Exhibit 10.112
FINANCING AND SECURITY AGREEMENT
Dated
August 9, 2000
By and Among
SPACEHAB, INCORPORATED
and its Subsidiaries
And
BANK OF AMERICA, N. A.
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS 1
Section 1.1 Certain Defined Terms. 1
Section 1.2 Accounting Terms and Other Definitional Provisions. 20
ARTICLE II THE CREDIT FACILITIES 21
Section 2.1 The Revolving Credit Facility. 21
2.1.1 Revolving Credit Facility. 21
2.1.2 Procedure for Making Advances Under the Revolving Credit; Lender Protection Loans. 21
2.1.3 Borrowing Base. 22
2.1.4 Borrowing Base Report. 22
2.1.5 Revolving Credit Note. 23
2.1.6 Mandatory Prepayments of Revolving Credit. 23
2.1.7 Optional Prepayments of Revolving Credit. 24
2.1.8 The Collateral Account. 24
2.1.9 Revolving Loan Account. 25
2.1.10 Revolving Credit Unused Line Fee. 25
2.1.11 Early Termination Fee. 25
Section 2.2 The Letter of Credit Facility. 26
2.2.1 Letters of Credit. 26
2.2.2 Letter of Credit Fees. 26
2.2.3 Terms of Letters of Credit. 26
2.2.4 Procedure for Letters of Credit. 27
2.2.5 Change in Law; Increased Cost. 27
Section 2.3 General Financing Provisions. 28
2.3.1 Borrowers' Representatives. 28
2.3.2 Use of Proceeds of the Revolving Credit. 29
2.3.3 Origination Fee. 30
2.3.4 Administration and Audit Fees. 30
2.3.5 Computation of Interest and Fees. 30
2.3.6 Maximum Interest Rate. 30
2.3.7 Payments. 31
2.3.8 Liens; Setoff. 31
2.3.9 Requirements of Law. 31
2.3.10 Funds Transfer Services. 32
2.3.11 ACH Transactions. 33
2.3.12 Guaranty. 33
Section 2.4 Interest 36
2.4.1 Applicable Interest Rates. 36
2.4.2 Selection of Interest Rates. 36
2.4.3 Inability to Determine Eurodollar Base Rate. 38
2.4.4 Indemnity. 39
2.4.5 Payment of Interest. 40
ARTICLE III THE COLLATERAL 40
Section 3.1 Debt and Obligations Secured. 40
Section 3.2 Grant of Liens. 41
Section 3.3 Collateral Disclosure List. 41
Section 3.4 Personal Property. 41
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Section 3.5 Record Searches. 41
Section 3.6 Costs. 41
Section 3.7 Release. 42
Section 3.8 Inconsistent Provisions. 42
ARTICLE IV REPRESENTATIONS AND WARRANTIES 42
Section 4.1 Representations and Warranties. 42
4.1.1 Subsidiaries. 42
4.1.2 Good Standing. 42
4.1.3 Power and Authority. 42
4.1.4 Binding Agreements. 43
4.1.5 No Conflicts. 43
4.1.6 No Defaults, Violations. 43
4.1.7 Compliance with Laws. 43
4.1.8 Margin Stock. 43
4.1.9 Investment Company Act; Margin Securities. 44
4.1.10 Litigation. 44
4.1.11 Financial Condition. 44
4.1.12 Full Disclosure. 44
4.1.13 Indebtedness for Borrowed Money. 45
4.1.14 Convertible Debt. 45
4.1.15 Taxes. 45
4.1.16 ERISA. 45
4.1.17 Title to Properties. 46
4.1.18 Patents, Trademarks, Etc. 46
4.1.19 Employee Relations. 46
4.1.20 Presence of Hazardous Materials or Hazardous Materials Contamination. 47
4.1.21 Perfection and Priority of Collateral. 47
4.1.22 Places of Business and Location of Collateral. 47
4.1.23 Business Names and Addresses. 47
4.1.24 No Suspension or Debarment. 47
4.1.25 Equipment. 48
4.1.26 Accounts. 48
4.1.27 Compliance with Eligibility Standards. 48
Section 4.2 Survival; Updates of Representations and Warranties. 48
ARTICLE V CONDITIONS PRECEDENT 49
Section 5.1 Conditions to the Initial Advance and Initial Letter of Credit. 49
5.1.1 Organizational Documents - Borrowers. 49
5.1.2 Opinion of Borrowers' Counsel. 50
5.1.3 Consents, Licenses, Approvals, Etc. 50
5.1.4 Note. 50
5.1.5 Financing Documents and Collateral. 50
5.1.6 Other Financing Documents. 50
5.1.7 Other Documents, Etc. 50
5.1.8 Payment of Fees. 50
5.1.9 Collateral Disclosure List. 50
5.1.10 Recordings and Filings. 50
5.1.11 Insurance Certificate. 51
5.1.12 Field Examination. 51
Section 5.2 Conditions to all Extensions of Credit and Issuance of Letters of Credit. 51
5.2.1 Compliance. 51
5.2.2 Borrowing Base. 51
5.2.3 Default. 51
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5.2.4 Representations and Warranties. 51
5.2.5 Adverse Change. 52
5.2.6 Legal Matters. 52
ARTICLE VI COVENANTS OF THE BORROWERS 52
Section 6.1 Affirmative Covenants. 52
6.1.1 Financial Statements. 52
6.1.2 Reports to SEC and to Stockholders. 54
6.1.3 Recordkeeping, Rights of Inspection, Administration and Audit, Etc. 54
6.1.4 Corporate Existence. 55
6.1.5 Compliance with Laws. 55
6.1.6 Preservation of Properties. 55
6.1.7 Line of Business. 55
6.1.8 Insurance. 55
6.1.9 Taxes. 56
6.1.10 ERISA. 56
6.1.11 Government Contracts. 56
6.1.12 Notification of Events of Default and Adverse Developments. 57
6.1.13 Hazardous Materials; Contamination. 57
6.1.14 Disclosure of Significant Transactions. 58
6.1.15 Financial Covenants. 59
6.1.16 Collection of Receivables. 60
6.1.17 Assignments of Receivables. 60
6.1.18 Notice of Returned Goods, etc. 61
6.1.19 Insurance With Respect to Equipment and Inventory. 61
6.1.20 Maintenance of the Collateral. 61
6.1.21 Equipment. 61
6.1.22 Defense of Title and Further Assurances. 62
6.1.23 Business Names; Locations. 62
6.1.24 Subsequent Opinion of Counsel as to Recording Requirements. 62
6.1.25 Use of Premises and Equipment. 63
6.1.26 Protection of Collateral. 63
6.1.27 Appraisals. 63
Section 6.2 Negative Covenants. 63
6.2.1 Capital Structure, Merger, Acquisition or Sale of Assets. 63
6.2.2 Subsidiaries. 64
6.2.3 Issuance of Stock. 64
6.2.4 Purchase or Redemption of Securities, Dividend Restrictions. 64
6.2.5 Indebtedness. 65
6.2.6 Investments, Loans and Other Transactions. 66
6.2.7 Stock of Subsidiaries. 67
6.2.8 Subordinated Indebtedness. 67
6.2.9 Liens. 68
6.2.10 Transactions with Affiliates. 68
6.2.11 Debenture. 68
6.2.12 ERISA Compliance. 69
6.2.13 Prohibition on Hazardous Materials. 69
6.2.14 Method of Accounting; Fiscal Year. 69
6.2.15 Compensation. 69
6.2.16 Transfer of Collateral. 69
6.2.17 Disposition of Collateral. 70
ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES 70
Section 7.1 Events of Default. 70
7.1.1 Failure to Pay. 70
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7.1.2 Breach of Representations and Warranties. 70
7.1.3 Failure to Comply with Covenants. 70
1.1.4 Other Covenants 70
7.1.5 Default Under Other Financing Documents or Obligations. 71
7.1.6 Receiver; Bankruptcy. 71
7.1.7 Involuntary Bankruptcy, etc. 71
7.1.8 Judgment. 71
7.1.9 Execution; Attachment. 72
7.1.10 Default Under Other Borrowings. 72
7.1.11 Challenge to Agreements. 72
7.1.12 Material Adverse Effect. 72
7.1.13 Change in Ownership. 72
7.1.14 Liquidation, Termination, Dissolution, Change in Management, etc. 72
7.1.15 Contract Default, Debarment or Suspension. 72
Section 7.2 Remedies. 73
7.2.1 Acceleration. 73
7.2.2 Further Advances. 73
7.2.3 Uniform Commercial Code. 73
7.2.4 Specific Rights With Regard to Collateral. 74
7.2.5 Application of Proceeds. 75
7.2.6 Performance by Lender. 75
7.2.7 Other Remedies. 76
ARTICLE VIII MISCELLANEOUS 76
Section 8.1 Notices. 76
Section 8.2 Amendments; Waivers. 76
8.2.1 In General. 76
Section 8.3 Cumulative Remedies. 77
Section 8.4 Severability. 77
Section 8.5 Assignments by Lender. 77
Section 8.6 Participations by Lender. 78
Section 8.7 Disclosure of Information by Lender. 78
Section 8.8 Successors and Assigns. 78
Section 8.9 Continuing Agreements. 78
Section 8.10 Enforcement Costs. 79
Section 8.11 Applicable Law; Jurisdiction. 79
8.11.1 Applicable Law. 79
8.11.2 Submission to Jurisdiction. 79
8.11.3 Appointment of Agent for Service of Process. 79
8.11.4 Service of Process. 80
Section 8.12 Duplicate Originals and Counterparts. 80
Section 8.13 Headings. 80
Section 8.14 No Agency. 80
Section 8.15 Date of Payment. 80
Section 8.16 Entire Agreement. 80
Section 8.17 Waiver of Trial by Jury. 81
Section 8.18 Liability of the Lender. 81
Section 8.19 Indemnification. 81
LIST OF SCHEDULES 86
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FINANCING AND SECURITY AGREEMENT
--------------------------------
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made this 9/th/
day of August, 2000, by and among SPACEHAB, INCORPORATED, a corporation
organized under the laws of the State of Washington (the "Company"), ▇▇▇▇▇▇▇
ENGINEERING CORPORATION, a corporation organized under the laws of the State of
Colorado ("▇▇▇▇▇▇▇ Engineering"), ASTROTECH SPACE OPERATIONS, INC., a
corporation organized under the laws of the State of Delaware ("Astrotech"); and
SPACE MEDIA, INC., a corporation organized under the laws of the State of
Delaware ("Space Media") jointly and severally (each of Company, ▇▇▇▇▇▇▇
Engineering, Astrotech and Space Media, a "Borrower"; Company, ▇▇▇▇▇▇▇
Engineering, Astrotech and Space Media, collectively, the "Borrowers"); and BANK
OF AMERICA, N. A., a national banking association, its successors and assigns
("Lender").
RECITALS
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A. The Borrowers have applied to the Lender for a revolving credit
facility in the maximum principal amount of Fifteen Million Dollars
($15,000,000), a letter of credit facility in the maximum principal amount of
Ten Million Dollars ($10,000,000), as part of the revolving credit facility to
be used by the Borrowers for the Permitted Uses described in this Agreement.
B. The Lender is willing to make these credit facilities available
jointly and severally to the Borrowers upon the terms and subject to the
conditions set forth in this Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1 Certain Defined Terms.
----------------------
As used in this Agreement, the terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts, accounts receivable,
contract rights (other than accounts, accounts receivable and contract rights
arising under the Astrotech Excluded Contracts), notes, drafts, instruments,
acceptances, chattel paper, leases and writings evidencing a monetary
obligation or a security interest in, or a lease of, goods, all rights to
receive the payment of money or other consideration under present or future
contracts (including, without limitation, all rights to receive payments under
presently existing or hereafter acquired or created letters of credit), or by
virtue of merchandise sold or leased, services rendered, loans and advances made
or other considerations given, by or set forth in or arising out of any present
or future chattel paper, note, draft, lease, acceptance, writing, bond,
insurance policy (including, without limitation, the right to receive refunds of
unearned insurance premiums), instrument, document or general intangible, and
all extensions and renewals of any thereof, all rights under or arising out of
present or future contracts, agreements or general interest in merchandise which
gave rise to any or all of the foregoing, including all goods, all claims or
causes of action now existing or hereafter arising in connection with or under
any agreement or document or by operation of law or otherwise, all collateral
security of any kind (including, without limitation, real property mortgages and
deeds of trust) and letters of credit given by any Person with respect to any of
the foregoing, all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to any or all of the foregoing and
all equipment and general intangibles necessary or beneficial to retain, access
and/or process the information contained in those books and records, and all
proceeds (cash and non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" mean all Persons who are obligated on the Receivables.
"ACH Transactions" means any cash management or related services including
the automatic clearing house transfer of funds by the Lender for the account of
the Borrowers pursuant to agreement or overdrafts.
"Additional Borrower" means each Person that has executed and delivered an
Additional Borrower Joinder Supplement that has been accepted and approved by
the Lender.
"Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with
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the blanks appropriately completed and executed and delivered by the Additional
Borrower and accepted by the Company on behalf of the Borrowers.
"Administration and Audit Fee" and "Administration and Audit Fees" have the
meanings described in Section 2.3.4 (Administration and Audit Fees).
"Affiliate" means, with respect to any designated Person (other than a
natural person), any other Person, (a) directly or indirectly controlling,
directly or indirectly controlled by, or under direct or indirect common control
with the Person designated, (b) directly or indirectly owning or holding five
percent (5%) or more of any equity interest in such designated Person, or (c)
five percent (5%) or more of whose stock or other equity interest is directly or
indirectly owned or held by such designated Person. For purposes of this
definition, the term "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other equity interests or by contract or otherwise.
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"Agreement" means this Financing and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in accordance with the
provisions of Section 8.2 (Amendments; Waivers).
"Applicable Interest Rate" means (a) the Eurodollar Rate or (b) the Base
Rate.
"Applicable Margin" means the applicable rate per annum added, as set forth
in Section 2.4.1 (Applicable Interest Rates), to the Eurodollar Base Rate or the
Prime Rate.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated balance
sheet of the Borrowers and their respective Subsidiaries.
"Assignee" means any Person to which the Lender assigns all of its
interests under this Agreement, any Revolving Credit Commitment, and any
Revolving Credit, in accordance with the provisions of Section 8.5 (Assignments
by Lender), together with any and all successors and assigns of such Person.
"Astrotech Excluded Contracts" means (i) subcontract 99797075 between
Astrotech and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, and (ii) that certain agreement
number 48801 between Astrotech and Lockheed ▇▇▇▇▇▇ Commercial Launch Services,
Inc., each as the same may be amended from time to time.
"Astrotech Loan" means that certain construction loan being made to
Astrotech or a special purpose entity to be created by Astrotech, in the
principal amount of approximately Twenty Five Million Dollars ($25,000,000), as
the same may be amended, extended, modified or renewed from time to time.
"Astrotech Loan Collateral" means (i) the real property which is the
subject of the Astrotech Loan, located in Titusville, Florida, having an address
of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and (ii) all monies due under
the Astrotech Excluded Contracts.
"Bankruptcy Code" means Title 11 of the United States Code, as amended from
time to time, and any successor Laws.
"Base Rate" means the sum of (a) the Applicable Margin, plus (b) the Prime
----
Rate.
"Base Rate Loan" means any advance under the Revolving Credit for which
interest is to be computed with reference to the Base Rate.
"Borrower" means each Person defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrowers" in the preamble to this
Agreement and all Additional Borrowers.
"Borrowing Base" has the meaning described in Section 2.1.3 (Borrowing
Base).
"Borrowing Base Deficiency" has the meaning described in Section 2.1.3
(Borrowing Base).
3
"Borrowing Base Report" has the meaning described in Section 2.1.4
(Borrowing Base Report).
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State are authorized or required to close.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into of a Capital Lease.
"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or should
be, in accordance with GAAP consistently applied, capitalized on the balance
sheet of that Person.
"Cash Equivalents" means (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Lender, any Affiliate of the Lender, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Lender and (c) commercial paper of a domestic issuer rated at
least either A-1 by Standard & Poor's Corporation (or its successor) or P-1 by
▇▇▇▇▇'▇ Investors Service, Inc. (or its successor) with maturities of six (6)
months or less from the date of acquisition.
"Chattel Paper" means a writing or writings which evidence both a monetary
obligation and a security interest in or lease of specific goods; any returned,
rejected or repossessed goods covered by any such writing or writings and all
proceeds (in any form including, without limitation, accounts, contract rights,
documents, chattel paper, instruments and general intangibles) of such returned,
rejected or repossessed goods; and all proceeds (cash and non-cash) of the
foregoing.
"CIT Collateral" means all equipment and inventory and other tangible
personal property of the Company, Astrotech and ▇▇▇▇▇▇▇ Engineering (other than
Flight Assets) presently existing or hereafter acquired or created and wherever
located, together with all accessions thereto, substitutions and replacements
therefor, and cash and non-cash proceeds thereof, including all accounts,
chattel paper, instruments and general intangibles constituting proceeds of such
equipment, together with all insurance proceeds of the foregoing, and all books
and records of the foregoing, which secure the CIT Loan Obligations.
"CIT Loan Obligations" means the loans and other obligations described in
that certain Loan and Security Agreement dated July 14, 1997 by and between
Astrotech, as Borrower, and
4
CIT Group/Equipment Financing, Inc., as Lender, as the same has been amended
prior to the Closing Date, to among other things, add ▇▇▇▇▇▇▇ Engineering as a
party thereto, and as the same may be amended from time to time in accordance
with this Agreement and all obligations of the Company described in that certain
Continuing Guaranty Agreement and that certain Security Agreement, each dated
July 14, 1997 from the Company in favor of CIT Group/Equipment Financing, Inc.,
in each case as the same has been amended prior to the date of this Agreement,
and as the same may be amended from time to time in accordance with this
Agreement.
"Closing Date" means the Business Day, in any event not later than August
9, 2000 on which the Lender shall be satisfied that the conditions precedent set
forth in Section 5.1 (Conditions to Initial Advance) have been fulfilled or
otherwise waived by the Lender.
"Collateral" means all property of each and every Borrower subject from
time to time to the Liens of this Agreement, any of the Security Documents
and/or any of the other Financing Documents, together with any and all cash and
non-cash proceeds and products thereof.
"Collateral Account" has the meaning described in Section 2.1.8 (The
Collateral Account).
"Collateral Disclosure List" has the meaning described in Section 3.3
(Collateral Disclosure List).
"Collection" means each check, draft, cash, money, instrument, item, and
other remittance in payment or on account of payment of the Accounts or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to an Account, and other proceeds of Collateral; and
"Collections" means the collective reference to all of the foregoing.
"Compliance Certificate" means a periodic Compliance Certificate described
in Section 6.1.1 (Financial Statements).
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with any Borrower within the meaning of Section
414(b) or (c) of the Internal Revenue Code.
"Convertible Debt Loan Documents" means any of the documents now or
hereafter evidencing or securing the Debentures.
"Credit Facility" means the Revolving Credit Facility or the Letter of
Credit Facility, as the case may be, and "Credit Facilities" means collectively
the Revolving Credit Facility, the Letter of Credit Facility and any and all
other credit facilities now or hereafter extended under or secured by this
Agreement.
"Debentures" means the Company's 8% Convertible Subordinated Notes due 2007
in the aggregate principal amount of $63,250,000 issued pursuant to the Purchase
Agreement dated as of October 15, 1997, by and among the Company, and Credit
Suisse First Boston Corporation, CIBC Wood Gundy Securities Corp. and
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
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"Debt Service" means as to each Borrower and its Subsidiaries for any
period of determination thereof an amount equal to the total of the aggregate
amount of all payments of principal and interest with respect to Indebtedness
for Borrowed Money of each Borrower and its Subsidiaries scheduled to be due and
payable during such period, minus non-cash amortized interest costs for such
period, provided however, for purposes of the calculation of Debt Service from
the Closing Date through December 31, 2000, the payments of interest on the
Debentures shall be annualized and applied only based on the portion of the
fiscal year then being measured.
"Debt Service Coverage Ratio" means as to each Borrower and its
Subsidiaries for the period of any determination the ratio of (a) EBITDA to (b)
Debt Service.
"Debt to Worth Ratio" means as to each Borrower and its Subsidiaries for
the date of any determination thereof the ratio of (a) Liabilities to (b) the
Tangible Net Worth.
"Default" means an event which, with the giving of notice or lapse of time,
or both, could or would constitute an Event of Default under the provisions of
this Agreement.
"Documents" means all documents of title, whether now existing or hereafter
acquired or created, and all proceeds (cash and non-cash) of the foregoing.
"Early Termination Fee" has the meaning described in Section 2.1.11 (Early
Termination Fee).
"EBITDA" means as to each Borrower and its Subsidiaries for any period of
determination thereof, the sum of (a) the net profit (or loss) determined in
accordance with GAAP consistently applied, plus (b) interest expense and income
tax provisions for such period, plus (c) depreciation and amortization of assets
for such period, plus (d) non-cash amortized interest costs for such period and,
minus (e) cash taxes paid for such period. All net profits and losses from
Space Media shall be excluded from the calculation of EBITDA.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each Account (excluding any and all
Accounts that are Excluded Assets) (net of any returns, discounts, claims,
credits, charges, accrued rebates or other allowances, offsets, deductions,
counterclaims, disputes or other defenses and reduced by the aggregate amount of
all reserves, limits and deductions provided for in this definition and
elsewhere in this Agreement) in United States Dollars of a Borrower, provided
such Account conforms and continues to conform to the following criteria to the
satisfaction of the Lender:
(a) the Account arose in the ordinary course of a Borrower's
business from services performed or products delivered by such Borrower;
(b) the Account is a valid, legally enforceable obligation of
the Account Debtor and requires no further act on the part of any Person
under any circumstances to make the account payable by the Account Debtor;
(c) the Account is based upon an enforceable order or contract,
written or oral, for services performed or products delivered, and the same
were performed in accordance with such order or contract;
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(d) if the Account arises from the performance of services, such
services have been fully rendered and do not relate to any warranty claim
or obligation;
(e) the Account is evidenced by an invoice or other
documentation in form acceptable to the Lender, dated no later than the
date of shipment or performance;
(f) the amount shown on the books of a Borrower and on any
invoice, certificate, schedule or statement delivered to the Lender is
owing to such Borrower and no partial payment has been received unless
reflected with that delivery;
(g) the Account is not outstanding more than ninety (90) days
from the date of the invoice therefor or past due more than sixty (60) days
after its due date, which shall not be later than thirty (30) days after
the invoice date;
(h) the Account is not owing by any Account Debtor for which the
Lender has deemed fifty percent (50%) or more of such Account Debtor's
other accounts (or any portion thereof) due to a Borrower, individually, or
all of the Borrowers collectively to be non-Eligible Receivables;
(i) the Account is not owing by an Account Debtor (other than
where a Governmental Authority is the Account Debtor) or a group of
affiliated Account Debtors (other than Governmental Authorities) whose then
existing accounts owing to any Borrower exceed in aggregate face amount
fifteen percent (15%) of that Borrower's total Eligible Receivables;
(j) the Account Debtor has not returned, rejected or refused to
retain, or otherwise notified the Borrower of any dispute concerning, or
claimed nonconformity of, any goods or services from the furnishing or
delivery of which the Account arose;
(k) other than customary offsets and claims which may arise
under Government Contracts, the Account is not subject to any present or
contingent (and no facts exist which are known to the Borrower to be the
basis for any future) offset, claim, deduction or counterclaim, dispute or
defense in law or equity on the part of such Account Debtor, or any claim
for credits, allowances, or adjustments by the Account Debtor because of
unsatisfactory services, or for any other reason including, without
limitation, those arising on Account of a breach of any express or implied
representation or warranty;
(l) the Account Debtor is not a Subsidiary or Affiliate of any
Borrower or an employee, officer, director or shareholder of any Borrower
or any Subsidiary or Affiliate of any Borrower;
(m) the Account Debtor is not incorporated or primarily
conducting business or otherwise located in any jurisdiction outside of the
United States of America, unless the Account Debtor's obligations with
respect to such Account are secured by a letter of credit, guaranty or
banker's acceptance having terms and from such issuers and
7
confirmation banks as are acceptable to the Lender in its sole and absolute
discretion (which letter of credit, guaranty or banker's acceptance is
subject to the perfected Lien of the Lender);
(n) as to which none of the following events has occurred and is
continuing with respect to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in effect;
the making of any general assignment by the Account Debtor for the benefit
of creditors; the appointment of a receiver or trustee for the Account
Debtor or for any of the assets of the Account Debtor, including, without
limitation, the appointment of or taking possession by a "custodian," as
defined in the Bankruptcy Code; the institution by or against the Account
Debtor of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the Account Debtor; the sale,
assignment, or transfer of all or any material part of the assets of the
Account Debtor; the nonpayment generally by the Account Debtor of its debts
as they become due; or the cessation of the business of the Account Debtor
as a going concern;
(o) no Borrower is indebted in any manner to the Account Debtor
(as creditor, lessor, supplier or otherwise), with the exception of
customary offsets and claims which may arise under Government Contracts and
customary credits, adjustments and/or discounts given to an Account Debtor
by a Borrower in the ordinary course of its business;
(p) the Account does not arise from services under or related to
any warranty obligation of a Borrower or out of service charges, finance
charges or other fees for the time value of money;
(q) the Account is not evidenced by chattel paper or an
instrument of any kind and is not secured by any letter of credit;
(r) the Account does not arise from an Excluded Asset;
(s) the title of the respective Borrower to the Account is
absolute and is not subject to any prior assignment, claim, Lien, or
security interest, except Permitted Liens;
(t) no bond or other undertaking by a guarantor or surety has
been or is required to be obtained, supporting the performance of any
Borrower or any other obligor in respect of any of such Borrower's
agreements with the Account Debtor;
8
(u) the Borrower to which the Account is owed has the full and
unqualified right and power to assign and grant a security interest in, and
Lien on, the Account to the Lender as security and collateral for the
payment of the Obligations;
(v) the Account does not arise out of a contract with, or order
from, an Account Debtor that, by its terms, forbids or makes void or
unenforceable the assignment or grant of a security interest by the
Borrowers to the Lender of the account arising from such contract or order;
(w) the Account is subject to a Lien in favor of the Lender,
which Lien is perfected as to the account by the filing of financing
statements and which Lien upon such filing constitutes a first priority
security interest and Lien;
(x) no part of the Account represents a retainage;
(y) the Lender in the good faith exercise of its sole and
absolute discretion has not deemed the Account ineligible because of
uncertainty as to the creditworthiness of the Account Debtor or because the
Lender otherwise considers the collateral value of such Account to the
Lender to be impaired or its ability to realize such value to be insecure;
(z) the Account does not constitute a final billing or close out
billing relating to a completed contract; and
(aa) if the Account Debtor is located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order
to permit a Borrower to seek judicial enforcement in such state of payment
of such Account, such Borrower has qualified to do business in such state
or has filed a Notice of Business Activities Report or equivalent report
for the then current year.
