<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant To Section 13 OR 15 (d) Of The Securities
Exchange Act Of 1934
For the quarterly period ended: March 31, 1997
or
[ ] Transition Report Pursuant To Section 13 OR 15(d) Of The Securities
Exchange Act Of 1934
Commission File Number: 001-11835
The American Materials & Technologies Corporation
-------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 33-0659916
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5915 Rodeo Road
Los Angeles, CA 90016
---------------------
(Address of Principal Executive Offices)
(310) 841-5200
--------------
(Issuer's Telephone Number, Including Area Code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by the court.
Yes ________ No________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $0.01 par value
per share, 4,393,554 shares issued and outstanding on May 8, 1997.
Transitional Small Business Disclosure Format (check one): Yes ___ No X
<PAGE> 2
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet at March 31, 1997 3
Condensed Consolidated Statement of Operations -
Three-month period ended March 31, 1997 and 1996 4
Condensed Consolidated Statement of Cash Flows-
Three-month period ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Default upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Matters 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
<PAGE> 3
The American Materials & Technologies Corporation
Condensed Consolidated Balance Sheet
March 31, 1997
(unaudited)
(000's)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and short term investments $ 350
Accounts receivable, net of allowance of $126 5,332
Inventories 3,282
Prepaid expenses and other current assets 718
-------
Total current assets 9,682
-------
Property and equipment, less accumulated depreciation and amortization of $810 5,881
Goodwill, net of accumulated amortization of $26 7,674
Other assets 699
-------
$23,936
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,971
Accrued liabilities 1,582
Current portion of loans due to bank 281
Current portion of subordinated notes 1,498
Taxes payable 281
-------
Total current liabilities 7,613
Term loan-bank 308
Revolving credit facility-bank 2,695
Subordinated notes 226
-------
Total liabilities 10,842
-------
Minority Interest
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized; none
issued and outstanding
Common stock, par value $0.01 per share, 15,000,000 shares authorized; 4,393,554
issued and outstanding 4,393,554 44
Additional paid-in capital 12,119
Retained earnings 931
-------
Total stockholders' equity 13,094
-------
$23,936
=======
</TABLE>
<PAGE> 4
The American Materials & Technologies Corporation
Condensed Consolidated Statement of Operations
(unaudited)
(000's)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
----------------------------
<S> <C> <C>
Net sales $ 7,152 $ 5,251
Cost and expenses
Materials 3,384 2,431
Fixed and variable manufacturing 1,769 1,353
Selling, general and administrative 1,433 826
Research and development 293 94
------- -------
6,879 4,704
------- -------
Income from operations 273 547
Other income (expense)
Interest income 81
Interest expense (84) (187)
Minority interest in subsidiary loss 70
------- -------
Income before income taxes 340 360
Provision for income taxes 66 114
------- -------
Net income $ 274 $ 246
======= =======
Per share:
Net income $ 0.06 $ 0.13
Weighted average number of common shares 4,457 1,879
</TABLE>
<PAGE> 5
The American Materials & Technologies Corporation
Condensed Consolidated statement of Cash Flows
(unaudited)
(000's)
<TABLE>
<CAPTION>
Three Months Ended March 31
1997 1996
---------------------------
<S> <C> <C>
Cash used in operations:
Net income (loss) $ 274 $ 246
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 217 136
Non-cash interest expense 20
(Increase) decrease in current assets:
Accounts receivable (407) (952)
Inventory (745) (68)
Prepaid expenses and other current assets (97) (59)
Increase (decrease) in current liabilities:
Accounts payable 784 (209)
Accrued liabilities (109) 248
Taxes payable 63 114
Increase in other assets (336) 92
---------------------------
Net cash used in operating activities: (356) (432)
---------------------------
Cash used for investing activities:
Cash paid for acquisition net of $269 cash
acquired (6,371)
Capital expenditures (245) (40)
---------------------------
Net cash used for investing activities (6,616) (40)
---------------------------
Cash provided by financing activities
Borrowings under revolving credit 7,684 2,722
Repayments under revolving credit (4,989) (2,395)
Payment of term loan-bank (28) (28)
Issuance of acquisition debt
---------------------------
Net cash provided by financing activities 2,667 299
---------------------------
Net decrease in cash (4,305) (173)
Cash at beginning of period 4,655 174
---------------------------
Cash at the end of period $ 350 $ 1
===========================
Supplementary Information
Cash paid for interest $ 84 $ 74
Cash paid for taxes $ 2 $ 3
</TABLE>
<PAGE> 6
The American Materials & Technologies Corporation
Notes To Condensed Consolidated Financial Statements
Three Months Ended March 31, 1997 and 1996
(unaudited)
1. BASIS OF PRESENTATION
The information contained in these unaudited consolidated financial
statements is condensed from that which would appear in the Company's annual
consolidated financial statements. Accordingly, the condensed consolidated
financial statements included herein should be read in conjunction with the
Form 10KSB and the consolidated financial statements of December 31, 1996. The
unaudited condensed consolidated financial statements as of March 31, 1997 and
1996 and for the quarterly periods then ended include all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation. The results of operations for interim periods are not necessarily
indicative of the results which may be expected for the entire year. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
The consolidated financial statements include the accounts of the
Company, Culver City Composites Corporation and Grafalloy Corporation, its
wholly owned subsidiaries, and Carbon Design Partnership Limited, a 51% owned
subsidiary, from the dates of acquisition. All significant intercompany
accounts and transactions have been eliminated.
2. NET INCOME PER SHARE
Net income per share is computed using the weighted average number of
shares of outstanding common stock and dilutive common stock equivalents from
the assumed exercise of stock options and warrants.
3. PURCHASES OF GRAFALLOY L.P. AND CARBON DESIGN PARTNERSHIP LIMITED
On February 27, 1997, the Company acquired all of the assets and
assumed certain liabilities of Grafalloy L.P. (the "Seller"), a manufacturer of
graphite golf shafts in a business combination accounted for by the purchase
method. The purchase price of approximately $9.2 million included a cash
payment to the Seller of approximately $6.4 million and acquisition costs of
approximately $315,000. In addition, the Company issued 179,492 shares of
common stock to the Seller, and issued three notes to the Seller in the
aggregate principal amount of approximately $1.7 million, of which $747,254
bears interest of the rate of 12% and the remainder bears interest at the rate
of 7%. An $800,000 note is due 13 months after the date of the acquisition. A
$747,254 note is due as follows: $300,000 is due in May 1997 and the balance is
due in equal installments 9 and 18 months after the date of the acquisition,
respectively. A $175,000 note is due as follows: $5,000 is due per month, with
a final balloon payment due 6 months after the date of the acquisition.
On November 22, 1996, the Company acquired 51% of the outstanding stock of
Carbon Design Partnership Limited ("Carbon Design"), a company which
manufactures and markets composite parts for recreational and industrial uses.
<PAGE> 7
The acquisition has been accounted for as a purchase combination. The purchase
price of $589,936 which includes direct acquisition costs of $87,135, included a
cash payment to the owners. The cash payment was financed through the cash flow
of the Company. The operating results of Carbon Design have been included in the
Company's consolidated financial statements since December 1, 1996.
4. INITIAL PUBLIC OFFERING
On July 5, 1996 the Company completed an initial public offering for
the sale of 2,000,000 shares of its common stock at $5.50 per share.
Subsequently, on July 26, 1996, the underwriter exercised an IPO related option
to purchase an additional 296,000 shares at $5.50 per share. The proceeds were
used to repay the outstanding loans under the Revolving Facility and repay
loans of $3,150,000 and interest of $172,000 to an affiliate. The Company may
reborrow as needed under the Revolving Facility. The remaining funds were
invested in short term investment grade securities pending their use to fund
the acquisitions of a 51% interest in Carbon Design Partnership Limited on
November 22, 1996 and the acquisition of the assets and certain liabilities of
Grafalloy L.P. on February 27, 1997.
5. PRO FORMA INFORMATION
The following table presents unaudited pro forma information for the
first quarter of 1997 and 1996 as if Carbon Design and Grafalloy L.P. had been
acquired on January 1 of each year; it does not show actual performance. Certain
pro forma adjustments were made to determine the following pro forma
information, including increased interest expense (assuming that each
acquisition was made and that related capital contributions and issuance of
acquisition debt occurred at the beginning of each quarterly period), new
compensation agreements effected after the close of the transaction and
revisions to the useful lives and depreciable bases of the assets.
<TABLE>
<CAPTION>
(000's)
Pro Forma
Quarter Ended Quarter Ended
March 31, 1997 March 31, 1996
<S> <C> <C>
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Net sales $8,879 $8,711
Net income $ 125 $ 737
Earnings per common share $ 0.03 $ 0.17
Weighted average shares outstanding 4,457 4,457
</TABLE>
6. CREDIT FACILITIES
On April 7, 1997 the Company renegotiated its bank credit facilities to
reduce the interest rate margins and to increase the total lines to $10,140,000
which includes $7,440,000 revolving credit based upon inventory and
receivables, $1,000,000 term loan, and $1,700,000 stand by term loan to finance
capital expenditures. The interest rate on the various loans is 1% above prime
and the loans are subject to certain financial covenants including tangible net
worth, interest coverage, debt service coverage ratios, and restrictions on
capital expenditures.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto. All dollar
amounts are in thousands.
OVERVIEW
AMT was incorporated in Delaware on March 29, 1995 and operates in the
advanced materials and technologies industries. It acquired Culver City
Composites Corporation ("CCC")on December 19, 1995, Grafalloy Corporation
("Grafalloy") on February 27, 1997 and Carbon Design Partnership Limited
("Carbon Design") on November 22, 1996. The following discussion reviews the
financial results of the Company for the three month periods ended March 31,
1997 and 1996.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 and March 31, 1996
Net sales were $7,152 (compared to $5,251), an increase of $1,901 or
36% over the corresponding period in 1996. Volume increases accounted for over
25% of the increase and acquisitions accounted for the rest. Prices of the
Company's products remained stable.
For the quarter ended March 31, 1997, the Company realized a gross
profit margin of $1,999, or 28% of sales (compared to 28% of sales in 1996), an
increase of $532 or 36% over the corresponding period of 1996. Material costs
of sales increased to 47%, compared to 46% in the corresponding period in 1996
due to increased materials prices which were not passed on to customers.
Manufacturing costs as a percentage of sales decreased to 25% compared to 26%
due to changes in product mix in 1997. In the 1997 first quarter, on a pro forma
basis, the gross profit margin of the acquired golf shaft business was
substantially lower than for the comparable period in 1996, due to sales under
one contract at lower sale prices and margins than for comparable contracts in
the first quarter of 1996.
Selling, general and administrative expenses were $1,433, an increase
of $607 or 73% over the corresponding period of 1996 due to additional staff in
sales, sales support, investor relations and administration to manage
acquisitions and an anticipated increase in sales.
Research and development expenses were $293 in the first quarter of
1997, an increase of $199 or 212% over the comparable period of 1996. The
Company has expanded and intends to continue to expand these activities to
develop new products and markets.
Interest expense was $84 for the first quarter of 1997 compared to $187
for the same quarter in 1996, a decrease of $103 or 55% due to reduced borrowing
in the 1997 period compared to 1996. Interest income was $81 for the first
quarter of 1997 compared to $0 for the same quarter of 1996, because the
proceeds of the IPO were invested until used to fund the Grafalloy acquisition
on February 27, 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the quarter ended March 31, 1997, cash used in operations was
$356, as cash generated was not sufficient to fund the increase in receivables
($407) and inventories ($745) resulting principally from the increase in
<PAGE> 9
sales and timing of purchases and payments. The $97 increase in prepaid
expenses and other current assets consists to a large extent of insurance
prepaid at the close of the Grafalloy transaction. These items were largely
offset by an increase of $784 in accounts payable.
Capital expenditures were $245 for the three months ended March 31,
1997. The Company plans to expend $2,000 in 1997 to reduce operating costs.
The backlog at March 31, 1997 was $8,200.
On February 27, 1997, the Company acquired all of the assets and
business, and assumed certain liabilities of Grafalloy L.P., a manufacturer of
composite golf club shafts. To pay for the Grafalloy acquisition, the Company
used available cash and borrowed approximately $2,300 under its revolving line
of credit with its bank. Subsequently, the Company renegotiated its bank credit
facilities to reduce the interest rates margins and to increase the amount to a
total of $10,140 which includes $7,440 revolving credit based upon inventory and
receivables, $1,000 in term loans, and $1,700 in standby term loans to finance
capital expenditures.
Although there can be no assurance that the Company will not require
additional financing, or that such financing will be available, the Company
believes that existing cash, available borrowings under the Company's revolving
credit agreements, and cash flows from operations will be sufficient to meet
currently projected needs for working capital for the next twelve months. These
needs do not include the impact of any acquisition the Company may make.
FACTORS THAT MAY EFFECT FUTURE RESULTS
Except for the historical material contained herein, the matters
discussed in this report are "forward-looking statements" under the federal
securities laws. The Company advises readers not to place undue reliance on such
statements, in light of risks and uncertainties to which they are subject. The
reader's attention is particularly drawn to the matters identified under the
caption "Risk Factors" in the Company's Post-Effective Amendment No. 1 to the
Registration Statement on Form SB-2 filed with the Securities and Exchange
Commission as of December 27, 1996, which could affect the Company's performance
and could cause actual results to differ materially from any forward-looking
statement with respect to future periods.
<PAGE> 10
PART II
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None.
ITEM 5. OTHER MATTERS.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description
----------- -----------
2.1+ Asset Purchase Agreement Dated as of
February 27, 1997 by and among the
Company, Grafalloy L.P., Grafalloy, Inc.,
and Grafalloy Acquisition Corporation
3.1* Restated Certificate of Incorporation of the
Company
3.2* Amended and Restated By-Laws of the Company
4.1* Specimen certificate for the Common Stock of
the Company
10.34** Asset Purchase Agreement dated February 27, 1997
by and among the Company, Grafalloy Acquisition
Corporation, Grafalloy L.P. and Grafalloy, Inc.
10.35** Employment Agreement between Grafalloy
Acquisition Corporation and William C. Gerhart,
dated February 27, 1997
10.36** Guaranty of the Company, dated February 27, 1997
10.37** Lease Agreement between Grafalloy, Inc. and
Robert C. Campbell and Alice C. Campbell, dated
July 21, 1993, together with addendum and
amendments thereto
10.38 Loan and Security Agreement dated April 7, 1997
between Grafalloy Corporation and LaSalle
Business Credit, Inc.
10.39 Stock Pledge Agreement dated April 7, 1997 by
the Company in favor of LaSalle Business Credit,
Inc.
10.40 Revolving Note of Grafalloy Corporation in the
amount of $3,000,000 in favor of LaSalle Business
Credit, Inc., dated April 7, 1997
10.41 Term Note of Grafalloy Corporation in the amount
of $300,000 in favor of LaSalle Business Credit,
Inc., dated April 7, 1997
10.42 Capex Note of Grafalloy Corporation in the amount
of $700,000 in favor of LaSalle Business Credit,
Inc., dated April 7, 1997
10.43 Guaranty of the Company in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.44 First Amendment to Loan and Security Agreement by
and between Culver City Composites Corporation
and LaSalle Business Credit, Inc., dated April 7,
1997
10.45 Term Note of Culver City Composites Corporation
in the amount of $727,000 in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.46 Capex Note of Culver City Composites Corporation
in the amount of $1,000,000 in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.47 Reaffirmation of Guaranty of the Company in favor
of LaSalle Business Credit, Inc., dated April 7,
1997
+ Incorporated herein by reference to the Company's current Report on Form 8-K,
initially filed with the Securities and Exchange Commission as of March 5, 1997
and thereafter amended.
* Incorporated herein by reference to the Company's Registration Statement on
Form SB-2, File No. 333-3836, originally filed with the Securities and Exchange
Commission as of April 19, 1996 and thereafter amended.
** Incorporated herein by reference to the Company's Report on Form 10-KSB,
filed as of March 31, 1997.
Pursuant to Item 601(b)(2) of Regulation 5B, the Company hereby
undertakes to furnish to the Commission, upon request, copies of the schedules
listed on the Exhibit Index accompanying this report, but omitted from Exhibits
10.38 and 10.44.
(b) Reports on Form 8-K
On March 5, 1997, the Company filed a report on Form 8-K relating to
its acquisition on February 27, 1997 of all of the assets and assumption of
certain liabilities, of Grafalloy L.P. ("Grafalloy"). The Form 8-K was
amended on May 2, 1997 to include financial statements of Grafalloy for
December 31, 1996 and 1995 and the years then ended, and pro forma financial
information relecting the combined operations of the entities for 1996.
<PAGE> 11
1995 and the years then ended, and pro forma financial information reflecting
the combined operations of the entities for 1996.
_______________________________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The American Materials & Technologies Corporation
/s/ PAUL W. PENDORF
-------------------
Paul W. Pendorf
Date: April 30, 1997
<PAGE> 12
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1+ Asset Purchase Agreement Dated as of
February 27, 1997 by and among the
Company, Grafalloy L.P., Grafalloy, Inc.,
and Grafalloy Acquisition Corporation
3.1* Restated Certificate of Incorporation of the
Company
3.2* Amended and Restated By-Laws of the Company
4.1* Specimen certificate for the Common Stock of
the Company
10.34** Asset Purchase Agreement dated February 27, 1997
by and among the Company, Grafalloy Acquisition
Corporation, Grafalloy L.P. and Grafalloy, Inc.
10.35** Employment Agreement between Grafalloy
Acquisition Corporation and William C. Gerhart,
dated February 27, 1997
10.36** Guaranty of the Company, dated February 27, 1997
10.37** Lease Agreement between Grafalloy, Inc. and
Robert C. Campbell and Alice C. Campbell, dated
July 21, 1993, together with addendum and
amendments thereto
10.38 Loan and Security Agreement dated April 7, 1997
between Grafalloy Corporation and LaSalle
Business Credit, Inc.
Exhibits and Schedules Omitted from
Exhibit 10.38:
Exhibit A - List of Business and Collateral
Locations
Schedule of Equipment
Schedule 1(a) - Permitted Liens
Schedule 13(q) - Other Indebtedness
Schedule 13(s) - List of Parent and
Subsidiaries
Schedule 13(q) - Litigation
10.39 Stock Pledge Agreement dated April 7, 1997 by
the Company in favor of LaSalle Business Credit,
Inc.
10.40 Revolving Note of Grafalloy Corporation in the
amount of $3,000,000 in favor of LaSalle Business
Credit, Inc., dated April 7, 1997
10.41 Term Note of Grafalloy Corporation in the amount
of $300,000 in favor of LaSalle Business Credit,
Inc., dated April 7, 1997
10.42 Capex Note of Grafalloy Corporation in the amount
of $700,000 in favor of LaSalle Business Credit,
Inc., dated April 7, 1997
10.43 Guaranty of the Company in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.44 First Amendment to Loan and Security Agreement by
and between Culver City Composites Corporation
and LaSalle Business Credit, Inc., dated April 7,
1997
Exhibits and Schedules Omitted from
Exhibit 10.44:
Exhibit A - List of Business and Collateral
Locations
Schedule of Equipment
Schedule 1(a) - Permitted Liens
Schedule 13(q) - Other Indebtedness
Schedule 13(s) - List of Parent and
Subsidiaries
Schedule 13(q) - Litigation
10.45 Term Note of Culver City Composites Corporation
in the amount of $727,000 in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.46 Capex Note of Culver City Composites Corporation
in the amount of $1,000,000 in favor of LaSalle
Business Credit, Inc., dated April 7, 1997
10.47 Reaffirmation of Guaranty of the Company in favor
of LaSalle Business Credit, Inc., dated April 7,
1997
+ Incorporated herein by reference to the Company's current Report on Form 8-K,
initially filed with the Securities and Exchange Commission as of March 5, 1997
and thereafter amended.
* Incorporated herein by reference to the Company's Registration Statement on
Form SB-2, File No. 333-3836, originally filed with the Securities and Exchange
Commission as of April 19, 1996 and thereafter amended.
** Incorporated herein by reference to the Company's Report on Form 10-KSB,
filed as of March 31, 1997.
<PAGE> 1
Exhibit 10.38
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 7, 1997
BETWEEN
GRAFALLOY CORPORATION,
AS BORROWER,
AND
LASALLE BUSINESS CREDIT, INC.,
AS LENDER.
$4,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
1. DEFINITIONS............................................................. 1
2. REVOLVING LOANS......................................................... 10
3. TERM LOANS AND CAPEX LOANS.............................................. 10
4. LETTERS OF CREDIT....................................................... 12
5. INTEREST, FEES AND CHARGES.............................................. 13
6. LOAN ADMINISTRATION..................................................... 14
7. GRANT OF SECURITY INTEREST TO LASALLE................................... 15
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN................................................................. 16
9. POSSESSION OF COLLATERAL AND RELATED MATTERS............................ 16
10. COLLECTIONS............................................................. 16
11. SCHEDULES AND REPORTS................................................... 20
12. TERMINATION............................................................. 20
13. REPRESENTATIONS AND WARRANTIES.......................................... 21
14. COVENANTS............................................................... 25
15. CONDITIONS PRECEDENT.................................................... 32
16. DEFAULT................................................................. 34
17. REMEDIES UPON AN EVENT OF DEFAULT....................................... 35
18. INDEMNIFICATION......................................................... 36
19. NOTICES................................................................. 37
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION................................ 37
21. FORUM SELECTION AND SERVICE OF PROCESS.................................. 37
</TABLE>
i.
<PAGE> 3
<TABLE>
<S> <C>
22. MODIFICATION AND BENEFIT OF AGREEMENT................................... 38
23. HEADINGS OF SUBDIVISIONS................................................ 38
24. POWER OF ATTORNEY....................................................... 38
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.................... 38
</TABLE>
ii.
<PAGE> 4
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of this 7th
day of April, 1997, by and among LASALLE BUSINESS CREDIT, INC., a Delaware
corporation ("LaSalle"), with its principal office at 135 South LaSalle Street,
Chicago, Illinois 60603, and GRAFALLOY CORPORATION, formerly known as GRAFALLOY
ACQUISITION CORPORATION, a Delaware corporation ("Borrower"), with its principal
office at 1020 North Marshall Avenue, El Cajon, California 92020.
W I T N E S S E T H:
WHEREAS, Borrower has acquired from Grafalloy, L.P., the Assets as
defined in the Asset Purchase Agreement; and
WHEREAS, from time to time Borrower may request LaSalle to make
loans and advances to and extend certain credit accommodations to Borrower, and
the parties wish to provide for the terms and conditions upon which such loans,
advances and credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made to
Borrower by LaSalle, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Borrower, the parties agree
as follows:
1. DEFINITIONS.
(a) General Definitions
"ACCOUNT," "ACCOUNT DEBTOR," "CHATTEL PAPER," "DOCUMENTS,"
"EQUIPMENT," "GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS," and "INVENTORY,"
shall have the respective meanings assigned to such terms in the Illinois
Uniform Commercial Code, as the same may be amended, modified or supplemented
from time to time.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by or under common control with Borrower.
"AMT" shall mean The American Materials & Technologies
Corporation, a Delaware corporation, which owns 100% of the issued and
outstanding shares of capital stock of Borrower.
"ASSET ACQUISITION" shall mean the acquisition by Borrower of the
assets of Grafalloy, L.P. pursuant to the Asset Purchase Agreement.
<PAGE> 5
"ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase Agreement
dated February 27, 1997 by and among Borrower, as purchaser, AMT, and Grafalloy,
L.P., as seller and Grafalloy, Inc.
"BORROWING BASE" shall have the meaning specified in paragraph
2(b)(i) hereof.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
or such other day as banks in Illinois are authorized or required to be closed
for business.
"CAPEX FACILITY TERMINATION DATE" shall have the meaning specified
in paragraph 3(c) hereof.
"CAPEX LOANS" shall have the meaning specified in paragraph 3(c)
hereof.
"CAPEX NOTE" shall mean the promissory note in the original
principal amount of $700,000 executed by the Borrower to the order of LaSalle
and dated as of the Closing Date.
"CAPEX LOAN COMMITMENT" shall mean $700,000.
"CAPITAL EXPENDITURES" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Borrower during
such period that are required by GAAP to be included in or reflected by the
property, plant or equipment or similar fixed asset accounts (or in intangible
accounts subject to amortization) in the balance sheet of Borrower.
"CCC" shall mean Culver City Composites Corp., a Delaware
corporation, and an Affiliate of Borrower.
"CLOSING DATE" shall mean the date upon which the initial Loan is
made.
"CLOSING DOCUMENT LIST" shall have the meaning specified in
paragraph 15 hereof.
