EXHIBIT 10.1
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CREDIT AGREEMENT
between
SOUTHWEST BANK OF ST. LOUIS
and
XXXXXX COMPANIES, INC.,
XXXXXX CORPORATION,
CAPE COMPOSITES, INC.,
ENGINEERING TECHNOLOGY CORPORATION,
ZOLTEK PROPERTIES, INC.,
AND
HARDCORE COMPOSITES OPERATIONS, LLC
Dated as of May 11, 2001
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (this "Agreement") is made as of the 11th day of
May, 2001 by and between XXXXXX COMPANIES, INC., a Missouri corporation
having its chief executive office and principal place of business located at
0000 XxXxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("Parent"), XXXXXX
CORPORATION, a Missouri corporation, CAPE COMPOSITES, INC., a California
corporation, ENGINEERING TECHNOLOGY CORPORATION, a Missouri corporation,
ZOLTEK PROPERTIES, INC., a Missouri corporation, and HARDCORE COMPOSITES
OPERATIONS, LLC, a Delaware limited liability company (individually and
collectively hereinafter "Borrowers"; all references to "Borrowers" or
"Borrower" shall mean each and all of the Borrowers) and SOUTHWEST BANK OF
ST. LOUIS (the "Bank"), with an office at 00000 Xxxxxxxxxx Xxxx, Xx. Xxxxx,
Xxxxxxxx 00000.
SECTION 1. DEFINITIONS
1.01. CERTAIN DEFINED TERMS. When used herein, the following terms shall
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have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
Account Debtor - Any Person who is or may become obligated under or on
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account of an Account.
Accounts - All accounts (as defined in the Code), contract rights,
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chattel paper, instruments and documents, in which the Borrowers now have or
hereafter acquire an interest.
Affiliate - A Person (i) which owns or otherwise has an interest in 5%
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or more of any stock or membership interest of any of the Borrowers, or (ii)
which owns or otherwise has an interest in 5% or more of the stock or other
ownership units of any entity in which any Borrower (or any shareholder,
director, officer, employee or direct or indirect subsidiary of any Borrower
or any combination thereof) owns or otherwise has an interest in, or (iii)
which, directly or through one or more intermediaries, is controlled by,
controls, or is under common control with any Borrower. For purposes of
subpart (iii) above, "control" means the ability, directly or indirectly, to
affect the management or policies of a Person by virtue of an ownership
interest, by right of contract or any other means.
Agreement - This Credit Agreement, as the same may be amended or
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otherwise modified from time to time.
Assignment of Life Insurance Policy - The Assignment of Life Insurance
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Policy to be executed by Parent pursuant to which Parent shall pledge, as
security for the Obligations, a life insurance policy on the life of Xxxxx
Xxxx ("Xxxx"), such policy to provide for a death benefit in the amount of
$10,000,000.00 or greater.
Borrowing Base - At any date of determination, an amount equal to: (i)
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eighty percent (80%) of the face amount of Eligible Accounts outstanding at
such date; plus (ii) the Eligible Inventory Advance Amount; minus (iii) the
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aggregate undrawn face amount of all outstanding letters of credit issued by
the Bank for the account of any one or more of the Borrowers. In no event,
however, shall the Borrowing Base exceed Ten Million Dollars
($10,000,000.00).
Business Day - Means any day other than Saturday, Sunday or other day
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on which commercial banks in St. Louis, Missouri are authorized or required
by law to close.
Capital Expenditures - Expenditures made and liabilities incurred for
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the direct or indirect acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including, without limitation, payments with respect to
capitalized lease obligations.
Closing Date - The date on which all of the conditions precedent set
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forth in Section 4 are satisfied and the initial Loan is made hereunder.
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Code - The Uniform Commercial Code as adopted and in force in the State
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of Missouri, as from time to time amended.
Collateral - All personal and real property in which a security
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interest or other lien has been granted to or for the benefit of the Bank
pursuant to the Security Agreement, the Second Leasehold Deed of Trust or
any of the other Loan Documents or which otherwise secures the payment or
performance of any of the Obligations.
Current Ratio - means the ratio of current assets to current
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liabilities as determined by GAAP.
Debt - With respect to the Borrowers means, without duplication, (i)
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indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which any Borrower is liable,
contingently or otherwise, as an obligor, guarantor or otherwise, or in
respect of which any Borrower otherwise assures a creditor against loss,
(ii) all other obligations or items which, in accordance with GAAP, would be
shown on the liability side of a balance sheet as of the date of incurrence
thereof, (iii) obligations under leases which shall have been or should be,
in accordance with GAAP, recorded as capital leases in respect of which
obligations any Borrower is liable, contingently or otherwise, as an
obligor, guarantor or otherwise, or in respect of which obligations any
Borrower otherwise assures a creditor against loss, and (iv) unfunded vested
benefits under each Plan maintained for employees of any Borrower.
Debt Coverage Ratio - At any date of determination means the ratio of
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Parent's consolidated EBITDA to principal and interest paid by Parent and
its subsidiaries in connection with any of Parent's and/or its subsidiaries
Indebtedness, on a rolling four quarter basis, but excluding any unscheduled
principal payments made by Parent or any of its subsidiaries on any
revolving credit debt of Parent or any of its subsidiaries.
Default - An event or condition, the occurrence of which would, with
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the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - As defined in Section 3.01(b) of this Agreement.
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EBITDA - For any period means net income for any Person as determined
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in accordance with GAAP for such period plus all amounts deducted in the
computation thereof on account of (a) interest expense, (b) depreciation and
amortization expenses and other non-cash charges and (c) income and taxes.
Eligible Account - An Account arising in the ordinary course of the
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Borrowers' business from the sale of goods or the rendering of services
which the Bank, in its reasonable credit judgment, deems to be an Eligible
Account. To be an Eligible Account, such Account must be subject to the
Bank's perfected first priority security interest and no other lien (other
than Permitted Liens), and must be evidenced by an invoice or other
documentary evidence reasonably satisfactory to the Bank. Without limiting
the generality of the foregoing, no Account shall be an Eligible Account if:
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(i) it remains unpaid more than ninety (90) days after the
original invoice date; or
(ii) Twenty-five percent (25%) or more of the Accounts from the
Account Debtor are not Eligible Accounts; or
(iii) The Account Debtor is also any Borrower's creditor or supplier,
or has disputed liability with respect to such Account, or has
made any claim with respect to such Account, or the Account
otherwise is or may become subject to any right of setoff by
the Account Debtor, but only to the extent of any offset,
dispute or claim; or
(iv) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or a decree
or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor
in an involuntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or any other petition or
other application for relief under the federal bankruptcy laws
has been filed against the Account Debtor, or if the Account
Debtor has failed, suspended business, ceased to be solvent, or
consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or
(v) it arises from a sale to an Account Debtor outside the United
States unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to the Bank in its sole
reasonable discretion; or
(vi) it arises from a sale to the Account Debtor on a xxxx-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or
any other repurchase or return basis; or
(vii) the Bank believes, in its reasonable credit judgment, that
collection of such Account is insecure or that payment thereof is
doubtful or will be materially delayed by reason of the Account
Debtor's financial condition; or
(viii) the goods giving rise to such Account have not been shipped to
the Account Debtor in accordance with the Account Debtor's
instructions in respect of such goods, or such goods are
otherwise nonconforming goods, or the services giving rise to
such Account have not been properly performed by the applicable
Borrower; or
(ix) the total unpaid Accounts of the Account Debtor exceed a credit
limit determined by the Bank in its reasonable discretion (which
credit limit shall be disclosed by the Bank to the Borrowers at
least thirty (30) days prior to it becoming effective and which
credit limit may be based upon the extent to which the total
unpaid Accounts of such Account Debtor are excessive relative
to all other unpaid Accounts and upon such other customary
credit criteria as the Bank reasonably deems appropriate), but
only to the extent such Account exceeds such limit; or
(x) the Account is evidenced by chattel paper or an instrument of any
kind (unless such instrument has been endorsed by the applicable
Borrower and delivered to the Bank), or has been reduced to
judgment; or
(xi) any Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances which
are made in the ordinary course of any Borrower's business for
prompt payment and which discounts or allowances are
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reflected in the calculation of the face value of each invoice
related to such Account, but only to the extent of such
deduction, discount or allowance; or
(xii) it arises out of a sale made by any Borrower to any subsidiary,
direct or indirect, of any Borrower or any Affiliate of any
Borrower or to a Person controlled by an Affiliate of any
Borrower.
Eligible Inventory - Such inventory of the Borrowers which the Bank, in
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the exercise of its reasonable credit judgment, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no inventory
shall be Eligible Inventory unless, in the Bank's opinion, it (i) is in
good, new and saleable condition, (ii) is not obsolete or unmerchantable,
(iii) meets all standards imposed by any applicable governmental agency or
authority, (iv) conforms in all material respects to the warranties and
representations set forth in this Agreement and the Security Agreement, (v)
is at all times subject to the Bank's duly perfected, first priority
security interest and no other lien (other than Permitted Liens), and (vi)
is situated at a location in compliance with Section 6.01(m) hereof.
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Eligible Inventory Advance Amount - Subject always to the limitations
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of the Maximum Inventory Advance, an amount equal to the product of (a) the
Eligible Inventory Advance Rate, times (b) the net amount of the Borrowers'
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Eligible Inventory, calculated at cost, on a first-in, first-out basis.
Eligible Inventory Advance Rate - With respect to all Eligible
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Inventory, fifty percent (50%) (measured at cost).
Environmental Laws - All federal, state, local and other applicable
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statutes, ordinances, rules, regulations, judicial orders or decrees, common
law theories of liability, governmental or quasi-governmental directives or
notices or other laws or matters now or hereafter relating in any respect to
occupational safety, health or environmental protection.
ERISA - The Employee Retirement Income Security Act of 1974, as amended
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from time to time, and all rules and regulations from time to time
promulgated thereunder.
Event of Default - As defined in Section 7.01 of this Agreement.
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GAAP - Means generally accepted accounting principles set forth from
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time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board
(or agencies with similar functions of comparable stature and authority
within the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination.
Hazardous Substance - Any hazardous, toxic, dangerous or otherwise
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environmentally unsound substance, waste or other material, in whatever
form, as defined or described in, or contemplated by, any Environmental Law
and any other hazardous, toxic, dangerous or otherwise environmentally
unsound substance, waste or other material in whatever form, or any other
substance, waste or other material regulated by any Environmental Law.
Indebtedness - With respect to the Borrowers shall mean indebtedness
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for borrowed money or for the deferred purchase price of property or
services (but excluding trade accounts payable incurred in the ordinary
course of the Borrowers' business) in respect of which any Borrower is
liable, contingently or otherwise, as an obligor, guarantor or otherwise, or
in respect of which any Borrower otherwise assures a creditor against loss.
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Inventory Turn Ratio - At any date of determination means the ratio of
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the Borrowers' cost of sales (as calculated in accordance with GAAP) for the
previous four quarters (on a rolling forward basis) to the aggregate value
of Borrowers' inventory, as valued on the consolidated balance sheet of
Parent as of the date of such determination.
Landlord's Waiver - An agreement in form reasonably acceptable to the
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Bank from any landlord who leases any real property to any Borrower whereby
such landlord waives any landlord's or other lien it may have on any of the
Collateral, allows Bank access to the leases premises and contains such
other matters as are reasonably requested by the Bank.
Loan Account - The loan account or accounts established on the books of
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the Bank pursuant to Section 2.05 hereof and in which the Bank will record
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all Loans, payments made on such Loans and other appropriate debits and
credits as provided by this Agreement.
Loan Documents - This Credit Agreement, the Notes, the Security
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Agreement, the Second Leasehold Deed of Trust and any other agreements or
documents now or hereafter evidencing, securing or otherwise relating to any
of the transactions described in or contemplated by this Agreement, as the
same may be amended, renewed, replaced, consolidated or otherwise modified
from time to time.
Loans - All Revolving Credit Loans and the Term Loan.