In the event of any dispute, under the foregoing criteria, as to whether an
Account is, or has ceased to be, an Eligible Receivable, the decision of the
Lender (as communicated by the Lender to the Company orally or in writing) in
the good faith exercise of its sole and absolute discretion shall control.
"Enforcement Costs" means all expenses, charges, costs and fees whatsoever
(including, without limitation, reasonable outside and allocated in-house
counsel attorney's fees and expenses) of any nature whatsoever paid or incurred
by or on behalf of the Lender in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, perfection, collection, maintenance, preservation, defense,
protection, realization upon, disposition, sale or enforcement of all or any
part of the Collateral, this Agreement or any of the other Financing Documents,
including, without limitation, those costs and expenses more specifically
enumerated in Section 3.6 (Costs) and/or Section 8.10 (Enforcement Costs), and
further including, without limitation, amounts paid to lessors, processors,
bailees, warehousemen, sureties, judgment creditors and others in possession of
or with a Lien against or claimed against the Collateral, and (c) the
monitoring, administration, processing and/or servicing of any or all of the
Obligations, the Financing Documents, and/or the
9
Collateral, other than the Administration and Audit Fees described in Section
2.3.4 of this Agreement.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature (other than Excluded Assets), presently existing or hereafter acquired or
created and wherever located, whether or not the same shall be deemed to be
affixed to real property and all of such types of property leased by any of the
Borrowers and all of the Borrowers' rights and interests with respect thereto
under such leases (including, without limitation, options to purchase), together
with all accessions, additions, fittings, accessories, special tools, and
improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property, all licenses, warranties,
franchises and general intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by any
Borrower on account of the sale, lease or other disposition of all or any part
of the foregoing, and together with all rights under or arising out of present
or future Documents and contracts relating to the foregoing and all proceeds
(cash and non-cash) of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Base Rate" means for any Interest Period with respect to any
Eurodollar Loan, the per annum interest rate rounded upward, if necessary, to
the nearest 1/100 of 1%, appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in dollars at or about 11:00
a.m. (London time) on the date that is two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "Eurodollar Base
Rate" shall mean, for any Eurodollar Loan for any Interest Period therefore, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
-------- -------
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
1/100 of 1%).
"Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.
"Eurodollar Loan" means any Revolving Credit for which interest is to be
computed with reference to the Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Loan, (a) the Applicable Margin, plus (b) the per annum rate of
----
interest calculated pursuant to the following formula:
10
Eurodollar Base Rate
--------------------
1.00 - Reserve Percentage
"Event of Default" has the meaning described in ARTICLE VII (Default and
Rights and Remedies).
"Excluded Assets" means (i) all Flight Assets, (ii) all patents, trademarks
copyrights, rights in intellectual property, service names, service marks, logos
and trade secrets of each Borrower, (iii) the CIT Collateral, and (iv) the
Astrotech Loan Collateral.
"Facilities" means the collective reference to the Revolving Credit
Facility, Letter of Credit Facility and cash management facilities now or
hereafter provided to any one or more of the Borrowers by the Lender.
"Fees" means the collective reference to each fee payable to the Lender
under the terms of this Agreement or under the terms of any of the other
Financing Documents, including, without limitation, the Revolving Credit Unused
Line Fees, Letter of Credit Fees, the Early Termination Fee, the Origination
Fee, and the Administration and Audit Fees.
"Financing Documents" means at any time collectively this Agreement, the
Notes, the Security Documents, the Letter of Credit Documents, and any other
instrument, agreement or document previously, simultaneously or hereafter
executed and delivered by any Borrower and/or any other Person, singly or
jointly with another Person or Persons, evidencing, securing, guarantying or in
connection with this Agreement, any Note, any of the Security Documents, any of
the Facilities, and/or any of the Obligations.
"Fixed or Capital Assets" of a Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.
"Flight Assets" shall mean all hardware and subsystems owned or leased by
the Company which are designed or acquired for space flight (including, but not
limited, to flight modules, adapter rings, tunnel segments, multi-layer
insulation blankets, cargo pallets and associated piece parts) and non-flight
equipment supporting such hardware and subsystems (including, but not limited
to, mechanical and electrical ground support, and flight training modules and
equipment), together with all computer hardware and software and copyrights,
patents, trademarks and other intellectual property directly arising or created
with respect to such assets.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"General Intangibles" means all general intangibles of every nature,
whether presently existing or hereafter acquired or created, and without
implying any limitation of the foregoing, further means all books and records,
claims (including without limitation all claims for income tax and other
refunds), choses in action, causes of action in tort or equity, contract rights,
judgments, customer lists, licensing agreements, goodwill (including goodwill of
any Borrower's business symbolized by and associated with any and all
trademarks, trademark licenses,
11
copyrights and/or service marks), royalty payments, licenses, rights as lessee
under any lease of real or personal property, literary rights, amounts received
as an award in or settlement of a suit in damages, deposit accounts, interests
in joint ventures, general or limited partnerships, or limited liability
companies or partnerships, rights in applications for any of the foregoing,
books and records in whatever media (paper, electronic or otherwise) recorded or
stored, with respect to any or all of the foregoing and all Equipment and
general intangibles necessary or beneficial to retain, access and/or process the
information contained in those books and records, and all proceeds (cash and
non-cash) of the foregoing.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any department, agency or instrumentality thereof.
"Government Contracts" means any contract with the United States or with
any state or political subdivision thereof or any department, agency or
instrumentality of the United States, or any state or political subdivision
thereof.
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated thereunder; (b) any "hazardous substance" as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any substance the presence of which on any property now or hereafter owned,
acquired or operated by any of the Borrowers is prohibited by any Law similar to
those set forth in this definition; and (d) any other substance which by Law
requires special handling in its collection, storage, treatment or disposal.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any of the Borrowers
or for which any of the Borrowers has responsibility, including, without
limitation, improvements, facilities, soil, ground water, air or other elements
on, or of, any property now or hereafter owned, acquired or operated by any of
the Borrowers, and any other contamination by Hazardous Materials for which any
of the Borrowers is, or is claimed to be, responsible.
"Indebtedness" of a Person means at any date the total liabilities of such
Person at such time determined in accordance with GAAP consistently applied.
"Indebtedness for Borrowed Money" of a Person means at any time the sum at
such time of (a) Indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of
12
such Person under an employee stock ownership plan or other similar employee
benefit plan which is in excess of amounts incurred by such Person in the
ordinary course of business; and (g) any obligation of such Person or a Commonly
Controlled Entity to a Multi-employer Plan, which is in excess of amounts
incurred by such Person in the ordinary course of business; but excluding trade
and other accounts payable in the ordinary course of business in accordance with
customary trade terms and which are not overdue (as determined in accordance
with customary trade practices) or which are being disputed in good faith by
such Person and for which adequate reserves are being provided on the books of
such Person in accordance with GAAP.
"Indemnified Parties" has the meaning set forth in Section 8.19
(Indemnification).
"Instrument" means a negotiable instrument (as defined under Article 3 of
the Uniform Commercial Code), a "certificated security" (as defined under
Article 8 of the Uniform Commercial Code), or any other writing which evidences
a right to payment of money and is not itself a security agreement or lease and
is of a type which is in the ordinary course of business transferred by delivery
with any necessary endorsement.
"Interest Period" means as to any Eurodollar Loan, the period commencing on
and including the date such Eurodollar Loan is made (or on the effective date of
the Borrowers' election to convert any Base Rate Loan to a Eurodollar Loan in
accordance with the provisions of this Agreement) and ending on and including
the day which is one month, two months or three months thereafter, as selected
by the Borrowers in accordance with the provisions of this Agreement, and
thereafter, each period commencing on the last day of the then preceding
Interest Period for such Eurodollar Loan and ending on and including the day
which is one month, two months or three months thereafter, as selected by the
Borrowers in accordance with the provisions of this Agreement; provided, however
that:
(a) the first day of any Interest Period shall be a Eurodollar
Business Day;
(b) if any Interest Period would end on a day that shall not be a
Eurodollar Business Day, such Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless such next succeeding Eurodollar
Business Day would fall in the next calendar month, in which case, such
Interest Period shall end on the next preceding Eurodollar Business Day;
and
(c) no Interest Period shall extend beyond the Revolving Credit
Expiration Date.
"Interest Rate Election Notice" has the meaning described in Section
2.4.2(e) (Selection of Interest Rates).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the Income Tax Regulations issued and proposed to be
issued thereunder.
"Inventory" means all inventory of each Borrower (other than Excluded
Assets) and all right, title and interest of each Borrower in and to all of its
now owned and hereafter acquired
13
goods, merchandise and other personal property furnished under any contract of
service or intended for sale or lease, including, without limitation, all raw
materials, work-in-process, finished goods and materials and supplies of any
kind, nature or description which are used or consumed in the any Borrower's
business or are or could be expected to be used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise and other licenses, warranties, franchises, general intangibles,
personal property and all documents of title or documents relating to the same
and all proceeds (cash and non-cash) of the foregoing.
"Item of Payment" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Receivables or
otherwise with respect to any Collateral (other than remittances on the Excluded
Assets), including, without limitation, cash proceeds of any returned, rejected
or repossessed goods, the sale or lease of which gave rise to a Receivable, and
other proceeds of Collateral; and "Items of Payment" means the collective
reference to all of the foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a Person means for any period the rental commitments
of such Person for such period under leases for real and/or personal property
(net of rent from subleases thereof, but including taxes, insurance, maintenance
and similar expenses which such Person, as the lessee, is obligated to pay under
the terms of said leases, except to the extent that such taxes, insurance,
maintenance and similar expenses are payable by sublessees), including rental
commitments under Capital Leases.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).
"Letter of Credit Agreement" means the collective reference to each letter
of credit application and agreement substantially in the form of the Lender's
then standard form of application for letter of credit or such other form as may
be approved by the Lender, executed and delivered by the Borrower in connection
with the issuance of a Letter of Credit, as the same may from time to time be
amended, restated, supplemented or modified and "Letter of Credit Agreements"
means all of the foregoing in effect at any time and from time to time.
"Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by the Borrower or
any other Person under, pursuant to or in connection with a Letter of Credit or
any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by the Lender
pursuant to Section 2.2 (Letter of Credit Facility).
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).
14
"Letter of Credit Obligations" means all Obligations of the Borrower with
respect to the Letters of Credit and the Letter of Credit Agreements.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a consolidated
balance sheet of the Borrowers and their respective Subsidiaries.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien, financing
statement, hypothecation, provision in any instrument or other document for
confession of judgment, cognovit or other similar right or other remedy, claim,
charge, control over or interest of any kind in real or personal property
securing any indebtedness, duties, obligations, and liabilities owed to, or a
claimed to be owed to, a Person, all whether perfected or unperfected, avoidable
or unavoidable, based on the common law, statute or contract or otherwise,
including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction, excluding the precautionary filing of any financing statement by
any lessor in a true lease transaction, by any ▇▇▇▇▇▇ in a true bailment
transaction or by any consignor in a true consignment transaction under the
Uniform Commercial Code of any jurisdiction or the agreement to give any
financing statement by any lessee in a true lease transaction, by any bailee in
a true bailment transaction or by any consignee in a true consignment
transaction.
"Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).
"Lockbox" has the meaning described in Section 2.1.8 (The Collateral
Account).
"Material Adverse Effect" means the occurrence of any event which in the
Lender's sole, but reasonable discretion (i) could be expected to be materially
adverse to the business, operations, property or financial condition of the
Borrowers taken as a whole, (ii) could be expected to materially and adversely
affect the ability of the Borrowers taken as a whole to perform their
obligations under this Agreement or the other Financing Documents, to which any
Borrower is a party, (iii) could be expected to materially and adversely affect
the ability of the Borrowers taken as a whole to perform the Obligations, (iv)
could be expected to materially and adversely affect the value of, or the
ability of the Lender to realize upon, the Collateral.
"Maximum Rate" has the meaning described in Section 2.3.6 (Maximum Interest
Rate).
"Multi-employer Plan" means a Plan that is a Multi-employer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Worth" means the consolidated shareholders' equity, defined in
accordance with GAAP, of the Borrower and its Subsidiaries.
"Note" means any Revolving Credit Note, and "Notes" means collectively the
Revolving Credit Note and any other promissory note which may from time to time
evidence all or any portion of the Obligations.
15
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of any one or more of the Borrowers to the Lender under, arising
pursuant to, in connection with and/or on account of the provisions of this
Agreement, each Note, each Security Document, and/or any of the other Financing
Documents, the Loans, and/or any of the Facilities including, without
limitation, the principal of, and interest on, each Note, late charges, the
Fees, Enforcement Costs, and prepayment fees (if any), Outstanding Letter of
Credit Obligations, Letter of Credit Fees or fees charged with respect to any
guaranty of any Letter of Credit; also means all other present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Borrowers to the
Lender or its Affiliates of any nature whatsoever including, without limitation,
any indebtedness, duties, obligations, and liabilities under or in connection
with, any cash management agreements, regardless of whether such indebtedness,
duties, obligations, and liabilities be direct, indirect, primary, secondary,
joint, several, joint and several, fixed or contingent; and also means any and
all renewals, extensions, substitutions, amendments, restatements and
rearrangements of any such indebtedness, duties, obligations, and liabilities.
"Origination Fee" has the meaning described in Section 2.3.3 (Origination
Fee).
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or
which the Lender has determined in the good faith exercise of its sole and
absolute discretion (i) are being diligently contested in good faith and by
appropriate proceedings, and such contest operates to suspend collection of the
contested Taxes and enforcement of a Lien, (ii) the respective Borrower or
Subsidiary has the financial ability to pay, with all penalties and interest, at
all times without a Material Adverse Effect, and (iii) are not, and will not be
with appropriate filing, the giving of notice and/or the passage of time,
entitled to priority over any Lien of the Lender; (b) deposits or pledges to
secure obligations under workers' compensation, social security or similar laws,
or under unemployment insurance in the ordinary course of business; (c) Liens
securing the Obligations; (d) judgment Liens to the extent the entry of such
judgment does not constitute a Default or an Event of Default under the terms of
this Agreement or result in the sale or levy of, or execution on, any of the
Collateral; (e) Liens on the Excluded Assets; (f) Purchase Money Liens in an
aggregate amount at any time, not exceeding Two Hundred Fifty Thousand Dollars
($250,000); (g) materialmen and landlord Liens incurred in the ordinary course
of the business of a Borrower, provided such claims are not and will not be with
appropriate filings, the giving of notice and/or the passage of time, entitled
to priority over any Lien of the Lender; (h) Liens incurred or deposits made in
the ordinary course of business to secure the performance of tenders, bids,
leases, contracts (other than the repayment of Indebtedness for Borrowed Money),
provided that, to the extent any such Liens attach to any of the Collateral,
such Liens are at all times subordinated and junior to the Liens in such
Collateral in favor of the Lender; and (i) such other Liens, if any, as are set
forth on Schedule 4.1.21 attached hereto and made a part hereof.
---------------
16
"Permitted Uses" means (a) the repayment of certain indebtedness of the
Company existing as of the Closing Date; and (b) the payment of expenses
incurred in the ordinary course of any Borrower's business, including, the
payment of costs, fees and other expenses in connection with this Agreement.
"Person" means and includes an individual, a corporation, a partnership, a
joint venture, a limited liability company or partnership, a trust, an
unincorporated association, a Governmental Authority, or any other organization
or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and in
respect of which any Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3 of ERISA.
"Prime Rate" means the floating and fluctuating per annum prime commercial
lending rate of interest of the Lender, as established and declared by the
Lender at any time or from time to time. The Prime Rate shall be adjusted
automatically, without notice, as of the effective date of any change in such
prime commercial lending rate. The Prime Rate does not necessarily represent the
lowest rate of interest charged by the Lender to borrowers.
"Post-Default Rate" means the Prime Rate in effect from time to time, plus
four percent (4.0%) per annum.
"Prepayment" means a Revolving Credit Mandatory Prepayment or a Revolving
Credit Optional Prepayment, as the case may be, and "Prepayments" mean
collectively all Revolving Credit Mandatory Prepayments and all Revolving Credit
Optional Prepayments.
"Purchase Money Lien" means Liens (i) on equipment acquired or held by a
Borrower incurred for financing the acquisition of the specific equipment, or
(ii) existing on equipment when acquired, provided that in all cases such Lien
is confined to the property and improvements and the proceeds of such equipment.
"Receivable" means one of each Borrower's now owned and hereafter owned,
acquired or created Accounts, Chattel Paper, General Intangibles and
Instruments, other than Receivables arising from the sale of the CIT Collateral;
and "Receivables" means all of each Borrower's now or hereafter owned, acquired
or created Accounts, Chattel Paper, General Intangibles and Instruments, other
than Receivables arising from the sale of the CIT Collateral; together with all
cash and non-cash proceeds and products thereof.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder.
"Reserve Percentage" means, at any time, the then current maximum rate for
which reserves (including any basic, special, supplemental, marginal and
emergency reserves) are required to be maintained by member banks of the Federal
Reserve System under Regulation D of the Board of Governors of the Federal
Reserve System against "Eurocurrency liabilities", as that term is defined in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Percentage shall reflect any other reserves required to be maintained by such
member banks with
17
respect to (a) any category of liabilities which includes deposits by reference
to which the Eurodollar Rate is to be determined, or (b) any category of
extensions of credit or other assets which include Eurodollar Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Reserve Percentage.
"Responsible Officer" means for each Borrower, its chief executive officer
or president or, with respect to financial matters, its chief financial officer.
"Revolving Credit" has the meaning described in Section 2.1.1. (Revolving
Credit Facility).
"Revolving Credit Commitment" means the agreement of the Lender relating to
making the Revolving Credit and advances thereunder subject to and in accordance
with the provisions of this Agreement.
"Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.
"Revolving Credit Committed Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).
"Revolving Credit Expiration Date" means August 8, 2003.
"Revolving Credit Facility" means the facility established by the Lender
pursuant to Section 2.1 (Revolving Credit Facility).
"Revolving Credit Mandatory Prepayment" and "Revolving Credit Mandatory
Prepayments" have the meanings described in Section 2.1.6 (Mandatory Prepayments
of Revolving Credit).
"Revolving Credit Note" has the meaning described in Section 2.1.5
(Revolving Credit Note).
"Revolving Credit Optional Prepayment" and "Revolving Credit Optional
Prepayments" have the meanings described in Section 2.1.7 (Optional Prepayment
of Revolving Credit).
"Revolving Credit Termination Date" means the earlier of (a) the Revolving
Credit Expiration Date, or (b) the date on which the Revolving Credit Commitment
is terminated pursuant to Section 7.2 (Remedies) or otherwise.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line Fees"
have the meanings described in Section 2.1.10 (Revolving Credit Unused Line
Fee).
"Revolving Credit" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).
"Revolving Loan Account" has the meaning described in Section 2.1.9
(Revolving Loan Account).
18
"RSC Energia/Space Media" means RSC Energia/Space Media, LLC, a limited
liability company organized under the laws of the State of Delaware.
"Security Documents" means collectively any assignment, pledge agreement,
security agreement, mortgage, deed of trust, deed to secure debt, financing
statement and any similar instrument, document or agreement under or pursuant to
which a Lien is now or hereafter granted to, or for the benefit of, the Lender
on any real or personal property of any Person to secure all or any portion of
the Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified, including, without limitation, this
Agreement and the Stock Pledge Agreement.
"Security Procedures" means the rules, policies and procedures adopted and
implemented by the Lender and its Affiliates at any time and from time to time
with respect to security procedures and measures relating to electronic funds
transfers, all as the same may be amended, restated, supplemented, terminated,
or otherwise modified at any time and from time to time by the Lender in its
sole and absolute discretion.
"Space Station Enterprise" means Space Station Enterprise LLC, a limited
liability company organized under the laws of the State of Delaware.
"State" means the Commonwealth of Virginia.
"Stock Pledge Agreement" means that certain pledge, assignment and security
agreement dated the date hereof from the Company to the Lender, as the same may
from time to time be amended, restated, supplemented or otherwise modified.
"Subordinated Indebtedness" means all Indebtedness incurred at any time by
any one or more of the Borrowers, which is in amounts, subject to repayment
terms, and subordinated to the Obligations, as set forth in one or more written
agreements, all in form and substance satisfactory to the Lender in its sole and
absolute discretion.
"Subsidiary" means any operating corporation with principal offices in the
United States where fifty one percent (51%) or more of the voting shares of
which at the time are owned directly by any Borrower and/or by one or more
Subsidiaries of any Borrower.
"Tangible Net Worth" means as to each Borrower and its Subsidiaries at any
date of determination thereof, the sum at such time of: the Net Worth, plus the
amount of all amounts due to the Company from Space Media, less the total of (a)
all Assets which would be classified as intangible assets under GAAP
consistently applied, (b) applicable reserves, allowances and other similar
properly deductible items to the extent such reserves, allowances and other
similar properly deductible items have not been previously deducted by the
Lender in the calculation of Net Worth, and (c) any revaluation or other write-
up in book value of assets subsequent to the date of the most recent financial
statements delivered to the Lender.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental
19
Authority on any or all of the Borrowers or any of its or their properties or
assets or any part thereof or in respect of any of its or their franchises,
businesses, income or profits.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.
"United States" means the United States of America and any territory or
insular possession of the United Sates of America.
"Wholly Owned Subsidiary" means any domestic United States corporation all
the shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by a Borrower and/or by one
or more Wholly Owned Subsidiaries of a Borrower.
"Wire Transfer Procedures" means the rules, policies and procedures set
forth in EXHIBIT C attached hereto, including, without limitation, the Security
---------
Procedures, all as the same may be amended, restated, supplemented, terminated
or otherwise modified at any time and from time to time by the Lender in its
sole and absolute discretion.
Section 1.2 Accounting Terms and Other Definitional Provisions.
---------------------------------------------------
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP, as consistently applied to the applicable Person on a
basis consistent with that used in preparing such Person's audited financial
statements for prior years. All terms used herein which are defined by the
Uniform Commercial Code shall have the same meanings as assigned to them by the
Uniform Commercial Code unless and to the extent varied by this Agreement. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified. As used herein, the singular number shall include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender shall include all genders, as the context may require. Reference
to any one or more of the Financing Documents shall mean the same as the
foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified. Reference in this Agreement and
the other Financing Documents to the "Borrower", the "Borrowers", "each
Borrower" or otherwise with respect to any one or more of the Borrowers shall
mean each and every Borrower and any one or more of the Borrowers, jointly and
severally, unless a specific Borrower is expressly identified.
20
ARTICLE II
THE CREDIT FACILITIES
---------------------
Section 2.1 The Revolving Credit Facility.
------------------------------
2.1.1 Revolving Credit Facility.
--------------------------
Subject to and upon the provisions of this Agreement, the
Lender agrees to establish a revolving credit facility in favor of the
Borrowers. The aggregate of all advances under the Revolving Credit Facility is
sometimes referred to in this Agreement collectively as the "Revolving Credit".
The principal amount of Fifteen Million Dollars ($15,000,000)
is the "Revolving Credit Committed Amount".
During the Revolving Credit Commitment Period, the Lender
agrees to make advances under the Revolving Credit requested by the Borrower
from time to time provided that after giving effect to the Borrower's request,
the sum of (a) the outstanding principal balance of the Revolving Credit and (b)
the Letter of Credit Obligations, would not exceed the lesser of (y) the
Revolving Credit Committed Amount, or (z) the then most current Borrowing Base.
2.1.2 Procedure for Making Advances Under the Revolving
-------------------------------------------------
Credit; LenderProtection Loans.
-------------------------------
The Borrowers may borrow under the Revolving Credit Facility
on any Business Day. Advances under the Revolving Credit shall be deposited to a
demand deposit account of the Company with the Lender or shall be otherwise
applied as directed by the Company, which direction the Lender may require to be
in writing, provided, however, the Lender may make the advances referred to in
Section 2.2.3, without the direction of the Company. Except for advances made
under the Revolving Credit by the Lender which the Lender is authorized to make
under this Agreement, not later than 11:00 a.m. (Eastern Standard Time) on the
date of the requested borrowing, the Company shall give the Lender oral or
written notice (a "Loan Notice") of the amount and (if requested by the Lender)
the purpose of the requested borrowing. Any oral Loan Notice shall be confirmed
in writing by the Company within three (3) Business Days after the making of the
requested advance under the Revolving Credit. Each Loan Notice shall be
irrevocable.
