TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this "Agreement"), dated as of June 26, 1998, is
made by and between KMG-BERNUTH, INC., a Delaware corporation (hereinafter
referred to as the "Borrower") and SOUTHTRUST BANK, NATIONAL ASSOCIATION (the
"Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Bank to lend it up to the sum of
Six Million and No/100 Dollars ($6,000,000.00) on a term loan basis, and the
Bank is willing to do so upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein contained, and each
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
16. DEFINITIONS.
1.1 DEFINED TERMS. As used herein:
"ACCOUNTS, "CHATTEL PAPER", "CONTRACTS", "DOCUMENTS", "EQUIPMENT",
"FIXTURES", "GENERAL INTANGIBLES", "GOODS", "INSTRUMENTS" and other terms not
specifically defined herein shall have the same respective meanings as are given
to those terms in the Uniform Commercial Code as presently adopted and in effect
in the State of Alabama.
"AFFILIATE" means, as to any Person, each other Person that directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or under common control with, such Person.
"AGREEMENT" means this Term Loan Agreement, as amended or modified
from time to time.
"BANK" means SouthTrust Bank, National Association.
"BORROWER" means KMG-Bernuth, Inc., a Delaware corporation.
"BORROWER'S CLOSING AFFIDAVIT" means an affidavit, in form and
substance satisfactory to Bank, dated the date of Closing, and signed by a duly
authorized officer of Borrower.
"CLOSING" means the time and place of actual execution and delivery of
this Agreement, the Term Note, the Purchase Money Security Agreement, the
Guaranty, and any other Loan Documents due to be executed and delivered
therewith.
"COLLATERAL" means the property and rights described in Sections 4.1,
4.2 and 4.3 hereof or in the Security Agreement, the Purchase Money Security
Agreement, or any of the other Loan Documents.
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"CURRENT ASSETS" and "CURRENT LIABILITIES" mean, at any time, all
assets or liabilities, respectively, that, in accordance with Generally Accepted
Accounting Principles consistently applied, should be classified as current
assets or current liabilities, respectively, on a balance sheet of a Person.
"DEFAULT" and "EVENT OF DEFAULT" each mean the occurrence of an event
described in Section 7.1.
"DOLLARS" and "$" each mean U.S. Dollars.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental Response
Compensation and Liability Act of 1980 (CERCLA), as amended (42 U.S.C. Sections
9601, ET SEQ.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, ET SEQ.), the Resource Conservation and Recovery Act
(RCRA), as amended (42 U.S.C. Sections 6901, ET SEQ.), the Clean Water Act, as
amended (42 U.S.C. Sections 7401, ET SEQ.), the Toxic Substances Control Act, as
amended (15 U.S.C. Sections 2601, ET SEQ.), and the rules and regulations
adopted and publications promulgated pursuant thereto, and the rules and
regulations of the Occupational Safety and Health Administration (OSHA)
pertaining to occupational law, ordinance, rule, or regulation now or hereafter
in effect.
"ERISA" means the Federal Employee Retirement Income Security Act of
1974, as amended and in effect from time to time, and the regulations and
published interpretations thereof.
"FINANCIAL STATEMENTS" means the interim balance sheets of the
Borrower as of April 30, 1998, and interim statements of income and retained
earnings of the Borrower for the period ended on such date plus the audited
balance sheets of the Borrower as of July 31, 1997, and the audited statement of
income and retained earnings for the year then-ended.
"FIXED ASSETS" means, at any time, all assets (other than Current
Assets) that should, in accordance with Generally Accepted Accounting Principles
consistently applied, be classified as assets on a balance sheet of the
Borrower.
"FIXED CHARGE COVERAGE" means the quotient which is obtained by
dividing (i) the sum of the net income of the Borrower (after provision for
federal and state taxes) for the 12-month period preceding the applicable date
plus the interest, lease and rental expenses of the Borrower for the same period
plus the sum of non-cash expenses or allowances for such period (including,
without limitation, amortization or write-down of intangible assets,
depreciation, depletion and deferred taxes and expenses) by (ii) the sum of the
current portion of the long-term debt of the Borrower as of the applicable date
plus the interest, lease and rental expenses for the 12-month period preceding
the applicable date.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally accepted
principles of accounting in effect from time to time in the United States
applied in a manner consistent with those used in preparing such financial
statements as have theretofore been furnished to the Bank by the applicable
Person.
"GUARANTOR" means KMG Chemicals, Inc., a Texas corporation.
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"GUARANTOR'S CLOSING AFFIDAVIT" means an affidavit, in form and
substance satisfactory to Bank, dated the date of Closing, and signed by a duly
authorized officer of Guarantor.
"GUARANTY" means the Guaranty of Payment, of even date herewith,
executed by the Guarantor in favor of the Bank, guaranteeing the payment and
performance to the Bank of the Borrower's obligations hereunder, as amended or
modified from time to time.
"HAZARDOUS MATERIALS" means any asbestos, urea formaldehyde foam
insulation, flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, hazardous or toxic substances, or related or unrelated
substances or materials defined, regulated, controlled, limited or prohibited in
any Environmental Laws.
"INDEBTEDNESS" means, as to any Person, all items of indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including, but without
limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or
(2) to purchase, sell or lease (as lessee or lessor) property,
products, materials or supplies or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such indebtedness or to
assure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest in the
debtor;
(C) All indebtedness secured by (or which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of goods or services
under leases that, in accordance with Generally Accepted Accounting Principles,
should not be reflected on the lessee's balance sheet.
"INVENTORY" means all inventory of the Borrower, whether now owned or
hereafter acquired by the Borrower, and wherever located, including, without
limitation, all goods, merchandise, raw materials, work in process, finished
goods, and other tangible personal property held for sale or lease or furnished
or to be furnished under contracts of service or used or consumed in the
Borrower's business; all Documents now or hereafter evidencing any such
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Inventory; all returned and repossessed Goods; and all proceeds and products of
the foregoing.
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LIABILITIES" means all Indebtedness that, in accordance with
Generally Accepted Accounting Principles, should be classified as liabilities on
a balance sheet of a Person.
"LOAN" means the Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Note, the Security
Agreement, the Purchase Money Security Agreement, the Guaranty, and any and all
other agreements, documents and instruments of any kind executed or delivered in
connection with, or evidencing, securing, guaranteeing or relating to, the Term
Loan, whether heretofore, simultaneously herewith or hereafter delivered,
together with all modifications and amendments heretofore or hereafter made to
any of the foregoing.
"LOAN FEE" means a fee of Ten Thousand and No/100 Dollars
($10,000.00), payable to the Bank by the Borrower concurrently with the
execution of this Agreement.
"LONG-TERM LIABILITIES" means Liabilities less the portion thereof
that constitutes Current Liabilities.
"NOTE" means the Term Note.
