EXHIBIT 10.6
AMENDED AND RESTATED LOAN AGREEMENT
between
MELLON BANK (DE), NATIONAL ASSOCIATION
and
ASTROPOWER, INC.
Dated as of November 24, 1997
LOAN AGREEMENT BETWEEN MELLON BANK (DE), N.A. and
ASTROPOWER, INC.
TABLE OF CONTENTS
Article Page
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I. DEFINITIONS..................................................... 1
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II. CREDIT ACCOMMODATIONS........................................... 8
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2.1 The Line of Credit....................................... 8
2.2 Term Loan................................................ 9
2.4 Borrowing................................................ 10
2.5 Prepayment and Repayment................................. 10
2.6 Requirements of Law...................................... 10
III. SECURITY........................................................ 11
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3.1 Security Documents....................................... 11
3.2 Additional Documents..................................... 11
IV. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.................. 11
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4.1 Good Standing of the Borrower; Authorization............. 11
4.2 Compliance with Laws and Other Agreements................ 11
4.3 No Conflict; Governmental Approvals...................... 12
4.4 Financial and Other Information Regarding Borrower....... 12
4.5 Taxes.................................................... 12
4.6 Encumbrances and Guaranties.............................. 12
4.7 Material Adverse Changes................................. 13
4.8 Margin Securities........................................ 13
4.9 ERISA.................................................... 13
4.10 Pending Litigation....................................... 13
4.11 Valid, Binding and Enforceable........................... 13
4.12 Priority of Security Interests........................... 13
4.13 Environmental Matters.................................... 14
4.14 No Untrue Statements..................................... 14
V. CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS.................. 14
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5.1 Documents to be Delivered by the Borrower at Closing..... 14
5.2 Conditions Precedent to Making Line of Credit Loans...... 15
VI. AFFIRMATIVE COVENANTS OF THE BORROWER........................... 16
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6.1 Use of Proceeds.......................................... 16
6.2 Financial Statements..................................... 16
6.3 Ordinary Course of Business; Records..................... 17
6.4 Information for the Bank................................. 17
6.5 Insurance................................................ 17
(i)
6.6 Maintenance............................................. 18
6.7 Taxes................................................... 18
6.8 Leases.................................................. 18
6.9 Corporate Existence; Certain Rights; Laws............... 18
6.10 Notice of Litigation or Other Proceedings............... 18
6.11 Indebtedness............................................ 19
6.12 Notice of Events of Default............................. 19
6.13 ERISA................................................... 19
6.14 Deposit Accounts........................................ 19
6.15 Management.............................................. 19
6.16 Financial Covenants..................................... 19
6.17 Compliance with Environmental Laws...................... 19
6.18 Further Actions......................................... 19
VII. NEGATIVE COVENANTS............................................. 20
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7.1 Fundamental Corporate Changes........................... 20
7.2 Indebtedness............................................ 20
7.3 Encumbrances............................................ 20
7.4 Guaranties.............................................. 21
7.5 Sales and Lease-Backs................................... 21
7.6 Loans, Investments...................................... 21
7.7 Change in Business...................................... 21
7.8 Capital Expenditures.................................... 21
7.9 Sale or Discount of Receivables......................... 21
7.10 Prepayment of Indebtedness.............................. 21
7.11 ERISA................................................... 22
7.12 Restricted Payments..................................... 22
7.13 Salary Limitations...................................... 22
7.14 Compliance with Federal Reserve Board Regulations....... 22
VIII. EVENTS OF DEFAULT....................................... 22
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8.1 Borrower's Failure to Pay............................... 22
8.2 Breach of Covenants or Conditions....................... 23
8.3 Defaults in Other Agreements............................ 23
8.4 Agreements Invalid...................................... 23
8.5 False Warranties; Breach of Representations............. 23
8.6 Judgments............................................... 23
8.7 Bankruptcy or Insolvency of the Borrower................ 23
IX. REMEDIES....................................................... 24
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9.1 Further Advances; Acceleration; Setoff.................. 24
9.2 Further Remedies; Confession of Judgment................ 25
X. MISCELLANEOUS.................................................. 26
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10.1 Remedies Cumulative; No Waiver.......................... 26
10.2 Notices................................................. 26
10.3 Costs, Expenses and Attorneys' Fees..................... 27
10.4 Survival of Covenants................................... 27
(ii)
10.5 Counterparts; Effectiveness............................. 27
10.6 Headings................................................ 28
10.7 Payment Due On A Day Other Than A Business Day.......... 28
10.8 Judicial Proceedings.................................... 28
10.9 Governing Law........................................... 28
10.10 Integration............................................. 28
10.11 Amendment and Waiver.................................... 28
10.12 Successors and Assigns.................................. 28
10.13 Severability of Provisions.............................. 29
10.14 Consent to Jurisdiction and Service of Process.......... 29
10.15 Indemnification......................................... 29
(iii)
LOAN AGREEMENT
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THIS AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"), dated as of
November 24, 1997, is between MELLON BANK (DE), N.A., a national banking
association (the "Bank"), and ASTROPOWER, INC., a Delaware corporation (the
"Borrower").
BACKGROUND
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A. The Bank is a national banking association with an office located
at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
B. The Borrower is a Delaware corporation with offices located at
Xxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000.
C. Prior to the date hereof, the Bank has provided to the Borrower a
line of credit and two term loan facilities pursuant to certain loan documents
including, without limitation, that certain Loan Agreement dated December 15,
1995, that certain Loan Agreement dated March 17, 1995, and that certain Loan
Agreement dated February 14, 1993 (collectively, and as amended from time to
time, the "Existing Loan Agreement").
D. The Borrower has requested the Bank to amend and restate the
Existing Loan Agreement to provide for an increase in Borrower's line of credit
and an increase and consolidation of the Borrower's two term loan facilities.
Under and subject to the terms of this Agreement, the Bank has agreed to this
request.
E. THIS AGREEMENT IS ISSUED IN ORDER TO AMEND, RESTATE AND EVIDENCE,
AND TO BE A SUBSTITUTE FOR, BUT NOT TO BE A PAYMENT, SATISFACTION, CANCELLATION
OR A NOVATION OF THE EXISTING LOAN AGREEMENT. THE SUBSTITUTION OF THIS AGREEMENT
FOR THE EXISTING LOAN AGREEMENT DOES NOT EXTINGUISH THE INDEBTEDNESS EVIDENCED
BY THE EXISTING LOAN AGREEMENT OR ANY PORTION THEREOF AND THE LIABILITIES OF THE
BORROWER THEREUNDER AND HEREUNDER ARE CONTINUOUS. EXCEPT TO THE EXTENT THE
PRINCIPAL AVAILABILITY UNDER THE BORROWER'S EXISTING LINE OF CREDIT AND TERM
LOAN FACILITIES IS INCREASED BY THE TERMS OF THIS AGREEMENT, THIS AGREEMENT DOES
NOT EVIDENCE ANY NEW ADVANCES OF CREDIT AND DOES NOT REFLECT ANY AGREEMENT BY
THE BANK FOR THE EXTENSION OF ANY ADDITIONAL CREDIT TO THE BORROWER.
ARTICLE 1.
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DEFINITIONS
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Terms used herein without definition that are defined in the Uniform
Commercial Code shall have the meanings ascribed to them therein, unless the
context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Account" shall have the meaning given to that term in the Uniform
Commercial
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Code and, in addition, shall include any right to payment for goods sold or
leased or services rendered which is evidenced by an instrument or chattel
paper.
"Affiliate" shall mean any Subsidiary of the Borrower and any Person
or entity that, now or hereafter, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common ownership or
control with the Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all exhibits,
amendments, modifications and supplements hereto as may be in effect from time
to time.
"Applicable Rate" shall mean: (i) for so long as neither of the
contingencies set forth in subparagraphs (ii) and (iii) hereof have occurred,
the Prime Rate plus one percent (1% per annum; (ii) if the Borrower realizes and
reports net income before taxes for its fiscal year ending as of December 31,
1997 of $500,000 or more, then as of the date of such reporting, the Prime Rate
plus three fourths of one percent ( 3/4%); or (iii) if the Borrower raises new
equity of at least $15,000,000 through an initial public offering, then as of
the date such new equity is received by the Company in full, the Prime Rate plus
one half of one percent ( 1/2%).
"Amended and Restated Line of Credit Note" shall have the meaning set
forth in Section 2.1 of this Agreement, together with all replacements,
amendments and renewals thereof.
"Amended and Restated Term Loan Note" shall have the meaning set forth
in Section 2.2 of this Agreement, together with all supplements, amendments and
renewals thereof.
"Assignment of Claims" shall mean that assignment by the Borrower to
the Bank, dated the date of this Agreement, in form and substance satisfactory
to the Bank, of claims of the Borrower upon the United States, as required
pursuant to Article III of this Agreement, together with all amendments,
modifications, exhibits and schedules thereto as may be in effect from time to
time.
