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EXHIBIT 10.55
LOAN AGREEMENT
Among
GE CAPITAL PUBLIC FINANCE, INC.,
as Lender,
CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY,
as Issuer,
and
GT BICYCLES, INC.,
as Borrower
Dated as of September 1, 1997
This instrument constitutes a security agreement under the California Uniform
Commercial Code.
LOAN AGREEMENT
Lender:
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxx.
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Issuer:
California Economic Development Financing Authority
000 X Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Chair
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Borrower:
GT Bicycles, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
THIS LOAN AGREEMENT dated as of September 1, 1997 (this "Agreement")
among GE Capital Public Finance, Inc., a Delaware corporation, as lender (with
its successors and assigns, "Lender"), California Economic Development Financing
Authority, a body public and corporate, and a public instrumentality of the
State of California
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(the "State"), as issuer ("Issuer"), and GT Bicycles, Inc. a Delaware
corporation, as borrower ("Borrower").
WHEREAS, the Issuer was established for the purpose of promoting and
encouraging commerce and industry, and generally to xxxxxx economic development
in the State and is authorized to provide financing for private activity
economic development projects pursuant to the provisions of Section 15710 et
seq. of the California Government Code (constituting Part 10.2 of Division 3 of
Title 2 of the Government Code of the State of California, as now in effect and
as it may from time to time hereafter be amended or supplemented) (the "Act");
and
WHEREAS, Issuer is authorized to enter into loan agreements,
contracts and other instruments and documents necessary or convenient to obtain
loans for the purpose of facilitating the financing of economic development
projects as described in the Act; and
WHEREAS, in furtherance of the purposes of the Act, Issuer proposes
to finance all or a portion of the acquisition and installation of the Project
(as hereinafter defined) by Borrower pursuant to this Agreement by obtaining a
loan from Lender and lending the proceeds thereof to Borrower; and
WHEREAS, Borrower proposes to borrow the proceeds of the loan made
by Lender to Issuer upon the terms and conditions set forth herein to finance
the acquisition and installation of the Equipment and other property comprising
the Project; and
WHEREAS, Borrower shall make Loan Payments (as hereinafter defined)
directly to Lender as assignee of Issuer, pursuant to the terms set forth in
this Agreement; and
WHEREAS, this Agreement shall not be deemed to constitute a debt or
liability or moral obligation of the State or any political subdivision thereof,
or a pledge of the faith and credit or taxing power of the State or any
political subdivision thereof, but shall be a special obligation payable solely
from the Loan Payments payable hereunder by Borrower to Lender as assignee of
Issuer;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and in consideration of the premises contained in
this Agreement, Lender, Issuer and Borrower agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.01. Definitions. The following terms used herein will have
the meanings indicated below unless the context clearly requires otherwise:
"Acquisition Costs" means the contract price paid or to be paid to
the Vendors or reimbursed to Borrower for any portion of the Project upon
Borrower's acceptance thereof, including administrative, engineering, legal,
financial and other costs incurred by Lender, Issuer, Borrower, Escrow Agent and
Vendors in connection with the acquisition, installation and financing by Lender
of such portion of the Project and costs of issuance that may be paid pursuant
to the Tax Regulatory Agreement, which Acquisition Costs are set forth in
Exhibit A hereto.
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"Additional Collateral" means the property identified as Additional
Collateral on Exhibit C attached hereto, together with all replacement parts,
additions, repairs, accessions and accessories incorporated therein and/or
affixed to such property.
"Affiliate" means an affiliate of Lender or any related entity 100%
of whose common stock is directly or indirectly owned by Lender or an affiliate
of Lender.
"Agreement" means this Agreement, including all exhibits hereto, as
any of the same may be supplemented or amended from time to time in accordance
with the terms hereof.
"Borrower" means GT Bicycles, Inc., a Delaware corporation.
"Business Day" means a day other than a Saturday or Sunday on which
banks are generally open for business in New York, New York, San Francisco,
California and Minneapolis, Minnesota.
"Certificate of Acceptance" means a Certificate of Acceptance, in
substantially the form set forth as Exhibit B hereto, whereby Borrower
acknowledges receipt in good condition of particular portions of the Project
identified therein and confirms the date of delivery thereof and certain other
matters.
"Code" means the Internal Revenue Code of 1986, as amended, and
United States Treasury regulations promulgated thereunder.
"Default" means an event that, with giving of notice or passage of
time or both, would constitute an Event of Default as provided in Article XII
hereof.
"Determination of Taxability" means any determination, decision or
decree by the Commissioner of Internal Revenue, or any District Director of
Internal Revenue or any court of competent jurisdiction, or an opinion obtained
by Lender of counsel qualified in such matters and reasonably acceptable to
Issuer and Borrower, that an Event of Taxability shall have occurred. A
Determination of Taxability also shall be deemed to have occurred on the first
to occur of the following:
(a) the date when Borrower files any statement, supplemental
statement, or other tax schedule, return or document, which discloses that an
Event of Taxability shall have occurred; or
(b) the effective date of any federal legislation enacted after
the date of this Agreement or promulgation of any income tax regulation or
ruling by the Internal Revenue Service that causes an Event of Taxability after
the date of this Agreement.
"Environmental Laws" has the meaning ascribed thereto in paragraph
(h) of Article V hereof.
"Equipment" means the property identified in Exhibit A hereto to be
used in connection with Borrower's operations (including, to the extent
permitted pursuant to the Code without jeopardizing the tax-exempt status of the
Interest, certain items originally financed through internal advances of
Borrower in anticipation of obtaining permanent financing through Issuer),
together with all
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replacement parts, additions, repairs, accessions and accessories incorporated
therein and/or affixed to such property.
"Escrow Agent" means First Trust of California, National
Association, as escrow agent under the Escrow Agreement, and its successors and
assigns permitted under the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement dated as of September
1, 1997 among Lender, Issuer, Borrower and Escrow Agent.
"Escrow Fund" means the fund established and held by Escrow Agent
pursuant to the Escrow Agreement.
"Event of Taxability" means the inclusion of interest on the loan
from Lender to Issuer in Lender's gross income (but not including the effect of
any alternative minimum tax, environmental tax, so-called "de minimus rule" or
other similar tax effect) as the result of (i) any act, failure to act or use of
the proceeds of the Loan, (ii) a change in use of the Project, (iii) any
misrepresentation or inaccuracy in any of the representations, warranties or
covenants contained in this Agreement or the Tax Regulatory Agreement by Issuer
or Borrower, (iv) the enactment of any federal legislation after the date of
this Agreement, (v) the promulgation of any income tax regulation or ruling by
the Internal Revenue Service after the date of this Agreement or (vi) the entry
of a non-appealable final judgment or determination by the Internal Revenue
Service or a court of competent jurisdiction.
"Gross-Up Rate" means, with respect to any Interest payment
(including payments made prior to the Event of Taxability), the rate necessary
to calculate an additional payment in an amount sufficient such that the sum of
the Interest payment plus the additional payments would, after being reduced by
the federal tax (including interest and penalties, but not including the effect
of any alternative minimum tax, environmental tax or other similar tax effect)
actually imposed thereon, equal the amount of the Interest payment.
"Interest" means the portion of any payment from Issuer to Lender
designated as and comprising interest as shown in Exhibit A hereto.
"Issuer" means California Economic Development Financing Authority,
acting as issuer under this Agreement.
"Lender" means (i) GE Capital Public Finance, Inc., acting as lender
under this Agreement, (ii) any surviving, resulting or transferee corporation of
GE Capital Public Finance, Inc. and (iii) except where the context requires
otherwise, any assignee(s) of Lender.
"Loan" means the loan from Issuer to Borrower pursuant to this
Agreement.
"Loan Payments" means the loan payments payable by Borrower pursuant
to the provisions of this Agreement as specifically set forth in Exhibit A
hereto. As provided in Article II hereof, Loan Payments shall be payable by
Borrower directly to Lender, as assignee of Issuer, in the amounts and at the
times as set forth in Exhibit A hereto.
"Loan Proceeds" means the total amount of money to be paid pursuant
to Section 2.02 hereof by Lender to Escrow Agent for deposit and application in
accordance with the Escrow Agreement.
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"Prepayment Amount" means the amount which Borrower may or must from
time to time pay or cause to be paid to Lender as assignee of Issuer in order to
prepay the Loan, as provided in Section 2.07 hereof, such amounts being set
forth in Exhibit A hereto, together with accrued interest and all other amounts
due hereunder.
"Principal" means the portion of any Loan Payment designated as
principal in Exhibit A hereto.
"Project" means the Equipment and additional property and leasehold
improvements to be acquired, constructed, equipped, installed and used in
connection with Borrower's operations as described in Exhibit A attached hereto.
"Purchase Agreements" means Borrower's purchase agreements or other
contracts with Vendors of the Project.
"Qualified Institutional Buyer" shall have the meaning ascribed
thereto in Rule 144A of the Securities Act of 1933, as amended.
"State" means the State of California.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement of
even date herewith between Borrower and Issuer, as such Tax Regulatory Agreement
may be amended from time to time in accordance with its terms.
"UCC" means the Uniform Commercial Code as adopted and in effect in
the State.
"Vendor" means the contractor, manufacturer or vendor of a portion
of the Project, as well as the agents or dealers of the manufacturer, from whom
Borrower has purchased or is purchasing items of the Project.
Section 1.02. Exhibits. The following exhibits are attached hereto
and made a part hereof:
Exhibit A: Schedule of the Project and Loan Payments describing the
Project and setting forth the Loan Payments and Prepayment Amounts. Issuer
hereby authorizes Lender to insert in Exhibit A the serial or other identifying
numbers relating to the Equipment when available.
Exhibit B: Form of Certificate of Acceptance.
Exhibit C: Description of Additional Collateral.
Exhibit D: Form of Investor's Letter of Representation.
Exhibit E: Schedule of Pending Litigation.
Section 1.03. Rules of Construction. (a) The singular form of any
word used herein, including the terms defined in Section 1.01 hereof, shall
include the plural, and vice versa. The use herein of a word of any gender shall
include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and
other subdivisions of this Agreement are to the designated Articles, Sections
and other subdivision of this Agreement as originally executed. The words
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"hereof," "herein," "hereunder" and words of similar import refer to this
Agreement as a whole.
(c) The headings or titles of the several articles and sections
shall be solely for convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
ARTICLE II
FINANCING OF PROJECT AND TERMS OF LOAN
Section 2.01. Acquisition of Project. Borrower either has
constructed, installed or ordered or shall construct, install or order the
Project pursuant to one or more Purchase Agreements from one or more Vendors.
Borrower shall remain liable to the Vendor or Vendors in respect of its duties
and obligations in accordance with each Purchase Agreement and shall bear the
risk of loss with respect to any loss or claim relating to any portion of the
Project covered by any Purchase Agreement, and neither Lender nor Issuer shall
assume any such liability or risk of loss. Borrower covenants and agrees to pay
or cause to be paid such amounts as may be necessary to complete the
construction, acquisition and installation of the Project and to ensure that the
Project is operational to the extent that the Loan Proceeds are insufficient to
cause such construction, acquisition and installation.
Section 2.02. Loan. Lender hereby agrees, subject to the terms and
conditions of this Agreement, to make a loan to Issuer in the amount of
$5,000,000; Issuer hereby agrees, subject to the terms and conditions of this
Agreement, to borrow such amount from Lender and to lend such amount to
Borrower; and Borrower hereby agrees to borrow such amount from Issuer. Upon
fulfillment of the conditions set forth in Article III hereof, Lender shall
deposit the Loan Proceeds in the Escrow Fund to be held, invested and disbursed
as provided in the Escrow Agreement. Issuer's obligation to repay the loan from
Lender, and Borrower's obligation to repay the Loan, shall commence, and
interest shall begin to accrue, on the date that Loan Proceeds are deposited in
the Escrow Fund.
Section 2.03. Interest. The principal amount of the loan from Lender
to Issuer and the Loan hereunder outstanding from time to time shall bear
interest (computed on the basis of actual days elapsed in a 360-day year) at the
rate of six and five hundredths percent (6.05%) per annum. Interest accruing on
the principal balance of such loans outstanding from time to time shall be
payable as provided in Exhibit A and upon earlier demand in accordance with the
terms hereof or prepayment in accordance with Section 2.07 hereof. Upon the
occurrence of a Determination of Taxability, Borrower shall, with respect to
future interest payments, begin making Loan Payments calculated at the Gross-Up
Rate. In addition, Borrower shall make immediately upon demand of Lender a
payment to Lender sufficient to supplement prior Loan Payments to the Gross-Up
Rate.
Section 2.04. Payments. Issuer shall pay the principal of, premium,
if any in accordance with Section 2.07 hereof, and interest on the loan from
Lender to Issuer, but only out of the amounts paid by Borrower pursuant to this
Agreement. Borrower shall pay to Lender, as assignee of Issuer, Loan Payments,
in the amounts and on the dates set forth in Exhibit A hereto. As security for
its obligation to pay the principal of, premium, if any in accordance with
Section 2.07 hereof, and interest on the loan from Lender, Issuer assigns to
Lender all of Issuer's right to receive Loan Payments from Borrower hereunder,
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all of Issuer's rights hereunder (except for the right to receive any Additional
Payments to the extent payable to Issuer, any rights of Issuer to
indemnification and rights of notice, inspection and consent) and all of
Issuer's right, title and interest in and to the Equipment and Additional
Collateral, and Issuer irrevocably constitutes and appoints Lender and any
present or future officer or agent of Lender as its lawful attorney, with full
power of substitution and resubstitution, and in the name of Issuer or
otherwise, to collect the Loan Payments and any other payments due hereunder and
to xxx in any court for such Loan Payments or other payments, to exercise all
rights hereunder with respect to the Equipment and/or Additional Collateral, and
to withdraw or settle any claims, suits or proceedings pertaining to or arising
out of this Agreement upon any terms. Such Loan Payments and other payments
shall be made by Borrower directly to Lender, as Issuer's assignee, and shall be
credited against Issuer's payment obligations hereunder. No provision, covenant
or agreement contained in this Agreement or any obligation imposed on Issuer
herein, or the breach thereof, shall constitute or give rise to or impose upon
Issuer a pecuniary liability, a charge upon its general credit or taxing powers
or a pledge of its general revenues. In making the agreements, provisions and
covenants set forth in this Agreement, Issuer has not obligated itself except
with respect to the application of the Loan Payments to be paid by Borrower
hereunder. All amounts required to be paid by Borrower hereunder shall be paid
in lawful money of the United States of America in immediately available funds.
No recourse shall be had by Lender or Borrower for any claim based on this
Agreement or the Tax Regulatory Agreement against any director, officer,
employee, counsel or agent of Issuer alleging personal liability on the part of
such person, unless such claim is based on the willful dishonesty of or
intentional violation of law by such person.
Section 2.05 Payment on Non-Business Days. Whenever any payment to
be made hereunder shall be stated to be due on a day which is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest
or the fees hereunder, as the case may be.
Section 2.06. Loan Payments To Be Unconditional. The obligations of
Borrower to make the Loan Payments required under this Article II and to make
other payments hereunder and to perform and observe the covenants and agreements
contained herein shall be absolute and unconditional in all events, without
abatement, diminution, deduction, setoff or defense for any reason, including
(without limitation) any failure of the Project to be delivered or installed,
any defects, malfunctions, breakdowns or infirmities in the Project or any
accident, condemnation, destruction or unforeseen circumstances. Notwithstanding
any dispute between Borrower and any of Issuer, Lender, any Vendor or any other
person, Borrower shall make all Loan Payments when due and shall not withhold
any Loan Payments pending final resolution of such dispute, nor shall Borrower
assert any right of set-off or counterclaim against its obligation to make such
payments required under this Agreement.
Section 2.07. Prepayments. (a) Borrower may, in its discretion,
prepay the Loan in whole at any time by paying the applicable Prepayment Amount.
(b) Borrower shall prepay the Loan in whole or in part at any time
pursuant to Article X hereof by paying the applicable Prepayment Amount.
(c) Borrower shall prepay the Loan in full immediately upon demand
of Lender after the occurrence of an Event of Default by paying the applicable
Prepayment Amount.