"COLLATERAL" shall mean all of the personal property of Borrower
described in paragraph 7 hereof, the Key Man Life Insurance Policy (at such time
as such Policy shall be reregistered to reflect Borrower as the owner thereof,
as more fully set forth in paragraph 15(a)(xiv) hereof) and all other real or
personal property of any Obligor or any other Person now or hereafter pledged to
LaSalle to secure, either directly or indirectly, repayment of any of the
Liabilities.
"DEBT SERVICE COVERAGE RATIO" shall mean, with respect to any
period, the ratio of (A) net income after taxes for such period (excluding any
after-tax gains or losses on the sale of assets (other than the sale of
Inventory in the ordinary course of business) and excluding other after-tax
extraordinary gains or losses), plus deferred taxes, plus depreciation and
amortization deducted in determining net income for such period, minus Capital
Expenditures for such period not financed, minus any cash dividends paid or
accrued and cash withdrawals paid or accrued
2.
<PAGE> 6
to shareholders or other Affiliates for such period which were not calculated in
determining net income after taxes, and plus the after tax increase in LIFO
reserves or minus the after tax decrease in LIFO reserves, to (B) current
principal maturities of long term debt and capitalized leases paid or scheduled
to be paid during such period, excluding any such long term debt, the
outstanding principal balance of which has been refinanced in full by an
Affiliate prior to or concurrently with the due date of the installment of
principal thereof scheduled to have been paid during such period, but including
the current principal maturities of any such refinanced debt scheduled to be
paid during such period or during any other referenced period, to the extent
that such refinanced debt constitutes long term debt, plus any prepayments on
indebtedness owed to any Person (except trade payables and revolving loans) and
paid during such period.
"DEFAULT" shall mean any event, condition or default which with
the giving of notice, the lapse of time or both would be an Event of Default.
"EBITDA" shall mean, with respect to any period, net income after
taxes for such period (excluding any after-tax gains or losses on the sale of
assets and excluding other after-tax extraordinary gains or losses) plus
interest expense, income tax expense, depreciation and amortization for such
period, less gains and losses attributable to any fixed asset sales made during
such period, plus or minus any other non-cash charges or gains which have been
subtracted or added in calculating net income after taxes for such period.
"ELIGIBLE ACCOUNT" shall mean an Account owing to Borrower which
is acceptable to LaSalle in its commercially reasonable credit judgment. LaSalle
shall, in general, consider an Account to be an Eligible Account if it meets,
and so long as it continues to meet, the following requirements:
(i) it is genuine and in all respects is what it purports to
be;
(ii) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(iii) it arises from (A) the performance of services by Borrower
and such services have been fully performed and acknowledged and
accepted by the Account Debtor thereunder; or (B) the sale or
lease of Goods by Borrower, and such Goods have been completed in
accordance with the Account Debtor's specifications (if any) and
delivered to and accepted by the Account Debtor, such Account
Debtor has not refused to accept and has not returned or offered
to return any of the Goods, or has not refused to accept any of
the services, which are the subject of such Account, and Borrower
has possession of, or has delivered to LaSalle at LaSalle's
request, shipping and delivery receipts evidencing delivery of
such Goods;
(iv) it is evidenced by an invoice rendered to the Account
Debtor thereunder and is due and payable (A) not more than thirty
(30) days after the date of the invoice and does not remain unpaid
more than sixty (60) days past the stated due date thereof or (B)
more than thirty (30) days but not more than sixty (60) days
3.
<PAGE> 7
after the date of the invoice and does not remain unpaid more than
ninety (90) days after the date of the invoice; provided, however,
that if more than twenty-five percent (25%) of the aggregate
dollar amount of invoices owing by a particular Account Debtor
remain unpaid for (Y) 60 days following the respective due dates
thereof, in the case of invoices containing terms described in
clause (A) hereof or (Z) 90 days following the respective issuance
dates thereof, in the case of invoices containing terms described
in clause (B) hereof, then all Accounts owing to Borrower by that
Account Debtor shall be deemed ineligible;
(v) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted
Liens;
(vi) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to
setoff, counterclaim, credit, allowance or adjustment by such
Account Debtor, or to any claim by such Account Debtor denying
liability thereunder in whole or in part;
(vii) it does not arise out of a contract or order which fails in
any material respect to comply with the requirements of applicable
law;
(viii) the Account Debtor thereunder is not a director, officer,
employee or agent of Borrower, or a Subsidiary, Parent or
Affiliate of Borrower;
(ix) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency
or instrumentality thereof, unless Borrower assigns its right to
payment of such Account to LaSalle pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended;
(x) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a
precondition to commencing or maintaining an action in the courts
of that state, either to (A) receive a certificate of authority to
do business and be in good standing in such state, or (B) file a
notice of business activities report or similar report with such
state's taxing authority, unless (x) Borrower has taken one of the
actions described in clauses (A) or (B), (y) the failure to take
one of the actions described in either clause (A) or (B) may be
cured retroactively by Borrower at its election, or (z) Borrower
has proven, to LaSalle's satisfaction, that it is exempt from any
such requirements under any such state's laws;
(xi) it is an Account which arises out of a sale made in the
ordinary course of Borrower's business;
(xii) the Account Debtor is a resident or citizen of, and is
located within, the United States of America, unless approval is
otherwise given in writing by LaSalle;
4.
<PAGE> 8
(xiii) it is not an Account with respect to which the Account
Debtor's obligation to pay is conditional upon the Account
Debtor's approval of the Goods or services or is otherwise subject
to any repurchase obligation or return right, as with sales made
on a bill-and-hold, guaranteed sale, sale on approval, sale or
return or consignment basis;
(xiv) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue
or (B) which violates any of the covenants of Borrower contained
in this Agreement;
(xv) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrower, exceeds ten
percent (10%) of the aggregate of Borrower's Accounts or a credit
limit determined by LaSalle in its reasonable credit judgment for
that Account Debtor, provided, however, that Accounts excluded
from Eligible Accounts solely by reason of this subparagraph (xv)
shall be Eligible Accounts to the extent of such credit limit;
(xvi) it is not an Account with respect to which the prospect of
payment or performance by the Account Debtor is or will be
impaired, as determined by LaSalle in its commercially reasonable
credit judgment.
"ELIGIBLE INVENTORY" shall mean Inventory of Borrower which is
acceptable to LaSalle in its commercially reasonable credit judgment. Without
limiting LaSalle's discretion, LaSalle shall, in general, consider Inventory to
be Eligible Inventory if it meets, and so long as it continues to meet, the
following requirements:
(i) it is owned by Borrower and Borrower has the right to
subject it to a security interest in favor of LaSalle;
(ii) it is located on the premises listed on Exhibit A and is
not in transit;
(iii) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted
Liens;
(iv) it is held for sale or lease or furnishing under contracts
of service, it is (except as LaSalle may otherwise consent in
writing) new and unused and free from defects which would, in
LaSalle's sole determination, affect its market value;
(v) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless LaSalle has given its prior
written approval and Borrower has caused any such bailee,
consignee, warehouseman, processor or similar party to issue and
deliver to LaSalle, in form and substance acceptable to LaSalle,
such UCC financing statements, warehouse receipts, waivers and
other documents as LaSalle shall require;
5.
<PAGE> 9
(vi) LaSalle has determined in accordance with LaSalle's
customary business practices that it is not unacceptable due to
age, type, category or quantity;
(vii) it consists solely of finished goods or raw materials; and
(viii) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are
untrue; (B) which consists of WIP; or (C) which violates any of
the covenants of Borrower contained in this Agreement.
"EVENT OF DEFAULT" shall have the meaning specified in paragraph
16 hereof.
"EXCESS AVAILABILITY" shall mean, as of any date of determination
by LaSalle, the excess, if any, of (i) the Borrowing Base over (ii) the
outstanding Revolving Loans and Letter of Credit Obligations, in each case as of
the close of business on such date. For purposes of calculating Borrower's
Excess Availability and the amount of the Borrowing Base relating thereto,
LaSalle may, in the exercise of its commercially reasonable credit judgment,
establish a reserve in an aggregate amount based on Borrower's outstanding trade
payables which are not current or which are past due in any material respect, as
of such date of determination, to the extent thereof.
"EXHIBIT A" shall mean the exhibit entitled Exhibit A - Business
and Collateral Locations which is attached hereto and made a part hereof.
"FISCAL YEAR" shall mean the fiscal year of the Borrower
commencing on January 1, and ending on December 31.
"GAAP" shall mean generally accepted accounting principles and
policies in the United States of America as in effect from time to time.
"GRAFALLOY, L.P." shall mean Grafalloy, L.P., a Delaware limited
partnership.
"INDEMNIFIED PARTY" shall have the meaning specified in paragraph
18 hereof.
"KEY MAN LIFE INSURANCE POLICY" shall mean the policy of insurance
owned by Borrower in the face amount of $1,000,000, policy number 2,723,128,
issued by First Colony Life Insurance Company, insuring the life of William
Gerhart.
"LETTERS OF CREDIT" shall mean those letters of credit issued for
Borrower's account in accordance with the terms of paragraph 4 hereof.
6.
<PAGE> 10
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn amount of all Letters of
Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of Borrower to LaSalle or to any parent, affiliate or subsidiary of
LaSalle of any and every kind and nature, howsoever created, arising or
evidenced and howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without limitation,
obligations of performance), whether several, joint or joint and several, and
whether arising or existing under written or oral agreement or by operation of
law.
"LOAN" or "LOANS" shall mean any and all Revolving Loans, the
Capex Loans, and the Term Loan made by LaSalle to Borrower pursuant to
paragraphs 2 and 3 hereof and all other loans, advances and financial
accommodations made by LaSalle to or on behalf of Borrower hereunder.
"LOCK BOX" and "BLOCKED ACCOUNT" shall have the meanings specified
in paragraph 10 hereof.
"MATERIAL ADVERSE EFFECT" shall mean with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
the business, property assets, operations, condition (financial or otherwise) or
prospects of Borrower.
"NOTE" shall mean the Revolving Note, the Capex Note or the Term
Note.
"OBLIGOR" shall mean Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Liabilities, provided,
however, that such term shall not include any Account Debtor.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents including, without limitation, guaranties, mortgages, trust deeds,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of Borrower or any other
Person and delivered to LaSalle or to any parent, affiliate or subsidiary of
LaSalle in connection with the Liabilities or the transactions contemplated
hereby.
"PARENT" shall mean any Person now or at any time or times
hereafter owning or controlling (alone or with any other Person) at least a
majority of the issued and outstanding stock of Borrower or any Subsidiary.
7.
<PAGE> 11
"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen or suppliers incurred in the
ordinary course of business and securing amounts not yet due or declared to be
due by the claimant thereunder, or being contested in good faith by appropriate
proceedings that have the effect of preventing the forfeiture or sale of the
property or assets subject to such lien, (ii) liens or security interests in
favor of LaSalle, (iii) zoning restrictions and easements, rights of way,
licenses, covenants and other restrictions affecting the use of real property
that do not individually or in the aggregate have a material adverse effect on
Borrower's ability to use such real property for its intended purpose in
connection with Borrower's business, (iv) liens securing the payment of taxes or
other governmental charges not yet delinquent or being contested in good faith
and by appropriate proceedings, (v) liens incurred or deposits made in the
ordinary course of Borrower's business in connection with capitalized leases or
purchase money security interests for purchase of, and applying only to,
Equipment included in the permitted borrowings under paragraph 13(q) or
permitted as Capital Expenditures under paragraph 14(o), the documents relating
to such liens to be in form and substance acceptable to LaSalle, (vi) liens
securing indebtedness owing by any Subsidiary to Borrower to the extent such
indebtedness is permitted under paragraph 14(i), or to any other Subsidiary of
Borrower, (vii) deposits to secure performance of bids, tenders, trade
contracts, leases, progress payments, surety and appeal bonds and other
obligations of like nature in each case incurred in the ordinary course of
business and statutory obligations (to the extent not excepted elsewhere
herein), (viii) liens specifically permitted by LaSalle in writing as set forth
on Schedule 1(a) attached hereto; (ix) any lien arising out of the refinancing,
extension, renewal or refunding of any indebtedness secured by a lien permitted
by any of the foregoing sections (i) through (viii) inclusive, provided that (A)
such indebtedness is not secured by any additional assets, and (B) the amount of
such indebtedness is not increased, (x) pledges or deposits in connection with
worker's compensation, unemployment insurance and other social security
legislation, (xi) grants of security and rights of setoff in deposit accounts,
securities and other properties held at banks or financial institutions to
secure the payment or reimbursement under overdraft, acceptance and other
facilities, (xii) rights of setoff, banker's liens and other similar rights
arising solely by operation of law and (xiii) liens securing the payment and
performance of the Subordinated Notes, as such liens are in effect on the
Closing Date.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or foreign or United States government
(whether federal, state, county, city, municipal or otherwise), including,
without limitation, any instrumentality, division, agency, body or department
thereof.
"PRIME RATE" shall mean the publicly announced prime rate of
LaSalle National Bank, Chicago, Illinois, in effect from time to time. The Prime
Rate is not intended to be the lowest or most favorable rate of LaSalle National
Bank in effect at any time.
"REVOLVING LOANS" shall have the meaning specified in paragraph 2
hereof.
"REVOLVING LOAN COMMITMENT" shall mean the sum of $3,000,000.
8.
<PAGE> 12
"REVOLVING NOTE" shall mean the promissory note in the original
principal amount of $3,000,000, executed by Borrower to the order of LaSalle,
dated as of the Closing Date.
"SUBORDINATED NOTES" shall mean the promissory notes made by
Borrower to Grafalloy, L.P. dated February 28, 1997 in the following original
principal amounts: $800,000, $747,254 and $175,000.
"SUBSIDIARY" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by Borrower or by any partnership or joint
venture of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by Borrower.
"TANGIBLE NET WORTH" shall mean shareholders' equity (including
retained earnings) less the amount of any prepaid expenses, less the book value
of all intangible assets, plus the amount of any debt subordinated to LaSalle on
terms and conditions acceptable to LaSalle in its commercially reasonable
judgment, all as determined in accordance with GAAP, consistently applied.
"TERM" shall have the meaning specified in paragraph 12 hereof.
"TERM LOAN" shall have the meaning specified in paragraph 3(a)
hereof.
"TERM NOTE" shall mean the promissory note in the original
principal amount equal to the amount of the Term Loan, executed by Borrower to
the order of LaSalle and dated as of the Closing Date.
"TOTAL CREDIT FACILITY" shall mean the sum of $4,000,000.
"WIP" shall mean Inventory of Borrower consisting of
work-in-process.
(b) Accounting Terms and Definitions. Unless otherwise defined or
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP. All accounting determinations for purposes of
determining compliance with the financial covenants contained in paragraph 14(o)
shall be made in accordance with GAAP as in effect on the Closing Date. The
financial statements required to be delivered hereunder from and after the
Closing Date, and all financial records, shall be maintained in accordance with
GAAP. If GAAP shall change from the basis used on or before the Closing Date to
establish the calculation of the financial covenants contained in paragraph
14(o), then the certificates required to be delivered pursuant to paragraph
14(b) demonstrating compliance with such covenants shall include, at the
election of Borrower or upon the request of LaSalle, calculations setting forth
the adjustments necessary to demonstrate how Borrower is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date.
9.
<PAGE> 13
2. REVOLVING LOANS. Subject to the terms and conditions of this
Agreement and the Other Agreements, during the Term, absent the existence of an
Event of Default:
(a) LaSalle shall make such revolving loans and advances (the
"REVOLVING LOANS") to Borrower as Borrower shall from time to time request, in
accordance with the terms of paragraph 2(b) hereof. The aggregate unpaid
principal amount of all Revolving Loans outstanding at any one time made to
Borrower shall not exceed the lesser of (A) the Borrowing Base and (B) the
Revolving Loan Commitment minus the outstanding Letter of Credit Obligations.
All Revolving Loans shall be repaid in full upon the earlier to occur of (i) the
last day of the Term and (ii) the acceleration of the Liabilities pursuant to
paragraph 17 of this Agreement. If at any time the outstanding principal balance
of the Revolving Loans made to Borrower exceeds (A) the Borrowing Base or (B)
the Revolving Loan Commitment less the outstanding Letter of Credit Obligations,
Borrower shall immediately, and without the necessity of a demand by LaSalle,
pay to LaSalle such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal balance of
the Revolving Loans. Borrower hereby authorizes LaSalle, in its reasonable
credit judgment, to charge any of Borrower's accounts to make any payments of
principal or interest required by this Agreement. All Revolving Loans shall be
evidenced by the Revolving Note.
(b) LaSalle shall make Revolving Loans to Borrower up to the
lesser of the following amounts, the amount calculated pursuant to clause (i)
below being hereinafter referred to as the "BORROWING BASE":
(i) (A) up to eighty-five percent (85%) of the face
amount (less maximum discounts, credits and allowances
which may be taken by or granted to Account Debtors in
connection therewith) of Eligible Accounts, plus (B) up to
the lesser of (1) an amount equal to the sum of up to fifty
percent (50%) of the value of Eligible Inventory consisting
of finished goods and raw materials and (2) $1,000,000
minus (C) such reserves as LaSalle elects to establish from
time to time in the exercise of its commercially reasonable
credit judgment, consistent with generally accepted
practices in the financial services industry for credit
transactions of the type contemplated between LaSalle and
the Borrower, minus (D) the outstanding amount of all
Letter of Credit Obligations, and
(ii) the Revolving Loan Commitment, minus the
outstanding amount of all Letter of Credit Obligations.
10.
<PAGE> 14
3. TERM LOANS AND CAPEX LOANS.
(a) On the Closing Date, LaSalle shall make a term loan to
Borrower in the original principal amount of Three Hundred Thousand Dollars
($300,000) ("the TERM LOAN"). Principal payable on account of the Term Loan
shall be payable in successive monthly installments (i) payable on the first day
of each month, the first of which installments shall be due and payable on the
first day of the month immediately following the month during which the Closing
Date occurs and (ii) based on an amortization schedule consisting of thirty-six
(36) equal and level payments, provided, however, that the entire unpaid
principal balance of the Term Loan shall be due and payable in full upon the
expiration of the Term of this Agreement. Notwithstanding anything hereinabove
to the contrary, the entire unpaid principal balance of the Term Loan, and any
accrued and unpaid interest thereon, shall be immediately due and payable upon
the earlier to occur of (i) the last day of the Term of this Agreement, and (ii)
the acceleration of the Liabilities pursuant to paragraph 17 of this Agreement.
(b) If Borrower sells any Equipment, other than Equipment
purchased with the proceeds of the Capex Loans, or if any of the Collateral is
damaged, destroyed or taken by condemnation, Borrower shall pay to LaSalle,
unless otherwise specifically provided herein or otherwise agreed to by LaSalle,
as and when received by Borrower and as a mandatory prepayment of the Term Loan,
to be applied against the last maturing installments of principal thereof, in
the inverse order thereof (or, at LaSalle's option, such of the other
Liabilities of Borrower as LaSalle may elect), a sum equal to the proceeds
received by Borrower from (i) such sale or (ii) such damage, destruction or
condemnation, provided, however, that without LaSalle's consent, unless and
until an Event of Default has occurred and is continuing:
(i) obsolete or worn out Equipment, other than Equipment
purchased with the proceeds of the Capex Loans, may be sold or otherwise
disposed of by Borrower and the proceeds thereof may be retained by Borrower, so
long as (A) LaSalle shall have received five (5) Business Days prior written
notice of any such disposition and (B) the fair market value of any such
Equipment sold or otherwise disposed of in any single transaction is less than
$100,000, and the fair market value, in the aggregate, of all such Equipment
sold or otherwise disposed of by Borrower during any twelve-month period is less
than $100,000; and
(ii) proceeds of Equipment arising from the damage,
destruction or condemnation thereof may be retained by Borrower and used by
Borrower to repair, restore or replace such Equipment, as the case may be, so
long as the fair market value of any such Equipment damaged, destroyed or
condemned in any single incident is less than $100,000, and the fair market
value, in the aggregate, of all such Collateral owned by Borrower and damaged,
destroyed or condemned during any twelve-month period is less than $100,000.
(c) On the Closing Date and through that date which is one year
from the date that LaSalle shall have made the first Capex Loan (THE "CAPEX
FACILITY TERMINATION DATE"), LaSalle shall make revolving loans and advances for
capital expenditures ("CAPEX LOANS") to Borrower as Borrower shall from time to
time request in accordance with the terms of paragraph 3(d) hereof, the proceeds
of which Capex Loans will be used to make capital expenditures for use in the
Borrower's business, which expenditures are approved by LaSalle as reasonably
11.
<PAGE> 15
necessary to the Borrower's business. The aggregate unpaid principal amount of
all Capex Loans outstanding at any one time made to Borrower shall not exceed
the Capex Loan Commitment. If at any time the outstanding principal balance of
the Capex Loans made to Borrower exceeds the Capex Loan Commitment, then,
without the necessity of a demand by LaSalle, Borrower shall pay to LaSalle,
within not more than two (2) Business Days' after LaSalle's notice to Borrower
of such excess, such amount as may be necessary to eliminate such excess, and
LaSalle shall apply such payment against the outstanding principal balance of
the Capex Loans. Principal payable on account of all Capex Loans outstanding as
of the Capex Facility Termination Date shall be payable in successive monthly
installments (i) payable on the first day of each month, the first of which
installments shall be due and payable on the first day of the month immediately
following the Capex Facility Termination Date and (ii) based on an amortization
schedule consisting of sixty (60) equal and level principal payments; provided,
however, that the entire unpaid principal balance of the Capex Loans shall be
due and payable in full upon the expiration of the Term of this Agreement.
Notwithstanding anything hereinabove to the contrary, the entire unpaid
principal balance of the Capex Loans, and any accrued and unpaid interest
thereon, shall be immediately due and payable upon the earlier to occur of (i)
the last day of the Term and (ii) the acceleration of the Liabilities pursuant
to paragraph 17 of this Agreement.
(d) Each Capex Loan to Borrower shall be in a principal amount
not greater than eighty-five percent (85%) of the purchase price of the
Equipment to be purchased with the proceeds of such Capex Loan; provided,
however, that for purposes of calculation thereof, the purchase price of
Equipment shall not include the related costs of freight, shipping and
installation and sales or other related taxes and provided further that no Capex
Loan shall be made to the extent that the sum of the amount of such Capex Loan
plus the aggregate unpaid principal amount of all other Capex Loans shall exceed
the Capex Loan Commitment.
(e) If the Borrower sells, transfers or otherwise disposes of
any Equipment purchased with the proceeds of a Capex Loan, the Borrower shall
pay to LaSalle a sum equal to the net cash proceeds received by the Borrower
from any such disposition (unless otherwise specifically provided herein or
otherwise agreed to by LaSalle), as and when received by Borrower and as a
mandatory prepayment of all Capex Loans, to be applied (i) if received prior to
the Capex Facility Termination Date, pro rata against the then unpaid principal
balance of each such Capex Loan then outstanding and (ii) if received on or
after the Capex Facility Termination Date, pro rata against the last maturing
installments of principal of each such Capex Loan then outstanding, in the
inverse order of such installments (or, at LaSalle's option, such of the other
Liabilities of the Borrower as LaSalle my elect).
4. LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, and the Other Agreements, during the Term, LaSalle shall, absent the
existence of an Event of Default, from time to time cause the issuance of and
co-sign for, upon Borrower's request, Letters of Credit, provided that the
aggregate undrawn amount of all such Letters of Credit shall at no time exceed
Five Hundred Thousand Dollars ($500,000), and provided further that no Letter of
Credit shall have an expiry date (i) more than 365 days from the date of
issuance, in the case of a stand-by Letter of Credit, (ii) more than 180 days
from the date of issuance, in the case of a documentary Letter of Credit, or
(iii) beyond five (5) days prior to the expiration of
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the Term. Borrower's reimbursement obligation in respect of the Letters of
Credit shall automatically reduce, dollar for dollar, the amount which Borrower
may borrow based upon the Revolving Loan Commitment and the Borrowing Base. Any
payment made by LaSalle to any Person on account of any Letter of Credit shall
constitute a Revolving Loan hereunder. At no time shall the aggregate sum of
direct Revolving Loans by LaSalle to Borrower plus the contingent liability of
LaSalle under the outstanding Letters of Credit be in excess of the Revolving
Loan Commitment or the Borrowing Base.
