Exhibit 10.17
Execution Copy
11/1/2004
U.S. $500,000
REVOLVING CREDIT AGREEMENT
DATED: AS OF NOVEMBER 1, 2004
BETWEEN
AVANTE HOLDING GROUP, INC.
AND
ALTERNATIVE CONSTRUCTION COMPANY, INC.
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated as of November 1, 2004 (the
"Agreement"), between Alternative Construction Company, Inc., a Florida
corporation (the "Borrower"), and Avante Holding Group, Inc., a Florida
Corporation (the "Lender").
WHEREAS, the Borrower has requested the Lender to make a Credit
Facility (as hereinafter defined) available to the Borrower in the aggregate
principal amount of up to U.S.$500,000 on the terms and conditions set forth
herein: and
WHEREAS, the Lender has agreed to make the Credit Facility available
to the Borrower on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement and
unless otherwise expressly indicated, the following terms shall have the
following meanings (such meanings to be equally applicable to both singular and
plural forms of the terms defined):
"Accounts" means all present and future rights of the Borrower or
any of its Subsidiaries to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising and whether or not earned by
performance, and all proceeds thereof.
"Accounts Payable" means all present and future rights of third
parties to payment for goods sold or leased to or for services performed for the
Borrower or any of its Subsidiaries (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising
and whether or not earned by performance, and all proceeds thereof.
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person. The term
"control" (including the terms "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to vote 10% or more of
the securities having ordinary voting power for the election of directors of
such Person or to direct or cause the direction of the management and policies
of such Person, whether through ownership of voting securities or by contract or
otherwise.
"Agreement" means this Revolving Credit Agreement, as amended,
supplemented or modified from time to time.
"Applicable Law" has the meaning specified in Section 7.06 hereto.
"Borrower" has the meaning specified in the preamble to this
Agreement.
"Business Day" means a day of the year on which commercial banks are
not required
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or authorized to close in New York City and wherever such day relates
to a Eurodollar Loan or notice with respect to any Eurodollar Loan, a day on
which dealings in Dollar deposits are also carried out in the London interbank
market.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures made by the Borrower or any of its Subsidiaries during such period
that, in conformity with generally accepted accounting principles, are required
to be included in or reflected by the property, plant or equipment or similar
fixed asset account reflected in the balance sheet of the Borrower or any of its
Subsidiaries.
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by such Person as lessee which lease would, in
conformity with generally accepted accounting principles, be required to be
accounted for as a capital lease on the balance sheet of such Person.
"Cash Dividends" means actual cash paid for dividends.
"Cash Taxes" means actual cash paid for income taxes.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C., 9601 et seq) and
any regulations promulgated thereunder.
"Change in Control" means the transfer or sale of a more than 50%
equity interest in the Borrower to any non-affiliated party.
"Closing Date" means the date on which the initial Loan is made
hereunder, which shall occur on or before May 31, 2005, or such later date as
the Borrower and the Lender may mutually agree.
"Consolidated" means, with reference to the accounts or financial
reports of any Person, the consolidated accounts or financial reports of such
Person and each Subsidiary of such Person.
"Current Assets" means at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a balance
sheet of the Borrower as at such date.
"Debt" means, (a) all Indebtedness of the Borrower, (b) all Debt
referred to in clause (a) above secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any Lien upon
or in property owned by the Borrower, even though such person has not assumed or
become liable for the payment of such Debt, and (c) all Guaranteed Debt of the
Borrower.
"Default" means an event which would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
"Dollars" and the sign "$" each means lawful money of the United
States.
"EBITDA" means earnings before interest, taxes, depreciation and
amortization,
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excluding certain minority interests and extraordinary items, where applicable.
"Environmental Law" means any law, rule, regulation, order, writ,
judgment, injunction, ordinance, decree, rule of common law, determination or
award relating to the environment, health or safety or to the release or
threatened release of any regulated materials into the environment, including,
without limitation, the Clean Air Act, as amended, the Clean Water Act of 1977,
as amended, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended,
the Toxic Substance Control Act, as amended and the Resource Conservation and
Recovery Act of 1976, as amended.
