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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 19, 1999
ZOLTEK COMPANIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20600 43-1311101
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
3101 MCKELVEY ROAD 63044
ST. LOUIS, MISSOURI (Zip Code)
(Address of principal executive offices
Registrant's telephone number, including area code: (314) 291-5110
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 19, 1999, Zoltek Companies, Inc., a Missouri
corporation ("Zoltek"), completed the acquisition of all of the issued
and outstanding share capital (the "Acquisition") of Structural Polymer
(Holdings) Limited, a corporation organized under the laws of England
and Wales ("SP Systems"), pursuant to the terms and conditions of that
certain Stock Purchase Agreement, dated November 19, 1999, by and among
Zoltek and each of the holders of the outstanding share capital of SP
Systems. The aggregate purchase price paid by Zoltek in connection with
the Acquisition was approximately $30 million in cash and an aggregate
of 2.5 million shares of the common stock of Zoltek. The aggregate
purchase price was determined through arms'-length negotiations between
the parties. SP Systems develops, markets and manufactures prepreg
(glass and carbon fiber pre-impregnated with resin) materials, special
bonding and laminating resins, reinforcement fabrics and consumable
materials for composite manufacturing and engineering of composite
structures. Zoltek intends to continue the historical business of SP
Systems.
The funds utilized by Zoltek for completion of the acquisition
were financed pursuant to a $71.0 million credit facility provided by
Mercantile Bank National Association.
On October 1, 1999, Zoltek acquired all of the outstanding
shares of Cape Composites Incorporated, a California corporation
("Cape Composites"). Cape Composites manufactures "carbon fiber
prepreg" (carbon fiber impregnated with resin) composite materials used
in the production of composite products requiring unidirectional
strength and stiffness, such as golf club shafts and other sporting
goods.
On November 9, 1999, Engineering Technology Corporation
("EnTech"), a Missouri corporation which is a wholly owned subsidiary of
Zoltek, acquired substantially all of the assets of Engineering
Technology, Inc., a Utah corporation. Engineering Technology, Inc.
designs, manufactures and sells filament winding equipment.
On November 15, 1999, EnTech acquired all of the outstanding
shares of Composite Machines Company, Inc., a Utah corporation ("CMC"),
and Ramal International, Inc., a Nevada corporation ("Ramal"). CMC and
Ramal design and manufacture filament winding and pultrusion equipment
used in the production of large volume composite parts.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired. No financial
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statements of SP Systems are provided in this Current Report on Form
8-K. Such financial statements will be provided when they become
available, and prior to the expiration of 60 days from the date on which
this Form 8-K must be filed. The acquisitions of the capital stock of
Cape Composites, CMC and Ramal, and the acquisition of substantially all
of the assets of Engineering Technology, Inc. are not considered
"significant" under applicable rules and regulations of the Securities
Exchange Commission either individually or in the aggregate.
(b) Pro forma financial information. No pro forma financial
-------------------------------
information is provided in this Current Report on Form 8-K. Such pro
forma financial information will be provided when it becomes available,
and prior to the expiration of 60 days from the date on which this Form
8-K must be filed.
(c) Exhibits. See Exhibit Index.
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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.
Dated: November 24, 1999
ZOLTEK COMPANIES, INC.
By: /s/ Daniel Greenwell
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Daniel Greenwell, Chief Financial
Officer and Secretary
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EXHIBIT INDEX
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Exhibit No. Description
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2.1 Stock Purchase Agreement, dated November 19, 1999, by and
among Zoltek Companies, Inc. and each of the holders of
the outstanding share capital of Structural Polymer
(Holdings) Limited.
2.2 Registration Rights Agreement, dated November 19, 1999,
by and among Zoltek Companies, Inc. and each of the
holders of the outstanding share capital of Structural
Polymer (Holdings) Limited.
2.3 Credit Agreement, dated as of November 19, 1999, by and
among Zoltek Companies, Inc., Zoltek Corporation, Zoltek
Intermediates Corporation, Zoltek Properties, Inc., Cape
Composites, Incorporated, Engineering Technology Corporation
and Mercantile Bank National Association.
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STOCK PURCHASE AGREEMENT
AMONG
ZOLTEK COMPANIES, INC.
"PURCHASER"
AND
EACH OF THE HOLDERS OF THE CAPITAL STOCK OF
STRUCTURAL POLYMER (HOLDINGS) LIMITED
"SELLERS"
NOVEMBER 19, 1999
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 19th
day of November, 1999, by and among Zoltek Companies, Inc., a
corporation organized under the laws of the State of Missouri
("Purchaser"), and each of the holders of the issued and outstanding
shares of capital stock of Structural Polymer (Holdings) Limited (as
defined below) as set forth on Exhibit A hereto (each a "Seller" and
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collectively, the "Sellers").
R E C I T A L S:
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WHEREAS, on the terms and subject to the conditions of this
Agreement, and subject to the performance by the parties of their
respective obligations under this Agreement, Sellers desire to sell, and
Purchaser desires to purchase, all of the issued and outstanding share
capital of Structural Polymer (Holdings) Limited, a corporation
organized under the laws of England and Wales ("SP Systems"), owned by
the Sellers as set forth on Exhibit A hereto (the "Shares") at the
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Closing (as defined in Section 1.1(b) of this Agreement) for the
Purchase Price described in Article I of this Agreement.
NOW, THEREFORE, Purchaser and Sellers, intending to be legally
bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; MANNER OF PAYMENT
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1.1 Method of Effecting the Purchase and Sale of Shares;
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Closing. The purchase and sale of the Shares shall be effected as
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follows:
(a) At the Closing (as defined in Section 1.1(b) hereof),
the Sellers shall sell to Purchaser, and Purchaser shall purchase from
the Sellers, the Shares, being all of the share capital of SP Systems
which is issued and outstanding, in consideration of the Purchase Price
(as defined in Section 1.2 hereof).
(b) The closing (the "Closing") of the transactions
contemplated hereby shall take place at the offices of Winthrop,
Stimson, Putnam & Roberts, New York, New York, commencing at 10:00 a.m.
on November 19, 1999 (the "Closing Date"), or such other date or time as
may be mutually agreed upon by the parties.
1.2 Purchase Price for the Shares. The aggregate
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consideration to be paid by Purchaser to the Sellers in connection with
the sale of the Shares (the "Purchase Price") shall consist of (i) an
amount in cash equal to Eighteen Million Four Hundred Sixty-One Thousand
Five Hundred Thirty-Eight Pounds Sterling ([Pound Sterling]18,461,538) (the
"Cash Consideration"), which amount shall be paid to the Sellers on the
Closing Date; and (ii) an aggregate of Two Million Five Hundred Thousand
(2,500,000) shares of common stock, $.01 par value (the "Common Stock"),
of Purchaser (the "Stock Consideration").
1.3 Payment of the Purchase Price. At the Closing, Purchaser
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shall pay to each of the Sellers a pro rata portion of the Purchase
Price, determined in accordance with each such Sellers' percentage
ownership of the Shares as set forth beside each Sellers' name on
Exhibit A to this Agreement, as follows:
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(a) Purchaser shall deliver to the Sellers the Cash
Consideration, by wire transfer of immediately available funds to such
account or accounts as shall be designated by the Sellers; and
(b) Purchaser shall deliver to the Sellers certificates
evidencing the Stock Consideration in such names and in such
denominations as shall be specified by the Sellers at least five
business days prior to the Closing Date. The shares of Common Stock
issued to the Sellers pursuant to this Agreement shall bear restrictive
legends and be subject to registration rights as set forth in the
Registration Rights Agreement (as defined below).
1.4 Fractional Shares. Notwithstanding any other provision of
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this Agreement, neither certificates nor scrip for fractional shares of
the Common Stock shall be issued as part of the Stock Consideration
Payment. If any Seller is otherwise entitled to a fraction of a share
of Common Stock, upon request to Purchaser, such Seller shall receive in
lieu thereof cash (without interest) in an amount determined by
multiplying the fractional interest to which such holder would otherwise
have been entitled by the closing price of the Common Stock on the
Nasdaq National Market on the fifth business day prior to the Closing
Date. The Sellers shall not be entitled to dividends, voting rights or
any other rights in respect of any fractional shares.
1.5 Closing of Stock Transfer Books. The stock transfer books
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of SP Systems shall be closed at the end of business on the business day
immediately preceding the Closing Date. In the event of a transfer of
ownership of the Shares which is not registered in the transfer records
prior to the closing of such record books, the payment of the Purchase
Price may be delivered to the transferee of the Shares if the
certificate or certificates evidencing such Shares is presented to
Purchaser at the Closing accompanied by all documents required to
evidence and effect such transfer and all applicable stock transfer
taxes have been paid.
1.6 Anti-Dilution Adjustments. If, during the period from the
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date hereof to the Closing Date, Purchaser shall declare a stock
dividend, or make a distribution in stock upon, or subdivide, split up,
reclassify or combine the Common Stock or declare a dividend or make a
distribution on the Common Stock in any security convertible into Common
Stock or otherwise issues any Common Stock (other than the exercise of
any options outstanding on the date hereof to purchase any such
securities) without consideration or for a consideration per share less
than the then reported price as reported by the Nasdaq National Market
(each, an "Extraordinary Corporate Transaction"), appropriate and
proportional adjustment or adjustments will be made to the Stock
Consideration such that such payment shall result in the issuance of
that number of shares of Common Stock as if the Extraordinary Corporate
Transaction had a record or payment date therefor immediately after the
Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SP SYSTEMS AND SELLERS
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The Sellers represent and warrant to Purchaser as of the date
hereof and as of the Closing Date as follows:
2.1 Organization And Standing; Investments. SP Systems and
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each subsidiary of SP Systems (each a "Subsidiary" and collectively with
SP Systems, the "Companies") is a corporation duly organized, and
validly existing under the laws of its jurisdiction of organization,
which jurisdictions are set forth in the Disclosure Letter. The
Disclosure Letter sets forth each subsidiary of SP Systems and describes
each business enterprise or person in which SP Systems or any of its
subsidiaries holds any equity securities of, or has any investment in or
loans or advances to (other than trade terms extended to customers in
the
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ordinary course of business or employee salary advances in the ordinary
course of business). SP Systems and each Subsidiary has full corporate
power and authority to carry on its business as and where now conducted
and to own or lease and operate its properties at and where now owned or
leased and operated by it. SP Systems and each Subsidiary is duly
qualified to do business and is duly qualified or licensed and in good
standing in every jurisdiction in which the property owned, leased or
operated by it, or the nature of the business conducted by it, makes
such qualification necessary. All jurisdictions in which SP Systems and
each Subsidiary are so qualified are set forth in the Disclosure Letter.
2.2 Capital Stock. The authorized, issued and outstanding
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share capital of SP Systems and each Subsidiary is set out in the
Disclosure Letter. All of the outstanding shares of the Companies are
duly authorized, validly issued, and fully paid, and are non-assessable
and were not issued in violation of preemptive or any other rights of
any person.
2.3 Title to Shares; Investments of SP Systems and Subsidiaries.
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(a) Each Seller owns all of the Shares set forth opposite
such Seller's name on Exhibit A, beneficially and of record free and
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clear of all liens, charges, security interests, adverse claims,
pledges, encumbrances and demands whatsoever. The Shares are sold
pursuant to this Agreement with full title guarantee within the meaning
given to that phrase by Section 3 of the Law of Property (Miscellaneous
Provisions) Act of 1994 and so that the provisions of Sections 6(2) and
6(3) of that Act will not apply to Purchaser.
(b) SP Systems owns all the share capital of each
Subsidiary beneficially and of record as set forth on Exhibit A, free
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and clear of all liens, charges, security interests, adverse claims,
pledges, encumbrances and demands whatsoever.
2.4 Outstanding Options and Warrants. There are no
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subscription rights, options, warrants, rights, puts, calls, commitments
or agreements (respecting issuance, redemption, repurchase, voting or
otherwise) relating to, nor any outstanding securities convertible into,
any shares of capital stock or other equity interest in SP Systems or
any of the Subsidiaries, or into any such convertible securities, and
neither Seller nor any of the Companies have agreed to issue, purchase,
sell or transfer any of same, except as provided in this Agreement.
2.5 Authority; Conflicts; Consents.
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(a) The execution by each Seller of this Agreement and all
other agreements to be entered into by such Seller at or prior to
Closing as contemplated by this Agreement (the "Ancillary Agreements")
shall, as applicable, have been duly authorized and approved by the
Board of Directors of such Seller, and at the Closing no further
corporate or shareholder action will be necessary to make this Agreement
or any Ancillary Agreement valid and binding on such Seller. The
execution, delivery and consummation of this Agreement and the Ancillary
Agreements by such Seller (i) does not now and will not, with the
passage of time, the giving of notice or otherwise, result in a material
violation or breach of, or constitute a material default under, any term
or provision of any indenture, mortgage, deed of trust, lease,
instrument, order, judgment, decree, rule, regulation, law, contract,
agreement or any other restriction to which such Seller or the Companies
are a party or to which any of them or any of their respective assets
are subject or bound at Closing, (ii) will not result in the creation of
any material lien or other charge upon any assets of the Companies, and
(iii) will not result in any acceleration or termination of any loan or
security interest agreement to which such Seller or the Companies are a
party or to which any of them or any of their respective assets are
subject or bound.
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(b) No material approval or consent of any person, firm or
other entity or governmental body is or was required to be obtained by
such Seller for the authorization of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements. Each Seller is authorized to
consummate the transactions contemplated hereby and upon the execution
hereof, this Agreement will constitute the legal, valid and binding
obligation of such Seller enforceable against such Seller in accordance
with its terms.
(c) No material approval or consent of any person, firm or
other entity or governmental body is or was required to be obtained by
the Companies for the authorization of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements. SP Systems and each Seller is
authorized to consummate the transactions contemplated hereby and upon
the execution hereof, this Agreement will constitute the legal, valid
and binding obligation of each Seller enforceable against each Seller in
accordance with its terms.
2.6 Financial Statements.
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(a) Prior to the date hereof, SP Systems has provided
Purchaser with copies of the audited consolidated balance sheets of SP
Systems as of December 31, 1998 and 1997 and the related audited
consolidated statements of income and cash flows of SP Systems for and
as of the years ended December 31, 1996, 1997 and 1998, together with
the independent auditor's reports thereon (the "Audited UK Financials"),
and the unaudited consolidated balance sheet of SP Systems as of
September 30, 1999, and the related unaudited combined statements of
income and cash flows of SP Systems for and as of the periods ended
September 30, 1998 and 1999 (the "Unaudited UK Financials;" and together
with the Audited UK Financials, the "UK GAAP Financial Statements"),
which UK GAAP Financial Statements (i) have been prepared in accordance
with United Kingdom generally accepted accounting principles
consistently applied ("UK GAAP"), except that the unaudited Financial
Statements do not contain all footnotes required by the UK GAAP;
(ii) comply with the provisions of the Companies Act 1985 (a UK statute)
and all other relevant statutes; (iii) make appropriate provision or
reserve for all actual liabilities in accordance with UK GAAP; (iv) make
appropriate provision for or specifically note, in accordance with UK
GAAP, all capital commitments and contingent liabilities in accordance
with UK GAAP; (v) make appropriate provision for all bad and doubtful
debts in accordance with UK GAAP; (vi) (A) with respect to the Audited
UK Financials show a true and fair view of the state of affairs of the
Companies as at the end of the financial year to which they relate and
of the profits or losses of SP Systems for the accounting period ended
on those dates in accordance with UK GAAP and (B) with respect to the
Unaudited UK Financials, fairly present the financial position and cash
flows at the dates and for the periods therein specified in accordance
with UK GAAP; (vii) include any notes and schedules thereto; and
(viii) comply with all Statements of Standard Accounting Practice and
All Financial Reporting Standards applicable to a UK company.
(b) Prior to the date hereof, SP Systems has provided
Purchaser with copies of the audited consolidated balance sheets of SP
Systems as of December 31, 1998 and 1997 and the related audited
consolidated statements of income and cash flows of SP Systems for and
as of the years ended December 31, 1996, 1997 and 1998, together with
the independent auditor's reports thereon (the "Audited US Financials"),
and the unaudited consolidated balance sheet of SP Systems as of
September 30, 1999, and the related unaudited combined statements of
income and cash flows of SP Systems for and as of the periods ended
September 30, 1998 and 1999 (the "Unaudited US Financials," the "Audited
US Financials and the "Unaudited US Financials" are hereinafter
collectively referred to as the "US GAAP Financials" and, together with
the UK GAAP Financial Statements, the "Financial Statements"), which US
GAAP Financial Statements (i) have been prepared in accordance with
United States generally accepted accounting principles consistently
applied ("US GAAP"), except that the unaudited Financial Statements
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do not contain all footnotes required by the US GAAP; (ii) make
appropriate provision or reserve for all actual liabilities in
accordance with US GAAP; (iii) make appropriate provision for or
specifically note, in accordance with US GAAP, all capital commitments
and contingent liabilities in accordance with US GAAP; (iv) make
appropriate provision for all bad and doubtful debts in accordance with
US GAAP; (v) (A) with respect to the Audited US Financials, show a true
and fair view of the state of affairs of the Companies as at the end of
the financial year to which they relate and of the profits or losses of
SP Systems for the accounting period ended on those dates and (B) with
respect to the Unaudited US Financials, fairly present the financial
position and cash flows at the dates and for the periods therein
specified in accordance with US GAAP; and (vi) include any notes and
schedules thereto in accordance with US GAAP.
2.7 Absence of Undisclosed Liabilities. Except to the extent
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included in the September 30, 1999 balance sheet included in the
Financial Statements, none of the Companies are obligated for, nor are
any of their respective assets or properties subject to, any material
liabilities or material adverse claims or obligations, absolute or
contingent, that would be required by UK GAAP to be reflected or
reserved against in the Financial Statements except those incurred in
the ordinary course of business since September 30, 1999, and none of
the Companies is in default with respect to any terms or conditions of
any material liability or obligation.
2.8 Absence of Certain Changes. Since September 30, 1999, the
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businesses of the Companies have been conducted in the ordinary course.
Since such date, other than as a result of general economic or industry
conditions, there has not been any material adverse change in the
business, assets, or liabilities of SP Systems or any Subsidiary taken
in the aggregate. Except as set forth in the Disclosure Letter, since
September 30, 1999, there has not been:
(a) other than in the ordinary course of business
consistent with past practice, any increase made or promised in the
compensation or other remuneration payable (including benefits payable
to employees) or to become payable to any of the employees, agents or
partners involved with the Companies;
(b) any mortgage or pledge of, or any other lien, charge
or encumbrance of any kind created in respect of any of the assets,
tangible or intangible of the Companies other than in the ordinary
course of business;
(c) any sale or transfer of any assets, except for sales
of inventory in the ordinary course of business, or settlement,
cancellation or release of any indebtedness owing to any of the
Companies;
(d) any sale, license, assignment or transfer by SP
Systems or any Subsidiary of any patents, trademarks, trade names or
other similar intangible assets;
(e) any amendments or termination of any material
contract, agreement or license to which any of the Companies is a party
or to which any of the Companies or any of their respective assets are
subject or bound that has or is likely to have a material adverse effect
on the properties, operations, liabilities, earnings or financial
condition of the Companies, taken as a whole;
(f) any legally binding commitment made (through
negotiations or otherwise) or any liability incurred to any labor
organization by any of the Companies;
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(g) except as set forth in the Disclosure Letter, any
payment, declaration or setting aside by SP Systems of dividends or a
return of capital or any distribution by SP Systems of any cash or other
assets in redemption of or as the purchase price for any capital stock
or equity or in discharge or cancellation in whole or in part of any
indebtedness owing (whether in payment of principal, interest or
otherwise) to any affiliate of the Companies;
(h) any discharge or satisfaction by any of the Companies
of any lien, encumbrance, obligation or liability (accrued, absolute,
fixed or contingent), other than those that have been discharged or
satisfied in the ordinary course without acceleration and other than
those incurred and discharged in the ordinary course of business;
(i) except in the ordinary course of business consistent
with past practice, any institution by any of the Companies of a bonus,
stock option, profit-sharing, pension plan or similar arrangement or any
changes in any such existing plans;
(j) any incurrence by any of the Companies (whether
discharged or not) of any obligation or liability (whether accrued,
absolute, fixed or contingent) other than current liabilities incurred,
and obligations entered into, in the ordinary course of business
consistent with past practice; and
(k) so far as Seller is aware any material loss, damage or
destruction of or to the Companies' properties (whether or not covered
by insurance) or any dispute with employees.
2.9 Business Relations. Except as set forth in the Disclosure
------------------
Letter:
(a) none of the Companies is required, in the ordinary
course of business, to provide any bonding or any other financial
security arrangements in connection with any transactions with any
customers or suppliers;
(b) none of the Companies has received any notice of any
material disruption (including, without limitation, delayed deliveries
or allocations by suppliers) in the availability of any materials or
products used in the Companies' businesses and have no reason to believe
that any such disruption will occur;
(c) there are no sole source suppliers of material goods,
equipment or services used by the Companies (other than public
utilities) with respect to which practical alternative sources of supply
are unavailable; and
(d) no single customer of any of the Companies accounted
for greater than 5% of the Companies' consolidated gross revenues for
either the most recently completed fiscal year or the nine-month period
ended October 31, 1999.
2.10 Real Property.
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(a) The Disclosure Letter contains a true and complete
listing of (i) all real property owned by SP Systems or any Subsidiary,
(ii) all real property leases to which SP Systems or any Subsidiary are
parties and (iii) all options, deeds of trust, deeds of declaration,
mortgages pursuant to or in which SP Systems or any Subsidiary has any
interest (collectively, the "Real Property"). SP Systems has delivered
to Purchaser a complete and correct copy of each deed or other
instrument which provide evidence of title to or interest in each
property lease or other interest comprising the Real Property.
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(b) None of the Companies has received written notice of a
breach of any laws and ordinances, or of any covenant, condition,
easement or restriction affecting the Real Property or relating to its
use or occupancy.
(c) With respect to the leased property comprising the
Real Property including all leasehold improvements (collectively, the
"Leased Property"):
(i) all leases relating to Real Property in the
United Kingdom are in the possession and are under the control of SP
Systems and are in writing, and copies of all leases are listed in the
Disclosure Letter and have been delivered to Purchaser or its counsel;
(ii) the rental set forth in each such lease is the
actual rental being paid, and there are no separate agreements or
understandings with respect to the same and the receipt for the payment
of rental due immediately prior to the date of this Agreement is
unqualified;
(iii) none of the Companies has received written
notice that there has been a default by the Companies or any other party
which affects the Leased Property, and the consummation of the
transactions contemplated by this Agreement. Neither SP Systems nor any
Subsidiary will require the consent of any other party to any lease or
agreement relating to the Leased Property to the sale of the Shares to
Purchaser or the consummation of the transactions contemplated by this
Agreement;
(iv) there are no written or oral contracts between
any of the Companies and any third party relating to any claim by such
third party of any right to all or any part of the interest of any of
the Companies in any leasehold estate or otherwise relating to the use
and occupancy by any of the Companies of such estate; and
(v) with respect to Leased Property located in the
United Kingdom, no notices or requests have been served or received
under Section 25 or Section 26 of the Landlord Tenant Act 1954.
2.11 Title to and Condition of Assets Excluding the Real
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Property. The Companies own and possess all right, title and interest
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in and to all the assets excluding the Real Property used in the
respective businesses of the Companies, in each case free and clear of
all liens, charges, security interests, adverse claims, encumbrances,
encroachments, reservations, limitations, servitudes and other title
defects or restrictions of any nature except for (a) encumbrances set
forth in the Disclosure Letter, ((b) encumbrances reflected in the
Financial Statements or created in the ordinary course of business
subsequent to September 30, 1999 and which are not material,
(c) encumbrances of record or otherwise that do not materially interfere
with the present use by the Companies of the property subject thereto or
affected thereby or which otherwise have not had a material adverse
effect on the properties, operations, liabilities, earnings or financial
condition of the Companies, taken as a whole, (d) encumbrances for
taxes, assessments or governmental charges, or landlords' mechanics',
workmen's, materialmen's or similar liens, in each case that are not
delinquent or which are being contested in good faith and (e)
encumbrances incurred in the ordinary course of business. All tangible
assets of any of the Companies are in such corporation's possession or
under its control, and, in the aggregate are in operating condition at
the date hereof, subject to normal wear and tear.
2.12 Taxes.
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(a) Tax Liabilities. The Financial Statements
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adequately and accurately reflect all liabilities of SP Systems, to the
extent required to be reflected in the Financial Statements in
accordance
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with UK GAAP, in respect of any Taxes (as defined below), including
(without limitation) any liability arising from failure to timely file
any Tax return or report or to accurately and adequately report
information therein.
(b) Taxes. As used herein, the term "Taxes" means all
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income, sales, payroll, employment, excise, value-added, property,
franchise, ad valorem or other taxes or charges, including without
limitation, those arising under the Capital Allowances Act of 1990, the
Capital Gains Tax Act of 1979, the Income and Corporation Taxes Act of
1988, the Taxation of Chargeable Gains Act of 1992 and the Value Added
Tax Act of 1994.
(c) Returns, Records And Payments.
-----------------------------
(i) The Companies have maintained complete records
of all taxation matters where required to do so including (but not
limited to) in relation to deductions made and/or accounted for in
relation to National Insurance Graduated Pension Contributions and sums
deducted under the PAYE system.
(ii) All returns, computations and payments which
should be, or should have been, made by the Companies for any taxation
purpose have been made and are on a proper basis and neither them is the
subject of any dispute with any taxation authority.
(iii) The Companies are not and has not at any time
been liable to pay any penalty or interest charged by virtue of the
provisions of the Taxes Management Act or other taxation legislations.
(iv) The Companies are not the subject of any
investigation or discovery by any taxation authority.
(v) All payments made by the Companies to employees,
ex-employees or to any other person which ought to have been made under
deduction of taxation have been so made.
(vi) All payments made by the Companies to employees,
ex-employees or to any other person which ought to have been made under
deduction of taxation have been so made.
(vii) The Companies have duly and properly accounted
to the relevant taxation authority for all taxation deducted where
required to do so.
(viii) The Companies have duly and properly accounted
to the Inland Revenue for all taxation chargeable on benefits provided
for employees and ex-employees of the Companies.
(ix) All National Insurance, and sums payable to the
Inland Revenue under the PAYE system up to the date of this agreement
have been duly and properly paid.
2.13 Indebtedness To Officers, Directors And Shareholders.
----------------------------------------------------
None of the Companies are indebted to any of its shareholders, officers
or directors (or to members of their immediate families or entities in
which such persons have a material financial interest) in any amount
whatsoever other than for salaries payable or for expenses incurred on
behalf of such corporation in the ordinary course of business.
2.14 Organizational Documents. True, accurate and complete
------------------------
copies of the articles of incorporation, memoranda of association,
Bylaws and other organizational documents, as applicable, of
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SP Systems and each Subsidiary, together with all amendments thereto in
effect on the date hereof, have been delivered to Purchaser or its
counsel.
2.15 Statutory Books. SP Systems has furnished or made
---------------
available to Purchaser and its counsel the statutory books of SP Systems
and each Subsidiary and the same are accurate and reflect all
resolutions adopted and all actions taken, authorized or ratified by the
shareholders and directors of SP Systems and each Subsidiary.
2.16 Brokerage and Finder's Fees. None of the Companies or any
---------------------------
affiliate, officer, director or agent of SP Systems or any Subsidiary
has incurred any liability to any broker, finder or agent for any
brokerage fees, finder's fees, or commissions with respect to the
transactions contemplated by this Agreement.
2.17 Accounts Receivable. SP Systems has previously delivered
-------------------
to Purchaser an aging schedule as of September 30, 1999, which is true,
correct and complete as at the close of business on the date to which it
is drawn, of the accounts receivables, both trade and non-trade, of SP
Systems and each Subsidiary as of that date. In the opinion of the
Chief Financial Officer of SP Systems the Financial Statements contain
appropriate provisions for bad and doubtful debts in accordance with UK
GAAP.
2.18 Employment Matters.
------------------
(a) None of the Companies is a party to, participant in,
or bound by, any recognition agreement with a trade union or any
collective bargaining agreement.
(b) The employment by any of the Companies of any person
(whether or not there is a written employment agreement) may be
terminated for any reason whatsoever not inconsistent with current law,
without penalty or liability of any kind other than accrued vacation
pay.
(c) There are no active, pending or threatened
administrative or judicial proceedings under any applicable law relating
to employment or employment discrimination and no employee of any of the
Companies has had their contract terminated in the six months preceding
the date of this Agreement in circumstances likely to lead to a claim in
relation to any of the Companies will be likely to have to make a
payment to such employee and none of the Companies has knowledge of any
such pending or threatened claim.
(d) None of the Companies is involved in any dispute with
any of their officers or employees and, to the knowledge of the
Companies, there are no circumstances which may result in any dispute
involving any of the officers or employees of the Companies nor have
there been any such disputes during the last six months.
(e) Except as set forth in the Disclosure Letter there is
not in existence any contract of employment with any director or
employee of the Companies which cannot be terminated by giving three
months' notice or less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment or statutory
compensation for unfair dismissal).
2.19 No Defaults. None of the Companies is in material default
-----------
(nor, to the knowledge of the Companies, is any such material default
alleged to exist) under terms of any material (i) written or oral
contract, (ii) agreement, (iii) lease, (iv) license, (v) mortgage,
(vi) deed of trust, (vii) note, (viii) guaranty, (ix) instrument or
(x) understanding ((i) through (x) being collectively referred to as the
"Contracts") to which it is a party or to which any of its assets,
business or operations is subject, nor, to the knowledge of
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the Companies, is any condition or event threatened, which, after notice
or the passage of time, or both, would constitute a material default
under any Contract. To the knowledge of the Companies, no such material
default, condition or event exists or is alleged to exist with respect
to the performance of any obligation of any other party to any of such
Contracts.
2.20 Material Contracts.
------------------
(a) The Disclosure Letter contains a copy or a written
summary of each Contract (a true and correct copy has been provided to
Purchaser) to which SP Systems or any Subsidiary is a party or by which
any of their assets, businesses or operations is bound or affected
excluding any Contract that (i) may be cancelled on 30 days' notice or
less without incurring a liability or obligation on the part of SP
Systems or any Subsidiary for such cancellation and that is not material
to the business, operations or condition (financial or otherwise) of SP
Systems or Subsidiary, or (ii) involves or is reasonably expected to
involve the payment of consideration having an aggregate value of less
than (Pound Sterling)50,000.
(b) The Disclosure Letter contains a copy or a written
summary of each Contract (a true and correct copy has been provided to
Purchaser) with a customer of SP Systems or Subsidiary that contains
provisions (i) providing for payment terms to such Corporation or
Subsidiary of 45 days or greater, (ii) permitting the customer to retain
any portion of the purchase price for the products or services to be
provided thereby as security for warranty claims or for any other
purpose, (iii) providing for liquidated or stipulated damages, or
(iv) providing bonding or similar requirements.
2.21 Purchase Orders. The Disclosure Letter contains a true
---------------
and complete list as of September 30, 1999 of all purchase orders under
which SP Systems or any Subsidiary is or will become obligated to pay
any particular vendor an aggregate sum in excess of (Pound Sterling)50,000.
2.22 Litigation. The Disclosure Letter contains details of all
----------
administrative or judicial proceedings to which any of the Companies was
a party at any time within the past two years, is a party or, to the
knowledge of the Companies, to which any of the Companies is threatened
to be made a party, which relate, directly or indirectly, to the
Companies' assets, including, without limitation, proceedings that could
affect title to or interests in the assets. There is no action, suit,
claim, demand, arbitration or other proceeding or investigation,
administrative or judicial, in respect of which written notice has been
received by the Companies or, to the knowledge of the Companies,
threatened against or affecting the Companies or any of their assets,
including, without limitation, any relating to products liability or
warranty, which, if adversely determined or resolved, would have a
material adverse effect on the business or assets of the Companies, or
any provisions of, or the validity of, or rights under, any leases or
other operating agreements, licenses, permits or grants of authority of
the Companies. None of the Companies have received notice that any is
the subject of any governmental investigation and none of the Companies
has received notice that it is subject to, nor is it or has it been in
default with respect to, any order, writ, injunction or decree of any
court, or of any federal, national, state, local or other governmental
department, commission, board, bureau, agency or instrumentality of the
United States, England or otherwise excluding matters of general
application not specific only to the Companies.
2.23 Insurance. The Disclosure Letter contains details of all
---------
the policies of insurance covering the business, properties and assets
of the Companies presently in force (including as to each (i) risk
insured against, (ii) name of carrier, (iii) policy number, (iv) amount
of coverage, (v) amount of premium, (vi) expiration date and (vii) the
property, if any, insured), indicating as to each whether it insures on
an "occurrence" or a "claims made" basis. All of the insurance policies
listed in the Disclosure Letter are in full force and effect and all
premiums, retention amounts and other related expenses due have been
paid, and none of the Companies has received any written notice of
cancellations with respect to any of the
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policies. None of the Companies has been refused any insurance by any
insurance carrier to which it has applied for insurance during the last
two years. To the knowledge of the Companies, there are no
circumstances existing that would enable any insurer to avoid liability
under policies of insurance of the Companies.
2.24 Transactions With Officers, Etc.
-------------------------------
(a) Excluding arrangements contemplated by this Agreement
and the Ancillary Agreements none of the Companies has any interest in
any entity that has any current contractual relationship, oral or
written, or other business relationship with any of the Companies.
(b) The Disclosure Letter contains a true and correct list
of all Contracts to which any of the Companies is a party and to which
any of the officers, directors or shareholders of any of the Companies,
or members of their immediate families or other corporations,
partnerships or other entities in which any of them has a material
interest, is also a party. The Disclosure Letter includes a list of
indebtedness of any such person or entity to any of the Companies.
(c) None of the Companies nor any officer, director or
shareholder of the Companies, nor members of their immediate families or
other corporations, partnerships or other entities in which any of them
has a material interest, has any direct or indirect interest in any
competitor, supplier or customer of the Companies or in any person, firm
or entity from whom or to whom any of the Companies leases any property,
or in any other person, firm or entity with whom any of the Companies
transacts business of any nature.
2.25 Employees. The Disclosure Letter contains a true and
---------
correct list of all employees of SP Systems and each Subsidiary with an
annual salary in excess of (Pound Sterling)50,000, their age, the nature of
their duties and the date and average amount of their last increase in
compensation. Full details of the terms and conditions of employment
including all entitlements to benefits and bonuses of all the officers
or employees of SP Systems and Subsidiary are set out in the Disclosure
Letter. Copies of the contracts of employment of the officers and
directors of SP Systems and each Subsidiary are included in the
Disclosure Letter. The Disclosure Letter also sets forth the names of
any persons with an annual salary in excess of (Pound Sterling)50,000 who
have or may have a right to return to employment with SP Systems or Subsidiary,
and the names of persons who have been offered employment with SP Systems or
Subsidiary.
2.26 Intellectual Property.
---------------------
(a) The Disclosure Letter lists all material trademark and
service mark registrations, copyright registrations, trade names and
patents and applications for any of the foregoing (i) owned by any
member of the Companies or (ii) licensed by any member of the Companies
(except for "off-the-shelf" software and similar property which is
readily available), that, in each case, are necessary to the business or
operations of such member of the Companies as currently conducted. Each
of the Companies owns or has the right to use all Intellectual Property
that is necessary to the business or operations of such member free and
clear of all liens, except permitted liens. No member of the Companies
has infringed upon or misappropriated any intellectual property rights
of third parties, and none of the Sellers or any of the Companies has
received any charge, complaint, claim, demand or notice alleging any
such interference, infringement on or conflict with any Intellectual
Property owned by any of the Companies by any other Person. The Sellers
have furnished or made available to Purchaser complete and correct
copies of all material licenses (other than licenses of standard, "off-
the-shelf" software) under which any of the Companies has Intellectual
Property licensed to it. Each license of Intellectual Property to which
any of the Companies is a party is a valid and binding agreement of such
party thereto and, to the
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knowledge of the Companies, as to each other party thereto, and is in
full force and effect and the terms and enforceability thereof will be
unaffected by the consummation of the transactions contemplated hereby.
None of the Companies nor, to the knowledge of the Companies, any other
party thereto, is in breach or default under any such license (and, to
the knowledge of the Companies, no event has occurred which with notice
or lapse of time would constitute a breach or default) except for such
defaults as, individually and in the aggregate, would not reasonably be
expected to adversely affect the ability of the Companies to conduct the
business of the Companies after the Closing in all material respects as
currently conducted. None of the Companies has granted any royalty-
bearing or exclusive licenses of any Intellectual Property to any other
person. Each of the Companies have taken such actions as are
commercially reasonable to register and maintain (including ensuring
that all payments due in respect thereof are up to date) the
registration of the Intellectual Property with the United States Patent
and Trademark Office, United States Copyright Office or such other
filing offices, domestic or foreign, and each of the Companies has taken
such other actions as are commercially reasonable to ensure full
protection of such Intellectual Property, in each case to the extent
material to the Companies.
For the purposes of this Agreement, "Intellectual
Property" means in each case to the extent necessary to the conduct of
the business or operations of the Companies, (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names,
corporate names and Internet domain names, together with all
translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations
and renewals in connection therewith, (iv) all mask works and all
applications, registrations and renewals in connection therewith,
(v) all trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and market plans and proposals),
(vi) all computer software (including data and related documentation),
(vii) all other similar proprietary rights, and (viii) all copies and
tangible embodiments thereof (in whatever form or medium).
(b) The Companies have conducted an inventory and
assessment of the hardware, software and embedded microcontrollers in
noncomputer equipment (collectively, the "Computer Systems") used by the
Companies in the conduct of their business in order to determine which
parts of the Computer Systems are not Y2K Compliant (as defined below)
and to estimate the cost of rendering such Computer Systems Y2K
Compliant prior to January 1, 2000 or such earlier date on which the
Computer Systems may shut down or may produce incorrect calculations or
otherwise malfunction without becoming totally inoperable. The
Disclosure Letter described all actions taken by the Companies to render
its Computer Systems Y2K Compliant (the "Company Y2K Plan"). The
Companies have taken reasonable steps to determine whether the failure
of any suppliers or customers with which any of the Companies has a
material relationship to be Y2K Compliant would adversely affect the
ability of the Companies to conduct their business as currently
conducted and, assuming the consummation of the Company Y2K Plan, the
occurrence of calendar year 2000 will not cause or will not reasonably
be expected to adversely affect the ability of the Companies to conduct
their business as currently conducted. For purposes of this Agreement:
"Y2K Compliant" means (i) with respect to Date Data (as defined below),
the such data is in proper format and accurate for all dates in the
twentieth and twenty-first centuries, and (ii) with respect to Date-
Sensitive Systems (as defined below), that each such system accurately
processes all Date Data, including for the twentieth and twenty-first
centuries, without loss or any functionality or performance, including,
without limitation, calculating, comparing, sequencing,
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storing and displaying such Date Data (including all leap year
considerations), when used as a stand-alone system or in combination
with other software or hardware; "Date Data" means any data of any kind
that includes date information or which is otherwise derived from,
dependent on or related to date information; and "Date-Sensitive System"
means any software, microcode or hardware system or component, including
any electronic or electronically controlled system or component that
processes any Date Data and that is installed, in development or on
order, for internal or external use, or the provision or operation of
which provides a benefit to customers, vendors, suppliers or any other
party.
2.27 [RESERVED].
----------
2.28 Environmental Matters.
---------------------
(a) Definitions. For purposes of this Section 2.28:
-----------
(i) "Contaminant" means hazardous substances as that
term is defined in the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA"), and any other individual or class of pollutants,
contaminants, toxins, chemicals, substances, wastes or materials in
their solid, liquid or gaseous phase, defined, listed, designated,
regulated, classified or identified under any Environmental Law and
includes asbestos and asbestos-containing materials, petroleum or
petroleum-based products or derivatives thereof, radioactive materials,
energy, flammable explosives and polychlorinated biphenyls all of which
are present in such quantities or forms as are likely to result in
liability under Environmental Laws.
(ii) "Environmental Laws" means all applicable
federal, national, state and local laws, rules, regulations legally
enforceable codes and ordinances, and binding determinations, orders,
permits, licenses, injunctions, writs, decrees or rulings of any
governmental or judicial authority, relating to or governing air
quality, soil quality, water quality, wetlands, solid waste, hazardous
waste, hazardous or toxic substances, pollution or the protection of
public health, human health or the environment.
(iii) "Release" means any release, spill, emission,
leaking, pumping, pouring, emptying, disposing, injection, deposit,
discharge, dispersal, leaching, or migration into any media, whether
soil, surface water, ground water, air or any combination of the
foregoing, or the movement of any Contaminant through any media, and
includes the abandonment or discarding of barrels, containers and other
receptacles containing any Contaminant.
(iv) "Remedial Action" means any action to: (i)
investigate, study, clean up, remove, treat or dispose of any
Contaminant, including, but not limited to, risk assessments and pilot
treatment or feasibility studies; (ii) prevent the Release or threatened
Release, or minimize the further Release of any Contaminant; or (iii)
bring the existing operations of the Companies in all material
compliance with Environmental Laws.
(b) Except as qualified in the Disclosure Letter:
(i) the Companies and the Real Property are, in
material compliance with all Environmental Laws;
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(ii) none of the Companies has caused any Contaminant
to be Released in violation of Environmental Law through the
corporation's operations on or off-site of any of the Real Property or
on any real property owned, leased or otherwise used at any time by such
corporation ("Former Property");
(iii) none of the Companies has received any written
notice, order, decree or agreement, regarding any Remedial Action or the
Release, threatened Release or presence of any Contaminants, and no
payments have been made in relation to Remedial Action which include
payments to a third party, and to the knowledge of the Companies no
charge is likely to be placed upon the Real Property in connection with
such matters; and
(iv) none of the Companies nor any of the Real
Property or any Former Property are subject to any liability under
Environmental Law in connection with any Remedial Action or the Release,
threatened Release, or presence of any Contaminants.
(c) Except as qualified in Seller's Disclosure Letter:
(i) Each of the Companies has obtained all
environmental, health and safety licenses, permits, authorizations,
consents, approvals, exemptions, registrations and certificates required
under all applicable Environmental Laws ("Environmental Licenses") and
made all notifications and filings necessary for the current use of the
Real Property and for full operation of the business of such Companies;
(ii) All such Environmental Licenses are in full
force and effect, in good standing and each Companies have made all
material notifications, filings and applications for renewal of such
Environmental Licenses on a timely basis, where necessary;
(iii) Each of the Companies and the Real Property are,
in compliance in all material respects with the terms and conditions of
such Environmental Licenses; and
(iv) the Companies do not have knowledge of any fact
or facts which would render invalid or require a material alteration in
any Environmental License currently in effect with respect to any of the
Companies, or the Real Property nor do the Companies have any knowledge
of any capital costs which would need to be incurred to satisfy such a
material alteration.
(d) To the knowledge of the Companies, except as qualified
in the Disclosure Letter there is not now nor has there ever been on, in
or under the Real Property or any Former Property:
(i) any generation, processing, treatment, storage,
recycling, disposal or arrangement therefor, of any "hazardous waste" as
that term is defined under applicable Environmental Laws;
(ii) any aboveground or underground storage tanks or
surface impoundments;
(iii) any asbestos or asbestos-containing material;
(iv) any PCBs in any hydraulic oils, transformers,
capacitors or other electrical equipment; or
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(v) any radioactive substances, in violation of
Environmental Law.
(e) The Disclosure Letter lists all written communications
between the Companies and any governmental authority or third party
arising within the last year under or relative to Environmental Laws,
and which remain outstanding including any orders, notices of violation,
warning letters or requests for information with respect to any of the
Companies, the Real Property or any Former Property.
(f) Except as qualified in the Disclosure Letter, to the
knowledge of the Companies, there are no past or present events,
conditions, circumstances, activities, practices, incidents, or actions
which have given to the Companies' knowledge or may to the Companies'
knowledge give rise to any liability or otherwise form the basis of any
claim, suit, action, demand, proceeding, penalty, fine, hearing, notice
of violation, directive or requirement to undertake any Remedial Action
under any Environmental Law, common law or otherwise, relating to the
Companies, or the Real Property or any Former Property.
(g) Except as qualified in the Disclosure Letter all
Contaminants removed from the Real Property or any Former Property have
been handled, transported, transferred, stored, treated, recycled,
received and disposed of in material compliance with all Environmental
Laws.
(h) The Disclosure Letter identifies all current waste
disposal, treatment and storage facilities and transporters and persons
or entities which currently arrange for the disposal of Contaminants
which are presently used by or arranged for use by any of the Companies.
(i) Except as qualified in the Disclosure Letter no
application, report, Environmental License, notification or other
document filed with or furnished to any governmental authority regarding
any of the Companies, the Real Property or any Former Property contains
any material omissions, inaccuracies or false or misleading statements.
2.29 Bank Accounts. The Disclosure Letter contains a list of
-------------
the name of each bank, savings and loan, or other financial institution
in which any of the Companies has an account or safe deposit box, the
names of all persons authorized to draw on each account or to have
access to each box, the number of signatures required to be given for a
withdrawal and a description of the type of account.
2.30 Compliance With Laws. To the knowledge of the Companies,
--------------------
each of the Companies has complied in all material respects with all
laws, regulations, rules and orders of any governmental department or
agency, including all laws and regulations of England, or any other
federal, national, state or local, or other requirements of law
affecting its business and operations, and none of the Companies has
received notice that it is in default under or in violation of any
provision of any federal, national, state or local law, regulation, rule
or order, law or regulation of England, or any appropriate foreign law
or regulation.
2.31 Powers Of Attorney. None of the Companies has given any
------------------
power of attorney (irrevocable or otherwise) that is presently in effect
to any person or entity, including Sellers, for any purpose.
2.32 Licenses And Rights. Each of the Companies possesses all
-------------------
material franchises, licenses, easements, permits and other
authorizations from governmental or regulatory authorities that are
necessary to permit it to engage in its business as presently conducted
in and at all locations and places where it is presently operating.
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2.33 Products.
--------
(a) The products sold by the Companies conform to and meet
or exceed the standards required by all applicable laws, ordinances and
regulations now in effect in relation to the person to which such
products are supplied and the jurisdiction in which they are supplied.
(b) The Disclosure Letter contains details of each of the
Companies' warranties and customer service policies and a description of
any material recurring warranty problems. None of the Companies has
outstanding contracts or proposals that depart in any material respect
from the warranty and customer service policies and described in the
Disclosure Letter. No claims of customers or others based on an alleged
or admitted defect of material, workmanship or design or otherwise in or
in respect of any of such corporation's products are presently pending
or, to the knowledge of the Companies, threatened other than product
warranty claims in the aggregate not in excess of US$25,000.
2.34 Casualty Occurrences. The Disclosure Letter contains true
--------------------
and correct details of occurrences during the last five years which have
resulted or which will be likely to result in damages being incurred in
excess of US$50,000 of which any of the Companies has knowledge of
damages to persons or property involving any defects or alleged defects
in any if the Companies products or their respective designs.
2.35 Inventory. The inventory of the Companies has been
---------
recorded in the Financial Statements in accordance with UK GAAP and US
GAAP, as applicable. The value at which the inventories are carried on
such Companies' books reflects the lower of cost or estimated net
realizable market value.
2.36 Capital Expenditure Plans. The Disclosure Letter contains
-------------------------
a description of each capital expenditure program of the Companies
involving the expenditure of at least US$100,000 as to which the
expenditure of funds is incomplete, setting forth (i) the budgeted
expenditures and (ii) the actual amounts expended, if any.
2.37 Generally. No representation or warranty by the Sellers
---------
in the Agreement or in any exhibit, schedule or closing certificate
furnished or to be furnished to Purchaser pursuant to this Agreement or
in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact, necessary to make the
statements herein or therein, in light of the circumstances in which
they were made, not misleading.
2.38 Knowledge. As used in this Agreement, the "Knowledge of
---------
Companies" shall be deemed to be limited to the actual knowledge after
reasonable inquiry of Paul Rudling, Paul Brown, Andrew Day or Derek Ness
without giving effect to imputed knowledge.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Sellers as of the date hereof
and as of the Closing Date, as follows:
3.1 Organization. Purchaser and each of its subsidiaries is a
------------
corporation duly organized, validly existing and in good standing under
the laws of the respective jurisdiction of its organization and
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has all requisite corporate or other power and authority and all
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or
to have such power, authority and governmental approvals would not have
a material adverse effect on Purchaser and its subsidiaries, taken as a
whole. Purchaser and each of its subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed
and in good standing would not have a material adverse effect on
Purchaser and its subsidiaries, taken as a whole.
3.2 Corporate Authorization; Validity Of Agreement; Necessary
----------------------------------------------------------
Action. Purchaser has full corporate power and authority to execute
- ------
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by
Purchaser of this Agreement and the consummation by Purchaser of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Purchaser and no other corporate action or
proceedings on the part of Purchaser are necessary to authorize the
execution and delivery by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Purchaser, and,
assuming this Agreement constitutes valid and binding obligations of
Sellers and SP Systems, constitutes valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with its terms.
3.3 Consents And Approvals; No Violations. Neither the
-------------------------------------
execution, delivery or performance of this Agreement by Purchaser nor
the consummation by Purchaser of the transactions contemplated hereby
nor compliance by Purchaser with any of the provisions hereof will
(a) conflict with or result in any breach of any provision of the
Articles of Incorporation (as amended) or By-laws (as amended) of
Purchaser, (b) require any filing with, or permit, authorization,
consent or approval of, any governmental entity (except where the
failure to obtain such permits, authorizations, consents or approvals or
to make such filings would not have a material adverse effect on
Purchaser and its subsidiaries, taken as a whole, or would not, or would
not be reasonably likely to, materially impair the ability of Purchaser
to consummate the transactions contemplated hereby), (c) result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, lease, license, contract,
agreement or other instrument or obligation to which Purchaser or any of
its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser,
any of its subsidiaries or any of their properties or assets, except in
the case of clauses (c) and (d) for violations, breaches or defaults
which would not have a material adverse effect on Purchaser and its
subsidiaries, taken as a whole, or would not, or would not be reasonably
likely to, materially impair the ability of Purchaser or Purchaser to
consummate the transactions contemplated hereby.
3.4 SEC Filings Complete. As of the time such document was
--------------------
filed, Purchaser's most recent Annual Report on Form 10-K, all
intervening Form 8-Ks, if any, and Form 10-Qs and Purchaser's most
recent annual meeting proxy statement (the "Disclosure Documents"), all
as filed with the Securities and Exchange Commission ("SEC"): (i) did
not contain a misstatement of a material fact or an omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (ii) complied in all material
respects with the requirements of the Securities Exchange Act of 1934,
as amended, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such documents. Since the filing
of the most recent Form 10-K, no other document has been required to be
filed by Purchaser with the SEC which has not been filed.
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3.5 Litigation. Except as disclosed in the Disclosure
----------
Documents, there is no litigation pending or, to the knowledge of
Purchaser, threatened against Purchaser or any of its subsidiaries which
would have a material adverse effect on its properties, assets or
business or which would prevent or hinder the consummation of the
transactions contemplated by this Agreement or its obligations
thereunder.
3.6 Shares Validly Issued. All of the Shares of the Common
---------------------
Stock to be issued to the Sellers pursuant to the terms of this
Agreement, when issued pursuant to the terms of this Agreement, shall be
duly and validly issued, fully paid and non-assessable, without
violation of any preemptive or dissenters' or similar rights and in full
compliance with all applicable securities laws.
3.7 Capitalization of Purchaser. The authorized, issued and
---------------------------
outstanding capital stock of Purchaser is set forth on Schedule 3.7.
------------
All of the issued and outstanding shares of capital stock of Purchaser
are duly authorized, validly issued, fully paid and non-assessable.
Except as disclosed on Schedule 3.7, there are no outstanding options,
------------
warrants or other rights of any kind to acquire any additional shares of
capital stock of Purchaser or securities convertible into or
exchangeable for, or which otherwise confer on the holder thereof any
right to acquire, any such additional shares, nor is Purchaser committed
to issue any such option, warrant, right or security.
3.8 Environmental Matters.
---------------------
(a) As of the date of this Agreement, Purchaser and its
subsidiaries have obtained or applied for all permits, licenses and
other such authorizations required to be obtained by them for the
operation of the business of Purchaser and its subsidiaries under
applicable Environmental Laws except for any permits, licenses or
authorizations which singly and in the aggregate the failure to obtain
have not had and are not likely to have a material adverse effect on the
business operations, financial condition or earnings of Purchaser;
(b) To the best knowledge of Purchaser, Purchaser and its
subsidiaries are, as of the date of this Agreement, (A) in compliance
with all material terms and conditions of the permits, licenses and
authorizations required by Environmental Laws, and (B) in compliance
with all other material limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations, contained in the
Environmental Laws presently in effect or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder and issued by a
governmental entity except in the case of (A) and (B) for violations, if
any, which singly and in the aggregate have not had and are not likely
to have a material adverse effect on the business operations, financial
condition or earnings of Purchaser;
(c) As of the date of this Agreement, there are no civil,
criminal or administrative actions, suits, hearings, proceedings,
written notices of violation, claims or demands pending or, to the best
knowledge of Purchaser, threatened against Purchaser or any of its
subsidiaries under the Environmental Laws which if adversely determined
against the Purchaser or any subsidiary of Purchaser would be likely to
have a material adverse effect on the business operations, financial
condition or earnings of Purchaser;
(d) As of the date of this Agreement, to the best
knowledge of Purchaser (A) neither Purchaser nor any of its subsidiaries
has had any reportable discharge or release of hazardous substance and
(B) no spill, discharge or cleanup has occurred which could result in
the assertion or creation of a lien by any governmental body or agency
with respect thereto and (C) no such assertion of a lien has been made
by any governmental body or agency with respect thereto.
