FIFTH AMENDMENT TO AND RESTATEMENT OF
LOAN AGREEMENT
THIS FIFTH AMENDMENT TO AND RESTATEMENT OF LOAN AGREEMENT (this
"Agreement") is made and entered into this 2nd day of April, 2001, by LMI
AEROSPACE, INC., formerly known as Leonard's Metal, Inc., a Missouri
corporation, LMI FINISHING INC., an Oklahoma corporation, LEONARD'S METAL, INC.,
formerly known as LMI Acquisition, Inc., a Missouri corporation, PRECISE MACHINE
COMPANY, a Missouri corporation, and METAL CORPORATION, a Missouri corporation
doing business in the state of California as Metal Corporation of Sun Valley ,
and which on or after the date hereof may change its name to Tempco Engineering,
Inc., as co-obligors and co-borrowers and not as accommodation parties (said
corporations being jointly and severally referred to herein as "Borrower"), and
UNION PLANTERS BANK, N.A., a national banking association, successor to Magna
Bank, National Association ("Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower and Bank have heretofore entered into that certain
Loan Agreement dated August 15, 1996 as amended by that certain First Amendment
to Loan Agreement dated January 15, 1997, that certain Second Amendment to Loan
Agreement dated November, 1997, that certain Third Amendment to Loan Agreement
dated March 30, 1998 and that certain Fourth Amendment to Loan Agreement dated
October 30, 2000 (the "Loan Agreement"); and
WHEREAS, Borrower and Bank desire to further amend the Loan Agreement
to provide for a new term loan to Borrower in the principal amount of
$14,250,000.00, provide for a multi-advance term loan to Borrower in the
principal amount of up to $1,250,000.00, add Metal Corporation as a co-obligor,
and to modify certain other provisions of the Loan Agreement; and
WHEREAS, Borrower and Bank desire to restate the Loan Agreement, as so
amended, in its entirety;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually agree and promise as follows:
SECTION 1. TERM.
The "Term" of this Agreement shall be deemed to have commenced on
August 15, 1996 and shall end on such date as Borrower's Obligations shall have
been paid in full and Bank has no further obligation to loan or advance monies
to or for the account of Borrower.
SECTION 2. DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement or in any
Exhibit or Schedule hereto, when used in this Agreement, the following terms
shall have the following meanings (such meanings shall be equally applicable to
the singular and plural forms of the terms used, as the context requires):
Attorneys' Fees shall mean the reasonable out-of-pocket fees (and
costs, charges and expenses related thereto) of attorneys retained by Bank from
time to time (i) in connection with the negotiation, preparation, execution,
delivery, administration and enforcement of this Agreement and/or any of the
other Transaction Documents, (ii) to represent Bank in any litigation, contest,
dispute, suit or proceeding, or to commence, defend or intervene in any
litigation, contest, dispute, suit or proceeding, or to file any petition,
complaint, answer, motion or other pleading or to take any other action in or
with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Bank, Borrower or any other Person and whether in bankruptcy or
otherwise) in any way or respect relating to the Collateral, any Third Party
Collateral, this Agreement or any of the other Transaction Documents, Borrower,
any Subsidiary of Borrower or any other Obligor, (iii) to protect, collect,
lease, sell, take possession of or liquidate any of the Collateral or any Third
Party Collateral, (iv) to attempt to enforce any security interest in or other
Lien upon any of the Collateral or any Third Party Collateral or to give any
advice with respect to such enforcement and (v) to enforce any of Bank's rights
to collect any of Borrower's Obligations.
Borrower's Obligations shall mean any and all indebtedness (principal,
interest, fees and other amounts), liabilities and obligations of Borrower to
Bank under the Notes, this Agreement, the Security Agreements, any of the other
Transaction Documents, or any other agreement, document or instrument
heretofore, now or hereafter executed and delivered by Borrower to or for the
benefit of Bank, in each case whether now existing or hereafter arising,
absolute or contingent, joint and/or several, secured or unsecured, direct or
indirect, expressed or implied in law, contractual or tortious, liquidated or
unliquidated, at law or in equity, or otherwise, and whether created directly or
acquired by Bank by assignment or otherwise, and any and all costs of collection
and/or Attorneys' Fees incurred or to be incurred in connection therewith.
Business Day shall mean any day except a Saturday, Sunday or legal
holiday observed by Bank.
Capital Expenditure shall mean any expenditure which, in accordance
with generally accepted accounting principles consistently applied, is or should
be capitalized on the balance sheet of the Person making the same; provided,
however, that Capital Expenditure shall not mean any expenditure in connection
with assets purchased pursuant to that certain Asset Purchase Agreement dated as
of April 2, 2001, by and between, among others, Tempco Engineering, Inc., a
California corporation, Hyco Precision, Inc., a California corporation, and
Metal Corporation, Inc., a Missouri corporation.
Capitalized Lease shall mean any lease which, in accordance with
generally accepted accounting principles consistently applied, is or should be
capitalized on the balance sheet of the lessee.
Capitalized Lease Obligations of any Person shall mean, as of the date
of any determination thereof, the amount at which the aggregate rental
obligations due and to become due under all Capitalized Leases under which such
Person is a lessee would be reflected as a liability on a balance sheet of such
Person in accordance with generally accepted accounting principles consistently
applied.
Code shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
Collateral shall mean any Property or assets of Borrower which now or
at any time hereafter secure the payment or performance of any of Borrower's
Obligations.
Consolidated Debt Service Coverage Ratio shall mean, for the period in
question, the ratio of (a) Consolidated EBITDA during such period to (b) the
aggregate amount of all principal payments required to be made by Borrower and
its Consolidated Subsidiaries on all Debt during the twelve (12) months
following the date of measurement (including the principal portion of payments
in respect of Capitalized Leases but excluding principal payments on the
Revolving Credit Loans) plus Consolidated Interest Expense during such period,
all determined on a consolidated basis and in accordance with generally accepted
accounting principles consistently applied.
Consolidated EBITDA shall mean for the period in question the sum of
(a) the after-tax net income (or loss) of Borrower and its Consolidated
Subsidiaries for the period in question (exclusive of extraordinary gains and/or
losses and gains and/or losses from the sale or other disposition of assets
other than in the ordinary course of business), plus (b) to the extent deducted
in determining net income, the sum of (i) all gross interest expense of Borrower
and its Consolidated Subsidiaries during each period, plus (ii) all provisions
for any Federal, state, local and/or foreign income taxes made by Borrower and
its Consolidated Subsidiaries during such period (whether paid or deferred),
plus (iii) all depreciation and amortization expenses of Borrower and its
Consolidated Subsidiaries during such period, all determined on a consolidated
basis.
Consolidated Interest Expense shall mean, for the period in question,
without duplication, all gross interest expense of Borrower and its Consolidated
Subsidiaries (including, without limitation, all commissions, discounts and/or
related amortization and other fees and charges owed by Borrower and its
Consolidated Subsidiaries with respect to letters of credit, the net costs
associated with interest swap obligations of Borrower and its Consolidated
Subsidiaries, capitalized interest expense, the interest portion of Capitalized
Lease Obligations and the interest portion of any deferred payment obligation)
during such period, all determined on a consolidated basis and in accordance
with generally accepted accounting principles consistently applied.
Consolidated Net Worth shall mean, at any date, the consolidated
stockholders' equity of Borrower and its Consolidated Subsidiaries.
Consolidated Subsidiary shall mean with respect to any Person at any
date, any Subsidiary or other entity the assets and liabilities of which are or
should be consolidated with those of such Person in its consolidated financial
statements as of such date in accordance with generally accepted accounting
principles consistently applied.
Consolidated Tangible Net Worth shall mean, at any date, the
consolidated stockholders' equity of Borrower and its Consolidated Subsidiaries
(which shall be deemed to exclude subordinated indebtedness) less their
Intangible Assets as of such date. For purposes of this definition, "Intangible
Assets" shall mean the amount (to the extent reflected in determining such
stockholders' equity) of (i) all write-ups in the book value of any asset owned
by Borrower or a Consolidated Subsidiary of Borrower resulting from a
revaluation thereof subsequent to the date of this Agreement and (ii) goodwill,
unamortized debt discount and expense, unamortized deferred charges, patents,
trademarks, service marks, trade names, copyrights, organizational and
developmental expenses and other similar intangible items and assets.
Current Assets shall mean all assets which, in accordance with
generally accepted accounting principles consistently applied, should be
classified as current assets on a balance sheet.
Current Liabilities shall mean all liabilities which, in accordance
with generally accepted accounting principles consistently applied, should be
classified as current liabilities on a balance sheet.
Default shall mean an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default as defined in Section 9 hereof.
Distribution in respect of any corporation shall mean:
(a) dividends or other distributions on capital stock of the
corporation; and
(b) the redemption, repurchase or other acquisition of such stock or of
warrants, rights or other options to purchase such stock (except when solely in
exchange for such stock).
Eligible Accounts shall mean all trade accounts receivable of Borrower
which have been invoiced by Borrower or which constitute "unbilled shippers"
except for those which remain unpaid for more than ninety (90) days after their
invoice dates.
Eligible Inventory shall mean all inventory of Borrower, valued at the
lower of cost or market value.
Environmental Laws shall mean the Resource Conservation and Recovery
Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act and any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Materials or
any other hazardous, toxic or dangerous waste, substance or constituent or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
Environmental Lien shall have the meaning ascribed thereto in Section
8.01(k)(vii).
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
ERISA Affiliate shall mean any corporation, trade or business that is,
along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
Event of Default shall have the meaning ascribed thereto in Section 9.
Hazardous Materials shall mean any hazardous substance or pollutant or
contaminant defined as such in (or for the purposes of) any Environmental Law.