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Maximum Inventory Advance - From the period from the Closing Date
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through and including the one year anniversary thereof (the "Inventory
Adjustment Date"), the maximum inventory advance on Eligible Inventory shall
not exceed Seven Million Dollars ($7,000,000.00). After the Inventory
Adjustment Date, the maximum inventory advance on Eligible Inventory shall
not exceed Five Million Dollars ($5,000,000.00).
Mortgagee's Waiver - An agreement in form reasonably acceptable to the
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Bank from any mortgagee who has a mortgage or like lien on any of the
Borrower's real property, whereby such mortgagee waives any mortgage lien on
the Collateral and consents to the security interest of Bank on the
Collateral, allows Bank access to the mortgaged premises and contains such
other matters as are reasonably requested by the Bank.
Notes - The Revolving Credit Note and the Term Loan Note.
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Obligations - All Loans and all other advances, debts, liabilities,
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obligations, covenants and duties owing, arising, due or payable from the
Borrowers to the Bank of any kind or nature, present or future, whether or
not evidenced by any note, letter of credit, guaranty or other instrument,
whether arising under this Agreement or any of the other Loan Documents or
otherwise and whether direct or indirect (including, without limitation,
those acquired by assignment), absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising and however
acquired, and all replacements, renewals, extensions and other modifications
of any of the foregoing. The term includes, without limitation, all
interest, charges, expenses, fees, attorneys' fees and any other sums
chargeable to the Borrowers under any of the Loan Documents.
Permitted Debt - Without duplication, any of the following:
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(i) Debt to trade creditors and normal expense accruals incurred
in the ordinary course of the Borrowers' business;
(ii) Debt to the Bank;
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(iii) Debt secured by Permitted Liens;
(iv) Debt which is subordinated to the Obligations pursuant to the
terms of a subordination agreement satisfactory to the Bank in
its sole discretion;
(v) Debt existing on the date of this Agreement and disclosed on
Schedule 1.01 (Existing Permitted Debt) of this Agreement (and any
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extensions, renewals, refinancings and replacements thereof in a
principal amount not in excess of the amount of such Debt
outstanding immediately prior to the effectiveness of such
extension, renewal, refinancing or replacement);
(vi) Debt incurred by any Borrower resulting solely from such Borrower's
guaranty of the debt or other obligations of another Borrower; and
(vii) other Debt approved in advance by the Bank in writing.
Permitted Liens - Any of the following:
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(i) liens for taxes, assessments or governmental charges not
delinquent or being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP
are maintained on the Borrowers' books;
(ii) liens arising out of deposits in connection with workers'
compensation, unemployment insurance, old age pensions or other
social security or retirement benefits legislation;
(iii) deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds, and other obligations of like nature
arising in the ordinary course of the Borrowers' business;
(iv) liens imposed by law, such as mechanics', workers', materialmen's,
carriers' or other like liens arising in the ordinary course of the
Borrowers' business which secure the payment of obligations which
are not past due or which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP are maintained on the Borrowers' books;
(v) liens existing on the Closing Date, after the funding of the
initial Loan hereunder, and described on Schedule 5.01(p), and any
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extensions, renewals or replacements thereof provided that no
additional property shall be encumbered by such liens and the
unpaid principal amount of the Debt secured thereby shall not be
increased on or after the date of any such extension, renewal or
replacement;
(vi) purchase money security interests for the purchase of equipment to
be used in the Borrowers' business, securing solely the equipment
so purchased, and which do not violate any provision of this
Agreement including the limits on Borrowers' right to make Capital
Expenditures;
(vii) liens of commercial depository institutions, arising in the
ordinary course of business and not securing Debt, constituting a
statutory or common law right of setoff against amounts on deposit
with such institution;
(viii) capitalized leases which do not violate any provision of
this Agreement;
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(ix) liens in favor of the Bank; and
(x) rights of way, zoning restrictions, easements and similar
encumbrances affecting the Borrowers' real property which do not
materially interfere with the use of such property.
Person - An individual, corporation, partnership, trust, governmental
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entity or any other entity, organization or group whatsoever.
Plan - An employee benefit plan (as defined in Section 3(3) of ERISA)
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now or hereafter maintained for employees of any of the Borrowers.
Prime Rate - The rate of interest announced by the Bank from time to
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time as its prime rate or other designation in replacement of the prime rate
announced by the Bank. Such rate may not be the lowest rate offered by the
Bank.
Requirement of Law - As to any person, the certificate of incorporation
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and bylaws or other organizational or governing documents of such person,
and any law, treaty, rule, regulation or determination of any arbitrator or
a court or other authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property
is subject.
Revolving Credit Loan - A Loan made by the Bank as provided in
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Section 2.02 of this Agreement.
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Revolving Credit Note - The Revolving Credit Note to be executed by the
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Borrowers on the Closing Date in favor of the Bank to evidence the Revolving
Credit Loans made pursuant to Section 2.02 of this Agreement, which shall be
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in the form of Exhibit A attached hereto, as the same may be amended,
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renewed, replaced, consolidated or otherwise modified from time to time
after execution and delivery thereof.
Second Leasehold Deed of Trust - The leasehold deeds of trust to be
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executed by Zoltek Properties, Inc. on or about the Closing Date in favor of
the Bank and by which Zoltek Properties, Inc. shall grant to the Bank, as
security for the Obligations, a lien upon the real property leased by Zoltek
Properties, Inc. and located at 00 Xxxxxxxx Xxxxxxxx Xxxx, Xx. Xxxxxxx,
Xxxxxxxx 00000 (the "Real Property").
Security Agreement - The Security Agreement to be executed by the
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Borrowers on the Closing Date in favor of the Bank and by which the
Borrowers shall grant to the Bank, as security for the Obligations, a
security interest in all of the Borrowers' presently owned or hereafter
acquired personal property, including, without limitation, all of the
Borrowers' inventory, Accounts, equipment and general intangibles.
Special Deposit Account - A deposit account established by the
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Borrowers pursuant to Section 3.07 of this Agreement.
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Term Loan - The Loan described in Section 2.03 of this Agreement.
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Term Loan Note - The Term Loan Note to be executed by the Borrowers on
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or about the Closing Date in favor of the Bank to evidence the Term Loan
made pursuant to Section 2.03 of this Agreement, which shall be in the form
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of Exhibit B attached hereto, as the same may be amended, renewed, replaced,
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consolidated or otherwise modified from time to time after execution and
delivery thereof.
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Working Capital - At any date of determination means the Borrowers'
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total current tangible assets minus the Borrowers' total current
liabilities.
1.02. ACCOUNTING TERMS. All accounting terms not specifically defined
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herein shall be construed in accordance with GAAP consistent (except for
changes in accordance with GAAP which are concurred in by Parent's
independent certified public accountants) with that applied in preparation
of the financial statements referred to in Section 4.03(b) hereof, and all
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financial data pursuant to the Agreement shall be prepared in accordance
with such principles.
1.03. OTHER INTERPRETIVE PROVISIONS. This Agreement and the other Loan
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Documents are the result of negotiations among and have been reviewed by
counsel to the Bank, the Borrowers and the other parties thereto, and are
the products of all parties. Accordingly, they shall not be construed
against the Bank merely because of the Bank's involvement in their
preparation. The section titles, table of contents and list of exhibits and
schedules appear as a matter of convenience only and shall not affect the
interpretation of this Agreement.
SECTION 2. CREDIT FACILITY
2.01. TOTAL CREDIT FACILITY. Subject to the following terms and
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conditions of this Agreement, the Bank agrees to make a total
credit facility of up to $14,000,000.00 available to the Borrowers.
2.02. REVOLVING CREDIT LOANS.
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(a) The Bank agrees, subject to the terms and conditions of this
Agreement, to make Revolving Credit Loans to the Borrowers from time to time
after the date hereof, for so long as there exists no Default or Event of
Default, up to a maximum principal amount at any time outstanding equal to
the Borrowing Base at such time. Subject to the terms and conditions hereof,
the Borrowers may borrow, repay and reborrow under this Section 2.02.
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(b) A request for a Revolving Credit Loan shall be made, or shall
be deemed to be made, in the following manner: (i) the Borrowers shall give the
Bank notice (whether in writing, by telephone or otherwise) of its intention
to borrow, in which notice the Borrowers shall specify the amount of the
proposed borrowing and the proposed borrowing date; (ii) the becoming due of
any amount required to be paid under this Agreement or any Note as interest
shall be deemed irrevocably to be a request for a Revolving Credit Loan on
the due date in the amount required to pay such interest if such amount is
not otherwise timely paid by the Borrowers; and (iii) the becoming due of
any other Obligations shall be deemed irrevocably to be a request for a
Revolving Credit Loan on the due date in the amount then so due if such
amount in not otherwise timely paid by the Borrowers. For purposes of
subpart (i) above, the Borrowers agree that the Bank may rely and act upon
any request for a Revolving Credit Loan from any individual who the Bank,
absent gross negligence or willful misconduct, believes to be an authorized
representative of any of the Borrowers.
(c) The Revolving Credit Loans shall be used by the Borrowers
solely for (i) repaying certain indebtedness of the Borrowers to
Firstar Bank, N.A., (ii) paying certain costs and expenses in
connection with the closing of the transactions contemplated by this
Agreement, and (iii) the Borrowers' general working capital needs and
general corporate purposes to the extent not inconsistent with the
terms of this Agreement.
2.03. TERM LOAN. The Bank shall make a Term Loan to the
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Borrowers in the principal amount of Four Million Dollars ($4,000,000.00),
which shall be evidenced by and repayable in accordance with the terms of
the Term Loan Note. The Term Loan shall be funded on the Closing Date
concurrently with
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the Bank's initial Revolving Credit Loan. The proceeds of the Term Loan
shall be used by the Borrowers solely for purposes of (i) repaying certain
indebtedness of the Borrowers to Firstar Bank, N.A., (ii) paying certain
costs and expenses in connection with the closing of the transactions
contemplated by this Agreement, and (iii) the Borrowers' general working
capital needs and general corporate purposes to the extent not inconsistent
with the terms of this Agreement.
2.04. ALL LOANS TO CONSTITUTE ONE OBLIGATION; CROSS DEFAULT. All Loans
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and all other Obligations of the Borrowers, whether under this Agreement, the
Loan Documents, or any other agreement or instrument executed by any of the
Borrowers in favor of the Bank, shall constitute one general obligation of
the Borrowers and shall be secured by the Bank's security interest in and
lien upon all of the Collateral, and by all other security interests and
liens heretofore, now or at any time or times hereafter granted by the
Borrowers to the Bank. A default under any one or more of the Loan
Documents, this Agreement or any other agreement between the Bank and the
Borrowers shall constitute an event of default under any other agreement
between any Borrower and the Bank.
2.05. LOAN ACCOUNT. The Bank shall enter all Revolving Credit Loans
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as debits to the Loan Account and shall also record in the Loan Account
all payments made by the Borrowers on account of Revolving Credit Loans and
all proceeds of Collateral which are finally paid to the Bank, and may
record therein, in accordance with customary accounting practice, all
charges and expenses properly chargeable to the Borrowers hereunder.
SECTION 3. INTEREST, FEES, REPAYMENT AND TERM
3.01. INTEREST AND CHARGES.
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(a) Interest shall accrue on the principal amount of the Revolving
Credit Note outstanding and the Term Loan Note outstanding at the end
of each day at a fluctuating rate per annum equal to the Prime Rate in
effect on such day. After the date hereof, the foregoing fluctuating rate of
interest shall be increased or decreased, as the case may be, by an amount
equal to any increase or decrease in the Prime Rate, with such adjustments
to be effective as of the opening of business on the day that any such
change in the Prime Rate becomes effective. Interest shall be calculated on
a daily basis (computed on the actual number of days elapsed over a year of
360 days), commencing on the date the initial Loan is made.
(b) Upon or after the occurrence and during the continuation of
any Event of Default, the principal amount of the Obligations shall
bear interest, calculated daily (computed on the actual days elapsed over a
year of 360 days), at a fluctuating rate per annum equal to two percent
(2.0%) above the interest rate that would otherwise apply under Section
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3.01(a) (the "Default Rate").