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(d) Borrower shall prepay the Loan in full immediately upon demand
of Lender after the occurrence of a Determination of Taxability by paying the
applicable Prepayment Amount plus an amount necessary to supplement the prior
Loan Payments to the Gross-Up Rate.
(e) The amounts due hereunder shall be repaid in part, without
penalty or premium, with funds remaining in the Escrow Fund upon termination of
the Escrow Agreement as provided in Sections 2.03 or 2.04 of the Escrow
Agreement.
(f) Borrower may prepay the Loan in full at any time as provided in
Sections 9.02 or 9.03 hereof by paying the applicable Prepayment Amount.
Upon any prepayment in part of the Loan, the prepayment shall be
applied first to interest accrued thereon and next to the Principal portion of
the Loan Payments in the inverse order of maturity.
Section 2.08. Special Obligations. The loan from Lender to Issuer as
provided herein, together with the interest thereon, shall not be deemed to
constitute a debt or liability of the State or any political subdivision thereof
or a pledge of the faith and credit of the State or any political subdivision
thereof, but shall be payable solely from the funds provided therefor pursuant
to this Agreement. The loan from Lender to Issuer as provided herein is only a
special obligation of Issuer as provided by the Act, and Issuer shall under no
circumstances be obligated to pay such loan and the interest and premium, if
any, thereon or any Acquisition Cost except from Loan Payments received from
Borrower and other funds pledged therefor.
Neither the faith and credit nor the taxing power of the State or
any political subdivision of the State, is pledged to the payment of the
principal of, premium, if any, or interest on the loan from Lender to Issuer as
provided herein, nor is the State or any political subdivision of the State, in
any manner obligated to make any appropriation for such payment. Issuer has no
taxing power.
Section 2.09. Additional Payments. Borrower shall pay to the Issuer
or to Lender, as appropriate, the following "Additional Payments" in addition to
the Loan Payments payable by Borrower: such amounts incurred by Lender or Issuer
after the closing as shall be required by Lender or Issuer in payment of any
reasonable costs and expenses incurred in connection with the performance or
enforcement of this Agreement, and the financing of the Project, including but
not limited to: (a) application, commitment or financing fees, if any; (b)
indemnification payments pursuant to Section 8.03 and 8.06 hereof; all taxes and
assessments of any type or character charged to the Issuer or Lender affecting
the amount available to the Issuer from payments to be received hereunder or in
any way arising due to the transactions contemplated hereby (including taxes and
assessments assessed or levied by any public agency or governmental authority of
whatsoever character having power to levy taxes or assessments), but excluding
franchise taxes based upon the capital and/or income of the Issuer or Lender and
taxes based upon or measured by the net income of the Issuer or Lender; (c) the
reasonable fees and expenses of such accountants, consultants, attorneys and
other experts as may be engaged by Issuer or Lender to prepare audits, financial
statements, reports or opinions or to provide such other services required under
this Agreement, or otherwise in connection with the enforcement of the Loan; (d)
insurance premiums not paid hereunder; and (e) all other reasonable, direct and
necessary administrative costs of Lender or Issuer and such other charges
required to be paid in order to enforce its rights under this Agreement. Such
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Additional Payments shall be billed to Borrower by Lender or Issuer, as the case
may be, from time to time, together with a statement certifying that the amount
so billed has been paid for one or more of the items described, or that such
amount is then payable for such items. Amounts so billed shall be due and
payable by Borrower within 30 days after receipt of the xxxx by Borrower.
ARTICLE III
CONDITIONS PRECEDENT
Lender's agreement to make the loan to Issuer hereunder and to
disburse the Loan Proceeds shall be subject to the condition precedent that
Lender shall have received all of the following, each in form and substance
satisfactory to Lender:
(a) This Agreement, properly executed on behalf of Issuer and
Borrower, and each of the Exhibits hereto properly completed.
(b) The Tax Regulatory Agreement, properly executed on behalf of
Issuer and Borrower.
(c) The Escrow Agreement, properly executed on behalf of Issuer,
Lender, Borrower and Escrow Agent.
(d) A certificate of the Secretary or an Assistant Secretary of
Borrower, certifying as to (i) the resolutions of the board of directors and, if
required, the shareholders of Borrower, authorizing the execution, delivery and
performance of this Agreement, the Escrow Agreement and the Tax Regulatory
Agreement and any related documents, (ii) the bylaws of Borrower, and (iii) the
signatures of the officers or agents of Borrower authorized to execute and
deliver this Agreement, the Escrow Agreement and the Tax Regulatory Agreement
and other instruments, agreements and certificates on behalf of Borrower.
(e) Currently certified copies of the Certificate of
Incorporation of Borrower.
(f) A Certificate of Good Standing issued as to Borrower by the
Secretary of the State of the state of Borrower's incorporation not more than 10
days prior to the date hereof.
(g) A Certificate of Status--Foreign Corporation issued by the
Secretary of State of the State dated not more than 10 days prior to the date of
closing.
(h) Certificates of the insurance required hereunder, containing
a lender's loss payable clause or endorsement in favor of Lender.
(i) A completed and executed Form 8038 or evidence of filing
thereof with the Secretary of Treasury.
(j) A resolution or evidence of other official action taken by
or on behalf of Issuer to authorize the transactions contemplated hereby.
(k) Evidence that the financing of the Project has been approved
by the "applicable elected representative" of the State after a public hearing
held upon reasonable notice.
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(l) A true and correct copy of any and all leases pursuant to
which Borrower is leasing the property where the Equipment or the Additional
Collateral will be located, together with a landlord's disclaimer and consent
with respect to each such lease.
(m) A true and correct copy of any and all mortgages, deeds of
trust or similar agreements (whether or not Borrower is a party to any such
agreement) relating to the property where the Equipment or the Additional
Collateral will be located, together with a mortgagee's waiver with respect to
each such mortgage, deed of trust or similar agreement.
(n) As applicable, financing statements executed by Borrower, as
debtor, and naming Issuer, as secured party, and Lender, as assignee, and/or the
original certificate of title or manufacturer's certificate of origin and title
application if any of the Equipment or Additional Collateral is subject to
certificate of title laws.
(o) Current searches of appropriate filing offices showing that
(i) no state, federal tax liens or judgment liens have been filed and remain in
effect against Borrower, (ii) no financing statements have been filed and remain
in effect against Borrower relating to the Equipment or the Additional
Collateral except those financing statements filed by Lender, (iii) Lender has
duly filed all financing statements necessary to perfect the security interest
created pursuant to this Agreement and (iv) Lender has duly filed all financing
statements necessary to perfect the transfer of Issuer's interest in this
Agreement and the Loan Payments.
(p) An opinion of counsel to Borrower, addressed to Lender and
Issuer, in form and substance acceptable to Lender and Issuer.
(q) An opinion of counsel to Issuer, addressed to Lender and
Borrower, in form and substance acceptable to Lender and Borrower.
(r) An opinion of special counsel, addressed to Lender, Issuer
and Borrower, in form and substance acceptable to Lender, Issuer and Borrower.
(s) Payment of Lender's fees, commissions and expenses required
by Section 13.01 hereof.
(t) Payment of Issuer's fees, commissions and expenses incurred
in connection with this Agreement and the transactions contemplated hereby.
(u) An investor letter of representation executed by Lender and
addressed to Issuer and Borrower, in the form attached hereto as Exhibit D.
(v) Any other documents or items required by Lender.
Lender's agreement to make the loan to Issuer hereunder, to disburse
the Loan Proceeds and to consider approval of any disbursement from the Escrow
Fund shall be subject to the further conditions precedent that on the date
thereof:
(w) Lender shall have received each of the items required for a
disbursement pursuant to the Escrow Agreement;
(x) Lender shall have received in form and substance
satisfactory to Lender Vendor invoice(s) and/or xxxx(s) of sale relating to the
Project and, if such invoices have been paid by Issuer or Borrower, evidence of
payment
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thereof and, if applicable, evidence of official intent to reimburse such
payment as required by the Code;
(y) the representations and warranties contained in Articles IV
and V hereof are correct on and as of the date of such disbursement as though
made on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date; and
(z) no event has occurred and is continuing, or would result
from such loan to Issuer or the Loan which constitutes a Default, an Event of
Default or a Determination of Taxability.
(aa) Borrower has provided to Lender all of the UCC releases
that Lender requires in order that Lender, as assignee of Issuer, will have a
valid first priority perfected security interest in the Equipment and the
Additional Collateral.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER
Issuer represents, warrants and covenants for the benefit of Lender
and Borrower, as follows:
(a) Issuer is a body public and corporate, and a public
instrumentality of the State, organized and existing by virtue of the laws of
the State.
(b) Issuer will exercise its best efforts to preserve and keep
in full force and effect its existence as a body public and corporate, and a
public instrumentality of the State.
(c) Issuer is authorized under the Act to enter into this
Agreement, the Escrow Agreement, the Tax Regulatory Agreement and the
transactions contemplated hereby and to perform all of its obligations
hereunder.
(d) Issuer has duly authorized the execution and delivery of
this Agreement, the Escrow Agreement and the Tax Regulatory Agreement under the
terms and provisions of the resolution adopted by its Board of Directors, and
further represents, covenants and warrants that all requirements have been met
and procedures have occurred in order to ensure the enforceability of this
Agreement, the Escrow Agreement and the Tax Regulatory Agreement against Issuer.
Issuer has taken all necessary action and has complied with all provisions of
the Act, including but not limited to the making of the findings required by the
Act, required to make this Agreement, the Escrow Agreement and the Tax
Regulatory Agreement the valid and binding obligation of Issuer.
(e) The authorized officer of the Board of Directors of Issuer
executing this Agreement and any related documents has been duly authorized to
execute and deliver this Agreement, the Escrow Agreement and the Tax Regulatory
Agreement and such related documents under the terms and provisions of a
resolution of Issuer or by other appropriate official action.
(f) This Agreement, the Escrow Agreement and the Tax Regulatory
Agreement are legal, valid and binding obligations of Issuer, enforceable in
accordance with their respective terms, except to the extent limited by
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bankruptcy, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights, to the application of equitable
principles, and to the limitations on enforcement remedies against public
entities in California.
(g) Issuer has assigned to Lender all of Issuer's rights in the
Equipment, the Additional Collateral and this Agreement (except any
indemnification payable to Issuer, rights to notice, the right to receive
Additional Payments to the extent payable to Issuer and any rights to inspection
and consent hereunder) including the assignment of all rights in the security
interest granted to Issuer by Borrower.
(h) Issuer will not pledge, mortgage or assign this Agreement or
its duties and obligations hereunder to any person, firm or corporation, except
as provided under the terms hereof.
(i) None of the execution and delivery of this Agreement, the
Escrow Agreement or the Tax Regulatory Agreement, the consummation of the
transactions contemplated hereby or the fulfillment of or compliance with the
terms and conditions of this Agreement, the Escrow Agreement or the Tax
Regulatory Agreement violates any law, rule, regulation or order, conflicts with
or results in a breach of any of the terms, conditions or provisions of any
restriction or any agreement or instrument to which Issuer is now a party or by
which it is bound or constitutes a default under any of the foregoing or results
in the creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of Issuer under the
terms of any instrument or agreement.
(j) There is no action, suit, proceeding, claim, inquiry or
investigation, at law or in equity, before or by any court, regulatory agency,
public board or body pending or, to the best of Issuer's knowledge, threatened
against or affecting Issuer, challenging Issuer's authority to enter into this
Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other
action wherein an unfavorable ruling or finding would adversely affect the
enforceability of this Agreement, the Escrow Agreement or the Tax Regulatory
Agreement or any other transaction of Issuer which is similar hereto, or the
exclusion of the Interest from gross income for federal tax purposes under the
Code, or would materially and adversely affect any of the transactions
contemplated by this Agreement.
(k) Issuer will submit or cause to be submitted to the Internal
Revenue Service a Form 8038 (or other information reporting statement) at the
time and in the form required by the Code.
(l) The financing of the Project has been approved by an
"applicable elected representative" (as defined in Section 147(f) of the Code)
of the State after a public hearing held upon reasonable notice.
(m) Issuer will comply fully at all times with provisions
contained in the Tax Regulatory Agreement that directly relate to Issuer, and
Issuer will not take any action, or omit to take any action, which, if taken or
omitted, respectively, would violate the Tax Regulatory Agreement.
(n) Issuer will take no action that would cause the Interest to
become includable in gross income for federal income tax purposes under the Code
(including, without limitation, intentional acts under Treas. Reg. Section
1.148-2(c) or consenting to a deliberate action within the meaning of Treas.
Reg. Section 1.141
13
2(d)), and Issuer will take and will cause its officers, employees and agents
to take all affirmative actions legally within its power necessary to ensure
that the Interest does not become includable in gross income of the recipient
for federal income tax purposes under the Code (including, without limitation,
the calculation and payment of any rebate required to preserve such exclusion).
(o) To the best knowledge of Issuer, no member, officer or other
official of Issuer has any financial interest whatsoever in Borrower or in the
transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER
Borrower represents, warrants and covenants for the benefit of
Lender and Issuer, as follows:
(a) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware, has power to enter
into this Agreement and by proper corporate action has duly authorized the
execution and delivery of this Agreement, the Escrow Agreement and the Tax
Regulatory Agreement. Borrower is in good standing and is duly licensed or
qualified to transact business in the State and in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary.
(b) Borrower has been fully authorized to execute and deliver
this Agreement, the Escrow Agreement and the Tax Regulatory Agreement under the
terms and provisions of the resolution of its board of directors, or by other
appropriate official approval, and further represents, covenants and warrants
that all requirements have been met, and procedures have occurred in order to
ensure, to the extent permitted by law, the enforceability of this Agreement,
the Escrow Agreement and the Tax Regulatory Agreement and this Agreement, the
Escrow Agreement and the Tax Regulatory Agreement have been duly authorized,
executed and delivered.
(c) The officer of Borrower executing this Agreement, the Escrow
Agreement and the Tax Regulatory Agreement and any related documents has been
duly authorized to execute and deliver this Agreement, the Escrow Agreement and
the Tax Regulatory Agreement and such related documents under the terms and
provisions of a resolution of Borrower's board of directors.
(d) This Agreement, the Escrow Agreement and the Tax Regulatory
Agreement constitute valid and legally binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except
to the extent limited by bankruptcy, reorganization or other laws and equitable
principles of general application relating to effecting the enforcement of
creditors' rights.
(e) The execution and delivery of this Agreement, the Escrow
Agreement and the Tax Regulatory Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms and conditions hereof do
not and will not violate any law, rule, regulation or order, conflict with or
result in a breach of any of the terms or conditions of the articles of
incorporation or bylaws of Borrower or of any corporate restriction or of any
agreement or instrument to which Borrower is now a party and do not and will not
14
constitute a default under any of the foregoing or result in the creation or
imposition of any liens, charges or encumbrances of any nature upon any of the
property or assets of Borrower contrary to the terms of any instrument or
agreement.
(f) The authorization, execution, delivery and performance of
this Agreement by Borrower do not require submission to, approval of, or other
action by any governmental authority or agency, which action with respect to
this Agreement has not been taken and which is final and nonappealable or will
not be taken within the time required by this Agreement or by applicable law.
(g) Except as has been disclosed in Exhibit E hereto, there is
no action, suit, proceeding, claim, inquiry or investigation, at law or in
equity, before or by any court, regulatory agency, public board or body pending
or, to the best of Borrower's knowledge, threatened against or affecting
Borrower, challenging Borrower's authority to enter into this Agreement, the
Escrow Agreement or the Tax Regulatory Agreement or any other action wherein an
unfavorable ruling or finding would adversely affect the enforceability of this
Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other
transaction of Borrower which is similar hereto, or the exclusion of the
Interest from gross income for federal tax purposes under the Code, or would
materially and adversely affect any of the transactions contemplated by this
Agreement.