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3.9 Generally. No representation or warranty by Purchaser in
---------
the Agreement or in any exhibit, schedule or closing certificate
furnished or to be furnished to the Sellers pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact, necessarily to make the
statements herein or therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE IV
TAX MATTERS
-----------
4.1 Cooperation In Tax Matters. Purchaser, Sellers and each
--------------------------
of the Companies shall cooperate fully as and to the extent reasonably
requested by any of the other above-named parties, in connection with
the filing of Tax Returns pursuant to this Article IV and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon request of any of the above-named
parties) the provision of copies of records and information which are
reasonably relevant to any such Tax Return, audit, litigation or other
proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material
provided hereunder. Sellers agree to, and Purchaser agrees to cause
each of the Companies to retain all books and records with respect to
Tax matters pertinent to each of the Companies relating to any taxable
period beginning before the Closing Date until the expiration of the
statute of limitations (including any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority. So long as taxable
periods of, or related to any of the Companies ending on or before the
Closing Date remain open, Purchaser will, and will cause any of the
Companies, as the case may be, to promptly notify Sellers in writing of
any pending or threatened Tax audits or assessments for which Sellers
have or may have liability. Sellers will promptly notify Purchaser and
any affected Companies, as the case may be, in writing of any written or
other notification received by Seller from the Internal Revenue Service
or any other taxing authority of any proposed adjustment raised in
connection with a Tax audit, examination, proceeding or determination of
a taxable period of any of the Companies, as the case may be, ending on
or before the Closing Date.
4.2 Tax Periods Ending On Or Before The Closing Date. Sellers
------------------------------------------------
and Purchaser shall jointly prepare or cause to be prepared, and file or
cause to be filed, and negotiate and agreed or caused to be negotiated
and agree all Tax Returns for each of the Companies for all periods
ending on or prior to the Closing Date which Tax Returns shall be
prepared in accordance with the past practice and customs of the
Companies unless such past practice and customers are clearly erroneous.
Purchaser shall cause each of the Companies to sign any claim or
election relating to any such Tax Return as jointly agreed by Purchaser
and Seller. The Seller and Purchaser shall use all reasonable endeavors
to agree on the form of the Tax Returns to be submitted to the relevant
tax authority and both parties agree that such agreement or consent
shall not be unreasonably withheld or delayed. If the Seller and
Purchaser are unable to agree to the form of a Tax Return within 30 days
of it being prepared, the dispute in question shall be referred to an
independent firm of Accountants, jointly selected, by the parties or in
the absence of such agreement by the President of the Institute of
Chartered Accountants of England and Wales in the case of the Companies
which are resident in the United Kingdom for tax purposes. Such person
shall act as an expert and save in the case of manifest error his
determination shall be binding on both parties. In the event that any
dispute arises between Seller and Purchaser regarding the negotiation
and/or agreement of any Tax Return, such dispute shall be settled in the
same manner as that set out in this clause. Seller shall pay to
Purchaser all Taxes shown to be due on such Tax Returns within 15 days
after receipt of a bill from Purchaser for such Taxes to the extent such
Taxes are not reflected in the reserve for Tax Liability shown on the
Balance Sheet of the Companies at and for the fiscal year ended
December 31, 1998 as adjusted for
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operations and transactions in the ordinary course of business through
the Closing Date in accordance with the past practice and custom of the
Companies.
ARTICLE V
COVENANTS OF THE SELLERS
------------------------
5.1 Conduct of Business. From the date hereof to the Closing
-------------------
Date, except for transactions which are contemplated by this Agreement
or expressly approved in writing by Purchaser, which Purchaser agrees
will not be unreasonably withheld, each of the Sellers shall use his or
her reasonable best efforts to ensure that the Companies refrain from:
(a) subjecting any of the Companies' assets and
properties, tangible or intangible, to any lien, encumbrance or other
claim of any kind, exclusive of existing liens disclosed to Purchaser as
to which there is no known default;
(b) except for sales of inventory in the ordinary course
of business, selling, assigning, transferring or otherwise disposing of
any of the Companies' assets or properties;
(c) other than in the ordinary course of business,
modifying, amending, altering or terminating (whether by written or oral
agreement, or any manner of action or inaction) any of the debt
instruments, Leases, Intellectual Property Licenses, Contracts or
Insurance Policies;
(d) declaring, setting aside or paying any dividends or
other distributions, directly or indirectly, to the Sellers with respect
to the Shares;
(e) increasing in any amount the benefits or compensation
of the Sellers or paying or agreeing to pay any bonus or commission to
the Sellers; and
(f) taking or permitting any other action that, if taken
or permitted immediately prior to the execution of this Agreement, would
constitute a breach of or an exception to the representations and
warranties in Section 2.8(d) hereof.
5.2 Affirmative Covenants Relating to the Companies and the
--------------------------------------------------------
Sellers. From the date hereof to the Closing Date, each of the Sellers
- -------
shall use its, her or his respective reasonable best efforts to assure
that the Companies shall:
(a) maintain the Companies' property and casualty and
other insurance coverage in amounts and with coverage at least as great
as the amounts and coverage in effect on the date of this Agreement;
(b) maintain, consistent with past practice, the
Companies' properties in good repair, order and condition, reasonable
wear and tear excepted, and preserve the Companies' possession and
control of all of its assets and properties;
(c) keep in the Companies' employ the present officers and
key employees, including the professional staff, of the Companies
necessary to preserve the goodwill of those having business relations
with the Companies;
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(d) maintain the books, accounts and records of the
Companies in a manner consistent with past practice;
(e) allow, upon prior notice to the Companies, Purchaser
and Purchaser's employees, attorneys, auditors, accountants and other
authorized representatives, free and full access during the Companies'
normal business hours to the facilities, plants, properties, books,
records, documents and correspondence of the Companies, including, but
not limited to, historical financial information with respect to the
Companies' major contracts, in order that Purchaser may have full
opportunity to make such investigation as Purchaser may desire of the
business of the Companies; provided, however, that such access shall not
unreasonably interfere with the operations of the Companies, and any
contractual confidentiality requirements between Purchaser and the
Companies or the Sellers existing prior to this Agreement shall remain
in full force and effect, as supplemented hereby, except as otherwise
required by law (including any required disclosure of the execution of
this Agreement);
(f) (A) materially comply with all applicable law relating
to the Companies, or to the conduct of its respective business, and
(B) conduct such business in such a manner so that on the Closing Date
the representations and warranties contained in this Agreement shall be
materially true as though such representations and warranties were made
on and as of such date, except for changes permitted or contemplated by
the terms of this Agreement;
(g) provide Purchaser with prompt written notice of any
material adverse change in the assets, operations, liabilities,
earnings, business or condition (financial or otherwise) of the
Companies, taken as a whole, or any change in information set forth in
the Disclosure Letter;
(h) maintain in inventory quantities of goods, supplies
and materials sufficient to allow the Companies to continue to operate
after the Closing Date free of any shortage of such items; and
(i) operate its business only in the ordinary course with
the objective of preserving the Companies' business organizations
intact, including using its reasonable best efforts to retain the
services of the Companies' present officers and the goodwill of its
suppliers, customers and others having business relations with the
Companies.
5.3 Consents and Closing Conditions. Each of the Sellers
-------------------------------
shall use its, her or his respective reasonable best efforts (a) to
obtain such third party and governmental consents, authorizations,
approvals, releases and terminations as may be required hereunder, and
to take other actions as may be appropriate in order to fulfill the
closing conditions contained in this Agreement and (b) to cause the
representations and warranties of the Sellers to be true and correct on
and as of the Closing Date.
5.4 Cooperation; Communication. Each of the Companies and the
--------------------------
Sellers shall furnish to Purchaser such information regarding the
Companies and the Sellers as Purchaser may reasonably request. In
addition, each of the Companies and the Sellers shall promptly inform
Purchaser of any material communication from any governmental entity
regarding any of the transactions contemplated hereby. If any of the
Companies, the Sellers or any affiliate thereof receives a request for
additional information or documentary material from any governmental
entity with respect to the transactions contemplated hereby, then each
of the Companies and the Sellers shall endeavor in good faith to make,
or cause to be made, as soon as reasonably practicable and after
consultation with Purchaser, an appropriate response in compliance with
such request.
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5.5 Sellers' Non-Competition Agreements.
-----------------------------------
(a) Each of the Sellers except Hallkvist Trading ApS
undertakes (individually and not jointly) with the Purchaser (for itself
and as trustees for each of the Companies) that, except with the consent
in writing of the Purchaser he will not, for a period of two years from
the Closing Date:
(i) either on his own account or for or on behalf of
or through or in conjunction, association or by arrangement with any
person whether for his own benefit or that of others, directly or
indirectly, carry on or be engaged, concerned or interested in or in the
carrying on of any business which is a Restricted Business anywhere in
the world, but this sub clause will not prevent him from holding for
investment up to 3% of any class of securities of a company which are
dealt with on a recognized stock exchange;
(ii) either on his own account or for or on behalf of
or through or in conjunction, association or by arrangement with any
person whether for his own benefit or that of others, directly or
indirectly in relation to the Restricted Business solicit, canvass or
approach any person, who, at any time during the 12 months prior to the
Relevant Date:
(x) was provided with goods or services by any
of the Companies from time to time;
(y) had negotiations with any of the Companies
from time to time relating to the provision of such goods or
services; or
(z) otherwise dealt with any of the Companies
from time to time;
for the purpose of offering to that person goods or services similar to
those provided by any of the Companies or otherwise to entice away the
custom or business of that person from any of the Companies;
(iii) either on his own account or for or on behalf of
or through or in conjunction, association or by arrangement with any
person, whether for his own benefit or that of others, directly or
indirectly supply to any person specified in the preceding sub-clause
goods or services similar to those with which such person was so
provided by the Restricted Business at any time during the 12 months
prior to the Closing Date or enter into any transaction with such person
in relation to such goods or services so provided by the Restricted
Business;
(iv) either on his own account or for or on behalf of
or through or in conjunction, association or by arrangement with any
person, whether for his own benefit or that of others, directly or
indirectly, solicit or entice away or endeavor to entice away from any
of the Companies or offer to employ or offer to conclude any contract
for services with any director, manager, consultant or employee who
worked for any of the Companies at any time during the 12 months prior
to the Closing Date (whether or not such persons would commit any breach
of contract by reason of his leaving service);
(v) either on his own account or for or on behalf of
or through or in conjunction, association or by arrangement with any
person whether for his own benefit of that of others, directly or
indirectly, employ or conclude any contract for services with any
director, manager, consultant or employee who worked for any of the
Companies at any time during the 12 months preceding the Closing Date.
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(b) Each of the Sellers except Hallkvist Trading ApS
undertakes with the Purchaser (for itself and as trustee for each of the
Companies) that, except with the prior consent in writing of the
Purchaser:
(i) he will not use to the detriment of any of the
Companies or of any customer of any of the Companies or disclose divulge
or communicate directly or indirectly to any person any secret or
confidential knowledge or information relating to the business,
transactions, products or affairs of any of the Companies or of any
customer of any of the Companies (including but not limited to
operations, processes, plans, inventions, product information, know-how,
design rights, trade secrets, software, market opportunities, customers
and business affairs) or supply or disclose to any person the names or
addresses of any customers of any of the Companies or details of any
contracts or negotiations to which any of the Companies is a party or of
any tenders offers or proposals submitted or to be submitted by any of
the Companies in connection with its business except as authorized in
writing by the board of directors of SP Systems or a court of competent
jurisdiction;
(ii) he will not at any time hereafter in relation to
any trade, business, firm, company or organization use a name (whether
registered or not) or any trade mark or design the same as or
confusingly similar to any name or trade mark of any of the Companies
and shall use his best endeavors to produce that no such name or trade
mark shall be used by any other person, firm, company or organization
with which he is concerned.
Notwithstanding the foregoing the parties understand and agree that the
restrictions set forth in this Section 5.5(b) shall not apply with
respect to information which is public or, other than as a result of an
action of a Seller, becomes public.
(c) Each of the covenants contained in Sections 5.5(a) and
5.5(c) shall be deemed to be separate covenants and independent of each
other.
(d) While the parties hereto consider that the covenants
contained in Sections 5.5(a) and 5.5(c) are reasonable as between
themselves their respective interests and the public interests in all
the circumstances in which this Agreement will operate in order to
protect the interests of the Purchaser, it is agreed by and between the
parties that if any such restrictions shall be adjudged by a court of
competent jurisdiction to be void or unenforceable but would be valid
and enforceable if deleted in part or reduced in scope, extent, period
or application, such restrictions shall apply with such deletion or
modification as may be necessary to make it valid and enforceable.
(e) For the purposes of this Section 5.5 the term
"Restricted Business" means the business of the manufacture, production,
sale, marketing, and distribution of epoxy and vinyl esters and
associated materials for use in the wind energy, automotive and marine
industries whether as raw materials or as finished products and the
activities associated therewith.
5.6 Confidentiality of Information. Prior to the Closing Date
------------------------------
(and if the Closing does not occur, indefinitely), the Sellers, the
Companies and their respective employees, agents, auditors, attorneys
and other authorized representatives shall not, without Purchaser's
prior written consent, communicate or divulge to any person or entity or
use for their benefit any information, other than information which is
otherwise available to the Sellers or the Companies or which becomes
public other than as a result of their action, concerning Purchaser's
financial condition or business, or concerning any marketing
information, equipment, methods, research, clients, contracts,
suppliers, customers, contracts or other data of or related to Purchaser
or other confidential matters possessed, owned or used by Purchaser that
may be communicated to, acquired by or learned by them. All
correspondence, records, files, tax returns,
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financial statements and other data relating to Purchaser which shall
come into the possession of Sellers or their respective employees,
agents, auditors, attorneys and other authorized representatives shall
remain and be deemed to be the sole property of Purchaser. If the
transactions contemplated hereby are not consummated for any reason,
then Sellers or their respective employees, agents, auditors, attorneys
and other authorized representatives shall return any and all of the
foregoing material to Purchaser, together with any and all copies
thereof made. The confidentiality provisions of this Agreement shall
supplement, and not supersede, any contractual confidentiality
requirements between Purchaser, the Companies or any of the Sellers and
such existing contractual confidentiality requirements shall remain in
full force and effect, as supplemented hereby, except as otherwise
required by law (including any required disclosure of the execution of
this Agreement).
ARTICLE VI
COVENANTS OF PURCHASER
----------------------
6.1 Confidentiality of Information. Prior to the Closing Date
------------------------------
(and if the Closing does not occur, indefinitely), Purchaser and its
employees, agents, auditors, attorneys and other authorized
representatives shall not, without the Sellers' prior written consent,
communicate or divulge to any person or entity or use for their benefit
any information, other than information which is otherwise available to
Purchaser or which becomes public other than as a result of its action,
concerning the Companies' financial conditions or business, or
concerning any marketing information, equipment, methods, research,
clients, contracts, suppliers, customers, contracts or other data of or
related to the Companies or other confidential matters possessed, owned
or used by the Companies that may be communicated to, acquired by or
learned by them. All correspondence, records, files, tax returns,
financial statements and other data relating to the Companies which
shall come into the possession of Purchaser or its employees, agents,
auditors, attorneys and other authorized representatives shall remain
and be deemed to be the sole property of the Companies, until
consummation of the transactions contemplated hereby. If the
transactions contemplated hereby are not consummated for any reason,
then Purchaser or its employees, agents, auditors, attorneys and other
authorized representatives shall return any and all of the foregoing
material to the Companies, together with any and all copies thereof
made. The confidentiality provisions of this Agreement shall
supplement, and not supersede, any contractual confidentiality
requirements between Purchaser, the Companies or any of the Sellers and
such existing contractual confidentiality requirements shall remain in
full force and effect, as supplemented hereby, except as otherwise
required by law (including any required disclosure of the execution of
this Agreement).
6.2 Receipt of Consents and Satisfaction of Closing
------------------------------------------------
Conditions. Purchaser shall use its best efforts (a) to obtain such
- ----------
consents from third parties and to take other actions as may be required
in order to fulfill the closing condition contained in this Agreement
hereof and (b) to cause the representations and warranties of Purchaser
in Article III to be true and correct on and as of the Closing Date.
6.3 Communication. Purchaser shall promptly inform the
-------------
Companies and the Representative of any material communication from any
governmental entity regarding any of the transactions contemplated
hereby. If Purchaser or any of its affiliates receives a request for
additional information or documentary material from any governmental
entity with respect to the transactions contemplated hereby, then
Purchaser shall endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable after consultation with the
Representative, an appropriate response in compliance with such request.
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ARTICLE VII
PURCHASER'S CONDITIONS TO CLOSING
---------------------------------
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to
Purchaser's reasonable satisfaction of each of the following conditions
on or prior to the Closing Date:
7.1 Continued Truth of Warranties. The representations and
-----------------------------
warranties of each of SP Systems and the Sellers contained herein shall
be true in all material respects on and as of the Closing Date with the
same force and effect as though made as of such date, except for any
variations permitted by this Agreement.
7.2 Performance of Covenants. Each of the Sellers shall have
------------------------
performed in all material respects all covenants and obligations and
complied in all material respects with all conditions required by this
Agreement to be performed or complied with by it on or prior to the
Closing Date.
7.3 No Material Adverse Change. There shall have been no
--------------------------
material adverse change to the properties, operations, liabilities,
earnings, business condition (financial or otherwise) of the Companies
taken as a whole since September 30, 1999 other than changes as the
result of general economic or industry conditions.
7.4 Permits and Consents. The parties hereto shall have
--------------------
secured the orders, consents, approvals and clearances set forth in
Section 7.4 of the Disclosure Letter, in form and substance satisfactory
to Purchaser, by and from all third parties reasonably requested by
Purchaser.
7.5 Closing Documents. Each of the Companies and the Sellers
-----------------
shall have delivered all documents required to be delivered by it, her
or him at the Closing as set forth below, in each case in form and
substance satisfactory to Purchaser:
(a) A certificate of incumbency and copies of the
resolutions adopted by the Board of Directors and shareholders of SP
Systems, authorizing the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, duly certified
as of the Closing Date by the Secretary or an Assistant Secretary of SP
Systems;
(b) To the extent documented in writing, copies of all
orders, consents, approvals and clearances identified pursuant to
Section 7.4;
(c) An opinion of Winthrop, Stimson, Putnam & Roberts,
special New York counsel for the Sellers and the Companies, as to the
matters set forth in Exhibit B-1, which opinion shall contain a
-----------
statement of reliance in favor of Purchaser's lenders, and an opinion of
Bond Pearce, counsel for the Sellers and the Companies, as to the
matters set forth in Exhibit B-2;
-----------
(d) The original corporate minute books, stock transfer
books and corporate seals of the Companies;
(e) Stock certificate(s) representing the Shares with duly
executed and valid stock powers or such other evidence of ownership or
instruments of transfer as are customary and sufficient to convey
ownership of the Shares, attached in form for transfer to Purchaser and
otherwise acceptable in form and substance to Purchaser;
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(f) Such other documents and instruments as Purchaser may
reasonably request in connection with the consummation of the
transactions contemplated by this Agreement.
ARTICLE VIII
THE SELLERS' CONDITIONS TO CLOSING
----------------------------------
The obligation of the Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to
the Sellers' reasonable satisfaction of the following conditions on or
prior to the Closing Date:
8.1 Continued Truth of Warranties. The representations and
-----------------------------
warranties of Purchaser herein contained shall be true in all material
respects on and as of the Closing Date with the same force and effect as
though made as of such date, except for any variations permitted by this
Agreement.
8.2 Performance of Covenants. Purchaser shall have performed
------------------------
in all material respects all covenants and obligations and complied in
all material respects with all conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing Date.
8.3 Permits and Consents. The parties hereto shall have
--------------------
secured all appropriate orders, consents, approvals and clearances set
forth in Section 7.4 of the Disclosure Letter in form and substance
reasonably satisfactory to Purchaser.
8.4 No Material Adverse Change. There shall have been no
--------------------------
material adverse change to Purchaser since September 30, 1999 other than
changes as the result of general economic or industry conditions.
8.5 Closing Documents. Purchaser shall have delivered the
-----------------
Purchase Price and all documents required to be delivered by it at the
Closing as set forth below, in form and substance satisfactory to each
of the Companies and the Sellers:
(a) A certificate of incumbency and copies of the
resolutions adopted by the Board of Directors of Purchaser, authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, duly certified as of the Closing Date
by the Secretary or an Assistant Secretary of Purchaser;
(b) To the extent documented in writing, copies of all
orders, consents, approvals and clearances to be obtained by Purchaser
identified in the Disclosure Letter pursuant to Section 7.4
(c) An opinion of Thompson Coburn LLP, counsel for
Purchaser, as to the matters set forth in Exhibit C;
---------
(d) A Registration Rights Agreement in favor of each of
the Sellers substantially in the form of Exhibit D attached hereto and
---------
made a part hereof (the "Registration Rights Agreement"); and
(e) A certified copy of the Purchaser's Stock Option Plan
in the form attached hereto as Exhibit E.
---------
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ARTICLE IX
INDEMNIFICATION
---------------
9.1 Indemnification of Purchaser. Subject to the provisions
----------------------------
of this Article IX, by execution of this Agreement, the Sellers hereby
acknowledge that Purchaser shall, subject to Section 9.1(c), be entitled
to full indemnification by the Sellers of the following:
(a) any and all loss, liability or damage (including
judgments and settlement payments) (a "Loss") incurred by the Companies
or Purchaser incident to, arising in connection with or resulting from
any misrepresentation, breach, nonperformance or inaccuracy of any
representation, warranty or covenant set forth in this Agreement by the
Sellers made or contained in this Agreement or in any exhibit, schedule,
certificate or other document executed and delivered to Purchaser by the
Sellers or by or on behalf of the Companies under or pursuant to this
Agreement or the transactions contemplated herein;
(b) any and all reasonable costs and expenses and all
other Losses incurred in claiming, contesting or remedying any breach,
misrepresentation, nonperformance or inaccuracy described in this
Section 9.1, or in enforcing their rights to indemnification hereunder,
including, by way of illustration and not limitation, all reasonable
legal and accounting fees, other reasonable professional expenses and
all filing fees and reasonable collection costs incident thereto and all
such reasonable fees, costs and expenses incurred in defending claims
which, if successfully prosecuted, would have resulted in a Loss; and
(c) (i) The remedy of Purchaser for any indemnification
of Losses under Section 9.1 arising out of a breach of any
representation, warranty or covenant other than any representation or
warranty set forth in Section 2.3(a), 2.5(a) or 2.5(b) may be satisfied
by proceeding against one or more of the Sellers individually for each
such Seller's pro rata portion of such Loss determined according to the
ownership percentage set forth opposite such Seller's name on
Exhibit A.
- ---------
(ii) The remedy of Purchaser for any indemnification
of Losses under Section 9.1 arising out of a breach of any
representation or warranty set forth in Section 2.3(a), 2.5(a) or 2.5(b)
may be satisfied by proceeding against any such Seller allegedly liable
for Losses arising out of such breach individually for the full amount
of Loss alleged to arise out of such breach.
9.2 Indemnification of the Sellers. By execution of this
------------------------------
Agreement, Purchaser hereby acknowledge that the Sellers shall be
entitled to full indemnification by Purchaser of the following:
(a) any and all Losses incurred by the Sellers incident
to, arising in connection with or resulting from any misrepresentation,
breach, nonperformance or inaccuracy of any representation, warranty or
covenant by Purchaser made or contained in this Agreement or in any
exhibit, schedule, certificate or other document executed and delivered
to the Sellers by Purchaser; and
(b) any and all Losses incurred in claiming, contesting or
remedying any breach, misrepresentation, nonperformance or inaccuracy
described above, or in enforcing its rights to indemnification
hereunder, including, by way of illustration and not limitation, all
reasonable legal and accounting fees, other reasonable professional
expenses and all filing fees and reasonable collection costs incident
thereto and all such reasonable fees, costs and expenses incurred in
defending claims which, if successfully prosecuted, would have resulted
in a Loss.
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<PAGE>
9.3 Notice of and Procedures for Collecting Indemnification.
-------------------------------------------------------
(a) Initial Claim Notice. When either Purchaser, on the
--------------------
one hand, or the Sellers, on the other hand, becomes aware of a
situation which may result in damages for which it or they would be
entitled to be indemnified hereunder, Purchaser, on the one hand, or the
Representative (on behalf of the Sellers), on the other (the
"Indemnitee") shall submit promptly a written notice (the "Initial Claim
Notice") to the other party from which indemnification may be
forthcoming pursuant to Section 9.1 or 9.2 (the "Indemnitor") to such
effect after it first becomes aware of such matter and shall furnish the
Indemnitor with such information as it has available demonstrating its
right or possible right to receive indemnity. If the potential claim is
predicated on, or later results in, the filing by a third party of any
action at law or in equity (a "Third Party Claim"), the Indemnitee shall
provide promptly to the Indemnitor a supplemental Initial Claim Notice
not later than 20 calendar days prior to the date on which a responsive
pleading must be filed, and shall also furnish a copy of such claim (if
made in writing) and of all documents received from the third party in
support of such claim. In addition, each Initial Claim Notice shall
name, when known, the person or persons making the assertions which are
the basis for such claim. Failure by the Indemnitee to deliver an
Initial Claim Notice or an update thereof in a timely manner shall not
relieve the Indemnitor of any of its obligations under this Agreement
except to the extent that actual and material prejudice to the
Indemnitor.
(b) Rights of Indemnitor. If, prior to the expiration
--------------------
of 30 calendar days from the mailing of an Initial Claim Notice (the
"Claim Answer Period"), the Indemnitor shall request in writing that
such claim not be paid, the same shall not be paid, and the Indemnitor
shall settle, compromise or litigate in good faith such claim, and
employ attorneys of its choice to do so; provided, however, that
Indemnitee shall not be required to refrain from paying any claim which
has matured by court judgment or decree, unless appeal is taken
therefrom and proper appeal bond posted by the Indemnitor, nor shall it
be required to refrain from paying any claim where such action would
result in the foreclosure of a lien upon any of its assets or a default
in a lease or other contract except a lease or other contract which is
the subject of the dispute. The Indemnitee shall cooperate fully to make
available to the Indemnitor and its attorneys, representatives and
agents, all pertinent information under its control. The Indemnitee
shall have the right to elect to settle or compromise all other
contested claims with respect to which the Indemnitor has not, within
the Claim Answer Period, acknowledged in writing (i) liability therefor,
and (ii) its election to assume full responsibility for the settlement,
compromise, litigation and payment of such claim.
(c) Final Claims Statement. At such time as damages for
----------------------
which the Indemnitor is liable hereunder are incurred by Indemnitee by
actual payment thereof or by entry of a final judgment, the Indemnitee
shall forward a Final Claims Statement to the Indemnitor setting forth
the amount of such damages in reasonable detail on an itemized basis.
The Indemnitee shall supplement the Final Claims Statement with such
supporting proof of loss (e.g. vouchers, canceled checks, accounting
summaries, judgments, settlement agreement, etc.) as the Indemnitor may
reasonably request in writing within 30 calendar days after receipt by
Indemnitor of a Final Claims Statement. All amounts reflected on Final
Claims Statements shall be paid promptly by the Indemnitor to the
Indemnitee and the Indemnitee shall have the right to immediate payment
of proceeds from insurance policies paid to Indemnitor in connection
with the claim for which the indemnification right arose.
9.4 Payment of Claims for Indemnification. Any amounts
-------------------------------------
payable to Purchaser pursuant to the provisions of Section 9.1 shall be
the responsibility of a Seller or the Sellers as provided in
Section 9.1. Any amounts shall be paid promptly upon notice of Purchaser
to the Representative of incurrence of such loss, liability, cost,
expense or damage and an explanation of the losses for Purchaser's
demand for indemnification under Article IX of this Agreement. Any
amounts payable to the Sellers
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<PAGE>
pursuant to the provisions of Section 9.2 of this Agreement shall be the
responsibility of Purchaser and shall be paid promptly upon notice of
the Representative to Purchaser of incurrence of such loss, liability,
cost, expense or damage and an explanation of the losses for the
Sellers' demand for indemnification under Section 9.2 of this Agreement.
9.5 Survival of Indemnification. Any other provision hereof
---------------------------
to the contrary notwithstanding, the parties agree that the
representations and warranties of the parties contained in this
Agreement and any certificates delivered pursuant to this Agreement
shall survive for a period of 15 months after the Closing Date for
purposes of this Article IX, regardless of any investigation made by
either party prior to the date hereof or prior to the Closing Date.
Purchaser, on the one hand, and the Sellers, on the other hand, shall
only be entitled to indemnification under this Article IX for breaches
of representations and warranties if a written notice describing the
claim for which indemnification is sought is signed by an executive
officer of Purchaser or by the Representative, as the case may be, and
is submitted to Purchaser or the Representative, not later than 15
months following the Closing Date in accordance with Section 9.3 hereof.
Any claim for indemnification pursuant to this Article IX not made prior
to the expiration of such 15-month period shall be extinguished, and all
representations and warranties with respect to which no claim is made
prior to the expiration of such 15-month period shall expire and be of
no further force and effect. Notwithstanding any provision of this
Section 9.5 to the contrary, the time limitations set forth in this
Section 9.5 shall not apply to the survival of any claim by either party
for actual fraud or intentional misrepresentation.
9.6 Certain Limitations on Indemnification. Sellers'
--------------------------------------
obligation to indemnify Purchaser for Losses under Section 9.1(a) shall
accrue only if the aggregate of all such Losses exceeds US$500,000, and
then Sellers shall be liable for all such Losses in excess of such
initial US$500,000. Each Seller's obligation to indemnify Purchaser for
Losses other than Losses indemnified under Section 9.1(b) shall be
limited to such Seller's pro rata portion of US$10,000,000. Purchaser's
obligation to indemnify Sellers for Losses shall be limited to
US$10,000,000.
9.7 Calculation of Losses. Any calculation of Loss for
---------------------
purposes of this Article IX shall be (i) net of any insurance recovery
made by the Indemnitee (whether paid directly to such Indemnitee or
assigned by the Indemnitor to such Indemnitee) and (ii) reduced to take
account of any net Tax benefit realized by the Indemnitee arising from
the deductibility of any such Loss or Tax. Any indemnification payment
hereunder shall initially be made without regard to this paragraph and
shall be reduced to reflect any such net Tax benefit only after the
Indemnitee has actually realized such benefit. For purposes of this
Agreement, an Indemnitee shall be deemed to have "actually realized" a
net Tax benefit to the extent that, and at such time as, the amount of
Taxes payable by such Indemnitee is reduced below the amount of Taxes
that such Indemnitee would have been required to pay but for
deductibility of such Losses. The amount of any reduction hereunder
shall be adjusted to reflect any final determination (which shall
include the execution of Form 870-AD or successor form) with respect to
the Indemnitee's liability for Taxes and, if necessary, either Sellers
or Purchaser, as the case may be, shall make payments to the other to
reflect such adjustment.
9.8 Exclusive Remedy. The sole and exclusive remedy of both
----------------
the Purchaser and the Sellers hereunder or otherwise in connection with
the transactions contemplated hereby shall be restricted to the
indemnification rights set forth in this Article 9.
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ARTICLE X
FEDERAL AND OTHER SECURITIES LAWS
---------------------------------
10.1 Investment Representations.
--------------------------
(a) This Agreement is made with the Sellers in reliance
upon each such Seller's representations to Purchaser, which by his or
her execution hereof such Seller hereby confirms, that the Common Stock
issued as the Stock Consideration (referred to herein as the
"Securities" for purposes of this Article X) to be received by him or
her will be acquired for investment for his or her own account, not as a
nominee or agent, and not with a view to the sale or distribution of any
part thereof, and that he or she has no present intention of selling,
granting participation in, or otherwise distributing the same. By
executing this Agreement, each Seller further represents that he or she
does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer, or grant participations to such person or
to any third person, with respect to any of the Securities.
(b) Each of the Sellers understands that the Securities
are not registered under the 1933 Act on the ground that the sale
provided for in this Agreement and the issuance of Securities hereunder
should be exempt from registration under the 1933 Act and that
Purchaser's reliance on such exemption is predicated on each Seller's
representations set forth herein. Each Seller realizes that the basis
for the exemption may not be present if, notwithstanding such
representations, the Seller has in mind merely acquiring the Securities
for a fixed or determinable period in the future, or for a market rise
or for sale if the market does not rise. Each Seller confirms that he
or she has no such intention.
(c) Each Seller represents that he or she is an
"accredited investor" within the meaning of Rule 501 under the 1933 Act
and that he or she is experienced in evaluating and investing in
companies such as Purchaser, is able to fend for himself or herself in
the transactions contemplated by this Agreement, has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of his investment and has the ability to
bear the economic risks of his investment. Each Seller further
represents that he or she has had access, during the course of the
transaction and prior to his or her purchase of the Securities, to the
information filed by Purchaser with the Securities and Exchange
Commission and that he or she has had, during the course of the
transaction and prior to his or her execution hereof, the opportunity to
ask questions of, and to receive answers from, Purchaser concerning the
terms and conditions of the offering of the Securities and to obtain
additional information necessary to verify the accuracy of any
information furnished to him or her or to which he has had access. Each
Seller is aware that a significant portion of any future revenues of
Purchaser may be adversely affected by market and regulatory forces.
Each Seller acknowledges that he or she has had the opportunity to
obtain additional information as desired in order to evaluate the merits
and risks inherent in purchasing and holding the Securities.
(d) Each Seller understands that the Securities may not be
sold, transferred or otherwise disposed of without registration under
the 1933 Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the 1933 Act, the Securities must be
held indefinitely. In particular, each Seller is aware that the
Securities may not be sold pursuant to Rule 144 promulgated under the
1933 Act unless all of the conditions of that Rule are met. Each Seller
represents that, in the absence of an effective registration statement
covering the Securities, he or she will sell, transfer or otherwise
dispose of the Securities only in a manner consistent with their
representations set forth herein and then only in accordance with the
provisions of Section 10.1(e) hereof.
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<PAGE>
(e) Each Seller agrees that in no event will he or she
make a transfer or disposition of any of the Securities (other than in
accordance with the terms of the Registration Rights Agreement or
pursuant to an effective registration statement under the 1933 Act),
unless and until (i) the Seller shall have notified Purchaser of the
proposed disposition and shall have furnished Purchaser with a statement
of the circumstances surrounding the disposition and assurance that the
proposed disposition is in compliance with all applicable laws and
(ii) if reasonably requested by Purchaser, at the expense of such Seller
or the transferee, he or she shall have furnished to Purchaser an
opinion of counsel, reasonably satisfactory to Purchaser, to the effect
that such transfer may be made without registration under the 1933 Act.
10.2 Legends; Stop Transfer.
----------------------
(a) All certificates for the Securities may bear the
following or a substantially similar legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT RELATING TO THE SECURITIES
WHICH IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
(ii) RULE 144 UNDER SUCH ACT, OR (iii) AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO ZOLTEK
COMPANIES, INC., THAT ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
(b) The certificates for the Securities may also bear any
legend required by any applicable state securities or other law.
(c) In addition, Purchaser shall cause its transfer agent
to make a notation regarding the restrictions on transfer of the
Securities in their respective records and the Securities shall be
transferred on the books of Purchaser only if transferred or sold
pursuant to an effective registration statement under the 1933 Act
covering such shares or pursuant to and in compliance with the
provisions of the Registration Rights Agreements and Section 10.1(e)
hereof.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Appointment of Representative.
-----------------------------
(a) Powers of Attorney. Each Seller irrevocably
------------------
constitutes and appoints Paul Rudling (the "Representative") as such
Seller's true and lawful agent, proxy and attorney-in-fact and agent and
authorizes the Representative acting for such Seller and in such
Seller's name, place and stead, in any and all capacities to do and
perform every act and thing required or permitted to be done in
connection with the transactions contemplated by this Agreement, as
fully to all intents and purposes as such person might or could do in
person, including, without limitation:
(i) deliver all notices required to be delivered by
such Sellers under this Agreement in connection with the foregoing;
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<PAGE>
(ii) receive all notices required to be delivered to
such Sellers under this Agreement in connection with the foregoing;
(iii) take any and all action on behalf of such Seller
from time to time, as the Representative may deem necessary or desirable
to defend, pursue, resolve and/or settle claims under this Agreement in
connection with the foregoing; and
(iv) engage and employ agents and representatives for
such Sellers (including accountants, legal counsel and other
professionals) and to incur such other expenses as he deems necessary or
prudent in connection with the administration of the foregoing.
Each Seller grants unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or
desirable to be done in connection with the transactions contemplated by
this Agreement, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that
the Representative may lawfully do or cause to be done by virtue hereof.
Each Seller will, by executing this Agreement, agree that such agency,
proxy and power of attorney are coupled with an interest, and are
therefore irrevocable without the consent of the Representative and
shall survive the death, incapacity, or bankruptcy of such Seller. Each
Seller acknowledges and agrees that upon execution of this Agreement,
any delivery by the Representative of any waiver, amendment, agreement,
opinion, certificate or other documents executed by the Representative
or any decisions made by the Representative pursuant to this
Section 11.1, such Seller shall be bound by such documents or decisions
as fully as if such Seller had executed and delivered such documents or
made such decisions.
(b) The Representative shall not have by reason of this
Agreement a fiduciary relationship in respect of any Seller, except in
respect of amounts received on behalf of such Seller. The
Representative shall not be liable to any Seller for any action taken or
omitted by him or any agent employed by him hereunder or under any other
related document referred to herein, or in connection therewith, except
that the Representative shall not be relieved of any liability imposed
by law for gross negligence or willful misconduct. The Representative
shall not be liable to Sellers for any apportionment or distribution of
payments made by him in good faith, and if any such apportionment or
distribution is subsequently determined to have been made in error, the
sole recourse of any Seller to whom payment was due, but not made, shall
be to recover from other Sellers any payment in excess of the amount to
which they are determined to have been entitled. The Representative
shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions
of this Agreement.
(c) Replacement of the Representative. Upon the death,
---------------------------------
disability, incapacity or resignation of the initial Representative
appointed pursuant to Section 11.1(a) above, each Seller acknowledges
and agrees that the remaining Sellers shall elect within 30 days one of
the remaining Sellers to serve as the Representative pursuant to this
Section 11.1. Any substituted representative shall be deemed the
Representative of all purposes of this Agreement.
(d) Actions of the Representative; Liability of the
------------------------------------------------
Representative. Each Seller agrees that Purchaser shall be entitled to
- --------------
rely on any action taken by the Representative, on behalf of the
Sellers, pursuant to Section 11.1(a) above (each, an "Authorized
Action"), and that each Authorized Action shall be binding on each
Seller as fully as if such Seller had taken such Authorized Action.
Purchaser agrees that the Representative shall have no liability to
Purchaser for any Authorized Action, except to the extent that such
Authorized Action is found by a final order of a court of competent
jurisdiction to have constituted fraud or willful misconduct. The
Sellers jointly and severally agree to pay, and to indemnify
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<PAGE>
and hold harmless Purchaser from and against any losses which it may
suffer, sustain, or become subject to, as the result of any claim by any
person that an Authorized Action is not binding on, or enforceable
against, the Sellers. In addition, the Sellers hereby release and
discharge Purchaser from and against any liability arising out of or in
connection with the Representative's failure to distribute any amounts
received by the Representative on the Sellers' behalf to the Sellers.
(e) Allocation of Payments. Whenever the Sellers are
----------------------
entitled to receive any payments hereunder or are obligated to make any
payments hereunder (including those specified in Section 11.1(a)(i),
each Seller shall be entitled to receive from Purchaser or shall be
obligated to pay to Purchaser such a pro rata portion of any payment
determined in accordance with each such Seller's percentage ownership of
the Shares as set forth beside each such Seller's name on Exhibit A to
---------
this Agreement.
11.2 Termination. This Agreement, other than the obligations
-----------
contained in Section 5.5(b), 5.6 and 11.10 which shall survive any
termination of this Agreement, may be terminated by the parties hereto,
prior to Closing as follows:
(a) by mutual written consent of Purchaser and the
Representative and the transactions contemplated herein abandoned;
(b) upon written notice from Purchaser to the
Representative if any of the conditions precedent to Purchaser's
obligations hereunder shall have become incapable of fulfillment through
no fault of Purchaser;
(c) upon written notice from the Representative to
Purchaser if any of the conditions precedent to the Sellers' obligations
hereunder shall have become incapable of fulfillment through no fault of
the Sellers;
(d) by Purchaser, on the one hand, or the Representative,
on the other hand, in the event of a breach by the other party to this
Agreement of any representation, warranty or agreement contained herein,
which breach is not cured within 30 days after written notice thereof is
given to the breaching party by the non-breaching party or is not waived
by the non-breaching party during such period;
(e) by Purchaser in accordance with the provisions of
Section 5.5; or
(f) at the election of Purchaser or the Sellers if the
Closing has not occurred on or prior to March 31, 2000.
Termination of this Agreement as provided in this Agreement shall not
affect any other rights or remedies any party may have at law, in equity
or otherwise for breach of this Agreement or otherwise.
11.3 Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which will be deemed to be an original but
all of which together will constitute one and the same document.
11.4 Right Of Inspection. From and after the date of this
-------------------
Agreement to the Closing Date, Sellers will give to Purchaser and its
counsel, accountants and other representatives, full access during
normal business hours to the offices, properties, agreements, records
and affairs of the Companies, and will furnish copies of all Contracts
and other instruments as Purchaser or its counsel may reasonably
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<PAGE>
request. Such investigation will not affect the warranties of Seller
under this Agreement. All such information will be treated
confidentially and will be used only for the purposes intended. If the
transactions contemplated under this Agreement do not take place, all
documents and other property of the Companies or Sellers will be
returned and all disclosures and information given to Purchaser as
contemplated under this Agreement will be treated as confidential and
not disclosed to others unless disclosed publicly by Seller or other
third parties without fault on the part of Purchaser, or unless
otherwise required by law.
11.5 Entire Agreement. This Agreement, including any
----------------
certificate, schedule, exhibit or other document delivered pursuant to
its terms, constitutes the entire agreement between the parties. There
are no verbal agreements, representations, warranties, undertakings or
agreements between the parties, and this Agreement may not be amended or
modified in any respect, except by a written instrument signed by the
parties to this Agreement.
11.6 Governing Law; Consent to Jurisdiction. This Agreement
--------------------------------------
shall be construed, performed and enforced in accordance with the laws
of the State of New York.
11.7 Press Releases. Prior to the Closing, neither party, will
--------------
issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions
contemplated under this Agreement without the prior consent of the other
party first obtained; provided, however, that nothing in this Agreement
will prohibit either party from issuing or causing publication of any
press release or public announcement to the extent that such action is
required by law or any regulatory authority, in which case the party
making such determination will, if practicable under the circumstances,
use reasonable efforts to allow the other party reasonable time to
comment on such release or announcement in advance of its issuance.
11.8 Currency. Any references in this Agreement to "dollars"
--------
shall mean U.S. Dollars.
11.9 Assignment, Third Parties, Binding Effect. The rights
-----------------------------------------
under this Agreement are not assignable nor are the duties delegable by
a party without the written consent of the other party first having been
obtained, and any attempted assignment or delegation without such
consent will be null and void; provided, however, that (i) Purchaser may
assign its rights or delegate its duties hereunder to any subsidiary of
Purchaser and (ii) Purchaser's rights to indemnification hereunder shall
be assignable to its senior lender, subject to any defenses and rights
of set-off that Sellers may have hereunder. Nothing contained in this
Agreement is intended to convey upon any person or entity, other than
the parties hereto and their successors in interest and permitted
assigns, any rights or remedies under or by reason of this Agreement
unless expressly stated. All covenants, agreements, representations and
warranties of the parties contained in this Agreement are binding on and
will inure to the benefit of Purchaser, on the one hand, and Sellers, on
the other, and their respective successors and permitted assigns.
11.10 Expenses. Except as specifically provided for in this
--------
Agreement, Purchaser will bear their own respective expenses, including,
without limitation, counsel and accountants, fees, and Purchaser will
bear Seller's reasonable expenses, including, without limitations, fees
of counsel and accountants to SP Systems and Sellers (but excluding
personal counsel to Sellers other than Winthrop, Stimson, Putnam &
Roberts and Bond Pearce), in connection with the preparation and
negotiation of, and transactions contemplated under, this Agreement.
11.11 Waivers. Any failure by any of the parties to comply with
-------
any of the obligations, agreements or conditions set forth in this
Agreement may be waived by the other party or parties, but any
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<PAGE>
such waiver will not be deemed a waiver of any other obligation,
agreement or condition contained herein.
11.12 Captions And Section Headings. Captions and section
-----------------------------
headings are for convenience only, are not a part of this Agreement and
may not be used in construing it.
11.13 Notices. All notices, requests, demands and other
-------
communications under this Agreement must be in writing and will be
deemed duly given, unless otherwise expressly indicated to the contrary
in this Agreement, (i) when personally delivered, (ii) if sent by
reputable overnight air courier (such as DHL or Federal Express) two
days after having been posted, (iii) if sent by registered or certified
mail in the United States, return receipt requested, upon receipt,
(iv) if sent by facsimile transmission, with a copy of same mailed in
the manner provided above, when transmitted and receipt is confirmed by
telephone. Such delivery shall be addressed to the parties at the
following addresses (or at such other address or number as is given in
writing by either party to the other) as follows:
To Purchaser: Zoltek Companies, Inc.
3101 McKelvey Road
Bridgeton, Missouri 63044
Facsimile No.: 314-291-8536
Attention: Mr. Zolt Rumy
With a copy to: Thompson Coburn LLP
One Mercantile Center
St. Louis, Missouri 63101-1693
Facsimile No.: 314-552-7000
Attention: Mr. Thomas A. Litz
Blake Lapthorn
New Court 1, Barnes Wallis Road, Segensworth
Fareham PO15 5 UA
Facsimile No.: (0)1489 579126
Attention: Mr. Mark Shepherd
To SP Systems Structural Polymer (Holdings) Limited
(prior to the St. Cross Business Park, Newport
Closing Date): Isle of Wight, PO3O 5WU
Facsimile No.: (0)1983 828215
Attention: Mr. Paul Brown
With a copy to: Winthrop Simson, Putnam and Roberts
One Battery Park Plaza
New York, New York 10004-1490
Facsimile No.: 212-858-1500
Attention: Mr. Kenneth E. Adelsberg
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<PAGE>
Bond Pearce
Town Quay House, 7 Town Quay
Southampton, England S014 2PT
Facsimile No.: (0)1703 222480
Attention: Mr. Moray MacPherson
To Sellers: Winthrop Stimson, Putnam and Roberts
One Battery Park Plaza
New York, New York 10004-1490
Facsimile No.: 212-858-1000
Attention: Mr. Kenneth E. Adlesberg
With a copy to: Bond Pearce
Town Quay House, 7 Town Quay
Southampton, England S014 2PT
Facsimile No.: (0)1703 222480
Attention: Mr. Moray MacPherson
[the remainder of this page is intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement
on the date first above written.
PURCHASER:
ZOLTEK COMPANIES, INC.
By:
----------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
SP SYSTEMS:
STRUCTURAL POLYMER (HOLDINGS) LIMITED
By:
----------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
SELLERS:
-------------------------------------------------
Paul Rudling
-------------------------------------------------
Andy Day
-------------------------------------------------
Giovanni Belgrano
-------------------------------------------------
Derek Ness
-------------------------------------------------
Paul Brown
-------------------------------------------------
James Austin
-------------------------------------------------
Adrian Williams
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<PAGE>
-------------------------------------------------
Graham Harvey
-------------------------------------------------
Simon Grosser
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Michael Turner
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Nicholas Partington
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Paul Lyon
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Richard Willoughby
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Lars Hallkvist
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David Cripps
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Christine Belgrano
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Jennifer Rudling
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Louise Ness
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Nicola Day
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<PAGE>
<PAGE>
EXHIBIT A
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STRUCTURAL POLYMER (HOLDINGS) LIMITED
<PAGE>
<PAGE>
EXHIBIT B-1
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Opinion letter of Winthrop, Stimson, Putnam & Roberts, special New York
counsel for Sellers and the Companies
<PAGE>
<PAGE>
EXHIBIT B-2
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Opinion letter of Bond Pearce, counsel for Sellers and the Companies
<PAGE>
<PAGE>
EXHIBIT C
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Opinion Letter of Thompson Coburn LLP, counsel for Purchaser
<PAGE>
<PAGE>
EXHIBIT D
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Registration Rights Agreement
<PAGE>
<PAGE>
EXHIBIT E
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Stock Option Plan
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of the 19th day of November, 1999, by and among Zoltek
Companies, Inc., a Missouri corporation (the "Company"), and each of the
holders of the Common Stock (as defined below) set forth on the
signature pages hereto (each a "Shareholder" and, collectively, the
"Shareholders").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase Agreement dated
as of November 19, 1999 (the "Purchase Agreement"), by and among the
Shareholders and the Company, the Shareholders have acquired an
aggregate of Two Million Five Hundred Thousand (2,500,000) shares of the
Company's Common Stock; and
WHEREAS, as a condition to closing the transactions contemplated
by the Purchase Agreement, the parties agreed to execute and deliver
this Agreement setting forth certain rights of the Shareholders with
respect to registration under the Securities Act of 1933, as amended, of
the shares of Common Stock held by the Shareholders.
NOW, THEREFORE, in consideration of these premises, the covenants
and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Registration of Registrable Securities
--------------------------------------
1.1 Certain Definitions. For purposes of this Agreement the
-------------------
following terms shall have the following meanings:
(a) "Act" means the U.S. Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations of the
Commission issued under the Act.
(b) "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or under
common control with such Person.
(c) "Commission" means the U.S. Securities and Exchange
Commission, or any other Federal agency then administering the Act.
(d) "Common Stock" shall mean shares of the Company's
Common Stock, $.01 per value per share, and any stock or securities
issued with respect to such Common Stock by reason of a stock dividend,
stock split, combination of shares, recapitalization, reclassification,
merger, consolidation, corporate reorganization or otherwise.
<PAGE>
<PAGE>
(e) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute, and the rules and
regulations of the Commission issued under the Exchange Act.
(f) "Holder" means (a) the Shareholder, and (b) any other
person holding Registrable Securities to whom the registration rights
set forth in this Agreement have been transferred pursuant to
Section 1.7.
(g) "Participating Holder" means any Holder of any
Registrable Securities included in a registration.
(h) "Person" means any individual, corporation, partnership,
limited liability company, trust or any other incorporated or
unincorporated entity or organization of any kind.
(i) "Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by any Registration Statement and all
other amendments and supplements to the prospectus, including post-
effective amendments and all materials incorporated by reference in such
prospectus.
(j) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement
in compliance with the Act and the declaration or ordering of
effectiveness of such Registration Statement;
(k) "Registrable Securities" means shares of Common Stock
issued to the Shareholder pursuant to the Purchase Agreement; provided,
however, that Registrable Securities shall cease to be Registrable
Securities upon any sale pursuant to a Registration Statement or
Section 4(1) of the Act or Rule 144 (or any combination thereof), and
provided, further, that, at such times as the entire block of otherwise
Registrable Securities may be sold by the holder thereof without any
volume limitation, including without limitation by reason of aggregation
or attribution, pursuant to Rule 144 or any successor rule, such block
shall not be deemed to be Registrable Securities.
(l) "Registration Expenses" shall mean all reasonable and
customary expenses of the Company incident to performance of or
compliance with this Agreement, including, without limitation: (i) all
Commission, stock exchange or registration and filing fees; (ii) filings
pursuant to the policy of the National Association of Securities
Dealers, Inc. with respect to the review of corporate financing;
(iii) all fees and expenses incurred in connection with compliance with
state securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualification of
any of the Registrable Securities and the preparation of a Blue Sky
Memorandum); (iv) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any
Registration Statement, Prospectus, certificates and other documents
relating to the performance of and
- 2 -
<PAGE>
<PAGE>
compliance with this Agreement; (v) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges or automated
quotation system; (vi) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company,
including the expenses of any special audit or "comfort" letters
required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable
Securities by the Holders and transfer taxes, if any, relating to the
sale or disposition of Registrable Securities by the Holders; and
(vii) the fees and disbursements of one counsel for the Holders.
(m) "Registration Statement" means any registration
statement of the Company and any other entity required to be a
registrant with respect to such registration statement pursuant to the
requirements of the Act, including any Prospectus, and all amendments
and supplements to any such registration statement, including post-
effective amendments, and all exhibits and all material incorporated by
reference in any such registration statement.
(n) "Rule 144" means Rule 144 under the Act (or any
successor rule that may be adopted by the Commission ).
(o) "Rule 145" means Rule 145 under the Act (or any
successor rule that may be adopted by the Commission ).
(p) "Rule 415" means Rule 415 under the Act (or any
successor rule that may be adopted by the Commission ).