"Bank" shall mean Mellon Bank (DE), N.A., together with its successors
and assigns.
"Borrower" shall mean AstroPower, Inc., a Delaware corporation,
together with its successors and assigns.
"Borrowing Base" shall mean, at any time, a dollar amount equal to the
sum of the following amounts as they exist at that time:
(a) eighty percent (80%) of all Qualified Accounts; and
(b) fifty percent (50%) of all Qualified Inventory valued in
accordance with GAAP.
"Business Day" shall mean any day upon which the Bank is open for
business at its
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main office in Philadelphia, Pennsylvania.
"Capital Lease" shall mean any lease of property which, in accordance
with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the liability
which, according to GAAP, should be capitalized or disclosed with respect to a
Capital Lease.
"Closing" shall mean the execution and delivery to the Bank of all of
the documents and instruments required by the terms of this Agreement and the
closing of the transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing takes place.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Encumbrance" shall mean, as to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or any interest or title of any vendor, lessor, lender to, or other secured
party of the Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of the Person.
"Environmental Laws" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S)(S) 9601,
et. seq., the Federal Resource Conservation and Recovery Act, 42 U.S.C. (S)(S)
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6901 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S)
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1801, et. seq., all other federal, state and local environmental or health laws
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applicable to the Borrower or its business, operations or assets now or
hereafter enacted, and all rules, regulations, orders and publications adopted
or promulgated pursuant thereto from time to time.
"ERISA" shall mean the federal Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" shall have the meaning set forth in Article VIII of
this Agreement.
"Financial Statements" shall have the meaning set forth in Section
4.4(a) of this Agreement.
"GAAP" shall mean generally accepted accounting principles, as in
effect at the time of application to the provisions hereof, and consistently
applied.
"Guaranty" shall mean any guaranty or agreement to be a surety or
other contingent liability (other than any endorsement for collection or deposit
in the ordinary course of business), direct or indirect, with respect to any
obligation of another Person.
"Hazardous Materials" shall mean all materials of any kind which are
flammable,
3
explosive, toxic, radioactive or otherwise hazardous to animal or plant life or
the environment, including, without limitation, "hazardous wastes," "hazardous
substances" and "contaminants," as such terms are defined by Environmental Laws.
"Indebtedness" shall mean any obligation for borrowed money,
including, without limitation:
(a) any obligation owed for all or any part of the purchase
price of property or other assets or for the cost of property or other assets
constructed or of improvements thereto, other than accounts payable included in
current liabilities and incurred in respect of property purchased in the
ordinary course of business;
(b) any Capital Lease Obligation; and
(c) any reimbursement obligations and other obligations under
any letter of credit, currency swap agreement, interest rate swap, cap, collar
or floor agreement or other interest rate management devise, or any forward sale
or purchase agreement for foreign currencies.
"Intercreditor Agreement" shall mean that certain Intercreditor and
Lien Priority Agreement between the Bank and Corning Incorporated, dated August
19, 1997, together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Judgment" shall have the meaning set forth in Section 8.6 of this
Agreement.
"Landlord's Waivers" shall mean landlord's waivers, in form and
substance satisfactory to the Bank, by University of Delaware as owner(s) of
real property leased to the Borrower, as required pursuant to Article III of
this Agreement, together with all amendments, modifications, exhibits and
schedules thereto as may be in effect from time to time.
"Line of Credit" shall mean the line of credit from the Bank to the
Borrower established pursuant to Section 2.1 of this Agreement.
"Line of Credit Commitment" shall have the meaning set forth in
Section 2.1 of this Agreement.
"Line of Credit Loans" shall mean the loans made by the Bank to the
Borrower pursuant to the Line of Credit.
"Loan Documents" shall mean this Agreement, the Security Agreement,
the Notes, and all agreements, amendments, certificates, financing statements,
schedules, reports, notices, and exhibits now, prior to the date hereof or
hereafter executed or delivered in connection with any of the foregoing, as may
be in effect from time to time.
"Loans" shall mean the Line of Credit Loans and the Term Loan.
"Net Income" shall mean, for any period, the net income (before the
deduction of federal and state income taxes) of the Borrower, determined in
accordance with GAAP,
4
excluding:
(a) the proceeds of any insurance policy;
(b) any gain or loss arising from:
(1) the sale or other disposition of any assets (other than
Current Assets);
(2) any write-up of assets; or
(3) the acquisition of outstanding securities representing
Indebtedness of the Borrower;
(c) any amount representing any interest in the undistributed
earnings of any Person;
(d) any earnings, prior to the date of acquisition, of any
Person acquired in any manner;
(e) any earnings of a successor to or transferee of the assets
of the Borrower prior to becoming such successor or transferee;
(f) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person; and
(g) any other item constituting an extraordinary gain or loss
under GAAP.
"Notes" shall mean the Amended and Restated Term Loan Note and the
Amended and Restated Line of Credit Note, and all replacements, amendments,
extensions and renewals thereof.
"Obligations" shall mean the obligations of the Borrower:
(a) To pay the principal, interest, commitment fees and any
other liabilities of the Borrower to the Bank under this Agreement and the other
Loan Documents in accordance with the terms thereof;
(b) To satisfy all of the other direct or indirect liabilities
of the Borrower to the Bank, whether hereunder or otherwise, whether now
existing or hereafter incurred, whether or not evidenced by any note or other
instrument, matured or unmatured, direct, absolute or contingent, joint or
several, including any extensions, modifications, renewals thereof and
substitutions therefor;
(c) To repay the Bank all amounts advanced by the Bank hereunder
or otherwise on behalf of the Borrower, including, but without limitation,
advances for principal or interest payments to prior secured parties, mortgagors
or lienors, or for taxes, levies, insurance, rent, wages, repairs to or
maintenance or storage of any Collateral; and
5
(d) To reimburse the Bank, on demand, for all of the Bank's
expenses and costs, including the reasonable fees and expenses of its counsel,
in connection with the negotiation, preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required
hereunder, including all amounts payable under Section 10.3 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Prime Rate" shall mean the floating annual rate of interest that is
designated from time to time by the Bank as the "Prime Rate" and is used by the
Bank as a reference based with respect to interest rates charged to borrowers.
The determination and statement of the Prime Rate shall not in any way preclude
the Bank from making loans to other borrowers at rates which are higher or lower
than the Prime Rate.
"Qualified Account" shall mean each Account which meets all of the
following criteria:
(a) The Account arose from a bona fide outright sale of goods by
the Borrower, or for services performed by the Borrower, under an enforceable
contract, within the United States for a Person located within the United States
(or elsewhere if accompanied by an irrevocable letter of credit reasonably
acceptable to the Bank issued in favor of the Borrower at the request of such
Person), and such goods have been shipped to the appropriate account debtor, or
the sale has otherwise been consummated, or the services have been performed for
the appropriate account debtor in accordance with such contract;
(b) The title of the Borrower to the Account, and, except as to
the account debtor, to any goods to be sold or leased in connection with the
Account, is absolute and is not subject to any prior assignment or Encumbrance;
(c) The amount of the Account shown on the books of the Borrower
and on any invoice or statement delivered to the Bank is owing to the Borrower
and no partial payment has been made thereon by any Person;
(d) The Account is not a contra account and is not subject to
any claim of reduction, counterclaim, set-off, recoupment, or any claim for
credits, allowances or adjustments by the account debtor because of returned,
inferior or damaged goods or unsatisfactory services, or for any other reason,
except for customary discounts allowed for prompt payment;
(e) The Account is not an account that the Bank, in its
discretion, has reasonably and in good faith determined does not constitute a
Qualified Account in whole or in part, as described in a notice of such
determination given by the Bank to the Borrower ;
(f) The account debtor has not returned or refused to accept or
retain any of the goods or services from the sale or furnishing of which the
Account arose;
(g) The Account is due and payable not more than sixty (60) days
from the
6
date of the invoice therefor;
(h) The age of the Account, calculated from the date of the
invoice therefor, is not more than ninety (90) days;
(i) Not more than fifty percent (50%) of all Accounts payable to
the Borrower by the account debtor are older than ninety (90) days from the
invoice date.
(j) The Account does not arise out of a contract with, or order
from, an account debtor that, by its terms, forbids or makes the assignment of
that Account to the Bank void or unenforceable;
(k) The Borrower has not received any note, trade acceptance,
draft or other instrument or chattel paper with respect to or in payment of the
Account, and, if any such instrument is received, the Borrower will immediately
notify the Bank and at the latter's request, endorse or assign and deliver the
same to the Bank;
(l) The Borrower has not received any notice of the dissolution,
termination of existence, insolvency, business failure, appointment of a
receiver for any part of the property of, assignment for the benefit of
creditors by, or the filing of a petition in bankruptcy or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against the account
debtor; and
(m) The account debtor is not an Affiliate of the Borrower.