"Equipment" means all machinery, all manufacturing, distribution,
selling, data processing and office equipment, all furniture, fixtures and trade
fixtures, all tools, tooling, molds, dies, vehicles, vessels and aircraft, and
all other goods or fixtures other than inventory, in each case whether now owned
or hereafter acquired by the Borrower or any of its Subsidiaries and wherever
located, and all accessions and additions thereto, parts and appurtenances
thereof, substitutions therefore and replacements thereof.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title TV of
ERISA is a member of the Borrower's controlled group, or under common control
with the Borrower, within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Event" means (a) a reportable event, within the meaning of
Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto
has been waived by the PBGC; (b) the provision by the administrator of any Plan
of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
ERISA (including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (c) the cessation of operations at a facility in the
circumstances described in Section 4068(f) of ERISA;(d) the withdrawal by the
Borrower from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure
by the Borrower to make a payment to a Plan required under Section 302(f)(1) of
ERISA, which Section imposes a lien for failure to make required payments; (f)
the adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, a Plan.
"Events of Default" has the meaning specified in Section 6.01.
"Funded Debt" means current balances outstanding on all senior bank
debt (both current and long term debt) leases, not intercompany debt (assumes
intercompany debt and receivables are to the same entity) and subordinated debt,
if applicable.
"Guaranteed Debt" of any Person means all Debt referred to in
clauses (a) and (b) of the definition of "Debt" in this Section guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through a agreement (a) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of such Debt
or (b) to purchase,
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(b) to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such Debt or to assure the holder of such Debt against loss, or (c) to supply
funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether or not such property is
received or such services are rendered), or (d) otherwise to assure a creditor
against loss.
"Hazardous Substance" means all material subject to any
Environmental Law, including, without limitation, materials listed in 49 C.F.R.,
172.101, materials defined as hazardous pursuant to Section 104 of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, flammable, explosive or radioactive materials, hazardous or toxic
wastes, petroleum or petroleum distillates, PCB's or asbestos containing
materials.
"Insufficiency" means, with respect to any Plan the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001 (a)(18) of
ERISA.
"Interest Expense" means interest expense as it appears on the
Income Statement.
"Loan Commitment" or "Commitment" means an amount not to exceed U.S.
$500,000.
"Loan Documents" means this Agreement the Note, and any agreement
executed in connection therewith, in each case as amended, supplemented or
otherwise modified from time to time.
"Net Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset by any Person, the aggregate amount of cash
received or receivable by such Person in connection with such transaction after
deducting therefrom only reasonable and customary brokerage commissions, legal
fees, finder's fees and other similar transaction fees and commissions and the
amount of taxes payable in connection with or as a result of such transaction,
to the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, paid to a Person that is not an Affiliate and are
properly attributable to such transaction or to the asset that is the subject
thereof.
"Note" means a promissory note of the Borrower payable to the order
of the Lender in substantially the form of Exhibit A (the "Note"), evidencing
the indebtedness of the Borrower to the Lender resulting from the Loan owing to
the Lender.
"Obligations" means all obligations of the Borrower now or hereafter
existing under the Loan Documents, whether for principal, interest, fees,
expenses, indemnification, or otherwise.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a country or political
subdivision thereof or any agency or instrumentality of such country or
subdivision.
"Prime Rate" means the base interest rate posted by 75% of the
nation's banks as listed in the Wall Street Journal.
"Real Property" means all real property in which the Borrower now or
hereafter has or acquires title to, and all buildings, structures and
improvements now or hereafter located on all or any
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portion of said real property.
"Required Principal Payments" means required long term debt
payments, excluding any voluntary repayments.
"Revolving Loan" or "Loan" means a loan by the Lender to the
Borrower pursuant to Section 2.01.
"Solvent" with respect to any Person means that as of any date of
determination, (a) the then fair saleable value of the assets of such Person is
(i) greater than the then total amount of liabilities (including contingent,
subordinated, matured and unliquidated liabilities) of such Person and (ii)
greater than the amount that will be required to pay such Person's probable
liability on such Person's then existing debts as they become absolute and
matured, (b) such Person's capital is not unreasonably small in relating to its
business or any contemplated or undertaken transaction, and (c) such Person does
not intend to incur, or believe or reasonably should have believed that it will
incur, debts beyond its ability to pay such debts as they become due.
"Subsidiary" means any corporation of which more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether or not at
the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency) is at the
time directly or indirectly owned by such Person, or by such Person and one or
more other Subsidiaries of such Person.
"Tangible Net Worth" means total stockholder's equity less
intangible assets.
"Termination Date" means October 31, 2006 or such other date as
provided for under Section 2.01.
"Use" means ownership, use, development, construction, maintenance,
management, operation or occupancy.
"United States" and "U.S." each means the United States of America.
"Year" means any 12-month period, year 1 commencing on the first day
of the first month following the month in which the Closing Date occurs and
ending on the last day of the 12th month thereafter. The number of a Year
hereunder shall mean and be a reference to the successive 12-month periods after
Year 1.