"OBLIGATIONS" means the obligations of Borrower:
(A) To pay the principal of and interest on the Term Note in
accordance with the terms thereof and to satisfy all of its other liabilities to
the Bank, whether hereunder or otherwise, whether now existing or hereafter
incurred, matured or unmatured, direct or contingent, joint or several,
including any extensions, modifications, and renewals thereof and substitutions
therefor;
(B) To repay to the Bank all amounts advanced by the Bank hereunder,
under any of the other Loan Documents or otherwise on behalf of the Borrower,
including, but without limitation, advances for principal or interest payments
to prior secured parties, mortgagees, or lienors, or for taxes, levies,
insurance, rent, or repairs to or maintenance or storage of, any of the
Collateral; and
(C) To reimburse the Bank, on demand, for all of the Bank's expenses
and costs, including the reasonable fees and expenses of its counsel, in
connection with the preparation, administration, amendment, modification, or
enforcement of this Agreement and the documents required hereunder, including,
without limitation, any proceeding brought or threatened to enforce payment of
any of the obligations referred to in the foregoing paragraphs (A) and (B).
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"PARTICIPANT" means any bank, financial institution, Affiliate of the
Bank, or other entity which purchases an interest in the Term Note from the Bank
at any time.
"PERMITTED LIENS" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, Contracts (other than for the
repayment of borrowed money) or leases, not in excess of ten percent (10%) of
the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(E) Liens in favor of the Bank;
(F) Purchase money security interests granted to secure not more than
one hundred percent (100%) of the purchase price of assets, the purchase of
which does not constitute a breach of this Agreement or any instrument required
hereunder; and
(G) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long as levy
and execution thereon have been stayed and continue to be stayed and they do
not, in the aggregate, materially detract from the value of the property of the
Borrower, or materially impair the use thereof in the operation of its business:
(1) Claims or liens for taxes, assessments or charges due and
payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title
to, real or personal property, including any attachment of personal or
real property or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"PERSON" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court or
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government or political subdivision or agency thereof, and any other legal
entity.
"PURCHASE MONEY SECURITY AGREEMENT" means the separate Purchase Money
Security Agreement, of even date herewith, executed by Borrower and granting the
Bank a security interest in the Collateral (as defined in the Purchase Money
Security Agreement), and includes any and all modifications or amendment to said
Purchase Money Security Agreement hereafter made.
"RECORDS" means correspondence, memoranda, tapes, discs, microfilm,
microfiche, papers, books and other documents, or transcribed information of any
type, whether expressed in ordinary or machine language, and all filing cabinets
and other containers in which any of the foregoing is stored or maintained.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as now or from time to time hereafter in effect and shall
include any successor or other regulation or official interpretation of said
Board of Governors relating to the extension of credit by banks for the purpose
of purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
"REVOLVING LOAN AGREEMENT" means that certain Revolving Loan Agreement
between Borrower and Bank dated as of August 1, 1996, and includes any and all
modifications or amendments thereto heretofore, simultaneously herewith or
hereafter made.
"REVOLVING LOAN DOCUMENTS" means the "Loan Documents" as defined in
the Revolving Loan Agreement.
"SECURITY AGREEMENT" means the separate Security Agreement, dated as
of August 1, 1996, executed by Borrower and granting the Bank a security
interest in the Collateral (as defined in the Security Agreement), and includes
any and all modifications or amendments to said Security Agreement heretofore,
simultaneously herewith or hereafter made.
"STOCKHOLDERS' EQUITY" means, at any time, the sum of the following
accounts set forth in a balance sheet of the Borrower, adjusted to U.S. Dollars
by means of applicable foreign currency exchange rates and prepared in
accordance with Generally Accepted Accounting Principles consistently applied:
(A) The par or stated value of all outstanding capital stock;
(B) Capital surplus; and
(C) Retained earnings.
"SUBSIDIARY" means any corporation of which more than fifty percent
(50%) of the outstanding voting securities shall, at the time of determination,
be owned directly, or indirectly through one or more intermediaries, by the
Borrower.
"TANGIBLE NET WORTH" means, at any time, Stockholders' Equity less the
sum of:
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(A) Any surplus resulting from any write-up of assets subsequent to
the date of Closing;
(B) Goodwill, including any amounts, however designated on a balance
sheet of the Borrower, representing the excess of the purchase price paid for
assets or stock acquired over the value assigned thereto on the books of the
Borrower;
(C) Patents, trademarks, trade names and copyrights;
(D) Any amount at which shares of capital stock of the Borrower
appear as an asset on the Borrower's balance sheet;
(E) Loans and advances to stockholders, directors, officers or
employees;
(F) Deferred expenses; and
(G) Any other amount in respect of an intangible that, in accordance
with Generally Accepted Accounting Principles, should be classified as an asset
on a balance sheet of the Borrower, including, without limitation, the
following:
(i) Advances for premiums on employee owned life insurance
policies; secured by the cash surrender value of the
policies;
(ii) EPA testing costs, net of accumulated amortization;
(iii) Licensing agreement;
and (iv) Loan costs, net of accumulated amortization, amortized on a
straight-line basis over the term of the line of credit.
"TERM LOAN" means the aggregate unpaid principal balance from time to
time of the loan made to the Borrower pursuant to Section 2.1 of this Agreement.
"TERM NOTE" means the promissory note, in substantially the form of
Exhibit "A" to this Agreement, dated as of the date of Closing, made by the
Borrower to evidence the Borrower's obligation to repay the Term Loan and the
interest thereon, and includes any amendment to or modification of such note and
any promissory note given in extension or renewal of, or in substitution for,
such note.
"TERM RATE" is defined in Section 2.4(A) of this Agreement.
1.2 ACCOUNTING TERMS. Accounting terms used and not otherwise defined in
this Agreement have the meanings determined by, and all calculations with
respect to accounting or financial matters unless otherwise provided herein
shall be computed in accordance with, Generally Accepted Accounting Principles.
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1.3 CONSTRUCTION OF TERMS. Whenever used in this Agreement, the singular
number shall include the plural and the plural the singular, and pronouns of one
gender shall include all genders.
ARTICLE II.
17. THE TERM LOAN
2.1 GENERAL TERMS. Subject to the terms hereof, the Bank will lend the
Borrower the principal sum of Six Million and No/100 Dollars ($6,000,000.00) on
a term loan basis.
2.2 DISBURSEMENT OF THE TERM LOAN. The Bank will credit the proceeds of
the Term Loan to the principal deposit account of the Borrower with the Bank, or
in such other manner as the Borrower and the Bank may agree.
2.3 THE TERM NOTE. The Borrower's obligation to repay the Term Loan shall
be evidenced by the Term Note.