"Qualified Inventory" shall mean inventory of the Borrower which meets
all of the following criteria:
(a) The inventory consists of either raw materials or finished
goods and does not include any work-in-process;
(b) The inventory is readily saleable in a bona fide arm's
length transaction, or is usable, in the ordinary course of business of the
Borrower;
(c) The title of the Borrower to the inventory is absolute and
is not subject to any prior assignment or Encumbrance, except the security
interest of the Bank; and
(d) If the inventory is located on leased premises, a landlord's
waiver satisfactory in form and substance to the Bank shall have been delivered
to the Bank for such premises.
"Security Agreement" shall mean that certain Amended and Restated
Security Agreement between the Borrower as debtor and the Bank as secured party,
dated the same date as this Agreement, in form and substance satisfactory to the
Bank, by which the Borrower shall reaffirm and grant security interests in
certain of its assets to the Bank, as required pursuant to Article III hereof,
together with all amendments, modifications, exhibits, and schedules thereto as
may be in effect from time to time.
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"Subsidiary" shall mean, as to any designated corporation, any
corporation, the outstanding shares of which having sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of the
members of its board of directors, are at the time owned by the designated
corporation.
"Term Loan" shall mean the loan made by the Bank to the Borrower
pursuant to Section 2.2 hereof.
"Termination Date" shall have the meaning set forth in Section 2.1 of
this Agreement.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of
Delaware as codified at 6 Del. C. (S) 1-102 et seq., as in effect on the date of
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this Agreement.
ARTICLE 2.
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CREDIT ACCOMMODATIONS
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2.1 The Line of Credit. The Bank shall make available to the
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Borrower, commencing on the Closing Date, a Line of Credit in the maximum
principal amount of $600,000 (the "Line of Credit Commitment"), upon the terms
and conditions set forth herein.
(a) Generally. At any time and from time to time during the
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period commencing on the Closing Date and ending on the earlier to occur of (i)
at the Banks option, the occurrence of an Event of Default hereunder, or (ii)
March 31, 1999 (as the case may be, the "Termination Date"), upon the request of
the Borrower, the Bank shall provide to the Borrower a loan or loans in
multiples of One Thousand Dollars ($1,000), which shall be used by the Borrower
for working capital. The Borrower may use the Line of Credit during the period
referred to in the preceding sentence by borrowing, repaying and reborrowing in
accordance with the terms of this Agreement. The aggregate outstanding principal
under the Line of Credit at any time shall not exceed the lesser of (i) the Line
of Credit Commitment or (ii) the Borrowing Base as at that time. If, at any
time, the aggregate outstanding principal under the Line of Credit exceeds the
Borrowing Base, then, without any requirement of demand or notice from the Bank,
the Borrower shall immediately pay to the Bank the amount of such excess. Upon
the Termination Date, unless the same has been extended by written agreement
between the Bank and the Borrower, the Bank's commitment to make Line of Credit
Loans shall terminate, all Line of Credit Loans shall immediately mature and all
Obligations under the Line of Credit Loans shall be immediately due and payable
in full.
(b) [INTENTIONALLY LEFT BLANK]
(c) Interest. Interest shall accrue on all loans outstanding
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under the Line of Credit at an annual rate equal at all times to the Applicable
Rate. Interest on the aggregate
8
outstanding principal under the Line of Credit shall be payable monthly on the
first day of each month commencing with the month immediately following that in
which the first advance under the Line of Credit is made, and shall change
simultaneously and automatically upon any change in the Prime Rate.
(d) Line of Credit Note. The obligations of the Borrower to
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repay the aggregate outstanding principal under the Line of Credit and to pay
accrued interest thereon shall be evidenced by an amended and restated
promissory note, in form and substance satisfactory to the Bank, to be executed
and delivered to the Bank concurrently with the execution and delivery of this
Agreement (the "Line of Credit Note").
2.2 Term Loan.
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(a) Generally. The Bank shall make available to the Borrower on
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the Closing Date a term loan (the "Term Loan") in the amount of $737,000, for
the purpose of consolidating the balances on the Borrower's existing term loan
facilities and funding the purchase of certain equipment as approved in writing
by the Bank. The Borrower shall repay the outstanding principal of the Term Loan
in consecutive, monthly installments of $17,500 on the first day of each month
beginning December 1, 1997 with the full amount of any outstanding principal,
interest and costs due on the Termination Date.
(b) Interest. Interest shall accrue on the outstanding principal
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of the Term Loan at the Applicable Rate and shall be payable monthly on the
first day of each month beginning December 1, 1997.
(c) Term Loan Note. The obligations of the Borrower to repay the
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aggregate outstanding principal under the Term Loan and to pay accrued interest
thereon shall be evidenced by an amended and restated promissory note, in form
and substance satisfactory to the Bank, to be executed and delivered to the Bank
concurrently with the execution and delivery of this Agreement (the "Term Loan
Note").
2.3 Payments and Computations. All amounts payable by the Borrower to
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the Bank under this Agreement or the Notes shall be paid directly to the Bank in
immediately available funds at the address of the Bank set forth in Section 10.2
hereof or at such other address of which the Bank shall give notice to the
Borrower pursuant to Section 10.2 hereof. The Bank is authorized to charge any
account of the Borrower at the Bank for any payment due by the Borrower under
this Agreement or any of the Notes. All computations of interest hereunder shall
be made by the Bank on the basis of a year of 360 days for the actual number of
days elapsed. All payments under each of the Notes shall be applied first to the
payment of interest due and payable thereunder and then to the reduction of the
outstanding principal balance thereof.
2.4 Borrowing. The Borrower shall notify the Bank of each proposed
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borrowing under the Line of Credit not later than 2:30 p.m., Philadelphia,
Pennsylvania time on the day of the proposed borrowing.
2.5 Prepayment and Repayment. The Borrower may make payments and
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prepayments of the Loans in whole or in part at any time and from time to time
without penalty or premium upon notification to the Bank not later than 2:30
p.m. Philadelphia, Pennsylvania time on
9
the date of the proposed payment or prepayment. All prepayments of the
outstanding principal of the Term Loan shall be applied to installments of
principal due thereunder in the inverse order of their maturity.
2.6 Requirements of Law. In the event that after the date hereof, any
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change in any law, regulation or treaty or in the interpretation or application
thereof or compliance by the Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority,
agency or instrumentality:
(a) subjects or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the loans made hereunder or the
issuance or maintenance of the Letters of Credit hereunder, or changes the basis
of taxation of payments to the Bank of principal, commitment fees, interest or
any other amount payable hereunder (except for changes in the rate of tax on the
overall net income of the Bank);
(b) imposes, modifies or holds or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of the Bank, which reserve, special deposit, compulsory
loan or similar requirement is not otherwise included in determination of the
interest rate hereunder;
(c) imposes or shall impose on the Bank any other condition; and
the result of any of the foregoing is to, directly or indirectly, increase the
cost to the Bank of making, renewing or maintaining advances or extensions of
credit or issuing or maintaining Letters of Credit or to reduce any amount
receivable thereunder then, in any such case, the Borrower shall promptly pay
the Bank, upon its demand, any additional amounts necessary to compensate the
Bank for such additional cost or reduced amount receivable. If the Bank becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled. The good faith determination as to any additional amounts payable
pursuant to the foregoing sentence by the Bank shall be conclusive in the
absence of manifest error.
ARTICLE 3.
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SECURITY
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3.1 Security Documents. As security for the prompt payment,
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performance, satisfaction and discharge when due of all the Obligations, the
Borrower shall execute and deliver or shall cause to be executed and delivered
to the Bank, concurrently with the execution of this Agreement, the Security
Agreement.
3.2 Additional Documents. The Borrower shall execute and deliver
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and/or cause to be executed and delivered, concurrently with the execution of
this Agreement, the Landlord's Waivers.
ARTICLE 4.
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10
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
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In order to induce the Bank to execute and deliver this Agreement and
to make the Loans available to the Borrower, the Borrower represents and
warrants to the Bank that, as of the date hereof:
4.1 Good Standing of the Borrower; Authorization. The Borrower is
--------------------------------------------
duly incorporated, organized and existing and in good standing in the State of
Delaware and is duly qualified as a foreign corporation and authorized to do
business in all other jurisdictions wherein the nature of its business or
property makes such qualification necessary, and has the corporate power to own
its properties and to carry on its business as now conducted. The execution,
delivery and performance of this Agreement, and the Loan Documents have been
duly authorized by all necessary corporate proceedings on the part of the
Borrower.
4.2 Compliance with Laws and Other Agreements. The Borrower is in
-----------------------------------------
compliance with all laws, rules, regulations, judgments, decrees, orders,
agreements and requirements which affect in any material way the Borrower, its
assets or the operation of its business and has not received, and has no
knowledge of, any order or notice of any governmental investigation or of any
violation or claim of violation of any law, regulation, judgment, decree, order,
agreement, or other governmental requirement.