5. INTEREST, FEES AND CHARGES.
(a) Rates of Interest. Interest accrued on the Loans shall be
due on the earliest of (i) the first day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding month,
(ii) the occurrence of an Event of Default in consequence of which LaSalle
elects to accelerate the maturity and payment of the Liabilities, or (iii)
termination of this Agreement pursuant to paragraph 12 hereof. Interest shall
accrue on the principal amount of the Revolving Loans outstanding at the end of
each day, the unpaid principal balance of the Term Loan outstanding at the end
of each day, and the unpaid principal balance of the Capex Loans outstanding at
the end of each day, in each case at a fluctuating rate per annum equal to one
percent (1%) above the Prime Rate. The rate of interest payable on the Loans
shall increase or decrease by an amount equal to any increase or decrease in the
Prime Rate, effective as of the opening of business on the day that any such
change in the Prime Rate occurs. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount of all Loans
shall bear interest on demand at a rate per annum equal to the rate of interest
then in effect hereunder plus two percent (2%).
(b) Computation of Interest and Fees. Interest and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year consisting of three hundred and sixty (360)
days. For the purpose of computing interest hereunder, all items of payment
received by LaSalle shall be deemed applied by LaSalle on account of the
Liabilities (subject to final payment of such items) on the second Business Day
after receipt by LaSalle of good funds in LaSalle's account located in Chicago,
Illinois.
(c) Maximum Interest. It is the intent of the parties that the
rate of interest and the other charges to Borrower under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.
(d) Letter of Credit Fees. Borrower shall remit to LaSalle a
Letter of Credit fee equal to one percent (1%) per annum on the aggregate
undrawn face amount of all outstanding Letters of Credit issued for the account
of Borrower, which fee shall be payable monthly in arrears on each day that
interest is payable hereunder. Borrower shall also pay on demand the normal and
customary administrative charges for issuance, amendment, negotiation, renewal
or extension of any Letter of Credit imposed by the bank issuing such Letter of
Credit.
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Upon the occurrence and during the continuance of an Event of Default, all
Letters of Credit fees shall be payable on demand at a rate equal to three
percent (3%) per annum on the aggregate undrawn face amount thereof.
(e) Closing Fee. Borrower shall pay to LaSalle a closing fee of
Forty Thousand Dollars ($40,000), which shall be fully earned, nonrefundable and
due on the Closing Date.
(f) Unused Line Fee. Borrower shall pay to LaSalle at the end
of each month, in arrears, an Unused Line Fee equal to one-half of one percent
(1/2 of 1%) per annum on the daily average amount by which the Revolving Loan
Commitment exceeds the sum of (i) the outstanding principal balance of the
Revolving Loans and (ii) the outstanding Letter of Credit Obligations. The
Unused Line Fee shall accrue from the Closing Date until the last day of the
Term.
(g) Examination and Appraisal Fees. In addition to the costs
and expenses described in paragraph 14(n) hereof, Borrower shall pay to LaSalle
an examination fee of $2,000 for each examination performed by or at LaSalle's
direction of Borrower's books and records and Collateral and such other matters
as LaSalle shall deem appropriate in its commercially reasonable judgment, each
such fee to be paid upon the completion of each such examination. Such
examinations are generally performed not more than four (4) times in any twelve
(12) month period, unless an Event of Default has occurred and is continuing.
(h) Capital Adequacy Charge. If LaSalle shall have determined
that the adoption of any law, rule or regulation regarding capital adequacy, or
any change therein or in the interpretation or application thereof, or
compliance by LaSalle with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or governmental
authority enacted after the Closing Date, does or shall have the effect of
reducing the rate of return on LaSalle's capital as a consequence of its
obligations hereunder to a level below that which LaSalle could have achieved
but for such adoption, change or compliance (taking into consideration LaSalle's
policies with respect to capital adequacy) by a material amount, then from time
to time, after submission by LaSalle to Borrower of a written demand therefor
(which demand should be made with reasonable promptness following such
determination), Borrower shall pay to LaSalle such additional amount or amounts
as will compensate LaSalle for any such reduction occurring on and after the
date of notice that LaSalle shall be entitled to payment hereunder. A
certificate of LaSalle claiming entitlement to payment as set forth above shall
be conclusive in the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such reduction, the additional
amount or amounts to be paid to LaSalle, and the method by which such amounts
were determined. In determining such amount, LaSalle may use any reasonable
averaging and attribution method, applied on a non-discriminatory basis.
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6. LOAN ADMINISTRATION.
(a) Loan Requests. A request for a Revolving Loan shall be made
or shall be deemed to be made and a request for a Capex Loan shall be made, each
in the following manner: (i) Borrower shall give LaSalle, in the case of a
Revolving Loan, same day notice, no later than 11:30 A.M. (Chicago time) of such
day, of its intention to borrow a Revolving Loan, and, in the case of a Capex
Loan, at least two (2) Business Days notice of its intention to borrow a Capex
Loan, in which notice Borrower shall specify the amount of the proposed
borrowing and the proposed borrowing date, and in the case of a notice for a
Capex Loan, a statement of the purpose for the Capex Loan together with
documentation substantiating the purchase or commitment to purchase Equipment or
the making of or the commitment to make the capital expenditures, which
documentation shall be satisfactory to LaSalle in its sole discretion; provided,
however, that no such request may be made at a time when there exists a Default
or an Event of Default; and (ii) the becoming due of any amount required to be
paid under this Agreement or any Note, whether on account of interest or for any
other Liability, shall be deemed irrevocably to be a request for a Revolving
Loan on the due date thereof in the amount required to pay such interest or
other Liability. As an accommodation to Borrower, LaSalle may permit telephone
requests for Revolving Loans and electronic transmittal of instructions,
authorizations, agreements or reports to LaSalle by Borrower. Unless Borrower
specifically directs LaSalle in writing not to accept or act upon telephonic or
electronic communications from Borrower, LaSalle shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of LaSalle's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to LaSalle by Borrower and
LaSalle shall have no duty to verify the origin of any such communication or the
authority of the Person sending it. Each notice of borrowing shall be
irrevocable by and binding on Borrower. Any Capex Loan shall be in the minimum
amount of $20,000.
(b) Disbursement. Borrower hereby irrevocably authorizes
LaSalle to disburse the proceeds of each Revolving Loan requested by Borrower,
or deemed to be requested by Borrower, and each Capex Loan requested by Borrower
as follows: (i) the proceeds of each Revolving Loan and each Capex Loan
requested under paragraph 6(a)(i) shall be disbursed by LaSalle in lawful money
of the United States of America in immediately available funds, in the case of
the initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and LaSalle from
time to time, or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolving Loan requested under paragraph 6(a)(ii)
shall be disbursed by LaSalle by way of direct payment of the relevant interest
or other Liability.
7. GRANT OF SECURITY INTEREST TO LASALLE. As security for the payment
of all Loans now or in the future made by LaSalle to Borrower hereunder and for
the payment or other satisfaction of all other Liabilities of Borrower, Borrower
hereby collaterally assigns to LaSalle, and grants to LaSalle a continuing
security interest in, all of Borrower's right, title and interest in and to each
of the kinds and types of property described in subparagraphs (a) through (f)
hereof, all replacements, additions, accessions, substitutions and
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repairs thereof, all documents, books, records, ledger sheets and files of
Borrower relating thereto, and all Proceeds of the foregoing property, in each
case, whether now owned or hereafter arising, acquired or created and wherever
located: (a) all Accounts (whether or not Eligible Accounts), including Accounts
arising from sales made or services rendered under any tradename, tradestyle or
division, and all Goods whose sale, lease or other disposition by Borrower has
given rise to Accounts and which have been returned to or repossessed or stopped
in transit by Borrower; (b) all Chattel Paper, Instruments, Documents and
General Intangibles (including, without limitation, all patents, patent
applications, trademarks, trademark applications, tradenames, trade secrets,
goodwill, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contracts
rights and rights to payments, whether or not earned by performance, security
interests, security deposits, rights as assignee of Borrower as purchaser under
the Asset Purchase Agreement, including rights of indemnification under Article
11 thereof and any other rights to indemnification, howsoever arising); (c) all
Inventory; (d) all Goods (other than Inventory) including, without limitation,
Equipment, vehicles and fixtures; (e) all shares of capital stock and interests
in capital stock owned beneficially or of record, and all certificates
evidencing same and (f) all deposits and cash and any other property of Borrower
now or hereafter in the possession, custody or control of LaSalle, its parent or
any of its affiliates or subsidiaries, or any participant with LaSalle in the
Loans for any purpose (whether for safekeeping, deposit, collection, custody,
pledge, transmission or otherwise). Proceeds means and includes (i) whatever is
now or hereafter received by Borrower upon the sale, exchange, collection or
other disposition of any item of such property and (ii) any such items which are
now or hereafter acquired by Borrower with any proceeds of such property.
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN. Borrower shall, at LaSalle's request, at any time and from time to
time, execute and deliver to LaSalle such financing statements, documents and
other agreements and instruments (and pay the cost of filing or recording the
same in all public offices deemed reasonably necessary or desirable by LaSalle)
and do such other acts and things as LaSalle may deem necessary or desirable in
order to establish and maintain a valid, attached and perfected security
interest in the Collateral in favor of LaSalle (free and clear of all other
liens, claims and rights of third parties whatsoever, whether voluntarily or
involuntarily created, except Permitted Liens) to secure payment of the
Liabilities, and in order to facilitate the collection of the Collateral.
Borrower irrevocably hereby makes, constitutes and appoints LaSalle (and all
Persons designated by LaSalle for that purpose) as Borrower's true and lawful
attorney and agent-in-fact to execute such financing statements, documents and
other agreements and instruments and do such other acts and things as may be
necessary to preserve and perfect LaSalle's security interest in the Collateral.
Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement shall be sufficient
as a financing statement.
9. POSSESSION OF COLLATERAL AND RELATED MATTERS. Until an Event of
Default has occurred and is continuing, Borrower shall have the right, except as
otherwise provided in this Agreement, in the ordinary course of Borrower's
business, to (a) sell, lease or furnish under contracts of service any of
Borrower's Inventory normally held by Borrower for any such purpose, and (b) use
and consume any raw materials, work in process
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or other materials normally held by Borrower for such purpose, provided,
however, that a sale in the ordinary course of business shall not include any
transfer or sale in satisfaction, partial or complete, of a debt owed by
Borrower.
10. COLLECTIONS.
(a) Borrower shall direct all of its Account Debtors to make
all payments on the Accounts directly to a post office box ("LOCK BOX") with a
financial institution acceptable to, and in the name and under exclusive control
of, LaSalle. Borrower shall establish an account ("BLOCKED ACCOUNT") in
LaSalle's name for the benefit of Borrower with a financial institution
acceptable to LaSalle, into which all payments received in the Lock Box shall be
deposited, and into which Borrower will immediately deposit all payments made
for Inventory or services sold or rendered by Borrower and received by Borrower
in the identical form in which such payments were made, whether by cash or
check. If Borrower, any Affiliate or Subsidiary of Borrower, or any shareholder,
officer, director, employee or agent of Borrower or any Affiliate or Subsidiary,
or any other Person acting for or in concert with Borrower shall receive any
monies, checks, notes, drafts or other payments relating to or as proceeds of
Accounts or other Collateral, Borrower and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, LaSalle and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Blocked Account. Each financial institution with which
a Lock Box and Blocked Account are established shall acknowledge and agree, in a
manner satisfactory to LaSalle, that the amounts on deposit in such Lock Box and
Blocked Account are the sole and exclusive property of LaSalle, that such
financial institution has no right to setoff against such Lock Box or Blocked
Account or against any other account maintained by such financial institution
into which the contents of such Blocked Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately available
funds in a manner satisfactory to LaSalle, funds deposited in the Blocked
Account on a daily basis as such funds are collected. Borrower agrees that all
payments made to the Blocked Account established by Borrower or otherwise
received by LaSalle, whether in respect of the Accounts of Borrower or as
proceeds of other Collateral of Borrower or otherwise, will be applied on
account of the Liabilities of Borrower in accordance with the terms of this
Agreement. Borrower agrees to pay all fees, costs and expenses which Borrower
incurs in connection with opening and maintaining a Lock Box and Blocked
Account. All of such fees, costs and expenses which remain unpaid by Borrower
pursuant to any Lock Box or Blocked Account Agreement with Borrower, to the
extent same shall have been paid by LaSalle hereunder shall constitute Revolving
Loans hereunder, shall be payable to LaSalle by Borrower upon demand, and, until
paid, shall bear interest at the highest rate then applicable to Revolving Loans
hereunder. All checks, drafts, instruments and other items of payment or
proceeds of Collateral delivered to LaSalle in kind shall be endorsed by
Borrower to LaSalle, and, if that endorsement of any such item shall not be made
for any reason, LaSalle is hereby irrevocably authorized to endorse the same on
Borrower's behalf. For the purpose of this paragraph, Borrower irrevocably
hereby makes, constitutes and appoints LaSalle (and all Persons designated by
LaSalle for that purpose) as Borrower's true and lawful attorney and
agent-in-fact (i) to endorse Borrower's name upon said items of payment and/or
proceeds of Collateral of Borrower and upon any Chattel Paper, document,
instrument, invoice or similar document or agreement relating to any Account of
Borrower or goods pertaining thereto; (ii) to take control in any
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manner of any item of payment or proceeds thereof; (iii) to have access to any
lock box or postal box into which any of Borrower's mail is deposited; and (iv)
open and process all mail addressed to Borrower and deposited therein, provided,
however, that LaSalle shall not exercise any such powers described in clauses
(i), (ii) and (iv) unless and until an Event of Default has occurred and is
continuing.
(b) LaSalle may, at any time and from time to time after the
occurrence and during the continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or after the
maturity of any of the Liabilities, (i) enforce collection of any of Borrower's
Accounts or contract rights by suit or otherwise; (ii) exercise all of
Borrower's rights and remedies with respect to proceedings brought to collect
any Accounts; (iii) surrender, release or exchange all or any part of any
Accounts of Borrower, or compromise or extend or renew for any period (whether
or not longer than the original period) any indebtedness thereunder; (iv) sell
or assign any Account of Borrower upon such terms, for such amount and at such
time or times as LaSalle deems advisable; (v) prepare, file and sign Borrower's
name on any proof of claim in bankruptcy or other similar document against any
Account Debtor indebted on an Account of Borrower; and (vi) do all other acts
and things which are necessary, in LaSalle's sole discretion, to fulfill
Borrower's obligations under this Agreement and to allow LaSalle to collect the
Accounts. In addition to any other provision hereof, LaSalle may at any time on
or after the occurrence and during the continuance of an Event of Default, at
Borrower's expense, notify any parties obligated on any of the Accounts of
Borrower to make payment directly to LaSalle of any amounts due or to become due
thereunder.
(c) LaSalle shall, within two (2) Business Days after receipt
by LaSalle at its office in Chicago, Illinois of cash or other immediately
available funds from collections of items of payment and proceeds of any
Collateral, apply the whole or any part of such collections or proceeds: (i) if
such Collateral consists of Accounts, and no Event of Default has occurred and
is continuing, (A) on any day other than a day when a payment of interest,
charges, fees or expenses is due hereunder, to the outstanding principal balance
of the Revolving Loans made to Borrower, and (B) on a day when a payment by
Borrower of interest, charges, fees or expenses is due hereunder, first to the
payment of such charges (other than interest charges), fees or expenses; second
to the payment of interest payable by Borrower and third to the outstanding
principal balance of the Revolving Loans and (ii) if such Collateral consists of
any property other than Accounts, against the Liabilities of Borrower in such
order as LaSalle shall determine in its sole discretion. Upon the occurrence and
during the continuance of an Event of Default, LaSalle may apply the whole or
any part of such collections or proceeds, regardless of the type or kind of
Collateral giving rise thereto, against the Liabilities in such order as LaSalle
shall determine in its sole discretion.
(d) In its reasonable credit judgment, without waiving or
releasing any obligation, liability or duty of Borrower under this Agreement or
the Other Agreements or any Event of Default, at any time or times hereafter,
except for Permitted Liens, LaSalle may (but shall not be obligated to) pay,
acquire or accept an assignment of any security interest, lien, encumbrance or
claim asserted by any Person in, upon or against the Collateral. All sums paid
by LaSalle in respect thereof and all costs, fees and expenses (including
without limitation reasonable attorney fees, all court costs and all other
charges relating thereto) incurred by
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LaSalle shall constitute Revolving Loans, payable by Borrower to LaSalle on
demand and, until paid, shall bear interest at the highest rate then applicable
to Revolving Loans hereunder.
(e) Immediately upon Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document including, without
limitation, any Chattel Paper, Borrower shall deliver the original thereof to
LaSalle together with an appropriate endorsement or other specific evidence of
assignment thereof to LaSalle (in form and substance acceptable to LaSalle). If
an endorsement or assignment of any such items shall not be made for any reason,
LaSalle is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's behalf.
11. SCHEDULES AND REPORTS.
(a) Borrower shall deliver to LaSalle on Monday of each week
(or on the next Business Day if such Monday is not a Business Day), by facsimile
transmission, a report of Borrower's invoice activity for the previous week.
(b) Within fifteen (15) days after the close of each calendar
month, and at such other times as may be requested by LaSalle from time to time
hereafter, Borrower shall deliver to LaSalle a borrowing base certificate for
such month, in form and substance satisfactory to LaSalle, together with an aged
trial balance of Borrower's accounts payable as of the end of such month. At
such times as may be requested by LaSalle from time to time hereafter, Borrower
shall deliver to Lasalle: (i) a schedule identifying by age each Account of
Borrower together with copies of the invoices when requested by LaSalle (with
evidence of shipment attached) pertaining to each such Account, for the month
(or other applicable period) immediately preceding; (ii) such additional
schedules, certificates, reports and information with respect to the Collateral
as LaSalle may from time to time reasonably require and (iii) a confirmation of
the collateral assignment of any or all items of Collateral to LaSalle. LaSalle,
through its officers, employees or agents, shall have the right, at any time and
from time to time in LaSalle's name, in the name of a nominee of LaSalle or in
Borrower's name, to verify the validity, amount or any other matter relating to
any of Borrower's Accounts, by mail, telephone, telegraph or otherwise. Borrower
shall reimburse LaSalle, on demand, for all reasonable costs, fees and expenses
incurred by LaSalle in this regard.
(c) Without limiting the generality of the foregoing, Borrower
shall deliver to LaSalle, at least once a month within fifteen (15) days after
the close of each month (or more frequently when requested by LaSalle), a report
with respect to Borrower's Inventory. Borrower shall immediately notify LaSalle
of any event causing loss or depreciation in value of Borrower's Inventory
(other than normal depreciation occurring in the ordinary course of business).
(d) All schedules, certificates, reports and assignments and
other items delivered by Borrower to LaSalle hereunder shall be executed by an
authorized representative of Borrower and shall be in such form and contain such
information as LaSalle shall reasonably request. Borrower shall deliver from
time to time such other schedules and reports pertaining to the Collateral of
Borrower as LaSalle may reasonably request.
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12. TERMINATION.
(a) This Agreement shall be in effect during the period from
the date hereof until the date which coincides with the third anniversary of the
Closing Date (such period being referred to herein as the "TERM"). Borrower
shall pay all of the Liabilities in full on the last day of the Term unless the
due date of the Liabilities is accelerated pursuant to paragraph 17 hereof. This
Agreement shall terminate on the date that the Liabilities are paid in full,
provided, however, that the security interests and liens created under this
Agreement and the Other Agreements shall survive such termination until the date
upon which payment and satisfaction in full of the Liabilities shall have
occurred. At such time as Borrower has repaid all of the Liabilities and this
Agreement has terminated, (i) if Borrower is obtaining new financing from
another lender, Borrower shall deliver such lender's indemnification of LaSalle,
in form and substance satisfactory to LaSalle, for checks which LaSalle has
credited to Borrower's account, but which subsequently are dishonored for any
reason and (ii) LaSalle shall deliver to Borrower executed UCC-3 termination
statements terminating LaSalle's security interests in the Collateral, and any
other document or instrument relating to such repayment of the Liabilities as
Borrower may reasonably request.
(b) If, during the term of this Agreement, Borrower prepays all
or any portion of the Liabilities, and in connection therewith, Borrower either
(a) permits any security agreement, financing statement or analogous instrument
to be executed or filed with respect to the Collateral for the benefit of
someone other than LaSalle, or (b) creates, incurs or assumes any liability for
borrowed money (except for borrowings from LaSalle and borrowings permitted
pursuant to paragraph 13(q) hereof), owing by Borrower, Borrower agrees to pay
to LaSalle, as a prepayment fee, in addition to the payment of all other
Liabilities owing by Borrower, an amount equal to: (i) one percent (1%) of the
Total Credit Facility if this Agreement is terminated during the first or second
year of the Term; and (ii) one-half of one percent (1/2 of 1%) of the Total
Credit Facility if this Agreement is terminated during the third year of the
Term, except if such prepayment is the result of LaSalle's election to terminate
the Loan Agreement for any reason other than Borrower's default hereunder.
Notwithstanding the foregoing, Borrower shall not be obligated to pay the
prepayment fee described in the immediately preceding sentence, if, but only if,
all of the following conditions shall have been met: (1) Borrower shall have
incurred liability for borrowed money to prepay the Liabilities; (2) the
proceeds of such borrowed money shall have been used in whole or in part (A) to
acquire, directly or indirectly, all or substantially all of the assets or
capital stock of any Person and, (B) to prepay the Liabilities; and (3) prior to
the incurrence of such liability for borrowed money, Borrower shall have offered
to LaSalle, and LaSalle shall have declined in writing, in a timely fashion, the
opportunity to increase the Total Credit Facility in order to consummate the
transaction described in clause (2)(A) hereof.
(c) Borrower shall make a mandatory prepayment of the unpaid
principal balance of all Loans, together with a payment of the accrued and
unpaid interest thereon, which prepayment and payment shall be due and payable
on the date, if any, of prepayment by CCC of the obligations owing by it to
LaSalle, pursuant to paragraph 12(b) of the Loan and Security Agreement between
them dated as of December 19, 1995.
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13. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the
following representations, warranties and covenants:
(a) the financial statements delivered or to be delivered by
Borrower to LaSalle at or prior to the date of this Agreement and at all times
subsequent thereto accurately reflect the financial condition of Borrower, and
there has been no event or development which has occurred since the date of the
Borrower's financial statements delivered to LaSalle most recently prior to the
date of this Agreement which has had, or is reasonably likely to have, a
Material Adverse Effect;
(b) the office where Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, Borrower's principal
place of business and all of Borrower's other places of business, locations of
Collateral and post office boxes are as set forth in Exhibit A; Borrower shall
promptly (but in no event less than ten (10) days prior thereto) advise LaSalle
in writing of the proposed opening of any new place of business, the closing of
any existing place of business, any change in the location of Borrower's books,
records and accounts (or copies thereof) or the opening or closing of any post
office box of Borrower;
(c) the Collateral, including without limitation the Equipment
(except any part thereof which prior to the date of this Agreement Borrower
shall have advised LaSalle in writing consists of Collateral normally used in
more than one state) is and shall be kept, or, in the case of vehicles, based,
only at the addresses set forth on the first page of this Agreement or on
Exhibit A, and at other locations within the continental United States of which
LaSalle has been advised by Borrower in writing;
(d) so long as Borrower has title to any Goods, Borrower shall
immediately give written notice to LaSalle of any use of any such Goods in any
state other than a state in which Borrower has previously advised LaSalle such
Goods shall be used, and such Goods shall not, unless LaSalle shall otherwise
consent in writing, be used outside of the continental United States;
(e) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral other
than any security agreement, financing statement or analogous instrument
evidencing Permitted Liens;
(f) each Account or item of Inventory which Borrower shall,
expressly or by implication, request LaSalle to classify as an Eligible Account
or as Eligible Inventory, respectively, shall, as of the time when such request
is made, conform in all respects to the requirements of such classification as
set forth in the respective definitions of Eligible Account and Eligible
Inventory and as otherwise established by LaSalle from time to time, and
Borrower shall promptly notify
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LaSalle in writing if any such Eligible Account or Eligible Inventory shall
subsequently become ineligible;
(g) Borrower is and shall at all times during the Term be the
lawful owner of all Collateral now purportedly owned or hereafter purportedly
acquired by Borrower, free from all liens, claims, security interests and
encumbrances whatsoever, whether voluntarily or involuntarily created and
whether or not perfected, other than the Permitted Liens;
(h) Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not conflict with the provisions of any statute, regulation, ordinance or
rule of law, or any agreement, contract or other document which is binding on
Borrower, and Borrower's execution, delivery and performance of this Agreement
and the Other Agreements shall not result in the imposition of any lien or other
encumbrance upon any of Borrower's property under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument by which Borrower or any of its property may be bound or affected,
other than in favor of LaSalle;
(i) as of the Closing Date, there are no actions or proceedings
which are pending against Borrower except as set forth on Schedule 13(i). There
are no actions or proceedings pending against Borrower that are reasonably
likely to have a Material Adverse Effect. There are no actions or proceedings
which, to the best of Borrower's knowledge, are threatened against Borrower
which are reasonably likely to have a Material Adverse Effect and Borrower
shall, promptly upon becoming aware of any such threatened action or proceeding,
give written notice thereof to LaSalle;
(j) Borrower has obtained all licenses, authorizations,
approvals and permits, the lack of which would have a Material Adverse Effect on
the operation of its business, and Borrower is and shall remain in compliance in
all material respects with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, statutes, orders, regulations, rules and ordinances relating to
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety or
environmental matters), the failure to comply with which would have or is
reasonably likely to have a Material Adverse Effect;
22.