Indebtedness of any Person shall mean and include, without duplication,
any and all indebtedness, liabilities and obligations of such Person which in
accordance with generally accepted accounting principles consistently applied
are or should be classified upon a balance sheet of such Person as liabilities
of such Person, and in any event shall include all (i) obligations of such
Person for borrowed money or which have been incurred in connection with the
acquisition of Property, (ii) obligations secured by any Lien or other charge
upon any Property owned by such Person, provided that if such Person has not
assumed or become liable for the payment of such obligations, such obligations
shall still be included in Indebtedness but the determination of the amount of
Indebtedness evidenced by such obligations shall be limited to the book value of
such Property, (iii) obligations created or arising under any conditional sale
or other title retention agreement with respect to any Property acquired by such
Person, provided that if the rights and remedies of the seller, lender or lessor
in the event of default under such agreement are limited to repossession or sale
of such Property such obligations shall still be included in Indebtedness but
the determination of the amount of Indebtedness evidenced by such obligations
shall be limited to the book value of such Property, (iv) all Guarantees and
other contingent indebtedness, liabilities and obligations of such Person
whether or not reflected on the balance sheet of such Person and (v) all
obligations of such Person as lessee under any Capitalized Lease.
LIBOR shall mean, as of any date, the highest London Interbank Offered
Rate reported for one (1) month in the Money Rates column or any successor
column of The Wall Street Journal based on the British Banker's Association
average of interbank offered rates for dollar deposits in the London market
based on quotations at 16 major banks.
LIBOR (Term) shall mean, as of any date, the highest London Interbank
Offered Rate reported for three (3) months in the Money Rates column or any
successor column of The Wall Street Journal based on the British Banker's
Association average of interbank offered rates for dollar deposits in the London
market based on quotations at 16 major banks.
Lien shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract, including, without
limitation, any security interest, mortgage, deed of trust, pledge,
hypothecation, judgment lien or other lien or encumbrance of any kind or nature
whatsoever, any conditional sale or trust receipt and any lease, consignment or
bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property.
Multiemployer Plan shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower, any
ERISA Affiliate or any Subsidiary of Borrower.
Notes shall mean the Revolving Credit Note, Term Note A and Term Note
B.
Obligor shall mean Borrower and each other Person who is or shall
become primarily or secondarily liable on any of Borrower's Obligations or who
grants Bank a Lien upon any of the Property or assets of such Person as security
for any of Borrower's Obligations.
Occupational Safety and Health Laws shall mean the Occupational Safety
and Health Act of 1970, as amended, and any other Federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct concerning employee
health and/or safety, as now or at any time hereafter in effect.
PBGC shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to the provisions of Title IV of ERISA
and which is established or maintained by Borrower, any ERISA Affiliate or any
Subsidiary of Borrower, other than a Multiemployer Plan.
Person shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity or government (whether national, Federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Property shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible. Properties shall
mean the plural of Property. For purposes of this Agreement, Borrower and each
Subsidiary of Borrower shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, financing lease
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
Related Party shall mean any Person (other than a wholly-owned
Subsidiary) (i) which directly or indirectly through one or more intermediaries
controls, or is controlled by or is under common control with, Borrower or any
Subsidiary of Borrower, (ii) which beneficially owns or holds ten percent (10%)
or more of the equity interest of Borrower or (iii) ten percent (10%) or more of
the equity interest of which is beneficially owned or held by Borrower or a
Subsidiary of Borrower. The term "control" shall mean the possession, directly
or indirectly, of the power to vote ten percent (10%) or more of the capital
stock of any Person or the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Reportable Event shall have the meaning given to such term in ERISA.
Revolving Credit Loan shall have the meaning ascribed thereto in
Section 3.01(a).
Revolving Credit Period shall mean the period commencing on March 30,
1998 and ending October 30, 2001.
Security Agreements shall mean the Security Agreement (Accounts
Receivable and Inventory) and the General Security Agreement to be executed by
Borrower and delivered to Bank pursuant to Section 6, as the same may from time
to time be amended.
Senior Funded Debt shall mean the aggregate outstanding principal
balance of all indebtedness for borrowed money of Borrower and its Consolidated
Subsidiaries.
Subsidiary shall mean, with respect to any Person, any corporation of
which fifty percent (50%) or more of the issued and outstanding capital stock
entitled to vote for the election of directors (other than by reason of default
in the payment of dividends) is at the time owned directly or indirectly by such
Person.
Term shall have the meaning ascribed thereto in Section 1.
Term Loan A shall have the meaning ascribed thereto in Section 4.01(a).
Term Loan B shall have the meaning ascribed thereto in Section 4.01(a).
Term Loans shall have the meaning ascribed thereto in Section 4.01(a).
Term Note A shall have the meaning ascribed thereto in Section 4.01(b).
Term Note B shall have the meaning ascribed thereto in Section 4.01(c).
Term Notes shall mean Term Note A and Term Note B.
Third Party Collateral shall mean any Property or assets of any Obligor
other than Borrower which now or at any time hereafter secure the payment or
performance of any of Borrower's Obligations.
Transaction Documents shall mean this Agreement, the Notes, the
Security Agreements and all other agreements, documents and instruments
heretofore, now or hereafter delivered to Bank with respect to or in connection
with or pursuant to this Agreement, any Loans made hereunder or any other of
Borrower's Obligations, and executed by or on behalf of Borrower, all as the
same may from time to time be amended, modified, extended or renewed.
SECTION 3. THE REVOLVING CREDIT LOANS.
3.01. Revolving Credit Loans.
(a) Subject to the terms and conditions of this Agreement, during the
Revolving Credit Period of this Agreement, and so long as no Default or Event of
Default under this Agreement has occurred and is continuing, Bank hereby agrees
to make such loans (individually, a "Revolving Credit Loan" and collectively,
the "Revolving Credit Loans") to Borrower as Borrower may from time to time
request pursuant to Section 3.02. The aggregate principal amount of Revolving
Credit Loans which Bank shall be required to have outstanding under this
Agreement at any one time shall not exceed the lesser of (A) $7,000,000.00 or
(B) the Borrowing Base. Subject to the terms and conditions of this Agreement,
Borrower may borrow, repay and reborrow such sums from Bank, provided, however,
that in no event may the aggregate outstanding principal amount of Revolving
Credit Loans on any given day exceed the applicable amount specified in the
preceding sentence. All Revolving Credit Loans not paid prior to the last day of
the Revolving Credit Period, together with all accrued and unpaid interest
thereon, shall be due and payable on the last day of the Revolving Credit
Period.
(b) For purposes of this Agreement, the "Borrowing Base" shall mean the
sum of:
(i) Eighty-Five Percent (85%) of the face amount of all then existing
Eligible Accounts; plus
(ii) the sum of (A) Fifty Percent (50%) of the Eligible Inventory of
Borrower consisting of finished goods, (B) Thirty Percent (30%)
of the Eligible Inventory of Borrower consisting of work in
process, and (C) Sixty-Five Percent (65%) of the Eligible
Inventory of Borrower consisting of raw materials.
(c) Borrower shall deliver to Bank monthly by the fifteenth (15th) day
of each month (calculated as of the close of business of the prior month) a
collateral report in the form of Exhibit E attached hereto and incorporated
herein by reference (or in such other form as Bank shall require from time to
time) (a "Collateral Report") setting forth:
(i) the Borrowing Base and its components as of the end of the
immediately preceding month;
(ii) the aggregate principal amount of all Revolving Credit Loans
outstanding as of the end of the immediately preceding month; and
(iii) the difference, if any, between the Borrowing Base and the
aggregate principal amount of all Revolving Credit Loans
outstanding as of the end of the immediately preceding month.
The Borrowing Base shown in such Collateral Report shall be and remain
the Borrowing Base hereunder until the next Collateral Report is delivered to
Bank, at which time the Borrowing Base shall be the amount shown in such
subsequent Collateral Report. Each Collateral Report shall be certified as to
truth and accuracy by the president or the chief financial officer of Borrower.
(d) If at any time the aggregate outstanding principal amount of the
Revolving Credit Loans is greater than the Borrowing Base as shown on the most
recent Collateral Report, Borrower shall be automatically required (without
demand or notice of any kind by Bank, all of which are hereby expressly waived
by Borrower) to immediately repay the Revolving Credit Loans in an amount
sufficient to reduce the aggregate outstanding principal amount of the Revolving
Credit Loans to the amount of the Borrowing Base.
3.02 Procedure for Borrowing. (a) Borrower shall give oral or written
notice (a "Borrowing Notice") to Bank by 2:00 p.m. (St. Louis time) on the
Business Day of each Revolving Credit Loan, specifying:
(i) the date of such Revolving Credit Loan, which shall be a Business
Day,
(ii) the aggregate principal amount of such Revolving Credit Loan,
(iii)that on the date of, and after giving effect to, such Revolving
Credit Loan, no Default or Event of Default under this Agreement
has occurred and is continuing, and
(iv) that on the date of, and after giving effect to, such Revolving
Credit Loan, all of the representations and warranties of
Borrower contained in this Agreement and in the other Transaction
Documents are true and correct in all material respects on and as
of such date of such Revolving Credit Loan as if made on and as
of the date of such Revolving Credit Loan.
(b) Bank shall make the proceeds of the applicable Revolving Credit
Loan available to Borrower by transferring the amount of such Revolving Credit
Loan to such account maintained with Bank as Borrower shall specify in the
Borrowing Notice, not later than 2:30 p.m. (St. Louis time) on the Business Day
specified in said Borrowing Notice.