(q) "Rule 424" means Rule 424 under the Act (or any
successor rule that may be adopted by the Commission ).
(r) "Shelf Registration" means a "shelf" registration
statement on an appropriate form pursuant to Rule 415.
(s) "Underwritten Offering" means an offering in which
securities of the Company are sold to an underwriter for reoffering to
the public pursuant to an effective Registration Statement under the
Act.
1.2 Demand Registrations.
--------------------
(a) Requests for Registration. At any time on or after
-------------------------
the date hereof, as set forth in this Section 1.2, the Holders of a
majority of the Registrable Securities may in writing request
registration under the Act of all or part of their Registrable
Securities. Each request for registration shall state that it is being
made pursuant to this Section 1.2 and shall specify the number of
Registrable Securities requested to be registered. Within ten days
after such notice has been given, the Company shall give written notice
to all other Holders, if any, of such requested registration. Each such
Holder shall have the right, by giving written notice to the Company
within 30 days after the Company gives its notice, to elect to have
included in such
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<PAGE>
<PAGE>
registration such of its Registrable Securities as such Holder may
request in such notice of election. Upon a request for a Demand
Registration, the Company shall use its best efforts to effect as
expeditiously as possible the registration, in accordance with
Section 1.4, of all Registrable Securities which the Company has been
requested to so register. Each registration requested pursuant to this
Section 1.2 is referred to herein as a "Demand Registration." If the
Company notifies the Holders in writing, prior to a request for a Demand
Registration from the Holders, of the Company's intent to register
securities with the Commission, and the Company effects a registration
in accordance with Section 1.3, the Holders' request shall be governed
by Section 1.3 and shall not constitute a Demand Registration.
(b) Limitations on Demand Registrations.
-----------------------------------
(i) The Company shall not be required to effect more
than one Demand Registration.
(ii) If the Board of Directors of the Company, acting
in good faith, determines that the registration and distribution of
Registrable Securities (or the use of the Registration Statement or
related Prospectus) resulting from a Demand Registration would:
(A) materially and adversely interfere with
any previously announced business combination transaction involving the
Company pursuant to which the Company would issue, in connection with
such transaction, shares of Common Stock; or
(B) result in the premature disclosure of any
material pending financing, acquisition, corporate reorganization or any
other corporate development involving the Company or any of its
subsidiaries;
then, in either such event, the Company shall promptly give the Holders
written notice of such determination. The Company shall thereupon have
the right to delay the filing or the effectiveness (but not the
preparation) of the Registration Statement for the Demand Registration
for a reasonable period of time, but in no event more than 120 days
after the date that the request for a Demand Registration was made;
provided that in the event of such delay, the Holders of a majority of
the Registrable Securities to be included in such Demand Registration
will be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration will not count as a Demand
Registration, and responsibility for Registration Expenses incurred by
the parties prior to such delay shall be allocated in accordance with
Section 1.2(e). The Company may not exercise this right to delay a
Demand Registration more than once during any period of twelve
consecutive months.
(c) Underwriting Requirements. In connection with any
-------------------------
Demand Registration involving an Underwritten Offering, the Company
shall (together with all Holders proposing to distribute their
securities through such Underwritten Offering) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters of recognized national or regional standing
selected for such Underwritten Offering
- 4 -
<PAGE>
<PAGE>
by the Holders of a majority of the Registrable Securities proposed to
be sold pursuant to such Demand Registration and reasonably acceptable
to the Company. If a Demand Registration is an Underwritten Offering
and the representative of the underwriters advises the Holders in
writing that marketing factors, including, but not limited to, the price
at which such securities will be sold, require a limitation of the
number of Registrable Securities to be included in the registration and
Underwritten Offering, then, the number of shares of Common Stock that
may be included in an Underwritten Offering shall be allocated among
all Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities requested to be included in the
registration by such Holders. Also, in the event that the underwriter
requires a limitation of 10% or more in the number of Registrable
Securities to be included in the registration and Underwritten Offering
in an offering that would otherwise be pursuant to a Demand
Registration, such registration of shares shall not constitute a Demand
Registration.
(d) Expenses of Demand Registration. Except as provided
-------------------------------
in Section 1.2(e), all Registration Expenses incurred in connection with
a Demand Registration shall be borne by the Company. Underwriting
discounts and commissions relating to the sale or disposition of
Registrable Securities by the Holders and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by the
Holders, all shall be borne by the Holders. The cost of preparing all
documents incorporated by reference or otherwise required to be prepared
in the ordinary course of the Company's business shall be borne by the
Company. Expenses to be borne by the Holders shall be allocated to each
Holder in the same proportion as the amount of Registrable Securities
owned by such Holder which are included in the Demand Registration bears
to the amount of Registrable Securities owned by all Holders which are
included in the Demand Registration.
(e) Withdrawal of Demand Registration. Holders of a
---------------------------------
majority of the Registrable Securities proposed to be registered in a
given Demand Registration may elect to withdraw such Demand Registration
at any time by giving written notice thereof to the Company. Any Demand
Registration so withdrawn shall not constitute a Demand Registration
hereunder. The Registration Expenses incurred in any withdrawn Demand
Registration shall be borne solely by the Holders unless (i) the Holders
agree to forfeit their right to a Demand Registration, in which case all
such Registration Expenses shall be borne by the Company, (ii) the
Demand Registration was withdrawn as a result of the election of the
Company to delay the registration in accordance with Section 1.2(b), in
which case all such Registration Expenses shall be borne by the Company
and, in addition, the Company shall pay all of the fees and
disbursements of counsel to the Holders incurred prior to such delay, or
(iii) the Company continues to pursue such registration with respect to
securities to be sold for the Company's own account or the account of
others, in which case all such Registration Expenses shall be borne by
the Company.
1.3 Piggyback Registrations. If the Company proposes to
-----------------------
register any of its Common Stock under the Act and the registration form
to be used can be used to register the resale of the Common Stock (other
than a Registration Statement (A) on Form S-8 or any successor form
relating to securities issuable pursuant to any benefit plan; (B) on
Form S-4, or any successor form relating to an exchange offer or
relating to a transaction pursuant to Rule 145, or (C) on Form S-3 or
any successor form with respect to securities registered in connection
with
- 5 -
<PAGE>
<PAGE>
dividend reinvestment plans or similar plans only), the Company shall,
each such time, promptly give the Holders written notice of such
determination to effect such a registration not later than 30 days prior
to the anticipated date of initial filing with the Commission of the
Registration Statement. Upon the written request of any of the Holders
given within 20 days after the date that the Company gives its notice,
as part of the registration to which such notice relates, the Company
shall use its best efforts to effect as expeditiously as possible the
registration of all Registrable Securities that the Holders have
requested to be registered.
(a) Underwritten Offerings. If the registration of
----------------------
which the Company gives notice is for an Underwritten Offering, then the
Company shall so advise the Holders as a part of such written notice. In
such event, the right of the Holders to registration pursuant to this
Section shall be conditioned upon the Holders' agreeing to participate
in such Underwritten Offering upon the terms and condition as shall be
negotiated by the Company, and the inclusion of the Registrable
Securities in the Underwritten Offering to the extent provided herein.
The Holders proposing to distribute securities through such Underwritten
Offering shall (together with the Company) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such Underwritten Offering by the Company. Notwithstanding
any other provisions of this Section, if the underwriter determines in
writing, in its sole and absolute discretion, that marketing factors,
including the price at which such securities will be sold, require a
limitation of the number of shares to be underwritten, then the
underwriter may exclude some or all Registrable Securities from such
registration and Underwritten Offering in accordance with the provisions
of this Section. The Company shall so advise the Holders distributing
securities through such Underwritten Offering, and the number of
Registrable Securities that may be included in the registration and
Underwritten Offering on behalf of the Holders shall be allocated among
the Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities which the Holders requested to be
included in the registration. The Company does hereby represent that,
other than as provided in this Agreement, there are no holders of shares
of capital stock of the Company that have any registration rights with
respect to such shares. The Company hereby covenants that it shall not
grant any person registration rights with respect to shares of capital
stock of the Company unless such registration rights are expressly
subordinated to the rights of the Holders hereunder, and it is
understood that in any registration in which the Holders may participate
pursuant to the Agreement that, in the event that the underwriter
requires a limitation in the number of securities to be included in the
registration and Underwritten Offering, the Registrable Securities shall
have priority over any other shares proposed to be included in such
offering other than shares offered for sale by the Company for its
account. If the Holders disapprove of the terms of any such
Underwritten Offering, then the Holders may elect to withdraw therefrom
by giving written notice to the Company and the underwriter. Any
securities so excluded or withdrawn from such Underwritten Offering
shall be withdrawn from such registration.
(b) Expenses of Piggyback Registrations. In the case of
-----------------------------------
any registration effected pursuant to this Section 1.3, all Registration
Expenses incurred in connection therewith shall be borne by the Company,
except that Underwriting discounts and commissions relating to the sale
or disposition of Registrable Securities by the Holders and transfer
taxes, if any, relating to the sale or disposition of Registrable
Securities by the Holders,
- 6 -
<PAGE>
<PAGE>
all shall be borne by the Holders. The cost of preparing all documents
incorporated by reference or otherwise required to be prepared in the
ordinary course of the Company's business shall be borne by the Company.
Expenses to be borne by the Holders shall be allocated to each Holder in
same proportion which the Registrable Securities owned by such Holder
which are included in the registration bears to the Registrable
Securities owned by all Holders which are included in the registration.
1.4 Registration Procedures. If and whenever the Company
-----------------------
shall be required to use its best efforts to effect or cause the
registration of any Registrable Securities under the Act as provided in
this Agreement, the Company shall (and, with respect only to Sections
1.4(i) and 1.4(j), the Holders shall) as expeditiously as reasonably
possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities on any form for
which the Company then qualifies or that counsel for the Company shall
deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the methods of distribution
thereof intended by the Holders participating in such registration, and
use its best efforts to cause such Registration Statement to become and
remain effective;
(b) prepare and file with the Commission amendments and
post-effective amendments to such Registration Statement and such
amendments and supplements to the Prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such
registration or as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the Company
or by the Act for a Shelf Registration if requested by the Holders of a
majority of the Registrable Securities to be included in such
registration, or otherwise necessary to keep such Registration Statement
effective to permit the methods of distribution intended by the Holders
participating in such registration for at least 120 days and cause the
Prospectus as so supplemented to be filed pursuant to Rule 424, and to
otherwise comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement in
the manner reasonably requested by the Holders of a majority of the
Registrable Securities to be included in such registration until the
earlier of (x) such time as all of the Registrable Securities have been
disposed of in accordance with the intended methods of disposition, and
(y) the expiration of six months after the effective date of such
Registration Statement (it being understood that the Company at its
option may determine to maintain such effectiveness for a longer period,
whether pursuant to a Shelf Registration or otherwise); provided,
however, that a reasonable time before filing a Registration Statement
or Prospectus, or any amendments or supplements thereto (other than
reports required to be filed by it under the Exchange Act), the Company
shall furnish to the Participating Holders, the managing underwriter and
their respective counsel for review and comment, copies of all documents
proposed to be filed;
(c) furnish to the Participating Holders and to any
underwriter in connection with an Underwritten Offering such number of
conformed copies of such Registration Statement and of each amendment
and post-effective amendment thereto (in each case including all
exhibits) and such number of copies of any preliminary Prospectus,
Prospectus or Prospectus
- 7 -
<PAGE>
<PAGE>
supplement and such other documents as the Participating Holders or
underwriter may reasonably request in order to facilitate the
disposition of the Registrable Securities by the Participating Holders
or underwriters (the Company hereby consenting to the use (subject to
the limitations set forth in Section 1.4(j) hereof) of the Prospectus or
any amendment or supplement thereto in connection with such
disposition);
(d) use its best efforts to register or qualify the sale
of such Registrable Securities covered by such Registration Statement
under such other securities or "blue sky" laws of such jurisdictions as
the Participating Holders shall reasonably request, except that the
Company shall not for any such purpose be required to (i) qualify
generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 1.4(d), it would not be
obligated to be so qualified, (ii) subject itself to taxation in any
such jurisdiction, or (iii) to consent to general service of process in
any such jurisdiction;
(e) notify the Participating Holders, at any time when a
Prospectus relating thereto is required to be delivered under the Act
within the appropriate period mentioned in Section 1.4(b) hereof, of the
Company's becoming aware that the Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and, at the
request of any Participating Holder, prepare and furnish to such
Participating Holder a reasonable number of copies of an amendment or
supplement to such Registration Statement or related Prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(f) notify the Participating Holders as soon as possible:
(i) when the Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective;
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
order preventing the use of a related Prospectus, or the initiation (or
any overt threats) of any proceedings for such purposes; and
(iv) of the receipt by the Company of any written
notification of the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation
(or overt threats) of any proceeding for that purpose;
- 8 -
<PAGE>
<PAGE>
(g) use its best efforts to cause all such Registrable
Securities to be listed on The Nasdaq Stock Market or any other national
securities exchange or automated quotation system on which the class of
Registrable Securities being registered is then listed, if such
Registrable Securities are not already so listed;
(h) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement or of any
order suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities included in
the Registration Statement for sale in any jurisdiction, the Company
shall use all commercially reasonable efforts promptly to obtain its
withdrawal;
(i) the Participating Holders shall furnish the Company
with such information regarding the Participating Holders and pertinent
to the disclosure requirements relating to the registration and the
distribution of such securities as the Company may from time to time
reasonably request in writing; and
(j) the Participating Holders shall, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 1.4(e) hereof, forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration
Statement covering such Registrable Securities until the Participating
Holders shall have received copies of the supplemented or amended
Prospectus contemplated by Section 1.4(e) hereof, and, if so directed by
the Company, the Participating Holders shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then
in the Participating Holders' possession, of the Prospectus covering
such Registrable Securities current at the time of receipt of such
notice.
1.5 Black-Out Period Agreement. In consideration for the
--------------------------
Company agreeing to its obligations under this Agreement, the Holders
agree in connection with any registration of the Company's securities
(other than pursuant to a Registration Statement (A) on Form S-8 or any
successor form relating to securities issuable pursuant to any benefit
plan; (B) on Form S-4, or any successor form relating to an exchange
offer or relating to a transaction pursuant to Rule 145 under the Act;
or (C) on Form S-3 or any successor form with respect to securities
registered in connection with dividend reinvestment plans and similar
plans only) and provided that (A) all officers and directors of the
-------------
Company and all other persons with registration rights enter into
similar agreements, and (B) nothing contained herein shall prohibit any
holder of Registrable Securities from transferring any Common Stock to a
trust established for estate planning purposes so long as the trust
executes a similar undertaking, that, upon the request of the
underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of any of the Common Stock
(other than those included in the registration) without the prior
written consent of such underwriters for up to 180 days after the
effective date of such registration. The restrictions in this
Section 1.5 shall not prevent a Holder from selling shares of Common
Stock purchased by it in the public markets, provided that such
Purchaser is not in a net short position with respect to publicly
tradeable Common Stock or other derivative securities with respect
thereto at any time during such 180-day period. Notwithstanding
anything to the contrary set forth herein, the terms
- 9 -
<PAGE>
<PAGE>
of this Section 1.5 may not be amended or modified, directly or
indirectly, without the express written consent of each holder of
Registrable Securities detrimentally affected by such amendment or
modification and any such amendment or modification made without such
holder's consent shall not be applicable to that holder.
1.6 Rule 144 Reporting. With a view toward making available
------------------
to the Holders the benefits of certain rules and regulations of the
Commission that may permit the sale of the Common Stock to the public
without registration, the Company agrees to use its best efforts to:
(a) make and keep current public information available,
within the meaning of Rule 144 or any similar or analogous rule
promulgated under the Act;
(b) file with the Commission, in a timely manner, all
reports and other documents required of the Company under the Act and
the Exchange Act;
(c) use commercially reasonable efforts to take such
action to enable the holders of Registrable Securities to utilize Form
S-3 for the sale of their shares; and
(d) so long as any party hereto owns any Registrable
Securities, furnish to such party forthwith upon request, a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144, the Act and the Exchange Act, or as to its
qualification that it qualifies as a registrant whose shares may be
resold pursuant to Form S-3; a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as
such party may reasonably request in availing itself of any rule or
regulation of the Commission allowing it to sell any such securities
without registration.
1.7 Transfer of Registration Rights. The registration rights
-------------------------------
of any Shareholder under this Agreement may not be transferred except
(i) to a transferee who is the heir of a Shareholder, the personal
representative of a Shareholder's estate or a revocable trust
voluntarily established by such Shareholder primarily for his benefit,
(ii) by any Shareholder to any Affiliate of such Shareholder to whom any
of the shares owned by the Shareholder are transferred, and (iii) by any
Shareholder to any transferee who acquires at least five thousand
(5,000) Registrable Securities (adjusted to reflect subsequent stock
splits, combinations, stock dividends and recapitalizations); provided,
however, that (i) the Company is given written notice by such
Shareholder at the time of such assignment and transfer stating the name
and address of the transferee and identifying the securities with
respect to which the rights under this Agreement are being assigned and
transferred, and (ii) the transferee executes such documents as the
Company may request evidencing the transferees agreement to be bound by
the restrictions herein.
For the purposes of this Section 1.7, a change in control of an
Affiliate of a Shareholder holding shares entitling such Affiliate to
the registration rights hereunder, such that such Affiliate is
subsequent to such change of control no longer an Affiliate of such
Shareholder, shall be deemed an attempted transfer of the registration
rights hereunder and such former Affiliate of such Shareholder shall not
be entitled to such registration rights.
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<PAGE>
1.8 Orderly Disposition of Large Amounts of Shares. Each
----------------------------------------------
Holder agrees that if he proposes to dispose of more than 100,000 shares
of Common Stock in any three-month period, he will give at least ten
days' notice to the Company prior to such disposition and use reasonable
efforts to coordinate such sales with the Company to facilitate an
orderly disposition without a material adverse effect on the market
price of the Common Stock.
ARTICLE 2
Indemnification
---------------
2.1 General Indemnification. In connection with any
-----------------------
registration or qualification of the Registrable Securities under this
Agreement, (i) the Company shall indemnify and hold harmless each of the
Holders, including but not limited to each Person, if any, who controls
a Holder within the meaning of Section 15 of the Act, against all
losses, claims, damages, liabilities and expenses (including but not
limited to reasonable expenses incurred in investigating, preparing and
defending against any claim) to which a Holder or such controlling
person may become subject under the Act, the Exchange Act or otherwise,
insofar as the same arise out of or are based upon or are caused by any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) furnished pursuant to this Agreement or insofar as
the same arise out of or are based upon or are caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses
are ultimately determined to have arisen out of or were based upon or
were caused by any untrue statement or alleged untrue statement or
omission or alleged omission based upon written information furnished to
the Company by or on behalf of any Holder or any such control person for
inclusion in any Registration Statement or Prospectus (and any
amendments or supplements thereto), and (ii) each Holder, severally and
not jointly, shall indemnify the Company, its affiliates, any person who
signed any Registration Statement, and their respective officers,
directors and control persons against all such losses, claims, damages,
liabilities and expenses (including but not limited to reasonable
expenses incurred in investigating, preparing and defending against any
claim) insofar as the same are ultimately determined to have arisen out
of or were based upon or were caused by any such untrue statement or
alleged untrue statement or any such omission or alleged omission based
upon written information furnished to the Company by or on behalf of
such Holder or any such control person for the inclusion in any
Registration Statement or Prospectus (and any amendments or supplements
thereto).
2.2 Notice of, and Procedures for, Collecting
------------------------------------------
Indemnification. Promptly upon receipt by a party indemnified under
- ---------------
this Agreement of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this Agreement, such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
have to any indemnified party otherwise than under this Agreement unless
such failure shall materially and
- 11 -
<PAGE>
<PAGE>
adversely affect the defense of such action. In case notice of
commencement of any such action shall be given to the indemnifying party
as above provided, the indemnifying party shall be entitled to
participate in and, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably
satisfactory to such indemnified party. The indemnified party shall
have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable expenses incurred in investigating,
preparing and defending against any claim) shall be paid by the
indemnified party unless (a) the indemnifying party agrees to pay the
same, (b) the indemnifying party fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party), or (c) the
named parties to any such action (including any impleaded parties) have
been advised by such counsel that representation of such indemnified
party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct (in
which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party). In the
event that either of the circumstances described in clauses (b) and (c)
of the sentence immediately preceding shall occur, the indemnified party
shall have the right to select a separate counsel and to assume such
legal defense and otherwise to participate in the defense of any such
action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party shall be liable
for any settlement entered into without its consent, which consent shall
not be unreasonably withheld or delayed.
ARTICLE 3
Miscellaneous
-------------
3.1 Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing and shall be given to such
party at its address or telecopier number set forth on the signature
page hereof, or such other address or telecopier number as such party
may hereinafter specify for the purpose. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this
Section 3.1 and the transmitting telecopier receives confirmation of
delivery, (b) if given by overnight air courier, on the next business
day after the date of shipment, or (c) if given by any other means, when
delivered at the address referred to in, or specified by such party
pursuant to, this Section 3.1.
3.2 Amendment and Waiver. The provisions of this Agreement
--------------------
may be amended or waived only upon the prior written consent of the
Company and the Holders of a majority of the Registrable Securities.
3.3 Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which taken together shall constitute one
instrument.
- 12 -
<PAGE>
<PAGE>
3.4 Binding on Successors and Assigns. Except as set forth in
---------------------------------
Section 1.7, no party may assign any of its rights or delegate any of
its duties under this Agreement without the prior consent of the other
party. This Agreement shall be binding upon, inure to the benefit of
and be enforceable by and against the parties hereto and their
respective successors and permitted assigns in accordance with the terms
hereof.
3.5 Headings. The headings in the sections and subsections of
--------
this Agreement are inserted for convenience only and in no way alter,
amend, modify, limit or restrict the contractual obligations of the
parties.
3.6 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be prohibited by or invalid under applicable law, such provision
will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
3.7 Arbitration. Any and all disputes relating to this
-----------
Agreement and the transactions contemplated hereby (including, without
limitation, that a party hereto is entitled to indemnification and/or
the amount thereof) shall be settled by binding arbitration conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association before a panel of three commercial arbitrators
in St. Louis, Missouri. Each disputing party shall select a single
arbitrator, and the two arbitrators so selected shall select a third
arbitrator. If such arbitrators cannot agree upon a third arbitrator
within 30 days after their appointment, then an arbitrator shall be
appointed by the American Arbitration Association. The arbitrators may
not consolidate arbitration proceedings under this Agreement with other
pending arbitration proceedings without the prior written consent of the
participants. The Commercial Arbitration Rules, as applied to any
arbitration conducted pursuant hereto, may be modified with the mutual
consent of the participants or upon the unanimous agreement of the three
arbitrators. The decision and/or award of a majority of such arbitrators
shall be final and binding upon all parties having an interest in the
dispute. The award of the arbitrators will include a reasoned opinion.
Any participant may enter a judgment upon the award rendered by the
arbitrators in any court having jurisdiction over the dispute.
3.8 Entire Agreement; Law Governing. All prior negotiations
-------------------------------
and agreements between the parties hereto are superseded by this
Agreement, and there are no representations, warranties, understandings
or agreements other than those expressly set forth herein, except as
modified in writing concurrently herewith or subsequent hereto. This
Agreement shall be governed by and construed and interpreted according
to the internal laws of the State of New York, determined without
reference to conflicts of law principles.
* * *
- 13 -
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day
and year first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
ZOLTEK COMPANIES, INC.
By
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address: 3101 McKelvey Road
St. Louis, Missouri 63044
Fax No. (314) 291-9082
SHAREHOLDERS:
--------------------------------------------
Paul Rudling
Address: St. Huberts Lodge
Shalfleet, Isle of Wight PO30 4NA
- 14 -
<PAGE>
<PAGE>
--------------------------------------------
Andrew Day
Address: 41 Green Lane
Cowes, Medham,
Isle of Wight PO31 8QJ
--------------------------------------------
Giovanni Belgranno
Address: Carrington House
Lawn Road
Milford on Sea, Lymington
Hampshire SO41 OQZ
--------------------------------------------
Derek Ness
Address: Warders Cottage
Thorpe Cross
Brightstone, Isle of Wight
--------------------------------------------
Paul Brown
Address: Two Trees
71 Foreland Road
Bembridge, Isle of Wight
- 15 -
<PAGE>
<PAGE>
--------------------------------------------
James Austin
Address: Hollies Farm Barn
Brick Kiln Lane
Morningthorpe, Norfolk NG15 2GL
--------------------------------------------
Adrian Williams
Address: 145 Avenue Road
Portswood, Southampton
Hampshire SO14 6BD
--------------------------------------------
Graham Harvey
Address: 7 Rockleigh Drive
Totton, Southampton
Hampshire, SO40 7JJ
--------------------------------------------
Simon Grosser
Address: 81 Princes Lane
Newport, Sydney
New South Wales, 2106
Australia
- 16 -
<PAGE>
<PAGE>
--------------------------------------------
Michael David Turner
Address: Forehaven
107 Howgate Road
Bembridge, Isle of Wight, PO35 5TW
--------------------------------------------
Nicholas Partington
Address: 31 Westhill Road
Cowes, Isle of Wight PO31 7SF
--------------------------------------------
Paul Lyon
Address: 27 Downs View Road
Bembridge, Isle of Wight,
PO35 5QT
--------------------------------------------
Richard Willoughby
Address: 25 Adams Close
Hedge End, Southampton
Hampshire, SO30 2NB
- 17 -
<PAGE>
<PAGE>
--------------------------------------------
Lars Hallkvist
Address: Hallkvist Trading ApS
Helleboek Kloedefabrik
Nodre Stranvej 119F
DK-3150 Helleboek
--------------------------------------------
David Cripps
Address: Warden Cottage
Warden Road
Totland Bay, Isle of Wight
PO39 0AD
--------------------------------------------
Christine Belgrano
Address: Carrington House
Lawn Road
Milford on Sea, Lymington
Hampshire SO41 0QZ
--------------------------------------------
Jennifer Rudling
Address: St. Huberts Lodge
Shalfleet, Isle of Wight PO30 4NA
- 18 -
<PAGE>
<PAGE>
--------------------------------------------
Louise Ness
Address: Warders Cottage
Thorpe Cross
Brightstone, Isle of Wight
--------------------------------------------
Nicola Day
Address: 41 Green Lane
Medham, Cowes
Isle of Wight PO31 8QJ
- 19 -
<PAGE>
U.S. $71,000,000
CREDIT AGREEMENT
dated as of November 19, 1999
among
ZOLTEK COMPANIES, INC.,
ZOLTEK CORPORATION,
ZOLTEK INTERMEDIATES CORPORATION,
ZOLTEK PROPERTIES, INC.,
CAPE COMPOSITES, INC., AND
ENGINEERING TECHNOLOGY CORPORATION,
as the Borrowers,
THE LENDERS
and any other lenders hereafter becoming
a party to this Agreement
and
MERCANTILE BANK NATIONAL ASSOCIATION,
as Agent
<PAGE>
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 1. TERM 5
SECTION 2. DEFINITIONS 5
SECTION 3. THE LOANS 26
3.1 Revolving Credit Commitment of Lenders 26
3.2 Swingline Facility 28
3.3 Acquisition Revolving Credit Facility 29
3.4 Term Loan Commitment of Lenders 31
3.5 Procedure for Borrowing. 32
(a) Revolving Credit Loan Advances 32
(b) Swingline Loan Advances 34
(c) Acquisition Revolving Credit Loan Advances 34
(d) Disbursement of Term Loan 36
(e) Interest Rate Conversions 37
3.6 Minimum Draw-Down 39
3.7 Letters of Credit 39
3.8 Interest Rates and Payments. 42
3.9 Prepayment; Funding Losses 43
3.10 Basis for Determining Interest Rate Inadequate or Unfair 44
3.11 Illegality 45
3.12 Requirements of Law: Increased Costs 45
3.13 Prime Loans Substituted for Affected LIBOR Loans 46
3.14 Arrangement Fee; Agent's Fee 46
3.15 Commitment Fee 46
3.16 Place and Manner of Payment 47
3.17 Maturity 47
3.18 Prepayments 47
(a) Voluntary Prepayments 47
(b) Mandatory Prepayments 48
(c) Notice of Payment 49
3.19 Discretion of Lenders as to Manner of Funding 49
3.20 Reduction of Loan Commitments 50
3.21 Interest Rate Protection 50
3.22 Utilization of Commitments in Optional Currencies 50
(a) Periodic Computations of Dollar Equivalent Amounts
of Loans and Letters of Credit Outstanding 50
(b) Notices from Lenders That Optional Currencies Are
Unavailable to Fund New Loans 50
(c) Notices From Lenders That Optional Currencies Are
Unavailable to Fund Renewals of the LIBOR Loans 51
i
<PAGE>
<PAGE>
3.23 Currency Repayments 51
3.24 Optional Currency Amounts 52
3.25 European Monetary Union 52
3.26 Judgment Currency 53
SECTION 4. PRECONDITIONS TO LOANS 54
4.1 Initial Loan 54
4.2 Subsequent Revolving Credit Loans 58
4.3 Subsequent Acquisition Revolving Credit Loans 58
SECTION 5. COLLATERAL 60
5.1 Security Agreement 60
5.2 Additional Collateral 60
(a) Domestic Subsidiaries 60
(b) Foreign Subsidiaries 60
5.3 Release 61
SECTION 6. REPRESENTATIONS AND WARRANTIES 61
6.1 Corporate Existence and Power 61
6.2 Corporate Authorization 61
6.3 Binding Effect 61
6.4 Financial Statements; Financial Condition 62
6.5 Litigation 62
6.6 Pension and Welfare Plans 62
6.7 Returns and Payment 63
6.8 Subsidiaries 63
6.9 Compliance With Other Instruments; None Burdensome 63
6.10 Other Loans and Guarantees 64
6.11 Labor Matters 64
6.12 Title to Property 64
6.13 Regulation U 64
6.14 Multi-Employer Pension Plan Amendments Act of 1980 64
6.15 Investment Company Act of 1940: Public Utility Holding
Company Act of 1935 64
6.16 Patents, Licenses, Trademarks, Etc. 65
6.17 Environmental and Health and Safety Matters 65
6.18 Corporate or Fictitious Names 65
6.19 Year 2000 Compliance 65
6.20 The Collateral Documents 66
6.21 SPHL Acquisition 66
SECTION 7. COVENANTS. 66
7.1 Affirmative Covenants of Borrowers 66
(a) Information 67
(b) Payment of Indebtedness 68
(c) Consultations and Inspections 68
ii
<PAGE>
<PAGE>
(d) Payment of Taxes; Corporate Existence; Maintenance
of Properties; Insurance 69
(e) Accountants 70
(f) ERISA Compliance 70
(g) Maintenance of Books and Records 71
(h) Further Assurances 71
(i) Financial Covenants 71
(j) Compliance with Law 72
(k) Notices 72
(l) Protection of Collateral 74
(m) Compliance with Environmental Laws 74
7.2 Negative Covenants of Borrowers 75
(a) Limitations on Liens 75
(b) Sale of Property 75
(c) Mergers and Consolidations 75
(d) Acquisitions 76
(e) Fiscal Year 76
(f) Stock Redemptions and Distributions 76
(g) Transactions with Related Parties 76
(h) Loans and Investments 76
(i) Dissolution or Liquidation 77
(j) Change in Nature of Business 77
(k) Pension Plans 77
(l) Limitation on Indebtedness 77
(m) Limitation on Stock Offerings 78
7.3 Use of Proceeds 78
SECTION 8. EVENTS OF DEFAULT 78
SECTION 9. THE AGENT 81
9.1 Appointment and Authorization 81
9.2 Agent and Affiliates 81
9.3 Action By Agent 82
9.4 Consultation with Experts 82
9.5 Liability of Agent 82
9.6 Indemnification 82
9.7 Credit Decision 82
9.8 Resignation of Agent 83
9.9 Removal of Agent 83
SECTION 10. GENERAL 83
10.1 No Waiver 83
10.2 Right of Setoff 84
10.3 Cost and Expenses 84
10.4 Environmental Indemnity 84
10.5 General Indemnity 85
iii
<PAGE>
<PAGE>
10.6 Authority to Act 85
10.7 Capital Adequacy 86
10.8 Notices 86
10.9 Consent to Jurisdiction 86
10.10 Agent's and Lenders' Books and Records 87
10.11 Governing Law: Amendments 87
10.12 Participations and Assignments 87
10.13 [Reserved.] 88
10.14 References: Headings for Convenience 89
10.15 Subsidiary Reference 89
10.16 No Oral Agreements: Entire Agreement 89
10.17 Severability 89
10.18 Counterparts 89
10.19 Resurrection of Obligations 89
10.20 U.S. Dollars 90
10.21 Subordination of Intercompany Indebtedness 90
10.22 Post Closing Actions 91
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Swingline Note
Exhibit C Form of Acquisition Revolving Credit Note
Exhibit D Form of Term Note
Exhibit E Form of Borrowing Notice
Exhibit F Form of Borrowing Base Certificate
Exhibit G Form of Standby Letter Credit Application
Exhibit H Form of Commercial Letter of Credit Application
Exhibit I Form of Participation Certificate
Exhibit J Form of Borrower's Counsel Opinion
Exhibit K Form of Officer's Certificate
Exhibit L Form of Assignment Agreement
Exhibit M Form of Joinder Agreement
Schedule 6.5 Litigation
Schedule 6.6 Pension and Welfare Plans
Schedule 6.8 Subsidiaries of the Borrowers
Schedule 6.10 Other Loans and Guarantees
Schedule 6.11 Labor Matters
Schedule 6.12 Liens
Schedule 6.18 Corporate or Fictitious Names
iv
<PAGE>
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT (this "Agreement") is made and entered into
this 19th day of November, 1999, by and among ZOLTEK COMPANIES, INC., a
Missouri corporation ("Parent"), ZOLTEK CORPORATION, a Missouri
corporation ("ZC"), ZOLTEK INTERMEDIATES CORPORATION, a Missouri
corporation, ("ZIC"), ZOLTEK PROPERTIES, INC., a Missouri corporation
("ZPI"), CAPE COMPOSITES, INC., a California corporation ("CCI"), and
ENGINEERING TECHNOLOGY CORPORATION, a Missouri corporation ("ETC")
(each, individually a "Borrower" and, collectively, the "Borrowers"),
the undersigned lenders and any other lenders hereafter becoming a party
to this Agreement (the "Lenders"), and MERCANTILE BANK NATIONAL
ASSOCIATION, a national banking association, as agent on behalf of the
Lenders (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrowers desire a credit facility to finance the
acquisition of Structural Polymer (Holdings) Limited and future
acquisitions purposes, to fund working capital requirements, to
refinance existing indebtedness, and for those other corporate purposes
expressly permitted hereunder; and
WHEREAS, ZC, ZIC, ZPI, CCI, and ETC are wholly-owned Subsidiaries
of Parent, and each Borrower will receive direct and indirect economic,
financial and other benefits from the credit facilities provided under
this Agreement;
WHEREAS, the Lenders, severally and not jointly, are willing, upon
the terms and subject to the conditions set forth in this Agreement, to
make loans and otherwise provide credit facilities to the Borrowers for
the purposes described;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby mutually agree and
promise as follows:
SECTION 1. TERM.
- -----------------
The "Term" of this Agreement shall commence on the date hereof and
shall end on November 18, 2005, unless earlier terminated by
acceleration or otherwise upon the occurrence of an Event of Default
under this Agreement, in which event the Term hereof shall end on such
earlier date.
SECTION 2. DEFINITIONS.
- ------------------------
In addition to the terms defined elsewhere in this Agreement or in
any Exhibit or Schedule hereto, when used in this Agreement, the
following terms shall have the following meanings (such meanings shall
be equally applicable to the singular and plural forms of the terms
used, as the context requires):
<PAGE>
<PAGE>
Abilene Facility means the manufacturing facility of the
----------------
Borrowers in Abilene, Texas, including, without limitation, the real
estate, buildings, improvements, fixtures, machinery, equipment, and
other tangible and certain intangible personal property and all
accessories and parts relating thereto.
Account Debtor shall mean any Person who is and/or may become
--------------
obligated to any Borrower or Structural Polymer (Holdings) Limited or
its Subsidiaries under or on account of an Account.
Accounts shall mean all trade accounts receivable of any
--------
Borrower which have been invoiced by such Borrower or Structural Polymer
(Holdings) Limited or its Subsidiaries, as the case maybe.
Acceptable Acquisition shall mean any Acquisition of an ongoing
----------------------
business similar to or consistent with the Borrowers' current (as of the
date hereof) lines of business: (a) which has been: (i) in the event a
corporation or its assets is the subject of such Acquisition, either (x)
approved by the Board of Directors of the corporation which is the
subject of such Acquisition or (y) recommended by such Board of
Directors to the shareholders of such corporation, (ii) in the event a
partnership is the subject of such Acquisition, approved by a majority
(by percentage of voting power) of the partners of the partnership which
is the subject of such Acquisition, (iii) in the event a limited
liability company is the subject of such Acquisition, approved by a
majority (by percentage of voting power) of the members of the limited
liability company which is the subject of such Acquisition, (iv) in the
event an organization or entity other than a corporation, partnership or
limited liability company is the subject of such Acquisition, approved
by a majority (by percentage of voting power) of the governing body, if
any, or by a majority (by percentage of ownership interest) of the
owners of the organization or entity which is the subject of such
Acquisition or (v) in the event the corporation, partnership, limited
liability company or other organization or entity which is the subject
of such Acquisition is in bankruptcy, approved by the bankruptcy court
or another court of competent jurisdiction; (b) which Borrowers shall
have given Agent and Lenders at least twenty (20) Business Days prior
written notice; (c) if such Acquisition involves a merger or
consolidation, shall result in a Borrower or a wholly-owned Subsidiary
of a Borrower being the surviving corporation; (d) if the portion of the
purchase price for such Acquisition payable by Borrowers in cash exceeds
$10,000,000.00 or if the aggregate of the cash portion of the purchase
price for all Acquisitions during the Term hereof exceeds
$15,000,000.00, then Borrowers shall have obtained the prior written
consent of the Required Lenders; (e) at least ten (10) Business Days
prior to the consummation of the Acquisition, Borrowers have given pro
---
forma financial statements of Borrowers giving effect to the
- -----
Acquisition which demonstrate, in the Agent's sole discretion (exercised
in good faith), that Borrowers will be in pro forma compliance with
---------
the financial covenants set forth in Section 7.1(i) of this Agreement to
Agent and Lenders; provided, however, that no Acquisition shall be an
--------
Acceptable Acquisition unless both as of the date of any such
Acquisition and immediately following such Acquisition the Borrowers are
(and on a pro forma basis the Borrowers project that they will continue
to be) in compliance with the terms, covenants and conditions contained
in this Agreement and the other Transaction Documents.
Acknowledgment Agreement shall mean any acknowledgment agreement
------------------------
required to be delivered by any of the Borrowers to Agent pursuant to
which any mortgagee other than
6
<PAGE>
<PAGE>
Agent, lessor of property on which Collateral is stored or otherwise
located or any warehouseman, filler, processor or packer of any
Inventory acknowledges the liens and security interests of Agent and, in
the case of any real property leased by any Borrower or subject to a
mortgage executed by any Borrower other than a mortgage executed by any
Borrower in favor of Agent, provides Agent access to such real property
for a reasonable period of time to assemble, complete and sell any
Collateral located thereon.
Acquisition shall mean any transaction or series of related
-----------
transactions, consummated on or after the date of this Agreement, by
which any Borrower (a) acquires any ongoing business or all or
substantially all of the assets of any corporation, partnership or other
organization or entity, whether through purchase of assets, merger or
otherwise or (b) directly or indirectly acquires (in one transaction or
as of the most recent transaction in a series of transactions) at least
(i) a majority (in number of votes) of the stock and/or other securities
of a corporation having ordinary voting power for the election of
directors (other than stock and/or other securities having such power
only by reason of the happening of a contingency), (ii) a majority (by
percentage of voting power) of the outstanding partnership interests of
a partnership, (iii) a majority (by percentage of voting power) of the
outstanding membership interests of a limited liability company, or (iv)
a majority of the ownership interests in any organization or entity
other than a corporation, partnership or limited liability company.
Acquisition Revolving Credit Commitment shall mean for each
---------------------------------------
Lender the amount set forth as the Acquisition Revolving Commitment of
such Lender next to its name on the signature pages hereof or on the
signature pages of any subsequent Assignment Agreement to which such
Lender is a party.
Acquisition Revolving Credit Loan and Acquisition Revolving
--------------------------------- ----------------------
Credit Loans shall have the meanings ascribed thereto in Section
- ------------
3.3(a).
Acquisition Revolving Credit Notes shall mean each of the
----------------------------------
Acquisition Revolving Credit Notes of the Borrowers to be executed and
delivered to each of the Lenders pursuant to Section 3.3(a), as the same
may from time to time be amended, modified, extended or renewed.
Agent shall have the meaning ascribed thereto in the preamble.
-----
Agent's Fees shall have the meaning assigned to such term in
------------
Section 3.14(b).
Applicable Margin shall mean (a) with respect to each type of
-----------------
Loan, the rate per annum listed in the applicable column below for the
type of Loan specified for each such column and (b) with respect to the
Commitment Fee, the rate per annum listed in the applicable column
below:
7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
If the Leverage Ratio is: <1.50:1 >=1.50:1 >=2.00:1 >=2.50:1 >=3.00:1 >3.5:1
<2.00:1 <2.50:1 <3.00:1 <=3.50:1
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIBOR Loans 1.00% 1.25% 1.75% 2.00% 2.25% 2.50%
Denominated in Dollars
- -----------------------------------------------------------------------------------------------
LIBOR Loans 1.125% 1.375% 1.875% 2.125% 2.375% 2.625%
Denominated in
Optional Currency
- -----------------------------------------------------------------------------------------------
Prime Loans 0.00% 0.00% 0.00% 0.25% 0.50% 0.75%
- -----------------------------------------------------------------------------------------------
Commitment Fee 0.35% 0.35% 0.40% 0.40% 0.50% 0.50%
- -----------------------------------------------------------------------------------------------
</TABLE>
The determination of the Applicable Margin as of any date shall be based
on the Leverage Ratio as of the end of the most recently ended fiscal
quarter of Parent for which consolidated financial statements of Parent
and its Consolidated Subsidiaries have been delivered to the Lenders
pursuant to Section 7.1(a), and shall be effective for purposes of
determining the Applicable Margin from and after the first day of the
Parent's fiscal quarter immediately following the date on which such
delivery of financial statements is required until the first day of the
Parent's fiscal quarter immediately following the next such date on
which delivery of consolidated financial statements of Parent and its
Consolidated Subsidiaries is so required. For example, the Leverage
Ratio as of the end of the fiscal quarter of Parent ending December 31,
1999 would be determined from the consolidated financial statements of
Parent and its Consolidated Subsidiaries as of and for the Parent's
fiscal quarter ending December 31, 1999 (which are required to be
delivered to Agent on or before February 14, 2000), and would be used in
determining the Applicable Margin from and after April 1, 2000.
Notwithstanding the above, until such date as Parent has delivered to
Agent consolidated and consolidating balance sheets as of the end of the
Parent's fiscal year 1999 and the related consolidated and consolidating
statements of income, the Applicable Margin applicable to each Loan
shall be Two and One-Quarter Percent (2.25%) per annum for LIBOR Loans
with Interest Periods commencing on or before such date and One Half of
One Percent (.5%) per annum for all Prime Loans outstanding on or before
such date, and in accordance with the terms of Section 3.15 of this
Agreement, the Commitment Fee shall be calculated at the rate of One
Half of One Percent (0.5%) for all fiscal quarters or portions thereof
ending on or before such date. All such adjustments shall become
effective as to LIBOR Loans outstanding on the first day of any quarter
upon the expiration of the then current applicable Interest Period for
such Loans.
Arrangement Fee shall have the meaning ascribed thereto in
---------------
Section 3.14(a).
Asset Disposition shall mean any sale or other disposition
-----------------
(including by way of merger, consolidation or condemnation and whether
by operation of law or otherwise), or series of sales or other
dispositions made on or after the date hereof by the Parent or any
Subsidiary of the Parent to any Person (other than the Parent or any
Subsidiary of the Parent) of any asset or assets which yields Net Cash
Proceeds in excess of $500,000 in any period of twelve (12) consecutive
months, other than (i) sales of inventory in the ordinary course of
business or (ii) a sale or disposition of the assets of a foreign
(non-U.S.) business unit of the Parent or of a foreign (non-U.S.)
Subsidiary or foreign (non-U.S.) business unit of any Subsidiary of the
Parent, direct or indirect, which yields Net Cash Proceeds of less than
$5,000,000.
8
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Assignment Agreement has the meaning ascribed thereto in Section
--------------------
10.12(b).
Attorneys' Fees shall mean: (a) the reasonable value of the
---------------
services (and reasonable costs, charges and expenses related thereto) of
the attorneys (and all paralegals, accountants and other experts and
professionals employed by such attorneys) employed by Agent (including,
without limitation, attorneys and paralegals who are employees of Agent
or any affiliate of Agent) in connection with the negotiation,
preparation, execution and delivery of this Agreement and/or any of the
other Transaction Documents; (b) the reasonable value of the services
(and reasonable costs, charges and expenses related thereto) of the
attorneys (and all paralegals, accountants and other experts and
professionals employed by such attorneys) employed by Agent (including,
without limitation, attorneys and paralegals who are employees of Agent
or of any direct or indirect parent corporation, subsidiary or affiliate
of Agent) from time to time (i) in connection with the amendment,
modification, extension and/or renewal of this Agreement and/or any of
the other Transaction Documents and/or (ii) in connection with the
preparation, negotiation or execution of any waiver or consent with
respect to this Agreement or any of the other Transaction Documents; and
(c) the reasonable value of the services (and reasonable costs, charges
and expenses related thereto) of the attorneys (and all paralegals,
accountants and other experts and professionals employed by such
attorneys) employed by Agent or any of the Lenders (including, without
limitation, attorneys and paralegals who are employees of Agent or any
of the Lenders or of any direct or indirect parent corporation,
subsidiary or affiliate of Agent or any of the Lenders) from time to
time (i) in connection with the enforcement of this Agreement and/or any
of the other Transaction Documents, (ii) to represent Agent or any of
the Lenders in any litigation, contest, dispute, suit or proceeding, or
to commence, defend or intervene in any litigation, contest, dispute,
suit or proceeding, or to file any petition, complaint, answer, motion
or other pleading or to take any other action in or with respect to any
litigation, contest, dispute, suit or proceeding (whether instituted by
Agent or any of the Lenders, Borrower or any other Person and whether in
bankruptcy or otherwise but excluding any of the foregoing involving a
dispute between the Agent and any one or more of the Lenders or a
dispute among the Lenders) in any way or respect relating to this
Agreement or any of the other Transaction Documents, Borrowers or any
Subsidiary of Borrowers, (iii) to protect, collect, lease, sell, take
possession of or liquidate any collateral, (iv) to attempt to enforce
any security interest in or other Lien upon any collateral or to give
any advice with respect to such enforcement and (v) to enforce any of
Agent's or any Lender's rights to collect any of Obligations. The Agent
or the applicable Lender, as the case may be, shall provide Borrowers
with reasonable detail for all such Attorneys' Fees.
BBA means the British Bankers' Association.
---
Borrowers shall have the meaning ascribed thereto in the
---------
preamble and shall include any Subsidiary which shall become a party to
the Transaction Documents as a "Borrower" thereunder.
Borrowing Base shall have the meaning ascribed thereto in
--------------
Section 3.1(b).
Borrowing Base Certificate shall have the meaning ascribed
--------------------------
thereto in Section 3.1(c).
9
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<PAGE>
Borrowing Notice shall have the meaning ascribed thereto in
----------------
Section 3.5(a).
Business Day shall mean any day other than a Saturday or Sunday
------------
or a legal holiday on which commercial banks are closed for business in
St. Louis, Missouri, and (a) if the applicable Business Day relates to
any LIBOR Loan, such day must also be a day on which dealings are
carried on in the London interbank market, and (b) with respect to
advances or payments of Loans or any other matters relating to Loans
denominated in an Optional Currency, such day also shall be a day on
which (i) deposits in the relevant Optional Currency are carried on in
the applicable interbank market, and (ii) all applicable banks into
which Loan proceeds may be deposited are open for business and foreign
exchange markets are open for business in the principal financial center
of the country of such Optional Currency.
Capital Expenditure shall mean any expenditure which, in
-------------------
accordance with generally accepted accounting principles, is or should
be capitalized on the balance sheet of the Person making the same.
Capitalized Lease shall mean any lease which, in accordance with
-----------------
generally accepted accounting principles, is or should be capitalized on
the balance sheet of the lessee.
Capitalized Lease Obligations of any Person shall mean, as of
-----------------------------
the date of any determination thereof, the amount at which the aggregate
rental obligations due and to become due under all Capitalized Leases
under which such Person is a lessee would be reflected as a liability on
a balance sheet of such Person in accordance with generally accepted
accounting principles.
Change of Control shall mean (a) Parent shall at any time cease
-----------------
to own 100% of the capital stock of any Subsidiary, other than Zoltek
RT, (b) Parent shall at any time cease to own at least 98% of the
capital stock of Zoltek RT, (c) individuals who are members of the board
of directors of the Parent on the date of this Agreement or individuals
nominated by such individuals or by their successors so nominated shall
cease to constitute a majority of the directors of the Parent, (d) any
Person, entity or "group" as such term is defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, (other than Zsolt Rumy
(together with any trust or partnership or other entity over which he
has voting control)) is or becomes the beneficial owner of more than
Twenty Five Percent (25%) of the outstanding Voting Stock of Parent, or
(e) Zsolt Rumy (together with any trust or partnership or other entity
over which he has voting control) ceases to own in the aggregate Ten
Percent (10%) of the outstanding Voting Stock of Parent.
Code shall mean the Internal Revenue Code of 1986, as amended,
----
and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of the Code shall be construed to also refer to
any successor sections.
Collateral means all "Collateral" referred to in the Collateral
----------
Documents and all other property and assets that are or are intended
under the terms of the Collateral Documents to secure the payment on
performance of any of the Obligations.
10
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<PAGE>
Collateral Documents means, collectively, the Security
--------------------
Agreement, the Pledge Agreement, the Deed of Trust and each other
agreement that creates or purports to create or perfect a Lien in favor
of the Agent for the benefit of the Lenders.
Commitment Fee has the meaning ascribed thereto in Section 3.15.
--------------
Computation Date shall have the meaning assigned to that term in
----------------
Section 3.22(a).
Consolidated Net Income shall mean the net income (or loss) of
-----------------------
Parent and its Consolidated Subsidiaries for the period in question on a
consolidated basis, after deducting all operating expenses, provisions
for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions, all determined in accordance
with generally accepted accounting principles, after eliminating all
intercompany items, all determined in accordance with generally accepted
accounting principles.
Consolidated Net Worth shall mean, at any date, total
----------------------
stockholders' equity of Parent and its Consolidated Subsidiaries as
determined in accordance with generally accepted accounting principles.
Consolidated Subsidiary shall mean with respect to any Person at
-----------------------
any date, any Subsidiary or other entity the assets and liabilities of
which are or should be consolidated with those of such Person in its
consolidated financial statements as of such date in accordance with
generally accepted accounting principles.
Conversion Notice shall have the meaning ascribed thereto in
-----------------
Section 3.5(e).
Debt Offering means any issuance, sale or other offering by the
-------------
Parent or any Subsidiary of the Parent of debt instruments or debt
securities to any Person (other than the Parent or any Subsidiary of the
Parent), other than any purchase money debt and any issuance, sale or
other offering of debt instruments or debt securities by a foreign
(non-U.S.) Subsidiary of the Parent, direct or indirect, which yields
Net Cash Proceeds of less than $10,000,000 in any single transaction or
series of related transactions (including a Stock Offering by a foreign
(non-U.S.) Subsidiary of any Borrower).
Deed of Trust shall mean that certain Deed of Trust, Assignment
-------------
of Rents and Leases, and Fixture Filing of even date herewith by ZPI to
a trustee for the benefit of Agent and creating a Lien on the Abilene
Facility, as the same may be amended, restated, modified or supplemented
from time to time.
Default shall mean an event or condition the occurrence of which
-------
would, with the lapse of time or the giving of notice or both, become an
Event of Default as defined in Section 8 hereof.
Distribution in respect of any corporation shall mean:
------------
(a) dividends or other distributions on capital stock of the
corporation (other than stock dividends); and
11
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<PAGE>
(b) the redemption, repurchase or other acquisition of such
stock or of warrants, rights or other options to purchase such stock
(except when solely in exchange for such stock).
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
----------------------------------------------
money of the United States of America.
Dollar Equivalent shall mean, with respect to any amount of any
-----------------
currency, the Equivalent Amount of such currency expressed in Dollars.
Dow Jones Markets Page 3750 shall mean the display designated as
---------------------------
"Page 3750" on the Dow Jones Markets Service (or such other page as may
replace Page 3750 on that service or such other service as may be
nominated by the BBA as the information vendor for the purpose of
displaying BBA's Interest Settlement Rates for deposits in U.S. Dollars
or Optional Currencies, as the case may be).