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(c) In no contingency or event whatsoever shall the aggregate of
all amounts deemed interest hereunder or under the Notes and charged or
collected pursuant to the terms of this Agreement or any other Loan
Documents exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable
thereto. In the event that such a court determines that the Bank has charged
or received interest hereunder or under the other Loan Documents in excess
of the highest applicable rate, the Bank shall apply such excess to any
other Obligations then due and payable, whether principal, interest, fees or
otherwise, and shall refund the remainder of such excess interest, if any,
to the Borrowers, and such rate shall automatically be reduced to the
maximum rate permitted by such law.
3.02. TERM OF AGREEMENT. Subject to the Bank's right to cease making
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Loans to the Borrowers at any time upon or after the occurrence and during the
continuation of any Default or Event of Default,
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the Borrowers shall be entitled to request advances under the Revolving
Credit Note for the period from the Closing Date to and including the day of
the second anniversary of the Closing Date. In no event may the Borrowers
terminate this Agreement until the Borrowers have repaid all Loans and
otherwise paid and performed their Obligations hereunder. All indemnities
given by the Borrowers to the Bank under any of the Loan Documents shall
survive the repayment of the Loans and the termination of this Agreement.
3.03. PAYMENTS. Except where evidenced by notes or other instruments
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issued or made by the Borrowers to the Bank specifically containing payment
provisions which are in conflict with this Section 3.03 (in which event the
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conflicting provisions of such notes or other instruments shall govern and
control), that portion of the Obligations consisting of:
(a) Principal payable on account of the Loans shall be payable by
the Borrowers to the Bank immediately upon the earliest to occur of (i)
the date or dates for payment as specified in the Notes, (ii) the occurrence
of any event described in Section 3.04 hereof which requires the payment of
------------
principal on the Loans, (iii) the occurrence and continuance of an Event of
Default in consequence of which the Bank elects to accelerate the maturity
and payment of any of the Obligations, (iv) termination of this Agreement
for any reason or (v) May 10, 2003 (the "Maturity Date"); provided, however,
that if the principal balance of Revolving Credit Loans outstanding at any
time shall exceed the Borrowing Base at such time, the Borrowers shall, on
demand, repay the Revolving Credit Loans in an amount sufficient to reduce
the aggregate unpaid principal amount of such Revolving Credit Loans by an
amount equal to such excess;
(b) Interest accrued on the Loans shall be due on the earliest
to occur of (i) the first day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding
month, (ii) the occurrence and continuance of an Event of Default in
consequence of which the Bank elects to accelerate the maturity and payment
of the Obligations, (iii) termination of this Agreement for any reason or
(iv) the Maturity Date; provided, however, that the Borrowers hereby
irrevocably authorize the Bank, in the Bank's sole discretion, to advance to
or on behalf of the Borrowers, and to charge to the Borrowers' Loan Account
as a Revolving Credit Loan, a sum sufficient each month to pay all interest
accrued on the Obligations during the immediately preceding month to the
extent such interest is not otherwise timely paid by the Borrowers;
(c) Costs, fees and expenses payable pursuant to this Agreement
or the other Loan Documents shall be payable by the Borrowers, on demand, to
the Bank or to any other Person designated by the Bank and the Borrowers
hereby authorize the Bank, in the Bank's sole discretion, to advance to or
on behalf of the Borrowers, and to charge the Borrowers' Loan Account as a
Revolving Credit Loan, all such costs, fees and expenses to the extent not
otherwise timely paid by the Borrowers; and
(d) The balance of the Obligations requiring the payment of money,
if any, shall be payable by the Borrowers to the Bank as and when provided
in this Agreement or the other Loan Documents, or if no specific provision
for payment is made, on demand.
3.04. MANDATORY PREPAYMENT. If any Borrower sells any of its equipment or
---------------------
real property, or if any of the Collateral is taken by condemnation or other
governmental taking, such Borrower shall pay the Bank, unless otherwise
agreed by the Bank, as a mandatory prepayment of the Term Loan, a sum equal
to the proceeds received by such Borrower from such sale or condemnation. If
the Term Loan shall have been paid in full, then such proceeds shall be
applied to reduce the outstanding principal balance of the Revolving Credit
Loans. Notwithstanding the foregoing, no such payment shall be required to
the extent that (i) such proceeds are from the disposition of equipment and,
within sixty (60) days of such disposition, such Borrower uses all or
substantially all of such proceeds to replace such equipment with
- 10 -
substantially similar or otherwise comparable equipment, or (ii) the sale
proceeds of such equipment and/or real property does not, in the aggregate,
exceed $250,000.00 in any fiscal year of the Borrowers.
3.05. MANDATORY PRINCIPAL PAYMENT ON TERM LOAN. The Borrowers shall,
-----------------------------------------
within twelve (12) months of the date of this Agreement, reduce the
principal balance of the Term Loan by making a principal payment on such
Term Loan in an amount equal to or greater than Five Hundred Thousand
Dollars ($500,000.00).
3.06. APPLICATION OF PAYMENTS AND COLLECTIONS. The Borrowers irrevocably
----------------------------------------
waive the right to direct the application of any and all payments and
collections at any time or times hereafter received by the Bank from or on
behalf of the Borrowers, and the Borrowers do hereby irrevocably agree that
the Bank shall have the continuing exclusive right to apply and reapply any
and all payments and collections received by the Bank or its agent at any
time or times hereafter by the Bank or its agent against the Obligations, in
such manner as the Bank may deem advisable, notwithstanding any entry by the
Bank upon any of its books and records. If as the result of collections of
Accounts as authorized by Section 3.07 hereof a credit balance exists in the
------------
Loan Account, such credit balance shall not accrue interest in favor of the
Borrowers, but shall be available to the Borrowers, on the second Business
Day after the Business Day on which the Bank receives immediately available
funds in respect thereof, for so long as no Event of Default exists. In no
event shall such credit balance be applied or be deemed to have been applied
as a prepayment of the Term Loan unless so requested by the Borrowers, but
the Bank may set-off such credit balance against the Obligations upon or
after the occurrence and during the continuation of an Event of Default.
3.07. COLLECTION OF ACCOUNTS.
-----------------------
(a) To expedite collection of the Accounts, the Borrowers
shall, upon the written request of the Bank, notify all of their Account
Debtors to make payment of the Accounts to one or more lock-box accounts or
deposit agreements (each a "Special Deposit Account") under the sole control
of the Bank. All funds in the Special Deposit Account shall immediately
become the property of the Bank and shall be applied by the Bank, subject to
Section 3.07(c) below, to reduce the Obligations. The Bank assumes no
---------------
responsibility for such lock-box arrangement, including, without limitation,
any claim of accord and satisfaction or release with respect to deposits
accepted thereunder. All remittances received by the Borrowers on account of
Accounts, and the proceeds of any of the other Collateral, shall be held as
the Bank's property by the Borrowers as trustee of an express trust for the
Bank's benefit and the Borrowers shall immediately deposit the same in the
Special Deposit Account.
(b) Upon or after the occurrence and during the continuation of
any Event of Default, the Bank may notify the Account Debtors that
Accounts have been assigned to the Bank and collect the Accounts directly in
its own name and may charge the collection costs and expenses, including
attorneys' fees, to the Borrowers. The Bank has no duty to protect, insure,
collect or realize upon the Accounts or preserve rights in them.
(c) For the purpose of computing interest hereunder, all items of
payment received by the Bank shall be deemed applied by the Bank on
account of the Obligations on the second Business Day after the Business Day
on which the Borrowers deposit such items of payment in the Special Deposit
Account; subject, however, to the Bank's right to charge the Borrowers for
any uncollected items of payment.
3.08. STATEMENTS OF ACCOUNT. The Bank will account to the Borrowers
----------------------
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by the Bank shall be deemed final,
binding and conclusive upon the Borrowers unless the Bank is notified
- 11 -
by the Borrowers in writing to the contrary within sixty (60) days after the
date each statement of account is sent to the Borrowers. Such notice shall
only be deemed an objection to those items specifically objected to therein.
3.09. CLOSING FEE; WARRANTS.
----------------------
(a) The Borrowers shall pay to the Bank a closing fee of
$35,000.00, which fee shall be deemed fully earned and nonrefundable at the
closing of the transactions contemplated hereby and which shall be paid
concurrently with the initial Loan hereunder. Such fee shall compensate the
Bank for the costs associated with the origination, structuring, processing,
approving and closing of the transactions contemplated by this Agreement,
including, but not limited to, administrative, general overhead and lost
opportunity costs, but not including any out-of-pocket or other costs, fees
or expenses for which the Borrowers have agreed to reimburse the Bank
pursuant to any other provision of this Agreement or the other Loan
Documents or any commitment letter, letter of intent or similar agreement.
(b) Parent shall issue warrants pursuant to a Warrant Agreement
satisfactory to the Bank pursuant to which the Bank shall be granted
warrants (the "Warrants") to purchase 12,500 shares of the common stock of
Parent, at an exercise price of $5.00 per share, with such warrants to be
exercisable by the Bank at any time during a period of five (5) years from
and after the date of this Agreement.
3.10. CAPITAL ADEQUACY.
-----------------
(a) In the event that the Bank shall have determined in good
faith that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application
thereof or compliance by the Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central
bank or governmental authority, does or shall have the effect of reducing
the rate of return on the Bank's capital as a consequence of its obligations
hereunder to a level below that which the Bank could have achieved but for
such adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank,
in its sole discretion, to be material, then from time to time, after
submission by the Bank to the Borrowers of a written demand therefor and a
detailed calculation thereof, the Borrowers shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such reduction.
(b) A certificate of the Bank claiming entitlement to payment as
set forth in Section 3.10(a) above shall be conclusive in the absence
---------------
of demonstrable error. Such certificate shall set forth the nature of the
occurrence giving rise to such payment, the additional amount or amounts to
be paid to the Bank, and the method by which such amounts were determined.
In determining such amount, the Bank may use any reasonable averaging and
attribution method.
3.11. REFINANCE OF REAL PROPERTY OF BORROWERS. In the event that the Bank
----------------------------------------
consents to the refinancing of any of the mortgages in place with respect to
any of the Borrowers' real property, or to any other increase in the
outstanding principal secured by such real property, then contemporaneously
with the consummation of such refinancing, the Borrowers shall pay to the
Bank an amount equal to $3,000,000.00, such sum to be applied by the Bank to
reduce the outstanding principal balance of the Term Loan, and in the event
that the Term Loan has been or becomes at such time paid in full, then the
balance of such amount shall be paid to reduce the outstanding balance of
the Revolving Credit Loan.
