EXHIBIT 10.9.7
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LOAN AGREEMENT
$15,700,000 Line of Credit Facility
By and Between
CHEMPOWER, INC.
and
FIRST NATIONAL BANK OF OHIO
Dated as of February 28, 1997
TABLE OF CONTENTS
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Article Page
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1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
2
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 The Loan . . . . . . . . . . . . . . . . . . . . . 13
2.2 Interest . . . . . . . . . . . . . . . . . . . . . 13
2.3 Payments and Prepayments . . . . . . . . . . . . . 14
2.4 Use of Proceeds . . . . . . . . . . . . . . . . . . 15
2.5 Facility Fee . . . . . . . . . . . . . . . . . . . 15
2.6 Authorization to Debit Accounts . . . . . . . . . . 15
2.7 Termination of Prior Line of Credit . . . . . . . . 16
3
Security . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Security Interests . . . . . . . . . . . . . . . . 16
3.2 Mortgages . . . . . . . . . . . . . . . . . . . . . 16
3.3 Guaranties . . . . . . . . . . . . . . . . . . . . 17
3.4 Execution and Delivery of Security Documents . . . 17
3.5 Subordination of Subordinated Debt Obligations . . 17
4 Conditions Precedent and Subsequent
4.1 Conditions Precedent to Closing . . . . . . . . . . 17
4.2 Conditions Precedent to All Advances . . . . . . . 20
4.3 Conditions for the Benefit of the Lender . . . . . 21
4.4 Failure of Conditions . . . . . . . . . . . . . . . 21
4.5 Conditions Subsequent . . . . . . . . . . . . . . . 21
5
Representations and Warranties of the Borrower . . . . . 21
5.1 Due Authorization . . . . . . . . . . . . . . . . . 21
5.2 Organization, Standing and Qualification of
Subsidiaries . . . . . . . . . . . . . . . . . . . 22
5.3 No Partnerships . . . . . . . . . . . . . . . . . . 23
5.4 Requisite Power . . . . . . . . . . . . . . . . . . 23
5.5 Corporate Authorization . . . . . . . . . . . . . . 23
5.6 Officer Authorization . . . . . . . . . . . . . . . 23
5.7 Binding Nature . . . . . . . . . . . . . . . . . . 23
5.8 No Conflict . . . . . . . . . . . . . . . . . . . . 23
5.9 Financial Statements . . . . . . . . . . . . . . . 24
5.10 Litigation and Contingent Liabilities . . . . . . . 24
5.11 No Event of Default . . . . . . . . . . . . . . . . 24
5.12 Tax Returns and Tax Matters . . . . . . . . . . . . 24
5.13 Employee Benefits . . . . . . . . . . . . . . . . . 25
5.14 Real Property . . . . . . . . . . . . . . . . . . . 27
5.15 Other Property . . . . . . . . . . . . . . . . . . 27
5.16 Environmental Matters . . . . . . . . . . . . . . . 28
5.17 Contracts . . . . . . . . . . . . . . . . . . . . . 29
5.18 Intellectual Property . . . . . . . . . . . . . . . 29
5.19 Employment Agreements and Relations . . . . . . . . 30
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . 30
5.21 Property Condition . . . . . . . . . . . . . . . . 30
5.22 Compliance With Laws . . . . . . . . . . . . . . . 30
5.23 Commitments . . . . . . . . . . . . . . . . . . . . 31
5.24 Financial and Other Information . . . . . . . . . . 31
5.25 Existing Defaults . . . . . . . . . . . . . . . . . 32
5.26 Statutory Regulation . . . . . . . . . . . . . . . 32
5.27 Burdensome Agreements . . . . . . . . . . . . . . . 32
5.28 Regulation U . . . . . . . . . . . . . . . . . . . 32
5.29 Liens . . . . . . . . . . . . . . . . . . . . . . . 33
5.30 Fiscal Year . . . . . . . . . . . . . . . . . . . . 33
5.32 Solvency . . . . . . . . . . . . . . . . . . . . . 33
6
Affirmative Covenants . . . . . . . . . . . . . . . . . 33
6.1 Accounting Records . . . . . . . . . . . . . . . . 33
6.2 Financial Statements and Notices . . . . . . . . . 34
6.3 Withholding Taxes . . . . . . . . . . . . . . . . . 37
6.4 Access . . . . . . . . . . . . . . . . . . . . . . 37
6.5 Corporate Existence . . . . . . . . . . . . . . . . 37
6.6 Qualifications To Do Business . . . . . . . . . . . 37
6.7 Compliance with Laws . . . . . . . . . . . . . . . 37
6.8 Material Agreements . . . . . . . . . . . . . . . . 37
6.9 Insurance . . . . . . . . . . . . . . . . . . . . . 37
6.10 Facilities . . . . . . . . . . . . . . . . . . . . 38
6.11 Taxes and Other Liabilities . . . . . . . . . . . . 38
6.12 Governmental Approvals . . . . . . . . . . . . . . 38
6.13 Compliance with Governmental Approvals and
Governmental Requirements . . . . . . . . . . . . . 39
6.14 Prevent Contamination . . . . . . . . . . . . . . . 39
6.15 Notice of Release . . . . . . . . . . . . . . . . . 39
6.16 Notice to the Lender . . . . . . . . . . . . . . . 40
6.17 Pension Increases . . . . . . . . . . . . . . . . . 40
6.18 Tax Qualification . . . . . . . . . . . . . . . . . 40
6.19 Notification by the Borrower . . . . . . . . . . . 41
6.20 ERISA Information . . . . . . . . . . . . . . . . . 42
6.21 Funding . . . . . . . . . . . . . . . . . . . . . . 42
6.22 Financial Tests . . . . . . . . . . . . . . . . . . 42
6.23 Tax Returns . . . . . . . . . . . . . . . . . . . . 43
6.24 Required Future Perfection and Performance . . . . 43
6.25 Change of Location . . . . . . . . . . . . . . . . 43
6.26 Rights Under Merger Documents . . . . . . . . . . . 43
7
Negative Covenants . . . . . . . . . . . . . . . . . . . 44
7.1 Mergers and Continuity of Operations . . . . . . . 44
7.2 Change of Name or Business . . . . . . . . . . . . 44
7.3 Stock . . . . . . . . . . . . . . . . . . . . . . . 44
7.4 Dividends . . . . . . . . . . . . . . . . . . . . . 44
7.5 Accounting Policies . . . . . . . . . . . . . . . . 45
7.6 Investments . . . . . . . . . . . . . . . . . . . . 45
7.7 Lien . . . . . . . . . . . . . . . . . . . . . . . 45
7.8 Guarantees . . . . . . . . . . . . . . . . . . . . 45
7.9 Indebtedness . . . . . . . . . . . . . . . . . . . 45
7.10 Sale of Assets . . . . . . . . . . . . . . . . . . 46
7.11 Capital Expenditures . . . . . . . . . . . . . . . 46
7.12 Operating Leases . . . . . . . . . . . . . . . . . 46
7.13 Prepayment . . . . . . . . . . . . . . . . . . . . 47
7.14 Sale-Lease backs . . . . . . . . . . . . . . . . . 47
7.15 Transactions With Affiliates . . . . . . . . . . . 47
7.16 Misrepresentations . . . . . . . . . . . . . . . . 47
7.17 Restrictive Agreements . . . . . . . . . . . . . . 47
7.18 Transactions With Officers, Directors and
Affiliates . . . . . . . . . . . . . . . . . . . . 47
7.19 Amendments of Other Instruments . . . . . . . . . . 47
8
Events of Default . . . . . . . . . . . . . . . . . . . 48
8.1 Events of Default . . . . . . . . . . . . . . . . . 48
8.2 Acceleration . . . . . . . . . . . . . . . . . . . 51
8.3 Other Remedies . . . . . . . . . . . . . . . . . . 51
8.4 Right to Cure . . . . . . . . . . . . . . . . . . . 51
9
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 52
9.1 Successors and Assigns and Sale of Interests. . . . 52
9.2 No Implied Waiver . . . . . . . . . . . . . . . . . 52
9.3 Amendments; Waivers . . . . . . . . . . . . . . . . 53
9.4 Remedies Cumulative . . . . . . . . . . . . . . . . 53
9.5 Severability . . . . . . . . . . . . . . . . . . . 53
9.7 Indemnification . . . . . . . . . . . . . . . . . . 54
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . 54
9.9 Interpretation . . . . . . . . . . . . . . . . . . 55
9.10 Governing Law and Consent to Jurisdiction . . . . . 55
9.11 Counterparts . . . . . . . . . . . . . . . . . . . 56
9.12 Integration . . . . . . . . . . . . . . . . . . . . 56
9.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 56
9.14 Headings . . . . . . . . . . . . . . . . . . . . . 56
9.15 Schedules and Exhibits . . . . . . . . . . . . . . 56
Exhibits
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2.1.1 Form of Note
3.1.1 Form of Security Agreement
3.3.1 Form of Guaranty
3.3.2 Form of Limited Guaranty
3.5.1 Form of Subordination Agreement
6.2.1 Form of Compliance Certificate
6.2.2 Form of Financial Covenants Compliance Certificate
Schedules
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1.1.1 Permitted Encumbrances
5.2 Organization, Standing and qualification of
Subsidiaries (and Equity Interests)
5.10 Litigation and Contingent Liabilities
5.13 Employee Benefits
5.16 Environmental Disclosures
5.18 Intellectual Property
5.20 Insurance
7.12 Operating Leases
LOAN AGREEMENT
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THIS LOAN AGREEMENT is dated as of February 28, 1997, by and
between CHEMPOWER, INC., an Ohio corporation (together with its
successors and permitted assigns, the "Borrower"), and FIRST
NATIONAL BANK OF OHIO, a national banking association (the
"Lender").
W I T N E S S E T H:
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In consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
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DEFINITIONS
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1.1 DEFINITIONS. In addition to any terms defined
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elsewhere in this Agreement, the following terms have the
meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural
forms of the defined term):
"ACCELERATION" means that the Loan shall have become due and
payable prior to its stated maturity pursuant to Section 8.2.
"ACCOUNT" means any right to payment in favor of the
Borrower, whether or not it has been earned by performance, for
goods sold or leased or for services rendered in the ordinary
course of business which is not evidenced by an instrument
(except as part of chattel paper).
"ACCOUNT DEBTOR" means the Person obligated on an Account,
obligated to pay a Receivable, or who is the buyer of goods or
services sold giving rise to a Receivable.
"ADVANCE" means a disbursement of all or part of the cash
proceeds of the Loan to the Borrower.
"AFFILIATE" means with respect to any Person (i) each Person
who, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary, ten
percent (10%) or more of the capital stock having ordinary voting
power in the election of directors of such Person, (ii) each
Person who controls, is controlled by or is under common control
with such Person or any Affiliate of such Person, of (iii) each
of such Person's officers, directors, joint venturers and
partners. For the purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" or "LOAN AGREEMENT" means this Loan Agreement,
as amended from time to time.
"AMERICAN ECO" shall mean American Eco Corporation, a
corporation incorporated under the laws of Ontario, Canada.
"ASSIGNMENTS" shall have the meaning specified in Section
3.2.
"AUTHORIZED OFFICER" means each officer of a corporation
authorized by the board of directors of that corporation to act
on behalf of that corporation under this Agreement or any of the
other Loan Documents, or in the case of a partnership (limited or
general) a general partner authorized to act on behalf of that
partnership under this Agreement or any of the other Loan
Documents.
"BANKING DAY" means a day other than a Saturday or a Sunday
when commercial banks are open for business in Akron, Ohio.
"BENEFICIAL OWNER" shall have the meaning ascribed to it in
Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended.
"BORROWER" means Chempower, Inc., an Ohio corporation, with
its principal headquarters and place of business at 000 X.
Xxxxxxxxxx Xxxx Xxxx, Xxxxx, Xxxx 00000 and shall include each
and every division thereof, including, without limitation,
Advanced Coil Industries, Houston Products, and Xxxxx Precision
Fabricators.
"BROOKFIELD" means Brookfield corporation, an Ohio
corporation which is a wholly owned subsidiary of Borrower.
"CAPITAL EXPENDITURES" means, for any period, the aggregate
of all expenditures (including such portion of Capitalized Lease
Obligations as would be capitalized in accordance with GAAP) for
any Fixed Assets (including replacements thereof, substitutions
therefor and additions thereto) that have a useful life of one
(1) year or more, where such expenditures are or would be
capitalized on the balance sheet of the Borrower (consolidated
with its Subsidiaries) during that period, in conformity with
GAAP.
"CAPITALIZED LEASE OBLIGATION" means any lease obligation
that, in accordance with GAAP, is required to be evidenced in the
financial statements of a lessee.
"CHANGE OF CONTROL" means (i) the failure of the holders of
the Equity Interests identified on Schedule 5.2 at all times,
collectively, to be the Beneficial Owner of one hundred percent
(100%) of the Equity Interests of the Borrower on a fully diluted
basis; provided, however, that a Change of Control shall not
include any change of control resulting in ownership of the
Equity Interests by Rochester or Kukk, either individually, or as
agent, pursuant to the Merger Documents or the Subordinated Debt
Documents; or (ii) a material change of management of the
Borrower, and for such purposes, a material change shall include
a change in the office of President or Chief Executive Officer,
or any change in composition of the Board of Directors of the
Borrower.
"CLOSING DATE" means February 28, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" shall have the meaning set forth in the Section
3.1.
"COMMITMENT" shall have the meaning set forth in Section
2.1(a).
"COMMITMENT EXPIRATION DATE" means the earlier of (i) 366
days after the Closing Date, or (ii) the date the Commitment is
terminated pursuant to Article 8.
"COMMITMENT LETTER" means the letter agreement dated
February 24, 1997, between the Lender and the Borrower.
"CONSOLIDATED ASSETS" means the aggregate amount of all
assets of the Borrower and its Subsidiaries that would, in
accordance with GAAP, be required to be included and shown as
assets on a consolidated balance sheet of the Borrower and its
Subsidiaries.
"CONSOLIDATED LIABILITIES" means the aggregate amount of all
liabilities of the Borrower and its Subsidiaries that would, in
accordance with GAAP, be required to be included and shown as
liabilities on a consolidated balance sheet of the Borrower and
its Subsidiaries.
"CONSOLIDATED NET WORTH" means Consolidated Assets less
Consolidated Liabilities, less the Note or other obligation of
$21,000,000 of American Eco to Borrower, but adding the amount of
the Subordinated Debt Obligations to Kukk and Rochester, to the
extent such obligations are subordinated to all creditors of
Borrower (but not to Equity Interests) pursuant to Section 4.5.
"CONSOLIDATED TANGIBLE NET WORTH" means (i) Consolidated Net
Worth, less (ii) the net book value of all items of the following
character which are included among Consolidated Assets:
(1) goodwill or any unamortized payment in respect of an
agreement not to compete with the Borrower, (2) organizational
expenses, (3) unamortized debt discount and expense, (4) stock
discount and expense, (5) patents, trademarks, trade names and
copyrights, (6) treasury stock, (7) cash held in a sinking or
other similar fund established for the purpose of redemption or
other retirement of capital stock, and (8) franchises, licenses
and permits.
"CONTINGENT OBLIGATION" means, as applied to any Person,
without duplication, any direct or indirect liability, contingent
or otherwise, of that Person with respect to any Indebtedness,
lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable.
The amount of any Contingent Obligation shall be equal to the
actual amount of the obligation so guaranteed or otherwise
supported.
"CONTROLLED POWER" means Controlled Power Limited
Partnership, an Illinois limited partnership in which Southwick
is the general partner and Brookfield is a limited partner.
"CONTROLLED POWER PROPERTY" shall mean the real property
owned by Controlled Power and commonly known as 0000 Xxxx Xxxx,
Xxxxxx, Xxxxx Xxxxxx, Xxxx.
"DEFAULT INTEREST RATE" shall have the meaning set forth in
Section 2.2(b).
"DOLLARS" and "$" mean United States Dollars.
"EBITDA" means in respect of any fiscal year the net income
of the Borrower and its Subsidiaries determined on a consolidated
basis (without any deduction in respect of any dividend on any
class of stock) as reflected in its financial statements but
increased by the amount reflected in such financial statements as
expenses incurred for interest, federal and state income taxes,
depreciation on Fixed Assets and amortization of intangible
assets.