SECTION 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 5.02 hereof.
SECTION 1.03. Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding".
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ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. Revolving Credit. (a) The Lender agrees on the terms
and conditions hereinafter set forth, to make loans (the "Revolving Credit
Loans" or "Loans") to the Borrower from time to time during the period from the
date of this Agreement up to but not including the Termination Date in an
aggregate amount not to exceed at any time outstanding Five Hundred Thousand
Dollars ($500,000), (the "Commitment"). Each Revolving Credit Loan which shall
not utilize the Commitment in full shall be in an amount not less than Five
Thousand Dollars ($5,000). On the Termination Date the Commitment will expire
and any outstanding amounts shall be repaid in full by the Borrower, unless the
Lender agrees, in its sole discretion, to extend the Loan Commitment, as
reduced, pursuant to Section 2.01 (b) hereof. Within the limits of the
Commitment, as reduced from time to time, the Borrower may borrow and reborrow
under this Section 2.01.
(b) The Termination Date may be extended for an additional one year
period in the Lender's sole discretion; such extension shall be effected by the
Borrower's requesting an extension in writing at least six months prior to the
Termination Date of and by the Lender's written acceptance of such extension
thirty (30) days prior to the Termination Date. In the absence of a written
response to any such request, the Commitment shall be deemed terminated on the
then effective Termination Date.
SECTION 2.02. Notice and Manner of Borrowing. The Borrower shall
give the Lender at least fourteen (14) Business Days' written or telegraphic
notice (effective upon receipt) of any Revolving Credit Loans under this
Agreement, specifying the date and amount thereof. Not later than 2:00 P.M. (New
York time) on the date of such Revolving Credit Loan and upon fulfillment of the
applicable conditions set forth in Article III, the Lender will make such
Revolving Credit Loan available to the Borrower in immediately available funds
by crediting the amount thereof to the Borrower's account with the Lender.
SECTION 2.03. Interest. The Borrower shall pay interest to the
Lender on the outstanding and unpaid principal amount of the Revolving Credit
Loans made under this Agreement at the Prime Rate plus four percent (4%).
Interest shall be calculated on the basis of a year of three hundred and sixty
(360) days for the actual number of days elapsed. Interest on the Revolving
Credit Loans shall be paid in immediately available funds at the end of each
quarter at the Lender's Corporate Office. Any amounts not paid when due (at
maturity, by acceleration, or otherwise) shall bear interest thereafter until
paid at a rate which shall be two percent (2%) above the rate which would
otherwise be applicable. Notwithstanding any provision of this Agreement or any
Loan Document to the contrary, the interest payable with respect to any Loan
shall in no event exceed the maximum amount of interest permitted from time to
time by applicable law.
SECTION 2.04. Commitment Fee. THERE WILL BE NO COMMITMENT FEES.
SECTION 2.05. Note. All Revolving Credit Loans made by the Lender
under this Agreement shall be evidenced by, and repaid with Interest in
accordance with, a single promissory note of the Borrower in substantially the
form of Exhibit A duly completed, in the principal amount of Five Hundred
Thousand Dollars ($500,000), dated the date of this Agreement, payable to the
Lender,
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and maturing as to principal on the Termination Date (the "Revolving Credit
Note"). The Lender is hereby authorized by the Borrower to endorse on the
schedule attached to the Note the amount of each Revolving Credit Loan and of
each payment of principal received by the Lender on account of the Revolving
Credit Loans, which endorsement shall, in the absence of manifest error, be
conclusive as to the outstanding balance of the Revolving Credit Loans made by
the Lender; provided, however, that the failure to make such notation with
respect to any Revolving Credit Loan or payment shall not limit or otherwise
affect the obligations of the Borrower under this Agreement or the Revolving
Credit Note.
SECTION 2.06. Method of Payment. The Borrower shall make each
payment under this Agreement and under the Note not later than 2:00 P.M. (New
York City time) on the date when due in lawful money of the United States to the
Lender at the Lender's Corporate Office in immediately available funds. The
Borrower hereby authorizes the Lender, if and to the extent payment is not made
when due under this Agreement or under the Note, to charge from time to time
against any account of the Borrower with the Lender any amount so due. Whenever
any payment to be made under this Agreement or under the Note shall be stated to
be due on a Saturday, Sunday, or a public holiday, or the equivalent for banks
generally under the laws of the State of New York, such payment shall be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of the payment of interest and the commitment
fee, as the case may be.