In addition, each of the Borrowers hereby irrevocably
authorizes the Lender at any time and from time to time, without further request
from or notice to the Borrowers, to make advances under the Revolving Credit,
and to establish, without duplication, reserves against the Borrowing Base,
which the Lender, in its sole and absolute discretion, deems necessary or
appropriate to protect the interests of the Lender, including, without
limitation, advances and reserves under the Revolving Credit made to cover debit
balances in the Revolving Loan Account, principal of, and/or interest on, any
Revolving Credit, the Obligations (including, without limitation, any Letter of
Credit Obligations), and/or Enforcement Costs, prior to, on, or after the
termination of other advances under this Agreement, regardless of whether the
outstanding principal amount of the Revolving Credit that the Lender may advance
or reserve hereunder exceeds the Total Revolving Credit Committed Amount or the
Borrowing Base,
21
provided, however, that the Lender agrees to give the Company two (2) Business
Days prior notice of any such advances, other than advances for the purposes of
covering debit balances in the Revolving Loan Account, principal of, and/or
interest on, any Revolving Credit, and the payment of any Fees, unless the
Lender in its exercise of its reasonable discretion determines that the failure
to provide such notice could result in a Material Adverse Effect.
2.1.3 Borrowing Base.
---------------
As used in this Agreement, the term "Borrowing Base" means at
any time, an amount equal to the aggregate of (a) ninety percent (90%) of the
amount of Eligible Receivables derived from Government Contracts, plus (b)
eighty five percent (85%) of Eligible Receivables derived from contracts other
than Government Contracts.
The Borrowing Base shall be computed based on the Borrowing
Base Report most recently delivered to and accepted by the Lender in its sole
and absolute discretion. In the event the Borrowers fail to furnish a Borrowing
Base Report required by Section 2.1.4 (Borrowing Base Report), or in the event
the Lender believes that a Borrowing Base Report is no longer accurate, the
Lender may, in its sole and absolute discretion exercised from time to time and
without limiting other rights and remedies under this Agreement, suspend the
making of or limit advances under the Revolving Credit. The Borrowing Base shall
be subject to reduction by amounts credited to the Collateral Account since the
date of the most recent Borrowing Base Report and by the amount of any
Receivable which was included in the Borrowing Base but which the Lender
determines fails to meet the respective criteria applicable from time to time
for Eligible Receivables.
If at any time the total of the aggregate principal amount of
the Revolving Credit and Outstanding Letter of Credit Obligations exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall
exist. Each time a Borrowing Base Deficiency exists, the Borrower, at the sole
and absolute discretion of the Lender exercised from time to time, shall pay the
Borrowing Base Deficiency within two Business Days of DEMAND to the Lender.
Without implying any limitation on the Lender's discretion
with respect to the Borrowing Base, the criteria for Eligible Receivables
contained in the definition of Eligible Receivables are in part based upon the
business operations of the Borrowers existing on or about the Closing Date and
upon information and records furnished to the Lender by the Borrowers. If at any
time or from time to time hereafter, the business operations of the Borrowers
change or such information and records furnished to the Lender is incorrect or
misleading, the Lender in its discretion, may at any time and from time to time
during the duration of this Agreement change such criteria or add new criteria.
The Lender may communicate such changed or additional criteria to the Borrowers
from time to time either orally or in writing.
2.1.4 Borrowing Base Report.
----------------------
(a) At all times as any Obligations are outstanding
under this Agreement or under any of the Financing Documents, the Borrowers will
furnish to the Lender no less frequently than the twenty fifth (25/th/) day of
each month and at such other times as may be requested by the Lender, a report
of the Borrowing Base (each a "Borrowing Base Report";
22
collectively, the "Borrowing Base Reports") in the form required from time to
time by the Lender, appropriately completed and duly signed. Unless otherwise
requested by the Lender, the Borrowing Base Report shall be dated as of the last
Business Day of the immediately preceding month and shall contain a detailed
aging schedule of all Receivables by Account Debtor as of the date of the
Borrowing Base Report, the amount and payments on the Receivables, and the
calculations of the Borrowing Base, all in such detail, and accompanied by such
supporting and other information, as the Lender may from time to time request,
including, but not limited to, a report containing a detailed aging of all
accounts payable by supplier, in such detail, and accompanied by such supporting
information, as the Lender may from time to time reasonably request. Upon the
Lender's request and upon the creation of any Receivables, or at such intervals
as the Lender may require, the Borrowers will provide the Lender with (a)
confirmatory assignment schedules; (b) copies of Account Debtor invoices; (c)
evidence of shipment or delivery; and (d) such further schedules, documents
and/or information regarding the Receivables as the Lender may reasonably
require. The items to be provided under this subsection shall be in form
satisfactory to the Lender, and certified as true and correct by a Responsible
Officer, and delivered to the Lender from time to time solely for the Lender's
convenience in maintaining records of the Collateral. Any Borrower's failure to
deliver any of such items to the Lender shall not affect, terminate, modify, or
otherwise limit the Liens of the Lender in the Collateral.
2.1.5 Revolving Credit Note.
----------------------
The obligation of the Borrowers to pay the Revolving Credit,
with interest, shall be evidenced by a promissory note (as from time to time
extended, amended, restated, supplemented or otherwise modified, the "Revolving
Credit Note") substantially in the form of EXHIBIT B attached hereto and made a
---------
part hereof, with appropriate insertions. The Revolving Credit Note shall be
dated as of the Closing Date, shall be payable to the order of the Lender at the
times provided in the Revolving Credit Note, and shall be in the principal
amount of the Revolving Credit Committed Amount. Each of the Borrowers
acknowledges and agrees that, if the outstanding principal balance of the
Revolving Credit outstanding from time to time exceeds the face amount of the
Revolving Credit Note, the excess shall bear interest at the rates provided from
time to time for advances under the Revolving Credit evidenced by the Revolving
Credit Note and shall be payable, with accrued interest, within two Business
Days of DEMAND. The Revolving Credit Note shall not operate as a novation of
any of the Obligations or nullify, discharge, or release any such Obligations or
the continuing contractual relationship of the parties hereto in accordance with
the provisions of this Agreement.
2.1.6 Mandatory Prepayments of Revolving Credit.
------------------------------------------
The Borrowers shall make the mandatory prepayments (each a
"Revolving Credit Mandatory Prepayment" and collectively, the "Revolving Credit
Mandatory Prepayments") of the Revolving Credit at any time and from time to
time in such amounts requested by the Lender pursuant to Section 2.1.3
(Borrowing Base) in order to cover any Borrowing Base Deficiency.
23
2.1.7 Optional Prepayments of Revolving Credit.
-----------------------------------------
The Borrowers shall have the option at any time and from time
to time to prepay (each a "Revolving Credit Optional Prepayment" and
collectively the "Revolving Credit Optional Prepayments") advances under the
Revolving Credit, in whole or in part without premium or penalty, other than any
sums due under Section 2.4.4 with respect to such prepayment.
2.1.8 The Collateral Account.
-----------------------
The Borrowers will deposit, or cause to be deposited, all
Items of Payment to a bank account designated by the Lender and from which the
Lender alone has power of access and withdrawal (the "Collateral Account"). Each
deposit shall be made not later than the next Business Day after the date of
receipt of the Items of Payment. The Items of Payment shall be deposited in
precisely the form received, except for the endorsements of the Borrowers where
necessary to permit the collection of any such Items of Payment, each Borrower
hereby agreeing to make such endorsement. In the event any Borrower shall fail
to do so, the Lender is hereby authorized by each Borrower to make the
endorsement in the name of such Borrower. Prior to such a deposit, none of the
Borrowers will not commingle any Items of Payment with any of the other funds or
property of any other Borrower, but will hold them separate and apart in trust
and for the account of the Lender.
In addition, if so directed by the Lender, the Borrowers shall
direct the mailing of all Items of Payment from its Account Debtors to a post-
office box designated by the Lender, or to such other additional or replacement
post-office boxes pursuant to the request of the Lender from time to time
(collectively, the "Lockbox"). The Lender shall have unrestricted and exclusive
access to the Lockbox.
Each Borrower hereby authorizes the Lender to inspect all
Items of Payment, endorse all Items of Payment in the name of each Borrower, and
deposit Items of Payment in the Collateral Account. The Lender reserves the
right, exercised in its sole and absolute discretion from time to time, to
provide to the Collateral Account credit prior to final collection of an Item of
Payment and to disallow credit for any Item of Payment which is unsatisfactory
to the Lender. However, if the Lender disallows credit for any Item of Payment,
the Lender will give the Company notice to that effect and will, upon request,
release such Item of Payment to the Company. In the event Items of Payment are
returned to the Lender for any reason whatsoever, the Lender may, in the
exercise of its discretion from time to time, forward such Items of Payment a
second time. Any returned Items of Payment shall be charged back to the
Collateral Account, the Revolving Loan Account, or other account, as
appropriate.
The Lender will apply the whole or any part of the collected
funds credited to the Collateral Account against the Revolving Credit (or with
respect to Items of Payment which are not proceeds of accounts or inventory or
after a Default or Event of Default, against any of the Obligations) or credit
such collected funds to the depository account of the Borrowers with the Lender
(or an Affiliate of the Lender), the order and method of such application to be
in the sole discretion of the Lender, provided, however, that if any collected
funds are credited to the Collateral Account at a time when there are no
outstanding and unpaid Obligations, the Lender will, on the day the funds are so
credited, credit them to the depository
24
account of a Borrower with the Lender (or an Affiliate of the Lender) or to such
other account as the Company has specified for the purpose, and prior to the
occurrence and continuance of any Default or Event of Default, the Lender will
apply collected funds, first toward the payment of amounts outstanding under
Base Rate Loans, and then toward payment of amounts outstanding under Eurodollar
Loans, provided, however, that unless directed to by the Company in writing, the
Lender will not apply payments to the Eurodollar Loans prior to the last day of
any Interest Period.
2.1.9 Revolving Loan Account.
------------------------
The Lender will establish and maintain a loan account on its
books (the "Revolving Loan Account") to which the Lender will (a) debit (i) the
-----
principal amount of each advance under the Revolving Credit made by the Lender
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Credit as and when due, and (iii) any other amounts due and payable by
the Borrowers to the Lender from time to time under the provisions of this
Agreement in connection with the Revolving Credit, including, without
limitation, Enforcement Costs, Fees, late charges, and service, collection and
audit fees, as and when due and payable, and (b) credit all payments made by the
------
Borrowers to the Lender on account of the Revolving Credit as of the date made
including, without limitation, funds credited to the Revolving Loan Account from
the Collateral Account. All credit entries to the Revolving Loan Account are
conditional and shall be readjusted as of the date made if final and
indefeasible payment is not received by the Lender in cash or solvent credits.
The Borrowers hereby promise to pay to the order of the Lender, within two (2)
Business Days after DEMAND, an amount equal to the excess, if any, of all debit
entries over all credit entries recorded in the Revolving Loan Account under the
provisions of this Agreement. Any and all periodic or other statements or
reconciliations, and the information contained in those statements or
reconciliations, of the Revolving Loan Account shall be final, binding and
conclusive upon the Borrowers in all respects, absent manifest error, unless the
Lender receives specific written objection thereto from the Borrowers within
thirty (30) Business Days after such statement or reconciliation shall have been
sent by the Lender.
2.1.10 Revolving Credit Unused Line Fee.
---------------------------------
The Borrowers shall pay to the Lender a monthly revolving
credit facility fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount equal to thirty
basis points (.30%) per annum on the average daily unused and undisbursed
portion of the Revolving Credit Committed Amount in effect from time to time
accruing during each calendar month. The accrued and unpaid portion of the
Revolving Credit Unused Line Fee shall be paid by the Borrowers to the Lender on
the first day of each month, commencing on the first such date following the
date hereof, and on the Revolving Credit Termination Date.
2.1.11 Early Termination Fee.
----------------------
In the event of the termination by, or on behalf of, the
Borrowers, of the Revolving Credit Commitment, the Borrowers shall pay a fee
(the "Early Termination Fee") equal to the following amounts at the following
times:
25
Period Early Termination Fee
------ ---------------------
Closing Date, through and including, 2% of the Revolving Credit
August 8, 2001 Committed Amount
August 9, 2001 through and including, 1% of the Revolving Credit
August 8, 2002 Committed Amount
August 9, 2002 through and including, 1/2% of the Revolving Credit
August 8, 2003 Committed Amount
Payment of the Revolving Credit in whole or in part by or on behalf of
the Borrowers, by court order or otherwise, following and as a result of the
institution of any bankruptcy proceeding by or against the Borrowers, shall be
deemed to be a prepayment of the Revolving Credit subject to the Early
Termination Fee provided in this subsection.
Section 2.2 The Letter of Credit Facility.
------------------------------
2.2.1 Letters of Credit.
------------------
Subject to and upon the provisions of this Agreement, and as a
part of the Revolving Credit Commitment, the Borrower may, upon the prior
approval of the Lender, obtain standby letters of credit (as the same may from
time to time be amended, supplemented or otherwise modified, each a "Letter of
Credit" and collectively the "Letters of Credit") from the Lender from time to
time from the Closing Date until the Business Day preceding the Revolving Credit
Termination Date. The Borrower will not be entitled to obtain a Letter of Credit
hereunder unless (a) after giving effect to the request, the outstanding
principal balance of the Revolving Credit and of the Letter of Credit
Obligations would not exceed the lesser of (i) the Revolving Credit Committed
Amount, or (ii) the most current Borrowing Base and (b) the sum of the aggregate
face amount of the then outstanding Letters of Credit (including the face amount
of the requested Letter of Credit) does not exceed Ten Million Dollars
($10,000,000).
2.2.2 Letter of Credit Fees.
----------------------
The Borrowers shall pay to the Lender, a letter of credit fee
(each a "Letter of Credit Fee" and collectively the "Letter of Credit Fees") in
an amount equal to two percent (2%) per annum of the amount of the Letter of
Credit. Such Letter of Credit Fees shall be paid monthly in arrears on the first
day of the first month after the opening of the Letter of Credit and on the
first day of each month thereafter. In addition, the Borrower shall pay to the
Lender any and all additional issuance, negotiation, processing, transfer or
other fees to the extent and as and when required by the provisions of any
Letter of Credit Agreement; such additional fees are included in and a part of
the "Fees" payable by the Borrower under the provisions of this Agreement.
Subsequent to an Event of Default, the Letter of Credit Fee shall be increased
to the Post-Default Rate on the face amount of each Letter of Credit.
2.2.3 Terms of Letters of Credit.
---------------------------
Each Letter of Credit shall (a) be opened pursuant to a Letter
of Credit Agreement, and (b) expire on a date not later than the Business Day
preceding the Revolving Credit Expiration Date; provided, however, if any Letter
of Credit does have an expiration date later than the Business Day preceding the
Revolving Credit Termination Date, as of the Business Day preceding the
Revolving Credit Termination Date an advance of the Revolving Credit
26
Facility shall be made by the Lender in the face amount of such Letter of Credit
(or Letters of Credit) and the proceeds thereof shall be deposited in an account
titled in the name of the Lender as trustee for the Borrower, which account will
bear interest in accordance with the Lender's standard procedures and practices
for escrow accounts. The proceeds of the trustee account referred to in the
immediately preceding sentence shall be held as collateral for the Letter of
Credit (or Letters of Credit) and in the event of a draw under the Letter of
Credit (or Letters of Credit), used to pay any such draw. The balance remaining
in such account after the expiration of such Letter of Credit (or Letters of
Credit) and the indefeasible repayment in full of the Obligations will be
released to an account of the Company's with the Lender specified by the
Company.
The aggregate face amount of all Letters of Credit at any one
time outstanding and issued by the Lender pursuant to the provisions of this
Agreement, plus the amount of any unpaid Letter of Credit Fees accrued or
scheduled to accrue thereon, and less the aggregate amount of all drafts issued
under or purporting to have been issued under such Letters of Credit that have
been paid by the Lender, is herein called the "Outstanding Letter of Credit
Obligations".
Except where an advance is made as provided above for a Letter
of Credit having an expiration date beyond the Revolving Credit Termination
Date, if the Lender makes payment under a draft presented under a Letter of
Credit and not otherwise reimbursed by the Borrowers on the date such
reimbursement is due under this Agreement or the relevant Letter of Credit
Documents, provided no Default or Event of Default has occurred and is then
continuing and further provided, that after making an advance in the amount of
such draft the outstanding Obligations will not exceed the Borrowing Base, then
the amount of such draft shall automatically become an advance under the
Revolving Credit Facility bearing interest at the Base Rate, and the Lender will
apply the proceeds of such advance to the repayment on such date of the draft
presented for payment under such Letter of Credit.
2.2.4 Procedure for Letters of Credit.
--------------------------------
The Borrower shall give the Lender written notice at least
three (3) Business Days prior to the date on which a Letter of Credit is
requested to be opened of its request for a Letter of Credit. Such notice shall
be accompanied by a duly executed and delivered Letter of Credit Agreement. Upon
receipt of the Letter of Credit Agreement, the Lender shall process such Letter
of Credit Agreement in accordance with its customary procedures and open such
Letter of Credit on the Business Day specified in such notice.
2.2.5 Change in Law; Increased Cost.
------------------------------
If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority charged with
the administration thereof shall either (a) impose, modify or deem applicable
any reserve, special deposit or similar requirement against Letters of Credit
issued by the Lender, or (b) impose on the Lender any other condition regarding
this Agreement or any Letter of Credit, and the result of any event referred to
in clauses (a) or (b) above shall be to increase the cost to the Lender of
issuing, maintaining or extending the Letter of Credit or the cost to the Lender
of funding any obligation under or in connection with the Letter of Credit,
then, upon demand by the Lender, accompanied by a
27
statement in reasonable detail explaining the nature and calculation of the
increased cost, the Borrower shall immediately pay to the Lender from time to
time as specified by the Lender, additional amounts which shall be sufficient to
compensate the Lender for such increased cost, together with interest on each
such amount from the date demanded until payment in full thereof at a rate per
annum equal to the then highest current rate of interest on the Revolving
Credit. A certificate as to such increased cost incurred by the Lender,
submitted by the Lender to the Borrower, shall be conclusive, absent manifest
error.
Section 2.3 General Financing Provisions.
-----------------------------
2.3.1 Borrowers' Representatives.
---------------------------
The Borrowers hereby represent and warrant to the Lender that
each of them will derive benefits, directly and indirectly, from each advance
under the Revolving Credit Facility, both in their separate capacity and as a
member of the integrated group to which each of the Borrowers belong, and
because the successful operation of the integrated group is dependent upon the
continued successful performance of the functions of the integrated group as a
whole, because (a) the terms of the consolidated financing provided under this
Agreement are more favorable than otherwise would be obtainable by the Borrowers
individually, and (b) the Borrowers' additional administrative and other costs
and reduced flexibility associated with individual financing arrangements which
would otherwise be required if obtainable would substantially reduce the value
to the Borrowers of the financing. The Borrowers in the discretion of their
respective managements are to agree among themselves as to the allocation of the
proceeds of each advance made under the Revolving Credit, provided, however,
that the Borrowers shall be deemed to have represented and warranted to the
Lender at the time of allocation that each benefit and use of proceeds is a
Permitted Use.
For administrative convenience, each Borrower hereby
irrevocably appoints the Company as the Borrower's attorney-in-fact, with power
of substitution (with the prior written consent of the Lender in the exercise of
its sole and absolute discretion), in the name of the Company or in the name of
any Borrower or otherwise to take any and all actions with respect to the this
Agreement, the other Financing Documents, the Obligations and/or the Collateral
(including, without limitation, the proceeds thereof) as the Company may so
elect from time to time, including, without limitation, actions to (i) request
advances under the Revolving Credit, and direct the Lender to disburse or credit
the proceeds of any advance made under the Revolving Credit directly to an
account of the Company, any one or more of the Borrowers or otherwise, which
direction shall evidence the making of such advance under the Revolving Credit
and shall constitute the acknowledgment by each of the Borrowers of the receipt
of the proceeds of such advance under the Revolving Credit, (ii) enter into,
execute, deliver, amend, modify, restate, substitute, extend and/or renew this
Agreement, any Additional Borrower Joinder Supplement, any other Financing
Documents, security agreements, mortgages, deposit account agreements,
instruments, certificates, waivers, letter of credit applications, releases,
documents and agreements from time to time, and (iii) endorse any check or other
item of payment in the name of the Borrower or in the name of the Company. The
foregoing appointment is coupled with an interest, cannot be revoked without the
prior written consent of the Lender, and may be exercised from time to time
through the Company's duly authorized officer, officers or other Person or
Persons designated by the Company to act from time to time on behalf of the
Company.
28
Each of the Borrowers hereby irrevocably authorizes the Lender
(in its sole discretion) to make advances under the Revolving Credit to the
Company pursuant to the provisions of this Agreement upon the written, oral or
telephone request of any one or more of the Persons who is from time to time a
Responsible Officer of the Company under the provisions of the most recent
certificate of corporate resolutions and/or incumbency of the Company on file
with the Lender.
The Lender assumes no responsibility or liability for any
errors, mistakes, and/or discrepancies (other than those due solely to the
Lender's gross negligence or willful misconduct) in the oral, telephonic,
written or other transmissions of any instructions, orders, requests and
confirmations between the Lender and the Borrowers in connection with the Credit
Facilities, any advance under the Revolving Credit or any other transaction in
connection with the provisions of this Agreement. Without implying any
limitation on the joint and several nature of the Obligations, the Lender agrees
that, notwithstanding any other provision of this Agreement, the Borrowers may
create reasonable inter-company indebtedness between or among the Borrowers with
respect to the allocation of the benefits and proceeds of the advances and
Credit Facilities under this Agreement. The Borrowers agree among themselves,
and the Lender consents to that agreement, that each Borrower shall have rights
of contribution from all of the other Borrowers to the extent such Borrower
incurs Obligations in excess of the proceeds of the Revolving Credit received
by, or allocated to purposes for the direct benefit of, such Borrower. All such
indebtedness and rights shall be, and are hereby agreed by the Borrowers to be,
subordinate in priority and payment to the indefeasible repayment in full in
cash of the Obligations, and, unless the Lender agrees in writing otherwise,
shall not be exercised or repaid in whole or in part until all of the
Obligations have been indefeasibly paid in full in cash. The Borrowers agree
that all of such inter-company indebtedness and rights of contribution are part
of the Collateral and secure the Obligations. Each Borrower hereby waives all
rights of counterclaim, recoupment and offset between or among the Borrowers
arising on account of that indebtedness and otherwise. Each Borrower shall not
evidence the inter-company indebtedness or rights of contribution by note or
other instrument, and shall not secure such indebtedness or rights of
contribution with any Lien or security. Notwithstanding anything contained in
this Agreement to the contrary, the amount covered by each Borrower under the
Obligations (including, without limitation, Section 2.3.12 (Guaranty)) shall be
limited to an aggregate amount (after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Borrower in respect of the Obligations) which, together with other amounts
owing by such Borrowers to the Lender under the Obligations, is equal to the
largest amount that would not be subject to avoidance under the Bankruptcy Code
or any applicable provisions of any applicable, comparable state or other Laws.
2.3.2 Use of Proceeds of the Revolving Credit.
----------------------------------------
The proceeds of each advance under the Revolving Credit shall
be used by the Borrowers for Permitted Uses, and for no other purposes except as
may otherwise be agreed by the Lender in writing. The Borrowers shall use the
proceeds of the Revolving Credit promptly.
29
2.3.3 Origination Fee.
----------------
The Borrower shall pay to the Lender on or before the Closing
Date a loan origination fee (the "Origination Fee") in the amount of Two Hundred
Twenty Five Thousand Dollars ($225,000), which fee has been fully earned and is
non-refundable, One Hundred Seventy Five Thousand Dollars ($175,000) of which
has been paid prior to the Closing Date.
2.3.4 Administration and Audit Fees.
------------------------------
The Borrower shall pay to the Lender an annual Administration
and Audit fee in the amount of Forty Thousand Dollars ($40,000) per annum, plus
any and all reasonable out of pocket expenses and travel time incurred by the
Lender (collectively, the "Administration and Audit Fees" and individually a
"Administration and Audit Fee"), which Administration and Audit Fees shall be
payable monthly in arrears on the first Business Day of each month commencing on
the first such date following the Closing Date, and continuing until the last
such date prior to which all Obligations arising out of, or under, the Credit
Facilities then outstanding have been paid in full.
2.3.5 Computation of Interest and Fees.
---------------------------------
All applicable Fees and interest shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. Any change in
the interest rate on any of the Obligations resulting from a change in the Prime
Rate shall become effective as of the opening of business on the day on which
such change in the Prime Rate is announced.
2.3.6 Maximum Interest Rate.
----------------------
In no event shall any interest rate provided for hereunder
exceed the maximum rate permissible for corporate borrowers under applicable law
for loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued under the terms of this Agreement is less than the
total amount of interest which would, but for this Section, have been paid or
accrued if the interest rates otherwise set forth in this Agreement had at all
times been in effect, then the Borrowers shall, to the extent permitted by
applicable law, pay the Lender, an amount equal to the excess of (a) the lesser
of (i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rates otherwise set forth in this Agreement, at
all times, been in effect over (b) the amount of interest actually paid or
accrued under this Agreement. In the event that a court determines that the
Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations outstanding, the
Lender shall refund to the Borrowers such excess.
30
2.3.7 Payments.
---------
All payments of the Obligations, including, without
limitation, principal, interest, Prepayments, and Fees, shall be paid by the
Borrowers without setoff or counterclaim to the Lender (except as otherwise
provided herein) at the Lender's office specified in Section 8.1 (Notices) in
immediately available funds not later than noon (Eastern Standard Time) on the
due date of such payment. All payments received by the Lender after such time
shall be deemed to have been received by the Lender for purposes of computing
interest and Fees and otherwise as of the next Business Day. Payments shall not
be considered received by the Lender until such payments are paid to the Lender
in immediately available funds.