"ENVIRONMENTAL LAWS" means any Governmental Requirement
pertaining to land use, air, soil, surface water, groundwater
(including the protection, cleanup, removal, remediation or
damage thereof), public or employee health or safety or any other
environmental matter, including without limitation, the following
laws, and any regulations promulgated thereunder, as the same may
be amended from time to time, or any such statute enacted after
the Closing Date:
(1) Clean Air Act (42 U.S.C. Sections 7401 to 7642);
(2) Federal Water Pollution Control Act (33 U.S.C. Sections
1251 to 1387);
(3) Resource Conservation and Recovery Act of 1976 (42
U.S.C. Sections 6901 to 6991i);
(4) Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Sections 9601 to 9675);
(5) Superfund Amendments and Reauthorization Act of 1986;
(6) Safe Drinking Water Act (42 U.S.C. Sections 300f to
3000j- 11);
(7) Toxic Substances Control Act (15 U.S.C. Sections
2601 to 2692);
(8) Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Sections 136 to 136yy);
(9) Occupational Safety and Health Act (29 U.S.C. Sections
651 to 678);
(10) Ohio environmental, health, and safety Governmental
Requirements; and
(11) local environmental, health, and safety ordinances;
together with any other foreign or domestic laws (federal, state,
provincial or local) relating to emissions, discharges, releases
or threatened releases of any Hazardous Substance into ambient
air, land, surface water, groundwater, personal property or
structures, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
discharge or handling of any Hazardous Substance.
"EQUITY INTEREST" shall mean any equity ownership of any
type or nature, including, without limitation, any class of
common or preferred stock or any warrant, option or other right
ot acquire any class of common or preferred stock or any security
convertible into any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" means Borrower and all of its
Subsidiaries.
"Event of Default" shall have the meaning set forth in
Article 8.
"EXTRAORDINARY INCOME" shall have the meaning as specified
by GAAP.
"FACILITY FEE" shall have the meaning set forth in Section
2.5.
"FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 5.9.
"FIXED ASSETS" means property, plant and equipment.
"GLOBAL POWER" means Global Power Company, formerly known as
Xxxxxxx insulation, Inc., an Ohio corporation with its principal
offices at 0000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx,
including its division, Global Erectors, and which is a wholly
owned subsidiary of Borrower.
"GLOBAL PROPERTY" shall mean the real property owned by
Global Power commonly known as 0000 Xxxx Xxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxxx.
"GAAP" means generally accounting principles set forth 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 in such other statements by such other entity
as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the
date of determination.
"GOVERNMENTAL APPROVALS" means any consent, right,
exemption, concession, permit, license, authorization,
certificate, order, franchise, determination or approval of any
federal, state, provincial, municipal or governmental department,
commission, board, bureau, agency or instrumentality of the
United States of America required for the ownership of, or
activities of the Borrower or any of its Subsidiaries or any
other Person in connection with the business of the Borrower or
any of its Subsidiaries.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state, province or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to the government
thereof.
"GOVERNMENTAL REQUIREMENTS" means all legal requirements in
effect from time to time of the United States of America and/or
the State of Ohio including all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, certificates,
orders, franchises, determinations, approvals, notices, demand
letters, directions and requirements of all governments,
departments, commissions, boards, courts authorities, agencies,
officials and officers, foreseen or unforeseen, ordinary or
extraordinary, including but not limited to any change in any
law, regulation or the interpretation thereof by any foreign or
domestic governmental authority, relating now or at any time
heretofore or hereafter to the business or operations of the
Borrower or any of its Subsidiaries or to any of the property
owned, leased or used by the Borrower or any of its Subsidiaries,
including, without limitation, the development, design,
construction, acquisition, startup, ownership and operation and
maintenance of property.
"GUARANTORS" means, collectively, American Eco, Controlled
Power, Global Power, Brookfield and Southwick.
"GUARANTY" means the Commercial Guaranty to be executed and
delivered by each of the Guarantors in favor of the Lender as of
the Closing Date.
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant,
toxic or hazardous substance, material, constituent or waste as
such terms are defined in or pursuant to any Environmental Law.
"HAZARDOUS WASTE FACILITY PERMIT" means any permit, license
or other governmental authorization relating to the storage,
treatment or disposal of any Hazardous Substance required
pursuant to any Environmental Law.
"HOLIDAY MORTGAGES" shall have the meaning set forth in
Section 3.2.
"HOLIDAY PROPERTIES" means Holiday Properties, an Ohio
general partnership between Kukk and Xxxxxx X. Rochester.
"INCIPIENT DEFAULT" shall have the meaning set forth in
Section 4.1(e).
"INDEBTEDNESS" means (a) any obligation of the Borrower or
any of its Subsidiaries for borrowed money; (b) any obligation of
the Borrower or any of its Subsidiaries evidenced by bonds,
debentures, notes or other similar instruments; (c) any
obligation of the Borrower or any of its Subsidiaries to pay the
deferred purchase price of property or for services (other than
in the ordinary course of business); (d) any obligation or
liability of others secured by a lien on any asset of the
Borrower or any of its Subsidiaries, whether or not such
obligation or liability is assumed; (e) any Contingent Obligation
of the Borrower or any of its Subsidiaries (other than those
incurred in the ordinary course of business); and (f) any other
obligation or liability which is required by GAAP to be shown as
part of the Consolidated Liabilities on a consolidated balance
sheet of the Borrower and its Subsidiaries.
"INDEMNIFIED MATTERS" shall have the meaning set forth in
Section 9.7.
"INTEREST EXPENSE" shall mean the amount reflected in the
Borrower's Financial Statements (or subsequent financial
statements thereafter) as expenses incurred for interest
determined in accordance with GAAP.
"INVENTORY" means all goods intended for sale or lease or
furnished or to be furnished under contracts of service or used
or consumed in the business of the Borrower or any of its
Subsidiaries, including, without limitation, all raw materials,
work in progress, and finished goods or materials, together with
all supplies of any kind, nature or description which are or
might be used in connection with the manufacture, packing,
shipping, advertisement, sale or finishing of such goods, and all
documents of title or documents representing, covering or
evidencing any of the foregoing.
"INVESTMENT" as applied to any Person, means any direct or
indirect ownership or purchase or other acquisition by that
Person of stock or other securities, or of a beneficial interest
in stock or other securities, of any other Person (including any
Subsidiary), or any direct or indirect loan, advance (other than
advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of
business) or capital contribution by that Person to any other
Person, including all indebtedness and accounts receivable from
that other Person in the ordinary course of business.
"KUKK" means Xxxxxx X. Xxxx, an individual residing in the
State of Ohio.
"LAND CONTRACT PROPERTIES" shall mean the real properties
which are the subject of Land Installment Contracts between
Holiday Properties and Borrower involving the real property
commonly known as follows:
000 Xxxx Xxxxxxxxxx Xxxx Xxxx, Xxxxx, Xxxxxx Xxxxxx, Xxxx
0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx Xxxxxx, Xxxx
0000 Xxxx Xxxxxxxx Xxxxx Xxxxx 00, Xxxxxxxx, Xxxxxx Xxxxxx,
Xxxx Xxxxxxxx
"LENDER" means First National Bank of Ohio, a national
banking association, 000 X. Xxxx Xxxxxx, Xxxxx, Xxxx 00000, or
any assignee of any interest in all or any part of the rights of
Lender under this Agreement.
"LENDER INDEMNITIES" shall have the meaning set forth in
Section 9.7.
"LIBOR RATE" shall mean the 30-day London Interbank Offered
Rate as published, from time to time, in the Wall Street Journal,
or if such rate becomes unavailable during the term of the Loan,
the Lender may designate a substitute index upon notice to
Borrower.
"LIMITED GUARANTY" shall have the meaning set forth in
Section 3.3.
"LOAN" shall have the meaning set forth in Section 2.1(a).
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranty, the Collateral Agreement, and all agreements,
instruments and documents (including, without limitation,
security agreements, loan agreements, notes, fee agreements,
guaranties, mortgages, deeds of trust, subordination agreements,
pledges, powers of attorney, consents, assignments, contracts,
notices, leases, financing statements, letter of credit
applications, reimbursement agreements, certificates, statements,
reports and notices and all other writings) heretofore, now or
hereafter executed by, on behalf of or for the benefit of the
Borrower or any of its Subsidiaries and delivered to the Lender
pursuant to or in connection with this Agreement or the
transactions contemplated hereby, together with all amendments,
modifications and supplements thereto.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse
change in (i) the business, assets, operations, or financial
condition of the Borrower and its Subsidiaries considered as a
whole, (ii) the collective ability of the Borrower and its
Subsidiaries to pay the Obligations in accordance with their
terms, or (iii) the security interests or liens of the Lender on
the Collateral or the priority of such security interests or
liens.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the business, assets, operations, or financial condition of
the Borrower and its Subsidiaries considered as a whole, (ii) the
collective ability of the Borrower and its Subsidiaries to pay
the Obligations in accordance with their terms, or (iii) the
security interests or liens of the Lender on the Collateral or
the priority of such security interests or liens.
"MATURITY" means any date on which a Loan or any portion
thereof becomes due and payable whether as stated, by virtue of
any mandatory prepayment, by Acceleration or otherwise.
"MERGER AGREEMENT" means the Agreement and Plan of Merger by
and among American Eco, Sub Acquisition and Borrower dated
September 10, 1996.
"MERGER DOCUMENTS" means the Merger Agreement, together with
all schedules and exhibits thereto, and all agreements,
instruments, documents or other written undertakings executed or
to be executed under or in connection with the Merger Agreement,
all of which are incorporated herein by reference.
"MORTGAGES" shall have the meaning set forth in Section 3.2.
"NOTE" shall have the meaning set forth in Section 2.1(c).
"OBLIGATIONS" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing to the Lender by the
Borrower or any of its Subsidiaries of any kind or nature,
present or future, whether or not evidenced by any note, guaranty
or other instrument, arising under this Agreement, the Notes, the
Collateral Agreement or any of the other Loan Documents, whether
or not for the payment of money, arising by reason of an
extension of credit, absolute or contingent, due or to become
due, now existing or hereafter arising, including all principal,
interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Borrower or any
of its Subsidiaries under this Agreement or any other Loan
Documents.
"Other Assurances" shall have the meaning set forth in
Section 3.1.
"OWNED REAL PROPERTIES" shall mean the real property owned
by the Borrower commonly known as 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx.
"PBGC" means the Pension Benefit Guaranty Corporation and
any successor to all or any part of such corporation's functions
under ERISA.
"PERMITTED ENCUMBRANCES" means: (a) the liens and security
interests created under the Security Documents, (b) carriers',
warehousemen's, mechanics', landlords', materialmen's,
suppliers', tax, assessment, governmental and other like liens
and charges arising in the ordinary course of business securing
obligations that are not incurred in connection with the
obtaining of any advance or credit and which are not overdue, or
are being contested in good faith by appropriate proceedings,
provided that, in accordance with GAAP, adequate reserves have
________
been set aside on the books of the Borrower for the eventual
payment thereof in the event it is determined that such
obligation is payable by the Borrower; (c) liens arising in
connection with worker's compensation, unemployment insurance,
appeal and release bonds and progress payments under government
contracts; (d) judgment liens in existence less than forty-five
(45) calendar days after the entry of the judgment, or with
respect to which execution has been stayed, or the payment of
which is covered in full by insurance; (e) zoning restrictions,
easements, licenses or other restrictions on the use of real
property, so long as the same do not materially impair the use of
such real property by the Borrower or the value thereof to the
Borrower; (f) any lien existing or arising by operation of law in
the ordinary course of business, such as a "banker's lien" or
similar right of offset; (g) liens arising incidental to the
conduct of the Borrower's business in the ordinary course and not
incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than credit for goods or
services); (h) liens or security interests arising under the
Subordinated Debt Documents; and (i) those encumbrances
specifically set forth on the attached Schedule 1.1.1.
"PERSON" means any individual, corporation, partnership,
trust, association or other entity or organization, including any
government, political subdivision, agency or instrumentality
thereof.
"PRIOR LINE OF CREDIT" shall have the meaning set forth in
Section 2.7.
"Property" means any property owned, leased or used by the
Borrower or any of its Subsidiaries.
"REAL PROPERTY COLLATERAL" shall have the meaning set forth
in Section 3.2.
"RESPONSIBLE OFFICER" means the President, Vice President,
Secretary, or Treasurer of the Borrower.
"ROCHESTER" means Xxxx X. Rochester, an individual residing
in the State of Ohio.
"SECURITY DOCUMENTS" means the Collateral Agreement and the
Mortgage and Other Assurances, together with any and all
documents, instruments, undertakings or financing statements
executed or to be executed under any of them.
"SOLVENT" means, when used with respect to any Person, that
at the time of determination:
(i) the fair value of its assets (determined on a
going concern basis) is in excess of the total amount of all
of its debts and liabilities, including contingent,
unmatured and unliquidated liabilities known to Borrower;
and
(ii) it is then able to pay its debts as they become
due; and
(iii) it owns property having a value (determined
on a going concern basis) in excess of the total amount
required to pay its debts; and
(iv) it has capital sufficient to carry on its
business.
"SOUTHWICK" means Southwick Corporation, an Ohio corporation
which is a wholly owned subsidiary of Borrower.
"SUB ACQUISITION" means Sub Acquisition Corp., an Ohio
corporation wholly owned by American Eco and formed for the
purpose of consummation of the transactions contemplated by the
Merger Agreement.
"SUBORDINATED DEBT DOCUMENTS" means, collectively, (i) the
Promissory Note in the original principal amount of $15,900,000
dated as of the Closing Date issued by the Borrower to Kukk, as
Agent for himself and Rochester, (ii) the Financing Agreement
dated as of the Closing Date between and among American Eco,
Borrower, Kukk and Rochester, (iii) all other documents relating
to the Financing Agreement, including, without limitation, any
security agreements, mortgages, or deeds of trust, and (iv) the
Purchase Agreement dated as of the Closing Date between Holiday
Properties and Borrower, and all documents relating thereto,
including land installment contracts.
"SUBORDINATED DEBT OBLIGATIONS" means the indebtedness of
the Borrower under the Subordinated Debt Documents.
"SUBORDINATION AGREEMENTS" shall have the meaning set forth
in Section 3.5.
"SUBSIDIARY" or "SUBSIDIARIES" means any or all
corporations, partnerships, joint ventures, associations or other
business entities of which the Borrower now or hereafter owns,
directly or indirectly, securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other governing body thereof, including, without
limitation, Controlled Power, Global Power, Brookfield and
Southwick.
ARTICLE 2
---------
Loan
----
2.1 THE LOAN.
--------
(a) LINE OF CREDIT LOAN AND LOAN COMMITMENT DEFINED.
-----------------------------------------------
Subject to all the terms and conditions of this Agreement, the
Lender will make such loans to the Borrower as from time to time
the Borrower requests until the Commitment Expiration Date (the
"Loan"). In no event shall the Loan exceed the Commitment. The
"Commitment" of the Lender at any time means Fifteen Million
Seven Hundred Thousand Dollars ($15,700,000). Subject to the
provisions of this Agreement, Borrower may borrow, repay without
penalty or premium, and reborrow hereunder, until the Commitment
Expiration Date, either the full amount of the Commitment or any
lesser sum.
(b) ADVANCES. The Lender agrees, subject to the
--------
fulfillment of the terms and conditions contained in Section 4.1
through 4.4 hereof, to make Advances in respect of the Loan to
the Borrower through disbursement thereof by wire transfer or
deposit to the account specified by Borrower from time to time
from and including the Closing Date to but not including the
Commitment Expiration Date. The aggregate outstanding principal
amount of the Loan shall not exceed at any time the Commitment.
Each Advance shall be made the same day as requested provided the
--------
Lender receives a telecopied or other acceptable notice prior to
12:00 Noon (Eastern time). The requesting of an Advance in and
of itself constitutes a representation and warranty by the
Borrower to the Lender that the conditions specified in Sections
4.1 through 4.4 hereof have been satisfied. Each request for an
Advance shall be made by an Authorized Officer.
(c) NOTE. The Borrower's obligation to repay the Loan
----
shall be evidenced by a promissory note of the Borrower (the
"Note") in the form of Exhibit 2.1.1 attached hereto. On the
Closing Date, the Borrower shall deliver the Note to the Lender,
executed by a Responsible Officer of the Borrower.
2.2 INTEREST.
--------
(a) INTEREST RATE. Subject to subsections (b) and (c) of
-------------
this Section, the Loan shall bear interest from the date of an
Advance on the unpaid principal amount thereof until such
principal amount shall become due and payable (whether upon
Maturity, by Acceleration or otherwise) at a variable rate, which
is subject to change from time to time, and which shall be
calculated by adding 1.50% to the LIBOR Rate. Borrower
understands and acknowledges that the LIBOR Rate is not
necessarily the lowest rate charged by Lender on its loans to
other customers of Lender. Borrower further understands and
acknowledges that Lender may make other loans, whether to
Borrower or any other customer of Lender based on rates other
than LIBOR Rate. Lender will, upon Borrower's request, inform
the Borrower of the then applicable LIBOR Rate. Any change in
the interest rate based on a change in the LIBOR Rate will not
occur more often than each 30 days. Changes in the interest rate
will be based on the most recently published LIBOR Rate two days
prior to the scheduled rate change date. UNDER NO CIRCUMSTANCES
WILL THE INTEREST RATE ON THE NOTE BE MORE THAN THE MAXIMUM RATE
ALLOWED BY APPLICABLE LAW.
