<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the period ended August 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from . . . . . . . . . . . . . . .
Commission file number 1-12556
TOWER TECH, INC.
(Name of small business issuer in its charter)
Oklahoma 73-1210013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Rural Route 3, Post Office Box 1838, Chickasha, Oklahoma 73023
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 405/222-2876
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes / / No / /
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date.
Common Stock $.001 par value 3,364,759 shares as of October 10, 1996
<PAGE>
INDEX
TOWER TECH, INC.
PART I. FINANCIAL INFORMATION
_______________________________
Item 1. Financial Statements (Unaudited)
Balance Sheet -- August 31, 1996
Statement of Operations --Three months ended August 31, 1996
and nine months ended August 31, 1995
Statement of Cash Flows -- Nine months ended August 31, 1996
and nine months ended August 31, 1995
Notes to Financial Statements -- August 31, 1996
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
PART 2. OTHER INFORMATION
__________________________
Item 1. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
TOWER TECH, INC.
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
August 31, 1996
<S> <C>
Assets
Current assets:
Cash $ 676,304
Accounts receivable, net of allowance
for doubtful accounts of $16,645 3,405,842
Accounts receivable, other 423,810
Receivables from officers and employees 48,371
Costs and estimated earnings in excess of
billings on uncompleted contracts 896,666
Inventory 3,116,085
Prepaid expenses 104,985
_____________
Total current assets 8,672,063
Property, plant and equipment, net 3,377,790
Rental fleet, net 793,839
Patents 161,238
Other assets 8,687
_____________
$13,013,617
_____________
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 1,570,979
Current maturities of obligations under capital
lease 58,396
Accounts payable 2,762,450
Accrued liabilities 857,171
Billings in excess of costs and estimated
earnings on uncompleted contracts 58,375
Interest payable 64,574
_____________
Total current liabilities 5,371,945
_____________
Long-term debt, net 3,412,182
_____________
Obligations under capital lease 71,316
_____________
Stockholders' equity:
Common stock, $.001 par value; 10,000,000 shares
authorized; 3,330,139 shares issued and outstanding 3,331
Capital in excess of par 6,927,708
Deficit (2,772,865)
_____________
Total stockholders' equity 4,158,174
_____________
$ 13,013,617
____________
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOWER TECH, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31 August 31,
1996 1995
<S> <C> <C>
Sales and other operating revenue:
Tower sales $ 2,260,771 $ 1,923,613
Concrete tower 1,638,262 408,578
Tower rentals 202,535 432,473
Other tower revenue 298,587 39,548
__________ __________
Total tower revenue 4,400,155 2,804,112
Other operating revenue 250,000 -
__________ __________
4,650,155 2,804,112
__________ __________
Costs and expenses:
Cost of goods sold and constructed 3,418,716 2,234,755
General and administrative 384,953 324,267
Selling expenses 252,781 168,595
Research and development 94,215 35,805
__________ __________
4,150,665 2,763,422
__________ __________
Income from operations 499,490 40,690
__________ __________
Other income (expense):
Interest, net (134,160) (104,937)
Miscellaneous 23,929 3,853
__________ __________
(110,231) (101,084)
__________ __________
Income (loss)before income taxes 389,259 (60,394)
Income taxes - -
__________ __________
Net income (loss) 389,259 (60,394)
Less dividends on preferred shares - (44,062)
__________ __________
Net income (loss) applicable to common
shares $ 389,259 $ (104,456)
__________ __________
Weighted average shares outstanding-
primary 3,527,428 2,428,572
__________ __________
Net income (loss) per common share-
primary $ .11 $ (.04)
__________ __________
Weighted average shares outstanding-
assuming full dilution 3,528,312 2,428,572
__________ __________
Net income (loss) per common share-
assuming full dilution $ .11 $ (.04)
__________ __________
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOWER TECH, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
August 31, August 31,
1996 1995
<S> <C> <C>
Sales and other operating revenue:
Tower sales $ 8,596,077 $ 5,749,360
Concrete tower 4,128,828 480,847
Tower rentals 486,737 835,885
Other tower revenue 506,121 254,894
__________ __________
Total tower revenue 13,717,763 7,320,986
Other operating revenue 589,983 -
__________ __________
14,307,746 7,320,986
__________ __________
Costs and expenses:
Cost of goods sold and constructed 10,940,165 6,224,524
General and administrative 1,097,399 995,353
Selling expenses 718,757 417,168
Research and development 251,579 58,492
__________ __________
13,007,900 7,695,537
__________ __________
Income from operations 1,299,846 (374,551)
__________ __________
Other income (expense):
Interest, net (333,300) (261,958)
Miscellaneous 59,798 25,030
__________ __________
(273,502) (236,928)
__________ __________
Income (loss)before income taxes 1,026,344 (611,479)
Income taxes - -
__________ __________
Net income (loss) 1,026,344 (611,479)
Less dividends on preferred shares - (120,217)
__________ __________
Net income (loss) applicable to common
shares $ 1,026,344 $ (731,696)
__________ __________
Weighted average shares outstanding-
primary 3,150,373 2,428,572
__________ __________
Net income (loss) per common share-
primary $ .33 $ (.30)
__________ __________
Weighted average shares outstanding-
assuming full dilution 3,240,797 2,428,572
__________ __________
Net income (loss) per common share-
assuming full dilution $ .32 $ (.30)
__________ __________
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOWER TECH, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
August 31, August 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,026,344 $ (611,479)
Adjustments to reconcile net income
(loss) to net cash used by operating
activities:
Depreciation and amortization 303,522 119,817
Loss (gain) on sale of assets 2,397 (3,950)
(Increase) decrease in accounts
receivable (1,718,126) 187,379
Increase in costs in excess of
billings (896,666) -
(Increase) decrease in inventory (1,013,000) 163,395
Increase in prepaid expenses (16,626) (12,973)
Increase in other assets - (26,508)
Increase (decrease) in accounts payable 202,810 (667,472)
Increase in interest payable and
accrued liabilities 274,080 129,392
Decrease in deposits - (184,644)
Decrease in dividends payable (101,719) -
(Decrease) increase in billings in
excess of costs (481,400) 206,238
___________ __________
Net cash used by operating activities (2,418,384) (700,805)
___________ __________
Cash flows from investing activities:
Purchase of property and equipment (635,961) (747,344)
Additions to rental fleet (350,191) (108,849)
Proceeds from sale of assets 11,226 3,950
Increase in patent costs (118,866) (36,206)
___________ __________
Net cash used in investing activities (1,093,792) (888,449)
___________ __________
Cash flows from financing activities:
Proceeds from borrowings 5,190,461 3,117,696
Repayments of long-term debt (3,812,426) (1,857,377)
Repayments of notes payable - stockholder - (42,742)
Proceeds from common stock issuances 3,734,997 -
Proceeds from preferred stock issuances - 490,000
Redemption of preferred stock (1,500,000) -
Payment of preferred dividends (62,812) (75,000)
___________ __________
Net cash provided by financing activities 3,550,220 1,632,577
___________ __________
Net increase in cash 38,044 43,323
Cash at beginning of period 638,260 158,159
___________ __________
Cash at end of period $ 676,304 $ 201,482
___________ __________
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TOWER TECH, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Interim Financial Statements
The balance sheet as of August 31, 1996, and the related statements of
operations for the three month and nine month periods ended August 31, 1996
and 1995 and the statement of cash flows for the nine month period ended
August 31, 1996 and 1995 are unaudited; in the opinion of management,
all adjustments necessary for a fair presentation of such financial
statements have been included.
These financial statements and notes are presented as permitted by Form
10-QSB and should be read in conjunction with the Company's financial
statements and notes included in the annual report on Form 10-KSB.
2. Long-Term Debt
In August 1996, the Company entered into a note payable for $387,500.
The note bears interest at 3.5% per annum and is due August 1, 1997, with
principal and interest payable in full at that time. The note is secured
by certain real estate.
3. Stockholders' Equity
Warrants held by two individuals to purchase 35,900 shares of the
Company's common stock were exercised at a price of $7.50 per share.
4. Joint Ventures and Licensing Agreements
In August 1996, the Company entered into a Joint Venture Agreement and
a License Agreement with Pace Air Conditioning and Engineering PTE. Ltd.
("Pace") to market the Company's products in Singapore, Malaysia,
Indonesia, and Thailand. The Company received the right and option to
purchase a maximum of 49% of the joint venture's equity shares. The
License Agreement grants the joint venture an exclusive, nontransferable
right to manufacture and market cooling towers in the specified territories
using the Company's technology. The Company earned an initial
nonrefundable license fee upon execution of the License Agreement.
In August 1996, the Company executed a License Agreement with KWCA,
Controle Ambiental, a Brazilian Corporation, to market the Company's
products in Brazil, Chile, Argentina, Paraguay, and Uruguay. The agreement
grants KWCA an exclusive, nontransferable right to assemble and market
cooling towers in the specified territories using the Company's technology.
The Company earned an initial nonrefundable license fee upon execution of
the License Agreement.
These fees are included in other operating revenue in the statement of
operations.
5. Subsequent Event
In September 1996, the Company entered into a $3,800,000 revolving line
of credit with a financial institution. The line of credit bears interest
at a monthly adjustable rate equal to the 30 day LIBOR rate plus 1% and
matures January 31, 1997. The line of credit is secured by certain assets
of the Company. The monies received will be utilized by the Company for
working capital needs in addition to the Company's facility expansion into
Oklahoma City, Oklahoma.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ----------------------------------------------------------------------------
Results of Operations
Three Months Ended August 31, 1996 Compared to Three Months Ended August 31,
1995
Total tower revenues increased to $4,400,155 for the three months ended
August 31, 1996, from $2,804,112 in the comparable period in the prior year.
During the current three month period, 51 percent of total tower revenues
was derived from sales of 57 modular fiberglass cooling towers, 37 percent
of total tower revenues was derived from design and construction of the new
modular concrete towers, 5 percent of total tower revenues was derived from
rental of modular fiberglass cooling towers, and 7 percent of total tower
revenues was derived from other tower revenues. In the comparable three
month period of 1995, 69 percent of revenues was derived from sales of 51
modular fiberglass cooling towers, 15 percent of total tower revenues was
derived from design and construction of the new modular concrete towers, 15
percent of revenues was derived from rental of modular fiberglass cooling
towers, and 1 percent of total tower revenues was derived from other tower
revenues. Other tower revenues consist primarily of modular tower parts
sales and service. The increase in fiberglass tower sales revenues for 1996
is due not only to the increase in the quantity of units sold but also due
to sales of larger capacity, more expensive units. The increase in concrete
tower sales reflects the success the Company has had marketing the design
and installation of this product since its introduction in the first quarter
of 1995. Other operating revenue for the three months ended August 31,
1996, consists of technology transfer fees which were realized as a result
of international license agreements with Pace Air Conditioning and
Engineering, PTE. LTD., Singapore (a subsidiary of Sembawang Corporation,
Singapore) covering Singapore, Indonesia, Thailand and Malaysia; and KWCA
Controle Ambiental, S.A., covering Brazil, Paraguay, Uruguay, Argentina and
Chile. These technology transfer fees continue to demonstrate the Company's
ability to capitalize on the technology it develops. The Company is in the
business of developing technology for the cooling tower industry and
marketing that technology either directly or in the form of products such as
its TTMT Series cooling towers.
The Company's cost of goods sold and constructed during the three month
period ended August 31, 1996, was $3,418,716 or 78 percent of total tower
revenues as compared to $2,234,755 or 80 percent of total tower revenues
during the comparable period in 1995. The increase in cost of goods sold
and constructed is due primarily to increased production and sales of the
modular fiberglass cooling tower and construction costs of the modular
concrete tower. The Company has experienced an improvement in gross margins
in the fiberglass cooling tower line which management believes is the result
of wider recognition of the technological and operating advantages of the
Company's product over competing products. The Company is able to
capitalize on these factors rather than competing based solely on price. In
the concrete line, the Company is still incurring unexpectedly high
construction costs due to the recent introduction of the product. Although
it enjoyed moderate overall improvement in gross margins during this quarter
because of favorable contract terms on certain jobs which will not
necessarily recur in future periods, management expects that gross margins
on concrete projects will continue to show improvement in the next several
quarters and will eventually be consistent with gross margins realized on
the Company's fiberglass cooling tower line. During the three month period
ended August 31, 1996, the Company expended $76,000 to retrofit and service
fiberglass towers previously sold and $5,800 of warranty costs on concrete
towers. These expenditures compare to average quarterly retrofit and
warranty costs of $195,000 during the fiscal year ended November 30, 1995.
In 1995, design changes were made and a complete quality control system was
implemented which management believes will continue to reduce such
expenditures on fiberglass towers in future periods. Based on the increase
in fiberglass tower sales and concrete tower installations, the Company
maintained the reserve to retrofit and service towers previously sold at
$100,000 at August 31, 1996. Management believes that the reserve is
sufficient to cover future costs to retrofit and service towers previously
sold.
In the three month period ended August 31, 1996, general and
administrative expenses increased from $324,267 in 1995, to $384,953 in
1996. The increase is due mainly to addition of office staff and related
expenses. Selling expenses increased from $168,595 for the three months
ended August 31, 1995 to $252,781 for the three months ended August 31,
1996, due to increased sales and marketing efforts for both the fiberglass
and the concrete modular cooling towers. The increase over 1995 is due
mainly to the increase in the sales and marketing staff. Increases were
also incurred in travel and related expenses due to increased participation
at national and international trade shows, international joint venture and
license agreements, and direct customer calls and presentations to
engineering firms across the United States. Research and development
expenses increased from $35,805 in the third quarter of 1995 to $94,215 in
the third quarter of 1996, due to expenditures to research refinements in
cooling tower design and construction for both the new modular concrete
tower and the modular fiberglass tower. Management will continue to
research refinements in cooling tower design and construction in order to
increase tower efficiencies and reduce costs, although the Company has no
fixed research and development budget.
The Company's income from operations for the three months ended August
31, 1996, was $499,490 as compared to income of $40,690 for the comparable
period in the prior year. After interest expense and miscellaneous items,
the Company's net income was $398,259 as compared to a net loss of $60,394
for the quarter ended August 31, 1995. The increase in the Company's net
income reflects the Company's success in developing and marketing of its
technology and products both nationally and internationally.
At August 31, 1996, the estimated backlog was $5,000,000 including a
total of six contracts for the modular concrete cooling towers totaling
$1,400,000. Five concrete tower contracts are scheduled for completion in
the fourth quarter of 1996 and the remaining contract is projected to
complete in the first quarter 1997. Interest in this product has continued
to increase dramatically in both the United States and international
markets. Sixty percent of the backlog for the modular fiberglass cooling
towers is scheduled for delivery in the fourth quarter of 1996, and forty
percent of the backlog for the fiberglass cooling towers is scheduled for
delivery in the first quarter 1997.
Nine Months Ended August 31, 1996 Compared to Nine Months Ended August 31,
1995
For the nine months ended August 31, 1996, total tower revenues
increased to $13,717,763 from $7,320,986 for the comparable period in the
prior year. During the current nine month period, 62 percent of total tower
revenues was derived from sales of 213 modular fiberglass cooling towers, 30
percent of total tower revenues was derived from design and construction of
the new modular concrete cooling towers, 4 percent of total tower revenues
was derived from rental of modular fiberglass cooling towers, and 4 percent
of total tower revenues was derived from other tower revenue. In the
comparable nine month period in 1995, 79 percent of total tower revenues was
derived from sales of 154 modular cooling towers, 7 percent of total tower
revenues was derived from design and construction of modular concrete
towers, 11 percent of total tower revenues was derived from rental of
modular cooling towers, and 3 percent of total tower revenues were derived
from other tower revenue. Other tower revenues consist primarily of modular
tower parts sales and service. The increase in fiberglass tower revenues for
1996 is due not only to the increase in the quantity of units sold but also
due to the sales of larger capacity, more expensive units. The increase in
concrete tower sales reflects the success the Company has had marketing this
product since its introduction in the first quarter of 1995. Other
operating revenue for the nine months ended August 31, 1996, consists of
technology transfer fees of $589,983 which were realized as a result of
international license agreements. These technology transfer fees
demonstrate the Company's ability to capitalize on the technology it
develops. The Company is in the business of developing technology for the
cooling tower industry and marketing that technology, either directly or in
the form of products such as its TTMT Series cooling tower.
The Company's cost of goods sold and constructed during the nine month
period ended August 31, 1996, was $10,940,165 or 80 percent of total tower
revenues as compared to $6,224,524 or 85 percent during the comparable
period in 1995. The increase in cost of goods sold and constructed resulted
from increased production and sales of both of the modular fiberglass and
concrete cooling towers. Included in cost of goods sold for the nine month
period ended August 31, 1996, is $205,000 to retrofit and service towers
previously sold. This compares to average nine month retrofit and warranty
costs of $585,000 during the fiscal year ended November 30, 1995. In 1995,
design changes were made and a complete quality control system was
implemented which management believes will continue to reduce such
expenditures in future periods.