2.4 INTEREST RATE AND PAYMENTS OF INTEREST.
(A) Interest on the Term Loan shall be calculated and paid as
provided in the Term Note (the rate of interest as may from time to time be
accruing under the Term Note being herein referred to as the "Term Rate").
(B) If, at any time, the Term Rate shall be deemed by any competent
court of law, governmental agency or tribunal to exceed the maximum rate of
interest permitted by any applicable Laws, then, for such time as the Term Rate
would be deemed excessive, its application shall be suspended and there shall be
charged instead the maximum rate of interest permissible under such Laws, and
any excess interest actually collected by the Bank shall be credited as a
partial prepayment of principal.
2.5 PAYMENTS OF PRINCIPAL. Borrower shall make to Bank such payments of
principal on the Term Loan as are required by the terms of the Term Note.
2.6 PAYMENT TO THE BANK. All sums payable to the Bank hereunder shall be
paid directly to the Bank in United States Dollars and immediately available
funds at the place payment is due. If the Bank shall send the Borrower
statements of amounts due hereunder, such statements shall be considered correct
and conclusively binding on the Borrower unless the Borrower notifies the Bank
to the contrary within ninety (90) days of its receipt of any statement which it
deems to be incorrect.
2.7 USE OF PROCEEDS OF TERM LOAN. The proceeds of the Term Loan hereunder
shall be used by the Borrower to finance costs incurred with the acquisition of
certain assets of the Carbon Materials and Technologies division of AlliedSignal
Inc., and to pay closing costs and expenses incurred by the Borrower in
connection with the closing of the Term Loan.
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ARTICLE III.
18. CONDITIONS PRECEDENT
The obligation of the Bank to make the Loan is subject to the following
conditions precedent:
3.1 DOCUMENTS REQUIRED FOR THE CLOSING. Prior to the disbursement of the
Loan, the following instruments and documents, duly executed by all proper
Persons shall have been delivered to the Bank:
(A) This Agreement;
(B) The Term Note;
(C) The financing statements required by Section 4.5;
(D) The lien waivers required by Section 4.6;
(E) (1) A certificate of the Borrower's corporate secretary dated as
of the date of this Agreement, certifying as to the incumbency and signatures of
the officers of the Borrower signing this Agreement, the Term Note, each of the
other Loan Documents to be executed by Borrower, and each other document to be
delivered pursuant hereto, together with the following documents attached
thereto:
(a) A copy of the resolutions of the Borrower's board of
directors authorizing the execution, delivery and performance of
this Agreement, the Term Note, each of the other Loan Documents
to be delivered by Borrower, and each other document to be
delivered by Borrower pursuant hereto;
(b) A copy, certified as of the most recent date
practicable by the secretary of state of the state where the
Borrower is incorporated, of the Borrower's articles or
certificate of incorporation; and
(c) A copy of the Borrower's bylaws;
(2) A certificate of the Guarantor's corporate secretary dated
as of the date of this Agreement, certifying as to the incumbency and signatures
of the officers of the Guarantor signing the Guarantor and each of the other
Loan Documents to be executed by Guarantor, and each other document to be
delivered pursuant hereto, together with the following documents attached
thereto:
(a) A copy of the resolutions of the Guarantor's board of
directors authorizing the execution, delivery and performance of
the Guaranty and each of the other Loan Documents to be delivered
by Guarantor, and each other document to be delivered by
Guarantor pursuant hereto;
(b) A copy, certified as of the most recent date
practicable by the secretary of state of the state where the
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Guarantor is incorporated, of the Guarantor's articles or
certificate of incorporation; and
(c) A copy of the Guarantor's bylaws;
(F) Certificates, as of the most recent dates practicable, of the
secretary of state of Delaware, Alabama, Louisiana, and Texas and the department
of revenue or taxation of each of the foregoing states, as to the good standing
of the Borrower; and certificates as of the more recent dates practicable of the
secretary of state of Texas and the department of revenue or taxation of such
state, as to the good standing of the Guarantor;
(G) A written opinion of Xxxxx & Xxxxxxx, L.L.P., dated the date of
this Agreement and addressed to the Bank, substantially in the form of Exhibit
"B", attached hereto;
(H) The Guaranty;
(I) The Borrower's Closing Affidavit and the Guarantor's Closing
Affidavit;
(J) The Purchase Money Security Agreement; and
(K) The Financial Statements.
3.2 CERTAIN EVENTS. At the time of disbursement of the Term Loan:
(A) No Event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage or time or both, would be an Event of Default;
(B) No material adverse change shall have occurred in the financial
condition of the Borrower since the date of this Agreement;
(C) All of the Loan Documents shall have remained in full force and
effect; and
(D) The Borrower shall have paid the Loan Fee.
3.3 LEGAL MATTERS. At the time of disbursement of the Term Loan, all
legal matters incidental thereto shall be satisfactory to Gordon, Silberman,
Xxxxxxx & Childs, P.C., counsel to the Bank.
ARTICLE IV.
4. COLLATERAL SECURITY
4.1 COMPOSITION OF THE COLLATERAL. The property in which a security
interest is granted pursuant to the provisions of Sections 4.2 and 4.3 is herein
collectively called the "Collateral." The Collateral, together with all of the
Borrower's other property of any kind held by the Bank, shall stand as one
general, continuing collateral security for all Obligations and may be retained
by the Bank until all Obligations have been satisfied in full.
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4.2 RIGHTS IN PROPERTY HELD BY THE BANK. As security for the prompt
satisfaction of all Obligations, the Borrower hereby assigns, transfers and sets
over to the Bank all of the Borrower's right, title and interest in and to, and
grants the Bank a lien on and a security interest in, all amounts that may be
owing from time to time by the Bank to the Borrower in any capacity, including,
without limitation, any balance or share belonging to the Borrower, of any
deposit or other account with the Bank, which lien and security interest shall
be independent of any right of set-off which the Bank may have.
4.3 RIGHTS IN PROPERTY HELD EITHER BY THE BORROWER OR BY THE BANK. As
further security for the prompt satisfaction of all Obligations, the Borrower
hereby assigns to the Bank all of the Borrower's right, title and interest in
and to, and grants the Bank a lien upon and security interest in, all of the
Collateral (as defined in the Security Agreement) and all of the Collateral (as
defined in the Purchase Money Security Agreement).
4.4 PRIORITY OF LIENS. The foregoing liens shall be first and prior liens
except for the Permitted Liens.
4.5 FINANCING STATEMENTS.
(A) The Borrower will:
(1) Execute such financing statements (including amendments
thereto and continuation statements thereof) in form satisfactory to
the Bank as the Bank, from time to time, may specify;
(2) Pay, or reimburse the Bank for paying, all costs and taxes
of filing or recording the same in such public offices as the Bank may
designate; and
(3) Take such other steps as the Bank, from time to time, may
direct, including the noting of the Bank's lien on the Collateral and
on any certificates of title therefor all to perfect the Bank's
security interest in the Collateral.