<PAGE> 26
(k) all written information now, heretofore or hereafter
furnished by Borrower to LaSalle is and shall be true and correct in all
material respects as of the date with respect to which such information was or
is furnished (except for financial projections, which have been prepared in good
faith based upon reasonable assumptions);
(l) Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the Collateral is now,
or will (while any Liabilities remain outstanding) be owned by any Affiliate;
provided, however, that Borrower may enter into transactions with Affiliates in
the ordinary course of business pursuant to terms that are no less favorable to
Borrower than the terms upon which such transfers or transactions would have
been made had they been made to or with a Person that is not an Affiliate and,
in connection therewith, may transfer cash or property to Affiliates for fair
value;
(m) Borrower's name has always been as set forth on the first
page of this Agreement and Borrower uses no tradenames or division names in the
operation of its business, except as otherwise disclosed in writing to LaSalle
and Borrower shall notify LaSalle in writing within ten (10) days of the change
of its corporate name or the use of any tradenames or division names not
previously disclosed to LaSalle in writing;
(n) with respect to Borrower's Equipment: (i) Borrower has good
and indefeasible and merchantable title to and ownership of all Equipment,
including, without limitation, the Equipment described or listed on the schedule
of Equipment delivered to LaSalle concurrently with this Agreement; (ii)
Borrower shall keep and maintain the Equipment in good operating condition and
repair and shall make all necessary replacements thereof and renewals thereto so
that the value and operating efficiency thereof shall at all times be preserved
and maintained, ordinary wear and tear excepted; (iii) Borrower shall not permit
any such items to become a fixture to real estate or an accession to other
personal property; (iv) from time to time Borrower may sell, exchange or
otherwise dispose of obsolete, unused or worn out Equipment, but only to the
extent provided in paragraph 3(b)(i) hereof; and (v) Borrower, immediately on
demand by LaSalle, shall deliver to LaSalle any and all evidence of ownership
of, including, without limitation, certificates of title and applications of
title to, any of the Equipment;
(o) this Agreement and the Other Agreements to which Borrower
is a party are the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms, except
to the extent that such enforceability may be limited by applicable law
affecting the rights of creditors generally and by other equitable principles of
law;
23.
<PAGE> 27
(p) Borrower is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business, now owns
property having a value both at fair valuation and at present fair saleable
value greater than the amount required to pay its debts, and will not be
rendered insolvent by the execution and delivery of this Agreement or any of the
Other Agreements or by completion of the transactions contemplated hereunder or
thereunder;
(q) Borrower is not now obligated, whether directly or
indirectly, for any loans or other indebtedness, whether for borrowed money or
otherwise other than (i) the Liabilities; (ii) indebtedness disclosed to LaSalle
on Schedule 13 (q); (iii) unsecured indebtedness to trade creditors arising in
the ordinary course of Borrower's business; (iv) indebtedness arising under the
Subordinated Notes; (v) unsecured indebtedness arising from the endorsement of
drafts and other instruments for collection, in the ordinary course of
Borrower's business; and (vi) indebtedness incurred in connection with the
financing of Capital Expenditures;
(r) Borrower does not own any margin securities, and none of
the proceeds of the Loans hereunder shall be used for the purpose of purchasing
or carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation G or Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time;
(s) except as otherwise disclosed on Schedule 13(s), Borrower
has no Parents, Subsidiaries or divisions, nor is Borrower engaged in any joint
venture or partnership with any other Person;
(t) Borrower is duly organized and in good standing in its
state of organization and Borrower is duly qualified and in good standing in all
states where the nature and extent of the business transacted by it or the
ownership of its assets makes such qualification necessary, except for such
other states in which the failure to so qualify would not have a Material
Adverse Effect;
(u) Borrower is not in default under any material contract,
lease or commitment to which it is a party or by which it is bound, nor does
Borrower know of any dispute regarding any contract, lease or commitment which
is material to the continued financial success and well-being of Borrower;
(v) there are no controversies pending or threatened between
Borrower and any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to the
continued financial success and well-being of Borrower, and Borrower is in
compliance in all material respects with all federal and state laws respecting
employment and employment terms, conditions and practices, except where the
failure to so comply would not have a Material Adverse Effect; and
24.
<PAGE> 28
(w) Borrower possesses, and shall continue to possess, adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and tradenames to continue to conduct its
business as heretofore conducted by it.
Borrower represents, warrants and covenants to LaSalle that all representations,
warranties and covenants of Borrower contained in this Agreement (whether
appearing in paragraphs 13 or 14 hereof or elsewhere) shall be true at the time
of Borrower's execution of this Agreement, shall survive the execution, delivery
and acceptance hereof by the parties hereto and the closing of the transactions
described herein or related hereto, and shall be remade by Borrower at the time
each Loan is made and each Letter of Credit is issued pursuant to this
Agreement.
14. COVENANTS. Until payment or satisfaction in full of all
Liabilities and termination of this Agreement, unless Borrower obtains LaSalle's
prior written consent waiving or modifying any of Borrower's covenants hereunder
in any specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of Borrower's
business activities, in accordance with GAAP, consistently
applied, and shall keep such books, records and accounts, and any
copies thereof, only at the addresses indicated for such purpose
on Exhibit A;
(b) Borrower agrees to deliver to LaSalle the following
information, including the following financial information, all of
which financial information shall be prepared in accordance with
GAAP, consistently applied: (i) no later than forty-five (45) days
after each calendar month, copies of internally prepared financial
statements of Borrower and its Subsidiaries, on a consolidated and
consolidating, monthly and year-to-date basis including, without
limitation, balance sheets and statements of income, retained
earnings and cash flow of Borrower and its Subsidiaries, certified
by the chief financial officer of Borrower and accompanied by an
officer's certificate certifying that no Event of Default exists
hereunder, together, if applicable, with a comparison to the
balance sheets, statements of income, retained earnings and cash
flow of the Borrower or its Subsidiaries for the same periods in
the prior year; (ii) no later than ninety (90) days after the end
of each of the Parent's fiscal years, annual financial statements
of the Parent and its Subsidiaries on a consolidated basis
certified by independent certified public accountants selected by
the Parent and reasonably satisfactory to LaSalle, together with
such accountants' "management letter"; and (iii) no later than
fifteen (15) days prior to the end of each fiscal year, beginning
with the fiscal year ended December 31, 1997, projections on a
month-by-month basis of Borrower's financial condition and results
of operations for the next succeeding year, including a projected
balance sheet, statement of income, statement of retained
earnings, and statement of cash flows, such projections to be
prepared by the chief financial officer of Borrower;
25.
<PAGE> 29
(c) LaSalle, or any Persons designated by it, shall have the
right, at any time, in the exercise of its commercially reasonable
credit judgment, to call at Borrower's places of business at any
reasonable times upon prior notice (unless an Event of Default has
occurred and is continuing), and, without hindrance or delay, to
inspect the Collateral and to inspect, audit, check and make
extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to
Borrower's business, the Collateral or any transactions between
the parties hereto, and shall have the right to make such
verification concerning Borrower's business as LaSalle may
consider reasonable under the circumstances. Borrower shall
furnish to LaSalle such information relevant to LaSalle's rights
under this Agreement as LaSalle shall at any time and from time to
time reasonably request. Borrower authorizes LaSalle to discuss
the affairs, finances and business of Borrower with any officers
or directors of Borrower or any Affiliate or with those managerial
employees of Borrower with whom LaSalle has determined in its
commercially reasonable judgment to be necessary or desirable to
converse, or directors of any Affiliate, and to discuss the
financial condition of Borrower with Borrower's independent public
accountants. Any such discussions shall be without liability to
LaSalle or to such accountants. Borrower shall pay to or reimburse
LaSalle for all reasonable fees, costs, and out-of-pocket expenses
incurred by LaSalle in the exercise of its rights hereunder (other
than the fees payable by Borrower pursuant to paragraph 5(g)
hereof in connection with LaSalle's examination, prior to the
occurrence and continuance of an Event of Default, of Borrower's
books and records and Collateral) and all of such costs, fees and
expenses shall constitute Revolving Loans hereunder, shall be
payable on demand and, until paid, shall bear interest at the
highest rate then applicable to Loans hereunder;
(d) (i) Borrower shall: keep the Collateral properly
housed and shall keep the Collateral insured
against such risks and in such amounts as are
customarily insured against by Persons engaged in
businesses similar to that of Borrower with such
companies, in such amounts and under policies in
such form as shall be reasonably satisfactory to
LaSalle. Originals or certified copies of such
policies of insurance have been or shall be
delivered to LaSalle within fifteen (15) days
after the Closing Date, together with evidence of
payment of all premiums therefor, and shall
contain an endorsement, in form and substance
acceptable to LaSalle, showing loss under such
insurance policies payable to LaSalle. Such
endorsement, or an independent instrument
furnished to LaSalle, shall provide that the
insurance company shall give LaSalle at least
thirty (30) days written notice before any such
policy of insurance is altered or cancelled and
that no act, whether willful or negligent, or
default of Borrower or any other Person shall
affect the right of LaSalle to recover under such
policy of insurance
26.
<PAGE> 30
in case of loss or damage. Borrower hereby
directs all insurers under such policies of
insurance to pay all proceeds payable thereunder
directly to LaSalle. Borrower irrevocably, makes,
constitutes and appoints LaSalle (and all
officers, employees or agents designated by
LaSalle) as Borrower's true and lawful attorney
(and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies
of insurance, endorsing the name of Borrower on
any check, draft, instrument or other item of
payment for the proceeds of such policies of
insurance and making all determinations and
decisions with respect to such policies of
insurance, provided, however, that LaSalle shall
exercise such rights only upon the occurrence and
during the continuance of an Event of Default;
(ii) Borrower shall maintain, at its expense,
such public liability and third party property
damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower
with such companies and in such amounts, with
such deductibles and under policies in such form
as shall be reasonably satisfactory to LaSalle
and originals or certified copies of such
policies have been or shall be delivered to
LaSalle within fifteen (15) days after the
Closing Date, together with evidence of payment
of all premiums therefor; each such policy shall
contain an endorsement showing LaSalle as
additional insured thereunder and providing that
the insurance company shall give LaSalle at least
thirty (30) days written notice before any such
policy shall be altered or cancelled; and
(iii) If Borrower at any time or times hereafter
shall fail to obtain or maintain any of the
policies of insurance required above or to pay
any premium in whole or in part relating thereto,
then LaSalle, without waiving or releasing any
obligation or default by Borrower hereunder, may
(but shall be under no obligation to) obtain and
maintain such policies of insurance and pay such
premiums and take such other actions with respect
thereto as LaSalle deems advisable. All sums
disbursed by LaSalle in connection with any such
actions, including, without limitation, court
costs, expenses, other charges relating thereto
and reasonable attorneys' fees, shall constitute
Revolving Loans hereunder and, until paid, shall
bear interest at the highest rate then applicable
to Revolving Loans hereunder.
27.
<PAGE> 31
(e) Borrower shall not use the Collateral, or any part
thereof, in any unlawful business or for any unlawful
purpose or use or maintain any of the Collateral in any
manner that does or could result in material damage to the
environment or a violation of any applicable environmental
laws, rules or regulations, if any such use has or is
reasonably likely to have a Material Adverse Effect;
Borrower shall keep the Collateral in good condition,
repair and order, ordinary wear and tear excepted; Borrower
shall not permit the Collateral, or any part thereof, to be
levied upon under execution, attachment, distraint or other
legal process; Borrower shall not sell, lease, grant,
suffer or otherwise permit to exist a security interest in
or otherwise dispose of any of its property except as
expressly permitted by this Agreement; and Borrower shall
not secrete or abandon any of the Collateral, or remove or
permit removal of any of the Collateral from any of the
locations listed on Exhibit A or in any written notice to
LaSalle pursuant to paragraph 13 hereof, except for the
removal of Inventory sold in the ordinary course of
Borrower's business as permitted in this Agreement;
(f) all monies and other property obtained by Borrower from
LaSalle pursuant to this Agreement will be used solely for
business purposes of Borrower, and, in the case of the
initial Loan, may be used to pay costs and expenses
directly associated with the closing of this Agreement and
the repayment of obligations incurred in connection with
the Asset Acquisition;
(g) Borrower shall, at the request of LaSalle, indicate on
its records concerning the Collateral a notation, in form
reasonably satisfactory to LaSalle, of the security
interest of LaSalle hereunder, and Borrower shall not
maintain duplicates or copies of such records at any
address other than Borrower's principal place of business
set forth on the first page of this Agreement; provided,
however, that Borrower, in the ordinary course of its
business, may furnish copies of such records to its
accountants, attorneys and other agents or advisors as it
may determine to be necessary or desirable, in the exercise
of its commercially reasonable judgment;
(h) Borrower shall file all required tax returns and pay
all of its taxes when due, including, without limitation,
taxes imposed by federal, state or municipal agencies, and
shall cause any liens for taxes to be promptly released;
provided that Borrower shall have the right to contest the
payment of such taxes in good faith by appropriate
proceedings so long as (i) the amount so contested is shown
on Borrower's financial statements, (ii) upon the
occurrence and during the continuance of Event of Default,
Borrower keeps on deposit with LaSalle (such deposit to be
held without interest) an amount of money which, in the
sole judgment of LaSalle, is sufficient to pay such taxes
and any interest or penalties that may accrue thereon, and
(iii) if Borrower fails to prosecute such contest with
reasonable diligence, LaSalle may apply the money so
deposited in payment of such taxes. If Borrower fails to
pay any such taxes and in the absence of any such contest
by Borrower, LaSalle may (but shall be under no obligation
to) advance and pay any sums required to pay any such taxes
and/or to secure the
28.
<PAGE> 32
release of any lien therefor, and any sums so advanced by
LaSalle shall constitute Revolving Loans hereunder, shall
be payable by Borrower to LaSalle on demand, and, until
paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(i) Borrower shall not (i) incur, create, assume or suffer
to exist any indebtedness other than (A) indebtedness
arising under this Agreement, (B) unsecured indebtedness
owing in the ordinary course of business to trade
suppliers, (C) indebtedness arising under the Subordinated
Notes and (D) any other indebtedness described in paragraph
13(q)(ii) hereof; or (ii) assume, guarantee or endorse, or
otherwise become liable in connection with, the obligations
of any Person, except by endorsement of instruments for
deposit or collection or similar transactions in the
ordinary course of business;
(j) Borrower shall not enter into any merger or
consolidation, or sell, lease or otherwise dispose of all
or substantially all of its assets; provided, however, that
Borrower may merge with CCC, upon the prior written consent
of LaSalle, which consent shall not be unreasonably
withheld or delayed. Without the prior written consent of
LaSalle, which consent shall not be unreasonably withheld
or delayed, Borrower shall not create any new Subsidiary or
Affiliate or issue any shares of, or warrants or other
rights to receive or purchase any shares of, any class of
its stock. Borrower shall not enter into any transaction
outside the ordinary course of Borrower's business;
(k) Except as may be required to repay on the Closing Date
obligations to AMT incurred in connection with the Asset
Acquisition, Borrower shall not (i) declare or pay any
dividend or other distribution (whether in cash or in kind)
on, purchase, redeem or retire any shares of any class of
its stock, or make any payment on account of, or set apart
assets for the repurchase, redemption, defeasance or
retirement of, any class of its stock; or (ii) make any
optional payment or prepayment on or redemption (including
without limitation by making payments to a sinking fund or
analogous fund) or repurchase of any indebtedness for
borrowed money other than indebtedness pursuant to this
Agreement;
(l) Borrower shall not make any investment in, or make any
loan, advance, capital contribution or transfer of property
to, any Person, whether in cash, securities or other
property of any kind, other than direct obligations of the
United States or interest-bearing demand or time deposits
insured by the Federal Deposit Insurance Corporation or
similar federal insurance program or publicly traded
obligations of LaSalle, ABN AMRO Bank N.V. or any other
subsidiary of ABN AMRO Bank N.V. except that Borrower may
make loans or advances in the ordinary course of business
to CCC, so long as such loans and advances are made at
arm's length and on fair and reasonable terms;
29.
<PAGE> 33
(m) Without prior written notice to LaSalle, Borrower shall
not make any material change in its organizational
documents; provided, however, that Borrower shall not make
any change to its organizational documents that would
adversely affect, or would be reasonably likely to
adversely affect, LaSalle. Borrower shall not change its
fiscal year;
(n) Borrower shall reimburse LaSalle for all costs and
expenses including, without limitation, legal expenses and
reasonable attorneys' fees (including the allocated costs
of in-house counsel), incurred by LaSalle in connection
with the documentation and consummation of this transaction
and any other transactions between Borrower and LaSalle,
including, without limitation, Uniform Commercial Code and
other public record searches, lien filings, Federal Express
or similar express or messenger delivery, appraisal costs,
surveys, title insurance and environmental audit or review
costs, and in seeking to collect, protect or enforce any
rights in or to the Collateral or incurred by LaSalle in
seeking to collect any Liabilities and to administer and
enforce any of LaSalle's rights under this Agreement.
Borrower shall also pay all normal service charges with
respect to accounts maintained by LaSalle for the benefit
of Borrower. All such costs, expenses and charges shall
constitute Revolving Loans hereunder, shall be payable by
Borrower to LaSalle on demand, and, until paid, shall bear
interest at the highest rate then applicable to Revolving
Loans hereunder; and
(o) Borrower shall maintain and keep in full force and
effect each of the financial covenants set forth below. The
calculation and determination of each such financial
covenant, and all accounting terms contained therein, shall
be so calculated and construed in accordance with GAAP:
(i) Tangible Net Worth. Borrower shall maintain
at all times a Tangible Net Worth of not less than
$1,000,000.
(ii) Interest Coverage Ratio. Borrower shall
maintain as of the end of each fiscal quarter, commencing
with the fiscal quarter ending June 30, 1997 a ratio of (A)
EBITDA for such fiscal quarter to (B) interest expense for
such fiscal quarter, of not less than 1.50 to 1.00.
(iii) Debt Service Coverage Ratio. For each period
set forth below, Borrower shall maintain a Debt Service
Coverage Ratio, as of the end of each such period, of not
less than the ratio set forth below opposite each such
period; provided, however, that for purposes of determining
compliance with this covenant, (A) indebtedness incurred or
repaid in connection with Revolving Loans shall be excluded
and (B) each scheduled monthly installment of principal of
each Capex Loan and Term Loan payable during the last year
of the Term shall be deemed to constitute "current
principal maturities of long term debt", as such phrase is
used in clause (B) of the definition of Debt Service
Coverage Ratio:
30.
<PAGE> 34
<TABLE>
<CAPTION>
Minimum Debt Service
Period Coverage Ratio
- --------------------------- ------------------------
<S> <C>
fiscal quarter ending in 1.00 to 1.00
June, 1997
two fiscal quarters ending in 1.00 to 1.00
September, 1997
three fiscal quarters ending 1.00 to 1.00
in December, 1997
four fiscal quarters ending 1.00 to 1.00
in March, 1998
each period of four fiscal 1.00 to 1.00
quarters ending in June,
September, and
December, 1998
four fiscal quarters ending 1.25 to 1.00
in March, 1999, and
each period of four fiscal
quarters thereafter
</TABLE>
(iv) Capital Expenditures. Other than Capital Expenditures the
acquisition of which is financed, Borrower shall not make Capital
Expenditures, of an aggregate amount of more than (A) $200,000 during
Fiscal Year 1997, (B) $200,000 during Fiscal Year 1998 and (C)
$900,000 during Fiscal Year 1999.
(p) Notwithstanding paragraph 14(h)(ii), Borrower shall not make any
payments or prepayments of principal of or interest on the
Subordinated Notes other than pursuant to the terms thereof, as in
effect on the Closing Date and Borrower shall not amend or modify the
Subordinated Notes.
15. CONDITIONS PRECEDENT.
(a) The obligation of LaSalle to fund the Term Loans, the Capex Loan
or to fund the initial Revolving Loan, and to co-sign as applicant for the
initial Letter of Credit, is subject to the satisfaction or waiver on or before
the Closing Date of the following conditions precedent:
(i) LaSalle shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other
documents set forth on the closing document list attached hereto as
Schedule A (the "Closing Document List").
(ii) Since November 30, 1996 no event shall have occurred
which has had or could reasonably be expected to have a Material
Adverse Effect (as determined by LaSalle in its sole discretion),
Borrower shall not be in default under any agreement or
31.
<PAGE> 35
instrument to which it is a party or pursuant to which it or its
property is bound and Borrower shall be in compliance with all laws,
orders, regulations and rules applicable to it.
(iii) LaSalle shall have received payment in full of all fees
and expenses payable to it by Borrower on or before the Closing Date.
(iv) LaSalle shall have determined that immediately after
giving effect to (A) the making of the initial Loans, including
without limitation the Term Loan, the Capex Loan and the Revolving
Loans, if any, requested to be made on the Closing Date, (B) the
issuance of the initial Letter of Credit, if any, requested to be made
on the Closing Date and (C) the payment or reimbursement by Borrower
of LaSalle for all closing costs and expenses incurred in connection
with the transactions contemplated hereby, on a pro forma basis the
Excess Availability of Borrower shall not be less than Three Hundred
Thousand Dollars ($300,000).
(v) LaSalle shall have received a certificate from Borrower's
chief executive officer or chief financial officer, pursuant to which
such officer shall certify that in calculating the Excess Availability
described in clause (iv) above, Borrower's outstanding trade payables
were (and are) current and not past due in any material respect.
(vi) The Obligors shall have executed and delivered to LaSalle
all documents which LaSalle determines are reasonably necessary to
consummate the transactions contemplated hereby.
(vii) LaSalle shall have reviewed to its satisfaction the
results of a field examination, performed by LaSalle as of a recent
date, of the Collateral and of Borrower's books and records and its
trade suppliers.
(viii) LaSalle shall have received the approval of its credit
committee of the transactions contemplated to occur hereunder.
(ix) Borrower shall have delivered to LaSalle copies of the
executed Asset Purchase Agreement with all attachments and schedules
thereto.
(x) LaSalle shall have determined that on a pro forma basis,
after giving effect to the consummation of the Asset Acquisition, the
consummation of the other transactions contemplated by this Agreement
and the Other Agreements, and the making of the initial Loans, both
before and after such events, Borrower shall not (A) be insolvent or
rendered insolvent, (B) be left with an unreasonably small amount of
capital with which to engage in its business or (C) have incurred
debts beyond its ability to pay as such debts mature.
32.
<PAGE> 36
(xi) LaSalle shall have reviewed to its satisfaction,
projections prepared by Borrower of its financial performance, on a
month-by-month basis, for the twelve (12) month period following the
Closing Date.
(xii) LaSalle shall have reviewed to its satisfaction, the
results of an environmental examination of all real property owned or
operated by Borrower, such examination to be performed by an
environmental consulting firm acceptable to LaSalle.
(xiii) LaSalle shall have received a guarantee in form and
substance satisfactory to it, from AMT and from CCC.
(xiv) Borrower shall execute an instrument of assignment
pursuant to which the Key Man Life Insurance Policy shall be
collaterally assigned to LaSalle to secure the payment and performance
of the Liabilities, such instrument to contain terms and conditions
satisfactory to LaSalle and to be acknowledged in writing by the
issuer of the Key Man Life Insurance Policy.
(xv) Borrower shall cause to be delivered to LaSalle a
landlord's waiver and consent agreement, executed in favor of LaSalle
by the lessor of the premises located at 1020 N. Marshall Avenue, El
Cajon, California 92020, such agreement to contain terms and
conditions acceptable to LaSalle in its commercially reasonable
judgment.
(xvi) CCC shall have entered into a First Amendment to Loan
and Security Agreement with LaSalle, in form and substance
satisfactory to LaSalle.