SECTION 4. CONDITIONS OF LENDING
4.01. GENERAL. Notwithstanding any other provision of this Agreement or
-------
anr of the other Loan Documents, it is understood that the Bank shall not be
obligated to make any Loan under SECTION 2 of
---------
- 12 -
this Agreement until each of the conditions set forth in this SECTION 4 have
---------
been and shall continue to be satisfied, in the sole reasonable discretion
of the Bank:
4.02. LOAN DOCUMENTATION. The Bank shall have received the following
-------------------
documents, duly executed and delivered by all parties thereto, and otherwise
satisfactory in form and content to the Bank and its counsel:
(a) Notes. The Revolving Credit Note and the Term Loan Note;
-----
(b) Security Agreement. The Security Agreement;
------------------
(c) UCC Financing Statements. Acknowledgment copies of filed
------------------------
UCC-1 financing statements from the Borrowers, as debtor, to the Bank,
as secured party, covering the Collateral, from such jurisdictions as the
Bank reasonably deems necessary to perfect its security interest in the
Collateral;
(d) Second Leasehold Deed of Trust. The Second Leasehold Deed of
------------------------------
Trust, and such UCC fixture financing statements and like real property
security documents as the Bank deems necessary to create, perfect and
preserve a lien in favor of the Bank, as security for the Obligations, on
the Real Property;
(e) Warrants. The Warrants;
--------
(f) Title Insurance. A fully paid mortgagee title insurance
---------------
policy, in standard ALTA form, issued by a title insurance company
satisfactory to the Bank, in an amount equal to not less than the fair
market value of the Real Property and insuring the validity and priority of
the mortgage lien thereon in favor of the Bank with no exceptions (including
survey exceptions) which the Bank shall not have approved in writing and
with such endorsements thereto as the Bank shall deem necessary, in its
reasonable determination, to protect its interest in such property or its
rights and remedies under the Loan Documents;
(g) Survey. A survey with respect to the Real Property, which
------
survey shall indicate the following: (i) an accurate metes and bounds
or lot, block and parcel description of such property; (ii) the correct
location of all building, structures and other improvements on such
property, including, without limitation, all streets; easements, rights of
way and utility lines; (iii) the location of ingress and egress from such
property, and the location of any set-back or other building lines affecting
such property; (iv) flood plain certificate and (v) a certification by a
registered land surveyor in form and substance acceptable to the Bank,
certifying in the Bank's favor to the accuracy and completeness of such
survey and to such other matters relating to such real property and survey
as the Bank shall require;
(h) Mortgagee's Waivers. Mortgagee's Waivers from all mortgagees
-------------------
who have a deed of trust, mortgage or like lien on any of the
Borrowers' real property;
(i) Landlord's Waivers. Landlord's Waivers from all landlords who
------------------
lease any real property to any Borrower;
(j) Assignment of Life Insurance. The Assignment of Life Insurance;
----------------------------
(k) Insurance. Copies of each Borrower's property damage
---------
insurance policies, together with loss payable endorsements on the Bank's
standard form of loss payee endorsement naming the Bank as sole loss payee
thereunder, and copies of each Borrower's liability insurance policies,
together with endorsements naming the Bank as an additional named insured
thereunder;
- 13 -
(l) Loan Disbursement Instructions; Borrowing Base Certificate.
----------------------------------------------------------
Written instructions from any Borrower directing the application of proceeds
of the initial Loan made pursuant to this Agreement, and an initial
Borrowing Base Certificate from the Borrowers reflecting that the Borrowers
have sufficient Eligible Accounts and Eligible Inventory to support
Revolving Credit Loans in the amount requested by the Borrowers on the date
of such certificate;
(m) Opinion of Borrowers' Counsel. The favorable written opinion
-----------------------------
of Xxxxxxxx Xxxxxx LLP, counsel to the Borrowers, to the Bank regarding
the Borrowers, the Loan Documents and the transactions contemplated by this
Agreement and the other Loan Documents;
(n) Certificate of the Borrower's Secretary. A certificate
---------------------------------------
executed by each Borrower's Secretary whereby such Secretary affirms that
attached to such certificate is (i) an accurate copy of such Borrower's
board resolutions authorizing the borrowing of monies, the granting of liens
and all other matters set forth in or contemplated by this Agreement and the
other Loan Documents, (ii) a copy of such Borrower's by-laws or operating
agreement in effect on the Closing Date, (iii) a copy of such Borrower's
articles or certificate of incorporation, articles of organization or
certificate of formation and all amendments thereto, certified by the
Secretary of State or other appropriate official of such Borrower's
jurisdiction of incorporation or organization; and (iv) an incumbency and
signature certification;
(o) President's Certificate. A closing certificate signed by the
-----------------------
President of each Borrower dated on the Closing Date, stating that (i)
the representations and warranties set forth in SECTION 5 hereof are true
---------
and correct on and as of such date, (ii) on such date such Borrower is in
compliance with all the terms and provisions set forth in this Agreement,
and (iii) on such date no Default or Event of Default has occurred or is
continuing; and
(p) Other Items. Such other agreements, documents and assurances
-----------
as the Bank may reasonably request in connection with the transactions
described in or contemplated by the Loan Documents.
4.03. OTHER CONDITIONS PRECEDENT TO LOANS. In addition, the Bank shall
------------------------------------
be under no duty to make any Loans pursuant to SECTION 2 hereof until the
---------
following conditions shall have been and shall continue to be satisfied, in
the sole discretion of the Bank:
(a) No Default or Event of Default shall exist;
(b) Except as set forth on Schedule 4.03(b) attached hereto, since
----------------
the December 31, 2000 financial statements submitted by the Borrowers to the
Bank, there shall not have occurred any material adverse change in the
business, financial condition or results of operations of the Borrowers taken
as a whole, or the existence or value of any material portion of the
Collateral, or any event, condition or state of facts which would reasonably
be expected materially and adversely to affect the actual or prospective
business, financial condition or operations of the Borrowers taken as a whole;
(c) No action, proceeding, investigation, regulation or legislation\
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or
to obtain damages in respect of, or which is related to or arises out of
this Agreement or the consummation of the transactions contemplated hereby;
and
(d) The Borrowers shall have paid all legal fees and other closing
or like costs and expenses of the Bank which the Borrowers are obligated to
pay hereunder.
- 14 -
4.04. CONDITIONS PRECEDENT TO EACH REVOLVING CREDIT LOAN. Without
---------------------------------------------------
limiting the applicability of the conditions precedent set forth in
Sections 4.01, 4.02 and 4.03 above to the Bank's obligation to make any
Loan, the obligation of the Bank to make any Revolving Credit Loan after the
Closing Date shall be subject to the further conditions precedent that, on
the date of each such Revolving Credit Loan:
(a) The following statements shall be true: (i) the representations
and warranties contained in SECTION 5 hereof are correct in all material
---------
respects on and as of the date of such Loan as though made on and
as of such date, and (ii) there exists no Default or Event of Default as of
such date, nor would any Default or Event of Default result from the making
of the Loan requested by the Borrowers; and
(b) The Borrowers shall have signed and sent to the Bank, if the
Bank so requests, a request for advance, setting forth in writing the amount
of the Revolving Credit Loan requested; provided, however, that the foregoing
condition precedent shall not prevent the Bank, if it so elects in its sole
discretion, from making a Revolving Credit Loan pursuant to the Borrowers'
non-written request therefor; and
(c) The Bank shall have received a completed Borrowing Base
Certificate in the form of Exhibit C hereto, signed by the Borrowers,
---------
and dated not more than thirty (30) days prior to the date of the Borrowers'
request for such Revolving Credit Loan; provided, however, that the Bank
reserves the right at any time to request and receive a more recent
Borrowing Base Certificate prior to an advance under the Revolving Credit
Loan; and
(d) The Bank shall have received such other approvals,
opinions or documents as it may reasonably request.
The Borrowers agree that the making of a request by the Borrowers for a
Revolving Credit Loan, whether in writing, by telephone or otherwise, shall
constitute a certification by the Borrowers and the person(s) executing or
giving the same that all representations and warranties of the Borrowers
herein are true in all material respects as of the date thereof and that all
required conditions to the making of the Revolving Credit Loan have been
met.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The
------------------------------------------------
Borrowers, jointly and severally, hereby represent, warrant and covenant to
the Bank as follows:
(a) Organization, Existence, Compliance with Law. Each of the
--------------------------------------------
Borrowers (i) is a corporation or limited liability company duly incorporated
or organized, validly existing and in good standing under the laws of the state
of its incorporation or organization, (ii) is in good standing in all other
jurisdictions in which it is required to be qualified to do business as a
foreign corporation or limited liability company (except where the failure
to so qualify would not materially and adversely affect the actual or
prospective business, financial condition or operations of the Borrowers
taken as a whole), (iii) has obtained all licenses and permits and has filed
all registrations necessary to the operation of its business (except where
the failure to so obtain such licenses or permits or file such registrations
would not materially and adversely affect the actual or prospective
business, financial condition or operations of the Borrowers taken as a
whole), and (iv) is in compliance with all Requirements of Law (except where
the failure to so comply would not materially and adversely affect the
actual or prospective business, financial condition or operations of the
Borrowers taken as a whole). The federal tax identification number of each
of the Borrowers is as follows:
- 15 -
Name of Borrower Tax Identification Number
---------------- -------------------------
Xxxxxx Companies, Inc. 00-0000000
Xxxxxx Corporation 00-0000000
Cape Composites, Inc. 00-0000000
Engineering Technology Corporation 00-0000000
Zoltek Properties, Inc. 00-0000000
Hardcore Composites Operations, LLC 00-0000000
(b) Authorization by the Borrowers. The execution, delivery and
------------------------------
performance by each of the Borrowers of the Loan Documents are within
each such Borrower's corporate or limited liability company powers, have
been duly authorized by all necessary corporate or limited liability company
action, and do not contravene (i) such Borrower's articles of incorporation,
articles of organization, certificate of formation, bylaws, operating
agreement or other organization documents or (ii) any law or contractual
restriction binding on or affecting such Borrower or its properties and do
not result in or require the creation of any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral
other than any such lien in favor of the Bank.
(c) Approval of Governmental Bodies. Except for such
-------------------------------
filings and recordings as may be necessary to create, record or perfect any
security interests and/or other liens created by any of the Loan Documents,
no authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for the due
execution, delivery and performance by each of the Borrowers of the Loan
Documents or the exercise by the Bank of its rights thereunder, including,
without limitation, the sale or other disposition of any of the Collateral
to any Person.
(d) Enforceability of Obligations. The Loan Documents are the
-----------------------------
legal, valid and binding obligations of each of the Borrowers which is
a party thereto, enforceable against such Borrowers in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforceability of creditors' rights generally and subject to
the discretion of courts in applying equitable remedies.
(e) Financial Statements. All financial statements of the Borrowers
--------------------
which have been furnished to the Bank fairly present the financial
condition of each of the Borrowers, as of the dates reflected on the
financial statements, and fairly present the results of the Borrowers
operations for the period covered thereby, all in accordance with GAAP,
subject in the case of unaudited interim financial statements to the absence
of footnotes required by GAAP. Except as set forth on Schedule 4.03(b), as
----------------
of the date of this Agreement, there has been no material change in such
conditions or such operations since the most recent financial statements
submitted to the Bank.
(f) Litigation. There is no pending or threatened action or
----------
proceeding affecting the Borrowers or their properties before any
court, governmental agency or arbitrator which could reasonably be expected
to materially and adversely affect the financial condition or business
prospects of the Borrowers taken as a whole.
(g) Investments. The Borrowers have no loans to or investments
-----------
in any Person except as may be permitted under Section 6.02(c) hereof.
---------------
- 16 -
(h) Existing Debt. The Borrowers have no Debt other than
-------------
Permitted Debt and Debt reflected on its most recent financial statements
submitted to the Bank.
(i) Leases. The Borrowers have no interest in any existing leases
------
other than the personal property and real property leases described in
Schedule 5.01(i) hereto, which schedule shall be updated by the Borrowers at
---------------
the time of any material change in the leases described therein and which
revised schedule shall be promptly furnished to the Bank. Notwithstanding
the foregoing, the Borrowers shall not be required to list on Schedule 5.01(i)
----------------
any personal property or real property leases under which the Borrowers'
remaining lease payments or other obligations thereunder do not exceed
$50,000.00.
(j) Outstanding Guaranties. The Borrowers have no guarantees
----------------------
outstanding, other than (i) the endorsement of instruments for collection
in the ordinary course of the Borrowers' business and (ii) guarantees by a
Borrower of any Debt of any other Borrower.
(k) Taxes. Except as otherwise disclosed on Schedule 4.03(b)
----- ----------------
attached hereto, the Borrowers have filed all required federal, state,
local and other tax returns and has paid, or made adequate provision for the
payment of, any taxes due pursuant thereto or pursuant to any assessment
received by the Borrowers except such taxes, if any, as are being contested
in good faith and as to which adequate reserves have been provided.
(l) Employee Plans. Except as disclosed on Schedule 5.01(l), the
--------------
Borrowers have no ERISA Plans.
(m) Stock and Records. All outstanding capital stock of
-----------------
each of the Borrowers which is a corporation was and is properly issued, and
all books and records of each of the Borrowers, including but not limited to
such Borrower's minute books, bylaws, operating agreement and books of
account, are accurate and complete in all material respects. None of the
Borrowers which is a corporation is obligated now or hereafter to redeem or
otherwise acquire, or pay any dividends or make any other distributions in
respect of, any of its stock.