(c) Borrower hereby irrevocably authorizes Bank to rely on telephonic,
telegraphic, telecopy, telex or written instructions of Ronald S. Saks or
Lawrence E. Dickinson (or any other individual from time to time authorized to
act on behalf of Borrower pursuant to a resolution adopted by the Board of
Directors of Borrower and certified by the Secretary of Borrower and delivered
to Bank) with respect to any request to make a Revolving Credit Loan or a
repayment hereunder, and on any signature which Bank believes to be genuine, and
Borrower shall be bound thereby in the same manner as if such person were
actually authorized or such signature were genuine. Borrower also hereby agrees
to indemnify Bank and hold Bank harmless from and against any and all claims,
demands, damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) relating to or arising out
of or in connection with the acceptance of instructions for making Revolving
Credit Loans or repayments hereunder, except for such of the foregoing as result
directly from Bank's gross negligence or willful misconduct.
3.03 Revolving Credit Note. (a) The Revolving Credit Loans of Bank to
Borrower shall be evidenced by an amended and restated Promissory Note of
Borrower dated the date hereof and payable to the order of Bank in the principal
amount of $7,000,000.00, which Promissory Note shall be in substantially the
form of Exhibit A attached hereto and incorporated herein by reference (as the
same may from time to time be amended, modified, extended or renewed, the
"Revolving Credit Note").
(b) Bank shall record the date, amount, type and maturity of each
Revolving Credit Loan made by it and the date and amount of each payment of
principal made by Borrower with respect thereto in Bank's books and records. The
books and records of Bank showing the account between Bank and Borrower shall be
admissible in evidence in any action or proceeding and shall constitute prima
facie proof of the items therein set forth.
3.04 Interest Rates. (a) So long as no Event of Default under this
Agreement has been declared by Bank and is continuing, all Revolving Credit
Loans shall bear interest prior to maturity at a rate per annum equal to LIBOR
plus Two and One-Fourth percent (2.25%) (fluctuating as and when LIBOR shall
change). So long as any Event of Default under this Agreement has been declared
by Bank and is continuing, each Revolving Credit Loan shall bear interest prior
to maturity at a rate per annum equal to Two Percent (2.0%) over and above the
rate applicable immediately preceding such Event of Default. Interest on
Revolving Credit Loans shall be payable monthly in accordance with the terms of
the Revolving Credit Note, and at the maturity of the Revolving Credit Note,
whether by reason of acceleration or otherwise. From and after the maturity of
the Revolving Credit Note, whether by reason of acceleration or otherwise, each
Revolving Credit Loan shall bear interest payable on demand until paid at a rate
per annum equal to Two Percent (2.0%) over and above the rate applicable
immediately preceding maturity.
(b) Bank shall calculate the interest accrued with respect to each
Revolving Credit Loan hereunder and its determination thereof shall be
conclusive in the absence of manifest error.
SECTION 4. THE TERM LOANS.
4.01 Commitment of Bank.
(a) Bank agrees to make Borrower a term loan in the original principal
amount of Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000.00)
("Term Loan A") and a multi-advance term loan of up to One Million Two Hundred
Fifty Thousand Dollars ($1,250,000.00) ("Term Loan B" and collectively with Term
Loan A referred to herein as the "Term Loans").
(b) Term Loan A shall be evidenced by a Promissory Note of Borrower
dated the date hereof and payable to the order of Bank in the original principal
amount of $14,250,000.00 (as the same may from time to time be amended,
modified, extended or renewed, the "Term Note A"), an unexecuted copy of which
is attached hereto as Exhibit B. Term Note A shall mature on September 15, 2004
(on which date all unpaid principal and all accrued and unpaid interest shall
become due and payable). Principal on the Term Note A shall be payable in
thirty-six (36) consecutive monthly installments in the amount of One Hundred
Sixty-Nine Thousand Six Hundred Forty-Two and 86/100's Dollars ($169,642.86)
each, due and payable on the fifteenth day of each month, commencing on October
15, 2001, through September 15, 2004. Interest on the outstanding principal
balance of Term Note A shall be payable monthly, on the fifteenth day of each
month commencing April 15, 2001 and at the maturity of Term Note A, whether by
reason of acceleration or otherwise. Interest on Term Note A shall be calculated
as provided for under Section 4.02.
(c) Term Loan B shall be evidenced by a Promissory Note of Borrower
dated the date hereof and payable to the order of Bank in the original principal
amount of $1,250,000.00 (as the same may from time to time be amended, modified,
extended or renewed, the "Term Note B"), an unexecuted copy of which is attached
hereto as Exhibit C. Term Note B may be funded in multiple advances from time to
time until May 31, 2003; provided, however, that the maximum aggregate principal
amount of all advances under Term Note B shall not exceed One Million Two
Hundred Fifty Thousand Dollars ($1,250,000.00). No advances may be made under
Term Note B after May 31, 2003 and no principal repaid during the term of Term
Note B may be reborrowed. Term Note B shall mature on May 31, 2003 (on which
date all unpaid principal and all accrued and unpaid interest shall become due
and payable). Interest on the outstanding principal balance of Term Note B shall
be payable monthly, on the fifteenth day of each month commencing April 15, 2001
and at the maturity of Term Note B, whether by reason of acceleration or
otherwise. Interest on Term Note B shall be calculated as provided for under
Section 4.02.
4.02 Interest Rates. So long as no Event of Default has been declared
by Bank and is continuing, Term Note A shall bear interest prior to maturity at
a rate per annum equal to LIBOR (Term) plus Three Percent (3%) (determined as of
the date hereof and fluctuating as of the first day of each calendar quarter
thereafter based on the LIBOR (Term) effective as of such date); provided,
however, that the applicable rate shall at no time be less that Seven Percent
(7%) per annum nor greater than Eight and One-Half Percent (8.5%) per annum.
From and after the declaration of an Event of Default by Bank, so long as such
Event of Default has not been cured or waived in writing by Bank, and from and
after the maturity of Term Note A, whether by reason of acceleration or
otherwise, the unpaid principal balance of Term Note A shall bear interest until
paid at a rate per annum equal to Two Percent (2%) over and above the rate
applicable immediately preceding such Event of Default. Interest shall be
computed with respect to the Term Note A on an actual day, 360-day year basis.
So long as no Event of Default has been declared by Bank and is continuing, Term
Note B shall bear interest prior to maturity at a rate per annum equal to LIBOR
(Term) plus Three Percent (3%) (determined as of the date hereof and fluctuating
as of the first day of each calendar quarter thereafter based on the LIBOR
(Term) effective as of such date); provided, however, that the applicable rate
shall at no time be less that Seven Percent (7%) per annum nor greater than
Eight and One-Half Percent (8.5%) per annum. From and after the declaration of
an Event of Default by Bank, so long as such Event of Default has not been cured
or waived in writing by Bank, and from and after the maturity of Term Note B,
whether by reason of acceleration or otherwise, the unpaid principal balance of
Term Note B shall bear interest until paid at a rate per annum equal to Two
Percent (2%) over and above the rate applicable immediately preceding such Event
of Default. Interest shall be computed with respect to the Term Note B on an
actual day, 360-day year basis.
4.03 Prepayment. Borrower shall be privileged to prepay all at any time
or any portion from time to time of the unpaid principal under the Term Notes
prior to maturity, without penalty or premium, provided that: (i) partial
prepayments shall be applied to installments of principal under the Term Notes
in the inverse order of their stated maturities; (ii) on each prepayment date,
Borrower shall pay to Bank all accrued and unpaid interest on the principal
portion of the Note being prepaid to and including the date of such prepayment;
(iii) Borrower shall have the option to select which Term Note such prepayment
shall be applied; and (iv) no Default or Event of Default under this Agreement
shall have occurred and be continuing.
4.04 Payments not on a Business Day. In case any installment of
principal or interest under the Term Notes shall become due on a day which is
not a Business Day, such principal and interest shall be payable on the next
succeeding Business Day.
SECTION 5. PRECONDITIONS TO LOAN.
Notwithstanding any provision contained herein to the contrary, Bank
shall have no obligation to make the Loans hereunder unless Bank shall have
first received:
1. this Agreement and the Notes, each executed by a duly authorized
officer of Borrower;
2. the duly executed Security Agreements, financing statements and such
other documents as Bank may reasonably require under Section 6;
3. a copy of resolutions of the Board of Directors of Borrower, duly
adopted, which authorize the execution, delivery and performance of this
Agreement, the Notes, the Security Agreements and the other Transaction
Documents, certified by the President and Secretary of Borrower;
4. a copy of the Certificate or Articles of Incorporation of Borrower,
including any amendments thereto, certified by the Secretary of State of the
State of Missouri and of the State of Oklahoma, as applicable;
5. a copy of the By-Laws of Borrower, including any amendments thereto,
certified by the Secretary of Borrower;
6. an incumbency certificate, executed by the Secretary of Borrower,
which shall identify by name and title and bear the signatures of all of the
officers of Borrower executing any of the Transaction Documents;
7. certificates of corporate good standing of Borrower;
8. an opinion of counsel of Gallop, Johnson & Neuman, L.C., independent
counsel to Borrower, in form and substance acceptable to Bank;
9. such other agreements, documents, instruments and certificates as
Bank may reasonably request.
