MORTGAGE,
OR BY JUDICIAL FORECLOSURE. NEITHER THIS EXERCISE OF SELF HELP
REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
20
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
AMERICAN TECHNICAL CERAMICS CORP.
By: /s/ Xxxxxx Xxxxxxx
---------------------
Its: President
----------
NATIONSBANK, N.A.
By: V.T. Fountain
--------------
Its: Agent
------
21
TAX INDEMNITY AGREEMENT
This Agreement is made this 25th day of November, 1998, by and between
AMERICAN TECHNICAL CERAMICS CORP. (the "Borrower") and NATIONSBANK, N.A. (the
"Bank").
Recitals
--------
The Bank and the Borrower are executing an Amended and Restated Loan
Agreement (as amended or restated from time to time, the "Loan Agreement") of
even date herewith. The Borrower may, pursuant to the Loan Agreement, execute
and deliver the Notes (as defined in the Loan Agreement). The Loan Agreement
and the Notes, together with all other Loan Documents (as defined in the Loan
Agreement) are collectively referred to herein as the "Credit Documents". The
Borrower has indicated that the Credit Documents are exempt from Florida
documentary stamp taxes (collectively, the "Taxes"). The Borrower is executing
this Agreement to induce the Bank to accept the Credit Documents without
payment of such taxes.
NOW THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. The Borrower assumes full liability for payment of all Taxes
(including interest and penalties, if any) now or hereafter due with respect to
or in connection with the Credit Documents. The Borrower agrees to indemnify
the Bank, its directors, officers, agents and employees from and against any
and all liability and costs (including, without limitation, reasonable
attorneys fees) that may accrue to or be sustained by the Bank, its directors,
officers, agents or employees in connection with or as a result of. (a) the
failure to pay any Taxes on or in connection with the Credit Documents when
due; and (b) any claim or action filed or brought by or in the name of the
State of Florida or any department or agency thereof (including, without
limitation, the Florida Department of Revenue) with respect to any non-payment
of Taxes on or in connection with the Credit Documents when due.
2. From and after the date hereof, the Bank agrees that promptly upon
receipt by it of notice of any demand, assertion, claim, action or proceeding,
judicial or otherwise, giving rise to a potential claim for indemnification
under this Agreement, the Bank will give prompt notice thereof in writing to
the Borrower, together in each instance with such information regarding such
proceeding as the Bank shall then have. The Borrower reserves the right to
contest and defend all appropriate legal or other proceedings, any demand,
assertion, claim, action or proceeding with respect to which it has been called
upon to indemnify the Bank under the provisions of this Agreement, provided,
however, that: (a) notice of the intention so to contest shall be delivered to
the Bank within twenty (20) calendar days from the date of receipt by the
Borrower of notice of the assertion of such demand, assertion, claim, action or
proceeding; and (b) the Borrower shall pay all costs and expenses of such
contest, including all attorneys fees.
3. The Borrower's rights and obligations herein shall continue in fall
force and effect notwithstanding the expiration or termination of the Credit
Documents for any reason.
4. This Agreement shall be governed by Florida law. No modifications,
amendments or waivers of this Agreement, or any of its provisions, shall be
binding on any party unless evidenced by a written instrument duly executed by
the parties.
Dated as of the date first set forth above.
AMERICAN TECHNICAL CERAMICS CORP.
By: /s/ Xxxxxx Xxxxxxx
-------------------
Its: President
---------
NATIONSBANK, N.A.
By: /s/ V.T. Fountain
-------------------
Its: Agent
------
2
CLOSING AFFIDAVIT
-----------------
SATE OF GEORGIA
COUNTY OF CAMDEN
Before me, the undersigned, a Notary Public in and for the county and
state aforesaid, personally appeared V. T. Fountain, the Agent of NationsBank,
N.A. "NationsBank") and Xxxxxx Xxxxxxx, the President of American Technical
--------------- ---------
Ceramics Corp. (the "Borrower"), who, being by me first duly sworn, stated:
1. On the date hereof, NationsBank and the Borrower executed and
delivered an Amended and Restated Loan Agreement (the "Loan Agreement") of even
date herewith by and among such parties in Camden County, Georgia. NationsBank
accepted the Loan Agreement in Camden County, Georgia.
2. On the date hereof, the Borrower executed a promissory note (the
"Revolving Note") of even date herewith in the principal amount of
$2,000,000.00 in favor of NationsBank in Camden County, Georgia. The Borrower
personally delivered the Revolving Note to NationsBank on the date hereof in
Camden County, Georgia, and NationsBank accepted the Revolving Note on the date
hereof in Camden County, Georgia.