2.3.8 Liens; Setoff.
--------------
The Borrowers hereby grant to the Lender a continuing Lien for
all of the Obligations upon any and all monies, securities, and other property
of the Borrowers and the proceeds thereof, now or hereafter held or received by
or in transit to, the Lender, and/or any Affiliate of the Lender, from or for
the Borrowers, and also upon any and all deposit accounts (general or special)
and credits of the Borrowers, if any, with the Lender or any Affiliate of the
Lender, at any time existing, excluding any deposit accounts held by the
Borrowers in their capacity as trustee for Persons who are not Borrowers or
Affiliates of the Borrowers. Without implying any limitation on any other rights
the Lender may have under the Financing Documents or applicable Laws, during the
continuance of an Event of Default, the Lender is hereby authorized by the
Borrowers at any time and from time to time, without notice to the Borrowers, to
set off, appropriate and apply any or all items hereinabove referred to against
all Obligations then outstanding (whether or not then due), all in such order
and manner as shall be determined by the Lender in its sole and absolute
discretion.
2.3.9 Requirements of Law.
--------------------
In the event that the Lender shall have determined in good
faith that (a) the adoption of any Capital Adequacy Regulation, or (b) any
change in any Capital Adequacy Regulation or application thereof or (c)
compliance by the Lender or any corporation controlling the Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or Governmental Authority, does or shall have the
effect of reducing the rate of return on the capital of the Lender or any
corporation controlling the Lender, as a consequence of the obligations of the
Lender hereunder to a level below that which the Lender or any corporation
controlling the Lender would have achieved but for such adoption, change or
compliance (taking into consideration the policies of the Lender and the
corporation controlling the Lender, with respect to capital adequacy) by an
amount deemed by the Lender to be material, then from time to time, after
submission by the Lender to the Borrowers of a written request therefor and a
statement of the basis for such determination, the Borrowers shall pay to the
Lender such additional amount or amounts in order to compensate for such
reduction. However, no such amount shall be payable in respect of any such
adoption, change or compliance occurring more than ninety (90) days before the
request from the Lender and a similar request for similar payments shall have
been made by the Lender to other borrowers having offices in the United States.
31
2.3.10 Funds Transfer Services.
------------------------
(a) The Borrowers have requested that the Lender and
its Affiliates make available to the Borrowers electronic funds transfer
services and related security measures in connection with the Obligations. A
copy of the Lender's current Wire Transfer Procedures, including the Security
Procedures, is attached to this Agreement as EXHIBIT C. Each Borrower
---------
acknowledges and agrees that all electronic funds transfers made by the Lender
or any Affiliate of the Lender to, or for the account of, any Borrower shall be
governed by, and subject to, the Wire Transfer Procedures and the Security
Procedures in effect from time to time. The Borrowers and the Lender agree that
the current Wire Transfer Procedures and the Security Procedures are
commercially reasonable. Each Borrower further acknowledges and agrees, however,
that the full scope of the Security Procedures which the Lender and its
Affiliates offer and strongly recommend for electronic funds transfers is
available only if the Company communicates directly with the Lender or its
Affiliate, as applicable, in accordance with and as required by the Wire
Transfer Procedures and the Security Procedures. If the Company or any Borrower
attempts to communicate with the Lender or any Affiliate of the Lender by any
other method or otherwise does not communicate with the Lender and/or its
Affiliate, as appropriate, in accordance with the Wire Transfer Procedures and
the Security Procedures, the Lender and/or its Affiliate, as applicable, shall
not be required to execute the instructions of the Company or any such Borrower,
but if the Lender or such Affiliate, as applicable, does so, the Borrowers will
be deemed to have refused and waived the Security Procedures that the Lender or
its Affiliate, as applicable, offers and strongly recommends, and the Borrowers
will be bound by any funds transfer, whether or not authorized, which is issued
in any Borrower's name and accepted by the Lender or any Affiliate, as
applicable, in good faith. The Lender or its Affiliate, as applicable, may
modify the Wire Transfer Procedures including, without limitation, the Security
Procedures at such time or times and in such manner as the Lender and/or any
Affiliate of the Lender, as applicable, in its or their sole and absolute
discretion, deems appropriate to meet then prevailing standards of good banking
practice. The Lender shall notify the Company of any material change or
modification to the Wire Transfer Procedures and/or the Security Procedures. By
continuing to use the wire transfer services of the Lender and/or any Affiliate
of the Lender following notice to the Company of any such change or modification
to the Wire Transfer Procedures and/or the Security Procedures, the Borrowers
shall be deemed automatically to have agreed to the Wire Transfer Procedures and
the Security Procedures, as changed and/or modified and to have further agreed
that the Wire Transfer Procedures and the Security Procedures, as changed and/or
modified, are likewise commercially reasonable. The Borrowers further agree to
establish and maintain procedures to safeguard the Security Procedures and any
information related thereto. Neither the Lender nor any Affiliate of the Lender
is responsible for detecting any error in any payment order sent by the Company
to the Lender or any Affiliate of the Lender.
(b) The Lend and its Affiliates, as applicable, will
generally use the Fedwire funds transfer system for domestic funds transfers,
and the funds transfer system operated by the Society for Worldwide
International Financial Telecommunication (SWIFT) for international funds
transfers. International funds transfers may also be initiated through the
Clearing House InterBank Payment System (CHIPs) or international cable. However,
the Lender and/or its Affiliates, as applicable, may use any means and routes
that the Lender or any such Affiliate, as applicable, in its sole discretion,
may consider suitable for the transmission of funds.
32
Each payment order, or cancellation thereof, carried out through a funds
transfer system or a clearinghouse will be governed by all applicable funds
transfer system rules and clearing house rules and clearing arrangements,
whether or not the Lender or any Affiliate, as applicable, is a member of the
system, clearinghouse or arrangement and the Borrower acknowledges that the
right of the Lender or any Affiliate, as applicable, to reverse, adjust, stop
payment or delay posting of an executed payment order is subject to the Laws,
regulations, rules, circulars and arrangements described herein.
2.3.11 ACH Transactions.
-----------------
The Company may request and the Lender or its Affiliates may,
in their sole and absolute discretion, provide ACH Transactions although the
Company is not required to do so. In the event the Company requests Lender or
its Affiliates to procure ACH Transactions, then the Borrowers agrees to jointly
and severally indemnify and hold the Lender or its Affiliates harmless from any
and all obligations now or hereafter owing to the Lender or its Affiliates in
connection with such ACH Transactions. The Borrowers agree to pay the Lender or
its Affiliates all amounts owing to the Lender or its Affiliates pursuant to ACH
Transactions. In the event the Borrowers shall not have paid to the Lender or
its Affiliates such amounts, the Lender may cover such amounts by an advance
under the Revolving Credit, which advance shall be deemed to have been requested
by the Borrowers. The Borrowers acknowledge and agree that the obtaining of ACH
Transactions from the Lender or its Affiliates (a) is in the sole and absolute
discretion of the Lender or its Affiliates and (b) is subject to all rules and
regulations of the Lender or its Affiliates.
2.3.12 Guaranty.
---------
(a) Each Borrower hereby unconditionally and
irrevocably, guarantees to the Lender:
(i) the due and punctual payment in full (and
not merely the collectibility) by the other Borrowers of the
Obligations, including unpaid and accrued interest thereon, in each
case when due and payable, all according to the terms of this
Agreement, the Notes and the other Financing Documents;
(ii) the due and punctual payment in full (and
not merely the collectibility) by the other Borrowers of all other
sums and charges which may at any time be due and payable in
accordance with this Agreement, the Notes or any of the other
Financing Documents;
(iii) the due and punctual performance by the
other Borrowers of all of the other terms, covenants and conditions
contained in the Financing Documents; and
(iv) all the other Obligations of the other
Borrowers.
33
(b) The obligations and liabilities of each Borrower as a
guarantor under this Section 2.3.12 shall be absolute and unconditional and
joint and several, irrespective of the genuineness, validity, priority,
regularity or enforceability of this Agreement, any of the Notes or any of the
Financing Documents or any other circumstance which might otherwise constitute a
legal or equitable discharge of a surety or guarantor. Each Borrower in its
capacity as a guarantor expressly agrees that the Lender may, in its sole and
absolute discretion, without notice to or further assent of such Borrower and
without in any way releasing, affecting or in any way impairing the joint and
several obligations and liabilities of such Borrower as a guarantor hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of the
Financing Documents;
(ii) modify, amend, change or terminate any
provisions of any of the Financing Documents;
(iii) grant extensions or renewals of or with respect
to the Credit Facilities, the Notes or any of the other Financing
Documents;
(iv) effect any release, subordination, compromise or
settlement in connection with this Agreement, any of the Notes or any
of the other Financing Documents;
(v) agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or any other
collateral for the Revolving Credit or to the subordination of any
lien or security interest therein;
(vi) make advances for the purpose of performing any
term, provision or covenant contained in this Agreement, any of the
Notes or any of the other Financing Documents with respect to which
the Borrowers shall then be in default;
(vii) make future advances pursuant to the Financing
Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise
transfer the Revolving Credit Commitment, the Obligations, the Notes,
any of the other Financing Documents or any interest therein, all as
and to the extent permitted by the provisions of this Agreement;
(ix) deal in all respects with the other Borrowers as
if this Section 2.3.12 were not in effect;
34
(x) effect any release, compromise or settlement
with any of the other Borrowers, whether in their capacity as a
Borrower or as a guarantor under this Section 2.3.12, or any other
guarantor; and
(xi) provide debtor-in-possession financing or allow
use of cash collateral in proceedings under the Bankruptcy Code, it
being expressly agreed by all Borrowers that any such financing and/or
use would be part of the Obligations.
(c) The obligations and liabilities of each Borrower, as
guarantor under this Section 2.3.12, shall be primary, direct and immediate,
shall not be subject to any counterclaim, recoupment, set off, reduction or
defense based upon any claim that a Borrower may have against any one or more of
the other Borrowers, the Lender, and/or any other guarantor and shall not be
conditional or contingent upon pursuit or enforcement by the Lender of any
remedies it may have against the Borrowers with respect to this Agreement, the
Notes or any of the other Financing Documents, whether pursuant to the terms
thereof or by operation of law. Without limiting the generality of the
foregoing, the Lender shall not be required to make any demand upon any of the
Borrowers, or to sell the Collateral or otherwise pursue, enforce or exhaust its
remedies against the Borrowers or the Collateral either before, concurrently
with or after pursuing or enforcing its rights and remedies hereunder. Any one
or more successive or concurrent actions or proceedings may be brought against
each Borrower under this Section 2.3.12, either in the same action, if any,
brought against any one or more of the Borrowers or in separate actions or
proceedings, as often as the Lender may deem expedient or advisable. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or
more of the Borrowers, any other guarantor or any obligor under any of the
Financing Documents, arising out of, or by virtue of, any bankruptcy,
arrangement, reorganization or similar proceeding for relief of debtors under
federal or state law initiated by or against any one or more of the Borrowers,
in their respective capacities as borrowers and guarantors under this Section
2.3.12, or under any of the Financing Documents shall not modify, limit, lessen,
reduce, impair, discharge, or otherwise affect the liability of each Borrower
under this Section 2.3.12 in any manner whatsoever, and this Section 2.3.12
shall remain and continue in full force and effect. It is the intent and purpose
of this Section 2.3.12 that each Borrower shall and does hereby waive all rights
and benefits which might accrue to any other guarantor by reason of any such
proceeding, and the Borrowers agree that they shall be liable for the full
amount of the obligations and liabilities under this Section 2.3.12, regardless
of, and irrespective to, any modification, limitation or discharge of the
liability of any one or more of the Borrowers, any other guarantor or any
obligor under any of the Financing Documents, that may result from any such
proceedings.
(d) Each Borrower, as guarantor under this Section 2.3.12,
hereby unconditionally, jointly and severally, irrevocably and expressly waives:
(i) presentment and demand for payment of the
Obligations and protest of non-payment;
(ii) notice of acceptance of this Section 2.3.12 and
of presentment, demand and protest thereof;
35
(iii) notice of any default hereunder or under
the Notes or any of the other Financing Documents and notice of all
indulgences;
(iv) notice of any increase in the amount of any
portion of or all of the indebtedness guaranteed by this Section
2.3.12;
(v) demand for observance, performance or
enforcement of any of the terms or provisions of this Section 2.3.12,
the Notes or any of the other Financing Documents;
(vi) all errors and omissions in connection with
the Lender's administration of all indebtedness guaranteed by this
Section 2.3.12, except errors and omissions resulting from the
Lender's acts of willful misconduct or gross negligence;
(vii) any right or claim of right to cause a
marshalling of the assets of any one or more of the other Borrowers;
(viii) any act or omission of the Lender which
changes the scope of the risk as guarantor hereunder; and
(ix) all other notices and demands otherwise
required by law which the Borrower may lawfully waive.
Section 2.4 Interest
--------
2.4.1 Applicable Interest Rates.
--------------------------
(a) Each advance under the Revolving Credit shall bear
interest until maturity (whether by acceleration, declaration, extension or
otherwise) at either the Base Rate or the Eurodollar Rate, as selected and
specified by the Borrowers in an Interest Rate Election Notice furnished to the
Lender in accordance with the provisions of Section 2.4.2(e), or as otherwise
determined in accordance with the provisions of this Section 2.4.
(b) Notwithstanding the foregoing, following the
occurrence and during the continuance of an Event of Default, at the option of
the Lender, all advances under the Revolving Credit and all other Obligations
shall bear interest at the Post-Default Rate.
(c) The Applicable Margin for (i) Eurodollar Loans
shall be 300 basis points per annum, and (ii) Base Rate Loans shall be zero (0)
basis points per annum.
2.4.2 Selection of Interest Rates.
----------------------------
(a) The Borrowers, through the Company, may select the
initial Applicable Interest Rate or Applicable Interest Rates to be charged on
the advances of the Revolving Credit.
36
(b) From time to time after the date of this Agreement
as provided in this Section, by a proper and timely Interest Rate Election
Notice furnished to the Lender in accordance with the provisions of Section
2.4.2(e), the Company may select an initial Applicable Interest Rate or
Applicable Interest Rates for any advances on the Revolving Credit or may
convert the Applicable Interest Rate and, when applicable, the Interest Period,
for any existing advance on the Revolving Credit to any other Applicable
Interest Rate or, when applicable, any other Interest Period.
(c) The Company's selection of an Applicable Interest
Rate and/or an Interest Period, the Company's election to convert an Applicable
Interest Rate and/or an Interest Period to another Applicable Interest Rate or
Interest Period, and any other adjustments in an interest rate are subject to
the following limitations:
(i) the Company shall not at any time select or
change to an Interest Period that extends beyond the Revolving Credit
Expiration Date;
(ii) except as otherwise provided in Section
2.4.4 (Indemnity), no change from the Eurodollar Rate to the Base Rate
shall become effective on a day other than a Business Day and on a day
which is the last day of the then current Interest Period, no change
of an Interest Period shall become effective on a day other than the
last day of the then current Interest Period, and no change from the
Base Rate to the Eurodollar Rate shall become effective on a day other
than a day which is a Eurodollar Business Day;
(iii) any Applicable Interest Rate change for any
advance under the Revolving Credit to be effective on a date on which
any principal payment on account of such advance is scheduled to be
paid shall be made only after such payment shall have been made;
(iv) no more than five (5) different Eurodollar
Rates may be outstanding at any time and from time to time with
respect to the advance;
(v) the first day of each Interest Period shall
be a Eurodollar Business Day;
(vi) as of the effective date of a selection,
there shall not exist an Event of Default; and
(vii) the minimum principal amount of a
Eurodollar Loan shall be One Million Dollars ($1,000,000).
(d) If a request for an advance under the Revolving
Credit is not accompanied by an Interest Rate Election Notice or does not
otherwise include a selection of an Applicable Interest Rate and, if applicable,
an Interest Period, or if, after having made a
37
selection of an Applicable Interest Rate and, if applicable, an Interest Period,
the Borrowers fail or are not otherwise entitled under the provisions of this
Agreement to continue such Applicable Interest Rate or Interest Period, the
Borrowers shall be deemed to have selected the Base Rate as the Applicable
Interest Rate until such time as the Company has selected a different Applicable
Interest Rate and specified an Interest Period in accordance with, and subject
to, the provisions of this Section.
(e) The Lender will not be obligated to make advances
on the Revolving Credit, to convert the Applicable Interest Rate on advances to
another Applicable Interest Rate, or to change Interest Periods, unless the
Lender shall have received an irrevocable written or telephonic notice (an
"Interest Rate Election Notice") from the Company specifying the following
information:
(i) the amount to be borrowed or converted;
(ii) a selection of the Base Rate or the
Eurodollar Rate;
(iii) the length of the Interest Period if the
Applicable Interest Rate selected is the Eurodollar Rate; and
(iv) the requested date on which such election
is to be effective.
Any telephonic notice must be confirmed in writing within
three (3) Business Days. Each Interest Rate Election Notice must be received by
the Lender not later than 12:00 noon (Eastern Standard Time) on the Business Day
of any requested borrowing or conversion in the case of a selection of the Base
Rate and not later than 12:00 noon (Eastern Standard Time) on the third Business
Day before the effective date of any requested borrowing or conversion in the
case of a selection of the Eurodollar Rate.
2.4.3 Inability to Determine Eurodollar Base Rate.
--------------------------------------------
In the event that (a) the Lender shall have determined that,
by reason of circumstances affecting the London interbank eurodollar market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Base
Rate for any requested Interest Period with respect to an advance the Borrowers
have requested to be made as or to be converted to a Eurodollar Loan or (b) the
Lender shall determine that the Eurodollar Base Rate for any requested Interest
Period with respect to an advance the Company has requested to be made as or to
be converted to a Eurodollar Loan does not adequately and fairly reflect the
cost to the Lender of funding or converting such Loan, the Lender shall give
telephonic or written notice of such determination to the Company at least one
(1) day prior to the proposed date for funding or converting such advance. If
such notice is given, any request for a Eurodollar Loan shall be made as or
converted to a Base Rate Loan. Until such notice has been withdrawn by the
Lender, the Company will not request that any advance under the Revolving Credit
be made as or converted to a Eurodollar Loan. Any such notice must be withdrawn
promptly following the cessation of the circumstances that caused such notice to
be given.
38
2.4.4 Indemnity.
----------
The Borrowers jointly and severally agree to indemnify and
reimburse the Lender and to hold the Lender harmless from any loss, cost
(including administrative costs) or expense which the Lender may sustain or
incur as a consequence of (a) a default by the Borrowers in payment when due of
the principal amount of or interest on any Eurodollar Loan, (b) the failure of
the Borrowers to make, or convert the Applicable Interest Rate of, an advance to
or at a Eurodollar Rate after the Borrowers have given a Loan Notice or an
Interest Rate Election Notice as of the date specified in such Notice and/or (c)
the making by the Borrowers of a prepayment of a Eurodollar Loan on a day which
is not the last day of the Interest Period for such Eurodollar Loan, calculated
as provided in the following section. This agreement and covenant of the
Borrowers shall survive termination or expiration of this Agreement and payment
of the other Obligations.
Contemporaneously with any prepayment of principal of a
Eurodollar Loan on a day that is not the last day for the Interest Period for
such Eurodollar Loan, a prepayment fee shall be due and payable to the Lender in
an amount equal to the product of
-------
(A) the amount so prepaid
multiplied by
-------------
(B) the difference (but not less than zero) of
--------------
(i) the constant maturity 360-day interest yield (as of the first day
of the then effective Interest Period and expressed as a decimal) for
a United States Treasury ▇▇▇▇, note, or bond (a "Treasury obligation")
selected by the Lender, in an aggregate amount comparable to the
amount prepaid, and having, as of the first day of the then effective
Interest Period, a remaining term approximately equal to the original
Interest Period,
minus
-----
(ii) the 360-day interest yield (as of the Business Day immediately
preceding the prepayment date and expressed as a decimal) on such
Treasury obligation and having, as of the Business Day immediately
preceding the prepayment date, a remaining term until maturity
approximately equal to the unexpired portion of the Interest Period,
multiplied by
-------------
(C) the quotient of
------------
(i) the number of calendar days in the unexpired portion of the
Interest Period,
divided by
----------
39
(ii) 360.
The applicable yields on the Treasury obligations described above
shall be determined based upon the Federal Reserve statistical release H.15
published for the applicable determination dates set forth above. Any Treasury
obligation selected when the related Interest Period is one year or less shall
be United States Treasury Bills. The Lender shall not be obligated or required
to have actually reinvested the prepaid amount of the Eurodollar Loan in any
such Treasury obligation as a condition precedent to the Borrowers being
obligated to pay a prepayment fee as outlined above. The Lender shall not be
obligated to accept any prepayment of principal unless it is accompanied by the
prepayment fee, if any, due in connection therewith as calculated pursuant to
the provisions of this paragraph. No prepayment fee payable in connection
herewith shall in any event or under any circumstances be deemed or construed as
a penalty.
2.4.5 Payment of Interest.
--------------------
(a) Unpaid and accrued interest on any portion of the
Revolving Credit which consists of a Base Rate Loan shall be paid monthly, in
arrears, on the first day of each calendar month, commencing on the first such
date after the date of this Agreement, and on the first day of each calendar
month thereafter, and at maturity (whether by acceleration, declaration,
extension or otherwise).
(b) Notwithstanding the foregoing, any and all unpaid and
accrued interest on any Base Rate Loan converted to a Eurodollar Loan or prepaid
shall be paid immediately upon such conversion and/or prepayment, as
appropriate.
(c) Unpaid and accrued interest on any Eurodollar Loan
shall be paid monthly and on the last Business Day of each Interest Period for
such Eurodollar Loan and at maturity (whether by acceleration, declaration,
extension or otherwise); provided, however that any and all unpaid and accrued
interest on any Eurodollar Loan prepaid prior to expiration of the then current
Interest Period for such Eurodollar Loan shall be paid immediately upon
prepayment.
ARTICLE III
THE COLLATERAL
--------------
Section 3.1 Debt and Obligations Secured.
----------------------------
All property and Liens assigned, pledged or otherwise granted under or in
connection with this Agreement (including, without limitation, those under
Section 3.2 (Grant of Liens)) or any of the Financing Documents shall secure (a)
the payment of all of the Obligations and (b) the performance, compliance with
and observance by the Borrowers of the provisions of this Agreement and all of
the other Financing Documents or otherwise under the Obligations.
40
Section 3.2 Grant of Liens.
---------------
Each of the Borrowers hereby assigns, pledges and grants to the Lender, and
agrees that the Lender shall have a perfected and continuing security interest
in, and Lien on, all of the Borrowers' Accounts, Inventory, Chattel Paper,
Documents, Instruments, Equipment and General Intangibles, and all of the
Borrowers' deposit accounts with any financial institution with which any of the
Borrowers maintains deposits, whether now owned or existing or hereafter
acquired or arising, all returned, rejected or repossessed goods, the sale or
lease of which shall have given or shall give rise to an Account or Chattel
Paper, all insurance policies relating to the foregoing, all books and records
in whatever media (paper, electronic or otherwise) recorded or stored, with
respect to the foregoing and all equipment and general intangibles necessary or
beneficial to retain, access and/or process the information contained in those
books and records, and all cash and non-cash proceeds and products of the
foregoing. Each of the Borrowers further agrees that the Lender shall have in
respect thereof all of the rights and remedies of a secured party under the
Uniform Commercial Code as well as those provided in this Agreement, under each
of the other Financing Documents and under applicable Laws.
Section 3.3 Collateral Disclosure List.
---------------------------
On or prior to the Closing Date, the Borrowers shall deliver to the Lender
a list (the "Collateral Disclosure List") which shall contain such information
with respect to each Borrower's business and real and personal property as the
Lender may require and shall be certified by a Responsible Officer of each of
the Borrowers, all in the form provided to the Borrowers by the Lender.
Promptly after demand by the Lender, the Borrowers, as appropriate, shall
furnish to the Lender an update of the information contained in the Collateral
Disclosure List at any time and from time to time as may be requested by the
Lender.
Section 3.4 Personal Property.
------------------
The Borrowers acknowledge and agree that it is the intention of the parties
to this Agreement that the Lender shall have a first priority, perfected Lien,
in form and substance satisfactory to the Lender and its counsel, on all of the
Borrowers' personal property of any kind and nature whatsoever, whether now
owned or hereafter acquired, subject only to the Permitted Liens, if any, and
excluding the Excluded Assets.
Section 3.5 Record Searches.
----------------
As of the Closing Date and thereafter at the time any Financing Document is
executed and delivered by the Borrowers pursuant to this Section, the Lender
shall have received, in form and substance satisfactory to the Lender, such Lien
or record searches with respect to all of the Borrowers and/or any other Person,
as appropriate, and the property covered by such Financing Document showing that
the Lien of such Financing Document will be a perfected first priority Lien on
the property covered by such Financing Document subject only to Permitted Liens
or to such other matters as the Lender may approve.
Section 3.6 Costs.
------
The Borrowers agree to pay, as part of the Enforcement Costs and to the
fullest extent permitted by applicable Laws, on demand all costs, fees and
expenses incurred by the Lender in
41
connection with the taking, perfection, preservation, protection and/or release
of a Lien on the Collateral.
Section 3.7 Release.