(b) DEFAULT INTEREST RATE. In the event any Loan is not
---------------------
paid when due (whether upon Maturity, by Acceleration or
otherwise), the applicable Loan (or such portion thereof as has
so become due and payable) shall to the extent permitted by
applicable law bear interest, for each day from the date payment
was due (whether or not declared due and payable by the Lender)
until paid, at a rate equal to the highest rate for any Loan
provided above, plus two percent (2%) per annum (the "Default
Interest Rate"). All other Obligations due the Lender, if not
paid when due, shall bear interest, to the extent permitted by
applicable law, from the date when due until paid, at rate equal
to the Default Interest Rate. As to any Obligation where the
date due for payment is not specified in any of the Loan
Documents, such Obligation shall be due when the Lender so
notifies the Borrower.
(c) COMPUTATION OF INTEREST. Interest on the Loan shall be
-----------------------
computed for the actual number of days elapsed on the basis of a
year consisting of three hundred sixty (360) days. The interest
can therefore be determined by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of
days the principal balance is outstanding.
2.3. PAYMENTS AND PREPAYMENTS.
------------------------
(a) SCHEDULED PAYMENTS. The Borrower shall pay accrued
------------------
interest on the Loan to the Lender in monthly installments
commencing April 1, 1997 and continuing on the first day of each
subsequent month until the Loan is due (whether by Maturity,
Acceleration, or otherwise). All of the principal of and unpaid
accrued interest on the Loan shall be paid to the Lender on the
Commitment Expiration Date.
(b) PAYMENTS. All payments of interest or principal on the
--------
Loan shall be in Dollars and in immediately available funds to
the Lender at its Akron, Ohio office and shall be made prior to
4:00 p.m., Akron, Ohio time, on the date of the scheduled
payment. All (whether or not scheduled) payments received after
4:00 p.m., Akron, Ohio time, shall be considered to have been
received the next Banking Day. The Borrower shall give the
Lender telephone notice not later than 12:00 noon, Akron, Ohio
time, on the date of any payments in respect of principal
outstanding in respect of the Loan which is not due and the
Borrower shall cause immediately available funds in the amount of
such payment to be paid to the Lender on such day. In case the
due date of any payment falls on a day which is not a Banking
Day, such payment shall instead be due the next succeeding
Banking Day, and interest shall continue to accrue. The Lender
is hereby authorized to note the date, amount and interest rate
of each payment of principal and interest with respect to the
Loan on the Lender's books and records (either manually or by
electronic entry), which notation shall be conclusive evidence of
the information noted absent manifest error.
(c) OPTIONAL PREPAYMENTS. The Borrower may at any time
--------------------
prepay any or all of the Loans in whole or in part.
(d) APPLICATION OF PREPAYMENTS. Amounts paid under
--------------------------
Sections 2.5(c) shall be applied first against scheduled
principal payments due in respect of the applicable Loan in
inverse order of their maturity.
(e) OFFSET. In addition to and not in limitation of all
------
rights of offset that the Lender may have under applicable law,
the Lender, upon the occurrence and during the continuance of an
Acceleration, shall have the right to appropriate and apply to
the payment of all Obligations any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter
with the Lender.
(f) LATE FEE. Any installment or other payment not made
--------
within ten (10) calendar days of the date such payment or
installment is due shall be subject to a late charge equal to the
lesser of (i) seven percent (7%) of such unpaid late payment or
installment or (ii) Five Hundred Dollars ($500.00).
2.4 USE OF PROCEEDS. The proceeds of the Loan shall be
---------------
used solely for Borrower's working capital purposes in connection
with the operation of the Borrower's business; provided, however,
that Borrower may obtain an Advance of up to Nine Million Dollars
($9,000,000) of the Commitment to fund the transactions
contemplated in the Merger Agreement.
2.5 FACILITY FEE. The Borrower shall pay to the Lender a
------------
facility fee (the "Facility Fee") on or prior to the Closing Date
in the amount of Seventy-five Thousand Dollars ($75,000).
2.6 AUTHORIZATION TO DEBIT ACCOUNTS. The Borrower hereby
-------------------------------
irrevocably authorizes the Lender from and after the occurrence
of an Event of Default, or an event which, with notice or lapse
of time, would become an Event of Default, to charge to and
deduct from any accounts of the Borrower with the Lender all
amounts, charges and liabilities which shall come due to the
Lender from the Borrower with respect to any of the Obligations
or under this Agreement or any of the other Loan Documents.
2.7 TERMINATION OF PRIOR LINE OF CREDIT. The Loan shall
-----------------------------------
replace and supersede a prior revolving loan provided by Lender
to Borrower pursuant to a Business Loan Agreement dated November
12, 1992, as amended from time to time, and evidenced by a
certain promissory note in the maximum principal amount of
$10,000,000 dated November 12, 1992, as amended from time to time
(the "Prior Line of Credit") which shall be deemed terminated on
the Closing Date. To the extent that there is a balance due on
the Prior Line of Credit on the Closing Date, Borrower shall not
be permitted an Advance under the Loan unless such an Advance is
first used to pay all amounts outstanding under the Prior Line of
Credit first.
ARTICLE 3
---------
SECURITY
--------
3.1 SECURITY INTERESTS. The Loan and any other Obligations
------------------
shall be secured by a security interest in and to all of the
assets of Borrower and each of the Subsidiaries, including but
not limited to, all Accounts, Inventory, equipment, contract
rights, and general intangibles, whether now owned or hereafter
acquired, wherever located, and including the products of such
assets or the proceeds (including insurance proceeds) of such
assets (the "Collateral"). To evidence Lender's security
interest in the Collateral, at Closing, Borrower and each of the
Subsidiaries shall execute and deliver to Lender a Commercial
Security Agreement, in form and substance substantially as set
forth on Exhibit 3.1.1 (the "Security Agreement") and any other
documents, instruments or other assurances necessary to effect
the transactions in connection with the Loan and Lender's
interest in the Collateral, including, but not limited to, UCC
Financing Statements and proof of insurance (the "Other
Assurances").
3.2 MORTGAGES. The Loan and any other Obligations further
---------
shall be secured by a mortgage interest (or deed of trust, if
applicable) in and to the Owned Real Properties, the Controlled
Power Property, the Global Power Property, and the Land Contract
Properties, including a collateral assignment of and interest in
and to land contracts, all fixtures, leases and rents (the "Real
Property Collateral"). To evidence Lender's mortgage or other
interest in and to the Real Property Collateral, at Closing,
Borrower and each Subsidiary (as necessary) shall execute and
deliver to Lender mortgages or deeds of trust (the "Mortgages")
and collateral assignments of land contracts, leases and rents
(the "Assignments") in such form and substance satisfactory to
Lender. To evidence Lender's interest in the Land Contract
Properties, Holiday Properties shall execute and deliver the
Limited Guarantee to Lender, along with such documents, including
mortgages or deed of trust, as may be required by Lender to
perfect a mortgage or similar interest in the Real Property
Collateral titled to Holiday Properties, including, without
limitation, the Land Contract Properties (the "Holiday
Mortgages").
3.3 GUARANTIES. To further secure payment of the Loan, at
----------
the Closing, each of the Guarantors shall execute and deliver to
Lender a Guaranty in substantially the form of the attached
Exhibit 3.3.1. In addition, Holiday Properties shall execute and
deliver to Lender a Limited Non-Recourse Guaranty (the "Limited
Guaranty") in substantially the form of the attached Exhibit
3.3.2.
3.4 EXECUTION AND DELIVERY OF SECURITY DOCUMENTS. The
--------------------------------------------
Security Agreements, the Mortgages, the Assignments, the
Guaranties and Other Assurances (collectively, together with any
and all documents, instruments, undertakings or financing
statements executed or to be executed thereunder, the "Security
Documents") shall be delivered to the Lender, executed by their
respective signatories, on the Closing Date and on the dates or
at the times specified in Section 6.24.
3.5 SUBORDINATION OF SUBORDINATED DEBT OBLIGATIONS. Kukk,
----------------------------------------------
Rochester and Holiday, as holders of the Subordinated Debt
Documents, shall execute and deliver to Lender such subordination
agreements, substantially in the form of the attached Exhibit
3.5.1 (the "Subordination Agreements") in order to subordinate
the Subordinated Debt Obligations to Borrower's Obligations to
Lender. Further, in the event that Borrower fails to meet the
Condition Subsequent set forth in Section 4.5, Subordination
Agreement between Lender and each of Kukk and Rochester shall
provide that up to $10.3 million of the Subordinated Debt
Obligations of Borrower to Kukk and Rochester (in the aggregate)
shall be subordinated to the obligations of all creditors of
Borrower and its Subsidiaries, but not to Equity Interests.
ARTICLE 4
---------
CONDITIONS PRECEDENT AND SUBSEQUENT
-----------------------------------
4.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of the
-------------------------------
Lender to make the Loan is subject to the prior contemporaneous
satisfaction of each of the following conditions precedent on the
Closing Date:
(a) DELIVERY OF DOCUMENTS. The Notes, the Security
---------------------
Documents, the other Loan Documents and the Subordination
Agreements shall each have been duly executed and delivered
to the Lender by the respective signatories thereto.
(b) REPORTS, CERTIFICATES AND OTHER INFORMATION. The
-------------------------------------------
Lender shall have received the following, dated
and in full force and effect on the Closing Date:
(i) a certificate of the Secretary or an
Assistant Secretary of each of the Borrower, American
Eco and each Subsidiary as to (A) such entities
Articles of Incorporation and Code of Regulations (if a
corporation) or, if not a corporation then a
certificate of the general partner of each partnership
or limited partnership as to the partnership agreement;
(B) resolutions of its board of directors (or, if not a
corporation, of the partners or owners) authorizing the
execution, delivery and performance of this Agreement
and the other Loan Documents; and (C) the incumbency
and signatures of the Responsible Officers of each such
entity;
(ii) a certificate, signed by a Responsible
Officer of Borrower, stating (A) that the
representations and warranties contained in Article 5
of this Agreement, the Note and the other Security
Documents executed by the Borrower are then true and
accurate as though made on and as of such date; and (B)
that there has then occurred no Event of Default or
Incipient Default which is continuing;
(iii) a certificate, signed by a Responsible
Officer of the Borrower and each of the Subsidiaries,
in form and substance satisfactory to the Lender,
stating that each of the Borrower and the Subsidiaries
are Solvent on and as of the Closing Date and that no
Material Adverse Change in the Borrower or any of the
Subsidiaries has occurred since the date of the
Financial Statements, on which it is acknowledged the
Lender has relied;
(iv) such other instruments or documents as the
Lender may reasonably request relating to the existence
and good standing of the Borrower or the corporate
authority for execution, delivery and performance of
this Agreement or any of the other Loan Documents.
(c) OPINION OF COUNSEL. There shall have been
------------------
delivered to the Lender the written opinion, dated as of the
Closing Date, of Xxxxxxxx, Xxxx & Xxxxx, as counsel to the
Borrower and each of the Subsidiaries, in form and substance
reasonably satisfactory to Lender and its counsel, as to the
matters set forth in Sections 5.1 through 5.7 of this
Agreement.
(d) PAYMENT OF FEES. The Borrower shall have paid the
---------------
Lender the Facility Fee and the fees and expenses of the
Lender's counsel, Xxxxxx & XxXxxxxx (such fees of Xxxxxx &
XxXxxxxx not to exceed $25,000), in connection with
preparation, negotiation, execution and closing of this
Agreement, and any other fee or expense reimbursement due
the Lender under any of the Loan Documents;
(e) NO EXISTING DEFAULT. No Event of Default or event
-------------------
which, upon the lapse of time or the giving of notice or
both, would constitute an Event of Default (an "Incipient
Default") shall exist on the Closing Date, or after giving
effect to the transactions contemplated to take place
hereunder on such Date;
(f) REPRESENTATIONS AND WARRANTIES CORRECT. The
--------------------------------------
representations and warranties set forth in Article 5 and
the representations and warranties set forth in Note, or in
the other Security Documents to be executed and delivered to
the Lender on the Closing Date shall be true and correct in
all material respects on the Closing Date, and after giving
effect to the transactions contemplated to occur on such
Date;
(g) LEGALITY OF TRANSACTIONS. It shall not be
------------------------
unlawful for either the Borrower or the Lender to carry out
their respective obligations under this Agreement;
(h) PERFECTION. The Lender's lien on or security
----------
interest in each item of Collateral and the mortgage
interest in each of the Real Property Collateral shall have
been granted and perfected by the filing, recording or
registration of the Mortgage and Other Assurance and
documents, instruments or financing statements in the
appropriate governmental offices or by such other action as
is necessary to perfect any such lien or security interest,
and the Lender shall have received evidence satisfactory to
it that all such liens and security interests are of first
priority, subject only to Permitted Encumbrances;
(i) TITLE INSURANCE. The Lender shall have received
---------------
(or shall be satisfied that it shall promptly receive after
the Closing Date) a title insurance policy in form
satisfactory to the Lender issued by a title insurance
company reasonably acceptable to the Lender, insuring that
the mortgage lien of the Lender covering the Owned Real
Property covered by the Mortgages is of first priority
subject to no exceptions, conditions or reservations other
Permitted Encumbrances or as other~vise approved in writing
by the Lender;
(j) CONSENTS. The Lender shall have received evidence
--------
satisfactory to it that all consents required for the
granting and perfection of the Lender's liens on and
security interest in the items of Collateral, including the
Landlord Consents, have been obtained;
(k) HAZARD AND OTHER INSURANCE. The Lender shall have
--------------------------
received evidence reasonably satisfactory to it that the
Borrower has in effect the insurance required by Section
6.9;
(l) WRITTEN RECEIPT. If any part of the proceeds of
---------------
the Loan is to be disbursed to a Person other than the
Borrower, the Lender shall have received from the Borrower
written disbursement instructions and a written receipt for
such proceeds;
(m) FINANCIAL STATEMENTS. The Lender shall have
--------------------
received and reviewed to its reasonable satisfaction income
statements, balance sheets, and statements of cash flows for
the Borrower, each prepared in accordance with GAAP;
(n) GUARANTY. The Lender shall have received from
--------
each Guarantor the executed Guaranty, dated as of the
Closing Date; and
(o) MERGER TRANSACTION. The Lender shall have
------------------
received evidence to its satisfaction that the transactions
contemplated in the Merger Agreement have been consummated,
and American Eco has made a $10,000,000 capital contribution
to Borrower.
4.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation
------------------------------------
of the Lender to make each Advance requested from time to time
shall be subject to satisfaction of the following conditions in
connection with each such Advance:
(a) REPRESENTATIONS AND WARRANTIES. The
------------------------------
representations and warranties contained in Article 5 hereof
shall be true and correct in all material respects on and as
of the date of such Advance as though made on and as of such
date, except to the extent such representations and
warranties expressly relate to an earlier specified date.
(b) NO DEFAULTS. No event constituting an Event of
-----------
Default or Incipient Default has occurred and is continuing
or would result from the first Advance.
(c) PERFORMANCE. The Borrower has performed and
-----------
complied in all material respects with all its obligations
required to be performed and/or complied with under the Loan
Documents to which it is a party.
4.3 CONDITIONS FOR THE BENEFIT OF THE LENDER. The
----------------------------------------
conditions set forth in this Article 4 are for the exclusive
benefit of the Lender and may be waived, for purposes of this
Agreement, only by the Lender, and only in writing.
4.4 FAILURE OF CONDITIONS. The Borrower shall take any and
---------------------
all actions necessary or appropriate on its part, and shall use
its reasonable best efforts to cause others to take necessary or
appropriate action on their part, in order to satisfy the
conditions set forth in Sections 4.1 and 4.2 and otherwise cause
the Closing Date to occur.
4.5 CONDITIONS SUBSEQUENT. Within forty-five (45) days
---------------------
after the Closing Date, Borrower shall provide to Lender (i)
Phase I environmental reports, in form and substance satisfactory
to Lender, performed by an environmental assessment company
satisfactory to Lender, as to each of the Owned Real Properties,
and (ii) appraisals, in form and substance satisfactory to
Lender, of the Tangible Assets of Borrower supporting the write
up of assets on Borrower's Financial Statements of $10,300,000,
including the Owned Real Properties. To the extent that the
aggregate appraised value of such assets is less than
$10,300,000, then the Subordinated Debt Obligations to Kukk and
Rochester shall be additionally subordinated by such difference
to the claims and interests of all creditors of Borrower and its
Subsidiaries, but not to Equity Interests.
ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
-----------------------------------------------
In order to induce the Lender to enter into or become a
party to this Agreement and to make the Loan, the Borrower makes
the following representations and warranties to the Lender.
5.1 DUE AUTHORIZATION. The Borrower, Global Power,
-----------------
Brookfield and Southwick, are each corporations, duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which each is incorporated, and each are duly
licensed or qualified to conduct business and are in good
standing in each jurisdiction wherein the character of the
property owned or the nature of the business transacted by each
makes such licensing or qualification necessary, except as to
jurisdictions where the failure to be so licensed or qualified
would not have a Material Adverse Effect. Controlled Power is an
Illinois limited partnership, duly organized, validly existing
and in good standing under the laws of the jurisdiction in which
it was organized and in which it does business, and it is duly
licensed or qualified to conduct business and is in good standing
in each jurisdiction wherein the character of the property owned
or the nature of the business transacted by it makes such
licensing or qualification necessary, except as to jurisdictions
where the failure to be so licensed or qualified would not have a
Material Adverse Effect.
5.2 ORGANIZATION, STANDING AND QUALIFICATION OF
-------------------------------------------
SUBSIDIARIES.
------------
(a) Set forth in Schedule 5.2 attached hereto is a
complete and accurate list of the Borrower's Subsidiaries,
as of the date hereof, showing for each, as of the date
hereof, and for the Borrower as well, the respective
jurisdictions of their incorporation; the jurisdictions in
which they are qualified to do business as a foreign
corporation; the number of shares of each class of common
stock authorized; the number of shares of each class of
common stock outstanding; and the number of such shares
covered by all outstanding options, warrants, rights of
conversion or purchase and other similar rights.
(b) The charter or articles of incorporation and all
amendments thereto for the Borrower and its Subsidiaries
have been duly filed and are in proper order. The Equity
Interests of the Borrower, including the number of
authorized, issued and outstanding shares of stock of the
Borrower and each of its Subsidiaries, their par value, and
the names of the holders thereof and the number of shares
held by each holder, are as set forth in Schedule 5.2
attached hereto. All of the outstanding capital stock of
the Borrower and each of its Subsidiaries has been validly
issued in compliance with all federal and state securities
laws, is fully paid and nonassessable and is free and clear
of all mortgages, deeds of trust, pledges, liens, security
interests and other charges or encumbrances, other than
those created by the Loan Documents.
(c) Except as set forth on Schedule 5.2, neither the
Borrower nor any of its Subsidiaries is, or will on the
Closing Date be, be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock.
(d) The chief executive office of the Borrower is
located at 000 Xxxx Xxxxxxxxxx Xxxx Xxxx, Xxxxx, Xxxx 00000.
5.3 NO PARTNERSHIPS. Neither the Borrower nor any
---------------
Subsidiary is a partner in any partnership or a joint venturer in
any joint venture other than Controlled Power and Tri-Chem, Inc.
5.4 REQUISITE POWER. The Borrower has, and each Subsidiary
---------------
has, all requisite corporate power and all governmental licenses,
permits, authorizations, consents and approvals necessary to own
and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. The Borrower has all
requisite corporate power to borrow the sums provided for in this
Agreement, and Borrower has, and each Subsidiary has, all
requisite corporate power to execute, deliver, issue and perform
this Agreement, the Notes, the other Loan Documents to which it
is a party, and the Acquisition Documents.
5.5 CORPORATE AUTHORIZATION. All corporate action on the
-----------------------
part of the Borrower and each Subsidiary and their respective
directors and stockholders necessary for the authorization,
execution and delivery and performance of this Agreement, the
Notes and any of the Other Loan Documents has been duly taken and
is in full force and effect.
5.6 OFFICER AUTHORIZATION. Each officer of the Borrower or
---------------------
any Subsidiary executing this Agreement, any of the other Loan
Documents, or the Acquisition Documents is (as of the date of
such execution) duly and properly in office and fully authorized
to execute and deliver the same.
5.7 BINDING NATURE. This Agreement, the Notes, each of the
--------------
other Loan Documents, and the Acquisition Documents is, or upon
the execution thereof will be, a legal, valid and binding
obligation of the Borrower, in full force and effect and
enforceable in accordance with its respective terms, except for
the effect of applicable laws regarding bankruptcy or insolvency
or general principles of equity.
5.8 NO CONFLICT. Neither the execution nor delivery of
-----------
this Agreement, the Notes, any of the other Loan Documents, or
the Acquisition Documents, nor fulfillment of nor compliance with
the terms and provisions hereof or thereof (a) conflicts with or
result in a breach of any Governmental Requirement, or of any
agreement or instrument binding upon the Borrower or any
Subsidiary (other than any agreement requiring the consent of the
other party thereto to the granting, pursuant to the Security
Documents, of a lien on or security interest in the rights of the
Borrower or such Subsidiary thereunder, where such consent has
not been obtained), or conflict with or result in a breach of any
provision of the Articles of Incorporation or Code of Regulations
of the Borrower or any Subsidiary, or (b) results in the creation
or imposition of any lien upon any property of the Borrower or
any Subsidiary pursuant to any such agreement or instrument,
except pursuant to this Agreement or any other Loan Documents.
No authorization, consent or approval or over action by, and no
notice to or filing, with, any Governmental Authority is required
to be obtained or made by the Borrower or any Subsidiary, other
than those which will be obtained or made prior to the Closing
Date, for the due execution, deliver and performance by the
Borrower or any Subsidiary of this Agreement, the Notes or any of
the other Loan Documents or for the validity or enforceability
thereof.
5.9 FINANCIAL STATEMENTS. The Borrower has heretofore
--------------------
furnished to the Lender the consolidated financial statements for
Borrower and its Subsidiaries dated September 30, 1996 and
preliminary income statements for the fiscal year ended December
31, 1996 and the consolidated financial forecasts of Borrower and
its Subsidiaries (the "Financial Statements"). Each of the
Financial Statements was prepared in accordance with GAAP and, to
the best knowledge of the Borrower, each of the Financial
Statements fairly presents the financial condition and operations
of the Borrower at such dates and the results of its operations
for the respective periods then ended except for normal year-end
audit adjustments.
5.10 LITIGATION AND CONTINGENT LIABILITIES. Except as set
-------------------------------------
forth on the attached Schedule 5.10, there is no material action,
suit, investigation, tax claim or proceeding pending or, to the
knowledge of any corporate officer of the Borrower, threatened in
writing against or affecting the Borrower or any Subsidiary or
the property of the Borrower or any Subsidiary, including without
limitation, the Acquisition Assets before any court, arbitrator
or administrative or governmental body.
5.11 NO EVENT OF DEFAULT. No Event of Default or Incipient
-------------------
Default has occurred and is continuing or would result from the
execution of this Agreement that would have a Material Adverse
Effect.
5.12 TAX RETURNS AND TAX MATTERS. The Borrower and each of
---------------------------
the Subsidiaries has filed all federal and state income,
withholding, franchise and property tax returns which are
required to be filed in the United States of America, and each
has paid all taxes as shown on said returns and on all
assessments received by it to the extent that such taxes have
become due. The Borrower has no knowledge of any proposed,
asserted or assessed tax deficiency against it or any of its
Subsidiaries, where any such deficiency or all such deficiencies,
considered in the aggregate, would reasonably be expected to have
a Material Adverse Effect.
5.13 EMPLOYEE BENEFITS.
-----------------
(a) PLANS MAINTAINED. Except as set forth in Schedule
----------------
5.13 attached hereto, neither the Borrower nor, to the best
knowledge of the Borrower, any ERISA Affiliate is a party to,
contributes to or is obligated to contribute to any plans,
programs, agreements, policies, commitments or other arrangements
(whether or not set forth in a written document) in the following
categories:
(i) Any employee pension benefit plan, as defined
in Section 3(2) of ERISA, including (without
limitation) any multiemployer plan, as defined in
Section 3(37) of ERISA;
(ii) Any employee welfare plan, as defined in
Section 3(1) of ERISA;
(iii) Any bonus, deferred-compensation,
incentive, restricted-stock, stock purchase, stock
option, stock appreciation right, phantom stock,
debenture, supplemental pension, profit-sharing,
commission, or similar plan or arrangement;
(iv) Any plan, program, agreement, policy,
commitment or other arrangement relating to severance
or termination pay, whether or not published or
generally known;
(v) Any plan, program, agreement, policy,
commitment or other arrangement relating to the
provision of any benefit described in Section 3(1) of
ERISA to former employees or their survivors;
(vi) Any plan, program, agreement, policy,
commitment or other arrangement relating to loans or
other extension of credit, loan guarantees, relocation
assistance, educational assistance, tuition payments or
similar benefits; or
(vii) Any other plan, program, agreement,
policy, commitment or other arrangement relating to
employee benefits, workers' compensation, executive
compensation or fringe benefits, including any plan
exempted from ERISA by virtue of section 4(b) thereof.
(b) REPORTING AND DISCLOSURE. With respect to each
------------------------
employee benefit plan (as defined in Section 3(3) of ERISA) which
is listed in Schedule 5.13 attached hereto and which is subject
to the reporting, disclosure and record retention requirements
set forth in Part 1 of Subtitle B of Title I of ERISA and the
regulations thereunder, each of such requirements has been fully
met on a timely basis, except where instances of failing to do so
would not, considered in the aggregate, have a Material Adverse
Effect.
(c) QUALIFICATION OF PLANS. Each employee pension
----------------------
benefit plan (as defined in Section 3(2) of ERISA) which is
listed in Schedule 5.13 attached hereto and which is neither an
excess benefit plan (as defined in Section 3(36) of ERISA) nor a
plan exempted under Section 4(b) or 201(2) of ERISA, meets all
requirements for qualification under Section 401(a) of the Code
and the regulations thereunder, except to the extent that such
requirements may be satisfied by adopting retroactive amendments
under Section 401 (b) of the Code and the regulations thereunder,
under Section 1140 of the Tax Reform Act of 1986, or any other
statute, regulation, administrative notice, procedure or other
authority. Each plan described in the preceding sentence is the
subject of a determination letter which was issued by the
Internal Revenue Service and which states that such plan meets
such requirements. Each such plan has in all material respects
been administered in accordance with its terms and the applicable
provisions of ERISA and the Code and the regulations thereunder.
(d) FUNDING OF PENSION PLANS. Except as listed in
------------------------
Schedule 5.13 attached hereto, there are no plans to which
Section 412(a) of the Code applies.
(e) TERMINATION OR WITHDRAWAL LIABILITY. Except as
-----------------------------------
set forth on Schedule 5.13 attached hereto, neither the Borrower
nor, to the best knowledge of the Borrower, any ERISA Affiliate
has any liability under Subtitle D or E of Title IV or ERISA (i)
to the PBGC, (ii) to any multiemployer plan (as defined in
Section 4001(a)(3) of ERISA), or (iii) to any trustee. No event
has occurred which, with the giving of notice under Sections 4063
or 4219 of ERISA, would result in such liability. Neither the
Borrower nor, to the best knowledge of the Borrower, any such
ERISA Affiliate has engaged in any transaction described in
Section 4069 of ERISA.
(f) CONTRIBUTIONS AND PREMIUMS. All contributions,
--------------------------
premiums or other payments due from the Borrower or, to the best
knowledge of the Borrower, any ERISA Affiliate to (or under) any
plan listed in Schedule 5.13 attached hereto have been fully paid
or adequately provided for on the books and financial statements
of the Borrower or such ERISA Affiliate.
(g) PROHIBITED TRANSACTIONS. With respect to each
-----------------------
employee benefit plan (as defined in Section 3(3) of ERISA) which
is listed in Schedule 5.13 attached hereto and which is subject
to Part 4 of Subtitle B of Title I or ERISA, there does not now
exist, nor has there existed within the four-year period ending
on the date hereof, any act or omission which constitutes a
violation of Sections 406 or 407 of ERISA and is not exempted by
Section 408 of ERISA or which constitutes a violation of Section
4975(c) of the Code and is not exempted by Section 4975(d) of the
Code, except for violations which, considered in the aggregate,
would not have a Material Adverse Effect.
(h) COBRA. The Borrower and all of its Subsidiaries
-----
are in compliance with the requirements of the Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"),
as amended from time to time, except for violations which,
considered in the aggregate, would not have a Material Adverse
Effect.
5.14 REAL PROPERTY. The Borrower or a Subsidiary has good
-------------
and marketable title in fee simple to all of the Owned Real
Property, and as to leased properties has good leasehold title,
in each case free from all liens, charges, mortgages, deeds of
trust, security interests and encumbrances of any nature
whatsoever, except for Permitted Encumbrances. A true, correct
and complete copy of each lease of real property to which the
Borrower or any Subsidiary is a party and all modifications,
amendments, supplements, and extensions thereof have been
delivered by the Borrower to the Lender. The Borrower and each
Subsidiary enjoys peaceful and undisturbed possession under all
such leases. All of such leases are valid and subsisting and in
full force and effect against Borrower and/or its
Subsidiary(ies). To the best of the Borrower's knowledge, no
default exists under any lease of real property by it or any of
its Subsidiaries which would give either party thereto the right
to terminate such lease nor any circumstances which, if continued
or on notice, could result in any such default, where all of such
defaults in the aggregate would have a Material Adverse Effect.
Borrower has delivered, or will at Closing deliver, appropriate
landlord consents and waivers, in such form as may be acceptable
to Lender, in connection with any real property leased by
Borrower or any of its Subsidiaries.
5.15 OTHER PROPERTY. The Borrower has good and marketable
--------------
title to all of its properties and assets referred to in the
Financial Statements, subject only to Permitted Encumbrances.
Such items of equipment, together with all items of equipment
covered by leases (plus any items of equipment of which the
Borrower or any of its Subsidiaries acquires ownership or in
which the Borrower or any of its Subsidiaries acquires a
leasehold interest after the Closing Date), constitute all such
of the items of equipment necessary to conduct the business of
the Borrower and its Subsidiaries. Exclusive of items of
equipment disposed of in the ordinary course of business, the
Borrower has good and marketable title to all items of equipment,
in each case free from all liens, charges, security interests and
encumbrances of any nature whatsoever, except for Permitted
Encumbrances.
5.16 ENVIRONMENTAL MATTERS. Except as disclosed on the
---------------------
attached Schedule 5.16, and except to the extent that no
reasonable possibility exists that the failure of the following
to be true and correct would result in a liability of the
Borrower or its Subsidiaries that is material in amount: (i) to
the best knowledge of the Borrower, the properties and operations
of the Borrower and each of its Subsidiaries comply in all
material respects with all applicable Environmental Laws; (ii)
none of the properties or operations of the Borrower or any of
its Subsidiaries is subject to any judicial or administrative
proceeding alleging the violation of the Environmental Law; (iii)
none of the properties or operations of the Borrower or any of
its Subsidiaries is the subject of any federal or state
investigation concerning any xxx or release of any Hazardous
Substance, except for any such investigation conducted entirely
without notice to the Borrower or any of its Subsidiaries,
without entry to any facility of the Borrower or any of its
Subsidiaries, and of which neither the Borrower nor any of its
Subsidiaries has any knowledge; (iv) neither the Borrower nor any
of its Subsidiaries has filed any notice under any federal or
state law indicating past or present treatment, storage or
disposal of a hazardous waste or reporting a spill or release or
a Hazardous Substance in to the environment; (v) to the best
knowledge of the Borrower, neither the Borrower nor any of its
Subsidiaries has any contingent liability in connection with any
release of any Hazardous Substance into the environment and no
release which could require remediation has occurred; (vi) none
of the Borrower's or any of its Subsidiaries' operations involve
the generation, transportation, treatment, storage or disposal of
Hazardous Substances; (vii) neither the Borrower nor any of its
Subsidiaries has disposed of any Hazardous Substances in, on or
about any premises owned, leased or used by the Borrower or any
of its Subsidiaries and, to the best of the Borrower's knowledge,
neither has any lessee, prior owner, or other Person; (viii) no
surface impoundments or, to the best of the Borrower's knowledge,
underground storage tanks are located in, on or about any of the
premises owned, leased or used by the Borrower or any of its
Subsidiaries; and (ix) no lien in favor of any Governmental
Authority for (A) any liability under Environment Laws, or (B)
damages arising from or costs incurred by such Governmental
Authority in response to a release of any Hazardous Substance
into the environment has been filed or attached to any of the
premises owned, leased or used by the Borrower or any of its
Subsidiaries.
