EXHIBIT 10.31
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of this
31st day of March, 1998, by and among FLEET CAPITAL CORPORATION ("Lender"), a
Rhode Island corporation having an office at 2711 North Xxxxxxx, Suite 2100, LB
21, Xxxxxx, Xxxxx 00000; and ADVANCED TECHNICAL PRODUCTS, INC. ("ATP"), a
Delaware corporation, ALCORE, INC. ("ALCORE"), a Delaware corporation, TECHNICAL
PRODUCTS GROUP, INC. ("TECHNICAL PRODUCTS"), a Delaware corporation, XXXXXX
PROPERTIES, INC. ("XXXXXX"), a Delaware corporation, DELAND PROPERTIES, INC.
("DELAND"), a Delaware corporation, and LINCOLN PROPERTIES, INC. ("LINCOLN"), a
Delaware corporation (ATP, Alcore, Technical Products, Xxxxxx, DeLand and
Lincoln being referred to individually, collectively, and joint and severally,
as "BORROWER"), each Borrower having its chief executive office at 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000. Capitalized terms used in
this Agreement have the meanings assigned to them in APPENDIX A, GENERAL
DEFINITIONS. Accounting terms not otherwise specifically defined herein shall be
construed in accordance with GAAP consistently applied.
RECITALS:
A. Lender and Technical Products, Xxxxxx, DeLand and Lincoln (collectively, the
"ORIGINAL BORROWERS") have entered into that certain Loan and Security Agreement
dated December 27, 1996, as amended by that certain First Amendment to Loan and
Security Agreement dated as of June 10, 1997, and as further amended by that
certain Second Amendment to Loan and Security Agreement dated as of October 31,
1997 (as amended, the "ORIGINAL LOAN AGREEMENT").
B. Lender and Borrower desire to amend, restate and modify (but not extinguish)
the Original Loan Agreement and the other Original Loan Documents as hereinafter
set forth to (i) add ATP and Alcore as borrowers hereunder and allow and provide
for the extension of loans and advances to ATP and Alcore hereunder, and (ii)
allow and provide for certain other matters as hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Lender and Borrower covenant and agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to $48,000,000
available upon Borrower's request therefor, as follows:
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1.1 REVOLVING CREDIT LOANS.
1.1.1 LOANS AND RESERVES. Lender agrees, during the term of this
Agreement and for so long as no Default or Event of Default exists, to make
Revolving Credit Loans to Revolving Credit Borrowers from time to time, as
requested by Borrower in the manner set forth in SECTION 3.1.1 hereof, up to a
maximum principal amount at any time outstanding equal to the Borrowing Base at
such time MINUS the LC Amount and reserves, if any. Lender shall have the right
to establish reserves in such amounts, and with respect to such matters, as
Lender shall deem necessary or appropriate, against the amount of Revolving
Credit Loans which Revolving Credit Borrower may otherwise request under this
SECTION 1.1, including, without limitation, with respect to (i) price
adjustments, damages, unearned discounts, returned products or other matters for
which credit memoranda are issued in the ordinary course of Revolving Credit
Borrowers' business; (ii) obsolescence of Inventory; (iii) slow moving
Inventory; (iv) other sums chargeable against Borrower's Loan Account as
Revolving Credit Loans under any section of this Agreement; (v) amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any
Property of Borrower; (vi) all amounts of past due rent or other charges owing
at such time by Borrower to any Landlord of any premises where any of the
Collateral is located; and (vii) such other matters, events, conditions or
contingencies as to which Lender, in its reasonable judgment, determines
reserves should be established from time to time hereunder.
1.1.2 USE OF PROCEEDS. The Revolving Credit Loans shall be used
solely for the satisfaction of existing Indebtedness of Borrower to Brunswick
and First Union National Bank, for the repayment of the Obligations, and for
Borrower's general operating capital needs in a manner consistent with the
provisions of this Agreement and Applicable Law. In no event shall any proceeds
of any Revolving Credit Loans be used to purchase or to carry, reduce, retire or
refinance any Indebtedness incurred to purchase or carry any margin stock
(within the meaning of Regulations G or U of the Federal Reserve Board).
1.2. TERM AND EQUIPMENT LOANS.
1.2.1 TERM LOAN. Borrower hereby represents and warrants that, on
December 27, 1996, Lender made a term loan to Original Borrowers in the
principal amount of $14,000,000 ("ORIGINAL TERM LOAN"), which Original Term Loan
is repayable in accordance with the terms of the Original Term Note and is
secured by all of the Collateral. Borrower further represents and warrants that,
as of the date of this Agreement, the unpaid principal balance of the Original
Term Loan is $12,000,000, and such amount is unconditionally owed by Original
Borrowers to Lender without offset, defense or counterclaim of any kind, nature
or description whatsoever. Subject to the terms of this Agreement, Lender agrees
to make an additional term loan to Borrower on the Closing Date in the principal
amount of $6,000,000, which additional term loan shall be combined with the
Original Term Loan into a single term loan of $18,000,000 ("TERM LOAN"). The
Term Loan shall be repayable in accordance with the terms of the Term Note and
shall be secured by all of the Collateral. The proceeds of the Term Loan shall
be used solely for purposes for which the proceeds of the Revolving Credit Loans
are authorized to be used. Borrower may not reborrow any amount repaid with
respect to the Term Loan.
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1.2.2 EQUIPMENT LOANS. Lender agrees, during the term of this
Agreement, for so long as no Default or Event of Default exists, to make Loans
("EQUIPMENT LOANS") to Borrower from time to time, to finance Borrower's
purchases of Equipment for use in its business. Each Equipment Loan shall be in
the aggregate principal amount of not less than $250,000, and shall not exceed
80% of the invoiced purchase price (excluding taxes, title, freight, and
installation costs) of the Equipment being acquired with the proceeds of such
Equipment Loan. Each Equipment Loan shall be secured by all of the Collateral
and shall be evidenced by the Equipment Note, which Equipment Note shall specify
the rate of interest and the repayment terms applicable to such Equipment Loan.
The principal amount of Equipment Loans hereunder shall not exceed, in the
aggregate, $3,000,000. Borrower may not reborrow any amount repaid with respect
to any Equipment Loan.
1.3 LETTERS OF CREDIT; LC GUARANTIES. Lender agrees, for so long as no
Default or Event of Default exists and if requested by Borrower, to (i) issue
its, or cause to be issued its Affiliate's, standby Letters of Credit for the
account of Revolving Credit Borrowers or (ii) execute LC Guaranties by which
Lender or its Affiliate shall guaranty the payment or performance by Revolving
Credit Borrowers of their reimbursement obligations with respect to standby
Letters of Credit, provided that the LC Amount at any time shall not exceed
$2,000,000. No Letter of Credit or LC Guarantee shall have an expiration date
that is after the last day of the Original Term or the then applicable Renewal
Term. Any amounts paid by Lender under any LC Guaranty or in connection with any
Letter of Credit shall be treated as Revolving Credit Loans, shall be secured by
all of the Collateral and shall bear interest and be payable at the same rate
and in the same manner as Revolving Credit Loans.
1.4 ALL LOANS TO CONSTITUTE ONE OBLIGATION. All Loans shall constitute one
general joint and several obligation of Borrowers, and shall be secured by
Lender's security interest in and Lien upon all of the Collateral, and by all
other security interests and Liens heretofore, now or at any time or times
hereafter granted by Borrower to Lender.
1.5 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION.
(A) Each Borrower states and acknowledges that: (i) pursuant to this
Agreement, Borrowers desire to utilize their borrowing potential on a
consolidated basis to the same extent possible if they were merged into a single
corporate entity and that this Agreement reflects the establishment of credit
facilities which would not otherwise be available to such Borrower if each
Borrower were not jointly and severally liable for payment of all of the
Obligations; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of Lender hereunder and a
desire of the Borrowers that each Borrower execute and deliver to Lender this
Agreement; and (iv) Borrowers have requested and bargained for the structure and
terms of and security for the advances contemplated by this Agreement.
(B) Each Borrower hereby irrevocably and unconditionally: (i) agrees
that it is jointly and severally liable to Lender for the full and prompt
payment of the Obligations and the performance by each Borrower of its
obligations hereunder in accordance with the terms hereof;
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(ii) agrees to fully and promptly perform all of its obligations hereunder with
respect to each advance of credit hereunder as if such advance had been made
directly to it; and (iii) agrees as a primary obligation to indemnify Lender on
demand for and against any loss incurred by Lender as a result of any of the
obligations of any one or more of the Borrowers being or becoming void,
voidable, unenforceable or ineffective for any reason whatsoever, whether or not
known to Lender or any Person, the amount of such loss being the amount which
Lender would otherwise have been entitled to recover from any one or more of the
Borrowers.
(C) It is the intent of each Borrower that the indebtedness,
obligations and liability hereunder of no one of them be subject to challenge on
any basis, including, without limitation, pursuant to any applicable fraudulent
conveyance or fraudulent transfer laws. Accordingly, as of the date hereof, the
liability of each Borrower under this SECTION 1.5, together with all of its
other liabilities to all Persons as of the date hereof and as of any other date
on which a transfer or conveyance is deemed to occur by virtue of this
Agreement, calculated in amount sufficient to pay its probable net liabilities
on its existing Indebtedness as the same become absolute and matured ("DATED
LIABILITIES") is, and is to be, less than the amount of the aggregate of a fair
valuation of its property as of such corresponding date ("DATED ASSETS"). To
this end, each Borrower under this SECTION 1.5, (i) grants to and recognizes in
each other Borrower, ratably, rights of subrogation and contribution in the
amount, if any, by which the Dated Assets of such Borrower, but for the
aggregate of subrogation and contribution in its favor recognized herein, would
exceed the Dated Liabilities of such Borrower or, as the case may be, (ii)
acknowledges receipt of and recognizes its right to subrogation and contribution
ratably from each of the other Borrowers in the amount, if any, by which the
Dated Liabilities of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated Assets of
such Borrower under this SECTION 1.5. In recognizing the value of the Dated
Assets and the Dated Liabilities, it is understood that Borrowers will
recognize, to at least the same extent of their aggregate recognition of
liabilities hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this SECTION 1.5 that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of its joint
and several obligations hereunder. In addition to and not in limitation of the
foregoing provisions of this SECTION 1.5, the Borrowers and Lender hereby agree
and acknowledge that it is the intent of each Borrower and of Lender that the
obligations of each Borrower hereunder be in all respects in compliance with,
and not be voidable pursuant to, applicable fraudulent conveyance and fraudulent
transfer laws.
1.6 STRUCTURE OF CREDIT FACILITY. Each Borrower agrees and acknowledges
that the present structure of the credit facilities detailed in this Agreement
is based in part upon the financial and other information presently known to
Lender regarding each Borrower, the corporate structure of Borrowers, and the
present financial condition of each Borrower. Each Borrower hereby agrees that
Lender shall have the right, in its sole credit judgment, to require that any or
all of the following changes be made to these credit facilities: (i) restrict
loans and advances between Borrowers, (ii) establish separate lockbox and
dominion accounts for Revolving Credit Borrowers and, upon and after the
occurrence of a Default or Event of Default, for each other Borrower, (iii)
separate the Term Loan into separate term loans to such of the
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Borrowers as shall be determined by Lender, and (iv) establish such other
procedures as shall be reasonably deemed by Lender to be useful in tracking
where Loans are made under this Agreement and the source of payments received by
Lender on such Loans.
1.7 ORIGINAL BORROWERS. Notwithstanding any other provision of the Term
Note or this Agreement to the contrary, it is hereby agreed that New Borrowers
are not assuming payment of the unpaid principal balance of the Obligations
which was incurred by Original Borrowers prior to the Closing Date pursuant to
the Original Loan Documents (the "ORIGINAL BORROWER OBLIGATIONS"). However the
parties hereto agree and acknowledge that the preceding sentence shall not (A)
limit any contingent liability of New Borrowers for payment of any of the
Original Borrower Obligations which arises pursuant to the Guaranty Agreements
to be executed on the Closing Date by New Borrowers, or (B) limit the Liens in
favor of Lender granted by New Borrowers against the assets of New Borrowers as
a result of New Borrowers becoming an additional named "Borrower", which Liens
shall secure payment of all Obligations arising in connection with this
Agreement, whether currently existing or hereafter arising. For purposes of
determining on or after the date hereof which Obligations outstanding constitute
Original Borrower Obligations, all payments received by Lender from Original
Borrowers on account of the Obligations shall be deemed to be applied first in
payment of the Original Borrower Obligations until such time as the Original
Borrower Obligations shall have been reduced to zero, and thereafter to the
other Obligations as hereinafter set forth.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. INTEREST.
2.1.1. RATES OF INTEREST. The outstanding principal amount of the
Loans shall bear interest at the following rates per annum (individually called,
as applicable, an "APPLICABLE ANNUAL RATE"): (i) FOR REVOLVING CREDIT LOANS, (a)
each Eurodollar Loan shall bear interest at a rate per annum equal to LIBOR PLUS
the Applicable Margin then in effect for the LIBOR Interest Period applicable
thereto, and (b) each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate PLUS one-quarter of one percent (0.25%), and (ii) FOR THE
TERM LOAN AND EACH EQUIPMENT LOAN, (a) each Eurodollar Loan shall bear interest
at a rate per annum equal to LIBOR PLUS the Applicable Margin then in effect for
the LIBOR Interest Period applicable thereto, and (b) each Base Rate Loan shall
bear interest at a rate per annum equal to the Base Rate PLUS one-half of one
percent (0.50%). Unless Borrower delivers a Borrowing Notice to Lender in
accordance with SECTION 3.1.1(A) hereof irrevocably electing that all or any
portion of the Loans are to bear interest at a rate based upon LIBOR, all of the
Loans shall bear interest at a rate based upon the Base Rate as provided in
CLAUSES (I)(B) and (II)(B) of this SECTION 2.1.1. The rate of interest
applicable to Base Rate Loans shall increase or decrease by an amount equal to
any increase or decrease in the Base Rate, effective as of the opening of
business on the day that any such change in the Base Rate occurs.
2.1.2. DEFAULT RATE OF INTEREST. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall, in Lender's
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sole discretion, bear interest at a rate per annum equal to 2.00% above the
Applicable Annual Rate or other interest rate otherwise applicable thereto (the
"DEFAULT RATE").
