LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), made and entered into as of the 21st
day of January, 1999, by and between BETHLEHEM ADVANCED MATERIALS CORPORATION, a
Pennsylvania corporation with principal offices in Knoxville, Tennessee
("Borrower"), and NATIONSBANK, N.A., a national banking association with offices
in Knoxville, Tennessee ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make available to Borrower
a loan in the original principal amount not exceeding $3,000,000 (the "Loan") on
the terms and conditions hereinafter set forth, and for the purposes hereinafter
set forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrower,
Borrower has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements
of Borrower, has agreed to make the Loan upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE I
THE LOAN
1.1 Loan Advances. So long as the Notes, as herein defined, have not
matured, no Event of Default has occurred and is continuing hereunder, and
Lender's obligation to make advances has not otherwise been terminated
hereunder, Lender shall advance Loan proceeds to Borrower from time to time upon
request by Borrower in compliance with Section 1.2 hereof, up to the maximum
amount of the Loan, but not to exceed amounts permitted pursuant to Sections 1.2
and 5.14 hereof.
1.2 Evidence of Indebtedness; Repayment.
(a) For the period from the date hereof until July 31, 1999
(the "Interest-Only Period"), the Loan shall be evidenced by a Master Secured
Promissory Note of even date herewith, in the original principal amount not
exceeding Three Million and No/100 Dollars ($3,000,000.00), made and executed by
Borrower, payable to the order of Lender, in substantially the form attached
hereto as Exhibit A-1 (the "Initial Note"). During the Interest-Only Period, the
Loan shall be payable in accordance with the terms of the Initial Note.
(b) On July 30, 1999 (the "Conversion Date"), the Borrower
shall execute and deliver to Lender (i) a Secured Promissory Note in a principal
amount equal to the total disbursements of the Loan for the Furnace
Improvements, as defined in Section 1.3 below, through the Conversion Date,
payable to the order of Lender, in substantially the form attached hereto as
Exhibit A-2 (together with any extensions, modifications, renewals and/or
replacements thereof, herein referred to as the "Term Note"); and (ii) a Master
Secured Promissory Note in a principal amount equal to $3,000,000 minus the
principal amount of the Term Note but in any event no greater than $500,000,
payable to the order of Lender, in substantially the form attached hereto as
Exhibit A-3 (together with any extensions, modifications, renewals and or
replacements thereof, herein referred to as the "Revolving Credit Line Note" the
Initial Note, Term Note and Revolving Credit Line Note are herein referred to
collectively as the "Notes"). Upon delivery of the Term Note and Revolving
Credit Line Note to the Lender, the Lender shall deliver to the Borrower the
Initial Note marked "paid." After the Conversion Date, the maximum amount that
Lender shall be required to advance in the aggregate to the Borrower under
Section 1.1 shall be the maximum amount of the Revolving Credit Line Note.
(c) The indebtedness of Borrower to Lender in connection with
the Loan shall be payable in accordance with the terms of the Notes.
1.3 Purposes of Loan and Requests for Advances on Loan.
(a) The purposes of the Loan shall be to (i) finance the
acquisition and installation of a high temperature furnace identified as Model
50 Bottom Loading Carbonization Furnace "Big Xxxxx" (the "Existing Furnace
Project") and the acquisition and installation of two new high temperature
furnaces, each identified as Dual Bottom Loading Carbonization Furnaces Model
HT66110BL (the "New Furnace Project"); the Existing Furnace Project and the New
Furnace Project are herein referred to collectively as the "Furnace Projects",
and (ii) provide working capital to Borrower on a revolving basis, provided,
however, that (A) after the Conversion Date, the Borrower shall only be
permitted to use the proceeds of the Loan for working capital and (B) the amount
that the Borrower may borrow to finance working capital shall at all times not
exceed $500,000. The proceeds of the Loan shall not be used for any other
purpose.
(b) If required by Lender, Borrower shall request all advances
under the Loan in writing, and in any event, Borrower shall request all advances
under the Loan prior to the Conversion Date in writing. Prior to the Conversion
Date, each request for an advance under the Initial Note shall identify the
amount that is being drawn to finance working capital and the amount that is
being drawn to finance the Furnace Projects. If any amount is being requested to
finance the New Furnace Project, Borrower must also certify at the time of the
advance that one of the benchmarks toward the completion of the particular
Furnace Projects has been met, which benchmarks are set forth on Exhibit C
attached hereto. Lender shall be entitled to verify independently whether the
benchmark has been met, and Borrower shall pay all costs reasonably incurred by
Lender in connection with such verification. All advances shall be subject to
the limitations of Section 5.14.
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(c) Draws against the Revolving Credit Line Note shall not be
less than $100,000 per draw unless Borrower participates in Lender's cash
management program known as AutoBorrow, in which event there shall be no
required minimum for draws against the Revolving Credit Line Note.
1.4 Closing Fee. In consideration of Lender's agreement to make the
Loan, the Borrower shall pay to the Lender a non-refundable closing fee in the
amount of $30,000. This fee shall be payable on the date hereof.
1.5 Unused Commitment Fee. Beginning on July 30, 1999 and in addition
to the fee payable under Section 1.4 above, the Borrower shall pay to the Lender
a fee equal to, on an annualized basis, .50% (calculated on the basis of a year
of 360 days and payable for the actual number of days elapsed) of the principal
amount of the Revolving Credit Line Note less the average daily balance of the
amount actually drawn by Borrower thereunder, payable quarterly in arrears, with
the first payment due on September 28, 1999 and continuing thereafter on the
twenty-eighth day of the last month of each succeeding calender quarter and on
the Termination Date.
1.6 Automatic Payment. Borrower hereby authorizes the Lender to effect
payment of sums due under this Agreement and the Notes by means of debiting the
Borrower's principal checking account or any other account which Borrower may
have with Lender subsequent to the date hereof. This authorization shall not
affect the obligation of the Borrower to pay such sums when due, without notice,
if there are insufficient funds in such account to make such payments in full in
the due date thereof, or if Lender fails to debit the account or accounts.
1.7 Rate Protection. Borrower will mitigate the risk of changes in
interest rates due to its variable interest rate debt by entering into, prior to
the Conversion Date, an interest rate cap agreement, interest rate swap
agreement or other hedge product acceptable to Lender (the "Interest Rate
Hedge") with a counterparty that is Lender or an affiliate thereof or another
financial institution with a long-term debt rating from a nationally recognized
rating agency that is equal to or greater than the long-term debt rating of
Lender. Such Interest Rate Hedge shall be applicable to at least one-half of
Borrower's funded debt that is bearing interest at a variable rate of interest
including the Loan made hereunder and the Subordinated Note. The Interest Rate
Hedge shall remain in effect until the earlier of the payment of the Loan or
until the funded debt coverage ratio set forth in Section 5.22 hereof is less
than 2.00:1.00 for four consecutive fiscal quarters.
ARTICLE II
SECURITY
2.1 Security. The Obligations (as hereinafter defined) shall be secured
by the following:
(a) Security Agreement. A Security Agreement of even date
herewith, between the Borrower and the Lender whereby Borrower grants
the Lender a security interest in the collateral described therein (the
"Security Agreement").
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(b) Pledge Agreement. The Pledge Agreement of even date
herewith, executed by The Bethlehem Corporation (the "Parent"),
pledging to Lender all of the issued and outstanding stock of Borrower
(the "Pledge Agreement")
This Security Agreement and the Pledge Agreement and any other
instruments, documents or agreements now or hereafter securing the
Obligations are herein referred to individually as a "Security
Instrument" and individually and collectively as the "Security
Instruments". The Security Instruments, together with this Agreement,
the Notes and any other instruments and documents now or hereafter
evidencing, securing or in any way related to the indebtednesses
evidenced by the Notes are herein referred to individually as a "Loan
Document" and individually and collectively as the "Loan Documents".
2.2 Obligations. Without limiting any of the provisions thereof, the
Security Instruments shall secure:
(a) The full and timely payment of the indebtednesses
evidenced by the Notes, together with interest thereon, and any
extensions, modifications and/or renewals thereof and any notes given
in payment thereof,
(b) The full and prompt performance of all of the obligations
of Borrower to Lender under the Loan Documents to which Borrower is a
party,
(c) The full and prompt payment of all court costs, expenses
and costs of whatever kind incident to the collection of the
indebtednesses evidenced by the Notes, the enforcement or protection of
the security interests of the Security Instruments and/or the exercise
by Lender of any rights or remedies of Lender with respect to the
indebtednesses evidenced by the Notes, including but not limited to
reasonable attorney's fees and expenses incurred by Lender, all of
which Borrower agrees to pay to Lender upon demand, and
(d) The full and prompt payment and performance of any and all
other indebtednesses and other obligations of Borrower to Lender,
direct or contingent (including but not limited to obligations incurred
as indorser, guarantor or surety), or the obligation to reimburse
Lender with respect to any draws on letters of credit issued by the
Lender on Borrower's behalf, however evidenced or denominated, and
however and whenever incurred, including but not limited to
indebtednesses incurred pursuant to any present or future commitment of
Lender to Borrower.
All of the foregoing indebtedness and other obligations are herein collectively
referred to as the "Obligations".
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ARTICLE III
CONDITIONS PRECEDENT
3.1 Condition Precedent to Loans. The obligation of Lender to advance
the proceeds of the Loan to or for the account of Borrower is subject to the
condition precedent that Lender shall have received each of the following, in
form and substance satisfactory to the Lender and its counsel:
(a) Notes. The Initial Note, duly executed by Borrower, which
Initial Note shall be deemed delivered as of the date all of the other
conditions precedent set forth in this Section 3.1 have been met;
(b) Security Instruments. The Security Instruments, duly
executed by the parties thereto, together with: (1) acknowledgment
copies of financing statements duly filed under the Uniform Commercial
Code of all jurisdictions necessary or, in the opinion of Lender,
desirable to perfect the security interests created by the Security
Instruments or such other documents, such as certificates of title with
Lender's lien noted thereon, that are necessary to perfect Lender's
security interest; and (2) evidence of the public recording or filing
of such of the Security Instruments as Lender deems it necessary or
desirable to record or file publicly, in such offices as Lender shall
require, together with evidence satisfactory to Lender of the priority
of the liens, security titles and/or security interests of such
Security Instruments;
(c) Title to Assets. Evidence satisfactory to Lender
demonstrating that Borrower is the owner of the collateral security
described in the Security Instruments, free and clear of defects
therein or claims thereto by persons other than Lender;
(d) Comfort Letter. A letter from the Parent to Lender
acknowledging the Lender's extension of the Loan to Borrower and
containing certain other representations and agreements which Lender
may request.