(B) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other reproduction of this
Agreement shall be sufficient as a financing statement and may be
filed in any appropriate office in lieu thereof; and
(2) To the extent lawful, the Borrower hereby appoints the Bank
as its attorney-in-fact (without requiring the Bank to act as such) to
execute any financing statement in the name of the Borrower, and to
perform all other acts that the Bank deems appropriate to perfect and
continue its security interest in, and to protect and preserve, the
Collateral.
4.6 LIEN WAIVERS. The Borrower will cause each mortgagee of all real
estate owned by the Borrower and each landlord of all premises leased by the
Borrower (as listed on Exhibit "C" attached hereto) on whose premises any of the
Collateral may be located, to execute and deliver to the Bank instruments, in
form and substance satisfactory to the Bank, by which such mortgagee or landlord
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waives his or its rights, if any, in and to all Goods composing a part of the
Collateral.
ARTICLE V.
5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Bank, knowing that Bank will rely
on such representations and warranties as an inducement to make the Loan, that:
5.1 BORROWER'S AND GUARANTOR'S EXISTENCE. Borrower is a duly organized
and existing Delaware corporation, is duly qualified to do business in Delaware
and in all other jurisdictions in which its business interest requires it to be
so qualified, and has full power and authority to consummate the transactions
contemplated (except where the failure to so qualify does not have a material
adverse effect on the Borrower) by this Agreement; Guarantor is a duly organized
and existing Texas corporation, is duly qualified to do business in Texas and in
all other jurisdictions in which its business interest requires it to be so
qualified, and has full power and authority to consummate the transactions
contemplated (except where the failure to so qualify does not have a material
adverse effect on the Guarantor) by the Guaranty.
5.2 BORROWER'S AND GUARANTOR'S AUTHORITY. The execution, delivery and
performance of all of the Loan Documents to be delivered by Borrower have been
duly authorized by all requisite corporate action, all of such Loan Documents
have been duly executed and delivered and constitute valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms, and the Bank will be entitled to the benefits of all of such Loan
Documents; the execution, delivery and performance of all of the Loan Documents
to be delivered by Guarantor have been duly authorized by all requisite
corporate action, all of such Loan documents have been duly executed and
delivered and constitute valid and binding obligations of the Guarantor,
enforceable in accordance with their respective terms, and the Bank will be
entitled to the benefits of all of such Loan Documents.
5.3 VIOLATIONS OR ACTIONS PENDING. There are no actions, suits, or
proceedings pending or, to the best of Borrower's knowledge, threatened, which
might adversely affect the financial condition of Borrower, or which might
impair the value of any collateral taken or to be taken by Bank in connection
with this Agreement. Borrower is not in violation of any agreement, the
violation of which will or might reasonably be expected to have a materially
adverse effect on Borrower's business or assets, and Borrower, is not in
violation of any order, judgment, or decree of any court, or any statute or
governmental regulation to which Borrower is subject. The execution and
performance of this Agreement by Borrower will not result in any breach of any
mortgage, lease, credit or loan agreement or any other instrument which may bind
or affect Borrower.
5.4 FINANCIAL STATEMENTS. All financial statements of Borrower and/or
Guarantor, given and hereafter to be given to Bank are and will be true and
complete in all respects as of their respective dates and will be prepared in
accordance with Generally Accepted Accounting Principles consistently applied,
and will fairly represent the financial conditions of the business or Persons to
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which they pertain, and no materially adverse change has occurred in the
financial conditions reflected therein since the respective dates thereof.
5.5 GOOD AND MARKETABLE TITLE. Borrower has good and marketable title to
all its assets, including, without limitation, the Collateral subject to no
encumbrances, liens, or claims of any third parties, except for Permitted Liens.
5.6 ERISA COMPLIANCE. All Defined Benefit Pension Plans, as defined in
ERISA, of the Borrower or the Guarantor meet, as of the date hereof, the minimum
funding standards of Section 302 of ERISA and no reportable event or prohibited
transaction as defined in ERISA has occurred.
5.7 ACCURACY OF DOCUMENTS. All documents furnished to Bank by or on
behalf of Borrower or the Guarantor as a part of or in support of the
application for the Loans or pursuant to the Bank's Commitment Letter dated June
17, 1998, or this Agreement are true, correct, complete and accurately represent
the matters to which they pertain.
5.8 ENVIRONMENTAL MATTERS. Neither any property of the Borrower nor the
Borrower, to the best of Borrower's knowledge, are in violation of or subject to
any existing, pending or threatened investigation or inquiry by any governmental
authority or any remedial obligations under any applicable laws, rules or
regulations pertaining to health or the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act
of 1976, as amended ("RCRA"), and the Superfund Amendments and Reauthorization
Act of 1986, as amended, and that to the best of its knowledge there are no
facts, conditions or circumstances known to it which could result in any such
investigation or inquiry if such facts, conditions and circumstances, if any,
were fully disclosed to the applicable governmental authority, and Borrower will
promptly notify Bank if it becomes aware of any such facts, conditions or
circumstances or any such investigation or inquiry; Borrower has not obtained
and is not required to obtain any permits, licenses, or similar authorizations
to construct, occupy, operate or use any buildings, improvements, fixtures or
equipment in connection with any of Borrower's property constructed or to be
constructed by reason of any environmental laws, rules or regulations; and
Borrower has no knowledge that any oil, toxic or hazardous substances or solid
wastes have been disposed of or released on any of Borrower's property, and
Borrower will not in its use of any of its property dispose of or release oil,
toxic or hazardous substances or solid wastes on any of its property (the term
"hazardous substance" and "release" shall have the meanings specified in CERCLA,
and the terms "solid waste" and "disposal", "dispose" or "disposed" shall have
the meanings specified in RCRA, except that if such acts are amended to broaden
the meanings thereof, the broader meaning shall apply herein). Notwithstanding
anything to the contrary herein, Borrower shall indemnify and hold Bank harmless
from and against any fines, charges, expenses, fees, attorney fees and costs
incurred by Bank in the event the Borrower or any of its property (whether or
not due to any fault of Borrower) is hereafter determined to be in violation of
any environmental laws, rules or regulations applicable thereto, excluding,
however, any conditions caused by materials placed on any of Borrower's property
following foreclosure or acceptance by Bank of a deed in lieu of foreclosure,
and this indemnity shall survive any foreclosure or deed in lieu of foreclosure.
This indemnification shall specifically include any and all costs due to
hazardous
13
substances that flow, diffuse, migrate, or percolate into, onto, from or
under any of Borrower's property.
5.9 CONTINUING EFFECTIVENESS. All representations and warranties
contained herein shall be deemed continuing and in effect at all times while
Borrower remains indebted to Bank under the Loan and shall be deemed to be
incorporated by reference in each requisition for an advance by Borrower, unless
Borrower specifically notifies Bank in writing of any change therein.
