EXHIBIT 4.2
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
GUNDLE/SLT ENVIRONMENTAL, INC.,
GSE LINING TECHNOLOGY, INC., and
SERROT INTERNATIONAL, INC.
AND
TRANSAMERICA EQUIPMENT FINANCIAL
SERVICES CORPORATION
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT is entered into as of February 4, 2002 by and between
GUNDLE/SLT ENVIRONMENTAL, INC., a Delaware corporation ("Gundle"), GSE LINING
TECHNOLOGY, INC., a Delaware corporation ("GSE"), and SERROT INTERNATIONAL,
INC., an Illinois corporation ("Serrot") (collectively the "Borrower"), and
TRANSAMERICA EQUIPMENT FINANCIAL SERVICES CORPORATION, a Delaware corporation
("Transamerica"). Transamerica and any other legal holder of the Loan (as
hereafter defined) are herein collectively called the "Lender". Reference is
made to Article Eleven for the definitions of certain terms used in but not
defined in the text of this Agreement.
In consideration of the representations, warranties, and covenants of
this Agreement and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Lender and Borrower hereby agree as follows:
ARTICLE 1
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COMMITMENT; SPECIAL TERMS; EXHIBITS
-----------------------------------
Section 1.1. Commitment to Lend Loan. Subject to and upon the terms and
conditions of this Agreement, Lender agrees to make, and Borrower agrees to
accept, loans to Borrower in one or more Advances (collectively the "Loan") in
the maximum principal amount of Twenty Five Million and No/100 Dollars
($25,000,000.00) (the "Committed Sum"). The parties contemplate that the full
Committed Sum shall be Advanced in a single Advance on or about the date of
execution of the Agreement. Notwithstanding this expectation, Lender has
retained the flexibility in this Agreement to make one or more subsequent
Advances hereunder should Lender withhold a portion of the Loan proceeds pending
the satisfaction of some condition, circumstance or other matter that Borrower
was to have satisfied prior to execution of the Agreement. Lender shall have no
obligation to make any Advance on a non-Business Day. Borrower's obligations and
Lender's rights under the Loan Documents shall continue in full force and effect
until the Obligations are paid and performed in full, in accordance with the
terms and provisions of the Loan Documents.
Section 1.2. Purpose. The primary purpose of the Loan is to provide a
portion of the financing so that Gundle may consummate the Stock Purchase of
Serrot from Waste Management Holdings, Inc. In the Stock Purchase, Gundle shall
acquire 100% ownership interest of Serrot. A portion of the Collateral hereunder
shall be equipment owned by Serrot and the closing of the Stock Purchase
concurrently with the closing of this Loan is a condition to the closing of this
Loan.
Section 1.3. Note. On or about the date of the execution of this
Agreement, Borrower shall execute a Note in the original stated principal amount
of the Committed Sum. In the event the Loan is made in more than one Advance,
notwithstanding the original stated principal amount of the Note, the Note
shall, at any time, only evidence Borrower's obligation to pay (and shall only
bear interest from time to time upon) the aggregate amount advanced and not
repaid at such time. The Note shall be due and payable on the Maturity Date and
otherwise payable as to principal, interest, and other
matters in accordance with the terms specified therein.
Section 1.4. Loan Closing Deposit. Borrower paid a loan closing deposit
(the "Deposit") in the amount of $250,000.00 in connection with Borrower's
execution of the loan commitment letter, dated January 16, 2002. After all Loan
Documents have been fully executed, all requirements under the Preliminary
Closing Checklist have been delivered, and all such Loan Documents and materials
reviewed by Lender and Lender's counsel, the Loan proceeds have been disbursed
in accordance with Borrower's Pay Proceeds Letter, then the Deposit (less all
fees and expenses of Transamerica's counsel and all expenses incurred by Lender
not paid at the Loan closing) shall be applied against the first payment due
under the Note. If the Loan is not funded due to the sole reason that the stock
or assets of Serrot become unavailable for purchase by Gundle, then Lender will
refund $125,000.00 of the Deposit (less all costs and expenses, including, legal
fees incurred by Lender as of the date Transamerica receives written notice from
Gundle of the unavailability of the Serrot stock or assets for purchase) and the
remainder of the Deposit will be retained by Lender as a fee. Except for the
foregoing sentence, in the event the Loan should not close for any reason,
including, but not limited to, Borrower funding the financing contemplated
hereunder with another lender, Borrower acknowledges and agrees that the Deposit
was fully earned by Lender as a fee and was not contingent upon the execution of
this Agreement or the making of any Advances hereunder.
Section 1.5. Guaranty. The Guarantor, on even date with this Agreement,
has entered into the Guaranty in connection with the Loan. The terms,
conditions, and limitations of the Guaranty are contained in the Guaranty.
Borrower acknowledges that providing the Guaranty is a condition precedent to
and a requirement of Lender making the Loan.
Section 1.6. Serrot Equipment Lines. Not less than 90 days after the
closing of the Loan, the Serrot Equipment (hereafter defined) shall be moved to
the Properties. Within 180 days after the closing of the Loan, the Serrot
Equipment shall be installed and made fully operational at the Properties. The
Serrot Equipment is the equipment designated on Schedule 2 as the equipment of
Serrot ("Serrot Equipment") currently located at 000 Xxxxxxxxxx Xxx, Xxxxxxxx,
Xxxxx Xxxxxxxx (the Serrot Real Property description is set forth on Exhibit D
attached hereto and incorporated herein). Lender is not taking a Lien on the
Serrot Real Property, but such is being designated only to aid in perfection of
Lender's Lien as to the Serrot Equipment at closing of the Loan. Borrower will
notify Lender when the Serrot Equipment becomes operational and allow Lender to
inspect such equipment. Any deficiencies in the Serrot Equipment as reasonably
determined by Lender shall be corrected by Borrower within sixty (60) days after
written notice to Borrower of the deficiencies discovered by Lender in the
Lender inspection or, if such deficiencies are of a type which cannot reasonably
be corrected within such period, Borrower shall promptly commence correcting
such deficiencies and shall complete the same as promptly as reasonably
possible.
Section 1.7. Schedules, Exhibits. The following Exhibits and Schedules
are attached hereto and made a part hereof for all purposes:
Exhibit A - Property Description for 00000 Xxxxxx Xxxx,
0
Xxxxxxx, Xxxxx 00000 ("Gundle Road
Property")
Exhibit B - Property Description for 00000 Xxxx Xxxxx
Xxxx, Xxxxxxx, Xxxxx 00000 ("Hardy Road
Property")
Exhibit C - Property Description for 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx ("Eastland
Avenue Property")
Exhibit D - Property Description for 000 Xxxxxxxxxx Xxx,
Xxxxxxxx, Xxxxx Xxxxxxxx ("Serrot Real
Property")
Schedule 1 - Preliminary Closing Checklist
Schedule 2 - Equipment List
Schedule 3 - Equipment Excluded from Collateral
Schedule 4 - Permitted Debt
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Authority. Gundle is a corporation duly formed and validly
existing under the Laws of the State of Delaware. Serrot is a corporation duly
formed and validly existing under the Laws of the State of Illinois. The
Borrower has full right, power and authority to enter into transactions
contemplated by the Loan, to own and operate the Properties, and execute,
deliver, and comply with the terms of the Loan Documents, for which no approval
or consent of any Person or Tribunal is required which has not been obtained.
Each Guarantor has full right, power and authority to enter into its respective
Guaranty and to comply with the terms of the respective Guaranty, for which no
approval or consent of any Person or Tribunal is required which has not been
obtained.
Section 2.2. Other Agreements. There are no provisions in any
indenture, contract, agreement, or other document (other than agreements which
will be terminated simultaneously with the initial Advance of the Loan)
controlling Borrower or any Guarantor, or to which Borrower or any Guarantor is
a party or by which Borrower or any Guarantor is bound, which prohibit the
execution and delivery by Borrower of this Agreement or the other Loan Documents
or observance and performance by Borrower of any other terms, covenants, and
conditions of this Agreement or the other Loan Documents, or which prohibit the
execution and delivery by the Guarantors of the Guaranties or observance and
performance by Guarantors of any of the terms, covenants, conditions of the
Guaranties.
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Section 2.3. Enforceable Documents. This Agreement and the other Loan
Documents, when duly executed and delivered by all parties thereto, will
constitute valid, legal, and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms (except as enforcement may be
limited by bankruptcy, insolvency, laws of general application, and other
general equitable principles). The Guaranties, when duly executed and delivered
by the Guarantors, will constitute valid, legal, and binding obligations of the
Guarantors enforceable against the Guarantors in accordance with their
respective terms (except as enforcement may be limited by bankruptcy,
insolvency, and other general equitable principles).
Section 2.4. Litigation. Other than suits within the insurance coverage
amounts being defended by Borrower's general liability insurance carrier which
suits do not have a Material Adverse Effect and which have been disclosed to
Lender and other suits which do not have a Material Adverse Effect and which
have been disclosed to Lender, there is no individual matter of Litigation
pending or, to the knowledge of Borrower or Guarantors, threatened against
Borrower, Guarantors, or Collateral in any Tribunal, nor are Borrower or
Guarantors knowingly in default with respect to any order of any Tribunal.
Section 2.5. No Default. Borrower is not in default in the payment of
the principal of, or interest on, any indebtedness for borrowed money, nor is
Borrower in default (however defined) under any instrument or agreement under or
subject to which any indebtedness for borrowed money has been issued, and no
event has occurred or failed to occur under the provisions of any instrument
which, with or without the lapse of time or the giving of notice, or both,
constitutes or could constitute an event of default (however defined)
thereunder. Guarantors are not in default in the payment of the principal of, or
interest on, any indebtedness or borrowed money, nor are Guarantors in default
(however defined) under any instrument or agreement under or subject to which
any indebtedness or borrowed money has been issued, and no event has occurred or
failed to occur under the provisions of any instrument which, with or without
the lapse of time or the giving of notice, or both, constitutes or could
constitute an event of default (however defined) thereunder.
Section 2.6. Taxes. All federal, state, foreign, and other Tax returns
of Borrower and Guarantors required to be filed have been filed, and all
federal, state, foreign, and other Taxes imposed upon Borrower and Guarantors
have been paid, or if not yet due, properly reserved for (except where failure
to file or not reserving for would not have a Material Adverse Effect). On or
before the Advance of the Loan, any and all Taxes on the Properties which are
due and payable will have been paid.