The nine month period ended August 31, 1996 reflected a 10 percent
increase in general and administrative expenses from $995,353 in 1995 to
$1,097,399 in 1996. The increase is due mainly to the addition of office
staff and related expenses. Selling expenses increased from $417,168 to
$718,757 due to increased sales and marketing efforts for both the
fiberglass and the concrete modular cooling towers. The increase over 1995
is due mainly to increased salaries expense related to the increase in the
sales and marketing staff. Increases were also incurred in travel and
related expenses, due to increased participation at national and
international trade shows, international joint venture and license
agreements, direct customer calls and presentations to engineering firms
across the United States. Increases were also incurred in postage costs
related to increased telemarketing efforts and advertising costs related to
increased direct advertising in trade journals and magazines. Management
expects the increased investment in selling expenses to have a continued
positive impact on revenues in future periods. Research and development
expenses increased from $58,492 in the first nine months of 1995 to $251,579
in the first nine months of 1996, due mainly to expenditures on the new
modular concrete tower development, and due to development of the new water
collection system. Management does not believe that the Company will incur
significant additional expenses on development of the new modular concrete
tower. However, management does expect to continue to research refinements
in cooling tower design and construction, although the Company has no fixed
research and development budget.
The Company's income from operations for the nine months ended August
31, 1996, was $1,299,846 as compared to loss from operations of $374,551
for the comparable period in the prior year. After interest expense and
miscellaneous items, the Company's net income was $1,026,344 compared to a
loss of $611,479 for the nine months ended August 31, 1995. The increase in
the Company's net income reflects the Company's success in developing and
marketing of its technology and products both nationally and
internationally.
Liquidity and Capital Resources
At August 31, 1996, the Company had working capital of $3,300,118 as
compared to working capital of $2,948,774 at May 31, 1996. Improvement in
the Company's liquidity during the third quarter resulted primarily from the
effects of concrete tower construction projects. During the third quarter,
costs and estimated earnings in excess of billings on uncompleted contracts
increased by approximately $300,000 while billings in excess of costs and
estimated earnings on uncompleted contracts decreased by approximately
$200,000. The Company also received approximately $270,000 from the sale of
common stock during the quarter. The Company's cash flow provided by and
used in its operating, investing and financing activities during the first
nine months of 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Operating activities ($2,418,384) ($ 700,805)
Investing activities ($1,093,792) ($ 888,449)
Financing activities $3,550,220 $1,632,577
</TABLE>
The Company's capital requirements for its continuing operations consist
of its general working capital needs, scheduled payments on its debt
obligations and capital expenditures. Management anticipates that the
Company's operating activities will require cash during 1996, which
primarily relates to the anticipated growth in receivables and inventory
levels to support expanding sales. The Company tries to minimize its
inventory of component parts, although minimum order requirements of some
suppliers can cause inventory levels to fluctuate significantly from period
to period. Similarly, management attempts to manage accounts receivable to
increase cash flow, but it is anticipated that accounts receivable will
increase as sales increase. Other significant variances in working capital
items can also be expected. Also, the Company's concrete construction
projects will have a greater effect on working capital requirements in the
future. At August 31, 1996, net costs in excess of billing and estimated
earnings on uncompleted contracts were $838,291 as compared to net costs in
excess of billings and estimated earnings on uncompleted concrete
construction projects of $295,864 at May 31, 1996. Generally, concrete
construction projects provide for progress payments of the contract price
with a retainage of 10 to 15 percent payable after completion of the
project. Such terms ordinarily provide positive cash flow to the Company
during the terms of the contracts.
Scheduled principal payments on capital leases will total approximately
$58,396 over the next twelve months. In addition, $1,570,979 of the
Company's debt will become due and payable during the next twelve months.
The Company is proceeding with its plans to expand its present
facilities to a new facility in Oklahoma City. Substantially all of the
Company's planned capital expenditures during the next six to eight months
will be related to the new facility, which is expected to be completed
during the first or second quarter of 1997. Management estimates that the
Company's total investment in the project will be approximately $7.5
million, including $1.5 million to equip the facility. Of the total capital
required for the plant, approximately $4.5 million will be derived from a
loan from the Oklahoma Industries Authority (OIA), and $1.5 million will be
contributed to the project by the Company. The Company's $3.8 million credit
facility at Boatmen's Bank, discussed below, includes $300,000 to be used
for equipment down payments and $1.5 million to be used to fund the
Company's contribution to the plant project. This funding commitment
enables the OIA to proceed with issuance of the industrial revenue bonds for
the plant project, which is expected to be completed by the middle of
October, 1996. However, the Boatmen's loan matures on January 31, 1997, and
therefore only provides temporary funding. Management expects that the
Boatmen's facility will be extended and/or replaced via the sale of common
stock or other debt/equity placements. The Company is negotiating with an
investor to provide the necessary funding and has had discussions with other
sources about selling common stock to raise additional capital if necessary.
Based on these negotiations and discussions, management is comfortable that
the Company will be able to raise sufficient capital for long term funding
of these projects, although it has not yet obtained any commitments.
The Company has secured loans with noncommercial lenders totaling
$3,600,000 to finance its working capital needs, of which $3,600,000 was
outstanding at August 31, 1996. Interest rates and payment terms are as
follows:
<TABLE>
<S> <S> <S> <S>
Loan Interest Interest Maturity
Amount Rate Expense Date
<C> <C> <C> <C>
$2,000,000 13% Quarterly 5/31/98
$1,000,000 11.25% Quarterly 5/8/99
$ 500,000 11.25% Quarterly 5/8/97
$ 100,000 15% Quarterly 4/25/97
</TABLE>
Management also has secured a line of credit at Chickasha Bank in the
amount of $500,000 for short term cash flow needs, of which $500,000 was
outstanding at August 31, 1996. This line of credit bears interest at the
bank's base floating rate, which was 10.25% at August 31, 1996. The
principal and interest are due April 13, 1997. In December 1995, the
Company secured financing in the amount of $294,505 to acquire extrusion
equipment to produce the water collection system for the cooling towers.
Previously these parts were out-sourced. However, to insure quality and an
uninterrupted supply, the Company made the decision to bring this
manufacturing process in-house. This note is payable monthly and matures in
January 2000. In August 1996, the Company secured a real estate mortgage in
the amount of $387,500 to finance the acquisition of the property in south
Oklahoma City which will be the site for the new plant expansion. Principal
and interest at 3.5% is due August 1, 1997. In September 1996, the Company
secured a line of credit at Boatmen's Bank in the amount of $3,800,000.
$2,000,000 of the credit facility is to be used for general working capital
needs; $1,500,000 of the credit facility is to be used to fund the Company's
commitment to the expansion in south Oklahoma City, and $300,000 is
earmarked for down payments on equipment, etc. to be acquired in conjunction
with the plant and office expansion. Interest on this line of credit is due
monthly. Principal on this line of credit is due January 31, 1997. In April
1995, the Company secured a real estate mortgage in the amount of $116,000
to finance the acquisition of property adjacent to its existing facilities
to be used as offices. Principal and interest on this mortgage is due in
monthly payments of $1,555 with the remaining principal and interest due
April 15, 1998. This mortgage bears interest at the bank's base floating
rate, which was 10.25% at August 31, 1996. In October 1995, the Company
obtained another mortgage loan in the amount of $83,723 secured by real
estate. The loan bears interest at the bank's floating rate, which was
10.25 percent at August 31, 1996, and is payable semi-annually, and matures
on October 12, 1998. In April 1996, the Company secured an $1,200,000
credit arrangement with one of its major vendors to fund materials purchased
from the vendor of which $790,000 was included in accounts payable at August
31, 1996.
During the first three quarters of 1996, the Company issued a total of
901,567 shares of common stock and received aggregate net proceeds of
approximately $3.7 million. The Company used the net proceeds to purchase
and redeem all outstanding shares of preferred stock, to pay dividends
accrued on the preferred stock, to retire debt and to fund its working
capital requirements. As discussed above, the Company may issue additional
shares of common stock in connection with the Oklahoma City plant expansion.
The Company has sufficient capital resources to fund its ordinary
capital requirements for at least the next four quarters, other than debt
which will mature during the next twelve months. Management anticipates
that the Company will be able to renew or replace its debt obligations as
they mature. Additional debt and equity capital will be required when the
Company proceeds with the expansion in Oklahoma City. Management is very
pleased with the continued improvement in the Company's liquidity and
capital resources and believes that the Company's improved financial
position will facilitate additional growth. Although the Company's
financial position has improved, substantial growth beyond that projected by
management could increase the Company's capital requirements and require it
to obtain additional capital to maintain its growth.
PART II
ITEM 1. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits have been filed as part of this registration
statement:
EXHIBIT NO. DESCRIPTION
3.1-1 Amended and Restated Certificate of Incorporation of
Tower
Tech, Inc.
3.2-1 Amended Bylaws of Tower Tech, Inc.
3.3-1 Amendment to Bylaws
4.1 Omitted
4.2 Omitted
4.3-1 Form of Stock Certificate
4.4-1 Form of Underwriters' Warrants
4.5 Omitted
4.6 Omitted
4.7 Omitted
4.8 Omitted
4.9 Omitted
4.10-9 Registration Rights Agreement, dated February 2, 1996,
among Tower Tech, Inc., Lancer LP, Michael Taglich, and
Robert Taglich
10.1 Promissory Note between Tower Tech, Inc. and Campbell,
Hurley, Campbell and Campbell, dated August 1, 1996.
10.2-6 Loan Agreement between Tower Tech, Inc. and Chickasha
Bank & Trust Co., dated March 23, 1995
10.3 Promissory Note between Tower Tech, Inc. and Boatmen's
Bank, dated September 26, 1996.
10.4 Omitted
10.5 Omitted
10.6 Omitted
10.7 Omitted
10.8-1 Executive Employment Agreement between Harold Curtis and
Tower Tech, Inc., dated September 1. 1993
10.9-1 Agreement between Morrison Molded Fiber Glass Co., and
Tower Tech, Inc., made effective July 26, 1993,
regarding the purchase by Tower Tech, Inc. of certain
pultruded components from Morrison Molded Fiber Glass
Company
10.10-1 U. S. Patent No. 5,143,657 entitled FLUID DISTRIBUTOR
issued September 1, 1993
10.11-1 U. S. Patent No. 5,152,458 entitled AUTOMATICALLY
ADJUSTABLE FLUID DISTRIBUTOR issued October 6, 1992
10.12-1 U. S. Patent No. 5,227,095 entitled MODULAR COOLING
TOWER issued July 13, 1993
10.13-1 Exclusive License Agreement by and between Harold D.
Curtis and Tower Tech, Inc.
10.14-1 Assignment by and between Harold D. Curtis, as Assignor,
and Tower Tech, Inc., as Assignee
10.15-1 Assignment of Invention Contained in PCT Application by
and between Harold D. Curtis, as assignor, and Tower
Tech, Inc., as Assignee
10.16-1 Assignment of Patent by and between Harold D. Curtis, as
Assignor, and Tower Tech, Inc., as Assignee, of Patent
No. 5,227,095
10.17-10 1993 Stock Option Plan, as amended
10.18-1 Form of Distributorship Agreement
10.19 Omitted
10.20 Omitted
10.21-2 Real Estate Purchase Agreement between Tower Tech, Inc.,
and Harold and Carolyn Curtis
10.22-2 Promissory Note between Tower Tech, Inc. and Harold and
Carolyn Curtis
10.23-3 Promissory Note between Tower Tech, Inc. and
Electrical Constructors, Inc., dated April 15, 1994.
10.24-3 Warrant Certificate, dated July 27, 1994, between
Electrical Constructors and Tower Tech, Inc., entitling
Electrical Constructors to purchase 50,000 shares of
Tower Tech, Inc.'s common stock, $.001 par value
10.25-3 Note between Tower Tech, Inc., as Maker, and
Electrical Constructors, as Payee, dated July 27, 1994.
10.26-3 Warrant Certificate, dated August 18, 1994, between
J. David Bronstad and Tower Tech, Inc., entitling
J. David Bronstad to purchase 100,000 shares of Tower
Tech, Inc.'s common stock, $.001 par value
10.27-5 Security Agreement between Tower Tech, Inc. and J. David
dated August 18, 1994
10.28-4 Assignment and License Agreement between Tower Tech,
Inc. and Electrical Constructors
10.29-6 Promissory Note between Tower Tech, Inc. and Chickasha
Bank & Trust Co., dated October 13, 1995
10.30-5 Promissory Note between Tower Tech, Inc., and Dan and
Juanita Wiltz, dated January 26, 1995.
10.31-7 Warrant Certificate, dated April 25, 1995, between
J. David Bronstad and Tower Tech, Inc. entitling
J. David Bronstad to purchase 40,000 shares of Tower
Tech, Inc. Common Stock
10.32-7 Warrant Certificate, dated April 25, 1995, between James
McDonald and Tower Tech, Inc. entitling James McDonald
to purchase 10,000 shares of Tower Tech, Inc. Common
Stock.
10.33-7 Security Agreement between Tower Tech, Inc. and J. David
Bronstad, dated April 25, 1995
10.34-7 Security Agreement between Tower Tech, Inc. and James
McDonald, dated April 25, 1995
10.35-7 Promissory Note between Tower Tech, Inc., and
Chickasha Bank and Trust Co., dated March 3, 1995.
10.36-7 Promissory Note between Tower Tech, Inc. and James
McDonald, dated May 2, 1995
10.37-7 Promissory Note between Tower Tech, Inc. and J. David
Bronstad, dated May 2, 1995
10.38-7 Promissory Note between Tower Tech, Inc. and J. David
Bronstad, dated June 14, 1995
10.39-7 Promissory Note between Tower Tech, Inc. and J. David
Bronstad, dated June 27, 1995
10.40-7 Promissory Note between Tower Tech, Inc. and Electrical
Constructors, dated September 12, 1995
10.41-9 Promissory Note between Tower Tech, Inc. and Chickasha
Bank & Trust, dated October 13, 1995
10.42-9 Promissory Note between Tower Tech, Inc. and Juanita
Wiltz, dated November 22, 1995
1 Incorporated by reference from the same numbered exhibit to Registration
Statement No. 33-69574-FW, as filed with the Commission on September 29,
1993, and as amended.
2 Incorporated by reference from the same numbered exhibit to
Form 10-KSB for the fiscal year ended November 30, 1993.
3 Incorporated by reference from the same numbered exhibit to Form 10-QSB
for the quarter ended August 31, 1994.
4 Incorporated by reference from the same numbered exhibit to Form 8-K, as
filed with the Commission on November 4, 1994.
5 Incorporated by reference from the same numbered exhibit to Form 10-KSB
for the year ended November 30,1994.
6 Incorporated by reference from the same numbered exhibit to Form 10-QSB
for quarter ended May 31, 1995.
7 Incorporated by reference from the same numbered exhibit to Form 10-QSB
for the quarter ended August 31, 1995.
8 Incorporated by reference from the same numbered exhibit to Amendment No
1 to Registration Statement No. 33-95870.
9 Incorporated by reference from the same numbered exhibit to Form
10-KSB/A for the year ended November 30, 1995.
10 Incorporated by reference from the same numbered exhibit to
Registration Statement No. 333-07337 on Form S-8.
(b) The Company filed a Form 8-K report with the Commission on March
12, 1996 to report the sale of 350,000 shares of Common Stock at a price of
$6.60 per share in a private placement. The Form 8-K is incorporated herein
by reference.
The Company filed a Form 8-K report with the Commission on
July 2, 1996, to report a change in the Company's certifying accountant.
<PAGE>
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 thereunto duly authorized.
TOWER TECH, INC.
(Registrant)
Date October 11, 1996 ss/HAROLD CURTIS
_____________
Harold Curtis
Chief Executive Officer
Date October 11, 1996 ss/CHARLES D. WHITSITT
___________________
Charles D. Whitsitt
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 3-7 OF THE
COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 676,304
<SECURITIES> 0
<RECEIVABLES> 3,422,487
<ALLOWANCES> 16,645
<INVENTORY> 3,116,085
<CURRENT-ASSETS> 8,672,063
<PP&E> 3,377,790
<DEPRECIATION> 303,522
<TOTAL-ASSETS> 13,013,617
<CURRENT-LIABILITIES> 5,371,945
<BONDS> 0
0
0
<COMMON> 3,331
<OTHER-SE> 4,158,174
<TOTAL-LIABILITY-AND-EQUITY> 13,013,617
<SALES> 4,400,155
<TOTAL-REVENUES> 4,650,155
<CGS> 3,418,716
<TOTAL-COSTS> 4,150,665
<OTHER-EXPENSES> 731,949
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (134,160)
<INCOME-PRETAX> 389,259
<INCOME-TAX> 0
<INCOME-CONTINUING> 389,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 389,259
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is entered into effective the 26th
day of September, 1996, by and between TOWER TECH, INC., an Oklahoma
corporation ("Borrower"), and BOATMEN'S NATIONAL BANK OF OKLAHOMA
("Lender").
WITNESSETH:
WHEREAS, the Borrower has requested a revolving line credit in the
amount of $3,800,000.00 which Lender is willing to do subject to the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration Of the foregoing, which are
incorporated into the body of this Agreement as additional agreements as if
set out in full and shall be deemed and held to be contractual in nature
and not as mere recitals, and the other terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or
hereafter made to or for the benefit of the Borrower by Lender, the parties
hereto hereby agree as follows:
1. DEFINITIONS.
When used herein, the following terms shall have the following
meanings:
"30 Day LIBOR" shall mean the one month rate, as reported in the "Money
Rates" section of The Wall Street Journal (Southwest Edition) as the
average of interbank offered rates for dollar deposits in the London market
based on quotations at five major banks, and shall remain in effect for the
next one month interest period. As of September 20, 1996, the 30 Day LIBOR
was five and one-half of one percent (5 1/2%). Each change in the per annum
interest rate charged under the 30 Day LIBOR shall become effective,
without notice (which notice is hereby waived), on the date of each change
in the 30 Day LIBOR on the first day of each successive one month interest
period. Lender may, from time to time, extend credit to anyone at rates of
interest varying from, and having no relation to, the 30 Day LIBOR.