SECTION 6. SECURITY AGREEMENTS
In order to secure the payment when due of Borrower's Obligations,
Borrower shall convey to Bank a security interest in all of Borrower's accounts
receivable, inventory, chattel paper, general intangibles, goods, machinery,
equipment, fixtures, monies, securities, books, records, and all accessions,
substitutions, renewals, improvements, replacements, proceeds and products
thereof, which security interest shall be a first and prior interest in all such
items. Said security interest shall be evidenced by a General Security Agreement
dated the date hereof and executed by Borrower in favor of Bank in the form
attached hereto as Exhibit D (as the same may from time to time be amended, the
"General Security Agreement" and by a Security Agreement (Accounts Receivable
and Inventory) dated October 30, 2000 (as the same may from time to time be
amended, the "Security Agreement (Accounts Receivable and Inventory)"). Borrower
further covenants and agrees to execute and deliver to Bank any and all
financing statements, continuation statements and such other documentation as
may be requested by Bank in order to create, perfect and continue said security
interest. Upon demand, Borrower shall pay all legal and filing fees and expenses
incurred by Bank in the preparation of the foregoing documents and perfection of
the security interests and liens contemplated thereby. Bank shall have no
obligation to make the Loans hereunder unless and until Borrower has fully
satisfied these requirements.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants to Bank that:
7.01 Corporate Existence and Power. Borrower: (a) is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation; (b) has all requisite corporate powers and all governmental and
regulatory licenses, authorizations, consents and approvals required to carry on
its business as now conducted; and (c) is duly qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, financial condition or operations.
7.02 Corporate Authorization. The execution, delivery and performance
by Borrower of this Agreement, the Notes, the Security Agreements and the other
Transaction Documents are within the corporate powers of Borrower and have been
duly authorized by all necessary corporate action.
7.03 Binding Effect. This Agreement, the Notes, the Security Agreements
and the other Transaction Documents have been duly executed and delivered by
Borrower and constitute the legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights in general.
7.04 Financial Statements. Borrower has furnished Bank with the
following financial statements, identified by the principal financial officer of
Borrower: (1) consolidated balance sheets and profit and loss statements of
Borrower and its Consolidated Subsidiaries as of December 31, 2000, all
certified by Borrower's independent certified public accountants, which
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied; and (2) unaudited consolidated
balance sheets and profit and loss statements of Borrower and its Consolidated
Subsidiaries as of January 31, 2001, certified by the principal financial
officer of Borrower as being true and correct to the best of his knowledge and
as being prepared in accordance with Borrower's normal accounting procedures.
Borrower further represents that: (1) said balance sheets and their accompanying
notes fairly present the condition of Borrower and its Consolidated Subsidiaries
as of the dates thereof; (2) there has been no material adverse change in the
condition or operation, financial or otherwise, of Borrower or any of its
Consolidated Subsidiaries since January 31, 2001; and (3) neither Borrower nor
any of its Consolidated Subsidiaries has any direct or contingent liabilities
which are not disclosed on said financial statements.
7.05 Litigation. Except as disclosed in Schedule 7.05 attached hereto,
there is no action or proceeding pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any Subsidiary of Borrower before
any court, arbitrator or any governmental, regulatory or administrative body,
agency or official which could result in any material adverse change in the
condition or operation, financial or otherwise, of Borrower or any Subsidiary of
Borrower, and neither Borrower nor any Subsidiary of Borrower is in default with
respect to any order, writ, injunction, decision or decree of any court,
arbitrator or any governmental, regulatory or administrative body, agency or
official, a default under which would have a material adverse effect on Borrower
or any Subsidiary of Borrower.
7.06 Pension and Welfare Plans. Each Pension Plan complies with all
applicable statutes and governmental rules and regulations; no Reportable Event
has occurred and is continuing with respect to any Pension Plan; neither
Borrower nor any ERISA Affiliate nor any Subsidiary of Borrower has withdrawn
from any Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal"
as defined in Sections 4203 or 4205 of ERISA, respectively; no steps have been
instituted by Borrower, any ERISA Affiliate or any Subsidiary of Borrower to
terminate any Pension Plan; no condition exists or event or transaction has
occurred in connection with any Pension Plan or Multiemployer Plan which could
result in the incurrence by Borrower, any ERISA Affiliate or any Subsidiary of
Borrower of any material liability, fine or penalty; and neither Borrower nor
any ERISA Affiliate nor any Subsidiary of Borrower is a "contributing sponsor"
as defined in Section 4001(a)(13) of ERISA of a "single-employer plan" as
defined in Section 4001(a)(15) of ERISA which has two or more contributing
sponsors at least two of whom are not under common control. Neither Borrower nor
any Subsidiary of Borrower has any contingent liability with respect to any
"employee welfare benefit plan", as such term is defined in Section 3(a) of
ERISA, which covers retired employees and their beneficiaries.
7.07 Tax Returns and Payment. Borrower and each Subsidiary of Borrower
has filed all Federal, state and local income tax returns and all other tax
returns which are required to be filed and has paid all taxes due pursuant to
such returns or pursuant to any assessment received by Borrower or any
Subsidiary of Borrower, except for the filing of such returns, if any, in
respect of which an extension of time for filing is in effect and except for
such taxes, if any, as are being contested in good faith by appropriate
proceedings being diligently conducted and as to which adequate reserves in
accordance with generally accepted accounting principles consistently applied
have been provided. The charges, accruals and reserves on the books of Borrower
and each Subsidiary of Borrower in respect of any taxes or other governmental
charges are, in the opinion of Borrower, adequate.
7.08 Subsidiaries. Borrowers currently have no further subsidiaries.
7.09 Compliance With Other Instruments; None Burdensome. Neither
Borrower nor any Subsidiary of Borrower is a party to any contract or agreement
or subject to any charter or other corporate restriction which materially and
adversely affects its business, Property or financial condition and which is not
disclosed on Borrower's financial statements heretofore submitted to Bank; none
of the execution and delivery by Borrower of the Transaction Documents, the
consummation of the transactions therein contemplated or the compliance with the
provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower, or any of the
provisions of Borrower's Certificate or Articles of Incorporation or By-Laws or
any of the provisions of any indenture, agreement, document, instrument or
undertaking to which Borrower is a party or subject, or by which it or its
Property is bound, or conflict with or constitute a default thereunder or result
in the creation or imposition of any Lien pursuant to the terms of any such
indenture, agreement, document, instrument or undertaking. No order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental, regulatory, administrative
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, the execution, delivery or
performance of, or the legality, validity, binding effect or enforceability of,
any of the Transaction Documents.
7.10 Other Loans and Guarantees. Except as disclosed on Schedule 7.10
attached hereto, neither Borrower nor any Subsidiary of Borrower is a party to
any loan transaction or Guarantee.
7.11 Labor Matters. Except as disclosed on Schedule 7.11 attached
hereto, (a) no labor contract to which Borrower or any Subsidiary of Borrower is
subject is scheduled to expire during the Term of this Agreement and (b) on the
date of this Agreement, (i) neither Borrower nor any Subsidiary of Borrower is a
party to any labor dispute and (ii) there are no strikes or walkouts relating to
any labor contract to which Borrower or any Subsidiary of Borrower is subject.
7.12 Title to Property. Borrower and each Subsidiary of Borrower is the
sole and absolute owner of, or has the legal right to use and occupy, all
Property it claims to own or which is necessary for Borrower or such Subsidiary
of Borrower to conduct its business. Neither Borrower nor any Subsidiary of
Borrower has signed any financing statements, security agreements or chattel
mortgages with respect to any of its Property, has granted or permitted any
Liens with respect to any of its Property or has any knowledge of any Liens with
respect to any of its Property, except as disclosed on Schedule 7.12 attached
hereto.
7.13 Regulation U. Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and no part of the
proceeds of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock, or to refund or repay indebtedness originally incurred for such purpose
or (ii) for any purpose which entails a violation of, or which is inconsistent
with, the provisions of any of the Regulations of The Board of Governors of the
Federal Reserve System, including, without limitation, Regulations G, U, T or X
thereof, as amended. If requested by Bank, Borrower shall furnish to Bank a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U.
7.14 Multi-Employer Pension Plan Amendments Act of 1980. Borrower and
each Subsidiary of Borrower is in compliance with the Multi-Employer Pension
Plan Amendments Act of 1980, as amended ("MEPP"), and has no liability for
pension contributions pursuant to MEPP.
7.15 Investment Company Act of 1940; Public Utility Holding Company Act
of 1935. Borrower is not an "investment company" as that term is defined in, and
is not otherwise subject to regulation under, the Investment Company Act of
1940, as amended. Borrower is not a "holding company" as that term is defined
in, and is not otherwise subject to regulation under, the Public Utility Holding
Company Act of 1935, as amended.
7.16 Patents, Licenses, Trademarks, Etc. Borrower and each Subsidiary
of Borrower possesses all necessary patents, licenses, trademarks, trademark
rights, trade names, trade name rights and copyrights to conduct its business
without conflict with any patent, license, trademark, trade name or copyright of
any other Person.
7.17 Environmental and Health and Safety Matters. Except as disclosed
on Schedule 7.17 attached hereto or in reports listed on Schedule 7.17 and
delivered to Bank: (i) the operations of Borrower and each Subsidiary of
Borrower comply with (A) all applicable Environmental Laws and (B) all
applicable Occupational Safety and Health Laws; (ii) none of the operations of
Borrower or any Subsidiary of Borrower are subject to any judicial,
governmental, regulatory or administrative proceeding alleging the violation of
any Environmental Law or Occupational Safety and Health Law; (iii) none of the
operations of Borrower or any Subsidiary of Borrower is the subject of any
Federal or state investigation evaluating whether any remedial action is needed
to respond to (A) any spillage, disposal or release into the environment of any
Hazardous Material or any other hazardous, toxic or dangerous waste, substance
or constituent or other substance, or (B) any unsafe or unhealthful condition at
any premises of Borrower or such Subsidiary of Borrower; (iv) neither Borrower
nor any Subsidiary of Borrower has filed any notice under any Environmental Law
or Occupational Safety and Health Law indicating or reporting (A) any past or
present spillage, disposal or release into the environment of, or treatment,
storage or disposal of, any Hazardous Material or any other hazardous, toxic or
dangerous waste, substance or constituent or other substance or (B) any unsafe
or unhealthful condition at any premises of Borrower or such Subsidiary of
Borrower; and (v) neither Borrower nor any Subsidiary of Borrower has any known
contingent liability in connection with (A) any spillage, disposal or release
into the environment of, or otherwise with respect to, any Hazardous Material or
any other hazardous, toxic or dangerous waste, substance or constituent or other
substance or (B) any unsafe or unhealthful condition at any premises of Borrower
or such Subsidiary of Borrower.