(h) The property at which the Equipment and the Additional
Collateral is located is properly zoned for its current and anticipated use and
the use of the Equipment and the Additional Collateral and the operation of the
Project and will not violate any applicable zoning, land use, environmental or
similar law or restriction. Borrower has or will have at the time the related
disbursement is requested from the Escrow Fund all licenses and permits to use
the Equipment and the Additional Collateral and operate the Project. Borrower
has or will have at the time the related disbursement is requested from the
Escrow Fund obtained all permits, licenses and other authorizations which are
required under federal, state and local laws relating to emissions, discharges,
releases of pollutants, contaminants, hazardous or toxic materials, or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") at the Borrower's facilities or in
connection with the operation of its facilities. Except as previously disclosed
to Lender in writing, Borrower and all activities of the Borrower at its
facilities comply with all Environmental Laws and with all terms and conditions
of any required permits, licenses and authorizations applicable to Borrower with
respect thereto. Except as previously disclosed to Lender in writing, Borrower
is also in compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
Environmental Laws or contained in any plan, order, decree, judgment or notice
of which Borrower is aware. Except as previously disclosed to Lender in writing,
Borrower is not aware of, nor has Borrower received notice of, any events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent continued compliance with, or which may give
rise to any liability under, any Environmental Laws.
(i) The Project will be used to manufacture and distribute
bicycles and bicycle related parts and accessories or for the production of
other tangible personal property.
15
(j) Borrower owns or will own the Project and intends to operate
the Project, or cause the Project to be operated, as an "economic development
project," within the meaning of the Act, until the date on which all of the Loan
Payments have been fully paid or the applicable Prepayment Amount has been fully
paid.
(k) Borrower will not take any action that would cause the
Interest to become includable in gross income of the recipient for federal
income tax purposes under the Code (including, without limitation, intentional
acts under Treas. Reg. Section 1.148-2(c) or deliberate action within the
meaning of Treas. Reg. Section 1.141-2(d)), and Borrower will take and will
cause its officers, employees and agents to take all affirmative actions legally
within its power necessary to ensure that the Interest does not become
includable in gross income of the recipient for federal income tax purposes
under the Code (including, without limitation, the calculation and payment of
any rebate required to preserve such exclusion).
(l) Borrower has heretofore furnished to Lender the audited
financial statements of Borrower for its fiscal years ended December 31, 1993,
December 31, 1994, December 31, 1995 and December 31, 1996 and the unaudited
financial statement of Borrower for the months ended June 30, 1997, and those
statements fairly present the financial condition of Borrower on the dates
thereof and the results of its operations and cash flows for the periods then
ended and were prepared in accordance with generally accepted accounting
principles. Since the date of the most recent financial statements, there has
been no material adverse change in the business, properties or condition
(financial or otherwise) of Borrower.
(m) Borrower has paid or caused to be paid to the proper
authorities when due all federal, state and local taxes required to be withheld
by it. Borrower has filed all federal, state and local tax returns which are
required to be filed, and Borrower has paid or caused to be paid to the
respective taxing authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become due.
(n) Borrower has or will have good and absolute title to all
Equipment, Additional Collateral and all proceeds thereof, free and clear of all
mortgages, security interests, liens and encumbrances except for the security
interest created pursuant to this Agreement.
(o) All financial and other information provided to Lender by or
on behalf of Borrower in connection with Borrower's request for the Loan
contemplated hereby is true and correct in all material respects, and Borrower
has not failed to provide Lender with any material information with respect to
Borrower or its financial or operating condition.
(p) Borrower has provided to Lender signed financing statements
sufficient when filed to perfect the security interest created pursuant to this
Agreement. When such financing statements are filed in the offices noted
therein, Lender, as assignee of Issuer, will have a valid and perfected security
interest in the Equipment and the Additional Collateral, subject to no other
security interest, assignment, lien or encumbrance. None of the Equipment or the
Additional Collateral is or will become a permanent fixture on real estate. None
of the Equipment or the Additional Collateral constitutes a replacement of,
substitution for or accessory to any property of Borrower subject to a lien of
any kind. Borrower leases the real property where the Equipment and the
16
Additional Collateral will be located pursuant to the lease dated January 3,
1997 between Borrower and Zeno Table Company, a California corporation.
(q) Upon delivery and installation of the Equipment, Borrower
will provide to Issuer and Lender a completed and executed copy of the
Certificate of Acceptance attached hereto as Exhibit B.
(r) Borrower will aid and assist Issuer in connection with
preparing and submitting to the Internal Revenue Service a Form 8038 (or other
applicable information reporting statement) at the time and in the form required
by the Code.
(s) Borrower will comply fully at all times with the Tax
Regulatory Agreement, and Borrower will not take any action, or omit to take any
action, which, if taken or omitted, respectively, would violate the Tax
Regulatory Agreement, and the representations and warranties contained in the
Tax Regulatory Agreement are true and correct.
(t) Expenses for work done by officers or employees of Borrower
in connection with the Project will be included as an Acquisition Cost, if at
all, only to the extent (i) such persons were specifically employed for such
particular purpose, (ii) the expenses do not exceed the actual cost thereof and
(iii) such expenses are treated or capable of being treated (whether or not so
treated) on the books of Borrower as a capital expenditure in conformity with
generally accepted accounting principles applied on a consistent basis.
(u) Any costs incurred with respect to that part of the Project
paid from the Loan Proceeds shall be treated or capable of being treated on the
books of Borrower as capital expenditures in conformity with generally accepted
accounting principles applied on a consistent basis.
(v) No part of the Loan Proceeds will be used to finance
inventory or rolling stock or will be used for working capital or to finance any
other cost not constituting an Acquisition Cost.
(w) No person other than Borrower is in occupancy or possession
of any portion of the real property where the Equipment and the Additional
Collateral are located.
(x) The Project is property of the character subject to the
allowance for depreciation under Section 167 of the Code.
(y) To the best of Borrower's knowledge, no member, officer or
other official of Issuer has any financial interest whatsoever in Borrower or in
the transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF LENDER
Lender represents and warrants for the benefit of Issuer and
Borrower, as follows:
(a) Lender is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has power to enter into
this Agreement and by proper corporate action has duly authorized the execution
and
17
delivery of this Agreement, the Escrow Agreement and the Tax Regulatory
Agreement.
(b) This Agreement the Escrow Agreement and the Tax Regulatory
Agreement constitute valid and legally binding obligations of Lender,
enforceable against Lender in accordance with their respective terms, except to
the extent limited by bankruptcy, reorganization or other laws of general
application relating to effecting the enforcement of creditors' rights.
(c) The execution and delivery of this Agreement, the Escrow
Agreement and the Tax Regulatory Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms and conditions hereof do
not and will not violate any law, rule, regulation or order, conflict with or
result in a breach of any of the terms or conditions of the articles or
certificate of incorporation or bylaws of Lender or of any corporate restriction
or of any agreement or instrument to which Lender is now a party and do not and
will not constitute a default under any of the foregoing or result in the
creation or imposition of any liens, charges or encumbrances of any nature upon
any of the property or assets of Lender contrary to the terms of any instrument
or agreement.
(d) There is no action, suit, proceeding, claim, inquiry or
investigation, at law or in equity, before or by any court, regulatory agency,
public board or body pending or, to the best of Lender's knowledge, threatened
against or affecting Lender, challenging Lender's authority to enter into this
Agreement, the Escrow Agreement or the Tax Regulatory Agreement or any other
action wherein an unfavorable ruling or finding would adversely affect the
enforceability of this Agreement, the Escrow Agreement or the Tax Regulatory
Agreement or any other transaction of Lender which is similar hereto, or the
exclusion of the Interest from gross income for federal income tax purposes
under the Code, or would materially and adversely affect any of the transactions
contemplated by this Agreement.
(e) Lender has sufficient knowledge and experience in financial and
business matters, including purchase and ownership of municipal and other
tax-exempt obligations, to be able to evaluate the risks and merits of the
investment represented by this Agreement including the payments of principal of,
premium, if any, and interest on the loan from Lender to Issuer and the Loan
Payments, and is able to bear the economic risk of such investment. Lender has
made its own inquiry and analysis with respect to Borrower, Issuer, this
Agreement, the payments of principal of, premium, if any, and interest on the
loan from Lender to Issuer and the Loan Payments and the security therefor, and
other material factors affecting the security and payment of this Agreement, the
payments of principal of, premium, if any, and interest on the loan from Lender
to Issuer and the Loan Payments.
(f) Lender has either been supplied with or has had access to
information, including financial statements and other financial information
which it has requested and has had the opportunity to ask questions and receive
answers concerning Borrower, Issuer, this Agreement the payments of principal
of, premium, if any, and interest on the loan from Lender to Issuer and the Loan
Payments and the security therefor, so that it has been able to make its
decision to make the Loan Proceeds available in accordance with the provisions
hereof and of the Escrow Agreement in exchange for the right to receive the
payments of principal of, premium, if any, and interest on the loan from Lender
to Issuer and the Loan Payments and enter into and perform its obligations under
this Agreement.
18
(g) Lender acknowledges that this Agreement, including the right to
receive payments of principal of, premium, if any, and interest on the loan from
Lender to Issuer and Loan Payments (i) are not being registered or otherwise
qualified for sale under the "Blue Sky" laws and regulations of any state, (ii)
shall not be listed on any stock or other securities exchange and (iii) shall be
issued in a form which may not be readily marketable.
(h) Lender acknowledges that this Agreement, including the right to
receive payments of principal of, premium, if any, and interest on the loan from
Lender to Issuer and Loan Payments, have not been registered under the
Securities Act of 1933, as amended, and that such registration is not legally
required. Lender represents to Issuer that it is entering into this Agreement,
including obtaining the right to receive payments of, premium, if any, and
interest on the loan from Lender to Issuer and Loan Payments, for investment for
its own account and not with a present view toward resale or the distribution
thereof, except for sale to an affiliate or a related entity whose voting common
stock is directly or indirectly 100% owned by an affiliate of Lender.
(i) Lender agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all non-public information
provided to it by Borrower or any of its subsidiaries in connection with this
Agreement and agrees and undertakes that neither it nor any of its affiliates
shall use any such information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement. Lender may disclose such
information (i) at the request of any regulatory authority or in connection with
an examination of Lender by any such authority; (ii) pursuant to subpoena or
other court process; (iii) when required to do so in accordance with the
provisions of any applicable law; (iv) at the express direction or any other
agency of any state of the United States of America or of any other jurisdiction
in which Lender conducts its business; and (v) to Lender's independent auditors
and other professional agents.
ARTICLE VII
TITLE TO EQUIPMENT AND ADDITIONAL COLLATERAL; SECURITY INTEREST
Section 7.01. Title to the Equipment and Additional Collateral.
Legal title to the Equipment and Additional Collateral and any and all repairs,
replacements, substitutions and modifications to such Equipment and Additional
Collateral shall be in Borrower. Borrower will at all times protect and defend,
at its own cost and expense, its title from and against all claims, liens and
legal processes of creditors of Borrower, and keep all Equipment and Additional
Collateral free and clear of all such claims, liens and processes.
Section 7.02. Security Interest in Equipment and Additional
Collateral. This Agreement is intended to constitute a security agreement within
the meaning of the UCC. As security for Borrower's payment to Lender, as
assignee of Issuer, of Loan Payments and all other amounts payable to Lender
hereunder, or any other obligation of Borrower to Lender (whether direct or
indirect and whether now existing or hereafter arising), Borrower hereby grants
to Issuer, and Issuer hereby assigns to Lender, a security interest constituting
a first lien on the Equipment and the Additional Collateral, all repairs,
replacements, substitutions and modifications thereto or thereof and all
proceeds of the foregoing. Borrower agrees to execute such additional documents,
including financing statements, assignments, affidavits, notices, releases and
similar instruments, in form satisfactory to Lender, and take such other actions
that
19
Lender deems necessary or appropriate to establish and maintain the security
interest created by this Section, and Borrower hereby designates and appoints
Lender as its agent, and grants to Lender a power of attorney (which is coupled
with an interest), to execute on behalf of Borrower such additional documents
and to take such other actions. If requested by Lender, Borrower shall obtain a
landlord and/or mortgagee's consent and waiver with respect to the property
where the Equipment or the Additional Collateral is located. If requested by
Lender, Borrower shall conspicuously xxxx the Equipment and the Additional
Collateral with appropriate lettering, labels or tags, and maintain such
markings, so as clearly to disclose Lender's security interest in the Equipment
and the Additional Collateral.
Section 7.03. Change in Name or Corporate Structure of Borrower;
Change in Location of Borrower's Principal Place of Business. Borrower's chief
executive office is located at the address set forth above, and all of
Borrower's records relating to its business and the Equipment and the Additional
Collateral are kept at such location. Borrower hereby agrees to provide written
notice to Lender and Issuer of any change or proposed change in its name,
corporate structure, place of business or chief executive office or change or
proposed change in the location of the Equipment or the Additional Collateral.
Such notice shall be provided 30 days in advance of the date that such change or
proposed change is planned to take effect. Borrower does business, and has done
business, only under its own name.
Section 7.04. Liens and Encumbrances to Title. Borrower shall not,
directly or indirectly, create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge, encumbrance or claim on or with respect to the Equipment
or the Additional Collateral (together, "Liens") other than the respective
rights of Lender and Issuer as herein provided. Borrower shall promptly, at its
own expense, take such action as may be necessary duly to discharge or remove
any such Lien. Borrower shall reimburse Lender for any expenses incurred by
Lender to discharge or remove any Lien.
Section 7.05. Personal Property. The parties hereby agree that the
Equipment and the Additional Collateral are, and during the period this
Agreement is in force will remain, personal property and, when subjected to use
by Borrower hereunder, will not be or become permanent fixtures; provided,
however, that if contrary to the parties' intent the Equipment or the Additional
Collateral is or may be deemed to be a fixture, Borrower shall cause filings to
be made with the applicable government officials or filing offices to create and
preserve for Lender as assignee of Issuer a perfected first priority security
interest in the Equipment and the Additional Collateral.
Section 7.06. Assignment of Insurance. As additional security for
the payment and performance of Borrower's obligations hereunder, Borrower hereby
assigns to Lender, as assignee of Issuer, any and all moneys (including, without
limitation, proceeds of insurance and refunds of unearned premiums) due or to
become due under, and all other rights of Borrower with respect to, any and all
policies of insurance now or at any time hereafter covering the Equipment or the
Additional Collateral or any evidence thereof or any business records or
valuable papers pertaining thereto, and Borrower hereby directs the issuer of
any such policy to pay all such moneys directly to Lender. Borrower hereby
assigns to Lender, as assignee of Issuer, any and all moneys due or to become
due with respect to any condemnation proceeding affecting the Equipment or the
Additional Collateral. At any time, whether before or after the occurrence of
any Event of Default, Lender may (but need not), in Lender's name or in
Borrower's name, execute and deliver proof of claim, receive all such moneys,
20
endorse checks and other instruments representing payment of such moneys, and
adjust, litigate, compromise or release any claim against the issuer of any such
policy or party in any condemnation proceeding.
Section 7.07. Occupancy. (a) Borrower hereby irrevocably grants to
Lender the right to occupy the property where the Equipment and the Additional
Collateral are located (the "Premises") at any time after the occurrence and
during the continuance of an Event of Default.
(b) Lender may occupy the Premises only to hold, sell, store,
liquidate, realize upon or otherwise dispose of the Equipment and/or the
Additional Collateral and for other purposes that Lender may in good xxxxx xxxx
to be related or incidental purposes.
(c) The right of Lender to occupy the Premises shall cease and
terminate upon the earlier of (1) payment in full and discharge of all
obligations of Borrower and Issuer hereunder, and (2) final sale or disposition
of all of the Equipment and/or the Additional Collateral and delivery of all
such Equipment and/or Additional Collateral to purchasers.
(d) Lender shall not be obligated to pay or account for any rent or
other compensation for the occupancy of the Premises. Borrower will pay, or
reimburse Lender for, all taxes, fees, duties, levies, charges and expenses at
any time incurred by or imposed upon Lender by reason of the execution,
delivery, existence, recordation, performance or enforcement of this Section.