(n) Hazardous Materials. Except as disclosed on Schedule 5.01(n)
------------------- ----------------
hereto, the Borrowers have duly complied with all Environmental Laws
and all of their facilities, leaseholds, assets and other property are in
compliance with all Environmental Laws, except where the failure to so
comply would not materially and adversely affect the actual or prospective
business, financial condition or operations of the Borrowers taken as a
whole. Except as disclosed on Schedule 5.01(n) hereto, there are no
----------------
outstanding or threatened citations, notices or orders of noncompliance
issued to the Borrowers or relating to their facilities, leaseholds, assets
or other property which could reasonably be expected to have a material
adverse affect on the actual or prospective business, financial condition or
operations of the Borrowers taken as a whole. The Borrowers have taken all
reasonable steps necessary to determine, and they have determined, that
(except as disclosed on Schedule 5.01(n) hereto) no Hazardous Substances
----------------
have been disposed of, released on, released from or otherwise affect any of
the Borrowers' facilities, leaseholds, assets and other property which could
reasonably be expected to have a material adverse affect on the actual or
prospective business, financial condition or operations of the Borrowers
taken as a whole. The Borrowers have been issued all licenses, certificates,
permits or other authorizations required under any Environmental Law or by
any federal, state or local governmental or quasi-governmental entity,
except for such licenses, certificates, permits and other authorizations the
failure to have could not reasonably be expected to have a material adverse
affect on the actual or prospective business, financial condition or
operations of the Borrowers taken as a whole.
- 17 -
(o) Negative Pledges. No Borrower is a party to or bound by any
----------------
indenture, contract or other instrument or agreement which prohibits the
creation, incurrence or sufferance to exist of any mortgage, pledge, lien,
security interest or other encumbrance upon any of the Collateral.
(p) Title to Property; Liens. Except for Permitted Liens, the
------------------------
Borrowers have good and marketable title to all assets and other property
purported to be owned by them, and the Bank has a perfected lien in
all of the Collateral subject to no other liens or claims except for
Permitted Liens.
(q) Insolvency. After the execution and delivery of the Loan
----------
Documents and the disbursement of the initial Loan hereunder, the
Borrowers will not be insolvent within the meaning of the United States
Bankruptcy Code or unable to pay their debts as they mature.
(r) Intellectual Property. The Borrowers own, license or otherwise
---------------------
have an interest in the patents, trademarks, trade names, copyrights
and other like intellectual property described on Schedule 5.01(r) and none
----------------
other.
(s) Survival of Representations. All representations and warranties
---------------------------
made in this SECTION 5 shall survive the execution and delivery of the
---------
Loan Documents and the making of the Loans.
(t) Regulated Entities. None of the Borrowers, any Person
------------------
controlling the Borrowers, or any subsidiary of the Borrowers, is an
"Investment Company" within the meaning of the Investment Company Act of
1940. The Borrowers are not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, any state public utilities code, or any other Federal or state statute
or regulation limiting its ability to incur indebtedness or grant liens or
encumbrances to or against any of their properties.
(u) Use of Proceeds. The proceeds of the Loans shall be used
---------------
solely for the purposes set forth in Sections 2.02 and 2.03 and shall
------------- ----
not be used directly or indirectly for purposes of purchasing or carrying
any "margin stock" as defined in any regulations of the Federal Reserve
Board.
SECTION 6. COVENANTS OF THE BORROWER
6.01. AFFIRMATIVE COVENANTS. So long as any Obligations remain unpaid
----------------------
or the Bank shall have any commitment to extend credit to or for the
benefit of the Borrowers, unless otherwise consented to in writing by the
Bank, the Borrowers shall:
(a) Compliance with Laws. Comply in all material respects with all
--------------------
applicable laws, rules, regulations and orders affecting the Borrowers or
their properties, including, without limitation, all Environmental Laws, the
noncompliance with which could reasonably be expected to have a material
adverse affect on the actual or prospective business, financial condition or
operations of the Borrowers taken as a whole.
(b) Reporting Requirements. Furnish to the Bank:
----------------------
(i) Consolidated Quarterly Statements. As soon as available
---------------------------------
and in any event within 60 days after the end of each of
the first three quarters of each fiscal year of Parent,
an internally prepared consolidated balance sheet of
Parent as of the end of such quarter and an internally
prepared consolidated income statement as of the end
of such quarter and for the fiscal year-to-date, each
certified by Parent's chief financial officer;
- 18 -
(ii) Consolidated Audited Year-End Statements. As soon as
----------------------------------------
available and in any event within 120 days after the end
of each fiscal year of Parent, final audited consolidated
financial statements (as described above but including a
statement of changes in financial position) as of the end
of such fiscal year of Parent, prepared by independent
certified accountants satisfactory to the Bank and a copy
of any management, operation or other letter or
correspondence from such accountant to the Borrowers in
connection therewith;
(iii) Preliminary Year-End Statements. As soon as available
-------------------------------
and in any event within 30 days after the end of
each fiscal year of Parent, internally prepared
consolidated year-end financial statements
(including, without limitation, a balance sheet,
income statement, and statement of cash flows)
as of the end of such fiscal year certified by
Parent's chief financial officer;
(iv) Projections. Upon the written request of the Bank,
-----------
detailed quarterly consolidated projections of Parent's
earnings for the next fiscal year of Parent;
(v) Monthly Compliance Certificates. As soon as available and
-------------------------------
in any event within 15 days after the end of the month, a
compliance certificate, in the form attached hereto as
Exhibit D, setting forth (A) detailed written calculations
---------
for such period or as of the last day of such period, as
appropriate, indicating Borrowers' compliance (or failure
of compliance) with each of the covenants sets forth in
Section 6.03 below, and (B) a certification that no
------------
Default or Event of Default exists as of the date of such
certificate, or if any Default or Event of Default exists,
providing detailed information concerning the nature of
all existing Defaults or Events of Default, which such
compliance certificate shall be certified by Parent's
Chief Financial Officer or President; and
(vi) Other. Such other information respecting the condition or
-----
operations, financial or otherwise, of the Borrowers as
the Bank may reasonably request from time to time.
All financial statements described in clauses (i), (ii), and (iii) shall be
prepared in accordance with GAAP on a basis consistent with the financial
statement of Parent dated December 31, 2000 (except for changes in
accordance with GAAP which are concurred in by Parent's independent
certified public accountants), except that unaudited financial statements
shall be subject to normal year-end audit adjustments, and need not contain
footnotes.
(c) Borrowing Base Certificates. Furnish to the Bank, within
---------------------------
fifteen (15) days after the end of each month (unless otherwise required
under Section 4.04 hereof), a Borrowing Base Certificate in the form of
------------
Exhibit C hereto, showing, as of the close of business on the last day of
---------
the immediately preceding month, the Borrowing Base.
(d) Preservation of Business and Existence. Carry on and conduct its
--------------------------------------
principal business substantially as it is now being conducted; maintain in
good standing its existence and its right to transact business in those
states in which it is now or may hereafter be doing business; and maintain
all licenses, permits and registrations necessary to the conduct of its
business (except where the failure to so
- 19 -
maintain its right to transact business or to maintain such licenses,
permits or registrations would not materially and adversely affect the
actual or prospective business, financial condition or operations of the
Borrowers taken as a whole).
(e) Insurance. Insure and keep insured at all times with financially
---------
sound and reputable insurers which are reasonably satisfactory to the Bank
(i) all of the Borrowers' property of an insurable nature, including, without
limitation, all real estate, equipment, fixtures and inventories, against
fire and other casualties in such a manner and to the extent that like
properties are usually insured by others owning properties of a similar
character in a similar locality or as otherwise reasonably required by the
Bank, with the proceeds of such casualty insurance payable solely to Bank as
its interest may appear, and (ii) against liability on account of damage to
persons or property (including product liability insurance and all insurance
required under all applicable worker's compensation laws) caused by the
Borrowers or their officers, directors, employees, agents or contractors in
such a manner and to the extent that like risks are usually insured by
others conducting similar businesses in the places where the Borrowers
conduct their business or as otherwise reasonably required by the Bank, with
the Bank being named as an additional insured under such liability policies.
The Borrowers shall cause the insurers under all of the Borrowers insurance
policies to provide the Bank at least 30 days prior written notice of the
termination of any such policy before such termination shall be effective
and to agree to such other matters in respect of any such casualty insurance
as provided in the Bank's loss payee endorsement provided to the Borrowers.
In addition, the Borrowers will, upon request of the Bank at any time,
furnish a written summary of the amount and type of insurance carried, the
names of the insurers and the policy numbers, and deliver to the Bank
certificates with respect thereto.
(f) Payment of Taxes. Pay and discharge, before they become
----------------
delinquent, all taxes, assessments and other governmental charges
imposed upon it, its properties, or any part thereof, or upon the income or
profits therefrom and all claims for labor, materials or supplies which if
unpaid might be or become a lien or charge upon any of its property, except
such items as it is in good faith appropriately contesting and as to which
adequate reserves have been provided to the Bank's reasonable satisfaction.
(g) Maintenance of Properties and Leases. Maintain, preserve and
------------------------------------
keep its properties and every part thereof in good repair, working
order and condition (except for such properties as the Borrowers in good
faith determine are not useful in the conduct of its business); from time to
time make all necessary and customary property repairs, renewals,
replacements, additions and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained; and maintain all
leases of real or personal property in good standing, free of any defaults
by the Borrowers thereunder.
(h) Employee Plans. (i) Notify the Bank promptly of the
--------------
establishment of any Plan, except that prior to the establishment of
any "welfare plan" (as defined in Section 3(1) of ERISA) covering any
------------
employee of the Borrowers for any period after such employee's termination
of employment other than such period required by the Consolidated Omnibus
Budget Reconciliation Act of 1986 or "defined benefit plan" (as defined in
Section 3(35) of ERISA), it will obtain the Bank's prior written approval of
-------------
such establishment; (ii) at all times make prompt payments or contributions
to meet the minimum funding standards of Section 412 of the Internal Revenue
-----------
Code of 1986, as amended, with respect to each Plan; (iii) promptly after
the filing thereof, furnish to the Bank a copy of any report required to be
filed pursuant to Section 103 of ERISA in connection with each Plan for each
-----------
Plan year, including but not limited to the Schedule B attached thereto, if
applicable; (iv) notify the Bank promptly of any "reportable event" (as
defined in Section 4043 of ERISA) or any circumstances arising in connection
------------
with any Plan which might constitute grounds for the termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer the
Plan, the initiation of any audit or inquiry by the Internal Revenue Service
or the Department of Labor of any Plan or transaction(s) involving or
related to any Plan, or any "prohibited
- 20 -
transaction" as defined in Section 406 of ERISA or Section 4975(c) of
----------- ---------------
the Internal Revenue Code of 1986, as amended, (v) notify the Bank prior to
any action that could result in the assertion of liability under Subtitle E
of Title IV of ERISA caused by the complete or partial withdrawal from any
multi-employer plan or to terminate any defined benefit plan sponsored by
any Borrower; and (vi) promptly furnish such additional information
concerning any Plan as the Bank may from time to time request.
(i) Notice of Default. Give prompt notice in writing to the Bank
-----------------
of any breach of any of the representations, warranties or covenants in
this Agreement or the other Loan Documents or any development or the
occurrence of any event, financial or otherwise, which constitutes a Default
or an Event of Default or which constitutes a material default under any
other material agreement to which any Borrower is a party or which may or
shall materially and adversely affect the business, properties or affairs of
the Borrowers taken as a whole or the ability of the Borrowers as a whole to
pay and perform their obligations under this Agreement or the other Loan
Documents.
(j) Books and Records; Inspection; Bank Audits. Maintain complete
------------------------------------------
and accurate books and financial records in accordance with GAAP; during normal
working hours permit the Bank and Persons designated by the Bank to visit
and inspect its properties and to conduct any environmental tests or audits
thereon, to inspect its books and financial records (including its journals,
orders, receipts and correspondence which relates to its Accounts), and to
discuss its affairs, finances and Accounts and operations with its
directors, officers, employees and agents and its independent public
accountants; and permit the Bank and Persons designated by the Bank to
perform audits of such books and financial records when and as requested by
the Bank; and pay to the Bank or Persons designated by the Bank an audit fee
based on the Bank's then current audit rate (which rate is presently $575.00
per day) plus expenses for each such audit.