EBITDA shall mean with respect to the four consecutive fiscal
------
quarter period ending on the date of such calculation, Consolidated Net
Income, plus, without duplication and to the extent deducted in
----
determining such Consolidated Net Income, the sum of (a) Interest
Expense for such period, (b) income tax expense for such period, (c) the
aggregate amount attributable to depreciation and amortization for such
period, (d) the aggregate amount of extraordinary losses during such
period, (e) the aggregate amount of non-cash expenses during such
period, and (f) the aggregate amount of losses on the sale or other
disposition of assets other than in the ordinary course of business
during such period, and minus, without duplication and to the extent
-----
added in determining such Consolidated Net Income for such period, (x)
the aggregate amount of extraordinary gains during such period and (y)
the aggregate amount of gains on the sale or other disposition of assets
other than in the ordinary course of business during such period, all
determined in accordance with generally accepted accounting principles.
For the purposes of calculating EBITDA for the Parent's fiscal quarters
ending December 31, 1999, March 31, 2000, June 30, 2000 and September
30, 2000 in order to determine compliance with Section 7.1(i)(i), EBITDA
for such period shall be calculated after giving pro forma effect
--- -----
thereto as if the SPHL Acquisition occurred on the first day of such
period. For the purposes of calculating EBITDA for any period in
connection with any determination of the ratio of Total Funded Debt to
EBITDA pursuant to Section 7.1(i)(ii), (i) if at any time during such
period the Parent or any of its Consolidated Subsidiaries shall have
made any Material Disposition, the EBITDA for such period shall be
reduced by an amount equal to the EBITDA (if positive) attributable to
the property that is the subject of such Material Disposition for such
period or increased by an amount equal to the EBITDA (if negative)
attributable thereto for such period and (ii) if during such period the
Parent or any of its Consolidated Subsidiaries shall have made a
Material Acquisition, EBITDA for such period shall be calculated after
giving pro forma effect thereto as if such Material Acquisition
--- -----
occurred on the first day of such period. As used in this definition,
"Material Acquisition" and "Material Disposition" mean, respectively,
any acquisition or disposition of property or series of related
acquisitions or dispositions of property that comprise all or
substantially all of an operating unit of a business or constitutes all
or substantially all of the common stock of a Person.
12
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<PAGE>
EBITDAR shall mean with respect to the four quarter period
-------
ending on the date of such calculation, the sum of EBITDA plus Rent
Expense for the Parent and its Consolidated Subsidiaries, determined in
accordance with generally accepted accounting principles.
Eligible Accounts shall mean all Accounts other than: (a)
-----------------
Accounts which remain unpaid for more than ninety (90) days after their
original invoice dates or past due more than thirty (30) days after
their original due dates; (b) Accounts owing by a single Account Debtor,
including a currently scheduled Account, if twenty-five percent (25%) or
more of the balance owing by said Account Debtor upon said Accounts is
ineligible pursuant to clause (a) above; (c) Accounts with respect to
which the Account Debtor is a partner of any Borrower or a Related Party
of the Borrowers, (d) Accounts with respect to which payment by the
Account Debtor is or may be conditional and Accounts commonly known as
bill and hold accounts or Accounts of a similar or like arrangement; (e)
Accounts (other than Accounts of Structural Polymer (Holdings) Limited
or its Subsidiaries) with respect to which the Account Debtor is not a
resident or citizen of or otherwise located in the United States of
America, unless the Account is backed by a commercial letter of credit
in form and substance acceptable to Agent and issued or confirmed by a
domestic bank acceptable to Agent; (f) Accounts with respect to which
the Account Debtor is the United States of America, any state of the
United States or any other governmental body or any department, agency
or instrumentality of any of the foregoing, unless such Accounts are
duly assigned to Agent for the benefit of each of the Lenders in
accordance with all applicable governmental and regulatory rules and
regulations (including, without limitation, the Federal Assignment of
Claims Act of 1940, as amended, if applicable) so that Agent is
recognized by the Account Debtor to have all of the rights of an
assignee of such Accounts; (g) Accounts with respect to which any
Borrower is or may become liable to the Account Debtor for goods sold or
services rendered by such Account Debtor to any Borrower, but only to
the extent of the then aggregate liability of such Borrower to such
Account Debtor (i.e. the excess of the aggregate face amount of Accounts
of such Account Debtor to Borrower over the aggregate liability of
Borrower to such Account Debtor shall constitute an Eligible Account),
(h) Accounts with respect to which the goods giving rise thereto have
not been shipped and delivered to and accepted as satisfactory by the
Account Debtor thereof or with respect to which the services performed
giving rise thereto have not been completed and accepted as satisfactory
by the Account Debtor thereof; (i) Accounts which are not invoiced (and
dated as of such date) and sent to the Account Debtor thereof
concurrently with or not later than ten (10) days after the shipment and
delivery to and acceptance by said Account Debtor of the goods giving
rise thereto or the performance of the services giving rise thereto; (j)
Accounts with respect to which possession and/or control of the goods
sold giving rise thereto is held, maintained or retained by any Borrower
(or by any agent or custodian of any Borrower) for the account of or
subject to further and/or future direction from the Account Debtor
thereof; (k) Accounts arising from a "sale on approval" or a "sale or
return;" (l) Accounts as to which Agent or the Required Lenders, at any
time or times hereafter, reasonably determine by written notice to the
Borrowers, that the prospects of payment or performance by the Account
Debtor is or will be impaired in any material respect; (m) Accounts of
an Account Debtor to the extent, but only to the extent, that the same
exceed a credit limit reasonably determined by Agent or Required
Lenders, by written notice to Borrowers, at any time or times hereafter;
(n) Accounts (other than Accounts of Structural Polymer (Holdings)
Limited or its Subsidiaries) which are not subject to a first priority
perfected security interest in favor of Agent for the benefit of each of
the Lenders; and (o) Accounts
13
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<PAGE>
with respect to which the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, or made an assignment for the benefit
of creditors, or if a decree or order for relief has been entered in
respect to the Account Debtor in an involuntary case under the federal
bankruptcy laws. In addition to the foregoing, Eligible Accounts shall
include such Accounts for which Borrowers shall request approval and
that Agent approves in advance, in writing, and in its reasonable
discretion, which approval shall not prevent Agent from time to time
from revoking such approval in the exercise of its reasonable
discretion.
Eligible Inventory shall mean all Inventory of Borrowers or
------------------
Structural Polymer (Holdings) Limited which consists of raw materials or
finished goods (specifically excluding any Inventory of Borrowers which
consists of modified raw materials or work-in-process) other than: (a)
any Inventory which is damaged, obsolete or unsaleable; (b) any
Inventory which Agent reasonably determines to be ineligible due to age,
type, category, quality and/or quantity; (c) any Inventory which
consists of packaging and/or shipping supplies and/or materials; (d) any
Inventory which consists of consigned raw materials or consigned
finished goods; (e) any Inventory (other than Inventory of Structural
Polymer (Holdings) Limited) which is not located in the continental
United States of America; (f) any Inventory of a Borrower which is not
located at the chief executive office of such Borrower, one of the
locations listed on Exhibit A to the Security Agreement or another
---------
location with respect to which the applicable Borrower has complied with
all of the requirements of the Security Agreement; and (g) any Inventory
(other than Inventory owned by Structural Polymer (Holdings) Limited or
its Subsidiaries) which is not subject to a first priority perfected
security interest in favor of Agent.
Environmental Laws shall mean the Resource Conservation and
------------------
Recovery Act of 1987, the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund" or "Superlien"
law, the Toxic Substances Control Act and any other federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct
concerning any Hazardous Materials or any other hazardous, toxic or
dangerous waste, substance or constituent or other substance, whether
solid, liquid or gas, as now or at any time hereafter in effect.
Environmental Lien shall have the meaning ascribed thereto in
------------------
Section 7.1(k)(vii).
Equivalent Amount shall mean, at any time, as determined by the
-----------------
Agent (which determination shall be conclusive absent manifest error),
with respect to an amount of any currency (the "Reference Currency")
which is to be computed as an equivalent amount of another currency (the
"Equivalent Currency"): (i) if the Reference Currency and the Equivalent
Currency are the same, the amount of such Reference Currency, or (ii) if
the Reference Currency and the Equivalent Currency are not the same, the
amount of such Equivalent Currency converted from such Reference
Currency at the Agent's spot selling rate (based on the market rates
then prevailing and available to the Agent) for the sale of such
Equivalent Currency for such Reference Currency at a time determined by
the Agent on the second Business Day immediately preceding the event for
which such calculation is made.
Equivalent Currency shall have the meaning assigned to that term
-------------------
in the definition of Equivalent Amount.
14
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<PAGE>
ERISA shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to
time. References to sections of ERISA shall be construed to also refer
to any successor sections.
ERISA Affiliate shall mean any corporation, trade or business
---------------
that is, along with any Borrower, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described
in Sections 414(b) and 414(c), respectively, of the Code or Section 4001
of ERISA.
Event of Default shall have the meaning ascribed thereto in
----------------
Section 8.
Fee Letter means that certain letter agreement, dated as of
----------
November 12, 1999, among the Agent and the Borrowers, as amended,
modified, restated or supplemented from time to time.
Fixed Charges shall mean for the period in question the sum of
-------------
(a) Interest Expense for the applicable period, (b) income tax expense
for the applicable period, (c) Rent Expense for the applicable period,
(d) scheduled principal installments on Indebtedness (as adjusted for
prepayments, and including payments under Capitalized Leases but
excluding principal payments on the Revolving Credit Loans and the
Acquisition Revolving Credit Loans other than principal payments of
Acquisition Revolving Credit Loans resulting from the reduction of such
Facility pursuant to Section 3.3(a) of this Agreement) due during the
applicable period, (e) Capital Expenditures during the applicable
period, and (f) dividends or other distributions on capital stock of the
Parent, in each case of the Parent and its Consolidated Subsidiaries
during the applicable period, all as determined in accordance with
generally accepted accounting principles.
Flood Hazard Property shall have the meaning ascribed thereto in
---------------------
Section 4.1(a)(xvii)(D).
Funded Debt of any Person shall mean, as of the date of
-----------
determination thereof, the sum of (without duplication): (a) all
Indebtedness of such Person for borrowed money; plus (b) all Capitalized
Lease Obligations of such Person; plus (c) all Guarantees by such Person
of Funded Debt of others.
Funding Office shall mean, with respect to Loans denominated in
--------------
Dollars, the lending office of the Agent at its address specified in or
pursuant to Section 10.8 and, with respect to Loans denominated in
Optional Currencies, such lending office, affiliate or correspondent
bank of the Agent as may be designated by the Agent with respect to any
Optional Currency.
Guarantee by any Person shall mean any obligation, contingent or
---------
otherwise, of such Person guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness of
any other Person or otherwise protecting the holder of such Indebtedness
against loss (whether by agreement to keep-well, to purchase assets,
goods, securities or services, or to take-or-pay or otherwise); provided
that the term Guarantee shall not include
15
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<PAGE>
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb shall have a correlative
meaning.
Hazardous Materials shall mean any hazardous substance or
-------------------
pollutant or contaminant defined as such in (or for the purposes of) any
Environmental Law and shall include, without limitation, petroleum,
including crude oil or any fraction thereof which is liquid at standard
conditions of temperature or pressure (60 degrees Fahrenheit and 14.7
pounds per square inch absolute), any radioactive material, including,
without limitation, any source, special nuclear or byproduct material as
defined in 42 U.S.C. Section 2011 et seq., as amended or hereafter
-- ----
amended, and asbestos in any form or condition.
Hedging Fee shall have the meaning ascribed thereto in Section 3.8.
-----------
Indebtedness of any Person shall mean and include, without
------------
duplication, any and all indebtedness, liabilities and obligations of
such Person which in accordance with generally accepted accounting
principles are or should be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all
(i) obligations of such Person for borrowed money or obligations which
have been incurred in connection with the acquisition of Property, (ii)
obligations secured by any Lien or other charge upon any Property owned
by such Person, provided that if such Person has not assumed or become
liable for the payment of such obligations, such obligations shall still
be included in Indebtedness but the determination of the amount of
Indebtedness evidenced by such obligations shall be limited to the book
value of such Property, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to any
Property acquired by such Person, provided that if the rights and
remedies of the seller, lender or lessor in the event of default under
such agreement are limited to repossession or sale of such Property such
obligations shall still be included in Indebtedness but the
determination of the amount of Indebtedness evidenced by such
obligations shall be limited to the book value of such Property, (iv)
all Guarantees and other contingent indebtedness, liabilities and
obligations of such Person whether or not reflected on the balance sheet
of such Person (including, without limitation, reimbursement obligations
in respect of letters of credit) and (v) all Capitalized Lease
Obligations of such Person. For the purpose of computing the
"Indebtedness" of any Person, there shall be excluded any particular
Indebtedness to the extent that, upon or prior to the maturity thereof,
there shall have been deposited with the proper depositary in trust the
necessary funds (or evidences of such Indebtedness) for the payment,
redemption or satisfaction of such Indebtedness; and thereafter such
funds and evidences of Indebtedness so deposited shall not be included
in any computation of the assets of such Person.
Indemnitees shall have the meaning ascribed thereto in Section 10.5.
-----------
Intercompany Indebtedness shall have the meaning ascribed thereto
-------------------------
in Section 10.21.
Interest Expense shall mean, on any date, for the period for
----------------
which such calculation is being made, total interest expense on any
Indebtedness of the Parent and/or its Consolidated Subsidiaries,
including, without limitation, the interest component on any Capitalized
Lease
16
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<PAGE>
Obligations, all as determined on a consolidated basis in accordance
with generally accepted accounting principles.
Interest Period means with respect to each LIBOR Loan, the
---------------
period beginning on, as the case may be, the borrowing date or
conversion date of, or on the date of expiration of the then current
Interest Period with respect to, such LIBOR Loan and extending one, two,
three or six months thereafter (to the extent funds are available to the
Lenders for such period), as selected by the Borrowers, as the case may
be, in the notice of borrowing as provided in Section 3.5 or its notice
of conversion as provided in Section 3.5 or by irrevocable notice to the
Agent not less than three (3) Business Days prior to the last day of the
then current Interest Period with respect to such LIBOR Loan if the Loan
is to be continued as such; provided that:
--------
(a) subject to paragraph (b) below, if any Interest Period would
otherwise end on a day which is not a Business Day, that Interest
Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day is in a different calendar month,
in which case such Interest Period shall end on the next preceding
Business Day;
(b) any Interest Period that would otherwise extend beyond
November 18, 2005 shall end on November 18, 2005; and
(c) if the Borrowers shall fail to give notice as provided
above, the affected LIBOR Loan shall automatically be converted to a
Prime Loan at the end of the Interest Period therefor.
Inventory shall mean all inventory of the Borrowers and
---------
Structural Polymer (Holdings) Limited valued at the lower of cost or
market in accordance with generally accepted accounting principles.
Joinder Agreement means a Joinder Agreement substantially in the
-----------------
form of Exhibit M hereto, executed and delivered by a Subsidiary in
---------
accordance with the terms of Section 5.2.
Letter of Credit shall have the meaning ascribed thereto in
----------------
Section 3.7.
Letter of Credit Application shall have the meaning ascribed
----------------------------
thereto in Section 3.7.
Letter of Credit Commission Fee shall have the meaning ascribed
-------------------------------
thereto in Section 3.7.
Letter of Credit Issuance Fee shall have the meaning ascribed
-----------------------------
thereto in Section 3.7.
Letter of Credit Negotiation Fee shall have the meaning ascribed
--------------------------------
thereto in Section 3.7.
17
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Leverage Ratio shall mean, on any date, the ratio of (a) Total
--------------
Funded Debt on such date less the amount of cash held by Parent and its
Consolidated Subsidiaries on such date in excess of $2,500,000.00 to (b)
EBITDA on such date.
LIBOR Base Rate shall mean, with respect to the applicable
---------------
Interest Period, (a) the LIBOR Index Rate for such Interest Period, if
such rate is available, or (b) if the LIBOR Index Rate is not available,
the arithmetic average (rounded upward, if necessary, to the next higher
1/100 of 1%) of the respective rates per annum of interest at which
deposits in U.S. Dollars or the Optional Currency, as the case may be,
in immediately available funds are offered to Agent in the London
interbank market by two (2) or more major banks selected by Agent in its
sole discretion, at such time on the date two (2) Business Days before
the first day of such Interest Period as Agent in its sole discretion
elects, for delivery on the first day of the applicable Interest Period
for a number of days comparable to the number of days in such Interest
Period and in an amount approximately equal to the principal amount of
the LIBOR Loan to which such Interest Period is to apply.
LIBOR Index Rate shall mean, with respect to the applicable
----------------
Interest Period, (a) with respect to LIBOR Loans denominated in Dollars,
the rate per annum (rounded upwards, if necessary, to the next higher
1/100 of 1%) for deposits in Dollars for a period equal to such Interest
Period, quoted by the BBA which appears on the Dow Jones Markets Page
3750 as of 9:00 a.m. (St. Louis time) on the day two (2) Business Days
before the commencement of such Interest Period, and (b) with respect to
LIBOR Loans denominated in an Optional Currency, the rate per annum
(rounded upwards, if necessary to the next higher 1/100 of 1%) for
deposits in the relevant Optional Currency for a period equal to such
Interest Period, quoted by the BBA, which appears on the Dow Jones
Markets Page 3750 as of 9:00 a.m. (St. Louis time) on the day two (2)
Business Days before the commencement of such Interest Period.
LIBOR Loan shall mean a Loan bearing interest based on the LIBOR
----------
Rate.
LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base
----------
Rate divided by (ii) one minus the applicable Reserve Percentage. The
LIBOR Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Percentage.
Lien shall mean any interest in Property securing an obligation
----
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract,
including, without limitation, any security interest, mortgage, deed of
trust, pledge, hypothecation, judgment lien or other lien or encumbrance
of any kind or nature whatsoever, any conditional sale or trust receipt
and any lease, consignment or bailment for security purposes. The term
"Lien" shall include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property.
Loan shall mean each Revolving Credit Loan, each Swingline Loan,
----
each Acquisition Revolving Credit Loan, and each Term Loan, in each case
whether a Prime Loan or a LIBOR Loan, and Loans shall mean any or all
-----
of the foregoing.
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Loan Commitments shall mean the total of the Revolving Credit
----------------
Commitments, the Acquisition Revolving Credit Commitments, and the Term
Loan Commitment of all of the Lenders.
Mandatory Prepayment means any prepayment required by Section
--------------------
3.18(b)(i) or (ii).
Material Adverse Change as used herein shall mean any event
-----------------------
which, if immediately taken into account on Parent's (or any of its
Subsidiaries', as the case may be) financial statements prepared in
accordance with generally accepted accounting principles, would have the
likely effect of causing Borrowers to be in default under any of the
financial covenants contained in Section 7.1(i).
Material Adverse Effect shall mean a material adverse effect on
-----------------------
the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Parent and its
Subsidiaries, taken as a whole.
Maximum Swingline Amount means Five Million Dollars
------------------------
($5,000,000.00).
Mercantile means Mercantile Bank National Association (or its
----------
successor) in its individual capacity.
Mortgagee Policy shall have the meaning ascribed thereto in
----------------
Section 4.1(a)(xvii)(C).
Multiemployer Plan shall mean a "multi-employer plan" as defined
------------------
in Section 4001(a)(3) of ERISA which is maintained for employees of
Parent, any ERISA Affiliate or any Subsidiary of Parent.
Net Cash Proceeds shall mean the proceeds of any Asset
-----------------
Disposition, Stock Offering, or Debt Offering net of (a) brokerage
commissions and other commissions, fees and expenses (including fees and
expenses of counsel, accountants and investment bankers) related to such
Asset Disposition, Stock Offering, or Debt Offering, and (b) a reserve
for taxes payable as a result of any such Asset Disposition and (c) in
the case of Asset Dispositions, (i) net of any Indebtedness secured by a
Permitted Lien on any of the assets being sold and which is paid off in
connection with such Asset Disposition and (ii) net of any amount
expended by Borrowers within 120 days after the applicable Asset
Disposition to replace any assets sold or otherwise disposed of in
connection with such Asset Disposition.
Notes shall mean the Revolving Credit Notes, the Swingline Note,
-----
the Acquisition Revolving Credit Notes, and the Term Notes, as the same
may from time to time be amended, restated, modified, extended or
renewed.
Obligations shall mean any and all indebtedness (principal,
-----------
interest, fees and other amounts), liabilities and obligations owing to
Agent or any of the Lenders under the Notes, this Agreement, the
Security Agreement, the Letter of Credit Applications (including any
unreimbursed amounts with respect to the Letters of Credit) or any of
the other Transaction Documents and any extensions, renewals, amendments
or replacements thereof, in each case whether absolute or contingent,
joint and/or several, secured or unsecured, direct or indirect,
expressed or implied in
19
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law, contractual or tortious, liquidated or unliquidated, at law or in
equity, or otherwise, and any and all costs of collection and/or
Attorneys' Fees incurred or to be incurred in connection therewith.
Occupational Safety and Health Laws shall mean the Occupational
-----------------------------------
Safety and Health Act of 1970, as amended, and any other Federal, state
or local statute, law, ordinance, code, rule, regulation, order or
decree regulating, relating to or imposing liability or standards of
conduct concerning employee health and/or safety, as now or at any time
hereafter in effect.
Optional Currency shall mean, subject to availability, any of
-----------------
the following currencies: British Pounds Sterling ("GBP"), Deutsche Mark
("DEM"), and the European common currency ("Euro").
Original Currency shall have the meaning assigned to such term
-----------------
in Section 3.26.
Other Currency shall have the meaning assigned to such term in
--------------
Section 3.26.
PBGC shall mean the Pension Benefit Guaranty Corporation and any
----
entity succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is
------------
defined in Section 3(2) of ERISA, which is subject to the provisions of
Title IV of ERISA and which is established or maintained by Parent, any
ERISA Affiliate or any Subsidiary of Parent, other than a Multiemployer
Plan.
Permitted Liens shall mean any of the following:
---------------
(a) Liens in favor of Agent or any of the Lenders arising under
any of the Collateral Documents.
(b) Liens existing as of the date of this Agreement and listed
on Schedule 6.12 attached hereto and any extensions, renewals or
-------------
replacements of any Lien listed on Schedule 6.12, provided that
------------- --------
no additional property shall be encumbered by such Liens and the
unpaid principal amount of the Debt secured thereby shall not be
increased on or after the date of any such extension, renewal or
replacement;
(c) incipient Liens for property taxes and assessments or
governmental charges or levies not yet due and payable or Liens for
property taxes and assessments or governmental charges or levies
being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with
generally accepted accounting principles;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Parent and its Subsidiaries or which customarily
exist on the properties of corporations engaged in similar activities
and similarly situated and which do not in any
20
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event materially interfere with or impair the use of such real
properties in the operation of the business of the Parent and its
Subsidiaries;
(e) Liens to secure claims for labor, materials or supplies in
respect of obligations not overdue or being contested in good faith
by appropriate proceedings in connection with the ownership of its
property (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and
attorney's liens and statutory landlords' liens) which are not
incurred in connection with the incurrence of Indebtedness and which
do not in the aggregate materially interfere with or impair the use
of such property in the operation of the business of the Parent and
its Subsidiaries, taken as a whole, or the value of such property for
the purpose of such business;
(f) Liens in respect of deposits or pledges made in the ordinary
course of business to secure performance in connection with bids or
contracts (other than for the payment of borrowed money) or to secure
surety, stay, appeal or customs bonds or other similar Liens, pledges
or deposits, provided that the aggregate amount of deposits or
--------
pledges at any time pursuant to this subparagraph (f) shall not
exceed $500,000;
(g) Liens of carriers, warehousemen, mechanics and materialmen,
and other like Liens incurred in the ordinary course of business, in
existence less than sixty (60) days (or in the case of any Lien with
respect to which the underlying claim shall currently be contested by
the Parent or the applicable Subsidiary in good faith by appropriate
proceedings, the period of time during which such Lien is being
contested) from the date of creation thereof in respect of
obligations not overdue or deposits to obtain the release of such
Liens, which Liens do not in the aggregate materially detract from
the value of the property or assets or materially impair the use
thereof in the operation of the business of the Parent or such
Subsidiary;
(h) Liens arising out of the existence of judgments or awards
not constituting an Event of Default under Section 8.9, provided
--------
that no cash or property is deposited or delivered to secure the
respective judgment or award (or any appeal bond in respect thereof,
except as permitted by preceding subparagraph (e));
(i) Liens of commercial depository institutions, arising in the
ordinary course of business and not securing Funded Debt,
constituting a statutory or common law right of setoff against
amounts on deposit with such institution;
(j) purchase money Liens granted to a Person financing a Capital
Expenditure, and any extensions, renewals or replacements thereof, so
long as (i) the Lien granted is limited to the specific fixed assets
acquired and the proceeds thereof, (ii) the Lien secures only the
Indebtedness incurred to acquire such asset(s), (iii) the aggregate
principal amount of Indebtedness secured by the Lien is not more than
the acquisition cost of the specific fixed assets on which the Lien
is granted, (iv) the aggregate outstanding principal amount of all
Indebtedness secured by Liens permitted by this subparagraph (j) does
not exceed the
21
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amount permitted by Section 7.2(l), and (v) the transaction does not
violate any other provision of this Agreement; and
(k) Capitalized Leases entered into by Parent or any Subsidiary
of Parent to the extent permitted by Section 7.2(l), provided that
--------
(i) such Liens only serve to secure the payment of Indebtedness
arising under such Capitalized Lease and (ii) the Lien encumbering
the asset subject to such Capitalized Lease does not encumber any
other asset of Parent or any Subsidiary of Parent.
Person shall mean any individual, sole proprietorship,
------
partnership, joint venture, limited liability company, trust,
unincorporated organization, association, corporation, institution,
entity or government (whether national, Federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Pledge Agreement shall mean the Pledge Agreement to be executed
----------------
by the Parent and delivered to the Agent for the benefit of each of the
Lenders pledging sixty-five percent (65%) of its interests in the common
stock or ownership interests of Zoltek Rt., a Hungarian corporation and
Structural Polymer (Holdings) Limited, a United Kingdom private limited
company, as the same may from time to time be amended, restated or
modified.
Prime Loan shall mean a Loan bearing interest based on the Prime
----------
Rate.
Prime Rate shall mean the interest rate announced from time to
----------
time by Agent as its "prime rate" on commercial loans (which rate shall
fluctuate as and when said prime rate shall change).
Property shall mean any interest in any kind of property or
--------
asset, whether real, personal or mixed, or tangible or intangible.
Properties shall mean the plural of Property. For purposes of this
- ----------
Agreement, Parent and each Subsidiary of Parent shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement
pursuant to which title to the Property has been retained by or vested
in some other Person for security purposes.
Pro Rata Share shall mean, with respect to each Lender, such
--------------
Lender's percentage of the aggregate amount of Loans (other than
Swingline Loans) then outstanding, determined by dividing the aggregate
principal amount of all Loans (other than Swingline Loans) of such
Lender then outstanding by the aggregate amount of all Loans (other than
Swingline Loans) of all Lenders then outstanding, or, if no Loans are
then outstanding, such Lender's percentage of the total Loan Commitments
of all of the Lenders, determined by dividing the sum of such Lender's
Revolving Credit Commitment, Acquisition Revolving Credit Commitment and
Term Loan Commitment by the aggregate Loan Commitments.
Real Property shall mean any interest in and to land,
-------------
improvements and fixtures, including any interest arising out of a lease
or license of land, improvements and/or fixtures.
Reference Currency shall have the meaning assigned to that term
------------------
in the definition of Equivalent Amount.
22
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Regulatory Change shall have the meaning ascribed thereto in
-----------------
Section 3.12.
Related Party shall mean any Person (other than a Consolidated
-------------
Subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by or is under common control
with, Parent or any Subsidiary of Parent, (ii) which beneficially owns
or holds ten percent (10%) or more of the equity interest of Parent or
(iii) ten percent (10%) or more of the equity interest of which is
beneficially owned or held by Parent or a Subsidiary of Parent. The
term "control" shall mean the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the capital stock of any
Person or the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Rent Expense shall mean all fixed rents payable by the Parent
------------
and its Consolidated Subsidiaries, as lessee or sublessee under a lease
of Property. Fixed rents under any so-called "percentage leases" shall
be computed based on the actual amount of rent paid, and not on the
basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues. The term Rent Expense
shall exclude any payments made in respect of any Capitalized Lease.
Reportable Event shall have the meaning given to such term in
----------------
ERISA.
Required Lenders shall mean, at any time, Lenders having at
----------------
least 67% of the aggregate amount of the Loans (other than Swingline
Loans) then outstanding, or, if no Loans are then outstanding, at least
67% of the Loan Commitments.
Reserve Percentage shall mean for any day the percentage
------------------
(including any supplemental percentage applied on a marginal basis or
any other reserve requirement having a similar effect), expressed as a
decimal, which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements for Agent as a member bank of the
Federal Reserve System in St. Louis, Missouri, in respect to new
eurocurrency liabilities having a maturity comparable to the related
Interest Period. The LIBOR Rate shall be adjusted automatically on and
as of the effective date of any change in the Reserve Percentage.
Responsible Officer shall mean the chief executive officer,
-------------------
chief operating officer, chief financial officer, chief accounting
officer or any other officer of Borrowers at or above the level of Vice
President.
Revolving Credit Commitment shall mean, subject to reduction as
---------------------------
set forth in Section 3.20, for each Lender the amount set forth as the
Revolving Credit Commitment of such Lender next to its name on the
signature pages hereof or on the signature pages of any subsequent
Assignment Agreement to which such Lender is a party.
Revolving Credit Loan and Revolving Credit Loans shall have
--------------------- ----------------------
the meanings ascribed thereto in Section 3.1(a).
23
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Revolving Credit Notes shall mean each of the Revolving Credit
----------------------
Notes of the Borrowers to be executed and delivered to each of the
Lenders pursuant to Section 3.1(a), as the same may from time to time be
amended, modified, extended or renewed.
SPHL Acquisition shall have the meaning ascribed thereto in
----------------
Section 4.1(b).
SPHL Acquisition Documents shall have the meaning ascribed
--------------------------
thereto in Section 4.1(b).
Security Agreement shall mean the Security Agreement to be
------------------
executed by each of the Borrowers and delivered to Agent for the benefit
of each of the Lenders pursuant to Section 5.1, as the same may from
time to time be amended, restated, or modified.
Stated Amount of each Letter of Credit shall, at any time, mean
-------------
the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could
then be met).
Stock Offering means any issuance, sale or other offering by the
--------------
Parent or any Subsidiary of the Parent of any shares of stock or other
equity securities to any Person (other than the Parent or any Subsidiary
of the Parent), other than (a) any issuance, sale or other offering of
stock or other equity securities by a foreign (non-U.S.) Subsidiary of
the Parent, direct or indirect, which yields Net Cash Proceeds of less
than $10,000,000 in any single transaction or series of related
transactions (including a Debt Offering by a foreign (non-U.S.)
Subsidiary of any Borrower), (b) any issuance of stock or other equity
securities as all or part of the purchase price for any Acceptable
Acquisition and (c) any issuance of stock as the result of the exercise
of any stock option.
Subsidiary shall mean, with respect to any Person, any
----------
corporation, partnership, joint venture, or limited liability company of
which more than fifty percent (50%) of (i) the issued and outstanding
capital stock entitled to vote for the election of directors (other than
by reason of default in the payment of dividends) or (ii) the interest
in the capital profits of such partnership, joint venture, or limited
liability company is at the time owned or controlled, directly or
indirectly, by such Person.
Swingline Expiry Date shall mean the date which is two (2)
---------------------
Business Days prior to the expiration of the Term of this Agreement.
Swingline Loan and Swingline Loans shall have the meanings
-------------- ---------------
ascribed thereto in Section 3.2(a).
Swingline Note shall mean the Swingline Note to be executed by
--------------
Borrowers and delivered to Mercantile pursuant to Section 3.2(a), as the
same may from time to time be amended, restated, modified, extended or
renewed.
Term shall have the meaning ascribed thereto in Section 1.
----
24
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Term Loan Commitment shall mean, for each Lender the amount set
--------------------
forth as the Term Loan Commitment of such Lender next to its name on the
signature pages hereof or the signature pages of any subsequent
Assignment Agreement to which such Lender is a party.
Term Loan and Term Loans shall have the meanings ascribed
--------- ----------
thereto in Section 3.4.
Term Notes shall mean each of the Term Notes of the Borrowers to
----------
be executed and delivered to each of the Lenders pursuant to Section
3.4, as the same may from time to time be amended, restated, modified,
extended or renewed.
Title Insurance Company shall have the meaning ascribed thereto
-----------------------
in Section 4.1(a)(xvii)(F).
Total Funded Debt shall mean as of any date, without
-----------------
duplication, the sum of (a) the outstanding principal amount of all
Revolving Credit Loans on such date (inclusive of any Revolving Credit
Loans deemed to be requested by Borrowers pursuant to Section 3.7(c)),
plus (b) the outstanding principal amount of all Acquisition Revolving
Credit Loans on such date, plus (c) the Stated Amount of all Letters of
Credit issued for the account of Borrowers or their Subsidiaries on such
date (net of any Revolving Credit Loans deemed to be requested by
Borrowers pursuant to Section 3.7(c)), plus (d) all other Funded Debt of
the Parent and its Consolidated Subsidiaries on such date.
Total Revolving Credit Usage shall mean at any time the sum of
----------------------------
(a) the aggregate Dollar Equivalent principal amount of all outstanding
Revolving Credit Loans (inclusive of any Revolving Credit Loans deemed
to be requested by Borrowers pursuant to Section 3.7(c)), (b) the
aggregate principal amount of all outstanding Swingline Loans, and (c)
the Stated Amount of all outstanding Letters of Credit (net of any
Revolving Credit Loans deemed to be requested by Borrowers pursuant to
Section 3.7(c)).
Transaction Documents shall mean this Agreement, the Notes, the
---------------------
Security Agreement, the Pledge Agreement, the Deed of Trust, the Letter
of Credit Applications and all other agreements, documents and
instruments heretofore, now or hereafter delivered to Agent or any of
the Lenders with respect to or in connection herewith or therewith, any
Loans made hereunder, any Letters of Credit issued hereunder or any
other of Obligations, and executed by or on behalf of Borrowers, all as
the same may from time to time be amended, modified, extended or
renewed.
Voting Stock shall mean, as to any Person, any class or classes
------------
of capital stock of a corporation and any and all equivalent ownership
interests in any Person (other than a corporation) pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors or
the like of such Person.
Year 2000 Compliant shall mean, with respect to any Person, that
-------------------
all software, embedded microchips and/or other computer and/or
processing capabilities utilized by such Person, and/or included in any
software, products, goods and/or services sold and/or leased by such
Person, are able to correctly and properly recognize, interpret,
process, calculate, compare, sequence and
25
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manipulate data and date-sensitive functions on and involving all
calendar dates (including, without limitation, dates in and after the
year 2000).
Accounting Terms and Determinations. Except as otherwise
-----------------------------------
specified in this Agreement, all accounting terms used in this Agreement
shall be interpreted, all accounting determinations under this Agreement
shall be made and all financial statements required to be delivered
under this Agreement shall be prepared in accordance with generally
accepted accounting principles as in effect from time to time in the
United States of America, applied on a basis consistent (except for
changes approved by Borrowers' independent certified public accountants)
with the most recent audited financial statements of Borrowers delivered
to the Lenders. Notwithstanding the foregoing, Borrowers may from time
to time change their accounting methods, either at their option or in
order to comply with generally accepted accounting principles, provided
that (a) any such change(s) are in accordance with generally accepted
accounting principles and are approved by the independent certified
public accountants of Borrowers and (b) if Borrowers or the Required
Lenders, in good faith, determine that any such accounting change(s),
individually or in the aggregate, have any significant effect on any of
the financial covenants contained in this Agreement (i) with respect to
those financial covenant(s) upon which the effect of such accounting
change(s) can be determined with mathematical certainty, such financial
covenant(s) shall be amended to reflect the effect of such accounting
change(s) (and Borrowers, the Agent and each of the Lenders shall be
obligated to promptly execute an amendment to such effect) and (ii) with
respect to those financial covenant(s) upon which the effect of such
accounting change(s) cannot be determined with mathematical certainty,
Borrowers and the Lenders shall, in good faith, negotiate and use their
best efforts to agree upon new financial covenant(s) reasonably
acceptable to Borrowers and the Lenders to replace the affected
financial covenant(s) (which new financial covenant(s) shall, to the
extent reasonably possible, approximate the effect of such accounting
change(s) on the existing financial covenant(s)), and if Borrowers and
the Lenders cannot, in good faith, agree on said new financial
covenant(s), the existing financial covenant(s) shall remain in full
force and effect and shall be computed using the accounting methods in
effect prior to the applicable change in accounting methods. Each such
amendment shall be evidenced by an instrument in writing signed by
Borrowers, the Agent and each of the Lenders and until such amendment
has been fully executed the existing financial covenant(s) shall remain
in full force and effect and shall be computed using the accounting
methods in effect prior to the applicable change in accounting methods.
SECTION 3. THE LOANS.
- ----------------------
3.1 Revolving Credit Commitment of Lenders.
--------------------------------------
(a) Subject to the terms and conditions hereof, during the Term
of this Agreement, each Lender hereby severally agrees to make such
loans in either Dollars or one or more Optional Currencies
(individually, a "Revolving Credit Loan" and collectively, the
"Revolving Credit Loans") to Borrowers as Borrowers may from time to
time request pursuant to Section 3.5(a). The Total Revolving Credit
Usage hereunder at any one time shall not exceed the lesser of (i) the
Borrowing Base; or (ii) Twenty Six Million Dollars ($26,000,000.00), and
the Dollar Equivalent amount each Lender shall be required to have
outstanding hereunder as Revolving Credit Loans plus their undivided Pro
Rata Share participation interest in the Stated
26
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Amount of each Letter of Credit issued by Agent under Section 3.7 shall
not exceed, in the aggregate at any one time outstanding, the lesser of
(x) the amount of such Lender's Revolving Credit Commitment or (y) such
Lender's Pro Rata Share of the then current Borrowing Base. Each
Revolving Credit Loan under this Section 3.1(a) shall be made from the
several Lenders ratably in proportion to their respective Revolving
Credit Commitments. The Revolving Credit Loans from Lenders to the
Borrowers shall be evidenced by Revolving Credit Notes of the Borrowers
dated the date hereof and payable to the order of each of the Lenders in
the respective principal amounts of each such Lender's Revolving Credit
Commitment and in the form attached hereto as Exhibit A and
---------
incorporated herein by reference (as the same may from time to time be
amended, modified, extended or renewed, the "Revolving Credit Notes").
Subject to the terms and conditions hereof, Borrowers may borrow, repay
and reborrow such sums from Lenders. Notwithstanding the foregoing, the
aggregate amount of Revolving Credit Loans outstanding under this
Agreement at any time which are denominated in an Optional Currency
shall not exceed Sixteen Million Dollars ($16,000,000.00).
(b) For purposes of computing the amount of Revolving Credit
Loans and Letters of Credit available under the Revolving Credit
Commitment, the "Borrowing Base" shall mean the sum of (i) Eighty
percent (80%) of the then face amount of Eligible Accounts of the
Borrowers, plus (ii) the lesser of (A) Fifty percent (50%) of the then
----
Eligible Inventory or (B) Fifteen Million Dollars ($15,000,000.00).
(c) Parent shall deliver to Agent on the date of execution
hereof (with respect to the month ended October 31, 1999) and thereafter
within fifteen (15) days after the end of each month, a borrowing base
certificate in the form of Exhibit F attached hereto and incorporated
---------
herein by reference (a "Borrowing Base Certificate") setting forth:
(i) the Borrowing Base and its components as of the end of
the immediately preceding month;
(ii) the calculation of the Total Revolving Credit Usage
then outstanding;
(iii) the difference, if any, between the Borrowing Base and
the Total Revolving Credit Usage.
The Borrowing Base shown in such Borrowing Base Certificate shall be and
remain the Borrowing Base hereunder until the next Borrowing Base
Certificate is delivered to Agent and each of the Lenders, at which time
the Borrowing Base shall be the amount shown in such subsequent
Borrowing Base Certificate. Each Borrowing Base Certificate shall be
certified (subject to normal year-end adjustments) as to truth and
accuracy by the President, the principal financial officer or the
principal accounting officer of the Parent.
(d) If as of any date the Total Revolving Credit Usage should
exceed the lesser of the then current Borrowing Base or the aggregate
Revolving Credit Commitments of all Lenders, whether by reduction of the
maximum aggregate Revolving Credit Commitments of all Lenders available
under Section 3.1(a) pursuant to Section 3.20, reduction of the
Borrowing Base, or
27
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<PAGE>
otherwise, the Borrowers shall be automatically required (without demand
or notice of any kind by Agent or any of the Lenders, all of which are
hereby expressly waived by the Borrowers) to immediately repay the
Swingline Loans until they are reduced to zero, and, if necessary, to
repay the Revolving Credit Loans in amounts sufficient to reduce such
Total Revolving Credit Usage to an amount equal to the lesser of the
Borrowing Base or the aggregate Revolving Credit Commitments of all
Lenders. If the Stated Amount of all Letters of Credit still exceeds
the lesser of the then current Borrowing Base or the aggregate Revolving
Credit Commitments of all Lenders after repayment in full of all
Swingline Loans and Revolving Credit Loans under the preceding sentence,
Borrowers agree to provide cash collateral in form and substance
acceptable to Agent in an amount sufficient to reduce the sum of (A) the
Stated Amount of outstanding Letters of Credit minus (B) the amount of
such cash collateral, to an amount which is not in excess of the lesser
of the then current Borrowing Base or the aggregate Revolving Credit
Commitments in the manner required under Section 3.7(f).
(e) Each Lender shall record in its books and records, and prior
to any transfer of its Revolving Credit Note shall endorse on the
schedules forming a part thereof, appropriate notations to evidence the
date and amount of each Revolving Credit Loan made by it during the Term
hereof, whether such Revolving Credit Loan is then a Prime Loan or a
LIBOR Loan, and the date and amount of each payment of principal and/or
interest made by Borrowers with respect thereto. Each Lender is hereby
irrevocably authorized by Borrowers to so endorse its Revolving Credit
Note and to attach to and make a part of any such Revolving Credit Note
a continuation of any such schedule as and when required; provided,
--------
however that the obligation of Borrowers to repay each Revolving
- -------
Credit Loan made hereunder shall be absolute and unconditional,
notwithstanding any failure of any Lender to endorse or any mistake by
any Lender in connection with endorsement on the schedules attached to
their respective Revolving Credit Notes. The books and records of each
Lender (including, without limitation, the schedules attached to the
Revolving Credit Notes) showing the account between such Lender and
Borrowers shall be admissible in evidence in any action or proceeding
and shall constitute prima facie proof of the items therein set forth
absent manifest error.
3.2 Swingline Facility.
------------------
(a) Subject to the terms and conditions hereof, Mercantile, for
itself alone, agrees from time to time on any Business Day during the
Term of this Agreement prior to the Swingline Expiry Date, to make such
loans (individually, a "Swingline Loan" and collectively, the "Swingline
Loans") to the Borrowers as the Borrowers may from time to time request
pursuant to Section 3.5(b). The aggregate principal amount of Swingline
Loans outstanding at any one time shall not exceed the Maximum Swingline
Amount and the Total Revolving Credit Usage shall not at any one time
exceed the lesser of (i) the Borrowing Base or (ii) the Revolving Credit
Commitment. The Swingline Loans from Mercantile to the Borrowers shall
be evidenced by a single Swingline Note of the Borrowers dated the date
hereof and payable to the order of Mercantile in the amount of the
Maximum Swingline Amount and in the form attached hereto as Exhibit B
---------
and incorporated herein by reference (as the same may from time to time
be amended, modified, extended or renewed, the "Swingline Note").
Subject to the terms and conditions hereof, the Borrowers may borrow,
repay and reborrow such Swingline Loans from Mercantile.
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(b) On any Business Day, Mercantile may, in its sole discretion,
give notice to the Lenders that its outstanding Swingline Loans shall be
funded with a borrowing of Revolving Credit Loans (provided that such
--------
notice shall be deemed to have been automatically given upon the
occurrence of a Default or an Event of Default under Sections 8.6 or
8.7, upon the termination of the obligations of the Lenders to make
Loans and for Agent to issue Letters of Credit after the occurrence of
an Event of Default, or upon the acceleration of all of the Obligations
after the occurrence of an Event of Default), in which case a borrowing
of Revolving Credit Loans constituting Prime Loans (each such Borrowing,
a "Mandatory Borrowing") shall be made on the immediately succeeding
-------------------
Business Day by all Lenders with a Revolving Credit Commitment pro
---
rata based on each Lender's Pro Rata Share and the proceeds thereof
- ----
shall be paid directly to Mercantile to repay Mercantile for such
outstanding Swingline Loans. Each such Lender hereby irrevocably agrees
to make Revolving Credit Loans upon one Business Day's notice pursuant
to each Mandatory Borrowing in the amount and in the manner specified in
the preceding sentence and on the date specified in writing by
Mercantile notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum amount for Borrowings
otherwise required hereunder, (ii) whether any conditions specified in
Section 4 are then satisfied, (iii) whether a Default or an Event of
- ---------
Default then exists, (iv) the date of such Mandatory Borrowing and (v)
the amount of the aggregate Revolving Credit Commitment at such time;
provided that, in no event shall such Lender be required to make
- --------
Revolving Credit Loans in excess of such Lender's Revolving Credit
Commitment. In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to any of the Borrowers), then each such
Lender hereby agrees that it shall forthwith purchase (as of the date
the Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrowers on or after such date and prior
to such purchase) from Mercantile such participations in the outstanding
Swingline Loans as shall be necessary to cause such Lender to share in
such Swingline Loans ratably based upon its respective Pro Rata Share,
provided that (x) all interest payable on the Swingline Loans shall be
- --------
for the account of Mercantile until the date as of which the respective
participation is required to be purchased and, to the extent
attributable to the purchased participation, shall be payable to the
participant from and after such date and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay Mercantile interest on the
principal amount of participation purchased for each day from and
including the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such
participation, at the effective rate charged to the Agent for overnight
federal funds transactions with members of the Federal Reserve System
for each day as determined by the Agent for the first three days and at
the rate otherwise applicable to Revolving Credit Loans maintained as
Prime Loans hereunder for each day thereafter.
3.3 Acquisition Revolving Credit Facility.
-------------------------------------
(a) Subject to the terms and conditions hereof, during the Term
of this Agreement, each Lender hereby severally agrees to make such
loans (individually, an "Acquisition Revolving Credit Loan," and
collectively, the "Acquisition Revolving Credit Loans"), to Borrowers as
Borrowers may from time to time request pursuant to Section 3.5(c). The
aggregate principal amount of Acquisition Revolving Credit Loans which
Lenders shall be required to have outstanding hereunder at any one time
shall not exceed Ten Million Dollars ($10,000,000.00), and the amount
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each Lender shall be required to have outstanding hereunder as
Acquisition Revolving Credit Loans shall not exceed the amount of such
Lender's Acquisition Revolving Credit Commitment. Each Acquisition
Revolving Credit Loan under this Section 3.3 shall be made from the
several Lenders ratably in proportion to their respective Acquisition
Revolving Credit Commitments. The Acquisition Revolving Credit Loans
from Lenders to the Borrowers shall be evidenced by the Acquisition
Revolving Credit Notes of the Borrowers, each dated the date hereof and
payable by the Borrowers to the order of each of the Lenders in the
respective principal amounts of each such Lender's Acquisition Revolving
Credit Commitment and in the form attached hereto as Exhibit C and
---------
incorporated herein by reference (as the same may from time to time be
amended, modified, extended or renewed, the "Acquisition Revolving
Credit Notes"). The Acquisition Revolving Credit Notes shall mature on
November 18, 2005, unless earlier terminated by acceleration or
otherwise upon the occurrence of an Event of Default under this
Agreement. Subject to any such earlier maturity by reason of
acceleration or otherwise, the aggregate Acquisition Revolving Credit
Commitments of the Lenders shall be reduced by the amount of Five
Hundred Thousand Dollars ($500,000.00) on the first day of each March,
June, September, and December during the Term hereof commencing on March
1, 2003 and continuing on the first day of each fiscal quarter of the
Borrowers thereafter during the Term hereof, with such reductions being
applied to the respective Acquisition Revolving Credit Commitments of
the Lenders in accordance with their Pro Rata Shares thereof. In the
event any such quarterly reduction in the aggregate Acquisition
Revolving Credit Commitments of all of the Lenders is to be decreased
below the then outstanding principal amount of all Acquisition Revolving
Credit Loans to Borrowers, Borrowers agree to pay to Agent for
distribution to the Lenders in accordance with their respective Pro Rata
Shares of the Acquisition Revolving Credit Commitments, the amount by
which the aggregate outstanding Acquisition Revolving Credit Loans then
exceeds the then available Acquisition Revolving Credit Commitments. To
the extent such sums have not been previously repaid pursuant to the
preceding sentence, the entire outstanding and unpaid principal balance
of the Acquisition Revolving Credit Loans shall be due and payable on
November 18, 2005. Subject to the terms and conditions of this
Agreement, the Borrowers may borrow, repay and reborrow the amounts
available under this Section 3.3.
(b) Each Lender shall record in its books and records, and prior
to any transfer of its Acquisition Revolving Credit Notes shall endorse
on the schedules forming a part thereof, appropriate notations to
evidence the date and amount of each Acquisition Revolving Credit Loan
made by its during the term hereof, whether such Acquisition Revolving
Credit Loan is then a Prime Loan or a LIBOR Loan, and the date and
amount of each payment of principal and/or interest made by Borrowers
with respect thereto. Each Lender is hereby irrevocably authorized by
Borrowers so to endorse its Acquisition Revolving Credit Note and to
attach and to make a part of any such Acquisition Revolving Credit Note
a continuation of any such schedule as and when required; provided,
--------
however that the obligation of Borrowers to repay each Acquisition
- -------
Revolving Credit Loan made hereunder shall be absolute and
unconditional, notwithstanding any failure of any Lender to endorse or
any mistake by any Lender in connection with endorsement on the
schedules attached to their respective Acquisition Revolving Credit
Notes. The books and records of each Lender (including, without
limitation, the schedules attached to the Acquisition Revolving Credit
Notes) showing the account between such Lender and Borrowers shall be
admissible in evidence in
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any action or proceeding and shall constitute prima facie proof of the
items therein set forth absent manifest error.
3.4 Term Loan Commitment of Lenders.
-------------------------------
(a) Subject to the terms and conditions hereof, each Lender
hereby severally agrees to make a term loan (collectively, the "Term
Loan") to the Borrowers. The aggregate principal amount of the Term
Loan which the Lenders shall be required to make shall not exceed Thirty
Five Million Dollars ($35,000,000.00) (the "Term Loan Commitment"), and
the amount of the Term Loan which each Lender shall be required to make
shall be the amount of such Lender's Term Loan Commitment. The Term
Loan from the Lenders to the Borrowers shall be evidenced by Term Notes
of the Borrowers dated the date hereof and payable to the order of each
of the Lenders in the respective original principal amounts of each such
Lender's Term Loan Commitment and in the form attached hereto as
Exhibit D and incorporated herein by reference (as the same may from
- ---------
time to time be amended, modified, extended or renewed, the "Term
Notes"). The Term Notes shall mature on November 18, 2005, unless
earlier terminated by acceleration or otherwise upon the occurrence of
an Event of Default under this Agreement. Subject to any such earlier
maturity by reason of acceleration or otherwise, Borrowers shall, on the
first day of each March, June, September and December during the Term
hereof, and on November 18, 2005, make a scheduled repayment of the
outstanding principal amount of the Term Loan in the amount set forth
opposite each such date:
AMOUNT OF REQUIRED
DATE PRINCIPAL PAYMENT
- ---- ------------------
March 1, 2000 $875,000
June 1, 2000 $875,000
September 1, 2000 $875,000
December 1, 2000 $875,000
March 1, 2001 $1,250,000
June 1, 2001 $1,250,000
September 1, 2001 $1,250,000
December 1, 2001 $1,250,000
March 1, 2002 $1,500,000
June 1, 2002 $1,500,000
September 1, 2002 $1,500,000
December 1, 2002 $1,500,000
March 1, 2003 $1,625,000
June 1, 2003 $1,625,000
September 1, 2003 $1,625,000
December 1, 2003 $1,625,000
March 1, 2004 $1,750,000
June 1, 2004 $1,750,000
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September 1, 2004 $1,750,000
December 1, 2004 $1,750,000
March 1, 2005 $1,750,000
June 1, 2005 $1,750,000
September 1, 2005 $1,750,000
November 18, 2005 $1,750,000
(b) Each Lender shall record in its books and records, and prior
to any transfer of its Term Note shall endorse on the schedules forming
a part thereof, appropriate notations to evidence the date and amount of
its Pro Rata Share of the Term Loan made by the Lenders, whether the
Term Loan is then a Prime Loan or a LIBOR Loan, and the date and amount
of each payment of principal and/or interest made by Borrowers with
respect thereto. Each Lender is irrevocably authorized by Borrowers so
to endorse its Term Note and to attach to and make a part of any such
Term Note a continuation of any such schedule as and when required;
provided, however, that the obligation of Borrowers to repay the
- -------- -------
Term Loan made hereunder shall be absolute and unconditional,
notwithstanding any failure of any Lender to endorse or any mistake by
any Lender in connection with endorsement on the schedules attached to
their respective Term Notes. The books and records of each Lender
(including, without limitation, the schedules attached to the Term
Notes) showing the account between such Lender and Borrowers shall be
admissible in evidence in any action or proceeding and shall constitute
prima facie proof of the items therein set forth absent manifest error.