(b) After the Closing Date, the obligation of LaSalle to make any
requested Revolving Loan, Capex Loan or Term Loan, or to co-sign as applicant
for any requested Letter of Credit is subject to the satisfaction of the
conditions precedent set forth below. Each such request shall constitute a
representation and warranty that such conditions are satisfied:
(i) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct in all
material respects on and as of the date of such request, as if then
made, other than representations and warranties that relate solely to
an earlier date;
(ii) No Default or Event of Default shall have occurred, or
would result from the making of the requested Revolving Loan, Capex
Loan or Term Loan, or the issuance of the requested Letter of Credit,
which has not been waived; and
(iii) Since the Closing Date, no event has occurred which has
had or could reasonably be expected to have a Material Adverse Effect.
16. DEFAULT. The occurrence of any one or more of the following events
shall constitute an "EVENT OF DEFAULT" hereunder:
33.
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(a) the failure of any Obligor to pay when due, declared due, or
demanded by LaSalle in accordance with the terms hereof, any of the Liabilities;
(b) the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements;
(c) the making or furnishing by any Obligor to LaSalle of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and LaSalle, which is
untrue or misleading in any material respect at the time made;
(d) the creation (whether voluntary or involuntary) of any lien or
other encumbrance upon any of the Collateral, other than the Permitted Liens, or
the making of any levy, seizure or attachment thereof;
(e) the commencement of any proceedings (i) in bankruptcy by or
against any Obligor, (ii) for the liquidation or reorganization of any Obligor,
(iii) alleging that such Obligor is insolvent or unable to pay its debts as they
mature, or (iv) for the readjustment or arrangement of any Obligor's debts,
whether under the United States Bankruptcy Code or under any other law, whether
state or federal, now or hereafter existing for the relief of debtors, or the
commencement of any analogous statutory or non-statutory proceedings involving
any Obligor; provided, however, that if such commencement of proceedings against
such Obligor is involuntary, such action shall not constitute an Event of
Default unless such proceedings are not dismissed within thirty (30) days after
the commencement of such proceedings;
(f) the appointment of a receiver or trustee for any Obligor, for any
of the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation or a partnership; provided, however, that if such appointment or
commencement of proceedings against such Obligor is involuntary, such action
shall not constitute an Event of Default unless such appointment is not revoked
or such proceedings are not dismissed within sixty (60) days after the
commencement of such proceedings;
(g) the entry of any judgment or order in excess of $200,000 against
any Obligor which remains unsatisfied or undischarged and in effect for thirty
(30) days after such entry without a stay of enforcement or execution;
(h) the occurrence of an Event of Default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to LaSalle pursuant to which such Person has guaranteed to LaSalle
the payment of all or any of the Liabilities or has granted LaSalle a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities;
34.
<PAGE> 38
(i) the occurrence of an Event of Default under any agreement or
instrument evidencing indebtedness for borrowed money in excess of $100,000
executed or delivered by Borrower or pursuant to which agreement or instrument
Borrower or its properties is or may be bound;
(j) the occurrence of an Event of Default under the Loan and Security
Agreement dated as of December 19, 1995 between CCC and LaSalle; or
(k) the occurrence of any event or condition which has or is
reasonably likely to have a Material Adverse Effect.
17. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default described in paragraph 16(e) hereof, all of the Liabilities shall
immediately and automatically become due and payable, without notice of any
kind. Upon the occurrence and during the continuance of any other Event of
Default, all of the Liabilities may, at the option of LaSalle, and without
demand, notice or legal process of any kind, be declared, and immediately shall
become, due and payable.
(b) Upon the occurrence and during the continuance of an Event of
Default, LaSalle may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code and any other applicable law
in addition to, and not in lieu of, any rights and remedies expressly granted in
this Agreement or in any of the Other Agreements and all of LaSalle's rights and
remedies shall be cumulative and non-exclusive to the extent permitted by law.
In particular, but not by way of limitation of the foregoing, LaSalle may,
without notice, demand or legal process of any kind, take possession of any or
all of the Collateral (in addition to Collateral of which it already has
possession), wherever it may be found, and for that purpose may pursue the same
wherever it may be found, and may enter into any of Borrower's premises where
any of the Collateral may be, and search for, take possession of, remove, keep
and store any of the Collateral until the same shall be sold or otherwise
disposed of, and LaSalle shall have the right to store the same at any of
Borrower's premises without cost to LaSalle. At LaSalle's request, Borrower
shall, at Borrower's expense, assemble the Collateral and make it available to
LaSalle at one or more places to be designated by LaSalle and reasonably
convenient to LaSalle and Borrower. Borrower recognizes that if Borrower fails
to perform, observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to LaSalle,
and Borrower agrees that LaSalle shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages. Any notification of intended disposition of any of the Collateral
required by law will be deemed reasonably and properly given if given at least
five (5) calendar days before such disposition. Any proceeds of any disposition
by LaSalle of any of the Collateral may be applied by LaSalle to the payment of
expenses in connection with the Collateral including, without limitation, legal
expenses and reasonable attorneys' fees (both in-house and outside counsel) and
any balance of such proceeds may be applied by LaSalle toward the payment of
such of the Liabilities, and in such order of application, as LaSalle may from
time to time elect.
35.
<PAGE> 39
18. INDEMNIFICATION. Borrower agrees to defend (with counsel reasonably
satisfactory to LaSalle), protect, indemnify and hold harmless LaSalle, each
affiliate or subsidiary of LaSalle, and each of their respective officers,
directors, employees, attorneys and agents (each an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature (including, without limitation, the disbursements and the reasonable
fees of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or any letters of
credit or the use or intended use of the proceeds of the Loans or any letters of
credit; provided, however, that Borrower shall not have any obligation hereunder
to any Indemnified Party with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Indemnified Party. To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall satisfy such undertaking to the maximum extent permitted by applicable
law. Any liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand, and,
failing prompt payment, shall, together with interest thereon at the highest
rate then applicable to Revolving Loans hereunder from the date incurred by each
Indemnified Party until paid by Borrower, be added to the Liabilities of
Borrower and be secured by the Collateral. The provisions of this paragraph 18
shall survive the satisfaction and payment of the other Liabilities and the
termination of this Agreement.
19. NOTICES. All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered in person, and in the case of LaSalle shall be
sent to it at 477 Madison Avenue, New York, New York 10022, Attention: District
Credit Manager, with a copy to Robert Stein, Esq., Lowenthal, Landau, Fischer &
Bring, P.C., 250 Park Avenue, New York, New York 10017 and in the case of
Borrower shall be sent to Borrower at its principal place of business as set
forth on the first page of this Agreement, with a copy to David Broadwin, Esq.,
Foley, Hoag & Eliot LLP, One Post Office Square, Boston, Massachusetts 02109.
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION. This Agreement and the Other
Agreements are submitted by Borrower to LaSalle for LaSalle's acceptance or
rejection at LaSalle's principal place of business as an offer by Borrower to
borrow monies from LaSalle now and from time to time hereafter, and shall not be
binding upon LaSalle or become effective until accepted by LaSalle, in writing,
at said place of business. If so accepted by LaSalle, this Agreement and the
Other Agreements shall be deemed to have been made at said place of business.
THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING,
36.
<PAGE> 40
WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT
EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN THE COLLATERAL, WHICH SHALL BE
GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION. If any
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or remaining provisions of this Agreement.
21. FORUM SELECTION AND SERVICE OF PROCESS. To induce LaSalle to accept this
Agreement, Borrower irrevocably agrees that, subject to LaSalle's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE
COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO,
STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. Borrower
hereby irrevocably appoints and designates the Secretary of State of Illinois,
whose address is Springfield, Illinois (or any other person having and
maintaining a place of business in such state whom Borrower may from time to
time hereafter designate upon ten (10) days written notice to LaSalle and who
LaSalle has agreed in its sole discretion in writing is satisfactory and who has
executed an agreement in form and substance satisfactory to LaSalle agreeing to
act as such attorney and agent), as Borrower's true and lawful attorney and duly
authorized agent for acceptance of service of legal process. Borrower agrees
that service of such process upon such person shall constitute personal service
of such process upon Borrower. BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY
LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
22. MODIFICATION AND BENEFIT OF AGREEMENT. This Agreement and the Other
Agreements may not be modified, altered or amended except by an agreement in
writing signed by Borrower and LaSalle. Borrower may not sell, assign or
transfer this Agreement, or the Other Agreements or any portion thereof
including, without limitation, Borrower's rights, titles, interest, remedies,
powers or duties thereunder. Borrower hereby consents to LaSalle's sale,
assignment, transfer or other disposition, at any time and from time to time
hereafter, of this Agreement, or the Other Agreements, or of any portion
thereof, or participations therein including, without limitation, LaSalle's
rights, titles, interest, remedies, powers and/or duties thereunder. Borrower
agrees that it shall execute and deliver such documents as LaSalle may request
in connection with any such sale, assignment, transfer or other disposition.
23. HEADINGS OF SUBDIVISIONS. The headings of subdivisions in this
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.
37.
<PAGE> 41
24. POWER OF ATTORNEY. Borrower acknowledges and agrees that its appointment
of LaSalle as its attorney and agent-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be irrevocable
until all of the Liabilities are paid in full and this Agreement is terminated.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.
(a) LASALLE AND BORROWER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT OF BORROWER OR LASALLE OR WHICH, IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND
LASALLE. IN NO EVENT SHALL LASALLE BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES.
(b) BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY LASALLE OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
OF BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
(c) Borrower hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.
(d) LaSalle's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of this Agreement or any of the
Other Agreements shall not waive, affect or diminish any right of LaSalle
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by LaSalle of an Event of Default under this Agreement or any default
under any of the Other Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default under any of the
Other Agreements, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. No delay on the part of LaSalle in
the exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by LaSalle
unless such suspension or waiver is in writing, signed by a duly authorized
officer of LaSalle and directed to Borrower specifying such suspension or
waiver.
38.
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 7th day of April, 1997.
LASALLE BUSINESS CREDIT, INC.
By: /s/ MARY ELLEN NIXON-MOORE
-------------------------------
Title: Vice President
GRAFALLOY CORPORATION
By: /s/ WILLIAM A. TIMMERMAN
-------------------------------
Title: Director
39.
<PAGE> 1
Exhibit 10.39
EXECUTION COPY
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") dated as of
April 7, 1997 by The American Materials & Technologies Corporation, a Delaware
corporation (the "Pledgor"), to LaSalle Business Credit, Inc. (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgor's wholly-owned subsidiary, Grafalloy
Corporation, a Delaware corporation ("Borrower"), and the Pledgee, as Lender,
are entering into a Loan and Security Agreement concurrently herewith dated as
of April 7, 1997 (as the same may be amended or modified from time to time, the
"Loan Agreement"); and
WHEREAS, it is a condition precedent to the effectiveness of
the Loan Agreement that the Pledgor shall have executed this Agreement and made
the pledge in favor of the Pledgee, as contemplated hereby.
NOW, THEREFORE, in consideration of the premises and to induce
the Pledgee to enter into the Loan Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Pledgor hereby agrees with the Pledgee as follows:
1. Definitions. Unless the context otherwise requires,
all terms used but not expressly defined herein shall have the meanings given
to them in the Loan Agreement or, if they are not defined in the Loan Agreement
but are defined in the Illinois Uniform Commercial Code (the "Code"), they
shall have the same meaning herein as in the Code.
2. Pledge of the Pledged Stock; Power of Attorney.
(a) As security for the prompt payment and
performance when due of the Liabilities, the Pledgor hereby pledges to the
Pledgee, and grants to the Pledgee a lien on and security interest in, the
following (the "Pledged Collateral"): (i) all of the issued and outstanding
shares of common stock of Borrower which shares are listed on Schedule A hereto
(the "Pledged Stock"), (ii) all additional shares of stock or other securities
at any time issued by Borrower, (iii) the certificates evidencing all such
shares and securities, (iv) subject to Section 6 hereof, all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Pledged Stock and such shares and securities and (v) all proceeds of any of the
foregoing (including, without limitation, proceeds constituting any property of
the types described above). The Pledgor has delivered to the Pledgee original
stock certificates for all of the Pledged Stock, each accompanied by an undated
stock power executed in blank by the Pledgor.
<PAGE> 2
(b) The Pledgee shall have no obligation with
respect to the Pledged Collateral or any other property held or received by it
hereunder except to use reasonable care in the custody thereof to the extent
required by law. The Pledgee may hold the Pledged Collateral in the form in
which it is received by it.
(c) The Pledgor, to the full extent permitted by
law, hereby constitutes and irrevocably appoints the Pledgee (and any officer
or agent of the Pledgee, with full power of substitution and revocation) as the
Pledgor's true and lawful attorney-in-fact, in the Pledgor's stead and in the
name of the Pledgor or in the name of the Pledgee, to transfer, upon the
occurrence and during the continuation of an Event of Default or at any time
the Pledgee reasonably believes, and has so notified the Pledgor in writing,
that fraud has occurred with respect to the Pledgor or any other Person
controlling, controlled by, or under common control with the Pledgor (a
"Fraud"), the Pledged Collateral on the books of Borrower in whole or in part,
to the name of the Pledgee or such other Person or Persons as the Pledgee may
designate and, upon the occurrence and during the continuation of an Event of
Default or at any time the Pledgee reasonably believes, and has so notified the
Pledgor in writing, that Fraud has occurred, to take all such other and further
actions as the Pledgor could have taken with respect to the Pledged Collateral
which the Pledgee in its absolute discretion determines to be necessary or
appropriate to accomplish the purposes of this Agreement.
(d) The powers of attorney granted pursuant to
this Agreement and all authority hereby conferred are granted and conferred
solely to protect the Pledgee's interests in the Pledged Collateral and shall
not impose any duty upon the attorney-in-fact to exercise such powers. Such
powers of attorney shall be irrevocable prior to the payment in full of the
Liabilities and the termination of the Loan Agreement, and shall not be
terminated prior thereto or affected by any act of the Pledgor or other Persons
or by operation of law.
(e) Each Person who shall be a transferee of the
beneficial ownership of any of the Pledged Collateral (any such transfer being
prohibited under Section 5 unless the Pledgee consents thereto) shall be deemed
to have irrevocably appointed the Pledgee, with full power of substitution and
revocation, as such Person's true and lawful attorney-in-fact in such Person's
name and otherwise to do any and all acts herein permitted and to exercise any
and all powers herein conferred.
3. Rights of the Pledger; Voting.
(a) During the term of this Agreement, and so
long as no Voting Notice (as defined below) is received from the Pledgee
following the occurrence of an Event of Default as hereinafter provided in this
Section 3, the Pledgor shall have the right to vote any of the Pledged
Collateral in all corporate matters except those which would violate this
Agreement or any of the Other Agreements, or any other agreement between the
Pledgor and the Pledgee, or which would be reasonably likely to materially
reduce the value of the Pledged Collateral, unless the Pledgee consents
thereto. The Pledgor shall not suffer or permit any such action to be taken by
Borrower without the prior written approval (which approval the Pledgee may
withhold in its sole discretion, exercised in a commercially reasonable manner)
of the Pledgee.
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<PAGE> 3
(b) Upon the occurrence and during the
continuation of an Event of Default or from and after such time as the Pledgee
has notified the Pledgor in writing that it reasonably believes that Fraud has
occurred, which notice shall set forth the allegations of Fraud in reasonable
detail, the Pledgor shall give the Pledgee at least five days' prior notice of
(i) any meeting of stockholders of Borrower or any meeting of directors
convened for any purpose and (ii) any written consent which the Pledgor
proposes to execute as the stockholder of Borrower or which any of the
representatives of the Pledgor proposes to execute as a director of Borrower.
The Pledgor hereby authorizes the Pledgee to send its agents and
representatives to any such meeting of shareholders or directors of Borrower,
that the Pledgee wishes to attend, and agrees to take such steps as may be
necessary to confirm and effectuate such authority, including, without
limitation, causing Borrower to give reasonable prior written notice to the
Pledgee of the time and place of any such meeting and the principal actions to
be taken thereat.
(c) Notwithstanding the occurrence of an Event of
Default, the Pledgor may continue to exercise the voting rights of the Pledgor
as herein described (and subject to the limitations herein) except to the
extent that the Pledgee may elect to exercise voting power (as determined by it
in its sole discretion) by a written notice given to the Pledgor at any time
during the continuance of an Event of Default (a "Voting Notice"), whereupon
the Pledgee shall have the exclusive right to exercise such rights to the
extent specified in such Voting Notice, and the Pledgor shall take all such
steps as may be necessary to effectuate such rights until the Pledgee notifies
the Pledgor of the release of such rights.
4. No Restrictions on Transfer. The Pledgor warrants and
represents that other than the restrictions created hereby, there are no
restrictions on the transfer of the Pledged Stock except for such restrictions
imposed by operation of law, that there are no options, warrants or rights
pertaining thereto, and that the Pledgor has the right to transfer the Pledged
Stock free of any encumbrances and without the consent of the creditors of the
Pledgor or the consent of Borrower, or any other Person or any governmental
agency whatsoever.
5. No Transfer or Liens; Additional Securities. The Pledgor
agrees that it will not sell, transfer or convey any interest in, or suffer or
permit any lien or encumbrance to be created upon or with respect to, any of
the Pledged Collateral during the term of this Agreement, except to or in favor
of the Pledgee. The Pledgor shall not cause, suffer or permit Borrower to
issue any common or preferred stock, or any other equity security, to any
Person, unless the Pledgee otherwise consents in writing (which consent may be
withheld in the Pledgee's sole discretion).
6. Adjustments of Capital Stock; Payment and Application of
Dividends. In the event that during the term of this Agreement any stock
dividend, reclassification, readjustment or other change is declared or made in
the capital structure of Borrower or if any other or additional shares of stock
of Borrower are issued to the Pledgor, all new, substituted and additional
shares or other securities issued by reason of any such change or acquisition
shall immediately be delivered by the Pledgor to the Pledgee and shall be
deemed to be part of the "Pledged Collateral" under the terms of this Agreement
in the same manner as the shares of stock originally pledged hereunder. All
cash dividends received by or payable to the Pledgor in respect of the Pledged
Collateral, including any additional shares of stock received by the Pledgor as
a result of the Pledgor's record ownership of the Pledged Stock shall
immediately be delivered by the Pledgor to the Pledgee, to be held by the
Pledgee as Pledged Collateral
- 3 -
<PAGE> 4
hereunder or to be applied by the Pledgee against the Liabilities. Upon the
occurrence and during the continuation of an Event of Default, the Pledgor will
not demand and will not be entitled to receive, any cash dividends or other
income, interest or property in or with respect to the Pledged Collateral, and
if the Pledgor receives any of the same, the Pledgor shall immediately deliver
it to the Pledgee to be held by it and applied as provided in the preceding
sentence.
7. Warrants and Options. In the event that during the term of
this Agreement subscription warrants or other rights or options shall be issued
in connection with the Pledged Collateral, all such stock warrants, rights and
options shall forthwith be assigned to the Pledgee by the Pledgor, and said
stock warrants, rights and options shall be, and, if exercised by the Pledgor,
all new stock issued pursuant thereto shall be, pledged by the Pledgor to the
Pledgee to be held as, and shall be deemed to be part of, the Pledged
Collateral under the terms of this Agreement in the same manner as the shares
of capital stock originally pledged hereunder.
8. Return of Pledged Collateral Upon Termination. Upon
the release, satisfaction, discharge or termination of all of the Liabilities
and the termination of the Loan Agreement, the Pledgee shall cause to be
transferred or returned to the Pledgor, within seven (7) business days
following such termination of the Loan Agreement, all of the stock pledged by
the Pledgor herein and any money, property and- rights received by the Pledgee
pursuant hereto, to the extent the Pledgee has not taken, sold or otherwise
realized upon the same as permitted hereunder, together with all other
documents reasonably required by the Pledgor to evidence termination of the
pledge contemplated hereby.
9. Events of Default; Remedies. (a) Upon the occurrence
of any Event of Default (as defined below), the Pledgee shall have and at any
time may exercise with respect to the Pledged Collateral, the proceeds thereof,
and any other property or money held by the Pledgee hereunder, all rights and
remedies available to it under law, including, without limitation, those given,
allowed or permitted to a secured party by or under the Code, and all rights
and remedies provided for herein. "Event of Default" shall mean any default by
the Pledgor in any of the Pledgor's obligations hereunder or under any of the
Other Agreements, any Event of Default as defined in the Loan Agreement, or any
default by the Borrowers in the payment or performance of any other
Liabilities.
(b) Without limiting the foregoing, in the event that the
Pledgee elects to sell the Pledged Stock (such term including, for purposes of
this Section 9, the Pledged Stock and all other shares of stock or securities
at any time forming part of the Pledged Collateral), the Pledgee shall have the
power and right in connection with any such sale, exercisable at its option and
in its absolute discretion, to sell, assign, and deliver the whole or any part
of the Pledged Stock or any additions thereto at a private or public sale for
cash, on credit or for future delivery and at such price as the Pledgee deems
to be satisfactory. Notice of any public sale shall be sufficient if it
describes the Pledged Collateral to be sold in general terms, and is published
at least once in The New York Times and The Wall Street Journal not less than
five (5) Business Days prior to the date of sale. If The New York Times or The
Wall Street Journal is not then being published, publication may be made in
lieu thereof in any newspaper then being circulated in the City of New York,
New York as the Pledgee may elect. All requirements of reasonable notice under
this Section 9 shall be met if such notice is mailed, postage prepaid at least
seven
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<PAGE> 5
(7) days before the time of such sale or disposition, to the Pledger at its
address set forth in Section 16 hereto or such other address as the Pledgor may
have, in writing, provided to the Pledgee. The Pledgee may, if it deems it
reasonable, postpone or adjourn any sale of any collateral from time to time by
an announcement at the time and place of the sale to be so postponed or
adjourned without being required to give a new notice of sale.
(c) Because federal and state securities laws may
restrict the methods of disposition of the Pledged Stock which are readily
available to the Pledgee, and specifically because a public sale thereof may be
impossible or impracticable by reason of certain restrictions under the
Securities Act of 1933, as amended, or under applicable Blue Sky or other state
securities laws as now or hereafter in effect, the Pledgor agrees that the
Pledgee may from time to time attempt to sell the Pledged Stock by means of a
private placement restricting the offering or sale to a limited number of
prospective purchasers who meet suitability standards the Pledgee deems
appropriate and who agree that they are purchasing for their own accounts for
investment and not with a view to distribution, and the Pledgee's acceptance of
the highest offer obtained therefrom shall be deemed to be a commercially
reasonable disposition of the Pledged Stock. The Pledgee or its assigns may
purchase all or any part of the Pledged Stock and any purchaser thereof shall
thereafter hold the same absolutely free from any right or claim of any kind.
To the fullest extent permitted by law, the Pledgee shall not be obligated to
make any such sale pursuant to notice and may, without notice or publication,
adjourn any public or private sale by announcement at the time and place fixed
for the sale, and such sale may be held at any time or place to which the same
may be adjourned. If any of the Pledged Stock is sold by the Pledgee upon
credit or for future delivery, the Pledgee shall not be liable for the failure
of the purchaser to pay for same and, in such event, the Pledgee may resell
such Pledged Stock and the Pledgor shall continue to be liable to the Pledgee
for the full amount of the Liabilities to the extent the Pledgee does not
receive full and final payment in cash therefor.
(d) The Pledgee shall have the sole right to
determine the order in which Liabilities shall be deemed discharged by the
application of the proceeds of Pledged Stock or any other property or money
held hereunder or any amount realized thereon.
10. Certain Representations and Warranties. The Pledgor
represents and warrants to the Pledgee that: (a) All shares of Pledged Stock
are fully paid, duly and properly issued, nonassessable and owned by the
Pledgor free and clear of any lien or encumbrance of any kind whatsoever,
excepting those herein granted to the Pledgee, and the Pledged Stock
constitutes all of the outstanding securities of any class or kind of Borrower.
(b) No effective financing statement or other
instrument similar in effect covering all or any part of the Pledged Collateral
is on file in any recording office.
(c) The pledge of the Pledged Collateral pursuant
to this Agreement creates a valid and perfected first priority security
interest in the Pledged Collateral, securing the payment of the Liabilities,
and all filing and other actions necessary or desirable to perfect and protect
such security interest have been duly made or taken.
(d) No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for (i) the pledge by the
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<PAGE> 6
Pledgor of the Pledged Collateral pursuant to this Agreement, the grant by the
Pledgor of the assignment or security interest granted hereby or the execution,
delivery or performance of this Agreement by the Pledgor, (ii) the perfection
of or exercise by the Pledgee of its rights and remedies provided for in this
Agreement, or (iii) the exercise by the Pledgee of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with the disposition of the Pledged Stock by laws affecting the offering and
sale of securities generally).