All payments to the Lender hereunder shall be made by wire transfer
to the Lender's account, at Wachovia Bank, or as otherwise specified by the
Lender to the Borrower from time to time, in lawful money of the United States
of America and in immediately available funds.
SECTION 2.07. Use of Proceeds. This proceed of the Loans shall be
used for inventory, Purchase Order financing, and general working capital. The
Borrower will not, directly or indirectly, use any part of such proceeds 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 or to
extend credit to any Person for the purpose of purchasing or carrying any such
margin stock or for any purpose which violates, or in inconsistent with,
Regulation X of said Board of Governors.
SECTION 2.08. Taxes and Other Charges. (a) All principal, interest,
and other amounts payable by Borrower to the Lender with respect to the Loan
shall be paid in full, free and clear of any deductions or withholdings imposed
by Laws. If Borrower is prohibited by any Laws from making such payments free
and clear of deductions or withholdings, the Borrower shall pay all additional
amounts necessary so that the actual amount received by the Lender after such
deductions or withholdings (and after any deductions or withholdings or payment
of additional taxes or charges due as a consequence of the payment of such
additional amount) equals the amount that would have been received by the Lender
if such deductions or withholdings were not required; (b) The Borrower shall pay
directly to the appropriate taxing authority any and all present and future
taxes, levies, stamp and other fees imposed by applicable Laws on or with regard
to any aspect of the Loans and/or any other transactions contemplated by this
Agreement, except taxes imposed on the overall net income or gross receipts of
the Lender, Borrower agrees to indemnify and hold harmless from all loss, cost,
liability, or expense, incurred by the Lender (including reasonable attorneys'
fees and costs) by reason of the delay or failure by Borrower to pay any such
taxes or charges promptly after demand; and Borrower shall reimburse the Lender
upon demand for any such taxes paid by it in connection therewith if the
Borrower does not pay such taxes directly (together with any interest, penalties
and expenses related thereto) (and the Lender shall not be required to obtain a
final determination of the legal validity of such taxes.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Initial Loan. The
obligation of the Lender to make the initial Loan is subject to the conditions
precedent that:
(a) The Lender shall be satisfied with the corporate and legal
structure and capitalization of the Borrower, including the terms and conditions
of the charter, bylaws and each class of capital stock of the Borrower.
(b) Before giving effect to the transactions contemplated by this
Agreement, there shall have occurred no material adverse change in the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower since December 31, 1997.
(c) The Borrower shall have paid all accrued expenses of the Lender
required to be paid hereunder and under any of the Loan Documents (including
those fees and expenses set forth in Section 7.04 hereof).
(d) The Lender shall have received on or before the day of the
initial Loan the following, each dated the date of the initial Loan, in form and
substance satisfactory to the Lender.
(i) The Note duly executed by the Borrower, to the order of the
Lender.
[(ii)A copy of the financial statements of the Borrower for its
fiscal year ending December 31, 2003, certified in a manner satisfactory to the
Lender and all related footnotes, notes, management letters and other statements
and disclosures prepared or made in connection therewith.
(iii)A certificate of the Secretary or an Assistant Secretary of the
Borrower that attached thereto are true and correct copies of (i) the
resolutions of the Board of Directors of the Borrower approving each Loan
Document and the transaction contemplated thereby, (ii) the certificate or
articles of incorporation and bylaws of the Borrowers, as amended through the
date of the initial Loan and (iii) the names and true signatures of the officers
of the Borrower authorized to sign each Loan Document to which it is or is to be
a party and the other documents to be delivered by it hereunder of each, the
Lender may conclusively rely on such certificate of the Borrower until the
Lender shall receive a further certification of the Secretary of Assistant
Secretary of the Borrower canceling or amending the prior certificate of the
Borrower and submitting the names and signatures of the officers named in such
further certificate.
(iv) Certified copies of (i) certificate of good standing and
qualification, tax clearances and comparable documents with respect to the
Borrower and (ii) all documents evidencing other necessary corporate action and
governmental approvals with respect to each Loan Document and the transactions
contemplated thereby.
(e) On the date of the initial Loan, and of each subsequent Loan,
the following statements shall be true:
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(i) The representations and warranties contained in Section 4.01 of
this Agreement and the representations and warranties contained in each Loan
Document are correct on and as of the date of the Loan, before and after giving
effect to the Loan and to the application of the proceeds therefrom, as though
made on and as of such date; and
(ii) No event has occurred and is continuing, or would result from
the Loan or from the application of the proceeds therefrom, which constitutes an
Event of Default (as defined in Section 6.01 hereof) or would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants to the Lender (which representations and
warrants will be deemed to be repeated by the Borrower on each day on which any
Loan remains outstanding) as follows:
(a) Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of State of Florida is duly qualified as a
foreign corporation and is in good standing in each jurisdiction as to which the
location of its assets or the nature of its business makes qualification
necessary or desirable and has all power, corporate or otherwise, to conduct its
business and to own, or hold under lease, its assets, and to execute and
deliver, and to perform all of its obligations under each of the Loan Documents.