"Business Day" shall mean any day of the year on which banks are not
required or authorized to close in Oklahoma City, Oklahoma.
"Cash Equivalent Investments" shall mean (i) short-term direct
obligations of the United States Government, (ii) readily marketable
commercial paper rated Al or better by Standard & Poor's Corporation (or a
similar rating by a similar organization which rates commercial paper),
(iii) federally insured negotiable certificates of deposit or bankers
acceptances, payable to the order of the Borrower or to bearer, issued by
one or more commercial banks or trust companies operating in the United
States and (iv) cash deposits maintained by the Borrower at Lender.
"Code" shall have the meaning assigned to that term in Section 1.3.
"Collateral" shall mean all property and interest in property, now
owned or hereafter acquired by the Borrower upon which a security interest,
lien, mortgage or collateral assignment is granted to Lender by the
Borrower, whether under this Agreement, the Financing Agreements or under
any other documents, instruments or writings executed by the Borrower and
delivered to Lender.
"Credit Purchase Agreement" shall mean that certain Credit Purchase
Agreement .of even date herewith executed by OG&E in favor of Lender in the
form of attached Exhibit "B".
"Debt" shall mean with respect to any Person, all liabilities of such
Person, including, without limitation, (i) all obligations of such Person
which, in accordance with generally accepted accounting principles, would
be shown on the balance sheet of such Person as a liability (including,
without limitation, obligations for borrowed money and for the deferred
purchase price of property or services, and obligations evidenced by bonds,
debentures, notes or other similar instruments); (ii) all rental
obligations under leases required to be capitalized under generally
accepted accounting principles; (iii) all guarantees (direct or indirect)
and other contingent obligations of such Person in respect of, or
obligations to purchase or otherwise acquire or to assure payment of, Debt
of others; and (iv) Debt of others secured by a lien, security interest or
other encumbrance upon property owned by such Person, whether or not
assumed.
"Default" shall mean the occurrence or existence of any one or more of
the following events:
(a) the Borrower fails to pay any of the Liabilities within five (5)
days of the date such Liabilities are due;
(b) the Borrower fails or neglects to perform, keep or observe any of
the covenants, conditions or agreements contained in this Agreement or in
any of the other Financing Agreements and such failure or neglect continues
for more than thirty (30) days after written notice by Lender to Borrower
and OG&E provided that such grace period shall not apply to the failure to
obtain the written consent of the Lender prior to taking any action
described in this Agreement which requires such prior written consent and
provided, further, that with respect to any Financing Agreements other than
this Agreement, the grace period provided under this clause (b) shall be
concurrent with, and not in addition to, any grace period that may be
provided under such Financing Agreements;
(c) any warranty or representation now or hereafter made by the
Borrower in connection with this Agreement or any of the other Financing
Agreements is untrue or incorrect in any material respect, or any schedule,
certificate, statement, report, financial data, notice, or writing
furnished at any time by the Borrower to Lender is untrue or incorrect in
any material respect on the date as of which the facts set forth therein
are stated or certified;
(d) a judgment or order requiring payment in excess of $100,000.00
shall be rendered against the Borrower and such judgment or order shall
remain unsatisfied or undischarged and in effect for thirty (30)
consecutive days, provided that this clause (d) shall not apply to any
judgment with respect to which (i) a stay of enforcement has been entered
within such thirty (30) day period or (ii) an appeal, properly bonded, has
been taken within such thirty (30) day period;
(e) a notice of lien, levy, or assessment in excess of $100,000.00 is
filed or recorded and shall remain unsatisfied or undischarged and in
effect for thirty (30) consecutive days with respect to all or a
substantial part of the assets of Borrower by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipality or other governmental agency or any taxes or debts owing at
any time or times hereafter to any one or more of them become a lien upon
all or a substantial part of the Collateral, provided that this clause (e)
shall not apply to any such lien, levy or assessment that is being
contested by the Borrower in good faith and by appropriate proceedings and
for which an adequate reserve is maintained by the Borrower;
all or any material part of the Collateral is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes within the
possession of any receiver, trustee, custodian or assignee for the benefit
of creditors and on or before the tenth (10th) day thereafter such assets
are not returned to the Borrower and/or such writ, distress warrant or levy
is not dismissed, stayed or lifted;
(g) a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is
either (i) filed by the Borrower, or the Borrower makes an assignment for
the benefit of creditors or Borrower takes any corporate action to
authorize any of the foregoing or (ii) instituted against the Borrower and
shall not be terminated or discharged within ninety (90) days;
(h) the Borrower voluntarily or involuntarily dissolves or is
dissolved, terminates or is terminated;
(i) the Borrower materially fails to pay its debts as they become due
in the ordinary and usual course of the Borrower's business;
(i) the Borrower is enjoined, restrained, or in any way prevented
(whether by affirmative order, by the suspension of any license, permit or
approval to conduct business, or otherwise) by the order of any court or
any administrative or regulatory agency from conducting all or any material
part of its business affairs, and such order is not dismissed, vacated,
withdrawn or otherwise terminated within ninety (90) days of the entry
thereof;
Or) the Borrower shall fail to make any payment due on any other
obligation for borrowed money or for the deferred purchase price of
property or services, and the effect of such failure shall (i) be to cause
or permit the holder of such obligation or a trustee thereof to cause such
obligation to become due prior to its date of maturity in the ordinary
course of such holder's business and (ii) have a material adverse effect on
the business or financial condition of the Borrower;
(1) the Credit Purchase Agreement shall cease to be in full force and
effect or OG&E shall so state in writing;
(m) a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is
either (i) filed by OG&E, or OG&E makes an assignment for the benefit of
creditors or OG&E takes any corporate action to authorize any of the
foregoing or (ii) is instituted against OG&E and shall not be terminated or
discharged within ninety (90) days;
(n) OG&E voluntarily or involuntarily dissolves or is dissolved,
terminates or is terminated; or
to) OG&E materially fails to pay its debts as they become due in the
ordinary and usual course of OG&E's business.
"Execution Date" shall mean September 26, 1996.
"EBISB" shall have the meaning assigned to that term in Section 5.15.
"Event of Default" shall mean an event which through the passage of
time, or the service or giving of notice, or both would (assuming the
action necessary to cure the same is not taken by the Borrower) mature into
a Default.
"Financing Agreements" shall mean all agreements, instruments and
documents, including, without limitation, this Agreement, Revolving Note,
the Security Agreement, the Financing Statements and all other written
matters whether heretofore, now, or hereafter executed by or on behalf of
Borrower and delivered to Lender, together with all agreements and
documents referred to therein or contemplated thereby.
"Financing Statements" shall mean those certain UCC-1 Financing
Statements executed by the Borrower from time to time in favor of Lender
and UCC-3 Amendments to Financing Statements.
"Liabilities" shall mean all of the Borrower's liabilities, obligations,
and indebtedness to Lender of any and every kind and nature, whether
heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred. acquired, or owing, whether primary,
secondary, direct, indirect, contingent, fixed or otherwise (including
obligations of performance) and arising or existing under this Agreement,
the other Financing Agreements and/or Revolving Note.
"LIBOR RATE" shall mean the per annum rate equal to the 30 Day LIBOR
plus one percent (1%).
"Monthly Rewrite" shall have the meaning assigned to that term in Section
3.1.
"Pension Plan" shall have the meaning assigned to that term in Section
5.15.
"Person" shall mean any individual, sole proprietorship, limited
liability company, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party, or
government (whether national, federal, state, provincial, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Revolving Loan" shall mean the revolving loan evidenced by the
Revolving Note and governed by the terms set forth in Section 2.
"Revolving Loan Advance Request" shall mean the written form of request
for advances on the Revolving Loan in the form of attached Exhibit "C" to
be signed by the Borrower and OG&E.
"Revolving Note" shall mean the Revolving Note executed by Borrower
substantially in the form of attached Exhibit "A" of even date herewith, as
the same may be extended, modified or amended from time to time.
"Security Agreement" shall mean that certain Security Agreement of even
date herewith executed by the Borrower in favor of Lender.
1.2 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily
given them in accordance with generally accepted accounting principles
consistently applied.
1.3 Other Terms Defined in Oklahoma Uniform Commercial Code. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided by the Uniform Commercial
Code of the State of Oklahoma (the "Code") to the extent the same are used
or defined therein.
2. Revolving Loan. Subject to the terms and conditions, and relying upon
the representations and conditions hereinafter set forth, Lender agrees to
lend and the Borrower agrees to borrow up to and not to exceed
$3,800,000.00, on a revolving basis as follows (the "Revolving Loan"):
2.1 Revolving Facility. Subject to the terms and conditions herein, the
Borrower may borrow, repay without penalty or premium and re-borrow
hereunder up to the maximum of $3,800,000.00; provided, however, each
advance must be in increments of $50,000.00 or greater.
2.2 Advances. Requests by the Borrower for advances under the Revolving
Loan for general corporate purposes shall be made in writing in the form of
a Revolving Loan Advance Request, submitted no later than 12:00 noon on the
requested date of disbursement. Each Revolving Loan Advance Request shall
be accompanied by such other documentation as the Lender may reasonably
request. Subject to the terms and conditions contained herein, upon receipt
of a Revolving Loan Advance Request, the Lender shall deposit the amount
requested to be advanced in the Borrower's demand deposit account
maintained with the Lender.
2.3 Maximum Principal Balance of Revolving Loan. The Borrower agrees
that if at any time the aggregate outstanding principal balance of the
Revolving Loan shall exceed an amount equal to $3,800,000.00, the Borrower
shall promptly pay to Lender the amount necessary to eliminate such excess.
2.4 Interest. The Revolving Note will bear interest on the unpaid
principal balance at a rate per annum equal to the LIBOR RATE. Interest on
the Revolving Note will be paid monthly commencing September 30, 1996 and
continuing on the last day of each month thereafter through maturity. All
interest accrued shall be computed on the basis of a year of 360 days, and
the actual number of days elapsed in the period in which it accrues.
Following the occurrence of a Default, the Borrower shall pay to Lender
interest from the date of such Default at the per annum rate of(i) five
percent (5%), plus (ii) the LIBOR RATE on the outstanding principal balance
of the Liabilities.
2.5 Maturity. Absent Default, the entire unpaid balance of principal and
accrued but unpaid interest owing on the Revolving Note will be due and
payable on January 31, 1997.
2.6 Collateral. Payment of the Revolving Loan and performance of all of
the Borrower's obligations under the Financing Agreements will be secured
by the Collateral.
2.7 Term of Revolving Loan. This agreement to fund the Revolving Loan
shall be effective for a period beginning on the Execution Date and
terminating on the earlier of (i) January 31, 1997, or (ii) termination
thereof as set forth in Section 8. All of Lender's rights and remedies
under this Agreement shall survive termination until all of the Liabilities
under this Agreement and the other Financing Agreements have been paid in
full. Upon the effective date of termination of the commitment to fund the
Revolving Loan, all of the Liabilities shall become immediately due and
payable without notice or
demand; provided, however, that if such termination is by reason of an
event specified in Section 8, all of the Liabilities shall become
immediately due and payable at such time without notice or demand.
Notwithstanding any termination, until all of the Liabilities shall have
been fully paid and satisfied, Lender shall be entitled to retain its
security interest in and to all existing and future Collateral.
2.8 Origination Fee. Contemporaneous with the execution of this
Agreement, the Borrower agrees to pay a non-refundable, origination fee of
$25,000 which will be deemed earned by Lender when paid.
2.9 Repayment. All payments which the Borrower is required to make to
Lender under this Agreement or under any of the other Financing Agreements
shall be made without defense, set-off and counterclaim and in same day
funds and delivered to Lender not later than 2:00 p.m. (Oklahoma City,
Oklahoma time) on the date due at Lender's offices located at 211 North
Robinson, Oklahoma City, Oklahoma, 73102, for the account of Lender or such
other office as shall be designated by Lender in writing; funds received by
Lender after that time shall be deemed to have been paid by the Borrower on
the next succeeding Business Day. The Borrower hereby authorizes Lender to
charge its accounts with Lender in order to cause timely payment to be made
to Lender of all principal, interest and fees due hereunder (subject to
sufficient funds being available in the Borrower's accounts).
3. COLLATERAL REPORTING AND RELATED REOUIREMENTS. The following are
reporting and related requirements for the Collateral and other matters:
3.1 Monthly Reports. The Borrower shall submit to Lender and OG&E, not
later than thirty (30) days following the end of each month, a Monthly
Report in the form of attached Exhibit "D", certified by the President,
Executive Vice President, Chief Financial Officer, Controller or other
authorized officer of the Borrower. Each Monthly Report shall include, as
of the closing day for the preceding month: (i) a summary aged trial
balance of accounts receivable for the Borrower ("Accounts Trial Balance");
(ii) the amount of the outstanding principal balance of the Revolving Loan;
(iii) a representation by the Borrower that no Default or Event of Default
has occurred during such month or, if a Default or Event of Default has
occurred during such month, a description of such Default or Event of
Default and of the actions the Borrower has taken and intends to take to
cure the same; and (iv) a representation by the Borrower that all
representations and warranties contained in this Agreement or any of the
Financing Agreements remain as true and correct on the date of the Monthly
Report as when they were originally submitted to the Lender.
3.2 Collateral Representations and Warranties. With respect to all
Collateral, the Borrower represents and warrants that: (i) it is owned by
the Borrower; and (ii) it is not subject to any lien or security interest
whatsoever except for the security interest granted to Lender and the
Permitted Exceptions as defined in Section 4(viii) herein.
3.3 Collateral Records. The Borrower shall at all times keep correct and
accurate records itemizing and describing the kind, type and age of
Collateral, the Borrower's cost therefor and accumulated depreciation
thereof; and retirements, sales, or other dispositions thereof, all of
which records will be available during the Borrower's usual business hours
at the request of any of Lender's or OG&E's officers, employees or agents
review and inspection and to make extracts therefrom.
3.4 Safekeeping of Collateral. So long as Lender is not in possession
of the Collateral, Lender shall not be responsible for: (i) safekeeping of
the Collateral; (ii) any loss or damage to the Collateral; (iii) any
diminution in the value of the Collateral; or (iv) any act or Default of
any repairman, bailee or any other Person with respect to the Collateral.
So long as Lender is not in possession of the Collateral, as between the
Borrower and Lender, all risk of loss, damage, destruction or diminution in
the value of the Collateral shall be borne by the Borrower.
4. CONDITIONS TO LENDER'S OBLIGATIONS. Notwithstanding any other
provision contained in this Agreement or in any of the other Financing
Agreements to the contrary, the obligations of Lender under this Agreement
are subject to the satisfaction of all the following:
(i) Insurance coverage on the Collateral reasonably determined by Lender
to be adequate shall have been obtained by the Borrower and loss payable
endorsements in form and substance reasonably satisfactory to Lender with
respect thereto shall have been executed;
(ii) Certified copies of the Certificate of Incorporation (as amended),
together with a good standing certificate from the Secretary of State of
the State of Oklahoma, for both Borrower and OG&E, each to be dated
satisfactory to Lender's counsel, shall have been delivered to Lender;
(iii) Copies of the Bylaws of the Borrower and OG&E, certified by the
respective corporate secretary or an assistant secretary shall have been
delivered to Lender;
(iv) Signature and incumbency certificates of the officers of the
Borrower and OG&E executing the Financing Agreements;
(v) Resolutions of either the Board of Directors or the Executive
Committee of the Board of Directors of the Borrower and OG&E, certified by
the secretary or assistant secretary, approving and authorizing the
execution, delivery and performance of each of the applicable Financing
Agreements shall have been delivered to Lender;
(vi) Originally executed copy of a favorable written opinion of Hartzog
Conger & Cason, counsel for the Borrower, in substantially the form of
attached Exhibit "E";
(vii) Originally executed copy of a favorable written opinion of Rainey,
Ross, Rice & Binns, counsel for OG&E, in substantially the form of attached
Exhibit "F";
(viii) Certificates of public officials, bonded abstracters or title
search companies satisfactory to Lender relating to the existence of UCC
financing statement filings, liens, charges and other encumbrances on the
Collateral, except those listed on attached Exhibit "G" (the "permitted
Exceptions"), those which exist in favor of Lender or those which are
permitted in Section 7.1;
(ix) Financial statements of the Borrower and OG&E and such other
financial information as required by the Financing Agreements or as
otherwise reasonably may be required by Lender, all in form satisfactory to
Lender;
(x) The Lender has received the Revolving Loan Advance Request,
appropriately executed and with all required information attached; and
(xi) The Borrower shall have executed, or caused to be executed, and
delivered to Lender on or before the Execution Date, the Financing
Agreements, including, without limitation, this Agreement, Revolving Note,
the Credit Purchase Agreement and the Security Agreement together with such
financing statements, certificates, endorsements, opinions and assurances
as Lender and Lender's counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
that as of the Execution Date, and continuing so long as any Liabilities
remain outstanding, and (even if there shall be no Liabilities outstanding)
so long as this Agreement remains in effect:
5.1 Corporate Existence. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Oklahoma and is duly qualified as a foreign corporation and in good
standing in all other states where the nature and extent of the business
transacted by it or the ownership of its assets makes such qualification
necessary, except for those jurisdictions in which the failure so to
qualify would not, in the aggregate, have a material adverse effect on the
Borrower's financial condition, results of operations or business.