Section 7.08. Agreement as Financing Statement. To the extent
permitted by applicable law, a carbon, photographic or other reproduction of
this Agreement or of any financing statements signed by Borrower is sufficient
as a financing statement in any state to perfect the security interests granted
in this Agreement. Pursuant to Section 5451 of the Government Code of the State
of California, the pledge of Loan Payments, the Equipment and the Additional
Collateral by Issuer for the repayment of the principal of, premium, if any, and
interest on the loan from Lender to Issuer constitutes a first lien and security
interest which immediately attaches to such Loan Payments, the Equipment and the
Additional Collateral, all repairs, replacements, substitutions and
modifications thereto or thereof and all proceeds of the foregoing, and is
effective and binding against Issuer, Borrower, their successors, purchasers of
the Equipment and the Additional Collateral, creditors, and all others asserting
rights therein irrespective of whether those parties have notice of the pledge,
irrespective of whether such amounts, the Equipment and the Additional
Collateral is or may be deemed to be a fixture and without the need for any
physical delivery, recordation, filing or further act.
ARTICLE VIII
AFFIRMATIVE COVENANTS OF BORROWER
So long as the Loan shall remain unpaid, Borrower will comply with
the following requirements:
Section 8.01. Reporting Requirements. Borrower will deliver, or
cause to be delivered, to Lender, and to Issuer if requested by Issuer, each of
the following, which shall be in form and detail acceptable to Lender and
Issuer, as to information requested by Issuer:
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(a) as soon as available, and in any event within 120 days after
the end of each fiscal year of Borrower, audited financial statements of
Borrower with the unqualified opinion of independent certified public
accountants selected by Borrower and acceptable to Lender, which annual
financial statements shall include the balance sheet of Borrower as at the end
of such fiscal year and the related statements of income, retained earnings and
cash flows of Borrower for the fiscal year then ended, all in reasonable detail
and prepared in accordance with generally accepted accounting principles applied
on a basis consistent with the accounting practices applied in the financial
statements referred to in Article V hereof, together with (i) a report signed by
such accountants stating that in making the investigations necessary for said
opinion they obtained no knowledge, except as specifically stated, of any
Default or Event of Default hereunder and all relevant facts in reasonable
detail to evidence, and the computations as to, whether or not Borrower is in
compliance with the requirements set forth in Section 8.09 hereof; and (ii) a
certificate of the chief financial officer of Borrower stating that such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
practices reflected in the annual financial statements referred to in Article V
hereof and whether or not such officer has knowledge of the occurrence of any
Default or Event of Default hereunder and, if so, stating in reasonable detail
the facts with respect thereto.
(b) as soon as available, and in any event within 120 days after
the end of each fiscal year of Borrower, Borrower shall provide to Lender
financial projections for the then current fiscal year, which annual projections
shall include the projected balance sheet of Borrower, the related projected
statement of income and a statement of facts and assumptions used to generate
such projections;
(c) as soon as available and in any event within 90 days after
the end of each fiscal quarter of Borrower, an unaudited/internal balance sheet
and statements of income and retained earnings of Borrower as at the end of and
for such month and for the year to date period then ended, in reasonable detail
and stating in comparative form the figures for the corresponding date and
periods in the previous year, all prepared in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
practices reflected in the financial statements referred to in Article V hereof
and certified by the chief financial officer of Borrower, subject to year-end
audit adjustments; and accompanied by a certificate of that officer stating (i)
that such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the accounting
practices reflected in the financial statements referred to in Article V hereof,
(ii) whether or not such officer has knowledge of the occurrence of any Default
or Event of Default hereunder not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto, and (iii) all
relevant facts in reasonable detail to evidence, and the computations as to,
whether or not Borrower is in compliance with the requirements set forth in
Section 8.09 hereof;
(d) immediately after the commencement thereof, notice in
writing of all litigation and of all proceedings before any governmental or
regulatory agency affecting Borrower of the type described in Article V hereof
or which seek a monetary recovery against Borrower in excess of $1,000,000;
provided, however, no such notice shall be required in connection with product
liability cases under which the potential liability of Borrower not covered by
insurance does not exceed $1,000,000;
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(e) as promptly as practicable (but in any event not later than
five Business Days) after an officer of Borrower obtains knowledge of the
occurrence of any event that constitutes a Default or an Event of Default
hereunder, notice of such occurrence, together with a detailed statement by a
responsible officer of Borrower of the steps being taken by Borrower to cure the
effect of such Default or Event of Default;
(f) promptly upon knowledge thereof, notice of any loss or
destruction of or damage to any Equipment or Additional Collateral or of any
material adverse change in any Equipment or Additional Collateral;
(g) promptly upon their distribution, copies of all financial
statements, reports and proxy statements that Borrower shall have sent to its
stockholders, including, without limitation 10-K and 10-Q reports;
(h) promptly after the amending thereof, copies of any and all
amendments to Borrower's certificate of incorporation, articles of incorporation
or bylaws;
(i) promptly upon knowledge thereof, notice of the violation by
Borrower of any law, rule or regulation that would have a material adverse
effect on the financial or operating condition of Borrower;
(j) promptly upon knowledge thereof, notice of any material
adverse change in the financial or operating condition of Borrower; and
(k) within sixty days of the receipt of a written request from
Issuer, a written report to Issuer, as of the end of Borrower's fiscal year,
stating the status of the Project, the outstanding and unpaid balance of the
Loan, the number of full-time and part-time employees of Borrower employed at
the Project during such prior fiscal year, and supplying such current
information as Issuer shall reasonably request regarding other matters covered
in Borrower's application for tax-exempt financing.
Section 8.02. Books and Records; Inspection and Examination.
Borrower will keep accurate books of record and account for itself pertaining to
the Project and the Additional Collateral and pertaining to Borrower's business
and financial condition and such other matters as Lender and/or Issuer may from
time to time request in which true and complete entries will be made in
accordance with generally accepted accounting principles consistently applied
and, upon request of Lender and/or Issuer, will permit any officer, employee,
attorney or accountant for Lender and/or Issuer to audit, review, make extracts
from, or copy any and all corporate and financial books, records and properties
of Borrower at all times during ordinary business hours, and to discuss the
affairs of Borrower with any of its directors, officers, employees or agents.
Borrower will permit Lender and/or Issuer, or its employees, accountants,
attorneys or agents, to examine and copy any or all of its records and to
examine and inspect the Project and the Additional Collateral at any time during
Borrower's business hours upon reasonable prior written notice; provided,
however, Lender and Issuer shall not have access to any product development
information or trade secrets. Audits and reviews of the corporate and financial
books, records and properties of Borrower will by limited to once annually if
Borrower is required to pay the costs of such audit or review and twice annually
if the costs of such audit or review are paid by Lender; provided, however, upon
the occurrence of an Event of Default, the number of audits and reviews will not
be limited.
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Section 8.03. Compliance With Laws; Environmental Indemnity.
Borrower will (a) comply with the requirements of applicable laws and
regulations, the noncompliance with which would materially and adversely affect
its business or its financial condition, (b) comply with all applicable
Environmental Laws and regulations and obtain any permits, licenses or similar
approvals required by any such laws or regulations and (c) use and keep the
Project and the Additional Collateral, and will require that others use and keep
the Project and the Additional Collateral, only for lawful purposes, without
violation of any federal, state or local law, statute or ordinance. Borrower
shall secure all permits and licenses, if any, necessary for the installation
and operation of the Project and the Additional Collateral. Borrower shall
comply in all respects (including, without limitation, with respect to the use,
maintenance and operation of each item of the Project and the Additional
Collateral) with all laws of the jurisdictions in which its operations involving
any component of Project or Additional Collateral may extend and of any
legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the items of the Project or the Additional Collateral or its
interest or rights under this Agreement. Borrower will indemnify, defend and
hold Lender harmless from and against any claims, loss or damage to which Lender
may be subjected as a result of any past, present or future existence, use,
handling, storage, transportation or disposal of any hazardous waste or
substance or toxic substance by Borrower or on property owned, leased or
controlled by Borrower. This indemnification shall survive the termination of
this Agreement and payment of the indebtedness hereunder.
Section 8.04. Payment of Taxes and Other Claims. Borrower will pay
or discharge, when due, (a) all taxes, assessments and governmental charges
levied or imposed upon it or upon its income or profits, upon any properties
belonging to it (including, without limitation, the Project and the Additional
Collateral) or upon or against the creation, perfection or continuance of the
security interest created pursuant to this Agreement, prior to the date on which
penalties attach thereto, (b) all federal, state and local taxes required to be
withheld by it, and (c) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien or charge upon any properties of
Borrower; provided, that Borrower shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings. Borrower will pay, as the
same respectively come due, all taxes and governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with
respect to the Project or the Additional Collateral, as well as all gas, water,
steam, electricity, heat, power, telephone, utility and other charges incurred
in the operation, maintenance, use, occupancy and upkeep of the Project or the
Additional Collateral.
Section 8.05. Maintenance of Project and Additional Collateral. (a)
Borrower shall, at its own expense, maintain, preserve and keep the Project and
the Additional Collateral in good repair, working order and condition, and shall
from time to time make all repairs and replacements necessary to keep the
Project and the Additional Collateral in such condition, and in compliance with
state and federal laws, ordinary wear and tear excepted. Borrower shall maintain
the Project and the Additional Collateral in a condition suitable for
certification by the manufacturer thereof (if certification is available) and in
conformance with all manufacturer's recommended maintenance requirements. In the
event that any parts or accessories forming part of any item or items of the
Project and the Additional Collateral become worn out, lost, destroyed, damaged
beyond repair or otherwise rendered unfit for use, Borrower, at its own expense
and expeditiously, will replace or cause the replacement of such parts or
24
accessories by replacement parts or accessories free and clear of all liens and
encumbrances and with a value and utility at least equal to that of the parts or
accessories being replaced (assuming that such replaced parts and accessories
were otherwise in good working order and repair). All such replacement parts and
accessories shall be deemed to be incorporated immediately into and to
constitute an integral portion of the Project and the Additional Collateral and,
as such, shall be subject to the terms of this Agreement. Neither Lender nor
Issuer shall have any responsibility in any of these matters, or for the making
of improvements or additions to the Project and the Additional Collateral.
(b) Borrower will defend the Project and the Additional Collateral
against all claims or demands of all persons (other than Lender) claiming the
Project, the Additional Collateral or any interest therein.
(c) Borrower will keep the Equipment and the Additional Collateral
free and clear of all security interests, liens and encumbrances except the
security interest created pursuant to this Agreement.
Section 8.06. Insurance. (a) Borrower shall, at its own expense,
procure and maintain continuously in effect: (i) public liability insurance for
personal injuries, death or damage to or loss of property arising out of or in
any way relating to the Project or the Additional Collateral sufficient to
protect Lender and Issuer from liability in all events, with a coverage limit of
not less than $1,000,000 per occurrence unless a different coverage minimum with
respect to any component of the Project or Additional Collateral is required by
Lender and approved by Issuer, and (ii) insurance against such hazards as Lender
may require, including, but not limited to, all-risk casualty and property
insurance, in an amount equal to the greater of the full replacement cost of the
Project and the Additional Collateral with new property having substantially
similar specifications or the applicable Prepayment Amount.
(b) If required by State law, Borrower shall carry workers'
compensation insurance covering all employees on, in, near or about the Project,
and upon request, shall furnish to Lender certificates evidencing such coverage.
(c) All insurance policies required by this Article shall be taken
out and maintained with insurance companies with an A.M. Best Company, Inc.
rating of "A8" or better; and shall contain a provision that the insurer shall
not cancel or revise coverage thereunder without giving written notice to the
insured parties at least thirty (30) days before the cancellation or revision
becomes effective. No insurance shall be subject to any co-insurance clause.
Each insurance policy required by this Article shall name Lender as an
additional insured party and loss payee without regard to any breach of warranty
or other act or omission of Borrower and shall include a lender's loss payable
endorsement for the benefit of Lender. Prior to the delivery of Project,
Borrower shall deposit with Lender evidence satisfactory to Lender of such
insurance and, prior to the expiration thereof, shall provide Lender evidence of
all renewals or replacements thereof.
(d) As among Lender, Borrower and Issuer, Borrower assumes all risks
and liabilities from any cause whatsoever, whether or not covered by insurance,
for loss or damage to any portion of the Project and the Additional Collateral
and for injury to or death of any person or damage to any property, whether such
injury or death be with respect to agents or employees of Borrower or of third
parties, and whether such property damage be to Borrower's property or the
property of others. Whether or not covered by insurance, Borrower hereby assumes
responsibility for and agrees to reimburse Lender and Issuer for and
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will indemnify, defend and hold harmless Lender and Issuer and its members,
agents, officers, directors and attorneys at Borrower's expense from and against
all liabilities, obligations, losses, damages, penalties, claims, actions, costs
and expenses (including reasonable attorneys' fees) of whatsoever kind and
nature, imposed on, incurred by or asserted against Lender or Issuer that in any
way relate to or arise out of this Agreement, the transactions contemplated
hereby and the Project or the Additional Collateral, including but not limited
to, (i) the construction, installation, selection, manufacture, purchase,
acceptance or rejection of the Project or the Additional Collateral or the
ownership of the Project or the Additional Collateral, (ii) the delivery, lease,
possession, maintenance, use, condition, return or operation of the Project or
the Additional Collateral, (iii) the condition of the Project or the Additional
Collateral sold or otherwise disposed of after possession by Borrower, (iv) any
patent or copyright infringement, (v) the conduct of Borrower, its officers,
employees and agents, (vi) a breach of Borrower of any of its covenants or
obligations hereunder; (vii) any claim, loss, cost or expense involving alleged
damage to the environment relating to the Project or the Additional Collateral,
including, but not limited to investigation, removal, cleanup and remedial
costs; and (viii) any untrue statement or alleged untrue statement of any
material fact or omission or alleged omission to state a material fact necessary
to make the statements made, in light of the circumstances under which they were
made, not misleading in connection with this Agreement, the Escrow Agreement and
the Tax Regulatory Agreement or the transactions contemplated thereby, (ix) any
violation of any environmental law, rule or regulation or the release of any
hazardous or toxic substance on or near the premises on which the Project or
Additional Collateral is located, (x) the ownership of any item of the Project
or Additional Collateral governed hereby, (xi) any act of negligence of
Borrower, its officers, agents, contractors, servants, employees, licensees or
invitees in connection with the Project or Additional Collateral or this
Agreement, the Escrow Agreement and the Tax Regulatory Agreement, (xii) the
recovery of claims under insurance policies on the Project or Additional
Collateral, (xiii) any accident in connection with the operation, use,
condition, possession, storage or return of any item of the Project or
Additional Collateral, any of the foregoing of which result in damage to
property or the injury to or death of any person, including without limitation
latent and other defects, whether or not discernible by Lender, Issuer or
Borrower. All amounts payable by Borrower pursuant to the immediately preceding
sentence shall be paid immediately upon demand of Issuer or Lender, as the case
may be. The provisions of this Section 8.06(d) shall survive the termination of
this Agreement.
Section 8.07. Preservation of Corporate Existence. Borrower will
preserve and maintain its corporate existence and all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business; and
shall conduct its business in an orderly, efficient and regular manner.
Section 8.08. Performance by Lender. If Borrower at any time fails
to perform or observe any of the covenants or agreements contained in this
Agreement, and if such failure shall continue for a period of thirty calendar
days after Lender gives Borrower written notice thereof (or in the case of the
agreements contained in Sections 8.05 and 8.06 hereof, immediately upon the
occurrence of such failure, without notice or lapse of time), Lender may, but
need not, perform or observe such covenant on behalf and in the name, place and
stead of Borrower (or, at Lender's option, in Lender's name) and may, but need
not, take any and all other actions which Lender may reasonably deem necessary
to cure or correct such failure (including, without limitation, the payment of
taxes, the satisfaction of security interests, liens or encumbrances, the
26
performance of obligations owed to account debtors or other obligors, the
procurement and maintenance of insurance, the execution of assignments, security
agreements and financing statements, and the endorsement of instruments); and
Borrower shall thereupon pay to Lender on demand the amount of all moneys
reasonably expended and all reasonable costs and expenses (including reasonable
attorneys' fees and legal expenses) incurred by Lender in connection with or as
a result of the performance or observance of such agreements or the taking of
such action by Lender, together with interest thereon from the date expended or
incurred at the lesser of 18% per annum or the highest rate permitted by law. To
facilitate the performance or observance by Lender of such covenants of
Borrower, Borrower hereby irrevocably appoints Lender, or the delegate of
Lender, acting alone, as the attorney in fact of Borrower with the right (but
not the duty) from time to time to create, prepare, complete, execute, deliver,
endorse or file in the name and on behalf of Borrower any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by Borrower under this Agreement.