5.10 PRIORITY OF COLLATERAL ASSIGNMENTS. The Security Agreement
constitutes a valid first lien against the collateral of Borrower subject
thereto, prior to all other liens and encumbrances, including those whose may
have accrued after the execution thereof, except for Permitted Liens, and the
Purchase Money Security Agreement, when duly executed and delivered, will
constitute a valid first lien against the collateral of Borrower subject
thereto, prior to all other liens and encumbrances, including those which may
hereafter accrue, except for Permitted Liens.
ARTICLE VI.
6. THE BORROWER'S COVENANTS
The Borrower does hereby covenant and agree with the Bank that, so long as
any of the Obligations remain unsatisfied or any commitments hereunder remain
outstanding, it will comply at all times with the following covenants:
6.1 AFFIRMATIVE COVENANTS.
(A) The Borrower will use the proceeds of the Term Loan only for the
purposes set forth in Section 2.7, and will furnish the Bank such evidence as it
may reasonably require with respect to such uses.
(B) The Borrower will furnish, or cause to be furnished, the Bank:
(1) Within thirty (30) days after the close of each calendar
month (a) an income statement of the Borrower for such period and (b)
a balance sheet of the Borrower as of the end of such period, adjusted
to U. S. Dollars, all in reasonable detail with Bank having full
access to all supporting schedules and comments, subject to year-end
audit adjustments, and certified by the Borrower's president or
principal financial officer to have been prepared in accordance with
Generally Accepted Accounting Principles consistently applied by the
Borrower, except for any inconsistencies explained in such
certificate;
(2) Within one hundred twenty (120) days after the close of each
fiscal year (a) a statement of Stockholders' Equity and a statement of
cash flows of the Borrower for such fiscal year, (b) an income
statement of the Borrower for such fiscal year, and (c) a balance
sheet of the Borrower as of the end of such fiscal year, adjusted to
U. S. Dollars, all in reasonable detail, including all supporting
schedules and comments; the statements and balance sheets to be
certified by Borrower to have been prepared in accordance with
14
Generally Accepted Accounting Principles consistently applied by the
Borrower;
(3) Contemporaneously with each monthly and year-end financial
report required by the foregoing paragraphs, a certificate of the
president or principal financial officer of the Borrower stating that,
to the best of his knowledge, the Borrower has observed and performed
each and every undertaking contained in this Agreement and is not at
the time in default in the observance or performance of any of the
terms and conditions hereof or, if the Borrower shall be so in
default, specifying all such defaults and events of which he may have
knowledge;
(4) Monthly, within twenty (20) days after the end of the prior
month, and at such other times as the Bank may request, a Collateral
Report and Borrowing Base Certificate for the immediately preceding
month, certified to be correct by the president or controller of the
Borrower;
(5) Within thirty (30) days after the close of each calendar
quarter (a) a consolidated income statement of the Guarantor for such
period and (b) a consolidated balance sheet of the Guarantor as of the
end of such period, adjusted to U. S. Dollars, all in reasonable
detail with Bank having full access to all supporting schedules and
comments, subject to year-end audit adjustments, and certified by the
Guarantor's president or principal financial officer to have been
prepared in accordance with Generally Accepted Accounting Principles
consistently applied by the Guarantor, except for any inconsistencies
explained in such certificate;
(6) Within one hundred twenty (120) days after the close of each
fiscal year (a) a consolidated statement of Stockholders' Equity and a
consolidated statement of cash flows of the Guarantor for such fiscal
year, (b) a consolidated income statement of the Guarantor for such
fiscal year, and (c) a consolidated balance sheet of the Guarantor as
of the end of such fiscal year, adjusted to U. S. Dollars, all in
reasonable detail, including all supporting schedules and comments;
the statements and balance sheets to be audited by an independent
certified public accountant selected by the Guarantor and acceptable
to the Bank, and certified by such accountants to have been prepared
in accordance with Generally Accepted Accounting Principles
consistently applied by the Guarantor, except for any inconsistencies
explained in such certificate; the Bank shall have the right, from
time to time, to discuss the Guarantor's affairs directly with the
Guarantor's independent certified public accountant after notice to
the Guarantor and opportunity of the Guarantor to be present at any
such discussions; and
(7) Promptly after sending or making available or filing of the
same, copies of all reports, proxy statements and financial statements
that the Borrower or Guarantor sends or makes available to its
stockholders and all registration statements and reports that
15
the Borrower or Guarantor files with the Securities and Exchange
Commission or any successor Person.
(C) The Borrower will maintain its Inventory, Equipment, real estate
and other properties in good condition and repair (normal wear and tear
excepted), and will pay and discharge or cause to be paid and discharged when
due, the cost of repairs to or maintenance of the same, and will pay or cause to
be paid all rental or mortgage payments due on such real estate. The Borrower
hereby agrees that, in the event it fails to pay or cause to be paid any such
payments, the Bank may do so and on demand be reimbursed therefor by the
Borrower.
(D) The Borrower will maintain, or cause to be maintained, public
liability insurance, and fire and extended coverage insurance on all tangible
assets owned by it, all in such form and amounts as are consistent with industry
practices and with such insurers as may be satisfactory to the Bank. Such
policies shall contain a provision whereby they cannot be cancelled except upon
thirty (30) days written notice to the Bank and shall contain a New York
standard endorsement or similar provision naming the Bank as loss payee. The
Borrower will, upon request, furnish to the Bank a Request for Insurance, duly
executed by the authorized agent, and other such evidence of insurance as the
Bank may require. The Borrower hereby agrees that, in the event it fails to pay
or cause to be paid the premium on any such insurance, the Bank may do so and be
reimbursed by the Borrower therefor.
(E) The Borrower will pay or cause to be paid when due all taxes,
assessments and charges or levies imposed upon it or on any of its property or
which it is required to withhold and pay over, except where contested in good
faith by appropriate proceedings with adequate reserves therefor having been set
aside on its books; provided, however, that the Borrower shall pay or cause to
be paid all such taxes, assessments, charges or levies forthwith whenever
foreclosure on any lien that attached (or security therefor) appears imminent.
(F) The Borrower will maintain during the term of this Agreement:
(1) Tangible Net Worth of, at minimum, Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) as of July 31, 1999,
and until July 30, 2000, and Five Million and No/100 Dollars
($5,000,000.00) as of July 31, 2000, and at all times thereafter.
(2) A Fixed Charge Coverage of not less than 1.25 to 1.0 at the
end of each fiscal year commencing July 31, 1999.
(3) A ratio of Liabilities to Tangible Net Worth of not more
than 3.50 to 1.0 as of July 31, 1999, and until July 30, 2000,
and 2.0 to 1.0 as of July 31, 2000, and at all times thereafter.