(e) Subordination Agreement. Execution and delivery by Parent
to Lender of a subordination agreement in form satisfactory to the
Lender whereby the Parent subordinates all indebtedness of the Borrower
to Parent to the Borrower's repayment of the Loan (the "Subordination
Agreement"), including the indebtedness evidenced by that certain
Promissory Note from Borrower to Parent dated as of the date hereof
(the "Subordinated Note").
(f) Consent of PNC Bank. Written consent from PNC Bank to the
extension of the Loan to the Borrower and to the Parent's execution and
delivery of the Pledge Agreement and the Subordination Agreement to the
Lender.
(g) Insurance. Evidence satisfactory to Lender of the
existence of the policies of insurance required by the provisions of
Article V of this Agreement and by the Security Instruments;
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(h) Evidence of Corporate Action by Borrower and Parent.
Certified (as of the date of this Agreement) copies of all corporate
action taken by Borrower and Parent, including resolutions of their
board of directors, authorizing the execution, delivery and performance
of the Loan Documents to which each is a party and each other document
to be delivered by Borrower or Parent pursuant to this Agreement;
(i) Incumbency and Signature Certificates. A certificate
(dated as of the date of this Agreement) of the Secretary or an
Assistant Secretary of Borrower and Parent certifying the names and
true signatures of the officers of Borrower and Parent authorized to
sign the Loan Documents to which it is a party and the other documents
to be delivered by Borrower or Parent under this Agreement;
(j) Organizational Documents. Copies of the corporate charter
and other publicly filed organizational documents of Borrower and
Parent, certified by the Secretary of State or other appropriate public
official in the jurisdiction in which Borrower or Parent is
incorporated and a copy of Borrower's and Parent's bylaws;
(k) Evidence of Legal Existence/Good Standing. A certificate
as to the legal existence and good standing of Borrower and Parent,
issued by the Secretary of State or other appropriate public official
in the jurisdiction in which Borrower or Parent is incorporated;
(l) Evidence of Foreign Qualifications. Certificates of the
Secretaries of State or other appropriate public officials as to
Borrower's and Parent's qualification to do business and good standing
in each jurisdiction in which a failure to be so qualified would have a
material adverse effect on Borrower's financial position or its ability
to conduct its business in the manner now conducted and as hereafter
intended to be conducted;
(m) Closing Fee. Borrower shall have paid to Lender a closing
fee in the amount of $30,000 and the other expenses of Lender relating
to making the Loan; and
(n) Legal Opinion. An opinion of counsel to Borrower addressed
to Lender as to the enforceability of the Loan Documents and such other
matters as Lender may request.
3.2 Additional Condition(s) Precedent to Loans. The obligation of
Lender to make each advance of Loan proceeds to or for the account of Borrower
(including the initial advance or advances) is subject to the further
condition(s) precedent that on and as of the date of such advance:
(a) Representations and Warranties True; Absence of Default.
The following statements shall be true, and Borrower's request for such
advance shall constitute an affirmation by Borrower that:
(i) The representations and warranties contained in
Article IV of this Agreement are correct on and as of the date
of such advance as though made on and as of such date; and
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(ii) Neither an Event of Default (as hereinafter
defined), nor any event that with the giving of notice or the
passage of time or both would constitute an Event of Default,
has occurred and is continuing, or would result from such
advance; and
(b) Additional Documentation. Lender shall have received such
other approvals, opinions and documents as Lender reasonably may
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender as follows:
4.1 Corporate Status. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Pennsylvania; and
has the corporate power to own and operate its properties, to carry on its
business as now conducted and to enter into and to perform its obligations under
this Agreement and the other Loan Documents to which it is a party. Borrower is
duly qualified to do business and is in good standing in the State of Tennessee
and in each state in which a failure to be so qualified would have a material
adverse effect on Borrower's financial position or its ability to conduct its
business in the manner now conducted.
4.2 Authorization. Borrower has full legal right, power and authority
to conduct its business and affairs in the manner contemplated by the Loan
Documents, and to enter into and perform its obligations thereunder, without the
consent or approval of any other person, firm, governmental agency or other
legal entity. The execution and delivery of this Agreement, the loan hereunder,
the execution and delivery of each Loan Document to which Borrower is a party,
and the performance by Borrower of its obligations thereunder are within the
corporate powers of Borrower and have been duly authorized by all necessary
corporate action properly taken, have received all necessary governmental
approvals, if any were required, and do not and will not contravene or conflict
with any provision of law, any applicable judgment, ordinance, regulation or
order of any court or governmental agency, the charter or by-laws of Borrower or
any agreement binding upon Borrower or its properties. The officer(s) executing
this Agreement, the Notes and all of the other Loan Documents to which Borrower
is a party are duly authorized to act on behalf of Borrower.
4.3 Validity and Binding Effect. This Agreement and the other Loan
Documents are the legal, valid and binding obligations of the parties thereto,
enforceable in accordance with their respective terms, subject to bankruptcy and
other creditor's rights laws and equitable principles.
4.4 Other Transactions. There are no prior loans, liens, security
interests, agreements or other financings upon which Borrower is obligated or by
which Borrower is bound that will in any way permit any third person to have or
obtain priority over Lender as to any of the collateral security granted to
Lender pursuant to this Agreement and the Security Instruments. Consummation of
the transactions hereby contemplated and the performance of the obligations of
Borrower under and by
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virtue of the Loan Documents to which Borrower is a party will not result in any
breach of, or constitute a default under, any mortgage, security deed or
agreement, deed of trust, lease, bank loan or credit agreement, corporate
charter or by-laws, agreement or certificate of limited partnership, partnership
agreement, license, franchise or any other instrument or agreement to which
Borrower is a party or by which Borrower or its properties may be bound or
affected.
4.5 Litigation. There are no actions, suits or proceedings pending, or,
to the knowledge of Borrower, threatened, against or affecting Borrower or
involving the validity or enforceability of any of the Loan Documents or the
priority of the liens thereof, at law or in equity, or before any governmental
or administrative agency, except actions, suits and proceedings that are fully
covered by insurance and that, if adversely determined, would not impair the
ability of Borrower to perform each and every one of its obligations under and
by virtue of the Loan Documents; and to Borrower's knowledge, Borrower is not in
default with respect to any order, writ, injunction, decree or demand of any
court or any governmental authority.
4.6 Financial Statements. All financial statements of Borrower
heretofore delivered to Lender are true and correct in all material respects,
have been prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the financial conditions of the
subjects thereof as of the dates thereof. No material adverse change has
occurred in the financial condition of Borrower since the dates thereof, and no
additional borrowings have been made by Borrower since the date thereof.
4.7 No Defaults. No default or event of default by Borrower exists
under this Agreement or any of the other Loan Documents, or under any other
instrument or agreement to which Borrower is a party or by which Borrower or its
properties may be bound or affected, and no event has occurred and is continuing
that with notice or the passage of time or both would constitute a default or
event of default thereunder.
4.8 Compliance With Law. To the best of its knowledge, Borrower has
obtained all necessary licenses, permits and governmental approvals and
authorizations necessary or proper in order to conduct its business and affairs
as heretofore conducted and as hereafter intended to be conducted. Borrower is
in compliance with all laws, regulations, decrees and orders applicable to it
(including but not limited to laws, regulations, decrees and orders relating to
environmental, occupational and health standards and controls, antitrust,
monopoly, restraint of trade or unfair competition), except to the extent that
noncompliance, in the aggregate, cannot reasonably be expected to have a
material adverse effect on its business, operations, property or financial
condition and will not materially adversely affect its ability to perform its
obligations under the Loan Documents to which it is a party. Borrower has not
received, and does not expect to receive, any order or notice of any violation
or claim of violation of any law, regulation, decree, rule, judgment or order of
any governmental authority or agency relating to the ownership and/or operation
of its properties, as to which the cost of compliance is or might be material
and the consequences of noncompliance would or might be materially adverse to
its business, operations, property or financial condition, or which would or
might impair its ability to perform its obligations under the Loan Documents to
which it is a party.
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4.9 Environmental Matters.
(a) As used in this Section 4.9 and in Section 5.11 hereof,
the following terms shall have the indicated meanings:
"Business" means all of Borrower's assets, both real and
personal, tangible and intangible, now existing or hereafter
acquired and wherever located, and all of Borrower's current
and future business operations at all locations and in all
jurisdictions.
"Environmental Authorities" means all federal, state and local
governmental bodies, authorities or agencies and all public
corporations created and/or empowered to administer, regulate
and/or enforce Environmental Laws, including without
limitation the U.S. Environmental Protection Agency.
"Environmental Laws" means any and all federal, state,
regional, county or local laws, statutes, rules, regulations
or ordinances relating to the generation, recycling, use,
reuse, sale, storage, handling, transport, treatment or
disposal of Hazardous Materials, including without limitation
the Comprehensive Environmental Response Compensation
Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. ss.9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act of
1976, as amended by the Solid and Hazardous Waste Amendments
of 1984, 42 U.S.C. ss.6901 et seq. ("RCRA"), the Tennessee
Hazardous Waste Management Act, T.C.A. ss.00-00-000 et seq.,
and any rules, regulations and guidance documents promulgated
or published thereunder, and any state, regional, county or
local statute, law, rule, regulation or ordinance relating to
public health, safety or the discharge, emission or disposal
of Hazardous Materials or Hazardous Wastes in or to air,
water, land or groundwater, to the withdrawal or use of
groundwater, to the use, handling or disposal or asbestos,
polychlorinated biphenyls, petroleum, petroleum derivatives or
by-products, other hydrocarbons or urea formaldehyde, to the
treatment, storage, disposal or management of Hazardous
Materials, to exposure to Hazardous Materials, to the
transportation, storage, disposal, management or release of
gaseous or liquid substances, and any regulation, order,
injunction, judgment, declaration, notice or demand issued
thereunder.
"Hazardous Materials" means any hazardous, toxic or dangerous
materials, substances, chemicals, waste or pollutants that
from time to time are defined by or pursuant to or are
regulated under any Environmental Laws, including without
limitation asbestos, polychlorinated biphenyls, petroleum,
petroleum derivatives or by-products, other hydrocarbons, urea
formaldehyde and any material, substance, pollutant or waste
that is defined as a hazardous waste under RCRA or defined as
a hazardous substance under CERCLA.