Section 2.7. Legal Purpose of Loan. To the best of Borrower's
knowledge, after diligent and thorough investigation, and after consulting with
its counsel, none of the proceeds of the Loan will be used for any purpose that
is contrary to, or that would result in a violation of, any Law. Without
limiting the foregoing, Borrower represents and warrants (i) there are no filing
requirements or waiting periods applicable to the Stock Purchase required under
the Xxxx Xxxxx Xxxxxx Act of 1976, as amended, or other applicable laws in
connection with the Stock Purchase, and (ii) the Stock Purchase does not violate
any anti-trust or anti-competition Laws. Without limiting any other
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provisions in this Agreement or the Loan Documents for the benefit of Lender,
Borrower further agrees to indemnify and hold Lender harmless against any and
all claims, causes of action, attacks against Liens, and any other matters that
may arise in connection with any antitrust or anti-competition Laws and/or suits
in connection therewith, including all reasonable attorneys' fees incurred by
Lender in defending any such actions.
Section 2.8. Title; Liens; Permitted Debt. Borrower has good and
marketable title to the Properties and the Collateral. The Lender Liens on the
Collateral are first and prior Liens. The Collateral is subject to no other
liens or encumbrances except for inchoate liens for taxes not yet due and
payable and permitted encumbrances under the Deeds of Trust (on an ongoing,
future basis, inchoate liens for taxes not yet due and payable, the permitted
encumbrances under the Deeds of Trust, mechanic, vendor, and other statutory
liens that arise by operation of law but which must be paid in the ordinary
course of business in accordance with Section 6.1(a) herein shall be "Permitted
Encumbrances," but Permitted Debt shall not be within the definition of
Permitted Encumbrances as there are to be no liens or security interests in
connection with the Permitted Debt which encumber or attach to the Collateral).
Borrower has not, by act or omission, caused there to be any defense,
counterclaim or invalidation of the Title Policy, and Borrower affirms that such
Title Policy is in full force and effect. No claim or threat of claim exists or
has been made against Borrower which is or may be covered under the terms and
provisions of the Title Policy, or of which the issuer of the Title Policy
should be notified in order to preserve the coverage of the Title Policy.
Notwithstanding anything to the contrary, Lender agrees that the indebtedness
set forth on Schedule 4 is permitted under the Loan Documents as long as such
indebtedness is not secured by any of the Collateral of Lender as set forth in
this Agreement ("Permitted Debt"). Deposits made in the ordinary course of
business in connection with, or secure payment of, obligations under worker's
compensation, unemployment insurance, social security, and other similar laws,
or to secure the performance of bids, tenders, or contracts (other than for the
repayment of Debt) or to secure an indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other for the repayment of
Debt) or to secure statutory obligations (other than liens arising under ERISA
or Environmental Laws) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds, shall be considered Permitted Debt hereunder
and not violate the terms of this Agreement or the prohibition against other
Liens as long as all such items are incurred in the ordinary course of business.
Without limiting the foregoing, subject to compliance with the Financial
Covenants as set forth in Section 7.3, and the other provisions herein
protecting the Collateral and Lender Liens, Borrower's incurrence of new Debt is
not prohibited by Lender.
Section 2.9. Contractual Obligations. Except for the Contractual
Obligations previously described in writing to Lender (if any Contractual
Obligations have been previously disclosed, none violate any other provision in
this Agreement or the Loan Documents except for Contractual Obligations to be
terminated simultaneously with the Advance of the Loan), Lender Liens, and
service and supply contracts in the normal course of business, Borrower is not
directly, indirectly, or contingently obligated with respect to any Contractual
Obligations relating to the Properties, Collateral, or any portion thereof.
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Section 2.10. Reimbursements. Neither Borrower nor any Guarantor (nor
Affiliates of Borrower or any Guarantor) will receive any reimbursements,
rebates, credits, discounts, allowances or similar economic considerations in
connection with the Loan which have not been previously disclosed in writing to
and approved by Lender.
Section 2.11. Affirmation of Representations and Warranties. Each
Advance (if more than one Advance) shall constitute an affirmation that the
representations and warranties contained in this Agreement are true and correct
as of the date thereof.
Section 2.12. Financial Condition. Borrower and Guarantors have
delivered to Lender the balance sheet of Gundle and its consolidated
subsidiaries, and the related statements of income and retained earnings for the
fiscal year ended December 31, 2001. Such balance sheet and statements fairly
present the financial condition of Gundle and its consolidated subsidiaries as
of such date and the results of the operations of Gundle and its consolidated
subsidiaries for the period ended on such date, all in accordance with Generally
Accepted Accounting Principles. Since the end of the latest fiscal quarter there
has been no Material Adverse Effect in such condition or operations for Borrower
or Guarantors.
Section 2.13. General. There are no facts or conditions relating to the
Loan Documents, the Collateral and/or the financial condition and business of
Borrower which could reasonably be expected to cause a Material Adverse Effect;
and all writings heretofore or hereafter exhibited or delivered to Lender by or
on behalf of Borrower and the Guarantors are and will be genuine and in all
respects are what they purport and appear to be.
Section 2.14. Construction and Operation of the Properties. To the best
of Borrower's knowledge, after due inquiry, the Properties are in compliance
with all applicable Laws and Borrower has obtained all necessary operating
permits, licenses, and any and all other approvals necessary to operate the
Properties as they are now operated. To the best of Borrower's knowledge, after
due inquiry, the Properties, as operated, comply in all material respects with
all applicable Laws, including, without limitation, all laws relating to
environmental, parking, and zoning.
Section 2.15. Appraisals. Borrower is not aware of any fact or
condition material to the appraisal not known to or not disclosed to the
appraiser in connection with the preparation of such appraisal for the
Properties presented to Lender.
ARTICLE 3
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ADVANCES
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Section 3.1. Conditions Precedent to Loan Advances. Lender will have no
obligation to make Advances of the Loan unless each of the following conditions
precedent have been satisfied in a manner satisfactory to Lender:
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(a) The conditions precedent set forth on Schedule 1
(Preliminary Closing Checklist) hereto (which are incorporated herein
as if set forth in this Section 3.1) have been fully satisfied;
(b) The Deeds of Trust, Financing Statements, and all other
Loan Documents required by Lender (in form and substance satisfactory
to Lender) shall have been executed for the Collateral;
(c) The Title Policy and all endorsements thereto required by
Lender has been issued or Lender has received an unconditional
commitment from the Title Company to issue the Title Policy and all
such endorsements;
(d) No Default or Potential Default has occurred and is
continuing;
(e) All other conditions of this Agreement and the Loan
Documents have been satisfied; and
(f) All matters related to such Advance are reasonably
satisfactory to Lender and its counsel. If requested by Lender,
Borrower shall deliver to Lender evidence substantiating any of the
matters contained in this Agreement which are necessary to enable
Borrower to qualify for such Advance. Additionally, Lender will not be
obligated to make any Advance if the making of such Advance is
prohibited by Law. Lender, at its election, may make any Advance,
without having received all items to be delivered, or which continue to
be a condition precedent thereto, but such action by Lender shall not
be deemed to be a waiver of the requirement that each such item be
delivered as a condition precedent to any subsequent Advance.
Section 3.2. Additional Conditions Precedent to Loan Advances. Without
in any way limiting the conditions precedent as set forth on Schedule 1 or
Section 3.1 above, Borrower shall provide to Lender prior to closing, all in
form and substance acceptable to Lender, the following:
(a) Accurate and complete Surveys in accordance with the
survey requirements and certificates as set forth on Schedule 1;
(b) Environmental Phase I Assessments by competent and
qualified environmental engineers and consultants showing no material
environmental risk (all such Phase I Assessments shall contain such
reviews and requirements as are standard for Environmental Phase I
Reports, shall review the operations by Borrower (including the ability
to operate the Properties at full capacity in a manner that complies
with all Environmental Laws);
(c) Borrower shall provide evidence of no applicable zoning
for the Properties acceptable to Lender;
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(d) Borrower shall provide copies of any and all certificates
of occupancy, original plans, site drawings together with all other
documentation pertaining to original purchase and construction of the
Properties as are in Borrower's possession or control;
(e) Lender shall have completed a physical inspection of the
Collateral at the Gundle Road Property and the Hardy Road Property;
(f) Borrower shall have provided a legal opinion of behalf of
Borrower and Guarantor relating to (i) compliance or exemption from
state and Federal anti-trust laws filing requirements, (ii) existence
and good standing of Borrower and Guarantor in those states required
for their respective business operations, (iii) enforceability of Loan
Documents, (iv) usury, and (v) such other matters as Lender may deem
appropriate;
(g) Lender shall have reviewed and approved the December 31,
2001 Financial Statements of Gundle and its consolidate subsidiaries;
(h) Borrower shall have closed, or will concurrently close,
with the closing of this Loan, an increase in its revolving line of
credit ("Revolver") with Bank of America, N.A. to not less than
$55,000,000.00;
(i) Borrower shall have $15,000,000.00 in liquidity at the
closing of the Loan calculated as follows: Revolver availability (Total
Borrowing Base as determined by Bank of America at closing) plus cash
held in deposit accounts by Borrower after deducting cash required to
close transaction less the initial advance under Bank of America Credit
Agreement and less $7,000,000.00 reserve for one time costs in
connection with the Stock Purchase;
(j) Lender shall have approved the indemnities from Waste
Management Holdings, Inc. regarding Serrots' liabilities and
contingencies as set forth in the Stock Purchase Agreement; and
(k) There shall have been no Material Adverse Effect.