3.5 Procedure for Borrowing.
-----------------------
(a) Revolving Credit Loan Advances.
------------------------------
(i) Subject to the terms and conditions hereof, Lenders
shall cause the Revolving Credit Loans to be made to Borrowers at any
time and from time to time during the Term of this Agreement, upon
timely prior oral or written notice ("Borrowing Notice") to Agent
specifying: (A) the currency in which such Revolving Credit Loan
shall be funded by Agent to Borrowers, (B) the desired amount of the
new Revolving Credit Loan (expressed in the currency in which such
Revolving Credit Loan shall be funded and also as a Dollar Equivalent
if such Revolving Credit Loan shall be funded in an Optional
Currency), (C) the date on which the Revolving Credit Loan proceeds
are to be made available to Borrowers, which shall be a Business Day,
and (D) whether such Revolving Credit Loan is to be a Prime Loan or a
LIBOR Loan, and if a LIBOR Loan, the applicable Interest Period
therefor. Each Borrowing Notice, if in writing, shall be in the form
of the notice attached hereto as Exhibit E, and any oral request
---------
made by the Borrowers shall be confirmed by the Borrowers by the
delivery of a written Borrowing Notice in the form of Exhibit E to
---------
Agent not later than the close of business on the next succeeding
Business Day. Each Borrowing Notice for a Prime Loan must be
received by Agent not later than 11:00 a.m. (St. Louis time) on the
Business Day on which a Prime Loan is to be made. Each Borrowing
Notice for a LIBOR Loan in Dollars must be received by Agent not
later than 11:00 a.m. (St. Louis time) three (3) Business Days in
advance of the Business Day on
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which such LIBOR Loan is to be made. Each Borrowing Notice for a
LIBOR Loan in an Optional Currency must be received by the Agent not
later than 11:00 a.m. (St. Louis time) four (4) Business Days in
advance of the Business Day on which such LIBOR Loan in an Optional
Currency is to be made.
(ii) Upon receipt of a Borrowing Notice, Agent shall
promptly notify each Lender on the date of receipt of such Borrowing
Notice by Agent specifying (A) the proposed date of borrowing and the
time and method of disbursement of such Revolving Credit Loans, (B)
the aggregate amount, type and currency of such Revolving Credit Loan
and the applicable Interest Period (if any), (C) if the Revolving
Credit Loan is to be denominated in an Optional Currency, the
designated Funding Office for such Revolving Credit Loans, and (D)
such Lender's Pro Rata Share (in Dollars, as calculated by Agent) of
the Revolving Credit Loan. A Borrowing Notice shall not be revocable
by Borrowers. Subject to the provisions of Section 3.22(b), each
Lender shall make available its Pro Rata Share of such Revolving
Credit Loan in Dollars in immediately available funds to Agent at the
designated Funding Office not later than 1:30 p.m. (St. Louis time)
on the date of each new Revolving Credit Loan such that the Agent is
able to fund such Revolving Credit Loans (in the requested currency)
to Borrowers. Agent shall not be required to make any amount
available to Borrowers hereunder except to the extent it shall have
received such amount from the Lenders as set forth herein,
provided, however, that unless Agent shall have been notified by
-------- -------
a Lender prior to the time a Revolving Credit Loan is to be made
hereunder that such Lender does not intend to make its Pro Rata Share
of such Revolving Credit Loan available to Agent, Agent may assume
that such Lender has made such Pro Rata Share available to Agent on
such date, and Agent may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to Agent by such
Lender and Agent has made such amount available to the Borrowers,
Agent shall be entitled to receive such amount from such Lender
forthwith upon its demand, together with interest thereon in respect
of each day during the period commencing on the date such amount was
made available to the Borrowers and ending on but excluding the date
Agent recovers such amount from the Lender at a rate per annum equal
to the effective rate charged to Agent for overnight federal funds
transactions with members of the Federal Reserve System for each day
as determined by Agent (or in the case of a day which is not a
Business Day, then for the preceding day). Subject to the terms and
conditions hereof, provided that Agent has received a timely
Borrowing Notice, Agent shall (unless Agent determines that any
applicable conditions specified in Section 4 have not been satisfied)
make the funds so received from the Lenders available to Borrowers at
the designated Funding Office not later than 2:00 p.m. (local time
with respect to such Funding Office) on the Business Day specified in
said Borrowing Notice in accordance with any instructions for such
disbursement received from the Borrowers.
(iii) The Borrowers hereby authorize Agent and Lenders to
rely on telephonic, telegraphic, telecopy, telex or written
instructions of any Person identifying himself or herself as Zsolt
Rumy, Daniel Greenwell or James Burch (or any other individual from
time to time authorized to act on behalf of the Borrowers pursuant to
a resolution adopted by the Board of Directors of the respective
Borrowers and certified by the Secretary
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<PAGE>
of each such Borrower and delivered to Agent) with respect to any
request to make a Loan or a repayment hereunder, and on any signature
which Agent or any of the Lenders in good faith believe to be
genuine, and the Borrowers shall be bound thereby in the same manner
as if such Person were actually authorized or such signature were
genuine. Borrowers also hereby agree, jointly and severally, to
indemnify Agent and Lenders and hold Agent and Lenders harmless from
and against any and all claims, demands, damages, liabilities,
losses, costs and expenses (including, without limitation, Attorneys'
Fees) relating to or arising out of or in connection with the
acceptance of instructions for making Revolving Credit Loans or
making repayments hereunder unless such acceptance results from the
gross negligence or willful misconduct of Agent or a Lender, as
determined by a court of competent jurisdiction.
(b) Swingline Loan Advances
------------------------
(i) Whenever the Borrowers desire to make a borrowing of
Swingline Loans hereunder, the Borrowers shall deliver to Mercantile
not later than 1:00 P.M. (St. Louis time) on the date that a
Swingline Loan is to be made, a Borrowing Notice for each Swingline
Loan to be made hereunder. Each such notice shall be irrevocable and
specify in each case (A) the date of borrowing (which shall be a
Business Day) and (B) the aggregate principal amount of the Swingline
Loan to be made pursuant to such borrowing. In the event of a
Swingline Borrowing, Mercantile will make funds in an amount equal to
the applicable Swingline Loan available to the Borrowers at
Mercantile's address.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 3.2(b), with the Borrowers irrevocably agreeing,
by their incurrence of any Swingline Loan, to the making of the
Mandatory Borrowings as set forth in Section 3.2(b).
(c) Acquisition Revolving Credit Loan Advances.
------------------------------------------
(i) Subject to the terms and conditions hereof, Lenders
shall cause the Acquisition Revolving Credit Loans to be made to the
Borrowers at any time and from time to time during the Term of this
Agreement upon Borrowers' application to Agent in writing signed by
the authorized representative of the Borrowers and received by Agent
not later than 11:00 a.m. (St. Louis time) ten (10) Business Days
prior to the date on which such Acquisition Revolving Credit Loan is
being borrowed, specifying: (A) the target business to be acquired
by Borrowers in a proposed Acceptable Acquisition with the proceeds
of such Acquisition Revolving Credit Loan, (B) a certificate of a
Responsible Officer of the Parent attesting that the Acceptable
Acquisition contemplated will not cause the Parent or any of its
Subsidiaries to violate any provision of the Transaction Documents
and including Parent's financial projections showing that post-
acquisition Parent and its Subsidiaries will be in pro forma
compliance with the financial covenants set forth in Section 7.1(i)
of this Agreement, (C) the approximate amount of the new Acquisition
Revolving Credit Loan, which shall not exceed the cash purchase price
for the target business, and (D) the date on which the Loan proceeds
are to be made available to the Borrowers, which shall be a Business
Day, and not later than three (3) Business Days prior to the date
funding of any such requested Acquisition Revolving Credit Loan,
Borrowers shall further notify Agent in
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writing: (1) of the exact amount of the new Acquisition Revolving
Credit Loan, (2) whether such Acquisition Revolving Credit Loan is a
Prime Loan or LIBOR Loan and (2) if a LIBOR Loan is requested, the
Interest Period, which in no event shall extend beyond the last day
of the Term hereof. Each application for an Acquisition Revolving
Credit Loan hereunder shall include a copy of the letter of intent,
purchase agreement or other documents signed by and between Borrowers
and the target business disclosing the terms of the Acceptable
Acquisition. Acquisition Revolving Credit Loans made hereunder to
fund Acceptable Acquisitions shall not require the prior written
consent of the Agent or the Required Lenders except as required in
subpart (d) of the definition of Acceptable Acquisition. An
Acquisition Revolving Credit Loan requested to fund any Acceptable
Acquisition shall be funded in a single advance.
(ii) Upon receipt of an application for an Acquisition
Revolving Credit Loan, the Agent shall deliver a copy of such
information to each Lender on the date of receipt and shall notify
each Lender of such Lender's Pro Rata Share of such new Acquisition
Revolving Credit Loan. An application for an Acquisition Revolving
Credit Loan, once issued, shall not be revocable by the Borrowers
unless the proposed Acceptable Acquisition fails to close. Under
such circumstances, the Borrowers shall reimburse each of the Lenders
and the Agent on demand for any resulting losses and expenses
incurred by the Agent or any such Lender, including, without
limitation any losses incurred in obtaining, liquidating or employing
deposits from third parties. No later than 1:30 p.m. (St. Louis
time) on the date of each new Acquisition Revolving Credit Loan, each
Lender shall make available its Pro Rata Share of such Acquisition
Revolving Credit Loan, in federal or other funds immediately
available in St. Louis, Missouri, to the Agent at its address
specified in or pursuant to Section 10.8. Agent shall not be
required to make any amount available to Borrowers hereunder except
to the extent it shall have received such amounts from the Lenders as
set forth herein, provided, however, that unless the Agent shall
-------- -------
have been notified by a Lender prior to the time an Acquisition
Revolving Credit Loan is to be made hereunder that such Lender does
not intend to make its Pro Rata share of such Acquisition Revolving
Credit Loan available to the Agent, the Agent may assume that such
Lender has made such Pro Rata Share available to the Agent on such
date, and the Agent may in reliance upon such assumption make
available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by
such Lender and the Agent has made such amount available to the
Borrowers, the Agent shall be entitled to receive such amount from
such Lender forthwith upon its demand, together with interest thereon
in respect of each day during the period commencing on the date such
amount was made available to the Borrowers and ending on but
excluding the date the Agent recovers such amount from the Lender at
a rate per annum equal to the effective rate charged to the Agent for
overnight federal funds transactions with member banks of the Federal
Reserve System for each day as determined by the Agent (or in the
case of a day which is not a Business Day, then for the preceding
day). Subject to the terms and conditions hereof, provided that
Agent has received a timely application from Borrowers as required in
this Section 3.5(c), Agent shall (unless Agent determines that any
applicable condition specified in Sections 4.1 or 4.3 has not been
satisfied) make the funds so received from the Lenders available to
Borrowers by wiring or otherwise transferring the proceeds of such
Loan not
35
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later than 2:00 p.m. (St. Louis time) on the Business Day specified
by Borrowers in their application in accordance with any instructions
for such disbursement received from the Borrowers.
(iii) The Borrowers hereby authorize Agent and Lenders to
rely on telephonic, telegraphic, telecopy, telex or written
instructions of any Person identifying himself of herself as Zsolt
Rumy, Daniel Greenwell or James Burch (or any other individual from
time to time authorized to act on behalf of the Borrowers pursuant to
a resolution adopted by the Board of Directors of the respective
Borrowers and certified by the Secretary of each such Borrower and
delivered to the Agent) with respect to any request to make a Loan or
a repayment hereunder, and on any signature which Agent or any of the
Lenders in good faith believe to be genuine, and the Borrowers shall
be bound thereby in the same manner as if such Person were actually
authorized or such signature were genuine. Borrowers also hereby
agree, jointly and severally, to indemnify Agent and Lenders and hold
Agent and Lenders harmless from and against any and all claims,
demands, damages, liabilities, losses, costs and expenses (including,
without limitation, Attorneys' Fees) relating to or arising out of or
in connection with the acceptance of instructions for making
Acquisition Revolving Credit Loans or making repayments hereunder
unless such acceptance results from the gross negligence or willful
misconduct o the Agent or a Lender, as determined by a court of
competent jurisdiction.
(d) Disbursement of Term Loan. On or prior to the date
-------------------------
hereof, Borrowers shall provide a Borrowing Notice to Agent specifying
whether the Term Loan is to be a Prime Loan or a LIBOR Loan. If the
Term Loan is to be a LIBOR Loan, the Borrowers shall have provided such
Borrowing Notice at least two (2) Business Days prior to the date hereof
and shall have specified the applicable Interest Period therefor. The
Term Loan shall be disbursed, in full, on the date hereof. Each Lender
shall make available the proceeds of its Pro Rata Share of the Term
Loan, in federal or other funds immediately available in St. Louis,
Missouri, to Agent at its address specified in or pursuant to Section
10.8. Agent shall not be required to make any amount available to
Borrowers hereunder except to the extent it shall have received such
amount from the Lenders as set forth herein, provided, however, that
-------- -------
unless Agent shall have been notified by a Lender prior to the date
hereof that such Lender does not intend to make its Pro Rata Share of
the Term Loan available to Agent, Agent may assume that such Lender has
made such Pro Rata Share available to Agent on such date, and Agent may,
in reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such corresponding amount is not in fact made
available to Agent by such Lender and Agent has made such amount
available to the Borrowers, Agent shall be entitled to receive such
amount from such Lender forthwith upon its demand, together with
interest thereon in respect of each day during the period commencing on
the date such amount was made available to the Borrowers and ending on
but excluding the date Agent recovers such amount from the Lender at a
rate per annum equal to the effective rate charged to Agent for
overnight federal funds transactions with members of the Federal Reserve
System for each day as determined by Agent (or in the case of a day
which is not a Business Day, then for the preceding day). Agent shall
(unless Agent determines that any applicable conditions specified in
Section 4 have not been satisfied) make the funds so received from the
Lender available to Borrowers by wiring or otherwise transferring the
proceeds of such Term Loan on the date hereof in accordance with any
instructions for such disbursement received from the Borrowers. The
Borrowers hereby authorize
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Agent and Lenders to rely on telephonic, telegraphic, telecopy, telex or
written instructions of any Person identifying himself or herself as
Zsolt Rumy, Daniel Greenwell or James Burch (or any other individual
from time to time authorized to act on behalf of the Borrowers pursuant
to a resolution adopted by the Board of Directors of the respective
Borrowers and certified by the Secretary of the Borrowers and delivered
to Agent) to furnish such instructions or to make a repayment hereunder,
and on any signature which Agent or any of the Lenders in good faith
believe to be genuine, and the Borrowers shall be bound thereby in the
same manner as if such Person were actually authorized or such signature
were genuine. Borrowers also hereby agree, jointly and severally, to
indemnify Agent and the Lenders and hold Agent and the Lenders harmless
from and against any and all claims, demands, damages, liabilities,
losses, costs and expenses (including, without limitation, Attorneys'
Fees) relating to or arising out of or in connection with the acceptance
of instructions for making the Term Loan or repayments or for converting
the Term Loan hereunder, unless such acceptance results from the gross
negligence or willful misconduct of Agent or a Lender, as determined by
a court of competent jurisdiction.
(e) Interest Rate Conversions.
-------------------------
(i) Subject to the terms and conditions hereof, Lenders
shall permit the Borrowers to convert all or any portion of the
outstanding Loans (other than Loans denominated in an Optional
Currency and Swingline Loans) from a Prime Loan to a LIBOR Loan or
from a LIBOR Loan to a Prime Loan, and Lenders shall permit the
Borrowers to request a new Interest Period for any existing LIBOR
Loan (including Loans denominated in an Optional Currency) at the end
of its then current Interest Period, upon timely oral or written
notice ("Conversion Notice") to Agent, in writing signed by the
authorized representative of the Borrowers (including any such notice
by facsimile transmission) specifying: (A) the amount of the
outstanding Loan being converted to a new interest rate basis, or the
amount of the LIBOR Loan being continued as a LIBOR Loan for a new
Interest Period, (B) the applicable interest rate option being
selected, (C) if a LIBOR Loan is requested, the Interest Period,
which in no event shall extend beyond the last day of the Term
hereof, and (D) the effective date, which shall be a Business Day,
and if pertaining to an existing LIBOR Loan, shall also be the last
day of the then current Interest Period. Each Conversion Notice must
be received by Agent not later than 11:00 a.m. (St. Louis time) on
the Business Day on which a conversion to a Prime Loan is to be made,
and not later than 11:00 a.m. (St. Louis time) on the third (3rd)
Business Day prior the Business Day on which a conversion to a LIBOR
Loan denominated in Dollars is to be made. Each Conversion Notice
for extension of an existing LIBOR Loan denominated in Dollars for a
new Interest Period must be received by Agent not later than 11:00
a.m. (St. Louis time) on the third (3rd) Business Day prior to the
last day of the then current Interest Period and for an extension of
an existing LIBOR Loan denominated in an Optional Currency for a new
Interest Period must be received by the Agent not later than 11:00
a.m. (St. Louis time) on the fourth (4th) Business Day prior to the
last day of the then current Interest Period. Any oral notice
furnished by the Borrowers shall be confirmed by the Borrowers by the
delivery of a written Conversion Notice to Agent (at its request) not
later than the close of business on the next succeeding Business Day.
Upon receipt of a Conversion Notice given to it, Agent shall notify
each Lender by 12:00 noon (St. Louis time) on the date of receipt of
such Conversion Notice by Agent of the contents thereof. Unless the
Borrowers shall have
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otherwise requested Agent to notify the Lenders to continue an
existing LIBOR Loan denominated in Dollars for a new Interest Period
in a timely Conversion Notice, upon the expiration of the current
Interest Period any LIBOR Loan denominated in Dollars made in
relation to such Interest Period and then outstanding shall bear
interest at the Prime Rate plus the Applicable Margin from and after
the expiration of such Interest Period unless and until subsequently
converted in accordance with the terms of this Section 3.5(e).
Unless the Borrowers shall have otherwise requested Agent to notify
Lenders to continue an existing LIBOR Loan denominated in an Optional
Currency for a new interest period in a timely Conversion Notice,
upon expiration of the current Interest Period, any LIBOR Loan
denominated in an Optional Currency made in relation to such Interest
Period and then outstanding shall be redenominated into a Prime Loan
in Dollars and shall bear interest at the Prime Rate plus the
Applicable Margin from and after the expiration of such Interest
Period. A Conversion Notice shall not be revocable by the Borrowers.
(ii) Subject to Section 3.22(c) and to the other terms
and conditions hereof, provided that Agent has timely received the
Conversion Notice, Lenders shall (unless Agent determines that any
applicable condition specified in Section 4 has not been satisfied)
convert the interest rate on the portion of the outstanding Loan
(other than a Loan denominated in an Optional Currency and a
Swingline Loan) as directed by the Borrowers in the Conversion
Notice, or Lenders shall extend any LIBOR Loan for a new Interest
Period as directed by the Borrowers in the Conversion Notice, at 2:00
p.m. (St. Louis time) on the Business Day specified in said
Conversion Notice; provided, however, that notwithstanding the
-------- -------
foregoing, in addition to and without limiting the rights and
remedies of Agent and the Lenders under Section 8 hereof, so long as
any Default or Event of Default under this Agreement has occurred and
is continuing, Borrowers shall not be permitted to renew any LIBOR
Loan as a LIBOR Loan or to convert any Prime Loan into a LIBOR Loan.
(iii) The Borrowers hereby authorize Agent and the Lenders
to rely on telephonic, telegraphic, telecopy, telex or written
instructions of Zsolt Rumy, Daniel Greenwell or James Burch (or any
other individual from time to time authorized to act on behalf of the
Borrowers pursuant to a resolution adopted by the Board of Directors
of the respective Borrowers and certified by the Secretary of each
such Borrower and delivered to Agent) to request a conversion of a
Loan (other than a Loan denominated in an Optional Currency and a
Swingline Loan), or to continue a LIBOR Loan hereunder, and on any
signature which Agent or any of the Lenders in good faith believe to
be genuine, and the Borrowers shall be bound thereby in the same
manner as if such Person were actually authorized or such signature
were genuine. The Borrowers also hereby agree, jointly and
severally, to indemnify Agent and the Lenders and hold Agent and the
Lenders harmless from and against any and all claims, demands,
damages, liabilities, losses, costs and expenses (including, without
limitation, Attorneys' Fees) relating to or arising out of or in
connection with the acceptance of instructions for converting Loans
to a new interest rate basis or continuing LIBOR Loans hereunder
unless such acceptance results from the gross negligence or willful
misconduct of Agent or a Lender as determined by a court of competent
jurisdiction. A Conversion Notice shall not be required in
connection with a Prime Loan made pursuant to Sections 3.10, 3.11
or 3.12.
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3.6 Minimum Draw-Down. Each LIBOR Loan denominated in Dollars
-----------------
shall be for an aggregate principal amount of not less than
$1,000,000.00 and shall be in multiples of $250,000.00, and each LIBOR
Loan denominated in an Optional Currency shall be in an amount of such
Optional Currency reasonably comparable to the minimum amount specified
for Revolving Credit Loans denominated in Dollars as shall be advised by
the Agent in light of the prevailing market conditions and conventions
at the time such Revolving Credit Loan proceeds are to be made available
to the Borrowers. Except for Swingline Loans, each Prime Loan shall be
for an aggregate principal amount of not less than $100,000.00 and shall
be in multiples of $50,000.00. Each Swingline Loan shall be a Prime
Loan, shall be for an aggregate principal amount of not less than
$50,000.00 and shall be in multiples of $10,000.00 (except that any
Swingline Loan may be in the aggregate amount of the unused portion of
the Maximum Swingline Amount).
3.7 Letters of Credit.
-----------------
(a) Subject to the terms and conditions of this Agreement,
during the Term of this Agreement, and so long as no Default or Event of
Default under this Agreement has occurred and is continuing (provided,
however, that Agent shall have no liability to any of the Lenders for
issuing a Letter of Credit after the occurrence of any Default or Event
of Default under this Agreement unless Agent has previously received
notice in writing to Agent by Borrowers or any of the Lenders of the
occurrence of such Default or Event of Default), Agent hereby agrees to
issue irrevocable standby and commercial letters of credit for the
account of Borrowers (individually, a "Letter of Credit" and
collectively, the "Letters of Credit") in an amount and for the term
specifically requested by Borrowers by application in writing to Agent
in the form of Exhibit G in the case of a standby Letter of Credit or
---------
in the form of Exhibit H in the case of a commercial Letter of Credit,
---------
each as attached hereto and incorporated herein by reference (a "Letter
of Credit Application") at least three (3) Business Days prior to the
requested issuance thereof; provided, however, that:
-------- -------
(i) Borrowers shall have executed and delivered to Agent
a Letter of Credit Application with respect to such Letter of Credit;
(ii) the term of any such Letter of Credit shall not
extend beyond the earlier of (A) the last day of the Term hereof, or
(B) the date one (1) year after the date of issuance thereof,
provided, however, that any such Letter of Credit may be
-------- -------
renewable on terms satisfactory to Agent; and
(iii) the aggregate Stated Amount of all outstanding
Letters of Credit shall not at any one time exceed Five Million
Dollars ($5,000,000.00) (or the Equivalent Amount in another
currency) and the amount of the Total Revolving Credit Usage shall
not at any one time exceed the lesser of (a) the Borrowing Base or
(b) the Revolving Credit Commitment; and
(iv) the text of any such Letter of Credit is provided to
Agent no less than three (3) Business Days prior to the requested
issuance date, which text must be acceptable to Agent in its sole and
absolute good faith discretion.
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(b) The payment of drafts under each Letter of Credit shall be
made in accordance with the terms thereof and, in that connection, Agent
shall be entitled to honor any drafts and accept any documents presented
to it by the beneficiary of such Letter of Credit in accordance with the
terms of such Letter of Credit and believed in good faith by Agent to be
genuine. Agent shall not have any duty to inquire as to the accuracy or
authenticity of any draft or other drawing document that may be
presented to it other than the duties contemplated by the applicable
Letter of Credit Application. If Agent shall have received documents
that in its judgment constitute all of the documents that are required
to be presented before payment or acceptance of a draft under a Letter
of Credit, it shall be entitled to pay such draft.
(c) In the event of any payment by Agent of a draft presented or
accepted under a Letter of Credit, Borrowers agree to pay to Agent in
immediately available funds at the time of such drawing an amount equal
to the sum of such drawing plus Agent's customary processing and other
----
fees related thereto. Borrowers hereby authorize Agent to charge or
cause to be charged to Borrowers' bank accounts at Agent to the extent
there are balances of immediately available funds therein, in an amount
equal to the sum of such drawing plus Agent's customary processing and
----
other fees related thereto, and Borrowers agree to pay the amount of any
such drawing (and/or Agent's negotiation, processing and other fees
related thereto) not so charged prior to the close of business of Agent
on the day of such drawing. In the event any payment under a Letter of
Credit is made by Agent prior to receipt of payment from Borrowers, such
payment by Agent shall constitute a request by Borrowers for a Revolving
Credit Loan as a Prime Loan under Section 3.1(a) above.
(d) (i) Borrowers shall also pay to Agent, for its own
account, with respect to each Letter of Credit, a nonrefundable
issuance fee in the amount of Forty Dollars ($40.00) for each
commercial Letter of Credit and One Hundred Twenty Five Dollars
($125.00) for each standby Letter of Credit, (collectively, the
"Letter of Credit Issuance Fee"), which Letter of Credit Issuance Fee
shall be due and payable on the date of issuance of each Letter of
Credit, and such other fees as Agent may from time to time
customarily charge in accordance with Agent's published schedule of
fees in effect from time to time, which fees shall be due and payable
on demand by Agent;
(ii) Borrowers shall pay to Agent for the ratable account
of the Lenders with respect to each standby Letter of Credit, for the
period during which such standby Letter of Credit is outstanding, a
nonrefundable Letter of Credit commission fee at a rate per annum
equal to the Applicable Margin for LIBOR Loans in effect for each
such fiscal quarter (calculated on an actual day, 360-day year basis)
times the Stated Amount (taking into account any scheduled increases
or decreases therein during the fiscal quarter in question) of each
standby Letter of Credit issued hereunder ("Letter of Credit
Commission Fee"), which Letter of Credit Commission Fee shall be due
and payable on the date of issuance for each standby Letter of Credit
issued hereunder, in each case prorated for the remainder of the then
current quarter, and such Letter of Credit Commission Fee shall also
be payable thereafter for all outstanding standby Letters of Credit
quarterly in advance on each March 1, June 1, September 1 and
December 1 during the Term hereof; and
(iii) Borrowers shall pay to Agent for the ratable account
of the Lenders with respect to each commercial Letter of Credit a
nonrefundable Letter of Credit
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negotiation fee in an amount equal to Three Eighths of One Percent
(0.375%) of each draw on such commercial Letter of Credit ("Letter of
Credit Negotiation Fee"), which fee shall not be less than Seventy
Five Dollars ($75.00) per individual drawing under each commercial
Letter of Credit, and which Letter of Credit Negotiation Fee shall be
due and payable upon the presentation of documents to the Agent by
the beneficiary of such commercial Letter of Credit (or its agent) in
connection with a request for payment under such commercial Letter of
Credit (whether or not such requested payment is made by the Agent).
Accrued Letter of Credit Negotiation Fees paid by Borrowers shall be
distributed to the Lenders on each March 1, June 1, September 1 and
December 1, beginning March 1, 2000.
(e) Upon the issuance of a Letter of Credit by Agent, an
undivided participation interest therein (including, without limitation,
an undivided participation interest in the reimbursement risk relating
to such Letter of Credit and in all payments and Revolving Credit Loans
made in connection with such Letter of Credit) shall automatically be
granted by Agent to and accepted by each of the Lenders in an amount
based on each Lender's Pro Rata Share of the face amount of such Letter
of Credit, which participation shall be evidenced by a single Letter of
Credit Participation Certificate executed by Agent in favor of such
Lender in the form attached hereto as Exhibit I and incorporated
---------
herein by reference. Agent agrees to provide each Lender with a copy of
each Letter of Credit issued hereunder. If Agent shall make payment on
any draft presented or accepted under a Letter of Credit, Agent shall
give notice of such payment to the Lenders, and each of the Lenders
hereby authorizes and requests Agent to advance for their respective
accounts, pursuant to the terms hereof, their respective shares of any
such payment based upon their respective Pro Rata Shares. If a Default
or Event of Default has occurred hereunder and if such drawing is not
paid by Borrowers in immediately available funds prior to the close of
business of Agent on the date of such drawing, Agent shall promptly so
notify the Lenders and each of the Lenders agrees to immediately
reimburse Agent in immediately available funds for its Pro Rata Share of
the amount of such drawing, plus interest calculated on its Pro Rata
Share of such amount at a rate per annum equal to the effective rate
charged to Agent for overnight federal funds transactions with member
banks of the Federal Reserve System calculated from the date of such
payment by Agent to but excluding the date of reimbursement by such
other Lender and on an actual-day, 360-day year basis. Each of the
Lenders will be entitled to its Pro Rata Share of any Letter of Credit
Commission Fees and Letter of Credit Negotiation Fees paid by Borrowers.
(f) Notwithstanding any provision contained in this Agreement or
any of the Letter of Credit Applications to the contrary: (i) if any of
the Letters of Credit remain outstanding on the last day of the Term of
this Agreement, Borrowers shall, on or before 12:00 noon (St. Louis
time) on the last day of the Term of this Agreement, (A) surrender the
originals of the applicable Letter(s) of Credit to Agent for
cancellation or (B) provide Agent with cash collateral (or other
collateral acceptable to the Required Lenders in their sole and absolute
discretion) in an amount at least equal to the aggregate Stated Amount
of all Letter(s) of Credit which remain outstanding at such time and
execute and deliver to Agent such agreements as the Required Lenders may
reasonably require to grant Agent a first priority perfected security
interest in such cash or other collateral; and (ii) upon the occurrence
of any Event of Default under this Agreement (including, without
limitation, Borrower's failure to comply with the requirements of clause
(i) above), at Agent's option and without demand or further notice to
Borrowers, an amount equal to the
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aggregate Stated Amount of all Letter(s) of Credit then outstanding
shall be deemed (as between Agent and Borrowers) to have been paid or
disbursed by Agent (notwithstanding that such amounts may not in fact
have been so paid or disbursed by Agent), and a Revolving Credit Loan to
Borrowers in such amount to have been made and accepted by Borrowers,
which Revolving Credit Loan shall be immediately due and payable. In
lieu of the foregoing, at the election of Agent, Borrowers shall, upon
Agent's demand, deliver to Agent cash, or other collateral acceptable to
the Required Lenders in their sole and absolute discretion, having a
value, as determined by the Required Lenders, at least equal to the
aggregate Stated Amount of all outstanding Letters of Credit and execute
and deliver to Agent such agreements as the Required Lenders may
reasonably require to grant Agent a first priority perfected security
interest in such cash or other collateral. Any such collateral and/or
any amounts received by Agent in payment of the Revolving Credit Loan
made pursuant to this Section 3.7(f) shall be held by Agent in a
separate account at Agent appropriately designated as a cash collateral
account in relation to this Agreement and the Letters of Credit and
retained by Agent as collateral security for the payment of the
Obligations. Cash amounts delivered to Agent pursuant to the foregoing
requirements of this Section 3.7(f) shall be invested, at the request
and for the account of Borrowers, in investments of a type and nature
and with a term reasonably acceptable to the Required Lenders. Such
amount, including in the case of cash amounts invested in the manner set
forth above, any interest realized thereon may be applied to reimburse
Agent for drawings or payments under or pursuant to the Letters of
Credit which Agent has paid, or if no such reimbursement is required, to
the payment of such other of Obligations as Agent shall determine. Any
amounts remaining in any cash collateral account established pursuant to
this Section 3.7(f) after payment in full of all of the Obligations and
the expiration or cancellation of all of the Letters of Credit shall be
returned to Borrowers (after deduction of Agent's reasonable expenses,
if any).
(g) In the event of any inconsistency or conflict between this
Agreement and any of the Letter of Credit Applications, the terms and
provisions of this Agreement shall govern and control.
3.8 Interest Rates and Payments.
---------------------------
(a) Each Loan (other than a Loan to be made in an Optional
Currency or a Swingline Loan) shall bear interest prior to maturity at a
rate per annum equal to such of the following as the Borrowers, at their
option, shall select in accordance with Section 3.5: (i) the Prime Rate
plus the Applicable Margin, which rate shall fluctuate as and when said
Prime Rate or said Applicable Margin shall change, or (ii) the LIBOR
Rate plus the Applicable Margin, determined in the case of LIBOR Loans
as of the date of the commencement of the applicable Interest Period.
Each LIBOR Loan made in an Optional Currency shall bear interest prior
to maturity at a rate per annum equal to the LIBOR Rate plus the
Applicable Margin, determined as of the date of the commencement of the
applicable Interest Period. Each Swingline Loan shall bear interest
prior to maturity at a rate per annum equal to the Prime Rate plus the
Applicable Margin, which rate shall fluctuate as and when said Prime
Rate or Applicable Margin shall change. Accrued interest on all Prime
Loans shall be payable monthly in arrears on the first day of each
calendar month during the Term, commencing on the first such date after
such Loan is made. Accrued interest on all LIBOR Loans shall be payable
in arrears on the last day of the Interest Period applicable to each
such LIBOR Loan, and if any such Interest Period exceeds three months,
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all accrued and unpaid interest shall be due and payable on the date
three months following the commencement of such Interest Period as well.
Interest on the principal amount of each Loan made in an Optional
Currency shall be paid by the Borrowers in such Optional Currency. In
addition, all accrued interest on all Loans shall be payable on the last
day of the Term hereof, whether by reason of acceleration or otherwise.
(b) Upon the occurrence and during the continuance of an Event
of Default, the principal balance of and, to the extent permitted by
law, any overdue interest on any Prime Loan shall bear interest, payable
on demand, for each day until paid, at a rate per annum equal to Two
Percent (2.00%) over and above the Prime Rate, fluctuating as and when
said Prime Rate shall change. Upon the occurrence and during the
continuance of an Event of Default, the principal balance of and, to the
extent permitted by law, any overdue interest on any LIBOR Loan shall
bear interest, payable on demand, for each day during the applicable
Interest Period until paid, at a rate per annum equal to the sum of Two
Percent (2.00%) plus the LIBOR Rate plus the Applicable Margin for such
LIBOR Loan, and after the expiration of such Interest Period, such Loan
shall thereafter bear interest at the default rate applicable to Prime
Loans under the preceding sentence. From and after the maturity of the
Notes, whether by reason of acceleration or otherwise, the unpaid
principal balance of each Loan shall bear interest until paid, payable
on demand, at a rate per annum equal to Two Percent (2.00%) over and
above the Prime Rate, fluctuating as aforesaid.
(c) Interest shall be computed with respect to all Loans on an
actual day, 360-day year basis. The Borrowers shall be permitted to
have no more than six (6) LIBOR Loans outstanding at any one time,
whether such LIBOR Loans shall constitute Revolving Credit Loans or
Acquisition Revolving Credit Loans.
(d) Agent (or Mercantile, in the event of Swingline Loans) shall
determine each interest rate applicable to the Loans hereunder as
selected by Borrowers pursuant to Section 3.5. Agent shall give prompt
notice to Borrowers and the Lenders by telephone, telecopy, telex or
cable of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error. Agent
shall, at the request of the Borrowers, deliver to the Borrowers a
statement showing the computations used by Agent in determining the
LIBOR Rate.
(e) A portion of the interest payable by the Borrowers in
respect of each LIBOR Loan denominated in an Optional Currency in an
amount equal to the amount of interest which would have accrued on such
Loan had such Loan been a LIBOR Loan denominated in Dollars shall be
deemed to be paid by the Borrowers to Agent for the account of each
Lender, to be distributed ratably to the Lenders on the date of such
interest payment. The balance of such interest payment (the "Hedging
Fee") shall be retained by the Agent as compensation to the Agent for
the cost of such foreign currency hedging mechanisms it may elect to
utilize, if any, from time to time in connection with Loans denominated
in an Optional Currency.
3.9 Prepayment; Funding Losses. Borrowers shall be privileged
--------------------------
to prepay all at any time or any portion from time to time of the unpaid
principal balance of any Loan in accordance with the terms of Section
3.18. If the Borrowers make any payment with respect to any LIBOR Loan
on any day other than the last of the Interest Period applicable thereto
(whether by reason of acceleration, a voluntary prepayment, a required
prepayment under this Agreement or otherwise), or
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if the Borrowers convert any LIBOR Loan or portion thereof to a Prime
Loan on any day other than the last day of the Interest Period
applicable thereto (whether by reason of Section 3.11, 3.12 or
otherwise), or if the Borrowers fail to borrow any LIBOR Loan after the
request of such a loan has been given to Agent pursuant hereto, the
Borrowers shall reimburse each of the Lenders on demand for any
resulting losses and expenses incurred by any such Lender, including,
without limitation any losses incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of margin for
the period after such payment or conversion, provided that such Lender
--------
shall have delivered to the Borrowers a certificate, with supporting
calculations, as to the amount of such losses and expenses, which
certificate shall be conclusive in the absence of manifest error.
3.10 Basis for Determining Interest Rate Inadequate or Unfair.
--------------------------------------------------------
If with respect to any Interest Period:
(a) By reason of circumstances affecting the London interbank
eurocurrency market, adequate and fair means do not exist for
ascertaining the rate of interest payable pursuant to Section 3.8 in
respect of a LIBOR Loan for such Interest Period, or
(b) any Lender determines that deposits in the relevant amount
of Dollars or in the relevant amount of the Optional Currency (as
applicable) are not being offered to such Lender in the relevant London
interbank eurocurrency market for such Interest Period, or
(c) any Lender determines that the LIBOR Rate will not
adequately and fairly reflect the cost to such Lender of maintaining or
funding the LIBOR Loans for such Interest Period, or
(d) with respect to a LIBOR Loan denominated in an Optional
Currency, appropriate hedging instruments designed to protect the Agent
and the Lenders from foreign currency exchange risk are unavailable to
the Agent at a cost equal to or less than the Hedging Fee with respect
to such Loan,
Agent or such Lender shall forthwith give notice thereof to Borrowers,
whereupon until such Lender notifies Borrowers that the circumstances
giving rise to such unavailability or suspension no longer exist, (a)
the obligations of such Lender to make LIBOR Loans, to convert Prime
Loans to LIBOR Loans or to fund Loans denominated in an Optional
Currency (as applicable) shall be suspended, and (b) Borrowers shall
repay in full the then outstanding principal amount of each of its LIBOR
Loans, together with accrued interest thereon, on the last day of the
then current Interest Period applicable to such Loan. Concurrently with
repaying each such LIBOR Loan pursuant to this Section, Borrowers shall
borrow a Prime Loan in an equal principal amount from such Lender, and
such Lender shall make such a Prime Loan unless Borrowers notify such
Lender at least one Business Day before the date of such repayment that
it elects not to borrow any Prime Loans on such date. The parties
recognize that the introduction of the Euro at the start of the third
stage of European monetary union may result in (i) the disappearance of
certain published or displayed rates for deposits in a national currency
unit used to determine LIBOR or a base currency rate or (ii) changes in
the way those rates are quoted and published or displayed. In such an
event, all references to LIBOR Index Rate with respect to a Currency
shall be replaced with references to
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Euro BBA LIBOR as it appears on or in any successor page or publication
officially designated by the sponsor of the dedicated page or
publication.
3.11 Illegality. If, after the date of this Agreement, the
----------
adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof
by any governmental or regulatory authority, the Board of Governors of
the Federal Reserve System or any comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender
with any request or directive (whether or not having the force of law)
of any such governmental or regulatory authority, the Board of Governors
of the Federal Reserve System or comparable agency shall make it
unlawful or impossible for such Lender to make, maintain or fund its
LIBOR Loans to the Agent and the Borrowers, such Lender shall forthwith
give notice thereof to the Borrowers. Upon receipt of such notice, the
Borrowers shall convert all of their then outstanding LIBOR Loans from
such Lender on either (a) the last day of the then current Interest
Period applicable to such LIBOR Loans if such Lender may lawfully
continue to maintain and fund such LIBOR Loans to such day or (b)
immediately if such Lender may not lawfully continue to fund and
maintain such LIBOR Loan to such day, to a Prime Loan of the same type
if (i.e., as a Revolving Credit Loan, an Acquisition Revolving Credit
Loan, or a Term Loan) in an equal principal amount. Interest accrued on
such LIBOR Loan prior to such conversion shall be due and payable on the
date of such conversion together with such other amounts due under
Section 3.9.
3.12 Requirements of Law: Increased Costs. If (a) Regulation D
-------------------------------------
of the Board of Governors of the Federal Reserve System, as amended or
(b) after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental or regulatory authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency
(a "Regulatory Change"):
(i) shall subject any Lender to any tax, duty or other
charge with respect to its LIBOR Loans, its Notes or its obligations
to make LIBOR Loans, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on its LIBOR
Loans or its obligations to make LIBOR Loans (except for taxes on or
changes in the rate of tax on the overall net income of such Lender);
or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System), special deposit, capital or
similar requirement against assets of, deposits with or for the
account of, or credit extended or committed to be extended by, any
Lender or shall, with respect to any Lender or the London interbank
market, impose, modify or deem applicable any other condition
affecting its LIBOR Loans, its Notes or its obligation to make LIBOR
Loans;
and the result of any of the foregoing is to increase the cost to (or in
the case of Regulation D, and to impose a cost on or increase the cost
to) such Lender of making or maintaining any LIBOR Loan, or to reduce
the amount of any sum received or receivable by such Lender under this
Agreement or
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under its Notes with respect thereto, and if such Lender is not
otherwise fully compensated for such increase in cost or reduction in
amount received or receivable by virtue of the inclusion of the
reference to "Reserve Percentage" in the calculation of the interest
rate applicable to LIBOR Loans, then upon notice by such Lender to
Borrowers together with a work sheet showing how the increase in cost or
reduction in the amount received or receivable was calculated and
details of the Regulatory Change (with a copy to Agent), Borrowers shall
pay for the account of such Lender as additional interest, such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction. The determination by any Lender under this
Section of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining
such amounts or amounts, the Lenders may use any reasonable averaging
and attribution methods. If the Lender demands additional compensation
under this Section, at the option of the Borrowers and upon five (5)
Business Days' prior telecopy notice (to be confirmed promptly by
letter) given by the Borrowers to such Lender, the Commitment of such
Lender to make LIBOR Loans shall forthwith be canceled and all loans by
such Lender then outstanding as LIBOR Loans, if any, shall be converted
automatically to Prime Loans. If any such conversion of a LIBOR Loan is
made on a day which is not the last day of an Interest Period therefor,
the Borrowers shall pay to such Lender upon such Lender's request, such
amount or amounts as may be necessary to compensate such Lender for such
increased cost in respect of such LIBOR Loan or as a result of such
conversion.
3.13 Prime Loans Substituted for Affected LIBOR Loans. If
------------------------------------------------
notice has been given by any Lender pursuant to Section 3.10 or 3.11 or
by the Borrowers pursuant to Section 3.12 requiring LIBOR Loans to be
repaid or converted, then, unless and until such Lender notifies the
Borrowers that the circumstances giving rise to such repayment or
conversion no longer apply, all Loans which would otherwise be made by
such Lender to the Borrowers as LIBOR Loans shall be made instead as
Prime Loans. Any such Lender shall promptly notify the Borrowers if and
when the circumstances giving rise to such repayment no longer apply.
All indemnities and all provisions relating to reimbursement to any
Lender of amounts sufficient to protect the yield to such Lender with
respect to the Loans, including, without limitation, Sections 3.9, 3.10,
3.11 and 3.12 hereof, shall survive the payment of the Notes and the
termination of this Agreement.
3.14 Arrangement Fee; Agent's Fee.
----------------------------
(a) Arrangement Fee. The Borrowers shall pay to Agent on the
---------------
date hereof, for its own account, a nonrefundable arrangement fee (the
"Arrangement Fee") in Dollars in the amount set forth in the Fee Letter.
(b) Agent's Fee. The Borrowers agree to pay to the Agent, for
-----------
its own account, a nonrefundable Agent's fee (collectively, the "Agent's
Fee") in Dollars in the amount set forth in the Fee Letter.
3.15 Commitment Fee. From the date of this Agreement to but
--------------
excluding the last day of the Term of this Agreement, Borrowers shall
pay to Agent, in Dollars, for the account of each Lender in accordance
with its respective Pro Rata Share, a quarterly nonrefundable commitment
fee equal to (a) One-Half of One Percent (.50%) per annum for all fiscal
quarters ending on or before December 31, 1999, or (b) the percentage
per annum equal to the then current
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Applicable Margin for all times after December 31, 1999, multiplied by
the average daily unused portion of the Loan Commitments (excluding the
Term Loan Commitment). The unused portion of the aggregate Revolving
Credit Commitments shall be calculated as (i) the sum of the amounts
each day during any such fiscal quarter equal to the aggregate Revolving
Credit Commitments minus (x) the outstanding principal balance of all
Revolving Credit Loans, (y) the outstanding principal balance of all
Swingline Loans, and (z) the Stated Amount of all issued and outstanding
Letters of Credit on each such day, divided by (ii) 90, or by such
lesser number of days in any partial fiscal quarter for which such
Revolving Credit Commitment was available. The unused portion of the
aggregate Acquisition Revolving Credit Commitments shall be calculated
as (i) the sum of the amounts each day during any such fiscal quarter
equal to the aggregate Acquisition Revolving Credit Commitments minus
the outstanding principal balance of all Acquisition Revolving Credit
Loans on each such day, divided by (ii) 90, or by such lesser number of
days in any partial fiscal quarter for which such Acquisition Revolving
Credit Commitment was available. Such commitment fee shall be payable
quarterly in arrears on each March 1, June 1, September 1 and December 1
during the Term of this Agreement commencing March 1, 2000, and on the
last day of the Term of this Agreement, and shall be calculated on an
actual day, 360-day year basis.
3.16 Place and Manner of Payment. Both principal and interest
---------------------------
on the Loans and all fees due hereunder and under any of the other
Transaction Documents payable to any Lender shall be paid in Dollars, in
federal or other immediately available funds, at Agent's banking office
at One Mercantile Center, 7th and Washington, St. Louis, Missouri 63101,
except that payments of principal and interest by Borrowers to Agent on
Loans made in Optional Currencies shall be made in the applicable
Optional Currency to the designated Funding Office and in immediately
available funds. Agent will promptly distribute to each Lender in
Dollars in immediately available funds its ratable share of each such
payment received by Agent pursuant to the terms of this Agreement for
the account of such Lenders. Whenever any payment of principal of, or
interest on, the Loans or of fees shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day, except as required by clauses (a) or (b) of the
definition of Interest Period. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon, at the
then applicable rate, shall be payable for such extended time.
3.17 Maturity. All Loans not paid prior to the last day of the
--------
Term hereof, together with all accrued and unpaid interest thereon,
shall be due and payable on the last day of the Term hereof, whether by
reason of the expiration thereof, acceleration or otherwise.
3.18 Prepayments.
-----------
(a) Voluntary Prepayments.
---------------------
(i) Borrowers may, upon notice to Agent specifying that
the Borrowers are paying Prime Loans and specifying whether the
Borrowers are paying a portion of the Swingline Loans, Term Loans,
Acquisition Revolving Credit Loans, and/or Revolving Credit Loans,
pay Prime Loans in whole at any time, or from time to time in part in
amounts aggregating $1,000,000.00 or any larger multiple of
$500,000.00 (or aggregating $50,000.00 or any larger multiple of
$10,000.00 in the case of Swingline Loans), by paying
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the principal amount to be paid together with all accrued and unpaid
interest thereon to and including the date of payment. All such
prepayments that are made on the Term Loan will be applied by Lenders
to reduce their Pro-Rata Shares, and consequently the aggregate
amounts, of the repayment installments required under Section 3.4(a)
in the inverse order of their due dates.
(ii) Borrowers may, upon at least two (2) Business Days
notice to Agent specifying (A) that the Borrowers are paying LIBOR
Loans, (B) whether the Borrowers are paying a portion of its Term
Loans, Acquisition Revolving Credit Loans and/or its Revolving Credit
Loans, and (C) the total amount and currency of such prepayment, and
the Dollar Equivalent of such prepayment, pay to the designated
Funding Office in the currency in which such Loan was made the LIBOR
Loans to which a given Interest Period applies, in whole, or in part
in Dollar Equivalent amounts aggregating $1,000,000.00 or any larger
multiple of $500,000.00, by paying the principal amount to be paid
together with all accrued and unpaid interest thereon to and
including the date of payment and all amounts owed under Section 3.9.
All such prepayments that are made on the Term Loan will be applied
by Lenders to reduce their Pro Rata Shares, and consequently the
aggregate amounts, of the repayment installments required under
Section 3.4(a) in the inverse order of their due dates.
(b) Mandatory Prepayments.
---------------------
(i) Currency Fluctuation. If on any Computation Date
--------------------
the Total Revolving Credit Usage is equal to or greater than the
lesser of (A) the aggregate Revolving Credit Commitment or (B) the
Borrowing Base, as a result of a change in exchange rates between one
(1) or more Optional Currencies and Dollars, then the Agent shall
notify the Borrowers of the same. The Borrowers shall pay or prepay
Loans within one (1) Business Day after receiving such notice such
that the Total Revolving Credit Usage shall not exceed the lesser of
(A) the aggregate Revolving Credit Commitment or (B) the Borrowing
Base after giving effect to such payments or prepayments. All
prepayments required pursuant to this Section 3.18(b)(i) shall first
be applied among the Prime Loans, then to LIBOR Loans denominated in
Dollars, and then to LIBOR Loans denominated in Optional Currencies.
In accordance with Section 3.9, the Borrowers shall indemnify the
Lenders and any Funding Office for any loss or expense, excluding
loss of margin, incurred with respect to any such prepayments applied
against LIBOR Loans on any day other than the last day of the
applicable Interest Period.
(ii) Asset Disposition. In the event of receipt by the
-----------------
Parent or any Subsidiary of the Parent of Net Cash Proceeds from an
Asset Disposition that are not used by the Parent or such Subsidiary
to purchase replacement assets within 120 days of such Asset
Disposition, the Parent shall or shall cause such Subsidiary to
prepay the Loans in an amount equal to all such proceeds not so used,
and such proceeds shall be applied to the Loans in accordance with
Section 3.18 (b)(iv).
(iii) Debt Offering; Stock Offering. Upon receipt by the
-----------------------------
Parent or any Subsidiary of the Parent of Net Cash Proceeds from a
Debt Offering, the Parent shall or shall cause such Subsidiary to
prepay the Loans in an amount equal to 100% of such Net
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Cash Proceeds and such proceeds shall be applied to the Loans in
accordance with Section 3.18 (b)(iv). Upon receipt by the Parent or
any Subsidiary of the Parent of Net Cash Proceeds from a Stock
Offering, the Parent shall or shall cause such Subsidiary to prepay
the Loans in an amount equal to 50% of such Net Cash Proceeds and
such proceeds shall be applied to the Loans in accordance with
Section 3.18 (b)(iv).
(iv) Application of Payment. Any prepayment pursuant to
----------------------
Sections 3.18(b)(ii) or 3.18 (b)(iii) shall first be applied to the
then outstanding principal amount of all Term Loans and to all
accrued and unpaid interest thereon to and including the date of
payment and shall reduce the repayment installments required under
Section 3.4(a) in the inverse order of the respective due dates. If
the Term Loans shall have been paid in full by application of the
prepayment or otherwise, then the balance of such prepayment shall be
applied to the then outstanding principal amount of all Acquisition
Revolving Credit Loans and to all accrued and unpaid interest thereon
to and including the date of payment. If the Acquisition Revolving
Credit Loans shall have been paid in full by application of the
prepayment or otherwise, then the balance of such prepayment shall be
applied to the then outstanding principal amount of all Swingline
Loans and to all accrued and unpaid interest thereon to and including
the date of payment. If the Swingline Loans shall have been paid in
full by application of the prepayment or otherwise, then the balance
of such prepayment shall be applied to the then outstanding principal
amount of all Revolving Credit Loans and to all accrued and unpaid
interest thereon to and including the date of payment.
(v) If on any Computation Date the aggregate amount of
Loans outstanding under this Agreement which are denominated in an
Optional Currency shall exceed Sixteen Million Dollars
($16,000,000.00) as a result of a change in exchange rates between
one (1) or more Optional Currencies and Dollars, then the Agent shall
notify the Borrowers of the same. The Borrowers shall pay or prepay
Loans within one (1) Business Day after receiving such notice such
that the principal amount of such Loans shall not exceed Sixteen
Million Dollars ($16,000,000.00). All prepayments shall be applied
to LIBOR Loans denominated in Optional Currencies. In accordance
with Section 3.9, the Borrowers shall indemnify the Lenders and any
Funding Office for any loss or expense, excluding loss of margin,
incurred with respect to any such prepayments applied against LIBOR
Loans on any day other than the last day of the applicable Interest
Period.