3. On the date hereof, the Borrower executed a promissory note (the
"Sub-Line Note") of even date herewith in the principal amount of $3,5000,000
in favor of NationsBank in Camden County, Georgia. The Borrower personally
delivered the Sub-Line Note to NationsBank on the date hereof in Camden County,
Georgia, and NationsBank accepted the Sub-Line Note on the date hereof in
Camden County, Georgia.
DATED this 25th day of November, 1998.
Signature of NationsBank's Officer:
/s/ V.T. Fountain
------------------------------
Print Name: V.T. Fountain
Signature of Borrower's Officer:
/s/ Xxxxxx Xxxxxxx
------------------------------
Print Name: Xxxxxx Xxxxxxx
Sworn to and subscribed before me as to Xxxxxx Xxxxxxx this 25th day of
November, 1998.
Notary Public V. Xxxxxx Xxxxxxxx
State and County Aforesaid Notary Public, Camden County, Georgia
My Commission Expires: Jan. 16, 2000
AMENDMENT TO LOAN AGREEMENT
---------------------------
THIS AMENDMENT is made this 4th day of February, 1999, by and between
AMERICAN TECHNICAL CERAMICS CORP. (the "Borrower"), a Delaware corporation, and
NATIONSBANK, N.A. (the "Bank"), successor by merger to Xxxxxxx Bank, N.A.
Recitals
The Borrower and the Bank entered into a Loan Agreement (as amended
from time to time, the "Loan Agreement") dated November 25, 1998, pursuant to
which the Bank has provided a credit facility to the Borrower. The parties wish
to amend the Loan Agreement in accordance with the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. Subparagraph (c) of Section 1.01 of the Loan Agreement is hereby
amended so that, from and after the date hereof, such subparagraph shall read
as follows:
(c) For purposes hereof, the "Revolving Period" shall mean a
period commencing on the date hereof and ending on June 30, 1999.
Notwithstanding the foregoing, the Revolving Period shall be extended
on June 30, 1999, and each June 30 thereafter through June 30, 2001
(each such date, including June 30, 1999, and "Extension Date") for a
one-year period commencing on each such Extension Date and continuing
until the next june 30 thereafter unless the Bank in its sole
discretion elects not to extend the Revolving Period in accordance
with the terms hereof. If the Bank elects not to extend the Revolving
Period, it shall provide written notice of such election to the
Borrower at least 45 days prior to the next scheduled Extension Date.
If the Bank provides such notice, then: (i) the Revolving Period shall
terminate on the next scheduled Extension Date; and (ii) the Revolving
Period shall not be further extended beyond such Extension date. The
bank's election shall be final and binding, and the Bank may elect not
to extend the Revolving Period whether or not a Default or Event of
Default (as defined herein) has occurred. The bank may condition any
extension of the Revolving Period on such terms as it may deem
appropriate. Notwithstanding any contrary provision set forth herein,
the Revolving Period shall not in any event extend beyond June 30,
2002.
2. The parties acknowledge that the Revolving Note and the Sub-Line
Note (as such terms are defined in the Loan Agreement) include a definition of
the term "Libor Rate Reference Page". Notwithstanding any contrary provision
set forth in such Notes, the parties agree that the term "Libor Rate Reference
Page", as used in such Notes, shall have the meaning set forth in Section
1.02(e)(ii) of the Loan Agreement. The last sentence of Section 3(a)(i) of the
Revolving Note and Section 3(a)(i) of the Sub-Line Note is hereby deleted from
each such Note.
3. The Loan Agreement shall continue in full force and effect except
as modified herein.
DATED the day and year first above written.
AMERICAN TECHNICAL CERAMICS CORP.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Its: President
--------------------------------------
By: /s/__Cynthia X. Xxxxxx
--------------------------------------
Its: Senior Vice_President
--------------------------------------
CORPORATE RESOLUTION AND
INCUMBENCY CERTIFICATE FOR BORROWING AND
THE OBTAINING OF CREDIT AND SERVICES
The undersigned Secretary of AMERICAN TECHNICAL CERAMICS CORP. (the
"Corporation"), a corporation duly authorized and existing under the laws of
Delaware, hereby certifies on behalf of the Corporation to NationsBank, N.A.
and its affiliates, subsidiaries and service corporations that:
1. The Corporation's name, address and federal tax identification number
are as follows:
Name: American Technical Ceramics Corp.