(G) The Borrower will, when requested so to do, make available for
inspection and audit by duly authorized representatives of the Bank any of its
books and records, and will furnish the Bank any information regarding its
business affairs and financial condition within a reasonable time after written
request therefor. Borrower shall reimburse Bank for all costs associated with
16
such audit if the audit reveals a material discrepancy in any financial report,
statement or other document provided to Bank pursuant to this Agreement.
(H) The Borrower will take all necessary steps to preserve its
corporate existence and franchises and comply with all present and future Laws,
applicable to it in the operation of its businesses, and all material agreements
to which it is subject.
(I) The Borrower will collect its Accounts and sell its Inventory
only in the ordinary course of business.
(J) The Borrower will keep accurate and complete Records of its
Accounts, Inventory and Equipment, consistent with sound business practices.
(K) The Borrower will give immediate written notice to the Bank of:
(1) Any litigation or proceeding in which it is a party if an
adverse decision therein would require it to pay over more than
$500,000.00 or deliver assets the value of which exceeds such sum
(whether or not the claim is considered to be covered by
insurance); and
(2) The institution of any other suit or proceeding involving it
that might materially and adversely affect its operations,
financial condition, property or business prospects.
(L) Within ten (10) days of the Bank's request therefor, the Borrower
will furnish the Bank with copies of federal income tax returns filed by the
Borrower.
(M) The Borrower will pay when due (or within applicable grace
periods) all Indebtedness due third Persons, except when the amount thereof is
being contested in good faith by appropriate proceedings and with adequate
reserves therefor being set aside on the books of the Borrower.
(N) The Borrower will notify the Bank immediately if it becomes aware
of the occurrence of any Event of Default or of any fact, condition or event
that only with the giving of notice or passage of time or both, could become an
Event of Default, or if it becomes aware of any material adverse change in the
business prospects, financial condition (including, without limitation,
proceedings in bankruptcy, insolvency, reorganization, or the appointment of a
receiver or trustee), or results of operations of the Borrower, or of the
failure of the Borrower to observe any of its undertakings hereunder or under
any of the other Loan Documents.
(O) The Borrower will notify the Bank thirty (30) days in advance of
any change in the location of any of its places of business in the United States
or of the establishment of any new place of business in the United States, or
the discontinuance of any existing place of business in the United States.
(P) The Borrower will:
17
(1) Fund all its Defined Benefit Pension Plans, as defined in
ERISA, in accordance with no less than the minimum funding
standards of Section 302 of ERISA;
(2) Furnish the Bank, promptly after the filing of the same,
with copies of all reports or other statements filed with the
United States Department of Labor or the Internal Revenue Service
with respect to all such Plans; and
(3) Promptly advise the Bank of the occurrence of any Reportable
Event or Prohibited Transaction with respect to any such Plan.
(Q) The Borrower will comply with all Environmental Laws, and will
handle, store, treat, discharge, and dispose of any Hazardous Materials only in
compliance with all Environmental Laws.
(R) The Borrower will pay all installments of the Loan Fee when due.
6.2 NEGATIVE COVENANTS. The Borrower does hereby covenant and agree with
the Bank that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, it will comply at all times with the
following negative covenants:
(A) The Borrower will not change its name, enter into any merger,
consolidation, reorganization or recapitalization, or reclassification of its
capital stock, or dissolve without the prior written consent of the Bank (which
consent shall not be unreasonably withheld).
(B) The Borrower will not sell, transfer, lease, assign or otherwise
dispose of all or (except in the ordinary course of business) any material part
of its assets.
(C) The Borrower will not sell, lease, transfer, assign, or otherwise
dispose of any of the Collateral except in the ordinary course of business and
as permitted under this Agreement.
(D) The Borrower will not replace its Chairman of the Board of
Directors or its President without the prior written consent of the Bank.
(E) The Borrower will not mortgage, pledge, grant or permit to exist
a security interest in or lien upon any of the Collateral, now owned or
hereafter acquired, except for Permitted Liens.
(F) [Intentionally Deleted]
(G) [Intentionally Deleted]
(H) [Intentionally Deleted]
(I) The Borrower will not make any future equity investment(s) or
loan(s) in an amount exceeding, in the aggregate, $250,000.00 in or to any
18
Subsidiary, foreign or domestic or in or to any other Person during the term of
this Agreement.
(J) [Intentionally Deleted]
(K) [Intentionally Deleted]
(L) [Intentionally Deleted]
(M) The Borrower will not issue, redeem, purchase or retire any of
its capital stock or grant or issue any warrant, right or option pertaining
thereto or any other security convertible into any of the foregoing. The
Borrower will not permit, and will cause the Guarantor not to permit, any
voluntary transfer, sale, redemption, retirement, or other change in the
ownership of the outstanding capital stock of the Borrower or of the Guarantor
by any of their respective shareholders which results in a "Change in Control".
For purposes of this Section 6.2(M), "Change in Control" shall mean either a
change in the ownership of the outstanding capital stock of the Borrower such
that the Guarantor owns less than fifty and 01/100 percent (50.01%) of the
outstanding capital stock of the Borrower, or a change in the ownership of the
outstanding capital stock of the Guarantor such that Xxxxx X. Xxxxxxx owns less
than fifty and 01/100 percent (50.01%) of the outstanding capital stock of the
Guarantor.
(N) [Intentionally Deleted]
(O) The Borrower will not enter into any sale-leaseback transaction.
(P) The Borrower will not furnish the Bank any certificate or other
document that will contain any untrue statement of material fact or that will
omit to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
(Q) The Borrower will not directly or indirectly apply any part of
the proceeds of the Loan to the purchasing or carrying of any "margin stock"
within the meaning of Regulation U or any regulations, interpretations or
rulings thereunder.
(R) The Borrower will not treat, store, handle, discharge, or dispose
of any Hazardous Materials except in compliance with all Environmental Laws.
ARTICLE VII.
7. DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
(A) The Borrower shall fail to pay any installment of principal or
interest or fee payable hereunder or under the Term Note within ten (10) days of
the due date thereof.
19
(B) The Borrower shall fail to observe or perform any other
obligation to be observed or performed by it hereunder or under any of the other
Loan Documents, and such failure shall continue for thirty (30) days after:
(1) Notice of such failure from the Bank; or
(2) The Bank is notified of such failure or should have been so
notified pursuant to the provisions of Section 6.1(N), whichever
is earlier.
(C) The Borrower shall fail to pay any Indebtedness due any third
Persons and such failure shall continue beyond any applicable grace period.
(D) Any financial statement, representation, warranty or certificate
made or furnished by the Borrower or the Guarantor to the Bank in connection
with this Agreement, or as inducement to the Bank to enter into this Agreement,
or in any separate statement or document to be delivered hereunder to the Bank,
shall be materially false, incorrect, or incomplete when made.