ARTICLE 4
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SECURITY AGREEMENT
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Section 4.1. Security For the Obligations. To secure the full and
complete payment and performance of the Obligations, Borrower hereby agrees that
this Agreement creates a security agreement and Borrower hereby grants, conveys,
and creates Lender Liens and continuing security interests in, to, and on all of
Borrower's right, title, and interest in and to (but none of Borrower's
obligations with respect to) the following items and types of property, together
with all present and future additions, parts, accessories, attachments,
substitutions, repairs, improvements, and
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replacements thereof or thereto, and any and all proceeds thereof (collectively
herein called the "Collateral"), each of which Lender Liens shall be first and
prior Liens:
(a) The Properties;
(b) All equipment (as such term is defined in the UCC), now
owned or hereafter acquired by Borrower, wherever located. Without
limiting the foregoing or subparagraph (c) below, the Serrot Equipment
(defined in Section 1.6), wherever located but at the time of execution
located at the Serrot Real Property;
(c) All equipment of any type or kind located on, or used in
connection with the Properties, including all manufacturing lines used
in connection with Borrower's business on the Properties and also
including all equipment described and set forth on Schedule 2 attached
to and incorporated herein, together with all other items, types, and
kinds of personal property of Borrower used in connection with the
Properties, including, but not limited to all fixtures, furniture,
shelving, computers, operating licenses and permits, approvals,
business and other permits, authorizations of, or declarations and
filings with, all Governmental Units relating to the Properties;
(d) All Plans, warranties, guaranties, service contracts and
contract rights in connection with Borrower's ownership and/or
operation of the Collateral and Properties;
(e) All proceeds of policies of insurance, condemnation
settlements or awards, and other proceeds or settlements of any type or
kind (such proceeds to be handled as specified herein) pertaining to
the Collateral herein described; and
(f) All other interest of every kind and character which
Borrower now has or at any time hereafter acquires in and to the
property described or referred to in subparagraphs (a), (b), (c), (d)
and (e) preceding. Notwithstanding anything to the contrary herein, it
is not the intent or agreement that the description or definition of
"Collateral" herein include any interest in accounts receivable,
contract rights, chattel paper, documents, instruments, investment
property, deposit accounts, supporting obligations, letter-of-credit
rights, inventory (including any raw materials, work in process, and
materials used or consumed in the business of Borrower), or general
intangibles, as such terms are defined in the UCC or if not defined
therein as such term means in normal commercial lender usage (except as
such general intangibles or contract rights are necessary or material
to the ownership or use of the equipment and Properties). Further
excluded from the definition of "Collateral" herein are (i) that
specific limited equipment held for resale or to be transferred to
Borrower's European operations to the extent specifically identified
and set forth on Schedule 3, (ii) purchase money security interest (as
defined in the UCC) purchases in new, additional equipment as long as
such equipment is not an addition, part, accessory, attachment,
substitution, improvement, or replacement of any of the Collateral set
forth on Schedule 2, and (iii) all vehicles whether certificated or
not. To the extent any equipment is specified on both
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Schedule 2 and Schedule 3 it is deemed deleted from Schedule 3.
ARTICLE 5
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CERTAIN AFFIRMATIVE COVENANTS
-----------------------------
Borrower covenants and agrees with Lender as follows:
Section 5.1. Claims Against Collateral. Borrower shall promptly pay or
cause to be paid, when due, all costs, charges, and expenses incurred in
connection with the Properties; provided, however, Borrower may, in good faith,
in lieu of paying such costs, charges, and expenses as they become due, contest
the validity thereof by appropriate proceedings after posting with Lender if
such amount is in excess of $250,000.00 either: (i) a bond on such terms, in
such amount, and with such surety reasonably acceptable to Lender or (ii) cash
equal to one hundred fifty percent (150%) of such contested sums for payment of
such costs, charges or expenses.
Section 5.2. Maintenance; Compliance; Correction of Defects. Borrower
will operate and maintain the Properties in compliance with all Laws and in
compliance in all material respects with all Environmental Laws and Occupational
Safety and Health Act guidelines. Borrower shall at all times maintain all
necessary operating permits, licenses, and any other approvals necessary for the
operation of the Properties. Borrower shall at all times maintain, preserve and
keep the Properties in good repair and condition, and from time to time make all
necessary and proper repairs, replacements and renewals. Borrower will not
commit nor permit any waste as to the Properties, and not do anything to
materially impair the value of the Collateral. Borrower shall permit Lender to
inspect the Properties at all reasonable times (but no more than two (2) times
per year unless in Default). Notwithstanding the foregoing sentence, Borrower
acknowledges and agrees that Lender agreed to make the inspection of the
Eastland Avenue Property a post-closing inspection which shall be subject to the
terms of this Section 5.2. Borrower shall, upon demand by Lender and at
Borrower's sole expense, properly correct any single defect as to the Properties
or Collateral in excess of $30,000 or cumulative defects in excess of $60,000
revealed in the Lender's inspection. Notwithstanding this section, Lender shall
have no affirmative obligation to review and inspect the Properties at any time
and Lender's right to inspection herein shall not impute any liability or
responsibility to Lender under any circumstance. After the occurrence of any
event resulting in damage to the Properties, or if Lender shall have reasonable
justification for inspections, tests or reviews, Lender shall be entitled to
designate, at Lender's sole expense unless Borrower is at such time in Default
under any Loan Documents, in which case same shall be at Borrower's expense, an
architect and/or engineer to make, on behalf of Lender, any of the inspections
Lender may make under any of the Loan Documents. Lender shall not be required to
make any Advance pursuant to this Agreement until Lender has received
certifications and inspections reasonably satisfactory to it.
Section 5.3. Insurance. Borrower shall maintain or cause to be
maintained for the Properties: (a) all peril property insurance equal to the
full replacement value of the Properties and Collateral with an appropriate
inflation rider and/or annual reviews as to replacement cost; (b) comprehensive
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(commercial) general liability insurance, with the broad form comprehensive
general liability endorsement (or its equivalent), including, without
limitation, contractual liability coverage and products and completed operations
liability coverage covering Borrower against any and all liability in connection
with the Properties; (c) "Business Interruption Insurance" in an amount equal to
not less than twelve (12) months of anticipated gross revenues from the
Properties or in such other amount as determined by Lender; (d) boiler and
vessel insurance; and (e) such other insurance as Lender may require. Borrower
shall do all acts and things, at Borrower's expense, as may be necessary or
appropriate, in the judgment of Lender, to enable Lender to receive all
insurance proceeds that Lender is entitled to receive pursuant to the standard
mortgagee payment clause endorsement. Each policy evidencing insurance shall
provide for a minimum thirty (30) days written cancellation notice to Lender and
shall contain a standard mortgagee endorsement naming Lender as its interests
may appear to receive all insurance proceeds and to compromise and/or settle all
insurance claims with respect to the Collateral; provided, however, so long as
no Default or Potential Default has occurred, Lender agrees to allow Borrower to
compromise and settle all such claims of Five Hundred Thousand Dollars
($500,000.00) or less and to participate in the compromise and/or settlement of
all other claims. General liability policies shall name Lender as an additional
insured. Each policy of insurance required hereunder shall be: (i) at the sole
cost and expense of Borrower; (ii) issued by a company or companies reasonably
acceptable to Lender; (iii) on forms and contain expiration dates reasonably
acceptable to Lender; (iv) specify deductibles reasonably acceptable to Lender;
(v) satisfy all applicable co-insurance requirements; and (vi) otherwise be in
form and substance reasonably acceptable to Lender. Lender may request annual
reviews as to the replacement cost protection of Borrower's all peril insurance
policy but shall have no obligation to do so nor shall incur any liability for
not doing so. Borrower shall give Lender prompt written notice after the
occurrence of any casualty insured hereunder in excess of $250,000.00. In
addition to Certificates, Borrower shall furnish Lender the original or a copy
certified as true and correct of each policy of insurance required hereunder,
and, at least thirty (30) days prior to the expiration of any such policy, proof
of insurance of a policy continuing in force the coverage provided by the
expiring policy. Borrower agrees until the Obligations have been paid in full to
maintain flood insurance for the Hardy Road Property and all related Collateral
in an amount not less than $5,000,000.00 but in no event shall such insurance be
less than the minimum to comply with applicable federal regulations as required
by the Flood Disaster Protection Act of 1973 as amended (this specific
requirement shall in no way limit Lender's right to require flood insurance be
maintained on other Properties in accordance with this Section 5.3). Although
Lender is not a federally regulated lender, Borrower acknowledges that Lender
may, at its option, post-closing provide to Borrower a flood notice that would
be required to be given to Borrower should Lender have been a federally
regulated lender. Borrower acknowledges that it knows and has known that the
Hardy Road Property is in a Special Flood Hazard Area and waives any requirement
that such notice be given ten (10) days before Loan closing.
Section 5.4. Condemnation. Borrower shall immediately notify Lender of
any notices, attempts or other action relating to a condemnation, dedication or
other conveyance to a Governmental Unit. Borrower shall do all acts and things,
at Borrower's expense, as may be necessary or appropriate, in the judgment of
Lender, to enable Lender to receive all condemnation,
11
settlement, eminent domain or similar awards or proceeds resulting from a
transfer in lieu thereof. Borrower hereby assigns to Lender all of its right and
power to compromise, settle, accept or otherwise participate in the
determination of any such claims, amounts or sums; provided, however, Lender
agrees to allow Borrower to compromise, settle, accept or otherwise participate
in the termination of any such claims, amounts or sums as long as Borrower is
not in Default or Potential Default hereunder and communicates with and obtains
Lender's approval prior to the agreement as to any award. Lender, upon receipt,
shall disburse the condemnation proceeds to restore and repair the Properties
pursuant to the normal procedures for disbursing funds under construction loans
then established by Lender; provided, however, that (i) if there is a Default or
Potential Default hereunder, or (ii) if the condemnation proceeds (plus any
other funds readily available for or on behalf of Borrower) are not adequate to
restore the Properties, or (iii) it is not commercially reasonable, as
determined in Lender's reasonable discretion, to restore and repair the
Properties, then Lender may, in its sole discretion, use such proceeds to reduce
the outstanding Obligations, except if there is an uncured Potential Default
which Lender reasonably expects to be cured within the applicable cure period,
then Lender shall not use such proceeds against the Obligations until the end of
the applicable cure period.
Section 5.5. Taxes and Debts. Borrower shall pay, or cause to be paid
when due, any and all Taxes and other debts, liabilities, and obligations of
Borrower directly associated with the Collateral; provided, however, Borrower
shall not be in breach of this covenant if it chooses to contest such Taxes so
long as Borrower is diligently pursuing such contestation and so long as
Borrower has established adequate reserves therefor and if the Tax could be a
Lien against the Collateral and the amount in controversy exceeds $250,000.00
furnished Lender with a bond or other adequate security, which, if such
contestation is unsuccessful, would be sufficient to allow Lender, in Lender's
reasonable discretion, to pay all such previously contested Taxes together with
all costs, losses, damages, penalties, contestation expenses, and other
associated charges.
Section 5.6. Books and Records. As to Borrower and the Properties,
Borrower shall keep, in the city to which it is to receive notices pursuant to
this Agreement, proper and complete books, records, and accounts, and shall
permit Lender or an agent of Lender to inspect the same at such location and
make and take away copies of such materials upon reasonable notice and at
reasonable times.