"Hazardous Wastes" means Hazardous Materials that are or
become "wastes" or "solid wastes" as such terms are used in
RCRA.
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"Property" means all real property now or hereafter
constituting a part of, or otherwise used or operated by
Borrower in connection with, the Business.
(b) Borrower represents and warrants to Lender as follows:
(i) The Property is being operated by Borrower in
material compliance with Environmental Laws, and Borrower has
obtained, maintained and is in good standing under all
approvals, consents, certificates, licenses and permits
required by Environmental Laws with respect to the Property.
(ii) To Borrower's knowledge, the Property is free of
all Hazardous Wastes and is free of all Hazardous materials
other than those maintained therein or thereon in full
compliance with Environmental Laws. Borrower has not caused or
permitted the Property to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer,
produce or process Hazardous Materials except in full
compliance with Environmental Laws.
(iii) Borrower has not received notice, and has no
knowledge, of any material noncompliance with or violation of
any Environmental Laws with respect to the Property or the
Business.
4.10 No Burdensome Restrictions. No instrument, document or agreement
to which Borrower is a party or by which it or its properties may be bound or
affected materially adversely affects, or may reasonably be expected so to
materially and adversely affect, the business, operations, property or financial
condition thereof.
4.11 Taxes. Borrower has filed or caused to be filed all tax returns
that to its knowledge are required to be filed (except for returns that have
been appropriately extended), and has paid all taxes shown to be due and payable
on said returns and all other taxes, impositions, assessments, fees or other
charges imposed on it by any governmental authority, agency or instrumentality,
prior to any delinquency with respect thereto (other than taxes, impositions,
assessments, fees and charges currently being contested in good faith by
appropriate proceedings, for which appropriate amounts have been reserved). To
the best of Borrower's knowledge, no tax liens have been filed against Borrower
or any of the property thereof.
4.12 Year 2000 Representations and Warranties.
(a) Borrower has (i) begun analyzing the operations of
Borrower and its subsidiaries and affiliates that could be adversely affected by
failure to become Year 2000 compliant (that is, that computer applications,
imbedded microchips and other systems will be able to perform date-sensitive
functions prior to and after December 31, 1999) and; (ii) developed a plan for
becoming Year 2000 compliant in a timely manner, the implementation of which is
on schedule in all material respects. Borrower reasonably believes that it will
become Year 2000 compliant for its operations and those of its subsidiaries and
affiliates on a timely basis except to the extent that a
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failure to do so could not reasonably be expected to have a material adverse
effect upon the financial condition of Borrower.
(b) Borrower reasonably believes any suppliers and vendors
that are material to the operations of Borrower or its subsidiaries and
affiliates will be Year 2000 compliant for their own computer applications
except to the extent that a failure to do so could not reasonably be expected to
have a material adverse effect upon the financial condition of Borrower.
(c) Borrower will promptly notify Bank in the event Borrower
determines that any computer application which is material to the operations of
Borrower, its subsidiaries or any of its material vendors or suppliers will not
be fully Year 2000 compliant on a timely basis, except to the extent that such
failure could not reasonably be expected to have a material adverse effect upon
the financial condition of Borrower.
ARTICLE V
COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this Agreement:
5.1 Payment of Obligations. Borrower shall pay the indebtednesses
evidenced by the Notes according to the tenor thereof, and shall timely pay or
perform, as the case may be, all of the other Obligations.
5.2 Further Assurances. Borrower will take all actions requested by
Lender to create and maintain in Lender's favor valid liens upon, security
titles to and/or perfected security interests in the collateral security
described in the Security Instruments and all other security for the Obligations
now or hereafter held by or for Lender. Without limiting the foregoing, Borrower
agrees to execute such further instruments (including financing statements and
continuation statements) as may be required or permitted by any law relating to
notices of, or affidavits in connection with, the perfection of Lender's
security interests, and to cooperate with Lender in the filing or recording and
renewal thereof.
5.3 Financial Statements. Borrower shall furnish to Lender:
(a) as soon as practicable and in any event within the earlier
of one-hundred twenty (120) days after the end of each fiscal year of
Borrower and Parent or five (5) days after such items are filed with
the United States Securities Exchange Commission ("SEC") or delivered
to the Borrower's or Parent's shareholders (i) a consolidated and
consolidating balance sheet of Borrower and Parent as of the close of
such fiscal year, the related statements of income, cash flow and
shareholders' equity for such fiscal year and all notes to such
financial statements, all in reasonable detail, prepared in accordance
with generally accepted accounting principles consistently applied,
audited in accordance with generally accepted auditing standards by
independent certified public accountants satisfactory to Lender, and
accompanied by the unqualified favorable opinion of such accountants,
and (ii)
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a certificate of the chief financial officer of Borrower, stating that
Borrower has kept, observed, performed and fulfilled each covenant,
term and condition of this Agreement and the other Loan Documents
during the preceding fiscal year and that no Event of Default hereunder
has occurred and is continuing (or if an Event of Default has occurred
and is continuing, specifying the nature of same, the period of
existence of same and the action Borrower proposes to take in
connection therewith) together with a schedule in form satisfactory to
Lender of the computations used by Borrower in determining, as of the
end of such fiscal year, compliance with all financial covenants
contained herein;
(b) as soon as practicable and in any event within the earlier
of forty-five (45) days after the end of each fiscal quarter of
Borrower's and Parent's fiscal year or five (5) days after such items
are filed with the SEC or delivered to Borrower's or Parent's
shareholders, (i) a consolidated and consolidating balance sheet of
Borrower and Parent as of the close of such fiscal quarter, and the
related statements of income, cash flow and shareholders' equity for
such fiscal quarter, all in reasonable detail, and prepared in
accordance with generally accepted accounting principles consistently
applied, certified by the chief financial officer of Borrower, and (ii)
a certificate of the chief executive or chief financial officer of
Borrower, stating that Borrower has kept, observed, performed and
fulfilled each covenant, term and condition of this Agreement and the
other Loan Documents during the preceding month and that no Event of
Default hereunder has occurred and is continuing (or if an Event of
Default has occurred and is continuing, specifying the nature of same,
the period of existence of same and the action Borrower proposes to
take in connection therewith) together with a schedule in form
satisfactory to Lender of the computations used by Borrower in
determining, as of the end of such fiscal quarter, compliance with all
financial covenants contained herein;
(c) as soon as practicable and in any event within twenty (20)
days after the end of each month, (i) a complete listing, in form
acceptable to Lender, of all of Borrower's receivables (by obligor, age
of receivable and dollar value per obligor and age category), (ii) a
contract report and backlog report, (iii) a report setting forth the
percentage of completion of all Furnace Projects financed with the
proceeds of the Loan, and (iv) a completed Borrowing Base Certificate
in the form attached hereto as Exhibit B; all as of the end of the
immediately preceding month, and, where applicable, in sufficient
detail to allow Lender to verify the calculations set forth in the
Borrowing Base Certificate;
(d) promptly upon receipt thereof, copies of all accountants'
reports and accompanying financial reports submitted to Borrower by
independent accountants in connection with each annual examination of
Borrower;
(e) to the extent not delivered pursuant to the foregoing
subsections of this Section 5.3, within five (5) days of their delivery
to the SEC or the Parent's or Borrower's shareholders, all Form 10-Ks,
Form 10-Qs and other filings made by Borrower or Parent with the SEC
and all annual reports and proxy statements with regard to Borrower and
Parent;
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(f) with reasonable promptness, such other financial data as
Lender reasonably may request.
5.4 Maintenance of Books and Records; Inspection. Borrower shall
maintain its books, accounts and records in accordance with generally accepted
accounting principles consistently applied, and permit any person designated by
Lender in writing to visit and inspect any of its properties (including but not
limited to the collateral security described in the Security Instruments),
corporate books and financial records, and to discuss its accounts, affairs and
finances with Borrower or the principal officers of Borrower during reasonable
business hours, all at such times as Lender reasonably may request.
5.5 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrower will maintain, in amounts satisfactory to Lender
(a) commercial general liability insurance on an "occurrence" basis, against
claims for "personal injury" (including but not limited to bodily injury, death
or property damage), (b) worker's compensation insurance (or maintained a
legally sufficient amount of self insurance against workers' compensation
liabilities, with adequate reserves, under a plan approved by Lender), (c)
"all-risk" casualty insurance with standard exceptions on its properties
(including but not limited to the collateral security now or hereafter securing
payment and performance of the Obligations), against such hazards and in at
least such amounts as is customary in Borrower's business, (d) rent or business
interruption insurance against loss of income arising out of damage or
destruction by such hazards as presently are included in so-called "all-risk
coverage", and (e) such other insurance in such amounts as Lender from time to
time may reasonably require against other insurance hazards that the time are
commonly insured against by persons engaged in enterprises or activities similar
to those of Borrower. At the request of Lender, Borrower will deliver forthwith
a certificate executed by a duly authorized officer of Borrower, specifying the
details of such insurance in effect. All policies of casualty insurance shall
provide that such insurance shall be payable to Borrower and Lender as their
respective interests may appear, and that at least thirty (30) days' prior
written notice of cancellation or modification of the policy shall be given to
Lender by the insurer. Borrower agrees that there shall be no recourse against
Lender for the payment of premiums, commissions, assessments or advances in
respect of any such policy, and at Lender's request will provide Lender with the
agreement of the insurer(s) to this effect. At the request of Lender, all such
policies shall be delivered to and held by Lender. Upon an Event of Default,
Lender may, at its option, act as attorney for Borrower in obtaining, adjusting,
settling and canceling such insurance and endorsing any drafts with respect
thereto, and this power, being coupled with an interest, shall be irrevocable
prior to payment in full of the Obligations and performance of all of the
obligations of Borrower to Lender in connection therewith.
5.6 Taxes and Assessments; Tax Indemnity. Borrower will (a) file all
tax returns and appropriate schedules thereto that are required to be filed
under applicable law, prior to the date of delinquency, (b) pay and discharge
all taxes, assessments and governmental charges or levies imposed upon Borrower,
upon its income and profits or upon any properties belonging to it, prior to the
date on which penalties attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy so long as
appropriate reserves are maintained with respect thereto. If any tax is or may
be
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imposed by any governmental entity in respect of sales of Borrower's inventory
or the merchandise that is the subject of such sales, or as a result of any
other transaction of Borrower, which tax Lender is or may be required to
withhold or pay, Borrower agrees to indemnify Lender and hold Lender harmless in
connection with such taxes, and Borrower will immediately reimburse Lender for
any such taxes paid by Lender and added to the Obligations pursuant to the terms
hereof.