2.1.3 MAXIMUM INTEREST. (A) Notwithstanding anything to the contrary
in this Agreement or otherwise, (i) if at any time the amount of interest
computed on the basis of an Applicable Annual Rate or a Default Rate would
exceed the amount of such interest computed upon the basis of the maximum rate
of interest permitted by applicable state or federal law in effect from time to
time hereafter (the "MAXIMUM LEGAL RATE"), the interest payable under this
Agreement shall be computed upon the basis of the Maximum Legal Rate, but any
subsequent reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable hereunder below
the amount computed on the basis of the Maximum Legal Rate until the aggregate
amount of such interest accrued and payable under this Agreement equals the
total amount of interest which would have accrued if such interest had been at
all times computed solely on the basis of an Applicable Annual Rate or Default
Rate, as applicable; and (ii) unless preempted by federal law, an Applicable
Annual Rate or Default Rate, as applicable, from time to time in effect
hereunder may not exceed the "weekly ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code. If the applicable state or federal law is
amended in the future to allow a greater rate of interest to be charged under
this Agreement than is presently allowed by applicable state or federal law,
then the limitation of interest hereunder shall be increased to the maximum rate
of interest allowed by applicable state or federal law as amended, which
increase shall be effective hereunder on the effective date of such amendment,
and all interest charges owing to Lender by reason thereof shall be payable in
accordance with SECTION 3.2.2 hereof.
(B) EXCESS INTEREST. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument, document or
agreement between Borrower and Lender or default of Borrower, or the exercise by
Lender of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in this Agreement or
any other Loan Document, or the arising of any contingency whatsoever, shall
entitle Lender to contract for, charge, or receive, in any event, interest
exceeding the Maximum Legal Rate. In no event shall Borrower be obligated to pay
interest exceeding such Maximum Legal Rate and all agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever operate
to bind, obligate or compel Borrower to pay a rate of interest exceeding the
Maximum Legal Rate, shall be without binding force or effect, at law or in
equity, to the extent only of the excess of interest over such Maximum Legal
Rate. In the event any interest is contracted for, charged or received in excess
of the Maximum Legal Rate ("EXCESS INTEREST"), Borrower acknowledges and
stipulates that any such contract, charge, or receipt shall be the result of an
accident and bona fide error, and that any Excess received by Lender shall be
applied, first, to reduce the principal then unpaid hereunder; second, to reduce
the other Obligations; and third, returned to Borrower, it being the intention
of the parties hereto not to enter at any time into a usurious or otherwise
illegal relationship. Borrower recognizes that, with fluctuations in the Base
Rate and the Maximum Legal Rate, such a result could inadvertently occur. By the
execution of this Agreement, Borrower covenants that (i) the credit or return of
any Excess Interest shall constitute the acceptance by Borrower of such Excess
Interest, and (ii) Borrower shall not seek or pursue any
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other remedy, legal or equitable, against Lender, based in whole or in part upon
contracting for, charging or receiving of any interest in excess of the maximum
authorized by applicable law. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by Lender, all interest at
any time contracted for, charged or received by Lender in connection with this
Agreement shall be amortized, prorated, allocated and spread in equal parts
during the entire term of this Agreement.
(C) INCORPORATION BY THIS REFERENCE. The provisions of SECTION
2.1.3(B) shall be deemed to be incorporated into every document or communication
relating to the Obligations which sets forth or prescribes any account, right or
claim or alleged account, right or claim of Lender with respect to Borrower (or
any other obligor in respect of Obligations), whether or not any provision of
SECTION 2.1.3(B) is referred to therein. All such documents and communications
and all figures set forth therein shall, for the sole purpose of computing the
extent of the Obligations and obligations of the Borrowers (or other obligor)
asserted by Lender thereunder, be automatically re-computed by any Borrower or
obligor, and by any court considering the same, to give effect to the
adjustments or credits required by SECTION 2.1.3(B).
2.2. COMPUTATION OF INTEREST AND FEES. Interest, Letter of Credit and LC
Guaranty Fees and unused line fees hereunder shall be calculated daily and shall
be computed on the actual number of days elapsed over a year of 360 days. For
the purpose of computing interest hereunder, all items of payment received by
Lender shall be deemed applied by Lender on account of the Obligations (subject
to final payment of such items) one (1) Business Day after receipt by Lender of
such items in Lender's account located in Chicago, Illinois, and Lender shall be
deemed to have received such item of payment on the date specified in SECTION
3.4 hereof.
2.3. CLOSING FEE. Borrower shall pay to Lender a closing fee of $80,000,
which shall be fully earned and (except to the extent otherwise required by
Applicable Law) nonrefundable on the Closing Date, and shall be paid
concurrently with the initial Loan hereunder.
2.4 LETTER OF CREDIT AND LC GUARANTY FEES. Borrower shall pay to Lender
for standby Letters of Credit and LC Guaranties of standby Letters of Credit,
one and one-half percent (1.50%) per annum of the aggregate face amount of such
Letters of Credit and LC Guaranties outstanding from time to time during the
term of this Agreement, plus all normal and customary charges associated with
issuance thereof, which fees and charges shall be deemed fully earned upon
issuance of each such Letter of Credit or LC Guaranty, shall be due and payable
on the first Business Day of each month and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
2.5. UNUSED LINE FEE. Borrower shall pay to Lender a fee equal to one-half
of one percent (0.50%) per annum of the amount by which the Average Monthly
Revolving Credit Loan Balance is less than the Total Revolving Credit Facility.
The unused line fee shall be payable monthly, in arrears, on the first day of
each calendar month hereafter.
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2.6. AUDIT AND APPRAISAL FEES. Borrower shall reimburse Lender for all
reasonable out-of-pocket costs and expenses incurred by Lender in connection
with audits and appraisals of Borrower's books and records and such other
matters as Lender shall deem appropriate. All such out-of-pocket expenses shall
be payable on demand.
2.7. REIMBURSEMENT OF EXPENSES. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (i) the negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or any sale or attempted sale of any interest herein to
any other Person; (ii) the administration of this Agreement or any of the other
Loan Documents and the transactions contemplated hereby and thereby (other than
Lender's overhead costs and expenses associated with the day to day
administration of the Loans); (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any
rights of Lender against Borrower or any other Person which may be obligated to
Lender by virtue of this Agreement or any of the other Loan Documents, including
the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such legal and accounting expenses, other costs and out of
pocket expenses of Lender shall be charged to Borrower. All amounts chargeable
to Borrower under this SECTION 2.7 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Lender, and shall bear interest from
the date such demand is made until paid in full at the rate applicable to
Revolving Credit Loans from time to time. Borrower shall also reimburse Lender
for expenses incurred by Lender in its administration of the Collateral to the
extent and in the manner provided in SECTION 6 hereof.
2.8. BANK CHARGES. Borrower shall pay to Lender, on demand, any and all
normal and customary fees, costs or expenses which Lender pays to a bank or
other similar institution arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, or by Lender,
of proceeds of loans made by Lender to Borrower pursuant to this Agreement and
(ii) the depositing for collection, by Lender, of any check or item of payment
received or delivered to Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION
3.1. MANNER OF BORROWING REVOLVING CREDIT LOANS. Borrowings under the
credit facility established pursuant to SECTION 1 hereof shall be as follows:
3.1.1. LOAN REQUESTS.
(A) A request for a Eurodollar Loan shall be made, or shall be
deemed to be made, if Borrower gives Lender notice of its intention to borrow in
the form of EXHIBIT P hereto (a "BORROWING NOTICE"), in which notice Borrower
shall specify (i) the aggregate amount of such Eurodollar Loan, (ii) the
requested date of such Eurodollar Loan, (iii) the Applicable
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Annual Rate selected in accordance with SECTION 2.1.1, and (iv) the LIBOR
Interest Period applicable thereto. If Borrower selects a Eurodollar Loan,
Borrower shall give Lender the Borrowing Notice no later than 11:00 a.m. Dallas,
Texas time at least two (2) Business Days prior to the requested date of the
Eurodollar Loan. Notwithstanding anything herein to the contrary, Lender shall
have the right to refuse to accept a request for a Eurodollar Loan and to refuse
to make a Eurodollar Loan if at the date such request is made or such Eurodollar
Loan is to be made there exists a Default or an Event of Default.
(B) A request for a Base Rate Loan shall be made, or shall be
deemed to be made, in the following manner: (i) Borrower shall give Lender
notice of its intention to borrow, in which notice Borrower shall specify the
amount of the proposed borrowing and the proposed borrowing date, no later than
11:00 a.m. Dallas, Texas time on the proposed borrowing date; PROVIDED, HOWEVER,
Lender shall have the right to refuse to accept such a request or make such a
Loan if at such time there exists a Default or an Event of Default; and (ii) the
becoming due of any amount required to be paid under this Agreement, under the
Term Note, the Equipment Note or any of the other Loan Documents, as principal,
accrued interest, fees or other charges, shall be deemed irrevocably to be a
request by Borrower from Lender for a Revolving Credit Loan on the due date of,
and in an aggregate amount required to pay, such principal, accrued interest,
fees or other charges and the proceeds of each such Revolving Credit Loan may be
disbursed by Lender by way of direct payment of the relevant Obligation and
shall bear interest at the rate of interest applicable to Revolving Credit Loans
(whether or not any Default, Event of Default or Out-of-Formula Condition exists
at the time of or would result from such Revolving Credit Loan). As an
accommodation to Borrower, Lender may permit telephonic requests for loans and
electronic transmittal of instructions, authorizations, agreements or reports to
Lender by Borrower. Unless Borrower specifically directs Lender in writing not
to accept or act upon telephonic or electronic communications from Borrower,
Lender shall have no liability to Borrower for any loss or damage suffered by
Borrower as a result of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to Lender telephonically or electronically and purporting to have
been sent to Lender by any individual from time to time designated by Borrower
as an authorized officer and Lender shall have no duty to verify the origin or
authenticity of any such communication.
3.1.2. DISBURSEMENT. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Loan requested, or deemed to be requested,
pursuant to this SECTION 3.1.2 as follows: (i) the proceeds of each Loan
requested under SECTION 3.1.1(A) or SECTION 3.1.1(B)(I) shall be disbursed by
Lender in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrower, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrower and Lender from time to time or elsewhere if pursuant to a written
direction from Borrower; and (ii) the proceeds of each Revolving Credit Loan
requested under SECTION 3.1.1(B)(II) shall be disbursed by Lender by way of
direct payment of the relevant interest or other Obligation.
3.1.3. AUTHORIZATION. Borrower hereby irrevocably authorizes Lender,
in Lender's sole discretion, to advance to Borrower, and to charge Borrower's
Loan Account
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hereunder as a Revolving Credit Loan, a sum sufficient to pay all interest
accrued on the Obligation during the immediately preceding month and to pay all
costs, fees and expenses at any time owed by Borrower to Lender hereunder.
3.2. PAYMENTS. All payments with respect to any of the Obligations shall
be made to Lender on the date when due, in Dollars and in immediately available
funds, without any offset or counterclaim. Except where evidenced by notes or
other instruments issued or made by Borrower to Lender specifically containing
payment provisions which are in conflict with this SECTION 3.2 (in which event
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1. PRINCIPAL. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral,
other than Equipment or real Property, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to SECTION 4 hereof; PROVIDED, HOWEVER, that if an
Out-of-Formula Condition shall exist at any time, Borrower shall, on demand,
repay the Obligations to the extent necessary to eliminate the Out-of-Formula
Condition.
3.2.2. INTEREST. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (i) the first calendar day of each month (for
the immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations,
(iii) with respect to any Eurodollar Loan, the last day of the applicable LIBOR
Interest Period, or (iv) termination of this Agreement pursuant to SECTION 4
hereof.
3.2.3. COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
SECTION 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4. OTHER OBLIGATIONS. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or,
if no date of payment is otherwise specified in the Loan Documents, on demand.
3.3. MANDATORY PREPAYMENTS.
3.3.1. PROCEEDS OF SALE, LOSS, DESTRUCTION OR CONDEMNATION OF
COLLATERAL. If Borrower sells any of the Equipment or real Property, or if any
of the Collateral is lost or destroyed or taken by condemnation, Borrower shall
pay to Lender, unless otherwise agreed by Lender, as and when received by
Borrower and as a mandatory prepayment of either or both the Term Loan or the
Equipment Loans, as determined by Lender (or, at Lender's option, such of the
other Obligations as Lender may elect), a sum equal to the net proceeds
(including insurance payments) in excess of $500,000 received by Borrower from
such sale, loss, destruction or
10
condemnation. Nothing in this SECTION 3.3.1 shall authorize Borrower to sell any
of the Collateral without Lender's prior written consent except as otherwise
expressly provided elsewhere in this Agreement.
3.4. APPLICATION OF PAYMENTS AND COLLECTIONS. All items of payment
received by Lender by 12:00 noon, Dallas, Texas time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, Dallas, Texas time, on any Business Day shall be deemed received on
the following Business Day. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lender shall have the continuing exclusive right
to apply and reapply any and all such payments and collections received at any
time or times hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by Lender upon
any of its books and records. If as the result of collections of Accounts as
authorized by SECTION 6.2.6 hereof a credit balance exists in the Loan Account,
such credit balance shall not accrue interest in favor of Borrower, but shall be
available to Borrower at any time or times for so long as no Default or Event of
Default exists. Such credit balance shall not be applied or be deemed to have
been applied as a prepayment of the Term Loan or any Equipment Loan, except that
Lender may, at its option, offset such credit balance against any of the
Obligations upon and after the occurrence of an Event of Default.
3.5. LOAN ACCOUNT. Lender shall establish an account on its books (the
"LOAN ACCOUNT") and shall enter all Loans as debits to the Loan Account and
shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.
3.6. STATEMENTS OF ACCOUNT. Lender will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within 30 days after the date each accounting is deemed to have been sent
pursuant to SECTION 11.9. Such notice shall only be deemed an objection to those
items specifically objected to therein.
3.7. ADDITIONAL PROVISIONS REGARDING EURODOLLAR LOANS.
(A) Borrower may select LIBOR with respect to all or any portion of
the Loans in accordance with the provisions of SECTION 3.1.1(A) hereof and of
this SECTION 3.7; PROVIDED, HOWEVER, that (i) each Eurodollar Loan shall be in a
principal amount of not less than Two Million Dollars ($2,000,000) and, if
greater than Two Million Dollars ($2,000,000), in integral multiples of One
Million Dollars ($1,000,000), and (ii) no more than three (3) LIBOR Interest
Periods in the aggregate may be in existence at any one time. Borrower shall
select LIBOR Interest Periods with respect to Eurodollar Loans so that no LIBOR
Interest Period
11
expires after the end of the Original Term. An outstanding Base Rate Loan may be
converted to a Eurodollar Loan at any time subject to the provisions of this
SECTION 3.7.