(k) Bank May Perform Obligations; Further Assurances. Permit the
------------------------------------------------
Bank, if the Bank so elects in its sole discretion, to pay or perform any of the
Borrowers' Obligations hereunder or under the other Loan Documents (subject
to the Borrowers' contest rights contained herein or therein) and to
reimburse the Bank, on demand, or, if the Bank so elects, by the Bank making
a Revolving Credit Loan on the Borrowers' behalf and charging the Loan
Account accordingly, for all amounts expended by or on behalf of the Bank in
connection therewith and all costs and expenses incurred by or on behalf of
the Bank in connection therewith; and execute, deliver or perform, or cause
to be executed, delivered or performed, all such documents, agreements or
acts, as the case may be, as the Bank may reasonably request from time to
time to create, perfect, continue or otherwise assure the Bank with respect
to any lien or security interest created or purported to be created by any
of the Loan Documents or to otherwise create, evidence, assure or enhance
the Bank's rights and remedies under, or as contemplated by, the Loan
Documents or at law or in equity.
(l) Bank Accounts. Maintain at all times all of its time, demand
-------------
and like deposit accounts with the Bank.
(m) Location of Collateral and Borrower Name. Keep all Collateral,
----------------------------------------
other than inventory in transit and motor vehicles, at one or more of the
locations set forth on Schedule 6.01(m) attached hereto and shall not remove
----------------
any Collateral therefrom except for, for so long as there exists no Event of
Default, (i) inventory sold in the ordinary course of the Borrowers'
business, and (ii) dispositions of obsolete equipment to the extent
permitted under this Agreement. Borrowers' legal name and all tradenames are
as set forth on Schedule 6.01(m) and Borrowers shall not change any such
----------------
names without giving the Bank thirty (30) days prior written notice.
- 21 -
(n) Life Insurance. Maintain life insurance in an aggregate amount
--------------
of at least $10,000,000.00, insuring the life of Xxxx, with Parent named as
beneficiary therein, and assign said insurance to the Bank as security for
the Obligations.
6.02. NEGATIVE COVENANTS. So long as any Obligations remain unpaid or the
-------------------
Bank shall have any commitment to extend credit to or for the benefit of the
Borrowers, unless otherwise consented to in writing by the Bank, the
Borrowers shall not:
(a) Liens and Security Interests. Create or suffer to
----------------------------
exist any lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement, upon or with respect to any of the
Borrowers' personal property or real property, whether now owned or
hereafter acquired, except for Permitted Liens.
(b) Debt. Create or suffer to exist any Debt except for Permitted
----
Debt.
(c) Restricted Investments. Make or permit to exist any loans
----------------------
or advances to or any other investment in any Person (including any
shareholders of the Borrowers or any Affiliates), except loans, advances
and/or investments in (i) a Borrower, (ii) interest-bearing United States
Government obligations, (iii) certificates of deposit issued by or time
deposits with any commercial bank organized and existing under the laws of
the United States or of any state thereof having capital and surplus of not
less than $10,000,000, (iv) prime commercial paper rated AAA by Standard and
Poor's or Prime P-1 by Xxxxx'x Investor Service, Inc., or (v) agreements
involving the sale and guaranteed repurchase of United States Government
securities. All instruments and documents evidencing such investments shall
be pledged to the Bank promptly after the Borrowers' receipt thereof, shall
be security for the Obligations, and shall be Collateral hereunder.
(d) Structure; Disposition of Assets. Merge or consolidate with
--------------------------------
or otherwise acquire, or be acquired by, any other Person; or sell,
lease or otherwise transfer all or any part of their properties other than,
for so long as there exists no Event of Default, (i) the sale of inventory
in the ordinary course of the Borrowers' business and (ii) the disposition
of obsolete equipment subject to Section 3.04 hereof.
------------
(e) Sale-Leasebacks; Subsidiaries; New Business. Enter into any sale
-------------------------------------------
and leaseback transaction with respect to any of their properties or create any
subsidiary, or manufacture any goods, render any services or otherwise enter
into any business which is not substantially similar to that existing on the
Closing Date.
(f) Conflicting Agreements. Enter into any agreement any term
----------------------
or condition of which conflicts with any provision of this Agreement or the
other Loan Documents.
(g) Changes in Accounting Principles; Fiscal Year. Make any change
---------------------------------------------
in their principles or methods of accounting as currently in effect, except such
changes as are permitted by GAAP and concurred in by Parent's independent
certified public accountants, or, without obtaining the Bank's prior written
consent, change its fiscal year.
(h) Transactions With Affiliates. Enter into or be a party to any
----------------------------
transaction or arrangement, including without limitation, the purchase, sale
or exchange of property of any kind or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrowers' business and upon fair and
reasonable terms substantially as favorable to the Borrowers as those which
would be obtained in a comparable arms-length transaction with a
non-Affiliate.
- 22 -
(i) Environmental Matters. Cause a release, omission or discharge
---------------------
of any Hazardous Substances in excess of amounts thereof permitted pursuant to
applicable Environmental Laws and will not operate their business in
violation of any applicable Environmental Laws or other applicable laws, the
violation of which could reasonably be expected to have a material adverse
effect on the actual or prospective business, financial condition or
operations of the Borrowers taken as a whole.
(j) Change in Management. Permit anyone other than Xxxx, or such
-------------------
other individual acceptable to the Bank in its sole reasonable judgment, to
serve as the Chief Executive Officer of Xxxxxx Corporation, or to materially
alter the authority or duties of such Chief Executive Officer.
6.03. SPECIFIC FINANCIAL COVENANTS. So long as any Obligations remain
-----------------------------
unpaid or the Bank shall have any commitment to extend credit to or for
the benefit of the Borrowers, unless otherwise consented to in writing by
the Bank:
(a) Minimum Working Capital. Parent shall maintain at all times,
-----------------------
on a consolidated basis, Minimum Working capital of not less than
$18,000,000.00.
(b) Debt Coverage Ratio. Parent shall not permit its Debt Coverage
-------------------
Ratio, on a consolidated basis and measured as at the end of each fiscal
quarter of the Borrowers, to be less than the ratio set forth below for the
relevant time period:
Quarter Ending Debt Coverage Ratio
-------------- -------------------
9/30/01 0.9 to 1.0
All quarters ending thereafter 1.0 to 1.0
(c) Current Ratio. Parent shall at all times maintain, on a
-------------
consolidated basis, a minimum Current Ratio of no less than 2.0 to 1.0.
(d) Inventory Turn Ratio. From and after March 31, 2002, Parent
--------------------
shall maintain at all times, on a consolidated basis, a minimum
Inventory Turn Ratio of at least 3.0 to 1.0.
(e) Capital Expenditures. Borrowers shall not make Capital
--------------------
Expenditures which exceed, in the aggregate and on a consolidated basis,
during any fiscal year of the Borrowers, the amounts set forth below for the
periods set forth below:
Time Period Maximum Capital Expenditures
----------- ----------------------------
Closing Date through 9/30/01 $2,500,000.00
10/1/01 and thereafter $3,000,000.00
SECTION 7. DEFAULT
7.01. EVENTS OF DEFAULT. Each of the following events shall
------------------
constitute an Event of Default hereunder:
(a) The Borrowers shall fail to pay any principal of or interest
on any Note when due; or
- 23 -
(b) The Borrowers shall fail to pay any Obligations due the
Bank pursuant to Sections 3.04, 3.09, or 8.05 in accordance with the terms
thereof; or
(c) The Borrowers shall fail to pay any other monetary
Obligations within five (5) days after notice thereof is given to the
Borrowers; or
(d) The Borrower shall fail to perform or observe any of the
provisions contained in Sections 3.07(a), 6.01(d), 6.01(e), 6.01(f),
6.01(i), 6.01(j), 6.01(k), 6.01(l), 6.01(m), 6.02 or 6.03 of this Agreement;
or
(e) The Borrowers shall fail to perform or observe any other
covenant or undertaking contained herein within fifteen (15) days after notice
thereof is given to any Borrower by the Bank, or the Borrowers shall fail to
pay, perform or observe any covenant or undertaking contained in any of the
other Loan Documents beyond any applicable grace or cure period, or any other
default or event of default (however defined or described) shall occur under
any other Loan Document; or
(f) Any representation or warranty made or furnished by the
Borrowers (or any of their officers) in connection with this Agreement or
the other Loan Documents shall prove to have been incorrect or misleading
in any material respect when made, or any such representation or warranty
shall become incorrect or misleading in any material respect and the
Borrowers shall fail to give the Bank prompt written notice thereof; or
(g) The Borrowers shall (i) fail to pay any Debt in a principal
amount in excess of $150,000.00 (other than the Debt described in
Sections 7.01(a), 7.01(b) and 7.01(c) above) of the Borrowers, or any
interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after any applicable grace period specified in the agreement
or instrument relating to such Debt, or (ii) fail to perform or observe any
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt when required to be
performed or observed, and such failure shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the
effect of such failure to pay or perform or observe is to accelerate or to
permit the acceleration of the maturity of such Debt; or any such Debt shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity
thereof as a result of a default by a Borrower; or
(h) Any of the Borrowers shall cease to be solvent or shall suffer
the appointment of a receiver, trustee, custodian or similar fiduciary,
or shall make an assignment for the benefit of creditors; or any petition
for an order for relief shall be filed by or against any of the Borrowers
under the federal Bankruptcy Code or any similar state insolvency statute
(if against any of the Borrowers, the continuation of such proceeding for
more than sixty (60) days); or any of the Borrowers shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally; or
(i) There shall occur a cessation of a material part of the
business of any of the Borrowers for a period which materially and
adversely affects the capacity of the Borrowers taken as a whole to continue
the Borrowers' business on a profitable basis; or any of the Borrowers shall
suffer the loss or revocation of any material license or permit now held or
hereafter acquired by such Borrower which is necessary to the continued or
lawful operation of its business; or any of the Borrowers shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or
any material lease or agreement pursuant to which any Borrower leases, uses
or occupies any property shall be canceled or terminated prior to the
- 24 -
expiration of its stated term; or any material part of the Collateral shall
be taken through condemnation or the value of such Collateral shall be
materially impaired through condemnation; or
(j) Xxxx shall die, be judicially declared incompetent, or shall
fail to perform fully those duties being performed by him for the benefit of
the Borrowers on the Closing Date; or
(k) Any Borrower shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement or any of
the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any lien granted to the Bank;
or
(l) A final judgment or order for the payment of money in excess
of $50,000.00 or final judgments or orders for the payment of money in
excess of an aggregate of $100,000.00 shall be rendered against any Borrower
and such judgment(s) or order(s) shall not have been vacated, discharged,
stayed, or bonded and shall continue unsatisfied and in effect for a period
of 60 consecutive days; or
(m) In the Bank's judgment, there shall occur a material adverse
change in the business prospects or financial condition of the Borrowers; or
(n) The Bank shall deem itself insecure.
7.02. OBLIGATION TO LEND; ACCELERATION. Upon or after the occurrence and
---------------------------------
during the continuation of any Default, the Bank may declare the obligation
of the Bank to make Revolving Credit Loans or to otherwise extend credit
hereunder to be terminated, whereupon the same shall forthwith terminate,
or, if the Bank so elects, reduce Collateral advance rates or otherwise
reduce the maximum Borrowing Base by such amounts as the Bank elects in its
sole and absolute discretion from time to time. Upon or after the occurrence
and during the continuation of any Event of Default, the Bank may declare
the Notes, all interest thereon, and all other Obligations to be forthwith
due and payable, whereupon the Notes, all such interest thereon and all such
other Obligations shall become and be forthwith due and payable, without
presentment, protest or further notice or demand of any kind, all of which
are hereby expressly waived by the Borrowers.
7.03. REMEDIES. Upon or after the occurrence and during the continuation
---------
of any Event of Default, the Bank shall have and may exercise from time
to time the following rights and remedies:
(a) All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights
to which the Bank may be entitled, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, and all of which shall be
in addition to any other rights or remedies contained in this Agreement or
any of the other Loan Documents.