Address: 00 Xxxxxx Xxxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
Tax ID Number: 00-0000000
2. The Corporation's directors have duly adopted the following
resolutions in accordance with Delaware law at a meeting duly called and
held or by unanimous written consent:
RESOLVED, that the President and Vice President -
Administration and Secretary of the Corporation be, and each of
them, with full authority to act without the other, hereby is
authorized, on behalf of and in the name of this Corporation: (a) to
renew the Corporation's existing revolving line of credit with
NationsBank, N.A. ("NationsBank"), as successor to Xxxxxxx Bank,
N.A., in an amount up to $2,000,000, said loan to bear interest at
2.0% above the offered rate for deposits in United States dollars in
the London Interbank Market for a three month period (the "Adjusted
Libor Rate"), which interest shall be payable on each October 1,
January 1, April 1 and July 1, commencing January 1, 1999, with
principal thereon to be payable at the end of the revolving period
in eight equal quarterly installments on each October 1, January 1,
April 1 and July 1, commencing with the first such date following
the end of the revolving period, and to be upon such other terms and
conditions as such officers, or either of them, deem necessary or
appropriate; (b) to apply for, negotiate, arrange for and obtain a
separate line of credit from NationsBank in an amount up to
$3,500,000 pursuant to which the Corporation may obtain advances
through September 30, 2000 on a revolving basis to finance the
purchase of equipment for use in the ordinary course of business,
said loan to bear interest at the Adjusted Libor Rate on each
October 1, January 1, April 1 and July 1 during the period any
principal balance is outstanding (with the outstanding principal
balance being rolled over every six months (or sooner if the full
amount of the loan has been drawn upon) into a fully amortized term
note of not less than four no more than seven years), to be secured
by a first priority security interest on the equipment purchased
with the proceeds thereof and to be upon such other terms and
conditions as such officers, or either of them, deem necessary or
appropriate; (c) to execute, endorse or deliver in connection with
such lines of credit such applications, promissory notes, checks,
drafts, acceptances, contracts, agreements (including security
agreements) and other instruments or obligations, waivers of trial
by jury and
agreements as to judicial jurisdiction, on such terms as such
officers, or either of them, deem necessary or appropriate; (d) to
request and direct proceeds (or authorize others to request and
direct proceeds) of such lines of credit to any person, entity,
account or obligation; and (d) in implementation of the authority
hereby conferred, to execute, endorse and deliver such documents in
favor of NationsBank, N.A. and its affiliates, on forms required by
any such entities, deemed necessary or appropriate by such officers,
or either of them, to commit, originate, implement, substitute,
exchange, amend, supplement, extend, renew, release, or discharge
any of the foregoing.
FURTHER RESOLVED, that any actions previously taken by the
Corporation's officers, or any of them, in connection with such
borrowing, credit, lease or service obtained or guaranteed or any
security granted be, and hereby are, confirmed, ratified and
approved.
FURTHER RESOLVED, that this Corporation shall indemnify and
shall hold NationsBank and it affiliates harmless from any loss or
damage incurred by them, or any of them, by acting in reliance upon
this resolution until a properly certified resolution superseding
this resolution is received by NationsBank.
FURTHER RESOLVED, that the officers of the Corporation be, and
each of them, with full authority to act without the others, hereby
is, authorized and directed to execute and deliver such instruments,
documents and agreements and to take such other action as they, in
their discretion, deem necessary, desirable or appropriate in order
to carry out the intent and effectuate the purposes of the foregoing
resolutions.
3. The foregoing is a true and complete copy of the resolutions duly
adopted at the meeting of the Corporation's Board of Directors or approved
without a meeting by unanimous consent of all Directors. The resolutions have
not been modified, amended, rescinded or annulled and are now in full force and
effect. The resolutions have been entered upon the minute book of this
Corporation. The resolutions are in conformity with and are not contrary to or
in conflict with any provisions of the Certificate of Incorporation of this
Corporation and are in accordance with the provisions of the Bylaws of this
Corporation.
4. The following persons are now acting on behalf of this Corporation in
the capacities set opposite their respective names, and the signatures set
opposite their names are their genuine signatures.
Name (Print or Type) Title Signature
-------------------- ----- ---------
Xxxxxx Xxxxxxx President /s/ Xxxxxx Xxxxxxx
-----------------------
Xxxxxxxx X. Xxxxx Vice President - /s/ Xxxxxxxx X. Xxxxx
Administration -----------------------
and Secretary
5. Attached hereto as Exhibit "A" is a true and correct copy of the
Corporation's Bylaws as in effect on the date hereof.
I have hereunto subscribed my name this 25 day of November, 1998.
/s/ Xxxxxxxx X. Xxxxx
--------------------------
Xxxxxxxx X. Xxxxx
Title: Secretary