Section 5.7. Reports and Other Information. Borrower shall promptly
deliver to Lender (a) notice of any change in any fact or circumstances
represented or warranted by Borrower in the Loan Documents and in any other
documents furnished to Lender in connection with this Agreement, and in any
condition whatsoever, which reasonably could be expected to result in the
occurrence of a Material Adverse Effect, (b) such additional agreements,
documents, and instruments as may be requested by Lender in order to create,
perfect, confirm, and maintain the Liens contemplated in this Agreement or to
otherwise effect the intentions of the parties to this Agreement, and (c) such
other information, not otherwise required herein, respecting the business
affairs, assets, and liabilities of Borrower as Lender shall from time to time
request, including, but not limited to, such opinions, certificates, and
documents, in addition to those heretofore mentioned, as Lender may reasonably
12
request.
Section 5.8. Licenses and Permits. Borrower will secure all licenses or
permits required by Laws for the operation and use of the Properties and the
business of Borrower in each jurisdiction where it is conducting business, and
Borrower will obtain from all Tribunals with jurisdiction the appropriate
licenses and permits for operation of the Properties.
Section 5.9. Expenses of Lender. Borrower will promptly pay all costs,
fees, and expenses paid or incurred by Lender incident to any of the Loan
Documents (including, but not limited to, all UCC searches, UCC filing fees,
environmental site assessments, travel expenses, survey, title, and recording
fees and expenses, the fees and expenses of architects or engineers employed by
Lender, escrow fees, and the fees and expenses of counsel to Lender in
connection with the negotiation, preparation, and execution of the Loan
Documents and any amendment, waiver, or consent with respect thereto, whether
any Advance is ever made, and in connection with the making of any Advance) or
to the enforcement of the Obligations of Borrower or the exercise of any Rights
(including, but not limited to, attorneys' fees, expenses, and court costs), all
of which shall be a part of the Obligations.
Section 5.10. Casualty Repairs. Borrower agrees that it has the
absolute obligation after a casualty to any Properties or to any other
Collateral to promptly repair or replace all such damage or pay to Lender the
collateral value of the Collateral, as determined by Lender in its sole and
absolute discretion, for application to the Obligations.
Section 5.11. Liens Against Collateral. Borrower shall, except for the
Permitted Encumbrances, keep the Collateral free and clear of any and all Liens
other than Lender Liens.
ARTICLE 6
---------
CERTAIN NEGATIVE COVENANTS
--------------------------
Borrower covenants and agrees with Lender as follows:
Section 6.1. Encumbrances. Borrower shall not, directly or indirectly,
(a) permit any equipment, fixtures, or any other part of the Collateral to be
purchased or installed under any arrangement wherein a Lien on such property is
retained or a Right is reserved or accrues to any Person to remove or repossess
any such items or to consider any real property or fixture as personal property
except when purchased in the ordinary course of business to be paid within
ninety (90) days after delivery, installation, or completion, as applicable,
from the operations of Borrower's business (it is the understanding and
agreement that after payment in the ordinary course of business, no Liens will
be applicable), or (b) otherwise create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any portion of the Collateral
except for Permitted Encumbrances. Notwithstanding Section 5.11 or this Section
6.1, Borrower may in good faith, contest the validity
13
of any such Lien so long as Borrower for any Lien in excess of $250,000.00
furnishes Lender with an indemnity bond, cash, or other security satisfactory to
Lender in the amount of the contested Lien plus an additional sum to pay all
costs, interest, and penalties that may be imposed in connection therewith, as
determined in Lender's reasonable discretion ( bond of 150% shall be deemed
reasonable).
Section 6.2. Fiscal Year and Accounting Methods. Borrower will not
change its fiscal year or method of accounting (other than immaterial changes in
methods or changes in methods required by Generally Accepted Accounting
Principles) without the prior consent of Lender, which shall not be unreasonably
withheld.
Section 6.3. Assignment. Borrower will not, directly or indirectly,
assign or transfer, any of its Rights, duties, or obligations under any of the
Loan Documents.
Section 6.4. Other Agreements. Borrower will not enter into any
agreement containing any provision which would be violated or breached by the
performance of its respective obligations under this Agreement or under any
instrument or document to be delivered by it under this Agreement or in
connection herewith.
Section 6.5. Prohibition on Transfers. Borrower shall not, without the
prior written consent of Lender, sell, pledge, transfer, convey, assign,
encumber or otherwise dispose of the Collateral or any part thereof or any
interest of Borrower therein to any Person, so long as any part of the
obligations are outstanding except that the Collateral may be replaced when worn
or in need of replacement or when Borrower desires to upgrade Collateral without
Lender's prior written consent as long as Borrower notifies Lender of
replacements in excess of $250,000.00 per calendar year for the Collateral on
Schedule 2. Also prohibited herein is any transfer by way of security, including
the placing against the Collateral of any mortgage, deeds of trust, assignment
of income or other security device, or the sale, conveyance, transfer, or
disposition thereof. Lender acknowledges, agrees, and consents to the merger of
Serrot into GSE after the closing of the Loan. Any sale of any ownership
interests in GSE or Guarantor (or Serrot, if the consented to merger does not
occur) shall require the prior written approval of Lender.
ARTICLE 7
---------
FINANCIAL COVENANTS
-------------------
Section 7.1. Financial and Business Information. During the term of
this Agreement, Borrower will deliver to Lender:
(a) Quarterly Financial Statements. As soon as reasonably
possible, and in any event within sixty (60) days after the close of
each quarter (other than the last fiscal quarter of each fiscal year),
financial statements, including, but not limited to, the following
14
information: (1) the balance sheets of Gundle and its consolidated
subsidiaries, as of the end of such fiscal quarter, setting forth in
comparative form, the corresponding figures for the previous fiscal
year, and (2) the income and retained earnings statement of Gundle and
it consolidated subsidiaries for such quarter and for the portion of
the fiscal year ended with such quarter, setting forth, in comparative
form the corresponding periods of the preceding fiscal year, all in
reasonable detail in accordance with the Generally Accepted Accounting
Principles, except for normal year end audit adjustments, and certified
by the President, Chief Financial Officer or Chief Accounting Officer
of Gundle.
(b) Annual Reports, Tax Returns and Financial Statements. For
Gundle and its consolidated subsidiaries, as soon as reasonably
possible, and in any event within one hundred twenty (120) days after
the close of each fiscal year of Gundle, financial statements,
including, but not limited to, the following information: (1) the
balance sheets of Gundle and its consolidated subsidiaries as of the
end of such fiscal year, setting forth in comparative form, the
corresponding figures at the end of the preceding fiscal year, (2) the
income, retained earnings and cash flows statements of Gundle and its
consolidated subsidiaries for such fiscal year, such statements setting
forth, in comparative form, the corresponding figures for the previous
fiscal year. Promptly after the U.S. federal income tax return for such
fiscal year has been prepared and filed, a copy of such tax return for
such calendar year. The balance sheets and statements provided for in
this subparagraph (b) shall be prepared in reasonable detail, and
audited in accordance with Generally Accepted Accounting Principles.
Such report shall also include such other reports, schedules or
information as may be furnished to the Borrower in connection with such
audit.
(c) Special Reports of Accountants. Promptly after the receipt
thereof by Borrower, copies of any detailed audit reports submitted to
Borrower by independent or internal accountants in connection with the
accounts, books, audit or business of Borrower or Guarantor.
(d) Additional Information. Such other data and information as
from time to time may be reasonably requested by Lender.
Lender may deliver copies of any of the financial statements furnished
to it pursuant to this section as well as copies of any other information or
reports furnished to it pursuant to this section or any other provisions of this
Agreement to any regulatory body, or to any agency, authority or commission, to
whose jurisdiction Lender may be subject, or to any Loan assignees or
participants.
Section 7.2. Compliance Statements. The Borrower shall provide Lender
with its annual Financial Statement a compliance statement ("Compliance
Statement") that (i) to Borrower's knowledge, no Default or Potential Default
has occurred under this Agreement or any of the Loan Documents or if a Default
or Potential Default has occurred, statements specifying in detail the nature of
such Default or Potential Default and the actions taken to effect a cure of such
Default or Potential Default, (ii) to Borrower's knowledge, Borrower has fully
complied with all Laws of any
15
and all Governmental Units applying to the operation and use of the Properties,
(iii) no action has been brought by any Governmental Unit, including, without
limitation, any state or federal agency relating to Environmental Laws, (iv)
each covenant specified in this Agreement is being performed and remains fully
satisfied, and (v) the calculations set forth in Section 7.3.
Section 7.3. Financial Covenants.
----------- --------------------
(a) Fixed Charge Coverage Ratio. Gundle will maintain a Fixed
Charge Coverage Ratio for each period set forth below of not less than
the ratio set forth below opposite such period:
--------------------------------------------------------------------------------
Fixed Charge Coverage
Period Ratio
--------------------------------------------------------------------------------
Two fiscal quarter period ending on June 30, 2002 .60 to 1.0
--------------------------------------------------------------------------------
Three fiscal quarter period ending on September 30, 2002 1.20 to 1.0
--------------------------------------------------------------------------------
Four fiscal quarter period ending on December 31, 2002
and on the last day of each fiscal quarter thereafter 1.25 to 1.0
--------------------------------------------------------------------------------
(b) Leverage Ratio. As of the end of the fiscal quarter ending
September 30, 2002, for Gundle and its consolidated subsidiaries on a
consolidated basis, the ratio of (i) Funded Debt as of such date to
(ii) 4/3 times EBITDA for the nine (9) months ending on such date,
shall not be greater than 4.0 to 1.0. The Leverage Ratio as of the end
of any fiscal quarter of Gundle ending on or after December 31, 2002
shall not be greater than 3.0 to 1.0. In calculating EBITDA, for
purposes of determining compliance with this clause (b), one-time
charges in connection with the acquisition of Serrot by Gundle in an
amount by which such one-time charges exceed $4,500,000 shall be added
to EBITDA so long as the aggregate amount of such one-time charges do
not exceed $10,000,000 and such one-time charges are made during 2002.