(B) Each Eurodollar Loan shall bear interest from and including the
first day of the LIBOR Interest Period applicable thereto (but not including the
last day of such LIBOR Interest Period) at the interest rate determined as
applicable to such Eurodollar Loan, but interest on such Eurodollar Loan shall
be payable as provided in the Term Note, the Equipment Note and in SECTION 3.2.2
hereof. If at the end of a LIBOR Interest Period for an outstanding Eurodollar
Loan, Borrower has failed to deliver to Lender a new Borrowing Notice with
respect to such Eurodollar Loan or to pay such Eurodollar Loan, then such
Eurodollar Loan shall be converted to a Base Rate Loan on and after the last day
of such LIBOR Interest Period and shall remain a Base Rate Loan until paid or
until the effective date of a new Borrowing Notice with respect thereto.
(C) If Lender determines that maintenance of any of its Eurodollar
Loans would violate any applicable law, rule, regulation or directive, whether
or not having the force of law, Lender shall suspend the availability of
Eurodollar Loans and require any Eurodollar Loans outstanding to be repaid; or
if Lender determines that (i) deposits of a type or maturity appropriate to
match fund Eurodollar Loans are not available, or (ii) LIBOR does not accurately
reflect the cost of making a Eurodollar Loan, then Lender shall promptly provide
notice to Borrower of its decision to suspend Borrower's ability to make
Eurodollar Loans and/or require Borrower to repay all Eurodollar Loans and shall
suspend the availability of Eurodollar Loans after the date of any such
determination.
(D) If any payment of a Eurodollar Loan occurs on a date which is
not the last day of the applicable LIBOR Interest Period, whether because of
acceleration, prepayment or otherwise, or a Eurodollar Loan is not made on the
date specified by Borrower because Borrower has not satisfied the conditions
precedent to such Eurodollar Loan contained in this Agreement or a Default or
Event of Default has occurred and is continuing, Borrower will indemnify Lender
for any loss or cost incurred by Lender resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits required to
fund or maintain the Eurodollar Loan.
(E) Lender shall deliver a written statement as to the amount due,
if any, under SECTIONS 3.7(C) or (D) hereof. Such written statement shall set
forth in reasonable detail the calculations upon which Lender determined such
amount and shall be final, conclusive and binding on Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though Lender funded
its Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining LIBOR applicable
to such Loan whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on demand
after receipt by Borrower of the written statement.
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SECTION 4. TERM AND TERMINATION
4.1. TERM OF AGREEMENT. Subject to Lender's right to cease making Loans to
Borrower upon or after the occurrence of any Default or Event of Default, this
Agreement shall be in effect through December 31, 2000 (the "ORIGINAL TERM").
4.2. TERMINATION.
4.2.1. TERMINATION BY LENDER. Upon at least sixty (60) days prior
written notice to Borrower, Lender may terminate this Agreement as of the last
day of the Original Term and Lender may terminate this Agreement without notice
upon or after the occurrence of an Event of Default.
4.2.2. TERMINATION BY BORROWER. Upon at least sixty (60) days prior
written notice to Lender, Borrower may, at its option, terminate this Agreement;
PROVIDED, HOWEVER, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Lender's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Lender otherwise agrees in writing, and Lender shall have no
obligation to make any Loans or issue or procure any Letters of Credit or LC
Guaranties on or after the termination date stated in such notice. Except as
specifically provided in SECTION 4.2.3 below (with respect to prepayment of the
Term Loan), Borrower may elect to terminate this Agreement in its entirety only.
Except as specifically provided in SECTION 4.2.3 below (with respect to
prepayment of the Term Loan), no section of this Agreement or type of Loan
available hereunder may be terminated singly.
4.2.3. TERMINATION CHARGES. On the effective date of termination of
this Agreement for any reason, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents), as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to
2.0% of the Total Credit Facility if termination occurs at any time on or prior
to March 31, 1999; and 1.0% of the Total Credit Facility if termination occurs
at any time on or prior to March 31, 2000. If termination occurs on or at any
time after March 31, 2000, no termination charge shall be payable. In addition,
if the Term Loan and/or the Equipment Loans are prepaid in full or in part
solely from the proceeds of a public offering of capital stock of ATP, no
termination charge shall be payable in respect of the principal amount so
prepaid.
4.2.4. EFFECT OF TERMINATION. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate its security interests in the
13
Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrower or any Account Debtor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the Collateral
for such period of time as Lender, in its reasonable discretion, may deem
necessary to protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 SECURITY INTEREST IN COLLATERAL. To secure the prompt payment and
performance to Lender of all of the Obligations, each Borrower hereby grants to
Lender a continuing security interest in and Lien upon all of each Borrower's
assets, including all of the following Property and interests in Property of
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All Equipment;
(iv) All General Intangibles;
(v) All investment property (as defined in SECTION 9.115 of the
Code);
(vi) All real Property;
(vii) All monies and other Property of any kind now or at any time
or times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(viii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (vii) above,
including proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
(ix) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (viii)
above.
5.2 CROSS-COLLATERALIZATION. Each Borrower agrees that the Collateral
pledged by such Borrower hereunder shall secure all of the Obligations of the
Borrower. Upon and after a Default or an Event of Default by any Borrower,
Lender may pursue all rights and remedies that Lender may have against all or
any part of the Collateral regardless of which Borrower has legal
14
title to such Collateral. Each Borrower hereby acknowledges that this
cross-collateralization of the Collateral owned by such Borrower is in
consideration of Lender extending the credit hereunder and is mutually
beneficial to each Borrower.
5.3. LIEN PERFECTION; FURTHER ASSURANCES. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by Applicable Law, Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf. The parties
agree that a carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Lender's request, Borrower shall also promptly
execute or cause to be executed and shall deliver to Lender any and all
documents, instruments and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Loan Documents.
5.4. LIEN ON REALTY; COLLATERAL ASSIGNMENTS OF LEASES. The due and
punctual payment and performance of the Obligations shall also be secured by the
Lien created by each Mortgage upon all real Property of Borrower described
therein. The Mortgage shall be executed by Borrower in favor of Lender and shall
be duly recorded, at Borrower's expense, in each office where such recording is
required to constitute a fully perfected Lien on the real Property covered
thereby. Borrower shall deliver to Lender, at Borrower's expense, mortgagee
title insurance policies issued by a title insurance company satisfactory to
Lender, which policies shall be in form and substance satisfactory to Lender and
shall insure a valid first Lien in favor of Lender on the Property covered
thereby, subject only to those exceptions acceptable to Lender and its counsel.
Borrower shall deliver to Lender such other documents, including all currently
existing as-built survey prints of the real Property, as Lender and its counsel
may request relating to the real Property subject to each Mortgage. The due and
punctual payment and performance of the Obligations shall also be secured by
each Collateral Assignment of Lease of the leasehold interest of Technical
Products in all real Property described therein. Each Collateral Assignment of
Lease shall be executed by Technical Products in favor of Lender and shall be
duly recorded, at Borrower's expense, in each office where such recording is
required to constitute a fully perfected Lien on the leasehold interest of
Technical Products in the real Property covered thereby.
SECTION 6. COLLATERAL ADMINISTRATION
6.1. General
6.1.1. LOCATION OF COLLATERAL. All tangible items of Collateral,
other than Inventory in transit, motor vehicles, and investment property held in
an account with a securities intermediary shall at all times be kept by Borrower
and its Subsidiaries at one or more of the business locations set forth in
EXHIBIT B hereto and shall not, without the prior written approval of Lender, be
moved therefrom, except prior to an Event of Default and Lender's acceleration
of the maturity of the Obligations in consequence thereof, for (i) sales of
Inventory in the ordinary
15
course of business and (ii) removals in connection with dispositions of
Equipment that are authorized by SECTION 6.4.2 hereof.
6.1.2. INSURANCE OF COLLATERAL. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver the originals or certified copies of such
policies to Lender with satisfactory lender's loss payable endorsements, which
policies shall name Lender as sole loss payee, assignee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever and
a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3. PROTECTION OF COLLATERAL. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales and use taxes imposed by any
Applicable Law on any of the Collateral or in respect of the sale thereof, and
all other payments required to be made by Lender to any Person to realize upon
any Collateral shall be borne and paid by Borrower. If Borrower fails to
promptly pay any portion thereof when due, Lender may, at its option, but shall
not be required to, pay the same and charge Borrower therefor. Lender shall not
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other Person whomsoever, but the same shall be at
Borrower's sole risk.
6.2. ADMINISTRATION OF ACCOUNTS.
6.2.1. RECORDS, SCHEDULES AND ASSIGNMENTS OF ACCOUNTS. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the twentieth day of each month from and
after the date hereof, Borrower shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("SCHEDULE OF ACCOUNTS"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $100,000 become
ineligible because they fall within one of the specified categories of
16
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrower shall notify Lender of such occurrence on the
first Business Day following the day such occurrence becomes known to Borrower
and the Borrowing Base shall thereupon be adjusted to reflect such occurrence.
If requested by Lender, Borrower shall execute and deliver to Lender agings and
formal written assignments of all of its Accounts weekly or daily, which shall
include all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto.
6.2.2. DISCOUNTS, ALLOWANCES, DISPUTES. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $100,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an Event
of Default, Lender shall have the right to settle or adjust all disputes and
claims directly with the Account Debtor and to compromise the amount or extend
the time for payment of the Accounts upon such terms and conditions as Lender
may deem advisable, and to charge the deficiencies, costs and expenses thereof,
including attorney's fees, to Borrower.
6.2.3. TAXES. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor; PROVIDED, HOWEVER, that Lender shall
not be liable for any such taxes to any governmental taxing authority that may
be due by Borrower.
6.2.4. ACCOUNT VERIFICATION. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise. Borrower
shall cooperate fully with Lender in an effort to facilitate and promptly
conclude any such verification process.
6.2.5. MAINTENANCE OF DOMINION ACCOUNT. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender; provided,
however, Borrower may at its option elect to terminate the Dominion Account upon
providing Lender five (5) days prior written notice of its election to terminate
the Dominion Account. Borrower shall issue to any such banks an irrevocable
letter of instruction directing such banks to deposit all payments or other
remittances received in the lockbox to the Dominion Account for application on
account of the Obligations. All funds deposited in the Dominion Account shall
immediately become the property of Lender and Borrower shall obtain the
agreement by such banks in favor of Lender to waive any offset rights against
the funds so deposited.
17
6.2.6. COLLECTION OF ACCOUNTS; PROCEEDS OF COLLATERAL. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender. All remittances received by Borrower in respect of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a Default
or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including reasonable attorneys' fees
to Borrower.
6.3. ADMINISTRATION OF INVENTORY.
6.3.1. RECORDS AND REPORTS OF INVENTORY. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall furnish Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each month, not later than the twentieth
day of such month. In the event Borrower conducts a physical inventory of its
Inventory, Borrower shall provide to Lender a report based on each such physical
inventory promptly thereafter, together with such supporting information as
Lender shall request.
6.3.2. RETURNS OF INVENTORY. Borrower shall not return any of its
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the ordinary course of business of Borrower and
such Person, (ii) no Default or Event of Default exists or would result
therefrom, (iii) the return of such Inventory will not result in an
Out-of-Formula Condition, (iv) if the value of all Inventory returned in any
month exceeds $250,000, Borrower promptly notifies Lender thereof, and (v) any
payments received by Borrower in connection with any such return is promptly
turned over to Lender for application to the Obligations.
6.4. ADMINISTRATION OF EQUIPMENT.
6.4.1. RECORDS AND SCHEDULES OF EQUIPMENT. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with SECTION
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrower shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
6.4.2. DISPOSITIONS OF EQUIPMENT. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $500,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall
18
be acquired prior to or concurrently with any disposition of the Equipment that
is to be replaced, the replacement Equipment shall be free and clear of Liens
other than Permitted Liens that are not Purchase Money Liens, and Borrower shall
have given Lender at least five (5) days' prior written notice of such
disposition.
6.4.3. CONDITION OF EQUIPMENT. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Borrower will
not permit any of the Equipment to become affixed to any real Property leased to
Borrower so that an interest arises therein under the real estate laws of the
applicable jurisdiction unless the landlord of such real Property has executed a
landlord waiver or leasehold mortgage in favor of and in form acceptable to
Lender, and Borrower will not permit any of the Equipment to become an accession
to any personal Property that is subject to a Lien unless the Lien is a
Permitted Lien (other than a Purchase Money Lien).
6.5. PAYMENT OF CHARGES. All amounts chargeable to Borrower under SECTION
6 hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1. GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to make advances hereunder, Borrower warrants and
represents to Lender and covenants with Lender that:
7.1.1. ORGANIZATION AND QUALIFICATION. Each Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each Borrower
and its Subsidiaries is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in each state or jurisdiction listed
on EXHIBIT C hereto and in all other states and jurisdictions where the
character of its Properties or the nature of its activities make such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect.
7.1.2. CORPORATE POWER AND AUTHORITY. Each Borrower is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the shareholders of any
Borrower; (ii) contravene any Borrower's charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Borrower to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to any
Borrower; (iv) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
any Borrower is a party or by which it or its Properties may be bound or
affected; or (v) result in, or
19
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower.
7.1.3. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Borrower, enforceable against it in
accordance with its respective terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or by principles of equity pertaining to the
availability of equitable remedies.
7.1.4. CAPITAL STRUCTURE. EXHIBIT D hereto states (i) the correct
name of each of the Subsidiaries of each Borrower, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by such Borrower,
(ii) the name of each of each Borrower's corporate or joint venture Affiliates
and the nature of the affiliation, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and each Subsidiary of such Borrower and
(iv) the number of authorized, issued and treasury shares of each Borrower and
each Subsidiary of such Borrower. Each Borrower has good title to all of the
shares it purports to own of the stock of each of its Subsidiaries, free and
clear in each case of any Lien, other than Permitted Liens. All such shares have
been duly issued and are fully paid and non-assessable. There are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of any Borrower or any of its Subsidiaries. There are no outstanding
agreements or instruments binding upon any of Borrower's shareholders relating
to the ownership of its shares of capital stock. ATP is the beneficial and legal
holder of all outstanding capital stock of each of Alcore, Technical Products,
Xxxxxx, DeLand and Lincoln.