Section 8.09. Financial Covenants. (a) Borrower will maintain at all
times its ratio of Debt (as defined below) to Tangible Net Worth (as defined
below) at not more than 3.50 to 1.00. "Debt" shall mean (i) all items of
indebtedness or liability which in accordance with generally accepted accounting
principles or federal tax law would be included in determining total liabilities
as shown on the liabilities side of a balance sheet, (ii) indebtedness secured
by any mortgage, pledge, lien or security interest existing on property owned by
Borrower, whether or not the indebtedness secured thereby shall have been
assumed, and (iii) guaranties and endorsements (other than for purposes of
collection in the ordinary course of business) by Borrower and other contingent
obligations of Borrower in respect of, or to purchase or otherwise acquire,
indebtedness of others. "Tangible Net Worth" means the excess of:
(a) the tangible assets of Borrower, which, in accordance with
generally accepted accounting principles, are tangible assets, after deducting
adequate reserves in each case where, in accordance with generally accepted
accounting principles, a reserve is proper over
(b) all Debt of Borrower; provided, however, that (i) inventory
shall be taken into account on the basis of the cost (determined on a first-in,
first-out basis) or current market value, whichever is lower, (ii) in no event
shall there be included as such tangible assets patents, trademarks, trade
names, copyrights, licenses, good will, advances or loans to, or receivables
from, directors, officers, employees or affiliates, prepaid or intangible
assets, amounts relating to covenants not to compete, pensions assets, deferred
charges or treasury stock or any securities or Debt of Borrower or any other
securities unless the same are readily marketable in the United States of
America or entitled to be used as a credit against federal income tax
liabilities, (iii) securities included as such tangible assets shall be taken
into account at their current market price or cost, whichever is lower, and (iv)
any write-up in the book value of any assets shall not be taken into account.
(b) Borrower will maintain for each fiscal year from and after
fiscal year 1996 its Debt Service Coverage Ratio (as defined below) at not less
than 1.20 to 1.00. "Debt Service Coverage Ratio" means the ratio of (i)
Borrower's Cash Flow Available for Debt Service (as defined below) to (ii)
Borrower's Debt Service (as defined below). "Cash Flow Available for Debt
Service" of Borrower
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means, with respect to the applicable period of determination, Borrower's
income, plus depreciation and amortization. "Debt Service" of Borrower means,
with respect to the applicable period of determination, the aggregate of (i) all
installments of principal on term Debt, or any Debt that is not revolving, of
Borrower that are due on demand or accelerated or during the period of
determination, (ii) all installments of rent under capitalized lease obligations
(to the extent not already accounted for in computation of net income or Debt)
of Borrower that are due on demand or during the period of determination and
(iii) distributions and dividends to stockholders and advances to affiliates of
Borrower during the period of determination.
(c) Borrower will maintain, on a consolidated basis, at all times
during the term of this Agreement its Tangible Net Worth at not less than 32
million dollars.
Section 8.10. Limitations of Liability. In no event, whether as a
result of breach of contract, warranty, tort (including negligence or strict
liability), indemnity or otherwise, shall Lender, its assignees, if any, or
Issuer be liable for any special, consequential, incidental, punitive or penal
damages including, but not limited to, loss of profit or revenue, loss of use of
the Project or any associated equipment, service materials or software, damage
to associated equipment, service materials or software, cost of capital, cost of
substitute property, service materials or software, facilities, services or
replacement power or down time costs.
ARTICLE IX
NEGATIVE COVENANTS OF BORROWER
So long as the Loan shall remain unpaid, Borrower agrees that:
Section 9.01. Lien. Borrower will not create, incur or suffer to
exist any mortgage, deed of trust, pledge, lien, security interest, assignment
or transfer upon or of any of the Equipment or the Additional Collateral except
for the security interest created pursuant to this Agreement.
Section 9.02. Sale of Assets. Except as otherwise permitted
hereunder, Borrower will not sell, lease, assign, transfer or otherwise dispose
of all or a substantial part of its assets or of any of the Project or the
Additional Collateral or any interest therein (whether in one transaction or in
a series of transactions); provided, however, that Borrower may at its option
prepay its obligations hereunder in full in connection with any such proposed
lease, assignment, transfer or disposition of all or a substantial part of its
assets as provided in Section 2.07(f) hereof.
Section 9.03. Consolidation and Merger. Borrower will not
consolidate with or merge into any person, or permit any other person to merge
into it, or acquire (in a transaction analogous in purpose or effect to a
consolidation or merger) all or substantially all of the assets of any other
person; provided, however, that such transactions are permitted if:
(a) Either (i) Borrower will be the surviving corporation or (ii)
the successor corporation (if other than Borrower) shall be a person organized
and existing under the laws of the United States of America or a state thereof
and such successor corporation shall expressly assume the due and punctual
payment of all amounts due hereunder and the due and punctual performance and
observance of all the covenants and conditions hereof and Lender and Issuer
shall have
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received a legal opinion, in form and substance satisfactory to Lender and
Issuer, to the effect that this Agreement is the legal, valid and binding
obligation of such successor corporation enforceable in accordance with its
terms;
(b) Lender and Issuer shall have received an opinion of bond
counsel, in form and substance satisfactory to Lender and Issuer, to the effect
that under then existing laws the consummation of such merger, consolidation,
sale or conveyance would not cause the interest hereunder to become includable
in gross income under the Code or adversely affect the validity of this
Agreement; and
(c) After giving effect to the proposed merger, consolidation, sale
or conveyance, Borrower or the successor corporation, as the case may be, shall
be in compliance with the financial covenants contained in Section 8.09 hereof
and no Default or Event of Default shall have occurred and be continuing
hereunder or would result from such transaction; and provided, finally, that
Borrower may at its option prepay its obligations hereunder in full in
connection with any such proposed transaction as provided in Section 2.07(f)
hereof.
Section 9.04. Accounting. Borrower will not adopt, permit or consent
to any material change in accounting principles or any change in its fiscal year
other than as required by generally accepted accounting principles unless
Borrower provides restated financial statements prepared on a consistent basis
and satisfies the financial covenants contained in Section 8.09 hereof with and
without giving effect to such change.
Section 9.05. Transfers. Borrower will not in any manner transfer
any property without prior or present receipt of full and adequate consideration
other than in the ordinary course of business and which in the aggregate are not
material.
Section 9.06. Other Defaults. Borrower will not permit any breach,
default or event of default to occur under any note, loan agreement, indenture,
lease, mortgage, contract for deed, security agreement or other contractual
obligation in an amount greater than $500,000 binding upon Borrower which
results in an acceleration of Borrower's obligations thereunder or under which
the applicable creditor has exercised rights and remedies or any judgment,
decree, order or determination applicable to Borrower.
Section 9.07. Place of Business. Borrower will not permit any of the
Equipment or the Additional Collateral or any records pertaining to the
Equipment or the Additional Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering such
Equipment or Additional Collateral would be required to be, but has not in fact
been, filed in order to perfect the security interest created pursuant to this
Agreement.
Section 9.08. Modifications and Substitutions. (a) Borrower will not
make any material alterations, modifications or additions to the Equipment or
the Additional Collateral which cannot be removed without materially damaging
the functional capabilities or economic value of the Project or the Additional
Collateral, as the case may be, unless after making such alterations,
modifications or additions the Equipment and Additional Collateral is of equal
or greater economic value, utility and useful life. Upon delivery of the
Equipment or the Additional Collateral to Lender and at the request of Lender,
29
Borrower, at its sole cost and expense, will remove all alterations,
modifications and additions and repair the Equipment as necessary to return the
Equipment or the Additional Collateral to the condition in which it was
furnished, ordinary wear and tear and permitted modifications excepted.
(b) Notwithstanding the provisions of subparagraph (a) of this
section, Borrower may, with the prior written consent of Lender and Issuer,
substitute for parts, elements, portions or all of the Project or Additional
Collateral, other parts, elements, portions, equipment or facilities; provided,
however, that any substitutions made pursuant to Borrower's obligations to make
repairs referenced under any provision of this Agreement shall not require such
prior written consent. Borrower shall provide such documents or assurances as
Lender and Issuer may reasonably request to maintain or confirm the security
interest assigned to Lender in the Equipment and the Additional Collateral as so
modified or substituted.
Section 9.09. Use of the Project. Borrower will not install, use,
operate or maintain the Project or the Additional Collateral improperly,
carelessly, in violation of any applicable law or in a manner contrary to that
contemplated by this Agreement.
ARTICLE X
DAMAGE AND DESTRUCTION;
USE OF NET PROCEEDS
Borrower shall provide a complete written report to Lender and
Issuer immediately upon any loss, theft, damage or destruction of any portion of
the Equipment or Additional Collateral and of any accident involving any portion
of the Equipment or Additional Collateral. If all or any part of the Project or
Additional Collateral is lost, stolen, destroyed or damaged beyond repair
("Damaged Property"), Borrower shall as soon as practicable after such event
either: (a) replace the same at Borrower's sole cost and expense with property
having substantially similar specifications and of equal or greater economic
value, utility and useful life to the Damaged Property immediately prior to the
time of the loss occurrence, whereupon such replacement equipment shall be
substituted in this Agreement and the other related documents by appropriate
endorsement or amendment; or (b) pay the applicable Prepayment Amount of the
Damaged Property. Borrower shall notify Lender and Issuer of which course of
action it will take within fifteen (15) calendar days after the loss occurrence.
If, within forty-five (45) calendar days of the loss occurrence, (a) Borrower
fails to notify Lender and Issuer; (b) Borrower, Issuer and Lender fail to
execute an amendment to this Agreement to delete the Damaged Property and add
the replacement property or (c) Borrower fails to pay the applicable Prepayment
Amount, then Lender may, at its sole discretion, declare the applicable
Prepayment Amount to be immediately due and payable, and Borrower is required to
pay the same. The Net Proceeds of insurance with respect to the Damaged Property
shall be made available by Lender to be applied to discharge Borrower's
obligation under this Article. The payment of the Prepayment Amount and the
termination of Lender's interest in the Damaged Property is subject to the terms
of Section 2.07 hereof. For purposes of this Article, the term "Net Proceeds"
shall mean the amount remaining from the gross proceeds of any insurance claim
or condemnation award after deducting all expenses (including reasonable
attorneys' fees) incurred in the collection of such claim or award.
ARTICLE XI
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ASSIGNMENT, SUBLEASING AND SELLING
Section 11.01. Assignment by Lender. Subject to the conditions
contained herein, this Agreement, and the right to receive payments of principal
of, premium, if any, and interest on the loan from Lender to Issuer and Loan
Payments, as assignee of Issuer, directly from Borrower, may be transferred,
assigned and reassigned in whole or in part by Lender without the consent of
Borrower or Issuer to an Affiliate or Qualified Institutional. In the event of a
sale or transfer to an Affiliate, Lender shall certify to Issuer and Borrower
that such transferee entity is an Affiliate. In the event of a sale or transfer
to a Qualified Institutional Buyer, Lender shall provide to Issuer and Borrower
a written statement representing that such transferee is a Qualified
Institutional Buyer and such transferee shall deliver to Issuer and Borrower a
letter of representations substantially in the form of Exhibit D hereto which
shall contain a certification that the transferee is a Qualified Institutional
Buyer as provided in this Agreement. In the event that such assignment or
reassignment is made to a bank or trust company as trustee for holders of
certificates representing interests in this Agreement, such bank or trust
company agrees to maintain, or cause to be maintained, a book-entry system by
which a record of the names and addresses of such holders as of any particular
time is kept and agrees, upon request of Issuer or Borrower, to furnish such
information to Issuer or Borrower. Upon assignment, Borrower will reflect in a
book-entry the assignee designated in the written request of assignment or in a
written certification of an Affiliate delivered to Issuer and Borrower pursuant
to this Section, and shall agree to make all payments to the assignee designated
in such written request, notwithstanding any claim, defense, setoff or
counterclaim whatsoever (whether arising from a breach of this Agreement or
otherwise) that Issuer and Borrower may from time to time have against Lender or
the assignee. Issuer and Borrower agree to execute all documents, including
notices of assignment and chattel mortgages or financing statements, which may
be reasonably requested by Lender or its assignee to protect their interest in
the Equipment and in this Agreement. Lender or assignee shall pay all reasonable
expenses of Issuer, including reasonable fees and expenses of counsel, in
connection with such transfer and assignment.
Section 11.02. No Sale or Assignment by Borrower. Except as
otherwise provided herein, this Agreement and the interest of Borrower in the
Project and the Additional Collateral may not be sold, assumed, assigned or
encumbered by Borrower.
ARTICLE XII
EVENTS OF DEFAULT AND REMEDIES
Section 12.01. Events of Default. The following constitute "Events
of Default" under this Agreement:
(a) failure by Borrower to pay to Lender, as assignee of Issuer,
when due any Loan Payment or to pay any other payment required to be paid
hereunder and the continuation of such failure for a period of ten (10) days;
(b) failure by Borrower to maintain insurance on the Project or
the Additional Collateral in accordance with Section 8.06 hereof;
(c) failure by Borrower or Issuer to observe and perform any
other covenant, condition or agreement contained herein, in the Escrow
Agreement, in the Tax Regulatory Agreement or in any other document or agreement
executed in
31
connection herewith on its part to be observed or performed for a period of 30
days after written notice is given to Borrower or Issuer, as the case may be,
specifying such failure and requesting that it be remedied; provided, however,
that, if the failure stated in such notice cannot be corrected within such
30-day period, Lender will not unreasonably withhold its consent to an extension
of such time if corrective action is instituted by Borrower or Issuer, as the
case may be, within the applicable period and diligently pursued until the
default is corrected;
(d) initiation by Issuer of a proceeding under any federal or
state bankruptcy or insolvency law seeking relief under such laws concerning the
indebtedness of Issuer;
(e) Borrower or any guarantor shall be or become insolvent, or
admit in writing its inability to pay its or his debts as they mature, or make
an assignment for the benefit of creditors; or Borrower or any guarantor shall
apply for or consent to the appointment of any receiver, trustee or similar
officer for it or for all or any substantial part of its property; or such
receiver, trustee or similar officer shall be appointed without the application
or consent of Borrower or any guarantor, as the case may be; or Borrower or any
guarantor shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar proceeding relating to it under the
laws of any jurisdiction; or any such proceeding shall be instituted (by
petition, application or otherwise) against Borrower or any guarantor; or any
judgment, writ, warrant of attachment or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower or any
guarantor;
(f) determination by Lender that any representation or warranty
made by Borrower, Issuer or any guarantor herein, in the Tax Regulatory
Agreement or in any other document executed in connection herewith was untrue in
any material respect when made;
(g) an Event of Taxability shall occur; or
(h) the occurrence of a default or an event of default under any
instrument, agreement or other document evidencing or relating to any
indebtedness or other monetary obligation of Borrower in an amount greater than
$500,000 and which results in the acceleration of such monetary obligation or
the exercise of rights and remedies with respect thereto.