--------
Upon the indefeasible repayment in full in cash of the Obligations and
performance of all Obligations of the Borrowers and all obligations and
liabilities of each other Person, other than the Lender, under this Agreement
and all other Financing Documents, the termination and/or expiration of the
Revolving Credit Commitment and Outstanding Letter of Credit Obligations, upon
the Borrowers' request and at the Borrowers' sole cost and expense, the Lender
shall release and/or terminate any Financing Document but only if and provided
that there is no commitment or obligation (whether or not conditional) of the
Lender to re-advance amounts which would be secured thereby.
Section 3.8 Inconsistent Provisions.
------------------------
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties.
-------------------------------
The Borrowers, for themselves and for each other, represent and warrant to
the Lender, as follows:
4.1.1 Subsidiaries.
-------------
The Borrowers have the Subsidiaries listed on the EXHIBIT D
---------
attached hereto and made a part hereof and any Additional Borrowers who are
parties to this Agreement, and no others, unless such Subsidiaries have been
released from liability under this Agreement pursuant to a written agreement by
and between the Company and the Lender. Each of the Subsidiaries is a Wholly
Owned Subsidiary except as shown on EXHIBIT D, which correctly indicates the
---------
nature and amount of each Borrower's ownership interests therein.
4.1.2 Good Standing.
--------------
Each Borrower and its Subsidiaries (a) is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its incorporation, (b) has the corporate power to own its property and to carry
on its business as now being conducted, and (c) is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
4.1.3 Power and Authority.
--------------------
Each Borrower has full corporate power and authority to
execute and deliver this Agreement, and the other Financing Documents to which
it is a party, to make the borrowings under this Agreement and to incur and
perform the Obligations whether under this
42
Agreement, the other Financing Documents, all of which have been duly authorized
by all proper and necessary corporate. No consent or approval of shareholders or
any creditors of any Borrower, and no consent, approval, filing or registration
with or notice to any Governmental Authority on the part of any Borrower, is
required as a condition to the execution, delivery, validity or enforceability
of this Agreement, or any of the other Financing Documents, or the performance
by any Borrower of the Obligations.
4.1.4 Binding Agreements.
-------------------
This Agreement and the other Financing Documents executed and
delivered by the Borrowers have been properly executed and delivered and
constitute the valid and legally binding obligations of the Borrowers and are
fully enforceable against each of the Borrowers in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties, and general principles of equity regardless of
whether applied in a proceeding in equity or at law.
4.1.5 No Conflicts.
-------------
Neither the execution, delivery and performance of the terms
of this Agreement or of any of the other Financing Documents executed and
delivered by any Borrower nor the consummation of the transactions contemplated
by this Agreement will conflict with, violate or be prevented by (a) any
Borrower's charter, bylaws, operating agreement or articles of organization, as
the case may be, (b) any existing mortgage, indenture, contract or agreement
binding on any Borrower or affecting its property, or (c) any Laws.
4.1.6 No Defaults, Violations.
------------------------
(a) No Default or Event of Default has occurred and is
continuing.
(b) None of the Borrowers nor any of their respective
Subsidiaries is in default under or with respect to any obligation under any
existing mortgage, indenture, contract or agreement binding on it or affecting
its property in any respect which could result in a Material Adverse Effect.
4.1.7 Compliance with Laws.
---------------------
None of the Borrowers nor any of their respective Subsidiaries
is in violation of any applicable Laws (including, without limitation, any Laws
relating to employment practices, to environmental, occupational and health
standards and controls) or order, writ, injunction, decree or demand of any
court, arbitrator, or any Governmental Authority affecting any Borrower or any
of its properties, the violation of which, considered in the aggregate, could
result in a Material Adverse Effect.
4.1.8 Margin Stock.
-------------
None of the proceeds of the Revolving Credit will be used,
directly or indirectly, by any Borrower or any Subsidiary for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or
43
carry, any "margin stock" within the meaning of Regulation U (12 CFR Part 221),
of the Board of Governors of the Federal Reserve System or for any other purpose
which might make the transactions contemplated in this Agreement a "purpose
credit" within the meaning of Regulation U, or cause this Agreement to violate
any other regulation of the Board of Governors of the Federal Reserve System or
the Securities Exchange Act of 1934 or the Small Business Investment Act of
1958, as amended, or any rules or regulations promulgated under any of such
statutes.
4.1.9 Investment Company Act; Margin Securities.
------------------------------------------
None of the Borrowers nor any of their respective Subsidiaries is
an investment company within the meaning of the Investment Company Act of 1940,
as amended, nor is it, directly or indirectly, controlled by or acting on behalf
of any Person which is an investment company within the meaning of said Act.
None of the Borrowers nor any of their respective Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin stock" within the
meaning of Regulation U (12 CFR Part 221), of the Board of Governors of the
Federal Reserve System.
4.1.10 Litigation.
-----------
Except as otherwise disclosed on Schedule 4.1.10 attached hereto
---------------
and made a part hereof, there are no proceedings, actions or investigations
pending or, so far as any Borrower knows, threatened before or by any court,
arbitrator or any Governmental Authority which, in any one case or in the
aggregate, if determined adversely to the interests of any Borrower or any
Subsidiary, would have a Material Adverse Effect.
4.1.11 Financial Condition.
--------------------
The consolidated financial statements of the Borrowers dated May
31, 2000, are complete and correct and fairly present the financial position of
each of the Borrowers and its Subsidiaries and the results of their operations
and transactions in their surplus accounts as of the date and for the period
referred to therein and have been prepared in accordance with GAAP applied on a
consistent basis throughout the period involved. There are no liabilities,
direct or indirect, fixed or contingent, of any Borrower or any Subsidiary as of
the date of such financial statements that are not reflected therein or in the
notes thereto. To the best of each Borrower's knowledge, there has been no
material adverse change in the financial condition or operations of any Borrower
or any Subsidiary since the date of such financial statements and to the best of
such Borrowers' knowledge no such adverse change is pending. None of the
Borrowers nor any Subsidiary has guaranteed the obligations of, or made any
investment in or advances to, any Person, except as permitted under this
Agreement or as disclosed in the most recent financial statements delivered by
the Company to the Lender.
4.1.12 Full Disclosure.
----------------
The financial statements referred to in Section 4.1.11 (Financial
Condition) of this Agreement, the Financing Documents (including, without
limitation, this Agreement), and the statements, reports or certificates
furnished by any Borrower in connection with the Financing Documents (a) do not
contain any untrue statement of a material fact and (b)
44
when taken in their entirety, do not omit any material fact necessary to make
the statements contained therein not misleading. There is no fact known to any
Borrower which such Borrower has not disclosed to the Lender in writing prior to
the date of this Agreement with respect to the transactions contemplated by the
Financing Documents which constitutes or could constitute a Material Adverse
Effect.
4.1.13 Indebtedness for Borrowed Money.
--------------------------------
Except for the Obligations and except as set forth in Schedule
--------
4.1.13 attached hereto and made a part hereof, the Borrowers have no
------
Indebtedness for Borrowed Money. The Lender has received photocopies of all
promissory notes evidencing any Indebtedness for Borrowed Money set forth in
Schedule 4.1.13, together with any and all subordination agreements, other
---------------
agreements, documents, or instruments securing, evidencing, guarantying or
otherwise executed and delivered in connection therewith.
4.1.14 Convertible Debt.
-----------------
None of the Convertible Debt Loan Documents has been amended,
supplemented, restated or otherwise modified except as otherwise disclosed to
the Lender in writing on or before the effective date of any such amendment,
supplement, restatement or other modification. In addition, there does not
exist any default or any event which upon notice or lapse of time or both would
constitute a default under the terms of any of the Convertible Debt Loan
Documents.
4.1.15 Taxes.
------
Each of the Borrowers and its Subsidiaries has filed all returns,
reports and forms for Taxes which, to the knowledge of the Borrowers, are
required to be filed, and has paid all Taxes as shown on such returns or on any
assessment received by it, to the extent that such Taxes have become due, unless
and to the extent only that such Taxes, assessments and governmental charges are
currently contested in good faith and by appropriate proceedings by a Borrower,
such Taxes are not the subject of any Liens other than Permitted Liens, and
adequate reserves therefor have been established as required under GAAP. All
tax liabilities of the Borrowers were as of the date of audited financial
statements referred to in Section 4.1.11 (Financial Condition), and are now,
adequately provided for on the books of the Borrowers and its Subsidiaries, as
appropriate. To the best of each Borrower's knowledge, no tax liability has
been asserted by the Internal Revenue Service or any state or local authority
against any Borrower for Taxes in excess of those already paid.
4.1.16 ERISA.
------
With respect to any Plan that is maintained or contributed to by
any Borrower and/or by any Commonly Controlled Entity or as to which any of the
Borrowers retains material liability: (a) no "accumulated funding deficiency" as
defined in Code (S)412 or ERISA (S)302 has occurred, whether or not that
accumulated funding deficiency has been waived; (b) no Reportable Event has
occurred other than events for which reporting has been waived or that are
unlikely to result in material liability for any of the Borrowers; (c) no
termination of any plan subject to Title IV of ERISA has occurred; (d) neither
any Borrower nor any Commonly Controlled Entity has incurred a "complete
withdrawal" within the meaning of ERISA (S)4203
45
from any Multi-employer Plan that is likely to result in material liability for
one or more of the Borrowers; (e) neither any Borrower nor any Commonly
Controlled Entity has incurred a "partial withdrawal" within the meaning of
ERISA (S)4205 with respect to any Multi-employer Plan that is likely to result
in material liability for one or more of the Borrowers; (f) no Multi-employer
Plan to which any Borrower or any Commonly Controlled Entity has an obligation
to contribute is to the knowledge of the Borrowers, in "reorganization" within
the meaning of ERISA (S)4241 nor has notice been received by any Borrower or any
Commonly Controlled Entity that such a Multi-employer Plan will be placed in
"reorganization."
4.1.17 Title to Properties.
--------------------
The Borrowers have good and marketable title to all of their
respective properties, including, without limitation, the Collateral and the
properties and assets reflected in the balance sheets described in Section
4.1.11 (Financial Condition). The Borrowers have legal, enforceable and
uncontested rights to use freely such property and assets. All of such
properties, including, without limitation, the Collateral which were purchased,
were in each Borrower's good faith belief purchased for fair consideration and
reasonably equivalent value in the ordinary course of business of both the
seller and the Borrowers and not, by way of example only, as part of a bulk
sale.
4.1.18 Patents, Trademarks, Etc.
-------------------------
Each of the Borrowers and its Subsidiaries owns, possesses, or has the
right to use all patents, licenses, trademarks, copyrights, permits and
franchises necessary to conduct its business as now conducted, without known
conflict with the rights of any other Person. Any and all obligations to pay
royalties or other charges with respect to such properties and assets are
properly reflected on the financial statements described in Section 4.1.11
(Financial Condition).
4.1.19 Employee Relations.
-------------------
Except as disclosed on Schedule 4.1.19 attached hereto and made a part
---------------
hereof, (a) no Borrower nor any Subsidiary thereof nor any of the Borrower's or
Subsidiary's employees is subject to any collective bargaining agreement, (b) no
petition for certification or union election is pending with respect to the
employees of any Borrower or any Subsidiary and no union or collective
bargaining unit has sought such certification or recognition with respect to the
employees of a Borrower, (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrowers after due
inquiry, threatened between any Borrower and its employees, and (d) no Borrower
nor any Subsidiary is subject to an employment contract, severance agreement,
commission contract or bonus agreement. Hours worked and payments made to the
employees of any one or more of the Borrowers have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters.
All payments due from any one or more of the Borrowers or for which any claim
may be made against a Borrower, on account of wages and employee and retiree
health and welfare insurance and other benefits have been paid or accrued as a
liability on its books. The consummation of the transactions contemplated by
the Financing Agreement or any of the other Financing Documents, will not give
rise to a right of termination or right of renegotiation on the
46
part of any union under any collective bargaining agreement to which any
Borrower is a party or by which it is bound.
4.1.20 Presence of Hazardous Materials or Hazardous Materials
------------------------------------------------------
Contamination.
--------------
Except as described on Schedule 4.1.20 and to the best of each
Borrower's knowledge, (a) no Hazardous Materials are located on any real
property owned, controlled or operated by any Borrower or for which any Borrower
is, or is claimed to be, responsible, except for reasonable quantities of
Hazardous Materials Used or generated by a Borrower in the ordinary course of
its business and stored, used and disposed in accordance with applicable Laws;
and (b) no property owned, controlled or operated by any Borrower or for which
any Borrower has, or is claimed to have, responsibility has ever been used as a
manufacturing, storage, disposal, or dump site for Hazardous Materials nor is
affected by Hazardous Materials Contamination at any other property.
4.1.21 Perfection and Priority of Collateral.
--------------------------------------
The Lender has, or upon execution and recording of this Agreement and
the Security Documents will have, and will continue to have as security for the
Obligations, a valid and perfected Lien on and security interest in all
Collateral, free of all other Liens, claims and rights of third parties
whatsoever except Permitted Liens, including, without limitation, those
described on Schedule 4.1.21 attached hereto and made a part hereof.
---------------
4.1.22 Places of Business and Location of Collateral.
----------------------------------------------
The information contained in the Collateral Disclosure List is
complete and correct. The Collateral Disclosure List completely and accurately
identifies the address of (a) the chief executive office of each Borrower, (b)
any and each other place of business of each Borrower, (c) the location of all
books and records pertaining to the Collateral, and (d) each location, other
than the foregoing, where any of the Collateral is located. The proper and only
places to file financing statements with respect to the Collateral within the
meaning of the Uniform Commercial Code are the filing offices for those
jurisdictions in which any one or more of the Borrowers maintain a place of
business as identified on the Collateral Disclosure List.
4.1.23 Business Names and Addresses.
-----------------------------
In the five (5) years preceding the date hereof, no Borrower has
changed its name, identity or corporate structure, has conducted business under
any name other than its current name, and has conducted its business in any
jurisdiction other than those disclosed on the Collateral Disclosure List.
4.1.24 No Suspension or Debarment.
---------------------------
Neither any Borrower nor any of their respective directors, officers
or employees has received any notice of, or information concerning, any
proposed, contemplated or initiated suspension or debarment, be it temporary or
permanent, due to an administrative or a statutory basis, of any Borrower by any
Governmental Authority. Each Borrower further warrants and represents that no
Borrower has defaulted under any Government Contract which default would be a
basis of terminating such Government Contract.
47
4.1.25 Equipment.
----------
All Equipment is personalty and is not and will not be affixed to real
estate in such manner as to become a fixture or part of such real estate. No
equipment is held by any Borrower on a sale on approval basis.
4.1.26 Accounts.
---------
With respect to all Accounts (other than Accounts which are considered
part of the Excluded Assets) and to the best of each Borrower's knowledge (a)
they are genuine, and in all respects what they purport to be, and are not
evidenced by a judgment, an Instrument, or Chattel Paper (unless such judgment
has been assigned and such Instrument or Chattel Paper has been endorsed and
delivered to the Lender); (b) they represent bona fide transactions completed in
accordance with the terms and provisions contained in the invoices, purchase
orders and other contracts relating thereto, and the underlying transaction
therefor is in accordance with all applicable Laws; (c) the amounts shown on the
respective Borrower's books and records, with respect thereto are actually and
absolutely owing to that Borrower and are not contingent or subject to reduction
for any reason other than regular discounts, credits or adjustments allowed by
that Borrower in the ordinary course of its business; (d) no payments have been
or shall be made thereon except payments turned over to the Lender by the
Borrowers; (e) all Account Debtors thereon have the capacity to contract; and
(f) the goods sold, leased or transferred or the services furnished giving rise
thereto are not subject to any Liens except the security interest granted to the
Lender by this Agreement and Permitted Liens.
4.1.27 Compliance with Eligibility Standards.
--------------------------------------
Each Account included in the calculation of the Borrowing Base as of
the date of the applicable Borrowing Base Certificate meets and complies with
all of the standards for Eligible Receivables. With respect to those Accounts
which the Lender has deemed Eligible Receivables (a) there are no facts, events
or occurrences which in any way impair the validity, collectibility or
enforceability thereof or tend to reduce the amount payable thereunder; and (b)
there are no proceedings or actions known to any Borrower which are threatened
or pending against any Account Debtor which could be expected to result in any
material adverse change in the Borrowing Base.
Section 4.2 Survival; Updates of Representations and Warranties.
----------------------------------------------------
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Revolving Credit and
extension of credit made hereunder or the issuance of each Letter of Credit, and
the incurring of any other Obligations and shall be deemed to have been made at
the time of each request for, and again at the time of the making of, each
advance under the Revolving Credit, except that the representations and
warranties which relate to the financial statements which are referred to in
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Lender pursuant to Section 6.1.1
(Financial Statements).
48
ARTICLE V
CONDITIONS PRECEDENT
--------------------
Section 5.1 Conditions to the Initial Advance and Initial Letter of
-------------------------------------------------------
Credit.
-------
The making of the initial advance under the Revolving Credit and the
issuance of the initial Letter of Credit is subject to the fulfillment on or
before the Closing Date of the following conditions precedent in a manner
satisfactory in form and substance to the Lender and its counsel:
5.1.1 Organizational Documents - Borrowers.
-------------------------------------
The Lender shall have received for each Borrower:
(a) a certificate of good standing certified by the
Secretary of State, or other appropriate Governmental Authority, of the
state of incorporation of such Borrower;
(b) a certified copy from the appropriate Governmental
Authority under which such Borrower is organized, of such Borrower's
recorded limited partnership certificate and all recorded amendments
thereto;
(c) a certificate of qualification to do business for
such Borrower certified by the Secretary of State or other Governmental
Authority of each state in which such Borrower conducts business;
(d) a certificate dated as of the Closing Date by the
Secretary or an Assistant Secretary of such Borrower covering:
(i) true and complete copies of that Borrower's
corporate charter, bylaws, and all amendments thereto;
(ii) true and complete copies of the resolutions
of its Board of Directors authorizing (A) the execution, delivery and
performance of the Financing Documents to which it is a party, (B) the
borrowings hereunder, and (C) the granting of the Liens contemplated by
this Agreement and the Financing Documents to which that Borrower is a
party;
(iii) the incumbency, authority and signatures of
the officers of such Borrower authorized to sign this Agreement and the other
Financing Documents to which such Borrower is a party; and
(iv) the identity of such Borrower's current
directors, common stock holders and other equity holders, as well as their
respective percentage ownership interests.
49
5.1.2 Opinion of Borrowers' Counsel.
------------------------------
The Lender shall have received the favorable opinion of counsel for
the Borrowers addressed to the Lender in form satisfactory to the Lender.
5.1.3 Consents, Licenses, Approvals, Etc.
-----------------------------------
The Lender shall have received copies of all consents, licenses and
approvals, required in connection with the execution, delivery, performance,
validity and enforceability of the Financing Documents, and such consents,
licenses and approvals shall be in full force and effect.
5.1.4 Note.
-----
The Lender shall have received the Revolving Credit Note, conforming
to the requirements hereof and executed by a Responsible Officer of each
Borrower and attested by a duly authorized representative of each Borrower.
5.1.5 Financing Documents and Collateral.
-----------------------------------
Each Borrower shall have executed and delivered the Financing
Documents to be executed by it, and shall have delivered original Chattel Paper,
Instruments, Securities, and related Collateral and all opinions, title
insurance, and other documents contemplated by Article III (The Collateral).
5.1.6 Other Financing Documents.
--------------------------
In addition to the Financing Documents to be delivered by the
Borrowers, the Lender shall have received the Financing Documents duly executed
and delivered by Persons other than the Borrowers.
5.1.7 Other Documents, Etc.
---------------------
The Lender shall have received such other certificates, opinions,
documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Lender.
5.1.8 Payment of Fees.
----------------
The Lender shall have received payment of any Fees due on or before
the Closing Date.
5.1.9 Collateral Disclosure List.
---------------------------
The Company shall have delivered the Collateral Disclosure List
required under the provisions of Section 3.3 (Collateral Disclosure List) duly
executed by a Responsible Officer of the Company.
5.1.10 Recordings and Filings.
-----------------------
Each Borrower shall have: (a) executed and delivered all Financing
Documents (including, without limitation, UCC-1 and UCC-3 statements) required
to be filed,
50
registered or recorded in order to create, in favor of the Lender, a perfected
Lien in the Collateral (subject only to the Permitted Liens) in form and in
sufficient number for filing, registration, and recording in each office in each
jurisdiction in which such filings, registrations and recordations are required,
and (b) delivered such evidence as the Lender may deem satisfactory that all
necessary filing fees and all recording and other similar fees, and all Taxes
and other expenses related to such filings, registrations and recordings will be
or have been paid in full.
5.1.11 Insurance Certificate.
----------------------
The Lender shall have received an insurance certificate in
accordance with the provisions of Section 6.1.8 (Insurance) and Section 6.1.19
(Insurance With Respect to Equipment and Inventory).
5.1.12 Field Examination.
------------------
The Lender shall have completed a field examination of each
Borrower's business, operations and income, the results of which field
examination shall be in all respects acceptable to the Lender in its sole and
absolute discretion.
Section 5.2 Conditions to all Extensions of Credit and Issuance of Letters of
-----------------------------------------------------------------
Credit.
-------
The making of all advances under the Revolving Credit and issuance of all
Letters of Credit is subject to the fulfillment of the following conditions
precedent in a manner satisfactory in form and substance to the Lender and its
counsel:
5.2.1 Compliance.
-----------
Each Borrower shall have complied and shall then be in compliance
with all terms, covenants, conditions and provisions of this Agreement and the
other Financing Documents that are binding upon it.
5.2.2 Borrowing Base.
---------------
The Borrowers shall have furnished all Borrowing Base Reports
required by Section 2.1.4 (Borrowing Base Report), there shall exist no
Borrowing Base Deficiency, and as evidence thereof, the Borrowers shall have
furnished to the Lender such reports, schedules, certificates, records and other
papers as may be requested by the Lender, and the Borrowers shall be in
compliance with the provisions of this Agreement both immediately before and
immediately after the making of the advance requested.
5.2.3 Default.
--------
There shall exist no Event of Default or Default hereunder.
5.2.4 Representations and Warranties.
-------------------------------
The representations and warranties of each of the Borrowers
contained among the provisions of this Agreement shall be true and with the same
effect as though such representations and warranties had been made at the time
of the making of, and of the request for, each advance under the Revolving
Credit or the issuance of each Letter of Credit, except that the representations
and warranties which relate to financial statements which are referred to in
51
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Lender pursuant to Section 6.1.1
(Financial Statements).
5.2.5 Adverse Change.
---------------
No adverse change shall have occurred in the condition (financial
or otherwise), operations or business of any Borrower that would, in the good
faith judgment of the Lender, result in a Material Adverse Effect.
5.2.6 Legal Matters.
--------------
All legal documents incident to each advance under the Revolving
Credit shall be reasonably satisfactory to counsel for the Lender.
ARTICLE VI
COVENANTS OF THE BORROWERS
--------------------------
Section 6.1 Affirmative Covenants.
----------------------
So long as any of the Obligations (or the Revolving Credit
Commitment therefor) shall be outstanding hereunder, the Borrowers agree jointly
and severally with the Lender as follows:
6.1.1 Financial Statements.
---------------------
The Borrowers shall furnish to the Lender:
(a) Annual Statements and Certificates. The Borrowers
-----------------------------------
shall furnish to the Lender as soon as available, but in no event more than one
hundred twenty (120) days after the close of the Borrowers' fiscal years, (i) a
copy of the Company's 10-K filed with the Securities and Exchange Commission or
if the 10-K is not filed, the Company's annual financial statement in reasonable
detail satisfactory to the Lender relating to the Borrowers and their
Subsidiaries, prepared in accordance with GAAP and examined and certified by
independent certified public accountants satisfactory to the Lender, which
financial statement shall include a consolidated and consolidating balance sheet
of the Borrowers and their Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income, cash flows and changes in
shareholders equity of the Borrowers and their Subsidiaries for such fiscal
year, and (ii) a Compliance Certificate, in substantially the form attached to
this Agreement as EXHIBIT E, containing a detailed computation of each financial
---------
covenant in this Agreement which is applicable for the period reported, a
certification that no change has occurred to the information contained in the
Collateral Disclosure List (except as set forth in any schedule attached to the
certification), and a cash flow projection report, each prepared by a
Responsible Officer of the Borrowers in a format acceptable to the Lender and
(iii) a management letter in the form prepared by the Borrowers' independent
certified public accountants.
(b) Annual Opinion of Accountant. The Borrowers shall
----------------------------
furnish to the Lender as soon as available, but in no event more than one
hundred twenty (120) days after the close of the Borrowers' fiscal years, a
letter or opinion of the accountant who examined and certified the annual
financial statement relating to the Borrowers and their
52
Subsidiaries (i) stating whether anything in such accountant's examination has
revealed the occurrence of a Default or an Event of Default hereunder due to the
breach of any of the financial covenants set forth in Section 6.1.16 of this
Agreement, and, if so, stating the facts with respect thereto and (ii)
acknowledging that the Lender will rely on the statement and that the Borrowers
know of the intended reliance by the Lender.
(c) Quarterly Statements and Certificates. The Borrowers shall
-------------------------------------
furnish to the Lender as soon as available, but in no event more than forty five
(45) days after the close of the Borrowers' fiscal quarters, the Company's 10-Q
as filed with the Securities and Exchange Commission or if such report is not
filed, the Borrowers' consolidated and consolidating balance sheets of the
Borrowers and its Subsidiaries as of the close of such period, consolidated and
consolidating income, cash flows and changes in shareholders equity statements
for such period, projected cash flow on a month to month basis and projected
income statements, and a Compliance Certificate, in substantially the form
attached to this Agreement as EXHIBIT E.