5.17 CONTRACTS. Borrower has delivered to Lender a true,
---------
correct and complete copy of each material contract or other
commitment of the Borrower or any of its Subsidiaries which does
not contemplate completion of performance by either party within
one (1) year, or which was not entered into in the ordinary
course of business. Each such contract or other commitment of
the Borrower or any of its Subsidiaries was in effect as of the
Closing Date. Performance by the parties to all contracts and
other commitments of the Borrower and its Subsidiaries would not
in the aggregate have a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries is in default in any
material respect under any such contract, and there are no
presently existing facts or circumstances which, if continued or
on notice, could reasonably be expected to result in such a
default under such agreements. Neither the Borrower nor any of
its Subsidiaries is in default in any material respect under the
provisions of any contract or commitment with a part which
contemplates completion of performance by either party within one
(1) year, and there are no presently existing facts or conditions
which, with the giving of notice or passage of time (or both),
could result in such a default under any provision of any such
contract or commitment, where all of such defaults in the
aggregate could reasonably be expected to result in a Material
Adverse Effect.
5.18 INTELLECTUAL PROPERTY. To the best knowledge of the
---------------------
Borrower, the Borrower and each of its Subsidiaries has all
patents, licenses, trademarks, trademark rights, trade names,
trade name rights, copyrights, permits and franchises which are
required in order for it to conduct its business and to operate
its properties as they have historically been conducted or
operated without known conflict with the rights of others.
Schedule 5.18 attached hereto contains a complete and correct
list of all material patents, copyrights, trademarks, licenses,
service marks, trade names and other similar rights (the
"Intellectual Property Rights") owned or used by the Borrower or
any of its Subsidiaries, showing for each item the owner thereof
and, for patents and trademarks, if registered, each registration
in the United States Patent and Trademark Office and each foreign
registration. Except as disclosed in such Schedule, no
proceedings have been instituted or are pending or have been
threatened in writing which challenge the validity, ownership or
use of any such Intellectual Property Rights. Except as
disclosed in such Schedule, to the best knowledge of the
Borrower, no infringement of any Intellectual Property Right of
any third party has occurred or will result in any way from the
operations or business of the Borrower or any of its
Subsidiaries, and no claim has been made by any such third party
based on allegation of any such infringement.
5.19 EMPLOYMENT AGREEMENTS AND RELATIONS. Other than
-----------------------------------
collective bargaining agreements entered into by Borrower in the
ordinary course of its business, neither the Borrower nor any of
its Subsidiaries was a party to any employment agreement or
collective bargaining agreement as of the Closing Date. Except
as contemplated by the Merger Agreement (which contemplates and
provides for employment agreements with Kukk and Xxxxxx
Rochester), Borrower is not obligated to assume or become liable
for any employment agreement. Neither the Borrower nor any of
its Subsidiaries has made, obligated itself to make, renewed,
extended, or otherwise modified or amended any previous agreement
to make any excess parachute payment as defined in Section 280G
of the Code. To the best knowledge of the Borrower, during the
four (4) years preceding the Closing Date there was or were no
(a) attempt by any union or other labor organization to organize
any employees of the Borrower or any of its Subsidiaries, or (b)
strikes or shutdowns resulting from labor activity or (c)
concerted work stoppages or concerted slowdowns of any nature or
length of time, at any plant or other facility owned or operated
by the Borrower.
5.20 INSURANCE. Schedule 5.20 attached hereto contains a
---------
complete and accurate list, as of the Closing Date, of all
insurance maintained by the Borrower or any of its Subsidiaries,
including, but not limited to fire, public liability, property
damage, products liability and workmen's compensation. The
Borrower and each of its Subsidiaries maintain such insurance
with insurers duly licensed in the applicable jurisdictions, in
such amounts and against such risks and losses as are deemed
reasonable by Borrower for their businesses and properties. All
such insurance is in full force and effect and all premiums with
respect thereto have been paid to the date hereof or paid in
accordance with payment schedules previously applicable thereto.
5.21 PROPERTY CONDITION. All of the Property of the
------------------
Borrower and its Subsidiaries used in connection with their
respective businesses is in good operating condition, usable in
the ordinary course of their respective businesses, in a state of
reasonable maintenance and repair, ordinary wear and tear
excluded, and adequate for the operation of their respective
businesses.
5.22 COMPLIANCE WITH LAWS. The Borrower and each of its
--------------------
Subsidiaries are in compliance with all Governmental Requirements
applicable to their properties, assets and business with only
such exceptions as in the aggregate have no reasonable likelihood
to cause a Material Adverse Effect. There are no proceedings
pending or, to the best of their knowledge, threatened, to
terminate or modify any Governmental Approvals.
5.23 COMMITMENTS. To the best knowledge of the Borrower, no
-----------
outstanding purchase commitment by the Borrower or any of its
Subsidiaries is materially in excess of the normal, ordinary and
usual requirements of their respective businesses, nor is any
such purchase commitment at a price or prices materially in
excess of market prices existing at the time such commitment was
made or upon terms materially different from past practices.
5.24 FINANCIAL AND OTHER INFORMATION. The Borrower has
-------------------------------
furnished to the Lender certain information including, but not
limited to, the Financial Statements. There are no statements or
conclusions therein which, when taken as a whole, in light of the
circumstances then existing, to the best knowledge and belief of
the Borrower, are based upon or include misleading information or
fail to take into account material information regarding the
matters covered therein. The projections provided to Lender in
the Financial Statements were prepared with reasonable care on
the basis of the assumptions stated therein and said assumptions
are reasonable in light of the current business conditions. It
is understood that no representation or warranty is made by the
Borrower concerning any predictions, forecasts, estimates, or any
other analyses prepared by or on behalf of the Borrower or one of
its Subsidiaries, which are dependent on future events, except
that such predictions, forecasts, estimates and analyses were
prepared with reasonable care. There is no fact known to the
Borrower (other than matters of a general economic nature) which
the Borrower reasonably believes would materially adversely
affect the business, operation, assets, prospects or conditions
of the Borrower and its Subsidiaries, taken as whole, which has
not been disclosed in the Loan Documents or in other documents
furnished to the Lender in connection with this Agreement.
Neither the business nor the assets nor the operations of the
Borrower or any of its Subsidiaries are presently affected by any
fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or
of the public enemy, or other casualty (irrespective of whether
covered by insurance), which materially and adversely affects the
business, operations, assets, prospects or condition (financial
or otherwise) of the Borrower and its Subsidiaries, taken as a
whole. To the best knowledge of the Borrower after reasonable
investigation, the representations, warranties and agreements
contained in the Merger Documents are true, accurate and complete
in all respects and no statement in any document, certificate or
other instrument furnished or to be furnished to the Borrower in
connection with the Merger Transaction contemplated by the
Acquisition Agreement, taken together, contains or will contain
any untrue statement of a material fact or omits or will omit to
state any material fact which is necessary to make the statements
contained therein not misleading.
5.25 EXISTING DEFAULTS. Neither the Borrower nor any of its
-----------------
Subsidiaries is in default under any mortgage, lease, indenture,
deed of trust or any other agreement or instrument to which it is
a party or by which it or any of its properties may be bound,
except where all such defaults, considered in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries is in
violation of any law, ordinances, rule, regulation, order, writ,
judgment, injunction or decree to which it or any of its
properties is subject, except where all such violations,
considered in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
5.26 STATUTORY REGULATION. Neither the Borrower nor any of
--------------------
its Subsidiaries is an investment company within the meaning of
the Investment Company Act of 1940, as amended, and is not,
directly or indirectly, controlled by or acting on behalf of any
person which is an investment company, within the meaning of said
Act. Neither the Borrower nor any of its Subsidiaries is subject
to any state law or regulation regulating public utilities or
similar entities, and is not, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, (a) a holding
company; (b) a subsidiary or affiliate of a holding company; or
(c) a public utility. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Interstate
Commerce Act or the Federal Power Act or any other federal or
state statute or regulation limiting or placing conditions upon
their respective power or right to borrow money.
5.27 BURDENSOME AGREEMENTS. To the best of Borrower's
---------------------
knowledge, neither the Borrower nor any of its Subsidiaries is a
party to an unduly burdensome agreement or undertaking, or is
subject to any unduly burdensome court order, writ, injunction or
decree of any court or any governmental instrumentality, domestic
or foreign.
5.28 REGULATION U. Neither the Borrower nor any of its
------------
Subsidiaries is engaged principally, nor as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System of the United States). No part of the proceeds of the
Loans will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or
carrying any such margin stock. No part of the proceeds of the
Loans will be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation G, T, U or X of
said Board of Governors.
5.29 LIENS. Except for Permitted Encumbrances, all liens
-----
granted in favor of the Lender by the Borrower as described in
this Agreement and the other Loan Documents shall constitute
first liens on the relevant property.
5.30 FISCAL YEAR. The fiscal year of the Borrower and each
-----------
of its Subsidiaries consists of a calendar year. The Borrower's
most recently-completed fiscal year ended on December 31, 1996.
Borrower has informed Lender that Borrower and its Subsidiaries
will change the fiscal year to a year end of November 30, 1997,
and Lender hereby consents to the change of fiscal year.
5.31 SUBORDINATED DEBT DOCUMENTS. The Subordinated Debt
---------------------------
Documents set forth the entire agreement between the Borrower and
the holders of the Subordinated Debt Obligations relating to the
Subordinated Debt Obligations.
5.32 SOLVENCY. As of the Closing Date and after giving
--------
effect to the transactions contemplated by this Agreement and the
other Loan Documents, including all of the Loans made hereunder,
the Borrower and each of the Subsidiaries were Solvent.
ARTICLE 6
---------
AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees that so long as any
principal of and/or interest accrued on any Loan is unpaid it
will comply with and, if applicable, cause each of its
Subsidiaries to comply with the following provisions:
6.1 ACCOUNTING RECORDS. The Borrower and each Subsidiary
------------------
shall maintain adequate books and accounts in accordance with
sound business practice and GAAP consistently applied. As soon
as possible, and in any event within ten (10) calendar days after
receipt of a written request from Lender, the Borrower and each
Subsidiary shall furnish to the Lender any information regarding
their business or finances as the Lender may reasonably request.
Upon reasonable request of the Lender and for good cause, the
Borrower will extend its cooperation and assistance and comply
with the requests of the Lender or its representative in
connection with any number of audits during any fiscal year
regarding the Collateral and will furnish any information
reasonably requested in respect thereof, including, without
limitation, appraisals of the Collateral, lien search reports and
physical counts. The Borrower will pay all reasonable
out-of-pocket expenses of the Lender in connection with a maximum
of one (1) such audit per fiscal year.
6.2 FINANCIAL STATEMENTS AND NOTICES. The Borrower shall
--------------------------------
furnish to the Lender the following financial statements and
notices:
(a) As soon as available but in any case within
forty-five (45) days after the close of each quarter in
Borrower's fiscal year, commencing with the quarter ending
May 31, 1997, a copy of the unaudited balance sheet and
income statement for such period.
(b) Within ninety (90) calendar days after the close
of each fiscal year, a copy of the annual audit report for
such year for the Borrower, including therein (i) a
consolidated statement of stockholders' equity for such
fiscal year; (ii) a consolidated statement of changes in
financial position or statement of cash flows for such
fiscal year, (iii) a consolidated income statement of the
Borrower and its Subsidiaries for such fiscal year, and (iv)
a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year. The
consolidated income statements, consolidated statement of
changes in financial position or statement of cash flows,
and balance sheets shall be audited by independent certified
public accountants reasonably acceptable to the Lender, and
shall be certified by such accountants as having been
prepared in accordance with GAAP consistently applied and
such accountants report shall be unqualified. Such
accountants shall also certify to the Lender that in the
course of the regular annual examination of the business of
the Borrower and its Subsidiaries, which examination was
conducted by such accountants in accordance with generally
accepted auditing standards, such accountants have obtained
no knowledge that an Event of Default, or an Incipient
Default, has occurred in connection with any of the
Financial Tests set forth in Section 6.22 and is continuing
as of the date of certification, or if, in the opinion of
such accountants, an Event of Default or an Incipient
Default has occurred in connection with any of the Financial
Tests set forth in Section 6.22 and is continuing, a
statement as to the nature thereof.
(c) Contemporaneously with each of the financial
reports required by the foregoing subsections (a) and (b),
certificates in the form of each of Exhibits 6.2.1 and 6.2.2
attached hereto;
(d) Promptly after they are sent, made available or
filed, copies of all material reports, proxy statements and
financial statements that the Borrower sends or makes
available to its stockholders and all registration
statements and reports that the Borrower files with the
Securities and Exchange Commission, or any other
governmental official, agency or authority;
(e) Promptly but in no event later than ten (10)
Banking Days after a Responsible Officer obtains actual
knowledge of (i) the occurrence of an Event of Default or an
Incipient Default, or (ii) any default or Event of Default
as defined in any evidence of Indebtedness or under any
material agreement, indenture or other instrument under
which such evidence of Indebtedness has been issued, whether
or not such indebtedness is accelerated or such default
waived, the Borrower shall notify the Lender thereof, and
within ten (10) Banking Days after obtaining such knowledge,
a statement of a Responsible Officer setting forth details
of such Event of Default or Incipient Default and the action
which the Borrower proposes to take with respect thereto;
(f) As soon as available, any written report involving
the Borrower's internal controls submitted to the Borrower
by its independent certified public accountants with its
annual or interim special audit of the financial condition
of the Borrower;
(g) Promptly but in no event later than five (5)
Banking Days after a Responsible Officer learns thereof,
written notice of any actual or threatened claims,
litigation, suits, investigations, proceedings or disputes
against or affecting the Borrower or any of its Subsidiaries
which may have a Material Adverse Effect, including, without
limitation: (i) any claim, litigation, suit, investigation,
proceeding or dispute involving a monetary amount in excess
of Two Hundred Fifty Thousand Dollars ($250,000.00), whether
or not covered by insurance; (ii) any labor controversy
which is reasonably expected to result in a strike against
the Borrower or any of its Subsidiaries; (iii) any proposal
by any public authority to acquire any of the assets or
business of the Borrower or any of its Subsidiaries, other
than in the ordinary course of Borrower's business; (iv) any
investigation or proceeding before or by any administrative
or governmental agency, the effect of which could reasonably
be expected to limit, prohibit or restrict in any material
respect the manner in which the Borrower or any of its
Subsidiaries currently conducts its business or to declare
any substance contained in the products manufactured or
distributed by the Borrower or any of its Subsidiaries to be
dangerous; (v) any summons, citation, directive, notice,
complaint, letter or other communication, whether oral or
written, from any person concerning any alleged material
violation by the Borrower, or any predecessor of the
Borrower, or any of its Subsidiaries, of any applicable
federal, state or local environmental, health or safety
statutes or regulations which has a reasonable possibility
to materially affect any of the properties or the operations
of the Borrower or such Subsidiary or any alleged material
noncompliance of any of the properties or the operations of
the Borrower or such Subsidiary therewith; or (vi) any
investigation of or request for information from the
Borrower or any of its Subsidiaries relating to the
handling, storage or disposal of any Hazardous Substance, or
the release thereof into the environment, by the Borrower or
such Subsidiary or any of their predecessors or any other
Person, which investigation or request is other than routine
or in response to Borrower's application for renewal of a
permit;
(h) Not later than ten (10) calendar days after
request by the Lender therefor, a copy of the working papers
for any of the Borrower's Subsidiaries used by the Borrower
in its preparation of consolidated financial statements for
itself and its Subsidiaries;
(i) Within ninety (90) calendar days after the close
of each fiscal year and, if prepared, within ten (10) days
following such preparation if prepared for a fiscal quarter,
an operating and capital budget for the Borrower and each
Subsidiary showing cash flow projections and projected
capital expenditures for the following fiscal year or
quarter, as the case may be;
(j) Within five (5) Banking Days after the management
of the Borrower obtains knowledge that a Material Adverse
Change has occurred in its business, properties or its
condition, financial or otherwise, a statement of an
Authorized Officer of the Borrower setting forth details of
such Material Adverse Change and the action which the
Borrower proposes to take with respect thereto;
(k) Immediately after a Responsible Officer obtains
actual knowledge thereof, report to the Lender all matters
materially affecting the value, enforceability or
collectibility of any material portion of the Receivables or
Inventory including, without limitation, the Borrower's
reclamation or repossession of, or the return to the
Borrower of, a material amount of goods or claims or
disputes asserted by any Account Debtor or other obligor;
and
(l) Within five (5) Banking Days after the management
of the Borrower acquires knowledge of the entry of a
judgment against the Borrower in excess of Fifty Thousand
Dollars ($50,000), a statement of an Authorized Officer of
the Borrower setting forth the amount of such judgment, the
parties to such action and whether an appeal is to be taken;
and
6.3 WITHHOLDING TAXES. Within ten (10) calendar days of
-----------------
the Lender's request therefor, the Borrower and its Subsidiaries
shall furnish to the Lender proof satisfactory to the Lender that
the Borrower and its Subsidiaries have complied with their
obligations to make deposits for FICA and withholding taxes.