5.2 Borrower's Corporate Authority. The execution and delivery by the
Borrower of this Agreement and all of the other Financing Agreements, the
grant to Lender of the security interests and liens contemplated herein and
therein, and the performance of the Borrower's obligations hereunder and
thereunder: (i) are within the Borrower's corporate powers; (ii) are duly
authorized by the Borrower's Board of Directors; (iii) are not in
contravention of the terms of the Borrower's Certificate of Incorporation
or By-Laws, or of any indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or undertaking to which the Borrower
is a party or by which the Borrower or any of its property is bound; (iv)
do not, as of the execution hereof, require any governmental consent,
registration or approval; (v) do not contravene any contractual or
governmental restriction binding upon the Borrower; and (vi) will not,
except as contemplated herein, result in the imposition of any lien, claim,
charge, security interest or other encumbrance upon any property of the
Borrower under any existing indenture, mortgage, deed of trust, loan or
credit agreement or other material agreement or instrument to which the
Borrower is a party or by which it or any of its property may be bound or
affected.
5.3 Binding Effect. This Agreement and all of the other Financing
Agreements are the legal, valid and binding obligations of the Borrower and
are enforceable against the -Borrower in accordance with their respective
terms except as the enforceability thereof may be impaired by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles.
5.4 Financial Data. The Borrower has delivered to Lender that certain
Financial Statement dated May 31, 1996. Such statement was prepared in
accordance with generally accepted accounting principles and fairly
presents the financial position of the Borrower as of the date thereof. The
Borrower does not have any material contingent liability, liability for
taxes, long-term lease or long-term commitment, which is not reflected in
the foregoing financial statements.
5.5 Collateral. All of the Collateral is owned by the Borrower, has been
fully paid for by the Borrower and is free and clear of all security
interests, liens, claims, charges and other encumbrances except liens for
current taxes not yet due and payable, those liens created in accordance
with this Agreement, the Permitted Exceptions, and those permitted in
Section 7.1.
5.6 Principal Place of Business. As of the Execution Date, the principal
office of the Borrower is located at Rural Route 3, Chickasha, Oklahoma
73023. As of the Execution Date, the books and records of the Borrower are
located at the principal office of the Borrower.
5.7 Tax Liabilities. The Borrower has filed all federal, state and local
tax reports and returns required by any law, rule, or regulation to be
filed by it except for extensions duly obtained, and has either duly paid
all taxes, duties and charges indicated due on the basis of such returns
and reports, or made adequate provision for the payment thereof, and the
assessment of any material amount of additional taxes in excess of those
paid and reported is not reasonably expected. The reserves for taxes
reflected on the balance sheets of Borrower submitted to Lender in
accordance with the terms of Section 61 will be adequate in amount for the
payment of all liabilities for all taxes (whether or not disputed) of the
Borrower accrued through the date of each such balance sheet. There are no
material unresolved questions or claims concerning any tax liability of the
Borrower.
5.8 Loans. Except (i) as disclosed on the financial statements
specifically identified in Section 5.4, and (ii) trade payables and other
obligations arising in the ordinary course of Borrower's business since the
date of the financial statements identified in Section 5.4 there are
currently no loans or other indebtedness for borrowed money.
5.9 Margin Security The Borrower does not own any margin securities and
the Revolving Loan advanced hereunder will not be used for the purpose of
purchasing or carrying any margin securities or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase any
margin securities or for any other purpose not permitted by Regulation G of
the Board of Governors of the Federal Reserve System.
5.10 Subsidiaries and Affiliates. As of the Execution Date, the Borrower
has no subsidiaries or affiliates except Tower Tech Southeast, a Florida
general partnership.
5.11 Litigation and Proceedings. No judgments are outstanding against
the Borrower nor is there now pending or, to the best of the Borrower's
knowledge after diligent inquiry, threatened litigation, contested claim,
or governmental proceeding by or against the Borrower.
5.12 Other Agreements. Except as disclosed to Lender, the Borrower is
not in default under any contract, lease, commitment or other agreement to
which it is a party or by which it is bound. The Borrower knows of no
dispute regarding any contract, lease, commitment or other agreement.
5.13 Employee Controversies. There are no controversies pending or, to
the best of the Borrower's knowledge, threatened between the Borrower and
any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to
the continued financial success and well-being of the Borrower.
5.14 Compliance with Laws and Regulations. The execution and delivery by
the Borrower of this Agreement and all of the other Financing Agreements
and the performance of the Borrower's obligations hereunder and thereunder
are not, to the best of Borrower's knowledge, in contravention of any law,
order, rule or regulation. The Borrower is in compliance with all laws,
orders, rules, regulations and ordinances of all federal, foreign, state
and local governmental authorities relating to the business operations and
the assets of the Borrower except for laws, orders, rules, regulations and
ordinances the violation of which would not, in the aggregate, have a
material adverse effect on the Borrower's financial condition, results of
operations or business.
5.15 Pension Reform Act. No events, including, without limitation, any
"Reportable Event" or "Prohibited Transactions", as those terms are
defined in the Employee Retirement Income Security Act of 1974, as the same
may be amended from time to time (herein, including any and all such
amendments, called "ERISA"), have occurred in connection with any "Employee
Benefit Plan" (herein called "Pension Plan") of the Borrower which might
reasonably be expected to constitute grounds for the termination of any
such Pension Plan by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a trustee to
administer any such Pension Plan. All of the Borrower's Pension Plans meet
the minimum funding standards of Section 302 of ERISA.
5.16 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement.
6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that, so
long as any Liabilities remain outstanding, and (even if there shall be no
Liabilities outstanding) so long as this Agreement remains in effect:
6.1 Financial Statements. Except as otherwise expressly provided for
herein, the Borrower shall keep proper books of record and account in which
full and true entries will be made of all dealings or transactions of or in
relation to the business and affairs of the Borrower, in accordance with
generally accepted accounting principles consistently applied and the
Borrower shall cause to be furnished to the Lender and OG&E quarterly
unaudited and annual audited financial statements within sixty (60) days of
each quarter end and one hundred twenty (120) calendar days of the end of
the Borrower's fiscal year prepared by an accounting firm acceptable to
Lender, whose opinion shall be unqualified as to scope and otherwise of
substance satisfactory to Lender; all in reasonable detail, subject to
changes for normal year-end adjustment; and (iii) with reasonable
promptness, such other business or financial data as the Lender may
reasonably request.
All financial statements delivered to the Lender pursuant to the
requirements of this Section 6.1 (except where otherwise expressly
indicated) shall be prepared in accordance with generally accepted
accounting principles consistently applied. The Lender shall exercise
reasonable efforts to keep such information, and all information acquired
as a result of any inspection conducted in accordance with Section 6.2,
confidential, provided that the Lender may communicate such information (a)
to any other Person in accordance with the customary practices of
commercial banks relating to routine trade inquiries, (b) to any court or
regulatory authority having jurisdiction over Lender, (c) to any other
Person in connection with Lender's sale of any participation in the
Liabilities, or (d) to any other Person in connection with the lawful
exercise of the Lender's rights hereunder or under any of the other
Financing Agreements. Borrower authorizes Lender and OG&E to discuss the
financial condition of the Borrower with the Borrower's independent public
accountants and agrees that such discussion or communication shall be
without liability to either the Lender or Borrower's independent public
accountants.
6.2 Inspection. Lender, OG&E or any Person designated by Lender or OG&E
in writing, shall have the right, from time to time hereafter, to call at
the Borrower's place or places of business (or any other place where the
Collateral or any information relating thereto is kept or located) during
reasonable business hours, and, without hindrance or delay, (i) to inspect,
audit, check and make copies of and extracts from the Borrower's books,
records, journals, orders, receipts and any correspondence and other data
relating to the Borrower's business or to any transactions between the
parties hereto, (ii) to make such verification concerning the Collateral as
the Lender or OG&E may consider reasonable under the circumstances, and
(iii) to discuss the affairs, finances and business of the Borrower with
any officers or directors of the Borrower.
6.3 Conduct of Business. Except as contemplated herein, the Borrower
shall maintain its corporate existence, shall maintain in full force and
effect all licenses, permits, bonds, franchises, leases, patents, contracts
and other rights necessary or desirable to the ordinary conduct of its
business, shall continue in, and limit its operations to, the same -general
line of business as that presently conducted by it and shall comply with
all applicable laws, rules and regulations of any federal, state or local
governmental authority, except for such laws, rules and regulations the
violation of which would not, in the aggregate, have a material adverse
effect on the Borrower's financial condition, results of operations or
business.
6.4 Claims and Taxes. The Borrower agrees to indemnify and hold the
Lender harmless from and against any and all claims, demands, liabilities,
losses, damages, penalties, costs, and expenses (including reasonable
attorneys' fees) relating to or in any way arising out of the possession,
use, operation or control of any of the Borrower's assets. The Borrower
shall pay or cause to be paid all bonding premiums and related taxes and
charges, and shall pay or cause to be paid all of the Borrower' real and
personal property taxes, assessments and charges and all of the Borrower's
franchise, income, unemployment, use, excise, old age benefit, withholding,
sales and other taxes and other governmental charges assessed against the
Borrower, or payable by the Borrower, at such times and in such manner as
to prevent any penalty from accruing or any lien or charge from attaching
to its property, provided that the Borrower shall have the right to contest
in good faith, by an appropriate proceeding promptly initiated and
diligently conducted, the validity, amount or imposition of any such tax,
assessment or charge, and upon such good faith contest to delay or refuse
payment thereof, if (i) the Borrower establishes adequate reserves to cover
such contested taxes, assessments or charges, and (ii) such contest does
not have a material adverse effect on the financial condition of the
Borrower, the ability of the Borrower to pay any of the Liabilities, or the
priority or value of the Lender's security interest in the Collateral.
6.5 Lender's Closing Costs and Expenses. The Borrower shall reimburse
Lender on demand for all reasonable expenses and fees paid or incurred in
connection with the documentation, negotiation and closing of the financing
transaction described herein, including, without limitation, filing and
recording fees and the reasonable fees and expenses of the Lender's
attorneys and paralegals, whether such expenses and fees are incurred prior
to, during or after the Execution Date.
6.6 Borrower's Liability Insurance. The Borrower shall maintain, at its
expense, such public liability and third party property damage insurance in
such amounts, with such deductibles and with such coverage as is consistent
with the practice of other companies engaged in the same or similar
industry as that of Borrower and otherwise reasonably acceptable to Lender.
6.7 Pension Plans. The Borrower shall (i) keep in full force and effect
any and all Pension Plans which are presently in existence or may, from
time to time, come into existence under ERISA, unless such Pension Plans
can be terminated without material liability to the Borrower in connection
with such termination (as distinguished from any continuing funding
obligation) (ii) make contributions to all of the Borrower's Pension Plans
in a timely manner and m a sufficient amount to comply with the
requirements of ERISA; (iii) comply with all material requirements of
ERISA which relate to such plans; and (iv) notify the Lender immediately upon
receipt by the Borrower of any notice of the institution of any
proceeding or other action which may result in the termination of any
Pension Plans.
6.8 Notice of Suit or Adverse Change in Business. The Borrower shall, as
soon as possible, and in any event within five (5) days after the Borrower
learns of the following, give notice to the Lender and OG&E of (i) any
material proceeding being instituted or threatened to be instituted by or
against the Borrower in any federal, state, local or foreign court or
before any commission or other regulatory body (federal, state, local or
foreign), and (ii) any material adverse change in Borrower's financial
condition results of operations or business.
6.9 Maintenance of Collateral. The Borrower shall keep and maintain all
Collateral in good condition and shall make all necessary replacements
thereof so that the value of the Collateral shall at all times be
maintained and preserved. The Borrower further agrees to comply with all
laws, statutes, rules, regulations and ordinances of any governmental
entity, or of any agency thereof, applicable to the Collateral a violation
of which, in any respect, may materially or adversely affect the Collateral
or the Borrower's business, property, assets, operations or condition,
financial or otherwise. The Borrower shall, immediately on demand therefor
by the Lender, deliver to Lender any and all evidence of ownership of any
of the Collateral.
6.10 Banking Accounts. The Borrower will maintain a banking account on
deposit with the Lender.
7. NEGATIVE COVENANTS. The Borrower covenants and agrees that so long as
any Liabilities remain outstanding, and (even if there shall be no
Liabilities outstanding) so long as this Agreement remains in effect
(unless the Lender shall give its prior written consent thereto):
7.1 Negative Pledge on Collateral. The Borrower will not pledge,
mortgage, transfer, sell, grant a security interest in, encumber, convey,
hypothecate, assign, exchange, or otherwise dispose of any or all of the
Collateral, other than (i) liens securing the payment of taxes, either not
yet due or the validity of which is being contested in good faith and with
due diligence by appropriate proceedings, and as to which the Borrower
shall, if appropriate under generally accepted accounting principles, have
set aside on its books and records adequate reserves; (ii) deposits under
workmen's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money) or to secure indemnity,
performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(iii) the liens and security interests in favor of the Lender under the
Financing Agreements; (iv) sales of inventory in the ordinary course of
business; and (v) Purchase money security interests granted in connection
with the purchase of new equipment as provided in Section 7.3(iv).
7.2 Negative Pledge on Other Assets. The Borrower will not pledge,
mortgage, grant a security interest or lien in, hypothecate, or otherwise
encumber of any or all of its other assets not including the Collateral,
other than (i) liens securing the payment of taxes, either not yet due or
the validity of which is being contested in good faith and with due
diligence by appropriate proceedings, and as to which the Borrower shall,
if appropriate under generally accepted accounting principles, have set
aside on its books and records adequate reserves; (ii) deposits under
workmen's compensation, unemployment insurance, social security and other
similar laws, or to Secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money) or to secure indemnity,
performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(iii) any liens and security interests in favor of the Lender under the
Financing Agreements; (iv) a security interest or mortgage lien on the real
and personal property interests of Borrower securing indebtedness permitted
pursuant to Section 7.3(iii); (v) zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real property; and
(vi) purchase money security interests granted in connection with the
purchase of new equipment securing obligations as provided in Section
7.3(iv).
7.3 Indebtedness/Capital Expenditures. The Borrower shall not incur,
create, assume, become or be liable in any manner with respect to, or
permit to exist, any obligations or indebtedness, nor incur capital
expenditures, including leases, except (i) the Liabilities; (ii) trade
obligations and normal accruals in the ordinary course of business not yet
due and payable, or with respect to which the Borrower is contesting in
good faith and with due diligence the amount of ability thereof by
appropriate proceedings, and then only to the extent that the Borrower has
set aside on its books adequate reserves therefor, if appropriate, under
generally accepted accounting principles; (iii) obligations represented by
the industrial revenue bonds issued by the Oklahoma industrial Authority in
an aggregate principal amount not to exceed $4,500,000.00 to finance
capital expenditures for the completion of the new facility located at I44
and S. 119th Street, Oklahoma City, Oklahoma; and (iv) purchase of new
equipment not to exceed $1,600,000.00 in the aggregate.
7.4 Expansions. Consolidations. Mergers or Acquisitions. The Borrower
shall not recapitalize or consolidate with, merge with, or otherwise
acquire all or substantially all of the assets or properties of any other
Person.
7.5 Investments or Loans. The Borrower shall not make or permit to exist
investments or loans in or to any other Person, except investments in Cash
Equivalent Investments and loans made to employees in the ordinary course
of business not to exceed $10,000.00.
7.6 Guarantees. The Borrower shall not guarantee, endorse or otherwise
in any way become or be responsible for obligations of any other Person,
whether by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of
working capital or other balance sheet covenants or conditions, or by way
of stock purchase, capital contribution, advance or loan for the Purpose of
paying or discharging any indebtedness or obligation of such other person
or otherwise, except endorsements of negotiable instruments for collection
in the ordinary course of business.
7.7 Amendment of Certificate of Incorporation or By-Laws. The Borrower
Shall not amend its Certificate of Incorporation or By-Laws except in the
ordinary course of the Borrower's business.
7.8 Creation of Subsidiary. The Borrower shall not create any subsidiary
of the Borrower or transfer any assets of the Borrower to any subsidiary or
any affiliate of the Borrower.
8. DEFAULT. RIGHTS AND REMEDIES OF THE LENDER.
8.1 Liabilities. In the event a Default described in clause (8) of the
definition of "Default" shall exist or occur, all of the Liabilities shall
automatically, without notice or grace period of any kind, be immediately
due and payable; and in the event any other Default shall exist or occur,
any or all of the Liabilities may, at the option of the Lender but subject
to the provisions of the Credit Purchase Agreement, and after applicable
grace period and without demand or notice of any kind, be declared, and
thereupon shall become, immediately due and payable.
8.2 Rights and Remedies Generally. In the event of a Default, the
obligation of the Lender to make further advances under the Revolving Loan
shall terminate and the Lender shall have, in addition to any other rights
and remedies contained in this Agreement or in any of the other Financing
Agreements, all of the rights and remedies of a secured party under the
Code or other applicable laws, all of which rights and remedies shall be
cumulative, and none exclusive, to the extent permitted by law. In addition
to all such rights and remedies, Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set-off the amount of such
purchase price against the Liabilities then owing. Any sales of the
Collateral may be adjourned from time to time with or without notice.