(e) The Pledgor has full right, power and
authority to enter into this Agreement and to grant the security interest in
the Pledged Collateral made hereby, and this Agreement constitutes the legal,
valid and binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms, except as the enforceability thereof may be (i)
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally, and (ii) subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
11. Indemnity and Expenses. (a) The Pledgor agrees to
and hereby indemnifies the Pledgee from and against any and all claims,
damages, losses, liabilities and expenses arising out of, or in connection
with, or resulting from, this Agreement (including, without limitation,
enforcement of this Agreement) except such as are caused by or result from the
willful misconduct or gross negligence of the Pledgee.
(b) The Pledgor agrees promptly upon the Pledgee's
demand to pay or reimburse the Pledgee for all expenses (including, without
limitation, reasonable fees and disbursements of counsel) incurred by the
Pledgee in connection with (i) the administration of this Agreement and any
modification or amendment to or waiver of any provision of this Agreement, (ii)
the custody or preservation of the Pledged Collateral, (iii) any actual or
attempted sale or exchange of, or any enforcement, collection, compromise or
settlement respecting, the Pledged Collateral or any other property or money
held hereunder, any other action taken by the Pledgee hereunder whether
directly or as attorney-in- fact pursuant to the power of attorney herein
conferred, (iv) the failure by the Pledgor to perform or observe any of the
provisions hereof or (v) any action taken by the Pledgee pursuant to this
Agreement. All such expenses shall be deemed a part of the Liabilities for all
purposes of this Agreement and the Pledgee may apply the Pledged Collateral or
any other property or money held hereunder to payment of or reimbursement for
such expenses after notice and demand to the Pledgor.
12. Pledgee May Perform. If the Pledgor fails to perform
any agreement contained herein, the Pledgee may, but shall not be obligated to,
perform, or cause performance of, such agreement, and the expenses of the
Pledgee incurred in connection therewith shall be payable by the Pledgor.
13. Waivers and Amendment. The rights and remedies
given hereby are in addition to all others however arising, but it is not
intended that any right or remedy be exercised in any jurisdiction in which
such exercise would be prohibited by law. No action, failure to act or
knowledge of the Pledgee shall be deemed to constitute a waiver of any power,
right or remedy hereunder, nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other power, right
or remedy. Any right or power of the
- 6 -
<PAGE> 7
Pledgee hereunder respecting the Pledged Collateral and any other property or
money held hereunder may at the option of the Pledgee be exercised as to all or
any part of the same and the term the "Pledged Collateral" wherever used
herein, unless the context clearly requires otherwise, shall be deemed to mean
(and shall be read as) "the Pledged Collateral and any other property or money
held hereunder or any part thereof." This Agreement shall not be amended nor
shall any right hereunder be deemed waived except by a written agreement
expressly setting forth the amendment or waiver and signed by the Pledgor.
14. Continuing Security Interest; Assignments of Secured Debt.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until released in
accordance herewith, (ii) be binding upon the Pledgor, and the Pledgor's
successors and assigns, and (iii) inure, together with the rights and remedies
of the Pledgee hereunder, to the benefit of the Pledgee, its successors and
assigns. Without limiting the generality of the foregoing clause (iii), the
Pledgee may assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement to any other person or entity, and such other
person or entity shall thereupon become vested with all the benefits in respect
hereof granted to the Pledgee herein; the Pledgee shall, however, retain all of
its rights and powers with respect to any part of the Pledged Collateral not
transferred. Any agent or nominee of the Pledgee shall have the benefit of
this Agreement as if named herein and may exercise all the rights and powers
given to the Pledgee hereunder.
15. GOVERNING LAW; SUITS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PLEDGOR AND THE PLEDGEE HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, NOTWITHSTANDING
ITS CONFLICTS OF LAW PRINCIPLES AS TO INTERPRETATION, ENFORCEMENT, VALIDITY,
CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, BUT EXCLUDING PERFECTION OF
THE SECURITY INTERESTS IN THE COLLATERAL, WHICH SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION. THE PLEDGOR HEREBY
IRREVOCABLY (I) CONSENTS THAT ANY SUIT, ACTION OR LEGAL PROCEEDING ARISING OUT
OF OR RELATED IN ANY WAY TO THIS AGREEMENT SHALL, IF THE PLEDGEE SO ELECTS, BE
BROUGHT AND ENFORCED IN COURTS HAVING SITUS IN THE CITY OF CHICAGO, ILLINOIS
AND (II) WAIVES ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH SUIT, ACTION
OR PROCEEDING COMMENCED IN ANY SUCH COURT AND ANY CLAIM THAT SUCH SUIT, ACTION
OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PLEDGOR AGREES
THAT SERVICE OF PROCESS IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PLEDGOR AND ITS COUNSEL AS PROVIDED UNDER SECTION
16 HEREOF, AND SUCH SERVICE SHALL BE DEEMED TO BE COMPLETE FIVE (5) BUSINESS
DAYS AFTER THE SAME HAS BEEN DEPOSITED IN THE U.S. MAILS AS AFORESAID.
16. Notices. All notices hereunder shall be in writing (except
only as otherwise provided in Section 13) and shall be conclusively deemed to
have been received and shall be effective (a) on the day on which delivered if
delivered personally (including delivery by courier
- 7 -
<PAGE> 8
providing evidence of delivery), or transmitted by telex or telegram or
telecopier with transmission confirmed, or (b) five days after the date on
which the same is deposited in the United States mail (certified or registered
if required under Section 15), with postage prepaid and properly addressed, and
any notice mailed shall be addressed:
(a) in the case of the Pledgor, to:
The American Materials & Technologies
Corporation
5635 Soledad Mountain Road
La Jolla, CA 92037
Attn: Paul Pendorf, President
and Chief Executive Officer
with a copy to:
Foley, Hoag, & Eliot LLP
1 Post Office Square
Boston, MA 02101
Attn: David Broadwin, Esq.
(b) in the case of the Pledgee, to:
LaSalle Business Credit, Inc.
477 Madison Avenue
New York, New York 10022
Attn: District Credit Manager
with a copy to:
Lowenthal, Landau, Fischer & Bring, P.C.
250 Park Avenue
New York, New York 10177
Attn.: Robert Stein, Esq.
or at such other address as the party giving such notice shall have been
advised of in writing for such purpose by the party to whom or to which the
same is directed.
17. WAIVERS OF JURY TRIAL AND CONSEQUENTIAL DAMAGES.
THE PLEDGOR AND, BY ITS ACCEPTANCE HEREOF, THE PLEDGEE HEREBY WAIVE TRIAL BY
JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, THE PLEDGED COLLATERAL, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT HERETO.
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<PAGE> 9
NEITHER THE PLEDGOR OR THE PLEDGEE, NOR ANY EMPLOYEE, AGENT OR
ATTORNEY OF EITHER OF THEM, SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL
DAMAGES ARISING FROM ANY BREACH OF CONTRACT, TORT OR OTHER WRONG RELATING TO
THIS AGREEMENT OR THE ESTABLISHMENT, ADMINISTRATION OR COLLECTION OF THE
LIABILITIES, EXCEPT FOR BAD FAITH.
18. Severability: Entire Agreement. (a) If any provision of this
Agreement shall be invalid, illegal, or unenforceable in any jurisdiction, the
validity, legality or enforceability of any such provision in any other
jurisdiction shall not be affected or impaired, and to the extent any provision
in held invalid, illegal or unenforceable, then such provision shall be deemed
severable from, and shall in no way affect the validity or enforceability of
the remaining provisions of, this Agreement.
(b) This Agreement constitutes the entire agreement
of the Pledgor, and replaces any other or prior agreements or undertakings,
with respect to the subject matter hereof, and there are no other agreements or
undertakings, oral or written, respecting such subject matter which are
intended to have any force or effect after the execution hereof.
19. Miscellaneous. This Agreement shall be binding upon
and shall inure to the benefit of the Pledgor and the Pledgee and their
respective successors, trustees, and assigns. Section headings used herein are
for convenience only and shall not affect the meaning or construction of any of
the provisions hereof.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to
be executed by its duly authorized officer as of the day and year first above
written.
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
By: /s/ WILLIAM A. TIMMERMAN
------------------------------
Name: William A. Timmerman
Title: CFO
- 9 -
<PAGE> 10
The undersigned hereby agrees to recognize all of the rights
granted to the Pledgee under the foregoing Agreement and to take all actions
necessary to effectuate said rights and the purposes of the Agreement
including, without limitation, performance of any acts requested by the Pledgee
pursuant to the terms thereof.
Date: April 7, 1997 GRAFALLOY CORPORATION
By: /s/ WILLIAM A. TIMMERMAN
-----------------------------
Name: William A. Timmerman
Title: Director
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<PAGE> 11
SCHEDULE A
Designation and Number of
shares of capital stock owned by Pledgor
Shares issued to Pledgor by Borrower: 100 shares of Common Stock, $.01
par value per share, certificate
number 2.
- 11 -
<PAGE> 1
Exhibit 10.40
EXECUTION COPY
REVOLVING NOTE
EXECUTED AS OF THE 7TH DAY OF APRIL, 1997 $3,000,000.00
FOR VALUE RECEIVED, GRAFALLOY CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of LASALLE BUSINESS CREDIT, INC.
("LaSalle"), at its offices located at 135 South LaSalle Street, Chicago,
Illinois 60603, the principal sum of THREE MILLION DOLLARS ($3,000,000) on the
last day of the Term (the "Maturity Date"), or so much of such principal sum as
shall be outstanding and unpaid on the Maturity Date, all as more fully set
forth in the Loan and Security Agreement dated as of April 7, 1997 (as the same
may be amended, modified, restated on supplemented from time to time, the "Loan
Agreement") by and between the Borrower and LaSalle, as Lender. Terms which
are capitalized in this Revolving Note ("Revolving Note") but are not otherwise
defined shall have the meanings ascribed to them in the Loan Agreement. The
Borrower further promises to (a) make mandatory prepayments of principal of
this Revolving Note as set forth in paragraphs 2(a) and 12(c) of the Loan
Agreement and (c) pay interest on the outstanding principal amount hereof on
the dates and at the rate provided in the Loan Agreement from the date hereof
until payment in full hereof. This Revolving Note is referred to in and was
delivered pursuant to the Loan Agreement and is subject to and entitled to all
provisions and benefits thereof.
The Borrower hereby authorizes LaSalle to charge any account of the
Borrower for all sums payable hereunder as and when such sums become due. If
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon at the rate specified during such extension.
Credit shall be given for payments made in the manner and at the times provided
in the Loan Agreement. It is the intent of the parties that the rate of
interest and other charges to the Borrower under this Revolving Note shall be
lawful; therefore, if for any reason the interest or other charges payable
hereunder are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrower.
The principal and all accrued interest hereunder may be prepaid by
the Borrower, in part or in full, at any time; provided, however, that if the
Borrower prepays all of the Liabilities prior to the end of the Term, the
Borrower may be required to pay a prepayment fee as provided in paragraph 12(b)
of the Loan Agreement.
The Borrower waives the benefit of any law that would otherwise
restrict or limit LaSalle in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any
time hereafter, owing from LaSalle to the Borrower.
<PAGE> 2
The Borrower, any other party liable with respect to the
Liabilities and any and all endorsers and accommodation parties, and each one
of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of LaSalle's rights hereunder.
The loans evidenced hereby have been and will be made and this
Revolving Note has been delivered at Chicago, Illinois. THIS REVOLVING NOTE
SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS
AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL
OTHER RESPECTS, INCLUDING WITHOUT LIMITATION THE LEGALITY OF THE INTEREST RATE
AND OTHER CHARGES, and shall be binding upon the Borrower and each of the
Borrower's legal representatives, successors and assigns. If this Revolving
Note contains any blanks when executed by the Borrower, LaSalle is hereby
authorized, without notice to the Borrower, to complete any such blanks
according to the terms upon which the loan or loans were granted. Wherever
possible, each provision of this Revolving Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Revolving Note shall be prohibited by or be invalid under such law,
such provision shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of
this Revolving Note.
To induce LaSalle to make the loans evidenced by this Revolving
Note, the Borrower (i) irrevocably agrees that, subject to LaSalle's sole and
absolute election, all actions arising directly or indirectly as a result of or
in consequence of this Revolving Note or any other agreement with LaSalle, or
the Collateral, shall be instituted and litigated only in courts having situs
in the City of Chicago, Illinois, (ii) hereby consents to the exclusive
jurisdiction and venue of any State or Federal Court located and having its
situs in said city, and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS REVOLVING
NOTE, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE
BORROWER OR LASALLE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF
OR RELATES TO THE RELATIONSHIP BETWEEN THE BORROWER AND LASALLE, waives
personal service of any and all process, and consents that all such service of
process may be made by certified mail, return receipt requested, directed to
the Borrower at the address indicated in LaSalle's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid.
IN WITNESS WHEREOF, the Borrower has executed this Revolving Note on
the date above set forth.
GRAFALLOY CORPORATION
By: /s/ WILLIAM A. TIMMERMAN
-----------------------------
Name: Wm. Timmerman
Title: Director
2
<PAGE> 1
Exhibit 10.41
EXECUTION COPY
TERM NOTE
EXECUTED AS OF THE 7TH DAY OF APRIL, 1997 $300,000.00
FOR VALUE RECEIVED, GRAFALLOY CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of LASALLE BUSINESS CREDIT, INC.
("LaSalle"), at its offices located at 135 South LaSalle Street, Chicago,
Illinois 60603, the principal sum of THREE HUNDRED THOUSAND DOLLARS ($300,000)
on the last day of the Term (the "Maturity Date"), or so much of such principal
sum as shall be outstanding and unpaid on the Maturity Date, all as more fully
set forth in the Loan and Security Agreement dated as of April 7, 1997 (as the
same may be amended, modified, restated on supplemented from time to time, the
"Loan Agreement") by and between the Borrower and LaSalle, as Lender. Terms
which are capitalized in this Term Note ("Term Note") but are not otherwise
defined shall have the meanings ascribed to them in the Loan Agreement. The
Borrower further promises to (a) pay the principal amount of this Term Note in
installments as set forth in paragraph 3(a) of the Loan Agreement, (b) make
mandatory prepayments of principal of this Term Note as set forth in paragraphs
3(a) and 3(b) and 12(c) of the Loan Agreement and (c) pay interest on the
outstanding principal amount hereof on the dates and at the rate provided in
the Loan Agreement from the date hereof until payment in full hereof. This
Term Note is referred to in and was delivered pursuant to the Loan Agreement
and is subject to and entitled to all provisions and benefits thereof.
The Borrower hereby authorizes LaSalle to charge any account of the
Borrower for all sums payable hereunder as and when such sums become due. If
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon at the rate specified during such extension.
Credit shall be given for payments made in the manner and at the times provided
in the Loan Agreement. It is the intent of the parties that the rate of
interest and other charges to the Borrower under this Term Note shall be
lawful; therefore, if for any reason the interest or other charges payable
hereunder are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrower.
The principal and all accrued interest hereunder may be prepaid by
the Borrower, in part or in full, at any time; provided, however, that if the
Borrower prepays all of the Liabilities prior to the end of the Term, the
Borrower may be required to pay a prepayment fee as provided in paragraph 12(b)
of the Loan Agreement.
The Borrower waives the benefit of any law that would otherwise
restrict or limit LaSalle in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any
time hereafter, owing from LaSalle to the Borrower.
<PAGE> 2
The Borrower, any other party liable with respect to the
Liabilities and any and all endorsers and accommodation parties, and each one
of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of LaSalle's rights hereunder.
The loan evidenced hereby has been made and this Term Note has been
delivered at Chicago, Illinois. THIS TERM NOTE SHALL BE GOVERNED AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS,
INCLUDING WITHOUT LIMITATION THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES, and shall be binding upon the Borrower and each of the Borrower's
legal representatives, successors and assigns. If this Term Note contains any
blanks when executed by the Borrower, LaSalle is hereby authorized, without
Notice to Borrower to complete any such blanks according to the terms upon
which the loan or loans were granted. Wherever possible, each provision of
this Term Note shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Term Note shall be
prohibited by or be invalid under such law, such provision shall be severable,
and be ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Term Note.
To induce LaSalle to make the loan evidenced by this Term Note, the
Borrower (i) irrevocably agrees that, subject to LaSalle's sole and absolute
election, all actions arising directly or indirectly as a result of or in
consequence of this Term Note or any other agreement with LaSalle, or the
Collateral, shall be instituted and litigated only in courts having situs in
the City of Chicago, Illinois, (ii) hereby consents to the exclusive
jurisdiction and venue of any State or Federal Court located and having its
situs in said city, and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS TERM NOTE,
THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE BORROWER
OR LASALLE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR
RELATES TO THE RELATIONSHIP BETWEEN THE BORROWER AND LASALLE, waives personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Borrower at the address indicated in LaSalle's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid.
IN WITNESS WHEREOF, the Borrower has executed this Term Note on the
date above set forth.
GRAFALLOY CORPORATION
By: /s/ William A. Timmerman
-------------------------------
Name: Wm. Timmerman
Title: Director
2
<PAGE> 1
Exhibit 10.42
EXECUTION COPY
CAPEX NOTE
EXECUTED AS OF THE 7TH DAY OF APRIL, 1997 $700,000.00
FOR VALUE RECEIVED, GRAFALLOY CORPORATION, a Delaware corporation
(the "Borrower"), promises to pay to the order of LASALLE BUSINESS CREDIT, INC.
("LaSalle"), at its offices located at 135 South LaSalle Street, Chicago,
Illinois 60603, the principal sum of SEVEN HUNDRED THOUSAND DOLLARS ($700,000)
on the last day of the Term (the "Maturity Date"), or so much of such principal
sum as shall be outstanding and unpaid on the Maturity Date, all as more fully
set forth in the Loan and Security Agreement dated as of April 7, 1997 (as the
same may be amended, modified, restated on supplemented from time to time, the
"Loan Agreement") by and between the Borrower and LaSalle, as Lender. Terms
which are capitalized in this Capex Note ("Capex Note") but are not otherwise
defined shall have the meanings ascribed to them in the Loan Agreement. The
Borrower further promises to (a) pay the principal amount of this Capex Note in
installments as set forth in paragraph 3(c) of the Loan Agreement, (b) make
mandatory prepayments of principal of this Capex Note as set forth in
paragraphs 3(c) and 3(e) and 12(c) of the Loan Agreement and (c) pay interest
on the outstanding principal amount hereof on the dates and at the rate
provided in the Loan Agreement from the date hereof until payment in full
hereof. This Capex Note is referred to in and was delivered pursuant to the
Loan Agreement and is subject to and entitled to all provisions and benefits
thereof.
The Borrower hereby authorizes LaSalle to charge any account of the
Borrower for all sums payable hereunder as and when such sums become due. If
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon at the rate specified during such extension.
Credit shall be given for payments made in the manner and at the times provided
in the Loan Agreement. It is the intent of the parties that the rate of
interest and other charges to the Borrower under this Capex Note shall be
lawful; therefore, if for any reason the interest or other charges payable
hereunder are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrower.
The principal and all accrued interest hereunder may be prepaid by
the Borrower, in part or in full, at any time; provided, however, that if the
Borrower prepays all of the Liabilities prior to the end of the Term, the
Borrower may be required to pay a prepayment fee as provided in paragraph 12(b)
of the Loan Agreement.
The Borrower waives the benefit of any law that would otherwise
restrict or limit LaSalle in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any
time hereafter, owing from LaSalle to the Borrower.
<PAGE> 2
The Borrower, any other party liable with respect to the
Liabilities and any and all endorsers and accommodation parties, and each one
of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of LaSalle's rights hereunder.
The loans evidenced hereby have been and will be made and this
Capex Note has been delivered at Chicago, Illinois. THIS CAPEX NOTE SHALL BE
GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING WITHOUT LIMITATION THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, and shall be binding upon the Borrower and each of the
Borrower's legal representatives, successors and assigns. If this Capex Note
contains any blanks when executed by the Borrower, LaSalle is hereby
authorized, without notice to the Borrower, to complete any such blanks
according to the terms upon which the loan or loans were granted. Wherever
possible, each provision of this Capex Note shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Capex Note shall be prohibited by or be invalid under such law, such provision
shall be severable, and be ineffective to the extent of such prohibition or
invalidity, without invalidating the remaining provisions of this Capex Note.
To induce LaSalle to make the loans evidenced by this Capex Note,
the Borrower (i) irrevocably agrees that, subject to LaSalle's sole and
absolute election, all actions arising directly or indirectly as a result of or
in consequence of this Capex Note or any other agreement with LaSalle, or the
Collateral, shall be instituted and litigated only in courts having situs in
the City of Chicago, Illinois, (ii) hereby consents to the exclusive
jurisdiction and venue of any State or Federal Court located and having its
situs in said city, and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS CAPEX NOTE,
THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE BORROWER
OR LASALLE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR
RELATES TO THE RELATIONSHIP BETWEEN THE BORROWER AND LASALLE, waives personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Borrower at the address indicated in LaSalle's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid.
IN WITNESS WHEREOF, the Borrower has executed this Capex Note on
the date above set forth.
GRAFALLOY CORPORATION
By: /s/ William A. Timmerman
-----------------------------
Name: Wm. Timmerman
Title: Director
2
<PAGE> 1
Exhibit 10.43
EXECUTION COPY
CONTINUING UNCONDITIONAL GUARANTY
WHEREAS, Grafalloy Corporation, a Delaware corporation (the
"Borrower") has entered into a Loan and Security Agreement dated as of April 7,
1997 (as amended from time to time, the "Loan Agreement") with LaSalle Business
Credit, Inc ("LaSalle") pursuant to which LaSalle has made or may, from time to
time hereafter, make loans and advances to or extend other financial
accommodations to Borrower; and
WHEREAS, in connection with such loans and advances to be made
under the Loan Agreement, LaSalle has required that The American Materials &
Technologies Corporation, a Delaware corporation, as guarantor hereunder (the
"Guarantor") execute and deliver this Guaranty to LaSalle as a condition to the
extension and continuation of credit by LaSalle; and
WHEREAS, the Guarantor owns beneficially and of record all of
the issued and outstanding shares of capital stock of the Borrower; and
WHEREAS, the extension and continued extension of credit, as
aforesaid, by LaSalle is necessary and desirable to the conduct and operation of
the business of each of the Borrower and the Guarantor.
NOW, THEREFORE, for value received and in consideration of any
loan, advance, or financial accommodation of any kind whatsoever heretofore, now
or hereafter made, given or granted to the Borrower by LaSalle (including,
without limitation, the Loans as defined in, and made or to be made by LaSalle
to the Borrower pursuant to the Loan Agreement), the undersigned unconditionally
guaranties (i) the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times thereafter, of
all of the indebtedness, liabilities and obligations of every kind and nature of
the Borrower, to LaSalle or any parent, affiliate or subsidiary of LaSalle (the
term "LaSalle" as used hereafter shall include such parents, affiliates and
subsidiaries), howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, joint or several, now or hereafter existing,
or due or to become due, and howsoever owned, held or acquired by LaSalle,
whether through discount, overdraft, purchase, direct loan or as collateral or
otherwise, including without limitation all obligations and liabilities of the
Borrower, to LaSalle under the Loan Agreement and (ii) the prompt, full and
faithful discharge by the Borrower of each and every term, condition, agreement,
representation and warranty now or hereafter made by the Borrower to LaSalle
(all such indebtedness, liabilities and obligations being hereinafter referred
to as the "Borrower's Liabilities"). Guarantor further agrees to pay all costs
and expenses, including, without limitation, all court costs and reasonable
attorneys' and paralegals' fees paid or incurred by LaSalle in endeavoring to
collect all or any part of the Borrower's Liabilities from, or in prosecuting
any action against, Guarantor or any other guarantor of all or any part of the
Borrower's Liabilities. All amounts payable by Guarantor under this Guaranty
shall be payable upon demand by LaSalle.
<PAGE> 2
Notwithstanding any provision of this Guaranty to the
contrary, it is intended that this Guaranty, and any liens and security
interests granted by Guarantor to secure this Guaranty, not constitute a
"Fraudulent Conveyance" (as defined below). Consequently, Guarantor agrees that
if the Guaranty, or any liens or security interests securing this Guaranty,
would, but for the application of this sentence, constitute a Fraudulent
Conveyance, this Guaranty and each such lien and security interest shall be
valid and enforceable only to the maximum extent that would not cause this
Guaranty or such lien or security interest to constitute a Fraudulent
Conveyance, and this Guaranty shall automatically be deemed to have been amended
accordingly at all relevant times. For purposes hereof, "Fraudulent Conveyance"
means a fraudulent conveyance under Section 548 of the "Bankruptcy Code" (as
hereinafter defined) or a fraudulent conveyance or fraudulent transfer under the
provisions of any applicable fraudulent conveyance or fraudulent transfer law or
similar law of any state, nation or other governmental unit, as in effect from
time to time.