4.3 No Conflict; Governmental Approvals. The execution, delivery, and
-----------------------------------
performance of this Agreement and each of the Loan Documents will not (i)
conflict with, violate, constitute a default under, or result in a breach of any
provision of any applicable law, rule, regulation, judgment, decree, order,
instrument or other agreement, or (ii) conflict with or result in a breach of
any provision of the certificate of incorporation or by-laws of the Borrower. No
authorization, permit, consent or approval of or other action by, and no filing,
registration or declaration with, any governmental authority or regulatory body
is required to be obtained or made by the Borrower for the due execution,
delivery and performance of this Agreement or any of the Loan Documents, except
such as have been duly obtained or made prior to the Closing Date and are in
full force and effect as of the Closing Date (copies of which have been
delivered to the Bank on or before the Closing Date).
4.4 Financial and Other Information Regarding Borrower.
--------------------------------------------------
(a) The Borrower has delivered to the Bank true, correct and
complete copies of the balance sheets of the Borrower as of December 31, 1996,
and related statements of income for the period then ended, together with notes
thereto and the unqualified opinion thereon, dated as of December 31, 1996. The
Borrower has also delivered to the Bank true, correct and complete copies of the
balance sheets of the Borrower as of September 30, 1997, and related statements
of income for the period then ended. Those financial statements ("Financial
Statements") present fairly the financial position of the Borrower as of the
designated date, and the results of the operations of the Borrower for the
period then ended in conformity with GAAP.
(b) The Borrower has no Indebtedness other than as shown in the
most recent Financial Statements.
11
(c) The Borrower has no "investment" (as such term is defined
under GAAP), whether by stock purchase, capital contribution, loan, advance,
purchase of property or otherwise, in any Person, other than as shown in the
most recent Financial Statements.
4.5 Taxes. The Borrower is not delinquent in payment of any income,
-----
property or other tax, except for any delinquency in the payment of a tax which
is contested in good faith by the Borrower and for which appropriate reserves
have been established in accordance with GAAP.
4.6 Encumbrances and Guaranties.
---------------------------
(a) All properties and assets of the Borrower are owned by the
Borrower free and clear of all Encumbrances except (i) those for taxes or other
government charges either not yet delinquent or the nonpayment of which is
permitted by Section 4.5 of this Agreement; (ii) those not arising in connection
with Indebtedness that do not materially impair the use or value of the
properties or assets of the Borrower in the conduct of its businesses; (iii)
Encumbrances whose release and termination is evidenced by the Borrower's
delivery to the Bank of appropriate documents on the Closing Date; (iv) the Loan
Documents and Encumbrances otherwise permitted under the Security Agreement and
the Mortgages; and (v) Encumbrances disclosed on Schedule 4.6 hereof.
(b) The Borrower is not obligated under any Guaranty.
4.7 Material Adverse Changes. Since September 30, 1997, there has not
------------------------
been any material adverse change in the business, operations, properties or
financial position of the Borrower. The Borrower does not know of any fact
(other than matters of a general economic or political nature) which materially
adversely affects, or, so far as the Borrower can now reasonably foresee, will
materially adversely affect, the business, operations, properties or financial
position of the Borrower or the performance by the Borrower of its obligations
under this Agreement and the other Loan Documents.
4.8 Margin Securities. The assets of the Borrower do not include any
-----------------
"margin securities" within the meaning of Regulations G or U of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207, 221), and the Borrower
does not have any present intention of acquiring any margin security.
4.9 ERISA. The provisions of each employee benefit plan as defined in
-----
Section 3(3) of ERISA ("Plan") maintained by the Borrower complies with all
applicable requirements of ERISA and of the Code, and with all applicable
rulings and regulations issued under the provisions of ERISA and the Code
setting forth those requirements. No reportable event, as defined in Section
4043 of ERISA, has occurred with respect to any Plan; no Plan to which Section
4021 of ERISA applies has been terminated; no Plan has incurred any liability to
PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no Plan has been
involved in any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code; and there are no unfunded liabilities with
respect to any Plan which are not disclosed in the Financial Statements.
4.10 Pending Litigation. There are no actions, suits, proceedings or
------------------
investigations
12
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower before any court, arbitrator or administrative or governmental body
which, in the aggregate, might adversely affect any action taken or to be taken
by the Borrower under this Agreement and the other Loan Documents or which, in
the aggregate, might materially adversely affect the business, operations,
properties or financial position of the Borrower, or the ability of the Borrower
to perform its obligations under this Agreement and the other Loan Documents.
4.11 Valid, Binding and Enforceable. This Agreement and the Loan
------------------------------
Documents have been duly and validly executed and delivered by the parties
thereto (other than the Bank) and constitute the valid and legally binding
obligations of such parties enforceable in accordance with their respective
terms, except as enforcement of this Agreement and the other Loan Documents may
be limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights and except as
enforcement is subject to general equitable principles.
4.12 Priority of Security Interests. The Security Agreement, upon the
------------------------------
filing of financing statements in the appropriate governmental offices and/or in
light of the financing statements already on file with such offices, will create
valid first perfected security interests in the personal property of the
Borrower described therein as collateral for all the Obligations subject to no
prior Encumbrances except as set forth on Schedule 4.12 attached hereto and by
reference made a part hereof.
4.13 Environmental Matters.
---------------------
(a) The Borrower has performed all of its obligations under, has
obtained all necessary approvals, permits, authorizations and other consents
required by, and is not in material violation of, any Environmental Laws.
(b) The Borrower has not received any notice, citation, summons,
directive, order or other communication, written or oral, from, and the Borrower
has no knowledge of the filing or giving of any such notice, citation, summons,
directive, order or other communication by, any governmental or quasi-
governmental authority or agency or any other Person concerning the presence,
generation, treatment, storage, transportation, transfer, disposal, release or
other handling of any Hazardous Materials within, on, from, related to, or
affecting any real property owned or occupied by the Borrower.
(c) To the best of the Borrower's knowledge, after reasonable
inquiry, no real property owned or occupied by the Borrower has ever been used,
either by the Borrower or any of its predecessors in interest, to generate,
treat, store, transport, transfer, dispose of, release or otherwise handle any
Hazardous Material in violation of any applicable Environmental Laws.
(d) To the best of the Borrower's knowledge, after due
inspection, there are no Hazardous Materials within, on or under any real
property owned or occupied by the Borrower in violation of any applicable
Environmental Laws.
4.14 No Untrue Statements. Neither this Agreement, the Loan Documents
--------------------
nor any other document, certificate or statement furnished or to be furnished by
the Borrower or by any other party to the Bank in connection herewith contains,
or at the time of delivery will contain,
13
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein and
therein not misleading.
ARTICLE 5.
----------
CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS
----------------------------------------------
The Bank's obligations hereunder are conditioned upon the satisfaction
by the Borrower of the following conditions precedent:
5.1 Documents to be Delivered by the Borrower at Closing. The
----------------------------------------------------
Borrower shall deliver or cause to be delivered to the Bank at the Closing the
following:
(a) This Agreement duly executed by the Borrower;
(b) The Notes duly executed by the Borrower;
(c) The Security Agreement duly executed by the Borrower,
together with such Uniform Commercial Code financing statements and other
documents as the Bank may reasonably require to be executed by the Borrower;
(d) Evidence of the Borrower's having complied with those
covenants regarding insurance as are contained in this Agreement and the other
Loan Documents;
(e) A certificate of the Secretary or an Assistant Secretary of
the Borrower dated the Closing Date including (i) resolutions duly adopted by
the Borrower authorizing the transactions under the Loan Documents; (ii) a copy
of the by-laws of the Borrower; (iii) evidence of the incumbency and signature
of the officers executing on its behalf any of the Loan Documents and any other
document to be delivered pursuant to any such documents, together with evidence
of the incumbency of such Secretary or Assistant Secretary; (iv) a copy,
certified by the Delaware Secretary of State, as of the most recent date
practicable, of the Borrower's Articles and Certificate of Incorporation,
together with the certification of the Secretary or Assistant Secretary of the
Borrower as of the Closing Date that such Articles and Certificate of
Incorporation have not been amended since the date of the aforesaid
certification by the Secretary of State; and (v) certificates of authority or
good standing for the Borrower from its jurisdiction of incorporation and any
other jurisdiction where the Borrower is qualified to do business;
(f) A copy of each and every authorization, permit, consent, and
approval of and other action by, and notice to and filing with, every
governmental authority and regulatory body which is required to be obtained or
made by the Borrower for the due execution, delivery and performance of this
Agreement and the other Loan Documents; and
(g) The opinion of Opton, Handler, Feiler, & Landau dated as of
Closing Date, in form and substance reasonably satisfactory to the Bank and its
counsel.