---------
(d) Contract Backlog Report. With the quarterly financial
-----------------------
statements to be delivered hereunder, reports relating to the Receivables
included in any Borrowing Base Report submitted during such quarter setting
forth a description of contracts giving rise to such Receivable, the percentage
of completion of the work to be performed with respect to such contracts, the
amounts billed under such contracts and the amounts remaining to be billed, in
form and detail satisfactory to the Lender.
(e) Monthly Statements and Certificates. The Borrowers shall
-----------------------------------
furnish to the Lender as soon as available, but in no event more than forty five
(45) days after the close of the Borrowers' fiscal months, (i) consolidated and
consolidating balance sheets of the Borrowers and their Subsidiaries as of the
close of such period, consolidated and consolidating income, cash flows and
changes in shareholders equity statements for such period, all as prepared and
certified by a Responsible Officer of the Borrowers and (ii) a detailed
computation of each financial covenant in this Agreement which is applicable for
the period reported, together with a certification that no change has occurred
to the information contained on the Collateral Disclosure List (except as set
forth on any schedule attached to the certification), each prepared by a
Responsible Officer of or on behalf of each Borrower in a format acceptable to
the Lender, and accompanied by a certificate of that officer stating whether any
event has occurred which constitutes a Default or an Event of Default hereunder,
and, if so, stating the facts with respect thereto.
(f) Annual Budget and Projections. The Borrowers shall furnish
-----------------------------
to the Lender as soon as available, but in no event later than June 30/th/ of
each fiscal year a consolidated and consolidating budget and pro forma financial
statements on a month-to-month basis for the following fiscal year, which
financial statements shall include at a minimum, a balance sheet, income
statements and statement of cash flows.
(g) Additional Reports and Information. The Borrowers shall
----------------------------------
furnish to the Lender promptly, such additional information, reports or
statements as the Lender may from time to time reasonably request.
53
6.1.2 Reports to SEC and to Stockholders.
-----------------------------------
The Borrowers will furnish to the Lender, promptly upon the filing or
making thereof, at least one (l) copy of all financial statements, reports,
notices and proxy statements sent by any Borrower to its stockholders, and of
all regular and other reports filed by any Borrower with any securities exchange
or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Administration and Audit,
--------------------------------------------------------------
Etc.
---
(a) Each of the Borrowers shall, and shall cause each of its
Subsidiaries to, maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.
(b) Each of the Borrowers shall, and shall cause each of its
Subsidiaries to, permit authorized representatives of the Lender to visit and
inspect the properties of the Borrowers and its Subsidiaries, to review, audit,
check and inspect the Collateral at any time during normal business hours, with
or after a Default without notice, to review, audit, check and inspect the
Borrowers' other books of record at any time with or without notice and to make
abstracts and photocopies thereof, and to discuss the affairs, finances and
accounts of the Borrowers and their Subsidiaries, with the officers, directors,
employees and other representatives of the Borrowers and their Subsidiaries and
their respective accountants, all at such times during normal business hours and
other reasonable times and as often as the Lender may reasonably request.
(c) Each of the Borrowers hereby irrevocably authorizes and
directs all accountants and auditors employed by any of the Borrowers and/or any
of their Subsidiaries at any time prior to the repayment in full of the
Obligations to exhibit and deliver to the Lender copies of any and all of the
financial statements, trial balances, management letters, or other accounting
records of any nature of any or all of the Borrowers and/or any or all of their
respective Subsidiaries in the accountant's or auditor's possession, and to
disclose to the Lender any information they may have concerning the financial
status and business operations of any or all of the Borrowers and/or any or all
of their respective Subsidiaries. Further, each of the Borrowers hereby
authorizes all Governmental Authorities to furnish to the Lender copies of
reports or examinations relating to any and all of the Borrowers and/or any or
all Subsidiaries, whether made by the Borrowers or otherwise. The Lender
acknowledges and agrees to the extent certain information is "classified" or the
Borrowers are otherwise prohibited by Law from disclosing such information to
the Lender, that the Borrowers shall not be obligated to release such
information to the Lender.
(d) Any and all reasonable costs and expenses incurred by, or
on behalf of, the Lender in connection with the conduct of any of the foregoing,
including, without limitation, travel (other than first class air travel),
lodging, meals, and other reasonable expenses for each auditor employed by the
Lender for inspections of the Collateral and the Borrowers' operations, shall be
part of the Enforcement Costs and shall be payable to the Lender upon demand.
The Borrowers acknowledge and agree that such expenses may include, but shall
54
not be limited to, any and all reasonable out-of-pocket costs and expenses of
the Lender's employees and agents in, and when, traveling to any of the
Borrowers' facilities.
6.1.4 Corporate Existence.
--------------------
Each of the Borrowers shall maintain, and cause each of its
Subsidiaries to maintain, its corporate existence in good standing in the
jurisdiction in which it is incorporated and in each other jurisdiction where it
is required to register or qualify to do business if the failure to do so in
such other jurisdiction could have a Material Adverse Effect.
6.1.5 Compliance with Laws.
---------------------
Each of the Borrowers shall comply, and cause each of its Subsidiaries
to comply, with all applicable Laws and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
could be expected to have a Material Adverse Effect.
6.1.6 Preservation of Properties.
---------------------------
Each of the Borrowers will, and will cause each of its Subsidiaries
to, at all times (a) maintain, preserve, protect and keep its properties,
whether owned or leased, in good operating condition, working order and repair
(ordinary wear and tear excepted), and from time to time will make all proper
repairs, maintenance, replacements, additions and improvements thereto needed to
maintain such properties in good operating condition, working order and repair,
unless such properties are no longer necessary or useful in the conduct of such
Borrower's business as determined by its management, but provided, however that
such Borrower's failure to maintain such property could not give rise to any
material liability, and (b) do or cause to be done all things necessary to
preserve and to keep in full force and effect its material franchises, leases of
real and personal property, trade names, patents, trademarks and permits which
are necessary for the orderly continuance of its business.
6.1.7 Line of Business.
-----------------
Each of the Borrowers will continue to engage substantially only in
the business of providing commercial space applications and other incidental
businesses.
6.1.8 Insurance.
----------
Each of the Borrowers will, and will cause each of its Subsidiaries
to, at all times maintain with "A" or better rated insurance companies such
insurance as is required by applicable Laws and such other insurance, in such
amounts, of such types and against such risks, hazards, liabilities, casualties
and contingencies as are usually insured against in the same geographic areas by
business entities engaged in the same or similar business. Without limiting the
generality of the foregoing, each of the Borrowers will, and will cause each of
its Subsidiaries to, keep adequately insured all of its property against loss or
damage resulting from fire or other risks insured against by extended coverage
and maintain public liability insurance against claims for personal injury,
death or property damage occurring upon, in or about any properties occupied or
controlled by it, or arising in any manner out of the businesses carried on by
it, all in such amounts not less than the Lender shall reasonably determine from
time to time. The Lender agrees that with respect to any assets of the
Borrowers and each of their Subsidiaries
55
which are Excluded Assets that unless such assets become subject to Liens in
favor of the Lender, the Lender will rely on the determination of any other
Person having a Lien on such assets or if no such Person exists, the Lender will
rely on the Company in the exercise of its reasonable discretion, to determine
the appropriate amount and types of insurance. Each of the Borrowers shall
deliver to the Lender on the Closing Date (and thereafter on each date there is
a material change in the insurance coverage) a certificate of a Responsible
Officer of the Borrowers containing a detailed list of the insurance then in
effect and stating the names of the insurance companies, the types, the amounts
and rates of the insurance, dates of the expiration thereof and the properties
and risks covered thereby. Within thirty (30) days after notice in writing from
the Lender, the Borrowers will obtain such additional insurance as the Lender
may reasonably request.
6.1.9 Taxes.
------
Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings, each of the Borrowers
will, and will cause each of its Subsidiaries, to pay and discharge all Taxes
prior to the date when any interest or penalty would accrue for the nonpayment
thereof. Each of the Borrowers shall furnish to the Lender at such times as the
Lender may require proof satisfactory to the Lender of the making of payments or
deposits required by applicable Laws including, without limitation, payments or
deposits with respect to amounts withheld by any of the Borrowers from wages and
salaries of employees and amounts contributed by any of the Borrowers on account
of federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act, as amended.
6.1.10 ERISA.
------
Each Borrower will, and will cause each of its Commonly Controlled
Entities to, comply with the funding requirements of ERISA with respect to Plans
for its respective employees. No Borrower will permit with respect to any Plan
(a) any prohibited transaction or transactions under ERISA or the Internal
Revenue Code, which results, or may result, in any material liability of the
Borrower, or (b) any Reportable Event if, upon termination of the plan or plans
with respect to which one or more such Reportable Events shall have occurred,
there is or would be any material liability of the Borrower to the PBGC. Upon
the Lender's request, each Borrower will deliver to the Lender a copy of the
most recent actuarial report, financial statements and annual report completed
with respect to any Plan.
6.1.11 Government Contracts.
---------------------
The Company shall promptly notify the Lender of the execution of any
Government Contract with a remaining value in excess of Two Million Dollars
($2,000,000) and shall in accordance with Section 3.2 execute any instruments
and take any steps necessary or prudent in order that all moneys due and to
become due under any Government Contracts with a remaining value in excess of
Two Million Dollars ($2,000,000) and a duration in excess of six months shall be
assigned to the Lender and notice thereof given to the Government under the
Federal Assignment of Claims Act of 1940 (31 U.S.C. (S)3727 and 41 U.S.C. (S)15)
or any other similar applicable law (the "Act"). In addition, the Lender shall
have the right at any time to require that all monies due or to become due under
any Government Contracts be assigned to the Lender pursuant to the Act.
56
6.1.12 Notification of Events of Default and Adverse
---------------------------------------------
Developments.
--------------
Each of the Borrowers shall promptly notify the Lender upon
obtaining knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened against any of the
Borrowers or any of their Subsidiaries and of the entry of any judgment or Lien
(other than any Permitted Liens) against any of the assets or properties of any
of the Borrowers or any Subsidiary where the claims against any Borrower or any
Subsidiary exceed One Hundred Thousand Dollars ($100,000) and are not covered by
insurance;
(d) any event, development or circumstance whereby the financial
statements furnished hereunder fail in any material respect to present fairly,
in accordance with GAAP, the financial condition and operational results of any
of the Borrowers or any of their respective Subsidiaries;
(e) any judicial, administrative or arbitral proceeding pending
against any of the Borrowers or any of their respective Subsidiaries and any
judicial or administrative proceeding known by any of the Borrowers to be
threatened against any Borrower or any Subsidiary which, if adversely decided,
could result in a Material Adverse Effect;
(f) the receipt by any of the Borrowers or any Subsidiary of any
notice, claim or demand from any Governmental Authority which alleges that any
of the Borrowers or any Subsidiary is in violation of any of the terms of, or
has failed to comply with any applicable Laws regulating its operation and
business, including, but not limited to, the Occupational Safety and Health Act
and the Environmental Protection Act;
(g) any default under any Government Contract or any event which
if not corrected could give rise to a default under any Government Contract or a
termination for convenience; and
(h) any other development in the business or affairs of any of
the Borrowers or any of their respective Subsidiaries which could be expected to
have a Material Adverse Effect;
in each case describing in detail satisfactory to the Lender the nature thereof
and the action the Borrowers propose to take with respect thereto.
6.1.13 Hazardous Materials; Contamination.
-----------------------------------
Each of the Borrowers agrees to:
(a) give notice to the Lender immediately upon acquiring
knowledge of the presence of any Hazardous Materials or any Hazardous Materials
Contamination on any property owned, operated or controlled by any Borrower or
for which any
57
Borrower is, or is claimed to be, responsible (provided that such notice shall
not be required for Hazardous Materials placed or stored on such property in
accordance with applicable Laws in the ordinary course (including, without
limitation, quantity) of a Borrower's line of business expressly described in
this Agreement or otherwise previously disclosed to the Lender in writing), with
a full description thereof;
(b) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Lender with satisfactory evidence of such
compliance, provided that the Borrowers may challenge the applicability of any
such requirement or appeal the imposition of any such requirement, within the
time period allowed under such Laws, provided that during any such challenge or
appeal, the existence of any such Hazardous Materials or Hazardous Materials
Contamination do not and will not with appropriate filings, the giving of notice
and/or the passage of time, result in any Lien against any of the Collateral or
could otherwise result in a Material Adverse Effect;
(c) provide the Lender, within thirty (30) days after a demand
by the Lender, with a bond, letter of credit or similar financial assurance
evidencing to the Lender's satisfaction that the necessary funds are available
to pay the cost of removing, treating, and disposing of such Hazardous Materials
or Hazardous Materials Contamination and discharging any Lien which may be
established as a result thereof on any property owned, operated or controlled by
any Borrower or for which any Borrower is, or is claimed to be, responsible; and
(d) as part of the Obligations, defend, indemnify and hold
harmless the Lender and its agents, employees, trustees, successors and assigns
from any and all claims which may now or in the future (whether before or after
the termination of this Agreement) be asserted as a result of the presence of
any Hazardous Materials or any Hazardous Materials Contamination on any property
owned, operated or controlled by any Borrower for which any Borrower is, or is
claimed to be, responsible. Each Borrower acknowledges and agrees that this
indemnification shall survive the termination of this Agreement and the
Revolving Credit Commitment and the payment and performance of all of the other
Obligations.
(e) The Company has advised the Lender of certain polishing,
photo processing and other related operations being performed at its location at
of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ as more fully described in
Schedule 6.1.13 attached hereto, and the Lender agrees that based on such
information, it will not require a bond, letter of credit or similar financial
assurance under section (c) above.
6.1.14 Disclosure of Significant Transactions.
---------------------------------------
Each of the Borrowers shall deliver to the Lender a written
notice describing in detail each transaction by it involving the purchase, sale,
lease, or other acquisition or loss or casualty to or disposition of an interest
in Fixed or Capital Assets (other than Excluded Assets) which exceeds Two
Hundred Fifty Thousand Dollars ($250,000.00), said notices to be delivered to
the Lender within thirty (30) days of the occurrence of each such transaction.
58
6.1.15 Financial Covenants.
--------------------
(a) Tangible Net Worth. The Company and its
-------------------
Subsidiaries, on a consolidated basis, will at all times maintain a Tangible Net
Worth of not less than the following:
Period Amount
------ ------
June 30, 2000 through June 29, 2001 $70,000,000
June 30, 2001 through September 29, 2001 $71,500,000
September 30, 2001 and at all times thereafter $71,500,000,
plus commencing as of September 30, 2001, an amount equal to seventy five
percent (75%) of the consolidated net income (without regard to any loss) of the
Company and its Subsidiaries from the most recently ended fiscal quarter,
rounded down to the nearest $100,000.
(b) Debt to Worth Ratio. The Company and its
-------------------
Subsidiaries, on a consolidated basis, will at all times maintain, tested as of
the end of each calendar month, commencing with the month ending June 30, 2000,
a Debt to Worth Ratio of not more than 2.50 to 1.0.
(c) Debt Service Coverage Ratio. The Company and its
---------------------------
Subsidiaries will maintain, on a consolidated basis and tested as of the last
day of each of the Company's fiscal quarters, a ratio of EBITDA to Debt Service
of not less than the following amounts at the following times:
Period Ratio
------ -----
June 30, 2000 1.10 to 1.0
September 30, 2000 through December 31, 2000 1.30 to 1.0
March 31, 2001 1.60 to 1.0
June 30, 2001 and at all times thereafter 1.75 to 1.0
The EBITDA to Debt Service Coverage Ratio shall be calculated as follows: (i)
for the quarter ending June 30, 2000 based on the single fiscal quarter then
ending, (ii) for the quarter ending September 30, 2000, for the period of two
(2) fiscal quarters ending on that date, (iii) for the quarter ending December
31, 2000, for the period of three (3) fiscal quarters ending on that date, and
(iv) thereafter for each quarter, for the period of four (4) fiscal quarters
ending on the last day of the relevant quarter.
(d) Cash to Subsidiaries and Space Media. Neither the
------------------------------------
Company nor any other Borrower shall make any cash advances to any Subsidiary or
Affiliate, other than investments and loans permitted under Section 6.2.5 of
this Agreement and cash advances to Space Media in amounts which may not exceed
the following amounts in the aggregate at the following times:
Period Amount
------ ------
July 1, 2000 through September 30, 2000 $ 5,000,000
July 1, 2000 through December 31, 2000 $10,000,000
Thereafter, no further cash advances may be made
to Space Media or its Subsidiaries
59
(e) Internally Funded Capital Expenditures. Capital
--------------------------------------
Expenditures which are funded by the Company or any other Borrower (taken as a
whole), plus all cash advances to Space Media will not exceed the following
amounts at the following times:
Period Amount
------ ------
July 1, 2000 through September 30, 2000 $10,000,000
July 1, 2000 through December 31, 2000 $16,000,000
Each Fiscal Quarter thereafter $ 3,000,000
6.1.16 Collection of Receivables.
--------------------------
Until such time as the Lender shall notify the Borrowers of the
revocation of such privilege, the Borrowers shall at their own expense have the
privilege for the account of, and in trust for, the Lender of collecting their
Receivables and receiving in respect thereto all Items of Payment and shall
otherwise completely service all of the Receivables including (a) the billing,
posting and maintaining of complete records applicable thereto, (b) the taking
of such action with respect to the Receivables as the Lender may request or in
the absence of such request, as each of the Borrowers may deem advisable; and
(c) the granting, in the ordinary course of business, to any Account Debtor, of
any rebate, refund or adjustment to which the Account Debtor may be lawfully
entitled, and may accept, in connection therewith, the return of goods, the sale
or lease of which shall have given rise to a Receivable and may take such other
actions relating to the settling of any Account Debtor's claim as may be
commercially reasonable. The Lender may, at its option, at any time or from
time to time after and during the continuance of an Event of Default hereunder,
revoke the collection privilege given in this Agreement to any one or more of
the Borrowers by either giving notice of its assignment of, and Lien on the
Collateral to the Account Debtors or giving notice of such revocation to the
Borrowers. The Lender shall not have any duty to, and the Borrowers hereby
release the Lender from all claims of loss or damage caused by the delay or
failure to collect or enforce any of the Receivables or to preserve any rights
against any other party with an interest in the Collateral. The Lender shall be
entitled at any time and from time to time to confirm and verify Receivables.
6.1.17 Assignments of Receivables.
---------------------------
Each Borrower will promptly, upon request, execute and deliver to the
Lender written assignments, in form and content acceptable to the Lender, of
specific Receivables or groups of Receivables; provided, however, the Lien
and/or security interest granted to the Lender under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Lender whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute. The
Borrowers agree that neither any assignment to the Lender nor any other
provision contained in this Agreement or any of the other Financing Documents
shall impose on the Lender any obligation or liability of any of the Borrowers
with respect to that which is assigned and the Borrowers hereby agree jointly
and severally to indemnify the Lender and hold the Lender harmless from any and
all claims, actions, suits, losses, damages, costs, expenses, fees, obligations
and liabilities brought by Persons other than the Borrowers or their Affiliates
or Subsidiaries which may be incurred by or imposed upon the Lender by virtue of
the assignment of and Lien on any Borrower's rights, title and interest in, to,
and under the Collateral.
60
6.1.18 Notice of Returned Goods, etc.
------------------------------
The Borrowers will promptly notify the Lender of the return,
rejection or repossession of any goods sold or delivered in respect of any
Receivables, and of any claims made in regard thereto to the extent that the
aggregate purchase price of any such goods in any given calendar month exceeds
in the aggregate Two Hundred Fifty Thousand Dollars ($250,000.00) for such
month.
6.1.19 Insurance With Respect to Equipment and Inventory.
--------------------------------------------------
The Borrowers will (a) maintain hazard insurance with fire and
extended coverage and naming the Lender as an additional insured with loss
payable to the Lender as its respective interest may appear on the Equipment and
Inventory in an amount at least equal to the lesser amount of the outstanding
principal amount of the Obligations or the fair market value of the Equipment
and Inventory (but in any event sufficient to avoid any co-insurance
obligations) and with a specific endorsement to each such insurance policy
pursuant to which the insurer agrees to give the Lender at least thirty (30)
days written notice before any alteration or cancellation of such insurance
policy and that no act or default of any of the Borrowers shall affect the right
of the Lender to recover under such policy in the event of loss or damage; (b)
file with the Lender, upon its request, a detailed list of the insurance then in
effect and stating the names of the insurance companies, the amounts and rates
of the insurance, dates of the expiration thereof and the properties and risks
covered thereby; and (c) within thirty (30) days after notice in writing from
the Lender, obtain such additional insurance as the Lender may reasonably
request.
6.1.20 Maintenance of the Collateral.
------------------------------
The Borrowers will cause the Lender to have at all times a
valid and perfected Lien on and security interest in all Collateral, free of all
other Liens, claims and rights of third parties whatsoever except Permitted
Liens, including, without limitation, those described on Schedule 4.1.21
---------------
attached hereto and made a part hereof. In addition, the Borrowers will maintain
the Collateral in good working order, saving and excepting ordinary wear and
tear, and will not permit anything to be done to the Collateral which may
materially impair the value thereof. The Lender, or an agent designated by the
Lender, shall be permitted to enter the premises of each of the Borrowers and
their Subsidiaries and examine, audit and inspect the Collateral at any
reasonable time and from time to time without notice. The Lender shall not have
any duty to, and the Borrowers hereby release the Lender from all claims of loss
or damage caused by the delay or failure to collect or enforce any of the
Receivables or to, preserve any rights against any other party with an interest
in the Collateral.
6.1.21 Equipment.
----------
The Borrowers shall (a) maintain all Equipment as personalty,
(b) not affix any Equipment to any real estate in such manner as to become a
fixture or part of such real estate, and (c) shall hold no Equipment on a sale
on approval basis. The Borrowers hereby declare their intent that,
notwithstanding the means of attachment, no goods of the Borrowers hereafter
attached to any realty shall be deemed a fixture, which declaration shall be
irrevocable, without the Lender's consent, until all of the Obligations have
been paid in full and the Revolving Credit Commitment has been terminated or
have expired.
61
6.1.22 Defense of Title and Further Assurances.
----------------------------------------
At their expense, the Borrowers will defend the title to the
Collateral (and any part thereof), and will immediately execute, acknowledge and
deliver any financing statement, renewal, affidavit, deed, assignment,
continuation statement, security agreement, certificate or other document which
the Lender may require in order to perfect, preserve, maintain, continue,
protect and/or extend the Lien or security interest granted to the Lender under
this Agreement, under any of the other Financing Documents and the first
priority of that Lien, subject only to the Permitted Liens. The Borrowers will
from time to time do whatever the Lender may require by way of obtaining,
executing, delivering, and/or filing financing statements, landlords' or
mortgagees' waivers, notices of assignment and other notices and amendments and
renewals thereof and the Borrowers will take any and all steps and observe such
formalities as the Lender may require, in order to create and maintain a valid
Lien upon, pledge of, or paramount security interest in, the Collateral, subject
to the Permitted Liens. The Borrowers shall pay to the Lender on demand all
taxes, costs and expenses incurred by the Lender in connection with the
preparation, execution, recording and filing of any such document or instrument.
To the extent that the proceeds of any of the Accounts or Receivables of the
Borrowers are expected to become subject to the control of, or in the possession
of, a party other than the Borrowers or the Lender, the Borrowers shall cause
all such parties to execute and deliver on the Closing Date security documents,
financing statements or other documents as requested by the Lender and as may be
necessary to evidence and/or perfect the security interest of the Lender in
those proceeds. The Borrowers agree that a copy of a fully executed security
agreement and/or financing statement shall be sufficient to satisfy for all
purposes the requirements of a financing statement as set forth in Article 9 of
the applicable Uniform Commercial Code. Each Borrower hereby irrevocably
appoints the Lender as the Borrower's attorney-in-fact, with power of
substitution, in the name of the Lender or in the name of the Borrower or
otherwise, for the use and benefit of the Lender, but at the cost and expense of
the Borrowers and without notice to the Borrowers, to execute and deliver any
and all of the instruments and other documents and take any action which the
Lender may require pursuant the foregoing provisions of this Section 6.1.22.
6.1.23 Business Names; Locations.
--------------------------
Each Borrower will notify and cause each of the Subsidiaries
to notify the Lender not less than thirty (30) days prior to (a) any change in
the name under which the Borrower or the applicable Subsidiary conducts its
business, (b) any change of the location of the chief executive office of the
applicable Borrower or Subsidiary, and (c) the opening of any new place of
business or the closing of any existing place of business, and any change in the
location of the places where the Collateral, or any part thereof, or the books
and records, or any part thereof, are kept (provided that, if any such change or
opening is pending within thirty (30) days at the time an Additional Borrower
becomes an Additional Borrower, such Additional Borrower will instead give such
notice to the Lender at that time).
6.1.24 Subsequent Opinion of Counsel as to Recording
---------------------------------------------
Requirements.
-------------
In the event that any Borrower or any Subsidiary shall
transfer its principal place of business or the office where it keeps its
records pertaining to the Collateral, upon the Lender's request the Borrowers
will provide to the Lender a subsequent opinion of counsel as to
62
the filing, recording and other requirements with which the Borrowers and their
Subsidiaries have complied to maintain the Lien and security interest granted by
such Borrower in favor of the Lender in the Collateral.
6.1.25 Use of Premises and Equipment.
------------------------------
The Borrowers agree that until the Obligations are fully paid
and the Revolving Credit Commitment has been terminated or have expired, the
Lender (a) after and during the continuance of an Event of Default, may use any
of the Borrowers' owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (b) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of the Borrowers' owned or
leased property.