(c) Tangible Net Worth. The Tangible Net Worth of Gundle and
its consolidated subsidiaries as of the end of any fiscal quarter of
Gundle ending on or after March 31, 2002, and on or before December 31,
2002, shall not be less than the sum of (i) $75,554,000, plus (ii) 75%
of cumulative positive consolidated net income of Gundle for the period
from February 1, 2002, and ending on the last day of such fiscal
quarter, plus (iii) 75% of the aggregate increases in Shareholders'
Equity of Gundle and its subsidiaries after the date hereof by reason
of the issuance and sale of capital stock of Gundle or its subsidiaries
(including, upon any conversion of debt securities of Gundle or its
subsidiaries into such capital stock); provided that the sum of clauses
(i) and (ii) preceding as of the end of any such fiscal quarter may not
be less than the sum of such clauses as of the end of the immediately
preceding fiscal quarter. The Tangible Net Worth of Gundle as of the
end of any fiscal quarter of Gundle ending on or after March 31, 2003
shall not be less than the sum
16
of (i) the Tangible Net Worth of Gundle required to be maintained under
this clause (c) as of the immediately preceding December 31, plus (ii)
75% of cumulative consolidated net income of Gundle for the period
beginning on the immediately preceding January 1 and ending on the last
day of such fiscal quarter, plus (iii) 75% of the aggregate increases
in Shareholders' Equity of Gundle and its consolidated subsidiaries on
or after the immediately preceding January 1 by reason of the issuance
and sale of capital stock of Gundle or its subsidiaries (including upon
any conversion of debt securities of Gundle or its subsidiaries into
such capital stock); provided that the sum of clauses (i) and (ii)
preceding as of the end of any such fiscal quarter may not be less than
the sum of such clauses as of the end of the immediately preceding
fiscal quarter.
(d) Minimum EBITDA. The EBITDA of Gundle and its consolidated
subsidiaries for the fiscal quarter period ending March 31, 2002 shall
not be less than $1,500,000 less than the amount thereof shown in the
projections furnished to Lender by Gundle on January 10, 2002. In
calculating EBITDA for purposes of determining compliance with this
clause (d), one-time charges taken during such fiscal quarter in an
amount equal to the lesser of $9,000,000 or the amount of such one-time
charges shall be added to EBITDA.
ARTICLE 8
---------
DEFAULT
-------
Section 8.1. General Defaults. The term "Default," as used in this
Agreement, means the occurrence of any one or more of the following events:
(a) Failure to pay any of the Obligations hereunder within ten
(10) days after same is due (but such is not in addition to the ten
(10) day period given under the Note but runs concurrently therewith);
(b) Failure of Borrower to comply with any provisions or
perform any of the non-monetary obligations arising under this
Agreement, including, but not limited to, the Affirmative Negative, and
Financial Covenants herein, or under any other Loan Documents, and such
failure continues for a period of twenty (20) days after Lender has
provided written notice of such failure to Borrower;
(c) The discovery by Lender that any statement,
representation, or warranty in the Loan Documents or in any writing
ever delivered to Lender by, Borrower or its accountants or lawyers
pursuant to the Loan Documents is false, misleading, or erroneous in
any material respect;
17
(d) Subjection of all or any portion of the Collateral to levy
or execution or other judicial process which is not or cannot be
removed within thirty (30) days from the subjection thereof, or if
Borrower fails to (i) pay any money judgment in an amount in excess of
$250,000.00 against it or (ii) post a bond which acts to supersede any
such money judgment at least twenty (20) days prior to the date on
which any of the assets of Borrower may be lawfully sold to satisfy
such judgment;
(e) Commencement of any proceedings under Debtor Relief Laws
by or against Borrower including any assignment by Borrower for the
benefit of creditors;
(f) Any default or event of default (if and/or whether
defined) under any of the other Loan Documents;
(g) The occurrence of any event which has a Material Adverse
Effect;
(h) The occurrence of any default or event of default, if
and/or whether defined (after the expiration of any applicable grace
and notice and cure periods, if any) under any other documents or
agreements relating to any other Debt of Borrower in excess of
$250,000.00;
(i) The lapse of any insurance coverage required under this
Agreement unless substitution insurance coverage as required under this
Agreement is in place;
(j) Any Event of Default under the certain Credit Agreement,
dated on or about the date of this Agreement, between Borrower, certain
lenders, and Bank of America, N.A.; or
(k) Any Federal tax lien is filed of record against any entity
comprising Borrower or against Guarantor in excess of $250,000.00 and
is not bonded or discharged within twenty (20) days after filing.
ARTICLE 9
---------
CERTAIN RIGHTS OF LENDER
------------------------
Section 9.1. Remedies Upon Default. Should a Default occur, Lender may,
at its election, do any one or more of the following: (a) declare the entire
unpaid balance of the Obligations, or any part thereof, immediately due and
payable, whereupon it shall be due and payable; or (b) terminate its commitment
to lend under this Agreement; or (c) take possession of the Properties and the
Collateral, and, at the option of Lender, in the name and on behalf of Borrower,
do any one or more of the following at the risk and expense of Borrower (i)
assume the rights and duties of Borrower under any contract, agreement or
subcontract entered into by Borrower in connection with the
18
Collateral and (ii) engage managers and/or management consultants to operate the
Collateral and architects, contractors, subcontractors, engineers, and others as
deemed necessary by Lender to perform services or furnish materials or equipment
in connection with the Collateral; or (d) pay any or all bills of, and settle or
compromise any or all claims against Borrower in any way related to the
Collateral; (e) take any action and make any payments necessary, in the judgment
of Lender, to continue in full force and effect any insurance contract,
subcontract, or other agreement; or (f) to the extent physically possible,
require Borrower to assemble any part or all of the Collateral and make it
available to Lender at a place designated by Lender, or (g) apply for and
obtain, by appropriate judicial action, appointment of a receiver or receivers
for all or any portion of the Collateral as a matter of right, without regard to
the sufficiency of the security, without any showing of insolvency, fraud, or
mismanagement on the part of Borrower, and without the necessity of filing
judicial proceedings (other than the proceedings for the appointment of the
receiver or receivers) to protect or enforce the Rights of Lender (and Borrower
hereby consents to any such appointment); or (h) reduce any claim to judgment;
or (i) foreclose or otherwise enforce any and all Lender Liens to secure payment
and performance of the Obligations, and, at Lender's option, buy all or any part
of the Collateral at any public or private sale; or (j) exercise any and all
Rights afforded by any Laws, or by any of the Loan Documents, at law, in equity,
or otherwise ; or (k) charge and collect Late Charges pursuant to and as
described in the Note; or (l) immediately establish the interest rate applicable
to the Loan as being the Default Rate. In no event shall Lender's performance of
one or more of the above remedies in anyway be construed as (i) an election of
remedies, or (ii) a waiver of Lender's right to pursue any and all deficiencies
after any type of foreclosure it being the intent that at all times Lender's
remedies are cumulative and that Lender shall have any and all rights to pursue
any deficiency after the exercise of any remedy.
Section 9.2. Performance. Should any covenant, duty, or agreement of
Borrower fail to be performed during the occurrence and continuance of a Default
in accordance with the terms of the Loan Documents, Lender may, at its option,
perform, or attempt to perform, such covenant, duty, or agreement on behalf of
Borrower (including, but not limited to, any repair or maintenance obligations).
In such event, Borrower shall, at the request of Lender, promptly pay to Lender
any amount expended by Lender in such performance or attempted performance,
together with interest thereon at the Maximum Legal Rate from the date of such
expenditure by Lender until paid. Notwithstanding the foregoing, it is expressly
understood that Lender does not assume and shall never have, except by express
written consent of Lender, any liability or responsibility , for the performance
of any duties of Borrower hereunder or in connection with all or any part of the
Collateral.
Section 9.3. Use or Operation By Lender. Should all or any portion of
the Collateral come into the possession of Lender, Lender may use or operate the
same for the purpose of preserving it or its value, or pursuant to the order of
a court of appropriate jurisdiction, or in accordance with any other Rights held
by Lender in respect thereof. The risk of accidental loss or damage to the
Collateral is on Borrower, and Lender shall have no liability whatsoever for
failure to obtain or maintain insurance, or to determine whether any insurance
ever in force is adequate as to amounts or as to the risks insured, or for
decline in the value of the Collateral.
19
Section 9.4. Attorney-in-Fact. Borrower hereby conditionally but
irrevocably constitutes and appoints Lender as the true and lawful agent and
attorney-in-fact of Borrower with full power of substitution (either generally
or for such limited periods or purposes as Lender may from time to time
prescribe), with full power and authority, for and on behalf and in the name of
Borrower to execute, acknowledge, and deliver any and all instruments,
certificates, transfers, assignments, and other documents of every nature, with
such covenants, warranties, indemnities, and other provisions, and to do all
other acts and things to be done by Borrower as may from time to time, in the
opinion of Lender, be necessary or proper to fully effectuate the purposes of
this Agreement and the intentions of the parties hereto. Borrower shall be bound
thereby as fully and effectively as if Borrower had so executed, acknowledged,
delivered, or done, for and on behalf of Borrower. The powers and authorities
herein conferred on Lender may be exercised by Lender through any person who, at
the time of any such execution, acknowledgment, delivery, or action, is an
officer of Lender. This power of attorney shall be deemed to be a power coupled
with an interest and cannot be revoked; provided it may not be exercised and
shall remain conditional until the occurrence of a Default hereunder.
Section 9.5. Diminution in Collateral Value. Lender does not assume,
and shall never have, any liability or responsibility for any loss or diminution
in the value of all or any part of the Collateral.
Section 9.6. Waivers. If a Default occurs and Lender subsequently
agrees in writing that it will not exercise any Rights hereunder as a result
thereof, the occurrence of such event shall no longer be deemed a "Default"
hereunder insofar, as the state of facts giving rise to such event is concerned,
but the same shall not operate as or be deemed to be waived with respect to any
identical or similar state of facts in existence or occurring thereafter, or if
such is not cured within the time period or pursuant to the terms stated in the
writing from Lender, if any. The acceptance by Lender at any time and from
time-to-time of partial payment on the Obligations shall not be deemed to be a
waiver of any Default then existing. No waiver by Lender of any Default shall be
deemed to be a waiver of any other then-existing or subsequent Default. No delay
or omission by Lender in exercising any Right under the Loan Documents shall
impair such Right or be construed as a waiver thereof or any acquiescence
therein, nor shall any single or partial exercise of any such Right preclude
other or further exercise thereof, or the exercise of any other Right under the
Loan Documents or otherwise.
Section 9.7. Cumulative Rights. All Rights available to Lender under
the Loan Documents shall be cumulative of and in addition to all other Rights
granted or available to Lender at law or in equity, whether or not the
obligations be due and payable and whether or not Lender shall have instituted
any suit for collection, foreclosure, or other action in connection with the
Loan Documents.