5.7 Corporate Existence. Borrower shall maintain its corporate
existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in Tennessee and in
each other jurisdiction in which such qualification is necessary pursuant to
applicable law.
5.8 Compliance with Law and Other Agreements. Borrower shall maintain
its business operations and property owned or used in connection therewith in
compliance with (a) all applicable federal, state and local laws, regulations
and ordinances governing such business operations and the use and ownership of
such property, and (b) all agreements, licenses, franchises, indentures and
mortgages to which Borrower is a party or by which Borrower or any of its
properties is bound. Without limiting the foregoing, Borrower will pay all of
its indebtedness promptly in accordance with the terms thereof.
5.9 Notice of Default. Borrower shall give written notice to Lender of
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
5.10 Notice of Litigation. Borrower shall give notice, in writing, to
Lender of (a) any actions, suits or proceedings wherein the amount at issue is
in excess of $100,000 and is not covered by insurance, instituted by any persons
whomsoever against Borrower, or affecting any of Borrower's assets in connection
with any applicable federal, state or local laws or regulations, and (b) any
dispute, not resolved within sixty (60) days of the commencement thereof,
between Borrower on the one hand and any governmental regulatory body on the
other hand, which dispute might interfere with the normal operations of
Borrower.
5.11 Environmental Matters.
(a) Borrower will cause the Property to remain free of all
Hazardous Wastes, and to remain free of all Hazardous Materials other
than those maintained therein or thereon in full compliance with
Environmental Laws. Borrower will not cause or permit the Property to
be used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous Materials
except in full compliance with Environmental Laws.
(b) Borrower will notify lender immediately if it receives any
notice or obtains knowledge of any noncompliance with or violation of
any Environmental Laws with respect to the Property or the Business.
(c) In the event that Hazardous Materials unrelated to the
Business, or Hazardous Wastes, are discovered on or are brought onto
the Property, Borrower will cause such
14
Hazardous Materials or Hazardous Wastes to be removed and disposed of
promptly and in full compliance with Environmental Laws. Borrower will
provide Lender prior written notice of such removal and disposal
actions.
(d) Borrower will comply with all Environmental Laws in all
jurisdictions in which Borrower operates, now or in the future, and
will comply with all environmental Laws that in the future become
applicable to the Property or the Business.
5.12 ERISA Plan. If Borrower has in effect, or hereafter institutes
(with Lender's consent, as hereinafter provided), a pension plan that is subject
to the requirements of Title IV of the Employee Retirement Income Security Act
of 1974, Pub. L. No. 93-406, September 2, 1974, 00 Xxxx. 000, 00 X.X.X.X. ss.
1001 et seq. (1975), as amended from time to time ("ERISA"), then the following
warranty and covenants shall be applicable during such period as any such plan
(the "Plan") shall be in effect: (a) Borrower hereby warrants that no fact that
might constitute grounds for the involuntary termination of the Plan, or for the
appointment by the appropriate United States District Court of a trustee to
administer the Plan, exists at the time of execution of this Agreement, (b)
Borrower hereby covenants that throughout the existence of the Plan, Borrower's
contributions under the Plan will meet the minimum funding standards required by
ERISA and Borrower will not institute a distress termination of the Plan, (c)
Borrower hereby covenants that the Plan's annual financial and actuarial
statements and the Plan's annual Form 5500 information return will be timely
filed with the Internal Revenue Service and a copy delivered to Lender upon
Lender's request and (d) Borrower covenants that it will send to Lender a copy
of any notice of a reportable event (as defined in ERISA) required by ERISA to
be filed with the Labor Department or the Pension Benefit Guaranty Corporation,
at the time that such notice is so filed.
No Plan shall be instituted by Borrower unless Lender shall have given
its written consent thereto, which consent shall not be unreasonably withheld.
5.13 Obligations of Borrower With Respect to Receivables. By the
execution of this Agreement, Lender shall not be obligated to do or perform any
of the acts or things provided in any contracts subject to the security interest
granted by the Security Instruments to be done or performed by Borrower, but
upon the occurrence of an Event of Default, Lender may, at its election, perform
some or all of the obligations provided in said contracts to be performed by
Borrower, and if Lender incurs any liability or expenses by reason thereof, same
shall be payable by Borrower upon demand and same shall also be secured by this
Agreement and the other Loan Documents. Upon the occurrence of an Event of
Default, Borrower will, on request from Lender, submit to Lender duplicate
copies of all invoices on outstanding receivables subject to Lender's security
interest. Lender shall have the right to notify the account debtors obligated on
any or all of Borrower's receivables to make payment thereof direct to Lender,
and to take control of all proceeds of any such receivables, which right Lender
may exercise at any time whether or not Borrower is then in default hereunder or
was theretofore making collections thereon. Until such time as Lender elects to
exercise such right by giving Borrower written notice thereof, Borrower is
authorized, as agent of Lender, to collect and enforce said receivables. If
Lender requests, Borrower will forthwith on receipt of all checks, drafts, cash
and other remittances in payment of inventory sold, or in payment on account of
Borrower's receivables, deposit the same in a special bank account maintained
with
15
Lender over which Lender alone has power of withdrawal. Said proceeds shall be
deposited in precisely the form received, except for the indorsement of Borrower
where necessary to permit collection of items, which indorsement Borrower agrees
to make, and which Lender is also hereby authorized to make on Borrower's
behalf. Pending such deposit, Borrower agrees that it will not commingle any
such checks, drafts, cash or other remittances with any of Borrower's other
funds or property, but will hold them separate and apart therefrom and in trust
for Lender until deposit thereof is made in the special account. The funds in
said account shall be held by Lender as additional security for the Obligations.
Lender will, at least once a week, apply the whole or any part of the collected
funds on deposit in the special account against the Obligations; the amount,
order and method of such application to be in the discretion of Lender. Any
portion of said funds on deposit in the special account that Lender elects not
to so apply or that exceed the amount owed to Lender hereunder shall, at the
election of Lender, be paid over by Lender to Borrower or held by Lender as
security for the Obligations.
5.14 Borrowing Base and Other Limitations on Advances.
(a) As used in this Section 5.14, the following terms shall have the
definitions set forth below:
"Approved Eligible Receivables" shall refer to Eligible
Receivables (as defined below) arising from contracts that are between
Borrower and another party of sufficient credit strength that such
other party is approved in writing by Lender;
"Eligible Inventory" shall refer to Borrower's inventory
computed on a "first in, first out" basis, excluding inventory that in
Lender's judgment is obsolete or otherwise unmarketable. Inventory
shall be valued at the lesser of cost or market, with such adjustments
thereto as Lender shall deem necessary or appropriate;
"Eligible Receivables" shall refer to Borrower's accounts
receivable that are due and payable not more than ninety (90) days
after the invoice date, including accounts receivable that relate to
payments that the obligor is legally required to make in advance of
performance by Borrower but excluding accounts receivable that are more
than ninety (30) days past due and further excluding all returns,
allowances, discounts, credits and intra-company items, all items
payable from any account obligor from whom twenty-five percent (25%) or
more of such obligor's aggregate outstanding balance on all items owed
to Borrowers are more than ninety (90) days past due, the amount by
which the aggregate amount owing from any account obligor exceeds ten
percent (10%) of Borrowers' total receivables, and all other items
Lender reasonably determines to be ineligible;
"Loan" shall refer to the aggregate of the outstanding
principal balance of, and all past due interest on, the Initial Note
for the period from the date hereof through July 31, 1999, and
thereafter the aggregate of the outstanding principal balance of, and
all past due interest on, the Term Note and the Revolving Line Note;
16
"New Equipment" shall refer to equipment owned by Borrower
that has not been placed in service prior to its acquisition by
Borrower and has not been placed in service by Borrower more than nine
(9) months prior to the date hereof; and
"Used Equipment" shall refer to all equipment owned by the
Borrower other than New Equipment.
(b) At no time will the Loan, exceed the sum of (a) eighty-five percent
(85%) of Approved Eligible Receivables, plus (b) eighty percent (80%) of
Eligible Receivables (exclusive of Approved Eligible Receivables), plus (c)
fifty percent (50%) of Eligible Inventory, plus (d) the lesser of (i)
seventy-five percent (75%) of the fair market value of New Equipment as
determined by an appraisal satisfactory to Lender, or (ii) one hundred percent
(100%) of the cost of New Equipment, plus (e) fifty percent (50%) of the orderly
liquidation value, as determined by an appraisal satisfactory to Lender, of all
Used Equipment.
(c) Notwithstanding any other provision to the contrary, upon
Borrower's satisfaction of all conditions precedent in this Agreement, Lender
shall advance to Borrower one hundred percent (100%) of the costs incurred by
Borrower for the Existing Furnace Project, including costs incurred prior to the
date hereof, up to 75% of the appraised value of the Existing Furnace Project.
Also notwithstanding any other provision hereof, the amount advanced relative to
each furnace constituting the New Furnace Project shall not exceed the lesser of
(i) 75% of the percentage of completion for the benchmark for which the advance
relates as shown on Exhibit C multiplied by the appraised value of the furnace
or (ii) 100% of the costs incurred by Borrower relative to such furnace since
the last advance (if any) to pay the costs of such furnace.
5.15 Mergers, Consolidations, Acquisitions and Sales. Without the prior
written consent of Lender, Borrower will not (a) be a party to any merger,
consolidation or corporate reorganization, nor (b) purchase or otherwise acquire
all or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity, nor (c) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets, nor (d) create any subsidiaries nor convey any of its assets to any
subsidiary.
5.16 Management; Ownership. The ownership, executive staff and
management of Borrower and Parent are material factors in Lender's willingness
to institute and maintain a lending relationship with Borrower. Borrower will
not permit any significant change in the ownership, executive staff or
management of Borrower or Parent without the prior written consent of Lender.
5.17 Guaranties; Loans. Borrower shall not guarantee nor be liable in
any manner, whether directly or indirectly, or become contingently liable after
the date of this Agreement in connection with the obligations or indebtedness of
any person or persons whomsoever, except for the indorsement of negotiable
instruments payable to Borrower for deposit or collection in the ordinary course
of business. Borrower shall not make any loan, advance or extension of credit to
any person other than in the normal course of its business.