(c) Notice of Payment. Upon receipt of a notice of payment
-----------------
pursuant to Section 3.18, Agent shall promptly notify each Lender of the
contents thereof and of such Lender's Pro Rata Share of such payment and
such notice shall not thereafter be revocable by Borrowers.
3.19 Discretion of Lenders as to Manner of Funding.
---------------------------------------------
Notwithstanding any provision contained in this Agreement to the
contrary, each of the Lenders shall be entitled to fund and maintain its
funding of all or any part of its LIBOR Loans in any manner it elects,
it being understood, however, that for purposes of this Agreement all
determinations hereunder (including, without limitation, the
determination of each Lender's funding losses and expenses under Section
3.9) shall be made as if such Lender had actually funded and maintained
each LIBOR Loan through the purchase of deposits having a maturity
corresponding to the maturity of the applicable Interest Period relating
to the applicable LIBOR Loan and bearing an interest rate equal to the
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applicable LIBOR Base Rate. Each Lender may, at its option, elect to
make, fund or maintain its Loans hereunder at the branches or offices
specified on the signature pages hereof or on any Assignment Agreement
executed and delivered pursuant to Section 10.12(b) hereof or at such
other of its branches or offices as such Lender may from time to time
elect, provided that the Borrowers shall not be required to reimburse
--------
any Lender under any of the provisions of this Agreement for any cost
which such Lender would not have incurred but for changing its lending
or funding branch unless Borrowers consent to such change.
3.20 Reduction of Loan Commitments. The Borrowers may, upon at
-----------------------------
least ten (10) Business Days prior written notice to Agent,
proportionately reduce among the Lenders, based on the Lenders'
respective Pro Rata Shares, the unused portions of the aggregate
Revolving Credit Commitments of the Lenders and/or the aggregate
Acquisition Revolving Credit Commitments of all Lenders as specified
by Borrowers in such notice to Agent, by an aggregate amount of
$1,000,000.00 or any larger multiple of $500,000.00; provided,
--------
however, that at no time shall (i) the aggregate Revolving Credit
- -------
Commitments of the Lenders be reduced to an amount less than the Total
Revolving Credit Usage or (ii) the aggregate Acquisition Revolving
Credit Commitments of all Lenders be reduced to an amount less than the
total of the outstanding principal amount of all Acquisition Revolving
Credit Loans.
3.21 Interest Rate Protection. Not later than ninety (90) days
------------------------
after the date of this Agreement, the Borrowers shall purchase interest
rate protection from the Agent in the form of either an interest rate
cap or an interest rate swap, covering a mutually agreed upon notional
amount of not less than fifty percent (50%) of the Term Loan for a
period of not less than three (3) years, upon such terms and conditions
as the Borrowers and the Agent may agree in writing.
3.22 Utilization of Commitments in Optional Currencies.
-------------------------------------------------
(a) Periodic Computations of Dollar Equivalent Amounts of Loans
-----------------------------------------------------------
and Letters of Credit Outstanding. The Agent will determine the Dollar
- ---------------------------------
Equivalent amount of (i) proposed Revolving Credit Loans to be
denominated in an Optional Currency as of the requested date of
borrowing, (ii) outstanding Revolving Credit Loans denominated in an
Optional Currency as of the last Business Day of each month, and (iii)
outstanding Revolving Credit Loans denominated in an Optional Currency
as of the end of each Interest Period (each such date under clauses (i)
through (iii), a "Computation Date").
(b) Notices from Lenders That Optional Currencies Are
-------------------------------------------------
Unavailable to Fund New Loans. The Lenders shall be under no
- -----------------------------
obligation to make the Revolving Credit Loans requested by the Borrowers
which are denominated in an Optional Currency if the Agent determines in
its own good faith discretion by 5:00 p.m. (St. Louis time) four (4)
Business Days prior to the date of borrowing for such Revolving Credit
Loans that the Optional Currency requested by the Borrowers is not
available to fund such Revolving Credit Loans. In the event the Agent
makes such determination pursuant to the preceding sentence, the Agent
will notify the Borrowers no later than 10:00 a.m. (St. Louis time)
three (3) Business Days prior to the date of borrowing for such
Revolving Credit Loans that the Optional Currency is not then available
for such Revolving Credit Loans, and the Agent shall promptly thereafter
notify the Lenders of the same. If the Borrowers receive a notice
described in the preceding sentence, the Borrowers may, by
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notice to the Agent not later than 5:00 p.m. (St. Louis time) three (3)
Business Days prior to the date of borrowing for such Revolving Credit
Loans, withdraw the Borrowing Notice for such Revolving Credit Loans.
If the Borrowers withdraw such Borrowing Notice, the Agent will promptly
notify each Lender of the same and the Lenders shall not make such
Revolving Credit Loans. If the Borrowers do not withdraw such Borrowing
Notice before such time, (i) the Borrowers shall be deemed to have
requested that the Revolving Credit Loans referred to in the Borrowing
Notice shall be made in Dollars in an amount equal to the Dollar
Equivalent of such Revolving Credit Loans and shall be Prime Loans, and
(ii) the Agent shall promptly deliver a notice to each Lender stating:
(A) that such Revolving Credit Loans shall be made in Dollars and shall
be Prime Loans, (B) the aggregate amount of such Revolving Credit Loans,
and (C) such Lender's Pro Rata Share of such Revolving Credit Loans.
(c) Notices From Lenders That Optional Currencies Are
-------------------------------------------------
Unavailable to Fund Renewals of the LIBOR Loans. If the Borrowers
- -----------------------------------------------
deliver a Conversion Notice requesting that the Lenders renew LIBOR
Loans denominated in an Optional Currency, the Lenders shall be under no
obligation to renew such LIBOR Loans if the Agent determines in its own
good faith discretion by 5:00 p.m. (St. Louis time) four (4) Business
Days prior to effective date of such renewal that the Optional Currency
requested by the Borrowers is not available to fund Revolving Credit
Loans in such Optional Currency. In the event the Agent makes such
determination pursuant to the preceding sentence, the Agent will notify
the Borrowers no later than 10:00 a.m. (St. Louis time) three (3)
Business Days prior to the renewal date that the renewal of such
Revolving Credit Loans in such Optional Currency is not then available,
and the Agent shall promptly thereafter notify the Lenders of the same.
If the Agent shall have so notified the Borrowers that any such
continuation of Optional Currency Loans is not then available, any
notice of renewal with respect thereto shall be deemed withdrawn, and
such Optional Currency Loans shall be redenominated into Prime Loans in
Dollars with effect from the last day of the Interest Period with
respect to any such Optional Currency Loans. The Agent will promptly
notify the Borrowers and the Lenders of such redenomination, and in such
notice, the Agent will state the aggregate Dollar Equivalent amount of
the redenominated Optional Currency Loans as of the Computation Date
with respect thereto and such Lender's Pro-Rata Share.
3.23 Currency Repayments. Notwithstanding anything contained
-------------------
herein to the contrary, the entire amount of principal of and interest
on any Loan made in an Optional Currency shall be repaid in the same
Optional Currency in which such Loan was made, provided, however, that
if it is impossible or illegal for the Borrowers to effect payment of a
Loan in the Optional Currency in which such Loan was made, or if the
Borrowers default on their obligation to do so, the Agent may at its
option permit such payment to be made (i) at and to a different
location, subsidiary, affiliate or correspondent of the Agent, or (ii)
in the Equivalent Amount of Dollars or (iii) in an Equivalent Amount of
such other currency (freely convertible into Dollars) as the Agent may
designate. Upon any events described in clauses (i) through (iii) of
the preceding sentence, the Borrowers shall make such payment and the
Borrowers agree to hold Agent and each Lender harmless from and against
any loss incurred by Agent or any Lender arising from the cost to Agent
or such Lender of any premium, any costs of exchange, the cost of
hedging and covering the Optional Currency in which such Loan was
originally made, and from any change in the value of Dollars, or such
other currency, in relation to the Optional Currency that was due and
owing. Such loss shall be calculated for the period commencing with the
first day of the Interest Period for such
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Loan and continuing through the date of payment thereof. Without
prejudice to the survival of any other agreement of any Borrower
hereunder, such Borrower's obligation under this Section 3.23 shall
survive termination of this Agreement.
3.24 Optional Currency Amounts. Notwithstanding anything
-------------------------
contained herein to the contrary, the Agent may, with respect to notices
by the Borrowers for Loans in an Optional Currency or voluntary
prepayments of less than the full amount of an Optional Currency Loan,
engage in reasonable rounding of the Optional Currency amounts requested
to be loaned or repaid; and, in such event, Agent shall promptly notify
the Borrowers and the Lenders of such rounded amounts and the Borrowers'
request or notice shall thereby be deemed to reflect such rounded
amounts.
3.25 European Monetary Union
-----------------------
(a) If, as a result of the implementation of the European
monetary union, (i) any Optional Currency ceases to be lawful currency
of the nation issuing the same and is replaced by the Euro or (ii) any
Optional Currency and the Euro are at the same time recognized by any
governmental authority of the nation issuing such currency as lawful
currency of such nation and the Agent shall so request in a notice
delivered to the Borrowers, then any amount payable hereunder by any
party hereto in such Optional Currency shall instead be payable in the
Euro and the amount so payable shall be determined by translating the
amount payable in such Optional Currency to the Euro at the exchange
rate recognized on the date of such request by the European Central Bank
for the purpose of implementing European monetary union. Prior to the
occurrence of the event or events described in clauses (i) or (ii) of
the preceding sentence, each amount payable hereunder in any Optional
Currency will, except as otherwise provided in this Agreement, continue
to be payable only in that Optional Currency.
(b) The Borrowers agree, at the request of Agent or any Lender,
to compensate Agent or such Lender for any loss, cost, expense or
reduction in return that Agent or such Lender shall reasonably determine
shall be incurred or sustained by Agent or such Lender as a result of
the implementation of European monetary union and that would not have
been incurred or sustained but for the transactions provided for herein.
A certificate of Agent or any Lender setting forth Agent's or such
Lender's determination of the amount or amounts necessary to compensate
Agent or such Lender shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay Agent or such
Lender, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.
(c) The parties hereto agree, at the time of or at any time
following the implementation of in European monetary union, to use
reasonable efforts to enter into an agreement amending this Agreement in
order to reflect the implementation of such monetary union, to place the
parties hereto in the position with respect to the settlement of
payments in the Euro as they would have been with respect to the
settlement of payments in the currencies it replaced.
(d) Each of the Borrowers, the Agent and the Lenders confirm
that the occurrence or non-occurrence of an event associated with
economic and monetary union in the European Community will not have the
effect of altering any term of, or discharging or excusing
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performance under, this Agreement or any Transaction Document, give a
party the right unilaterally to alter or terminate this Agreement or any
Transaction Document or, in and of itself, give rise to an Event of
Default.
An event associated with the economic and monetary union in
the European Community includes, without limitation, each (and any
combination) of the following:
(i) the introduction of, changeover to, operation of, or
the ceasing of the operation of a single or unified European
currency;
(ii) the fixing of conversion rates between a member
state's currency and the new currency or between the currencies of
member states;
(iii) the introduction of that new currency as lawful
currency in a member state;
(iv) the withdrawal from legal tender of any currency
that, before the introduction of the new currency, was lawful
currency in one of the member states;
(v) the disappearance or replacement of a relevant rate
option or other price source for the Euro or the national currency of
any member state, or the failure of the agreed sponsor (or successor
sponsor) to publish or display a relevant rate, index, price, page or
screen; or
(vi) the failure of the monetary union and return by a
member state to its own separate currency or any other currency
recognized by such member state as lawful currency.
(e) If for any reason following the implementation of European
monetary union and the replacement of lawful currencies of nations
issuing the same, the Euro ceases to be recognized as lawful currency,
then any amount payable by Borrowers which would otherwise be
denominated in Euros shall be payable by Borrowers in accordance with
the provisions of Section 3.23.
3.26 Judgment Currency. If for the purposes of obtaining a
-----------------
judgment in any court it is necessary to convert a sum due hereunder in
any currency (the "Original Currency") into another currency (the "Other
Currency"), the parties hereby agree, to the fullest extent permitted by
law, that the rate of exchange used shall be that at which in accordance
with normal banking procedures each Lender could purchase the Original
Currency with the Other Currency after any premium and costs of exchange
on the Business Day preceding that on which final judgment is given.
The obligation of the Borrowers in respect of any sum due from Borrowers
to any Lender hereunder shall, notwithstanding any judgment in an Other
Currency, whether pursuant to a judgment or otherwise, be discharged
only to the extent that, on the Business Day following receipt by any
Agent or by any Lender of any sum adjudged to be so due in such Other
Currency, such Agent or Lender may in accordance with normal banking
procedures purchase the Original Currency with such Other Currency. If
the amount of the Original Currency so purchased is less than the sum
originally due to such Agent or Lender in the Original Currency, the
Borrowers agree,
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as a separate obligation and notwithstanding any such judgment or
payment, to indemnify such Agent or Lender against such loss. If the
amount of the Original Currency so purchased is more than the sum
originally due to such Agent or Lender in the Original Currency, the
Agent or such Lender, as the case may be, agrees, as a separate
obligation and notwithstanding any such judgment or payment, to credit
such excess for the account of Borrowers.
3.27 Substitution of Bank. If (a) the obligation of any Lender
--------------------
to make and/or convert LIBOR Loans has been suspended pursuant to
Sections 3.10, 3.11 and/or 3.22 or (b) any Lender has demanded
compensation under Sections 3.12, 3.25 and/or 10.7 (in each case, an
"Affected Lender"), Borrowers shall have the right, with the assistance
of the Agent, to seek a mutually satisfactory substitute lender or
lenders (which may be one or more of the Lenders) (the "Purchasing
Lender" or "Purchasing Lenders") to purchase the Notes and assume the
Loan Commitments of such Affected Lender. The Affected Lender shall be
obligated to sell its Notes and assign its Loan Commitments to such
Purchasing Lender or Purchasing Lenders within fifteen (15) days after
receiving notice from Borrowers requiring it to do so, at an aggregate
price equal to the outstanding principal amount thereof plus unpaid
interest accrued thereon up to but excluding the date of sale. In
connection with any such sale, and as a condition thereof, Borrowers
shall pay to the Affected Lender the sum of (a) all fees accrued for
its account under this Agreement to but excluding the date of such sale,
(b) the amount of any compensation which would be due to the Affected
Lender under Section 3.9 if Borrowers had prepaid the outstanding LIBOR
Loans of the Affected Lender on the date of such sale and (c) any
additional compensation accrued for its account under Sections 3.12,
3.25 and/or 10.7 to but excluding said date. Upon such sale, (a) the
Purchasing Lender or Purchasing Lenders shall assume the Affected
Lender's Loan Commitments and the Affected Lender shall be released from
its obligations under this Agreement to a corresponding extent and (b)
the Affected Lender, as assignor, such Purchasing Lender, as assignee,
Borrowers and the Agent shall enter into an Assignment Agreement in
accordance with Section 10.12, whereupon such Purchasing Lender shall be
a Lender party to this Agreement, shall be deemed to be an Assignee
under this Agreement and shall have all the rights and obligations of a
Lender with Loans Commitments equal to its ratable share of the Loan
Commitments of the Affected Bank. Upon the consummation of any sale
pursuant to this Section 3.27, the Affected Lender, the Agent and the
Borrowers shall make appropriate arrangements so that, if required, each
Purchasing Lender receives new Notes.
SECTION 4. PRECONDITIONS TO LOANS.
- -----------------------------------
4.1 Initial Loan. Notwithstanding any provision contained
------------
herein to the contrary, Lenders shall have no obligation to make any
Loan hereunder and Agent shall have no obligation to issue any Letter of
Credit, unless on or prior to November 30, 1999:
(a) Agent shall have first received on or prior to November 30,
1999, for itself and on behalf of the Lenders:
(i) this Agreement and the Notes, each executed by a
duly authorized officer of each Borrower;
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(ii) the Security Agreement, financing statements, and
such other documents as Agent shall require under Section 5.1, each
executed by a duly authorized officer of each Borrower;
(iii) copies of resolutions of the Board of Directors of
each Borrower, duly adopted, which authorize the execution, delivery
and performance of each Transaction Document to which such Borrower
is a party, certified by the Secretary of such Borrower;
(iv) copies of the certificate or articles of
incorporation of the Parent and each Subsidiary of Parent, including
any amendments thereto, certified by the Secretary of State (or other
appropriate government official) of their respective jurisdictions of
incorporation;
(v) a copy of the bylaws of the Parent and each
Subsidiary of Parent, including any amendments thereto, certified by
the Secretary of the Parent or the respective Subsidiary;
(vi) incumbency certificates, executed by the Secretary
of each Borrower, which shall identify by name and title and bear the
signatures of all of the officers of each Borrower;
(vii) good standing certificates from the Secretary of
State (or other appropriate government official) of the respective
jurisdictions of incorporation of the Parent and each Subsidiary, and
each other jurisdiction in which the Parent or any Subsidiary is
qualified as a foreign corporation;
(viii) an opinion of counsel of Thompson Coburn LLP,
counsel to the Borrowers, substantially in the form of Exhibit J
---------
attached hereto and incorporated herein by reference, and an opinion
of Texas local counsel to the Borrowers relating to the Deed of Trust
in form and substance, and from counsel, reasonably satisfactory to
the Agent;
(ix) the Borrowing Notices required by Sections 3.5(a),
3.5(b), 3.5(d) and/or the initial application for an Acquisition
Revolving Credit Loan required by Section 3.5(c);
(x) a pro-forma consolidated balance sheet for the
Parent and its Consolidated Subsidiaries giving effect to the
consummation of the transactions contemplated by this Agreement and
the other Transaction Documents including, without limitation, the
SPHL Acquisition, accompanied by a solvency certificate of the chief
financial officer of the Parent;
(xi) payment by Borrowers of all costs and expenses
currently payable by Borrowers pursuant to Sections 7.1(c) and 10.3;
(xii) the initial Borrowing Base Certificate;
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(xiii) the policies or certificates of insurance required by
Section 7.1(d) hereof;
(xiv) the Fee Letter;
(xv) such Acknowledgment Agreements as may be required in
order for Borrowers to comply with the provisions of Section 2(d) of
the Security Agreement with respect to the locations listed on
Exhibit A to the Security Agreement;
---------
(xvi) the Pledge Agreement executed by a duly authorized
officer of Parent and share certificates and duly executed
instruments of transfer for the stock pledged by the Parent pursuant
to the Pledge Agreement; and
(xvii) The Agent shall have received, in form and substance
reasonably satisfactory to the Agent:
(A) the Deed of Trust, fully executed and notarized,
encumbering the fee interest ZPI in the Abilene Facility;
(B) a title report obtained by ZPI in respect of the
Abilene Facility;
(C) an ALTA mortgagee title insurance policy (the
"Mortgagee Policy"), in an amount not less than the amount
designated in Schedule 4.1(a)(xvii) with respect to the Abilene
---------------------
Facility, assuring the Agent that the Deed of Trust creates a
valid and enforceable first priority mortgage lien on the Abilene
Facility, free and clear of all defects and encumbrances except
Permitted Liens, which Mortgagee Policy shall be in form and
substance satisfactory to the Agent and shall provide for
affirmative insurance and such reinsurance as the Agent may
reasonably request, all of the foregoing in form and substance
satisfactory to the Agent;
(D) Evidence, which may be in the form of a letter
from an insurance broker or a municipal engineer, as to whether
(a) the Abilene Facility is in an area designated by the Federal
Emergency Management Agency as having special flood or mud slide
hazards (a "Flood Hazard Property") and (b) the community in which
such Flood Hazard Property is located is participating in the
National Flood Insurance Program;
(E) If the Abilene Facility is a Flood Hazard
Property, ZPI's written acknowledgment of receipt of written
notification from the Agent (a) as to the existence of each such
Flood Hazard Property and (b) as to whether the community in which
each such Flood Hazard Property is located is participating in the
National Flood Insurance Program;
(F) Maps or plats of an as-built survey of the site
of the Abilene Facility certified to the Agent and the title
insurance company issuing the policy referred to in Section
4.1(a)(xvii)(C) (the "Title Insurance Company") in a manner
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reasonably satisfactory to them, dated a date satisfactory to the
Agent and the Title Insurance Company by an independent
professional licensed land survey or reasonably satisfactory to
the Agent and the Title Insurance Company, which maps or plats and
the surveys on which they are based shall be sufficient to delete
any standard printed survey exception contained in the applicable
title policy and be made in accordance with the Minimum Standard
Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting
the generality of the foregoing, there shall be surveyed and shown
on such maps, plats or surveys the following: (1) the locations on
such sites of all the buildings, structures and other improvements
and the established building setback lines; (2) the lines of
streets abutting the sites and width thereof; (3) all access and
other easements appurtenant to the sites necessary to use the
sites; (4) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (5)
any encroachments on any adjoining property by the building
structures and improvements on the sites; and (6) if the site is
described as being on a filed map, a legend relating the survey to
said map; and
(G) Evidence satisfactory to the Agent that the
Abilene Facility, and the uses of the Abilene Facility, are in
compliance in all material respects with all applicable laws,
regulations and ordinances including without limitation health and
environmental protection laws, erosion control ordinances, storm
drainage control laws, doing business and/or licensing laws,
zoning laws (the evidence submitted as to zoning should include
the zoning designation made for the Real Property, the permitted
uses of the Real Property under such zoning designation and zoning
requirements as to parking, lot size, ingress, egress and building
setbacks) and laws regarding access and facilities for disabled
persons including, but not limited to, the federal Architectural
Barriers Act, the Fair Housing Amendments Act of 1988, the
Rehabilitation Act of 1973 and the Americans with Disabilities Act
of 1990.
(xviii) such other agreements, documents, instruments and
certificates as Agent may reasonably request.
(b) On or prior to the funding of the initial Loans hereunder,
(i) Parent or a Subsidiary of Parent shall have acquired 100% of the
capital stock or ownership interests of Structural Polymer (Holdings)
Limited (the "SPHL Acquisition") and (ii) the Agent and the Lenders
shall have received true and correct copies of all agreements and other
documents relating to such acquisition (the "SPHL Acquisition
Documents"), all of which shall be in form and substance satisfactory to
the Agent and the Lenders. All conditions precedent to the obligations
of Parent or such Subsidiary of Parent in respect of the SPHL
Acquisition as set forth in the SPHL Acquisition Documents shall have
been satisfied and not waived (unless waived with the consent of the
Agent and the Lenders) and the SPHL Acquisition shall have been
consummated in accordance with all applicable law and with the SPHL
Acquisition Documents.
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In the event the foregoing conditions precedent shall not have
been satisfied on or prior to November 30, 1999, Lenders shall have no
obligation to make any Loan hereunder and Agent shall have no obligation
to issue any Letter of Credit.
4.2 Subsequent Revolving Credit Loans. Notwithstanding any
---------------------------------
provision contained herein to the contrary, Lenders shall have no
obligation to make any subsequent Revolving Credit Loan hereunder, and
Agent shall have no obligation to issue any subsequent Letter of Credit
under any Letter of Credit Application, unless:
(a) Agent and each of the Lenders shall have received a current
Borrowing Base Certificate as required by Section 3.1(c);
(b) Agent shall have received a Borrowing Notice or Conversion
Notice for such Loan as required by Section 3.5(e), or the Letter of
Credit Application as required by Section 3.7;
(c) On the date of and immediately after such Loan, Loan
conversion or Letter of Credit issuance, no Default or Event of Default
under this Agreement shall have occurred and be continuing;
(d) On the date of and immediately after such Loan, Loan
conversion or Letter of Credit issuance, no Material Adverse Change
shall have occurred since the date of this Agreement and be continuing;
and
(e) All of the representations and warranties of the Borrowers
contained in this Agreement shall be true and correct in all material
respects on and as of the date of such Loan, Loan conversion or Letter
of Credit issuance as if made on the date of such Loan, the date of such
Loan conversion or the issuance date of such Letter of Credit, as the
case may be, except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall remain true
and correct in all material respects on and as of such earlier date (and
for purposes of this Section 4.2(e), the representations and warranties
made by Borrowers in Section 6.4 shall be deemed to refer to the most
recent financial statements of Parent delivered to the Lenders pursuant
to Section 7.1(a)).
Each request for a Loan, for conversion of a Loan or application
for a Letter of Credit by the Borrowers hereunder shall be deemed to be
a representation and warranty by the Borrowers on the date of such Loan,
Loan conversion or Letter of Credit issuance as to the facts specified
in clauses (c), (d) and (e) of this Section 4.3.
4.3 Subsequent Acquisition Revolving Credit Loans.
---------------------------------------------
Notwithstanding any provision contained herein to the contrary, Lenders
shall have no obligation to make any subsequent Acquisition Revolving
Credit Loan hereunder unless:
(a) Agent and each of the Lenders shall have received the
current quarter-end financial statements and compliance certificate as
required by Sections 7.1(a)(ii) and (iii);
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(b) Agent shall have received a complete application for such
Acquisition Revolving Credit Loan as required by Section 3.5(c);
(c) Any Subsidiary created or acquired by Borrowers in
connection with the Acceptable Acquisition which is to be funded with
the proceeds of such Acquisition Revolving Credit Loan shall have
executed and delivered:
(i) A Joinder Agreement (if required by Section 5.2(a))
executed and delivered by a duly authorized officer of such new
Subsidiary;
(ii) A pledge agreement (if required by Section 5.2(b)),
along with share certificates and duly executed instruments of
transfer, executed and delivered by the applicable Borrower;
(iii) A copy of the resolutions of the Board of Directors
of such new Subsidiary, duly adopted, authorizing the execution,
delivery and performance by such Subsidiary of the Joinder Agreement
and any other Transaction Documents to be executed by such
Subsidiary, certified by the Secretary of such Subsidiary;
(iv) An incumbency certificate, executed by the Secretary
of such new Subsidiary, which shall identify by name and title and
bear the signatures of all of the officers of such Subsidiary
executing any of the Transaction Documents;
(v) A copy of the certificate or articles of
incorporation (or other comparable organic document) of such new
Subsidiary, certified by the Secretary of State of its state of
organization;
(vi) A copy of the bylaws (or other comparable organic
document) of such new Subsidiary, certified by the corporate
secretary of such Subsidiary;
(vii) A certificate of corporate, limited partnership, or
limited liability company good standing of such Subsidiary, issued by
the Secretary of State of its state of organization and each other
jurisdiction in which such Subsidiary is qualified as a foreign
entity; and
(viii) If requested by the Agent, an opinion of independent
counsel to the Borrowers and such Subsidiary in form and substance
reasonably satisfactory to Agent and the Lenders.
(d) On the date of and immediately after such Acquisition
Revolving Credit Loan, no Default or Event of Default under this
Agreement shall have occurred and be continuing;
(e) On the date of and immediately after such Acquisition
Revolving Credit Loan, no Material Adverse Change shall have occurred
since the date of this Agreement and be continuing; and
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(f) All of the representations and warranties of the Borrowers
contained in this Agreement, including any pertaining to the new
Subsidiary created or acquired as a result of the Acceptable
Acquisition, shall be true and correct in all material respects on and
as of the date of such Acquisition Revolving Credit Loan, as if made on
the date of such Acquisition Revolving Credit Loan, except to the extent
such representations and warranties expressly refer to an earlier date,
in which case they shall remain true and correct in all material
respects on and as of such earlier date (and for purposes of this
Section 4.3(f), the representations and warranties made by Borrowers in
Section 6.4 shall be deemed to refer to the most recent financial
statements of Parent delivered to the Lenders pursuant to Section
7.1(a).
SECTION 5. COLLATERAL.
- -----------------------
5.1 Security Agreement. In order to secure the payment when
------------------
due of the Obligations, the Borrowers shall convey to Agent for the
benefit of each of the Lenders a security interest in, among other
things, all Collateral, which security interest shall be a first and
prior interest in all such items except for Permitted Liens. Said
security interest shall be evidenced by a Security Agreement dated the
date hereof and executed by the Borrowers in favor of Agent for the
benefit of each of the Lenders in the form attached hereto as Exhibit M
(as the same may from time to time be amended, the "Security
Agreement"). The Borrowers further covenant and agree to execute and
deliver to Agent for the benefit of each of the Lenders any and all
financing statements, continuation statements and such other
documentation as may be requested by Agent from time to time in order to
create, perfect and continue said security interests. Upon demand, the
Borrowers shall pay all Attorneys Fees and all filing fees and expenses
incurred by Agent in the preparation of the foregoing documents and
perfection of the security interests contemplated thereby. Lenders
shall have no obligation to make any Loan or convert the interest rate
on any Loan hereunder unless and until the Borrowers have fully
satisfied these requirements.
5.2 Additional Collateral.
---------------------
(a) Domestic Subsidiaries. With respect to any new Subsidiary
---------------------
created or acquired after the date hereof by the Borrowers (other than a
foreign (non-U.S.) Subsidiary), Borrowers will promptly cause such new
Subsidiary (i) to become a party to this Agreement and the Security
Agreement by executing a Joinder Agreement, (ii) to take such actions as
the Agent deems reasonably necessary or advisable to grant to the Agent
for the benefit of the Lenders a perfected first priority security
interest in the Collateral with respect to such new Subsidiary,
including the filing of all financing statements in such jurisdictions
as may be required by the Security Agreement or by law or as may be
reasonably requested by the Agent, and (iii) if requested by the Agent,
deliver to the Agent customary legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Agent.
(b) Foreign Subsidiaries. With respect to any new foreign
--------------------
(non-U.S.) Subsidiary created or acquired after the date hereof by the
Borrowers, Borrowers (i) will promptly cause sixty-five percent (65%) of
the common stock or other ownership interests of such foreign (non-U.S.)
Subsidiary to be pledged to the Agent, as pledgee, for the benefit of
the Lenders, pursuant to a pledge agreement in substantially the same
form as the Pledge Agreement and otherwise in substance reasonably
acceptable to the Agent and the Lenders, and (ii) will take all
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other steps necessary to perfect the Agent's interests therein pursuant
to the laws of such Subsidiary's jurisdiction of organization.
5.3 Release. Promptly after such date, if any, when Parent
-------
shall have delivered financial statements to Agent pursuant to Section
7.1(a) of this Agreement, together with a certificate of Parent's chief
financial officer setting forth the appropriate calculations, which
demonstrate that Parent and its Consolidated Subsidiaries have generated
EBITDA of not less than Twenty Four Million Dollars ($24,000,000) as of
the end of two consecutive fiscal quarters of Parent, and provided that
no Default or Event of Default shall then have occurred and be
continuing, Agent shall release the security interests granted for the
benefit of the Lenders in the Collateral created under any Collateral
Document (other than Collateral pledged pursuant to the Pledge Agreement
or any other pledge agreement). The Agent shall execute and deliver to
the Borrowers (at the Borrowers' expense) such release documentation as
the Borrowers shall reasonably require to effect such release.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
- -------------------------------------------
Each of the Borrowers represents and warrants to Agent and the
Lenders that:
6.1 Corporate Existence and Power. Each of the Borrowers and
-----------------------------
each of their respective Subsidiaries: (a) is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation; (b) has all requisite corporate powers required to
carry on its business as now conducted; (c) has all requisite
governmental and regulatory licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except
such licenses, authorizations, consents and approvals the failure to
obtain would not have a Material Adverse Effect; and (d) is duly
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where
failure to so qualify would have a Material Adverse Effect.
6.2 Corporate Authorization. Each Borrower has the corporate
-----------------------
power and authority, and the legal right, to execute, deliver and
perform the Transaction Documents to which it is a party. Each Borrower
has taken all necessary corporate action to authorize the execution,
delivery and performance of the Transaction Documents to which it is a
party.
6.3 Binding Effect. Each of the Transaction Documents
--------------
executed contemporaneously with the execution of this Agreement to which
any of the Borrowers is a party has been duly executed and delivered by
each such Borrower and constitutes the legal, valid and binding
obligations of each such Borrower enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally
and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
the Transaction Documents not executed contemporaneously with the
execution of this Agreement, when executed and delivered in accordance
with this Agreement, will constitute legal, valid and binding
obligations of each Borrower which is a party thereto enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws
affecting
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creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
6.4 Financial Statements; Financial Condition.
-----------------------------------------
The Borrowers have furnished Agent and the Lenders with the
following financial statements, identified by the chief financial
officer of Parent: (a) a balance sheet and income statement of Parent
and its Consolidated Subsidiaries for each of the five fiscal years
ended September 30, 1994, 1995, 1996, 1997, and 1998, all certified by
Parent's independent certified public accountants, which financial
statements have been prepared in accordance with generally accepted
accounting principles; (b) an unaudited balance sheet and income
statement of Parent and its Consolidated Subsidiaries as of June 30,
1999 certified (subject to normal adjustments and the absence of
footnotes and other disclosures) as to fairness of presentation,
generally accepted accounting principles by the principal financial
officer of Parent; and (c) a pro forma balance sheet and income
---------
statement of Parent and its Consolidated Subsidiaries after giving
effect to the consummation of the SPHL Acquisition and to the incurrence
of the initial Loans by the Borrowers hereunder. The Borrowers further
represent that: (a) said balance sheets and their accompanying notes
fairly present in all material respects the condition of Parent and its
Consolidated Subsidiaries as of the dates thereof; (b) there has been no
Material Adverse Change since September 30, 1998; and (c) neither Parent
nor any of its Consolidated Subsidiaries has any direct or contingent
liabilities which are not disclosed on said financial statements (to the
extent disclosure thereof would be required under generally accepted
accounting principles); (d) on and as of the date hereof, after giving
effect to the consummation of the SPHL Acquisition and to the incurrence
of the initial Loans by the Borrowers hereunder, (i) the sum of the
assets, at a fair valuation, of the Parent and its Consolidated
Subsidiaries will exceed their debts; (ii) the Borrowers have not
incurred and do not intend to incur, and do not believe they will incur,
debts beyond their ability to pay such debts as such debts mature, (iii)
the Borrowers will have sufficient capital with which to conduct their
businesses, and (iv) the Borrowers are is in pro forma compliance with
---------
the financial covenants set forth in Section 7.1(i) of this Agreement.
6.5 Litigation. Except as disclosed on Schedule 6.5
---------- ------------
attached hereto, there is no action or proceeding pending or, to the
knowledge of the Borrowers, threatened against or affecting any Borrower
or any Subsidiary of a Borrower before any court, arbitrator or any
governmental, regulatory or administrative body, agency or official
which could reasonably be expected to have a Material Adverse Effect,
and neither any Borrower nor any Subsidiary of a Borrower is in default
with respect to any order, writ, injunction, decision or decree of any
court, arbitrator or any governmental, regulatory or administrative
body, agency or official, a default under which would have a Material
Adverse Effect.
6.6 Pension and Welfare Plans. Each Pension Plan
-------------------------
substantially complies with all applicable statutes and governmental
rules and regulations; no Reportable Event has occurred and is
continuing with respect to any Pension Plan; neither any Borrower nor
any ERISA Affiliate nor any Subsidiary of a Borrower has withdrawn from
any Multiemployer Plan in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 or 4205 of ERISA, respectively;
no steps have been instituted by any Borrower, any ERISA Affiliate or
any Subsidiary of a Borrower to terminate any Pension Plan; no condition
exists or event or transaction has occurred in
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connection with any Pension Plan or Multiemployer Plan which could
result in the incurrence by any Borrower, any ERISA Affiliate or any
Subsidiary of a Borrower of any material liability, fine or penalty; and
neither any Borrower nor any ERISA Affiliate nor any Subsidiary of a
Borrower is a "contributing sponsor" as defined in Section 4001(a)(13)
of ERISA of a "single-employer plan" as defined in Section 4001(a)(15)
of ERISA which has two or more contributing sponsors at least two of
whom are not under common control. Except as disclosed on Schedule 6.6
------------
attached hereto, neither any Borrower nor any Subsidiary of a Borrower
has any contingent liability with respect to any "employee welfare
benefit plan" as such term is defined in Section 3(a) of ERISA, which
covers retired employees and their beneficiaries.
6.7 Returns and Payment. Each of the Borrowers and each of
-------------------
their respective Subsidiaries has (a) filed or caused to be filed all
tax reports and returns that are required to have been filed by it with
any governmental authority, except for state (other than State of
Missouri), local and foreign tax returns which the failure to file could
not reasonably be expected to have a Material Adverse Effect, and (b)
paid all taxes shown to be due and payable on such returns and all other
taxes levied upon it or its properties, assets, income or franchises, to
the extent such taxes have become due and payable and before they have
become delinquent, except for any taxes (i) the amount of which is not
individually or in the aggregate material or (ii) the amount,
applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the
applicable Borrower or the applicable Subsidiary, as the case may be,
has established adequate reserves in accordance with generally accepted
accounting principles on its books. The charges, accruals and reserves
on the books of the Borrowers and each of their respective Subsidiaries
in respect of any taxes or other governmental charges are, in the
reasonable opinion of Borrowers, adequate.
6.8 Subsidiaries. As of the date of this Agreement, the
------------
Borrowers have no Subsidiaries other than as set forth on Schedule 6.8
------------
attached hereto. Parent owns 100% of the Voting Stock of each of the
other Borrowers.
6.9 Compliance With Other Instruments; None Burdensome.
--------------------------------------------------
Neither any Borrower nor any Subsidiary of a Borrower is a party to any
contract or agreement or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material
Adverse Effect and which is not disclosed on Parent's consolidated
financial statements heretofore submitted to Agent or the Lenders; none
of the execution and delivery by any Borrower of any Transaction
Documents, the consummation of the transactions therein contemplated or
the compliance with the provisions thereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding
on any Borrower, or any of the provisions of such Borrower's certificate
or articles of incorporation or bylaws or any of the provisions of any
indenture or other material agreement, document, instrument or
undertaking to which such Borrower is a party or subject, or by which it
or its Property is bound, or conflict with or constitute a default
thereunder or result in the creation or imposition of any Lien pursuant
to the terms of any such indenture, agreement, document, instrument or
undertaking (other than Liens in favor of Agent under the Collateral
Documents). No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption
by, any governmental, regulatory, administrative or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, the execution, delivery or performance of,
or the legality, validity, binding effect
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or enforceability of, any of the Transaction Documents (other than
filings and recordings necessary to perfect the Liens granted under the
Collateral Documents).
6.10 Other Loans and Guarantees. Except as disclosed on
--------------------------
Schedule 6.10 attached hereto, neither any Borrower nor any Subsidiary
- -------------
of a Borrower is a party to any loan transaction or Guarantee as of the
date of this Agreement.
6.11 Labor Matters. Except as disclosed on Schedule 6.11
------------- -------------
attached hereto, (a) no labor contract to which a Borrower or any
Subsidiary of a Borrower is subject is scheduled to expire during the
Term of this Agreement and (b) on the date of this Agreement, (i)
neither any Borrower nor any Subsidiary of a Borrower is a party to any
labor dispute and (ii) there are no strikes or walkouts relating to any
labor contract to which a Borrower or any Subsidiary of a Borrower is
subject.
6.12 Title to Property. Each of the Borrowers and each
-----------------
Subsidiary of a Borrower is the sole and absolute owner of, or has the
legal right to use and occupy, all Property (including, without
limitation, all Accounts and Inventory) it claims to own or which is
necessary for such Borrower or such Subsidiary to conduct its business.
Neither any Borrower nor any Subsidiary of a Borrower has signed any
financing statements, security agreements or chattel mortgages with
respect to any of its Property, has granted or permitted any Liens with
respect to any of its Property or has any knowledge of any Liens with
respect to any of its Property, except as created pursuant to the
Transaction Documents or as disclosed on Schedule 6.12 attached hereto
-------------
and except for Permitted Liens.
6.13 Regulation U. None of the Borrowers are engaged
------------
principally, or as one of their important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of The Board of Governors of the
Federal Reserve System, as amended). The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section
7.3. No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for
any purpose which entails a violation of, or which is inconsistent with,
the provisions of any of the Regulations of The Board of Governors of
the Federal Reserve System, including, without limitation, Regulations
U, T or X thereof, as amended. If requested by Agent, Borrowers shall
furnish to Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U.
6.14 Multi-Employer Pension Plan Amendments Act of 1980. Each
--------------------------------------------------
of the Borrowers and each Subsidiary of a Borrower is in compliance with
the Multi-Employer Pension Plan Amendments Act of 1980, as amended
("MEPP"), and has no liability for pension contributions pursuant to
MEPP.
6.15 Investment Company Act of 1940: Public Utility Holding
------------------------------------------------------
Company Act of 1935. None of the Borrowers nor any of their respective
- -------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended. None of the Borrowers nor any of their respective
Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a
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"holding company" or of a "subsidiary company" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
6.16 Patents, Licenses, Trademarks, Etc. Each of the Borrowers
----------------------------------
and each of their respective Subsidiaries possesses all necessary
patents, licenses, trademarks, trademark rights, trade names, trade name
rights and copyrights to conduct its business without any present
conflict with any patent, license, trademark, trade name or copyright of
any other Person.
6.17 Environmental and Health and Safety Matters. Except for
-------------------------------------------
matters which could not reasonably be expected to have a Material
Adverse Effect, (i) the operations of any Borrower and each of its
Subsidiaries comply with (A) all applicable Environmental Laws and (B)
all applicable Occupational Safety and Health Laws; (ii) none of the
operations of any Borrower or any of its Subsidiaries are subject to any
judicial, governmental, regulatory or administrative proceeding alleging
the violation of any Environmental Law or Occupational Safety and Health
Law; (iii) none of the operations of any Borrower or any of its
Subsidiaries is the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to (A) any
spillage, disposal or release into the environment of any Hazardous
Material or any other hazardous, toxic or dangerous waste, substance or
constituent or other substance, or (B) any unsafe or unhealthful
condition at any premises of any Borrower or such Subsidiary; (iv)
neither any Borrower nor any of its Subsidiaries has filed any notice
under any Environmental Law or Occupational Safety and Health Law
indicating or reporting (A) any past or present spillage, disposal or
release into the environment of, or treatment, storage or disposal of,
any Hazardous Material or any other hazardous, toxic or dangerous waste,
substance or constituent or other substance or (B) any unsafe or
unhealthful condition at any premises of any Borrower or such
Subsidiary; and (v) neither any Borrower nor any of its Subsidiaries has
any known contingent liability in connection with (A) any spillage,
disposal or release into the environment of, or otherwise with respect
to, any Hazardous Material or any other hazardous, toxic or dangerous
waste, substance or constituent or other substance or (B) any unsafe or
unhealthful condition at any premises of any Borrower or such
Subsidiary.
6.18 Corporate or Fictitious Names. The Parent and each of its
-----------------------------
Subsidiaries have not, during the five (5) year period preceding the
date of this Agreement, been known by or used any corporate or
fictitious name other than the names listed on Schedule 6.18 attached
-------------
hereto.
6.19 Year 2000 Compliance. Each Borrower and each of its
--------------------
Subsidiaries has (a) undertaken a detailed inventory, review and
assessment of all areas within its business and operations that could be
adversely affected by the failure of such Borrower or such Subsidiary,
as the case may be, to be Year 2000 Compliant on a timely basis, (b)
developed a detailed plan and timeline for becoming Year 2000 Compliant
on a timely basis and (c) to date, implemented such plan in accordance
with such timetable in all material respects. Each Borrower reasonably
anticipates that it and each of its Subsidiaries will be Year 2000
Compliant on a timely basis, except to the extent such noncompliance
could not reasonably be expected to have a Material Adverse Effect.
Neither any Borrower nor any Subsidiary of a Borrower is aware that any
of its key suppliers, vendors or customers will not, on a timely basis,
be Year 2000 Compliant, except to the extent such noncompliance could
not reasonably be expected to have a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects, income
or condition (financial or
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otherwise) of such Person. For purposes of this Section 6.19, "key
suppliers, vendors and customers" refers to those suppliers, vendors and
customers of a Borrower or the applicable Subsidiary, as the case may
be, whose business failure could reasonably be expected to have a
Material Adverse Effect.
6.20 The Collateral Documents. (a) The provisions of the
------------------------
Security Agreement are effective to create in favor of the Agent for the
benefit of the Lenders a legal, valid and enforceable security interest
in all right, title and interest of the Borrowers in the Collateral
described therein, and the Security Agreement, upon the filing of Form
UCC-1 financing statements, creates a fully perfected security interest
in, all right, title and interest in all of the Collateral described
therein, to the extent that a security interest may be perfected therein
by filing a financing statement under the Uniform Commercial Code,
subject to no other Liens other than Permitted Liens. Each of the
Borrowers has good and valid title to all Collateral owned by such
Borrower described therein, free and clear of all Liens except those
described above in this clause (a).
(b) The security interests created in favor of the Agent, as
Pledgee, for the benefit of the Lenders under the Pledge Agreement
constitute first priority perfected security interests in the common
stock or ownership interests described in the Pledge Agreement, subject
to no security interests of any other Person. No filings or recordings
in the United States are required in order to perfect (or maintain the
perfection or priority of) the security interests created in the common
stock or ownership interests and the proceeds thereof under the Pledge
Agreement.
6.21 SPHL Acquisition. At the time of consummation thereof,
----------------
the SPHL Acquisition shall have been consummated in all respects in
accordance with the terms of the SPHL Acquisition Documents and all
applicable laws. At the time of consummation of the SPHL Acquisition,
all consents and approvals of, and filings and registrations with, and
all other actions in respect of, all governmental agencies, authorities
or instrumentalities required in order to make or consummate the SPHL
Acquisition will have been obtained, given, filed or taken and are or
will be in full force and effect (or effective judicial relief with
respect thereto has been obtained). All applicable waiting periods with
respect thereto have or, prior to the time when required, will have,
expired without, in all such cases, any action being taken by any
competent authority which restrains, prevents, or imposes material
adverse conditions upon the SPHL Acquisition. Additionally, there does
not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the SPHL Acquisition or the performance
by the Borrowers of their obligations under the respective SPHL
Acquisition Documents. All actions taken by the Borrowers pursuant to
or in furtherance of the SPHL Acquisition have been taken in material
compliance with the respective SPHL Acquisition Documents and all
applicable laws.
SECTION 7. COVENANTS.
- ----------------------
7.1 Affirmative Covenants of Borrowers. Each of the Borrowers
----------------------------------
covenants and agrees that, so long as Lenders have any obligation to
make any Loan hereunder or any of Obligations remain unpaid or any
Letter of Credit remains outstanding:
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(a) Information. Borrowers will deliver to Agent with
-----------
sufficient copies for each of the Lenders:
(i) As soon as available and in any event within ninety
(90) days after the end of each fiscal year of Parent, consolidated
and consolidating balance sheets of Parent and its Consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income, retained
earnings and cash flows for such fiscal year, setting forth in each
case, in comparative form, the figures for the previous fiscal year,
all such financial statements to be prepared in accordance with
generally accepted accounting principles and reported on by and
accompanied by the unqualified opinion of independent certified
public accountants of recognized standing selected by Parent and
reasonably acceptable to Agent;
(ii) As soon as available and in any event within thirty
(30) days after the end of each fiscal month of each fiscal year of
Parent, consolidated balance sheets of Parent and its Consolidated
Subsidiaries for the month ending as of the end of such fiscal month
and the related consolidated statements of income, retained earnings
and cash flows for the month ending as of the end of such fiscal
month and for the portion of Parent's fiscal year ended at the end of
such fiscal month, setting forth in each case in comparative form,
the figures for the corresponding month and the corresponding portion
of Parent's previous fiscal year, all certified (subject to normal
year-end adjustments and the absence of footnotes and other
disclosures) as to fairness of presentation, generally accepted
accounting principles and consistency by the principal financial
officer of Parent;
(iii) Simultaneously with the delivery of each set of
financial statements referred to in clauses (i) and (ii) above with
respect to the end of a fiscal year or fiscal quarter of Parent, a
certificate of the principal financial officer of Parent, in the form
attached hereto as Exhibit K and incorporated herein by reference,
---------
accompanied by supporting financial work sheets where appropriate;
(iv) Promptly upon receipt thereof, any reports submitted
to Parent or any Consolidated Subsidiary of Parent (other than
reports previously delivered pursuant to Sections 7.1(a)(i) and (ii)
above) by independent accountants in connection with any annual,
interim or special audit made by them of the books of Parent or any
Consolidated Subsidiary of Parent;
(v) Promptly upon any filing thereof, and in any event
within ten (10) days after the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other
reports which any Borrower shall file with the Securities and
Exchange Commission;
(vi) Promptly upon the mailing thereof to the shareholders
of any Borrower generally, and in any event within ten (10) days
after such mailing, copies of all financial statements, reports,
proxy statements and other material information so mailed; and
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(vii) As soon as available and in any event within ninety
(90) days after the start of each fiscal year of Parent, an operating
and financial budget for Parent and its Consolidated Subsidiaries
which shall be in form and substance reasonably satisfactory to the
Agent and the Lenders; and
(viii) With reasonable promptness, such further information
regarding the business, affairs and financial position of a Borrower
or any Subsidiary of a Borrower as Agent or any of the Lenders may
from time to time reasonably request.
Agent and each of the Lenders are hereby authorized to deliver a
copy of any financial statement or other information made available by
any Borrower to any regulatory authority having jurisdiction over Agent
or such Lender, pursuant to any request therefor.
(b) Payment of Indebtedness. Each of the Borrowers and each
-----------------------
of its respective Subsidiaries will (i) pay any and all Indebtedness
payable or Guaranteed by such Borrower or such Subsidiary, as the case
may be, and any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) in accordance with the agreement or instrument relating to
such Indebtedness or Guarantee and (ii) faithfully perform, observe and
discharge all covenants, conditions and obligations which are imposed
upon such Borrower or such Subsidiary, as the case may be, by any and
all agreements, documents, instruments and indentures evidencing,
securing or otherwise relating to such Indebtedness or Guarantee;
provided, however, that neither any Borrower nor any Subsidiary of a
- -------- -------
Borrower shall be required to pay any such Indebtedness arising out of
trade payables or other Indebtedness not constituting Funded Debt
incurred by such Borrower or any such Subsidiary in the ordinary course
of business or perform, observe or discharge any related covenant,
condition or obligation the payment, performance, observance or
discharge of which is being contested in good faith and by appropriate
proceedings being diligently conducted and for which adequate reserves
in accordance with generally accepted accounting principles have been
provided, except that such Borrower or such Subsidiary, as the case may
be, shall pay or cause to be paid all such Indebtedness forthwith upon
the commencement of proceedings to foreclose any Lien which is attached
as security therefor, unless such foreclosure is stayed by the filing of
an appropriate bond.
(c) Consultations and Inspections. Borrowers will permit and
-----------------------------
will cause each Subsidiary of a Borrower to permit, upon reasonable
prior notice, Agent and Lenders (and any Person appointed by Agent or
any of the Lenders) to discuss the affairs, finances and accounts of
Borrowers and each Subsidiary of a Borrower with the officers of the
Borrowers and each Subsidiary of a Borrower and their independent public
accountants all at such reasonable times and as often as Agent or any of
the Lenders may reasonably request. Each of the Borrowers will also
permit and will cause each of its Subsidiaries to permit, upon
reasonable prior notice (provided, however, that no such notice shall be
required if any Event of Default has occurred and is continuing),
inspection of its Properties, books and records and the Collateral by
Agent and Lenders during normal business hours or at other reasonable
times. Each of the Borrowers will also permit, and will cause each of
its Subsidiaries to permit, upon reasonable prior notice (provided
however that no such notice shall be required if any Event of Default
has occurred and is continuing), Agent and Lenders to conduct field
inspections with respect to the Collateral at such reasonable times as
Agent or any of the Lenders elects. Borrowers shall pay all reasonable
costs and expenses incurred
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by Agent and the Lenders for any such inspection conducted while any
Event of Default has occurred and is continuing. Borrowers and their
respective Subsidiaries irrevocably authorize Agent and Lenders to
communicate directly with their independent public accountants and
irrevocably authorize and direct such accountants to disclose to Agent
or any Lender any and all information with respect to the business and
financial condition of Borrowers and their respective Subsidiaries as
Agent or a Lender may from time to time reasonably request in writing.