Lender may, in its sole discretion, cause the Collateral to remain on the
Borrower's premises, at Borrower's expense, pending sale or other
disposition of the Collateral. The Lender shall have the right to conduct
such sales on the Borrower's premises, at Borrower's expense, or elsewhere,
on such occasion or occasions as Lender may see fit.
8.3 Entry Upon Premises and Access to Information. In the event of a
Default, Lender shall have the right to enter upon the premises of the
Borrower where the Collateral is located (or is believed to be located)
without any obligation to pay rent to the Borrower, or any other place or
places where the Collateral is believed to be located and kept, and render
the Collateral temporarily unusable or remove the Collateral therefrom to
the premises of Lender or any agent of Lender, for such time as Lender may
desire, in order effectively to collect or liquidate the Collateral, and/or
Lender may require the Borrower to assemble the Collateral and make it
available to Lender at a place or places to be designated by Lender. In the
event of a Default, Lender shall have the right to obtain access to
Borrower's data processing equipment, computer hardware and software
relating to the Collateral and to use all of the foregoing and the
information contained therein in any manner Lender deems appropriate; and
Lender shall have the right to notify post office authorities to change the
address for delivery of Borrower's mail to an address designated by Lender
and to receive, open and properly distribute all mail addressed to
Borrower.
8.4 Sale or Other Disposition of Collateral by Lender. Any notice
required to be given by Lender of a sale, lease or other disposition or
other intended action by Lender with respect to any of the Collateral which
is deposited in the United States mails, postage prepaid certified mail,
return receipt requested, and duly addressed to the Borrower at the address
specified in Section 9.13, at least ten (10) calendar. days prior to such
proposed action shall constitute fair and reasonable notice to the Borrower
of any such action. The net proceeds realized by Lender upon any such sale
or other disposition, after deduction for the expenses of retaking,
holding, preparing for sale, selling or the like and the reasonable
attorneys' and paralegal fees and legal expenses incurred by Lender in
connection therewith, shall be applied as provided herein toward
satisfaction of the Liabilities including, without limitation, the
Liabilities described in Sections 6.5 and 9.2. Lender shall account to the
Borrower for any surplus realized upon such sale or other disposition, and
the Borrower shall remain liable for any deficiency. The commencement of
any action, legal or equitable, or the rendering of any judgment or decree
for any deficiency shall not affect Lender's security interest in the
Collateral until the Liabilities are fully paid. Borrower agrees that
Lender has no obligation to preserve rights to the Collateral against any
other parties. Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks and
advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and
selling any Collateral or completing scheduled deliveries to customers of
Borrower and including, without limitation, the Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit until
the Liabilities are paid. 8.5 Waiver of Demand. Demand, presentment,
protest, notice of protest, and notice of nonpayment are hereby waived by
the Borrower. The Borrower also waives the benefit of all valuation,
appraisal and exemption laws.
8.6 Collections Received by the Borrower and Its Affiliates. From and
after a Default, the Borrower and any affiliates, subsidiaries, directors,
officers, employees, agents or those Persons acting for or in concert with
Borrower shall, acting as agent for Lender, receive, as the sole and
exclusive property of Lender, any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Accounts or other Collateral which
come into the possession or under the control of Borrower or any affiliates,
subsidiaries, shareholders, directors, officers, employees, agents or those
Persons acting for or in concert the Borrower and, immediately upon receipt
thereof, Borrower shall remit the same, or cause the same to be remitted,
in the form received, to Lender, at Lender's address set forth in Section
9.13.
9. MISCELLANEOUS.
9.1 Waiver. Lender's failure, at any time or times hereafter, to require
strict performance by the Borrower of any provision of this Agreement shall
not constitute a waiver, or affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of a Default by the Borrower on any occasion
under this Agreement or any of the other Financing Agreements shall not
suspend, constitute a waiver or affect any other Default by the Borrower
under this Agreement or any of the other Financing Agreements, whether the
same is prior or subsequent thereto and whether of the same or of a
different kind or character. None of the undertakings, agreements,
warranties, covenants and representations of the Borrower contained in this
Agreement or any of the other Financing Agreements and no Default by the
Borrower under this Agreement or any of the other Financing Agreements
shall be deemed to have been suspended or waived by the Lender unless such
suspension or waiver is in writing signed by an officer of the Lender, and
directed to the Borrower specifying such suspension or waiver.
9.2 Costs and Attorneys' Fees. If at any time or times after the
Execution Date Lender employs counsel in connection with protecting or
perfecting the Lender's security interest in the Collateral or collecting
the Liabilities or in connection with any matters contemplated by or
arising out of this Agreement or any of the Financing Agreements then the
Borrower shall pay all of the reasonable attorneys' and paralegals' fees,
expenses, charges and costs arising pursuant thereto and such fees,
expenses, charges and costs, together with interest at the pre-default rate
prescribed in Section 2.4, shall be part of the Liabilities, payable on
demand and secured by the Collateral, provided that in the event litigation
enforcement of the parties' rights under this Agreement, such fees,
expenses, charges and costs shall be payable by the non-prevailing party.
9.3 Expenditures by Lender. In the event the Borrower shall fail to pay
taxes, insurance, assessments, costs or expenses which the Borrower is,
under any of the terms hereof, required to pay, or fails to keep the
Collateral free from other security interests, liens, claims, charges or
other encumbrances, except as permitted herein, Lender may, in its sole
discretion, make expenditures for any or all of such purposes, and the
amount so expended, together with interest thereon at the post-default rate
prescribed in Section 2.4, shall be part of the Liabilities, payable on
demand and secured by the Collateral.
9.4 Custody and Preservation of Collateral. Lender shall be deemed to
have .exercised reasonable care in the custody and preservation of any of
the Collateral in its possession if it takes such action for that purpose
as the Borrower shall request in writing, but failure by Lender to comply
with any such request shall not of itself be deemed a failure to exercise
reasonable care, and no failure by Lender to preserve or protect any right
with respect to such Collateral against prior parties, or to do any act
with respect to the preservation of such Collateral not so requested by the
Borrower, shall of itself be deemed a failure to exercise reasonable care
in the custody or preservation of such Collateral.
9.5 Reliance by the Lender. All covenants, agreements, representations
and warranties made herein by the Borrower shall, notwithstanding any
investigation by Lender or OG&E, be deemed to be material to and to have
been relied upon by the Lender and OG&E.
9.6 Parties. Whenever in this Agreement there is reference made to any
of the parties hereto, such reference shall be deemed to include a
reference to the successors and assigns of the Borrower and the successors
and assigns of Lender. The Borrower shall not, without the prior written
consent of Lender and OG&E, assign or delegate any of its rights or
obligations hereunder or any part of the Liabilities to any other Person.
The Lender shall be allowed to assign its rights and obligations hereunder
and the other Financing Agreements without the prior written consent of the
Borrower,
9.7 Applicable Law: Severability. This Agreement shall be construed in
all respects in accordance with, and governed by, all of the provisions of
the Code and by the other laws of the State of Oklahoma. Wherever possible,
each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
9.8 Submission to Jurisdiction. The Lender and the Borrower hereby
consent to the jurisdiction of any local, state or federal court located
within the State of Oklahoma and waive any objection which either may have
based on improper venue or forum non conveniens to the conduct of any
proceeding in any such court.
9.9 Application of Payments. From and after the occurrence of a Default,
notwithstanding any contrary provision contained in this Agreement or in
any of the other Financing Agreements, the Borrower irrevocably waives the
right to direct the application of any and all payments at any time or
times thereafter received by Lender from the Borrower or with respect to
any of the Collateral, and the Borrower does hereby irrevocably agree that
Lender shall have the continuing exclusive right to apply and reapply any
and all payments received at any time or times hereafter, whether with
respect to the Collateral or otherwise, against the Liabilities in such
manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records.
9.10 Marshalling: Payments Set Aside. Lender shall be under no obligation
to marshall any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Liabilities. To the extent that
the Borrower makes a payment or payments to Lender or Lender enforces its
security interests or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or
part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred.
9.11 Section Titles. The section titles contained in this Agreement
shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties.
9.12 Continuing Effect. This Agreement, Lender's security interests in
the Collateral, and all of the other Financing Agreements shall continue in
full force and effect so long as any Liabilities shall be owed to Lender.
9.13 Notices. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall be in
writing, shall be addressed to the Person to be notified as follows (or to
such other address or addresses as may hereafter be furnished in writing by
the Person to be notified):
(i) If to Lender at:
Boatmen's National Bank of Oklahoma
211 North Robinson Avenue
P. O. Box 25189
Oklahoma City, Oklahoma 73125-0189
Attention: Sue Anderson, Vice President
with a copy to:
Phillips McFall McCaffrey McVay & Murrah, P.C.
12th Floor, One Leadership Square
211 North Robinson Avenue
Oklahoma City, Oklahoma 73102
Attention: D. Keith McFall
(ii) If to the Borrower at:
Tower Tech, Inc.
P. O. Box 1838
Chickasha, Oklahoma 73023
Attention: Chief Financial Officer
with a copy to:
Hartzog Conger & Cason
1600 Bank of Oklahoma Plaza
201 Robert S. Kerr
Oklahoma City, Oklahoma 73102
Attention: John D. Robertson
(iii) If to OG&E at:
Oklahoma Gas and Electric Company
101 North Robinson
Oklahoma City, Oklahoma 73101
Attention: Treasurer
and notice shall be deemed to have been validly served, given or delivered
on (i) the date of delivery, if delivered in person, (ii) the third
Business Day after deposit in the United States mails, if delivered by
certified mail, return receipt requested, (iii) the first Business Day
after delivery to the courier, if delivered by private overnight courier
service, or (iv) upon actual receipt thereof, if delivered in any other
manner.
9.14 Participations. Lender may sell participations in all or in part of
the Revolving Loan or any part thereof, to any bank or entity, subject to
the limitations set forth in the Credit Purchase Agreement. The terms of
the participations and rights of any participant under this Agreement, the
Revolving Note, or any other document delivered in connection herewith
shall be governed by a participation agreement between the Lender and such
participant. All amounts payable by the Borrower hereunder shall be made as
if Lender had not sold such participation. Lender may furnish any
information in possession of Lender and concerning the Borrower from time
to time to participants or prospective participants.
9.15 Set-off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Lender and any participant in the
Revolving Loan are hereby authorized by the Borrower at any time or from
time to time, without notice to the Borrower, or to any other person, any
such notice being hereby expressly waived, to set off and to appropriate
and apply any and all deposits (general or special, including, but not
limited to, certificates of deposit, whether matured or unmatured but not
including trust accounts) and any other obligations at any time held or
owing by Lender to or for the credit or the account of the Borrower against
and on account of the Liabilities.
9.16 Entire Agreement. This Agreement constitutes the entire agreement
and understanding among the parties with respect to the matters contained
in this Agreement, and supersedes all other agreements among and
representations by the parties with respect to such matters.
9.17 Amendment and Modification. This Agreement may be amended or
modified only by a writing executed and delivered by Borrower, Lender and
OG&E.
9.18 Third Party Beneficiary. This Agreement and the other Financing
Agreements inures to the benefit of OG&E and OG&E shall be a third party
beneficiary for all purposes hereof and thereof.
9.19 Time of the Essence. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
"LENDER": BOATMEN'S NATIONAL BANK OF OKLAHOMA
Sue Anderson, Vice President
"BORROWER" : TOWER TECH, INC., an Oklahoma corporation
Charles D. Whitsitt, Chief Financial Officer
</page>
<PAGE>
Exhibit "A"
REVOLVING PROMISSORY NOTE
$3,800,000.00 September 26, 1996 Oklahoma City, Oklahoma
For value received, TOWER TECH, INC., an Oklahoma corporation ("Maker"),
promises to pay to the order of BOATMEN'S NATIONAL BANK OF OKLAHOMA, P. O.
Box 25189, 211 North Robinson Avenue, Oklahoma City, Oklahoma, 73125-0189
("Lender"), on or before January 31, 1997, the principal sum of Three
Million Eight Hundred Thousand and No/100 Dollars ($3,800,000.00), or so
much thereof as shall be disbursed, together with interest thereon from the
date of funding at the rates hereinafter specified, payable as follows:
The unpaid principal amount from time to time outstanding under this
Note shall bear interest from the date hereof at the following rates per
annum: (a) prior to maturity, at a rate equal to the 30 Day LIBOR, as
hereinafter defined, plus one percent (1.00%), from time to time in effect;
and (b)) after maturity of any installment, whether by acceleration or
otherwise, until paid at a rate equal to the sum of (i) five percent
(5.00%) plus (ii) the 30 Day LIBOR from time to time in effect plus (iii)
one percent (1.00%).
"30 Day LIBOR" shall mean the one month rate, as reported in the "Money
Rates" section of The Wall Street Journal (Southwest Edition) as the
average of interbank offered rates for dollar deposits in the London market
based on quotations at five major banks, one (1) business day before the
last day of each one month interest period under this Note, and shall
remain in effect for the next one month interest period. As of September
20, 1996, the 30 Day LIBOR was 5 1/2%. Lender may, from time to time,
extend credit to anyone at rates of interest varying from, and having no
relation to, the 30 Day LIBOR.
Accrued interest shall be payable monthly beginning September 30, 1996
and on the last day of each month thereafter, through and including the
Maturity Date, at which time all outstanding principal and interest shall
become due and payable.
Interest shall be computed on the actual number of days elapsed on the
basis of a 360 day year.
Payments of both principal and interest are to be made in the lawful
money of the United States of America.
This Note is executed pursuant and subject to the terms and provisions
of that certain Credit Agreement of even date herewith by and between Maker
and Lender (the "Credit Agreement"), to which reference is made for a
statement of such terms and provisions, including, without limitation,
those under which the indebtedness evidenced by this Note may be declared
to be immediately due and payable. Unless otherwise defined, the terms used
herein have the meanings provided in the Credit Agreement. This Note is
secured pursuant to the Credit Agreement, the Security Agreement and the
other Financing Agreements referred to therein, and reference is made
thereto for a statement of additional terms and provisions.
The Maker shall have the right to prepay this Note in whole or in part
at any time and from time to time without premium or penalty, but with
interest to the date of payment on the amount prepaid. All payments under
this Note shall be applied first to any accrued interest and then to
principal.
The Maker agrees that if, and as often as, this Note is placed in the
hands of an attorney for collection or to defend or enforce any of the
holder's rights hereunder, the Maker shall pay to the holder hereof its
reasonable attorney's fees, together with all court costs and other
expenses reasonably incurred and paid by such holder.
The Maker, OG&E, endorsers, sureties, guarantors and all other persons
who may become liable for all or any part of this obligation severally
waive presentment for payment, protest and notice of nonpayment. Said
parties consent to any extension of time (whether one or more) of payment
hereof, any renewal (whether one or more) hereof, and any release of any
party liable for payment of this obligation. Any such extension, renewal or
release may be made without notice to such party and without discharging
said party's liability hereunder.
The failure of the holder hereof to exercise any of the remedies or
options set forth in this Note or in any instrument securing payment
hereof, upon the occurrence of one or more events of default, shall not
constitute a waiver of the right to exercise the same or any other remedy
at any subsequent time in respect to the same or any other event of
default. The acceptance of the holder hereof of any payment which is less
than the total of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any of the foregoing
remedies or options at that time or any subsequent time, or nullify any
prior exercise of any such remedy or option, without the express consent of
the holder hereof, except as and to the extent otherwise provided by law.
It is the intention of the Maker and Lender to comply strictly with all
applicable usury laws; accordingly, it is agreed that notwithstanding any
provisions to the contrary in this Note, or in any of the documents
securing payment hereof or otherwise relating hereto, in no event shall
this Note or other documents require the payment or permit the collection
of an aggregate amount of interest in excess of the maximum amount
permitted by any laws which may apply to this transaction, including the
laws of the State of Oklahoma.
If any such excess of interest is contracted for, charged or received
under this Note or under the terms of any of the documents securing payment
hereof or otherwise relating hereto, or if the maturity of the indebtedness
evidenced by this Note is accelerated in whole or in part, or if all or
part of the principal or interest of this Note shall be prepaid, so that
under any of such circumstances the amount of interest (including all
amounts payable hereunder or in connection with the loan evidenced hereby
which are not denominated as interest but which constitute interest under
applicable laws) contracted for, charged or received under this Note shall
exceed the maximum amount of interest permitted by the applicable usury
laws, as now or hereafter enacted, then in any such event (a) the
provisions of this paragraph shall govern and control, (b) neither the
Maker hereof nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
the applicable usury laws, as now or hereafter enacted, (c) any such excess
interest which may have been collected shall be either applied as a credit
against the then unpaid principal amount hereof or, if this Note shall have
been paid in full, refunded to Maker, and (d) the effective rate of
interest shall be automatically reduced to the maximum lawful contract rate
allowed under the applicable usury laws as now or hereafter construed by
the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received under this Note or under such other
documents which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent
permitted by applicable usury laws, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of
the loan evidenced hereby, all interest at any time contracted for, charged
or received from Maker or otherwise by the holder or holders hereof in
connection with such loan.