Section 12.02. Remedies on Default. Whenever any Event of Default
shall have occurred and be continuing, Lender, as assignee of Issuer, shall have
the right, at its sole option without any further demand or notice, to take any
one or any combination of the following remedial steps insofar as the same are
available to secured parties under Article 9 of the UCC in effect in the State
from time to time and which are otherwise accorded to Lender, as assignee of
Issuer, by applicable law:
(a) by notice to Issuer and Borrower, declare the entire unpaid
principal amount of the Loan then outstanding, all interest accrued and unpaid
thereon and all amounts payable under this Agreement to be forthwith due and
payable, whereupon the Loan, all such accrued interest and all such amounts
shall become and be forthwith due and payable, without presentment, notice of
dishonor, protest or further notice of any kind, all of which are hereby
expressly waived by Borrower;
32
(b) take possession of the Equipment and/or Additional Collateral
wherever situated, without any court order or other process of law and without
liability for entering the premises, and lease, sublease or make other
disposition of the Equipment and/or Additional Collateral for use over a term in
a commercially reasonable manner, all for the account of Lender, provided that
Borrower shall remain directly liable for the deficiency, if any, between the
rent or other amounts paid by a lessee or sublessee of the Equipment and/or the
Additional Collateral pursuant to such lease or sublease during the same period
of time, after deducting all costs and expenses, including reasonable attorneys'
fees and expenses, incurred with respect to the recovery, repair and storage of
the Equipment and/or Additional Collateral during such period of time;
(c) take possession of the Equipment and/or the Additional
Collateral wherever situated, without any court order or other process of law
and without liability for entering the premises, and sell the Equipment and/or
Additional Collateral in a commercially reasonable manner. All proceeds from
such sale shall be applied in the following manner:
FIRST, to pay all proper and reasonable costs and expenses
associated with the recovery, repair, storage and sale of the Equipment and/or
Additional Collateral, including reasonable attorneys' fees and expenses;
SECOND, to pay (i) Lender the amount of all unpaid Loan Payments
or other obligations (whether direct or indirect owed by Borrower to Lender), if
any, which are then due and owing, together with interest and late charges
thereon, (ii) Lender the then applicable Prepayment Amount (taking into account
the payment of past-due Loan Payments as aforesaid), plus a pro rata allocation
of interest, at the rate utilized to calculate the Loan Payments, from the next
preceding due date of a Loan Payment until the date of payment by the buyer, and
(iii) any other amounts due hereunder, including indemnity payments, taxes,
charges, reimbursement of any advances and other amounts payable to Lender or
Issuer hereunder; and
THIRD, to pay the remainder of the sale proceeds, purchase
moneys or other amounts paid by a buyer of the Equipment and/or Additional
Collateral to Borrower;
(d) proceed by appropriate court action to enforce specific
performance by Issuer or Borrower of the applicable covenants of this Agreement
or to recover for the breach thereof, including the payment of all amounts due
from Borrower. Borrower shall pay or repay to Lender or Issuer all costs of such
action or court action, including, without limitation, reasonable attorneys'
fees; and
(e) take whatever action at law or in equity may appear necessary or
desirable to enforce its rights with respect to the Equipment and/or Additional
Collateral. Borrower shall pay or repay to Lender or Issuer all costs of such
action or court action, including, without limitation, reasonable attorneys'
fees.
Notwithstanding any other remedy exercised hereunder, Borrower shall
remain obligated to pay to Lender any unpaid portion of the Prepayment Amount.
Section 12.03. Return of Equipment and Additional Collateral. Upon
an Event of Default, Borrower shall within fifteen (15) calendar days after
notice from Lender, at its own cost and expense: (a) perform any testing and
repairs
33
required to place the Equipment and Additional Collateral in the condition
required by Article VIII; (b) if deinstallation, disassembly or crating is
required, cause the Equipment and Additional Collateral to be deinstalled,
disassembled and crated by an authorized manufacturer's representative or such
other service person as is satisfactory to Lender; and (c) deliver the Equipment
and the Additional Collateral to a location specified by Lender, freight and
insurance prepaid by Borrower. If Borrower refuses to deliver the Equipment or
the Additional Collateral in the manner designated, Lender may enter upon
Borrower's premises where the Equipment or Additional Collateral is kept and
take possession of the Equipment or Additional Collateral and charge to Borrower
the costs of such taking. Borrower hereby expressly waives any damages
occasioned by such taking.
Section 12.04. No Remedy Exclusive. No remedy herein conferred upon
or reserved to Lender or Issuer is intended to be exclusive and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or now or hereafter existing at law or in equity. No delay
or omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle Lender or Issuer to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give any notice other than such notice as may be required by this Article. All
remedies herein conferred upon or reserved to Lender or Issuer shall survive the
termination of this Agreement.
Section 12.05. Late Charge. Any Loan Payment not paid by Borrower on
the due date thereof shall, to the extent permissible by law, bear a late charge
equal to the lesser of five cents ($.05) per dollar of the delinquent amount or
the lawful maximum, and Borrower shall be obligated to pay the same immediately
upon receipt of Lender's written invoice therefor.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Costs and Expenses of Lender. Borrower shall pay to
Lender and Issuer, in addition to the Loan Payments payable by Borrower
hereunder, such amounts in each year as shall be required by Lender or Issuer in
payment of any reasonable costs and expenses incurred by Lender and Issuer in
connection with the execution, performance or enforcement of this Agreement,
including but not limited to payment of all reasonable fees, costs and expenses
and all administrative costs of Lender and Issuer in connection with the Project
and Additional Collateral, expenses (including, without limitation, attorneys'
fees and disbursements), fees of auditors or attorneys, insurance premiums not
otherwise paid hereunder and all other direct and necessary administrative costs
of Lender and Issuer or charges required to be paid by it in order to comply
with the terms of, or to enforce its rights under, this Agreement. Such costs
and expenses shall be billed to Borrower by Lender or Issuer, as the case may
be, from time to time, together with a statement certifying that the amount so
billed has been paid by Lender or Issuer, as the case may be, for one or more of
the items above described, or that such amount is then payable by Lender or
Issuer, as the case may be, for such items. Amounts so billed shall be due and
payable by Borrower within 30 days after receipt of the xxxx by Borrower.
Section 13.02. Disclaimer of Warranties. LENDER AND ISSUER MAKE NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN,
34
CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR
USE OF THE PROJECT, OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
WITH RESPECT THERETO. In no event shall Lender or Issuer be liable for any loss
or damage in connection with or arising out of this Agreement, the Project or
the existence, furnishing, functioning or Borrower's use of any item or products
or services provided for in this Agreement.
Section 13.03. Notices. All notices, certificates, requests, demands
and other communications provided for hereunder or under the Escrow Agreement or
the Tax Regulatory Agreement shall be in writing and shall be (a) personally
delivered, (b) sent by first class United States mail, (c) sent by overnight
courier of national reputation, or (d) transmitted by telecopy, in each case
addressed to the party to whom notice is being given at its address as set forth
above and, if telecopied, transmitted to that party at its telecopier number set
forth above or, as to each party, at such other address or telecopier number as
may hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy. If notice to Borrower of any
intended disposition of the Equipment and/or Additional Collateral or any other
intended action is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given (in the manner specified in this
Section) at least ten (10) calendar days prior to the date of intended
disposition or other action.
Section 13.04. Further Assurance and Corrective Instruments. Issuer
and Borrower hereby agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such further acts, instruments, conveyances, transfers and assurances, as Lender
reasonably deems necessary or advisable for the implementation, correction,
confirmation or perfection of this Agreement, the Escrow Agreement or the Tax
Regulatory Agreement and any rights of Lender hereunder or thereunder.
Section 13.05. Binding Effect; Time of the Essence. This Agreement
shall inure to the benefit of and shall be binding upon Lender, Issuer, Borrower
and their respective successors and assigns. Time is of the essence.
Section 13.06. Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 13.07. Amendments. To the extent permitted by law, the terms
of this Agreement shall not be waived, altered, modified, supplemented or
amended in any manner whatsoever except by written instrument signed by the
parties hereto, and then such waiver, consent, modification or change shall be
effective only in the specific instance and for the specific purpose given.
Borrower, Issuer and Lender agree that Borrower and Lender may amend
Exhibit A to this Agreement solely to more specifically identify the Project
being financed hereunder at such time as such identification is possible. Such
amendment shall be effected by written instrument signed by Borrower and Lender,
with written notice provided to Issuer. Issuer's agreement to the amendment
referred to in this paragraph shall not be required. Such amendment may take
35
the form of a Payment Request Form in the form attached to the Escrow Agreement
as Exhibit A executed by Borrower and Lender.
Section 13.08. Execution in Counterparts. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart, provided that
only the original marked "Original: 1 of 6" on the execution page thereof shall
constitute chattel paper under the UCC.
Section 13.09. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State.
Section 13.10. Captions. The captions or headings in this Agreement
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Agreement.
Section 13.11. Entire Agreement. This Agreement, the Tax Regulatory
Agreement, the Escrow Agreement and the exhibits hereto and thereto constitute
the entire agreement among Lender, Issuer, Borrower and Escrow Agent. There are
no understandings, agreements, representations or warranties, express or
implied, not specified herein or in such documents regarding this Agreement or
the Project financed hereby.
Section 13.12. Usury. It is the intention of the parties hereto to
comply with any applicable usury laws; accordingly, it is agreed that,
notwithstanding any provisions to the contrary in this Agreement, in no event
shall this Agreement require the payment or permit the collection of interest or
any amount in the nature of interest or fees in excess of the maximum permitted
by applicable law.
Section 13.13. Waiver of Jury Trial. lender and borrower hereby
waive their respective rights to a jury trial of any claim or cause of action
based upon or arising out of, directly or indirectly, this agreement, any of the
related documents, any dealings among lender or borrower relating to the subject
matter of the transactions contemplated by this agreement or any related
transactions, and/or the relationship that is being established among lender and
borrower. the scope of this waiver is intended to be all encompassing of any and
all disputes that may be filed in any court (including, without limitation,
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims). this waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, renewals, supplements or modifications to this agreement,
any related documents, or to any other documents or agreements relating to the
transactions contemplated by this agreement or any related transactions. in the
event of litigation, this agreement may be filed as a written consent to a trial
by the court.
[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
in their respective corporate names by their duly authorized officers, all as of
the date first written above.
Lender: GE CAPITAL PUBLIC FINANCE, INC.
36
/s/ Xxxxxx Xxxx
--------------------------------
By: Xxxxxx Xxxx
Title: Vice President
Issuer: CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
/s/ Xxxxxxxxxxx Xxxxxx
--------------------------------
By: Xxxxxxxxxxx Xxxxxx
Title: Chair
Borrower: GT BICYCLES, INC.
/s/ Xxxxxxx Xxxxxxxx
--------------------------------
By: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
37
EXHIBIT A TO LOAN AGREEMENT
SCHEDULE OF PROJECT AND LOAN PAYMENTS
Description of Project
The following Project is the subject of the Loan Agreement dated as of
September 1, 1997 among GE Capital Public Finance, Inc. ("Lender"), California
Economic Development Financing Authority ("Issuer"), and GT Bicycles, Inc.
("Borrower").
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
ACCESSORIE AIR COMPRESSOR SYSTEMS, INC.
---------------------------------------
COMPRESSED AIR SYSTEM
---------------------
1 TW-0 BALANCER ZERO GRAVITY TYPE
1 ABT-5 BALANCER TROLLEY
1 AES-5 END STOP
1 U-350-SD SCREWDRIVER
1 ASH-250C-15MSZ COIL HOSE ASSEMBLY
.50 5.50 LABOR LABOR-INSTALL AIR LINES
1 MISC PIPE PARTS
1 C21 COUPLER
.00 1.00 LABOR REPAIR BROKEN LINE AT XXXXXXXX
00 11.00 LABOR LABOR
1 MISC PIPE PARTS
2 C21 COUPLER
100 C20-44 QUICK DISCONNECT
100 406 HOSE XXXX
100 7330 FERRULE - W/O
60 CP21-03 PLUG - W/O
0 1 UPS FREIGHT
0 500 63262 3/8 AIR HOSE (BLACK)
1 UPS FREIGHT
18 AT5-9 9FT TRACK
18 AT5-9 9FT TRACK
10 TW-0 BALANCER ZERO GRAVITY TYPE
18 AMP-5 MOUNTING BRACKET
10 ABT-5 BALANCER TROLLEY
18 AB-5 ANGLE BRACKET
13 2FAN2F-N2M FREE ANGLE HOSE FITTING
9 AT5-9 9FT TRACK
00 XXX-0 XXXXX XXXXXX XXXXXXX
00 XXX-0 END STOP
1 US-LT30B-11 SCREWDRIVER INLINE PUSH
0 XXXXX-00 XXXXXX XXXXXXX XXXX
0 XXXXX-00 XXXX WHEEL TOOL
1 U-350-D FRONT DERAIL TOOL
1 U-410-D REAR DERAIL TOOL
1 U-350-SD SCREWDRIVER
1 U-350-D FRONT DERAIL TOOL
A-1
38
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
1 U-410-SD REAR BRAKE TOOL
1 UX-450-SD SEAT POST M6 TOOL
12 ASH-250C-15MSZ COIL HOSE ASSEMBLY
.00 21.00 LABOR LABOR
1 MISC PIPE PARTS
500 63262 3/8 AIR HOSE (BLACK)
1 MISC PARTS
1 SCISSOR-LIFT
60 MISC 3/4" PIPE PLUG
1 6.1981.0 OIL FILTER
2 6.1945.0 FILTER MAT - 38 1/4x38 1/4
1 MANUAL-B CS-121 PARTS & SERVICE MANUAL
1 MISC PIPE PARTS
2 2 AT5-4 FOUR FOOT TRACK
1 1 AMP-5 MOUNTING BRACKET
1 1 AB-5 ANGLE BRACKET
5 5 ABT-5 BALANCER TROLLEY
5 TW-0 BALANCER ZERO GRAVITY TYPE
3 3 XXX-0 XXX XXXX
0 0 XXX-0 XXX CAP
1 U-350-D FRONT DERAIL TOOL
1 U-350-D FRONT DERAIL TOOL
1 US-LT31PB-11 SEAT COLLAR
1 US-LT30B-11C WATER BOTTLE SCREW
1 1 ABT-5 BALANCER TROLLEY
1 TW-0 BALANCER ZERO GRAVITY TYPE
1 1 AES-5 END STOP
1 1010P3 IMPACT WRENCH
2 2 AT5-4 FOUR FOOT TRACK
1 1 AMP-5 MOUNTING BRACKET
1 1 AB-5 ANGLE BRACKET
2 2 ABT-5 BALANCER TROLLEY
2 TW-0 BALANCER ZERO GRAVITY TYPE
2 2 AES-5 END STOP
2 2 AEP-5 END CAP
1 A-1010PQ CHAIN STAY SEAT PIVOT
1 A-1010PQ CHAIN STAY SEAT PIVOT
2 C-351 RIVNUT
1000 63262 3/8 AIR HOSE (BLACK)