6.4 ACCESS. The Borrower and each of its Subsidiaries
------
shall permit the Lender, at such reasonable times and intervals
as the Lender may designate upon reasonable notice, at its own
expense (unless as part of an audit of the Collateral as provided
in Section 6.1), by and through the representatives and agents of
the Lender, to inspect, audit and examine its books and records,
to make copies thereof, to discuss its affairs, finances and
accounts with their respective officers and independent public
accountants, and to visit and inspect their respective
properties.
6.5 CORPORATE EXISTENCE. The Borrower and each of its
-------------------
Subsidiaries shall preserve and maintain their respective
corporate existences and all of their licenses, privileges and
franchises and other rights necessary or desirable in the normal
course of their businesses, except that any of the Borrower's
Subsidiaries may be merged into the Borrower.
6.6 QUALIFICATIONS TO DO BUSINESS. The Borrower shall
-----------------------------
qualify to do business and shall be and remain in good standing
in each jurisdiction in which the nature of its business requires
it to be so qualified, except where the failure to so qualify
would not in the aggregate have a Material Adverse Effect.
6.7 COMPLIANCE WITH LAWS. The Borrower and its
--------------------
Subsidiaries shall comply with all Governmental Requirements
except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.
6.8 MATERIAL AGREEMENTS. The Borrower and its Subsidiaries
-------------------
shall comply in all respects with the terms of each agreement to
which any of them is a party, except where all instances of any
failure to so comply would not, in the aggregate, have a Material
Adverse Effect.
6.9 INSURANCE. The Borrower and its Subsidiaries shall
---------
maintain in full force and effect insurance of the types
customarily carried in their respective lines of business,
including, but not limited to, fire, public liability, property
damage, products liability and workers' compensation insurance;
provided, however, that Borrower and its Subsidiaries may
self-insure for workers compensation claims in those states where
such self-insurance is permitted. All such insurance shall be
carried with companies, under policies and in amounts which are
customary and reasonable in the industry and reasonably
satisfactory to the Lender. The Borrower and its Subsidiaries
shall maintain and keep in full force and effect property damage
insurance (including a lender's loss payable endorsement in favor
of the Lender and in form and substance satisfactory to the
Lender) covering Inventory and their respective Fixed Assets.
All policies of liability insurance shall name the Lender as a
first mortgagee, loss payee, and/or additional insured, as the
Lender shall direct. Within ten (10) calendar days of the
Lender's request therefor, the Borrower and the Subsidiaries
shall deliver or cause to be delivered to the Lender, but in any
event concurrently with the financial information required to be
delivered pursuant to Section 6.2(c), schedules identifying all
insurance then in effect and certificates evidencing such
insurance.
6.10 FACILITIES. The Borrower and its Subsidiaries shall
----------
keep the material properties used in their respective businesses
in good repair, working order and condition, and from time to
time shall make necessary repairs or replacements thereto so that
their property shall be maintained adequately for its intended
use.
6.11 TAXES AND OTHER LIABILITIES. The Borrower and its
---------------------------
Subsidiaries shall pay and discharge when due any and all
indebtedness, obligations, assessments and real and personal
property taxes, including, but not limited to, federal and state
income and personal and real property taxes, except as may be
subject to good faith contest or as to which a bona fide dispute
may arise; provided, however, that adequate reserves in
-------- -------
accordance with GAAP or other provision is made to the reasonable
satisfaction of the Lender for prompt payment thereof in the
event that it is found that the same are its obligation.
6.12 GOVERNMENTAL APPROVALS. Except where there exists no
----------------------
reasonable possibility that failure to do so would have a
Material Adverse Effect, the Borrower and its Subsidiaries shall
apply for, diligently pursue, and obtain or cause to be obtained,
and shall thereafter maintain in full force and effect all
Governmental Approvals that shall now or hereafter be necessary
under any Governmental Requirement (a) for land use, public and
employee health and safety, pollution or protection of the
environment, (b) for the grant by the Borrower or any of its
Subsidiaries of the security interests and liens granted by any
of the Security Documents and for the validity and enforceability
thereof, or for the perfection of Lender's rights and remedies
thereunder, and (c) for the operation of the business of the
Borrower and its Subsidiaries. The Borrower shall notify the
Lender within five (5) days after a Responsible Officer receives
actual knowledge of, and shall provide the Lender with a copy of
all notices relating to, any denial, suspension, revocation or
granting of any material Governmental Approvals.
6.13 COMPLIANCE WITH GOVERNMENTAL APPROVALS AND GOVERNMENTAL
-------------------------------------------------------
REQUIREMENTS. Except where the failure to do so could not
------------
reasonably be expected to have a Material Adverse Effect, the
Borrower and each of its Subsidiaries shall comply with all terms
and conditions of all Governmental Approvals and with all other
limitations, restrictions, obligations, schedules, timetables and
reporting requirements in any Governmental Requirements. The
Borrower and its Subsidiaries shall not intentionally interfere
with or prevent material compliance with, or give rise to any
common law, civil or criminal liability related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, handling or the presence, emission,
discharge, release or threatened release into or in the air,
land, surface water, groundwater, personal property or
structures, wherever located, of any Hazardous Substance.
6.14 PREVENT CONTAMINATION. The Borrower and its
---------------------
Subsidiaries shall conduct their operations on their Property in
such a way as to prevent material contamination of any part of
the Property by any Hazardous Substance. The Borrower and its
Subsidiaries shall manage all Hazardous Substances in a manner
that does not require a Hazardous Waste Facility Permit (unless a
permit or approval is required for a process change and such
permit or approval is obtained), and in compliance in all
material respects with all Governmental Requirements and
Governmental Approvals. The Borrower and its Subsidiaries shall
not permit any other Person to, emit, release or discharge into
air, soil, surface water or groundwater on, over, or in any
property or facilities owned or leased by Borrower, any Hazardous
Substance in excess of permitted levels or reportable quantities,
or other concentrations, standards, or limitations under any
Governmental Requirements or Governmental Approvals.
6.15 NOTICE OF RELEASE. Unless there is no reasonable
-----------------
possibility that any of the following occurrences could have a
Material Adverse Effect, the Borrower shall promptly notify the
Lender of any leaching, leak, drop, spill, discharge, release,
emission or other contamination by any Hazardous Substance in
violation of any law or which requires notification of a
governmental body pursuant to any Governmental Requirement or
requires any Governmental Approval. The Borrower or its affected
Subsidiary shall, without waiving any defenses it may have
against any third-party claim, or assertion of a claim against a
third party, assume full financial and other responsibility for
(a) the prompt remedy, removal, or cleanup of such leaching,
leak, drip, spill, discharge, release, emission or contamination,
as required by any Governmental Requirement; and (b) the
generation, storage, use and transportation of any Hazardous
Substance in connection with its business.
6.16 NOTICE TO THE LENDER. The Borrower shall promptly give
--------------------
written notice to the Lender of any proceeding or order before
any court or administrative body requiring the Borrower or any of
its Subsidiaries to comply with any Environmental Law or
Governmental Requirement or to clean up, remove or otherwise
remediate any condition in, on or about the Property of the
Borrower and its Subsidiaries.
6.17 PENSION INCREASES. Except with respect to plans
-----------------
maintained pursuant to collective bargaining agreements, without
the prior written consent of the Lender, which consent shall not
be unreasonably withheld, the Borrower shall not, and shall use
its best efforts to not permit any ERISA Affiliate to:
(a) Adopt, or commence contributions to, any new plan
that would be subject to Title IV of ERISA; or
(b) Except as necessary to comply with applicable
Governmental Requirements, adopt any amendment to any plan
which is maintained by the Borrower or such ERISA Affiliate
and which is subject to Title IV of ERISA, if such amendment
would result in a material increase in benefits or unfunded
liabilities.
6.18 TAX QUALIFICATION. For each pension plan (as defined
-----------------
in section 3(2) of ERISA) which is maintained or hereafter
adopted by the Borrower or any ERISA Affiliate and which is
intended to be qualified under Section 401 (a) of the Code, the
Borrower shall, or shall use its best efforts to cause such ERISA
Affiliate to:
(a) Use its best efforts to seek and receive
determination letters from the Internal Revenue Service
stating that such plan, or any material amendment to such
plan, meets the requirements for qualification under section
401(a) of the Code, unless there is no reasonable
possibility that the failure to do so would have a Material
Adverse Effect;
(b) Use its best efforts to cause such plan to meet
such requirements in operation and to be administered in all
material respects in accordance with the requirements of the
Code and ERlSA; and
(c) Refrain from taking any action that would cause
such plan to lose its qualification under Section 401(a) of
the Code or to violate the requirements of the Code or ERISA
in any material respect.
6.19 NOTIFICATION BY THE BORROWER. As soon as possible, and
----------------------------
in any event within ten (10) calendar days, after the Borrower or
any ERISA Affiliate knows or has reason to know that any of the
following events has occurred, the Borrower shall, or shall use
its best efforts to cause such ERISA Affiliate to, deliver to the
Lender a statement of a Responsible Officer describing such event
and any action that it proposes to take with respect thereto:
(a) Any reportable event (as defined in Section 4043
of ERISA) with respect to a plan maintained by the Borrower
or any ERISA Affiliate, other than a reportable event for
which the 30-day notice requirement under ERISA has been
waived in regulations of the PBGC;
(b) The withdrawal of the Borrower or any ERISA
Affiliate from a plan subject to Title IV of ERISA during a
plan year in which it was a substantial employer (as defined
in Section 4001 (a)(2) of ERISA) with respect to such plan;
(c) The filing by the Borrower or any ERISA Affiliate
with the PBGC of a notice of intent to terminate a plan;
(d) The treatment of a plan amendment adopted by the
Borrower or any ERISA Affiliate as a plan termination under
Section 4041(e) of ERISA;
(e) The institution of proceedings by the PBGC to
terminate any plan maintained by the Borrower or any ERISA
Affiliate or to have a trustee appointed to administer such
plan, or receipt of notice of any intention by the PBGC to
do so;
(f) Any event or condition which would constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any plan
maintained by the Borrower or any ERISA Affiliate;
(g) The filing of a request for a minimum funding
waiver under Section 412 of the Code with respect to any
plan maintained by the Borrower or any ERISA Affiliate;
(h) The receipt by the Borrower or any ERISA Affiliate
of a demand for withdrawal liability under Sections 4129 and
4202 of ERISA;
(i) The adoption of any new pension plan (as defined
in section 3(2) of ERISA) which is subject to Title IV of
ERISA or Section 412 of the Code by the Borrower or any
ERISA Affiliate;
(j) The adoption of any amendment to any pension plan
(as defined in Section 3(2) of ERISA) which is subject to
Title IV of ERISA or section 412 of the Code maintained by
the Borrower or any ERISA Affiliate, if such amendment
results in a material increase in benefits or unfunded
liabilities; or
(k) The commencencement or contributions by the
Borrower or any ERISA Affiliate to any pension plan (as
defined in Section 3(2) of ERISA) which is subject to Title
IV of ERISA or Section 412 of the Code to which it
previously did not contribute.
6.20 ERISA INFORMATION. As soon as possible, and in any
-----------------
event within ten (10) calendar days after receipt of a written
request from the Lender, the Borrower shall deliver, and shall
use its best efforts to cause any ERISA Affiliate to deliver, to
the Lender the following information or documents, as requested
by the Lender:
(a) A copy of any report, description or other
document filed with any governmental agency with respect to
any plan (as defined in section 3(3) of ERISA) maintained by
the Borrower or any ERISA Affiliate;
(b) A copy of any notice, determination letter, ruling
or opinion that the Borrower or any ERISA Affiliate receives
from any governmental agency with respect to any such plan;
and
(c) Such other information concerning any such plan as
the Lender may reasonably request.
6.21 FUNDING. The Borrower shall, and shall use its best
-------
efforts to cause each ERISA Affiliate to, make all contributions
that it is required to make by law or by any plan prior to the
earliest date when statutory liens could be imposed under the
Code or ERISA on any assets of the Borrower or any such ERISA
Affiliate in order to satisfy payment of such contributions. The
Borrower shall not, and shall use its best efforts to not permit
any ERISA Affiliate to, allow or suffer any statutory lien to be
placed upon its assets under the Code or ERISA.
6.22 FINANCIAL TESTS. The Borrower shall:
---------------
(a) maintain from the Closing Date through May 30,
1997, Consolidated Tangible Net Worth of not less than
$9,000,000, maintain from May 31, 1997 through August 30,
1997, Consolidated Tangible Net Worth of not less than
$9,250,000 and maintain from August 31, 1997 through the
Commitment Expiration Date, Consolidated Tangible Net Worth
of not less than $9,500,000.
(b) maintain at all times a ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth of not more
than 6.25 to 1.0.
(c) maintain at all times on its financial statements
provided to Lender under Section 6.2, a ratio of year to
date cumulative (EBITDA less Extraordinary Income) to year
to date cumulative interest expense of no less than 2.00 to
1.00.
6.23 TAX RETURNS. Borrower and its Subsidiaries shall
-----------
promptly and timely file, with any available extensions, all
federal, state and local tax returns, including, without
limitation, income, sales, property and use taxes.
6.24 REQUIRED FUTURE PERFECTION AND PERFORMANCE. Within ten
------------------------------------------
(10) calendar days of Lender's reasonable request therefor, the
Borrower and its Subsidiaries shall do all things and deliver all
documents and instruments to perfect, protect and enforce the
security interests and liens granted under the Security
Documents. Such acts may include, but shall not be limited to,
the marking of the books and records of the Borrower and each of
its Subsidiaries to show the Lender's security interests,
obtaining the consent of Account Debtors to the assignment of
accounts receivable in such form as the Lender may reasonably
require, the execution and delivery of assignments of tax
refunds, the execution and delivery of assignments of trademarks,
trade narnes, patents and copyrights and other general
intangibles, and the filing of financing statements under the
Uniform Commercial Code and of other documents and instruments
under other applicable laws, and the filing of assignments of
financing statements showing the Borrower or the respective
Subsidiary as secured party. Borrower shall promptly after the
Closing Date deliver or have delivered to the Lender the title
insurance policies described in Section 4.1 (k) of this Loan
Agreement.
6.25 CHANGE OF LOCATION. The Borrower shall notify the
------------------
Lender not later than thirty (30) calendar days in advance of the
change in the location of any place of business of the Borrower
or any of its Subsidiaries or of the establishment of any new, or
the discontinuance of any existing, place of business of the
Borrower or any of its Subsidiaries.
6.26 RIGHTS UNDER MERGER DOCUMENTS. The Borrower shall
-----------------------------
obtain all consents and approvals of, make all filings and
registrations with, and take any other action in respect of, all
governmental agencies, authorities or instrumentalities required
in order to consummate the transactions contemplated by the
Merger Documents at or prior to the time when required, to
maintain the same in full force and effect as required, except
those, if any, the failure of which to obtain, give, file or take
would not materially adversely affect the ability of the Borrower
to perform its obligations under this Agreement, the Note or any
of the other Loan Documents, or to consummate the transactions
contemplated by the Merger Documents. All actions pursuant to or
in furtherance of the transactions contemplated by the Merger
Documents will be taken in compliance in all material respects
with all applicable laws.
ARTICLE 7
---------
Negative Covenants
------------------
The Borrower covenants and agrees that so long as any
principal of and/or interest accrued on any Loan is unpaid it
will comply with and, if applicable, cause each of its
Subsidiaries to comply with the following provisions:
7.1 MERGERS AND CONTINUITY OF OPERATIONS. Neither the
------------------------------------
Borrower nor any of its Subsidiaries shall enter into any merger,
consolidation, reorganization or recapitalization, or any
agreement to do any of the foregoing or reclassify any of its
capital stock, except that any Subsidiary of the Borrower may be
merged into the Borrower. Borrower shall not cease operations,
liquidate, transfer, acquire or consolidate with any other entity
without the express written consent of Lender.
7.2 CHANGE OF NAME OR BUSINESS. Neither the Borrower nor
--------------------------
any of its Subsidiaries shall change its name without at least
thirty (30) days' prior notice to the Lender. Neither the
Borrower nor any of its Subsidiaries shall change the nature of
its business or engage in any other business other than the
businesses in which they are respectively engaged as of the
Closing Date.
7.3 STOCK. Except as described in Schedule 5.2, neither
-----
the Borrower nor any of its Subsidiaries shall issue any
additional Equity Interest or repurchase, redeem or retire any
Equity Interests.