The Maker and Lender intend and believe that each provision in this Note
comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of
any provision or provisions, in this Note is found by a court of law to be
in violation of any applicable local, state or federal ordinance, statute,
law, administrative or judicial decision, or public policy, and if such
court should declare such portion, provision or provisions of this Note to
be illegal, invalid, unlawful, void or unenforceable as written, then it is
the intent of all parties hereto that such portion, provision or provisions
shall be given force to the fullest possible extent that they are legal,
valid and enforceable, that the remainder of this Note shall be construed
as if such illegal, invalid, unlawful, void or unenforceable portion,
provision or provisions were not contained herein, and that the rights,
obligations and interest of Maker and Lender under the remainder of this
Note shall continue in full force and effect.
The records of the holder of this Note shall be prima facie evidence of
the amount owing on this Note. This Note may be assigned by holder without
the prior consent of Maker.
This Note is made under and governed by the laws of the State of Oklahoma.
IN WITNESS WHEREOF, the undersigned Maker has executed this instrument
effective the 26th day of September, 1996.
"MAKER": TOWER TECH, INC.
By:
Charles D. Whitsitt, Chief Financial Officer
STATE OF OKLAHOMA
ss. COUNTY OF OKLAHOMA
This instrument was acknowledged before me this day of September, 1996,
by Charles D. Whitsitt as Chief Financial Officer of Tower Tech, Inc.
Notary Public
My Commission Expires:
[SEAL]
</page>
<PAGE>
Exhibit "B"
CREDIT PURCHASE AGREEMENT
THIS CREDIT PURCHASE AGREEMENT (this "Agreement") is made effective as
of the 26th day of September, 1996, by and between OKLAHOMA GAS AND
ELECTRIC COMPANY, an Oklahoma corporation ("OG&E"), having a notice address
at 101 North Robinson, Oklahoma City, Oklahoma, 73101 and BOATMEN'S
NATIONAL BANK OF OKLAHOMA (the "Bank"), having a notice address at 211
North Robinson, Post Office Box 25189, Oklahoma City, Oklahoma, 73125-0189.
WITNESSETH:
WHEREAS, simultaneously with the execution of this Agreement and
pursuant to that certain Credit Agreement of even date herewith (the
"Credit Agreement"), the Bank has committed to extend a revolving loan in
an aggregate principal amount up to Three Million Eight Hundred Thousand
and No/100 Dollars ($3,800,000.00) (the "Revolving Loan"), to Tower Tech,
Inc., an Oklahoma corporation (the "Borrower");
WHEREAS, this Agreement is executed and delivered to the Bank by OG&E to
induce the Bank to make the Revolving Loan to Borrower in satisfaction of a
material condition precedent to such extension of credit by the Bank; and
WHEREAS, unless otherwise defined herein, all capitalized terms used
herein shall have the same meaning as used in the Credit Agreement.
NOW, THEREFORE, in consideration of the Revolving Loan by the Bank to
the Borrower, the mutual covenants and agreements contained in this
Agreement, and other good and valuable consideration not recited in this
Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. In the event the Borrower fails to pay any of the Liabilities on the
date such Liabilities are due, including, without limitation, at the
maturity of the Revolving Loan (collectively, a "Monetary Default"), OG&E
will, within five days of written notice from the Bank of the occurrence of
a Monetary Default and demand for payment of the Liabilities pursuant to
this Section 1, pay to the Bank the full amount of the Liabilities
outstanding under the Credit Agreement, including all outstanding principal
and accrued and unpaid interest thereunder, and thereby purchase the
following (collectively, the "Credit"): (i) all of the Bank's right, title,
interest and obligation in, to and under the Credit Agreement, the
Revolving Loan and the other Financing Agreements, and (ii) all of the
Bank's right, title and interest in, to and under all other instruments
evidencing or securing the Revolving Loan and the Liabilities and any and
all collateral of the Borrower in the possession of the Bank and held as
security under the Credit Agreement or the other Financing Agreements. The
Bank hereby agrees, upon the receipt of payment in full of all Liabilities
outstanding under the Credit Agreement from OG&E, to simultaneously
transfer, assign and convey the Credit to OG&E without recourse or warranty
other than that the Bank has good and valid title thereto free and clear of
any liens, claims (of parties other than the Borrower or OG&E, and
encumbrances. The Bank makes no representations or warranties as to the
title, condition or location of the Collateral.
2. Upon the occurrence of a Default, other than a Monetary Default, the
Bank agrees to obtain the written consent of OG&E prior to exercising and
enforcing the Bank's rights and remedies against the Borrower under the
Credit Agreement and the other Financing Agreements, provided, however,
upon the occurrence of a Monetary Default, the Bank may, subject to the
terms hereof, at the Bank's option, (i) proceed to enforce this Agreement
directly against OG&E without first proceeding against the Borrower or any
other person liable for payment or performance under the Financing
Agreements and without first proceeding against or exhausting any
collateral now or hereafter held by the Bank to secure payment or
performance under the Financing Agreements, and (ii) if upon notice as
provided in Section 1. OG&E fails to perform its obligations as provided in
Section 1 or if OG&E otherwise consents in writing, exercise and enforce
all of its rights and remedies against the Borrower under the Credit
Agreement and the other Financing Agreements.
3. OG&E's obligations under this Agreement are an absolute,
unconditional, continuing obligation to purchase the Credit, provided that
OG&E's obligations hereunder and the Bank's rights hereunder will terminate
upon payment in full of all of the Liabilities owing to the Bank.
4. OG&E agrees that OG&E's liability hereunder will not be released,
reduced, impaired or affected by the occurrence of any one or more of the
following events: acceptance of guarantors or endorsers; the Bank's
obtaining collateral from the Borrower or any other person to secure
payment or performance under the Financing Agreements; the assumption of
liability by any other person (whether as guarantor or otherwise) for
payment or performance under the Financing Agreements; any non-material
modifications, waivers or releases under the Financing Agreements by the
Bank; insolvency, bankruptcy, reorganization, discharge, waiver or other
exoneration of the Borrower or any other person now or hereafter liable for
payment or performance under the Financing Agreements through court order
or judgment; the failure, delay, waiver or refusal by the Bank to exercise
any right or remedy held by the Bank under the Financing Agreements; the
sale, encumbrance, transfer or other modification of the ownership of the
Borrower or the Borrower's assets or the change in the financial condition
or management of the Borrower; the invalidity, unenforceability or
insufficiency of any one or more of the Financing Agreements or any
collateral securing payment or performance thereunder; or the failure of
OG&E to receive notice of any one or more of the foregoing actions or
events. In order to hold OG&E liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort to the Borrower
or any guarantor for payment, to seek or obtain a deficiency judgment
against the Borrower or to proceed against any security or collateral for
the Borrower's obligations under the Financing Agreements. Subject to the
provisions and restrictions of Section 2 hereof, Bank shall have the
absolute, unconditional and continuing right to enforce this Agreement
irrespective of whether or not other proceedings or steps are being taken
against any property securing the Borrower's obligations under the
Financing Agreements or any other party primarily or secondarily liable on
any of Borrower's obligations under the Financing Agreements, OG&E
expressly and voluntarily waives and relinquishes all set offs, rights and
remedies accorded by applicable law, including, without limitation, any and
all offsets, set offs, rights, remedies or defenses with the exception of
those arising out of a breach of this Agreement by the Bank.
5. Except with respect to the notice to be given pursuant to Section 1
hereof, OG&E hereby waives diligence, presentment, protest, notice of
dishonor, demand for payment, notice of nonpayment or nonperformance,
notice of acceptance of this Agreement and all other notices of any nature
in connection with the exercise of the Bank's rights under this Agreement.
OG&E agrees that any rights which OG&E might now or hereafter hold against
the Borrower will be subordinate, junior and inferior to all rights which
the Bank might now or hereafter hold against the Borrower.
6. OG&E shall have the right, to be exercised at any time after the date
hereof in its sole discretion, to pay to the Bank the full amount of the
Liabilities outstanding under the Credit Agreement and thereby purchase the
Credit. The Bank agrees, upon receipt of payment in full of all Liabilities
outstanding under the Credit Agreement to simultaneously transfer, assign
and convey the Credit to OG&E without recourse or warranty [other than that
Bank has good and valid title thereto free and clear of any liens, claims
(of parties other than the Borrower and OG&E), and encumbrances].
7. This Agreement is solely for the benefit of the parties to this
Agreement, and the parties do not intend to create any third-party
beneficiary rights on any other parties, including without limitation, the
Borrower.
8. Following a Monetary Default and OG&E's failure to perform under this
Agreement, nothing herein contained will limit the Bank in exercising any
rights held under any one or more of the Financing Agreements executed
pursuant to the Credit Agreement and the Bank will be entitled to
selectively and successively enforce any one or more of the rights held by
the Bank and such action will not be deemed a waiver of any other right
held by the Bank. Subject to Section 2 hereof, all of the remedies of the
Bank under this Agreement and the Credit Agreement are cumulative and not
alternative.
9. OG&E will also pay or reimburse the Bank for all outstanding fees,
costs or expenses owed by the Borrower to the Bank, and all costs and legal
fees of the Bank for the transfer and assignment of the Credit in
accordance with this Agreement or incurred in the enforcement hereof.
10. The Bank agrees to promptly execute and deliver to OG&E all further
documents and instruments reasonably requested by OG&E in order to effect
the intent of this Agreement and to obtain the full benefit of this
Agreement, including the execution and delivery of any necessary
assignments and transfers relating to the Credit.
11. The Bank agrees not to amend, or waive any material provision of,
the Credit Agreement or any other Financing Agreements without the prior
written consent of OG&F and shall not release all or any material portion
of the Collateral without the prior written consent of OG&E. OG&E hereby
acknowledges that the Collateral is subject to the Permitted Exceptions.
12. The execution and delivery by OG&E of this Agreement and the
performance of OG&E's obligations hereunder: (i) are within OG&E's
corporate powers; (ii) are duly authorized by OG&E's Board of Directors;
(iii) are not in contravention of the terms of OG&E's Certificate of
Incorporation or By-Laws, or of any indenture, mortgage, deed of trust,
loan or credit agreement or other material agreement or undertaking to
which OG&E is a party or by which OG&E or any of its property is bound;
(iv) do not, as of the execution hereof, require any governmental consent,
registration or approval which has not been obtained; (v) do not contravene
any governmental restriction binding upon OG&E; and (vi) will not, except
as contemplated herein, result in the imposition of any lien, claim,
charge, security interest or other encumbrance upon any property of OG&E
under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other material agreement or instrument to which OG&E is a
party or by which it or any of its property may be bound or affected.
13. Except as otherwise expressly provided herein, any notice required
or desired to be served, given or delivered hereunder shall be in writing,
shall be addressed to the Person to be notified as follows (or to such
other address or addresses as may hereafter be furnished in writing by the
Person to be notified):
(i) If to Bank at:
Boatmen's National Bank of Oklahoma
211 North Robinson Avenue
P. O. Box 25189
Oklahoma City, Oklahoma 73125-0189
Attention: Sue Anderson, Vice President
(ii) If to OG&E at:
Oklahoma Gas and Electric Company
101 North Robinson
Oklahoma City, Oklahoma 73101
Attention: Treasurer
and notice shall be deemed to have been validly served, given or delivered
on (i) the date of delivery, if delivered in person, (ii) the third
Business Day after deposit in the United States mails, if delivered by
certified mail, return receipt requested, (iii) the first Business Day
after delivery to the courier, if delivered by private overnight courier
service, or (iv) upon actual receipt thereof, if delivered in any other
manner.
14. OG&E covenants and agrees that, so long as any Liabilities remain
outstanding under the Credit Agreement and the other Financing Agreements,
OG&E will cause to be furnished to Bank a copy of its most current Form 10-
Q as filed with the Securities and Exchange Commission.
15. This Agreement has been negotiated, executed and delivered in
conjunction with the loan to be made in Oklahoma County, Oklahoma and this
Agreement is intended to be construed in accordance with the laws of the
State of Oklahoma. OG&E consents to the venue and jurisdiction of any state
or federal court sitting in the State of Oklahoma in any action arising
under this Agreement. If any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect or application for any
reason, such invalidity, illegality or unenforceability will not affect any
other provisions herein contained and such other provisions will remain in
full force and effect. This Agreement will be binding on OG&E and all
successors and assigns of OG&E and will inure to the benefit of the Bank
and all successors and assigns of the Bank.
16. OG&E consents to the assignment of all or any portion of the rights
of the Bank hereunder in connection with any assignment of the rights of
the Bank under the Financing Agreements, provided that OG&E receives
reasonable prior notice of such assignment if such assignment is outside
the Bank's banking group. OG&E may at any time assign its rights and
obligations under this Agreement to OG&E Energy Corp. ("Parent"), provided.
however. that such assignment shall be null and void and of no effect
unless: (i) Parent enters into the Assignment and Assumption Agreement
attached hereto as Exhibit "A" (the "Assumption"); (ii) Bank has received
copies of a Certificate of Good Standing for the Parent and the Certificate
of Incorporation of the Parent, together with all amendments, from the
appropriate governmental officer in its jurisdiction of incorporation;
(iii) Bank has received copies, certified by the secretary or assistant
secretary of Parent of its Bylaws and of its Board of Directors'
resolutions authorizing the execution, delivery and performance of the
Assumption and this Agreement; (iv) Bank has received an incumbency
certificate authorized by the secretary or assistant secretary of Parent,
which will identify by name and title and bear the signatures of the
officers of Parent authorized to sign the Assumption, upon which
certificate Bank will be entitled to rely until informed of any change in
writing by Parent; (v) Bank has received a favorable opinion from legal
counsel for Parent having the same form and content as the Rainey, Ross,
Rice & Binns opinion of even date herewith issued on behalf of OG&E,
including, without limitation, Parent's authority to execute and deliver
the Assumption and be bound by the terms of this Agreement; and (vi)
Parent's commercial paper is rated A-l+ or better by Standard and Poor's
Corporation or P1 or better by Moody's Investors Service, Inc. at the time
of the Assumption. This Agreement cannot be amended except by an agreement
in writing signed by OG&E and the Bank.
IN WITNESS WHEREOF, OG&E and Bank have duly executed this Agreement
effective as of the date first above written in multiple counterpart
copies, each of which executed counterparts shall be deemed an original for
all purposes and all of which executed counterparts shall constitute but
one and the same instrument.
"OG&E": OKLAHOMA GAS AND ELECTRIC COMPANY, an Oklahoma corporation
By:
James R. Hatfield, Treasurer
"BANK": BOATMEN'S NATIONAL BANK OF OKLAHOMA
By:
Sue Anderson, Vice President
STATE OF
) SS. COUNTY OF
This instrument was acknowledged before me this 26th day of September,
1996,by James R. Hatfield as Treasurer of Oklahoma Gas and Electric Company,
an Oklahoma corporation.
Notary Public
My Commission Expires:
(SEAL)
STATE OF
) SS. COUNTY OF
This instrument was acknowledged before me this day of September, 1996,
by Sue Anderson, Vice President of Boatmen's National Bank of Oklahoma.
Notary Public
My Commission Expires:
(SEAL)
</page>
<PAGE>
Exhibit "A"
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment and
Assumption Agreement") is entered into and effective the , 19 ,
among Oklahoma Gas and Electric Company, an Oklahoma corporation (the
"Utility"), OGE Energy Corp., an Oklahoma corporation (the "Parent"), and
Boatmen's National Bank of Oklahoma (the "Bank).
WHEREAS, the Utility is a party to that certain Credit Purchase
Agreement (as amended, supplemented or otherwise modified from time to
time, the "Credit Purchase Agreement") dated as of September 26, 1996
between the Utility and the Bank.
WHEREAS, the Utility is hereby assigning to the Parent all of the
Utility's rights and obligations under the Credit Purchase Agreement; and
WHEREAS, the Parent has agreed to become a party to the Credit Purchase
Agreement, to be bound by all of the terms thereof and to perform all of
the obligations of the Utility thereunder.
NOW, THEREFORE, in consideration of the promises herein made and subject
to the terms and conditions herein set forth, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Credit Purchase Agreement.
2. Assignment and Delegation. As of the date hereof, the Utility hereby
irrevocably (i) assigns, transfers and conveys to the Parent all of the
Utility's rights, title and interest in and to the Credit Purchase
Agreement, and (ii) delegates to the Parent all of its obligations and
liabilities under the Credit Purchase Agreement.
3. Assumption. As of the date hereof, the Parent hereby accepts the
foregoing assignment and delegation and agrees to assume and be bound by
all of the terms of, and to undertake all of the obligations and
liabilities of the Utility contained in, the Credit Purchase Agreement to
the same extent as if the Parent were a party to the Credit Purchase
Agreement. The Parent hereby agrees and confirms that it shall be a party
to the Credit Purchase Agreement and all references to "OG&E" in the Credit
Purchase Agreement shall refer to the Parent. The Parent hereby ratifies
and confirms all previous action taken or instructions given by the Utility
under the Credit Purchase Agreement.
4. Release of Utility. Simultaneously with the effectiveness of this
Assignment and Assumption Agreement, the Utility shall be released from its
obligations under the Credit Purchase Agreement.
5. Representations. Warranties and Agreements of the Utility. The Utility
hereby represents and warrants to the Parent and the Bank that this
Assignment and Assumption Agreement has been duly executed and delivered by
the Utility and, assuming due authorization, execution and delivery by the
Parent, constitutes a legal, valid and binding obligation of the Utility.