7.1.5. CORPORATE NAMES. Neither any Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on EXHIBIT E hereto. Except as set forth on EXHIBIT E,
neither any Borrower nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
7.1.6. BUSINESS LOCATIONS; AGENT FOR PROCESS. Each Borrower's and
its Subsidiaries' chief executive office and other places of business are as
listed on EXHIBIT B hereto. During the preceding five-year period, neither any
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on EXHIBIT B. Except as shown
on EXHIBIT B, no Inventory of Borrower is stored with a bailee, warehouseman or
similar Person, nor is any Inventory consigned to any Person.
7.1.7. TITLE TO PROPERTIES; PRIORITY OF LIENS. Each Borrower and its
Subsidiaries have good and indefeasible title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of their real Property, and
good title to all of the Collateral and all of their other Property, in each
case, free and clear of all Liens except Permitted Liens. Each Borrower has paid
or discharged all lawful claims which, if unpaid, might become a Lien against
any of such
20
Borrower's Properties that is not a Permitted Lien. The Liens granted to Lender
under SECTION 5 hereof are first priority Liens, subject only to Permitted
Liens.
7.1.8. ACCOUNTS. Lender may rely, in determining which Accounts of
Revolving Credit Borrowers are Eligible Accounts, on all statements and
representations made by Revolving Credit Borrowers with respect to any Account
or Accounts. Unless otherwise indicated in writing to Lender, with respect to
each Account:
(i) It is genuine and in all respects what it purports to
be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, BONA FIDE sale and delivery
of goods or rendition of services by a Revolving Credit Borrower in the
ordinary course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents relating
thereto and forming a part of the contract between such Revolving Credit
Borrower and its Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is
not subject to any offset, Lien, deduction, defense, dispute, counterclaim
or any other adverse condition except for disputes resulting in returned
goods where the amount in controversy is deemed by Lender to be
immaterial, and each such Account is absolutely owing to a Revolving
Credit Borrower and is not contingent in any respect or for any reason;
(v) The applicable Revolving Credit Borrower has made no
agreement with any Account Debtor thereunder for any extension,
compromise, settlement or modification of any such Account or any
deduction therefrom, except discounts or allowances which are granted by
such Revolving Credit Borrower in the ordinary course of its business for
prompt payment and which are reflected in the calculation of the net
amount of each respective invoice related thereto and are reflected in the
Schedules of Accounts submitted to Lender pursuant to SECTION 6.2.1
hereof;
(vi) There are no facts, events or occurrences which in any
way impair the validity or enforceability of any Accounts or tend to
reduce the amount payable thereunder from the face amount of the invoice
and statements delivered to Lender with respect thereto;
(vii) To the best of Revolving Credit Borrowers' knowledge,
the Account Debtor thereunder (a) had the capacity to contract at the time
any contract or other document giving rise to the Account was executed and
(b) such Account Debtor is Solvent; and
21
(viii) To the best of Revolving Credit Borrowers' knowledge,
there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9. FINANCIAL STATEMENTS; FISCAL YEAR. The Consolidated balance
sheets of Borrower as of December 31, 1997, and the related statements of
income, changes in stockholder's equity, and changes in financial position for
the periods ended on such dates, have been prepared in accordance with GAAP
(excluding incentive compensation accrual), and present fairly the financial
position of Borrower at such dates and the results of the operations of Borrower
for such periods. Since December 31, 1997, there has been no material change in
the condition, financial or otherwise, of any Borrower and no change in the
aggregate value of Equipment and real Property owned by each Borrower, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of each Borrower ends on
December 31 of each year.
7.1.10. FULL DISCLOSURE. The financial statements referred to in
SECTION 7.1.9 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact or circumstances which Borrower has
failed to disclose to Lender in writing and which may reasonably be expected to
have a Material Adverse Effect.
7.1.11. SOLVENT FINANCIAL CONDITION. Each Borrower and its
respective Subsidiaries are now and, after giving effect to the Loans to be made
to be issued hereunder, at all times will be, Solvent.
7.1.12. SURETY OBLIGATIONS. Neither any Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person.
7.1.13. TAXES. ATP's federal tax identification number is 000000000.
Alcore's federal tax identification number is 000000000. Technical Products'
federal tax identification number is 00-0000000. DeLand's federal tax
identification number is 00-0000000. Lincoln's federal tax identification number
is 00-0000000. Marion's federal tax identification number is 00-0000000. The
federal tax identification number of each of each Borrower's Subsidiaries is
shown on EXHIBIT F hereto. Each Borrower and each of its Subsidiaries has filed
all federal, state and local tax returns and other reports it is required by law
to file and has paid, or made provision for the payment of, all Taxes upon it,
its income and Properties as and when such Taxes are due and payable, except to
the extent being Properly Contested. The provision for Taxes on the books of ATP
and its Subsidiaries are adequate for all years not closed by applicable
statutes, and for its current fiscal year.
22
7.1.14. BROKERS. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.15. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Each Borrower
and its Subsidiaries own or possess all the patents, trademarks, service marks,
trade names, copyrights and licenses necessary for the present and planned
future conduct of their business without any conflict with the rights of others.
All such patents, trademarks, service marks, trade names, copyrights, licenses
and other similar rights are listed on EXHIBIT G hereto.
7.1.16. GOVERNMENTAL CONSENTS. Each Borrower and its Subsidiaries
have, and are in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct their business as heretofore or
proposed to be conducted by them and to own or lease and operate their
Properties as now owned or leased by them.
7.1.17. COMPLIANCE WITH LAWS. Each Borrower and its Subsidiaries
have duly complied with, and their Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries under any such
law, rule or regulation. Each of each Borrower and its Subsidiaries has
established and maintains an adequate monitoring system to insure that it
remains in compliance with all federal, state and local laws, rules and
regulations applicable to it. No Inventory has been produced in violation of the
Fair Labor Standards Act (29 U.S.C. ss. 201 ET seq.), as amended.
7.1.18. RESTRICTIONS. Neither any Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Neither any Borrower nor any of its Subsidiaries is a
party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on EXHIBIT H hereto, none
of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by any Borrower or any of its Subsidiaries, as applicable.
7.1.19. LITIGATION. Except as set forth on EXHIBIT I hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of any Borrower, threatened, against or affecting any Borrower or any
of its Subsidiaries, or the business, operations, Properties, prospects, profits
or condition of any Borrower or any of its Subsidiaries. Neither any Borrower
nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or
arbitration board or tribunal.
7.1.20. NO DEFAULTS. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or any
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed.
23
7.1.21. LEASES. EXHIBIT J hereto is a complete listing of all
capitalized leases of each Borrower and its Subsidiaries on the date hereof and
EXHIBIT K hereto is a complete listing of all operating leases of each Borrower
and its Subsidiaries on the date hereof. Each of each Borrower and its
Subsidiaries is in full compliance with all of the terms of each of its
respective capitalized and operating leases.
7.1.22. PENSION PLANS. Except as disclosed on EXHIBIT L hereto,
neither any Borrower nor any of its Subsidiaries has any Plan on the date
hereof. Each Borrower and each of its Subsidiaries is in full compliance with
the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that could result in a material
adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. Neither any Borrower nor any of
its Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.23. TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between any Borrower or any of its Subsidiaries and
any customer or any group of customers whose purchases individually or in the
aggregate are material to the business of such Borrower or any of its
Subsidiaries, or with any material supplier, and there exists no condition or
state of facts or circumstances which would materially affect adversely any
Borrower or any of its Subsidiaries or prevent any Borrower or any of its
Subsidiaries from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
7.1.24. LABOR RELATIONS. Except as described on EXHIBIT M hereto,
neither any Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement on the date hereof. On the date hereof, there are no
material grievances, disputes or controversies with any union or any other
organization of any Borrower's or any of its Subsidiaries' employees, or threats
of strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.
7.2. CONTINUOUS NATURE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of a Borrower's or its Subsidiaries' business or
operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement, and
except for such representations and warranties that by their nature are limited
only to a specific date in time.
7.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
24
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1. AFFIRMATIVE COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1. VISITS AND INSPECTIONS. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to (i) visit and inspect its Properties and the
Properties of each of their respective Subsidiaries, and (ii) inspect, audit and
make extracts from its books and records, and discuss with its officers,
employees and independent accountants, its business, assets, liabilities,
financial condition, business prospects and results of operations.
8.1.2. NOTICES. Notify Lender in writing (i) of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading; (ii) promptly after Borrower's learning thereof, of
the commencement of any litigation affecting Borrower or any of its Properties,
whether or not the claim is considered by Borrower to be covered by insurance,
and of the institution of any administrative proceeding which if determined
adversely to Borrower, would have a Material Adverse Effect; (iii) at least
sixty (60) days prior thereto, of Borrower's opening of any new office or place
of business or Borrower's closing of any existing office or place of business;
(iv) promptly after Borrower's learning thereof, of any labor dispute to which
Borrower may become a party, any strikes or walkouts relating to any of its
plants or other facilities, and the expiration of any labor contract to which it
is a party or by which it is bound; (v) promptly after Borrower's learning
thereof, of any material default by any Loan Party under any note, indenture,
loan agreement, mortgage, lease, deed, guaranty or other similar agreement
relating to any Indebtedness of Borrower exceeding $500,000; (vi) promptly after
the occurrence thereof, of any Default or Event of Default; (vii) promptly after
the occurrence thereof, of any default by any obligor under any note or other
evidence of Indebtedness payable to Borrower (other than trade receivables) in
an amount exceeding $100,000; and (viii) promptly after the rendition thereof,
of any judgment rendered against any Loan Party in an amount exceeding $50,000.
8.1.3. FINANCIAL STATEMENTS. Keep, and cause each Subsidiary to
keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Lender
the following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):
(i) not later than 90 days after the close of each fiscal year
of Borrower, unqualified audited financial statements of Borrower, as of
the end of such year, on a Consolidated basis (with a footnote exhibiting
the consolidating information used in preparing such audited financial
statements), certified by a firm of independent
25
certified public accountants of recognized standing selected by Borrower,
but acceptable to Lender (except for a qualification for a change in
accounting principles with which the accountant concurs);
(ii) not later than 30 days after the end of each month
hereafter, including the last month of Borrower's fiscal year, unaudited
interim financial statements of Borrower, as of the end of such month and
of the portion of Borrower's financial year then elapsed, on a
Consolidated basis, certified by the principal financial officer of ATP as
prepared in accordance with GAAP (excluding incentive compensation
accrual) and fairly presenting the financial position and results of
Borrower on a combined basis, for such month and period subject only to
changes from audit and year-end adjustments and except that such
statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which ATP or any other Borrower has made available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which ATP or any other Borrower files with the
Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or any national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed in accordance with ERISA in connection with each Plan;
and
(v) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or any Borrower's and each of its Subsidiaries'
financial condition or results of operations.
Concurrently with the delivery of the financial statements described in
CLAUSE (I) of this SECTION 8.1.3, Borrower shall forward to Lender a copy of the
accountants' letter to ATP's management that is prepared in connection with such
financial statements and also shall cause to be prepared and shall furnish to
Lender a certificate of the aforesaid certified public accountants certifying to
Lender that, based upon their examination of the financial statements of
Borrower performed in connection with their examination of said financial
statements, they are not aware of any Default or Event of Default, or, if they
are aware of such Default or Event of Default, specifying the nature thereof,
and acknowledging, in a manner satisfactory to Lender, that they are aware that
Lender is relying on such financial statements in making its decisions with
respect to the Loans. Concurrently with the delivery of the financial statements
described in CLAUSES (I) and (II) of this SECTION 8.1.3, or more frequently if
requested by Lender, Borrower shall cause to be prepared and furnished to Lender
a Compliance Certificate in the form of EXHIBIT N hereto executed by the chief
financial officer of Borrower.
8.1.4. LANDLORD AND STORAGE AGREEMENTS. Provide Lender with copies
of all agreements between any Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
26
8.1.5. GUARANTOR FINANCIAL STATEMENTS. In addition to the financial
statements of New Borrowers to be supplied pursuant to SECTION 8.1.3 hereof,
deliver or cause to be delivered to Lender financial statements for each
Guarantor other than New Borrowers (if any), in form and substance satisfactory
to Lender, at such intervals and covering such time periods as Lender may
request.
8.1.6. PROJECTIONS. No later than 30 days prior to the end of each
fiscal year of Borrower, deliver to Lender the budgeted Consolidated balance
sheets, profit and loss statements, statement of changes and capitalization
statements (all prepared on a consistent basis with the historical financial
statements of Borrower, together with appropriate supporting details and a
statement of underlying assumptions) for the forthcoming fiscal year, month by
month, of Borrower.
8.1.7. TAXES. Pay and discharge, and cause each Subsidiary to pay
and discharge, all Taxes prior to the date on which such Taxes become delinquent
or penalties attach thereto, except and to the extent only that such Taxes are
being Properly Contested.
8.1.8. COMPLIANCE WITH LAWS. Comply and cause each Subsidiary to
comply, with all Applicable Law, including all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of Taxes, and all ERISA
and Environmental Laws, and obtain and keep in force any and all licenses,
permits, franchises, or other governmental authorizations necessary to the
ownership of its Properties or to the conduct of its business, which violation
or failure to obtain might have a Material Adverse Effect.
8.1.9. INSURANCE. In addition to the insurance required herein with
respect to the Collateral, Borrower shall maintain, with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such casualties and contingencies of such type (including product
liability, business interruption, larceny, embezzlement, or other criminal
misappropriation insurance) as is customary in the business of Borrower and in
such amounts as are acceptable to Lender.
8.1.10. BACKLOG REPORTS. In addition to all other reports and
information to be supplied hereunder to Lender, Borrower shall supply on a
monthly basis to Lender a report to Lender detailing the backlog of Revolving
Credit Borrowers in satisfying its orders, such report to be in form acceptable
to Lender.
8.2. NEGATIVE COVENANTS. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Lender has first consented thereto in writing, it will not:
8.2.1. MERGERS; CONSOLIDATIONS; ACQUISITIONS. Merge or consolidate,
or permit any Subsidiary of Borrower to merge or consolidate, with any Person;
nor acquire, nor permit any of its Subsidiaries to acquire, all or any
substantial part of the Properties of any Person.
27
8.2.2. LOANS. Make, or permit any of the Subsidiaries to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
8.2.3. TOTAL INDEBTEDNESS. Create, incur, assume, or suffer
to exist, or permit any of its Subsidiaries to create, incur or suffer to
exist, any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this Agreement;
(iii) Indebtedness of any Subsidiary of Borrower to
Borrower;
(iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than 45
days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being
Properly Contested;
(v) obligations to pay Rentals permitted by SECTION
8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(viii) Indebtedness existing on the date hereof and
described on EXHIBIT Q hereto; and
(ix) Indebtedness not included in PARAGRAPHS (I) through
(VIII) above which, as to Borrower, does not exceed at any time, in the
aggregate, the sum of $500,000.