SECTION 8. COVENANTS.
8.01 Affirmative Covenants of Borrower. Borrower covenants and agrees
that, so long as Bank has any obligation to make any Loan hereunder or any of
Borrower's Obligations remain unpaid:
(a) Information. Borrower will deliver to Bank:
(i) As soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of Borrower,
consolidated balance sheets of Borrower and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash
flow for such fiscal year, setting forth in each case, in
comparative form, the figures for the previous fiscal year, all
such financial statements to be prepared in accordance with
generally accepted accounting principles consistently applied and
reported on by and accompanied by the unqualified opinion of
independent certified public accountants of nationally recognized
standing selected by Borrower and reasonably acceptable to Bank
together with (i) if requested by Bank, a certificate from such
accountants to the effect that, in making the examination
necessary for the signing of such annual audit report, such
accountants have not become aware of any Default or Event of
Default that has occurred and is continuing, or, if such
accountants have become aware of any such event, describing it
and the steps, if any, being taken to cure it and (ii) the
computations of such accountants evidencing Borrower's compliance
with the financial covenants contained in this Agreement;
(ii) As soon as available and in any event within forty-five (45) days
after the end of each month, consolidated and consolidating
balance sheets of Borrower and its Consolidated Subsidiaries as
of the end of such month and the related consolidated and
consolidating statements of income, retained earnings and cash
flow for such month and for the portion of Borrower's fiscal year
ended at the end of such month, setting forth in each case in
comparative form, the figures for the corresponding month and the
corresponding portion of Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting principles and
consistency by the principal financial officer of Borrower;
(iii)Simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a
certificate of the principal financial officer of Borrower, in
the form attached hereto as Exhibit F and incorporated herein by
reference, accompanied by supporting financial work sheets where
appropriate;
(iv) Promptly upon receipt thereof, any reports submitted to Borrower
or any Consolidated Subsidiary of Borrower (other than reports
previously delivered pursuant to Sections 8.01(a)(i) and (ii)
above) by independent accountants in connection with any annual,
interim or special audit made by them of the books of Borrower or
any Consolidated Subsidiary of Borrower; and
(v) With reasonable promptness, such further information regarding
the business, affairs and financial position of Borrower or any
Subsidiary of Borrower as Bank may from time to time reasonably
request.
Bank is hereby authorized to deliver a copy of any financial statement
or other information made available by Borrower to any regulatory authority
having jurisdiction over Bank, pursuant to any request therefor.
(b) Payment of Indebtedness. Borrower and each Subsidiary of Borrower
will (i) pay any and all Indebtedness payable or Guaranteed by Borrower or such
Subsidiary of Borrower, as the case may be, and any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) or prior to the expiration of any applicable cure periods,
in accordance with the agreement or instrument relating to such Indebtedness or
Guarantee and (ii) faithfully perform, observe and discharge all covenants,
conditions and obligations which are imposed upon Borrower or such Subsidiary of
Borrower, as the case may be, by any and all agreements, documents, instruments
and indentures evidencing, securing or otherwise relating to such Indebtedness
or Guarantee.
(c) Consultations and Inspections. Borrower will permit, and will cause
each Subsidiary of Borrower to permit, Bank (and any Person appointed by Bank to
whom Borrower does not reasonably object) to discuss the affairs, finances and
accounts of Borrower and each Subsidiary of Borrower with the officers of
Borrower and each Subsidiary of Borrower, all at such reasonable times and as
often as Bank may reasonably request. Borrower will also permit, and will cause
each Subsidiary of Borrower to permit, inspection of its Properties, books and
records by Bank during normal business hours or at other reasonable times.
(d) Payment of Taxes; Corporate Existence; Maintenance of Properties;
Insurance. Borrower and each Subsidiary of Borrower will:
(i) Duly file all Federal, state and local income tax returns and all
other tax returns and reports of Borrower and each Subsidiary of
Borrower which are required to be filed and duly pay and
discharge promptly all taxes, assessments and other governmental
charges imposed upon it or any of its Property; provided,
however, that neither Borrower nor any Subsidiary of Borrower
shall be required to pay any such tax, assessment or other
governmental charge the payment of which is being contested in
good faith and by appropriate proceedings diligently conducted
and for which adequate reserves in form and amount satisfactory
to Bank have been provided, except that Borrower and each
Subsidiary of Borrower shall pay or cause to be paid all such
taxes, assessments and governmental charges forthwith upon the
commencement of proceedings to foreclose any Lien which is
attached as security therefor, unless such foreclosure is stayed
by the filing of an appropriate bond;
(ii) Do all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchise and to be
duly qualified to do business in all jurisdictions where the
nature of its business requires such qualification;
(iii)Maintain and keep its Properties as a whole in good repair,
working order and condition; provided, however, that nothing in
this subsection (iii) shall prevent any abandonment of any
Property which is not disadvantageous in any material respect to
Bank and which, in the opinion of the management of Borrower, is
in the best interests of Borrower or such Subsidiary of Borrower,
as the case may be; and
(iv) Insure with financially sound and reputable insurers acceptable
to Bank, all Property of Borrower and each Subsidiary of Borrower
of the character usually insured by corporations engaged in the
same or similar businesses similarly situated, against loss or
damage of the kind customarily insured against by such
corporations, unless higher limits or coverage are reasonably
required in writing by Bank, and carry adequate liability
insurance and other insurance of a kind and in an amount
generally carried by corporations engaged in the same or similar
businesses similarly situated, unless higher limits or coverage
are reasonably required in writing by Bank. All such insurance
may be subject to reasonable deductible amounts. Promptly upon
Bank's request therefor, Borrower shall provide Bank with
evidence that Borrower maintains, and that each Subsidiary of
Borrower maintains, the insurance required under this Section
8.01(d)(iv), and evidence of the payment of all premiums
therefor.
(e) Accountant. Borrower shall give Bank prompt notice of any change of
Borrower's independent certified public accountants and a statement of the
reasons for such change. Borrower shall at all times utilize independent
certified public accountants reasonably acceptable to Bank.
(f) ERISA Compliance. If Borrower or any Subsidiary of Borrower shall
have any Pension Plan, Borrower and such Subsidiary or Subsidiaries of Borrower
shall comply with all requirements of ERISA relating to such plan. Without
limiting the generality of the foregoing, neither Borrower nor any Subsidiary of
Borrower will:
(i) permit any Pension Plan maintained by it to engage in any
nonexempt "prohibited transaction," as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended;
(ii) permit any Pension Plan maintained by it to incur any
"accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, 29 U.S.C.ss. 1082, whether or not waived;
(iii)terminate any such Pension Plan in a manner which could result
in the imposition of a Lien on any Property of Borrower or any
Subsidiary of Borrower pursuant to Section 4068 of ERISA, 29
U.S.C.ss.1368; or
(iv) take any action which would constitute a complete or partial
withdrawal from a Multiemployer Plan within the meaning of
Sections 4203 and 4205 of Title IV of ERISA.
Notwithstanding any provision contained in this Section 8.01(f) to the
contrary, an act by Borrower or any Subsidiary of Borrower shall not be deemed
to constitute a violation of subparagraphs (i) through (iv) hereof unless Bank
determines in good faith that said action, individually or cumulatively with
other acts of Borrower and the Subsidiaries of Borrower, does have or is likely
to cause a significant adverse financial effect upon Borrower or any Subsidiary
of Borrower.
Borrower shall have the affirmative obligation hereunder to report to
Bank any of those acts identified in subparagraphs (i) through (iv) hereof,
regardless of whether said act does or is likely to cause a significant adverse
financial effect upon Borrower or any Subsidiary of Borrower, and failure by
Borrower to report such act promptly upon Borrower's becoming aware of the
existence thereof shall constitute an Event of Default hereunder.
(g) Maintenance of Books and Records. Borrower and each Subsidiary of
Borrower will maintain its books and records in accordance with generally
accepted accounting principles consistently applied and in which true, correct
and complete entries will be made of all of its dealings and transactions.
(h) Further Assurances. Borrower will execute any and all further
agreements, documents and instruments, and take any and all further actions
which may be required under applicable law, or which Bank may from time to time
reasonably request, in order to effectuate the transactions contemplated by this
Agreement, the Note, the Security Agreements and the other Transaction
Documents.
(i) Financial Covenants. Borrower will:
(i) Maintain a Consolidated Tangible Net Worth of at least
$39,000,000.00 as of each fiscal quarter end of Borrower, which
minimum Consolidated Tangible Net Worth shall increase as of the
end of each fiscal year of Borrower, commencing with the fiscal
year ending December 31, 2001, by an amount equal to Seventy-Five
(75%) of the after-tax net income shown on Borrower's
consolidated financial statements for such fiscal year, such
required increases to be cumulative for each fiscal year;
(ii) Have a Senior Funded Debt to Consolidated EBITDA ratio of (A) not
more than 3.5 to 1.0 as of the end of each fiscal quarter of
Borrower for the twelve month period then ended, commencing with
the fiscal quarter ending on June 30, 2001, and (B) not more 3.0
to 1.0 as of the end of each fiscal quarter of Borrower for the
twelve month period then ended, commencing with the fiscal
quarter ending on September 30, 2001 and for each fiscal quarter
of Borrower ending thereafter;
(iii)Have a minimum Consolidated Debt Service Coverage Ratio of at
least 1.25 to 1.0 as of the end of each fiscal quarter of
Borrower for the twelve (12) month period then ended, commencing
with the fiscal quarter ending on June 30, 2001;
(iv) Deliver a certificate of the principal financial officer of
Borrower containing the financial calculations required in
clauses (i) and (ii) above simultaneously with the financial
statements referred to in Sections 8.01(a)(i) and (ii).