(b) The right to take immediate possession of the Collateral, and
(i) to require the Borrowers to assemble the Collateral, at the
Borrowers' expense, and make it available to the Bank at a place designated
by the Bank which is reasonably convenient to both parties, and (ii) to
enter upon and use any premises in which the Borrowers have an ownership,
leasehold or other interest, or wherever any of the Collateral shall be
located, and to store, remove, abandon, manufacture, sell, dispose of or
otherwise use all or any part of the Collateral on such premises without the
payment of rent or any other fees by the Bank to the Borrowers for the use
of such premises or such Collateral.
(c) The right to sell or otherwise dispose of all or any inventory
or equipment in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as
may be required by law, in lots or in bulk, for cash or on credit, all as
the Bank, in its sole discretion, may deem advisable. The Borrowers agree
that ten (10) days written notice to any of the
- 25 -
Borrowers of any public or private sale or other disposition of such
Collateral shall be reasonable notice thereof, and such sale shall be at
such locations as the Bank may designate in such notice. The Bank shall have
the right to conduct such sales on the Borrowers' premises, without charge
therefor, and such sales may be adjourned from time to time in accordance
with applicable law. The Bank shall have the right to sell, lease or
otherwise dispose of such Collateral, or any part thereof, for cash, credit
or any combination thereof, and the Bank may purchase all or any part of
such Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may setoff or credit the amount of
such price against the Obligations.
(d) The Bank is hereby granted a license or other right to use,
without charge, all of the Borrowers' labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any property of a similar nature as it pertains to
the Collateral or any other property of the Borrowers, in storing, removing,
transporting, manufacturing, advertising, selling or otherwise using the
Collateral, and the Borrowers' rights in and under such property shall inure
to the Bank's benefit.
(e) The proceeds realized from the sale of any Collateral may be
applied, after the Bank is in receipt of good funds, as follows: first, to the
reasonable costs, expenses and attorneys' fees and expenses incurred by the
Bank for collection and for acquisition, completion, manufacture,
protection, removal, storage, sale and delivery of the Collateral; second,
to any fees or expenses due the Bank under the Loan Documents; third, to
interest due upon any of the Obligations; and fourth, to the principal of
the Obligations; or in such other manner as the Bank may elect in its sole
discretion. If any deficiency shall arise, the Borrowers shall remain
jointly and severally liable to the Bank therefor. Any surplus remaining
after payment in full of the Obligations will be returned to the Borrowers
or to whomever may be legally entitled thereto.
7.04. RIGHT OF SET-OFF. Upon or after the occurrence and during the
-----------------
continuation of any Event of Default, the Bank is hereby authorized at any
time and from time to time, without notice to the Borrowers (any such notice
being hereby waived by the Borrowers), to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by the Bank to or for the
credit or the account of the Borrowers against any and all of the
Obligations irrespective of whether or not the Bank shall have made any
demand under this Agreement or the other Loan Documents and although such
Obligations may be unmatured. The rights of the Bank under this Section are
in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Bank may have.
SECTION 8. MISCELLANEOUS
8.01. NOTICES. Except as otherwise provided herein, all notices, requests
--------
and demands to or upon a party hereto to be effective shall be in writing and
shall be personally delivered, mailed by certified or registered mail,
return receipt requested, sent prepaid by reliable overnight courier or sent
by facsimile transmission. Unless otherwise expressly provided herein,
notices shall be deemed to have been validly given when delivered against
receipt; or, in the case of mailing, three (3) Business Days after deposit
in the mail in the continental United States, postage prepaid; or, in the
case of reliable overnight courier, on the Business Day after the courier
accepts delivery of such item for next Business Day delivery; or, in the
case of facsimile transmission, when sent against confirmation of receipt
prior to 5:00 p.m. local time at the recipient's office, in each case
addressed as follows:
- 26 -
If to the Bank:
---------------
Southwest Bank of St. Louis
00000 Xxxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx
Telecopy No.: (000) 000-0000
and with a copy to:
-------------------
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. X'Xxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Borrower:
-------------------
Xxxxxx Companies, Inc., as agent for all the Borrowers
0000 XxXxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxx
Telecopy No.: (000) 000-0000
and with a copy to:
-------------------
Xxxxxxxx Xxxxxx LLP
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
or to such other address or telecopy number as each party may designate for
itself by like notice given in accordance with this Section 8.01.
------------
8.02. POWER OF ATTORNEY. The Borrowers hereby irrevocably designate, make,
------------------
constitute and appoint the Bank (and all Persons designated by the Bank) as
the Borrowers' true and lawful attorney (and agent-in-fact) and the Bank, or
the Bank's agent, may, without notice to the Borrowers and in either the
Borrowers' or the Bank's name, but at the cost and expense of the Borrowers:
(a) At such time or times hereafter as the Bank or such agent, in
its sole discretion, may determine, endorse the Borrowers' name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of the Bank or
under the Bank's control; and
(b) At such time or times upon or after the occurrence and during
the continuance of any Event of Default as the Bank or its agent in its
sole discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings or
otherwise, and generally exercise all of the Borrowers' rights and remedies
with respect to the collection of the Accounts; (ii) settle, adjust,
compromise, discharge or release any of the Accounts or other Collateral or
any legal proceedings brought to collect any of the Accounts or other
Collateral; (iii) sell or otherwise transfer any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as
the Bank deems advisable; (iv) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (v) prepare, file and sign
the Borrowers' name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and process all mail addressed to the
Borrowers and to notify postal authorities to change the address for
delivery thereof to such address as the Bank may designate; (vii) endorse
the name of any of the Borrowers upon any of the items of payment or
proceeds relating to any Collateral and deposit the same to the account of
the Bank on account of the Obligations; (viii) endorse the name of any of
the
- 27 -
Borrowers upon any chattel paper, document, instrument, invoice, freight
xxxx, xxxx of lading or similar document or agreement relating to the
Accounts, inventory and any other Collateral; (ix) use the Borrowers'
stationery and sign the name of any of the Borrowers to verifications of the
Accounts and notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and computer
hardware and software relating to the Accounts, inventory, equipment and any
other Collateral and to which the Borrowers have access; (xi) make and
adjust claims under policies of insurance; and (xii) do all other acts and
things necessary, in the Bank's good faith determination, to fulfill the
Borrowers' obligations under this Agreement.
8.03. INDEMNITY. The Borrowers, jointly and severally, hereby agree to
----------
indemnify the Bank and its shareholders, directors, officers, employees and
agents and hold the Bank and such other indemnitees harmless from and against
any liability, loss, expense, damage, suit, action or proceeding now or
hereafter suffered or incurred by the Bank or such other indemnitees as the
result of any Borrower's failure to observe, perform or discharge any of the
Borrowers' duties under any of the Loan Documents, any misrepresentation
made by or on behalf of the Borrowers under any of the Loan Documents or any
use of Loan proceeds by the Borrowers. Without limiting the generality of the
foregoing, this indemnity shall extend to any claims asserted against the Bank
or such other indemnitees by any Person under any Environmental Laws or
similar laws by reason of the Borrowers' failure to comply with laws
applicable to Hazardous Substances. The obligation of the Borrowers under
this Section 8.03 shall survive the payment in full of the Obligations and
------------
the termination of this Agreement.
8.04. ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT; SALE OF INTEREST.
--------------------------------------------------------------
This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in
connection therewith or with reference thereto, embody the entire agreement
between the parties hereto and thereto with respect to the subject matter
hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written. This Agreement may
not be modified, altered or amended, except by an agreement in writing
signed by the Borrowers and the Bank. The Borrowers may not sell, assign or
transfer any interest in this Agreement and any of the other Loan Documents,
or any portion thereof, including, without limitation, the Borrowers'
rights, title, interests, remedies, powers and duties hereunder or
thereunder. The Borrowers hereby consent to the Bank's participation, sale,
assignment, transfer or other disposition, at any time or times hereafter,
of this Agreement and any of the other Loan Documents, or of any portion
hereof or thereof, including, without limitation, the Bank's rights, title,
interests, remedies, powers and duties hereunder or thereunder.
8.05. REIMBURSEMENT OF EXPENSES. If, at any time or times prior or
--------------------------
subsequent to the date hereof, regardless of whether or not an Event of
Default then exists or any of the transactions contemplated hereunder are
concluded, the Bank employs counsel for advice or other representation, or
incurs legal and/or appraisers', liquidators', engineers' expenses and/or
other costs or out-of-pocket expenses in connection with: (i) the
negotiation and preparation of this Agreement and any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or any sale or attempted sale of any interest herein
to a participating lender or other Person; (ii) the administration of this
Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by the Bank, the Borrowers or
any other Person) in any way relating to the Collateral, this Agreement, any
of the other Loan Documents or the Borrowers' affairs; (iv) any attempt to
enforce any rights of the Bank against the Borrowers or any other Person
which may be obligated to the Bank by virtue of this Agreement or any of the
other Loan Documents, including, without limitation, the Account Debtors,
irrespective of whether litigation is commenced in pursuance of such rights;
or (v) any attempt to
- 28 -
inspect, verify, protect, preserve, restore, collect, sell, manufacture,
liquidate or otherwise dispose of or realize upon the Collateral (all
of which are hereinafter collectively referred to as the "Expenses"); then,
in any such event, such Expenses shall be payable, on demand, by the
Borrowers to the Bank, and shall be additional Obligations hereunder secured
by the Collateral and may be funded, if the Bank so elects, by the Bank
making a Revolving Credit Loan on the Borrowers' behalf, paying the same to
the appropriate Persons, and charging the Loan Account accordingly.
Additionally, if any taxes (excluding taxes imposed upon or measured by the
net income of the Bank) shall be payable on account of the execution or
delivery of this Agreement or the other Loan Documents, or the execution,
delivery, issuance or recording of any of the Loan Documents, or the
creation of any of the Obligations hereunder, by reason of any existing or
hereafter enacted federal, state or local statute or other law, the
Borrowers will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold the Bank
harmless from and against liability in connection therewith.
8.06. INDULGENCES NOT WAIVERS. The Bank's failure, at any time or times
------------------------
hereafter, to require strict performance by the Borrowers of any provision
of this Agreement or the other Loan Documents shall not waive, affect or
diminish any right of the Bank thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by the Bank of a Default or
an Event of Default by the Borrower under this Agreement or any of the other
Loan Documents shall not suspend, waive or affect any other Default or Event
of Default by the Borrowers under this Agreement or any of the other Loan
Documents, whether the same is prior or subsequent thereto and whether of
the same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of the Borrowers contained in this
Agreement or any of the other Loan Documents and no Default or Event of
Default by the Borrowers under this Agreement or any of the other Loan
Documents shall be deemed to have been suspended or waived by the Bank,
unless such suspension or waiver is by an instrument in writing specifying
such suspension or waiver and is signed by a duly authorized representative
of the Bank and directed to the Borrowers.
8.07. SEVERABILITY. Wherever possible, each provision of this Agreement
-------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
8.08. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan Documents,
-----------------------
shall be binding upon and inure to the benefit of the successors and assigns
of the Borrowers and the Bank. This provision, however, shall not be deemed
to modify Section 8.04 hereof.
------------
8.09. GENERAL WAIVERS BY THE BORROWERS. Except as otherwise expressly
---------------------------------
provided for in this Agreement, the Borrowers waive: (i) presentment,
protest, demand for payment, notice of dishonor demand and protest and
notice of presentment, default, notice of nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
Accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by the Bank on which any Borrower may in any way
be liable and hereby ratifies and confirms whatever the Bank may do in this
regard; (ii) notice prior to taking possession or control of the Collateral
or any bond or security which might be required by any court prior to
allowing the Bank to exercise any of the Bank's remedies, including the
issuance of an immediate writ of possession; (iii) except as may otherwise
be prohibited under applicable law, the benefit of all valuation,
appraisement and exemption laws; and (iv) except as may otherwise be
prohibited under applicable law, any and all other notices, demands and
consents in connection with the delivery, acceptance, performance, default
or enforcement of this Agreement or any of the other Loan Documents and/or
any of the Bank's rights in respect of the Collateral.