6. Representations and Warranties of the Parent. The Parent hereby
represents and warrants to the Utility and the Bank that (i) this
Assignment and Assumption Agreement has been duly executed and delivered by
the Parent and, assuming due authorization, execution and delivery by the
Utility, constitutes a legal, valid and binding obligation of the Parent,
(ii) the Parent has the requisite corporate power and authority to enter
into and carry out the transactions contemplated by this Assignment and
Assumption Agreement and the Credit Purchase Agreement, (iii) each of the
Utility and the Parent has performed in all material respects all
agreements and satisfied all conditions which the Credit Purchase Agreement
provides shall be performed by it on or before the date hereof, and (iv)
the representations and warranties contained in Section 12 of the Credit
Purchase Agreement are true and correct as to the Parent as of the date
hereof.
7. Further Assurances. Each party hereto agrees that from time to time
after the date hereof, it shall execute and deliver or cause to be executed
and delivered such instruments. documents and papers, and take all such
further action as may be reasonably required in order to consummate more
effectively the purposes of this Assignment and Assumption Agreement and to
implement the transactions contemplated hereby.
8. Amendment. No waiver, modification or amendment of any provision of
this Assignment and Assumption Agreement shah be effective unless it is in
writing and signed by the Utility, the Parent and the Bank.
9. GOVERNING LAW. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF OKLAHOMA.
10. Counterparts. This Assignment and Assumption Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be duly executed and delivered on the day and year
first above written.
OKLAHOMA GAS AND ELECTRIC COMPANY
By: Title:
OGE ENERGY CORP.
By: Title:
BOATMEN'S NATIONAL BANK OF OKLAHOMA
By: Title:
</page>
<PAGE>
Exhibit "C"
REOUEST FOR ADVANCE
(Tower Tech, Inc.)
Reference is made to that certain Credit Agreement ("Credit Agreement")
between TOWER TECH, INC., an Oklahoma corporation (the "Borrower"), and
BOATMEN'S NATIONAL BANK OF OKLAHOMA ("Bank") dated September 26th 1996.
Terms which are defined in the Credit Agreement and which are used but not
defined herein shall have the meanings given them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, the Borrower and Oklahoma
Gas and Electric Company ('OG&E") hereby request Bank to advance funds to
the Borrower under the Revolving Note in the principal amount of $ _______,
which sum the Borrower is entitled to pursuant to the terms of the Credit
Agreement.
The Borrower hereby certifies that:
1. To the best of Borrower's knowledge, the representations and
warranties set forth in all Financing Agreements are true and correct on
and as of the date hereof, with the same effect as though such
representations and warranties had been made on and as of the date hereof.
2. To the best of Borrower's knowledge, there does not exist on the date
hereof any condition or event which constitutes a Default under any of the
Financing Agreements.
3. To the best of Borrower's knowledge, the Borrower has performed and
complied with all agreements and conditions in the Credit Agreement
required to be performed or complied with by the Borrower on or prior to
the date hereof and each of the conditions precedent to an additional
advance under the Revolving Note contained in the Credit Agreement has been
satisfied.
4. As of the date hereof, there has been no material adverse change in
the financial condition of the Borrower or from the date of the Credit
Agreement and the Borrower is not the subject of any bankruptcy,
reorganization or insolvency proceeding.
5. To the best of Borrower's knowledge, there is no action, suit or
administrative proceeding pending or threatened, affecting the Borrower, at
law or in equity, before any federal, state, municipal or other
governmental agency or authority which involves the likelihood of any
liability which would result in any material adverse change in the business
operations, properties or condition (financial or otherwise) of the
Borrower.
6. To the best of Borrower's knowledge, the Borrower is not in default
with respect to any order, writ, injunction or other decree by a court or
any other governmental agency or authority.
7. To the best of Borrower's knowledge, the execution, delivery and
performance of the documents to be executed in connection with the
disbursement under the Revolving Note will not constitute a violation of or
a default under any other agreement by which the Borrower is bound.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
___day of 1996.
"BORROWER": TOWER TECH, INC.
By: Its:
"OG&E": OKLAHOMA GAS & ELECTRIC COMPANY, a
Oklahoma corporation
By:
,Treasurer
</page>
<PAGE>
Exhibit "D"
Monthly Report
TOWER TECH, INC., an Oklahoma corporation
[DATE]
Boatmen's National Bank of Oklahoma 211 North Robinson
P. O. Box 25189
Oklahoma City, Oklahoma 73125-0189
Attention: Sue Anderson, Vice President
Dear Sue:
This Certificate is submitted in compliance with the requirements of
Section 3.1 of that certain Credit Agreement entered into effective
September 26th 1996 (the "Agreement"), by and between TOWER TECH, INC., an
Oklahoma corporation (the "Borrower"), and BOATMEN'S NATIONAL BANK OF
OKLAHOMA (the "Bank"). Unless otherwise defined herein, all capitalized
terms shall have the meaning ascribed to them in the Agreement. By
execution hereof, the undersigned officer or other authorized
representative of the Borrower, certifies that: (i) no Default or Event of
Default has occurred or is continuing or, if a Default or Event of Default
has occurred during such month, a description of such Default or Event of
Default and of the actions the Borrower has taken and intends to take to
cure the same has been attached hereto; (ii) all representations and
warranties contained in the Agreement or any of the Loan Documents remain
as materially true and correct on this date as when they were originally
submitted to the Bank; (iii) attached hereto as Schedule "A" is the most
current Accounts Trial Balance; and (iv) the outstanding principal balance
of the Revolving Loan is $
This information is submitted as of the date and year first above written.
Sincerely,
TOWER TECH, INC.
By: Title:
</page>
<PAGE>
Exhibit "E"
HARTZOG CONGER & CASON
A PROFESSIONAL CORPORATION
LAWYERS
600 BANK OF OKLAHOMA PLAZA
201 ROBERT S. KERR
OKLAHOMA CITY OKLAHOMA 73102
(405)235-7000 FACSIMILE (405) 235-7329
September 26, 1996
Boatmen's National Bank
of Oklahoma
Boatmen's Plaza
211 North Robinson Oklahoma City, OK 73102
Attention: Sue Anderson, Vice President
Re: Credit Agreement dated September 26, 1996, between Tower Tech, Inc. and
Boatmen's National Bank of Oklahoma
Dear Ms. Anderson:
We have acted as counsel to Tower Tech, Inc. ("borrower') in connection
with the above-referenced transaction. This opinion is delivered to you
pursuant to Section 4(vi) of the Credit Agreement (the "Credit Agreement"),
dared effective September 26, 1996, between Borrower and Boatmen's National
Bank of Oklahoma ("Bank"). Except as otherwise specified in this opinion,
all capitalized words and phrases used in this opinion are defined in the
Credit Agreement and shall have the respective meanings ascribed to them
therein.
In our capacity as counsel to Borrower, and in connection with the
opinions hereinafter expressed, we have examined the following documents
and papers:
1. Certificate of Incorporation of Borrower, and all amendments thereto,
issued by the Office of the Secretary of State of Oklahoma (the
"Certificate of Incorporation");
2. Bylaws of Borrower, dated September 23, 1993, as amended to date (the
"Bylaws");
3. Certificate of Corporate Secretary dated September 25, 1996;
4. Consent in Lieu of Meeting of the Board of Directors of Borrower dated
September 24, 1996;
5. A Certificate (the "Certificate"), dated as of the date hereof, from
the Borrower certifying the truth and accuracy of certain matters relating
to the Borrower;
6. The Credit Agreement;
7. Revolving Promissory Note;
8. Security Agreement; and
9. UCC-1 Financing Statement covering the Collateral executed by Borrower
in favor of Bank.
The documents and instruments set forth in subparagraphs 6 through 9 are
sometimes herein collectively referred to as the "Loan Documents".
We have also examined such questions of law and such other documents,
data and records of or pertaining to Borrower furnished to us by Borrower
as we deemed necessary, appropriate or advisable in order to give the
opinions hereinafter set forth.
In making our examination of the Loan Documents, we have assumed (except
as to Borrower) (i) the due existence and good standing of each party
thereto, (ii) that each such party had the power to enter into and perform
all of its obligations thereunder, (iii) the due authorization by each such
party of all requisite action, and (iv) the due execution and delivery of
such document by each such party. We have also assumed the disbursement of
the proceeds of the Loans under the Loan Documents and that the interest
rate applicable to the Loans will not exceed 45% per annum.
Based upon the foregoing, and subject to the assumptions, limitations,
qualifications and exceptions set forth herein, it is our opinion that:
1. Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Oklahoma and, to our
knowledge, is duly qualified and in good standing as a foreign corporation
in all jurisdictions in which its present operations or the ownership of
its properties require such qualification, except where the failure to be
so qualified would not have a material adverse effect on the financial
condition of Borrower or on the ability of the parties to consummate the
transactions contemplated by the Loan Documents. Borrower has all requisite
power and authority to carry on its business as such business is known to
us to be conducted. The Loan Documents have been duly executed, authorized
and delivered by Borrower and constitute the legal, valid and binding
obligations of Borrower enforceable in accordance with their respective
terms and provisions.
2. The execution, delivery and performance of the Loan Documents by
Borrower does not and will not (a) conflict with, or result in a breach of
the terms, conditions or provisions of or constitute a default under or
result in any violation of the Certificate of Incorporation or the Bylaws
of Borrower or, to our knowledge, any agreement, instrument, undertaking,
judgment, decree, order, injunction, statute, law, rule or regulation to
which Borrower is subject or by which Borrower's assets are bound or
affected; (b) to our knowledge, result in the creation or imposition of any
lien, charge, or encumbrance on, or security interest in, any property now
or hereafter owned by Borrower pursuant to the provisions of any mortgage,
indenture, security agreement, contract, undertaking or other agreement to
which Borrower is a party other than the obligations of Borrower in favor
of the Bank created by the Loan Documents; or (c) to our knowledge, require
any authorization, consent, license, approval or authorization of, or other
action by, notice or declaration to, or registration with, any court or
administrative or governmental body (domestic or foreign), or, to the
extent any consent or other action may have been required, it has been
validly procured or duly taken.
3. To our knowledge, there are no actions, suits or proceedings pending
or threatened against or affecting Borrower before any court or arbitrator
or before any administrative agency or governmental authority which, if
adversely determined, would have a materially adverse effect on the
financial condition or business of Borrower.
4. To our knowledge, Borrower is not in default with respect to any
material agreement, instrument, undertaking, judgment, decree, order, writ,
injunction, statute, law, rule, regulation, permit or license, which
default has, or is likely to have, a material adverse effect on Borrower.
In rendering the foregoing opinions, we have relied without independent
investigation (other than various inquiries directed to our client
regarding appropriate factual matters) upon the Certificate, a copy of
which is attached hereto. Where reference is made in this letter to matters
we know or which are within our knowledge. such reference means only that
we do not know of any facts or circumstances contradicting the statement
which ensues, and does not imply that we know that statement to be correct
or have any basis (other than the documents referred to above and
information obtained by us in the course of our representation of the
Borrower) for that statement. Furthermore, the "knowledge" referred to is
solely the actual knowledge of the attorneys of our firm who worked on the
Loan Documents and does not include matters of which such attorneys could
otherwise be deemed to have constructive knowledge, nor the knowledge of
other attorneys in our firm.
Our opinion set forth in this letter as to the validity, binding effect and
enforceability of the Loan Documents are specifically qualified to the
extent that the validity, binding effect or enforceability of any
obligations of Borrower under such documents, or the availability or
enforceability of any of the remedies provided in such documents, may be
subject to or limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other statutory or decisional laws,
now or hereafter in effect, affecting the rights of creditors generally,
(ii) the exercise of judicial or administrative discretion in accordance
with general equitable principles (regardless of whether enforcement is
sought in a proceeding at law or in equity), (iii) the application by
courts of competent jurisdiction of laws containing provisions determined
to have a paramount public interest, (iv) your implied duty of good faith,
and (v) the availability or enforceability of particular remedies, of
exculpatory provisions and of waivers contained in the Loan Documents and
the other agreements and instruments contemplated by the Loan Documents,
which particular remedies, exculpatory provisions and waivers of rights may
be limited by and are subject to equitable principles, applicable laws,
rules, regulations, court decisions and constitutional requirements and the
discretion of the court before which any proceeding for relief may be
brought. We express no opinion as to the right of the Bank to accelerate
the due date of the Loans made pursuant to the Loan Documents upon the
happening of an immaterial breach of the Loan Documents (including material
breaches of nonmaterial provisions thereof). Without limiting the
foregoing, we express no opinion as to the availability of specific
performance or other equitable remedies (with the exception of a
foreclosure or similar action) as a remedy for noncompliance with the
agreements of Borrower.
We have not made or undertaken to make any independent investigation of
the status of the title of the properties in which a lien or security
interest is created by the Loan Documents and, accordingly, we express no
opinion as to (i) the status of title to such properties, or (ii) the rank
or priority of the liens and security interests intended to be created by
the Loan Documents, or (iii) the existence of other liens, security
interests or encumbrances on such properties, or (iv) whether the grant to
Lender of a security interest in the Collateral conflicts with or will
result in a breach of the terms, conditions or provisions of, or
constitutes a default under, any agreement or instrument evidencing or
relating to the Permitted Exceptions.
We have also assumed the authenticity and accuracy of all documents
submitted to us as originals, the genuineness of all signatures thereon,
the legal capacity of natural persons executing such documents, and the
conformity to originals of all documents submitted to us as copies.
We are licensed to practice in the State of Oklahoma only, and the
foregoing opinions are based on and limited to the laws of the State of
Oklahoma and the relevant federal laws.
This opinion is solely for your information and is not to be quoted in
whole or in part or otherwise referred to, nor is it to be filed with any
governmental agency or any other person without our prior written consent,
and no one other than you is entitled to rely on this opinion in any
manner. The opinions expressed in this letter are based on the law as in
effect on the date of this letter and are subject to any change in such
law, including judicial and administrative interpretations which may occur
or be reported subsequent to the date of this letter. This opinion is given
to you as of the date hereof, and we assume no obligation to advise you of
changes, facts or circumstances that may hereafter be brought to our
attention. Notwithstanding anything to the contrary herein, we hereby
acknowledge and agree that your counsel, Phillips McFall McCaffrey McVay &
Murrah, P.C., may rely upon this opinion, as may any and all participants
in the Loans or any part thereof.
Respectfully submitted,
Hartzog Conger & Cason
</page>
<PAGE>
Exhibit "F"
RAINEY. ROSS. RICE & BINNS
115 FIRST NATIONAL CENTER WEST
OKLAHOMA CITY, OKLAHOMA 73102-7495
TELEPHONE (405) 235-1356
FAX (401) 235-2340
September 26, 1996
Boatmen's First National Bank of Oklahoma 211 North Robinson
Post Office Box 25189
Oklahoma City, Oklahoma 73125-0189
Attention: Sue Anderson, Vice President
Re: Credit Agreement dated September 26, 1996 (the "Credit Agreement") by
and between Tower Tech Inc., an Oklahoma corporation ("Borrower"), and
Boatmen's First National Bank of Oklahoma ("Lender"); and Credit Purchase
Agreement by and between Oklahoma Gas and Electric Company, an Oklahoma
corporation ("OG&E"), and Lender.
Dear Ms. Anderson:
We have acted as counsel to OG&E in connection with a revolving loan to
be made by the Lender to the Borrower in the maximum principal amount of
163,800,000. Capitalized terms used in this opinion letter and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
We have reviewed the Credit Agreement and the other Loan Documents,
including the Credit Purchase Agreement, as defined in the Credit
Agreement, and have also examined such other documents and made such
inquiries in the Credit Agreement, and have also examined such other
documents and made such inquiries as we deem necessary or appropriate for
the purpose of these opinions.
We have been furnished with certificates of officers of OG&E with
respect to certain factual matters. We have relied upon such certificates
and assurances from public officials as we have deemed necessary.
Based on our examination, we are of the following opinions:
1. OG&E is a corporation validly existing and in good standing under the
laws of the State of Oklahoma and has all requisite corporate power and
authority to carry on its business as now conducted, to own its properties
and to execute and deliver the Credit Purchase Agreement.
2. The execution, delivery and performance of the Credit Purchase Agreement
by OG&E has been duly authorized by all necessary action in compliance with
applicable law and the provisions of the Articles of Incorporation and By-
laws of OG&E.
3. The Credit Purchase Agreement has been duly executed and delivered by
OG&E and constitutes the legal, valid and binding obligations of OG&E,
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by applicable bankruptcy insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights
of creditors and the application of general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4. We have no knowledge of any approval, authorization, order, license,
permit, franchise or consent of, or registration declaration or filing with
any governmental authority or private entity which is required of OG&E in
connection with the transactions covered by the Credit Purchase Agreement
other than those already obtained by OG&E.
5. Except as disclosed in OG&E's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 and its Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1996 and September 30, 1996 filed
with the Securities and Exchange Commission, we have no knowledge of any
action, suit or administrative proceeding pending or threatened against
OG&E or its assets, at law or in equity, before any federal, state,
municipal or other governmental agency or authority, which involves the
significant likelihood of any liability which would result in any material
adverse change in the business, operations, properties or condition
(financial or otherwise) of OG&E.
6. The execution, delivery and performance of the Credit Purchase
Agreement will not constitute a violation of or a default under any other
agreement of which we have knowledge and by which OG&E is bound.
This opinion is limited to the application of the laws of the United
States and the State of Oklahoma and we express no opinion as to the laws
of any other jurisdiction.