5.2 Conditions Precedent to Making Line of Credit Loans. The Bank
---------------------------------------------------
shall not be obligated to make any Line of Credit Loans hereunder unless:
14
(a) As of the date of the proposed advance, no Event of Default has
occurred and is continuing and no event has occurred and is continuing which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default;
(b) The representations and warranties contained in Article IV are
true and correct on the date of the proposed advance, except that the
representations and warranties in Section 4.4 shall refer to the financial
statements most recently supplied to the Bank pursuant to Section 6.2 of this
Agreement; and
(c) No material adverse change has occurred in the financial condition
of the Borrower since the date hereof; and
(d) The Borrower has delivered to the Bank, upon the Bank's request, a
certificate executed by the chief executive officer of the Borrower confirming
the statements made in paragraphs (a), (b), and (c) above.
ARTICLE 6.
-----------
AFFIRMATIVE COVENANTS OF THE BORROWER
-------------------------------------
The Borrower hereby covenants and agrees that from the date hereof and
until satisfaction in full of the Obligations, unless the Bank shall otherwise
consent in writing, the Borrower shall do the following:
6.1 Use of Proceeds. Use the proceeds of the borrowings hereunder only for
---------------
the purposes specified in Article 2 of this Agreement.
6.2 Financial Statements. Furnish to the Bank:
--------------------
(a) within one hundred twenty (120) days after the end of each fiscal
year, financial statements of the Borrower, including a balance sheet, statement
of income, statement of cash flows and such other financial statements of the
Borrower in such detail as the Bank may reasonably request. Such financial
statements shall present fairly the financial condition of the Borrower as of
the close of such year and the results of its operations and its cash flows
during such year, in accordance with GAAP, and shall be audited and accompanied
by the opinion, satisfactory in form and substance to the Bank, of an
independent public accountant acceptable to the Bank, and a certificate signed
by such accountant to the effect that such accountant does not know of any Event
of Default specified in Article VIII hereof, or of the occurrence and
continuance of any event which, with the giving of notice or lapse of time, or
both, would constitute such an Event of Default, or, if such accountant shall
have obtained knowledge of any such Event of Default or other event, specifying
the nature thereof;
(b) within thirty days after the end of each month, a balance sheet,
statement of income, statement of cash flows, accounts payable aging, accounts
receivable aging and report (including summary of domestic, foreign, and U.S.
Government receivables), inventory report (including all major categories of
inventory) and such other financial statements and information in such detail as
the Bank may reasonably request, which shall present fairly the financial
position of the Borrower as of the end of such month and the results of its
operations
15
and a statement of cash flows during such month, in accordance with GAAP, as
well as a covenant compliance certificate in form satisfactory to the Bank all
as certified by the chief financial officer of the Borrower;
(c) within thirty (30) days after the end of each month, a certificate
in form satisfactory to the Bank executed by the chief financial officer or the
controller of the Borrower as to the amounts of the Qualified Accounts,
Qualified Inventory, Borrowing Base, outstanding principal of Line of Credit
Loans and availability under the Line of Credit as of the end of that month.
(d) on each Monday until the Obligations are paid in full or the
Borrower has completed its initial public offering raising $15,000,000 at a
minimum (the "AstroPower IPO"), a copy of the Borrower's projected rolling
weekly Cash Receipts and Disbursements Schedule ("CRDS") in form and substance
satisfactory to the Bank for the succeeding two months ending;
(e) on each Monday until the Obligations are paid in full or
completion of the AstroPower IPO, the Borrower's actual CRDS performance for the
immediately preceding week ending Friday, showing actual performance for such
week as compared with the projected performance for such week, as well as a
rolling CRDS as projected for the succeeding eight (8) weeks; and
(f) Promptly, from time to time, copies of all annual reports and
other securities reports and filings made by the Borrower with the Securities
and Exchange Commission on any comparable body of a foreign securities exchange.
6.3 Ordinary Course of Business; Records. Conduct its business only in
------------------------------------
the ordinary course and keep accurate and complete books and records of its
assets, liabilities and operations consistent with sound business practices and
in accordance with GAAP.
6.4 Information for the Bank. Make available during normal business hours
------------------------
for inspection by the Bank or its designated representatives any of its books
and records when reasonably requested by the Bank to do so, and furnish the Bank
any information reasonably requested regarding its operations, business affairs
and financial condition within a reasonable time after the Bank gives notice of
its request therefor. In particular, and without limiting the foregoing, the
Borrower shall permit, during normal business hours, representatives of the
Bank's Audit Department to make such periodic inspections of the Borrower's
books, records and assets as such representatives deem necessary and proper.
6.5 Insurance. Carry at all times in financially sound and reputable
---------
insurers: (a) all workers' compensation or similar insurance as may be required
under the laws of any jurisdiction; (b) public liability insurance against
claims for personal injury, death or property damage suffered upon, in or about
any premises occupied by it or occurring as a result of the ownership,
maintenance or operation by it of any automobile, truck or other vehicle or as a
result of the use of products manufactured, constructed or sold by it, or
services rendered by it; (c) business interruption insurance covering risk of
loss as a result of the cessation for all or any part of one year of any
substantial part of the business conducted by it; (d) hazard insurance against
such other hazards as are usually insured against by business entities of
established reputation engaged
16
in like businesses and similarly situated, including, without limitation, fire
(flood, if applicable) and extended coverage; and (e) such other insurance as
the Bank may from time to time reasonably require, and pay all premiums on the
policies for all such insurance when and as they become due and take all other
actions necessary to maintain such policies in full force and effect at all
times. The insurance specified in Subsections (b), (c) and (d) shall be
maintained in such amounts (and with co-insurance and deductibles) as such
insurance is usually carried by business entities of established reputation
engaged in the same or similar business and similarly situated. The Borrower
shall from time to time, upon request by the Bank, promptly furnish or cause to
be furnished to the Bank evidence, in form and substance satisfactory to the
Bank, of the maintenance of all insurance required to be maintained hereby,
including, without limitation, such originals or copies as the Bank may request
of policies, certificates of insurance, riders and endorsements relating to such
insurance and proof of premium payments. The Borrower shall cause each hazard
insurance policy to provide, and the insurer issuing each such policy to certify
to the Bank, that (a) if such insurance be proposed to be canceled or materially
changed for any reason whatsoever, such insurer will promptly notify the Bank
and such cancellation or change shall not be effective for 30 days after receipt
by the Bank of such notice, unless the effect of such change is to extend or
increase coverage under the policy; (b) the Bank shall be named as lender loss
payee with respect to personal property and mortgagee with respect to real
property; and (c) the Bank will have the right, at its election, to remedy any
default in the payment of premiums within 30 days of notice from the insurer of
such default. The foregoing covenants regarding insurance are in addition to,
and not intended to supersede, those covenants regarding insurance set forth in
the Security Agreement. In the event and to the extent of any conflict between
the provisions of this Agreement and the provisions of the Security Agreement
regarding the insuring of Collateral, the provisions of the Security Agreement
with respect thereto shall govern.
6.6 Maintenance. Maintain its equipment, real property and other
-----------
properties in good condition and repair (normal wear and tear excepted) and pay
and discharge the cost of repairs thereto or maintenance thereof.
6.7 Taxes. Pay all taxes, assessments, charges and levies imposed upon it
-----
or on any of its property, or which it is required to withhold and pay over, and
provide evidence of payment thereto to the Bank if the Bank so requests, except
where contested in good faith by lawful and appropriate proceedings and where
adequate reserves therefor have been set aside on its books; provided, however,
that the Borrower shall pay all such taxes, assessments, charges and levies
forthwith whenever foreclosure on any lien which attaches or security therefor
appears imminent.
6.8 Leases. Pay all rent or other sums required by every lease to which
------
the Borrower is a party as the same becomes due and payable, perform all its
obligations as tenant or lessee thereunder except where contested in good faith
by lawful and appropriate proceedings and where adequate reserves therefor have
been set aside; and keep all such leases at all times in full force and effect
during the terms thereof.
6.9 Corporate Existence; Certain Rights; Laws. Do all things necessary to
-----------------------------------------
preserve and keep in full force and effect in each jurisdiction in which it
conducts business the business existence, licenses, permits, rights, patents,
trademarks, trade names and franchises of the Borrower and comply with all
present and future laws, ordinances, rules, regulations judgments, orders and
decrees which affect in any material way the Borrower, its assets or the
operation of its business.
17
6.10 Notice of Litigation or Other Proceedings. Give immediate notice to
-----------------------------------------
the Bank of (i) the existence of any dispute, (ii) the institution of any
litigation, administrative proceeding or governmental investigation involving
the Borrower or (iii) the entry of any judgment, decree or order against or
involving the Borrower, any of which might materially and adversely affect the
operation, financial condition, property or business of the Borrower or affect
the enforceability of this Agreement or any of the other Loan Documents.
6.11 Indebtedness. Pay or cause to be paid when due (or within applicable
------------
grace periods) all Indebtedness of the Borrower.