- 29 -
8.10. INCORPORATION BY REFERENCE. All of the terms of the other Loan
---------------------------
Documents are incorporated in and made part of this Agreement by reference;
provided, however, that to the extent of any inconsistency between this
Agreement and such other Loan Documents, this Agreement shall prevail and
govern.
8.11. EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES. This
------------------------------------------------
Agreement, and any of the other Loan Documents, may be executed in any
number of counterparts and by different parties to such Loan Documents in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. A signature of a party to any of
the Loan Documents sent by facsimile or other electronic transmission shall
be deemed to constitute an original and fully effective signature of such
party.
8.12. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement and the
---------------------------------------
other Loan Documents have been negotiated, executed and delivered in various
jurisdictions. In order to provide for a uniform and well established body
of commercial and other law to define and govern the rights and duties of
the parties, the parties agree that this Agreement shall be governed by and
construed in accordance with the internal substantive laws of the State of
Missouri without giving effect to any choice of law rules thereof; provided,
however, that if any of the Collateral shall be located in any jurisdiction
other than Missouri, the laws of such jurisdiction shall govern (a) the
perfection and the effect of the perfection or non-perfection of the Bank's
security interest or other lien upon such Collateral and (b) the method,
manner and procedure for foreclosure of the Bank's security interest or
other lien upon such Collateral and the enforcement of the Bank's other
remedies in respect of such Collateral to the extent that the laws of such
jurisdiction are different from or inconsistent with the laws of Missouri.
THE BORROWERS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE COURT LOCATED
WITHIN THE CITY OF ST. LOUIS OR ST. LOUIS COUNTY, MISSOURI OR FEDERAL COURT
IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DIVISION, AND WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON THEM AND CONSENT THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE BORROWERS
AT THE ADDRESS STATED IN SECTION 8.01 HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. THE BORROWERS WAIVE ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST THE
BORROWERS AS PROVIDED HEREIN AND AGREE NOT TO ASSERT ANY DEFENSE BASED ON
LACK OF JURISDICTION OR VENUE. THE BORROWERS FURTHER AGREE NOT TO ASSERT
AGAINST THE BANK (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING
INITIATED BY THE BANK) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH
RESPECT TO THE LOAN DOCUMENTS, THE BANK'S CONDUCT OR OTHERWISE IN ANY
JURISDICTION OTHER THAN THE FOREGOING JURISDICTIONS.
8.13. STATUTORY NOTICE. The following notice is given pursuant to
-----------------
Section 432.045 of the Missouri Revised Statutes; nothing contained in such
---------------
notice shall be deemed to limit or modify the terms of the Loan Documents.
"ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR
FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH
DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT."
- 30 -
8.14. WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE ANY RIGHT TO
---------------------
TRIAL BY JURY (WHICH THE BANK ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL, OR THE BANK'S CONDUCT IN RESPECT
OF ANY OF THE FOREGOING.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE TO FOLLOW]
- 31 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the
date first above written.
BORROWERS:
XXXXXX COMPANIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXX CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CAPE COMPOSITES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ENGINEERING TECHNOLOGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ZOLTEK PROPERTIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
HARDCORE COMPOSITES OPERATIONS, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SOUTHWEST BANK OF ST. LOUIS
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 32 -
Exhibit A
---------
REVOLVING CREDIT NOTE
---------------------
St. Louis, Missouri
US $10,000,000.00 May 11, 2001
For value received, the undersigned, Xxxxxx Companies, Inc., a Missouri
corporation, Xxxxxx Corporation, a Missouri corporation, Zoltek Properties,
Inc., a Missouri corporation, Engineering Technology Corporation, a Missouri
corporation, Cape Composites, Inc., a California corporation, and Hardcore
Composites Operations, LLC, a Delaware limited liability company
(individually and collectively hereinafter "Borrowers"; all references to
"Borrowers" or "Borrower" shall mean each and all of the Borrowers), hereby
jointly and severally promise to pay to the order of Southwest Bank of St.
Louis (the "Bank"), in lawful money of the United States of America, the
principal sum of Ten Million Dollars ($10,000,000.00), or if less, the
amount outstanding under Section 2.02 of the Credit Agreement (as
------------
hereinafter defined), together with interest from the date hereof at the
rate provided for in the Credit Agreement. Principal and interest of this
Note shall be payable at the time or times provided in Section 3 of the
---------
Credit Agreement.
This Revolving Credit Note (this "Note") is the Revolving Credit Note
referred to in, and is issued pursuant to, that certain Credit Agreement
between the Borrowers and the Bank dated even date herewith (as amended or
otherwise modified from time to time, the "Credit Agreement"), and is
entitled to all of the benefits and security of the Credit Agreement. All of
the terms, covenants and conditions of the Credit Agreement and all other
instruments evidencing or securing the indebtedness hereunder are hereby
made a part of this Note and are deemed incorporated herein in full. All
capitalized terms used herein, unless otherwise specifically defined in this
Note, shall have the meanings ascribed to them in the Credit Agreement.
This Note is secured by the Collateral described in the Credit
Agreement.
Interest hereunder shall be computed on, the basis of actual days
elapsed over the period of a 360-day year. Upon or after the occurrence and
during the continuation of any Event of Default, the outstanding principal
balance of this Note shall bear interest at a variable rate per annum equal
to the Default Rate until the principal balance of this Note is paid in
full.
In no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof or otherwise, shall the amount paid or agreed to be
paid to the Bank for the use, forbearance or detention of money advanced
hereunder exceed the highest lawful rate permissible under any law which a
court of competent jurisdiction may deem applicable hereto.
The Borrowers may prepay this Note, in whole or in part, at any time
without premium or penalty.
The termination of the Credit Agreement or the occurrence and
continuance of an Event of Default shall entitle the Bank, at its option, to
declare the then outstanding principal balance and accrued interest hereon
to be, and the same shall thereupon become, immediately due and payable
without notice to or demand upon the Borrowers, all of which the Borrowers
hereby expressly waive.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, the Borrowers, for themselves and their successors and
assigns, expressly waive presentment, demand,
protest and notice of dishonor, and hereby consent to any extensions of
time, renewals, release of any parties to or guarantors of this Note,
waivers and any other modifications that may be granted or consented to by
the Bank from time to time in respect of the time of payment or any other
provision of this Note.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of the Bank in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial
exercise by the Bank of any right or remedy preclude any other right, or
remedy. The Bank, at its option, may enforce its rights against any
collateral securing this Note without enforcing its rights against the
Borrowers, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to the Borrowers. The
Borrowers agree that, without releasing or impairing the Borrowers'
liability hereunder, the Bank may at any time release, surrender, substitute
or exchange any collateral securing this Note and may at any time release
any party primarily or secondarily liable for the indebtedness evidenced by
this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Missouri.
BORROWERS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO
WAIVES) IN ANY ACTION, SUITE, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS, THE
COLLATERAL, OR BANK'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
and delivered by their respective duly authorized representatives as of the
date first above written.
XXXXXX COMPANIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXX CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ZOLTEK PROPERTIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 2 -
ENGINEERING TECHNOLOGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CAPE COMPOSITES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
HARDCORE COMPOSITES OPERATIONS, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
- 3 -
Exhibit B
---------
TERM LOAN NOTE
--------------
St. Louis, Missouri
US $4,000,000.00 May 11, 2001
For value received, the undersigned, Xxxxxx Companies, Inc., a Missouri
corporation, Xxxxxx Corporation, a Missouri corporation, Zoltek Properties,
Inc., a Missouri corporation, Engineering Technology Corporation, a Missouri
corporation, Cape Composites, Inc., a California corporation, and Hardcore
Composites Operations, LLC, a Delaware limited liability company
(individually and collectively hereinafter "Borrowers"; all references to
"Borrowers" or "Borrower" shall mean each and all of the Borrowers), hereby
jointly and severally promise to pay to the order of Southwest Bank of St.
Louis (the "Bank"), in lawful money of the United States of America, the
principal sum of Four Million and 00/100 Dollars ($4,000,000.00), together
with interest from and after the date hereof on the unpaid principal balance
outstanding at the rate provided for in the Credit Agreement (as hereinafter
defined).
This Term Loan Note (this "Note") is the Term Loan Note referred to in,
and is issued pursuant to, that certain Credit Agreement between the
Borrowers and the Bank dated even date herewith (as amended from time to
time, the "Credit Agreement"), and is entitled to all of the benefits and
security of the Credit Agreement. All of the terms, covenants and conditions
of the Credit Agreement and all other instruments evidencing or securing the
indebtedness hereunder are hereby made a part of this Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings
ascribed to them in the Credit Agreement.
This Note is secured by the Collateral described in the Credit
Agreement.
Interest hereunder shall be computed on the basis of actual days
elapsed over the period of a 360-day year. Upon or after the occurrence and
during the continuation of any Event of Default, the outstanding principal
balance of this Note shall bear interest at a variable rate per annum equal
to the Default Rate until the principal balance of this Note is paid in
full.
In no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof or otherwise, shall the amount paid or agreed to be
paid to the Bank for the use, forbearance or detention of money advanced
hereunder exceed the highest lawful rate permissible under any law which a
court of competent jurisdiction may deem applicable hereto.
For so long as no Event of Default shall have occurred and be
continuing under the Credit Agreement, the principal amount and accrued
interest of this Note shall be due and payable on the dates and in the
manner hereinafter set forth:
(a) Interest on the entire outstanding principal balance hereof
shall be payable on the first day of each month (for the immediately
preceding month), computed through the last calendar day of the
immediately preceding month, commencing June 1, 2001;
(b) A principal payment in an amount equal to or greater than
$500,000,00 shall be made on or before May 10, 2002; and
(c) On May 10, 2003, a final principal payment equal to the entire
unpaid principal balance hereof, together with any and all accrued
interest thereon and any other amounts due hereunder shall be immediately
payable.
Payments of principal and interest shall be made to the Bank before
12:00 noon, St. Louis, Missouri time, on the appropriate due date, at its
offices in St. Louis, Missouri, or in such other manner as the Bank may
elect from time to time. If any payment is due on a day other than a
Business Day, such payment shall be due on the next succeeding Business Day.
The Borrowers may prepay this Note, in whole or in part, at any time
without premium or penalty, together with accrued interest on the principal
amount so prepaid at the prepayment date. Any partial prepayment shall be
applied to principal installments of this Note in the inverse order of their
maturities.
The termination of the Credit Agreement or the occurrence and
continuance of an Event of Default shall entitle the Bank, at its option, to
declare the then outstanding principal balance and accrued interest hereof
to be, and the same shall thereupon become, immediately due and payable
without notice to or demand upon the Borrowers, all of which the Borrowers
hereby expressly waive.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, the Borrowers, for themselves and their respective
successors and assigns, expressly waive presentment, demand, protest and
notice of dishonor, and hereby consent to any extensions of time, renewals,
release of any parties to or guarantors of this Note, waivers and any other
modifications that may be granted or consented to by the Bank from time to
time in respect of the time of payment or any other provision of this Note.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note. No delay or failure on the part of the Bank in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor shall any single or partial
exercise by the Bank of any right or remedy preclude any other right or
remedy. The Bank, at its option, may enforce its rights against any
collateral securing this Note without enforcing its rights against the
Borrowers, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to the Borrowers. The
Borrowers agree that, without releasing or impairing the Borrowers'
liability hereunder, the Bank may at any time release, surrender, substitute
or exchange any collateral securing this Note and may at any time release
any party primarily or secondarily liable for the indebtedness evidenced by
this Note.
This Note shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Missouri.
BORROWERS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO
WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS, THE
COLLATERAL, OR BANK'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
IN WITNESS WHEREOF, the Borrowers has caused this Note to be executed
and delivered by their respective duly authorized representatives as of the
date first above written.
XXXXXX COMPANIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXX CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ZOLTEK PROPERTIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ENGINEERING TECHNOLOGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CAPE COMPOSITES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
HARDCORE COMPOSITES OPERATIONS, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