8.2.4. AFFILIATE TRANSACTIONS. Enter into, or be a party to, or
permit any of its Subsidiaries to enter into or be a party to, any transaction
with any Affiliate or stockholder, except in the ordinary course of and pursuant
to the reasonable requirements of Borrower's or such Subsidiary's business and
upon fair and reasonable terms which are fully disclosed to Lender and are no
less favorable than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate or stockholder of Borrower or such Subsidiary.
8.2.5. LIMITATION ON LIENS. Create or suffer to exist, or permit any
of its Subsidiaries to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
28
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due or being Properly Contested;
(iii) Liens arising in the ordinary course of its business by
operation of law or regulation, but only if payment in respect of any such
Lien is not at the time required or the Indebtedness secured by such Lien
is being Properly Contested and such Lien does not materially detract from
the value of its Property or materially impair the use thereof in the
operation of its business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) Rights of the United States of America or any department,
agency or instrumentality thereof pursuant to the "Government Property
Clause" and "Progress Payment Clause", if any, in any contract with
Revolving Credit Borrowers;
(vii) such other Liens as appear on EXHIBIT O hereto; and
(viii) such other Liens as Lender may hereafter approve in
writing.
8.2.6. SUBORDINATED DEBT. Make, or permit any of its Subsidiaries to
make, any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with the subordination agreement relative thereto.
8.2.7. DISTRIBUTIONS. Declare or make, or permit any of its
Subsidiaries to declare or make, any Distributions; PROVIDED, HOWEVER, that so
long as no Default or Event of Default then exists or would arise therefrom,
Technical Products may (i) pay dividends on its common stock in an amount not to
exceed $80,000 during any calendar year for the purpose of permitting ATP to pay
dividends on its preferred stock, and (ii) pay Cash Taxes imposed or levied upon
ATP, as and when due.
8.2.8. CAPITAL EXPENDITURES. Make Capital Expenditures (including,
by way of capitalized leases) which, in the aggregate, as to Borrowers and their
Subsidiaries, exceed (i) $5,600,000 during the fiscal year of the Borrowers
ending December 31, 1998, (ii) $6,500,000 during the fiscal year of the
Borrowers ending December 31, 1999, and (iii) $5,000,000 during the fiscal year
of the Borrowers ending December 31, 2000.
8.2.9. DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of
any of, or permit any its Subsidiaries to sell, lease or otherwise dispose of
any of, its Properties, including any disposition of Property as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
29
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower or (iii) dispositions expressly authorized by this Agreement.
8.2.10. STOCK OF SUBSIDIARIES. Permit any of its
Subsidiaries to issue any additional shares of its capital stock, except
director's qualifying shares.
8.2.11. XXXX-AND-HOLD SALES, ETC. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis; PROVIDED, HOWEVER, that
Revolving Credit Borrowers may make sales to the United States of America or any
department, agency or instrumentality thereof, and may retain the sold goods on
its premises if such goods have been approved by a government inspector having
authority to approve such goods (hereinafter referred to as "GOVERNMENT
XXXX-AND-HOLD GOODS").
8.2.12. RESTRICTED INVESTMENT. Make or have, or permit any
of its Subsidiaries to make or have, any Restricted Investment.
8.2.13. OPERATING LEASES. Become, or permit any of its Subsidiaries
to become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of 12 consecutive months
under the lease in question and all other leases under which Borrower or any of
its Subsidiaries is then lessee would exceed $1,000,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.14. TAX CONSOLIDATION. File or consent to the filing of
any consolidated income tax return with any Person other than its
Subsidiaries or another Borrower.
8.2.15. COMPLIANCE WITH ASSIGNMENT OF CLAIMS ACT. Fail to
expeditiously assign to Lender upon request of Lender after the occurrence of a
Default or an Event of Default, in a manner satisfactory to Lender, the right of
Technical Products to payment of all then existing and thereafter arising
Accounts where the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, so as to comply with the
Assignment of Claims Act of 1940 (31 U.S.C. ss. 203 et seq.).
8.3. SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing:
8.3.1. FIXED CHARGE RATIO. Borrower shall maintain, on a
Consolidated basis, as of the end of each fiscal quarter set forth below for the
twelve calendar month period ending on such date, a Fixed Charge Ratio of not
less than the ratio set forth below for each fiscal period indicated below:
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PERIOD RATIO
(i) Twelve calendar month period (i) 1.10 to 1.0
ending respectively on each of
March 31, 1998, June 30, 1998,
September 30, 1998,
and December 31, 1998
(ii) Twelve calendar month period (ii) 1.20 to 1.0
ending respectively on each of
March 31, 1999, June 30, 1999,
and September 30, 1999
(iii) Twelve calendar (iii) 1.40 to 1.0
month period ending
on December 31, 1999
(iv) Twelve calendar month period (iv) 1.50 to 1.0
ending respectively on each
of March 31, 2000, June 30,
2000, September 30, 2000,
and December 31, 2000
8.3.2. INTEREST COVERAGE RATIO. Borrower shall achieve on a
Consolidated basis, at the end of each fiscal quarter set forth below, for the
twelve calendar month period ending on such date, an Interest Coverage Ratio
equal to or greater than the ratio set forth below for the fiscal period
corresponding thereto:
PERIOD RATIO
(i) Twelve calendar month (i) 3.50 to 1.0
period ending respectively
on each of March 31, 1998,
June 30, 1998, September 30,
1998, December 31, 1998,
March 31, 1999, June 30, 1999
and September 30, 1999
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(ii) Twelve calendar month (ii) 4.50 to 1.0
period ending respectively
on each of December 31, 1999,
March 31, 2000, June 30, 2000,
September 30, 2000, and
December 31, 2000
8.3.3. ADJUSTED TANGIBLE NET WORTH. Borrower shall maintain, as of
the last day of each fiscal quarter indicated below, on a Consolidated basis
Adjusted Tangible Net Worth of not less than the amount shown below as of the
date shown below:
DATE AMOUNT
(i) March 31, 1998, June 30, (i) $12,800,000
1998, and September 30,
1998
(ii) December 31, 1998, March (ii) $17,500,000
31, 1999, June 30, 1999,
and September 30, 1999
(iii) December 31, 1999, March (iii) $23,500,000
31, 2000, June 30, 2000,
and September 30, 2000
(iv) December 31, 2000 (iv) $33,200,000
8.3.4. TOTAL LIABILITIES TO EBITDA. Borrower shall maintain on a
Consolidated basis, as of the last day of each fiscal quarter set forth below
(the "CALCULATION DATE"), a ratio of (i) the Total Liabilities of Borrower on
such Calculation Date, to (ii) Borrower's EBITDA for the twelve calendar month
period ending on such Calculation Date, of not more than the ratio set forth
below on the Calculation Date corresponding thereto:
CALCULATION DATE RATIO
(i) March 31, 1998, June (i) 5.00 to 1.0
30, 1998, and September
30, 1998
(ii) December 31, 1998, (ii) 4.00 to 1.0
March 31, 1999, June
30, 1999, and September
30, 1999
(iii) December 31, 1999, (iii) 3.00 to 1.0
March 31, 2000, June
30, 2000,
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September 30, 2000,
and December 31, 2000
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make any
Loan under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
9.1. DOCUMENTATION. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.
9.2. NO DEFAULT. No Default or Event of Default shall exist.
9.3. OTHER LOAN DOCUMENTS. Each of the conditions precedent set forth
in the other Loan Documents shall have been satisfied.
9.4. EVIDENCE OF PERFECTION AND PRIORITY OF LIENS IN COLLATERAL. Lender
shall have received copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Lender in the Collateral and evidence in form satisfactory
to Lender that such Liens constitute valid and perfected security interests and
Liens, and that there are no other Liens upon any Collateral except for
Permitted Liens.
9.5. ARTICLES OF INCORPORATION. Lender shall have received a copy of the
Articles or Certificate of Incorporation of each Borrower, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
the jurisdiction of such Borrower's incorporation.
9.6. GOOD STANDING CERTIFICATES. Lender shall have received good standing
certificates for each Borrower, issued by the Secretary of State or other
appropriate official of Borrower's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's business activities or ownership of
its Property necessitates qualification.
9.7. OPINION LETTERS. Lender shall have received a favorable, written
opinion of counsel to Borrower, as to the transactions contemplated by this
Agreement, to be in form and substance satisfactory to Lender and Lender's
counsel, in their sole discretion.
9.8. INSURANCE. Lender shall have received copies of the casualty
insurance policies of Borrower, together with loss payable endorsements on
Lender's standard form of loss payee endorsement naming Lender as loss payee
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and copies of Borrower's liability insurance policies, together with
endorsements naming Lender as a co-insured.
9.9. DISBURSEMENT LETTER. Lender shall have received written instructions
from Borrower directing application of proceeds of the initial Loans made
pursuant to this Agreement, and an initial Borrowing Base Certificate from
Borrower, in form satisfactory to Lender.
9.10. TITLE INSURANCE POLICIES. Lender shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Lender's satisfaction to evidence the form of such
policies to be delivered after the Closing Date), in standard ALTA form issued
by a title insurance company satisfactory to Lender, each in an amount equal to
not less than the fair market value of the real Property or leasehold interest,
as the case may be, subject to the relevant Mortgage, insuring such Mortgage to
create a valid Lien on all real Property and valid Liens on the leasehold
interest described therein with no exceptions which Lender shall not have
approved in writing.
9.11. SURVEY. Lender shall have received all currently existing surveys in
the possession of Borrower with respect to each parcel of real Property owned in
fee by Borrower.
9.12. DOMINION ACCOUNT. Lender shall have received the duly executed
agreement establishing the Dominion Account with a financial institution
acceptable to Lender for the collection or servicing of the Accounts.
9.13. LANDLORD AGREEMENTS. Lender shall have received all landlord or
warehouseman agreements with respect to all premises leased by Borrower and
which are disclosed on EXHIBIT K hereto.
9.14. CUSTOMER REFERENCE CHECKS. Lender shall have received a satisfactory
reference check from such customers of Borrower as shall be required by Lender.
9.15. NO LITIGATION. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.16. STOCK PLEDGE AGREEMENTS. Lender shall have received a Stock Pledge
Agreement, in form and substance satisfactory to Lender, duly executed by ATP,
together with all the original stock certificates issued to ATP by each of
Alcore, Technical Products, Xxxxxx, DeLand and Lincoln, and together with a
stock power for each such stock certificate, duly executed in blank by ATP.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
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10.1.1. PAYMENT OF NOTES. Borrower shall fail to pay any installment
of principal, interest or premium, if any, owing on the Term Note or the
Equipment Note on the due date of such installment.
10.1.2. PAYMENT OF OTHER OBLIGATIONS. Borrower shall fail to pay any
of the Obligations that are not evidenced by the Term Note or the Equipment Note
on the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3. MISREPRESENTATIONS. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Borrower, any
Subsidiary of any Borrower or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
SECTION 7.2 hereof.
10.1.4. BREACH OF SPECIFIC COVENANTS. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in SECTIONS 6.1.1, 6.2,
8.1.1, 8.1.3(I), (II), (III) OR (IV), 8.2 or 8.3 hereof on the date that
Borrower is required to perform, keep or observe such covenant.
10.1.5. BREACH OF OTHER COVENANTS. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in SECTION 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within 5
days after the sooner to occur of Borrower's receipt of notice of such breach
from Lender or the date on which such failure or neglect first becomes known to
any officer of Borrower.
10.1.6. DEFAULT UNDER SECURITY DOCUMENTS/OTHER AGREEMENTS. Any event
of default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
10.1.7. OTHER DEFAULTS. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.
10.1.8. UNINSURED LOSSES. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9. ADVERSE CHANGES. There shall occur any material
adverse change in the financial condition or business prospects of the Loan
Parties, taken as a whole.
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10.1.10. INSOLVENCY AND RELATED PROCEEDINGS. Any Loan Party shall
cease to be Solvent or shall suffer the appointment of a receiver, trustee,
custodian or similar fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed by or against
any Loan Party under the Bankruptcy Code (if against a Loan Party, the
continuation of such proceeding for more than 30 days), or any Loan Party shall
make any offer of settlement, extension or composition to such Loan Party's
unsecured creditors generally.
10.1.11. BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of any Borrower, any Subsidiary
of any Borrower or any Guarantor for a period which significantly affects such
Borrower's or such Guarantor's capacity to continue its business, on a
profitable basis; or any Borrower, any Subsidiary of any Borrower or any
Guarantor shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by such Borrower or such Guarantor which could reasonably
be expected to have a Material Adverse Effect; or any Borrower or any Guarantor
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which any Borrower or
any Guarantor leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term; or any material part of
the Collateral shall be taken through condemnation or the value of such Property
shall be materially impaired through condemnation.
10.1.12. CHANGE OF OWNERSHIP. Either (i) ATP shall cease to own and
control, beneficially and of record, 100% of the issued and outstanding capital
stock of each of Alcore and Technical Products, (ii)Technical Products shall
cease to own and control, beneficially and of record, 100% of the issued and
outstanding capital stock of each of Xxxxxx, DeLand and Lincoln or (iii) EQUUS
Capital Appreciation Fund L.P. shall cease to own and control, beneficially and
of record, at least 15% of the issued and outstanding capital stock of ATP.
10.1.13. ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Borrower, any Subsidiary of any Borrower or any
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from such Borrower's, such
Subsidiary's or such Guarantor's complete or partial withdrawal from such Plan.
10.1.14. CHALLENGE TO AGREEMENT. Any Borrower, any Subsidiary of any
Borrower or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
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10.1.15. REPUDIATION OF OR DEFAULT UNDER GUARANTY AGREEMENT. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.16. CRIMINAL FORFEITURE. Any Borrower, any Subsidiary of any
Borrower or any Guarantor shall be criminally indicted or convicted under any
law that could lead to a forfeiture of any Property of any Borrower, any
Subsidiary of Borrower or any Guarantor.