(j) Compliance with Law. Borrower will, and will cause each Subsidiary
of Borrower to, comply in all material respects with any and all laws,
ordinances and governmental and regulatory rules and regulations to which it is
subject and obtain any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its business, which violation or failure to
obtain might materially adversely affect the condition or operation, financial
or otherwise, of Borrower or any Subsidiary of Borrower.
(k) Notices. Borrower will notify Bank in writing of any of the
following promptly, but in no event more than five (5) days after an executive
officer of Borrower learns of the occurrence thereof, describing the same and,
if applicable, the steps being taken by the Person(s) affected with respect
thereto:
(i) Default. The occurrence of any Default or Event of Default under
this Agreement or any default or event of default by Borrower,
any other Obligor or any Subsidiary of Borrower under any note,
indenture, loan agreement, mortgage, deed of trust, security
agreement, lease or other similar agreement, document or
instrument to which Borrower, any other Obligor or any Subsidiary
of Borrower, as the case may be, is a party or by which it is
bound or to which it is subject;
(ii) Litigation. The institution of any litigation, arbitration
proceeding or governmental or regulatory proceeding affecting
Borrower, any other Obligor, any Subsidiary of Borrower, any
Collateral or any Third Party Collateral, whether or not
considered to be covered by insurance;
(iii)Judgment. The entry of any judgment or decree against Borrower,
any other Obligor or any Subsidiary of Borrower;
(iv) Pension Plans. The occurrence of a Reportable Event with respect
to any Pension Plan; the filing of a notice of intent to
terminate a Pension Plan by Borrower, any ERISA Affiliate or any
Subsidiary of Borrower; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial withdrawal"
as defined in Sections 4203 and 4205, respectively, of ERISA by
Borrower, any ERISA Affiliate or any Subsidiary of Borrower from
any Multiemployer Plan; or the incurrence of any material
increase in the contingent liability of Borrower or any
Subsidiary of Borrower with respect to any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA which covers
retired employees and their beneficiaries;
(v) Change of Name. Any change in the name of Borrower, any other
Obligor or any Subsidiary of Borrower;
(vi) Change in Place(s) of Business. Any proposed opening, closing or
other change of any place of business of Borrower or any
Subsidiary of Borrower;
(vii)Environmental Matters. Receipt of any notice that the operations
of Borrower, any other Obligor or any Subsidiary of Borrower are
not in full compliance with any of the requirements of any
applicable Environmental Law or Occupational Safety and Health
Law; receipt of notice that Borrower, any other Obligor or any
Subsidiary of Borrower is subject to any Federal, state or local
investigation evaluating whether any remedial action is needed to
respond to the release of any Hazardous Materials or any other
hazardous or toxic waste, substance or constituent or other
substance into the environment; or receipt of notice that any of
the Properties or assets of Borrower, any other Obligor or any
Subsidiary of Borrower are subject to an "Environmental Lien."
For purposes of this Section 8.01(k)(vii), "Environmental Lien"
shall mean a Lien in favor of any governmental or regulatory
agency, entity, authority or official for (1) any liability under
Environmental Laws or (2) damages arising from or costs incurred
by any such governmental or regulatory agency, entity, authority
or official in response to a release of any Hazardous Materials
or any other hazardous or toxic waste, substance or constituent
or other substance into the environment;
(viii) Material Adverse Change. The occurrence of any material adverse
change in the business, operations or condition, financial or
otherwise, of Borrower, any other Obligor or any Subsidiary of
Borrower;
(ix) Change in Management or Line(s) of Business. Any material change
in the senior management of Borrower or any Subsidiary of
Borrower or any change in Borrower's or any Subsidiary of
Borrower's line(s) of business; and
(x) Other Notices. Any notices required to be provided pursuant to
other provisions of this Agreement and notice of the occurrence
of such other events as Bank may from time to time reasonably
specify.
8.02 Negative Covenants of Borrower. Borrower covenants and agrees
that, so long as Bank has any obligation to make any Loan hereunder or any of
Borrower's Obligations remain unpaid, unless the prior written consent of Bank
is obtained:
(a) Limitation on Indebtedness. Neither Borrower nor any Subsidiary of
Borrower will incur or be obligated on any Indebtedness, either directly or
indirectly, by way of Guarantee, suretyship or otherwise, other than:
(i) Indebtedness evidenced by the Notes;
(ii) Indebtedness in a principal amount not to exceed $1,000,000.00
outstanding at any given time which is subordinated in a manner
acceptable to Bank, in its sole and absolute discretion, to
Borrower's Obligations;
(iii)Indebtedness other than to Bank incurred to finance the purchase
of capital assets provided that (A) the principal amount of the
indebtedness incurred in each instance does not exceed the
purchase price of the asset(s) being acquired; and (B) the
principal amount of such indebtedness incurred shall not exceed
$1,500,000.00 for the fiscal year of Borrower ending December 31,
2001 and for each fiscal year of Borrower thereafter;
(iv) Indebtedness reflected on the most recent financial statements of
Borrower furnished to Bank;
(v) Unsecured trade accounts payable incurred in the ordinary course
of business; and
(vi) Indebtedness representing loans against life insurance policies
of Borrower or any Subsidiary of Borrower in an amount not to
exceed the aggregate cash surrender value of such life insurance
policies.
(b) Limitations on Liens. Borrower will not create, incur, assume or
suffer to exist, and will not cause or permit any Subsidiary of Borrower to
create, incur, assume or suffer to exist, any Lien on any of its Property,
assets or revenues other than:
(i) Liens presently in existence which are described on Schedule 7.12
attached hereto;
(ii) Purchase money liens or security interests covering the property
acquired with the proceeds of Indebtedness permitted to be
incurred under Section 8.02(a)(iv) above;
(iii)Pledges or deposits in connection with or to secure workmen's
compensation, unemployment insurance, pension or other employee
benefits;
(iv) Any Lien renewing, extending or refunding any Lien permitted
hereunder, provided that the principal amount of Indebtedness
secured by such Lien is not increased and such Lien is not
extended to cover any other Property or assets of Borrower or any
Subsidiary of Borrower; and
(v) Subject to Section 8.01(d)(i), Liens for taxes, assessments or
governmental charges or levies on Property of Borrower or any
Subsidiary of Borrower if the same are being contested in good
faith and by appropriate proceedings diligently conducted and for
which adequate reserves in form and amount satisfactory to Bank
are provided.
(c) Sale of Property. Neither Borrower nor any Subsidiary of Borrower
will sell, lease, transfer or otherwise dispose of any Property or assets of
Borrower or such Subsidiary of Borrower, as the case may be, except in the
ordinary course of business; provided, however, that the foregoing shall not
preclude Borrower or any Subsidiary of Borrower from selling, leasing,
transferring or otherwise disposing of less than substantially all of its
Property or assets so long as (i) the aggregate book value of all such Property
or assets sold, leased, transferred or otherwise disposed of in any given fiscal
year does not exceed $500,000.00; and (ii) the purchase price for said Property
or assets shall be equal to or greater than the depreciated book value of said
Property or assets.
(d) Mergers and Consolidations. Neither Borrower nor any Subsidiary of
Borrower will merge or consolidate with any other Person or sell, transfer or
convey all or a substantial part of its Property or assets to any Person, except
that Subsidiaries of Borrower may merge with each other or into Borrower.
(e) Acquisitions. Neither Borrower nor any Subsidiary of Borrower will
acquire all or substantially all of the stock or assets of any Person.
(f) Fiscal Year. Neither Borrower nor any Subsidiary of Borrower will
change their respective fiscal years.
(g) Stock Redemptions and Distributions. Borrower will not make or
declare or incur any liability to make any Distribution in respect of the
capital stock of Borrower.
(h) Transactions with Related Parties. Neither Borrower nor any
Subsidiary of Borrower will, directly or indirectly, engage in any material
transaction, in the ordinary course of business or otherwise, with any Related
Party unless such transaction is upon fair market terms, is not disadvantageous
in any material respect to Bank and has been approved by a majority of the
disinterested directors of Borrower or such Subsidiary of Borrower, as the case
may be (or, if none of such directors are disinterested, by a majority of the
directors), as being in the best interests of Borrower or such Subsidiary of
Borrower, as the case may be. In addition, neither Borrower nor any Subsidiary
of Borrower shall (i) transfer any Property or assets to any Related Party or
(ii) purchase or sign any agreement to purchase any stock or other securities of
any Related Party (whether debt, equity or otherwise), underwrite or Guarantee
the same, or otherwise become obligated with respect thereto.