(d) Payment of Taxes; Corporate Existence; Maintenance of
-----------------------------------------------------
Properties; Insurance. Each of the Borrowers and each of its
- ---------------------
Subsidiaries will:
(i) Duly file all Federal, state and local income tax
returns and all other tax returns and reports of such Person which
are required to be filed and duly pay and discharge promptly all
taxes, assessments and other governmental charges imposed upon it or
any of its Property; provided, however, that no Borrower nor any
-------- -------
Subsidiary of a Borrower shall be required to pay any such tax,
assessment or other governmental charge the payment of which is being
contested in good faith and by appropriate proceedings diligently
conducted and for which adequate reserves in accordance with
generally accepted accounting principles have been provided, except
that such Borrower and each such Subsidiary shall pay or cause to be
paid all such taxes, assessments and governmental charges forthwith
upon the commencement of proceedings to foreclose any Lien which is
attached as security therefor, unless such foreclosure is stayed by
the filing of an appropriate bond;
(ii) Do all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchise and to
be duly qualified to do business in all jurisdictions where the
nature of its business requires such qualification, except for those
jurisdictions in which the failure to be so qualified or remain in
good standing could not reasonably be expected to have a Material
Adverse Effect;
(iii) Maintain and keep its Properties as a whole in good
repair, working order and condition;
(iv) Keep all of the Collateral in good and merchantable
condition, and will, as applicable, shelter, store, secure,
refrigerate, process and otherwise deal with the Collateral in
accordance with the standards and practices adhered to generally by
owners, bailees or processors, as applicable, of like properties; and
(v) Insure with financially sound and reputable insurers
reasonably acceptable to Lenders all Property of the Borrowers and
their respective Subsidiaries of the character usually insured by
Persons engaged in the same or similar businesses similarly situated,
against loss or damage of the kind customarily insured against by
such Persons, unless higher limits or coverage are reasonably
required in writing by Agent, and carry adequate liability insurance
and other insurance of a kind and in an amount generally carried by
Persons engaged in the same or similar businesses similarly situated,
unless higher limits or coverage are reasonably required in writing
by Agent. All such insurance may be subject to reasonable deductible
amounts. Promptly upon Agent's request therefor, Borrowers shall
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provide Agent with evidence that Borrowers maintain, and that each
Subsidiary of the Borrowers maintains, the insurance required under
this Section 7.1(d)(v), and evidence of the payment of all premiums
therefor. UNLESS BORROWERS PROVIDE EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED UNDER THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS, AGENT MAY PURCHASE INSURANCE AT BORROWERS' EXPENSE TO
PROTECT AGENT'S AND LENDERS' INTEREST IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT BORROWERS' INTERESTS. THE
COVERAGE THAT AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWERS
MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST BORROWERS IN CONNECTION
WITH THE COLLATERAL. BORROWERS MAY LATER CANCEL ANY INSURANCE
PURCHASED BY AGENT, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWERS
HAVE OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS. IF AGENT PURCHASES INSURANCE FOR THE
COLLATERAL, BORROWERS WILL BE RESPONSIBLE FOR THE COSTS OF THAT
INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER
CHARGES AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION
OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF
INSURANCE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN.
(e) Accountants. Borrowers shall give Agent prompt notice of
-----------
any change of Borrowers' independent certified public accountants and a
statement of the reasons for such change. Borrowers shall at all times
utilize independent certified public accountants of recognized standing
reasonably acceptable to Agent.
(f) ERISA Compliance. If a Borrower or any Subsidiary of a
----------------
Borrower shall have any Pension Plan, such Borrower and such Subsidiary
or Subsidiaries shall promptly comply with all requirements of ERISA
relating to such plan. Without limiting the generality of the
foregoing, neither any Borrower nor any Subsidiary of a Borrower will:
(i) permit any Pension Plan maintained by it to engage
in any nonexempt "prohibited transaction," as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended;
(ii) permit any Pension Plan or Pension Plans maintained
by it to incur any "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA, 29 U.S.C. Section 1082 which in the
aggregate exceeds $500,000.00, whether or not waived;
(iii) terminate any such Pension Plan in a manner which
could result in the imposition of a Lien on any Property of a
Borrower or any Subsidiary of a Borrower pursuant to Section 4068 of
ERISA, 29 U.S.C. Section 11368; or
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(iv) take any action which would constitute a complete or
withdrawal from a Multiemployer Plan within the meaning of Sections
4203 and 4205 of Title IV of ERISA.
Borrowers shall have the affirmative obligation hereunder to
report to Agent any of those acts identified in subparagraphs (i)
through (iv) hereof, regardless of whether said act does or is likely to
cause a Material Adverse Change and failure by Borrowers to report such
act promptly upon a Borrower becoming aware of the existence thereof
shall constitute an Event of Default hereunder.
(g) Maintenance of Books and Records. Each of the Borrowers
--------------------------------
and each of its Subsidiaries will maintain its books and records in a
manner sufficient to permit the preparation of financial statements in
accordance with generally accepted accounting principles and in which
true, correct and complete entries will be made of all of its dealings
and transactions.
(h) Further Assurances. Each Borrower will execute any and
------------------
all further agreements, documents and instruments, and take any and all
further actions which may be required under applicable law, or which
Agent or any of the Lenders may from time to time reasonably request, in
order to effectuate the transactions contemplated by this Agreement, the
Notes and the other Transaction Documents.
(i) Financial Covenants.
-------------------
(i) Minimum EBITDA. Parent will not permit EBITDA (as
--------------
calculated on a consolidated basis for Parent and its Consolidated
Subsidiaries) to be less than the amount set forth opposite such
period below.
Fiscal Quarters Ending Amount
---------------------- ------
December 31, 1999 $10,000,000.00
March 31, 2000 $12,000,000.00
June 30, 2000 $14,000,000.00
September 30, 2000 and thereafter $17,000,000.00
(ii) Maximum Total Funded Debt to EBITDA. Parent will
-----------------------------------
not permit the ratio of Total Funded Debt to EBITDA (as calculated on
a consolidated basis for Parent and its Consolidated Subsidiaries) as
of the last day of any fiscal quarter set forth below to exceed the
ratio set forth opposite such quarter:
Fiscal Quarter Ending Ratio
--------------------- -----
December 31, 1999 - June 30, 2000 3.75 to 1.0
September 30, 2000 and thereafter 3.0 to 1.0
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(iii) Minimum Net Worth. Parent will not permit its
-----------------
Consolidated Net Worth exclusive of any cumulative translation
adjustments as of the end of each fiscal quarter during the term
hereof to be less than the sum of (A) $153,750,000, plus (B) 100% of
Consolidated Net Income for each fiscal quarter in which net income
was earned (with no deduction for a net loss) during the period from
October 1, 1999 through the last day of the fiscal quarter
immediately preceding the date of determination, plus (C) 100% of the
net cash proceeds to Borrowers or any Subsidiary of the Borrowers of
any public or private issuance of equity securities.
(iv) Minimum Fixed Charge Coverage Ratio. Parent will not
-----------------------------------
permit the ratio of EBITDAR to Fixed Charges (as calculated on a
consolidated basis for Parent and its Consolidated Subsidiaries) as
of the last day of any fiscal quarter set forth below to be less than
the ratio set forth opposite such quarter:
Fiscal Quarter Ended Ratio
-------------------- -----
June 30, 2000 1.10 to 1.0
September 30, 2000 - June 30, 2001 1.15 to 1.0
September 30, 2001 and thereafter 1.20 to 1.0
Notwithstanding the foregoing, for purposes of calculating Fixed
Charges for the period ended June 30, 2000, Capital Expenditures
shall mean all Capital Expenditures made during the period beginning
October 1, 1999 and ending on June 30, 2000.
(v) Compliance Certificate. Parent will deliver a
----------------------
certificate of the principal financial officer of Parent containing
the financial ratio calculations required in clauses (i) through (iv)
above simultaneously with the financial statements referred to in
Section 7.1(a)(i) and with the financial statements referred to in
Section 7.1(a)(ii) which cover a period of three (3), six (6) or nine
(9) fiscal months.
(j) Compliance with Law. Borrowers will, and will cause each
-------------------
Subsidiary of Borrowers to, comply with any and all laws, ordinances and
governmental and regulatory rules and regulations to which it is subject
and obtain any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership
of their Properties or to the conduct of its business, which violation
or failure to obtain could reasonably be expected to have a Material
Adverse Effect.
(k) Notices. Borrowers will notify Agent and the Lenders in
-------
writing of any of the following within three (3) Business Days after a
Responsible Officer learns of the occurrence thereof, describing the
same and, if applicable, the steps being taken by the Person(s) affected
with respect thereto:
(i) Default. The occurrence of any Default or Event of
-------
Default under this Agreement or any default or event of default by
any Borrower or any Subsidiary of a Borrower under any note,
indenture, loan agreement, mortgage, deed of trust, security
agreement, or any lease or other similar agreement, document or
instrument to which a
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Borrower or any Subsidiary of a Borrower is a party or by which it is
bound or to which it is subject;
(ii) Litigation. The institution of any litigation,
----------
arbitration proceeding or governmental or regulatory proceeding
affecting a Borrower, any Subsidiary of a Borrower, or any
Collateral, (A) in which the amount involved is estimated to be
$1,000,000 or more and whether or not considered to be covered by
insurance; (B) or in which injunctive or similar relief is sought and
which, if granted, would have a Material Adverse Effect;
(iii) Judgment. The entry of any judgment or decree
--------
against a Borrower or any Subsidiary of a Borrower;
(iv) Pension Plans. The occurrence of a Reportable Event
-------------
with respect to any Pension Plan; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by a
Borrower, any ERISA Affiliate or any Subsidiary of a Borrower from
any Multiemployer Plan; or the incurrence of any increase in an
aggregate amount in excess of $250,000 (for all such plans) in the
contingent liability of a Borrower or any Subsidiary of a Borrower
with respect to any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA which covers retired employees and their
beneficiaries;
(v) Change of Name. Any change in the name of a
--------------
Borrower or any Subsidiary of a Borrower;
(vi) Change in Place(s) of Business. Any proposed
------------------------------
opening, closing or other change of any place of business of a
Borrower or any Subsidiary of a Borrower;
(vii) Environmental Matters. Receipt of any notice that
---------------------
the operations of a Borrower or any Subsidiary of a Borrower are not
in full compliance with any of the requirements of any applicable
Environmental Law or Occupational Safety and Health Law; receipt of
notice that a Borrower or any Subsidiary of a Borrower is subject to
any federal, state or local investigation evaluating whether any
remedial action is needed to respond to the release of any Hazardous
Materials or any other hazardous or toxic waste, substance or
constituent or other substance into the environment; or receipt of
notice that any of the Properties or assets of a Borrower or any
Subsidiary of a Borrower are subject to an "Environmental Lien". For
purposes of this Section 7.10(vii), "Environmental Lien" shall mean a
Lien in favor of any governmental or regulatory agency, entity,
authority or official for (1) any liability under Environmental Laws
or (2) damages arising from or costs incurred by any such
governmental or regulatory agency, entity, authority or official in
response to a release of any Hazardous Materials or any other
hazardous or toxic waste, substance or constituent or other substance
into the environment;
(viii) Material Adverse Change; Material Adverse Effect.
------------------------------------------------
The occurrence of any Material Adverse Change, or the occurrence of
any event which could reasonably be expected to have a Material
Adverse Effect;
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(ix) Change in Management or Line(s) of Business. Any
-------------------------------------------
material change in the senior management of a Borrower or any
Subsidiary of a Borrower or any change in a Borrower's or any
Subsidiary of a Borrower's line(s) of business; and
(x) Other Notices. Any notices required to be provided
-------------
pursuant to other provisions of this Agreement and notice of the
occurrence of such other events as Agent may from time to time
reasonably specify.
(l) Protection of Collateral. During the term of this
------------------------
Agreement, the Borrowers will:
(i) do all things necessary to keep unimpaired the
rights of the Borrowers in and to the Collateral;
(ii) pay or cause to be paid, promptly as and when due
and payable, all expenses incurred in or arriving from the
maintenance, storage and care of the Collateral; provided,
--------
however, that Borrowers shall not be required to pay any such
-------
expense the payment of which is being contested in good faith and by
appropriate proceedings diligently conducted and for which adequate
reserves in accordance with generally accepted accounting principles
have been provided, except that Borrowers shall pay or cause to be
paid all such expenses forthwith upon the commencement of proceedings
to foreclose any Lien which is attached as security therefor, unless
such foreclosure is stayed by the filing of an appropriate bond; and
(iii) cause the Inventory and other Collateral to be
properly maintained and protected in accordance with prudent
operating practices, giving consideration to and complying with
applicable federal, state and local laws, rules and regulations.
(m) Compliance with Environmental Laws. Each Borrower will:
----------------------------------
(i) Comply, and will cause each of its Subsidiaries to
comply, with all Environmental Laws applicable to the ownership or
use of its Real Property now or hereafter owned or operated by such
Borrower or any of its Subsidiaries, the noncompliance with which
could reasonably be expected to have a Material Adverse Effect, will
pay or cause to be paid all costs and expenses incurred in connection
with such compliance, and will keep or cause to be kept all such Real
Property free and clear of any Liens on such Real Property imposed
pursuant to such Environmental Laws. None of such Borrower nor any
of its Subsidiaries will generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage,
release or disposal of Hazardous Materials on any Real Property now
or hereafter owned or operated by such Borrower or any of its
Subsidiaries, or transport or permit the transportation of Hazardous
Materials to or from any such Real Property except for Hazardous
Materials used or stored at any such Real Property in compliance with
all applicable Environmental Laws and reasonably required in
connection with the operation, use and maintenance of any such Real
Property.
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(ii) In the event that Agent or the Required Lenders
reasonably believe, at any time or from time to time, that Hazardous
Materials are present at any of such Real Property other than in
compliance with the foregoing clause (i) of this subparagraph (m), or
such Real Property is otherwise not in material compliance with all
applicable Environmental Laws, at the written request of Agent or the
Required Lenders, provide an environmental site assessment report
concerning any Real Property now or hereafter owned or operated by
such Borrower or any of its Subsidiaries, prepared by an
environmental consulting firm approved by Agent, indicating the
presence or absence of Hazardous Materials on such Real Property. If
such Borrower fails to provide the same within thirty (30) days after
such request was made, Agent may order the same, and Borrowers shall
grant and hereby grants to Agent and the Lenders and their agents
access to such Real Property and specifically grants Agent and the
Lenders an irrevocable non-exclusive license, to undertake such an
assessment, all at the Borrowers' expense.
7.2 Negative Covenants of Borrowers. Each of the Borrowers
-------------------------------
covenants and agrees that, so long as Lenders have any obligation to
make any Loan hereunder or any of Obligations remain unpaid or any
Letter of Credit remains outstanding, unless the prior written consent
of the Required Lenders is obtained:
(a) Limitations on Liens. Borrowers will not create, incur,
--------------------
assume or suffer to exist, and will not cause or permit any Subsidiary
of Borrower to create, incur, assume or suffer to exist, any Lien on any
of its Property, assets or revenues other than Permitted Liens.
(b) Sale of Property. Neither any Borrower nor any of its
----------------
Subsidiaries will sell, lease, transfer or otherwise dispose of any
Property or assets of such Person, except (i) sales, leases, transfers
and/or other dispositions of any Property or assets to the Parent or any
Subsidiary; (ii) sales of inventory in the ordinary course of business;
(iii) the sale or disposition in the ordinary course of business of
property and assets of such Borrower or any of its Subsidiaries no
longer useful in the conduct of their respective businesses provided
--------
that the net proceeds thereof (subject to payment of any related
purchase money Indebtedness and to the use of such proceeds to purchase
replacement Property or assets) are used by such Person for the benefit
of the business of such Person, in the ordinary course of business,
provided further, that the aggregate net proceeds of all assets
- --------
subject to sales or other dispositions pursuant to clause (iv) shall not
exceed $500,000 in any period of twelve (12) consecutive months; (v) a
sale or disposition of the assets of a foreign (non-U.S.) business unit
or Subsidiary of any Borrower which yields net proceeds of less than
$5,000,000; or (vi) an Asset Disposition so long as the Net Cash
Proceeds are used by the applicable Borrower or any of its Subsidiaries
to purchase replacement assets within 120 days of such Asset Disposition
or are applied to prepay the Loans hereunder pursuant to Section
3.18(b)(ii).
(c) Mergers and Consolidations. Neither any Borrower nor any
--------------------------
of its Subsidiaries will merge or consolidate with any other Person or
sell, transfer or convey all or a substantial part of its Property or
assets to any Person, except for acquisitions permitted under Section
7.2(d) and provided that Subsidiaries of the Borrowers may merge with
each other or into a Borrower.
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(d) Acquisitions. Neither any Borrower nor any of its
------------
Subsidiaries will make any Acquisition of any Person, except Acceptable
Acquisitions.
(e) Fiscal Year. Neither any Borrower nor any of its
-----------
Subsidiaries will change their respective fiscal years without the
consent of Agent, which consent shall not be unreasonably withheld.
(f) Stock Redemptions and Distributions. Parent will not,
-----------------------------------
directly or indirectly, make or declare or incur any liability to make
any Distribution in respect of the capital stock of Parent, either in
cash or property.
(g) Transactions with Related Parties. Neither any Borrower
---------------------------------
nor any of its Subsidiaries will, directly or indirectly, engage in any
material transaction, in the ordinary course of business or otherwise,
with any Related Party except as otherwise expressly permitted in this
Agreement, unless such transaction is upon fair market terms, is not
disadvantageous in any material respect to Agent or the Lenders and has
been approved by a majority of the disinterested directors of such
Borrower or such Subsidiary, as the case may be (or, if none of such
directors are disinterested, by a majority of the directors), as being
in the best interests of such Borrower or such Subsidiary, as the case
may be. In addition, neither such Borrower nor any of its Subsidiaries
shall (i) transfer any Property or assets to any Related Party or (ii)
purchase or sign any agreement to purchase any stock or other securities
of any Related Party (whether debt, equity or otherwise), underwrite or
Guarantee the same, or otherwise become obligated with respect thereto.
(h) Loans and Investments. Neither any Borrower nor any of
---------------------
its Subsidiaries will make any loans or advances or extensions of credit
to (other than extensions of credit in the ordinary course of business),
purchase any stocks, bonds, notes, debentures or other securities of,
make any expenditures on behalf of, or in any manner assume liability
(direct, contingent or otherwise) for the Indebtedness of any Person,
except that a Borrower and the Subsidiaries of a Borrower may:
(i) Make or permit to remain outstanding loans or
advances to any Borrower and/or any Subsidiary of a Borrower;
(ii) Acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to such Borrower or any Subsidiary of such Borrower;
(iii) Own, purchase or acquire (A) prime commercial paper
and certificates of deposit in United States commercial banks (having
capital resources in excess of $100,000,000.00), in each case due
within one (1) year from the date of purchase and payable in the
United States in United States dollars, (B) obligations of the United
States government or any agency thereof, (C) obligations guaranteed
directly by the United States government, (D) repurchase agreements
of United States commercial banks (having capital resources in excess
of $100,000,000.00) for terms of less than one (1) year, (E) shares
in the Arch Fund or other mutual funds; or (F) for a period of six
(6) months after the date of this
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Agreement, investments existing as of the date of this Agreement and
described in Schedule 7.2(h)(iii) attached hereto;
(iv) Make or permit to remain outstanding travel and
other like advances to directors, officers and employees of a
Borrower or any Subsidiary of a Borrower in the ordinary course of
business in an aggregate amount outstanding at any one time not to
exceed $250,000; and
(v) Acquire or invest in Acceptable Acquisitions.
(i) Dissolution or Liquidation. Neither any Borrower nor any
--------------------------
of its Subsidiaries will seek or permit the dissolution or liquidation
of a Borrower or any Subsidiary of a Borrower in whole or in part.
(j) Change in Nature of Business. Neither any Borrower nor
----------------------------
any of its Subsidiaries will make any material change in the nature of
its business.
(k) Pension Plans. Neither any Borrower nor any of its
-------------
Subsidiaries shall (i) permit any condition to exist in connection with
any Pension Plan which might constitute grounds for the PBGC to
institute proceedings to have such Pension Plan terminated or a trustee
appointed to administer such Pension Plan or (ii) engage in, or permit
to exist or occur, any other condition, event or transaction with
respect to any Pension Plan which could result in the incurrence by a
Borrower or any Subsidiary of a Borrower of any material liability, fine
or penalty. Neither any Borrower nor any Subsidiary of a Borrower shall
become obligated to contribute to any Pension Plan or Multiemployer Plan
other than any such plan or plans in existence on the date hereof,
unless such new Pension Plan or Multi-Employer Plan is in compliance
with ERISA and all other laws covering such plans and is in compliance
with all of the representations, warranties and covenants contained
herein.
(l) Limitation on Indebtedness. Neither any Borrower nor any
--------------------------
Subsidiary of a Borrower will incur or be obligated on any Indebtedness,
either directly or indirectly, by way of Guarantee, suretyship or
otherwise, other than:
(i) The Obligations;
(ii) Unsecured trade accounts payable and normal accruals
incurred in the ordinary course of business;
(iii) Indebtedness existing as of the date of this
Agreement and listed on Schedule 6.10 attached hereto (and any
-------------
extensions, renewals, refinancings and replacements thereof in a
principal amount not in excess of the amount of such Indebtedness
outstanding immediately prior to the effectiveness of such extension,
renewal, refinancing or replacement and otherwise on terms no less
favorable than the terms of such Indebtedness as of the date of this
Agreement;
(iv) Capitalized Lease Obligations and Purchase money
Indebtedness secured by Liens permitted under Section 7.2(a) pursuant
to subparagraph (j) of the
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definition of Permitted Liens, provided that in no event shall the
--------
aggregate outstanding principal amount of Indebtedness permitted by
this clause (iv) exceed, at any one time or from time to time,
$5,000,000.00;
(v) Loans or advances by Parent or any Subsidiary of
Parent to any Subsidiary of Parent;
(vi) Loans or advances by any Subsidiary of Parent to
Parent or any other Subsidiary of Parent;
(vii) Guarantees of Indebtedness of Parent or any
Subsidiary of Parent by Parent or any Subsidiary of Parent; and
(viii) Indebtedness incurred pursuant to a Debt Offering by
Parent or any Subsidiary of Parent so long as the Net Cash Proceeds
are applied by the Parent or such Subsidiary of Parent to prepay the
Loans hereunder in accordance with the provisions of Section
3.18(b)(iii).
(m) Limitation on Stock Offerings. Neither the Parent nor the
-----------------------------
Subsidiary of Parent shall make a Stock Offering, unless the Net Cash
Proceeds are applied in accordance with the provisions of Section
3.18(b)(iii).
7.3 Use of Proceeds. Borrowers agree that the proceeds of the
---------------
Loans will be used solely (a) for working capital requirements and other
corporate needs and purposes of Borrowers in the ordinary course of
Borrowers' businesses, (b) to refinance existing Indebtedness of the
Borrowers, and (c) for Acceptable Acquisitions. The Borrowers shall not
use any portion of the proceeds of the Loans, directly or indirectly (i)
to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (ii) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of Regulations U, T and X of The Board of Governors of the
Federal Reserve System, as amended.
SECTION 8. EVENTS OF DEFAULT.
- ------------------------------
If any of the following (each of the following herein sometimes
called an "Event of Default") shall occur and be continuing:
8.1 Any Borrower shall fail to pay any of the Obligations
constituting principal as and when the same shall become due and
payable, whether by reason of demand, acceleration, maturity or
otherwise; or any Borrower shall fail to pay any of the Obligations
(other than any Obligations constituting principal) within five (5) days
after the date the same shall first become due and payable, whether by
reason of demand, acceleration, maturity or otherwise;
8.2 Any representation or warranty of a Borrower made in this
Agreement, in any other Transaction Document, or in any certificate,
agreement, instrument or statement furnished or made or delivered
pursuant hereto or thereto or in connection herewith or therewith, shall
prove to have been untrue or incorrect in any material respect when made
or effected;
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8.3 Any Borrower shall fail to perform or observe any term,
covenant or provision contained in Sections 7.1(i) or (k), Section 7.2
or Section 7.3;
8.4 Any Borrower shall fail to perform or observe any other
term, covenant or provision contained in this Agreement and any such
failure remains unremedied for thirty (30) days after written notice
thereof shall have been given to Borrowers by Agent or any of the
Lenders;
8.5 This Agreement or any of the other Transaction Documents
shall at any time for any reason cease to be in full force and effect or
shall be declared to be null and void by a court of competent
jurisdiction, or if the validity or enforceability thereof shall be
contested or denied by any Borrower, or if the transactions completed
hereunder or thereunder shall be contested by any Borrower or if any
Borrower shall deny that it has any or further liability or obligation
hereunder or thereunder;
8.6 Any Borrower or any Subsidiary of a Borrower shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal, state or
foreign bankruptcy, insolvency, receivership, liquidation or similar
law, (ii) consent to the institution of, or fail to contravene in a
timely and appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official of
itself, himself or herself or of a substantial part of its, his or her
Property or assets, (iv) file an answer admitting the material
allegations of a petition filed against itself, himself or herself in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its, his or her
inability or fail generally to pay its, his or her debts as they become
due or (vii) take any corporate or other action for the purpose of
effecting any of the foregoing;
8.7 An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower or any Subsidiary of a
Borrower, or of a substantial part of the Property or assets of any
Borrower or any Subsidiary of a Borrower, under Title 11 of the United
States Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official of a Borrower or any Subsidiary of a Borrower or of a
substantial part of the Property or assets of a Borrower or any
Subsidiary of a Borrower or (iii) the winding-up or liquidation of a
Borrower or any Subsidiary of a Borrower; and such proceeding or
petition shall continue undismissed for sixty (60) consecutive days or
an order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for sixty (60) consecutive days;
8.8 (i) A Borrower or any Subsidiary of a Borrower shall be in
default in the payment of any principal of or interest on any Funded
Debt having an aggregate outstanding principal balance equal to or in
excess of $100,000 beyond any applicable period of grace provided with
respect thereto; or (ii) any Borrower or any Subsidiary of a Borrower
shall be in default in the performance of or compliance with any term,
provision, condition or covenant contained in any agreement, document or
instrument evidencing, securing, guaranteeing the payment of or
otherwise relating to any Funded Debt having an aggregate outstanding
principal balance equal to or in excess of $100,000, and as a
consequence of such default such Funded Debt has become, or has been
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<PAGE>
declared, due and payable before its stated maturity or before its
regularly scheduled dates of payment;
8.9 A Borrower or any Subsidiary of a Borrower shall have a
judgment in an amount in excess of $100,000 entered against it, him or
her by a court having jurisdiction in the premises and such judgment
shall not be appealed in good faith or satisfied by such Borrower or
such Subsidiary of such Borrower, as the case may be, within the time
period permitted by applicable law for the appeal of such judgment;
8.10 The occurrence of a Reportable Event with respect to any
Pension Plan; the institution of proceedings to terminate a Pension Plan
by the PBGC or any other Person; the withdrawal in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections 4203 and
4205, respectively, of ERISA by a Borrower, any ERISA Affiliate or any
Subsidiary of a Borrower from any Multiemployer Plan; or the incurrence
of any increase in an aggregate amount in excess of $100,000 (for all
such plans) in the contingent liability of a Borrower or any Subsidiary
of a Borrower with respect to any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which covers retired employees and
their beneficiaries;
8.11 The institution by a Borrower, any ERISA Affiliate or any
Subsidiary of a Borrower of steps to terminate any Pension Plan if, in
order to effectuate such termination, such Borrower, such ERISA
Affiliate or such Subsidiary of a Borrower, as the case may be, would be
required to make a contribution to such Pension Plan in excess of
$100,000, or would incur a liability or obligation to such Pension Plan
in excess of $100,000; or
8.12 A Change of Control shall occur;
THEN, and in each such event (other than an event described in
Sections 8.6 or 8.7), Agent may, or if requested in writing by the
Required Lenders shall, declare that the obligations of Lenders to make
Loans and of Agent to issue Letters of Credit under this Agreement have
terminated, whereupon such obligations of Agent and Lenders shall be
immediately and forthwith terminated, and Agent may further, or if
requested in writing by the Required Lenders shall further, declare on
behalf of each of the Lenders that the entire outstanding principal
balance of and all accrued and unpaid interest on the Notes and all of
the other Obligations to be due and payable, whereupon all of the unpaid
principal balance of and all accrued and unpaid interest on the Notes
and all such other Obligations shall become and be immediately due and
payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrowers, and
Agent and the Lenders may exercise any and all other rights and remedies
which any of them may have under any of the Transaction Documents or
under applicable law; provided, however, that upon the occurrence of
-------- -------
any event described in Sections 8.6 or 8.7, Lenders' obligations to make
Loans and Agent's obligation to issue Letters of Credit under this
Agreement shall automatically terminate and the entire outstanding
principal balance of and all accrued and unpaid interest on the Notes
issued under this Agreement and all other Obligations shall
automatically become immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrowers, and Agent and the Lenders may
exercise any and all other rights and remedies which any of them may
have under any of the Transaction Documents or under applicable law.
Following acceleration of the
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Obligations hereunder as set forth above, Agent may, or if requested in
writing by the Required Lenders and provided with the indemnity required
under Section 9.6 shall, proceed to enforce any remedy then available to
Agent or any of the Lenders under any applicable law, including, without
limitation, all rights granted to Agent hereunder, the Security
Agreement or under any Letter of Credit Application, and the rights and
remedies available to a secured party under the Uniform Commercial Code
as in effect in the State of Missouri.
Upon the occurrence and during the continuance of any Event of
Default, Agent will have the right, in addition to all other rights and
remedies available to Agent and the Lenders under this Agreement or
under the other Transaction Documents, after oral or written notice is
sent to the Borrowers, to take possession of, preserve and care for the
Collateral, to execute and/or endorse as the Borrowers' agent any bills
of sale or documents, instruments or chattel paper in or pertaining to
the Collateral, to notify Account Debtors and obligors on documents,
Accounts and instruments included in the Collateral to make payment
directly to Agent, to take control of the Borrowers' cash, to collect
and receive funds generated by the Collateral, including proceeds or
refunds from insurance, or as a result of claims for the damage, loss,
or destruction of the Collateral, and use the same to reduce any part of
the Obligations.
Agent shall give notice of a Default to Borrowers promptly upon
being requested to do so by any Lender and shall thereupon notify all of
the Lenders thereof.
Following any Default or Event of Default and so long as any such
Default or Event of Default is continuing, all payments and other
amounts received by Agent and/or any of the Lenders, whether voluntary
or involuntary, including but not limited to any proceeds of any
Collateral, any right of offset or otherwise, shall be shared among the
Lenders in accordance with their Pro Rata Shares of the outstanding
principal indebtedness under all of the Loans and Letter of Credit
obligations then outstanding of Borrowers. Such application shall be
made first, to any costs or expenses of Agent or any of the Lenders
incurred in connection with the collection of such proceeds, second, to
any accrued and unpaid fees due hereunder or under any of the other
Transaction Documents, third, to any and all accrued and unpaid interest
on any of the Loans, fourth, to collateralize any outstanding Letters of
Credit pursuant to Section 3.6 hereof, and fifth, to the unpaid
principal amounts of any of the Loans outstanding hereunder and under
the other Transaction Documents.
SECTION 9. THE AGENT
- ---------------------
9.1 Appointment and Authorization. Each Lender irrevocably
-----------------------------
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the Notes and
other Transaction Documents as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as may be reasonably
incidental thereto.
9.2 Agent and Affiliates. The Agent shall have the same
--------------------
rights and powers under this Agreement as any other Lender and may
exercise or refrain from exercising the same as though it were not the
Agent, and the Agent and its affiliates may accept deposits from, lend
money to and generally engage in any kind of business with Borrowers or
any of their Subsidiaries or Affiliates as if it were not the Agent
hereunder.
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9.3 Action By Agent. The obligations of the Agent hereunder
---------------
are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default or Event of Default, except as
expressly provided in Section 8.
9.4 Consultation with Experts. The Agent may consult with
-------------------------
legal counsel, independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of
such counsel, accountants or other experts.
9.5 Liability of Agent. Neither the Agent nor any of its
------------------
directors, officers, employees, agents or advisors shall be liable to
any of the Lenders for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the requisite
percentage in interest of the Lenders set forth herein or (ii) in the
absence of its own gross negligence or willful misconduct as determined
by a court of competent jurisdiction. Neither the Agent nor any of its
directors, officers, employees, agents or advisors shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this
Agreement or any Loan hereunder; (ii) the performance or observance of
any of the covenants or agreements of Borrowers; (iii) the satisfaction
of any condition specified in Section 4, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Notes or any of the
other Transaction Documents. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or
other writing (which may be a bank wire, telex, telecopy or similar
writing) believed by it to be genuine or to be signed by the proper
party or parties.
9.6 Indemnification. Notwithstanding any other provision
---------------
contained in this Agreement to the contrary, to the extent Borrowers
fail to reimburse the Agent pursuant to Section 10.3, Section 10.4 or
Section 10.5, or if any Default or Event of Default shall occur under
this Agreement, the Lenders shall ratably in accordance with their
respective Pro Rata Shares, indemnify the Agent and hold it harmless
from and against any and all liabilities, losses, costs and/or expenses,
including, without limitation, any liabilities, losses, costs and/or
expenses arising from the failure of any Lender to perform its
obligations hereunder or in respect of this Agreement, and also
including, without limitation, reasonable attorneys' fees and expenses,
which the Agent may incur, directly or indirectly, in connection with
this Agreement, the Notes or any of the other Transaction Documents, or
any action or transaction related hereto or thereto; provided only
--------
that the Agent shall not be entitled to such indemnification for any
losses, liabilities, costs and/or expenses directly and solely resulting
from its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. This indemnity shall be a continuing
indemnity, contemplates all liabilities, losses costs and expenses
related to the execution, delivery and performance of this Agreement,
the Notes and the other Transaction Documents, and shall survive the
satisfaction and payment of the Loans and the termination of this
Agreement.
9.7 Credit Decision. Each Lender acknowledges that it has,
---------------
independently and without reliance upon the Agent or any other Lender,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Lender also acknowledges that it will,
independently and without reliance
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upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking any action under this
Agreement.
9.8 Resignation of Agent. The Agent may resign at any time by
--------------------
giving written notice thereof to the Lenders and Borrowers, which
resignation shall become effective upon the appointment of a successor
Agent. Upon any such resignation, Lenders shall have the right to
appoint a successor Agent, which successor Agent shall be reasonably
acceptable to Borrowers and shall be a commercial bank organized under
the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000.00. If
no successor Agent shall have been so appointed by Lenders, and shall
have accepted such appointment, within thirty (30) days after the
retiring Agent's giving of notice of resignation, then the Agent shall,
on behalf of all of the Lenders, appoint a successor Agent with the
prior consent of Borrowers, which consent shall not be unreasonably
withheld, and which successor Agent shall be a commercial bank organized
under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of a least $500,000,000.00.
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all of its duties
and obligations under this Agreement. After any retiring Agent's
resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
9.9 Removal of Agent. The Agent may be removed at any time,
----------------
for or without cause, by an instrument or instruments in writing
executed by all of the Lenders and delivered to the Agent with a copy to
Borrowers, specifying the removal and the date when it shall take effect
(which shall be the date of the appointment of a successor Agent). Upon
any such removal, Lenders shall have the right to appoint a successor
Agent, which successor Agent shall be reasonably acceptable to Borrowers
and shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital
and surplus of at least $300,000,000.00. If no successor Agent shall
have been so appointed by Lenders, and shall have accepted such
appointment, within thirty (30) days after the date of the removal of
the Agent, then the Required Lenders shall, on behalf of all of the
Lenders, appoint a successor Agent, which successor Agent shall be
reasonably acceptable to Borrowers and shall be a commercial bank
organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least
$300,000,000.00. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the removed Agent, and the removed Agent shall be discharged
from all of its duties and obligations under this Agreement. After any
such removal, the provisions of this Section 9 shall inure to such
former Agent's benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
SECTION 10. GENERAL.
- --------------------
10.1 No Waiver. No failure or delay by Agent or any of the
---------
Lenders in exercising any right, remedy, power or privilege hereunder or
under any other Transaction Document shall
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operate as a waiver thereof; nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The remedies provided
herein and in the other Transaction Documents are cumulative and not
exclusive of any remedies provided by law. Nothing herein contained
shall in any way affect the right of Agent or any of the Lenders to
exercise any statutory or common law right of banker's lien or setoff.
10.2 Right of Setoff. Upon the occurrence and during the
---------------
continuance of any Event of Default, each of the Lenders is hereby
authorized at any time and from time to time, without notice to
Borrowers (any such notice being expressly waived by Borrowers) and to
the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at
any time held by any such Lender and any and all other indebtedness at
any time owing by any such Lender to or for the credit or account of
Borrowers against any and all of the Obligations irrespective of whether
or not such Lender shall have made any demand hereunder or under any of
the other Transaction Documents and although such obligations may be
contingent or unmatured. Such Lender agrees to promptly notify
Borrowers after any such setoff end application made by such Lender,
provided, however, that the failure to give such notice shall not
- -------- -------
affect the validity of such setoff and application. The rights of
Lenders under this Section 10.2 are in addition to any other rights and
remedies (including, without limitation, other rights of setoff) which
Lenders may have. Nothing contained in this Agreement or any other
Transaction Document shall impair the right of each of the Lenders to
exercise any right of setoff or counterclaim it may have against
Borrowers and to apply the amount subject to such exercise to the
payment of indebtedness of Borrowers unrelated to this Agreement or the
other Transaction Documents.
10.3 Cost and Expenses. Borrowers agree, whether or not any
-----------------
Loan is made hereunder, to pay Agent upon demand (a) all reasonable
out-of-pocket costs and expenses and all Attorneys' Fees of Agent in
connection with the preparation, negotiation and execution of this
Agreement, the Notes and the other Transaction Documents, (b) all
recording and filing fees incurred in connection with this Agreement and
the other Transaction Documents, (c) all reasonable out-of-pocket costs
and expenses and all Attorneys' Fees of Agent in connection with the
preparation of any waiver or consent hereunder or any amendment hereof,
(d) all out-of-pocket costs and expenses and all Attorneys' Fees of
Agent and each of the Lenders in connection with or any Event of Default
hereunder, (e) if an Event of Default occurs, all out-of-pocket costs
and expenses and all Attorneys' Fees incurred by Agent and each of the
Lenders in connection with such Event of Default and collection and
other enforcement proceedings resulting therefrom and (f) all other
Attorneys' Fees incurred by Agent and each of the Lenders relating to or
arising out of or in connection with this Agreement or any of the other
Transaction Documents. The Borrowers further agree to pay or reimburse
Agent and each of the Lenders for any stamp or other taxes which may be
payable with respect to the execution, delivery, recording and/or filing
of this Agreement, the Notes, the Security Agreement or any of the other
Transaction Documents. All of the obligations of Borrowers under this
Section 10.3 shall survive the satisfaction and payment of Obligations
and the termination of this Agreement.
10.4 Environmental Indemnity. Borrowers hereby agree to
-----------------------
indemnify the Indemnitees and hold the Indemnitees harmless from and
against any and all losses, liabilities, damages, injuries, costs,
expenses and claims of any and every kind whatsoever (including, without
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limitation, court costs and Attorneys' Fees) which at any time or from
time to time may be paid, incurred or suffered by, or asserted against
the Indemnitees with respect to or as a direct or indirect result of the
violation by Parent or any Subsidiary of Parent of any Environmental
Laws; or with respect to, or as a direct or indirect result of the
presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission or release from, properties utilized by Parent
and/or any Subsidiary of Parent in the conduct of their receptive
businesses into or upon any land, the atmosphere or any watercourse,
body of water or wetland, of any Hazardous Materials or any other
hazardous or toxic waste, substance or constituent or other substance
(including, without limitation, any losses, liabilities, damages,
injures, costs, expenses or claims asserted or arising under the
Environmental Laws); and the provisions of and undertakings and
indemnification set out in this Section 10.4 shall survive the
satisfaction and payment of Obligations and the termination of this
Agreement.
10.5 General Indemnity. In addition to the payment of expenses
-----------------
pursuant to Section 10.3, whether or not the transactions contemplated
hereby shall be consummated, Borrowers hereby agree to indemnify, pay
and hold Agent, each of the Lenders and any other holder(s) of the
Notes, and the officers, directors, employees, agents and affiliates of
any of them (collectively, the "Indemnitees") harmless from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel for such Indemnities in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnities shall be
designated a party thereto), that may be imposed on, incurred by or
asserted against the Indemnities, in any manner relating to or arising
out of this Agreement, any of the other Transaction Documents or any
other agreement, document or instrument executed and delivered by
Borrowers in connection herewith or therewith, the statements contained
in any commitment letters delivered by Agent or any of the Lenders, the
Lender's agreements to make the Loans hereunder the Agent's agreement to
issue Letters of Credit, or the use or intended use of the proceeds of
any Loan or Letter of Credit hereunder; provided that Borrowers shall
--------
have no obligation to an Indemnitee hereunder with respect to
indemnified liabilities (a) arising from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction or (b) arising out of dispute between the Agent and one or
more of the Lenders and/or a dispute among one or more of the Lenders
(collectively, the "indemnified liabilities"). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any
law or public policy, Borrowers shall contribute the maximum portion
that they are permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities incurred by the
Indemnities or any of them. The provisions of the undertakings and
indemnification set out in this Section 10.5 shall survive satisfaction
and payment of the Obligations and the termination of this Agreement.
10.6 Authority to Act. Agent and the Lenders shall each be
----------------
entitled to act on any notices and instructions (telephonic or written)
believed by Agent or any such Lender to have been delivered by Zsolt
Rumy, Daniel Greenwell or James Burch (or any other person from time to
time authorized to act on behalf of Borrowers pursuant to a resolution
adopted by the respective Boards of Directors of the Borrowers and
certified by the Secretary of each such Borrower and delivered to
Agent), regardless of whether such notice or instruction was in fact
delivered by such person, and
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Borrowers hereby agree to indemnify Agent and each of the Lenders and
hold Agent and each of the Lenders harmless from and against any and all
losses and expenses, if any, ensuing from any such action.
10.7 Capital Adequacy. If, after the date of this Agreement,
----------------
Agent or any of the Lenders shall have determined that the adoption of
any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental or regulatory authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Agent or any of the Lenders
with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or will have the effect of reducing the rate of
return on Agent's or such Lender's capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender
could have achieved but for such adoption, change or compliance (taking
into consideration Agent's or such Lender's policies with respect to
capital adequacy), then from time to time Borrowers shall pay to Agent
or such Lender upon demand such additional amount or amounts as will
compensate Agent or such Lender for such reduction. All determinations
made by Agent or such Lender of the additional amount or amounts
required to compensate Agent or such Lender in respect of the foregoing
shall be conclusive in the absence of demonstrable error. In
determining such amount or amounts, Agent or such Lender may use any
reasonable averaging and attribution methods.
10.8 Notices Any notice, request, demand, consent,
-------
confirmation or other communication hereunder shall be in writing and
delivered in person or sent by telegram, telex, telecopy or registered
or certified mail, return receipt requested and postage prepaid, if to
Borrowers at the each Borrower's address specified opposite its
signature below, or if to Agent at One Mercantile Center, 7th and
Washington, St. Louis, Missouri 63101, Attention: Thomas S. Sherman,
Telecopy No. (314) 418-8074, or if to Lenders, at their respective
addresses or telecopy numbers set forth on the signature pages of this
Agreement, or at such other address as any party may designate as its
address for communications hereunder by notice so given. Such notices
shall be deemed effective on the day on which delivered or sent if
delivered in person or sent by telegram, telex or telecopy, or on the
third (3rd) Business Day after the day on which mailed, if sent by
registered or certified mail.
10.9 Consent to Jurisdiction. BORROWERS IRREVOCABLY SUBMIT TO
-----------------------
THE NONEXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED
STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS
AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. BORROWERS
HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION
OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS.
BORROWERS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH BORROWERS MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT 1N ANY SUCH COURT,
AND BORROWERS FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
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INCONVENIENT FORUM. BORROWERS HEREBY EXPRESSLY WAIVE ALL RIGHTS OF ANY
OTHER JURISDICTION WHICH BORROWERS MAY NOW OR HEREAFTER HAVE BY REASON
OF THEIR PRESENT OR SUBSEQUENT DOMICILES. BORROWERS AUTHORIZE THE
SERVICE OF PROCESS UPON BORROWERS BY REGISTERED MAIL SENT TO BORROWERS
AT THEIR RESPECTIVE ADDRESSES IN ACCORDANCE WITH SECTION 10.8.
10.10 Agent's and Lenders' Books and Records. Agent's and each
--------------------------------------
Lender's books and records showing the account between Borrowers and
Agent or any of the Lenders shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof thereof in
the absence of manifest error.
10.11 Governing Law: Amendments. This Agreement shall be
-------------------------
governed by and construed in accordance with the internal laws of the
State of Missouri. Any provision of this Agreement, the Notes, the
Security Agreement or any of the other Transaction Documents may be
amended or waived if, but only if, such amendment or waiver is in
writing and is signed by Borrowers and the Required Lenders (and if the
rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all
- --------
of the Lenders, (i) increase the Revolving Credit Commitment,
Acquisition Revolving Credit Commitment, or Term Loan Commitment of any
Lender, (ii) reduce the principal amount of or rate of interest on any
Loan or any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder,
(iv) release any collateral security or any guaranty for any Loan
hereunder, (v) amend or waive any Event of Default, (vii) change the
percentage in the definition of Required Lenders, or (viii) amend this
Section 10.11.
10.12 Participations and Assignments.
------------------------------
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns, except that Borrowers may not assign or
otherwise transfer any of its rights or delegate any of its obligations
under this Agreement. Any of the Lenders may sell participations in its
Notes and its rights under this Agreement, the other Transaction
Documents, and in the Collateral, in whole or in part, in minimum
amounts equal to the lesser of (i) $2,500,000 or (ii) such Lender's Pro
Rata Share of the Loan Commitments to any commercial bank organized
under the laws of the United States or any state thereof; provided,
--------
that the sale of any participation shall require the consent of the
Agent. Each agreement pursuant to which any such participation is
granted shall provide that no such participant shall have any rights
under this Agreement or any other Transaction Document (the
participants' rights against the Lender granting its participation to be
those set forth in the Participation Agreement between the participant
and such Lender), and such selling Lender shall retain the sole right to
approve or disapprove any amendment, modification or waiver of any
provision of this Agreement or any of the other Transaction Documents.
Each such participant shall be entitled to the benefits of the yield
protection provisions hereof to the extent the Lender granting such
participation would have been so entitled had not such participation
been sold.
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(i) Any Lender which, in accordance with Section
10.12(a), grants a participation in any of its rights under this
Agreement or its Notes shall give prompt notice describing the
details thereof to the Agent and Borrowers.
(ii) Unless otherwise agreed to by Borrowers in writing,
no Lender shall, as between Borrowers and that Lender, be relieved of
any of its obligations under this Agreement as a result of such
Lender's granting of a participation in all or any part of such
Lender's Notes or all or any part of such Lender's rights under this
Agreement.
(b) Each Lender may, upon prior notice to and consent of
Borrowers and Agent, which consent shall not be unreasonably withheld,
from time to time sell or assign to other banking institutions having a
Thomson BankWatch Global Issuer Rating of "B" or better all or a pro
rata part of all of the indebtedness evidenced by the Notes then owed by
it together with an equivalent proportion of its obligation to make
Loans hereunder and the credit risk incidental to the Letters of Credit
pursuant to an Assignment Agreement substantially in the form of
Exhibit L attached hereto, executed by the assignor, the assignee and
- ---------
the Borrowers, which agreements shall specify in each instance the
portion of the indebtedness evidenced by the Notes which is to be
assigned to each such assignor and the portion of the Loan Commitments
of the assignor and the credit risk incidental to the Letters of Credit
(which portions shall be equivalent) to be assumed by it (the
"Assignment Agreements"), provided that nothing herein contained shall
--------
restrict, or be deemed to require any consent as a condition to, or
require payment of any fee in connection with, any sale, discount or
pledge by any Lender of any Note or other obligation hereunder to a
Federal Reserve Bank. Any such portion of the indebtedness assigned by
any Lender pursuant to this Section 10.12(b) shall not be less than
$5,000,000. Upon the execution of each Assignment Agreement by the
assignor, the assignee and the Borrowers and consent thereto by the
Agent (i) such assignee shall thereupon become a "Lender" for all
purposes of this Agreement with Loan Commitments in the amount set forth
in such Assignment Agreement and with all the rights, powers and
obligations afforded a Lender hereunder, (ii) the assignor shall have no
further liability for funding the portion of its Loan Commitments
assumed by such other Lender and (iii) the address for notices to such
Lender shall be as specified in the Assignment Agreement, and the
Borrowers shall, in exchange for the cancellation of the Notes held by
the assignor Lender, execute and deliver Notes to the assignee Lender in
the amount of its Loan Commitments and new Notes to the assignor Lender
in the amount of the Loan Commitments after giving effect to the
reduction occasioned by such assignment, all such Notes to constitute
"Notes" for all purposes of this Agreement, and there shall be paid to
the Agent, as a condition to such assignment, an administration fee of
$2,500 plus any out-of-pocket costs and expenses incurred by it in
effecting such assignment, such fee to be paid by the assignor or the
assignee as they may mutually agree, but under no circumstances shall
any portion of such fee be payable by or charged by the Borrowers.
(c) The Lender may, in connection with any assignment or
proposed assignment or grant or proposed grant of a participation,
disclose to the proposed assignee or participant any information
relating to the Borrowers furnished to the Lender by or on behalf of the
Borrowers, provided that Lender shall give the Agent and Borrowers
written notice of any proposed assignee or participant prior to the
making of any such disclosure.
10.13 [Reserved.]
--------
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10.14 References: Headings for Convenience. Unless otherwise
-------------------------------------
specified herein, all references herein to Section numbers refer to
Section numbers of this Agreement, and all references herein to
Exhibits A, B, C, E, F, G, H, I, J, K, L and M refer to annexed
- ----------------------------------------------
Exhibits A, B, C, E, F, G, H, I, J, K, L and M which are hereby
- ----------------------------------------------
incorporated herein by reference and all references herein to Schedules
6.5, 6.6, 6.8, 6.10, 6.11, 6.12, 6.18 referred to annexed Schedules 6.5,
6.6, 6.8, 6.10, 6.11, 6.12, 6.18 which are hereby incorporated herein by
reference. The Section headings are furnished for the convenience of
the parties and are not to be considered in the construction or
interpretation of this Agreement.
10.15 Subsidiary Reference. Any reference herein to a
--------------------
Subsidiary or Consolidated Subsidiary of Parent, and any financial
definition, ratio, restriction or other provision of this Agreement
which is stated to be applicable to Parent and its Subsidiaries or
Consolidated Subsidiaries or which is to be determined on a
"consolidated" or "consolidating" basis, shall apply only to the extent
Parent has any Subsidiaries or Consolidated Subsidiaries and, where
applicable, to the extent any such Subsidiaries are consolidated with
Parent for financial reporting purposes.
10.16 No Oral Agreements: Entire Agreement. ORAL AGREEMENTS OR
------------------------------------
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE
NOT ENFORCEABLE. TO PROTECT YOU (BORROWERS) AND US (AGENT AND LENDERS)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS, WHICH ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF
THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO
MODIFY IT. THIS AGREEMENT AND THE NOTE EMBODY THE ENTIRE AGREEMENT AND
UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR
AGREEMENT AND UNDERSTANDINGS (ORAL OR WRITTEN) RELATING TO THE SUBJECT
MATTER HEREOF, PROVIDED THAT, WHERE NOT INCONSISTENT WITH THE TERMS OF
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, THE TERMS OF THE
COMMITMENT LETTER DATED NOVEMBER 12, 1999 SHALL SURVIVE AND REMAIN
BINDING UPON BORROWERS.
10.17 Severability. In case any one or more of the provisions
------------
contained in this Agreement should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected
or impaired thereby.
10.18 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
10.19 Resurrection of Obligations. To the extent that Agent or
---------------------------
any of the Lenders receives any payment on account of any of
Obligations, and any such payment(s) or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside, subordinated and/or required to be repaid to a trustee, receiver
or any other Person under any bankruptcy act, state or Federal law,
common law or equitable cause, then, to the extent of such payment(s)
received, Obligations or part thereof intended to be satisfied and any
and all Liens upon or pertaining to any Property or assets of Borrowers
and theretofore created and/or existing in favor of Agent for the
benefit of the Lenders as security for the payment of Obligations shall
be revived and
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continue in full force and effect, as if such payment(s) had not been
received by Agent or any such Lender and applied on account of
Obligations.
10.20 U.S. Dollars. Except as otherwise expressly set forth in
------------
this Agreement, all currency references set forth herein, in any other
Transaction Documents and in any transactions referenced herein or
therein shall be denominated in Dollars of the United States of America.
10.21 Subordination of Intercompany Indebtedness. Each of the
------------------------------------------
Borrowers agrees that any and all claims of such Borrower against any
other Borrower, any endorser, obligor or any other guarantor of all or
any part of the Obligations, or against any of its properties shall be
subordinate and subject in right of payment to the prior payment, in
full and in cash, of all Obligations. Notwithstanding any right of any
Borrower to ask, demand, sue for, take or receive any payment from any
other Borrower, all rights, liens and security interests of any
Borrower, whether now or hereafter arising and howsoever existing, in
any assets of any other Borrower (whether constituting part of
Collateral given to the Agent for the benefit of the Lenders to secure
payment of all or any part of the Obligations or otherwise) shall be and
are subordinated to the rights of the Agent and the Lenders in those
assets. No Borrower shall have any right to possession of any such
asset or to foreclose upon any such asset, whether by judicial action or
otherwise, unless and until all of the Obligations (other than
contingent indemnity obligations) shall have been fully paid and
satisfied and all financing arrangements among the Borrowers and the
Lenders have been terminated. So long as any Default shall have
occurred and be continuing, if all or any part of the assets of any
Borrower, or the proceeds thereof, are subject to any distribution,
division or application to the creditors of such Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding, or if the
business of any Borrower is dissolved or if substantially all of the
assets of any Borrower are sold, then, and in any such event, any
payment or distribution of any kind or character, either in cash,
securities or other property, which shall be payable or deliverable upon
or with respect to any indebtedness of any such Borrower to any other
Borrower ("Intercompany Indebtedness") shall be paid or delivered
directly to the Agent for application on any of the Obligations, due or
to become due, until such Obligations (other than contingent indemnity
obligations) shall have first been fully paid and satisfied. The
Borrowers irrevocably authorize and empower the Agent to demand, sue
for, collect and receive every such payment or distribution and give
acquittance therefor and to make and present for and on behalf of the
applicable Borrower such proofs of claim and take such other action, in
the Agent's own name or in the name of the applicable Borrower or
otherwise, as the Agent may deem necessary or advisable for the
enforcement of this Section 10.21; provided, that the Agent agrees
------------- --------
not to exercise such powers unless an Event of Default shall have
occurred and be continuing. The Agent may vote such proofs of claim in
any such proceeding, receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be
paid or issued and apply the same on account of any of the Obligations.