6.12 Notice of Events of Default. Give immediate notice to the Bank if
---------------------------
the Borrower becomes aware of the occurrence of any Event of Default, or of any
fact, condition or event which with the giving of notice or lapse of time, or
both, would be an Event of Default, or of the failure of the Borrower to observe
or perform any of the conditions or covenants to be observed or performed by it
under this Agreement or any of the other loan Documents.
6.13 ERISA. Maintain each Plan in compliance with all applicable
-----
requirements of ERISA and of the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code. As promptly as
practicable (but in any event not later than ten days) after the Borrower
receives from the PBGC a notice of intent to terminate any Plan or to appoint a
trustee to administer any Plan, after the Borrower has notified the PBGC that
any reportable event, as defined in Section 4043 of ERISA, with respect to any
Plan has occurred, or after the Borrower has provided a notice of intent to
terminate to each affected party, as defined for purposes of Section 4041(a)(2)
of ERISA, with respect to any Plan, a certificate of the chief executive officer
of the Borrower shall be furnished to the Bank setting forth the details with
respect to the events resulting in such reportable event, as the case may be,
and the action which the Borrower proposes to take with respect thereto,
together with a copy of the notice of intent to terminate or to appoint a
trustee from the PBGC, of the notice of such reportable event or of the
Borrower's notice of intent to terminate, as the case may be.
6.14 Deposit Accounts. Use the Bank as its sole depository institution
----------------
unless otherwise agreed in writing by the Bank; and notify the Bank, in writing
and on a continuing basis, of all deposit accounts and certificates of deposit
(including the numbers thereof) maintained with or purchased from other banks
and other financial institutions.
6.15 Management. Furnish to Bank within five (5) days of any election or
----------
appointment of officers or directors, written notice of any change in the
persons who from time to time become officers and directors of Borrower and
retain executive management personnel at all times satisfactory to the Bank, it
being understood that management, which consists of Xxxxxx Xxxxxx and Xxxxx
Xxxxxxx as of the date hereof, is satisfactory.
6.16 Financial Covenants. Observe the financial covenants set forth on
-------------------
Schedule 6.16 attached hereto and made a part hereof.
6.17 Compliance with Environmental Laws. Comply fully with all
----------------------------------
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
18
6.18 Further Actions. Cooperate and join with the Bank, at its own
---------------
expense, in taking all such further actions as the Bank, in its sole judgment,
shall deem necessary to effectuate the provisions of the Loan Documents and to
perfect or continue the perfected status of all Encumbrances granted to the Bank
pursuant to the Loan Documents, including, without limitation, the execution,
delivery and filing of financing statements, amendments thereto and continuation
statements, the delivery of chattel paper, documents or instruments to the Bank,
and the notation of Encumbrances in favor of the Bank on certificates of title.
ARTICLE 7.
----------
NEGATIVE COVENANTS
------------------
The Borrower hereby covenants and agrees that from the Closing Date until
satisfaction in full of the Obligations, it will not do any one or more of the
following without first obtaining the written consent of the Bank:
7.1 Fundamental Corporate Changes.
-----------------------------
(a) Change its name, enter into or effect any merger, consolidation,
share exchange, division, conversion, reclassification, recapitalization,
reorganization or other transaction of like effect, or dissolve;
(b) Sell, transfer, lease or otherwise dispose of all or (except in
the ordinary course of business) any material part of its assets or any
significant product line or process;
(c) Have any Subsidiary.
7.2 Indebtedness. Incur, create, assume or have any Indebtedness except:
------------
(a) The Loans; and
(b) Indebtedness as disclosed in the Intercreditor Agreement.
7.3 Encumbrances. Create or allow any Encumbrances to be on or otherwise
------------
affect any of its property or assets except:
(a) Encumbrances in favor of the Bank;
(b) Encumbrances for taxes, assessments and other governmental
charges incurred in the ordinary course of business which are not yet due and
payable;
(c) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation or to participate in any fund in
connection with workmen's compensation, unemployment insurance or other social
security obligations;
(d) Good faith pledges or deposits made in the ordinary course of
business to secure performance of tenders, contracts (other than for the
repayment of Indebtedness) or leases or to secure statutory obligations or
surety, appeal, indemnity, performance or other similar
19
bonds required in the ordinary course of business;
(e) Liens of mechanics, materialmen, warehousemen, carriers or other
similar liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(f) Encumbrances securing Indebtedness permitted under Section 7.2
(b), provided that (i) no other covenants of this Agreement are thereby violated
and (ii) no equipment other than the equipment so acquired secures such
Indebtedness;
(g) Encumbrances, if any, otherwise expressly permitted by the
Security Agreement or the Mortgage;
(h) Encumbrances disclosed in the Financial Statements; and
(i) Encumbrances disclosed in the Intercreditor Agreement.
7.4 Guaranties. Directly or indirectly make any Guaranty.
----------
7.5 Sales and Lease-Backs. Sell, transfer or otherwise dispose of any
---------------------
property, real or personal, now owned or hereafter acquired, with the intention
of directly or indirectly taking back a lease on such property.
7.6 Loans, Investments. Purchase, invest in, or make any loan in the
------------------
nature of an investment in the stocks, bonds, notes or other securities or
evidence of Indebtedness of any person, or make any loan or advance to or for
the benefit of any Person except for (i) short-term obligations of the Treasury
of the United States of America; (ii) certificates of deposit issued by banks
with shareholders' equity of at least $100,000,000; (iii) repurchase agreements
not exceeding 29 days in duration issued by banks with shareholders' equity of
at least $100,000,000; (iv) notes and other instruments generally known as
"commercial paper" which arise out of current transactions, which have
maturities at the time of issuance thereof not exceeding nine months and which
have, at the time of such purchase, investment or other acquisition, the highest
credit rating of Standard & Poor's Corporation or Xxxxx'x Investors Service,
Inc.
7.7 Change in Business. Discontinue any substantial part, or change the
------------------
nature of, the business of the Borrower, or enter into any new business
unrelated to the present business conducted by the Borrower.
7.8 Sale or Discount of Receivables. Sell any notes receivable or
-------------------------------
accounts receivable, with or without recourse.
7.9 Prepayment of Indebtedness. Make any voluntary prepayments of
--------------------------
Indebtedness other than the Loans.
7.10 ERISA.
-----
(a) Terminate any Plan maintained by the Borrower to which Section
4021 of ERISA applies;
20
(b) Allow the value of the benefits guaranteed under Title IV of
ERISA to exceed the value of assets allocable to such benefits;
(c) Incur a withdrawal liability within the meaning of Section 4201
of ERISA.
7.11 Restricted Payments. Declare or pay any dividend, or make any
-------------------
distributions of cash or property, to holders of any shares of its capital
stock, or, directly or indirectly, redeem or otherwise acquire any such shares
or any option, warrant or right to acquire any such shares.
7.12 Compliance with Federal Reserve Board Regulations. (i) Use any of the
-------------------------------------------------
proceeds of the Loans, directly or indirectly, for the purposes of purchasing or
carrying any "margin security" within the meaning of Regulations G or U of the
Board of Governors of the Federal Reserve System (12 X.X.X. 000, 000), (xx) use
any of the proceeds of the Loans, directly or indirectly, for the purpose of
purchasing, carrying or trading in any securities under such circumstances as to
involve the Borrower in a violation of Regulation X of such Board (12 C.F.R.
224), or (iii) take or permit to be taken any other action which would result in
the Loans or the consummation of any of the other transactions contemplated
hereby being violative of such regulations or any other regulation of such
Board.
ARTICLE 8.
----------
EVENTS OF DEFAULT
-----------------
An event of default ("Event of Default") under this Agreement shall be
deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
8.1 Borrower's Failure to Pay. The Borrower fails to pay any amount of
-------------------------
principal interest, fees or other sums as and when due under this Agreement or
any of the Loan Documents, or any other Obligations, whether upon stated
maturity, acceleration, or otherwise.
8.2 Breach of Covenants or Conditions. The Borrower fails to perform or
---------------------------------
observe any term, covenant, agreement or condition in this Agreement or any of
the other Loan Documents or is in violation of or non-compliance with any
provision of this Agreement or any of the Loan Documents, and has not remedied
and fully cured such non-performance, non-observance, violation of or non-
compliance within twenty one (21) days after the Bank has given written notice
thereof to the Borrower; provided, however, that during such twenty one (21) day
period the Bank's obligations to make further Loans to the Borrower shall be
suspended.
8.3 Defaults in Other Agreements. The Borrower fails to perform or
----------------------------
observe any term, covenant, agreement or condition contained in, or there shall
occur any default under or as defined in, any other agreement applicable to the
Borrower or by which the Borrower is bound involving a material liability of the
Borrower which shall not be remedied within the period of time (if any) within
which such other agreement permits such default to be remedied, unless such
default is waived by the other party thereto or excused as a matter of law.