(b) The execution, delivery and performance by Borrower of each Loan
Document to which it is or will be a party are within Borrower's corporate
powers, have been duly authorized by all necessary corporate action, do not
contravene (i) Borrower's charter or bylaws, (ii) any law, rule, regulation
(including, without limitation, Regulation G,U or X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award binding on or affecting Borrower or any of its
properties, (iii) the terms of any license, permit, certificate, authorization,
qualification or other right or approval with respect to the business of
Borrower, or (iv) any contractual restriction binding on or affecting Borrower
or any of its properties, and Borrower is not in violation of or in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, award or restriction or of the terms of any license, permit,
certificate authorization, qualification or other approval.
(c) No authorization, approval or other action by, and no notice to
or filing with, any governmental authority, regulatory body or other Person is
required for the due execution, delivery and performance by Borrower of any Loan
Document to which it is or will be a party.
(d) This Agreement, is the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms. Each
other Loan Document to which Borrower will be a party will, upon execution and
delivery thereof, be the legal, valid and binding obligation of enforceable
against Borrower in accordance with its terms.
(e) The Balance Sheet of the Borrower as of December 31, 2004, and
the related Consolidated Statements of Income and Stockholder's Equity and cash
flows of the Borrower for the period then ended, certified by the chief
financial officer of the Borrower, copies of each of which have been furnished
to the Lender, fairly present the Consolidated financial condition of the
Borrower
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and its Subsidiaries as at such date and the Consolidated results of the
operations of the Borrower and its Subsidiaries for the periods ended on such
dates, all in accordance with generally accepted accounting principles
consistently applied. Since December 31, 2003, until and including the Closing
Date, there has been to material adverse change in the condition or operations
or in the prospects, business, performance or properties of the Borrower.
(f) There is no action, suit, or administrative or other proceeding,
investigation or review process pending or, to the knowledge of Borrower,
threatened in any court or governmental department, commission, board, bureau,
arbitrator, agency or instrumentality, domestic or foreign, (i) which relates to
any material aspect of the transactions contemplated by any Loan Document (ii)
which relates to Borrower or any of the property (whether real or personal) of
Borrower and which may adversely affect the legality, validity or enforceability
of any Loan Document, or have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, performance or
properties of Borrower. To the knowledge of the Borrower, no preliminary or
permanent injunction, order or other restraint has been issued by any court or
other governmental authority and is in effect that prohibits the making of the
Advance.
(g) Borrower has filed all tax returns (federal, state and local)
required to be filed by it and has paid or caused to be paid all taxes due and
payable for the periods covered thereby, including interest and penalties.
(h) All information and reports requested by the Lender and
furnished in writing by or on behalf of Borrower or made available to the Lender
relating to the condition (financial or otherwise), operations, business,
properties, performance or prospects of the Borrower or otherwise in connection
with the transactions contemplated by the Loan Documents are true and correct in
all material respects, and no such information, exhibit or report contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(i) Neither the business nor the properties of Borrower or any of
its Subsidiaries is affected by any fire, explosion, accident, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) materially and adversely affecting such
business or properties or the operations of Borrower.
(j) To the best knowledge of the Borrower, the operations of the
Borrower comply in all material respects with all applicable Environmental Laws
and have not been used for the storage, treatment, disposal or handling of any
Hazardous Substances except in material compliance with all applicable
Environmental Laws. To the best knowledge of the Borrower, there are no material
liabilities under any applicable Environmental Law associated with or arising
from the Real Property or the operations of Borrower, and there are no
conditions on, in, under or relating to the Real Property or the operations of
Borrower that could give rise to any material liabilities imposed under any
applicable Environmental Laws.
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(k) Neither the making of any Loan under any facility, nor the
application of the proceeds of such Loan will violate or be inconsistent with
the provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System (the "Margin Regulations").
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as the Note shall
remain unpaid, the Borrower will, unless the Lender shall otherwise consent in
writing:
(a) Payment of Taxes, Etc. Pay and discharge before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property, and (ii) all lawful claims which, if
unpaid, might by law become a Lien upon its property; provided that no such
charge or claim need be paid if being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefore.