7.4 DIVIDENDS. Etc. Borrower shall not, directly or
---------
indirectly, make or declare any dividend (in cash, securities or
any other form of property) on, or other payment or distribution
on account of, or set aside assets for a sinking fund or other
similar fund for purchase, or redeem, purchase, retire or
otherwise acquire, any Equity Interest, or make any other
distribution in respect thereof, whether in cash or other
property.
7.5 ACCOUNTING POLICIES. Except as provided in Section
-------------------
5.30 or in order to comply with GAAP, the Borrower shall not
materially change any of its accounting policies or its fiscal
year or the fiscal year of any of its Subsidiaries.
7.6 INVESTMENTS. Neither the Borrower nor any of its
-----------
Subsidiaries shall make or permit to remain outstanding any
Investment, except (a) Investments reflected in the Financial
Statements and existing as of the Closing Date; (b) Investments
in certificates of deposit issued by, and other deposits with any
commercial bank organized under the laws of the United States or
a state thereof having capital of at least One Hundred Million
Dollars ($ 100,000,000); (c) Investments in short-term marketable
obligations of the United States and in open market commercial
paper given the highest credit rating by a national credit agency
and maturing not more than one year from the creation thereof;
and (d) Investments received in the settlement of any debt owing
to the Borrower or any of its Subsidiaries, where such debt was
incurred in the ordinary course of business.
7.7 LIENS. Neither the Borrower nor any of its
-----
Subsidiaries shall mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, any of their respective
assets of any kind now owned or hereafter required, or any income
or profits therefrom, except for Permitted Encumbrances, or enter
into any agreement to refrain from granting a lien (other than in
connection with the granting or sufferance of a Permitted
Encumbrance, provided that such agreement pertains only to the
--------
property covered by the Permitted Encumbrance).
7.8 GUARANTEES. Except as permitted under this Agreement,
----------
neither the Borrower nor any of its Subsidiaries shall become
liable, directly or indirectly, for any Contingent Obligation,
except such liabilities incurred in the ordinary course of
business.
7.9 INDEBTEDNESS. Neither the Borrower nor any of its
------------
Subsidiaries shall incur, create, assume or permit to exist any
Indebtedness except:
(a) Obligations;
(b) the Subordinated Debt Obligations (subject to the
holder thereof executing a Subordination
Agreement);
(c) trade indebtedness incurred in the ordinary course
of business;
(d) Indebtedness where payment is secured by a
Permitted Encumbrance;
(e) taxes, assessments and governmental charges or
levies which are not
(f) reserves for contingent liabilities where such
reserves are established in accordance with GAAP;
and
(g) current liabilities incurred in connection with
the obtaining of goods or services in the ordinary
course of business.
7.10 SALE OF ASSETS. Other than sales of Inventory in the
--------------
ordinary course of business and sales of tangible personal
property in any one fiscal year for an aggregate price of not
more than One Hundred Thousand Dollars ($100,000), the proceeds
from which are used by the Borrower to acquire replacement
property of equivalent value and similar in kind to such tangible
personal property, neither the Borrower nor any of its
Subsidiaries shall sell, transfer, lease or otherwise dispose of
any of their respective assets (including, but not limited to,
sales, transfers, leases or other dispositions between or among
any of the Borrower and its Subsidiaries), without the express
written consent of Lender.
7.11 CAPITAL EXPENDITURES. The Borrower and its Subsidiaries
--------------------
shall not make Capital Expenditures during the period commencing
on the Closing Date and ending Commitment Termination Date,
inclusive, or during any fiscal year of Borrower thereafter
which, in the aggregate, exceed Seven Hundred Fifty Thousand
Dollars ($750,000) without the written consent of Lender;
provided, however, that Borrower's purchase of an Apelio III 376V
Punch Laser Combination Machine for $660,044 using funds of the
Loan shall not be included in the determination of Capital
Expenditures.. Upon the occurrence and during the continuation of
any Event of Default or any Incipient Default, neither the
Borrower nor any of its Subsidiaries shall make any Capital
Expenditure to which it is not already legally committed or enter
into any new commitment to make any Capital Expenditure except
for any such capital expenditure required to comply with any
applicable Governmental Requirements.
7.12 OPERATING LEASES. Except for the leases set forth on
----------------
the attached Schedule 7.12, neither the Borrower nor any of its
Subsidiaries shall enter into, extend or renew any operating
lease involving property with a cost or value in excess of
Fifty-Thousand Dollars ($50,000.00) without the express written
consent of Lender.
7.13 PREPAYMENT. Neither the Borrower nor any of its
----------
Subsidiaries shall purchase or prepay any Indebtedness arising
from borrowed money or any Indebtedness secured by any Permitted
Encumbrance except pursuant to Sections 2.3(c) and 2.3(d).
7.14 SALE-LEASE BACKS. Neither the Borrower nor any of its
----------------
Subsidiaries shall enter into or become liable in connection with
any sale-leaseback transaction.
7.15 TRANSACTIONS WITH AFFILIATES. Except for transactions
or
----------------------------
relationships existing as of the Closing Date, neither the
Borrower nor any of its Subsidiaries shall, directly or
indirectly, enter into any transaction or permit to exist any
relationship with or for the benefit of an Affiliate on terms
more favorable to the Affiliate than would have been obtainable
in arm's length dealings. After the Closing Date, but prior to
the Borrower or any of its Subsidiaries engaging in any
transaction or relationship not prohibited by this Section 7.15,
the board of directors of the Borrower shall determine that such
transaction has been negotiated or such relationship will be
conducted in good faith and on an arm's length basis and such
determination shall be evidenced by a resolution of the board of
directors of the Borrower. This section shall not prohibit
Borrower from advancing or reimbursing ordinary and usual
business and travel expenses of its officers and employees in the
ordinary course of Borrower's business.
7.16 MISREPRESENTATIONS. The Borrower shall not and shall
not
------------------
permit any of its Subsidiaries to furnish the Lender with any
certificate or other document that (i) contains any untrue
statement of material fact, or (ii) omits to state a fact
necessary to make it not materially misleading in light of the
circumstances under which it was furnished.
7.17 RESTRICTIVE AGREEMENTS. The Borrower shall not, and
shall
----------------------
not permit any of its Subsidiaries to, enter into any agreement
which restricts the ability of such Subsidiaries to make payments
to the Borrower by way of dividends, advances, reimbursement or
otherwise.
7.18 TRANSACTIONS WITH OFFICERS, DIRECTORS AND AFFILIATES.
The
----------------------------------------------------
Borrower and its Subsidiaries shall not, directly or indirectly,
enter into any transaction with any of their directors, officers
or Affiliates to loan or advance any sums of money. This section
shall not prohibit Borrower from advancing or reimbursing
ordinary and usual business and travel expenses of its officers
and employees in the ordinary course of Borrower's business.
7.19 AMENDMENTS OF OTHER INSTRUMENTS. The Borrower shall not
-------------------------------
amend, modify or supplement in any material respect (or agree to
amend, modify or supplement in any material respect) its Articles
of Incorporation or the Subordinated Debt Documents (except as
permitted in the Subordination Agreement).
ARTICLE 8
---------
Events of Default
-----------------
8.1 EVENTS OF DEFAULT. Each of the following shall
-----------------
constitute an Event of Default under this Agreement:
(a) PAYMENTS. The Borrower shall fail to pay when due
--------
any installment of principal, interest or other surn payable
hereunder or under any other Loan Document within ten (10)
calendar days of the due date thereof;
(b) COVENANTS AND AGREEMENTS. The Borrower shall
default
------------------------
in the performance of any of its respective agreements set
forth herein or in any of the other Loan Documents (and not
constituting an Event of Default under any of the other
clauses of this Section 8.1);
(c) WARRANTIES. Any warranty, representation or
----------
certification made by the Borrower or any Subsidiary, or any
officer of the Borrower or any Subsidiary, in or pursuant to
any of the Loan Documents, shall be untrue in any material
respect, in any case on any date as of which the facts set
forth are stated or certified;
(d) JUDGMENT. A judgment or judgments shall be entered
--------
against the Borrower or any Subsidiary in the aggregate
amount of Fifty Thousand Dollars ($50,000) or more on an
uninsured and unbounded claim or claims, and such judgment
or judgments shall remain unstayed, unvacated, undischarged
or unsatisfied for thirty (30) calendar days;
(e) LIENS FOR PENSION CONTRIBUTIONS. Any statutory
-------------------------------
lien shall have been placed upon the assets of the
Borrower or any ERISA Affiliate under the Code or ERISA
involving a claim for unfunded benefits liabilities or
minimum funding contributions;
(f) PLAN TERMINATION OR WITHDRAWAL LIABILITY. Any
----------------------------------------
termination of a single employer plan (as defined in Section
4001(a)(15) of ERISA) or any complete or partial withdrawal
from a multiemployer plan (as defined in section 4001(a)(3)
of ERISA) shall occur, or steps shall have been taken by any
Person that make it reasonable to expect that such
termination or withdrawal will occur, and such termination
or withdrawal could reasonably be expected to result in
liability of the Borrower or any ERISA Affiliate to the
PBGC, to a trustee or to such multiemployer plan in the
aggregate amount of Twenty-Five Thousand Dollars ($25,000)
or more. A plan amendment described in Section 4041 (e) of
ERISA shall be treated as a plan termination for purposes of
this Section 8.1(f);
(g) FUNDING WAIVER. The Borrower or any Affiliate
shall
--------------
apply under Section 412 of the Code for a waiver of the
minimum funding standard;
(h) PLAN QUALIFICATION. Any plan of the Borrower or
an
------------------
ERISA Affiliate that is intended to have qualification under
Section 401(a) of the Code loses such qualification, and the
Lender believes in good faith that the loss of such
qualification could reasonably be expected to have a
Material Adverse Effect;
(i) CROSS DEFAULT. Subject to the provisions of the
-------------
Subordination Agreement, the Borrower or any of its
Subsidiaries and/or the Guarantors shall default (unless
waived) in the payment when due, whether by Acceleration or
otherwise, of any amount under any other Indebtedness for
borrowed money of, or any guaranty of Indebtedness for
borrowed money by, the Borrower (not arising hereunder or
under any of the other Loan Documents) or any of its
Subsidiaries or by the Guarantor, or default (unless waived)
in the performance or observance (subject to any applicable
grace period) of any agreement, covenant or condition with
respect to any such Indebtedness or guaranty if the effect
of such default is to accelerate the maturity of any such
Indebtedness or to permit the holder or holders of any such
Indebtedness or guaranty, or any trustee or agent for such
holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity or to call upon such
guaranty in advance of nonpayment of the guaranteed
indebtedness;
(j) COLLATERAL. A judgment creditor of the Borrower or
----------
any of its Subsidiaries shall obtain possession of any of
the Collateral by any legal means, including, but not
limited to, levy, distraint, replevin or self-help;
(k) BANKRUPTCY. The Borrower or any of its
Subsidiaries
----------
shall institute a voluntary case seeking liquidation or
reorganization under Chapter 7 or Chapter 11, respectively,
of the United States Bankruptcy Code, or shall consent to
the institution of an involuntary case thereunder against
it; or the Borrower or any of its Subsidiaries shall file a
petition initiating or shall otherwise institute any similar
proceeding under any other applicable federal or state law
of the United States of America, or shall consent thereto;
or the Borrower or any of its Subsidiaries shall apply for,
or by consent or acquiescence there shall be an appointment
of, a receiver, liquidator, sequestrator, trustee or other
officer with similar powers, or the Borrower or any of its
Subsidiaries shall make an assignment for the benefit of
creditors; or the Borrower or any of its Subsidiaries shall
admit in writing its inability to pay its debts generally as
they become due; or, if an involuntary case shall be
commenced seeking the liquidation or reorganization of the
Borrower or any of its Subsidiaries under Chapter 7 or
Chapter 11, respectively, of the United States Bankruptcy
Code, or any similar proceeding shall be commenced against
the Borrower or any of its Subsidiaries under any other
applicable federal or state law of the United States of
America, and (i) the petition commencing the involuntary
case is not timely controverted; or (ii) the petition
commencing the involuntary case is not dismissed within
sixty (60) calendar days of its filing; or (iii) an interim
trustee is appointed to take possession of all or a portion
of the property and/or to operate all or any part of the
business of the Borrower or such Subsidiary; or (iv) an
order for relief shall have been issued or entered therein;
or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee or other officer having similar powers
over the Borrower or such Subsidiary, or of all or a part of
the property of any of the foregoing, shall have been
entered; or any other similar relief shall be granted
against the Borrower or any of its Subsidiaries under any
applicable federal or state law;
(l) MATERIAL ADVERSE CHANGE. The Lender shall have
-----------------------
reasonably determined in good faith that a Material Adverse
Change shall have occurred since the Closing Date;
(m) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan
----------------------------
Documents shall cease for any reason to be in full force and
effect or any party thereto (other than the Lender) shall
purport to disavow its obligations thereunder, shall declare
that it does not have any further obligation thereunder or
shall contest the validity or enforceability thereof;
(n) IMPAIRMENT OF COLLATERAL. The Lender's security
------------------------
interest in, or lien on, any portion of the Collateral shall
become materially impaired or otherwise unenforceable or
Borrower shall incur any Indebtedness or create or suffer to
exist any security interest in or encumbrance upon any of
its assets except as otherwise provided in this Loan
Agreement;
(o) DEFAULT OR ACCELERATION OF SUBORDINATED DEBT
--------------------------------------------
OBLIGATIONS. Except as provided in the Subordination
-----------
Agreement, Borrower shall either be in default (or have been
declared to be in default) of any of Borrower's obligations
under the Subordinated Debt Documents, which Subordinated
Debt Documents shall not be modified, amended or otherwise
altered without the express written consent of Lender;
(p) CHANGE OF CONTROL. A Change of Control shall
occur
-----------------
without the prior written consent of the Lender;
(q) TERMINATION OR LIMITATION OF GUARANTY. Any
-------------------------------------
Guarantor seeks, claims, or otherwise attempts to limit,
modify or revoke such Guarantor's guarantee of the Loan or
any other loan with Lender; or
(r) GENERAL INSECURITY. The Lender for any reason in
------------------
good xxxxx xxxxx itself insecure with respect to the
repayment of the indebtedness provided for herein.
8.2 ACCELERATION. If any Event of Default described in
------------
Section 8.1(k) shall occur, the Loan, the Note and all other
Obligations shall become immediately due and payable, and the
Commitment shall automatically and immediately terminate, all
without notice of any kind. If any other Event of Default shall
be continuing, the Lender may declare the Note and all other
Obligations to be due and payable, whereupon the Note and all
other Obligations shall immediately become due and payable, all
as so declared by the Lender and without presentment, demand,
protest or other notice of any kind. Any such declaration made
pursuant to this Section 8.2 may be rescinded by the Lender. In
addition to the foregoing, the Lender may (i) terminate the
Commitment, whereupon the Lender shall have no further obligation
to make Advances; or (ii) exercise all remedies provided in the
Loan Documents, the Uniform Commercial Code, or otherwise at law
or in equity; or (iii) do all of the foregoing.
8.3 OTHER REMEDIES. If any Event of Default shall occur and
--------------
be continuing, the Lender shall have, in addition to the remedies
set forth in Section 8.2, all other remedies specified in the
Loan Documents or otherwise available under law.
8.4 RIGHT TO CURE. If any Event of Default (other than a
-------------
default in payment of Indebtedness under Section 8.1(a) of this
Agreement), is curable, and if Borrower has not been given a
notice of a similar Event of Default within the preceding 12
month period, it may be cured (and no Event of Default will have
occurred) if Borrower (a) cures the default within fifteen (15)
days; or (b) if the cure requires more than fifteen (15) days,
and only with the express written consent of Lender, immediately
initiates steps which Lender deems in Lender's sole discretion to
be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps to produce
compliance as soon as reasonably practicable.
ARTICLE 9
---------
Miscellaneous
-------------
9.1 SUCCESSORS AND ASSIGNS AND SALE OF INTERESTS.
--------------------------------------------
(a) SUCCESSORS AND ASSIGNS. The terms and provisions
of
----------------------
this Agreement shall be binding upon, and the benefits
thereof shall inure to, the parties hereto and their
respective successors and assigns; provided, however, that
the Borrower
-------- -------
shall not assign this Agreement or any of the rights, duties
or obligations of the Borrower hereunder without the prior
written consent of the Lender.