10.1.17. JUDGMENTS. Any (i) money judgment is filed against any
Borrower, any Subsidiary of any Borrower or any Guarantor or any of their
respective Property, and such judgment shall remain unpaid, unsatisfied by
insurance, and unstayed for more than 30 days, whether or not consecutive, or
(ii) writ of attachment or similar process is filed against any Borrower, any
Subsidiary of any Borrower or any Guarantor, or any of their respective
Property, and such writ of attachment or similar process is not bonded or
secured in an amount and manner reasonably satisfactory to lender.
10.1.18. DOMINION ACCOUNT. Borrower shall fail to maintain a
Dominion Account or shall notify Lender that it intends to terminate its
existing Dominion Account.
10.2. ACCELERATION OF THE OBLIGATIONS. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with SECTION 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations; PROVIDED, HOWEVER, that upon
the occurrence of an Event of Default specified in SECTION 10.1.10 hereof, all
of the Obligations shall become automatically due and payable without
declaration, notice or demand by Lender.
10.3. OTHER REMEDIES. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
rights and remedies:
10.3.1. All of the rights and remedies of a secured party under the
Code or under other Applicable Law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2. The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, then
Borrower agrees not to charge Lender for storage thereof).
37
10.3.3. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that any requirement of
notice to Borrower of any proposed public or private sale or other disposition
of Collateral by Lender shall be deemed reasonable notice thereof if given at
least 10 days prior thereto, and such sale may be at such locations as Lender
may designate in said notice. Lender shall have the right to conduct such sales
on Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with Applicable Law. Lender shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing 2 Business Days for collection, first to the
costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, each Borrower shall remain jointly and severally liable
to Lender therefor.
10.3.4. The right to exercise all of Lender's rights and remedies
under the Mortgage with respect to any real Property forming a part of the
Collateral.
Lender is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
10.3.5. Lender may, at its option, require Borrower to deposit with
Lender funds equal to the LC Amount and, if Borrower fails to promptly make such
deposit, Lender may advance such amount as a Revolving Credit Loan (whether or
not an Out-of-Formula Condition is created thereby). Any such deposit or advance
shall be held by Lender as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have
been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4. REMEDIES CUMULATIVE; NO WAIVER. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution
38
of any of the terms, covenants, conditions, or agreements of Borrower herein
contained. The failure or delay of Lender to require strict performance by
Borrower of any provision of this Agreement or to exercise or enforce any
rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and all other Obligations owing or to become owing
from Borrower to Lender shall have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Event of
Default by Borrower under this Agreement or any other Loan Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by a duly authorized representative of Lender and directed to
Borrower.
SECTION 11. MISCELLANEOUS
11.1 THE TERM "BORROWER" OR BORROWERS". All references to "Borrower" or
"Borrowers" herein shall refer to and include each of ATP, Alcore, Technical
Products, Xxxxxx, DeLand and Lincoln separately and all representations
contained herein shall be deemed to be separately made by each of them, and each
of the covenants, agreements and obligations set forth herein shall be deemed to
be the joint and several covenants, agreements and obligations of them. Any
notice, request, consent, report or other information or agreement delivered to
Lender by any Borrower shall be deemed to be ratified by, consented to and also
delivered by the other Borrower. Each Borrower recognizes and agrees that each
covenant and agreement of "Borrower" or "Borrowers" under this Agreement and the
other Loan Documents shall create a joint and several obligation of the
Borrowers, which may be enforced against Borrowers, jointly, or against each
Borrower separately. Without limiting the terms of this Agreement and the other
Loan Documents, security interests granted under this Agreement and other Loan
Documents in properties, interests, assets and collateral shall extend to the
properties, interests, assets and collateral of each Borrower. Similarly, the
term "Obligations" shall include, without limitation, all obligations,
liabilities and indebtedness of such corporations, or any one of them, to
Lender, whether such obligations, liabilities and indebtedness shall be joint,
several, joint and several or individual.
11.2. POWER OF ATTORNEY. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
11.2.1. At such time or times as Lender or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
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11.2.2. At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.
11.3. INDEMNITY. BORROWER HEREBY INDEMNIFIES, HOLDS HARMLESS, AND SHALL
DEFEND LENDER AND ITS DIRECTORS, OFFICERS, AGENTS, COUNSEL AND EMPLOYEES
("INDEMNIFIED PERSONS") FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND PROCEEDINGS ("LOSSES") EVER
SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY LOSSES CAUSED BY THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, BUT
NOT INCLUDING ANY (I) LOSSES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNIFIED PERSON OR (II) LOSSES SUFFERED BY ANY INDEMNIFIED
PERSON AS THE RESULT OF ANY ACTION, SUIT OR PROCEEDING INSTITUTED AGAINST SUCH
INDEMNIFIED PERSON BY ANOTHER INDEMNIFIED PERSON, AND BORROWER SHALL REIMBURSE
LENDER AND EACH OTHER INDEMNIFIED PERSON FOR ANY EXPENSES (INCLUDING IN
CONNECTION WITH THE INVESTIGATION OF, PREPARATION FOR OR DEFENSE OF ANY ACTUAL
OR THREATENED CLAIM, ACTION OR PROCEEDING ARISING THEREFROM, INCLUDING ANY SUCH
COSTS OF RESPONDING TO DISCOVERY REQUESTS OR SUBPOENAS, REGARDLESS OF WHETHER
LENDER OR SUCH OTHER INDEMNIFIED PERSON IS A PARTY THERETO). WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THIS INDEMNITY SHALL EXTEND TO ANY CLAIMS
ASSERTED AGAINST LENDER OR ANY OTHER INDEMNIFIED PERSON BY ANY PERSON UNDER
40
ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF BORROWER'S OR ANY OTHER
PERSON'S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE
MATERIALS OR OTHER TOXIC SUBSTANCES. BORROWER MAY SELECT COUNSEL WITH RESPECT TO
ANY LOSSES; PROVIDED, HOWEVER, EACH INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO
MONITOR THE PROGRESS OF ANY CLAIMS, SUITS AND ADMINISTRATIVE PROCEEDINGS
DEFENDED BY BORROWER HEREUNDER WITH COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE,
OR CONDUCT ITS DEFENSE THROUGH COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, IN
THE EVENT THAT (I) SUCH INDEMNIFIED PERSON DETERMINES IN GOOD FAITH THAT THE
CONDUCT OF ITS DEFENSE BY BORROWER COULD BE MATERIALLY PREJUDICIAL TO SUCH
INDEMNIFIED PERSON'S INTERESTS OR THAT OTHER REASONABLE GROUNDS EXIST WHICH
DEMONSTRATE A LACK OF EFFECTIVENESS OR HIGH LEVEL OF QUALITY IN THE CONDUCT OF
SUCH DEFENSE BY BORROWER, AND (II) PRIOR TO RETAINING SUCH COUNSEL FOR SUCH
PURPOSE, SUCH INDEMNIFIED PERSON SHALL CONSULT WITH BORROWER AND SHALL ATTEMPT
IN GOOD FAITH TO AGREE UPON COUNSEL TO CONDUCT THE DEFENSE ON BEHALF OF BORROWER
AND SUCH INDEMNIFIED PERSON, AND IN EACH CASE THE FEES AND DISBURSEMENTS OF SUCH
COUNSEL SHALL BE PAID BY BORROWER; PROVIDED, HOWEVER, THAT IF SUCH MUTUAL
AGREEMENT IS NOT REACHED WITHIN A REASONABLE TIME ON SELECTING COUNSEL, THEN
SUCH INDEMNIFIED PERSON MAY RETAIN ITS OWN COUNSEL AT BORROWER'S EXPENSE.
NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS AGREEMENT, THE OBLIGATION OF
BORROWER UNDER THIS SECTION 11.3 SHALL SURVIVE THE PAYMENT IN FULL OF THE
OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
11.4. MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may not
be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrower hereby consents to Lender's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement and any of the other Loan Documents, or of
any portion hereof or thereof, including Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. In the case of an
assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender" hereunder and
Lender shall be relieved of all obligations hereunder upon any such assignment.
Borrower agrees that it will use its best efforts to assist and cooperate with
Lender in any manner reasonably requested by Lender to effect the sale of
participations in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential participant or assignee.
11.5. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any
41
provision of this Agreement shall be prohibited by or invalid under Applicable
Law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.6. SUCCESSORS AND ASSIGNS. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under SECTION 11.4
hereof.
11.7. CUMULATIVE EFFECT; CONFLICT OF TERMS. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in SECTION 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
11.9 NOTICE. All notices, requests and demands to or upon a party hereto
shall be in writing and shall be sent by certified or registered mail, return
receipt requested, by personal delivery against receipt, by overnight courier or
by facsimile transmissions and shall be deemed to have been validly served,
given or delivered immediately when delivered against receipt or one (1)
Business Day after deposit in the U.S. mail, postage prepaid, or with an
overnight courier or in the case of facsimile transmission, when sent,
answerback received, in each case addressed as follows:
If to Lender: Fleet Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000, XX 21
Xxxxxx, Xxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Borrower: Advanced Technical Products, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
42
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Gardere & Xxxxx, L.L.P.
Thanksgiving Tower
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this SECTION 11.9; PROVIDED, HOWEVER, that any notice,
request or demand to or upon Lender pursuant to SECTION 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender. Any written notice or demand
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
11.10. LENDER'S CONSENT. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion.
11.11. CREDIT INQUIRIES. Each Borrower hereby authorizes and permits
Lender (but Lender shall have no obligation) to respond to usual and customary
credit inquiries from third parties concerning such Borrower or any of its
Subsidiaries.
11.12. TIME OF ESSENCE. Time is of the essence of this Agreement,
the Other Agreements and the Security Documents.
11.13. ENTIRE AGREEMENT; APPENDIX A AND EXHIBITS AND SCHEDULES. This
Agreement and the other Loan Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written. Appendix A and each of the Exhibits
and Schedules attached hereto are incorporated into this Agreement and by this
reference made a part hereof.
11.14. INTERPRETATION. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
43
11.15. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS: PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS
COUNTY, TEXAS, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
44
11.16. WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (III) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (IV) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
11.17 WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS UNDER
THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT SECTION 17.41 ET. SEQ.
BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION,
BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. BORROWER EXPRESSLY WARRANTS AND
REPRESENTS THAT BORROWER (I) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION RELATIVE TO LENDER, AND (II) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
BORROWER HAS READ AND UNDERSTANDS
SECTION 11:17: __________ (INITIALS OF ATP)
__________ (INITIALS OF ALCORE)
__________ (INITIALS OF TECHNICAL PRODUCTS)
__________ (INITIALS OF XXXXXX)
__________ (INITIALS OF DELAND)
__________ (INITIALS OF LINCOLN)
45
11.18 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
11.19 NONAPPLICABILITY OF CHAPTER 346 OF THE TEXAS FINANCE CODE. Borrower
and Lender hereby agree that, except for SECTION 346.004 thereof, the provisions
of Chapter 346 of the Texas Finance Code (regulating certain revolving credit
loans and revolving tri-party accounts) shall not apply to this Agreement or any
of the other Loan Documents.
11.20 CERTAIN MATTERS OF CONSTRUCTION. All references to statutes and
related regulations in this Agreement, the Other Agreements and the Security
Agreements shall include any amendments of same and any successor statutes and
regulations. All references in this Agreement, the Other Agreements and the
Security Agreements to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
11.21 RELEASE. EACH ORIGINAL BORROWER ACKNOWLEDGES AND AGREES THAT (A) IT
HAS NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE ORIGINAL LOAN
DOCUMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (B) IF IT HAS
ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE ORIGINAL
LOAN DOCUMENTS AND/OR ANY TRANSACTION RELATED TO THE ORIGINAL LOAN DOCUMENTS,
SAME ARE HEREBY WAIVED, RELINQUISHED AND RELEASED IN CONSIDERATION OF LENDER'S
EXECUTION AND DELIVERY OF THIS AGREEMENT.
11.22. AMENDMENT AND RESTATEMENT. This Agreement is given in amendment,
restatement, renewal and extension (and not in extinguishment or satisfaction)
of the Original Loan Agreement and, to the extent applicable, the Original Loan
Documents. With respect to matters relating to the period prior to the date
hereof, all the provisions of the Original Loan Agreement and, to the extent
applicable, the Original Loan Documents are hereby ratified and confirmed and
shall remain in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning of this Agreement.
BORROWER:
ADVANCED TECHNICAL PRODUCTS, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
ALCORE, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
TECHNICAL PRODUCTS GROUP, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
XXXXXX PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
DELAND PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
47
LINCOLN PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
ACCEPTED IN DALLAS, DALLAS COUNTY, TEXAS:
LENDER:
FLEET CAPITAL CORPORATION
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. XxxXxxxx
Portfolio Manager
48
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan and Security Agreement dated as
of March 27, 1998, by and among Fleet Capital Corporation, Advanced Technical
Products, Inc., Alcore, Inc., Technical Products Group, Inc., Xxxxxx Properties,
Inc., DeLand Properties, Inc. and Lincoln Properties, Inc., the following terms
shall have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
ACCOUNT DEBTOR - any Person who is or may become obligated under or
on account of an Account.
ACCOUNTS - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest.
ADJUSTED NET EARNINGS FROM OPERATIONS - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes
for such fiscal period of Borrower, as reflected on the financial
statement of Borrower supplied to Lender pursuant to SECTION 8.1.3 of the
Agreement, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of a Borrower accrued prior
to the date it becomes a Subsidiary;
(iv) earnings of any corporation, substantially all the assets
of which have been acquired in any manner by a Borrower, realized by
such corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of a Borrower) in which such Borrower has an ownership
interest, unless such net earnings shall have actually been received
by Borrower in the form of cash contributions;
(vi) any portion of the net earnings of any Subsidiary of a
Borrower which for any reason is unavailable for payment of
dividends to such Borrower;
(vii) the earnings of any Person to which any assets of a
Borrower shall have been sold, transferred or disposed of, or into
which such Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transactions;
A-1
(viii) any gain arising from the acquisition of any
Securities of a Borrower;
(ix) any gain arising from extraordinary or non-recurring
items;
(x) any deferred debt issue costs relating specifically to the
refinancing of Borrower's Indebtedness to FINOVA Capital
Corporation; and
(xi) any debt issue costs expensed as an extraordinary item
related to the refinancing with Lender.
ADJUSTED TANGIBLE ASSETS - all assets except: (i) any surplus
resulting from any write-up of assets subsequent to April 28, 1995; (ii)
deferred assets, other than prepaid insurance and prepaid taxes; (iii)
patents, copyrights, trademarks, trade names, non-compete agreements,
franchises and other similar intangibles; (iv) goodwill, including any
amounts, however designated on a Consolidated balance sheet of a Person or
its Subsidiaries, representing the excess of the purchase price paid for
assets or stock over the value assigned thereto on the books of such
Person; (v) Restricted Investments; (vi) unamortized debt discount and
expense; (vii) assets located and notes and receivables due from obligors
outside of the United States of America; and (viii) Accounts, notes and
other receivables due from Affiliates or employees.