(b) Preservation of Corporate Existence, Etc. Preserve and maintain
its corporate existence, rights, (charter and statutory), franchises, licenses,
permits, certificates, authorizations and other legal rights and approvals.
(c) Compliance with Laws, Etc. Comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of, and
all applicable restrictions imposed by all governmental bodies in respect of the
conduct of its business and the ownership of its property.
(d) Visitation Rights. During regular business hours, permit the
Lender or any consultant or representatives thereof, upon reasonable notice,
from time to time to examine and make copies of and abstracts from the records
and books of account of, and to visit the properties of, the Borrower and to
discuss the affairs, finances and accounts of the Borrower with any of their
respective directors, officers, or agents.
(e) Keeping of Books. Keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Borrower in accordance with generally accepted
accounting principles consistently applied.
(f) Maintenance of Properties, Etc. Maintain and preserve all of its
properties which are necessary or desirable in the conduct of its business
fully-insured and in good working order and condition, ordinary wear and tear
excepted.
(g) Environmental Matters. Use its best efforts to comply in all
material respects with all applicable Environmental Laws relating to the
operations of Borrower and not engage in or otherwise permit, the material
violation of any applicable Environmental Law.
(h) Further Assurances. Upon ten (10) days notice from the Lender,
take all such further actions and execute all such further documents and
instruments as the Lender may at any time determine in its reasonable discretion
may be necessary or advisable to further carry out and consummate the
transactions contemplated by the Loan Documents including, but not limited to,
12
amendments of this Agreement and any other Loan Documents considered necessary
or appropriate by the Lender in connection with any assignment or other transfer
by the Lender of its rights hereunder.
SECTION 5.02. Negative Covenants. So long as the Note shall remain
unpaid, the Borrower will not, without the written consent of the Lender:
(a) Mergers, Etc. Merge with or into or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, or acquire all or substantially all of the
assets of, any Person, if any such transaction or series of transactions would
result in a Change of Control, or liquidate.
(b) Sale, Etc. of Assets. Sell, lease, transfer or otherwise dispose
of any of its assets (whether now owned or hereafter acquired), except (i) sales
of inventory in the ordinary course of business, and (ii) sales of damaged, worn
or obsolete Equipment which is replaced with other Equipment of comparable
quality and value.
(c) Accounting Changes. Change its fiscal year, or make, or permit
any of its Subsidiaries to make, any other significant change in Consolidated or
consolidating accounting treatment and reporting practices except as required by
GAAP.
(d) Change in Nature of Business. Make any material change in the
nature of its business as conducted as of the Closing Date.
(e) Capital Stock. Issue or sell any of its capital stock or any
rights, warrants or options to acquire any of its capital stock the result of
which is, or could be upon exercise of such rights, warrants or options, a
Change in Control.
(f) Encumbrances. Pledge, hypothecate, or otherwise encumber any of
its assets.
SECTION 5.03. Reporting Requirements. So long as any Loans shall
remain unpaid, the Borrower will, unless the Lender shall otherwise consent in
writing, furnish the Lender.
(a) Default Notice. As soon as possible and in any event within ten
Business Days after the occurrence of any Default continuing on the date of such
statement, a statement of the chief financial officer of the Borrower setting
forth details of such Default and the action that the Borrower has taken or
proposes to take with respect thereto.
(b) Quarterly Financial. As soon as available and in any event
within 60 days after the end of the each of the first three quarters of each
fiscal year of the Borrower, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter and consolidated of income and cash
flows of the Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
the chief financial officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles and a certificate of
the chief financial officer of the Borrower stating (i) that no Default has
occurred and is continuing or, if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower has taken or
proposes to take with respect thereto.
13
(c) Annual Financial Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower, a copy
of the annual audit report for such year for the Borrower, accompanied by an
opinion of an independent public accountant of recognized standing acceptable to
the Lender, together with a certificate of the chief financial officer of the
Borrower stating (i) that no Default has occurred and is continuing or, if a
default has occurred and is continuing, a statement as to the nature thereof and
the action that the Borrower has taken or proposes to take with respect thereto.
(d) Litigation. Promptly after receipt of notice of the commencement
thereof, notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting Borrower of
the type described in Section 4.01(f).