SECTION 9.8. INDEMNIFICATION OF LENDER. BORROWER SHALL INDEMNIFY LENDER
AND HOLD LENDER HARMLESS AGAINST ANY AND ALL LIABILITIES (INCLUDING ANY AND ALL
TAXES AND SPECIAL ASSESSMENTS LEVIED AGAINST THE COLLATERAL, PROPERTIES OR ANY
IMPROVEMENTS,
20
FIXTURES, OR PERSONAL PROPERTY LOCATED THEREON), OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, ATTORNEYS' FEES, COSTS, EXPENSES,
AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY, OR ASSERTED AGAINST LENDER, IN ANY WAY RELATING TO, OR ARISING OUT
OF, THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, OR THE
OWNERSHIP AND/OR OPERATION OF THE PROPERTIES (INCLUDING, BUT IN NO WAY LIMITED
TO, ENVIRONMENTAL PROTECTION AGENCY OR STATE ENVIRONMENTAL AGENCY ACTIONS AND/OR
ACTIONS UNDER CERCLA AND/OR ANY OTHER TYPE OF ENVIRONMENTAL ACTION OF ANY KIND
WHATSOEVER BY ANY PERSON OR GOVERNMENTAL UNIT RELATED TO THE PROPERTIES OR
COLLATERAL, AS MORE PARTICULARLY DESCRIBED IN THE ENVIRONMENTAL INDEMNITY WHICH,
BY THIS REFERENCE, IS INCORPORATED HEREIN), TO THE EXTENT THAT ANY SUCH
INDEMNIFIED LIABILITIES RESULT, DIRECTLY OR INDIRECTLY, FROM ANY CLAIMS MADE OR
ACTIONS, SUITS, OR PROCEEDINGS COMMENCED BY OR ON BEHALF OF ANY PERSON OTHER
THAN LENDER; PROVIDED THAT LENDER SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED
HEREUNDER FOR ITS OWN INTENTIONAL OR WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR BAD
FAITH. IN THIS CONNECTION, LENDER AGREES TO NOTIFY BORROWER OF ANY SUCH LEGAL
ACTIONS, SUITS, OR PROCEEDINGS AND TO PERMIT BORROWER TO PARTICIPATE IN THE
DEFENSE THEREOF IF BORROWER PROVIDES ADEQUATE SECURITY, IN LENDER'S JUDGMENT,
FOR BORROWER'S INDEMNIFICATION OBLIGATIONS. THE RIGHTS OF LENDER UNDER THIS
SECTION AND ALL OTHER INDEMNITIES RUNNING FOR THE BENEFIT OF LENDER IN THE LOAN
DOCUMENTS SHALL SURVIVE THE REPAYMENT AND PERFORMANCE OF THE OBLIGATIONS FOR THE
MAXIMUM PERIOD PERMITTED BY LAWS.
Section 9.9. Acceptance of Assignments and Items Delivered. By
acceptance of delivery of copies of, or by taking an assignment of or security
interest in, any of the items delivered to or received by Lender pursuant to
this Agreement, including, but not limited to the Contractual Obligations
related to the Collateral, Lender shall not be deemed to have approved same or
to have assumed any liability, obligation, or responsibility whatsoever in
connection therewith except as expressly stated in the Loan Documents.
Section 9.10. Expenditures by Lender. Any sums expended by Lender
during any period of Default or Potential Default pursuant to the exercise of
any Right provided in the Loan Documents, including, but not limited to,
expenses of taking, foreclosure and attorneys' and appraisal fees, shall be
reimbursed to Lender and become part of the Obligations and shall bear interest
at the Default Rate from the date disbursed until the date repaid by Borrower.
Notwithstanding the foregoing, if Borrower cures any non-monetary Potential
Default within the applicable cure period, the excess of the Default Rate
interest over the amount of interest which would have accrued under this
Agreement absent such a non-monetary Potential Default shall be credited to
Borrower.
21
Section 9.11. Delegation of Duties and Rights. Lender may exercise any
of its duties and/or exercise any of its Rights under the Loan Documents by or
through its officers, directors, employees, attorneys, agents, or other
representatives.
Section 9.12. Lender Not in Control. None of the covenants or other
provisions contained in this Agreement shall, or shall be deemed to, give Lender
the Right or power to exercise control over the affairs of Borrower, the power
of Lender being limited to the specific Rights and remedies provided in this
Agreement and elsewhere in the Loan Documents.
ARTICLE 10
----------
NO PREPAYMENT
-------------
Section 10.1. No Prepayment. Lender only approved this Loan based on
obtaining its expected interest return over the term of the Loan. Consequently,
Borrower may not prepay all or any portion of the Loan. If Borrower causes the
acceleration of the Obligations due to a Default and has the means and
wherewithal to pay in full the Obligations after acceleration of the
Obligations, then any such acceleration in connection with a Default shall
require an additional fee of five percent (5%) of the Obligations in connection
with the payment in full of the Obligations.
ARTICLE 11
----------
CERTAIN DEFINITIONS AND TERMS
-----------------------------
Section 11.1. Money. Unless stipulated otherwise, all references in any
of the Loan Documents to "dollars," "money," "payments," or other similar
financial or monetary terms, are references to currency of the United States of
America.
Section 11.2. Number and Gender of Words. Whenever in any Loan Document
the singular number is used, the same shall include the plural where
appropriate, and vice versa; and other words of any gender in any Loan Document
shall include each other gender where appropriate. The words "herein" and
"hereunder," and other words of similar importance, refer to the relevant Loan
Document as a whole and not to any particular part or subdivision thereof.
Section 11.3. Other Definitions. As used herein, the following terms
have the meanings indicated:
"Adjusted Net Earnings from Operations" means, with respect to any
fiscal period, the net income, without duplication, of Gundle and its
consolidated subsidiaries and of Serrot and its
22
consolidated subsidiaries, after provision for income taxes for such fiscal
period, as determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles and reported on the financial statements of
Gundle for such period, excluding any and all of the following included in such
net income: (a) gain or loss arising from the sale of any capital assets; (b)
gain arising from any write-up in the book value of any asset and non-cash loss
arising from the write-down in the book value of any asset, including long-lived
assets, intangible assets, stock based compensation or deferred financing
charges but excluding any write-down of inventory or accounts receivable; (c)
earnings or losses of any Person, substantially all the assets of which have
been acquired by Gundle or any of its subsidiaries or Serrot or any of its
subsidiaries, as the case may be, in any manner to the extent realized by such
other Person prior to the date of acquisition; (d) earnings or losses of any
Person which is not a consolidated subsidiary of Gundle or any of its
subsidiaries or of Serrot or any of its subsidiaries unless such earnings or
losses, as the case may be, shall have actually been received or funded, as the
case may be, by Gundle or Serrot in the form of cash distributions or cash
disbursements, as the case may be; (e) earnings of any Person to which assets of
Gundle or any of its subsidiaries or Serrot or any of its subsidiaries shall
have been sold, transferred or disposed of, or into which Gundle or any of its
subsidiaries or Serrot or any of its subsidiaries shall have been merged, or
which has been a party with Gundle or any of its subsidiaries or Serrot or any
of its subsidiaries to any consolidation or other form of reorganization, prior
to the date of such transaction; (f) gain or non-cash loss arising from the
acquisition of debt or equity securities of Gundle or any of its subsidiaries or
Serrot or any of its subsidiaries or from cancellation or forgiveness of Debt;
and (g) gain or non-cash loss arising from extraordinary items, as determined in
accordance with Generally Accepted Accounting Principles, or from any other
non-recurring transaction.
"Advance" means a disbursement of the Loan by Lender to Borrower under
any of the Loan Documents.
"Affiliate" means (i) any parent or subsidiary corporation of any
Person, or any corporation which is a subsidiary of the same corporation of
which such Person is a subsidiary, (ii) any partner in Borrower or any
partnership or corporation with one or more of the same general partners, (iii)
any partnership or corporation in which Borrower or any Guarantor is a general
partner or more than a ten percent (10%) shareholder or limited partner, (iv)
any Person related through marriage or otherwise to any Guarantor, (v) any
spouse or parent, sibling, child, or cousin, whether any such relation is
through marriage or otherwise, or any such relation to any Affiliate, and (vi) a
Person directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with the Person in question. The term
"control", as used in the immediately preceding sentence, means, with respect to
a Person that i a corporation, the right to exercise, directly or indirectly,
more than ten percent (10%) of the voting rights attributable to the shares of
the controlled corporation and, with respect to a Person that is not a
corporation, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of the controlled Person.
"Agreement" means this Loan and Security Agreement, as amended,
modified, supplemented,
23
renewed, extended, and/or restated, from time to time.
"Bankruptcy Code" means Title 11 of the United States Bankruptcy Code,
as amended from time to time.
"Business Day" means every day on which Lender is open for business.
"Capital Expenditures" means all payments due (whether or not paid
during any fiscal period) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto (other than in
connection with acquisitions of capital stock or other equity interests or of
property which constitutes a significant or material portion of an existing
business), which has a useful life of more than one year, including, without
limitation, those costs arising in connection with the direct or indirect
acquisition of such asset by way of increased product or service charges or in
connection with a capital lease.
"CERCLA" shall have the meaning set forth for such term in the
Environmental Indemnity.
"Collateral" means, when used herein, all of the property described in
Article 4 herein, including, but not limited to, the Properties.
"Contractual Obligations" of any Person means (a) each item of Debt
owed by such Person in excess of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00), and (b) all other direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several material
obligations and/or liabilities of such Person (other than service, supply, and
vendor contracts, and purchase orders) in excess of Two Hundred Fifty Thousand
and No/100 Dollars ($250,000.00) for the payment of money, including, but not
limited to, obligations and/or liabilities evidenced by promissory notes,
chattel paper, leases, or other contractual obligations which are not cancelable
by such Person on notice of ninety (90) days or less without liability for
further payment other than a nominal penalty.
"Debt" means, with respect to any Person, without duplication, (a) all
obligations or liabilities of such Person for borrowed money, including the
Loan, (b) all obligations or liabilities of such Person evidenced by bonds,
notes, debentures, or other similar instruments, (c) the amount of all
obligations or liabilities of such Person under capital leases, (d) the amount
of all obligations or liabilities of such Person secured by a Lien existing on
property owned by such Person whether or not the obligations or liabilities
secured thereby has been assumed by such Person or is non-recourse to such
Person (provided that the amount of such Debt shall be limited to the lesser of
the amount of the Debt or the fair market value of the property subject to such
Lien if such Person has not assumed such Debt), (e) all non-contingent
obligations of such Person to redeem or retire any capital stock of such Person;
provided that the holder(s) of such capital stock shall on the date of
determination have the right to require the redemption or retirement of such
capital stock for cash, (f) all obligations or liabilities of such Person in
respect of unfunded vested benefits under any benefit plan under ERISA, (g) all
obligations of such Person to pay the deferred purchase price of
24
property or services (excluding trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than ninety (90)
days or that are being contested in good faith by appropriate proceedings
diligently pursued and for which adequate reserves have been established in
accordance with Generally Accepted Accounting Principles), (h) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds, and similar
instruments, (i) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off balance sheet loan, or similar off balance
sheet financing product to which such Person is a party, where such transaction
is considered borrowed money indebtedness for tax purposes but is classified as
an operating lease in accordance with Generally Accepted Accounting Principles,
(j) all obligations or liabilities of such Person under guaranties in respect of
the Debt of others, and (k) obligations under Hedge Agreements.