ADJUSTED TANGIBLE NET WORTH - at any date means a sum equal to:
(i) the net book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves) at
which the Adjusted Tangible Assets of a Person would be shown on a
balance sheet at such date in accordance with GAAP, MINUS
(ii) the amount at which such Person's liabilities (other than
capital stock and surplus) would be shown on such balance sheet in
accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities.
AFFILIATE - a Person (other than a Subsidiary): (i) which directly
or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of
a Person; or (iii) 5% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by a Person or a Subsidiary of a
Person.
AGREEMENT - the Amended and Restated Loan and Security Agreement
referred to in the first sentence of this APPENDIX A, all Exhibits and
Schedules thereto and this APPENDIX A, as amended, renewed, extended and
restated from time to time.
A-2
APPLICABLE ANNUAL RATE - as defined in SECTION 2.1.1 of the
Agreement.
APPLICABLE LAW - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Loan Documents in question,
including all applicable common law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of governmental bodies; and orders,
judgments and decrees of all courts and arbitrators.
APPLICABLE MARGIN - shall mean the following percentages determined
as a function of the Applicable Margin Ratio as set forth on the most
recent and timely Compliance Certificate delivered to Lender by Borrower:
LIBOR MARGIN FOR
LIBOR MARGIN FOR TERM LOAN AND
APPLICABLE MARGIN REVOLVING CREDIT EACH EQUIPMENT
RATIO LOANS LOAN
-------------------------------------------------------------------
Greater than 3.50 to 1.00 2.25% 2.75%
-------------------------------------------------------------------
Greater than 3.25 to 1.00 2.00% 2.50%
but equal to or less than
3.50 to 1.00
-------------------------------------------------------------------
Greater than 3.00 to 1.00 1.75% 2.25%
but equal to or less than
3.25 to 1.00
-------------------------------------------------------------------
Greater than 2.75 to 1.00 1.50% 2.00%
but equal to or less than
3.00 to 1.00
-------------------------------------------------------------------
Greater than 2.50 to 1.00 1.25% 1.75%
but equal to or less than
2.75 to 1.00
-------------------------------------------------------------------
Less than 2.50 to 1.00 1.00% 1.50%
-------------------------------------------------------------------
The Applicable Margin Ratio shall be determined as of the end of each fiscal
quarter of Borrower, for the twelve-month period ending on such date, from the
monthly financial statements of Borrower most recently delivered to Lender
together with a Compliance Certificate in accordance with SECTION 8.1.3(II)
hereof; PROVIDED, HOWEVER, that the Applicable Margin shall not be greater than
2.00% with respect to Revolving Credit Loans and 2.50% with respect to the Term
Loan and any Equipment Loans at any time during the period from the Closing Date
through June 30, 1998. Any change in the Applicable Margin after the date that
the Borrower delivers its quarter-end monthly financial statements and related
Compliance Certificate to Lender pursuant to SECTION 8.1.3(II) shall be
effective upon the date of receipt of such by Lender. If Borrower fails to
deliver a Compliance Certificate by the date required pursuant to SECTION
8.1.3(II) hereof, each applicable LIBOR margin shall be conclusively presumed to
equal to the highest applicable LIBOR margin specified in the pricing table set
forth above until the date of delivery of the Compliance Certificate.
A-3
APPLICABLE MARGIN RATIO - at any date of determination, means the
ratio of (i) the total Funded Indebtedness of Borrower at such date of
determination to (ii) the sum of (a) Borrower's EBITDA for the
twelve-month period ending on such date of determination, minus (b)
Borrower's Capital Expenditures during the twelve-month period ending on
such date of determination (but only to the extent such Capital
Expenditures are not financed by Equipment Loans hereunder or borrowings
under any other financing arrangement otherwise permitted hereunder).
ASSET PURCHASE AGREEMENT - the Asset Purchase Agreement, dated as of
November 23, 1994, executed by TPG Holdings, Inc. and Brunswick, as
amended from time to time.
AVAILABILITY - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrower pursuant to any of the Loan Documents and
which have not been reimbursed by Borrower) and the LC Amount is
subtracted from the Borrowing Base. If the amount outstanding is equal to
or greater than the Borrowing Base, Availability is 0.
AVERAGE MONTHLY REVOLVING CREDIT BALANCE - the amount obtained by
adding the aggregate unpaid balance of Revolving Credit Loans and the LC
Amount at the end of each day during the month in question and by dividing
such sum by the number of days in such month.
BANK - Fleet National Bank, and its successors or assigns.
BASE RATE - the rate of interest announced or quoted by Bank from
time to time as its prime rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such prime rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
BASE RATE LOAN - a Loan which bears interest based upon the Base
Rate.
BORROWING BASE - as at any date of determination thereof, an amount
equal to the lesser of:
(a) Total Revolving Credit Facility; or
(b) an amount equal to:
(i) up to 85% of the net amount of Eligible
Accounts outstanding at such date;
A-4
PLUS
(ii) the lesser of (A) $10,000,000 or (B) up to 50% of
the value of Eligible Inventory at such date;
MINUS (subtract from the sum of
CLAUSES (A) and (B) above)
(c) the sum of (i) the LC Amount, PLUS (ii) the amount of any
reserves established by Lender pursuant to SECTION 1.1.1 at such
date.
For purposes of CLAUSE (B)(I) hereof, the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible Accounts
less any and all returns, rebates, discounts (which may, at Lender's
option, be calculated on shortest terms), credits, allowances or sales,
excise or withholding taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection
with such Accounts at such time.
For purposes of CLAUSE (B)(II) above, the value of Eligible Inventory on a
date shall be calculated on the basis of the lower of cost or market. Cost shall
be calculated on a first-in, first-out basis.
BRUNSWICK - Brunswick Corporation, a Delaware corporation.
BUSINESS DAY - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the state of Texas or is a day on
which banking institutions located in such state are closed.
CAPITAL EXPENDITURES - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
CAPITALIZED LEASE OBLIGATION - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
CLOSING DATE - the date on which all of the conditions precedent in
SECTION 9 of the Agreement are satisfied and the initial Loan is made or
the initial Letter of Credit or LC Guaranty is issued under the Agreement.
CODE - the Uniform Commercial Code as adopted and in force in the
state of Texas, as from time to time in effect.
A-5
COLLATERAL - all of the Property and interests in Property described
in SECTION 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any
of the Obligations.
COLLATERAL ASSIGNMENT OF LEASES - each respective collateral
assignment of lease to be executed by Technical Products, in favor of
Lender and by which Technical Products shall grant and convey to Lender,
as security for the Obligations, an assignment of Technical Products'
leasehold interest in all the real Property covered by the Mortgages,
which collateral assignment shall be consented to by the fee owner of such
real Property.
CONSOLIDATED - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
CURRENT ASSETS - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP except that
amounts due from Affiliates and investments in Affiliates shall be
excluded therefrom.
DATED ASSETS - as defined in SECTION 1.5 of the Agreement.
DATED LIABILITIES - as defined in SECTION 1.5 of the Agreement.
DEFAULT - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
DEFAULT RATE - as defined in SECTION 2.1.2 of the Agreement.
DISTRIBUTION - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of
the corporation (except distributions in such stock) and (ii) the
redemption or acquisition of Securities unless made contemporaneously from
the net proceeds of the sale of Securities.
DOLLARS AND THE SIGN "$" - lawful money of the United States of
America.
DOMINION ACCOUNT - a special account of Lender established by
Borrower pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which Lender
shall have sole and exclusive access and control for withdrawal purposes.
EBITDA - for any fiscal period of Borrower, means the sum of (i)
Adjusted Net Earnings from Operations for such period, PLUS (ii) accrued
taxes for such period, PLUS (iii) Interest Expense for such period, PLUS
(iv) depreciation and amortization for such period.
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ELIGIBLE ACCOUNT - an Account arising in the ordinary course of any
Revolving Credit Borrower's business from the sale of goods or rendition
of services which is payable in Dollars and which Lender, in its
reasonable credit judgment, deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an Eligible
Account if: (i) it arises out of a sale made by any Revolving Credit
Borrower to a Subsidiary or an Affiliate of such Revolving Credit Borrower
or to a Person controlled by an Affiliate of such Revolving Credit
Borrower; (ii) it is due or unpaid more than 90 days after the original
invoice date; (iii) with respect to any contract between any Revolving
Credit Borrower and any Account Debtor, 20% or more of the Accounts owing
under such Contract are not deemed Eligible Accounts hereunder; (iv) (a)
with respect to any Account Debtor other than XxXxxxxxx Xxxxxxx Corp.,
Lockheed Xxxxxx Corp., Boeing Co. or the United States of America (or any
department, agency or instrumentality thereof), the total unpaid Accounts
of the Account Debtor exceed 20% of the net amount of all Eligible
Accounts, to the extent of such excess or (b) with respect to any contract
between any Revolving Credit Borrower and XxXxxxxxx Xxxxxxx Corp.,
Lockheed Xxxxxx Corp., Boeing Co. or the United States of America (or any
department, agency or instrumentality thereof), the total unpaid Accounts
owing under any such contract exceeds 20% of the net amount of all
Eligible Accounts, to the extent of such excess; (v) any covenant,
representation or warranty contained in the Agreement with respect to such
Account has been breached; (vi) the Account Debtor is also a Revolving
Credit Borrower's creditor or supplier, or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor has made any
claim with respect to any other Account due from such Account Debtor to a
Revolving Credit Borrower, or the Account otherwise is or may become
subject to any right of setoff, counterclaim, reserve or chargeback,
PROVIDED THAT, in any event, the Accounts of such Account Debtor shall be
ineligible only to the extent of the amount owing by Borrower to such
creditor or supplier or to the extent of such offset, counterclaim,
disputed amount, reserve or chargeback; (vii) the Account Debtor has
commenced a voluntary case under the federal bankruptcy laws or made an
assignment for the benefit of creditors, or a decree or order for relief
has been entered by a court having jurisdiction in the proceedings in
respect of the Account Debtor in an involuntary case under the federal
bankruptcy laws or any other petition or other application for relief
under the federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended business, ceased to
be Solvent, or consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of
its assets or affairs; (viii) it arises from a sale to an Account Debtor
with its principal office, assets or place of business outside the United
States or Canada, unless the sale is backed by an irrevocable letter of
credit issued or confirmed by Bank and is in form and substance acceptable
to Lender, payable in the full amount of the Account in freely convertible
Dollars at a place of payment within the United States; (ix) it arises
from a sale to the Account Debtor on a xxxx-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or any other repurchase or
return basis (unless such sale is a Government Xxxx-and-Hold Sale); (x)
(a) a Default has occurred hereunder and the Account Debtor is the United
States of America or any department, agency or instrumentality thereof,
unless the applicable Revolving Credit Borrower assigns its right to
payment of such Account to Lender, in a manner
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satisfactory to Lender, so as to comply with the Assignment of Claims Act
of 1940 (31 U.S.C. ss.203 ET SEQ.) or (b) thE Account Debtor is a state,
county or municipality, or a political subdivision or agency thereof,
which is subject to any Applicable Law that would disallow an assignment
of Accounts on which it is the Account Debtor; (xi) the Account Debtor is
located in New Jersey, Minnesota, Indiana, West Virginia or any other
state imposing similar conditions on the right of a creditor to collect
accounts receivable unless the applicable Revolving Credit Borrower has
either qualified to transact business in such state as a foreign
corporation or filed a Notice of Business Activities Report or other
required report with the appropriate officials in those states for the
then current year; (xii) the Account is subject to a Lien other than a
Permitted Lien; (xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by the applicable Revolving
Credit Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale (unless such sale is a
Government Xxxx-and-Hold Sale); (xiv) the Account is evidenced by chattel
paper or an instrument of any kind, or has been reduced to judgment; (xv)
any Revolving Credit Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt payment and
which discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; (xvi) any Revolving Credit
Borrower has made an agreement with the Account Debtor to extend the time
of payment thereof; (xvii) the Account is billed on a progress basis or on
the basis of the stage of completion (unless such Account is a "Milestone
Billing"); or (xviii) that portion of an Account which is an incurred
costs billing account governed by the Federal Acquisition Regulations.
ELIGIBLE INVENTORY - such Inventory of Revolving Credit Borrowers
(other than packaging materials and supplies) which Lender, in its
reasonable credit judgment, deems to be Eligible Inventory. Without
limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory UNLESS: (i) it is raw materials or finished goods; (ii) it is in
good, new and salable condition; (iii) it is not slow-moving, obsolete or
unmerchantable; (iv) it meets all standards imposed by any governmental
agency or authority; (v) it conforms in all respects to the warranties and
representations set forth in this Agreement; (vi) it is at all times
subject to Lender's duly perfected, first priority Lien and no other Lien
except a Permitted Lien; (vii) it is situated at a location in compliance
with this Agreement and is not in transit or outside the continental
United States; and (viii) it is not subject to progress payment offsets.
For purposes hereof, in no event shall Eligible Inventory include raw
materials that have been entered into work in process or to which any
manufacturing, improvement or value adding process has occurred or raw
materials associated with incurred costs billing programs.
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety or environmental matters.
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EQUIPMENT - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal Property
(other than Inventory) of every kind and description used in Borrower's
operations or owned by Borrower or in which Borrower has an interest,
whether now owned or hereafter acquired by Borrower and wherever located,
and all parts, accessories and special tools and all increases and
accessions thereto and substitutions and replacements therefor.
EQUIPMENT LOAN - the Loans to be made by Lender to Borrower pursuant
to SECTION 1.2.2 of the Agreement.
EQUIPMENT NOTE - the Amended and Restated Equipment Promissory Note
to be executed by Borrower, in favor of Lender, as provided in SECTION
1.2.2 of the Agreement, which shall be in the form of EXHIBIT A-2 to the
Agreement.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
EURODOLLAR LOAN - a Loan which bears interest based upon LIBOR.
EVENT OF DEFAULT - as defined in SECTION 10.1 of the Agreement.
EXCESS INTEREST - as defined in SECTION 2.1.3(B) of the Agreement.