(e) Environmental Conditions. Promptly after the occurrence thereof,
notice of any condition or occurrence on any Real Property of Borrower that
results in a material noncompliance by Borrower with any Environmental Law or
could (i) form the basis of material liabilities under any Environmental Law
against Borrower or any Real Property or (ii) cause any Real Property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(f) Other information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower as the Lender from time to time reasonably
request.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of, or interest on
the Note, or shall fail to make any other payment under any Loan Document, in
each case within five(5) days of when the same becomes due and payable; or
(b) any representation or warranty made by the Borrower under or in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 5.01, 5.02, and 5.03, for a period of thirty
days following the giving of notice by the Lender to the Borrower; or
(d) Borrower shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for thirty days after written notice
thereof shall have been given to the Borrower by the Lender; or
(e) Borrower shall fail to pay any principal of, premium or interest
on or any other amount payable in respect of any Debt (but excluding Debt
outstanding hereunder) of Borrower, as the case may be, when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable
14
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the holder thereof
to cause, such Debt to mature; or any such Debt shall be declared to be due and
payable or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer
to prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) Borrower shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against Borrower or any of their Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain undismissed
or unstayed for a period of 60 days or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall be taken by the
applicable court, or the Borrower shall take any corporate action to authorize
any of the actions set forth above in this subsection (f); or
(g) any materially adverse judgment or order for the payment of
money shall be rendered against Borrower or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(h) any Change of Control shall occur; or
(i) a material adverse change in the financial condition or
operations of the Borrower shall occur;
then, and in any such event, Lender may, by notice to the Borrower, (i) declare
its obligation to make any Loan, if any, to be terminated, whereupon the same
shall forthwith terminate, and (ii) declare the Note, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower,
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to Borrower under the Federal Bankruptcy Code, (A) the
obligation of the Lender to make any Loan, if any, shall automatically be
terminated and (B) the Note, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
Borrower.
15
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 7.02. Notices, Etc. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given or made: if by hand,
immediately upon delivery and receipt acknowledged; if by telex, telecopier,
telegram or similar electronic device, immediately upon sending and receipt
confirmed, provided it is sent on a Business Day, but if not, then immediately
upon the beginning of the first Business Day after being sent; if by Federal
Express, Express Mail or any other overnight delivery service, on the first
Business Day after dispatch with proof of delivery from the company making such
delivery; and if mailed by certified mail, return receipt requested, three (3)
Business Days after delivery or the return of the notice to sender marked
"unclaimed." All notices, requests and demands are to be given or made to the
parties at the following addresses (or to such other address as either party may
designate by notice in accordance with the provisions of this paragraph):
if to the Borrower, at its address at 0000 X. Xxxxxx Xxxx Xxxx,
Xxxxx 000, Xxxxxxxxx, XX 00000 and if to the Lender at its offices at 0000 X.
Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx XX 00000, Attention: Xxxxxxx X. Xxxxxxx.
SECTION 7.03. No Waiver: Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof: nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by Law.
SECTION 7.04. Costs, Expenses, Fees and Taxes.
(a) All payments made by the Borrower in respect of principal of,
and interest on, all Loans and all other amounts payable in respect of other
Extensions of credit and under the Loan Documents or otherwise will be made
without set-off, counterclaim or other defense and will be made free and clear
of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein and all interest, penalties or similar
liabilities with respect thereto (collectively, the "Taxes"). The Borrower shall
pay on demand all stamp, documentary and other similar duties and taxes, if any,
to which any Loan Document from time to time may be subject or give rise. If the
Borrower is required by applicable law to make any deduction or withholding on
any payment as described above in respect of Taxes or otherwise, the Borrower
shall (i) promptly notify the Lender of such occurrence; (ii) pay to the
relevant taxation or other authorities the full amount of the deduction or
withholding within the time allowed; (iii) furnish to the Lender within thirty
(30) days of such payment, an official receipt from such authorities for all
amounts so deducted or withheld; and (iv) pay to the Lender an additional amount
so that the Lender receives on the due
16
on the due date of such payment the full amount the Lender would have received
had no such deduction or withholding taken place.
Subject to the Lender's compliance with its obligations to deliver
certain forms, certificates and documents as set forth in this paragraph, the
Borrower will indemnify and hold harmless the Lender, and reimburse the Lender
upon its written request, for the amount of any Taxes imposed on or measured by
the net income of the Lender pursuant to the laws of the jurisdiction in which
the principal office or lending office of the Lender is located or under the
laws of any political subdivision or taxing authority of any such jurisdiction.
Upon demand by the Borrower, the Lender shall, as soon as practicable, deliver
to the Borrower or to such government or taxing authority as the Borrower
reasonably directs, any form, certificate or document which the Lender is
entitled as a matter of law to deliver that may be requested in order to allow
the Borrower to make payments in respect of the Loans and all other amounts
payable in respect of the Loan Documents without any deduction or withholding
for or on account of any Taxes or with such deduction or withholding at a
reduced rate.