(E) The Borrower or the Guarantor shall admit its inability to pay
its debts as they mature, or shall make an assignment for the benefit of itself
or any of its creditors.
(F) Proceedings in bankruptcy, or for reorganization of the Borrower
or the Guarantor, or for the readjustment of any of their respective debts,
under the Bankruptcy Code, as amended, or any part thereof, or under any other
Laws, whether state or federal, for the relief of debtors, now or hereafter
existing, shall be commenced by the Borrower or the Guarantor, or shall be
commenced against the Borrower or the Guarantor and shall not be discharged
within sixty (60) days of commencement.
(G) A receiver or trustee shall be appointed for the Borrower or the
Guarantor or for any substantial part of their respective assets, or any
proceedings shall be instituted for the dissolution or the full or partial
liquidation of the Borrower or the Guarantor, and such receiver or trustee shall
not be discharged within thirty (30) days of his appointment, or such
proceedings shall not be discharged within sixty (60) days of its commencement,
or the Borrower or the Guarantor shall discontinue business or materially change
the nature of its business.
(H) The Borrower shall suffer final judgments for payment of money
aggregating in excess of $100,000.00 and shall not discharge the same within a
period of thirty (30) days unless, pending further proceedings, execution has
not been commenced or if commenced has been effectively stayed.
(I) A judgment creditor of the Borrower shall obtain possession of
any of the Collateral by any means, including, without limitation, levy,
distraint, replevin or self-help.
(J) The validity or enforceability of this Agreement, the Term Note,
or any of the other Loan Documents shall be contested by the Borrower or the
Guarantor and/or Borrower or Guarantor shall deny that it has any or further
liability or obligation hereunder or thereunder.
20
(K) Any Defined Benefit Pension Plan, as defined in ERISA, shall fail
to meet the minimum funding standards of the Internal Revenue Code of 1986, as
now in effect or hereafter amended.
(L) The Guarantor shall be dissolved either voluntarily or by
operation of law.
(M) There shall occur any "Event of Default" under and as defined in
the Revolving Loan Agreement or any of the other Revolving Loan Documents.
7.2 ACCELERATION. All Obligations shall, at the option of Bank, become
immediately due and payable, without notice, upon the occurrence of an Event of
Default without further action of any kind.
7.3 REMEDIES. After any acceleration, as provided for in Section 7.2, the
Bank shall have, in addition to the rights and remedies given it by this
Agreement and each of the other Loan Documents, all those allowed by all
applicable Laws, including, but without limitation, the Uniform Commercial Code
as enacted in any jurisdiction in which any Collateral may be located. Without
limiting the generality of the foregoing, the Bank may immediately, without
demand for performance and without other notice (except as specifically required
by this Agreement or any of the other Loan Documents, or as required by law and
which cannot be waived) or demand to the Borrower, all of which are hereby
expressly waived, and without advertisement, sell at public or private sale or
otherwise realize upon, the whole or, from time to time, any part of the
Collateral, or any interest which the Borrower may have therein. After
deducting from the proceeds of sale or other disposition of the Collateral all
expenses (including all reasonable expenses for legal services), the Bank shall
apply such proceeds toward the satisfaction of the Obligations in such order as
the Bank may elect. Any remainder of the proceeds after satisfaction in full of
the Obligations shall be distributed as required by applicable Laws. Notice of
any sale or other disposition shall be given to the Borrower at least five (5)
days before the time of any intended public sale or of the time after which any
intended private sale or other disposition of the Collateral is to be made,
which the Borrower hereby agrees shall be reasonable notice of such sale or
other disposition. The Borrower agrees to assemble, or to cause to be
assembled, at its own expense, the Collateral at such place or places as the
Bank shall designate. At any such sale or other disposition, the Bank may, to
the extent permissible under applicable Laws, purchase the whole or any part of
the Collateral, free from any right of redemption on the part of the Borrower,
which right is hereby waived and released. Without limiting the generality of
any of the rights and remedies conferred upon the Bank under this paragraph, the
Bank may, to the full extent permitted by applicable Laws:
(A) Enter upon the premises of the Borrower, exclude therefrom the
Borrower or any Affiliate thereof, and take immediate possession of the
Collateral, either personally or by means of a receiver appointed by a court of
competent jurisdiction, using all necessary force to do so;
(B) At the Bank's option, use, operate, manage and control the
Collateral in any lawful manner;
(C) Collect and receive all rents, income, revenue, earnings, issues
and profits therefrom; and
21
(D) Maintain, repair, renovate, alter or remove the Collateral as the
Bank may determine in its discretion.
7.4 RIGHT OF SET-OFF. Upon the occurrence of any Event of Default, the
Bank may, and is hereby authorized by the Borrower, at any time and from time to
time, to the fullest extent permitted by applicable Laws, and without advance
notice to the Borrower (any such notice being expressly waived by the Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other Indebtedness at any time
owing by the Bank to, or for the credit or the account of, the Borrower against
any or all of the Obligations of the Borrower now or hereafter existing whether
or not such Obligations have matured and irrespective of whether the Bank has
exercised any other rights that it has or may have with respect to such
Obligations, including without limitation any acceleration rights. The
aforesaid right of set-off may be exercised by the Bank against the Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of the creditors, receiver, or execution, judgment or attachment
creditor of the Borrower, or such trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of set-off shall
not have been exercised by the Bank prior to the making, filing or issuance, or
service upon the Bank of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. The Bank agrees
to promptly notify the Borrower after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Bank under this Section 7.4 are
in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which the Bank may have.
ARTICLE VIII.
8. MISCELLANEOUS
8.1 CONSTRUCTION. The provisions of this Agreement shall be in addition
to those of any guaranty, pledge or security agreement, note or other evidence
of liability held by the Bank, all of which shall be construed as complementary
to each other. Nothing herein contained shall prevent the Bank from enforcing
any or all other notes, guaranties, pledges or security agreements in accordance
with their respective terms.
8.2 FURTHER ASSURANCE. From time to time, the Borrower will execute and
deliver to the Bank such additional Documents and will provide such additional
information as the Bank may reasonably require to carry out the terms of this
Agreement and be informed of the status and affairs of the Borrower.
8.3 INDEMNITY. The Borrower hereby agrees to indemnify the Bank and its
officers, directors, agents and attorney's against, and to hold the Bank and all
such other persons harmless from, any claims, demands, liabilities, costs,
damages, and judgments (including, without limitation, liability under any
Environmental Laws and costs of defense and attorneys' fees) resulting from any
representation or warranty made by Borrower or on Borrower's behalf pursuant to
Article V of this Agreement having been false when made, or resulting from
22
Borrower's breach of any of the covenants set forth in Article VI of this
Agreement. This agreement of indemnity shall be a continuing agreement and
shall survive payment of the Loan and termination of this Agreement.