FIXED CHARGE RATIO - for any fiscal period means, the ratio of (i)
an amount equal to (a) the sum of (1) Adjusted Net Earnings from
Operations for such period, (2) Interest Expense for such period, (3)
depreciation and amortization for such period, and (4) the incentive
compensation expense accrual for such period (net of income taxes), MINUS
(b) the sum of (1) Capital Expenditures incurred during such period and
not financed by Equipment Loans hereunder or by borrowings under any other
financing arrangement otherwise permitted hereunder, and (2) the incentive
compensation actually paid in cash during such period (net of income
taxes), to (ii) Fixed Charges of Borrower for such period.
FIXED CHARGES - for any fiscal period means the sum of (i) scheduled
principal payments required to be made during such period in respect to
Indebtedness and (ii) Interest Expense for such period.
FUNDED INDEBTEDNESS - as of the date of determination of Funded
Indebtedness: (i) all Obligations of Borrower (without duplication); (ii)
all outstanding Subordinated Debt; and (iii) all Capitalized Lease
Obligations.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
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GENERAL INTANGIBLES - all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including all
choses in action, causes of action, corporate or other business records,
deposit accounts, inventions, blueprints, designs, patents, patent
applications, trademarks, trademark applications, trade names, trade
secrets, service marks, goodwill, brand names, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer
programs, operational manuals, all claims under guaranties, security
interests or other security held by or granted to Borrower to secure
payment of any of the Accounts by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts).
GOVERNMENT XXXX-AND-HOLD SALE - As defined in SECTION 8.2.11 of the
Agreement.
GUARANTOR - Any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations.
GUARANTY AGREEMENT - collectively, any and all the Continuing
Guaranty Agreements which are to be executed by a Guarantor in form and
substance satisfactory to Lender, including, without limitation, the
Guaranty Agreements to be executed on or before the Closing Date by each
of ATP and Alcore in favor of Lender.
INDEBTEDNESS - as applied to a Person means, without duplication:
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person as at the date as of which Indebtedness is to be
determined, including Capitalized Lease Obligations; (ii) all obligations
of other Persons which such Person has guaranteed; (iii) all reimbursement
obligations in connection with letters of credit or letter of credit
guaranties issued for the account of such Person; and (iv) in the case of
Borrower (without duplication), the Obligations.
INDEMNIFIED PERSONS - as defined in SECTION 11.3 of the Agreement.
INTEREST COVERAGE RATIO - with respect to any period of
determination, the ratio of (i) an amount equal to the sum of (a) Adjusted
Net Earnings From Operations for such period, (b) accrued taxes for such
period, and (3) Interest Expense for such period, to (ii) Interest Expense
for such period, all as determined in accordance with GAAP.
INTEREST EXPENSE - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP
PLUS Letter of Credit and LC Guaranty fees owing for such period.
INVENTORY - all of Borrower's inventory, whether now owned or
hereafter acquired, including, but not limited to, all goods intended for
sale or lease by Borrower, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection
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with the manufacture, printing, packing, shipping, advertising, selling,
leasing or furnishing of such goods or otherwise used or consumed in
Borrower's business; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter acquired
by Borrower.
LC AMOUNT - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.
LC GUARANTY - any guaranty pursuant to which Lender or any Affiliate
of Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
LETTER OF CREDIT - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.
LIBOR - with respect to a Eurodollar Loan for the relevant LIBOR
Interest Period, a rate per annum equal to the quotient of the following:
(i) the rate at which deposits in U.S. dollars in immediately available
funds are offered by Lender or Bank to first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such LIBOR Interest Period, in the
approximate amount of the Eurodollar Loan and having a maturity
approximately equal to the LIBOR Interest Period, DIVIDED BY (ii) the
difference of one (1) MINUS the Reserve Requirement.
LIBOR INTEREST PERIOD - with respect to a Eurodollar Loan, a period
of one (1), two (2), or three (3) months commencing on a Business Day
selected by Borrower pursuant to this Agreement; PROVIDED, THAT (i) any
LIBOR Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless
such Business Day falls in another calendar month, in which case such
LIBOR Interest Period shall end on the next preceding Business Day; and
(ii) any LIBOR Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Interest
Period) shall, subject to CLAUSES (III) below and (I) above, end on the
last Business Day of a calendar month; and (iii) any LIBOR Interest Period
which would otherwise end after the termination of the Agreement, shall
end on the termination of the Agreement. No LIBOR Interest Period for the
Term Loan or an Equipment Loan shall extend beyond a date on which
Borrower is required to make a scheduled payment of principal on the Term
Note or the Equipment Note, as the case may be, unless the sum of the
aggregate Revolving Credit Loans consisting of Base Rate Loans equals or
exceeds the principal amount required to be paid on the Term Note or the
Equipment Note, as the case may be, on such date.
LIEN - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien"
shall also include reservations, exceptions,
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encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purpose of the Agreement, Borrower shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for
security purposes.
LOAN ACCOUNT - the loan account established on the books of Lender
pursuant to SECTION 3.5 of the Agreement.
LOAN DOCUMENTS - the Agreement, the Other Agreements and the
Security Documents.
LOAN PARTY - Borrower, each Guarantor and each other Person (other
than Lender) who is at any time a party to any Loan Document.
LOANS - all loans and advances of any kind made by Lender pursuant
to the Agreement.
LOSSES - as defined in SECTION 11.3 of the Agreement.
MATERIAL ADVERSE EFFECT - the effect of any event or condition
which, alone or when taken together with other events or conditions
occurring or existing concurrently therewith, (a) has a material adverse
effect upon the business, operations, Properties, condition (financial or
otherwise) or business prospects of Borrower, or any Subsidiary; (b) has
any material adverse effect whatsoever upon the validity or enforceability
of the Agreement or any of the other Loan Documents; (c) has or may be
reasonably expected to have any material adverse effect upon the value of
the whole or any material part of the Collateral, the Liens of Lender with
respect to the Collateral or any material part thereof or the priority of
such Liens; (d) materially impairs the ability of Borrower to perform its
obligations under this Agreement or any of the other Loan Documents,
including repayment of the Obligations when due; or (e) materially impairs
the ability of Lender to enforce or collect the Obligations or realize
upon any of the Collateral in accordance with the Loan Documents and
Applicable Law.
MAXIMUM LEGAL RATE - as defined in SECTION 2.1.3(A) of the
Agreement.
MONEY BORROWED - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (A)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to
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letters of credit or guaranties of letters of credit and (v) Indebtedness
of Borrower under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under CLAUSES (I) through (III) hereof, if
owed directly by Borrower.
MORTGAGES - each respective mortgage or deed of trust to be executed
by Borrower, in favor of Lender, and by which Borrower shall grant and
convey to Lender, as security for the Obligations, a Lien upon all the
real Property owned in fee by Borrower, including, without limitation, the
real Property owned in fee (i) by Marion and located at (a) 000 Xxxxxxxxx
Xxxx, Xxxxxx, Xxxxxxxx, (b) 0000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx and (c)
101 and 000 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx, (ii) by DeLand and located at
0000 Xxxxxxxxx Xxxx, XxXxxx, Xxxxxxx, (iii) by Lincoln and located at (a)
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx and (b) 0000 X. 00xx Xxxxxx,
Xxxxxxx, Xxxxxxxx, (iv) by Alcore and located at 0000 Xxxxx Xxxx Xxxx,
Xxxxxxx Xxxxxx, Xxxxxxxx.
MULTIEMPLOYER PLAN - has the meaning set forth in Section 4001(a)(3)
of ERISA.
NEW BORROWERS - individually, collectively, and joint and severally,
ATP and Alcore.
OBLIGATIONS - all Loans, and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrower to
Lender of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under the
Agreement or any of the other Loan Documents or otherwise, and whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired.
ORIGINAL BORROWERS - as defined in the recitals of the Agreement.
ORIGINAL BORROWER OBLIGATIONS - as defined in SECTION 1.7 of the
Agreement.
ORIGINAL LOAN AGREEMENT - as defined in the recitals of the
Agreement.
ORIGINAL LOAN DOCUMENTS - the Original Loan Agreement and all other
documents evidencing, governing, securing or otherwise pertaining to the
Loans advanced under the Original Loan Agreement and the Original Term
Note.
ORIGINAL TERM - as defined in SECTION 4.1 of the Agreement.
ORIGINAL TERM LOAN - as defined in SECTION 1.2.1 of the Agreement.
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ORIGINAL TERM NOTE - the Secured Promissory Note, dated December 27,
1996, in the principal amount of $14,000,000, executed by Original
Borrowers and payable to the order of Lender.
OTHER AGREEMENTS - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other
third party and delivered to Lender in respect of the transactions
contemplated by the Agreement.
OUT-OF-FORMULA CONDITION - at any date of determination thereof, a
condition such that the outstanding principal amount of Revolving Credit
Loans PLUS the LC Amount on such date exceeds the Borrowing Base on such
date.
PARTICIPANT - each Person who shall be granted the right by Lender
to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
PERMITTED LIEN - a Lien of a kind specified in SECTION 8.2.5 of the
Agreement.
PERMITTED PURCHASE MONEY INDEBTEDNESS - Purchase Money Indebtedness
of Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations of Borrower at
the time outstanding, does not exceed $500,000. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
PERSON - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
PLAN - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
PROPERLY CONTESTED - in the case of any Indebtedness of a Loan Party
(including any Taxes) that is not paid as and when due or payable by
reason of such Loan Party's bona fide dispute concerning its liability to
pay same or concerning the amount thereof, that (i) such Indebtedness and
any Liens securing same are being properly contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, (ii)
such Loan Party has established appropriate reserves as shall be required
in conformity with GAAP, (iii) the non-payment of such Indebtedness will
not have a Material Adverse Effect and will not result in a forfeiture of
any assets of such Loan Party; (iv) no Lien is imposed upon any of such
Loan Party's assets with respect to such Indebtedness unless such Lien is
at all times junior and subordinate in priority to the Liens in favor of
Lender (except only with respect to property taxes that have priority as a
matter of applicable
A-14
state law); (v) if the Indebtedness results from the entry, rendition or
issuance against a Loan Party or any of its assets of a judgment, writ,
order or decree, such judgment, writ, order or decree is stayed or bonded
pending a timely appeal or other judicial review; and (vi) if such contest
is abandoned, settled or determined adversely to such Loan Party, such
Loan Party forthwith pays such Indebtedness and all penalties and interest
in connection therewith.
PROPERTY - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
PURCHASE MONEY INDEBTEDNESS - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purpose of financing all or
any part of the purchase price thereof, and (iii) any renewals, extensions
or refinancings thereof, but not any increases in the principal amounts
thereof outstanding at the time.
PURCHASE MONEY LIEN - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
RENTALS - as defined in SECTION 8.2.13 of the Agreement.
REPORTABLE EVENT - any of the events set forth in Section 4043(b)
of ERISA.
RESERVE REQUIREMENT - at any date of determination, that percentage
(expressed as a decimal fraction) which is in effect on such day, as
provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal
and emergency reserves) under Regulation D with respect to "eurocurrency
liabilities" as currently defined in Regulation D, or under any similar or
successor regulation with respect to eurocurrency liabilities or
eurocurrency funding. Each determination by Lender of the Reserve
Requirement shall be provided to Borrower and, in the absence of manifest
error, be conclusive and binding. Any Reserve Requirement shall be
determined in accordance with Lender's customary practice and applied on a
consistent basis.
RESTRICTED INVESTMENT - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
A-15
(i) investments in one or more Subsidiaries of Borrower
to the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and
(vi) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than 270
days from the date of creation thereof.
REVOLVING CREDIT BORROWERS - individually, collectively, and joint
and severally, ATP, Alcore and Technical Products.
REVOLVING CREDIT LOAN - a Loan made by Lender as provided in SECTION
1.1 of the Agreement.
SCHEDULE OF ACCOUNTS - as defined in SECTION 6.2.1 of the Agreement.
SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
SECURITY DOCUMENTS - the Guaranty Agreement, the Mortgages, the
Collateral Assignments of Leases, the Stock Pledge Agreements, and all
other instruments and agreements now or at any time hereafter securing the
whole or any part of the Obligations.
SOLVENT - as to any Person, such Person (i) owns Property whose fair
salable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay
all of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
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STOCK PLEDGE AGREEMENTS - that certain (i) Stock Pledge Agreement,
executed by ATP on or before the Closing Date, whereby ATP grants to
Lender a first priority Lien in all the issued and outstanding capital
stock of each Alcore and Technical Products, to be in form and substance
satisfactory to Lender, and (ii) Stock Pledge Agreement, executed by
Technical Products on or before the Closing Date, whereby Technical
Products grants to Lender a first priority Lien in all the issued and
outstanding capital stock of each of Xxxxxx, DeLand and Lincoln, to be in
form and substance satisfactory to Lender.
SUBORDINATED DEBT - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Lender.
SUBSIDIARY - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
TAXES - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all
interest, penalties, additions to tax and similar liabilities with respect
thereto.
TERM LOAN - the Loan described in SECTION 1.2.1 of the Agreement.
TERM NOTE - the Amended and Restated Secured Promissory Note to be
executed by Borrower on or about the Closing Date in favor of Lender to
evidence the Term Loan, which shall be in the form of EXHIBIT A-1 to the
Agreement.
TOTAL CREDIT FACILITY - $48,000,000.
TOTAL LIABILITIES - at any date means all amounts properly
classified as liabilities on a balance sheet at such date in accordance
with GAAP, plus all reserves for contingencies and all other potential
liabilities for which no reserves have previously been established on such
balance sheet, to the extent such amounts are not already classified as
liabilities in accordance with GAAP.
TOTAL REVOLVING CREDIT FACILITY - $27,000,000.
VOTING STOCK - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
A-17
OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Loan Documents shall include any and all modifications thereto and any and all
extensions or renewals thereof. Wherever the phrase "including" shall appear in
the Agreement, such word shall be understood to mean "including, without
limitation."
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
A-18
IN WITNESS WHEREOF, this Appendix has been duly executed in Dallas, Dallas
County, Texas, on March 31, 1998.
BORROWER:
ADVANCED TECHNICAL PRODUCTS, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
ALCORE, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
TECHNICAL PRODUCTS GROUP, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
XXXXXX PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
DELAND PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
A-19
LINCOLN PROPERTIES, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Executive Vice President
ACCEPTED IN DALLAS, DALLAS COUNTY, TEXAS:
LENDER:
FLEET CAPITAL CORPORATION
By: /s/ XXXXX X. XXXXXXXX
Xxxxx X. XxxXxxxx
Portfolio Manager
A-20