8.4 Agreements Invalid. The validity, binding nature of, or
------------------
enforceability of any
21
material term or provision of any of the Loan Documents is disputed by, on
behalf of, or in the right or name of the Borrower or any material term or
provision of any such Loan Document is found or declared to be invalid,
avoidable, or non-enforceable by any court of competent jurisdiction.
8.5 False Warranties; Breach of Representations. Any warranty or
-------------------------------------------
representation made by the Borrower in this Agreement or any other Loan Document
or in any certificate or other writing delivered under or pursuant to this
Agreement or any other Loan Document, or in connection with any provision of
this Agreement or related to the transactions contemplated hereby shall prove to
have been false or incorrect or breached in any material respect on the date as
of which made.
8.6 Judgments. A final judgment or judgments is entered, or an order or
---------
orders of any judicial authority or governmental entity is issued against the
Borrower (such judgment(s) and order(s) hereinafter collectively referred to as
"Judgment") (i) for payment of money, which Judgment, in the aggregate, exceeds
Fifty Thousand Dollars ($50,000.00) outstanding at any one time; or (ii) for
injunctive or declaratory relief which would have a material adverse effect on
the ability of the Borrower to conduct its business, and such Judgment is not
discharged or execution thereon or enforcement thereof stayed pending appeal,
within thirty days after entry or issuance thereof, or, in the event of such a
stay, such Judgment is not discharged within thirty days after such stay
expires.
8.7 Bankruptcy or Insolvency of the Borrower
----------------------------------------
(a) The Borrower becomes insolvent, or generally fails to pay, or is
generally unable to pay, or admits in writing its inability to pay, its debts as
they become due or applies for, consents to, or acquiesces in, the appointment
of a trustee, receiver or other custodian for the Borrower or a substantial part
of its property, or makes a general assignment for the benefit of creditors.
(b) The Borrower commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any state or federal bankruptcy
or insolvency law, or any dissolution or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other case
or proceeding under any state or federal bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is involuntarily commenced against or in
respect of the Borrower, or an order for relief is entered in any such
proceeding.
(d) A trustee, receiver, or other custodian is appointed for the
Borrower or a substantial part of the Borrower's property.
ARTICLE 9.
----------
REMEDIES
--------
9.1 Further Advances; Acceleration; Setoff.
--------------------------------------
22
(a) Upon the occurrence of any one or more Events of Default, the
Bank may, in its sole discretion, refuse to make any further advances or Loans
to the Borrower;
(b) Automatically upon the occurrence of any Event of Default
described in Section 8.7 of this Agreement, and in the sole discretion of the
Bank upon the occurrence of any other Event of Default, the unpaid principal
balance of all Loans, all interest and fees accrued and unpaid thereon, and all
other amounts and Obligations payable by the Borrower under this Agreement and
the other Loan Documents shall immediately become due and payable in full, all
without protest, presentment, demand, or further notice of any kind to the
Borrower, all of which are expressly waived by the Borrower;
(c) If any of the Obligations shall be due and payable or any one or
more Events of Default shall have occurred, the Bank shall have the right, in
addition to all other rights and remedies available to it, without notice to the
Borrower, to apply toward and set-off against and apply to the then unpaid
balance of the Notes and the other Obligations any items or funds held by the
Bank, any and all deposits (whether general or special, time or demand, matured
or unmatured, fixed or contingent, liquidated or unliquidated) now or hereafter
maintained by the Borrower for its own account with the Bank, and any other
indebtedness at any time held or owing by the Bank to or for the credit or the
account of the Borrower. For such purpose the Bank shall have, and the Borrower
hereby grants to the Bank, a first lien on all such deposits. The Bank is hereby
authorized to charge any such account or indebtedness for any amounts due to the
Bank. Such right of set-off shall exist whether or not the Bank shall have made
any demand under this Agreement, the Notes or any other Loan Document and
whether or not the Notes and the other Obligations are matured or unmatured. The
Borrower hereby confirms the Bank's lien on such accounts and right of set-off,
and nothing in this Agreement shall be deemed any waiver or prohibition of such
lien and right of set-off.
9.2 Further Remedies; Confession of Judgment.
----------------------------------------
(a) Upon the occurrence of any one or more Events of Default, the
Bank may proceed to protect and enforce its rights under this Agreement and the
other Loan Documents by exercising such remedies as are available to the Bank in
respect thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any provision contained in
this Agreement or any of the other Loan Documents or in aid of the exercise of
any power granted in this Agreement or any of the other Loan Documents.
(b) THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS THE BANK,
BY ITS ATTORNEY, OR BY THE CLERK OF ANY COURT OF RECORD IN ANY JURISDICTION
WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY
TIME THEREAFTER, TO APPEAR FOR THE BORROWER AND CONFESS AND ENTER JUDGMENT
AGAINST IT IN FAVOR OF THE BANK IN ANY JURISDICTION IN WHICH THE BORROWER OR ANY
OF ITS PROPERTY IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH
COSTS OF SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING REASONABLE ATTORNEYS'
FEES), WITH OR WITHOUT DECLARATION, WITHOUT STAY OF EXECUTION AND WITH RELEASE
OF ALL ERRORS AND THE RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO
23
THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
THE BORROWER HEREBY WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE EXERCISE
THEREOF, AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID, PERFORMED,
DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE VALIDITY
OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE BANK UNDER THIS AGREEMENT
BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF THE BORROWER CAN BE
GARNISHED AND ATTACHED, THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO THE BANK,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING
JUDGMENT AGAINST THE BORROWER BY CONFESSION AND ATTACHING AND GARNISHING THE
BANK ACCOUNTS AND OTHER ASSETS OF THE BORROWER, WITHOUT PRIOR NOTICE OR
OPPORTUNITY FOR A HEARING. THE BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND
FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING PROVISIONS
CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO THE BORROWER BY
SUCH COUNSEL.
ARTICLE 10.
-----------
MISCELLANEOUS
-------------
10.1 Remedies Cumulative; No Waiver. The rights, powers and remedies of
------------------------------
the Bank provided in this Agreement and the other Loan Documents are cumulative
and not exclusive of any right, power or remedy provided by law or equity, and
no failure or delay on the part of the Bank in the exercise of any right, power,
or remedy shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy.
10.2 Notices. Every notice and communication under this Agreement or any
-------
of the other Loan Documents shall be in writing and shall be given by either (i)
hand-delivery, (ii) first class mail (postage prepaid), (iii) reliable overnight
commercial courier (charges prepaid), or (iv) telecopy or other means of
electronic transmission, if confirmed promptly by any of the methods specified
in clauses (i), (ii) and (iii) of this sentence, to the following addresses:
To the Borrower:
AstroPower, Inc.
Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Vice President
Telecopy: 000-000-0000
24
With a copy to:
Xxxxx Xxxxxx, Esquire
Opton, Handler, Xxxxxx & Xxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
To the Bank:
Mellon Bank, N.A.
0000 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Vice President
Telecopier No.: (000) 000-0000
With a copy to:
Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esquire
Telecopier Number: 000-000-0000
Notice given by telecopy or other means of electronic transmission shall be
deemed to have been given and received when sent. Notice by overnight courier
shall be deemed to have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been given and received three
(3) calendar days after the date first deposited in the United States Mail.
Notice by hand delivery shall be deemed to have been given and received upon
delivery. A party may change its address by giving written notice to the other
party as specified herein.
10.3 Costs, Expenses and Attorneys' Fees. Whether or not the transactions
-----------------------------------
contemplated by this Agreement and the other Loan Documents are fully
consummated, the Borrower shall promptly pay (or reimburse, as the Bank may
elect) all costs and expenses which the Bank has incurred or may hereafter incur
in connection with the negotiation, preparation,
25
reproduction, interpretation and enforcement of this Agreement and the other
Loan Documents, the collection of all amounts due hereunder and thereunder, and
any amendment, modification, consent or waiver which may be hereafter requested
by the Borrower or otherwise required. Such costs and expenses shall include,
without limitation, the fees and disbursements of counsel to the Bank, the costs
of appraisal fees, searches of public records, costs of filing and recording
documents with public offices, and similar costs and expenses incurred by the
Bank. Upon the occurrence of an Event of Default, such costs shall also include
the fees of any accountants, consultants or other professionals retained by the
Bank. The Borrower's reimbursement obligations under this Section shall survive
any termination of this Agreement.
10.4 Survival of Covenants. This Agreement and all covenants, agreements,
---------------------
representations and warranties made herein and in any certificates delivered
pursuant hereto shall survive the making of the Loans and the execution and
delivery of the Notes and, subject to the provisions of 10.15 hereof, shall
continue in full force and effect until all of the Obligations have been fully
paid, performed, satisfied and discharged.
10.5 Counterparts; Effectiveness. This Agreement may be executed in any
---------------------------
number of counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Bank has
received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
10.6 Headings. The headings of sections have been included herein for
--------
convenience only and shall not be considered in interpreting this Agreement.