"Debtor Relief Laws" means the Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief Laws from time to time in effect affecting the Rights of creditors
generally.
"Deeds of Trust" or "Mortgage" means (i) the Deed of Trust, Security
Agreement, Assignment of Leases and Rents, and Financing Statement for the
Gundle Road Property, (ii) the Deed of Trust, Security Agreement, Assignment of
Leases and Rents, and Financing Statement for the Hardy Road Property, and (iii)
Mortgage, Security Agreement, Assignment of Leases, Rents and Profits, Financing
Statement and Fixture Filing for the Eastland Avenue Property, each also
encumbering the related Collateral at such site and each securing the Note, as
may be amended from time to time.
"Default Rate" means fifteen percent (15%) per annum but in no case to
exceed the Maximum Legal Rate.
"Distribution" means, in respect of any corporation: (a) the payment or
making of any dividend or other distribution of property in respect of capital
stock (or any options or warrants for, or other rights with respect to, such
stock) of such corporation, other than distributions in capital stock (or any
options or warrants for such stock) of the same class; or (b) the redemption or
other acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"EBITDA" means, with respect to any fiscal period of Gundle, calculated
on a consolidated basis in accordance with Generally Accepted Accounting
Principles, Adjusted Net Earnings from Operations, plus, to the extent deducted
in the determination of Adjusted Net Earnings from Operations for that fiscal
period, interest expense, Federal, state, local and foreign income and franchise
taxes, depreciation and amortization.
"Environmental Indemnity" means the Environmental Indemnity Agreement,
in form and upon terms satisfactory to Lender, as executed by Borrower to
Lender, as may be amended from time
25
to time.
"Environmental Laws" shall have the meaning set forth for such term in
the Environmental Indemnity.
"Financing Statements" means any and all Financing statements executed
in conjunction with this Agreement to further secure the Loan to Borrower.
"Fixed Charge Coverage Ratio" means, for the two fiscal quarters ending
on June 30, 2002, the three fiscal quarters ending on September 30, 2002, and
the four fiscal quarters ending on December 31, 2002 or the last day of any
fiscal quarter ending thereafter, determined, without duplication, for Gundle
and its subsidiaries and for Serrot and its subsidiaries for the two, three, or
four, as the case may be, fiscal quarters then ended on a consolidated basis in
accordance with Generally Accepted Accounting Principles (other than the
exclusion from such determination of any of the following items used in such
determination to the extent that it arises with respect to a Subsidiary of
Gundle (other than Serrot) prior to the date such Person becomes a Subsidiary
of, or is consolidated with, Gundle), the ratio of (a) EBITDA for such period to
(b) the sum of, without duplication, of (i) the aggregate amount of all
principal payments due with respect to Funded Debt during such period (excluding
repayments on, and any prepayment penalty associated with, the revolving loans
incurred pursuant to the Credit Agreement dated of same date as this Agreement,
among the lenders identified therein, Bank of America, N.A., as agent, and
Borrower, as amended, refinanced or refunded from time to time, Funded Debt
repaid on the date the first Advance of the Loan is made, and Funded Debt repaid
with other Debt permitted by this Agreement), plus (ii) the amount of interest
expense accrued (excluding any prepayment penalty associated with the repayment
of the revolving loans made pursuant to the aforementioned Credit Agreement
prior to their stated maturity or other Funded Debt repaid on the date the first
Advance of the Loan is made) during such period, plus (iii) Distributions made
during such period, plus (iv) the net cash amount of income or franchise taxes
paid or refunded during such period, plus (v) the amount of Net Capital
Expenditures during such period. In calculating the Fixed Charge Coverage Ratio,
such calculation shall be net of the impact of one-time charges in connection
with the Acquisition in an amount by which such one-time charges exceed
$4,500,000 shall be added to EBITDA so long as the aggregate amount of such
one-time charges do not exceed $10,000,000 and such one-time charges are made
during 2002.
"Funded Debt" means those categories of Debt described in clauses (a),
(b), (c), (d), (g) and (j) of the definition thereof.
"Generally Accepted Accounting Principles" or "GAAP" means the
application of such principles on a consistent basis, (a) as set forth in
Opinions of Accounting Principles Board of The American Institute of Certified
Public Accounts ("AICPA") and/or in statements of the Financial Accounting
Standards Board which are applicable in the circumstances as of the date in
question, and (b) where not inconsistent with such opinions and statements, as
set forth in other AICPA publications and guidelines and/or which otherwise
arise by custom for the particular industry; and
26
the requisite that such principles be applied on a consistent basis means that
the accounting principles in a current period are comparable in all material
respects to those applied in a preceding period (other than immaterial changes
in methods or changes in methods required by Generally Accepted Accounting
Principles).
"Governmental Unit" means the United States of America or any nation,
commonwealth, state, territory, possession, county, parish, city, town, or
municipality, and any governmental agency, authority or department of any type
or kind empowered or authorized by any of the foregoing entities.
"Guaranty" means the Guaranty of the Guarantors.
"Guarantors" or "Guarantor" means GSE International, Inc., a Delaware
corporation.
"Gundle" means Gundle/SLT Environmental, Inc., a Delaware corporation,
"Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging an exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity
prices.
"Intangible Assets" means assets that are considered to be intangible
assets under Generally Accepted Accounting Principles, including customer lists,
goodwill, computer software, copyrights, trade names, trade marks, patents,
unamortized deferred charges, unamortized debt discount and capitalized research
and development costs.
"Laws" mean all applicable statutes, laws, ordinances, rules
regulations, orders, writs, injunctions, decisions, opinions or decrees of any
Governmental Unit or any Tribunal.
"Lender Lien" means Liens in favor of Lender securing all or any of the
obligations, including, but not limited to Rights in any Collateral created in
favor of Lender, whether by mortgage, pledge, hypothecation, assignment,
transfer, or other granting or creation of Liens.
"Leverage Ratio" means, as of any date of determination, for Gundle and
its subsidiaries on a consolidated basis, the ratio of (a) Funded Debt as of
such date to (b) EBITDA for the period of four fiscal quarters ending on such
date.
"Lien" means any lien, mortgage, security interest, pledge, charge, or
encumbrance of any kind, including, without limitation, a mechanic's lien, a
materialman's lien, the rights of a vendor, lessor, or similar party under any
conditional sales agreement or other title retention agreement or
27
lease substantially equivalent thereto, any production payment, and any other
right of or arrangement with any creditor to have his claim satisfied out of any
property or assets, or the proceeds therefrom, prior to the general creditors of
the owner thereof.
"Litigation" means any proceeding, claim, and/or lawsuit conducted by
or before any Tribunal.
"Loan Documents" means the Agreement, Note, Deeds of Trust,
Environmental Indemnity, Financing Statement(s) and any and all other promissory
notes, mortgages, deeds of trust, security agreements, financing statements, and
any other agreements, documents, and instruments executed and delivered to
Lender pursuant to the terms of, or otherwise in connection with, this
Agreement, and any future amendments hereto or restatements hereof, or pursuant
to the terms of any of the other Loan Documents, together with any and all
renewals, extensions, and restatements of, and amendments and modifications to,
any of the foregoing.
"Material Adverse Effect" means any effect whatsoever which could
materially impair the ability of Borrower to fulfill its obligations under the
terms and conditions of the Loan Documents.
"Material Change" means a change in any documents, which: (a) could
cause a Material Adverse Effect; or (b) causes the Properties to not comply with
any Environmental Law or any other material applicable Law.
"Maturity Date" means the maturity date stated in the Note.
"Maximum Legal Rate" shall have the meaning set forth for such term in
the Note.
"Net Capital Expenditures" means for any period, the aggregate amount
of Capital Expenditures during such period, minus the aggregate amount of such
Capital Expenditures which were financed during such period with Debt other than
revolving loans, minus the cash proceeds of assets sales during such period.
"Note" means the promissory note executed in conjunction with this
Agreement to further evidence the Loan to Borrower.
"Obligations" means all present and future indebtedness, obligations
and liabilities, and all renewals and extensions thereof, or any part thereof,
now or hereafter owed to Lender by Borrower arising pursuant to this Agreement,
or the Loan Documents, and all interest accruing thereon and costs, expenses,
prepayment fees or penalties, cancellation fees or penalties, and reasonable
attorneys' fees incurred in the enforcement or collection thereof regardless of
whether such indebtedness, obligations, and liabilities are direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, but not limited to, the indebtedness, obligations, and
liabilities evidenced, secured, or arising pursuant to any of the Loan
Documents, and all renewals and extensions thereof, or any part thereof, and all
present and future amendments thereto.
"Permitted Debt" shall have the meaning set forth for such term in
Section 2.8 of this
28
Agreement.
"Permitted Encumbrances" shall have the meaning set forth in Section
2.8 of this Agreement.
"Person" means any individual, firm, corporation, association,
partnership, joint venture, Tribunal, or other entity.
"Plans" means the plans and specifications used for the construction of
the Properties.
"Potential Default" means the occurrence of any event which, after
notice or the passage of time, or both, could become a Default hereunder.
"Properties" means the real property described on Exhibit A with a
street address of 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx, the real property described
on Exhibit B with a street address of 00000 X. Xxxxx Xxxx, Xxxxxxx, Xxxxx, and
the real property described on Exhibit C with a street address of 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx. "Properties," as used herein, incorporate by
definition "Mortgaged Property" as defined in the Deeds of Trust.
"Rights" means rights, remedies, powers, and privileges.
"Serrot" means Serrot International, Inc., an Illinois corporation.
"Serrot Equipment" shall have the meaning set forth in Section 1.6.
"Serrot Real Property" means the real property described on Exhibit D
attached hereto.
"Shareholders' Equity" means, as of any date of determination, for
Gundle and its subsidiaries on a consolidated basis, shareholders' equity as of
that date determined in accordance with Generally Accepted Accounting
Principles.