100 C20-44 QUICK DISCONNECT
100 406 HOSE XXXX
100 7330B FERRULE
25 MISC 3/4x1/4 BUSHING
1 CS-121 KAESER 100 HP AIR COMPRESSOR
1 KLD-450 DESICCANT DRYER
1 660V150 AIR RECEIVER
1 AAC300B4 GAUGE * (INCL.)
1 FIG-8C-3/4X150 SAFETY RELIEF VALVE *
A-2
39
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
1 ALF-850 AIR LINE FILTER
1 ORF-550 OIL REMOVAL FILTER
2 ADT-190 TRAP
1 INBOUND FREIGHT ON DRYER & COMPRESSOR
2 C21 COUPLER
103 C20-44 QUICK DISCONNECT
10 CP21 PLUG
101 406 HOSE XXXX
3 461 XXXX
4 7328 FERRULE - W/O
50 ###-##-#### XXXXXX GRIP
1 855 CRIMPER
528 63262 3/8 AIR HOSE (BLACK)
85 MISC 3/4 PIPE
5 MISC 3/4 TEE
4 MISC 3/4 90'S
4 MISC 3/4 PLUG
2 MISC 3/4 x CLOSE NIPPLE
1 MISC 3/4 x 1/4 BUSHING
9 MISC PIPE HANGERS
100 7330B FERRULE
00 XX0-0 0XX XXXXX
00 XX0-0 0XX TRACK
3 ABT-5 BALANCER TROLLEY
14 AMP-5 MOUNTING BRACKET
14 AB-5 ANGLE BRACKET
7 AT5-9 9FT TRACK
2 AT5-4 FOUR FOOT TRACK
1 AMP-5 MOUNTING BRACKET
1 AB-5 ANGLE BRACKET
5 ABT-5 BALANCER TROLLEY
3 XXX-0 XXX XXXX
0 XXX-0 XXX CAP
1 ABT-5 BALANCER TROLLEY
1 AES-5 END STOP
2 AT5-4 FOUR FOOT TRACK
1 AMP-5 MOUNTING BRACKET
1 AB-5 ANGLE BRACKET
2 ABT-5 BALANCER TROLLEY
2 XXX-0 XXX XXXX
0 XXX-0 XXX CAP
7 2 TW-0 BALANCER ZERO GRAVITY TYPE
7 1 ABT-5 BALANCER TROLLEY
7 5 ASH-250C-15MSZ COIL HOSE ASSEMBLY
7 5 2FAN2F-N2M FREE ANGLE HOSE FITTING
7 1 AES-5 END STOP
0 XXXXX-00 XXXXXX XXXXXXX XXXX
0 XXXXX-00 XXXX WHEEL TOOL
A-3
40
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
1 U-350-D FRONT DERAIL TOOL
1 U-410-D REAR DERAIL TOOL
1 U-350-D FRONT DERAIL TOOL
0 1 U-410-SD REAR BRAKE TOOL
1 UX-450-SD SEAT POST M6 TOOL
41
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
WELDING MACHINES SOUTHERN CALIFORNIA AIRGAS
---------------- --------------------------
Item Number Item Description
----------- ----------------
RELEASE #: 586
** Location: 32 **
*TWE80416 16 0 TWECO XX00X-0 XXX. TORCH
*TWE18DWC 16 0 TWECO XXXXX CONNECTOR
*TWEBGPTS 1 0 TWECO TUNGSTEN SHARPENER
*TWEBGPTSGW 1 0 TWECO TUNG SHARPENER GRIN WHEEL
*TWEBGRHR 6 0 XXX XXXXXXX
*MISCSV4X51LV 6 0 TWECO-CIGWELD WELD HOOD
WEC40V76 16 0 WC 40V76 121/2WTR HOSE
WEC40V77 16 0 WC 40V77 121/2ARG HOSE
*WECWC36 16 0 WELDCRAFT 6 FT. CABLE COV
BERBS300 16 0 300A STEEL GROUND CLAMP
TWET120 16 0 SOLDER TWECOLUG
CAB84 160 0 8/4 PRIMARY CABLE
CAB10 160 0 1/0 WELDING CABLE
RELEASE #: 586
TWET68 60 0 POWER CABLE TWECOLUG
TWET62 15 0 SOLDER TWECOLUG
*THD101025 16 0 THERMAL ARC 400 GTSW TIG
*THD102008 16 0 THERMAL ARC FOOT CONTROL
CNC MACHINE XXXXXXXX ELECTRIC
----------- -----------------
PROVIDE 20A CIRCUIT FOR NEW CNC MACHINE IN PRODUCT DEVELOPMENT (BID)
VC08 1.00 1.00 EACH
TOTAL AMOUNT DUE
NEW CNC FOR PRODUCT DEVELOPMENT
97286
A-5
42
Description Manufacturer,
Quantity of Project Contractor or Vendor Serial Number
------------ ----------------------- ---------------------------------------------- --------------
Overhead Crane
Heat Treat System
Wheelbuilding Equipment
Racking
Welding Equipment
Welding Stations
Forklifts
Order Picker
Assembly Lines
CNC Machining
Computers
Tool Room Equipment
Cut Off Equipment
Fabrication Upgrades
Quality Control Equipment
Auto Taper Equipment
Bending Equipment
Compressed Air Systems
Composite Expansion
Tech Shop Equipment
Bike Test Equipment
Butting Equipment
Additional Laser Miter
Polishing Equipment
Ball Burnish Equipment
Bead Blast System
Annodize System
Chrome Plating System
The Project and the Additional Collateral are located at the following address.
Prior to the relocation of the Equipment and/or the Additional Collateral or
portion thereof, Borrower will provide 30 days' prior written notice to Lender
and Issuer:
0000 Xxxx Xxxx Xxxx
Xxxxx Xxx, XX 00000
A-6
43
EXHIBIT B TO LOAN AGREEMENT
FORM OF CERTIFICATE OF ACCEPTANCE
I, the undersigned, hereby certify that I am the duly qualified and
acting ______________________ of GT Bicycles, Inc. ("Borrower") and, with
respect to the Loan Agreement dated as of September 1, 1997 (the "Agreement") by
and among Borrower, GE Capital Public Finance, Inc. ("Lender") and California
Economic Development Financing Authority ("Issuer"), that:
1. The portion of the Project described in Exhibit A to the Agreement
(the "Project") has been delivered and installed in accordance with Borrower's
specifications and has been accepted by Borrower.
2. Borrower has obtained from a reputable insurance company qualified
to do business in the State (as defined in the Agreement) insurance with respect
to all risks required to be covered thereby pursuant to Section 8.06 of the
Agreement.
3. Attached to this Certificate of Acceptance are Vendor invoice(s)
and/or xxxx(s) of sale relating to the Project and, if such invoices have been
paid by Borrower, evidence of payment thereof and, if applicable, evidence of
official intent to reimburse such payment as required by the Code (as defined in
the Agreement).
4. Borrower hereby directs Lender, on behalf of Issuer, to pay the Loan
Proceeds (as defined in the Agreement) as follows:
5. All of the representations and warranties of Borrower contained in
the Agreement are true and correct as of the date hereof and no Default or Event
of Default has occurred thereunder.
Dated: , 19 .
---------------------------- --
GT BICYCLES, INC.
Borrower
By:
---------------------------------
Title:
---------------------------------
Date:
---------------------------------
44
EXHIBIT C TO LOAN AGREEMENT
DESCRIPTION OF ADDITIONAL COLLATERAL
1. Office Furnishings and workstations as described in Xxxxxxxx Interior
Systems, Inc. invoice #22000 dated May 22, 1997.
2. (1) Lot each of Pallet Racks, Row Spacers and Column Guards; (25) Ups;
(50) pair of Beams as described in XxXxxx Industries invoice #572 dated
10/5/96 and #943 dated 10/27/96.
3. (1) Meridian PBX system
4. (1) Canon NP-8530 Copier: S/N NCM05049 with stapler/sorter S/N
ZCE27249.
5. (1) LMI TM-156 Laser Workstation: S/N TM156-2200-1-1134
6. (1) Carousel System including AIMS software system; computers and
peripherals including the following:
(3) HP Laserjet 5 printers: S/N's JPKK055689; JPKK055691;
JPKK055693
(1) Bar Code Scanner: S/N 503814
(1) Remstar conveyor: vendor #123266 with Lift platform
No. Item Number Quantity Item Description
-------- ----------- ------------- -----------------------------------
31 SP3 1 **** CON'T ON NEXT PAGE ****
32 MN 1 M.N. S/N # 00AU01518
33 MS 1 MOUSE S/N # 00297109, 00297111
34 MS 1 MOUSE S/N # 00240637
35 MD 1 XXXXX X/X # 00XX00X0XXX0
00 XX 0 M.N. S/N # 000U00559, 00403
37 MN 1 M.N. S/N # 000U00573
00 XX 0 XXX X X/X # 000XX000, 1829A6DB
00 XX 0 XXX X X/X # 0000X0XX
00 XX0 0 ==========================
41 AC3200 3 Q MOUSE PAD (NO CHARGE)
42 SP2 1 ==========================
43 XX 0 X. X. # 00000
C-1
45
SCHEDULE OF LOAN PAYMENTS
GE Capital Public Finance, Inc.
Amortization Schedule
Funding Date..........................................Sep.-17-97
Coupon Rate................................................5.87%
Payment Payment Loan Principal Interest Principal Prepayment
Date Number Payment Component Component Balance* Amount*
------------ ------- ---------- ---------- --------- ------------ ------------
Sep-17-97 0 0.00 0.00 0.00 5,000,000.00 5,100,000.00
Nov-01-97 1 65,539.66 29,667.44 35,872.22 4,970,332.56 5,069,739.21
Dec-01-97 2 65,539.66 41,226.45 24,313.21 4,929,106.11 5,027,688.24
---------- --------- ---------
131,079.32 70,893.89 60,185.43
Jan-01-98 3 65,539.66 41,428.11 24,111.54 4,887,678.00 4,985,431.56
Feb-01-98 4 65,539.66 41,630.77 23,908.89 4,846,047.23 4,942,968.18
Mar-01-98 5 65,539.66 41,834.41 23,705.25 4,804,212.82 4,900,297.08
Apr-01-98 6 65,539.66 42,039.05 23,500.61 4,762,173.77 4,857,417.25
May-01-98 7 65,539.66 42,244.69 23,294.97 4,719,929.08 4,814,327.66
Jun-01-98 8 65,539.66 42,451.34 23,088.32 4,677,477.74 4,771,027.29
Jul-01-98 9 65,539.66 42,659.00 22,880.66 4,634,818.74 4,727,515.12
Aug-01-98 10 65,539.66 42,867.67 22,671.99 4,591,951.07 4,683,790.09
Sep-01-98 11 65,539.66 43,077.36 22,462.29 4,548,873.71 4,639,851.18
Oct-01-98 12 65,539.66 43,288.09 22,251.57 4,505,585.62 4,595,697.33
Nov-01-98 13 65,539.66 43,499.84 22,039.82 4,462,085.75 4,551,327.50
Dec-01-98 14 65,539.66 43,712.62 21,827.04 4,418,373.16 4,506,740.63
---------- --------- ---------
786,475.91 510,732.95 275,742.95
Jan-01-99 15 65,539.66 43,926.45 21,613.21 4,374,446.71 4,461,935.65
Feb-01-99 16 65,539.66 44,141.32 21,398.34 4,330,305.39 4,416,911.50
Mar-01-99 17 65,539.66 44,357.25 21,182.41 4,285,948.14 4,371,667.10
Apr-01-99 18 65,539.66 44,574.23 20,965.43 4,241,373.91 4,326,301.39
May-01-99 19 65,539.66 44,792.27 20,747.39 4,196.581.64 4,280,513.27
Jun-01-99 20 65,539.66 45,011.38 20,528.28 4,151,570.26 4,234,601.66
Jul-01-99 21 65,539.66 45,231.56 20,308.10 4,106,338.70 4,188,465.47
Aug-01-99 22 65,539.66 45,452.82 20,086.84 4,060,885.88 4,142,103.60
Sep-01-99 23 65,539.66 45,675.16 19,864.50 4,015,210.72 4,095,514.93
Oct-01-99 24 65,539.66 45,898.59 19,641.07 3,969,312.13 4,048,698.38
Nov-01-99 25 65,539.66 46,123.11 19,416.55 3,923,189.03 4,001,652.81
Dec-01-99 26 65,539.66 46,348.73 19,190.93 3,876,840.30 3,954,377.11
---------- --------- ---------
786,475.91 541,532.86 244,943.05
Page 1
46
Payment Payment Loan Principal Interest Principal Prepayment
Date Number Payment Component Component Balance* Amount*
------------ ------- ---------- ---------- --------- ------------ ------------
Jan-01-00 27 65,539.66 46,575.45 18,964.21 3,830,264.85 3,906,870.15
Feb-01-00 28 65,539.66 46,803.28 18,736.38 3,783,461.57 3,859,130.80
Mar-01-00 29 65,539.66 47,032.23 18,507.43 3,736,429.34 3,811,157.93
Apr-01-00 30 65,539.66 47,262.29 18,277.37 3,689,167.05 3,762,950.39
May-01-00 31 65,539.66 47,493.48 18,046.18 3,641,673.57 3,714,507.04
Jun-01-00 32 65,539.66 47,725.81 17,813.85 3,593,947.76 3,665,826.72
Jul-01-00 33 65,539.66 47,959.26 17,580.39 3,545,988.50 3,616,908.27
Aug-01-00 34 65,539.66 48,193.87 17,345.79 3,497,794.63 3,567,750.53
Sep-01-00 35 65,539.66 48,429.61 17,110.05 3,449,365.02 3,518,352.32
Oct-01-00 36 65,539.66 48,666.52 16,873.14 3,400,698.51 3,468,712.48
Nov-01-00 37 65,539.66 48,904.58 16,635.08 3,351,793.93 3,418,829.81
Dec-01-00 38 65,539.66 49,143.80 16,395.86 3,302,650.13 3,368,703.13
---------- --------- ---------
786,475.91 574,190.17 212,285.74
Jan-01-01 39 65,539.66 49,384.20 16,155.46 3,253,265.93 3,318,331.25
Feb-01-01 40 65,539.66 49,625.77 15,913.89 3,203,640.17 3,267,712.97
Mar-01-01 41 65,539.66 49,868.52 15,671.14 3,153,771.65 3,216,847.08
Apr-01-01 42 65,539.66 50,112.46 15,427.20 3,103,659.19 3,165,732.37
May-01-01 43 65,539.66 50,357.59 15,182.07 3,053,301.60 3,114,367.63
Jun-01-01 44 65,539.66 50,603.93 14,935.73 3,002,697.67 3,062,751.62
Jul-01-01 45 65,539.66 50,851.46 14,688.20 2,951,846.21 3,010,883.13
Aug-01-01 46 65,539.66 51,100.21 14,439.45 2,900,746.00 2,958,760.92
Sep-01-01 47 65,539.66 51,350.18 14,189.48 2,849,395.82 2,906,383.74
Oct-01-01 48 65,539.66 51,601.36 13,938.29 2,797,794.46 2,853,750.35
Nov-01-01 49 65,539.66 51,853.78 13,685.88 2,745,940.68 2,800,859.49
Dec-01-01 50 65,539.66 52,107.43 13,432.23 2,693,833.24 2,747,709.91
---------- --------- ---------
786,475.91 608,816.89 177,659.02
Jan-01-02 51 65,539.66 52,362.32 13,177.33 2,641,470.92 2,694,300.34
Feb-01-02 52 65,539.66 52,618.46 12,921.20 2,588,852.45 2,640,629.50
Mar-01-02 53 65,539.66 52,875.86 12,663.80 2,535,976.60 2,586,696.13
Apr-01-02 54 65,539.66 53,134.51 12,405.15 2,482,842.09 2,532,498.93
May-01-02 55 65,539.66 53,394.42 12,145.24 2,429,447.67 2,478,036.62
Jun-01-02 56 65,539.66 53,655.61 11,884.05 2,375,792.06 2,423,307.90
Jul-01-02 57 65,539.66 53,918.08 11,621.58 2,321,873.98 2,368,311.46
Aug-01-02 58 65,539.66 54,181.83 11,357.83 2,267,692.16 2,313,046.00
Sep-01-02 59 65,539.66 54,446.86 11,092.79 2,213,245.29 2,257,510.20
Oct-01-02 60 65,539.66 54,713.20 10,826.46 2,158,532.09 2,201,702.73
Nov-01-02 61 65,539.66 54,980.84 10,558.82 2,103,551.25 2,145,622.28
Dec-01-02 62 65,539.66 55,249.79 10,289.87 2,048,301.46 2,089,267.49
---------- --------- ---------
786,475.91 645,531.78 140,944.13
Page 2
47
Payment Payment Loan Principal Interest Principal Prepayment
Date Number Payment Component Component Balance* Amount*
------------ ------- ---------- ---------- --------- ------------ ------------
Jan-01-03 63 65,539.66 55,520.05 10,019.61 1,992,781.41 2,032,637.04
Feb-01-03 64 65,539.66 55,791.64 9,748.02 1,936,989.78 1,975,729.57
Mar-01-03 65 65,539.66 56,064.55 9,475.11 1,880,925.23 1,918,543.73
Apr-01-03 66 65,539.66 56,338.80 9,200.86 1,824,586.43 1,861,078.15
May-01-03 67 65,539.66 56,614.39 8,925.27 1,767,972.04 1,803,331.43
Jun-01-03 68 65,539.66 56,891.33 8,648.33 1,711,080.71 1,745,302.32
Jul-01-03 69 65,539.66 57,169.62 8,370.04 1,653,911.08 1,686,989.31
Aug-01-03 70 65,539.66 57,449.28 8,090.38 1,596,461.81 1,628,391.04
Sep-01-03 71 65,539.66 57,730.30 7,809.36 1,538,731.51 1,569,506.14
Oct-01-03 72 65,539.66 58,012.70 7,526.96 1,480,718.31 1,510,333.19
Nov-01-03 73 65,539.66 58,296.48 7,243.18 1,422,422.33 1,450,870.78
Dec-01-03 74 65,539.66 58,581.64 6,958.02 1,363,840.69 1,391,117.50
--------- --------- --------
786,475.91 684,460.77 102,015.13
Jan-01-04 75 65,539.66 58,868.20 6,671.45 1,304,972.49 1,331,071.94
Feb-01-04 76 65,539.66 59,156.17 6,383.49 1,245,816.32 1,270,732.64
Mar-01-04 77 65,539.66 59,445.54 6,094.12 1,186,370.78 1,210,098.19
Apr-01-04 78 65,539.66 59,736.33 5,803.33 1,126,634.45 1,149,167.14
May-01-04 79 65,539.66 60,028.54 5,511.12 1,066,605.91 1,087,938.03
Jun-01-04 80 65,539.66 60,322.18 5,217.48 1,006,283.73 1,026,409.40
Jul-01-04 81 65,539.66 60,617.25 4,922.40 945,666.48 964,579.81
Aug-01-04 82 65,539.66 60,913.77 4,625.89 884,752.70 902,447.76
Sep-01-04 83 65,539.66 61,211.74 4,327.92 823,540.96 840,011.78
Oct-01-04 84 65,539.66 61,511.17 4,028.49 762,029.79 777,270.38
Nov-01-04 85 65,539.66 61,812.06 3,727.60 700,217.72 714,222.08
Dec-01-04 86 65,539.66 62,114.43 3,425.23 638,103.30 650,865.36
--------- --------- --------
786,475.91 725,737.39 60,738.51
Jan-01-05 87 65,539.66 62,418.27 3,121.39 575,685.03 587,198.73
Feb-01-05 88 65,539.66 62,723.60 2,816.06 512,961.43 523,220.66
Mar-01-05 89 65,539.66 63,030.42 2,509.24 449,931.00 458,929.62
Apr-01-05 90 65,539.66 63,338.75 2,200.91 386,592.26 394,324.10
May-01-05 91 65,539.66 63,648.58 1,891.08 322,943.68 329,402.55
Jun-01-05 92 65,539.66 63,959.93 1,579.73 258,983.75 264,163.43
Jul-01-05 93 65,539.66 64,272.80 1,266.86 194,710.96 198,605.18
Aug-01-05 94 65,539.66 64,587.20 952.46 130,123.76 132,726.23
Sep-01-05 95 65,539.66 64,903.14 636.52 65,220.62 66,525.03
Oct-01-05 96 65,539.66 65,220.62 319.04 0.00 0.00
--------- --------- ------
655,396.59 638,103.30 17,293.29
TOTAL 6,291,807.26 5,000,000.00 1,291,807.26
============ ============ ============
* After payment of Loan Payment due opposite Prepayment Amount.