10.7 Payment Due On A Day Other Than A Business Day. If any payment due or
----------------------------------------------
action to be taken under this Agreement or any Loan Document falls due or is
required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
10.8 Judicial Proceedings. Each party to this Agreement agrees that any
--------------------
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by any party hereto or any successor or assign of any party, on or with respect
to this Agreement or any of the other Loan Documents or the dealings of the
parties with respect hereto, or thereto, shall be tried only by a court and not
by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each
party waives any right it may have to claim or recover, in any such suit, action
or proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. THE BORROWER ACKNOWLEDGES
AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT
AND THAT THE BANK WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE WAIVERS SET
FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
10.9 Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the internal laws of the State of Delaware.
26
10.10 Integration. This Agreement and the other Loan Documents constitute
-----------
the sole agreement of the parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior writings with respect to
the subject matter hereof and thereof.
10.11 Amendment and Waiver. No amendment of this Agreement, and no waiver
--------------------
of any one or more of the provisions hereof shall be effective unless set forth
in writing and signed by the parties hereto.
10.12 Successors and Assigns.
----------------------
(a) Generally. This Agreement (i) shall be binding upon the Borrower
---------
and the Bank and their respective successors and assigns, and (ii) shall inure
to the benefit of the Borrower and the Bank and its respective successors and
assigns, provided, however, that the Borrower may not assign its rights
hereunder or any interest herein without the prior written consent of the Bank,
and any such assignment or attempted assignment by the Borrower shall be void
and of no effect with respect to the Bank.
(b) Participations. The Bank may from time to time sell or otherwise
--------------
grant participations in the Loans and the Notes, and the holder of any such
participation, if the participation agreement so provides, (i) shall, with
respect to its participation, be entitled to all of the rights of the Bank and
(ii) may exercise any and all rights of setoff or banker's lien with respect
thereto, in each case as fully as though the Borrower were directly indebted to
the holder of such participation in the amount of such participation. The Bank
may disclose to prospective participants such information regarding the
Borrower's affairs as the Bank possesses. The Bank shall give notice to the
Borrower of the grant of such participations; however, the failure to give such
notice shall not affect any of the Bank's rights hereunder.
10.13 Severability of Provisions. Any provision in this Agreement that is
--------------------------
held to be inoperative, unenforceable, voidable, or invalid in any jurisdiction
shall, as to that jurisdiction, be ineffective, unenforceable, void or invalid
without affecting the remaining provisions, and to this end the provisions of
this Agreement are declared to be severable.
10.14 Consent to Jurisdiction and Service of Process. The Borrower
----------------------------------------------
irrevocably appoints each and every officer of the Borrower as its attorneys
upon whom may be served, by regular or certified mail at the address set forth
in Section 10.2 hereof, any notice, process or pleading in any action or
proceeding against it arising out of or in connection with this Agreement or any
of the other Loan Documents; and the Borrower hereby (i) consents that any
action or proceeding against it be commenced and maintained in any court within
the State of Delaware or in the United States District Court for the District of
Delaware by service of process on any such officer; (ii) agrees that the courts
of the State of Delaware and the United States District Court for the District
of Delaware shall have jurisdiction with respect to the subject matter hereof
and the person of the Borrower and the Collateral, and (iii) waives any
objection that such Borrower may now or hereafter have as to the venue of any
such suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. Notwithstanding the foregoing, the Bank, in its absolute
discretion may also initiate proceedings in the courts of any other jurisdiction
in which the Borrower may be found or in which any of its properties or the
Collateral may be located.
27
10.15 Indemnification
---------------
(a) If, after receipt of any payment of all or any part of the
Obligations, the Bank is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that such
payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrower shall be liable for, and shall indemnify, defend and hold harmless the
Bank with respect to the full amount so surrendered.
(b) The Borrower shall indemnify, defend and hold harmless the Bank
with respect to any and all claims, expenses, demands, losses, costs, fines or
liabilities of any kind, including reasonable attorneys' fees and costs, arising
from or in any way related to (i) acts or conduct of the Borrower under,
pursuant to or related to this Agreement and the other Loan Documents, (ii)
Borrower's breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrower's failure to comply with any or all laws, statutes, ordinances,
governmental rules, regulations or standards, whether federal, state, or local,
or court or administrative orders or decrees, including without limitation those
resulting from any Hazardous Materials or dangerous environmental condition
within, on, from, related to or affecting any real property owned or occupied by
the Borrower, unless resulting from the acts or conduct of the Bank constituting
gross negligence or willful misconduct.
(c) The provisions of this section shall survive the termination of
this Agreement and the other Loan Documents and shall be and remain effective
notwithstanding the payment of the Obligations, the cancellation of any of the
Notes, the release of any Encumbrance securing the Obligations or any other
action which the Bank may have taken in reliance upon its receipt of such
payment. Any cancellation of any of the Notes, release of any Encumbrance or
other such action shall be deemed to have been conditioned upon any payment of
the Obligations having become final and irrevocable.
28
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized officers on the date first above written.
MELLON BANK (DE),
NATIONAL ASSOCIATION
By:_______________________________
Xxxx Xxxxxxxx
Vice President
Mellon Bank (DE), N.A.
ATTEST: ASTROPOWER, INC.
By:_______________________________
Secretary Name:_____________________________
Title:____________________________
29
Schedule 6.16
FINANCIAL COVENANTS
-------------------
This Schedule is a part of the Amended and Restated Loan Agreement dated
November 24, 1997 by and between Mellon Bank (DE), N.A. and AstroPower, Inc.
Until such time as the Borrower has received net equity proceeds of not less
than $15,000,000 from an initial public offering of its common stock (the
"AstroPower IPO"):
A. Tangible Net Worth. The Borrower shall have a Tangible Net Worth at
------------------
the end of each calendar quarter of not less than:
(i) $3,250,000 for the quarter ending December 31, 1997;
(ii) $3,000,000 for the quarter ending March 31, 1998;
(iii) $2,850,000 for the quarter ending June 30, 1998;
(iv) $2,850,000 for the quarter ending September 30, 1998; and
(v) $2,950,000 for the quarter ending December 31, 1998 and each
quarter thereafter.
B. Ratio of Liabilities to Tangible Net Worth. The Borrower shall have a
-------------------------------------------
ratio of Total Liabilities to Tangible Net Worth at the end of each calendar
quarter of not more than:
(i) 3.25:1 for the quarter ending December 31, 1997;
(ii) 3.5:1 for the quarter ending March 31, 1998;
(iii) 3.75:1 for the quarter ending June 30, 1998;
(iv) 3.75:1 for the quarter ending September 30, 1998; and
(v) 3.5:1 for the quarter ending December 31, 1998 and each
quarter thereafter.
C. Cash Flow Coverage. As of the end of each fiscal quarter, the
-------------------
Borrower shall have a ratio of Cash Flow for the four quarters then-ended to
Debt Service for the four quarters then-ended of not less than 1.20.
Following the AstroPower IPO the foregoing financial covenants shall be reset as
follows:
A. Tangible Net Worth. The Borrower shall have a Tangible Net Worth at
------------------
all times not less than $18,000,000.
B. Ratio of Liabilities to Tangible Net Worth. The Borrower shall have a
-------------------------------------------
ratio of Liabilities to Tangible Net Worth at all times equal to .70:1
C. Cash Flow Coverage. As of the end of each fiscal quarter, the
-------------------
Borrower shall have a ratio of Cash Flow for the four quarters then-ended to
Debt Service for the four quarters
30
then-ended of not less than 1.20.
For purposes of this Schedule, all capitalized terms used herein and not
otherwise defined shall have the meanings given to them, respectively, in the
Loan Agreement, and the following terms shall have the following meanings:
"Cash Flow" shall mean for any four quarter period the sum of the
Borrower's Net Income: (i) before funded losses attributable to development of
the Corning/Silicon film plant project for such four quarter period; (ii) after
income taxes and dividends for such four quarter period; (iii) plus depreciation
and other non-cash expenses for such period; and (iv) plus interest paid in cash
for such four quarter period.
"Debt Service" shall mean the sum of all principal payments and cash
interest payments due or to become due during any period on Long Term
Indebtedness.
"Stockholders' Equity" shall mean, at any time, stockholders' equity as
determined in accordance with GAAP as applied to closely-held companies.
"Tangible Net Worth" shall mean, at any time, the aggregate Stockholders'
Equity, less all intangible assets of the Borrower, including, without
limitation, organization costs, securities issuance costs, unamortized debt
discount and expense, goodwill, excess of purchase costs over net assets
acquired, patents, trademarks, trade names, copyrights, trade secrets, knowhow,
licenses, franchises, capitalized research and development expenses, amounts
owing from officers and/or Affiliates and any amount reflected as treasury
stock.
"Total Liabilities" shall mean, at any time, all liabilities which, in
accordance with GAAP, shall be classified as liabilities of the Borrower.
31