6.1.26 Protection of Collateral.
-------------------------
The Borrowers agree that the Lender may at any time following
an Event of Default take such steps as the Lender deems reasonably necessary to
protect the interest of the Lender in, and to preserve the Collateral,
including, the hiring of such security guards or the placing of other security
protection measures as the Lender deems appropriate, may employ and maintain at
any of the Borrowers' premises a custodian who shall have full authority to do
all acts necessary to protect the interests of the Lender in the Collateral and
may lease warehouse facilities to which the Lender may move all or any part of
the Collateral to the extent commercially reasonable. The Borrowers agree to
cooperate fully with the Lender's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as the Lender may reasonably
direct. All of the Lender's expenses of preserving the Collateral, including any
reasonable expenses relating to the compensation and bonding of a custodian,
shall be part of the Enforcement Costs.
6.1.27 Appraisals.
-----------
Whenever a Default or an Event of Default exists, if the
Lender requests, but not more frequently than once a year, the Borrowers shall,
at their expense, provide the Lender with appraisals or updates thereof of any
or all of the Collateral from an appraiser and in form in all respects
satisfactory to the Lender.
Section 6.2 Negative Covenants.
-------------------
So long as any of the Obligations or the Revolving Credit Commitment
therefor shall be outstanding hereunder, the Borrowers agree with the Lender
that without the prior written consent of the Lender:
6.2.1 Capital Structure, Merger, Acquisition or Sale of
-------------------------------------------------
Assets.
-------
None of the Borrowers will alter or amend its capital structure,
authorize any additional class of equity, issue any stock or equity of any
class, except as permitted under Sections 6.2.2, 6.2.3 and 6.2.6 of this
Agreement, windup or dissolve itself (or suffer any liquidation or dissolution)
or acquire all or substantially all the assets of any Person, or sell, lease or
otherwise dispose of any of its assets (except Inventory disposed of in the
ordinary course of business prior to an Event of Default), except that the
foregoing shall not prohibit or require the
63
Lender's consent for (i) any Subsidiary's merger into or transfer of assets to a
Borrower, or consolidation with or transfer of assets to any other Subsidiary of
a Borrower; (ii) the disposition prior to a Default of tangible property
included in the Collateral, which, in each case, a Borrower determines in good
faith to be obsolete; (iii) the creation of any Subsidiaries to the extent the
new Subsidiary shall have joined this Agreement as a Additional Borrower
pursuant to Section 8.20 (Joinder of Additional Borrowers); (iv) the conversion
of the Debentures into common stock in accordance with their terms; (v) any
Wholly-Owned Subsidiary of any Additional Borrower may be merged into or
consolidated with such Additional Borrower in which such Subsidiary is not the
surviving corporation or entity; (vi) Space Media altering or amending its
capital structure, and Space Media and/or the Company issuing additional classes
of equity, or issuing additional stock or equity, in connection with Space
Media's efforts to raise additional equity; (vii) Space Media's transferring to
RSC Energia up to fifty percent (50%) of the membership interests in RSC
Energia/Space Media owned on the Closing Date by Space Media; or (viii) the
Company transferring to RSC Energia up to fifty percent (50%) of the membership
interests in Space Station Enterprise owned on the Closing Date by the Company.
None of the Borrowers will enter into any merger or consolidation or
amalgamation without the Lender's prior consent, which consent will not be
unreasonably withheld, but which consent will be based on such conditions as the
Lender deems appropriate in its sole but reasonable discretion. None of the
Borrowers nor any of the Subsidiaries will directly or indirectly enter into any
arrangement to sell or transfer all or any substantial part of its fixed assets
(other than the Flight Assets on terms and conditions acceptable to the Lender)
and thereupon or within one year thereafter rent or lease the assets so sold or
transferred. Any consent of the Lender to the disposition of any assets may be
conditioned on a specified use of the proceeds of disposition. Subsidiaries.
None of the Borrowers will create or acquire any Subsidiaries other than the
Subsidiaries identified on the Collateral Disclosure List or those which join
this Agreement as an Additional Borrower pursuant to Section 8.20 (Joinder of
Additional Borrowers), provided that such Subsidiary and the Borrowers, as
applicable, shall grant and cause to be perfected first priority Liens to the
Lender in the assets held by such Subsidiary, subject only to Permitted Liens.
6.2.2 Issuance of Stock.
------------------
None of the Borrowers (other than Space Media) will issue, or
grant any option or right to purchase, any of its capital stock, except as
permitted in Section 6.2.1 and Section 6.2.6, and except that the foregoing
shall not prohibit or require the Lender's consent for: (i) the issuance of
stock under any Borrower's employee stock purchase plan as approved by such
Borrower's board of directors; or (ii) the issuance of stock options to
employees, officers and directors of any Borrower as approved by such Borrower's
board of directors.
6.2.3 Purchase or Redemption of Securities, Dividend
----------------------------------------------
Restrictions.
-------------
None of the Borrowers will purchase, redeem or otherwise
acquire any shares of its capital stock or warrants now or hereafter
outstanding, declare or pay any dividends thereon, apply any of its property or
assets to the purchase, redemption or other retirement of, set apart any sum for
the payment of any dividends on, or for the purchase, redemption, or other
retirement of, make any distribution by reduction of capital or otherwise in
respect of, any shares of any class of capital stock of any Borrower, or any
warrants, permit any Subsidiary to purchase
64
or acquire any shares of any class of capital stock of, or warrants issued by,
any Borrower, make any distribution to stockholders or set aside any funds for
any such purpose, prepay, purchase or redeem any Indebtedness for Borrowed Money
other than the Obligations, provided, however, if at the time there is no
Default or Event of Default and, after giving effect to the proposed dividends,
no Default or Event of Default will occur, (a) a Borrower may declare and
deliver dividends and make distributions payable solely in common stock of such
Borrower; (b) a Borrower may purchase or otherwise acquire shares of its capital
stock by exchange for or out of the proceeds received from a substantially
concurrent issue of new shares of its capital stock, and (c) a Borrower may
declare and pay cash dividends; provided that no Borrower shall declare or pay
any dividends permitted under this Section 6.2.4 until the Lender has received
written notice from such Borrower at least ten (10) Business Days in advance of
declaring or paying any such dividend and has also received such other
information as the Lender may have requested in order to verify the amount of
the proposed dividends and to determine that all of the conditions precedent to
the making of the requested dividends have been satisfied.
6.2.4 Indebtedness.
-------------
None of the Borrowers will create, incur, assume or suffer to
exist any Indebtedness for Borrowed Money, except:
(a) the Obligations;
(b) current accounts payable arising in the ordinary
course;
(c) Indebtedness secured by Permitted Liens;
(d) Subordinated Indebtedness;
(e) Indebtedness of the Borrowers and their
Subsidiaries existing on the date hereof and reflected on the financial
statements furnished pursuant to Section 4.1.11 (Financial Condition);
(f) the Debentures;
(g) Indebtedness arising through any extension,
renewal or refinancing of any other Indebtedness listed in subsections (a) - (e)
above, provided that no collateral of a class other than that which currently
secures such Indebtedness may be pledged to secure any such Indebtedness and
further provided that the principal amount thereof does not exceed such
Indebtedness being extended renewed or refinanced;
(h) Indebtedness of any Wholly Owned Subsidiary to
another Wholly Owned Subsidiary or to a Borrower or Indebtedness of any Borrower
to another Borrower;
(i) Indebtedness of Astrotech arising under the
Astrotech Loan; and
65
(j) Other Indebtedness not otherwise permitted
hereunder, not exceeding Five Hundred Thousand Dollars ($500,000) in the
aggregate outstanding at any time, provided no Default or Event of Defaults
exists at the time or as a result of the incurrence of such Indebtedness.
6.2.5 Investments, Loans and Other Transactions.
------------------------------------------
Except as otherwise provided in this Agreement, none of the
Borrowers will (a) make, assume, acquire or continue to hold any investment in
any real property (unless used in connection with its business and treated as a
Fixed or Capital Asset of any Borrower) or any Person, whether by stock
purchase, capital contribution, acquisition of indebtedness of such Person or
otherwise (including, without limitation, investments in any joint venture or
partnership), (b) guaranty or otherwise become contingently liable for the
Indebtedness or obligations of any Person, or (c) make any loans or advances, or
otherwise extend credit to any Person, except for:
(i) any advance to an officer or employee of
any Borrower or any Subsidiary for travel or other business expenses
in the ordinary course of business, provided that the aggregate amount
of all such advances by all of the Borrowers and their Subsidiaries
(taken as a whole) outstanding at any time shall not exceed Ten
Thousand Dollars ($10,000);
(ii) the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary
course of business;
(iii) any investment in Cash Equivalents, which
are pledged to the Lender as collateral and security for the
Obligations;
(iv) trade credit extended to customers in the
ordinary course of business;
(v) investments, guaranties and contingent
liabilities existing on the date of this Agreement and set forth in
Schedule 6.2.5 hereof;
---------------------
(vi) as otherwise permitted in Section 6.2.4
hereof;
(vii) investments in an aggregate amount not to
exceed Ten Million Dollars ($10,000,000) through conversion of the
advances from the Company to Space Media permitted pursuant to Section
6.1.16(d) of this Agreement into equity in Space Media;
(viii) loans to Space Station Enterprise that are
approved by the Lender;
66
(ix) investments in membership interests in
Space Station Enterprise through conversion to equity of all or any
part of the loans referred to in clause (viii) above in this Section
6.2.5;
(x) transfer by Space Media to RSC Energia of
fifty percent (50%) of the membership interest in RSC Energia/Space
Media owned on the Closing Date by Space Media; and
(xi) transfer by the Company to RSC Energia of
fifty percent (50%) of the membership interest in Space Station
Enterprise owned on the Closing Date by Space Media.
6.2.6 Stock of Subsidiaries.
----------------------
None of the Borrowers will sell or otherwise dispose of any
shares of capital stock of any Subsidiary (except in connection with the
proposed equity investment in Space Media as permitted in this Section 6.2.6 and
the transfers of membership interests contemplated in Section 6.2.5 (x) and
(xi)), the merger or consolidation of a Wholly Owned Subsidiary into any of the
Borrowers or another Wholly Owned Subsidiary of any of the Borrowers or with the
dissolution of any Subsidiary) or permit any Subsidiary to issue any additional
shares of its capital stock except pro rata to its stockholders. The Lender and
--- ----
the Borrowers agree that the Company may sell shares of capital stock of Space
Media in connection with the Company's efforts to raise additional equity for
Space Media. The Lender agrees that after Space Media raises such additional
equity, the Lender will, upon the Company's request and at the Company's
expense, subject to the terms of this Agreement, release Space Media from all
Obligations under this Agreement and the Financing Documents to which it is a
party, upon Space Media's satisfaction of certain conditions to be set by the
Lender, including, without limitation, (a) evidence that Space Media has raised
additional equity in an amount equal to not less than Ten Million Dollars
($10,000,000), (b) confirmation that after such equity has been raised the
Company owns less than fifty percent (50%) of the issued and outstanding stock
of Space Media, (c) Space Media shall have either converted all outstanding
loans from the Company into equity in Space Media and pledged and delivered such
additional equity to the Lender, free and clear of any Liens, or to the extent
such loans are not converted into equity, the Company shall deliver to the
Lender notes evidencing such remaining indebtedness, free and clear of any
Liens; and (f) no Default or Event of Default shall have occurred and been
continuing at such time. In addition, it is understood and agreed that the
release of Space Media described above shall not result in the release of any of
the Stock Collateral.
6.2.7 Subordinated Indebtedness.
--------------------------
None of the Borrowers will, or will permit any Subsidiary to
make:
(a) any payment of principal of, or interest on, any of the
Subordinated Indebtedness, if a Default or an Event of Default then exists
hereunder or would result from such payment;
67
(b) any payment of the principal or interest due on the
Subordinated Indebtedness as a result of acceleration thereunder or a mandatory
prepayment thereunder;
(c) any amendment or modification of or supplement to the
documents evidencing or securing the Subordinated Indebtedness, other than
amendments or modifications that change terms which are not material; and
(d) payment of principal or interest on the Subordinated
Indebtedness other than when due (without giving effect to any acceleration of
maturity or mandatory prepayment).
6.2.8 Liens.
------
Each Borrower agrees that it (a) will not create, incur,
assume or suffer to exist any Lien upon any of its properties or assets,
including the Flight Assets (other than Liens on any real property owned by any
Borrower), whether now owned or hereafter acquired, or permit any Subsidiary so
to do, except for Liens securing the Obligations and Permitted Liens, (b) will
not agree to, assume or suffer to exist any provision in any instrument or other
document for confession of judgment, cognovit or other similar right or remedy
(except as existing in any instrument or other document as of the Closing Date
or if existing in such instrument or other documents in any extension, renewal
or refinancing of such instrument or other documents as permitted under Section
6.2.4, (c) will not allow or suffer to exist any Permitted Liens to be superior
to Liens securing the Obligations, (d) will not enter into any contracts for the
consignment of goods, will not execute or suffer the filing of any financing
statements or the posting of any signs giving notice of consignments, and will
not, as a material part of its business, engage in the sale of goods belonging
to others, and (e) will not allow or suffer to exist the failure of any Lien
described in the Security Documents to attach to, and/or remain at all times
perfected on, any of the property described in the Security Documents.
6.2.9 Transactions with Affiliates.
-----------------------------
None of the Borrowers or any of their Subsidiaries will enter
into or participate in any transaction with any Affiliate or, with the officers,
directors, employees and other representatives of any Borrower and/or any
Subsidiary, except in the ordinary course of business, transfers of membership
interests to RSC Energia as contemplated in Sections 6.2.1, 6.2.5 and 6.2.6 of
this Agreement, or as otherwise permitted in this Agreement.
6.2.10 Debenture.
----------
None of the Borrowers will, or will permit any Subsidiary to
make:
(a) any amendment or modification of or supplement to the
Convertible Debt Loan Documents, other than amendments or modifications that
change terms which are not material; and
(b) payment of principal or interest on the Debenture other
than when due (without giving effect to any acceleration of maturity or
mandatory prepayment).
68
6.2.11 ERISA Compliance.
-----------------
None of the Borrowers or any Commonly Controlled Entity shall:
(a) engage in or permit any "prohibited transaction" (as defined in ERISA); (b)
cause any "accumulated funding deficiency" as defined in ERISA and/or the
Internal Revenue Code; (c) terminate any pension plan in a manner which could
result in the imposition of a lien on the property of any Borrower pursuant to
ERISA; or (d) incur a complete or partial withdrawal with respect to any Multi-
employer Plan.
6.2.12 Prohibition on Hazardous Materials.
-----------------------------------
None of the Borrowers shall place, manufacture or store or
permit to be placed, manufactured or stored any Hazardous Materials on any
property owned, operated or controlled by any Borrower or for which any Borrower
is responsible other than Hazardous Materials placed or stored on such property
in accordance with applicable Laws in the ordinary course of a Borrower's
business expressly described in this Agreement.
6.2.13 Method of Accounting; Fiscal Year.
----------------------------------
Each Borrower agrees that:
(a) it shall not change the method of accounting
employed in the preparation of any financial statements furnished to the Lender
under the provisions of Section 6.1.1 (Financial Statements), unless required to
conform to GAAP or on the advice of the Borrowers' accountants, and on the
condition that the Borrowers' accountants shall furnish such information as the
Lender may request to reconcile the changes with the Borrowers' prior financial
statements
(b) it will not change its fiscal year from a year
ending on June 30/th/.
6.2.14 Compensation.
-------------
None of the Borrowers or any Subsidiary will pay any bonuses,
fees, compensation, commissions, salaries, drawing accounts, or other payments
(cash and non-cash), whether direct or indirect, to any stockholders of any
Borrower or any Subsidiary, or any Affiliate of any Borrower or any Subsidiary,
other than (i) reasonable compensation for actual services rendered by
stockholders in their capacity as officers or employees, (ii) dividends
otherwise permitted under this Agreement, (iii) severance arrangements as
provided for in employment contracts in existence as of the Closing Date or
approved in the future by the Lender, (iv) in connection with any
indemnifications provided for in any Borrower's charter documents, (v) any
payments required by law or by court order in settlement of benefits disputes,
or (vi) in any contract permitted under this Agreement.
6.2.15 Transfer of Collateral.
-----------------------
None of the Borrowers nor any of their Subsidiaries will
transfer, or permit the transfer, to another location of any of the Collateral
or the books and records related to any of the Collateral, except in accordance
with Section 6.1.23 of this Agreement.
69
6.2.16 Disposition of Collateral.
--------------------------
None of the Borrowers will sell, discount, allow credits or
allowances, transfer, assign, extend the time for payment on, convey, lease,
assign, transfer or otherwise dispose of the Collateral, except, prior to an
Event of Default, dispositions expressly permitted elsewhere in this Agreement,
the sale of Inventory in the ordinary course of business, and the sale of
unnecessary or obsolete Equipment, but only if the proceeds of the sale of such
Equipment are (a) used to purchase similar Equipment to replace the unnecessary
or obsolete Equipment or (b) immediately turned over to the Lender for
application to the Obligations in accordance with the provisions of this
Agreement.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
-------------------------------
Section 7.1 Events of Default.
------------------
The occurrence of any one or more of the following events shall constitute
an "Event of Default" under the provisions of this Agreement:
7.1.1 Failure to Pay.
---------------
The failure of the Borrowers to pay any of the Obligations as
and when due and payable in accordance with the provisions of this Agreement,
the Notes and/or any of the other Financing Documents and which failure remains
uncured for five (5) Business Days.
7.1.2 Breach of Representations and Warranties.
-----------------------------------------
Any representation or warranty made in this Agreement or in
any report, statement, schedule, certificate, opinion (including any opinion of
counsel for the Borrowers), financial statement or other document furnished in
connection with this Agreement, any of the other Financing Documents, or the
Obligations, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.
7.1.3 Failure to Comply with Covenants.
---------------------------------
The failure of the Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in Sections 6.1.1, 6.1.2,
6.1.3(a), 6.13(b), 6.1.13, 6.1.16 hereof or in Section 6.2 of this Agreement.
7.1.4 Other Covenants
----------------
The failure of the Borrowers to perform, observe or comply
with any covenant, condition or agreement contained in this Agreement, other
than those set forth in Sections 7.1.1, 7.1.2 or 7.1.3 provided, that if such
failure is capable of cure, then such failure shall constitute an Event of
Default if such failure is not cured within ten (10) days after notice is given
to the Company in accordance with Section 8.1 of this Agreement, provided
however, that if the Borrowers have commenced and are at all times diligently
seeking a cure of such Default, but is unable to complete such cure within such
ten (10) day period, the Borrower shall have an
70
additional twenty (20) days to complete such cure, provided the Borrowers are at
all times diligently seeking a cure.
7.1.5 Default Under Other Financing Documents or Obligations.
-------------------------------------------------------
A default shall occur under any of the Financing Documents
other than this Agreement or under any other Obligations, and such default is
not cured within any applicable grace period provided therein.
7.1.6 Receiver; Bankruptcy.
---------------------
Any Borrower or any Subsidiary shall (a) apply for or consent
to the appointment of a receiver, trustee or liquidator of itself or any of its
property, (b) admit in writing its inability to pay its debts as they mature,
(c) make a general assignment for the benefit of creditors, (d) be adjudicated a
bankrupt or insolvent, (e) file a voluntary petition in bankruptcy or a petition
or an answer seeking or consenting to reorganization or an arrangement with
creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against it in any
proceeding under any such law, or take corporate action for the purposes of
effecting any of the foregoing, (f) by any act indicate its consent to, approval
of or acquiescence in any such proceeding or the appointment of any receiver of
or trustee for any of its property, or suffer any such receivership, trusteeship
or proceeding to continue undischarged for a period of sixty (60) days, or (g)
by any act indicate its consent to, approval of or acquiescence in any order,
judgment or decree by any court of competent jurisdiction or any Governmental
Authority enjoining or otherwise prohibiting the operation of a material portion
of any Borrower's or any Subsidiary's business or the use or disposition of a
material portion of any Borrower's or any Subsidiary's assets.
7.1.7 Involuntary Bankruptcy, etc.
----------------------------
(a) An order for relief shall be entered in any involuntary
case brought against any Borrower or any Subsidiary under the Bankruptcy Code,
or (b) any such case shall be commenced against any Borrower or any Subsidiary
and shall not be dismissed within sixty (60) days after the filing of the
petition, or (c) an order, judgment or decree under any other Law is entered by
any court of competent jurisdiction or by any other Governmental Authority on
the application of a Governmental Authority or of a Person other than any
Borrower or any Subsidiary (i) adjudicating any Borrower, or any Subsidiary
bankrupt or insolvent, or (ii) appointing a receiver, trustee or liquidator of
any Borrower or of any Subsidiary, or of a material portion of any Borrower's or
any Subsidiary's assets, or (iii) enjoining, prohibiting or otherwise limiting
the operation of a material portion of any Borrower's or any Subsidiary's
business or the use or disposition of a material portion of any Borrower's or
any Subsidiary's assets, and such order, judgment or decree continues unstayed
and in effect for a period of thirty (30) days from the date entered.
7.1.8 Judgment.
---------
Unless adequately insured in the opinion of the Lender, the
entry of a final judgment for the payment of money involving more than One
Hundred Thousand Dollars ($100,000) against any Borrower or any Subsidiary, and
the failure by such Borrower or such
71
Subsidiary to discharge the same, or cause it to be discharged, within thirty
(30) days from the date of the order, decree or process under which or pursuant
to which such judgment was entered, or to secure a stay of execution pending
appeal of such judgment.
7.1.9 Execution; Attachment.
----------------------
Any execution or attachment shall be levied against the
Collateral, or any part thereof, and such execution or attachment shall not be
set aside, discharged or stayed within thirty (30) days after the same shall
have been levied.
7.1.10 Default Under Other Borrowings.
-------------------------------
Default shall be made by any of the Borrowers with respect to
any Indebtedness for Borrowed Money in connection with an Indebtedness in an
amount in excess of Five Hundred Thousand Dollars ($500,000) (other than the
Revolving Credit) if such Indebtedness for Borrowed Money is accelerated in
consequence of such event of default or if demand for payment of such
Indebtedness for Borrowed Money is made.
7.1.11 Challenge to Agreements.
------------------------
Any Borrower shall challenge the validity and binding effect
of any provision of any of the Financing Documents or shall state its intention
to make such a challenge of any of the Financing Documents or any of the
Financing Documents shall for any reason (except to the extent permitted by its
express terms) cease to be effective or to create a valid and perfected first
priority Lien (except for Permitted Liens) on, or security interest in, any of
the Collateral purported to be covered thereby.
7.1.12 Material Adverse Effect.
------------------------
The Lender, in its sole discretion, determines in good faith
that an event has occurred or a condition has arisen that could result in a
Material Adverse Effect and gives the Company notice to that effect.
7.1.13 Intentionally Omitted.
----------------------
7.1.14 Liquidation, Termination, Dissolution, Change in
------------------------------------------------
Management, etc.
----------------
Any Borrower shall liquidate, dissolve or terminate its
existence or any change in the identity of the President, Chief Financial
Officer or Chief Executive Officer of any Borrower or control of any Borrower
(other than the Company) without the prior written consent of the Lender.
7.1.15 Contract Default, Debarment or Suspension.
------------------------------------------
Default shall be made under any Government Contract, or any
Government Contract is terminated for default by any Governmental Authority for
any reason whatsoever, or if the Borrower is debarred or suspended, whether
temporarily or permanently, by any Governmental Authority, unless within fifteen
(15) days of when any Borrower's has knowledge or should have knowledge of such
default, debarment, or suspension, the Lender agrees in writing to extend, waive
or suspend the effects of this provision.
72
Section 7.2 Remedies.
---------
Upon the occurrence and during the continuance of any Event of Default, the
Lender may, in the exercise of its sole and absolute discretion from time to
time, at any time thereafter exercise any one or more of the following rights,
powers or remedies.
7.2.1 Acceleration.
-------------
The Lender may after oral notice to the Company, declare any
or all of the Obligations to be immediately due and payable, notwithstanding
anything contained in this Agreement or in any of the other Financing Documents
to the contrary, without presentment, demand, protest, notice of protest or of
dishonor, or other notice of any kind, all of which the Borrowers hereby waive.
7.2.2 Further Advances.
-----------------
The Lender may from time to time without notice to the
Borrowers suspend, terminate or limit any further advances, loans or other
extensions of credit under the Revolving Credit Commitment, under this Agreement
and/or under any of the other Financing Documents. Further, upon the occurrence
of an Event of Default or Default specified in Sections 7.1.6 (Receiver;
Bankruptcy) or 7.1.7 (Involuntary Bankruptcy, etc.), the Revolving Credit
Commitment and any agreement in any of the Financing Documents to provide
additional credit shall immediately and automatically terminate and the unpaid
principal amount of the Notes (with accrued interest thereon) and all other
Obligations then outstanding, shall immediately become due and payable without
further action of any kind and without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrowers.
7.2.3 Uniform Commercial Code.
------------------------
The Lender shall have all of the rights and remedies of a
secured party under the applicable Uniform Commercial Code and other applicable
Laws. Upon demand by the Lender, the Borrowers shall assemble the Collateral and
make it available to the Lender, at a place designated by the Lender. The Lender
or its agents may without notice from time to time enter upon any Borrower's
premises to take possession of the Collateral, to remove it, to render it
unusable, to process it or otherwise prepare it for sale, or to sell or
otherwise dispose of it.
Any written notice of the sale, disposition or other intended
action by the Lender with respect to the Collateral which is sent by regular
mail, postage prepaid, to the Borrowers at the address set forth in Section 8.1
(Notices), or such other address of the Borrowers which may from time to time be
shown on the Lender's records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute commercially reasonable notice to
the Borrowers. The Lender may alternatively or additionally give such notice in
any other commercially reasonable manner. Nothing in this Agreement shall
require the Lender to give any notice not required by applicable Laws.