(i) Capital Expenditures. Neither Borrower nor any Subsidiary of
Borrower will make any Capital Expenditures or enter into any Capitalized Leases
which in the aggregate (for Borrower and all Subsidiaries of Borrower) exceed
the amount indicated during each of the following periods:
$2,750,000.00 April 2, 2001 to December 31, 2001
$3,000,000.00 January 1, 2002 to December 31, 2002
$3,250,000.00 January 1, 2003 to September 15, 2004
(j) Loans and Investments. Neither Borrower nor any Subsidiary of
Borrower will make any loans or advances or extensions of credit to (other than
extensions of credit in the ordinary course of business), purchase any stocks,
bonds, notes, debentures or other securities of, make any expenditures on behalf
of, or in any manner assume liability (direct, contingent or otherwise) for the
Indebtedness of any Person, except that Borrower and the Subsidiaries of
Borrower may:
(i) Make or permit to remain outstanding loans or advances to any
Subsidiary of Borrower;
(ii) Acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business)
owing to Borrower or any Subsidiary of Borrower;
(iii)Own, purchase or acquire (A) prime commercial paper and
certificates of deposit in United States commercial banks (having
capital resources in excess of $100,000,000.00), in each case due
within one (1) year from the date of purchase and payable in the
United States in United States dollars, (B) obligations of the
United States government or any agency thereof, (C) obligations
guaranteed directly by the United States government or (D)
repurchase agreements of United States commercial banks (having
capital resources in excess of $100,000,000.00) for terms of less
than one (1) year; and
(iv) Make or permit to remain outstanding travel and other like
advances to officers and employees of Borrower or any Subsidiary
of Borrower in the ordinary course of business; and
(v) Redeem or repurchase outstanding capital stock of Borrower
provided that (A) the aggregate amounts expended with respect to
such transactions in any given year shall not exceed $200,000.00
or (B) Borrower has obtained Bank's prior written consent, which
such consent shall not be unreasonably withheld.
(k) Dissolution or Liquidation. Neither Borrower nor any Subsidiary of
Borrower will seek or permit the dissolution or liquidation of Borrower in whole
or in part.
(l) Leases. Neither Borrower nor any Subsidiary of Borrower will enter
into or permit any new agreements to rent or lease (as lessee) any real or
personal property for initial terms (including options to renew or extend any
term, whether or not exercised) of more than one (1) year which in the aggregate
(for Borrower and all Subsidiaries of Borrower) provide for payments in excess
of $375,000 during any consecutive twelve-month (12-month) period.
(m) Change in Nature or Ownership of Business. Neither Borrower nor any
Subsidiary of Borrower will make or permit any material change in the nature or
ownership of its business. A material change in ownership shall mean a sale of
more than Forty-Three Percent (43%) of the equity of a Borrower.
(n) Pension Plans. Neither Borrower nor any Subsidiary of Borrower
shall (a) permit any condition to exist in connection with any Pension Plan
which might constitute grounds for the PBGC to institute proceedings to have
such Pension Plan terminated or a trustee appointed to administer such Pension
Plan or (b) engage in, or permit to exist or occur, any other condition, event
or transaction with respect to any Pension Plan which could result in the
incurrence by Borrower or any Subsidiary of Borrower of any material liability,
fine or penalty. Neither Borrower nor any Subsidiary of Borrower shall become
obligated to contribute to any Pension Plan or Multiemployer Plan other than any
such plan or plans in existence on the date hereof.
8.03 Use of Proceeds. Borrower agrees that (i) the proceeds of the
Loans will be used solely for the acquisition of the assets of Tempco
Engineering, Inc., a California corporation and Hyco Precision, Inc., a
California corporation, and for general working capital; (ii) none of such
proceeds will be used in violation of any applicable law or regulation; and
(iii) Borrower will not engage principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying "margin stock" within the meaning of Regulation U of The Board of
Governors of the Federal Reserve System, as amended.
SECTION 9. EVENTS OF DEFAULT.
If any of the following (each of the following herein sometimes called
an "Event of Default") shall occur and be continuing:
9.01 Borrower shall fail to pay any of Borrower's Obligations as and
when the same shall become due and payable, whether by reason of demand,
acceleration or otherwise, and such failure remains unremedied for ten (10) days
after written notice thereof shall have been given to Borrower by Bank.
9.02 Any representation or warranty of Borrower made in this Agreement,
in any other Transaction Document to which Borrower is a party or in any
certificate, agreement, instrument or statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall prove
to have been untrue or incorrect in any material respect when made or effected;
9.03 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 8.01(i), Section 8.02 or Section 8.03;
9.04 Borrower shall fail to perform or observe any other term, covenant
or provision contained in this Agreement and any such failure remains unremedied
for ten (10) days after written notice thereof shall have been given to Borrower
by Bank;
9.05 This Agreement or any of the other Transaction Documents shall at
any time for any reason cease to be in full force and effect or shall be
declared to be null and void by a court of competent jurisdiction, or if the
validity or enforceability thereof shall be contested or denied by Borrower, or
if the transactions completed hereunder or thereunder shall be contested by
Borrower or if Borrower shall deny that it has any or further liability or
obligation hereunder or thereunder;
9.06 Borrower, any Subsidiary of Borrower or any other Obligor shall
(i) voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (ii) consent
to the institution of, or fail to contravene in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator or
similar official of itself, himself or herself or of a substantial part of its,
his or her Property or assets, (iv) file an answer admitting the material
allegations of a petition filed against itself, himself or herself in any such
proceeding, (v) make a general assignment for the benefit of creditors, (vi)
become unable, admit in writing its, his or her inability or fail generally to
pay its, his or her debts as they become due or (vii) take any corporate or
other action for the purpose of effecting any of the foregoing;
9.07 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Borrower, any Subsidiary of Borrower or any other Obligor, or of a
substantial part of the Property or assets of Borrower, any Subsidiary of
Borrower or any other Obligor, under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official of Borrower, any Subsidiary of
Borrower or any other Obligor or of a substantial part of the Property or assets
of Borrower, any Subsidiary of Borrower or any other Obligor or (iii) the
winding-up or liquidation of Borrower, any Subsidiary of Borrower or any other
Obligor, and such proceeding or petition shall continue undismissed for
forty-five (45) consecutive days or an order or decree approving or ordering any
of the foregoing shall continue unstayed and in effect for forty-five (45)
consecutive days;
9.08 An "Event of Default" (as defined therein) shall occur under or
within the meaning of the Security Agreements;
9.09 Borrower, any Subsidiary of Borrower, or any other Obligor shall
be declared by Bank to be in default on, or pursuant to the terms of, (1) any
other present or future obligation to Bank, including, without limitation, any
other loan, line of credit, revolving credit, guaranty or letter of credit
reimbursement obligation, or (2) any other present or future agreement
purporting to convey to Bank a Lien upon any Property or assets of Borrower,
such Subsidiary of Borrower or such other Obligor, as the case may be;
9.10 Borrower, any Subsidiary of Borrower or any other Obligor shall
fail (and such failure shall not have been cured or waived) to perform or
observe any term, provision or condition of, or any other default or event of
default shall occur under, any agreement, document or instrument evidencing,
securing or otherwise relating to any outstanding Indebtedness of Borrower, such
Subsidiary of Borrower or such other Obligor, as the case may be, for borrowed
money (other than Borrower's Obligations), if the effect of such failure or
default (after taking into account all applicable cure periods and waivers) is
to cause or permit such Indebtedness to be declared to be due and payable or
otherwise accelerated, or to be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
9.11 Borrower, any Subsidiary of Borrower or any other Obligor shall
have a judgment in excess of $50,000.00 entered against it, him or her by a
court having jurisdiction in the premises and such judgment shall not be
appealed in good faith or satisfied by Borrower, such Subsidiary of Borrower or
such other Obligor, as the case may be, within thirty (30) days after the entry
of such judgment;
9.12 The occurrence of a Reportable Event with respect to any Pension
Plan; the filing of a notice of intent to terminate a Pension Plan by Borrower,
any ERISA Affiliate or any Subsidiary of Borrower; the institution of
proceedings to terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial withdrawal" as defined in
Sections 4203 and 4205, respectively, of ERISA by Borrower, any ERISA Affiliate
or any Subsidiary of Borrower from any Multiemployer Plan; or the incurrence of
any material increase in the contingent liability of Borrower or any Subsidiary
of Borrower with respect to any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA which covers retired employees and their beneficiaries; or
9.13 The institution by Borrower, any ERISA Affiliate or any Subsidiary
of Borrower of steps to terminate any Pension Plan if, in order to effectuate
such termination, Borrower, such ERISA Affiliate or such Subsidiary of Borrower,
as the case may be, would be required to make a contribution to such Pension
Plan, or would incur a liability or obligation to such Pension Plan, in excess
of $50,000.00; or the institution by the PBGC of steps to terminate any Pension
Plan;
THEN, and in each such event (other than an event described in Sections
9.06 or 9.07), Bank may declare that its obligation to lend funds under this
Agreement has terminated, whereupon such obligation of Bank shall be immediately
and forthwith terminated and Bank may further declare the entire outstanding
principal balance of and all accrued and unpaid interest on the Notes issued
under this Agreement and all other amounts payable by Borrower hereunder to be
forthwith due and payable, whereupon all of the unpaid principal balance,
accrued and unpaid interest and all such other amounts shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
Bank may exercise any and all other rights and remedies which it may have under
any of the other Transaction Documents or under applicable law; provided,
however, that upon the occurrence of any event described in Sections 9.06 or
9.07, Bank's obligation to lend funds under this Agreement shall automatically
terminate and the entire outstanding principal balance of and all accrued and
unpaid interest on the Notes issued under this Agreement and all other amounts
payable by Borrower hereunder shall automatically become immediately due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by Borrower, and Bank may exercise any and
all other rights and remedies which it may have under any of the other
Transaction Documents or under applicable law.
SECTION 10. GENERAL.
10.01 No Waiver. No failure or delay by Bank in exercising any right,
remedy, power or privilege hereunder or under any other Transaction Document
shall operate as a waiver thereof; nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The remedies provided herein and in the
other Transaction Documents are cumulative and not exclusive of any remedies
provided by law. Nothing herein contained shall in any way affect the right of
Bank to exercise any statutory or common law right of banker's lien or set-off.