17
5.18 Debt. Without the prior written consent of Lender, Borrower shall
not create, incur, assume or suffer to exist indebtedness of any description
whatsoever, excluding (a) the indebtednesses evidenced by the Notes, (b) trade
accounts payable and accrued expenses incurred in the ordinary course of
business, (c) the indorsement of negotiable instruments payable to Borrower for
deposit or collection in the ordinary course of business, (d) bonds or other
indebtedness incurred in connection with any self-insurance plans, (e) debt
subordinated to the Loan in payment and priority by writing satisfactory to
Lender, and (f) other indebtedness not to exceed the aggregate amount of $25,000
per year.
5.19 Prepayment of Indebtedness. Borrower shall not pay or prepay any
long-term indebtedness (other than the indebtedness evidenced hereby and by the
Notes) prior to the time that the same is due and payable according to its
stated terms. For purposes of this Section 5.19, "long-term indebtedness" shall
mean debt obligations with a term of one year or more.
5.20 Dividends and Redemptions. Without the prior written consent of
Lender, Borrower shall not (a) declare or pay, or set aside any sum for the
payment of, any dividends or make any other distribution upon any shares of its
capital stock of any class, or (b) purchase, redeem or otherwise acquire for
value any shares of its capital stock of any class, or commit to do any of same,
or set aside any sum therefor, or permit any subsidiary to purchase or acquire
for value any shares of its capital stock of any class, or commit do to any of
the same, or set aside any sum therefor.
5.21 Debt to Worth Ratio. Borrower at all times will maintain a ratio
of total liabilities less the principal amount of the Subordinated Note to
tangible net worth plus the principal amount of the Subordinated Note of not
more than 2.50 to 1.0 for the period from the date hereof through May 31, 2000,
2.25 to 1.0 for the period from June 1, 2000 through May 31, 2001 and 2.00 to
1.0 for the period from June 1, 2001 and thereafter. For purposes of this
Section 3.21, "tangible net worth" shall refer to the excess of Borrower's total
assets over the sum of its intangible assets, all determined in accordance with
generally accepted accounting principles consistently applied.
5.22 Fixed Charge Coverage Ratio. Borrower will maintain, as of the end
of each fiscal quarter, for such fiscal quarter and the immediately preceding
three fiscal quarters in the aggregate, a ratio of net income before interest
expense, income taxes, depreciation and amortization to interest expense
(including interest expense on the Subordinated Note) plus scheduled principal
payments (including principal payments on the Subordinated Note) plus capital
lease expenses plus capital expenditures (but excluding capital expenditures
funded with the proceeds of the Loan) plus income taxes, all determined in
accordance with generally accepted accounting principles consistently applied,
of not less than (a) 1.15 to 1.0 for the period from the date hereof through May
31, 2001, and (b) 1.20 to 1.0 for the period from June 1, 2001 and thereafter.
5.23 Funded Debt Coverage Ratio. Beginning on June 1, 1999, Borrower
will maintain, as of the end of each fiscal quarter for such fiscal quarter and
the immediately preceding three fiscal quarters in the aggregate, a ratio of
funded debt to net income before interest expense, income taxes, depreciation
and amortization, all determined in accordance with generally accepted
accounting principles consistently applied, of not greater than (a) 3.50 to 1.0
for the period from the date hereof through May 31, 2000, (b) 3.00 to 1.0 for
the period from June 1, 2000 through May 31, 2001, and
18
(c) 2.50 to 1.0 for the period from June 1, 2001 and thereafter. For purposes of
this covenant, "funded debt" shall mean all indebtedness for which the Borrower
and its creditors have entered into a contractual arrangement for repayment and
compensation for risk, including, but not limited to, the Loan.
5.24 Current Ratio. Borrower at all times will maintain a ratio of
current assets to current liabilities of not less than (a) .30 to 1.00 for the
period from the date hereof through May 31, 2000, and (b) .50 for the period
from June 1, 2000 and thereafter. For purposes of this covenant, "current
assets" shall refer to cash, accounts receivable and marketable securities but
not inventory, and "current liabilities" shall refer to any indebtedness due and
payable within one year from the date of Borrower's most recent quarterly
balance sheet, all determined in accordance with generally accepted accounting
principles consistently applied.
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Failure to make payment of any principal of or interest on
the indebtedness evidenced by the Notes in accordance with the terms of
the Notes;
(b) Any representation by Borrower as to any material matter
hereunder or under any of the other Loan Documents, or delivery by
Borrower of any schedule, statement, resolution, report, certificate,
notice or writing to Lender that is untrue in any material respect on
the date as of which the facts set forth therein are stated or
certified;
(c) The Borrower shall breach or fail to perform any term,
covenant warranty or agreement contained in Section 5.7 ("Corporate
Existence"), Section 5.15 ("Mergers, Consolidations, Acquisitions and
Sales"), Section 5.21 ("Debt to Worth Ratio"), Section 5.22 ("Fixed
Charge Coverage Ratio"), Section 5.23 ("Funded Debt Coverage Ratio"),
or Section 5.24 ("Current Ratio");
(d) Failure of Borrower to perform any of its obligations
under this Agreement, the Notes, any of the Security Instruments or any
of the other Loan Documents other than those described in (a), (b) or
(c) above, provided, however, that such failure shall not constitute a
default if such failure is remedied within fifteen (15) days of notice
of such default from Lender;
(e) Borrower (i) shall generally not pay or shall be unable to
pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute
19
of any jurisdiction, whether now or hereafter in effect; or (iv) shall
have had any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or an
adjudication or appointment is made; or (v) shall indicate, by any act
or omission, its consent to, approval of or acquiescence in any such
petition, application, proceeding or order for relief or the
appointment of a custodian, receiver or trustee for it or a substantial
part of its assets; or (vi) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of
thirty (30) days or more;
(f) Borrower shall be liquidated, dissolved or terminated, or
the charter or certificate of authority thereof shall expire or be
revoked;
(g) A default or event of default shall occur under any of the
other Loan Documents subject to any applicable cure periods;
(h) Borrower shall default in the timely payment or
performance of any obligation now or hereafter owed to Lender in
connection with any other indebtedness of Borrower now or hereafter
owed to Lender, subject to any applicable cure period;
(h) Parent shall default in any obligation it may have to PNC
Bank; or
(i) Lender shall reasonably suspect the occurrence of one or
more of the aforesaid Events of Default and Borrower, upon the request
of Lender, shall fail to provide evidence reasonably satisfactory to
Lender that such event or Events of Default have not in fact occurred.
6.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 6.1(e) hereof as it relates to
Borrower, the indebtednesses evidenced by the Notes as well as any and all other
indebtedness of Borrower to Lender shall be immediately due and payable in full;
and upon the occurrence of any other Event of Default described above, Lender at
any time thereafter may at its option accelerate the maturity of the
indebtednesses evidenced by the Notes as well as any and all other indebtedness
of Borrower to Lender; all without notice of any kind. Upon the occurrence of
any such Event of Default and the acceleration of the maturity of the
indebtednesses evidenced by the Notes:
(a) any obligation of Lender to advance any theretofore
undisbursed proceeds of the Loan shall immediately cease and be of no
further force nor effect, and Lender shall be immediately entitled to
exercise any and all rights and remedies possessed by Lender pursuant
to the terms of the Security Instruments and all of the other Loan
Documents;
(b) Lender shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as adopted in the State
of Tennessee; and
(c) Lender shall have any and all other rights and remedies
that Lender may now or hereafter possess at law, in equity or by
statute.
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6.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lender to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed expedient by Lender.
6.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including reasonable
attorney's fees, incurred by Lender in connection with the exercise of
its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lender elects, in its sole discretion, to
cure the default that has occurred;
Third, to the payment of the Obligations, including but not
limited to the payment of the principal of and interest on the
indebtednesses evidenced by the Notes, in such order of priority as
Lender shall determine in its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
ARTICLE VII
MISCELLANEOUS
7.1 Performance By Lender.
(a) Lender may file one or more financing statements
disclosing Lender's security interests under this Agreement and the
other Loan Documents, and Borrower shall pay the costs of, or
incidental to, any recording or filing of any financing statements
concerning the collateral security described in the Security
Instruments. Borrower agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or any other Security
Instrument or of a financing statement is sufficient as a financing
statement.
(b) If Borrower shall default in the payment, performance or
observance of any covenant, term or condition of this Agreement, Lender
may, at its option, pay, perform or observe the same, and all payments
made or costs or expenses incurred by Lender in
21
connection therewith (including but not limited to reasonable
attorney's fees), with interest thereon at the greatest default rate
provided in the Notes (if none, then at the maximum rate from time to
time allowed by applicable law), shall be immediately repaid to Lender
by Borrower and shall constitute a part of the Obligations secured by
the Security Instruments until fully repaid. Lender shall be the sole
judge of the necessity for any such actions and of the amounts to be
paid.
7.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
7.3 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or otherwise would be within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default if such action is taken or condition
exists.
7.4 Integration. This Agreement and the Loan Documents contain the
entire agreement among the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto. The
execution and delivery of this Agreement and the other Loan Documents by
Borrower were not based upon any facts or materials provided by Lender, nor was
Borrower induced or influenced to execute and deliver this Agreement or any
other Loan Document by any representation, statement, analysis or promise made
by Lender.
7.5 Amendments, Etc. No amendment, modification, termination or waiver
of any provision of any Loan Document to which Borrower is a party, nor consent
to any departure by Borrower from compliance with the terms of any Loan Document
to which it is a party, shall be effective unless the same shall be in writing
and signed on behalf of Lender by a duly authorized officer of Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
7.6 Costs and Expenses. Lender shall not incur any cost or expense
whatsoever in connection with the making, administration, servicing or
collection of the Loan. Borrower agrees to pay on demand all costs and expenses,
including but not limited to filing fees, recording taxes, insurance premiums
and reasonable attorney's fees, promptly upon demand of Lender.
7.7 Assignment. The Notes, this Agreement and the other Loan Documents
may be endorsed, assigned and/or transferred in whole or in part by Lender, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lender under all of the same to the extent transferred
and assigned. Lender may grant participations in all or any portion of its
interest in the indebtednesses evidenced by the Notes. Borrower shall not assign
any
22
of its rights nor delegate any of its duties hereunder or under any of the other
Loan Documents without the prior express written consent of Lender.