Page 3
48
DESCRIPTION OF ADDITIONAL COLLATERAL
CONTINUED
(1) Carousel System with all attachments and accessories, including, but not
limited to:
------- ---------------------- ---------------- -------------------------------
NO. ITEM NUMBER QUANTITY ITEM DESCRIPTION
------- ---------------------- ---------------- -------------------------------
1 SPC 3 MICRO Q PENTIUM PCI SYSTEM
2 CPUI5133 3 INTEL PENTIUM 133MHZ CPU
3 CPUF505 3 586 COOLING FAN BALL BEARING
4 MB51263 3 A+ P5 TRITON VX MB 512K CACHE
5 MBSP1000 3 PS/2 MOUSE ADAPTER FOR MAIN B
6 RC73300 6 8 MB SIMM EDO 2X32
7 MSDO6000 3 DOS 6.22 3.5" W/SYSTEM OEM
8 MSW3100 3 WINDOWS FOR WORKGROUPS 3.11
9 CS1210 3 3D 182 MINI TOWER 230W PS
10 FD1100 3 TEAC 1.44M XXXXXX XXXXX
00 XXX0000 3 WESTERN DIGITAL 1.2GB IDE H.D.
12 KBNM1000 3 NMB ENHANCED CLICK [LARGE] KB
13 VDS32500 3 S3 A+ 765 PCI VGA 1MB MPEG
14 MNSC1400 3 SCEPTRE 14" CRT DDC MONITOR
15 MKMS1005 3 MS PS/2 MOUSE 11 W/SYSTEM
16 NWTK2005 3 TK 32BIT PCI REG COMBO
17 MDUS2150 1 USK SPORTSTER 33.6 INT (OEM)
18 SP1 1 **** ASSEMBLED & TESTED ****
19 SYS 1 SYS. S/N #54222, 54223
20 SYS 1 SYS. S/N #54225
21 MB 1 M.B. S/N #073677514, 515
22 MB 1 M.B. S/N #07367765_
23 FD 1 F.D. S/N #_______________
24 FD 1 F.D. S/N #1,906175
25 __ 1 ___ S/N #1066247, 1049709
26 __ 1 H.D. S/N #0269867
27 __ 1 K.B. S/N #12971598, 12971581
28 __ 1 X.X. X/X #00000000
00 XX 0 VIDEO S/N #205225, 205211
30 VD 1 VIDEO S/N #205219
C-2
49
DESCRIPTION OF ADDITIONAL COLLATERAL
CONTINUED
(1) Carousel System with all attachments and accessories, including, but not
limited to:
------- ---------------------- ---------------- -------------------------------
NO. ITEM NUMBER QUANTITY ITEM DESCRIPTION
------- ---------------------- ---------------- -------------------------------
1 CPQP1010 1 COMPAQ PROLIANT 2500 6/200
2 SPC 1 PENTIUM PRO SERVER SYSTEM
3 SPC 1 COMPAQ STOCK NO. 250980-001
4 SPC 1 200 MHZ PENTIUM PRO PROCESSOR
5 SPC 1 32MB HI-SPEED ECC MEMORY
6 SPC 1 TOWER-CASE WITH POWER SUPPLY
7 SPC 1 BUILT-IN SERIAL/PARALLEL
8 SPC 1 BUILT-IN SVGA PORT
9 SPC 1 INTERNAL CD-ROM DRIVE
10 SPC 1 KEYBOARD & MOUSE
11 SP2 1 ===============================
12 CTAD3025 1 ADAPTEC AHA-294OUW KIT SCSI
13 HDSE2105 1 BARRACUDA 2.1GB ST32171W UW
14 HDSE2105 1 BARRACUDA 2.1GB ST32171W UW
15 MNSC1400 1 SCEPTRE 14" CRT DDC MONITOR
16 TBSE2000 1 SEAGATE 8GB INT DAT.DDS-2 5.2
17 SP2 1 ===============================
18 SP1 1 **** ASSEMBLED & TESTED ****
19 SP2 1 ===============================
20 TPDE5600 2 DEC 4mm 120M 4-8GB DATA TAPE
21 AC3200 1 Q MOUSE PAD (NO CHARGE)
22 SP2 1 ===============================
23 SYS 1 SYS. S/N # D706HWB10175
24 XX 0 XXXX X/X # XX00XX0
25 HD 1 H.D. S/N #je499322
26 HD 1 H.D. S/N je500816
27 MN 1 M.N. S/N # 703wa000u00410
2 CBPI1005 3 10FT 1EEE 1284 PRINTER CABLE
3 BA1100 1 BAR CODE CCD SCANNER
C-3
50
DESCRIPTION OF ADDITIONAL COLLATERAL
CONTINUED
(1) Kenworth Model T2000 Truck with Transport Trailer: S/N 0XXXXX0XXXX000000
with all attachments and accessories, including, but not limited to:
ADDITIONS TO CUSTOMERS TRAILER:
-- INSTALL 110 VOLT ELECTRICAL + (1) AIR COUPLER AT CURBSIDE
WORKBENCH
-- INSTALL 4-ROW 5 TIRE STORAGE RACK UNDER CURBSIDE WORKBENCH
-- INSTALL EXTERIOR ROADSIDE WATER HOSE SPIGOT AT 5TH DECK
EXTERIOR
-- INSTALL AIR COUPLER "T" AT ROADSIDE WORKBENCH TOP
-- INSTALL (2) EXTERIOR "T" AIR RECEPTACLES AHEAD AND BEHIND
CURBSIDE DOOR
-- INSTALL ROADSIDE WORKBENCH SHELVING (3-4)
-- INSTALL CUSTOMERS BENCH GRINDER
-- REWIRE REAR FLUORESCENT LIGHTS ON SEPARATE SWITCH
-- INSTALL CUSTOMERS FRONT CHANNEL SPEAKERS IN CAR STORAGE AREA
-- INSTALL CUSTOMERS A/V COMPONENTS IN WARDROBE CABINET
-- MOUNT CUSTOMERS SPEAKERS AT ROOF AREA OF CAR STORAGE
-- FABRICATE AND INSTALL REAR ENTRY STEP WITH HAND RAILS
-- FABRICATE AND INSTALL (2) HAND RAILS AT REAR CURBSIDE STEP
-- REWORK AWNING RAFTER POLE STORAGE BRACKETS TO ACCOMMODATE
BIKE STORAGE
-- INSTALL ADDITIONAL AWNING DOORWAY AT FRONT
-- REMOVE CUSTOMERS TRAILER DECALS
-- INSTALL PREPAINTED WHITE ALUMINUM SKINS AT PARTITION WALLS
-- SUPPLY RACHET AND AXLE STRAPS, TIE-DOWN ASSEMBLIES
-- REWORK TRIANGULAR LIGHT BRACES AND POWDERCOAT WHITE
-- INSTALL ADDITIONAL BATTERY/CHARGE SYSTEM FOR A AUDIO
COMPONENTS
-- INSTALL NEW TRAILER/TRUCK DECAL GRAPHICS
C-4
51
DESCRIPTION OF ADDITIONAL COLLATERAL
CONTINUED
(3) Altair Welder TWX2 Systems w/FC: S/N's Y6251, Y 6234, Y6250 with all
attachments and accessories, including, but not limited to:
----------------------------------------------------------------------------------------------
QUANTITY QUANTITY CYLINDERS
-----------------
ITEM NUMBER _______ ___ SHIPPED RETURNED ITEM DESCRIPTION UNIT
-----------------------------------------------------------------------------------------------
** Location 550 **
PANYC300TWX2Y37 3 0 WELDER TWX2 SYSTEM W/FC EA
S/N'S Y6251, Y6234 AND Y6250
SET UP 480 VOLT 3 PHASE
DEMO FOOT PEDALS WILL BE REPLACED WHEN RECEIVED FROM FACTORY
BER3500SS 3 0 WATER CIRCULATOR EA
WELWP2012 3 0 TIG TORCH WP-20 12' EA
*WELBS1 3 0 WEL B5-1 SWITCH BOOT EA
*WELSW-1 3 0 WEL SW-1 BULB SWITCH EA
ESB45V11 3 0 ADAPTOR POWER CABLE EA
WELWC310 3 0 CABLE COVER NYLON ZIPPERE EA
COMPC-84 75 0 CABLE PRIMARY #8/4 FT
COMCABLE-10 45 0 CABLE WELDING #1/0 FT
CUT 1/0 CABLE INTO 3 15' SECTIONS AND ASSEMBLY WITH GROUND CLAMP
TWET120 6 0 CABLE LUG 1 THRU 2/0 EA
TWESGC300 3 0 CLAMP GROUND 300 AMP EA
ESDBW25 3 0 BW-25 STRAIN RELIEF EA
C-5
52
EXHIBIT D TO LOAN AGREEMENT
FORM OF INVESTOR'S LETTER OF REPRESENTATION
California Economic Development
Financing Authority
000 X Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
GT Bicycles, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxx, XX 00000
Re: Loan Agreement dated as of September 1, 1997 by and among GE
Capital Public Finance, Inc. ("Lender"), California Economic
Development Financing Authority ("Issuer") and GT Bicycles,
Inc. ("Borrower")
Ladies and Gentlemen:
The undersigned, as Lender under the Loan Agreement described above
(the "Loan Agreement"), hereby represents to you that:
1. The undersigned has duly authorized, by all necessary action, the
making of the Loan contemplated pursuant to the terms and provisions of the Loan
Agreement.
2. We have sufficient knowledge and experience in financial and
business matters, including purchase and ownership of municipal and other
tax-exempt obligations, to be able to evaluate the risks and merits of the
investment represented by the Issuer Payments, the Loan Payments (capitalized
terms used herein and not otherwise defined shall have the meanings given such
terms in the Loan Agreement) and the Loan Agreement. We are able to bear the
economic risks of such investment.
3. We understand that the obligations of Issuer to make payments under
the Loan Agreement (the "Issuer Payments") under the Loan Agreement are special,
limited obligations payable solely from amounts paid to Issuer from Borrower
pursuant to the terms of the Loan Agreement and that notwithstanding anything to
the contrary contained in the Loan Agreement, Issuer shall not be obligated to
make Issuer Payments, or pay any portion of the purchase price of the Equipment
or make any other payment or advance any moneys or be liable for any other costs
or expenses in connection with the Equipment, the Issuer Payments, the Loan
Payments or the Loan Agreement, except from the amounts paid to Issuer from
Borrower pursuant to the Loan Agreement, and no such payment shall constitute a
charge against the general credit of the Issuer. We further understand that
Issuer shall not be directly or indirectly or contingently or morally obligated
to use any other moneys or assets of Issuer to pay Issuer Payments or any
portion of the purchase price of the Equipment or for all or any portion of such
other costs or expenses.
D-1
53
4. We acknowledge that we have either been supplied with or have been
given access to information, including financial statements and other financial
information which we have requested, and we have had the opportunity to ask
questions and receive answers concerning Borrower, the Issuer Payments, the Loan
Payments, the Loan Agreement and the security therefor, so that we have been
able to make the Loan on the terms as set forth in the Loan Agreement. We
acknowledge that we have not relied upon the Issuer for any information in
connection with the Loan, except as set forth in Article IV of the Loan
Agreement.
5. We have made our own inquiry and analysis with respect to the Loan
Agreement, the Issuer Payments, the Loan Payments and the security therefor, and
other material factors affecting the security and payment of such payments set
forth in the Loan Agreement. We are aware that the business of the Borrower
involves certain economic variables and risks that could adversely affect the
security for the payments to be made by the Issuer to the Lender under the terms
of the Loan Agreement. We have examined drafts in final form of the basic legal
documents relating to the Loan Agreement, including the proposed legal opinions
to be delivered by Borrower's counsel and Xxxxx Xxxx, as Lender's and special
counsel.
6. We understand that the Loan Agreement (including the right to
receive Issuer Payments and Loan Payments under the terms of the Loan Agreement)
(a) is not being registered or otherwise qualified for sale under the "Blue Sky"
laws and regulations of any state, (b) will not be listed in any stock or other
securities exchange, (c) will not carry a rating from any rating service and (d)
will be delivered in a form which may not be readily marketable.
7. We understand that the Loan Agreement (including the right to Issuer
Payments and Loan Payments under the terms of the Loan Agreement) has not been
registered under the Securities Act of 1933, as amended. We represent to you
that we are purchasing the Loan for investment for our own account and not with
a present view toward resale or the distribution thereof, in that we do not
intend to resell or otherwise dispose of all or any part of our interests in the
Loan, except for sale to an Affiliate. Except for a transfer to an entity which
Lender has certified to Issuer and Borrower that such entity is an Affiliate, we
agree not to sell, transfer or otherwise dispose of or permit such Affiliate to
sell, transfer or otherwise dispose of all or part of our interest in the Loan
except in accordance with the requirements of the Loan Agreement.
8. We agree to indemnify and hold harmless the Issuer with respect to
any claim asserted against Issuer that is based upon our sale, transfer or other
disposition of our interests in the Loan Agreement in violation of the
provisions hereof or of the Loan Agreement, other than any claim that is based
upon the gross negligence or willful misconduct of Issuer.
9. We have executed and delivered this letter in connection with the
execution and delivery of the Loan Agreement as an inducement to Issuer to cause
the execution and delivery of the Loan Agreement to us. Only the addressees
hereof may rely upon this letter.
GE CAPITAL PUBLIC FINANCE, INC.
By:
-------------------------------
Authorized Officer
D-2
54
EXHIBIT E TO LOAN AGREEMENT
SCHEDULE OF PENDING LITIGATION
[None]