If any consent, approval, or authorization of any state,
municipal or other Governmental Authority or of any other Person or of any
Person having any interest therein, should be necessary to effectuate any sale
or other disposition of the Collateral, the Borrowers
73
agree to execute all such applications and other instruments, and to take all
other action, as may be required in connection with securing any such consent,
approval or authorization.
The Borrowers recognize that the Lender may be unable to
effect a public sale of all or a part of the Collateral consisting of Securities
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and other applicable Federal and state Laws. The Lender may, therefore,
in its discretion, take such steps as it may deem appropriate to comply with
such Laws and may, for example, at any sale of the Collateral consisting of
securities restrict the prospective bidders or purchasers as to their number,
nature of business and investment intention, including, without limitation, a
requirement that the Persons making such purchases represent and agree to the
satisfaction of the Lender that they are purchasing such securities for their
account, for investment, and not with a view to the distribution or resale of
any thereof. The Borrowers covenant and agree to do or cause to be done promptly
all such acts and things as the Lender may request from time to time and as may
be necessary to offer and/or sell the securities or any part thereof in a manner
which is valid and binding and in conformance with all applicable Laws. Upon any
such sale or disposition, the Lender shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral consisting of securities so
sold.
7.2.4 Specific Rights With Regard to Collateral.
------------------------------------------
In addition to all other rights and remedies provided
hereunder or as shall exist at law or in equity from time to time, the Lender
may (but shall be under no obligation to), without notice to any of the
Borrowers, and each Borrower hereby irrevocably appoints the Lender as its
attorney-in-fact, with power of substitution, in the name of the Lender and/or
in the name of any or all of the Borrowers or otherwise, for the use and benefit
of the Lender, but at the cost and expense of the Borrowers and without notice
to the Borrowers:
(a) request any Account Debtor obligated on any of the
Accounts to make payments thereon directly to the Lender, with the Lender taking
control of the cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or
deal with the same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or
any part of the Collateral;
(d) copy, transcribe, or remove from any place of business
of any Borrower or any Subsidiary all books, records, ledger sheets,
correspondence, invoices and documents, relating to or evidencing any of the
Collateral or without cost or expense to the Lender, make such use of any
Borrower's or any Subsidiary's place(s) of business as may be reasonably
necessary to administer, control and collect the Collateral;
(e) repair, alter or supply goods if necessary to fulfill
in whole or in part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
74
(g) institute and prosecute legal and equitable proceedings
to enforce collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange
or adjust claims in respect of any of the Collateral or any legal proceedings
brought in respect thereof;
(i) endorse or sign the name of any Borrower upon any items
of payment, certificates of title, instruments, securities, stock powers,
documents, documents of title, financing statements, assignments, notices or
other writing relating to or part of the Collateral and on any proof of claim in
bankruptcy against an Account Debtor;
(j) notify the Post Office authorities to change the
address for the delivery of mail to the Borrowers to such address or Post Office
Box as the Lender may designate and receive and open all mail addressed to any
of the Borrowers; and
(k) take any other action necessary or beneficial to
realize upon or dispose of the Collateral or to carry out the terms of this
Agreement.
7.2.5 Application of Proceeds.
------------------------
Any proceeds of sale or other disposition of the Collateral
will be applied by the Lender to the payment of any and all Enforcement Costs,
and any balance of such proceeds will be applied to the Obligations in such
order and manner as the Lender may from time to time in its sole and absolute
discretion determine. If the sale or other disposition of the Collateral fails
to fully satisfy the Obligations, the Borrowers shall remain liable to the
Lender for any deficiency.
7.2.6 Performance by Lender.
----------------------
If the Borrowers shall fail to pay the Obligations or
otherwise fail to perform, observe or comply with any of the conditions,
covenants, terms, stipulations or agreements contained in this Agreement or any
of the other Financing Documents, the Lender without notice to or demand upon
the Borrowers and without waiving or releasing any of the Obligations or any
Default or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of the Borrowers, and may enter upon the premises of the Borrowers for
that purpose and take all such action thereon as the Lender may consider
necessary or appropriate for such purpose and each of the Borrowers hereby
irrevocably appoints the Lender as its attorney-in-fact to do so, with power of
substitution, in the name of the Lender, in the name of any or all of the
Borrowers or otherwise, for the use and benefit of the Lender, but at the cost
and expense of the Borrowers and without notice to the Borrowers. All sums so
paid or advanced by the Lender together with interest thereon from the date of
payment, advance or incurring until paid in full at the Post-Default Rate and
all costs and expenses, shall be deemed part of the Enforcement Costs, shall be
paid by the Borrowers to the Lender on demand, and shall constitute and become a
part of the Obligations.
75
7.2.7 Other Remedies.
---------------
The Lender may from time to time proceed to protect or enforce
the rights of the Lender by an action or actions at law or in equity or by any
other appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of any or all of the Borrowers now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, the Lender or any Affiliate of the
Lender.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1 Notices.
--------
All notices, requests and demands to or upon the parties to this Agreement
shall be in writing and shall be deemed to have been given or made when
delivered by hand on a Business Day, or two (2) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Business Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:
Borrowers: c/o Spacehab, Incorporated
Spacehab, Inc.
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, D. C. 20024
Attention: Chief Financial Officer
Lender: Bank of America, N. A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, VP
By written notice, each party to this Agreement may change the address to
which notice is given to that party, provided that such changed notice shall
include a street address to which notices may be delivered by overnight courier
in the ordinary course on any Business Day.
Section 8.2 Amendments; Waivers.
--------------------
8.2.1 In General.
-----------
This Agreement and the other Financing Documents may not be
amended, modified, or changed in any respect except by an agreement in writing
signed by the Lender and the Borrowers. No waiver of any provision of this
Agreement or of any of the other Financing Documents, nor consent to any
departure by the Borrowers therefrom, shall in any event be effective unless the
same shall be in writing signed by the Lender. No course of dealing between the
Borrowers and the Lender and no act or failure to act from time to time on the
part of the
76
Lender shall constitute a waiver, amendment or modification of any provision of
this Agreement or any of the other Financing Documents or any right or remedy
under this Agreement, under any of the other Financing Documents or under
applicable Laws.
Section 8.3 Cumulative Remedies.
--------------------
The rights, powers and remedies provided in this Agreement and in the other
Financing Documents are cumulative, may be exercised concurrently or separately,
may be exercised from time to time and in such order as the Lender shall
determine, subject to the provisions of this Agreement, and are in addition to,
and not exclusive of, rights, powers and remedies provided by existing or future
applicable Laws. In order to entitle the Lender to exercise any remedy reserved
to it in this Agreement, it shall not be necessary to give any notice, other
than such notice as may be expressly required in this Agreement.
Section 8.4 Severability.
-------------
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability of the
remaining provisions shall remain effective and binding on the parties thereto
and shall not be affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the
limit of such validity;
(c) if such provision or part thereof pertains to repayment
of the Obligations, then, at the sole and absolute discretion of the Lender, all
of the Obligations of the Borrowers to the Lender shall become immediately due
and payable; and
(d) if the affected provision or part thereof does not
pertain to repayment of the Obligations, but operates or would prospectively
operate to invalidate this Agreement in whole or in part, then such provision or
part thereof only shall be void, and the remainder of this Agreement shall
remain operative and in full force and effect.
Section 8.5 Assignments by Lender.
----------------------
The Lender may, without notice to or consent of the Borrowers, assign to
any Person (an "Assignee") all of the Lender's Revolving Credit Commitment,
provided that prior to any Default or Event of Default, such Assignee will be a
commercial bank. The Lender and its Assignee shall notify the Borrowers in
writing of the date on which the assignment is to be effective (the "Adjustment
Date"). On or before the Adjustment Date, the assigning Lender, the Borrowers
and the respective Assignee shall execute and deliver a written assignment
agreement in a form acceptable to the Lender, which shall constitute an
amendment to this Agreement to the extent necessary to reflect such assignment.
Upon the request of any assigning Lender following an assignment made in
accordance with this Section 8.5, the Borrowers shall issue new Notes to
77
the Assignee reflecting such assignment, in exchange for the existing Notes held
by the assigning Lender.
In addition, the Lender may at any time pledge all or any portion of the
Lender's rights under this Agreement, the Revolving Credit Commitment or any of
the Obligations to a Federal Reserve Bank.
Section 8.6 Participations by Lender.
-------------------------
The Lender may at any time sell to one or more financial institutions
participating interests in any of the Lender's Obligations or Revolving Credit
Commitment; provided, however, that (a) no such participation shall relieve the
Lender from its obligations under this Agreement or under any of the other
Financing Documents to which it is a party, (b) the Lender shall remain solely
responsible for the performance of its obligations under this Agreement and
under all of the other Financing Documents to which it is a party, and (c) the
Borrowers shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement and the
other Financing Documents.
Section 8.7 Disclosure of Information by Lender.
------------------------------------
In connection with any sale, transfer, assignment or participation by the
Lender in accordance with Section 8.5 (Assignments by Lender) or Section 8.6
(Participations by Lender), the Lender shall have the right to disclose to any
actual or potential purchaser, assignee, transferee or participant all financial
records, information, reports, financial statements and documents obtained in
connection with this Agreement and/or any of the other Financing Documents or
otherwise.
Section 8.8 Successors and Assigns.
-----------------------
This Agreement and all other Financing Documents shall be binding upon and
inure to the benefit of the Borrowers and the Lender and their respective
successors and assigns, except that the Borrowers shall not have the right to
assign their rights hereunder or any interest herein without the prior written
consent of the Lender.
Section 8.9 Continuing Agreements.
----------------------
All covenants, agreements, representations and warranties made by the
Borrowers in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lender of the Revolving Credit and the execution and delivery of the Notes,
shall be binding upon the Borrowers regardless of how long before or after the
date hereof any of the Obligations were or are incurred, and shall continue in
full force and effect so long as any of the Obligations are outstanding and
unpaid. From time to time upon the Lender's request, and also as a condition of
the release of any one or more of the Security Documents, the Borrowers and
other Persons obligated with respect to the Obligations shall provide the Lender
with such acknowledgments and agreements as the Lender may require, to the
effect that there exists no defenses, rights of setoff or recoupment, claims,
counterclaims, actions or causes of action of any kind or nature whatsoever
against the Lender and/or any of its agents and others, or to the extent there
are, the same are waived and released, including, without
78
limitation, acknowledgements as to all of the matters set forth in Section
2.3.12 of this Agreement,.
Section 8.10 Enforcement Costs.
------------------
The Borrowers agree to pay to the Lender on demand all Enforcement Costs,
together with interest thereon from the date incurred or advanced until paid in
full at a per annum rate of interest equal at all times to the Post-Default
Rate. Enforcement Costs shall be due and payable on demand. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
Section 8.11 Applicable Law; Jurisdiction.
-----------------------------
8.11.1 Applicable Law.
---------------
Borrowers acknowledge and agree that the Financing Documents,
including, this Agreement, shall be governed by the Laws of the State, as if
each of the Financing Documents and this Agreement had each been executed,
delivered, administered and performed solely within the State even though for
the convenience and at the request of the Borrowers, one or more of the
Financing Documents may be executed elsewhere. The Lender acknowledges,
however, that remedies under certain of the Financing Documents that relate to
property outside the State may be subject to the laws of the state in which the
property is located.
8.11.2 Submission to Jurisdiction.
---------------------------
The Borrowers irrevocably submit to the jurisdiction of any
state or federal court sitting in the State over any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Financing
Documents. Each of the Borrowers irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. Final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon the Borrowers and may be enforced in any court in which the Borrowers are
subject to jurisdiction, by a suit upon such judgment, provided that service of
process is effected upon the Borrowers in one of the manners specified in this
Section or as otherwise permitted by applicable Laws.
8.11.3 Appointment of Agent for Service of Process.
--------------------------------------------
The Borrowers hereby irrevocably designate and appoint ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, c/o Spacehab, Incorporated, ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ as each Borrower's authorized agent to receive on each Borrower's
behalf service of any and all process that may be served in any suit, action or
proceeding of the nature referred to in this Section in any state or federal
court sitting in the State. If such agent shall cease so to act, the Borrowers
shall irrevocably designate and appoint without delay another such agent in the
State satisfactory to the Lender and shall promptly deliver to the Lender
evidence in writing of such other agent's acceptance of such appointment and its
agreement that such appointment shall be irrevocable.
79
8.11.4 Service of Process.
-------------------
Each of the Borrowers hereby consents to process being served
in any suit, action or proceeding of the nature referred to in this Section by
(a) the mailing of a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to the Borrower at the Borrower's address
designated in or pursuant to Section 8.1 (Notices), and (b) serving a copy
thereof upon the agent, if any, designated and appointed by the Borrower as the
Borrower's agent for service of process by or pursuant to this Section. The
Borrowers irrevocably agree that such service (y) shall be deemed in every
respect effective service of process upon the Borrowers in any such suit, action
or proceeding, and (z) shall, to the fullest extent permitted by law, be taken
and held to be valid personal service upon the Borrowers. Nothing in this
Section shall affect the right of the Lender to serve process in any manner
otherwise permitted by law or limit the right of the Lender otherwise to bring
proceedings against the Borrowers in the courts of any jurisdiction or
jurisdictions.
Section 8.12 Duplicate Originals and Counterparts.
-------------------------------------
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.
Section 8.13 Headings.
---------
The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
Section 8.14 No Agency.
----------
Nothing herein contained shall be construed to constitute the Borrowers as
the agent of the Lender for any purpose whatsoever or to permit the Borrowers to
pledge any of the credit of the Lender. The Lender shall not be responsible or
liable for any shortage, discrepancy, damage, loss or destruction of any part of
the Collateral wherever the same may be located and regardless of the cause
thereof. The Lender shall not, by anything herein or in any of the Financing
Documents or otherwise, assume any of the Borrowers' obligations under any
contract or agreement assigned to the Lender, and the Lender shall not be
responsible in any way for the performance by the Borrowers of any of the terms
and conditions thereof.
Section 8.15 Date of Payment.
----------------
Should the principal of or interest on the Notes become due and payable on
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and in the case of principal, interest shall be payable
thereon at the rate per annum specified in the Notes during such extension.
Section 8.16 Entire Agreement.
-----------------
This Agreement is intended by the Lender and the Borrowers to be a
complete, exclusive and final expression of the agreements contained herein.
Neither the Lender nor the Borrowers shall hereafter have any rights under any
prior agreements pertaining to the matters addressed by
80
this Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.
Section 8.17 Waiver of Trial by Jury.
------------------------
EACH OF THE BORROWERS AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES ARISING
OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING
DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the Borrowers
and the Lender, and the Borrowers and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect. The
Borrowers and the Lender further represent that they have been represented in
the signing of this Agreement and in the making of this waiver by independent
legal counsel, selected of their own free will, and that they have had the
opportunity to discuss this waiver with counsel.
Section 8.18 Liability of the Lender.
------------------------
The Borrowers hereby agree that the Lender shall not be chargeable for any
negligence, mistake, act or omission of any accountant, examiner, agency or
attorney employed by the Lender in making examinations, investigations or
collections, or otherwise in perfecting, maintaining, protecting or realizing
upon any lien or security interest or any other interest in the Collateral or
other security for the Obligations.
By inspecting the Collateral or any other properties of the Borrowers or by
accepting or approving anything required to be observed, performed or fulfilled
by the Borrowers or to be given to the Lender pursuant to this Agreement or any
of the other Financing Documents, the Lender shall not be deemed to have
warranted or represented the condition, sufficiency, legality, effectiveness or
legal effect of the same, and such acceptance or approval shall not constitute
any warranty or representation with respect thereto by the Lender.
Section 8.19 Indemnification.
---------------
The Borrowers agrees to indemnify and hold harmless, Lender, the respective
parent and Affiliates of the Lender and the respective parent's and Affiliates'
officers, directors, shareholders, employees and agents (each an "Indemnified
Party," and collectively, the "Indemnified Parties"), from and against any and
all claims, liabilities, losses, damages, costs and expenses (whether or not
such Indemnified Party is a party to any litigation), including without
limitation, reasonable attorney's fees and costs and costs of investigation,
document production, attendance at depositions or other discovery, incurred by
any Indemnified Party with respect to, arising out of or as a consequence of (a)
this Agreement or any of the other Financing Documents, including without
limitation, any failure of the Borrowers to pay when due (at maturity, by
acceleration or otherwise) any principal, interest, fee or any other amount due
under
81
this Agreement or the other Financing Documents, or any other Event of Default;
(b) the use by the Borrowers of any proceeds advanced hereunder; (c) the
transactions contemplated hereunder; or (d) any claim, demand, action or cause
of action being asserted against (i) the Borrowers or any of their Affiliates by
any other Person, or (ii) any Indemnified Party by the Borrowers in connection
with the transactions contemplated hereunder. Notwithstanding anything herein or
elsewhere to the contrary, the Borrowers shall not be obligated to indemnify or
hold harmless any Indemnified Party from any liability, loss or damage resulting
from the gross negligence, willful misconduct or unlawful actions of such
Indemnified Party. Any amount payable to the Lender under this Section will bear
interest at the Post- Default Rate from the due date until paid.
Section 8.20 Joinder of Additional Borrowers.
-------------------------------
Any Additional Borrower which is required to join this Agreement as an
Additional Borrower pursuant to Section 6.2.1 (Subsidiaries) shall execute and
deliver to the Lender (i) an Additional Borrower Joinder Supplement in
substantially the form attached hereto as EXHIBIT A pursuant to which it shall
---------
join as a Borrower each of the documents to which the Borrowers are parties and
(ii) all documents necessary to grant and perfect a first lien security interest
to the Lender in all Collateral held by such Additional Borrower, subject only
to Permitted Liens. The Company shall at its expense deliver such Additional
Borrower Joinder Supplement, and related documents, including, without
limitation, Uniform Commercial Code financing statements, lien searches, and
resolutions, to the Lender within fifteen (15) days after the date of the filing
of such Additional Borrower's articles of incorporation if the Additional
Borrower is a corporation, the date of the filing of its certificate of limited
partnership if it is a limited partnership or the date of its organization if it
is an entity other than a limited partnership or corporation.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
82
IN WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.
WITNESS/ATTEST: SPACEHAB, INCORPORATED
_________________________ By:____________________________(Seal)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS/ATTEST ▇▇▇▇▇▇▇ ENGINEERING CORPORATION
_________________________ By:____________________________(Seal)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS/ATTEST: ASTROTECH SPACE OPERATIONS, INC.
_________________________ By:____________________________(Seal)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
WITNESS/ATTEST: SPACE MEDIA, INC.
_________________________ By:____________________________(Seal)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
83
WITNESS: BANK OF AMERICA, N. A.
_________________________ By:____________________________(Seal)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
84
LIST OF EXHIBITS
----------------
A. Additional Borrower Joinder Supplement
B. Revolving Credit Note
C. Wire Transfer Procedures
D. Subsidiaries
E. Form of Compliance Certificate
LIST OF SCHEDULES
-----------------
Schedule 4.1.10 Litigation
Schedule 4.1.13 Indebtedness for Borrowed Money
Schedule 4.1.19 Employee Relations
Schedule 4.1.20 Hazardous Materials
Schedule 4.1.21 Perfection and Priority of Collateral
Schedule 6.1.13 Description of Operations Involving Hazardous Materials
Schedule 6.2.5 Investments and Loans as of Closing Date
EXHIBIT E
---------
FINANCING AGREEMENT
-------------------
COMPLIANCE CERTIFICATE
----------------------
THIS CERTIFICATE is made as of __________________, 200_, by Spacehab,
Incorporated, a corporation organized under the laws of the State of Washington
(the "Company"), to Bank of America, N.A., a national banking association (the
"Lender"), pursuant to Section _________of the Financing and Security Agreement
dated August 9, 2000, (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Agreement") by and
between the Company, the Borrowers named therein and the Lender.
I, ____________________, hereby certify that I am the ______________ of the
Company and am a Responsible Officer (as that term is defined in the Financing
Agreement) authorized to certify to the Lender on behalf the Borrowers as
follows:
(a) This Certificate is given to induce the Lender to make
advances to the Borrowers under the Financing Agreement.
(b) This Certificate accompanies the consolidated financial
statements for the period ended ___________________, 200__ (the "Current
Financials") which the Company is furnishing to the Lender pursuant to Section
6.1.1(__) of the Financing Agreement. The Current Financials have been prepared
in accordance with GAAP (as that term is defined in the Financing Agreement).
(c) As required by Section 6.1.1(__) of the Financing Agreement,
I have set forth on Schedule 1 a detailed computation of each financial covenant
----------
in the Financing Agreement and a cash flow projection report.
(d) No change has occurred to the information contained in the
Collateral Disclosure List except as set forth on Schedule 2 to this
----------
Certificate. By way of example and not limitation, the Collateral Disclosure
List, together with Schedule _, contains a listing of all of the locations
----------
(owned, leased, warehouses or otherwise) where any Collateral (as that term is
defined in the Financing Agreement) is located, all Subsidiaries (as that term
is defined in the Financing Agreement).
(e) As of the date hereof, there exists no Default or Event of
Default, as defined in the Article 7 of the Financing Agreement.
(f) On the date hereof, the representations and warranties
contained in Article 4 of the Financing Agreement are true with the same effect
as though such representations and warranties had been made on the date hereof.
WITNESS my signature this _____ day of ____________, 200_.
SPACEHAB, INCORPORATED
BY: ______________________________
Name:
Title:
EXHIBIT C
---------
BANK OF AMERICA BUSINESS CREDIT
WIRE TRANSFER PROCEDURES
The transfer of funds by means of wire may be made by Bank of America
(lender) at the request of its customer (borrower). Such wire transfers are
categorized by lender as either repetitive or non-repetitive.
Repetitive:
----------
Repetitive wire transfers may vary in amount, but are consistent in terms
of the payee, the location to which funds are wired, the bank name, account
number and the routing transit number.
Either borrower or lender may initiate a repetitive wire transfer. The
borrower may identify the repetitive nature of transfers and request they be
established as such via the "Repetitive Wire Transfer Authorization Form" (copy
attached). Lender, after observing numerous transfers to the same recipient and
destination, may initiate the repetitive process by faxing or mailing the
"Repetitive Wire Authorization Form" to the borrower for completion and return.
Although a first request for a repetitive wire transfer may be honored from
a faxed copy of the "Repetitive Wire Transfer Authorization Form", a copy of the
form containing an original signature must be received from the borrower. All
transfer authorization forms must be approved by and contain the signature of a
person authorized by the borrower to advance funds from borrower's line of
credit with the lender.
After receipt of the original "Repetitive Wire Transfer Authorization Form"
by the lender, subsequent wire transfers to the recipient named thereon may be
initiated by telephone request, provided the requesting party is identified by
the lender as a person authorized by borrower to advance funds from the
borrower's line of credit with lender.
Non-Repetitive:
--------------
Non-Repetitive wire transfers are directed to recipients on a one-time or
infrequent basis or are directed to varied destinations. Non-repetitive wire
transfers require that written notification be provided to lender by borrower,
showing payee, location, account number, routing transit number and name and
location of bank into which funds are to be transferred. Such written
notification may be provided by means of a "Non-Repetitive Wire Transfer
Authorization Form" (copy attached).
Required information may be faxed to lender in order to expedite the
transfer; however, a copy of the transfer authorization form with an original
signature(s) must be received by lender from borrower. The transfer
authorization form must be approved by and contain the signature
of a person authorized by the borrower to advance funds from borrower's line of
credit with the lender.
For any non-repetitive wire transfer, Lender may, at its discretion,
perform a telephone verification with an authorized representative (the original
signer or another authorized representative) of borrower prior to initiating the
transfer.
BANK OF AMERICA BUSINESS CREDIT
REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
Customer Name:______________________________ Date: _______________
Name of Person Authorizing Transfer for Customer: ____________________________
Note: Must be Person
Authorized to Advance Funds
Signature of Person Authorizing Transfer for Customer: _________________________
PAYEE
Name of Recipient of Funds: ____________________________________________________
Location: ______________________________________________________________________
Account Number into Which Funds are to be Transferred: _________________________
DESTINATION OF FUNDS
Name and Location of Bank Receiving Funds:
Bank Name: _____________________________________________________________________
Routing Information (ABA Number): ______________________________________________
Bank Location: City: ____________________________________________
State: ____________________________________________
(for International Wires) Country: _____________________________________________
Special Instructions: __________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
BANK USE ONLY
Business Credit Department
Business Credit Authorization: _________________________________________________
Print name of person at Bank approved to authorize Wire Transfers
Business Credit Authorization: _____________________________________________
Signature of person at Bank approved to authorize Wire Transfers
WIRE TRANSFER DEPARTMENT
F.D. Number Assigned: _____________________________________________
Account Number to Debit: __________________________________________
BANK OF AMERICA BUSINESS CREDIT
NON-REPETITIVE WIRE TRANSFER AUTHORIZATION
CUSTOMER INFORMATION
Customer Name: ___________________________ Date: _______________________
Name of Person Authorizing Transfer for Customer: _______________________
Note: Must be Person Authorized to
Advance Funds
Signature of Person Authorizing Transfer for Customer: __________________
PAYEE
Name of Recipient of Funds: _____________________________________________
Location: _______________________________________________________________
Account Number into Which Funds are to be Transferred: __________________
DESTINATION OF FUNDS
Name and Location of Bank Receiving Funds:
Bank Name: ______________________________________________________________
Routing Information (ABA Number): _______________________________________
Bank Location: City: __________________________________
State: ___________________________________
(for International Wires) Country: ______________________________________
Special Instructions: ___________________________________________________
_________________________________________________________________________
_________________________________________________________________________