7.8 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
7.9 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.10 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limited any of the provisions of this
Agreement.
7.11 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing and shall be
delivered personally, telecopied or sent by certified mail or nationally
recognized courier service (such as Federal Express) to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy or the date of mailing (or delivery to such courier
service), as the case may be, shall be the date of such notice, election or
demand. For the purposes of this Agreement:
The address of Lender is:
NationsBank, N.A.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy Number: (000) 000-0000
The address of Borrower is:
Bethlehem Advanced Materials Corporation
25th and Xxxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxxxx Xxxxxx
Telecopy Number: (000) 000-0000
23
with a copy to:
Bethlehem Advanced Materials Corporation
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopy Number: (000) 000-0000
7.12 Interest and Loan Charges Not to Exceed Maximum Amounts Allowed by
Law. Anything in this Agreement, the Notes, the Security Instruments or any of
the other Loan Documents to the contrary notwithstanding, in no event
whatsoever, whether by reason of advancement of proceeds of the Loan,
acceleration of the maturity of the unpaid balance of the Loan or otherwise,
shall the interest and loan charges agreed to be paid to Lender for the use of
the money advanced or to be advanced hereunder exceed the maximum amounts
collectible under applicable laws in effect from time to time. It is understood
and agreed by the parties that, if for any reason whatsoever the interest or
loan charges paid or contracted to be paid by Borrower in respect of the Loan
shall exceed the maximum amounts collectible under applicable laws in effect
from time to time, then ipso facto, the obligation to pay such interest and/or
Loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by Lender
that exceed such maximum amounts shall be applied to the reduction of the
principal balance of the Loan and/or refunded to Borrower so that at no time
shall the interest or Loan charges paid or payable in respect of this Loan
exceed the maximum amounts permitted from time to time by applicable law.
7.13 ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
BORROWER AND THE LENDER, INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF THE JUDICIAL ARBITRATION AND
MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN XXXX
COUNTY, TENNESSEE, AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR.
IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION
24
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY
(90) DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY,
UPON A SHOWING OR CAUSE, BE PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING
FOR AN ADDITIONAL SIXTY (60) DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF
THE PROTECTION AFFORDED TO IT BY 12 U.S.C.ss.91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP
REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY
REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER
THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY
ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO
ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH
REMEDIES.
7.14 FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
7.15 Miscellaneous. This Agreement shall be construed and enforced
under the laws of the State of Tennessee. No amendment or modification hereof
shall be effective except in a writing executed by each of the parties hereto.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
NATIONSBANK, N.A.
By:________________________________
Title: ______________________________
BORROWER:
BETHLEHEM ADVANCED MATERIALS
CORPORATION
By:________________________________
Title:_______________________________
ATTEST:
By:_______________________________
Title:______________________________
26
EXHIBIT A-1
MASTER SECURED PROMISSORY NOTE
$3,000,000 Knoxville, Tennessee January 21, 1999
FOR VALUE RECEIVED, on or before July 30, 1999 (the "Maturity Date"),
the undersigned BETHLEHEM ADVANCED MATERIALS CORPORATION, a Pennsylvania
corporation (referred to herein as "Maker"), promises to pay to the order of
NATIONSBANK, N.A., a national banking association organized under the laws of
the United States of America ("Payee"; Payee and any subsequent holder[s] hereof
are hereinafter referred to collectively as "Holder"), without grace, at the
office of Payee at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or at such other
place as Holder may designate to Maker in writing form time to time, the
principal sum of THREE MILLION AND NO/100THS DOLLARS ($3,000,000), or such other
amount as may hereafter be outstanding hereunder pursuant to that certain Loan
Agreement of even date herewith between Maker and Payee (the "Loan Agreement"),
whichever is less, together with interest on the outstanding principal balance
hereof from date at an annual rate equal to the interest rate designated from
time to time by Payee as its "Prime Rate", plus one-half of one percent (.50%),
which rate shall be adjusted on each day that said Prime Rate changes; provided
that in no event shall the rate of interest payable in respect of the
indebtedness evidenced hereby exceed the maximum rate of interest from time to
time allowed to be charged by applicable law (the "Maximum Rate"). Interest
shall be calculated at the basis of a 360-day year for each day that all or any
part of the indebtedness evidenced hereby shall be outstanding, to the extent
permitted by applicable law.
Interest only on the outstanding principal balance hereof shall be due
and payable monthly, in arrears, with the first installment being payable on
February 1, 1999 and subsequent installments being payable on the first day of
each succeeding month thereafter until the Maturity Date, at which time the
entire outstanding principal balance hereof, together with all accrued and
unpaid interest, shall be due and payable in full; provided, however, that in
the event the Maker executes and delivers to the Payee the Term Note and the
Revolving Credit Line Note (as defined in the Loan Agreement) on or before the
Maturity Date, the indebtedness evidenced hereby shall thereafter be evidenced
by the Term Note and the Revolving Credit Line Note.
All payments in respect to the indebtedness evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses owing under or in connection with this Note in such order
as Holder elects.
The indebtedness evidenced hereby may be prepaid in whole or in part,
at any time and from time to time, without penalty or premium.
Any advance by Payee to Maker that is not evidenced by another
instrument or agreement between the parties shall be conclusively presumed to
have been made hereunder when such advance is either (1) deposited or credited
to an account of Maker with Payee, notwithstanding that such
A-1
advance was requested, orally or in writing, by someone other than Maker or that
someone other than Maker is authorized to draw on such account and may or does
withdraw the whole or part of such advance, or (2) made in accordance with the
oral or written instructions of Maker. The entire balance of all advances
hereunder that may be outstanding from time to time shall constitute a single
indebtedness, and no single advance increasing the outstanding balance hereof
shall itself be considered a separate loan, but rather an increase in the
aggregate outstanding balance of the indebtedness evidenced hereby.
Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any default be made in the payment of principal or interest
when due as stipulated above; or in the event that any Event of Default, as
defined in the Loan Agreement, shall occur; or should any default or event of
default occur under any other instrument or document now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced hereby
subject to any applicable cure periods; then and in such event, the entire
outstanding principal balance of the indebtedness evidence hereby, together with
any other sums advanced hereunder, under the Loan Agreement or under any other
instrument, document or agreement now or hereafter evidencing securing or in any
way relating to the indebtedness evidenced hereby, together with all unpaid
interest accrued thereon, shall at the option of Holder and without notice to
Maker, at once become due and payable and may be collected forthwith, regardless
of the stipulated date of maturity. Upon the occurrence of any default as set
forth herein, at the option of Holder and without notice to Maker, all accrued
and unpaid interest, if any, shall be added to the outstanding principal balance
hereof, and the entire outstanding principal balance, as so adjusted, shall bear
interest thereafter until paid at a rate (the "Default Rate") equal to the
lesser of (i) the rate that is four percentage points (4%) in excess of Payee's
Prime Rate, as it varies from time to time, or (ii) the Maximum Rate, regardless
of whether there has been an acceleration of the payment of principal as set
forth herein. All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default.
To the extend permitted by applicable law, Maker shall pay to Holder a
late charge equal to four percent (4%) of any payment hereunder that is not
received by Holder within fifteen (15) days of the date on which it is due, in
order to cover the additional expenses incident to the handling and processing
of delinquent payments; provided, however, that nothing in this provision shall
be deemed to waive any other right or remedy of the Holder hereof by reason of
Maker's failure to make payments when due hereunder.
In the event this Note is placed in the hands of an attorney for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security, Maker and any endorsers hereof agree
to pay a reasonable attorney's fee, all court and other costs, and the
reasonable costs of any collection efforts.
Presentment for payment, demand, protest and nonpayment are hereby
waive by Maker and all other parties hereto. No failure to accelerate the
indebtedness evidenced hereby by reason of default hereunder, acceptance of a
past-due installment or other indulgences granted from time to time, shall be
construed as a novation of this Note or as a waiver of such right of
acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note or to
A-2
prevent the exercise of such right of acceleration or any other right granted
hereunder or by applicable laws. Unless otherwise specifically agreed by Holder
in writing, the liability of Maker and all other persons now or hereafter liable
for payment of the indebtedness evidenced hereby, or any portion thereof, shall
not be affected by (1) any renewal hereof or other extension of the time for
payment of the indebtedness evidenced hereby or any amount due in respect
thereof, (2) the release of all or any part of any collateral now or hereafter
securing the payment of the indebtedness evidenced hereby or any portion
thereof, or (3) the release of or resort to any person now or hereafter liable
for payment of the indebtedness evidenced hereby or any portion thereof. This
Note may not be changed orally, but only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
The indebtedness and other obligations evidenced by this Note are
further evidenced and/or secured by a (1) Pledge Agreement from The Bethlehem
Corporation for the benefit of Payee of even date herewith, (2) a Security
Agreement between the Maker and Payee of even date herewith, and (3) certain
other instruments and documents as more particularly described in the Loan
Agreement.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the interest and loan
charges agreed to be paid to Holder for the use of the money advanced or to be
advanced hereunder exceed the maximum amounts collectible under applicable laws
in effect from time to time. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the indebtedness evidenced
thereby shall exceed the maximum amounts collectively under applicable laws in
effect from time to time, then, ipso facto, the obligation to pay such interest
and/or loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by Holder
that exceed such maximum amounts shall be applied to the reduction of the
principal balance remaining unpaid hereunder and/or refunded to Maker so that at
no time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced hereby exceed the maximum amounts permitted from time to
time by applicable law. This provision shall control every other provision in
any and all other agreements and instruments now existing or hereafter arising
between Maker and Holder with respect to the indebtedness evidenced hereby.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law. In the event that
more than one person, firm or entity is a maker hereunder then all reference to
"Maker" shall be deemed to refer equally to each of said persons, firms, or
entities, all of whom shall be jointly and severally liable for all of the
obligations of Maker hereunder.
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE MAKER AND THE LENDER,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS
A-3
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF THE JUDICIAL ARBITRATION AND
MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION.
THE ARBITRATION SHALL BE CONDUCTED IN XXXX COUNTY, TENNESSEE,
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OR CAUSE, BE PERMITTED TO EXTEND THE
COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60) DAYS.