10.02 Right of Set-Off. Upon the occurrence and during the continuance
of any Event of Default, Bank is hereby authorized at any time and from time to
time, without notice to Borrower (any such notice being expressly waived by
Borrower) and to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by Bank and any and all other indebtedness at any time owing by
Bank to or for the credit or account of Borrower against any and all of
Borrower's Obligations irrespective of whether or not Bank shall have made any
demand hereunder or under any of the other Transaction Documents and although
such obligations may be contingent or unmatured. Bank agrees to promptly notify
Borrower after any such set-off and application made by Bank, provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of Bank under this Section 10.02 are in
addition to any other rights and remedies (including, without limitation, other
rights of set-off) which Bank may have. Nothing contained in this Agreement or
any other Transaction Document shall impair the right of Bank to exercise any
right of set-off or counterclaim it may have against Borrower and to apply the
amount subject to such exercise to the payment of indebtedness of Borrower
unrelated to this Agreement or the other Transaction Documents.
10.03 Cost and Expenses. Borrower agrees, whether or not any Loan is
made hereunder, to pay Bank upon demand (i) all out-of-pocket costs and expenses
and all Attorneys' Fees of Bank in connection with the preparation, negotiation,
execution and administration of this Agreement, the Note and the other
Transaction Documents, (ii) all recording, filing, title insurance, surveying
and appraisal fees incurred in connection with this Agreement and the other
Transaction Documents, (iii) all out-of-pocket costs and expenses and all
Attorneys' Fees of Bank in connection with the preparation of any waiver or
consent hereunder or any amendment hereof or any Event of Default or alleged
Event of Default hereunder, (iv) if an Event of Default occurs, all
out-of-pocket costs and expenses and all Attorneys' Fees incurred by Bank in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom and (v) all other Attorneys' Fees incurred by
Bank relating to or arising out of or in connection with this Agreement or any
of the other Transaction Documents. Borrower further agrees to pay or reimburse
Bank for any stamp or other taxes which may be payable with respect to the
execution, delivery, recording and/or filing of this Agreement, the Note, the
Security Agreements or any of the other Transaction Documents. All of the
obligations of Borrower under this Section 10.03 shall survive the satisfaction
and payment of Borrower's Obligations and the termination of this Agreement.
10.04 Environmental Indemnity. Borrower hereby agrees to indemnify Bank
and hold Bank harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses and claims of any and every kind whatsoever
(including, without limitation, court costs and Attorneys' Fees) which at any
time or from time to time may be paid, incurred or suffered by, or asserted
against, Bank for, with respect to or as a direct or indirect result of the
violation by Borrower or any Subsidiary of Borrower of any Environmental Laws;
or with respect to, or as a direct or indirect result of the presence on or
under, or the escape, seepage, leakage, spillage, discharge, emission or release
from, properties utilized by Borrower and/or any Subsidiary of Borrower in the
conduct of their respective businesses into or upon any land, the atmosphere or
any watercourse, body of water or wetland, of any Hazardous Materials or any
other hazardous or toxic waste, substance or constituent or other substance
(including, without limitation, any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under the Environmental Laws); and
the provisions of and undertakings and indemnification set out in this Section
10.04 shall survive the satisfaction and payment of Borrower's Obligations and
the termination of this Agreement. Notwithstanding the foregoing, Borrower shall
have no obligation to the Bank under this Section 10.04 with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of Bank as determined by a court of competent jurisdiction.
10.05 General Indemnity. In addition to the payment of expenses
pursuant to Section 10.03, whether or not the transactions contemplated hereby
shall be consummated, Borrower hereby agrees to indemnify, pay and hold Bank and
any holder(s) of the Note, and the officers, directors, employees, agents and
affiliates of Bank and such holder(s) (collectively, the "Indemnitees") harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for such Indemnities in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnities shall be designated a party thereto), that may
be imposed on, incurred by or asserted against the Indemnities, in any manner
relating to or arising out of this Agreement, any of the other Transaction
Documents or any other agreement, document or instrument executed and delivered
by Borrower or any other Obligor in connection herewith or therewith, the
statements contained in any commitment letters delivered by Bank, Bank's
agreement to make the Loans hereunder or the use or intended use of the proceeds
of any Loan hereunder (collectively, the "indemnified liabilities"); provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to indemnified liabilities arising from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities incurred by the
Indemnities or any of them. The provisions of the undertakings and
indemnification set out in this Section 10.05 shall survive satisfaction and
payment of Borrower's Obligations and the termination of this Agreement.
10.06 Authority to Act. Bank shall be entitled to act on any notices
and instructions (telephonic or written) believed by Bank to have been delivered
by any person authorized to act on behalf of Borrower pursuant hereto,
regardless of whether such notice or instruction was in fact delivered by a
person authorized to act on behalf of Borrower, and Borrower hereby agrees to
indemnify Bank and hold Bank harmless from and against any and all losses and
expenses, if any, ensuing from any such action.
10.07 Notices. Any notice, request, demand, consent, confirmation or
other communication hereunder shall be in writing and delivered in person or
sent by telegram, telex, telecopy or registered or certified mail, return
receipt requested and postage prepaid, if to Borrower at 3600 Mueller Road, St.
Charles, Missouri 63302, Attention: Ronald S. Saks, or if to Bank at 8182
Maryland Avenue, St. Louis, Missouri 63105, Attention: Patricia A. O'Herin, or
at such other address as either party may designate as its address for
communications hereunder by notice so given. Such notices shall be deemed
effective on the day on which delivered or sent if delivered in person or sent
by telegram, telex or telecopy, or on the third (3rd) Business Day after the day
on which mailed, if sent by registered or certified mail.
10.08 Consent to Jurisdiction. BORROWER IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED STATES OF
AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS BANK MAY ELECT, IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT. BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED
IN ANY OF SUCH COURTS. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT, AND BORROWER FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. BORROWER HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION
WHICH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT
DOMICILES. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY
REGISTERED MAIL SENT TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.07.
10.09 Bank's Books and Records. Bank's books and records showing the
account between Borrower and Bank shall be admissible in evidence in any action
or proceeding and shall constitute prima facie proof thereof.
10.10 Governing Law; Amendments. This Agreement, the Note, the Security
Agreements and all of the other Transaction Documents shall be governed by and
construed in accordance with the internal laws of the State of Missouri, and
this Agreement and the other Transaction Documents may not be changed, nor may
any term, condition or Event of Default be waived, modified, or discharged
orally but only by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought. To the
extent of any inconsistencies between the terms and provisions of this Agreement
and the other Transaction Documents, the terms and provisions of this Agreement
shall govern and control.
10.11 References; Headings for Convenience. Unless otherwise specified
herein, all references herein to Section numbers refer to Section numbers of
this Agreement, and all references herein to Exhibits "A", "B", "C", "D", "E"
and "F" refer to annexed Exhibits "A", "B", "C", "D", "E" and "F" which are
hereby incorporated herein by reference. The Section headings are furnished for
the convenience of the parties and are not to be considered in the construction
or interpretation of this Agreement.
10.12 Subsidiary Reference. Any reference herein to a Subsidiary or
Consolidated Subsidiary of Borrower, and any financial definition, ratio,
restriction or other provision of this Agreement which is stated to be
applicable to Borrower and its Subsidiaries or Consolidated Subsidiaries or
which is to be determined on a "consolidated" or "consolidating" basis, shall
apply only to the extent Borrower has any Subsidiaries or Consolidated
Subsidiaries and, where applicable, to the extent any such Subsidiaries are
consolidated with Borrower for financial reporting purposes.
10.13 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of Borrower and its successors and Bank and its successors and
assigns. Borrower may not assign or delegate any of its rights or obligations
under this Agreement.
10.14 No Oral Agreements; Entire Agreement. Oral agreements or
commitments to loan money, extend credit or to forbear from enforcing repayment
of a debt, including promises to extend or renew such debt, are not enforceable.
To protect Borrower and Bank from misunderstanding or disappointment, any
agreements reached by Borrower and Bank covering such matters are contained in
this Agreement and the other Transaction Documents, which Agreement and other
Transaction Documents are a complete and exclusive statement of the agreements
between Borrower and Bank, except as Borrower and Bank may later agree in
writing to modify them. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings (oral or written) relating to the subject matter hereof.
10.15 Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.17 Resurrection of Borrower's Obligations. To the extent that Bank
receives any payment on account of any of Borrower's Obligations, and any such
payment(s) or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
Federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrower's Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any Property or assets of
Borrower and theretofore created and/or existing in favor of Bank as security
for the payment of such Borrower's Obligations shall be revived and continue in
full force and effect, as if such payment(s) had not been received by Bank and
applied on account of Borrower's Obligations.
ORAL AGREEMENTS OR COMMITMENTS TO LEND MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND BANK FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY BORROWER AND BANK
COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT, WHICH AGREEMENT IS THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN BORROWER AND BANK,
EXCEPT AS BORROWER AND BANK MAY LATER AGREE IN WRITING TO MODIFY THEM.
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment to
and Restatement of Loan Agreement this 2nd day of April, 2001.
LMI AEROSPACE, INC. (formerly known as
Leonard's Metal, Inc.)
By /s/ Lawrence E. Dickinson
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Title: Chief Financial Officer
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LMI FINISHING, INC.
By /s/ Lawrence E. Dickinson
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Title: Vice President
----------------------------------------
LEONARD'S METAL, INC. (formerly known as
LMI Acquisition, Inc.)
By /s/ Lawrence E. Dickinson
--------------------------------------------
Title: Vice President
----------------------------------------
PRECISE MACHINE COMPANY
By /s/ Lawrence E. Dickinson
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Title: Vice President
----------------------------------------
METAL CORPORATION
By /s/ Lawrence E. Dickinson
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Title: Vice President
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UNION PLANTERS BANK, N.A.
By /s/ Patricia A. O'Herin
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Title: E.V.P.
----------------------------------------