Guarantor hereby agrees that, except as hereinafter provided,
its obligations under this Guaranty shall be unconditional, irrespective of (i)
the validity or enforceability of the Borrower's Liabilities or any part
thereof, or of any promissory note or other document evidencing all or any part
of the Borrower's Liabilities, (ii) the absence of any attempt to collect the
Borrower's Liabilities from the Borrower, or any other guarantor or other action
to enforce the same, (iii) the waiver or consent by LaSalle with respect to any
provision of any instrument evidencing the Borrower's Liabilities, or any part
thereof, or any other agreement heretofore, now or hereafter executed by the
Borrower and delivered to LaSalle, (iv) failure by LaSalle to take any steps to
perfect and maintain its security interest in, or to preserve its rights to, any
security or collateral for the Borrower's Liabilities, (v) the institution of
any proceeding under Chapter 11 of Title 11 of the United States Code (11 U.S.C.
ss.101 et seq.), as amended (the "Bankruptcy Code"), or any similar proceeding,
by or against the Borrower, or LaSalle's election in any such proceeding of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by the Borrower, as debtor-in-possession, under
Section 364 of the Bankruptcy Code, (vii) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of LaSalle's claim(s) for repayment
of the Borrower's Liabilities, or (viii) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership or
bankruptcy of the Borrower, protest or notice with respect to the Borrower's
Liabilities and all demands whatsoever, and covenants that this Guaranty will
not be discharged, except by complete performance of the obligations and
liabilities contained herein. Upon any default by the Borrower, as provided in
any instrument or document evidencing all or any part of the Borrower's
Liabilities, including without limitation the Loan Agreement, LaSalle may, at
its sole election, proceed directly and at once, without notice, against
Guarantor to collect and recover the full amount or any portion of the
Borrower's Liabilities, without first proceeding against the Borrower or any
other person, firm, or corporation, or against any security or collateral for
the Borrower's Liabilities.
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<PAGE> 3
LaSalle is hereby authorized, without notice or demand and
without affecting the liability of Guarantor hereunder, to at any time and from
time to time (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to the Borrower's Liabilities or otherwise
modify, amend or change the terms of any promissory note or other agreement,
document or instrument now or hereafter executed by the Borrower and delivered
to LaSalle; (ii) accept partial payments on the Borrower's Liabilities; (iii)
take and hold security or collateral for the payment of the Borrower's
Liabilities guaranteed hereby, or for the payment of this Guaranty, or for the
payment of any other guaranties of the Borrower's Liabilities or other
liabilities of the Borrower, and exchange, enforce, waive and release any such
security or collateral; (iv) apply such security or collateral and direct the
order or manner of sale thereof as in its sole discretion it may determine; and
(v) settle, release, compromise, collect or otherwise liquidate the Borrower's
Liabilities and any security or collateral therefor in any manner, without
affecting or impairing the obligations of Guarantor hereunder. LaSalle shall
have the exclusive right to determine the time and manner of application of any
payments or credits, whether received from the Borrower, or any other source,
and such determination shall be binding on Guarantor. All such payments and
credits may be applied, reversed and reapplied, in whole or in part, to any of
the Borrower's Liabilities as LaSalle shall determine in its sole discretion
without affecting the validity or enforceability of this Guaranty.
To secure the payment and performance of Guarantor's
obligations and liabilities contained herein, Guarantor grants to LaSalle a
security interest in all property of Guarantor delivered concurrently herewith
or which is now, or at any time hereafter in transit to, or in the possession,
custody or control of LaSalle, and all proceeds of all such property. Guarantor
agrees that LaSalle shall have the rights and remedies of a secured party under
the Uniform Commercial Code of Illinois, as now existing or hereafter amended,
with respect to all of the aforesaid property, including without limitation
thereof, the right to sell or otherwise dispose of any or all of such property
and apply the proceeds of such sale to the payment of the Borrower's
Liabilities. In addition, at any time after maturity of the Borrower's
Liabilities by reason of acceleration or otherwise, LaSalle may, in its sole
discretion, without notice to Guarantor and regardless of the acceptance of any
security or collateral for the payment hereof, appropriate and apply toward the
payment of the Borrower's Liabilities (i) any indebtedness due or to become due
from LaSalle to Guarantor, and (ii) any moneys, credits or other property
belonging to Guarantor, at any time held by or coming into the possession of
LaSalle whether for deposit or otherwise.
Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and any and all endorsers
and/or other guarantors of any instrument or document evidencing all or any part
of the Borrower's Liabilities and of all other circumstances bearing upon the
risk of nonpayment of the Borrower's Liabilities or any part thereof that
diligent inquiry would reveal and Guarantor hereby agrees that LaSalle shall
have no duty to advise Guarantor of information known to LaSalle regarding such
condition or any such circumstances or to undertake any investigation not a part
of its regular business routine. If LaSalle, in its sole discretion, undertakes
at any time or from time to time to provide any such information to any
Guarantor, LaSalle shall be under no obligation to update any such information
or to provide any such information to Guarantor on any subsequent occasion.
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<PAGE> 4
Guarantor consents and agrees that LaSalle shall be under no
obligation to marshall any assets in favor of Guarantor or against or in payment
of any or all of the Borrower's Liabilities. Guarantor further agrees that, to
the extent that the Borrower makes a payment or payments to LaSalle, or LaSalle
receives any proceeds of collateral, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to the Borrower, its estate, trustee,
receiver or any other party, including, without limitation, Guarantor, under any
bankruptcy law, state or federal law, common law or equitable theory, then to
the extent of such payment or repayment, the Borrower's Liabilities or the part
thereof which has been paid, reduced or satisfied by such amount, and
Guarantor's obligations hereunder with respect to such portion of the Borrower's
Liabilities, shall be reinstated and continued in full force and effect as of
the date such initial payment, reduction or satisfaction occurred.
Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of the
Borrower's Liabilities, or against any of the Borrower's properties, whether
arising by reason of any payment by Guarantor to LaSalle pursuant to the
provisions hereof, or otherwise, shall be subordinate and subject in right of
payment to the prior payment, in full, of all of the Borrower's Liabilities.
LaSalle may, without notice to anyone, sell or assign the
Borrower's Liabilities or any part thereof, or grant participations therein, and
in any such event each and every immediate or remote assignee or holder of, or
participant in, all or any of the Borrower's Liabilities shall have the right to
enforce this Guaranty, by suit or otherwise for the benefit of such assignee,
holder, or participant, as fully as if herein by name specifically given such
right, but LaSalle shall have an unimpaired right, prior and superior to that of
any such assignee, holder or participant, to enforce this Guaranty for the
benefit of LaSalle, as to any part of the Borrower's Liabilities retained by
LaSalle.
This Guaranty shall be binding upon Guarantor and upon the
successors (including without limitation, any receiver, trustee or debtor in
possession of or for Guarantor) of Guarantor and shall inure to the benefit of
LaSalle and its successors and assigns. The Guarantor represents and warrants
that it has all necessary corporate authority to execute and deliver this
Guaranty and to perform its obligations hereunder.
This Guaranty shall continue in full force and effect, and
LaSalle shall be entitled to make loans and advances and extend financial
accommodations to the Borrower, on the faith hereof until such time as LaSalle
has, in writing, notified Guarantor that all of the Borrower's Liabilities have
been paid in full and discharged and the Loan Agreement has been terminated or
until LaSalle has actually received written notice from the Guarantor of the
discontinuance of this Guaranty or written notice of the dissolution of the
Guarantor. In case of any discontinuance by dissolution of the Guarantor (a
"Termination Event"), this Guaranty and the obligations of Guarantor and its
successors or assigns shall remain in full force and effect with respect to all
of the Borrower's Liabilities incurred prior to the receipt by LaSalle of
written notice of the Termination Event.
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<PAGE> 5
Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS.
Guarantor irrevocably agrees that, subject to LaSalle's sole
and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. GUARANTOR HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID CITY AND STATE. Guarantor hereby irrevocably appoints and
designates the Secretary of State of Illinois, whose address is Springfield,
Illinois (or any other person having and maintaining a place of business in such
state whom Guarantor may from time to time hereafter designate upon ten (10)
days written notice to LaSalle and who LaSalle has agreed in its sole discretion
in writing is satisfactory and who has executed an agreement in form and
substance satisfactory to LaSalle agreeing to act as such attorney and agent),
as Guarantor's true and lawful attorney and duly authorized agent for acceptance
of service of legal process. Guarantor agrees that service of such process upon
such person shall constitute personal service of such process upon Guarantor.
GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF
ANY LITIGATION BROUGHT AGAINST GUARANTOR BY LASALLE IN ACCORDANCE WITH THIS
PARAGRAPH.
GUARANTOR HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY
TO THIS GUARANTY.
IN WITNESS WHEREOF, this Guaranty has been duly executed by
the undersigned as of this 7th day of April, 1997.
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
By: /s/ William A. Timmerman
-------------------------------
Name: Wm. Timmerman
Title: CFO
-5-
<PAGE> 1
Exhibit 10.44
EXECUTION COPY
FIRST AMENDMENT dated as of April 7, 1997 (the "Amendment") to LOAN
AND SECURITY AGREEMENT dated as of December 19, 1995 (the "Loan Agreement")
between CULVER CITY COMPOSITES CORPORATION, a Delaware corporation, formerly
known as AMT Sub, Inc. (the "Borrower") and LASALLE BUSINESS CREDIT, INC.
("LaSalle"). Terms which are capitalized in this Amendment and not otherwise
defined shall have the meanings ascribed to such terms in the Loan Agreement.
WHEREAS, the Borrower has requested that LaSalle consider (i)
increasing the amount of the Total Credit Facility by extending a new term loan
to the Borrower and establishing a subline of credit available to the Borrower
for the purpose of financing its capital expenditure needs and (ii) modifying
the Loan Agreement so as to decrease the interest rate margin applicable to the
Loans; and
WHEREAS, LaSalle has consented to the foregoing request, on the
terms and subject to the fulfillment of the conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION ONE. NEW TERM LOAN.
(a) On the First Amendment Closing Date, LaSalle agrees
to make a term loan to the Borrower in the original principal amount of Seven
Hundred Twenty-Seven Thousand Dollars ($727,000). Principal payable on account
of such term loan shall be payable in successive monthly installments (i)
payable on the first day of each month, the first of which installments shall
be due and payable on the first day of May, 1997 and (ii) based on an
amortization schedule consisting of sixty (60) equal and level payments.
Proceeds of such term loan shall be disbursed first by application thereof
against the unpaid principal balance of the Term Loan outstanding as of the
First Amendment Closing Date and the aggregate amount of accrued and unpaid
interest on the Term Loan through and including the day immediately preceding
the First Amendment Closing Date and second by wire transfer of the remaining
proceeds as the Borrower shall direct LaSalle in writing.
(b) The Borrower warrants and represents that (i) as of
April 7, 1997, the outstanding principal balance of the Term Loan made by
LaSalle to it on the Closing Date equals $410,666.56 and (ii) the aggregate
amount of accrued and unpaid interest on the Term Loan through and including
April 6, 1997 equals $684.42.
(c) The Borrower agrees to execute and deliver to
LaSalle, concurrently with the execution and delivery of this Amendment, a
promissory note in the form of Exhibit A to this Amendment. Such promissory
note shall (i) be in the amount of $727,000, and (ii) evidence the aggregate
amount of the original principal indebtedness owing by the Borrower to LaSalle
<PAGE> 2
pursuant to the term loan made by LaSalle to it on the First Amendment Closing
Date. Upon the execution and delivery by the Borrower to the Lender of this
Amendment, such promissory note and any other documents or instruments to be
executed or delivered in connection with this Amendment, and the consummation
of the transactions contemplated to occur hereunder, the Lender shall return
the Term Note to the Borrower, marked "cancelled and paid in full."
SECTION TWO. AMENDMENT. Upon the fulfillment of the conditions
set forth in Section Four hereof, the Loan Agreement shall be and is hereby
amended as follows:
(a) PARAGRAPH 1. DEFINITIONS. Paragraph 1(a) is amended
by (i) adding thereto in the appropriate alphabetical order each of the terms
"Agreement", "Amendment", "Asset Purchase Agreement", "Capex Facility
Termination Date", "Capex Loans", "Capex Loan Commitment", "Capex Note", "First
Amendment Closing Date", "First Amendment Term Loan", "Grafalloy", and the
definitions thereof, as hereinafter provided and (ii) deleting the definitions
of the following terms in their entireties and substituting the definitions set
forth below in lieu thereof: "Loan" or "Loans", "Note", "Term Note", and "Total
Credit Facility":
"Agreement" means the Loan Agreement (including all Schedules and
Exhibits annexed thereto) dated as of December 19, 1995, between LaSalle
Business Credit, Inc. and AMT Sub Inc., now known as Culver City Composites
Corporation, as the same may hereafter be further amended, modified,
supplemented or restated from time to time.
"Amendment" means the First Amendment to the Agreement, dated as of
April 7, 1997.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated
as of February 27, 1997, among AMT, Grafalloy, as purchaser, Grafalloy, L.P., a
Delaware limited partnership, as seller, and Grafalloy, Inc.
"Capex Facility Termination Date" has the meaning specified in
paragraph 2(d) hereof.
"Capex Loans" has the meaning specified in paragraph 2(d) hereof.
"Capex Loan Commitment" shall mean the sum of $1,000,000.
"Capex Note" shall mean the promissory note in the original
principal amount of $1,000,000 executed by the Borrower to the order of
LaSalle, dated as of the First Amendment Closing Date.
"First Amendment Closing Date" means the date upon which the last
of the events, the fulfillment of each of which is a condition precedent to the
effectiveness of the Amendment, shall have occurred.
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<PAGE> 3
"First Amendment Term Loan" shall have the meaning specified in
paragraph 3(a) hereof.
"Grafalloy" shall mean Grafalloy Corporation, formally known as
Grafalloy Acquisition Corporation, a Delaware corporation, 100% of the issued
and outstanding shares of capital stock of which is owned beneficially and of
record by AMT.
"Loan or "Loans" shall mean any and all Revolving Loans, the Term
Loan, the First Amendment Term Loan and the Capex Loans made by LaSalle
pursuant to paragraphs 2, 3 and 4 hereof and all other loans, advances and
financial accommodations made by LaSalle to or on behalf of the Borrower
hereunder.
"Note" shall mean the Revolving Note, the Term Note and the Capex
Note.
"Term Note" shall mean, initially, the promissory note payable to
the order of LaSalle and dated as of the Closing Date, evidencing the Term Loan
made by LaSalle to the Borrower on the Closing Date, and on and after the First
Amendment Closing Date, shall mean the promissory note payable to the order of
LaSalle and dated as of the First Amendment Closing Date, evidencing the
original principal amount of the First Amendment Term Loan.
"Total Credit Facility" means the sum of $6,167,000.
(b) PARAGRAPHS 2(d) AND 2(e). New paragraphs 2(d) and
2(e) are added to read as follows:
"(d) Commencing on the First Amendment Closing
Date and through that date which is one year from the date that
LaSalle shall have made the first Capex Loan (the "Capex Facility
Termination Date"), LaSalle shall make revolving loans and advances
for capital expenditures ("Capex Loans") to the Borrower as the
Borrower shall from time to time request in accordance with the
terms of paragraph 2(e) hereof, the proceeds of which Capex Loans
will be used to finance the Borrower's purchase of Equipment to be
used in the Borrower's business. The aggregate unpaid principal
amount of all Capex Loans outstanding at any one time made to the
Borrower shall not exceed the Capex Loan Commitment. If at any
time the outstanding principal balance of the Capex Loans made to
the Borrower exceeds the Capex Loan Commitment, then, without the
necessity of a demand by LaSalle, the Borrower shall pay to
LaSalle, within not more than two (2) Business Days' after
LaSalle's notice to the Borrower of such excess, such amount as may
be necessary to eliminate such excess, and LaSalle shall apply such
payment against the outstanding principal balance of the Capex
Loans. Principal payable on account of all Capex Loans outstanding
as of the Capex Facility Termination Date shall be payable in
successive monthly installments (i) payable on the first day of
each month, the first of which installments shall be due and
payable on the first day of the month immediately following the
Capex Facility Termination Date and (ii) based on an amortization
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<PAGE> 4
schedule consisting of sixty (60) equal and level principal
payments; provided, however, that the entire unpaid principal
balance of the Capex Loans shall be due and payable in full upon
the expiration of the Original Term of this Agreement, and provided
further that in the event that the Original Term of this Agreement
is initially or subsequently renewed in accordance with paragraph
12 hereof, then the final installment due and payable upon the
expiration of the Original Term or upon the expiration of the
Renewal Term, as the case may be, shall not be due and instead,
commencing on the day such final installment would otherwise have
been due and payable, the Borrower shall pay during the ensuing
Renewal Term eleven (11) monthly installments, each of which shall
be in an amount equal to the amount of each installment of
principal of the Capex Loans payable during the Original Term,
followed by a final installment payable upon the expiration of the
Renewal Term, in an amount equal to the then unpaid principal
balance of the Capex Loans. Notwithstanding anything hereinabove
to the contrary, the entire unpaid principal balance of the Capex
Loans, and any accrued and unpaid interest thereon, shall be
immediately due and payable upon the earlier to occur of (i) the
last day of the Original Term or the last day of any Renewal Term,
if either LaSalle or the Borrower elects to terminate this
Agreement as of the end of any such term and (ii) the acceleration
of the Liabilities pursuant to paragraph 17 of this Agreement."
"(e) Each Capex Loan to the Borrower shall be in a
principal amount not greater than eighty-five percent (85%) of the
purchase price of the Equipment to be purchased with the proceeds
of such Capex Loan; provided, however, that for purposes of
calculation thereof, the purchase price of such Equipment shall not
include the related costs of freight, shipping and installation and
sales or other related taxes. If the Borrower sells, transfers or
otherwise disposes of any Equipment purchased with the proceeds of
a Capex Loan, the Borrower shall pay to LaSalle a sum equal to the
net cash proceeds received by the Borrower from any such
disposition (unless otherwise specifically provided herein or
otherwise agreed to by LaSalle), as and when received by the
Borrower and as a mandatory prepayment of all Capex Loans, to be
applied (i) if received prior to the Capex Facility Termination
Date, pro rata against the then unpaid principal balance of each
such Capex Loan then outstanding and (ii) if received on or after
the Capex Facility Termination Date, pro rata against the last
maturing installments of principal of each such Capex Loan then
outstanding, in the inverse order of such installments (or, at
LaSalle's option, such of the other Liabilities of the Borrower as
LaSalle may elect)."
(c) PARAGRAPH 3. Paragraph 3 is amended in its entirety
to read as follows:
"3. TERM LOANS. (a) On the Closing Date,
LaSalle shall make a term loan to the Borrower in the original
principal amount of Five Hundred Sixty Thousand Dollars ($560,000)
(the "Term Loan"). On the First Amendment Closing Date, LaSalle
shall make a term loan to the Borrower in the original
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<PAGE> 5
principal amount of Seven Hundred Twenty-Seven Thousand Dollars
($727,000) (the "First Amendment Term Loan"), the initial portion
of the proceeds of which shall be used to pay and satisfy in full
the unpaid principal balance of, and all accrued and unpaid
interest on, the Term Loan. Principal payable on account of the
Term Loan and the First Amendment Term Loan shall be payable in
successive monthly installments (i) payable on the first day of
each month, the first of which installments shall be due and
payable, in the case of the Term Loan, on the first day of the
month immediately following the month during which the Closing Date
occurs and in the case of the First Amendment Term Loan, on the
first day of May, 1997 and (ii) based on an amortization schedule
consisting of sixty (60) equal and level principal payments,
provided, however, that the entire unpaid principal balance of the
First Amendment Term Loan shall be due and payable in full upon the
expiration of the Original Term of this Agreement and provided
further that in the event that the Original Term of this Agreement
is initially or subsequently renewed in accordance with paragraph
12 hereof, then the final installment due and payable in respect of
the First Amendment Term Loan upon the expiration of the Original
Term or upon the expiration of the Renewal Term, as the case may
be, shall not be due and instead, commencing on the day such final
installment would otherwise have been due and payable, the Borrower
shall pay during the ensuing Renewal Term eleven (11) monthly
installments, each of which shall be in an amount equal to the sum
of the amount of each installment of principal of the First
Amendment Term Loan payable during the Original Term, followed by a
final installment payable upon the expiration of the Renewal Term,
in an amount equal to the then unpaid principal balance of the
First Amendment Term Loan. Notwithstanding anything hereinabove to
the contrary, the entire unpaid principal balance of the First
Amendment Term Loan, and any accrued and unpaid interest thereon,
shall be immediately due and payable upon the earlier to occur of
(i) the last day of the Original Term or the last day of any
Renewal Term, if either LaSalle or the Borrower elects to terminate
this Agreement as of the end of any such term and (ii) the
acceleration of the Liabilities pursuant to paragraph 17 of this
Agreement. The original principal amount of the First Amendment
Term Loan shall be evidenced by a promissory note payable by the
Borrower to LaSalle and shall be in the form of Exhibit A to the
Amendment."
"(b) If the Borrower sells any Equipment, other
than Equipment purchased with the proceeds of Capex Loans, or if
any of the Collateral is damaged, destroyed or taken by
condemnation, the Borrower shall pay to LaSalle, unless otherwise
specifically provided herein or otherwise agreed to by LaSalle, as
and when received by the Borrower and as a mandatory prepayment the
First Amendment Term Loan, to be applied pro rata against the last
maturing installments of principal thereof, in the inverse order
thereof (or, at LaSalle's option, such of the other Liabilities of
the Borrower as LaSalle may elect), a sum equal to the proceeds
received by the Borrower from (i) such sale or (ii) such
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<PAGE> 6
damage, destruction or condemnation, provided, however, that
without LaSalle's consent, unless and until an Event of Default has
occurred and is continuing:
(i) obsolete or worn out Equipment, other
than Equipment purchased with the proceeds of Capex
Loans, may be sold or otherwise disposed of by the
Borrower and the proceeds thereof may be retained by
the Borrower, so long as LaSalle shall have received
at least five (5) Business Days prior written notice
of any such sale or disposition and the fair market
value of any such Equipment sold or otherwise
disposed of in any single transaction is less than
$50,000, and the fair market value, in the aggregate,
of all such Equipment sold or otherwise disposed of
by the Borrower during any twelve-month period is
less than $100,000; and
(ii) proceeds of Equipment arising from the
damage, destruction or condemnation thereof, may be
retained by the Borrower and used by the Borrower to
repair, restore or replace such Equipment, so long as
(A) LaSalle shall have received prompt written notice
of any such damage, destruction or condemnation as
well as prompt written notice of the Borrower's
receipt of any such proceeds and (B) the fair market
value of any such Equipment damaged, destroyed or
condemned in any single incident is less than
$100,000, and the fair market value, in the
aggregate, of all such Equipment damaged, destroyed
or condemned during any twelve-month period is less
than $100,000."
(d) PARAGRAPH 5(a). Paragraph 5(a) is amended in its
entirety to read as follows:
"(a) Rates of Interest. Interest accrued on the
Loans shall be due on the earliest of (i) the first day of each
month (for the immediately preceding month), computed through the
last calendar day of the preceding month, (ii) the occurrence of an
Event of Default in consequence of which LaSalle elects to
accelerate the maturity and payment of the Liabilities, or (iii)
termination of this Agreement pursuant to paragraph 12 hereof.
From the Closing Date through and including the day preceding the
First Amendment Closing Date, interest shall accrue on the
principal amount of the Revolving Loans outstanding at the end of
each day and the unpaid principal balance of the Term Loan
outstanding at the end of each day, in each case at a fluctuating
rate per annum equal to one and one-half per cent (1 1/2%) above
the Prime Rate. On and after the First Amendment Closing Date,
interest shall accrue on the principal amount of the Revolving
Loans outstanding at the end of each day, and on the unpaid
principal balance of the First Amendment Term Loan and each Capex
Loan outstanding at the end of each day at a fluctuating rate per
annum equal to one per cent (1%) above the Prime Rate. The rate of
interest payable on all Loans shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate,
effective as of the opening of business on the day that any such
change in the
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<PAGE> 7
Prime Rate occurs. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal amount
of all Loans shall bear interest on demand at a rate per annum
equal to the rate of interest then in effect hereunder plus two
percent (2%)."