"Stock Purchase" means the purchase of all outstanding stock of Serrot
from Waste Management Holdings, Inc. concurrently with the closing of the Loan.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
by and between Gundle and Waste Management Holdings, Inc., dated January 22,
2002, relating to the purchase of all of the outstanding stock of Serrot.
"Tangible Net Worth" means, as of any date of determination, for Gundle
and its subsidiaries on a consolidated basis, Shareholders' Equity on such date
(excluding therefrom the effects of currency translations, calculated in
accordance with Generally Accepted Accounting Principles) minus the Intangible
Assets of Gundle and its subsidiaries on such date.
"Taxes" means all taxes, assessments, fees, levies, impositions,
duties, deductions, withholdings, or other charges of any nature whatsoever from
time to time or at any time imposed by any Laws or by any Tribunal, including,
but not limited to, sales and F.I.C.A. taxes and payments.
29
"Title Company" means Partners Title Company, as agent for Commonwealth
Land Title Insurance Company as underwriter (for Texas) and Xxxxxxxxx &
Xxxxxxxxx, P.A., as agent for Fidelity National Title Insurance Company as
underwriter (for South Carolina).
"Title Policy" means, collectively, an TLTA Loan Policy of Title
Insurance for the Gundle Road Property and the Hardy Road Property and an ALTA
Loan Policy of Title Insurance for the Eastland Avenue Property, with all
endorsements required by Lender dated as of this Agreement, issued or endorsed
to Lender by the Title Company insuring that the Deeds of Trust create a valid,
first, and prior Lien on the Properties, subject to no exceptions other than
those accepted by Lender in Lender's sole discretion.
"Tribunal" means court, department, commission, board, bureau, agency,
or instrumentality of any Governmental Unit.
"UCC" means the applicable Uniform Commercial Code.
ARTICLE 12
----------
MISCELLANEOUS
-------------
Section 12.1. Headings. The headings, captions, and arrangements used
in any of the Loan Documents are, unless specified otherwise, for convenience
only and shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, nor affect the meaning thereof.
Section 12.2. Articles, Sections, Exhibits, and Schedules. All
references to "Article," "Articles," "Sections," "Subsection," or "Subsections"
contained in this Agreement are, unless specifically indicated otherwise,
references to articles, sections, and subsections of this Agreement. All
references to "Exhibits" and "Schedules" contained in this Agreement are
references to exhibits and schedules attached to this Agreement all of which are
made a part of this Agreement for all purposes, the same as if set forth in this
Agreement verbatim, it being understood that if any Exhibit, which is to be
executed and delivered, contains blanks, Lender and Lender's counsel are
authorized to complete the same and in accordance with the terms and provisions
contained and as contemplated in this Agreement and Schedule 1 prior to or at
the time of, or after, the execution and delivery thereof.
Section 12.3. Notices. Unless specifically otherwise provided herein,
whenever any of the Loan Documents requires or permits any consent, approval,
notice, requests or demand from one party to another, the consent, approval,
notice, request, or demand must be in writing to be effective and, if mailed,
shall be deemed to have been given on the third (3rd) Business Day after it is
enclosed in an envelope, addressed to the party to be notified at the address
stated below (or at such other address as may have been designated by written
notice), properly stamped, sealed, and deposited in the United States mail
registered or certified, return receipt requested. As an alternative to the
foregoing notice and delivery provisions, notices or demands to be given
hereunder may be personally delivered or delivered by overnight courier or other
courier (including, without limitation, by Federal Express) and notices or
demands shall be effective on the date of delivery (whether such
30
was personally delivered by hand of courier, or delivered by overnight courier
or delivery service), or sent by facsimile to the number referenced below (which
delivery shall be effective on the date of confirmation of such facsimile if
before 5:00 P.M. on a Business Day or the next Business Day if after 5:00 P.M.).
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be the receipt
of the notice or other communication sent. The address for each party for
purposes hereof is as follows:
BORROWER:
Gundle/SLT Environmental, Inc.
GSE Lining Technology, Inc.
Serrot International, Inc.
00000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Vice President and Corporate Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: T. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
LENDER:
Transamerica Equipment Financial Services Corporation
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
(No facsimile notice to this office permitted)
with copies to:
Transamerica Equipment Financial Services Corporation
00000 Xxxxxx Xxxxx, Xxxxx 000
00
Xxxxxxxx Xxxx, XX 00000
Attention: Division Credit Manager
Fax: (000) 000-0000
Transamerica Equipment Financial Services Corporation
0000 Xxxxxxxx Xxxxx, Xxxxx 0000 Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Legal Department
Fax: (000) 000-0000
Section 12.4. Exceptions to Covenants. Borrower shall not be deemed to
be permitted to take any action or fail to take any action which is permitted as
an exception to any of the covenants contained in any of the Loan Documents if
such action or omission would result in the breach of any other covenant
contained in any of the Loan Documents.
Section 12.5. Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and, except as otherwise indicated, shall
not be affected by any investigation made by any party.
Section 12.6. Maximum Interest Rate. It is the intent of Borrower and
Lender and all other parties to the Loan Documents to conform to and contract in
strict compliance with all applicable usury Laws from time to time in effect.
All Loan Documents and agreements between Borrower and Lender (or any other
party liable with respect to the obligations under the Loan Documents) as to any
and all of the obligations are limited and controlled by Paragraph 4 of the
Note.
Section 12.7. Invalid Provisions. If any provision of any of the Loan
Documents is held to be illegal, invalid, or unenforceable under present or
future Laws effective during the term thereof, such provision shall be fully
severable; the appropriate Loan Document shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part
thereof; and the remaining provisions thereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance therefrom. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of such Loan Document a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.
Section 12.8. Entirety and Amendments. This Agreement and the other
Loan Documents embody the entire agreement between the parties relating to the
subject matter hereof, supersede all prior agreements and understandings, if
any, relating to the subject matter hereof including, but not limited to, that
certain loan commitment letter, dated on or about January 16, 2002, to Borrower
from Lender, and may be amended only by an instrument in writing executed
jointly by Borrower and Lender, and supplemented only by documents delivered or
to be delivered in accordance with the express terms hereof.
Section 12.9. Multiple Counterparts. This Agreement has been executed
in a number of identical counterparts, each of which constitutes an original and
all of which constitute, collectively one agreement; but in making proof of this
Agreement, it shall not be necessary to produce or
32
account for more than one such counter part. Signature pages from one or more
counterparts may be detached and reattached to a single copy of this Agreement
to physically form one entire document. Further, as each party will execute at
least three counterparts of this Agreement, Lender is authorized to detach and
attach pages and form one entire document and retain the other counterparts
separately.
Section 12.10. Parties Bound. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender, and their respective successors and
assigns; provided that Borrower may not, without the prior written consent of
Lender, assign or delegate any Rights, duties, or obligations hereunder, No term
or provision of this Agreement shall inure to the benefit of any Person other
than Borrower and Lender, and their respective successors and assigns;
consequently, no other Person shall be entitled to rely upon, or to raise as a
defense, in any manner whatsoever, the failure of Borrower or Lender to perform,
observe, or comply with any such term or provision.
Section 12.11. Time of the Essence. It is expressly agreed by the
parties hereto that time is of the essence with respect to this Agreement.
Section 12.12. Lender's Name. Borrower shall not use the names of
Lender or refer directly or indirectly to Lender in connection with any public
announcement, brochure, prospectus or placement memorandum, article, or other
material without Lender's prior written consent.
Section 12.13. Syndication/Participation. Borrower agrees that although
this Agreement and all other Loan Documents name Lender as the holder hereof,
Lender, in Lender's sole discretion, with or without notice to Borrower, is
authorized to assign in whole or in part, syndicate and/or sell participating
interests in the Loan to other lenders or financial institutions (collectively,
"Syndication"), and Borrower agrees that, subject to the terms of the agreements
of such Syndication, each will be entitled to rely on the terms of the Loan
Documents as if such holder had been named as an original party herein.
Notwithstanding any other agreement by Lender, Lender may disclose information
regarding the Loan and Borrower to any Syndication assignee or potential
assignee provided any such assignee or potential assignee (i) is informed by
Lender of the confidential nature of any documents or information which Lender
has otherwise agreed to keep confidential, and (ii) agrees in writing to be
bound by substantially the same agreement of confidentiality to which Lender has
agreed. To the extent that any such participants request certifications,
estoppel letters, corrections or clarifications be made to Loan Documents,
Borrower agrees to enter into such corrections, clarifications or further
assurances as long as such revisions do not change the financial and legal terms
of the overall transaction.
Section 12.14. Controlling Agreement. If any provisions of the other
Loan Documents conflict with the terms of this Agreement, this Agreement shall
control except for Paragraph 4 of the Note which shall always control as to
usury and the Maximum Legal Rate, and except for the Environmental Indemnity,
which shall control as to all environmental matters.
Section 12.15. Rules of Construction. Should any provision of this
Agreement or any of the Loan Documents require interpretation or construction in
any judicial, administrative, or other proceeding or circumstance, it is agreed
that the parties hereto intend that the court, administrative body, or other
entity interpreting or construing the same shall not apply a presumption that
the
33
provisions hereof shall be more strictly construed against one party by reason
of the rule of construction that a document is to be construed more strictly
against the party who itself or through its agent prepared the same, it being
agreed that the agents of both parties hereto have fully participated in the
preparation of all provisions of this Agreement and the Loan Documents,
including, without limitation, all exhibits attached to the Agreement and Loan
Documents.
Section 12.16. Joint and Several. Although defined collectively, the
Obligations hereunder are joint and several to all parties executing below for
Borrower. Each Person comprising Borrower shall be responsible, individually,
and jointly, for each agreement, covenant, representation and warranty contained
in this Agreement.
Section 12.17. GOVERNING LAW. THIS AGREEMENT AND THE LOAN DOCUMENTS
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF).
Section 12.18. CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX,
STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR
THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY AND JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE OTHER LOAN
DOCUMENTS OR THE OBLIGATIONS.
Section 12.19. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER
IN ENTERING INTO THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
34
EXECUTED as of the day and year first herein set forth.
LENDER:
TRANSAMERICA EQUIPMENT FINANCIAL
SERVICES CORPORATION,
a Delaware corporation
By: /s/ R.E. XXX
-------------------------------------
R.E. Xxx, Vice President Region
Credit Manager
BORROWER:
GUNDLE/SLT ENVIRONMENTAL, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx, Executive Vice
President
GSE LINING TECHNOLOGY, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx, Executive Vice
President
SERROT INTERNATIONAL, INC.,
an Illinois corporation
By: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx, Executive Vice
President
35