(b) SALE OF INTERESTS. Borrower agrees and consents to
-----------------
Lender's sale or transfer, whether now or later, of one or
more participation interests in the Loans to one or more
purchasers, or potential purchasers, whether related or
unrelated to Lender. Lender may provide, without any
limitation whatsoever, to any one or more purchasers or
potential purchasers, any information or knowledge Lender
may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters so long as
such purchasers or potential purchases treat such
information in a similar manner as Lender. Borrower
additionally waives any and all notices of sale of
participation interests, as well as all notices of any
repurchase of such participation interests. Borrower also
agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such
interests in the Loans and will have all of the rights of
offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or
such purchaser may enforce Borrower's obligation under the
Loans irrespective of the failure or insolvency of any
holder of any interest in the Loan. Borrower further agrees
that the purchaser of any such participation interest may
enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Lender.
9.2 NO IMPLIED WAIVER. Except as otherwise provided in
-----------------
Section 4.3, no delay or omission to exercise any right, power or
remedy accruing to the Lender upon any breach or default of the
Borrower under this Agreement or under any of the other Loan
Documents shall impair any such right, power or remedy of the
Lender, nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of any similar
breach or default occurring thereafter, nor shall any waiver or
any single breach or default be deemed a waiver of any other
breach or default occurring theretofore or thereafter.
9.3 AMENDMENTS; WAIVERS. No amendment, modification or
waiver
-------------------
of, or consent with respect to, any provision of this Agreement,
the Note or any of the other Loan Documents shall in any event be
effective unless the same shall be in writing and signed and
delivered by the Lender to the Borrower. Any amendment,
modification, waiver or consent hereunder shall be effective only
in the specific instance and for the specific purpose for which
given.
9.4 REMEDIES CUMULATIVE. All rights and remedies, either
-------------------
under this Agreement, by law or otherwise accorded to the Lender
shall be cumulative and not exclusive, and any single or partial
exercise of any power or right hereunder or thereunder does not
preclude other or further exercise thereof, or the exercise of
any other power or right.
9.5 SEVERABILITY. Any provision of this Agreement, the
Notes
------------
or any of the other Loan Documents which is prohibited or
unenforceable in any jurisdiction, shall be, only as to such
jurisdiction, ineffective to the extent of such prohibition or
unenforceability, but all the remaining provisions of this
Agreement, the Notes and the other Loan Documents shall remain
valid.
9.6 COSTS, EXPENSES AND ATTORNEYS' FEES. The Borrower
shall
-----------------------------------
reimburse the Lender for all reasonable costs and expenses,
including, but not limited to, reasonable attorneys' fees and
expenses, expended or incurred by the Lender in connection with
the preparation, negotiation and execution of this Agreement and
the other Loan Documents, in connection with the disbursement of
the Loan, and in amending this Agreement, and shall reimburse the
Lender for all reasonable costs and expenses, including, but not
limited to, reasonable attorneys' fees and expenses, expended or
incurred by the Lender in collecting any sum which becomes due
under the Notes or under this Agreement or any of the other Loan
Documents, or in the protection, perfection, preservation and
enforcement of any and all rights of the Lender in connection
with the Loan Documents, including, without limitation, the
reasonable fees and costs incurred in any out-of-court work-out
or a bankruptcy or reorganization proceeding. This obligation on
the part of the Borrower shall survive the expiration or
termination of this Agreement, without occurrence of the Closing
Date.
9.7 INDEMNIFICATION. The Borrower shall indemnify and hold
---------------
the Lender and its directors, officers, employees, Affiliates,
attorneys and agents (collectively called the "Lender
Indemnities") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for the Lender Indemnities in
connection with any investigative, administrative or judicial
proceeding, whether or not the Lender shall be designated a party
thereto) which may be imposed on, incurred by or asserted against
the Lender or any Lender Indemnitee by any Person (whether
direct, indirect or consequential and whether based on any
federal or state laws or other statutory regulations, including,
without limitation, securities, environmental and commercial laws
and regulations, under common law or at equitable cause, or on
contract or otherwise) in any manner relating to or arising out
of this Agreement, any other Loan Documents, or any act, event or
transaction related or attendant thereto; the making of Loans
hereunder; the management of the Loans (including any liability
under federal, state or local environmental laws or regulations)
or the use or intended use of the proceeds of the Loans
(collectively, the "Indemnified Matters"); Provided, however,
-----------------------
that the Borrower shall have no obligation to the Lender under
this Section 9.7 with respect to Indemnified Matters to
the extent such Indemnified Matters were caused by or
resulted from the gross negligence or willful misconduct of
the Lender. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may
be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute to the payment and
satisfaction of all Indemnified Matters incurred by the Lender
or any Lender Indemnitee the maximum portion which the
Borrower is permitted to pay and satisfy under applicable law.
This indemnification shall survive for seven (7) years following
the repayment by the Borrower of the Loan made under this
Agreement or the termination of this Agreement without occurrence
of the Closing Date.
9.8 NOTICES.Any notice which the Borrower or the Lender may
-------
be required or may desire to give to the other party under any
provision of this Agreement shall be in writing, by telex or
electronic facsimile transmission and shall be deemed to have
been given or made three days after deposit in the United States
mail, or if by telex or electronic facsimile transmission, when
transmitted and addressed as follows:
To the Borrower: CHEMPOWER, INC.
000 Xxxx Xxxxxxxxxx Xxxx Xxxx
Xxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopier: (000) 000-0000
Copy to: XXXX & PRIEST LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
and
XXXXXXXX, XXXX & XXXXX P.L.L.
0000 Xxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
To the Lender: FIRST NATIONAL BANK OF OHIO
000 X. Xxxx Xxxxxx
Xxxxx, Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxxx,
Vice President
Telecopier: (000) 000-0000
Copy to: XXXXXX & XxXXXXXX
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
Any party may change the address to which all notices,
requests and other communications are to be sent to it by giving
written notice of such address change to the other party in
conformity with this Section 9.8, but such change shall not be
effective until notice of such change has been received by the
other party.
9.9 INTERPRETATION. The Agreement, together with the
exhibits
--------------
and schedules to this Agreement, is intended by the Lender and
the Borrower as a final expression of their agreement and,
together with all of the other Loan Documents, is intended as a
complete statement of the terms and conditions of their
agreement. This Agreement completely supersedes the Commitment
Letter.
9.10 GOVERNING LAW AND CONSENT TO JURISDICTION. Borrower
-----------------------------------------
acknowledges that this Agreement has been delivered to Lender and
accepted by Lender in the State of Ohio. The validity,
construction and effect of this Agreement, the Notes and all of
the other Loan Documents shall be governed by the laws of the
State of Ohio, without regard to its laws regarding choice of
applicable law, but giving effect to federal laws applicable to
national and federally insured banks. All judicial proceedings
brought against the Borrower with respect to this Agreement, the
Notes or any of the other Loan Documents may be brought in any
state or federal court of competent jurisdiction in Summit
County, Ohio, and the Borrower accepts for itself and its assets
and properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts. The Borrower waives, to the
fullest extent permitted by applicable law, any objection
(including, without limitation, any objection to the laying of
venue or based on the grounds of forum non-conveniens) which it
may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Nothing herein shall limit
the right of the Lender to bring proceedings against the Borrower
in the court of any other jurisdiction.
9.11 COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon
the same instrument.
9.12 INTEGRATION. This Agreement and the other Loan
Documents
-----------
contain all of the agreements and understandings between the
Borrower and the Lender, conceding the Loans and the other
transactions contemplated hereby. In the event of any conflict
between this Agreement and any other Loan Document, the
provisions of this Agreement shall govern.
9.13 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
--------
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH REGARD TO ANY ACTION
OF ANY TYPE OR NATURE WHATSOEVER UNDER OR CONCERNING THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY RELATED
TO THE LOANS OR THE ADMINISTRATION OR ENFORCEMENT THEREOF.
9.14 HEADINGS. Captions, headings and the table of contents
--------
in this Agreement are for convenience only, and are not to be
deemed part of this Agreement.
9.15 SCHEDULES AND EXHIBITS. All Schedules, Exhibits and
----------------------
other attachments referred to in, and attached to, this Loan
Agreement are hereby incorporated into and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their respective duly authorized officers as of the
date and year first above written.
CHEMPOWER, INC. FIRST NATIONAL BANK OF OHIO
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxxxxx Xxxxxxxx
------------------------- ---------------------------
Xxxxxx X. Xxxx, Xxxxxxxx X. Xxxxxxxx,
Chairman/President/CEO Vice President
Schedule 1.1.1
PERMITTED ENCUMBRANCES
1. Mortgage on 000 Xxxx Xxxxxxxxxx Xxxx Xxxx, Xxxxx,
Xxxxxx Xxxxxx, Xxxx dated _______________, 1993 in favor of First
National Bank of Ohio by Holiday Properties and recorded on
_____________________, 1993 in Volume __, Page __ of the Records
of Summit County, Ohio.
Schedule 5.2
ORGANIZATION, STANDING AND QUALIFICATION
OF SUBSIDIARIES (AND EQUITY INTERESTS)
CHEMPOWER, INC. (a wholly-owned Subsidiary of American Eco
--------------
Corporation)
State of Incorporation: Ohio
Foreign Qualifications: AL, IN, KY, LA, Ml, MO, NJ, NV, NY, PA,
TN, and WV
Shares of Common Stock Authorized: 15,000,000
Shares of Common Stock Outstanding: 1,000
Outstanding Options: None
Divisions: Advanced Coil Industries, Houston Products, and Xxxxx
Precision Fabricators
GLOBAL POWER COMPANY (A SUBSIDIARY OF CHEMPOWER. INC.):
-------------------------------------------------------
State of Incorporation: Ohio
Foreign Qualifications: AL, GA, IL, IN, KY, MD, Ml, MN, MO, MS,
NC, NJ, PA, SC, TN, VA, and WV
Shares of Common Stock Authorized: 750
Shares of Common Stock Outstanding: 20 (all held by Chempower)
Divisions: Global Erectors
BROOKFIELD CORP. (A SUBSIDIARY OF CHEMPOWER. INC.):
--------------------------------------------------
State of Incorporation: Ohio
Shares of Common Stock Authorized: 850
Shares of Common Stock Outstanding: 50 (all held by Chempower)
SOUTHWICK CORP. (A SUBSIDIARY OF CHEMPOWER, INC.):
------------------------------------------------
State of Incorporation: Ohio
Foreign Qualifications: CA and IL
Shares of Common Stock Authorized: 850
Shares of Common Stock Outstanding: 50 (all held by
Chempower)
CONTROLLED POWER LIMITED PARTNERSHIP:
------------------------------------
State of Incorporation: An Illinois limited partnership (1)
Foreign Qualifications: OH
General Partner: Southwick Corp.
Limited Partner: Brookfield Corp.
(1) See Application for Reinstatement
Schedule 5.10
LITIGATION AND CONTINGENT LIABILITIES
None.
Schedule 5.13
EMPLOYEE BENEFITS
PLANS MAINTAINED:
----------------
1. Employee Pension Plans:
a. Employee Stock Ownership Plan (ESOP)
b. 401(k) Plan
c. Multiemployer Plans
pursuant to various collective bargaining agreements.
2. Employee Welfare Plans:
a. Company-sponsored Employee Health Insurance
b. Company-sponsored Employee Life Insurance
c. Multiemployer Plans
pursuant to various collective bargaining agreements.
Schedule 5.16
ENVIRONMENTAL MATTERS
To the best knowledge of the Borrower, there are no environmental
matters to disclose in accordance with Section 5.16 of the
Agreement.
Schedule 5.18
INTELLECTUAL PROPERTY
HOUSTON PRODUCTS, A DIVISION OF CHEMPOWER, INC.:
----------------------------------------------
Patents:
1. Lagging Panel
Patent Number: 5,285,609
Date of Patent: February 15, 1994
CONTROLLED POWER LIMITED PARTNERSHIP:
------------------------------------
Patents:
1. Adjustable Support Assembly for Electrical Conductors
Patent Number: 5,053,584
Date of Patent: October 1, 1991
2. PLC Controller for Circuit Breakers
Patent Number: 5,534,782
Date Filed: July 9, 1996
Patent Applications:
1. Adjustable Support for Electrical Conductors (Canadian
Patent Application)
Registration Number: 1,321,695
Registration Filed: December 17, 1991
Trademarks/Service Marks:
1. CPC Design
Registration Number: 1,870,009
Registration Filed: December 27, 1994
2. Technibus
Registration Number: 1,794,174
Registration Filed: September 21, 1993
License Agreements:
1. Assignment of rights and obligations under License Agreement
between Associated Electrical Industries Limited and Power
Apparatus Manufacturing Company, Inc. dated January 19, 1989
to CPC.
GLOBAL POWER COMPANY:
--------------------
Copyrights:
1. Management Safety Program
Registration Number: TX3-579-438
Registration Date: July 15, 1993
2. Asbestos Abatement Work Procedures Manual
Registration Number: TX3-579-439
Registration Date: July 15, 1993
3. Asbestos Abatement Respiratory Protection Manual
Registration Number: TX3-579-440
Registration Date: July 15, 1993
4. Hazard Communication Plan
Registration Number: TX#-627-879
Registration Date: July 15, 1993
Schedule 5.20(a)
INSURANCE
POLICY BROKER CARRIER POLICY #
-----------------------------------------------------------------------------
General Liability Xxxxxxx-Xxxx Commerce & Industry AA17779633
Umbrella Xxxxxxx-Xxxx American International 7734491
(GL & Auto)
Property(1) Xxxxxx-XxxXxxx Xxxx & Xxxxxxx 503141922
Auto Xxxxxx-XxxXxxx Xxxx & Xxxxxxx 133635414
Excess Auto Xxxxxx-XxxXxxx Xxxx & Xxxxxxx 5520006493
Boiler & Mach. Xxxxxx-XxxXxxx Hartford Steam & Blr 9847104-02
D&O Liability Xxxxxx-XxxXxxx AIG 000-00-00
Fiduciary ESOP Xxxxxxx-Xxxx National Union 000-00-00
L-T Disability Xxxxxx-XxxXxxx Reliance
Medical/Dental Xxxxxx-XxxXxxx Unicare
Erisa Bond Xxxxxxx-Xxxx
POLICY EFFECTIVE DATES
---------------------------------------------------------------------
General Liability 1-1-97 xx 00-00-00
Umbrella 1-1-97 xx 00-00-00
(GL & Auto)
Property(1) 5-3-96 to 5-3-97
Auto 12-31-96 xx 00-00-00
Excess Auto 12-31-96 xx 00-00-00
Boiler & Mach. 12-31-96 xx 00-00-00
D&O Liability 2-19-96 to 2-18-97
Fiduciary ESOP 6-22-96 to 6-22-97
L-T Disability
Medical/Dental 1-1-97 xx 00-00-00
Erisa Bond 1-1-97 to 12-31-97
LIMIT DEDUCTIBLE PREMIUM NOTES
-------------------------------------------------------------------
$1 MM occur $50,000 $101,000
$1 MM aggr. $100,000 cap
$5 MM occur None $118,230
$5 MM aggr.
$22.3 MM $1,000 $23,063
$1MM None $53,445
$1MM None $8,215
$5MM $5,000 $4,360
$2MM $75,000 $28,000
$250,000 $2,400 ESOP & 401(k) Fiduc.
$270
(1) Includes Installation floater (CPC), EDP & Rented Equipment.
COVERAGE INCLUDES:
LIMITED
PARENT SUBSIDIARIES DIVISIONS PARTNERSHIP
------ ------------ --------- -----------
Chempower, Inc. Brookfield Advanced Cell CPC
Southwick Houston Products
Global Power Global Erectors
Xxxxx Precision
Schedule 5.20(b)
INSURANCE
WORKERS' COMPENSATION
CHEMPOWER, INC.
--------------
STATE CARRIER
----- -------
Alabama AIG
Delaware AIG
Illinois AIG
Indiana AIG
Kentucky AIG
Michigan AIG
Nevada SIIS/State Fund
New Jersey AIG
North Carolina AIG
Ohio State Fund
Pennsylvania Self-Insured
Tennessee AIG
Virginia AIG
West Virginia State Fund
GLOBAL POWER COMPANY:
--------------------
STATE CARRIER
----- -------
Alabama AIG
Georgia AIG
Indiana AIG
Kentucky AIG
Missouri AIG
North Carolina AIG
Ohio State Fund
Pennsylvania SWIF/State Fund
South Carolina AIG
Tennessee AIG
Virginia AIG
West Virginia State Fund
CONTROLLED POWER LIMITED PARTNERSHIP:
------------------------------------
STATE CARRIER
----- -------
Ohio State Fund
Schedule 7.12
OPERATING LEASES
----------------
CHEMPOWER, INC.:
---------------
Facility Location Lessor
Akron, OH Holiday Properties
Cincinnati, OH Holiday Properties
Las Vegas, NV Xxxxx Properties, Inc.
Washington, PA Holiday Properties