NOTHING IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C.ss.91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING
OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR FOR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
A-4
Maker represents to Lender that the proceeds of this Note are to be
used primarily for business, commercial or agricultural purposes. Maker
acknowledges having read and understood, and agrees to be bound by, all terms
and conditions of this Note.
THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be
executed by its duly authorized officer as of the date first above written.
MAKER:
BETHLEHEM ADVANCED MATERIALS
CORPORATION
By:______________________________
Title:___________________________
X-0
XXXXXXX X-0
TERM PROMISSORY NOTE
$____________ Knoxville, Tennessee July 30, 1999
FOR VALUE RECEIVED, on or before the February 1, 2006 (the "Maturity
Date"), the undersigned, BETHLEHEM ADVANCED MATERIALS CORPORATION, a
Pennsylvania corporation (referred to herein as "Maker"), promises to pay to the
order of NATIONSBANK, N.A., a national banking association organized under the
laws of the United State of America ("Payee"; Payee and any subsequent holder[s]
hereof are hereinafter referred to collectively as "Holder"), without grace, at
the office of Payee at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or at such
other place as Holder may designate to Maker in writing from time to time, the
principal sum of _________________________ DOLLARS AND 00/100THS
($_____________), together with interest on the outstanding principal balance
hereof from the date hereof until the Maturity Date at an annual rate equal to
the interest rate designated from time to time by Payee as its "Prime Rate",
plus one-half of one percent (.50%), which rate shall be adjusted on each day
that said Prime Rate changes; provided that in no event shall the rate of
interest payable in respect of the indebtedness evidenced hereby exceed the
maximum rate of interest from time to time allowed to be charged by applicable
law (the "Maximum Rate"). Notwithstanding the foregoing, however, in the event
Maker and The Bethlehem Corporation maintain compliance with all financial and
reporting covenants set forth in the Loan Agreement between Maker and Payee
dated January 21, 1999 (the "Loan Agreement") and the other documents relating
to the indebtedness described therein for a one year period commencing on the
date of the Loan Agreement, the amount of "one-half of one percent (.50%)" in
the foregoing sentence shall be replaced with the amount of "one-quarter of
one-percent (.25%)" beginning on the first day succeeding such one year period.
Interest shall be calculated on the basis of a 360-day year for each day that
all or any part of the indebtedness evidenced hereby shall be outstanding, to
the extent permitted by applicable law.
The aforesaid principal amount shall be payable in seventy-eight (78)
monthly payments on the 1st day of each successive month commencing on September
1, 1999, the amount of which monthly payments shall be calculated so as to fully
amortize the principal balance of this Note in equal monthly principal payments
over an assumed amortization period of seven (7) years commencing as of
September 1, 1999, provided, however, that the full principal balance hereof and
all accrued interest thereon shall be due and payable, in any event, on the
Maturity Date. Accrued interest shall also be paid at the same time as each
monthly principal payment.
Notwithstanding the foregoing, commencing on October 1, 1999 and
continuing on each October 1st thereafter, Maker shall apply fifty percent (50%)
of its excess cash flow (as hereinafter defined) from the fiscal year ending
immediately prior to such date to prepayment of this Note. "Excess cash flow" as
used in the foregoing sentence shall mean earnings before interest expense,
taxes, depreciation and amortization minus scheduled principal payments,
interest expense and state and local income taxes. In addition to the foregoing,
Maker may prepay this Note at any time without premium or penalty except in the
event the source of the funds of such prepayment is other
A-6
indebtedness and such prepayment occurs on or before July 1, 2000, in which
event Maker shall pay Holder a penalty equal to one percent (1%) of the
principal balance of this Note at the time of such prepayment. All prepayments
of principal shall be applied in the inverse order of maturity, or in such other
order as the Payee shall determine in its sole discretion.
All payments in respect of the indebtedness evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses owing under or in connection with this Note in such order
as Holder elects.
Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any default be made in the payment of principal or interest
when due as stipulated above; or in the event that any Event of Default, as
defined the Loan Agreement, shall occur; or should any default or event of
default occur under any other instrument or document now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced hereby,
subject to any applicable cure periods; then, and in such event, the entire
outstanding principal balance of the indebtedness evidenced hereby, together
with any other sums advanced hereunder, under the Loan Agreement or under any
other instrument, document or agreement now or hereafter evidencing, securing or
in any way relating to the indebtedness evidenced hereby, together with all
unpaid interest accrued thereon, shall, at the option of Holder and without
notice to Maker, at once become due and payable and may be collected forthwith,
regardless of the stipulated date of maturity. Upon the occurrence of any
default as set forth herein, at the option of Holder and without notice to
Maker, all accrued and unpaid interest, if any, shall be added to the
outstanding principal balance hereof, and the entire outstanding principal
balance, as so adjusted, shall bear interest thereafter until paid at a rate
(the "Default Rate") equal to the lesser of (i) the rate that is four percentage
points (4%) in excess of Payee's Prime Rate, as it varies from time to time, or
(ii) the Maximum Rate, regardless of whether there has been an acceleration of
the payment of principal as set forth herein. All such interest shall be paid at
the time of and as a condition precedent to the curing of any such default.
To the extent permitted by applicable law, Maker shall pay to Holder a
late charge equal to four percent (4%) of any payment hereunder that is not
received by Holder within fifteen (15) days of the date on which it is due, in
order to cover the additional expense incident to the handling and processing of
delinquent payments; provided however that nothing in this provision shall be
deemed to waive any other right or remedy of the Holder hereof by reason of
Maker's failure to make payments when due hereunder.
In the event this Note is placed in the hands of an attorney for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security, Maker and any indorsers hereof agree
to pay a reasonable attorney's fee, all court and other costs and the reasonable
costs of any other collection efforts.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Maker and all other parties hereto. No
failure to accelerate the indebtedness evidenced hereby by reason of default
hereunder, acceptance of a past-due installment or other indulgences granted
from time to time, shall be construed as a novation of this Note or as a waiver
A-7
of such right of acceleration or of the right of Holder thereafter to insist
upon strict compliance with the terms of this Note or to prevent the exercise of
such right of acceleration or any other right granted hereunder or by applicable
laws. Unless otherwise specifically agreed by Holder in writing, the liability
of Maker and all other persons now or hereafter liable for payment of the
indebtedness evidenced hereby, or any portion thereof, shall not be affected by
(1) any renewal hereof or other extension of the time for payment of the
indebtedness evidenced hereby or any amount due in respect thereof, (2) the
release of all or any part of any collateral now or hereafter securing the
payment of the indebtedness evidenced hereby or any portion thereof, or (3) the
release of or resort to any person now or hereafter liable for payment of the
indebtedness evidenced hereby or any portion thereof. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
The indebtedness and other obligations evidenced by this Note are
further evidenced and/or secured by a (1) Pledge Agreement from The Bethlehem
Corporation for the benefit of Payee dated January 21, 1999, (2) a Security
Agreement between the Maker and Payee dated January 21, 1999, and (3) certain
other instruments and documents as more particularly described in the Loan
Agreement.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the interest and loan
charges agreed to be paid to Holder for the use of the money advanced or to be
advanced hereunder exceed the maximum amounts collectible under applicable laws
in effect from time to time. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the indebtedness evidenced
hereby shall exceed the maximum amounts collectible under applicable laws in
effect from time to time, then, ipso facto, the obligation to pay such interest
and/or loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by Holder
that exceed such maximum amounts shall be applied to the reduction of the
principal balance remaining unpaid hereunder and/or refunded to Maker so that at
no time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced hereby exceed the maximum amounts permitted from time to
time by applicable law. This provision shall control every other provision in
any and all other agreements and instruments now existing or hereafter arising
between Maker and Holder with respect to the indebtedness evidenced hereby.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law. In the event that
more than one person, firm or entity is a maker hereunder, then all references
to "Maker" shall be deemed to refer equally to each of said persons, firms, or
entities, all of whom shall be jointly and severally liable for all of the
obligations of Maker hereunder.
A-8
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE MAKER AND THE LENDER,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS INSTRUMENT, AGREEMENT OR
DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY
CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR
ARBITRATION OF COMMERCIAL DISPUTES OF THE JUDICIAL ARBITRATION AND MEDIATION
SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT
OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY
OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
THE ARBITRATION SHALL BE CONDUCTED IN XXXX COUNTY, TENNESSEE,
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OR CAUSE, BE PERMITTED TO EXTEND THE
COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60) DAYS.
NOTHING IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C.ss.91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING
OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR FOR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
A-9
Maker represents to Lender that the proceeds of this Note are to be
used primarily for business, commercial or agricultural purposes. Maker
acknowledges having read and understood, and agrees to be bound by, all terms
and conditions of this Note.
THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be
executed by its duly authorized officer as of the date first above written.
MAKER:
BETHLEHEM ADVANCED
MATERIALS CORPORATION
By:_____________________________
Title:_______________________
X-00
XXXXXXX X-0
MASTER SECURED PROMISSORY NOTE
(Revolving Note)
$__________ Knoxville, Tennessee July 30, 1999
FOR VALUE RECEIVED, on or before July 31, 2001 (the "Maturity Date"),
the undersigned BETHLEHEM ADVANCED MATERIALS CORPORATION, a Pennsylvania
corporation (referred to herein as "Maker"), promises to pay to the order of
NATIONSBANK, N.A., a national banking association organized under the laws of
the United States of America ("Payee"; Payee and any subsequent holder[s] hereof
are hereinafter referred to collectively as "Holder"), without grace, at the
office of Payee at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or at such other
place as Holder may designate to Maker in writing form time to time, the
principal sum of _________________________ DOLLARS ($_________), or such other
amount as may hereafter be outstanding hereunder pursuant to that certain Loan
Agreement of even date herewith between Maker and Payee, whichever is less,
together with interest on the outstanding principal balance hereof from date at
an annual rate equal to the interest rate designated from time to time by Payee
as its "Prime Rate", plus one-quarter of one percent (.25%), which rate shall be
adjusted on each day that said Prime Rate changes; provided that in no event
shall the rate of interest payable in respect of the indebtedness evidenced
hereby exceed the maximum rate of interest from time to time allowed to be
charged by applicable law (the "Maximum Rate"). Interest shall be calculated at
the basis of a 360-day year for each day that all or any part of the
indebtedness evidenced hereby shall be outstanding, to the extent permitted by
applicable law.