This opinion is furnished solely for your benefit in connection with the
above transactions. This opinion may not be relied upon for any other
purpose, or furnished to, quoted to or relied upon by any other person,
firm or corporation for any purpose without our prior written consent,
provided this opinion may be provided to and relied upon by your counsel,
Phillips, McFall, McCaffrey, McVay, & Murrah, P.C.
Very truly yours,
HUGH D. RICE
<PAGE>
COMMMERCIAL/INDUSTRIAL REAL ESTATE PURCHASE CONTRACT
This is a legally binding contract; if not understood seek legal advice.
Oklahoma City, Oklahoma, March 1996
1. PROPERTY: undersigned Buyer(s) ("Buyer") hereby agrees to purchase
from the undersigned Seller(s) (Seller) the following described property
(the "Property):
(a) The following described real estate (the "Land"):
Approximately 30 acres located in and a part of the SE/4 of Sec. 11,
T10N, R 4W of the I.M. Approximate 30 acre location is marked in red on
attached Exhibit "1." Exact legal description of said 30 ac. shall be
determined by survey, Cleveland County, Oklahoma, which street address is:
(b) (check one)
___ together with all of Seller' right, title, interest and estate in and
to oil, gas and other minerals in and under the Land not previously
reserved or conveyed of record, or
X less and except all oil, gas and other minerals in and under the Land:
(c) together with all of the buildings. structures and improvements in, on
or under the Land (the "Improvements");
(d) together with all of the appurtenances belonging thereto and all of
Seller's right, title and interest in and to all streets, alleys and other
public ways adjacent to the land:
(e) subject to existing zoning ordinances, restrictions, easements and
rights of way
___________________________________________________________________; and
(f) the following described personal property (the "Personal Property")
______________________________________________________________________
______________________________________________________________________
upon the following terms and conditions:
2. TERMS: Buyer shall pay for the Property the sum of. Two Hundred Fifty
Thousand
and no/100 Dollars ($250,000.00) payable as follows:
(a) The sum of $10,000 00 (check) as Earnest Money, receipt of which is
hereby
acknowledged, and upon acceptance in writing and delivery of this Contract.
the Earnest Money shall promptly be assigned to and deposited in the trust
account of Gerald L.
Gamble Co., Inc., to be applied on the purchase price and/or closing costs,
if any, at the
time of the Closing;
(b) At Closing, IN CASH OR CERTIFIED FUNDS, the further sum of $90,000.00
(subject to the adjustments set forth in this Contract); and
(c) The balance (subject to adjustments set forth in this Contract) as
follows:
Set forth in paragraph 17 on attached Addendum "A."
3. TITLE EVIDENCE: Seller shall furnish Buyer title evidence covering the
Property,
which shows marketable title vested in Seller according to the title
standards adopted by
the Oklahoma Bar Association.
(a) Such title evidence shall be in the form of: (check one)
X Commitment for Owner's Title Insurance Policy. The premium for such
Policy
including the attorney's fees for examination of the abstract shall be paid
50% by Seller and 50% by Buyer. All abstracting costs shall be paid by
Seller. Such Policy shall insure
Buyer in an amount equal to the purchase price. The mechanics. And
materialmen's liens
exception shall be deleted from such Policy.
____ Abstract of Title. The Seller, at Seller's expense, shall provide an
abstract of title
certified to a date subsequent to the date of this Contract (including
current Uniform Commercial Code Certification and U.S. District Court
Certification). Buyer shall, at Buyer's expense, obtain either a title
opinion or an Owner's Title Insurance Policy.
(b) A pin survey (check one)
___shall not be provided, or
X shall be provided to Buyer by Seller. The cost of such survey shall be
paid 50% by Seller and 50% by Buyer. The survey of the Land and
improvements shall be prepared by a licensed surveyor, and shall contain
such detail and certification to permit the survey exceptions to be deleted
from the Owner's Title Insurance Policy. Any encroachment shown on the
survey shall be deemed to be a title defect, unless the title company
agrees to provide affirmative coverage against loss arising from any final
court order or judgment which denies the right to maintain the existing
improvements on the Land because of such encroachment.
(c) Seller shall make existing title evidence (base abstract of title or
Owner's Title Insurance Policy) available to the escrow closing agent
within a reasonable time after the date of acceptance of this Contract.
(d) Upon delivery to Buyer of the last of the current Commitment for
Owner's Title Insurance Policy, the certified abstract or the certified
survey, whichever are to be provided under this Contract. Buyer shall have
a reasonable time, not to exceed 30 days, to examine same and return same
to Seller with a written report specifying any objections or defects in the
title or such right to object shall be deemed waived. Seller shall have 30
days after receipt of such report to correct such defects and perfect title
unless such time is extended in writing by Buyer. If Seller is unable or
unwilling to cure any defects within such period, then unless Buyer waives
such defects in writing, this Contract will terminate and the Earnest Money
shall be refunded to Buyer less costs which Buyer has agreed to pay.
(e) The title to the Property shall be conveyed to Buyer by General
Warranty Deed in recordable form unless otherwise specified in Paragraph 4
below. Upon Closing the existing abstract of title shall become tile
properly of Buyer
(1) Title to any Personal Property specified herein shall be conveyed to
Buyer by Bill of Sale.
4. SPECIAL PROVISIONS AND/OR ATTACHMENTS HERETO: See Addendum "A" attached
hereto and by reference made a part hereof for additional terms and
conditions of this Contract.
5. TAXES, ASSESSMENTS AND PRORATIONS:
(a) Seller shall pay all expenses owing to the day of Closing. including,
but not limited to, real estate ad valorem taxes, personal property taxes,
matured or unmatured special assessments, interest on any indebtedness
assumed hereunder, insurance, all utility bills, salaries and any other
expenses related to the operation of the Property, if the amount of taxes
cannot be ascertained, such proration shall be on the basis of the taxes
paid for the preceding year. All other expenses shall be prorated on the
basis of thirty days to the month on the basis of such expense paid for the
previous month.
(b) Rents shall be prorated on the basis of thirty days to the month.
Rents delinquent more than thirty days shall be collected by the Seller
and shall not be adjusted.
(c) Buyer shall receive all income and shall pay all expenses for the day
of Closing.
Buyer's Initials ______________________ Seller's Initials ________________
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<PAGE>
COMMERCIAL/INDUSTRIAL REAL ESTATE PURCHASE CONTRACT
This is a legally binding contract; if not understood seek legal advice.
(d) Any and all leases in effect shall be assigned. and security deposits
and prepaid rents, if any, shall be paid to Buyer by Seller al the Closing
unless otherwise provided herein
6. CONDITION OF PROPERTY:
(a) Until the Closing or transfer of possession, risk of loss to the
Property. ordinary wear and tear excepted, shall be upon the Seller. After
the Closing or transfer of possession, such risk shall be upon the Buyer.
(b) Unless otherwise agreed upon in writing, Buyer, by the Closing or
taking possession of the Property, shall be deemed to have accepted the
Property in its then existing condition. including fixtures and equipment
permanently affixed to the Property and shall acknowledge the same to
Seller in writing at the Closing. To the best of Seller's knowledge. No
hazardous substances or conditions exist on the Property, NO WARRANTIES are
expressed or implied by Seller or Seller's agents that shall be deemed to
survive the Closing with reference to the condition of the Property or any
fixtures or equipment.
(c) Except for the provisions above, the Seller shall deliver the Property
and improvements thereon in their present condition, ordinary wear and tear
excepted.
(d) Utilities, if presently on, shall be left on until Closing.
7. CLOSING/POSSESSION: This transaction shall be closed on or before
Wednesday May 15, 1996
(the "Closing"), unless the Closing is extended as may be required by
Paragraph 3(d) above, or by written agreement of Seller and Buyer with
legal possession delivered to Buyer at the time of the Closing and actual
and complete possession of the Property to be given at the Closing or as
follows: ________________________________________
8. BUYER'S EXPENSE: Buyer shall pay at the time of the Closing. IN CASH
OR CERTIFIED FUNDS, one-hall of the escrow closing fee. Buyer's recording
fees. Oklahoma sales tax (if any). and ail other funds required from Buyer
set forth in this Contract.
9. SELLER'S EXPENSE: Seller shall pay at the time of the Closing,
documentary stamps required, one-half of the escrow closing fee. Seller's
recording lees (if any). and all other expenses required from Seller set
forth in this Contract.
10. DEFAULT:
(a) If Buyer wrongfully refuses to close. Seller and Buyer agree that
since it is impracticable and extremely difficult to fix the actual damages
sustained, the Earnest Money shall be forfeited as liquidated damages to
Seller, subject to deduction for expenses incurred and one-half of the
balance thereof shall be retained by the REALTOR(S) to apply on
professional services. Seller may, at Seller's option, seek specific
performance
(b) If Seller's title detects cannot be corrected as herein provided. or if
Seller wrongfully refuses to close, Buyer's Earnest Money shall be returned
after deduction for expenses incurred on Buyer's behalf and Seller shall be
liable for any other expenses incurred on Seller's behalf as provided in
this Contract Buyer may, at Buyer's option, seek specific performance. (c)
In the event any suit is instituted. the prevailing party shall have the
right to recover all of such party's expenses and costs incurred by reason
of such litigation including. but not limited to, attorney's fees, court
costs. and costs of suit preparation.
11. BINDING EFFECT: This Contract, when executed by both Seller and
Buyer, shall be binding upon and inure to the benefit of Seller and Buyer,
their respective heirs, legal representatives, successors and permitted
assigns. This Contract sets forth the complete understanding of Seller and
Buyer and supersedes all previous negotiations, representations and
agreements between them and their agents. This Contract can only be
amended, modified, or assigned by written agreement signed by both Seller
and Buyer 12. ACCEPTANCE TIME: The foregoing offer is made subject to
acceptance in writing hereon by Seller, and the return of an executed copy
to the undersigned Buyer on or before 5:00 p.m.., Tuesday, March 26, 1996.
If the offer is not accepted, the Earnest Money shall be returned to Buyer.
13. TIME IS OF THE ESSENCE.
14. DISCLAIMER AND INDEMNIFICATION: It is expressly understood by Seller
and Buyer that Listing REALTOR or its agents and Selling REALTOR or its
agents do not warrant the present or future value, size by square footage.
condition. structure or structure systems of the Property or any
improvements, nor do they hold themselves out to be experts in quality,
design and construction. Seller and Buyer shall hold the Listing REALTOR
and its agents and Selling REALTOR and its agents harmless in the event of
losses, claims or demands by or against Seller and Buyer, This paragraph
shall survive the Closing.
15. AGENCY DISCLOSURE: Listing REALTOR and Selling REALTOR are agents of
the Seller unless otherwise specified herein.
Tower Tech, Inc.
By: Randal K. Oberlag
Vice President
(Signature)
Buyer
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<PAGE>
16. SELLER'S ACCEPTANCE: Seller accepts the foregoing offer and shall sell
the above-described Property on the terms and conditions herein stated and
shall pay the Listing REALTOR the compensation previously agreed upon in
the Listing Agreement or other agreement of employment between them, which
shall survive this Contract, for professional services rendered and to be
rendered in this transaction.
Accepted this 10th day of March, 1996
E. R. Campbell, Seller
Signature
EARNEST MONEY RECEIPT: Received the sum of $10,000.00 (check) as Earnest
Money, to be held and applied in accordance with the items and conditions
of the foregoing offer.
March 20, 1996
Gerald L. Gamble
Selling REALTOR-ASSOCIATE
(Signature)
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<PAGE>
ADDENDUM "A"
17. Note and Mortgage: The balance of the purchase price in the amount
of $150,000.00 shall be evidenced by a purchase money mortgage and
promissory note both in the amount of $150,000.00. Said note shall bear
interest at the rate of 5% per annum and shall be payable one year after
closing date. Buyer shall have the right to prepay all of the principal at
any time without penalty.
18. Property to be Purchased: It is understood and agreed by and
between Buyer and Seller that the Buyer is purchasing 30 acres of an
approximate 50-acre parcel owned by the Seller. The 30 acres being
purchased is marked in red on the attached Exhibit "1." The remaining
approximate 20 acres is marked in blue.
19. Survey: Buyer and Seller agree to survey the entire 50-acre site
setting out the separate legal descriptions of the 30-acre parcel being
purchased and the approximate 20-acre parcel being retained by Seller.
20. Option to Purchase: It is hereby agreed by and between Buyer and
Seller that Seller hereby grants Buyer the right and option to purchase the
remaining approximate 20 acres (as shown marked in blue on the attached
plat). Said option shall be for a period of one year, and shall begin on
the date of closing of the purchase of the 30-acre parcel. It is agreed
that the option price on the approximate 20-acre parcel shall be $250,000
cash. In order for Buyer to exercise the option to purchase, Buyer shall
give written notice to Seller on or before one Year after the date of
closing of the purchase of the 30-acre parcel, of Buyer's desire to
purchase the 20-acre parcel. The closing of the purchase of the I0-acre
parcel should Buyer exercise Buyer's option to purchase, shall take place
within 30 days after Buyer gives written notice to Seller. The form of the
Real Estate Purchase Contract to be used shall be the same form as set
forth on the printed portion of this Real Estate Purchase Contract. It is
agreed that the title policy costs shall be split 50/50 between Buyer and
seller, and the cost of any survey shall be split 50/50.
21. First Right of Refusal: Further, it is agreed between the parties
that if Buyer does not exercise Buyer's option to purchase the remaining
approximate 20 acres during the first year after closing Seller hereby
grants Buyer the first right of refusal during the second year after
closing to purchase the remaining approximate 20-acre parcel. During the
second year after closing (the 13th through 24th month alter closing), if
Seller receives an offer from a bona fide third party to purchase all or
part of the remaining approximate 20-acre parcel, Seller shall notify Buyer
in writing of said offer and Buyer shah have 7 days after receipt thereof
in which to either notify Seller that Buyer exercises Buyer's first right
of refusal to purchase the property submitted or that Buyer does not wish
to exercise said right of refusal. The Real Estate Purchase Contract shall
be in the form to be negotiated between Seller and any third party offeror.
It is further agreed that this first right of refusal shall be for the
second full year after closing and shall end 24 months after closing.
After said time, Buyer shall have no further right either under an option
or first right of refusal to purchase the remaining 20 acres.
22. Closing Costs: Buyer and Seller agree to share the cost of the
closing agent on a 50/50 basis.
23. Broker: It is hereby understood and agreed that Gerald L. Gamble Co.
is the real estate broker in this transaction, and Seller agrees to pay
said broker a commission of 5% of the sale price. Said commission shall be
due and payable in cash at closing. It is further agreed that said broker
has made no representations, warranties or promises with respect to the
premises, buildings, surrounding areas or land;
Further, in the event Buyer exercises Buyer's option to purchase the
remaining 20 acres, or Buyer exercises Buyer's first right of refusal as
outlined in paragraph 28, then at closing, Seller agrees to pay said broker
a commission equal to 5% of the sales Price covering all or part of the
remaining approximate 20-acre parcel.
24. Access to Water Line: Seller hereby agrees to grant Buyer an easement
either along the westerly property line, or along the front line of the
remaining 20 acres in order that Buyer shall have an easement to the water
line which is located on 119th Street. Seller makes no representation as
to whether Buyer can connect into the water line on 119th Street. The
parties shall agree to the exact location of the easement to be granted.
If Buyer and Seller cannot arrive at a satisfactory location for the
proposed easement by April 20, 1996, then Buyer Shall have the right to
cancel and rescind the Contract and Buyer's earnest money shall be
refunded.
25. Buyer's Plan to Construct Improvements on the Property: It is
understood between the parties that Buyer plans to construct a 3-story
building on the property. Buyer shall have the right to ascertain whether
the City will allow Buyer to construct said 3-story building on the
property. If Buyer determines that the City will not allow Buyer to
construct a 3-story building on the property, then Buyer shall have the
right to cancel and rescind this Contract and Buyer's earnest money shall
be refunded. Buyer shall have until April 20, 1996 in which to determine
whether the City will allow the Buyer to construct its contemplated building.
26. Zoning: Before April 20, 1996, the Realtor named herein Gerald I.
Gamble Co., shall obtain a zoning letter from the City of Oklahoma City
stating that the property is currently zoned "I-2" moderate industrial.
Said letter shall be forwarded to Buyer.
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<PAGE>
AGREEMENT
It is understood by and between E .R. Campbell and Tower Tech, Inc. the
following:
The undersigned parties entered into a real estate purchase contract on or
about Mach 20, 1996, to purchase an approximate 30 acres of land located in
and being a part of the SE/4 of Section 11, Township 10N, Range 4W, of the
Indian Meridian.
Both parties agreed to modify the contract as follows:
1. The contracts shall cover the entire 50 acre parcel owned by the Seller
at this location. The exact legal description shall be determined by
survey.
2. The sale price shall be $487,500
3. At closing, Seller shall pay $100,000 down ($10,000 earnest money
currently deposited with Gerald L. Gamble Company, Inc. plus an additional
$90,000 - subject to adjustments). The remaining balance of $387,500 shall
be financed by the Seller and evidenced by a purchase money note and
mortgage. That note shall bear interest at the rate of 3.5% per annum and
shall be due and payable one year after closing. In the event that the
Buyer wishes to pre-pay the note, there shall be no pre-payment penalty.
4. Closing date shall be June 24, 1996.
Signed this 17th day of June ,1996.
BUYER
Randal K. Oberlag, Vice President
SELLER
E. R. Campbell