(e) PARAGRAPHS 6(a) AND (b). Paragraphs 6(a) and (b) are
amended in their entirety to read as follows:
"(a) Loan Requests. A request for a Revolving Loan
shall be made or shall be deemed to be made and a request for a
Capex Loan shall be made, each in the following manner: (i) the
Borrower shall give LaSalle, in the case of a Revolving Loan, same
day notice, no later than 11:30 A.M. (Chicago time) of such day, of
its intention to borrow such Revolving Loan and, in the case of a
Capex Loan, at least two (2) Business Days notice of its intention
to borrow a Capex Loan, in which notice the Borrower shall specify
the amount of the proposed borrowing and the proposed borrowing
date, and in the case of a notice for a Capex Loan, a statement of
the purpose for the Capex Loan together with documentation
substantiating the purchase or commitment to purchase Equipment or
the making of or the commitment to make the capital expenditures,
which documentation shall be satisfactory to LaSalle in its sole
discretion; provided, however, that no such request may be made at
a time when there exists a Default or an Event of Default; and (ii)
the becoming due of any amount required to be paid under this
Agreement or any Note, whether on account of interest or for any
other Liability, shall be deemed irrevocably to be a request for a
Revolving Loan on the due date thereof in the amount required to
pay such interest or other Liability. As an accommodation to the
Borrower, LaSalle may permit telephone requests for Revolving Loans
and electronic transmittal of instructions, authorizations,
agreements or reports to LaSalle by the Borrower. Unless the
Borrower specifically directs LaSalle in writing not to accept or
act upon telephonic or electronic communications from the Borrower,
LaSalle shall have no liability to the Borrower for any loss or
damage suffered by the Borrower as a result of LaSalle's honoring
of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent
to LaSalle by the Borrower and LaSalle shall have no duty to verify
the origin of any such communication or the authority of the Person
sending it. Each notice of borrowing shall be irrevocable by and
binding on the Borrower. Any Capex Loan shall be in the minimum
amount of $50,000."
"(b) Disbursement. The Borrower hereby irrevocably
authorizes LaSalle to disburse the proceeds of each Revolving Loan
requested, or deemed to be requested, by the Borrower and each
Capex Loan requested by the Borrower, as follows: (i) the proceeds
of each Revolving Loan and each Capex Loan requested under
paragraph 6(a)(i) shall be disbursed by LaSalle in lawful money of
the United States of America in immediately available funds, in the
case of the initial
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<PAGE> 8
borrowing, in accordance with the terms of the written disbursement
letter from the Borrower, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed
upon by the Borrower and LaSalle from time to time, or elsewhere if
pursuant to a written direction from the Borrower; and (ii) the
proceeds of each Revolving Loan deemed to have been requested under
paragraph 6(a)(ii) shall be disbursed by LaSalle by way of direct
payment of the relevant interest or other Liability."
(f) PARAGRAPH 12(c). New Paragraph 12(c) is added to
read as follows:
"(c) Borrower shall make a mandatory prepayment of
the unpaid principal balance of all Loans, together with a payment
of the accrued and unpaid interest thereon, which prepayment and
payment shall be due and payable on the date, if any, of prepayment
by Grafalloy of the obligations owing by it to LaSalle, pursuant to
paragraph 12(b) of the Loan and Security Agreement between them
dated as of April 7, 1997."
(g) PARAGRAPH 14(b). Clause (ii) of Paragraph 14(b) is
amended in its entirety to read as follows:
"(ii) no later than ninety (90) days after the end of
each of the Parent's fiscal years, annual financial statements of
the Parent and its Subsidiaries on a consolidated basis certified
by independent certified public accountants selected by the Parent
and reasonably satisfactory to LaSalle, together with such
accountants' "management letter;".
(h) PARAGRAPH 14(j). Paragraph 14(j) is amended to read
in its entirety as follows:
"(j) Except for the Merger, Borrower shall not
enter into any merger or consolidation, or sell, lease or otherwise
dispose of all or substantially all of its assets; provided,
however, that Borrower may merge with Grafalloy, upon the prior
written consent of LaSalle, which consent shall not be unreasonably
withheld or delayed. Without the prior written consent of LaSalle,
which consent shall not be unreasonably withheld or delayed,
Borrower shall not create any new Subsidiary or Affiliate or issue
any shares of, or warrants or other rights to receive or purchase
any shares of, any class of its stock. Borrower shall not enter
into any transaction outside the ordinary course of Borrower's
business".
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<PAGE> 9
(i) PARAGRAPH 14(l). Paragraph 14(l) is amended to read
in its entirety as follows:
"(l) Borrower shall not make any investment in, or
make any loan, advance, capital contribution or transfer of
property to, any Person, whether in cash, securities or other
property of any kind, other than direct obligations of the United
States or interest-bearing demand or time deposits insured by the
Federal Deposit Insurance Corporation or similar federal insurance
program or publicly traded obligations of LaSalle, ABN AMRO Bank
N.V. or any other subsidiary of ABN AMRO Bank N.V. except that
Borrower may make loans or advances in the ordinary course of
business to Grafalloy, so long as such loans and advances are made
at arm's length and on fair and reasonable terms";
(j) PARAGRAPH 14(m). Paragraph 14(m) is amended to read
in its entirety as follows:
"(m) Except on account of the Merger or to effectuate
the change of corporate name permitted under Paragraph 13(m)(iii)
hereof, without prior written notice to LaSalle, Borrower shall not
make any material change in its organizational documents; provided,
however, that Borrower shall not make any change to its
organizational documents that would adversely affect, or would be
reasonably likely to adversely affect, LaSalle. Borrower shall not
change its fiscal year;".
(k) PARAGRAPH 14(o)(iv). Paragraph 14(o)(iv) is amended
in its entirety to read as follows:
"(iv) Capital Expenditures. Other than Capital
Expenditures the acquisition of which shall have been financed,
Borrower shall not make any Capital Expenditures of an aggregate
amount of more than $600,000 during any fiscal year."
(l) SCHEDULES. Exhibit A, the Schedule of Equipment,
Schedules 1(a), 13(i), 13(q) and 13(s) are amended to read in their entirety as
set forth in Exhibit A, the Schedule of Equipment, Schedules 1(a), 13(i), 13(q)
and 13(s) hereto, respectively.
SECTION THREE. CONDITIONS PRECEDENT. This Amendment shall become
effective on the date when all of the following conditions, the fulfillment of
each of which is a condition precedent to the effectiveness of this Amendment,
shall have occurred or shall have been waived in writing by LaSalle.
(a) LaSalle shall have received fully executed
counterparts or originals of each of the following agreements, instruments,
opinions, certificates and documents:
(i) the Term Note, in the form of Exhibit A
hereto;
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<PAGE> 10
(ii) the Capex Note, in the form of Exhibit B
hereto;
(iii) the Reaffirmation of Guaranty of AMT in the
form of Exhibit C hereto;
(iv) the opinion of the law firm of Foley, Hoag &
Eliot LLP in form and substance satisfactory
to LaSalle;
(v) a Certificate of the Secretary of the
Borrower (A) relating to the adoption of the
resolutions of the Borrower's Board of
Directors approving the First Amendment and
the other documents executed or delivered in
connection therewith and (B) certifying that
no amendments have been made to the
Borrower's Certificate of Incorporation as
amended, and the Borrower's, by-laws, as
amended, since prior to December 19, 1995 and
further certifying the names and incumbency
of officers, and the names and validity of
signatures of such officers;
(vi) updated Certificates of Good Standing, as to
the Borrower, from Secretaries of State of
California and Delaware; and
(vii) a notice of borrowing from the Borrower,
together with a completed schedule of payees
and wiring instructions.
(b) Upon the effectiveness of this Amendment, all
representations and warranties set forth in the Loan Agreement (except for such
inducing representations and warranties that were only required to be true and
correct as of a prior date) shall be true and correct in all material respects
on and as of the effective date hereof, and no Default or Event of Default
shall have occurred and be continuing.
(c) All corporate and legal proceedings and all documents
and instruments executed or delivered in connection with this Amendment shall
be satisfactory in form and substance to LaSalle and its counsel, and LaSalle
and its counsel shall have received all information and copies of all documents
which LaSalle and its counsel may have requested in connection herewith and the
matters contemplated hereunder, such documents, when requested by them, to be
certified by appropriate corporate authorities.
(d) There shall be no action, suit or proceeding pending
or threatened against the Borrower before any court (including any bankruptcy
court), arbitrator or governmental or administrative body or agency which
challenges or relates to the consummation of this Amendment or the other
transactions contemplated herein.
(e) LaSalle shall have received such further agreements,
consents, instruments and documents as may be necessary or proper in the
reasonable opinion of LaSalle and its counsel to carry out the provisions and
purposes of this Amendment.
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<PAGE> 11
SECTION FOUR. REPRESENTATIONS AND WARRANTIES. The Borrower
hereby represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) to LaSalle that:
(a) The Borrower has the corporate power, authority and
legal right to execute, deliver and perform this Amendment, and the
instruments, agreements, documents and transactions contemplated hereby, and
has taken all actions necessary to authorize the execution, delivery and
performance of this Amendment, and the instruments, agreements, documents and
transactions contemplated hereby;
(b) No consent of any Person (including, without
limitation, stockholders or creditors of the Borrower, as the case may be)
other than LaSalle, and no consent, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required in connection with the execution,
delivery, performance, validity or enforceability of this Amendment, and the
instruments, agreements, documents and transactions contemplated hereby;
(c) This Amendment has been duly executed and delivered
on behalf of the Borrower by its duly authorized officer, and constitutes the
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms;
(d) The Borrower is not in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which it is a party
or by which it may be bound. Neither the execution and delivery of this
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will (i) violate any law or regulation,
or (ii) result in or cause a violation by the Borrower of any order or decree
of any court or government instrumentality, or (iii) conflict with, or result
in the breach of, or constitute a default under, any indenture, mortgage, deed
of trust, agreement or other instrument to which such Borrower is a party or by
which it may be bound, or (iv) result in the creation or imposition of any
lien, charge, or encumbrance upon any of the property of the Borrower, except
in favor of LaSalle, to secure the Liabilities, or (v) violate any provision of
the Certificate of Incorporation, By-Laws or any capital stock provisions of
the Borrower;
(e) No Event of Default has occurred and is continuing;
(f) Since the date of LaSalle's receipt of the Borrower's
financial statements for the period ended November 30, 1996, no change or event
has occurred which has had or could reasonably be expected to have a Material
Adverse Effect; and
(g) The recitals contained in this Amendment are true and
correct in all respects.
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<PAGE> 12
SECTION FIVE. GENERAL PROVISIONS.
(a) Except as herein expressly amended, the Loan
Agreement and all other agreements, documents, instruments and certificates
executed in connection therewith, are ratified and confirmed in all respects
and shall remain in full force and effect in accordance with their respective
terms.
(b) All references in the Other Agreements to the Loan Agreement
shall mean the Loan Agreement as amended as of the effective date hereof, and
as amended hereby and as hereafter amended, supplemented or modified from time
to time. From and after the date hereof, all references in the Loan Agreement
to "this Agreement," "hereof," "herein," or similar terms, shall mean and refer
to the Loan Agreement as amended by this Amendment.
(c) This Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be an original and all which shall constitute one and the same agreement.
(d) This Amendment shall be governed and controlled by
the laws of the State of Illinois without reference to its choice of law
principles.
IN WITNESS WHEREOF, the Borrower and LaSalle have caused this
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
LASALLE BUSINESS CREDIT, INC.
/s/ Mary E. Nixon-Moore
--------------------------------
Name: Mary Ellen Nixon-Moore
Title: Vice President
CULVER CITY COMPOSITES
CORPORATION, formerly known
as AMT Sub, Inc.
By: /s/ William A. Timmerman
----------------------------
Name: Wm. Timmerman
Title: Director
-12-
<PAGE> 1
Exhibit 10.45
EXECUTION COPY
TERM NOTE
EXECUTED AS OF THE 7TH DAY OF APRIL, 1997 $727,000.00
FOR VALUE RECEIVED, CULVER CITY COMPOSITES CORPORATION, a Delaware
corporation, formerly known as AMT Sub, Inc. (the "Borrower"), promises to pay
to the order of LASALLE BUSINESS CREDIT, INC. ("LaSalle"), at its offices
located at 135 South LaSalle Street, Chicago, Illinois 60603, the principal sum
of SEVEN HUNDRED TWENTY-SEVEN THOUSAND DOLLARS ($727,000) on the last day of
the Original Term or, if applicable, the last day of the Renewal Term (each a
"Maturity Date"), or so much of such principal sum as shall be outstanding and
unpaid on the applicable Maturity Date, all as more fully set forth in the Loan
and Security Agreement dated as of December 19, 1995 (as the same may be
amended, modified, restated on supplemented from time to time, the "Loan
Agreement") by and between the Borrower and LaSalle, as Lender. Terms which
are capitalized in this Term Note ("Term Note") but are not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement. The Borrower
further promises to (a) pay the principal amount of this Term Note in
installments as set forth in paragraph 3(a) of the Loan Agreement, (b) make
mandatory prepayments of principal of this Term Note as set forth in paragraphs
3(b) and 12(c) of the Loan Agreement and (c) pay interest on the outstanding
principal amount hereof on the dates and at the rate provided in the Loan
Agreement from the date hereof until payment in full hereof. This Term Note is
referred to in and was delivered pursuant to the Loan Agreement and is subject
to and entitled to all provisions and benefits thereof.
The Borrower hereby authorizes LaSalle to charge any account of the
Borrower for all sums payable hereunder as and when such sums become due. If
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon at the rate specified during such extension.
Credit shall be given for payments made in the manner and at the times provided
in the Loan Agreement. It is the intent of the parties that the rate of
interest and other charges to the Borrower under this Term Note shall be
lawful; therefore, if for any reason the interest or other charges payable
hereunder are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrower.
The principal and all accrued interest hereunder may be prepaid by
the Borrower, in part or in full, at any time; provided, however, that if the
Borrower prepays all of the Liabilities prior to the end of the Original Term,
the Borrower may be required to pay a prepayment fee as provided in paragraph
12(b) of the Loan Agreement.
The Borrower waives the benefit of any law that would otherwise
restrict or limit LaSalle in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any
time hereafter, owing from LaSalle to the Borrower.
<PAGE> 2
The Borrower, any other party liable with respect to the
Liabilities and any and all endorsers and accommodation parties, and each one
of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of LaSalle's rights hereunder.
The loan evidenced hereby has been made and this Term Note has been
delivered at Chicago, Illinois. THIS TERM NOTE SHALL BE GOVERNED AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS,
INCLUDING WITHOUT LIMITATION THE LEGALITY OF THE INTEREST RATE AND OTHER
CHARGES, and shall be binding upon the Borrower and each of the Borrower's
legal representatives, successors and assigns. If this Term Note contains any
blanks when executed by the Borrower, LaSalle is hereby authorized, without
notice to the Borrower, to complete any such blanks according to the terms upon
which the loan or loans were granted. Wherever possible, each provision of
this Term Note shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Term Note shall be
prohibited by or be invalid under such law, such provision shall be severable,
and be ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Term Note.
To induce LaSalle to make the loan evidenced by this Term Note, the
Borrower (i) irrevocably agrees that, subject to LaSalle's sole and absolute
election, all actions arising directly or indirectly as a result of or in
consequence of this Term Note or any other agreement with LaSalle, or the
Collateral, shall be instituted and litigated only in courts having situs in
the City of Chicago, Illinois, (ii) hereby consents to the exclusive
jurisdiction and venue of any State or Federal Court located and having its
situs in said city, and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS TERM NOTE,
THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE BORROWER
OR LASALLE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR
RELATES TO THE RELATIONSHIP BETWEEN THE BORROWER AND LASALLE, waives personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Borrower at the address indicated in LaSalle's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid.
IN WITNESS WHEREOF, the Borrower has executed this Term Note on the
date above set forth.
CULVER CITY COMPOSITES
CORPORATION, formerly known
as AMT Sub, Inc.
By: /s/ WILLIAM A. TIMMERMAN
-----------------------------
Name: Wm. Timmerman
Title: Director
2
<PAGE> 1
EXHIBIT 10.46
EXECUTION COPY
CAPEX NOTE
EXECUTED AS OF THE 7TH DAY OF APRIL, 1997 $1,000,000.00
FOR VALUE RECEIVED, CULVER CITY COMPOSITES CORPORATION, a Delaware
corporation, formerly known as AMT Sub, Inc. (the "Borrower"), promises to pay
to the order of LASALLE BUSINESS CREDIT, INC. ("LaSalle"), at its offices
located at 135 South LaSalle Street, Chicago, Illinois 60603, the principal sum
of ONE MILLION DOLLARS ($1,000,000) on the last day of the Original Term or, if
applicable, the last day of the Renewal Term (each a "Maturity Date"), or so
much of such principal sum as shall be outstanding and unpaid on the applicable
Maturity Date, all as more fully set forth in the Loan and Security Agreement
dated as of December 19, 1995 (as the same may be amended, modified, restated
on supplemented from time to time, the "Loan Agreement") by and between the
Borrower and LaSalle, as Lender. Terms which are capitalized in this Capex
Note ("Capex Note") but are not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement. The Borrower further promises to (a)
pay the principal amount of this Capex Note in installments as set forth in
paragraph 2(d) of the Loan Agreement, (b) make mandatory prepayments of
principal of this Capex Note as set forth in paragraphs 2(e) and 12(c) of the
Loan Agreement and (c) pay interest on the outstanding principal amount hereof
on the dates and at the rate provided in the Loan Agreement from the date
hereof until payment in full hereof. This Capex Note is referred to in and was
delivered pursuant to the Loan Agreement and is subject to and entitled to all
provisions and benefits thereof.
The Borrower hereby authorizes LaSalle to charge any account of the
Borrower for all sums payable hereunder as and when such sums become due. If
payment hereunder becomes due and payable on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business Day, and
interest shall be payable thereon at the rate specified during such extension.
Credit shall be given for payments made in the manner and at the times provided
in the Loan Agreement. It is the intent of the parties that the rate of
interest and other charges to the Borrower under this Capex Note shall be
lawful; therefore, if for any reason the interest or other charges payable
hereunder are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge the
Borrower, then the obligation to pay interest or other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrower.
The principal and all accrued interest hereunder may be prepaid by
the Borrower, in part or in full, at any time; provided, however, that if the
Borrower prepays all of the Liabilities prior to the end of the Original Term,
the Borrower may be required to pay a prepayment fee as provided in paragraph
12(b) of the Loan Agreement.
The Borrower waives the benefit of any law that would otherwise
restrict or limit LaSalle in the exercise of its right, which is hereby
acknowledged, to set-off against the Liabilities, without notice and at any
time hereafter, owing from LaSalle to the Borrower.
<PAGE> 2
The Borrower, any other party liable with respect to the
Liabilities and any and all endorsers and accommodation parties, and each one
of them, if more than one, waives any and all presentment, demand, notice of
dishonor, protest, and all other notices and demands in connection with the
enforcement of LaSalle's rights hereunder.
The loans evidenced hereby have been and will be made and this
Capex Note has been delivered at Chicago, Illinois. THIS CAPEX NOTE SHALL BE
GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING WITHOUT LIMITATION THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, and shall be binding upon the Borrower and each of the
Borrower's legal representatives, successors and assigns. If this Capex Note
contains any blanks when executed by the Borrower, LaSalle is hereby
authorized, without notice to the Borrower, to complete any such blanks
according to the terms upon which the loan or loans were granted. Wherever
possible, each provision of this Capex Note shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Capex Note shall be prohibited by or be invalid under such law, such provision
shall be severable, and be ineffective to the extent of such prohibition or
invalidity, without invalidating the remaining provisions of this Capex Note.
To induce LaSalle to make the loans evidenced by this Capex Note,
the Borrower (i) irrevocably agrees that, subject to LaSalle's sole and
absolute election, all actions arising directly or indirectly as a result of or
in consequence of this Capex Note or any other agreement with LaSalle, or the
Collateral, shall be instituted and litigated only in courts having situs in
the City of Chicago, Illinois, (ii) hereby consents to the exclusive
jurisdiction and venue of any State or Federal Court located and having its
situs in said city, and (iii) waives any objection based on forum
non-conveniens. IN ADDITION, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS CAPEX NOTE,
THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY THE BORROWER
OR LASALLE OR WHICH IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR
RELATES TO THE RELATIONSHIP BETWEEN THE BORROWER AND LASALLE, waives personal
service of any and all process, and consents that all such service of process
may be made by certified mail, return receipt requested, directed to the
Borrower at the address indicated in LaSalle's records; and service so made
shall be complete five (5) days after the same has been deposited in the U.S.
mails as aforesaid.
IN WITNESS WHEREOF, the Borrower has executed this Capex Note on
the date above set forth.
CULVER CITY COMPOSITES
CORPORATION, formerly known
as AMT Sub, Inc.
By: /s/ WILLIAM A. TIMMERMAN
-----------------------------
Name: William A. Timmerman
Title: Director
2
<PAGE> 1
Exhibit 10.47
EXECUTION COPY
LASALLE BUSINESS CREDIT, INC.
135 South LaSalle Street
Chicago, Illinois 60603
As of April 7, 1997
The American Materials &
Technologies Corporation
5635 Soledad Mountain Road
La Jolla, California 92037
Gentlemen:
Reference is made to (a) the Loan and Security
Agreement dated as of December 19, 1995 (the "Loan Agreement") between Culver
City Composites Corporation, a Delaware corporation, formerly known as AMT Sub,
Inc. ("Borrower"), and LaSalle Business Credit, Inc., a Delaware corporation
("LaSalle"), and (b) the Continuing Unconditional Guaranty dated as of December
19, 1995 executed by The American Materials & Technologies Corporation
("Guarantor") in favor of LaSalle (the "Guaranty"). Terms which are
capitalized herein and not otherwise defined shall have the meanings ascribed
to them in the Loan Agreement or the Guaranty.
On or about the date hereof, the Loan Agreement is
being amended in accordance with the terms of the First Amendment thereto,
pursuant to which, among other things, the Total Credit Facility shall increase
to $6,167,000.
By Guarantor's execution of this letter agreement, it
hereby confirms its acknowledgment of and understanding of the foregoing and it
further confirms its agreement that, effective as of the date hereof, the
Guaranty shall be and is hereby amended to provide that all references in the
Guaranty to the "Loan Agreement" shall mean the Loan Agreement, as amended by
the First Amendment and as the Loan Agreement may be further amended, modified,
supplemented or restated from time to time.
This letter agreement shall also confirm Guarantor's
understanding and agreement that by virtue of the increase in the Total Credit
Facility, the amount of the Liabilities and the amount of Guarantor's
contingent liability under the Guaranty for the Liabilities may increase, and
Guarantor hereby consents to such increase in its capacity as guarantor under
the Guaranty.
Guarantor hereby reaffirms all of the terms,
provisions and conditions of the Guaranty, as amended hereby, and confirms that
the Guaranty continues to be in full force and effect and is enforceable
against Guarantor in accordance with its terms. Except to the extent set forth
herein, no other change in any of the terms or conditions of the Guaranty is
intended
<PAGE> 2
The American Materials &
Technologies Corporation
65635 Soledad Mountain Road
La Jolla, California 92037
or implied. Please indicate Guarantor's agreement with the foregoing by
signing this letter in the space indicated below.
Very truly yours,
LASALLE BUSINESS CREDIT, INC.
By: /s/ MARY ELLEN NIXON-MOORE
--------------------------------
Name: Mary Ellen Nixon-Moore
Title: Vice President
Accepted and Agreed to
as of April 7, 1997
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
By: /s/ WILLIAM A. TIMMERMAN
------------------------------
Name: Wm. Timmerman
Title: Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENT OF
OPERATION IN THE COMPANY'S MARCH 31, 1997 FORM 10-QSB FILING AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-01-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 350
<SECURITIES> 0
<RECEIVABLES> 5,458
<ALLOWANCES> 126
<INVENTORY> 3,282
<CURRENT-ASSETS> 9,682
<PP&E> 6,691
<DEPRECIATION> 810
<TOTAL-ASSETS> 23,936
<CURRENT-LIABILITIES> 7,613
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 13,050
<TOTAL-LIABILITY-AND-EQUITY> 23,936
<SALES> 7,152
<TOTAL-REVENUES> 7,152
<CGS> 5,153
<TOTAL-COSTS> 6,879
<OTHER-EXPENSES> (151)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 340
<INCOME-TAX> 66
<INCOME-CONTINUING> 274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