Interest only on the outstanding principal balance hereof shall be due
and payable monthly, in arrears, with the first installment being payable on
September 1, 1999 and subsequent installments being payable on the first day of
each succeeding month thereafter until the Maturity Date, at which time the
entire outstanding principal balance hereof, together with all accrued and
unpaid interest, shall be due and payable in full.
All payments in respect to the indebtedness evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses owing under or in connection with this Note in such order
as Holder elects.
Subject to the provisions of the Loan Agreement regarding prepayment,
the indebtedness evidenced hereby may be prepaid in whole or in part, at any
time and from time to time, without penalty or premium, and in the absence of
default Maker may reborrow up to the maximum amount hereof in accordance with
the Loan Agreement.
Any advance by Payee to Maker that is not evidenced by another
instrument or agreement between the parties shall be conclusively presumed to
have been made hereunder when such advance is either (1) deposited or credited
to an amount of Maker with Payee, notwithstanding that such
A-11
advance was requested, orally or in writing, by someone other than Maker or that
someone other than Maker is authorized to draw on such account and may or does
withdraw the whole or part of such advance, or (2) make in accordance with the
oral or written instructions of Maker. The entire balance of all advances
hereunder that may be outstanding from time to time shall constitute a single
indebtedness, and no single advance increasing the outstanding balance hereof
shall itself be considered a separate loan, but rather an increase in the
aggregate outstanding balance of the indebtedness evidenced hereby.
Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any default be made in the payment of principal or interest
when due as stipulated above; or in the event that any Event of Default, as
defined in that certain Loan Agreement dated January 21, 1999, by and between
Maker and Payee (the "Loan Agreement"), shall occur; or should any default or
event of default occur under any other instrument or document now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced hereby,
subject to any applicable cure periods; then and in such event, the entire
outstanding principal balance of the indebtedness evidence hereby, together with
any other sums advanced hereunder, under the Loan Agreement or under any other
instrument, document or agreement now or hereafter evidencing securing or in any
way relating to the indebtedness evidenced hereby, together with all unpaid
interest accrued thereon, shall at the option of Holder and without notice to
Maker, at once become due and payable and may be collected forthwith, regardless
of the stipulated date of maturity. Upon the occurrence of any default as set
forth herein, at the option of Holder and without notice to Maker, all accrued
and unpaid interest, if any, shall be added to the outstanding principal balance
hereof, and the entire outstanding principal balance, as so adjusted, shall bear
interest thereafter until paid at a rate (the "Default Rate") equal to the
lesser of (I) the rate that is four percentage points (4%) in excess of Payee's
Prime Rate, as it varies from time to time, or (ii) the Maximum Rate, regardless
of whether there has been an acceleration of the payment of principal as set
forth herein. All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default.
To the extend permitted by applicable law, Maker shall pay to Holder a
late charge equal to four percent (4%) of any payment hereunder that is not
received by Holder within fifteen (15) days of the date on which it is due, in
order to cover the additional expenses incident to the handling and processing
of delinquent payments; provided, however, that nothing in this provision shall
be deemed to waive any other right or remedy of the Holder hereof by reason of
Maker's failure to make payments when due hereunder.
In the event this Note is placed in the hands of an attorney for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security, Maker and any endorsers hereof agree
to pay a reasonable attorney's fee, all court and other costs, and the
reasonable costs of any collection efforts.
Presentment for payment, demand, protest and nonpayment are hereby
waive by Maker and all other parties hereto. No failure to accelerate the
indebtedness evidenced hereby by reason of default hereunder, acceptance of a
past-due installment or other indulgences granted from time to time, shall be
construed as a novation of this Note or as a waiver of such right of
acceleration or of
A-12
the right of Holder thereafter to insist upon strict compliance with the terms
of this Note or to prevent the exercise of such right of acceleration or any
other right granted hereunder or by applicable laws. Unless otherwise
specifically agreed by Holder in writing, the liability of Maker and all other
persons now or hereafter liable for payment of the indebtedness evidenced
hereby, or any portion thereof, shall not be affected by (1) any renewal hereof
or other extension of the time for payment of the indebtedness evidenced hereby
or any amount due in respect thereof, (2) the release of all or any part of any
collateral now or hereafter securing the payment of the indebtedness evidenced
hereby or any portion thereof, or (3) the release of or resort to any person now
or hereafter liable for payment of the indebtedness evidenced hereby or any
portion thereof. This Note may not be changed orally, but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
The indebtedness and other obligations evidenced by this Note are
further evidenced and/or secured by a (1) Pledge Agreement from The Bethlehem
Corporation for the benefit of Payee dated January 21, 1999, (2) a Security
Agreement between the Maker and Payee dated January 21, 1999, and (3) certain
other instruments and documents as more particularly described in the Loan
Agreement.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the interest and loan
charges agreed to be paid to Holder for the use of the money advanced or to be
advanced hereunder exceed the maximum amounts collectible under applicable laws
in effect from time to time. If for any reason whatsoever the interest or loan
charges paid or contracted to be paid in respect of the indebtedness evidenced
thereby shall exceed the maximum amounts collectively under applicable laws in
effect from time to time, then, ipso facto, the obligation to pay such interest
and/or loan charges shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by Holder
that exceed such maximum amounts shall be applied to the reduction of the
principal balance remaining unpaid hereunder and/or refunded to Maker so that at
no time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced hereby exceed the maximum amounts permitted from time to
time by applicable law. This provision shall control every other provision in
any and all other agreements and instruments now existing or hereafter arising
between Maker and Holder with respect to the indebtedness evidenced hereby.
This Note has been negotiated, executed and delivered in the State of
Tennessee, and is intended as a contract under and shall be construed and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.
As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law. In the event that
more than one person, firm or entity is a maker hereunder then all reference to
"Maker" shall be deemed to refer equally to each of said persons, firms, or
entities, all of whom shall be jointly and severally liable for all of the
obligations of Maker hereunder.
A-13
ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE MAKER AND THE LENDER,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS INSTRUMENT, AGREEMENT OR
DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY
CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR
ARBITRATION OF COMMERCIAL DISPUTES OF THE JUDICIAL ARBITRATION AND MEDIATION
SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT
OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO
THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY
OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.
THE ARBITRATION SHALL BE CONDUCTED IN XXXX COUNTY, TENNESSEE,
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OR CAUSE, BE PERMITTED TO EXTEND THE
COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60) DAYS.
NOTHING IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C.ss.91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING
OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR FOR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
A-14
Maker represents to Lender that the proceeds of this Note are to be
used primarily for business, commercial or agricultural purposes. Maker
acknowledges having read and understood, and agrees to be bound by, all terms
and conditions of this Note.
THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be
executed by its duly authorized officer as of the date first above written.
MAKER:
BETHLEHEM ADVANCED MATERIALS
CORPORATION
By:___________________________
Title:________________________
A-15
EXHIBIT B
BORROWING BASE AND COMPLIANCE CERTIFICATE
Dated as _____________, ______
To: NationsBank, N.A.
Commercial Loans
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Re: Loan Agreement dated January 21, 1999 (the "Loan Agreement") by and
among Bethlehem Advanced Materials Corporation ("Borrower") and
NationsBank, N.A. ("Lender").
1. Computation of Borrowing Base and Availability under the Loan.
(a) Approved Eligible Receivables
as defined in Section 5.14 of the
Loan Agreement $_____________________
X85%
Total Borrowing Base from Approved
Eligible Receivables $_____________________
(b) Eligible Receivables (other than Approved Eligible
Receivables) as defined in Section 5.14 of the
Loan Agreement $_____________________
X80%
Borrowing Base from Other
Eligible Receivables $_____________________
(c) Eligible Inventory as defined in
Section 5.14 of the Loan Agreement $_____________________
X50%
Total Borrowing Base from
Eligible Inventory $_____________________
B-1
(d) The lesser of:
(i) the fair market value of New Equipment
as defined in Section 5.14 of the Loan
Agreement $_____________________
X75%; or
(ii) the cost of New Equipment $_____________________
X100%
Total Borrowing Base from New Equipment $_____________________
(e) The fair market value of Used Equipment as defined in Section
5.14 of the
Loan Agreement $_____________________
X50%
Total Borrowing Base from
Used Equipment $_____________________
Total Borrowing Base from Section 1(a), 1(b), 1(c), 1(d) and
1(e) above (not to exceed total amount of
Loan). $_____________________
Less Total Outstanding Under Loan $_____________________
AVAILABILITY UNDER LOAN $_____________________
2. Attached as Exhibit A hereto is a true and correct aging and listing of
all of Borrower's accounts receivable.
3. As of the date hereof, all of the representations and warranties set
forth in Article IV of the Loan Agreement are and remain true and
correct with the same effect as though such representations and
warranties had been made on and as of this date.
4. As of the date hereof, Borrower is in full compliance with all of the
terms and provisions set forth in the Loan Agreement, including without
limitation the covenants and agreements set forth in Article V of the
Loan Agreement, and all of the instruments and documents executed in
connective therewith, and no Event of Default, as defined in Article VI
of the Loan Agreement, or any event which, upon notice, lapse of time
or both, would constitute an Event of Default, has occurred or is
continuing.
The undersigned certifies that the information set out herein and the
Exhibit attached hereto is true and correct in all material respects as of the
date hereof. The undersigned further certifies that the figures set forth out of
Paragraph 1 hereof pertain only the Approved Eligible Receivables, Other
B-2
Eligible Receivables, Eligible Inventory, New Equipment and Used Equipment as
those terms are defined in the Loan Agreement.
BETHLEHEM ADVANCED MATERIALS
CORPORATION
By:_________________________________
Title:______________________________
B-3
EXHIBIT C
BENCHMARKS FOR FURNACE PROJECTS
Benchmarks for New Furnace Project
First Benchmark Percentage of Completion
Completion of Facility modification 20% of total
oGround pits
oConcrete work for floor & piers
oElectrical upgrades
oNatural gas system enhancement
oNitrogen bulk system and distribution lines
Second Benchmark Percentage of Completion
Completion of Furnace computer control system 40% of total
oMain vessel
oInstrumentation, controls and safety
oFurnace support structure
Third Benchmark Percentage of Completion
Completion of Furnace internals 20% of total
oCarbon/Carbon liners
oCarbon insulation
oHeating elements & graphite internals
oSpacer plates & hearth
Fourth Benchmark Percentage of Completion
Completion of Furnace support systems 20% of total
oVacuum pumping systems
oAfterburner
oCooling water safety system
oHeat exchanger
C-1