Should any payment, distribution, security or instrument or proceeds
thereof be received by any Borrower upon or with respect to the
Intercompany Indebtedness at any time a Default shall have occurred and
be continuing and prior to the satisfaction of all of the Obligations
and the termination of all financing arrangements among the Borrowers
and the Lenders, the applicable Borrower shall receive and hold the same
in trust, as trustee, for the benefit of the Lenders and shall so long
as any Default shall have occurred and be continuing promptly deliver
the same to the Agent, for the benefit of the
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Lenders, in precisely the form received (except for the endorsement or
assignment of the Borrower where necessary), for application to any of
the Obligations, due or not due, and, until so delivered, the same shall
be held in trust by the Borrower as the property of the Lenders. If any
Borrower fails to make any such endorsement or assignment to the Agent,
the Agent or any of its officers or employees are irrevocably authorized
to make the same. So long as any Default shall have occurred and be
continuing, the Borrowers agree that until the Obligations have been
paid in full (in cash) and satisfied and all financing arrangements
among the Borrowers and the Lenders have been terminated, the Borrowers
will not assign or transfer to any Person (other than the Agent) any
claim such Borrower has or may have against any other Borrower.
10.22 Post Closing Actions. Notwithstanding anything to the
--------------------
contrary contained in this Agreement or the other Transaction Documents,
the parties hereto acknowledge and agree that:
(a) The Parent will, within sixty (60) days from the date
hereof, deliver properly reissued share certificates evidencing
ownership of 65% of the Voting Stock of each of Structural Polymer
(Holdings) Limited and Zoltek Rt. and shall take all steps necessary
to consummate a legal mortgage of 65% of the Voting Stock of each of
Structural Polymer (Holdings) Limited and Zoltek Rt. pursuant to the
jurisdiction of incorporation of such Person; and
(b) ZPI will deliver or cause to be delivered to the Agent,
within sixty (60) days from the date hereof, each of the items in
respect of the Abilene Facility as are described in Section
4.1(a)(xvii) and the Borrowers shall take any further action,
including, without limitation, obtaining the consent of the
Development Corporation of Abilene, Inc. to the encumbrance of such
property, to assure that the mortgagee policy with respect to the
Abilene Facility is in the form and substance satisfactory to the
Agent;
(c) The Borrowers shall cause to be delivered to the Agent,
within sixty (60) days from the date hereof, the opinion of Texas
local counsel to the Borrowers described in Section 4.1(a)(viii);
(d) The Borrowers shall cause to be delivered to the Agent,
within sixty (60) days from the date hereof, the Acknowledgment
Agreements described in Section 4.1(a)(xv);
(e) The Borrowers shall have caused, within ninety (90) days
from the date hereof, each of Ramal, Inc., Composite Machines
Company, Inc. and Motimation, Inc. to be merged with and into ETC,
with ETC as the surviving corporation; and
(f) The Borrowers shall deliver to the Agent, within five (5)
Business Days from the date hereof, evidence of repayment of the
credit facilities with ABN Amro and RZB described on Schedule 6.10 to
this Agreement.
All conditions precedent and representations and warranties
contained in this Agreement and the other Transaction Documents shall be
deemed modified to the extent necessary
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to effect the foregoing (and to permit the taking of actions described
above within the time periods required above, rather than as elsewhere
provided in the Transaction Documents); provided, that (x) to the
--------
extent any representation and warranty would not be true because the
foregoing actions were not taken on the date of this Agreement, the
respective representation and warranty shall be required to be true and
correct at the time the respective action is taken (or was required to
be taken) in accordance with the foregoing provisions of this Section
10.22 and (y) all representations and warranties relating to the
Collateral shall be required to be true immediately after the actions
required to be taken by this Section 10.22 have been taken (or were
required to be taken). The acceptance of the benefits of each Loan or
Letter of Credit shall constitute a representation, warranty and
covenant by the Borrowers to each of the Lenders that the actions
required pursuant to this Section 10.22 will be taken within the
relevant time periods referred to in this Section 10.22 and that, at
such time, all representations and warranties contained in this
Agreement and the other Transaction Documents shall then be true and
correct without any modification pursuant to this Section 10.22. In the
event any of the post closing actions described in clauses (a)-(e) above
are not consummated within the applicable time periods, the obligations
of Lenders to make additional Revolving Credit Loans and of Agent to
issue additional Letters of Credit shall terminate without any further
action by Agent or Lenders.
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IN WITNESS WHEREOF, the parties have executed this Credit Agreement
this 19th day of November, 1999.
Address: ZOLTEK COMPANIES, INC.
- -------
3101 McKelvey Road
St. Louis, Missouri 63044 By:
Telecopy: (314) 291-9082 -------------------------------
Attention: Zsolt Rumy Name:
-----------------------------
Title:
----------------------------
c/o Zoltek Companies, Inc. ZOLTEK CORPORATION
3101 McKelvey Road
St. Louis, Missouri 63044
Telecopy: (314) 291-9082 By:
Attention: Zsolt Rumy -------------------------------
Name:
-----------------------------
Title:
----------------------------
c/o Zoltek Companies, Inc ZOLTEK INTERMEDIATES CORPORATION
3101 McKelvey Road
St. Louis, Missouri 63044
By:
-------------------------------
Telecopy: (314) 291-9082 Name:
Attention: Zsolt Rumy -----------------------------
Title:
----------------------------
c/o Zoltek Companies, Inc ZOLTEK PROPERTIES, INC.
3101 McKelvey Road
St. Louis, Missouri 63044
By:
-------------------------------
Telecopy: (314) 291-9082 Name:
Attention: Zsolt Rumy -----------------------------
Title:
----------------------------
c/o Zoltek Companies, Inc CAPE COMPOSITES, INC.
3101 McKelvey Road
St. Louis, Missouri 63044
By:
-------------------------------
Telecopy: (314) 291-9082 Name:
Attention: Zsolt Rumy -----------------------------
Title:
----------------------------
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c/o Zoltek Companies, Inc ENGINEERING TECHNOLOGY CORPORATION
3101 McKelvey Road
St. Louis, Missouri 63044
By:
-------------------------------
Telecopy: (314) 291-9082 Name:
Attention: Zsolt Rumy -----------------------------
Title:
----------------------------
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Revolving Credit Commitment MERCANTILE BANK NATIONAL
ASSOCIATION, as Agent, as a Swingline
$26,000,000.00 Lender, and as a Lender
Term Loan Commitment
$35,000,000.00
Acquisition Revolving Credit
Commitment
$10,000,000.00
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address: One Mercantile Center
7th and Washington
St. Louis, Missouri 63101
Attention: Thomas S. Sherman
Telecopy No.: (314) 418-8074
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Schedule 6.5
LITIGATION
None, except as described below. Zoltek Intermediates ("Intermediates")
initiated a lawsuit against Dan Tingley and Wood Science Technologies
Ltd. (collectively, "Tingley"), parties to that certain license
agreement under which Tingley licensed to Intermediates certain patent
rights and other technologies used in manufacturing carbon fiber
reinforced wood panels. Intermediates claimed, among other things, that
the inventory and processing equipment purchased from Tingley pursuant
to the license agreement was defective and that Tingley made certain
misrepresentations to induce Intermediates to enter into the license
agreement. Pursuant to the license agreement, the matter was referred to
arbitration. In the arbitration, Tingley has asserted a claim that
Intermediates breached the license agreement and interfered with
Tingley's efforts to commercialize the technology. Intermediates is
vigorously prosecuting and defending the arbitration and expects to
prevail on the merits of its claims against Tingley. Intermediates does
not expect the outcome of the arbitration will be materially adverse to
Zoltek Companies, Inc. and its subsidiaries take as a whole.
<PAGE>
<PAGE>
Schedule 6.6
PENSION AND WELFARE PLANS
None
<PAGE>
<PAGE>
Schedule 6.8
SUBSIDIARIES OF THE BORROWER
Zoltek Corporation
Zoltek Properties, Inc.
Zoltek Intermediates Corporation
Engineering Technology Corporation
Cape Composites, Inc.
Ramal International, Inc.
Motimation, Inc.
Composite Machines Company, Inc.
Zoltek Rt.
Viscotrade Rt.
Mavipol Rt.
Note: Pursuant to the SPHL Acquisition dated the date hereof the
Borrower has acquired the following entities:
Structural Polymer (Holdings) Ltd.
Structural Polymer Systems Limited
SP Systems (Australia) Pty. Ltd.
SP Systems (New Zeland) Ltd.
<PAGE>
<PAGE>
Schedule 6.10
OTHER LOANS AND GUARANTEES
Zoltek Properties, Inc.
Loan from GE Capital $1,462,598.23
Loan from City of Abilene $2,432,988.21
Zoltek Corporation
Loan from Southwest Bank $2,158,510.72
Zotlek Rt.
Loan from ABN Amro $1,108,250.00
Loan from RZB $346,737.00
<PAGE>
<PAGE>
Schedule 6.11
LABOR MATTERS
Zoltek Rt. labor agreement covering approximately 1,200 employees is
scheduled to expire during the term of this agreement.
<PAGE>
<PAGE>
Schedule 6.12
LIENS
Leasehold Deed of Trust executed by Zoltek Properties, Inc. for the
benefit of GE Capital.
Deed of Trust dated September 29, 1998, executed by Zoltek Properties,
Inc. for the benefit of Development Corporation of Abilene, Inc.
Deed of Trust encumbering property at 3101 McKelvey Road, St. Louis,
Missouri 63044, executed by Zoltek Corporation for the benefit of
Southwest Bank.
<PAGE>
<PAGE>
Schedule 6.18
OTHER CORPORATE OR FICTITIOUS NAMES
Zoltek Rt. formerly known as Zoltek Magyar Viscosa Rt. formerly known as
Magyar Viscosa Rt.
Zoltek Intermediates Corporation formerly known as Composite
Intermediates Corporation
Cape Composites, Inc. formerly known as Waters Technology, Inc.
<PAGE>
<PAGE>
EXHIBIT A
---------
FORM OF REVOLVING CREDIT NOTE
-----------------------------
REVOLVING CREDIT NOTE
$_____________ St. Louis, Missouri
____________, ___
FOR VALUE RECEIVED, on November 18, 2005, the undersigned, ZOLTEK
COMPANIES, INC., a Missouri corporation; ZOLTEK CORPORATION, a Missouri
corporation; ZOLTEK INTERMEDIATES CORPORATION, a Missouri corporation;
ZOLTEK PROPERTIES, INC., a Missouri corporation; CAPE COMPOSITES, INC.,
a California, corporation; and ENGINEERING TECHNOLOGY CORPORATION, a
Missouri corporation (each, individually, a "Borrower" and,
collectively, the "Borrowers"), hereby promise, jointly and severally,
to pay to the order of ___________________, a ___________ ("Lender"),
the principal sum of ________________ ($__________), or such lesser sum
as may then constitute the aggregate unpaid principal amount of all
Revolving Credit Loans made by Lender to the Borrowers pursuant to the
Credit Agreement referred to below. The aggregate principal amount of
Revolving Credit Loans which Lender shall be committed to have
outstanding under this Note at any one time shall not exceed
___________________ Dollars ($___________), which amount may be
borrowed, paid, reborrowed and repaid, in whole or in part, subject to
the terms and conditions hereof and of the Credit Agreement referred to
below.
The Borrowers further promise, jointly and severally, to pay
interest on the principal amount from time to time outstanding hereunder
prior to maturity from the date disbursed until paid at the rates, at
the time or times and in the manner which shall be determined in
accordance with the Credit Agreement. All payments hereunder shall be
applied first to the payment of all accrued and unpaid interest, with
the balance, if any, to be applied to the payment of principal.
Interest shall be computed on an actual day, 360-day year basis.
All payments of principal and interest under this Note shall be
made in lawful currency of the United States (or in such Optional
Currency as the terms of the Credit Agreement may require) in
immediately available funds at the office of Mercantile Bank National
Association ("Agent") situated at One Mercantile Center, St. Louis,
Missouri 63101, or at such other place as the Agent may from time to
time designate in writing.
Lender shall record the date and amount of all loans and all
payments of principal and interest hereunder in the records it maintains
with respect thereto, and may, if Lender so elects in connection with
any transfer or enforcement of this Note, endorse on the schedules
forming a part of this Note appropriate notations to evidence the
foregoing information with respect to each such Revolving Credit Loan
then outstanding; provided, however, that the joint and several
obligation of the Borrowers to repay each Revolving Credit Loan made to
the Borrowers hereunder shall be absolute and unconditional,
notwithstanding any failure of Lender to make any such recordation or
endorsement or any mistake by Lender in connection with any such
recordation or endorsement. Lender is hereby irrevocably authorized by
the Borrowers to so endorse this Note and to attach to
<PAGE>
<PAGE>
and make a part of this Note a continuation of any such schedule as and
when required. The books and records of Lender (including, without
limitation, the schedules attached to this Note) showing the account
between Lender and the Borrowers shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof of the items
therein set forth in the absence of manifest error.
Subject to the terms of the Credit Agreement referred to below,
the Borrowers shall have the right to prepay all at any time or any
portion from time to time of the unpaid principal amount of this Note
prior to maturity, without premium or penalty.
This Note is one of the Revolving Credit Notes referred to in that
certain Credit Agreement dated the date hereof by and among the
Borrowers, the Agent and the lenders party thereto (as the same may from
time to time be amended, modified, extended or renewed, the "Credit
Agreement"). The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the
occurrence of certain stated events and also for prepayments on account
of the principal of this Note and interest on this Note prior to the
maturity of this Note upon the terms and conditions specified therein.
All capitalized terms used and not otherwise defined in this Note shall
have the respective meanings ascribed to them in the Credit Agreement.
If any Event of Default shall occur under or within the meaning of
the Credit Agreement, then Lender's obligation to make additional
Revolving Credit Loans under this Note may be terminated in the manner
and with the effect as provided in the Credit Agreement and the entire
outstanding principal balance of this Note and all accrued and unpaid
interest thereon may be declared to be immediately due and payable in
the manner and with the effect as provided in the Credit Agreement.
In the event that any payment of any principal of or interest on
this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection or if this Note is placed in the
hands of an attorney or attorneys for representation of Agent and/or
Lender in connection with bankruptcy or insolvency proceedings relating
hereto, the Borrowers promise, jointly and severally, to pay to the
order of Agent or such Lender, as the case may be, in addition to all
other amounts otherwise due hereon, the costs and expenses of such
collection and representation, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive
presentment for payment, demand for payment, protest, notice of protest
and notice of dishonor.
<PAGE>
<PAGE>
This Note shall be governed by and construed in accordance with the laws
of the State of Missouri (without reference to conflict of law
principles).
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
SCHEDULE FOR ENDORSEMENT OF ADVANCES AND (PRE)PAYMENTS
TO
REVOLVING CREDIT NOTE DATED ____________, _____
Amount Amount Balance
of of Remaining Notation
Date Advance (Pre)Payment Unpaid Made By
- ---- ------- ------------ --------- -------
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
<PAGE>
<PAGE>
EXHIBIT B
---------
FORM OF SWINGLINE NOTE
----------------------
St. Louis, Missouri
$5,000,000 November 19, 1999
For value received on November 18, 2005, the undersigned, ZOLTEK
COMPANIES, INC., a Missouri corporation; ZOLTEK CORPORATION, a Missouri
corporation; ZOLTEK INTERMEDIATES CORPORATION, a Missouri corporation;
ZOLTEK PROPERTIES, INC., a Missouri corporation; CAPE COMPOSITES, INC.,
a California corporation; and ENGINEERING TECHNOLOGY CORPORATION, a
Missouri corporation (each, individually, a "Borrower" and,
collectively, the "Borrowers") promise, jointly and severally, to pay to
the order of MERCANTILE BANK NATIONAL ASSOCIATION (the "Swingline
---------
Lender"), the lesser of (i) the principal sum of Five Million Dollars
- ------
($5,000,000), or (ii) the aggregate unpaid principal amount of each
Swingline Loan made by the Swingline Lender to the Borrowers pursuant to
the terms of the Credit Agreement referred to below. The Borrowers
promise, jointly and severally, to pay interest on the unpaid principal
amount of each such Swingline Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal
and interest shall be made in Federal or other immediately available
funds at the office of the Swingline Lender, One Mercantile Center, St.
Louis, Missouri 63101
The Swingline Lender shall record the date and amount of all loans
and all payments of principal and interest hereunder in the records it
maintains with respect thereto, and may, if the Swingline Lender so
elects in connection with any transfer or enforcement of this Note,
endorse on the schedules forming a part of this Note appropriate
notations to evidence the foregoing information with respect to each
such Swingline Loan then outstanding; provided, however, that the joint
and several obligation of the Borrowers to repay each Swingline Loan
made to the Borrowers hereunder shall be absolute and unconditional,
notwithstanding any failure of the Swingline Lender to make any such
recordation or endorsement or any mistake by the Swingline Lender in
connection with any such recordation or endorsement. The Swingline
Lender is hereby irrevocably authorized by the Borrowers to so endorse
this Note and to attach to and make a part of this Note a continuation
of any such schedule as and when required. The books and records of the
Swingline Lender (including, without limitation, the schedules attached
to this Note) showing the account between the Swingline Lender and the
Borrowers shall be admissible in evidence in any action or proceeding
and shall constitute prima facie proof of the items therein set forth in
the absence of manifest error.
Subject to the terms of the Credit Agreement referred to below,
the Borrowers shall have the right to prepay all at any time or any
portion from time to time of the unpaid principal amount of this Note
prior to maturity, without premium or penalty.
This Note is the Swingline Note referred to in that certain Credit
Agreement dated the date hereof by and among the Borrowers, the Agent
and the lenders party thereto (as the same may from time to time be
amended, modified, extended or renewed, the "Credit Agreement"). The
Credit Agreement, among other things, contains provisions for
acceleration of the maturity of this Note upon the occurrence of certain
stated events and also for prepayments on account of the principal of
<PAGE>
<PAGE>
this Note and interest on this Note prior to the maturity of this Note
upon the terms and conditions specified therein. All capitalized terms
used and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Credit Agreement.
If any Event of Default shall occur under or within the meaning of
the Credit Agreement, then the Swingline Lender's obligation to make
additional Swingline Loans under this Note may be terminated in the
manner and with the effect as provided in the Credit Agreement and the
entire outstanding principal balance of this Note and all accrued and
unpaid interest thereon may be declared to be immediately due and
payable in the manner and with the effect as provided in the Credit
Agreement.
In the event that any payment of any principal of or interest on
this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection or if this Note is placed in the
hands of an attorney or attorneys for representation of Agent and/or the
Swingline Lender in connection with bankruptcy or insolvency proceedings
relating hereto, the Borrowers promise, jointly and severally, to pay to
the order of Agent or the Swingline Lender, as the case may be, in
addition to all other amounts otherwise due hereon, the costs and
expenses of such collection and representation, including, without
limitation, reasonable attorneys' fees and expenses (whether or not
litigation shall be commenced in aid thereof). All parties hereto
severally waive presentment for payment, demand for payment, protest,
notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with
the laws of the State of Missouri (without reference to conflict of law
principles).
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
SCHEDULE FOR ENDORSEMENT OF ADVANCES AND (PRE)PAYMENTS
TO
SWINGLINE NOTE DATED ____________, _____
Amount Amount Balance
of of Remaining Notation
Date Advance (Pre)Payment Unpaid Made By
- ---- ------- ------------ --------- -------
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
<PAGE>
<PAGE>
EXHIBIT C
---------
FORM OF ACQUISITION REVOLVING CREDIT NOTE
-----------------------------------------
ACQUISITION REVOLVING CREDIT NOTE
$______________________ St. Louis, Missouri
____________, ___
FOR VALUE RECEIVED, on November 18, 2005, the undersigned, ZOLTEK
COMPANIES, INC., a Missouri corporation; ZOLTEK CORPORATION, a Missouri
corporation; ZOLTEK INTERMEDIATES CORPORATION, a Missouri corporation;
ZOLTEK PROPERTIES, INC., a Missouri corporation; CAPE COMPOSITES, INC.,
a California corporation; and ENGINEERING TECHNOLOGY CORPORATION, a
Missouri corporation (each, individually, a "Borrower" and,
collectively, the "Borrowers"), hereby promise, jointly and severally,
to pay to the order of __________________, a ___________ ("Lender"), the
principal sum of ________________ ($__________), or such lesser sum as
may then constitute the aggregate unpaid principal amount of all
Acquisition Revolving Credit Loans made by Lender to the Borrowers
pursuant to the Credit Agreement referred to below. The aggregate
principal amount of Acquisition Revolving Credit Loans which Lender
shall be committed to have outstanding under this Note at any one time
shall not exceed ___________________ Dollars ($___________), which
amount may be borrowed, paid, reborrowed and repaid, in whole or in
part, subject to the terms and conditions hereof and of the Credit
Agreement referred to below.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit
Agreement referred to below, the terms of which are incorporated herein
by reference. The Borrowers further promise, jointly and severally, to
pay interest on the principal amount from time to time outstanding
hereunder prior to maturity from the date disbursed until paid at the
rates, at the time or times and in the manner which shall be determined
in accordance with the Credit Agreement. All payment hereunder shall be
applied first to the payment of all accrued and unpaid interest, with
the balance, if any, to be applied to the payment of principal.
Interest shall be computed on an actual day, 360-day year basis.
All payments of principal and interest under this Note shall be
made in lawful currency of the United States in Federal or other
immediately available funds at the office of Mercantile Bank National
Association ("Agent") situated at One Mercantile Center, St. Louis,
Missouri 63101, or at such other place as the Agent may from time to
time designate in writing.
Lender shall record the date and amount of all loans and all
payments of principal and interest hereunder in the records it maintains
with respect thereto, and may, if Lender so elects in connection with
any transfer or enforcement of this Note, endorse on the schedules
forming a part of this Note appropriate notations to evidence the
foregoing information with respect to each such Acquisition Revolving
Credit Loan then outstanding; provided, however, that the joint and
several obligation of the Borrowers to repay each Acquisition Revolving
Credit Loan made to the Borrowers hereunder shall be absolute and
unconditional, notwithstanding any failure of Lender to make any such
recordation or endorsement or any mistake by Lender in connection with
any such recordation or endorsement. Lender is hereby irrevocably
authorized by the Borrowers to so
<PAGE>
<PAGE>
endorse this Note and to attach to and make a part of this Note a
continuation of any such schedule as and when required. The books and
records of Lender (including, without limitation, the schedules attached
to this Note) showing the account between Lender and the Borrowers shall
be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth in the
absence of manifest error.
Subject to the terms of the Credit Agreement referred to below,
the Borrowers shall have the right to prepay all at any time or any
portion from time to time of the unpaid principal amount of this Note
prior to maturity, without premium or penalty.
This Note is one of the Acquisition Revolving Credit Notes
referred to in that certain Credit Agreement dated the date hereof by
and among the Borrowers, the Agent and the lenders party thereto (as the
same may from time to time be amended, modified, extended or renewed,
the "Credit Agreement"). The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon
the occurrence of certain stated events and also for prepayments on
account of the principal of this Note and interest on this Note prior to
the maturity of this Note upon the terms and conditions specified
therein. All capitalized terms used and not otherwise defined in this
Note shall have the respective meanings ascribed to them in the Credit
Agreement.
If any Event of Default shall occur under or within the meaning of
the Credit Agreement, then Lender's obligation to make additional
Acquisition Revolving Credit Loans under this Note may be terminated in
the manner and with the effect as provided in the Credit Agreement and
the entire outstanding principal balance of this Note and all accrued
and unpaid interest thereon may be declared to be immediately due and
payable in the manner and with the effect as provided in the Credit
Agreement.
In the event that any payment of any principal of or interest on
this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection or attorneys for representation of
Agent and/or Lender in connection with bankruptcy or insolvency
proceedings relating hereto, the Borrowers promise, jointly and
severally, to pay to the order of Agent or such Lender, as the case may
be, in addition to all other amounts otherwise due hereon, the costs and
expenses of such collection and representation, including, without
limitation, reasonable attorneys' fees and expenses (whether or not
litigation shall be commenced in aid thereof). All parties hereto
severally waive presentment for payment, demand for payment, protest,
notice of protest and notice of dishonor.
<PAGE>
<PAGE>
This Note shall be governed by and construed in accordance with
the substantive laws of the State of Missouri (without reference to
conflict of law principles).
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
SCHEDULE FOR ENDORSEMENT OF ADVANCES AND (PRE)PAYMENTS
TO
ACQUISITION REVOLVING CREDIT NOTE DATED ____________, _____
Amount Amount Balance
of of Remaining Notation
Date Advance (Pre)Payment Unpaid Made By
- ---- ------- ------------ --------- -------
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
<PAGE>
<PAGE>
EXHIBIT D
---------
FORM OF TERM NOTE
-----------------
$____________ St. Louis, Missouri
November 19, 1999
FOR VALUE RECEIVED, the undersigned, ZOLTEK COMPANIES, INC., a
Missouri corporation; ZOLTEK CORPORATION, a Missouri corporation; ZOLTEK
INTERMEDIATES CORPORATION, a Missouri corporation; ZOLTEK PROPERTIES,
INC., a Missouri corporation; CAPE COMPOSITES, INC., a California
corporation; and ENGINEERING TECHNOLOGY CORPORATION, a Missouri
corporation (each, individually, a "Borrower" and, collectively, the
"Borrowers"), hereby promise, jointly and severally, to pay to the order
of _____________________________, a ______________ ("Lender"), the
principal sum of _____________________ ($____________) in the amounts
and on the dates set forth in the Credit Agreement referred to below.
The Borrowers further promise, jointly and severally, to pay
interest on the principal amount from time to time outstanding hereunder
prior to maturity from the date disbursed until paid at the rates, at
the time or times and in the manner which shall be determined in
accordance with the provisions of the Credit Agreement. All payments
hereunder shall be applied first to the payment of all accrued and
unpaid interest, with the balance, if any, to be applied to the payment
of principal. Interest shall be computed on an actual day, 360-day
basis.
All payments of principal and interest hereunder shall be made in
lawful currency of the United States in federal or other immediately
available funds at the office of the Agent located at One Mercantile
Center, St. Louis, Missouri 63101, or at such other place as the Agent
may from time to time designate in writing.
Lender shall record the date and amount of all loans and all
payments of principal and interest hereunder in the records it maintains
with respect thereto, and may, if Lender so elects in connection with
any transfer or enforcement of this Note, endorse on the schedules
forming a part of this Note appropriate notations to evidence the
foregoing information with respect to the Term Loan then outstanding;
provided, however, that the joint and several obligation of the
Borrowers to repay the Term Loan made to the Borrowers hereunder shall
be absolute and unconditional, notwithstanding any failure of Lender to
make any such recordation or endorsement or any mistake by Lender in
connection with any such recordation or endorsement. Lender is hereby
irrevocably authorized by the Borrowers to so endorse this Note and to
attach to and make a part of this Note a continuation of any such
schedule as and when required. The books and records of Lender
(including, without limitation, the schedules attached to this Note)
showing the account between Lender and the Borrowers shall be admissible
in evidence in any action or proceeding and shall constitute prima facie
proof of the items therein set forth in the absence of manifest error.
Subject to the terms of the Credit Agreement referred to below,
the Borrowers shall have the right to prepay all at any time or any
portion from time to time of the unpaid principal amount of this Note
prior to maturity, without premium or penalty.
<PAGE>
<PAGE>
This Note is one of the Term Notes referred to in that certain
Credit Agreement dated the date hereof by and among the Borrowers, the
Agent and the lenders party thereto (as the same may from time to time
be amended, modified, extended or renewed, the "Credit Agreement"). The
Credit Agreement, among other things, contains provisions for
acceleration of the maturity of this Note upon the occurrence of certain
stated events and also for prepayments on account of the principal of
this Note and interest on this Note prior to the maturity of this Note
upon the terms and conditions specified therein. All capitalized terms
used and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Credit Agreement.
If any Event of Default shall occur under or within the meaning of
the Credit Agreement, the entire outstanding principal balance of this
Note and all accrued and unpaid interest thereon may be declared to be
immediately due and payable in the manner and with the effect as
provided in the Credit Agreement.
In the event that any payment of any principal of or interest on
this Note is not paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection or if this Note is placed in the
hands of an attorney or attorneys for representation of Agent and/or
Lender in connection with bankruptcy or insolvency proceedings relating
hereto, the Borrowers promise, jointly and severally, to pay to the
order of Agent or such Lender, as the case may be, in addition to all
other amounts otherwise due hereon, the costs and expenses of such
collection and representation, including, without limitation, reasonable
attorneys' fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive
presentment for payment, demand for payment, protest, notice of protest
and notice of dishonor.
<PAGE>
<PAGE>
This Note shall be governed by and construed in accordance with
the laws of the State of Missouri (without reference to conflict of law
principles).
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
SCHEDULE FOR ENDORSEMENT OF ADVANCES AND (PRE)PAYMENTS
TO
TERM NOTE DATED ____________, _____
Amount Amount Balance
of of Remaining Notation
Date Advance (Pre)Payment Unpaid Made By
- ---- ------- ------------ --------- -------
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
<PAGE>
<PAGE>
EXHIBIT E
---------
[BORROWER'S LETTERHEAD]
NOTICE OF BORROWING
[DATE]
Mercantile Bank National Association, as Agent
One Mercantile Center
St. Louis, Missouri 63101
Attention: __________________
Re: Credit Agreement dated November 19, 1999 (as
amended, restated, replaced or otherwise modified,
the "Credit Agreement").
Gentlemen:
The undersigned desires to borrow on _______________, ____, a(n)
[Revolving Credit Loan, Swingline Loan, Acquisition Revolving Credit
Loan] (as defined in the Credit Agreement) in an aggregate principal
amount of _____________ pursuant to the Credit Agreement. Such Loan
shall be (check one):
______ Prime Loan
______ LIBOR Loan
if a Revolving Credit Loan, shall be borrowed and repaid in [US Dollars,
Pounds Sterling, Deutsche Marks, Euros]; and if a LIBOR Loan, shall be
for an Interest Period of _________ (one, two, three or six) months.
Accordingly, the undersigned requests that you make available to the
undersigned said amount on said date.
The undersigned hereby represents and warrants to you that as of
the date hereof all of the representations and warranties of the
undersigned contained in the Credit Agreement are true and correct in
all material respects on and as of the date hereof as if made on the
date hereof except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall remain true
and correct in all material respects on and as of such earlier date and
for purposes of this Notice, the representations and warranties made by
Borrowers in Section 6.4 of the Credit Agreement shall be deemed to
refer to the most recent financial statements of Parent delivered to the
Lenders pursuant to Section 7.1(a) of the Credit Agreement, and no
Default or Event of Default (as defined in the Credit Agreement) has
occurred and is continuing, and that no such Default or Event of Default
will result from the loan requested hereby.
<PAGE>
<PAGE>
Very truly yours,
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
EXHIBIT F
----------
FORM OF BORROWING BASE CERTIFICATE
----------------------------------
This Borrowing Base Certificate is delivered pursuant to Section
3.1(c) of that certain Credit Agreement dated as of November 19, 1999
(as the same may from time to time be amended, modified, extended or
renewed, the "Credit Agreement"), by and among Zoltek Companies, Inc., a
Missouri corporation, Zoltek Corporation, a Missouri corporation, Zoltek
Intermediates Corporation, a Missouri corporation, Zoltek Properties,
Inc., a Missouri corporation, Cape Composites, Inc., a California
corporation, and Engineering Technology Corporation, a Missouri
corporation (collectively, the "Borrowers"), Mercantile Bank National
Association, as agent (the "Agent"), and the lenders party thereto.
Each capitalized term used herein without definition shall have the
meaning ascribed to such term in the Credit Agreement.
The Borrowers hereby jointly and severally represent and warrant
to the Agent and the Lenders that the following information is true,
correct and complete in all material respects as of _________________,
______:
1. 80% of face amount of Eligible Accounts $______________
2. 50% of Eligible Inventory (not to exceed $15,000,000) $______________
3. Borrowing Base (Sum of Items 1 and 2 above) $______________
4. Total Revolving Credit Commitments $______________
5. Borrower's Maximum Revolving Credit Availability
(Lesser of Item 3 or Item 4) $______________
6. Total Revolving Credit Usage $______________
7. Unused Revolving Credit Availability (Item 5 minus
-----
Item 6) (Negative amount requires mandatory repayment)
$______________
If Item 7 above is negative, this Certificate is accompanied by
the mandatory repayment required by Section 3.1(d) of the Credit
Agreement.
<PAGE>
<PAGE>
This Borrowing Base Certificate is dated the _____ day of
_________, _____.
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
EXHIBIT G
---------
FORM OF STANDBY LETTER OF CREDIT APPLICATION
--------------------------------------------
<PAGE>
<PAGE>
EXHIBIT H
---------
FORM OF COMMERCIAL LETTER OF CREDIT APPLICATION
-----------------------------------------------
<PAGE>
<PAGE>
EXHIBIT I
---------
FORM OF LETTER OF CREDIT
PARTICIPATION CERTIFICATE
This Letter of Credit Participation Certificate is issued pursuant
to Section 3.7 of that certain Credit Agreement dated November 19,
1999, by and among ZOLTEK COMPANIES, INC., a Missouri corporation;
ZOLTEK CORPORATION, a Missouri corporation; ZOLTEK INTERMEDIATES
CORPORATION, a Missouri corporation; ZOLTEK PROPERTIES, INC., a Missouri
corporation; CAPE COMPOSITES, INC., a California corporation; and
ENGINEERING TECHNOLOGY CORPORATION, a Missouri corporation (each,
individually a "Borrower" and, collectively, the "Borrowers"), the Agent
and the lenders party thereto, as the same may from time to time be
amended, modified, extended or renewed (the "Credit Agreement"). All
capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
Subject to the terms, provisions and conditions contained in the
Credit Agreement, Agent hereby issues to ____________________ a
__________ Percent (_____%) undivided participation interest in all
Letters of Credit issued by the Agent from time to time under the Credit
Agreement (including, without limitation, an undivided participation
interest in the reimbursement risk relating to such Letters of Credit
and in all payments and Revolving Credit Loans made in connection with
such Letters of Credit).
This Certificate may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were on the same instrument.
Executed this ____ day of ____________, _____.
MERCANTILE BANK NATIONAL
ASSOCIATION, as Agent
By:
--------------------------
Title:
-----------------------
The foregoing Letter of Credit Participation Certificate is hereby
accepted this ____ day of _____________, ____.
-----------------------------
By:
--------------------------
Title:
-----------------------
<PAGE>
<PAGE>
EXHIBIT J
---------
FORM OF BORROWERS' COUNSEL OPINION
----------------------------------
[LETTERHEAD OF BORROWERS' COUNSEL]
November 19, 1999
The Lenders party to the Credit
Agreement referred to below and
Mercantile Bank National Association,
as the Agent for the Lenders
Ladies and Gentlemen:
We are counsel to ZOLTEK COMPANIES, INC., a Missouri corporation,
ZOLTEK CORPORATION, a Missouri corporation, ZOLTEK INTERMEDIATES
CORPORATION, a Missouri corporation, ZOLTEK PROPERTIES, INC., a Missouri
corporation, CAPE COMPOSITES, INC., a California corporation and
ENGINEERING TECHNOLOGY CORPORATION, a Missouri corporation (individually
a "Borrower" and collectively, the "Borrowers"). We are providing this
opinion in connection with the execution and delivery of that certain
Credit Agreement (the "Credit Agreement"), dated as of November 19,
1999, by and among the Borrowers, the Lenders and Mercantile Bank
National Association, as Agent (the "Agent"), for the purpose of
satisfying the condition set forth in Section 4.1(a)(viii) of the Credit
Agreement. Capitalized but undefined terms used herein shall have the
meanings assigned to them in the Credit Agreement.
We have examined and considered, in addition to such other
documents, records of proceedings and information as we have deemed
appropriate for purposes of this opinion, the following documents:
(i) A copy of the Certificate of the Secretary of each of the
Borrowers and exhibits thereto listed supplied to us by each such
Borrower:
Exhibit A Articles of Incorporation certified by the
Secretary of State of the State of
incorporation;
Exhibit B Bylaws;
Exhibit C Resolutions;
Exhibit D Certificate of Incumbency;
(ii) the Credit Agreement;
(iii) the Notes;
<PAGE>
<PAGE>
(iv) the Security Agreement;
(v) the Pledge Agreement;
(vi) the Deed of Trust;
(vii) each of the Financing Statements on Form UCC-1 (the
"Financing Statements") executed by Borrowers showing a Borrower as
debtor and Agent as secured party and to be filed [identify filing
locations]; and
(viii) the [acquisition agreement regarding Structured Polymer
Holdings, Ltd. and other documents].
The documents referred to in clauses (ii) through (vii) above are
hereinafter sometimes referred to collectively as the "Credit
Documents." The documents referred to in clause (viii) above are
hereinafter sometimes referred to collectively as the "Acquisition
Documents."
In rendering this opinion, we have assumed the genuineness of all
signatures on documents, statements and certificates which we have
reviewed, the accuracy and authenticity of all documents, statements and
certificates which we have reviewed, the legal competence of all natural
persons who are signatories thereto, and the conformity to authentic
original documents of all documents, statements and certificates
submitted to us as certified, conformed or photostatic copies (except
for the signatures of the Borrower, which we have personally witnessed
and observed, and with respect to which no such assumptions are
required).
Subject to the qualifications expressly set forth herein, we are
of the opinion that:
1. Each of the Borrowers is a corporation duly organized and
validly existing and in good standing under the laws of its state of
incorporation, and is duly licensed or qualified and is in good standing
as a foreign corporation in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business
transacted by it makes such licensing or qualification necessary.
2. Each of the Borrowers has all requisite corporate power,
authority and legal capacity and legal right (a) to own, lease and
operate its properties and assets and to carry on its business as now
being conducted, (b) to execute and deliver the Credit Documents to
which it is a party, and (c) to perform its obligations thereunder.
3. The execution, delivery, and performance by each of the
Borrowers of each of the Credit Documents to which it is a party have
been duly authorized by all requisite corporate action on the part of
the Borrower. Each of the Credit Documents has been duly executed and
delivered by each of the Borrowers which is a party thereto.
4. All corporate action on the part of each of the Borrowers
requisite for the execution, delivery and performance of the Credit
Documents to which it is a party has been fully and effectively taken.
5. The execution and delivery by each of the Borrowers of the
Credit Documents to which it is a party, and the performance of its
obligations thereunder, will not violate,
<PAGE>
<PAGE>
be in conflict with, result in the breach of, or constitute (with due
notice or lapse of time, or both) a default under (i) such Borrower's
Articles of Incorporation, By-laws or any resolution of its Board of
Directors or any committee thereof, (ii) any license or franchise to
which such Borrower is a party or by which it or its properties may be
bound or affected, or (iii) any federal, state or local law (including,
without limitation, environmental or occupational health and safety
laws), any statute, regulation, rule, order or other legal requirement
of any court or any federal, state, county or municipal government or
public authority or agency. The execution and delivery by each of the
Borrowers of the Credit Documents will not violate, be in conflict with,
result in a breach of, or constitute (with due notice or lapse of time,
or both) a default under, the agreements and indentures to which such
Borrower is a party, and will not result in the creation or imposition
of any lien, charge or encumbrance on or security interest in any
property of such Borrower.
6. Each of the Borrowers has obtained any and all consents,
approvals or other authorizations required to be obtained in connection
with the execution, delivery and performance of the Credit Documents.
No consent, approval or authorization of or by any court, administrative
agency or other governmental authority is required in connection with
the execution and delivery by Borrowers of the Credit Documents.
7. There are no actions, proceedings or investigations pending
or, to the best of our knowledge (after due inquiry), threatened against
any Borrower which question the validity of the Credit Documents or the
transactions contemplated thereby or which involve the possibility of
adversely affecting the ability of any Borrower to perform its
obligations under the Credit Documents.
8. Each of the Credit Documents has been duly executed and
delivered by a duly authorized officer of each Borrower which is a party
thereto, and constitutes the legal, valid and binding obligation of such
Borrower, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and subject to general principles of
equity.
9. The use of proceeds of the Loans does not violate the
provisions of Regulations T, U and X of the Board of Governors of the
Federal Reserve System.
10. None of the Borrowers is (i) an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, (ii) a "holding company"
or a "subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or (iii) subject to any other law which purports to regulate or
restrict its ability to borrow money or to consummate the transactions
contemplated by the Credit Documents.
11. The Security Agreement creates a security interest in favor
of the Agent in the collateral of the Borrowers described therein.
Without limiting the generality of the foregoing opinion, we expressly
advise you that the chief executive office of Borrower is located in the
County of St. Louis, Missouri and that the Agent has and will have,
under the Security Agreement, a valid, perfected security interest in
the collateral described therein.
<PAGE>
<PAGE>
12. The filing of the Financing Statements in the locations
indicated on Schedule A hereto are sufficient to perfect a security
----------
interest in favor of the Agent in the collateral described therein.
13. The Pledge Agreement creates a security interest in favor of
the Agent in the collateral of the Borrowers described therein and the
pledged shares referenced in and pledged under the Pledge Agreement
represent 65% of the issued and outstanding stock of such Subsidiaries
which are pledged thereunder. Delivery to the Agent of actual physical
possession of the pledged shares is sufficient to perfect a security
interest in favor of the Agent under the Uniform Commercial Code as in
effect in the State of Missouri.
14. The execution, delivery and performance by each of the
Borrowers of each of the Acquisition Documents to which it is a party
have been duly authorized by all necessary corporate action on the part
of such Borrower. Each of the Acquisition Documents to which a Borrower
is a party has been duly executed and delivered by each Borrower which
is a party thereto. The execution, delivery and performance by each of
the Borrowers of the Acquisition Documents to which it is a party do not
(a) violate any provision of any Federal or state statute, rule or
regulation, (b) violate any provision of any order, writ, judgment,
injunction decree, determination or award presently in effect which
affects or binds such Borrower or any of its respective properties, (c)
violate any provision of the Articles of Incorporation of such Borrower
or the Bylaws of such Borrower or (d)(i) conflict with, or result in the
breach of, or constitute a default under, any agreement, document or
instrument to which such Borrower is a party or (ii) result in the
creation or imposition of any lien, charge or encumbrance upon any of
the property of such Borrower pursuant to any agreement, document or
instrument to which such Borrower is a party. The transaction
contemplated by the Acquisition Documents have been effected in
accordance with the terms of the Acquisition Documents.
We are qualified to practice law in the State of Missouri and our
opinions are limited to the laws of the State of Missouri and the
federal laws of the United States of America.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT K
---------
FORM OF OFFICER'S CERTIFICATE
,
---------------- --------
Mercantile Bank National Association, as Agent
One Mercantile Center
St. Louis, Missouri 63101
Attention: _________________
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated
November 19, 1999, by and among you, the lenders party thereto and the
undersigned, as the same may from time to time be amended, modified,
extended or renewed (the "Credit Agreement"). All capitalized terms
used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Credit Agreement.
The Borrowers hereby certify to Agent and the Lenders that as of
the date hereof:
(a) all of the representations and warranties of the Borrowers
contained in the Credit Agreement and in the other Transaction Documents
are true and correct in all material respects as if made on and as of
the date hereof, except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall
remain true and correct in all material respects on and as of such
earlier date, and for purposes of this Certificate, the representations
and warranties made by Borrowers in Section 6.4 of the Credit Agreement
shall be deemed to refer to the most recent financial statements of
Parent delivered to the Lenders pursuant to Section 7.1(a);
(b) no violation or breach of any of the affirmative covenants
of the Borrowers contained in the Credit Agreement has occurred and is
continuing;
(c) no violation or breach of any of the negative covenants of
the Borrowers contained in the Credit Agreement has occurred and is
continuing;
(d) no Default or Event of Default under or within the meaning
of the Credit Agreement has occurred and is continuing;
(e) the financial statements of the Parent delivered to you with
this letter are true, correct and complete and have been prepared in
accordance with generally accepted accounting principles consistently
applied; and
(f) the financial covenant information set forth in Schedule 1
----------
to this letter is true and correct.
<PAGE>
<PAGE>
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
SCHEDULE 1
Financial Covenant Information
___________________as of ________19___
Financial Covenant Actual Required
------------------ ---------------
<PAGE>
<PAGE>
EXHIBIT L
---------
FORM OF ASSIGNMENT AGREEMENT
DATE: __________, ____
Reference is made to the Credit Agreement described in Item 2 of
Annex I annexed hereto (as such Credit Agreement may hereafter be
amended, modified or supplemented from time to time, the "Credit
Agreement"). Unless defined in Annex I attached hereto, terms defined
in the Credit Agreement are used herein as therein defined.
_____________________ (the "Assignor") and _______________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as
expressly provided herein), and the Assignee hereby purchases and
assumes from the Assignor, that interest in and to all of the Assignor's
rights and obligations under the Credit Agreement as of the date hereof
which represents the percentage interest specified in Item 4 of Annex I
(the "Assigned Share") of all of the outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 4
of Annex I, including, without limitation, all rights and obligations
with respect to the Assigned Share of the Term Loans, Revolving Credit
Loans, Acquisition Revolving Credit Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any liens or
security interests; (ii) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or
the other Transaction Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Transaction Documents or any other instrument or
document furnished pursuant thereto; and (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the performance or observance by the
Borrowers of any of their respective obligations under the Credit
Agreement or the other Transaction Documents or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement and the other Transaction Documents, together with
copies of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment Agreement;
(ii) agrees that it will, independently and without reliance upon Agent,
the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Transaction Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; [and] (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender [; and (v)
attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Credit Agreement or
such other documents as are
<PAGE>
<PAGE>
necessary to indicate that all such payments are subject to such rates
at a rate reduced by an applicable tax treaty].<F1>
4. Following the execution of this Assignment Agreement by the
Assignor and the Assignee, an executed original hereof (together with
all attachments) will be delivered to the Agent. The effective date of
this Assignment Agreement shall be the date of execution hereof by the
Assignor and the Assignee, the receipt of the consent of the Agent and
the Borrowers, receipt by the Agent of the assignment fee referred to in
Section 10.12 of the Credit Agreement, and the recordation by the Agent
of the assignment effected hereby in its records, unless otherwise
specified in Item 5 of Annex I (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Agent, as of the Settlement Date, (i) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment
Agreement, have the rights and obligations of a Lender thereunder and
under the other Transaction Documents and (ii) the Assignor shall, to
the extent provided in this Assignment Agreement, relinquish its rights
and be released from its obligations under the Credit Agreement and the
other Transaction Documents.
6. It is agreed that upon the effectiveness hereof, the Agent
shall make all payments in respect of the Assigned Share (including
payments of principal, interest, fees and other amounts) to the Assignee
whether such amounts have accrued prior to the Settlement Date or
accrued subsequent to the Settlement Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the
Credit Agreement for periods prior to the Settlement Date directly
between themselves.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MISSOURI (WITHOUT
REFERENCE TO CONFLICT OF LAW PRINCIPLES).
[FN]
- --------------
<F1> If the Assignee is organized under the laws of a jurisdiction
outside the United States.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution also
being made on Annex I hereto.
[NAME OF ASSIGNOR],
as Assignor
By
----------------------------------------
Title:
[NAME OF ASSIGNEE],
as Assignee
By
----------------------------------------
Title:
Acknowledged and Agreed:
MERCANTILE BANK NATIONAL ASSOCIATION, as Agent
By:
---------------------------
Title:
ZOLTEK COMPANIES, INC. ZOLTEK CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
ZOLTEK INTERMEDIATES ZOLTEK PROPERTIES, INC.
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
CAPE COMPOSITES, INC. ENGINEERING TECHNOLOGY
CORPORATION
By: By:
--------------------------- -------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
<PAGE>
<PAGE>
ANNEX FOR ASSIGNMENT AGREEMENT
ANNEX I
1. The Borrower: Zoltek Companies, Inc.
Zoltek Corporation
Zoltek Intermediates Corporation
Zoltek Properties, Inc.
Cape Composites, Inc.
Engineering Technology Corporation
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of November 19, 1999, among the
Borrowers, the Agent and the Lenders.
3. Date of Assignment Agreement: ______________________
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Acquisition
Revolving Revolving
Credit Credit
Term Loan Commitment Commitment
--------- ---------- ----------
<S> <C> <C> <C>
a. Aggregate Amount for all Lenders $___________ $__________ $__________
b. Assigned Share $___________ __________% __________%
c. Amount of Assigned Share $___________ $__________ $__________
</TABLE>
5. Settlement Date: _____________________
Payment Instructions:
ASSIGNEE:
____________________________
____________________________
____________________________
Attention:
Reference:
<PAGE>
<PAGE>
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By By
-------------------------- ------------------------------
-------------------------- ------------------------------
(Print Name and Title) (Print Name and Title)
<PAGE>
<PAGE>
EXHIBIT M
---------
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
---------
_____________, _____, is by and between _____________________, a
___________________ (the "Subsidiary"), and MERCANTILE BANK NATIONAL
----------
ASSOCIATION, in its capacity as Agent under that certain Credit
Agreement (as it may be amended, modified, restated or supplemented from
time to time, the "Credit Agreement"), dated as of November 19, 1999,
----------------
by and among the Borrowers party thereto (the "Borrowers"), the
---------
lenders party thereto, and Mercantile Bank National Association, as
Agent. All of the defined terms in the Credit Agreement are
incorporated herein by reference.
The Borrowers are required by Section 5.2 of the Credit Agreement
to cause the Subsidiary to become a "Borrower".
--------
Accordingly, the Subsidiary hereby agrees as follows with the
Agent, for the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be deemed
to be a party to the Credit Agreement and a "Borrower" for all purposes
of the Credit Agreement, and shall have all of the obligations of a
Borrower thereunder as if it had executed the Credit Agreement. The
Subsidiary hereby ratifies, as of the date hereof, and agrees to be
bound by, all of the terms, provisions and conditions applicable to the
Borrowers contained in the Credit Agreement. Without limiting the
generality of the foregoing terms of this paragraph 1, the Subsidiary
hereby jointly and severally agrees with the other Borrowers to pay to
each Lender and the Agent, or otherwise perform as provided in the
Credit Agreement, the Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise)
strictly in accordance with the terms thereof.
2. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be deemed
to be a party to the Security Agreement, and shall have all the
obligations of an obligor and grantor under the Security Agreement as if
it had executed the Security Agreement. The Subsidiary hereby ratifies,
as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement. Without
limiting the generality of the foregoing, the Subsidiary hereby grants
to the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right of set off against any and all right, title and
interest of the Subsidiary in and to the Collateral (as such term is
defined in the Security Agreement) of the Subsidiary. The Subsidiary
hereby represents and warrants to the Agent that:
(i) The Subsidiary's chief executive office and chief
place of business are (and for the prior four months have been)
located at the locations set forth on Schedule 1 attached hereto
----------
and the Subsidiary keeps its books and records at such locations.
(ii) The type of Collateral owned by the Subsidiary and
the location of all Collateral owned by the Subsidiary is as shown
on Schedule 2 attached hereto.
----------
<PAGE>
<PAGE>
(iii) The Subsidiary's legal name is as shown in this
Agreement and the Subsidiary has not in the past four months
changed its name, been party to a merger, consolidation or other
change in structure or used any tradename except as set forth in
Schedule 3 attached hereto.
----------
3. The address of the Subsidiary for purposes of all notices
and other communications is ____________________,
____________________________, Attention of ______________ (Facsimile No.
____________).
4. The Subsidiary hereby waives acceptance by the Agent and the
Lenders of the undertakings by the Subsidiary under the Credit Agreement
upon the execution of this Agreement by the Subsidiary.
5. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original but all of which when taken
together shall constitute one and the same contract.
6. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder
Agreement to be duly executed by its authorized officers, and the Agent,
for the benefit of the Lenders, has caused the same to be accepted by
its authorized officer, as of the day and year first above written.
[SUBSIDIARY]
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Acknowledged and accepted:
MERCANTILE BANK NATIONAL
ASSOCIATION, as Agent
By:
--------------------------
Name:
------------------------
Title:
-----------------------
<PAGE>
<PAGE>
SCHEDULE 1
----------
TO FORM OF JOINDER AGREEMENT
----------------------------
[Chief Executive Office and
Chief Place of Business of Subsidiary]
<PAGE>
<PAGE>
SCHEDULE 2
----------
TO FORM OF JOINDER AGREEMENT
----------------------------
[Types and Locations of Collateral]
<PAGE>
<PAGE>
SCHEDULE 3
----------
TO FORM OF JOINDER AGREEMENT
----------------------------
[Tradenames]