8.4 ENFORCEMENT AND WAIVER BY THE BANK. The Bank shall have the right at
all times to enforce the provisions of this Agreement, the Term Note, and the
other Loan Documents in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the Bank in refraining from
so doing at any time or times. The failure of the Bank at any time or times to
enforce its rights under such provisions, strictly in accordance with the same,
shall not be construed as having created a custom in any way or manner contrary
to specific provisions of this Agreement or as having in any way or manner
modified or waived the same. All rights and remedies of the Bank are cumulative
and concurrent and the exercise of one right or remedy shall not be deemed a
waiver or release of any other right or remedy.
8.5 EXPENSES OF THE BANK. The Borrower will, on demand, reimburse the
Bank for all reasonable expenses, including the fees and expenses of legal
counsel for the Bank, incurred in connection with the preparation,
administration, amendment, modification or enforcement of this Agreement and the
other Loan Documents and the collection or attempted collection of the Loan and
the Term Note.
8.6 NOTICES. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or telegraph, as follows, unless such address is changed by written notice
hereunder:
(A) If to the Borrower:
KMG-Bernuth, Inc.
00000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
with copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxx
0000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
(B) If to the Bank:
SouthTrust Bank, National Association
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Metropolitan Lending
23
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Gordon, Silberman, Xxxxxxx & Childs, P.C.
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
8.7 WAIVER AND RELEASE BY THE BORROWER. To the maximum extent permitted
by applicable Laws, the Borrower:
(A) Waives protest of all commercial paper at any time held by the
Bank on which the Borrower is any way liable;
(B) Except as the same may herein be specifically granted, waives
notice of acceleration and of intention to accelerate;
(C) Waives notice and opportunity to be heard, after acceleration in
the manner provided in Section 7.2, before exercise by the Bank of the remedies
of self-help, set-off, or of other summary procedures permitted by any
applicable Laws or by any agreement with the Borrower, and except where required
hereby or by any applicable Laws which requirement cannot be waived, notice of
any other action taken by the Bank; and
(D) Releases the Bank and its officers, attorneys, agents and
employees from all claims for loss or damage caused by any act or omission on
the part of any of them except willful misconduct.
8.8 PARTICIPATION. Notwithstanding any other provision of this Agreement,
the Borrower understands that the Bank may enter into participation agreements
with Participants whereby the Bank will allocate certain percentages of its
commitment to them. The Borrower acknowledges that, for the convenience of all
parties, this Agreement is being entered into with the Bank only and that its
obligations under this Agreement are undertaken for the benefit of, and as an
inducement to each of any such Participant as well as the Bank, and the Borrower
hereby grants to each such Participant, to the extent of its participation in
the Loan, the right to set off deposit accounts maintained by the Borrower with
such Participant. The Borrower authorizes the Bank to disclose financial and
other information regarding the Borrower to Participants and potential
Participants.
8.9 GOVERNING LAW. This Agreement is entered into and performable in
Jefferson County, Alabama, and the substantive Laws, without giving effect to
principles of conflict of laws, of the United States and the State of Alabama
shall govern the construction of this Agreement and the documents executed and
delivered pursuant hereto, and the rights and remedies of the parties hereto and
thereto, except to the extent that the location of any Collateral in a state or
jurisdiction other than Alabama requires that the perfection of the Bank's
security interest hereunder, and the enforcement of certain of the Bank's
remedies with respect to the Collateral, be governed by the laws of such other
state or jurisdiction.
8.10 SUBMISSION TO JURISDICTION; WAIVERS.
(A) THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
24
(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
ALABAMA, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF ALABAMA, AND APPELLATE COURTS FROM ANY
THEREOF;
(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN
AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET
FORTH IN SECTION 8.6 OR AT SUCH OTHER ADDRESS OF WHICH THE BANK
SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND
(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
(B) THE BORROWER AND THE BANK HEREBY:
(1) IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE
AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH
RESPECT TO THIS AGREEMENT, THE TERM NOTE, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH
OR THEREWITH; AND
(2) AGREE THAT EITHER OF THEM MAY FILE A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE
TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND
WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.11 BINDING EFFECT, ASSIGNMENT. This Agreement shall inure to the benefit
of, and shall be binding upon, the respective successors and permitted assigns
of the parties hereto. The Borrower has no right to assign any of its rights or
obligations hereunder without the prior written consent of the Bank.
8.12 ENTIRE AGREEMENT, AMENDMENTS. This Agreement, including the Exhibits
hereto, all of which are hereby incorporated herein by reference, and the
documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties, and may be amended only by a writing signed on
behalf of each party.
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8.13 SEVERABILITY. If any provision of this Agreement, the Term Note, or
any of the other Loan Documents shall be held invalid under any applicable Laws,
such invalidity shall not affect any other provision of this Agreement or such
other instrument or agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
8.14 HEADINGS. The paragraph and subparagraph headings hereof are inserted
for convenience of reference only, and shall not alter, define, or be used in
construing the text of such paragraphs or subparagraphs.
8.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
8.16 SEAL. This Agreement is intended to take effect as an instrument
under seal.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the day and year
first above written.
THE BORROWER:
KMG-BERNUTH, INC.
By: /s/ Xxxxx X. Xxxxxxx [SEAL]
----------------------------------------
Xxxxx X. Xxxxxxx
Its: Vice President
THE BANK:
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx III [SEAL]
----------------------------------------
Xxxx X. Xxxxxxx III
-------------------------------------------
Its Group Vice Pres
----------------------------------------
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STATE OF TEXAS )
COUNTY OF XXXXXX )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that Xxxxx X. Xxxxxxx, whose name as Vice President of
KMG-Bernuth, Inc., a Delaware corporation, is signed to the foregoing
Agreement, and who is known to me, acknowledged before me on this day that,
being informed of the contents of said Agreement, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the 25th day of June, 1998.
/s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Notary Public
(SEAL) My Commission Expires: 7/11/2001
---------------
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that XXXX X. XXXXXXX III, whose name as GROUP VICE
PRESIDENT of SouthTrust Bank, National Association, a national banking
association, is signed to the foregoing Agreement, and who is known to me,
acknowledged before me on this day that, being informed of the contents of
said Agreement, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said banking association.
Given under my hand and official seal, this the 26th day of June, 1998.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Notary Public
(SEAL) My Commission Expires: 1/24/2000
---------------
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LIST OF EXHIBITS
"A" Form of Term Note
"B" Form of Opinion Letter
"C" Addresses of Leased Premises of Borrower
EXHIBIT "C"
LEASED PREMISES
1. Premises leased from Gulf Facilities, Inc.:
Xxxxxx Xxxxx & Mineral Xxxx
Xxxxxxxxxxx, Xxxxx 00000
2. Premises leased from International-Matex Tank Terminals:
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
3. 00000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