(b) The Borrower agrees to pay on demand all of the Lender's costs
and expenses, including, without limitation, reasonable attorney's fees, in
connection with the preparation of this Agreement and the Loan Documents,
collection of any sums due to the Lender and the enforcement, protection or
perfection of its rights or interests hereunder and under the Loan Documents.
SECTION 7.05. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.
SECTION 7.06. Governing Law. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of Florida.
SECTION 7.07. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.08. Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of Florida, and
courts of the United States of America for the Central District of Florida, and
appellate courts from any such courts;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
17
(c) agrees that service or process of any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in this Agreement or at such other address of which the Lender
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law nor shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this subsection any punitive damages.
SECTION 7.09. Acknowledgments. The Borrower hereby acknowledges
that;
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Note and the other Loan Documents;
(b) the Lender does have a fiduciary relationship with the Borrower,
however the relationship between the Lender, on one hand, and the Borrower, on
the other hand, in reference to this agreement is solely that of debtor and
creditor.
SECTION 7.10. Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ALTERNATIVE CONSTRUCTION COMPANY, INC.
/s/ Xxxxxx X. Xxxx
------------------
Name: Xxxxxx X. Xxxx
Title: Secretary
AVANTE HOLDING GROUP, INC.
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
18
EXHIBIT A
REVOLVING CREDIT NOTE
$500,000 As of November 1, 2004
New York, New York
FOR VALUE RECEIVED, the undersigned, Alternative Construction
Company, Inc., a Florida corporation (the "Borrower"), DOES HEREBY PROMISE to
pay to the order of Avante Holding Group, Inc (the "Lender"), at its office at
0000 X. Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, in lawful money of the
United States and in immediately available funds, the principal amount of Five
Hundred Thousand Dollars ($500,000 or the aggregate unpaid principal amount of
all Revolving Credit Loans (as defined in the Revolving Credit Agreement
hereafter defined) made to the Borrower by the Lender pursuant to the Revolving
Credit Agreement (the "Revolving Credit Loans") hereinafter referred to,
whichever is less, on the Termination Date (as defined in the Revolving Credit
Agreement), and to pay interest (computed on the basis of a year of 360 days
from the date of this Revolving Credit Note) on the unpaid principal amount of
this Revolving Credit Note, in like money, at said office, at a rate per annum
equal to the Prime Rate plus four percent (4%) payable on each Interest Payment
Date. Any amount of principal hereof which is not paid when due (whether at
maturity, by acceleration, or otherwise) shall bear interest thereafter until
paid at a rate which shall be two percent (2%) above the rate which would
otherwise be applicable.
The Borrower hereby authorizes the Lender to endorse on the Schedule
annexed to this Revolving Credit Note all Revolving Credit Loans made to the
Borrower and all payments of principal amount in respect of such Revolving
Credit Loans, which endorsements shall, in the absence of manifest error, be
conclusive as to the outstanding principal amount of all Revolving Credit Loans;
provided, however, that the failure to make such notation with respect to any
Revolving Credit Loan or payment shall not limit or otherwise affect the
obligations of the Borrower under the Revolving Credit Agreement or this
Revolving Credit Note.
This Revolving Credit Note is referred to in the Revolving Credit
Agreement dated November 1, 2004, between the Borrower and the Lender (the
"Revolving Credit Agreement"). The Revolving Credit Agreement, among other
things, contains provisions for acceleration of the maturity of this Revolving
Credit Note upon the happening of certain stated events and also for prepayments
on account of the principal of this Revolving Credit Note prior to the maturity
of the Revolving Credit Note upon the terms and conditions specified in the
Revolving Credit Agreement.
This Revolving Credit Note shall be governed by the laws of the
State of Florida, provided that, as to the maximum rate of interest which may be
charged or collected, if the laws applicable to the Lender permit it to charge
or collect a higher rate than the laws of the State of Florida then such law
applicable to the Lender shall apply to the Lender under this Revolving Credit
Note.
ALTERNATIVE CONSTRUCTION COMPANY,INC.
-------------------------------------
Name of Borrower
By: /s/ Xxxxxx X. Xxxx
---------------------
Name: Xxxxxx X. Xxxx
Title: Secretary
SCHEDULE TO REVOLVING CREDIT NOTE
Unpaid Principal
Amount of Principal Balance of Revolving Name of Person
Date Amount of Loan Prepaid Credit Note Making Notation
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