This Loan
Agreement (the "Agreement") is made this 30th day
of June, 2010 by and between BRANCH BANKING AND TRUST COMPANY, a North Carolina
banking corporation ("Bank"), and:
Synalloy Corporation, a
Delaware corporation ("Synalloy"), having its chief executive office at 2155
West Croft Circle, Spartanburg, South Carolina 29302, and:
Metchem, Inc., a Delaware
corporation (“Metchem”), having its chief executive office at 900 Market Street,
Suite 200, Wilmington, Delaware 19801, and:
SFR, LLC, a South Carolina
limited liability company (“SFR”), having its chief executive office at 2155
West Croft Circle, Spartanburg, South Carolina 29302, and:
Ram-Fab, LLC, a South Carolina
limited liability company (“Ram-Fab”), having its chief executive office at 150
Hwy 133-S, Crosset, Arkansas 71635, and:
Synalloy Metals, Inc., a
Tennessee corporation (“Synalloy Metals”), having its chief executive office at
390 Bristol Metals Road, Bristol, Tennessee 37320, and:
Bristol Metals, LLC, a
Tennessee limited liability company (“Bristol”), having its chief executive
office at 390 Bristol Metals Road, Bristol, Tennessee 37320, and:
Manufacturers Soap & Chemical
Company, a Tennessee corporation (“Manufacturers Soap”), having its chief
executive office at 4325 Old Tasso Road, Cleveland, Tennessee 37320,
and:
Manufacturers Chemicals, LLC,
a Tennessee limited liability company (“Manufacturers Chemicals”), having its
chief executive office at 4325 Old Tasso Road, Cleveland, Tennessee
37320.
Synalloy,
Metchem, SFR, Ram-Fab, Synalloy Metals, Bristol, Manufacturers Soap and
Manufacturers Chemicals are collectively referred to herein as the
“Borrowers”.
The
Borrowers have applied to Bank for and the Bank has agreed to make, subject to
the terms of this Agreement, the following loan(s) (hereinafter referred to,
singularly or collectively, if more than one, as “Loan”):
Line of Credit ("Line of
Credit") in the maximum principal amount not to exceed, at any one time, the
lesser of (a) $20,000,000 or (b) the
Availability (as defined in Section 10.01 below). The Line
of Credit shall be for the purpose of working capital and shall be evidenced by
the Borrowers’ Promissory Note dated on or after the date hereof which shall
mature approximately 36 months from the closing date, when the entire unpaid
principal balance then outstanding plus accrued interest thereon shall be paid
in full. In the event that at any time the principal amount
outstanding under the Line of Credit shall exceed the lesser of (a) $20,000,000 or (b) the
Availability then the Borrower shall promptly repay such excess principal
amounts to the extent necessary to regain compliance with such
limitations. Accrued interest only shall be repayable monthly
beginning thirty (30) days from the date of this Agreement. Prior to
maturity or the occurrence of any Event of Default hereunder and subject to the
Availability limitations, the Borrowers may borrow, repay, and reborrow under
the Line of Credit through maturity. The Line of Credit shall bear interest at
the rate set forth in any such Note evidencing all or any portion of the Line of
Credit, the terms of which are incorporated herein by reference.
Section
1 Conditions Precedent
The Bank
shall not be obligated to make any disbursement of Loan proceeds until all of
the following conditions have been satisfied by proper evidence, execution,
and/or delivery to the Bank of the following items in addition to this
Agreement, all in form and substance satisfactory to the Bank and the Bank's
counsel in their sole discretion:
USA Patriot Act Verification
Information: Information or documentation, including but not
limited to the legal name, address, tax identification number, driver’s license,
and date of birth (if the Borrower is an individual) of the Borrowers sufficient
for the Bank to verify the identity of the Borrowers in accordance with the USA
Patriot Act. Borrowers shall notify Bank promptly of any change in
such information.
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Note(s): The
Note(s) evidencing the Loans(s) duly executed by the
Borrowers.
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Security Agreement(s):
Security Agreement(s) in which Borrowers and any other owner (a
“Debtor”) of personal property collateral shall grant to Bank a first
priority security interest in the personal property specified
therein. (If Bank has or will have a security interest in any
collateral which is inferior to the security interest of another creditor,
Borrowers must fully disclose to Bank any and all prior security
interests, and Bank must specifically approve any such security interest
which will continue during the
Loan.)
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Negative Pledge
Agreement: No pledge agreement on all of the assets of the
Borrowers, including the real
estate.
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UCC Financing Statements:
Copies of UCC Financing Statements duly filed in Borrowers’ or
other owner’s state of incorporation, organization or residence, and in
all jurisdictions necessary, or in the opinion of the Bank desirable, to
perfect the security interests granted in the Security Agreement(s), and
certified copies of Information Requests identifying all previous
financing statements on record for the Borrowers or other owner, as
appropriate from all jurisdictions indicating that no security interest
has previously been granted in any of the collateral described in the
Security Agreement(s), unless prior approval has been given by the
Bank.
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Authorization and Certificate:
An Authorization and Certificate executed by each Debtor under
which such Debtor authorizes Bank to file a UCC Financing Statement
describing collateral owned by such
Debtor.
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Commitment
Fee: A commitment fee (or balance thereof) of $25,000 payable to the
Bank on the date of execution of the Loan
Documents.
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Corporate
Resolution: A Corporate Resolution duly adopted by the
Board of Directors of Synalloy, Metchem, Synalloy Metals and Manufacturers
Soap authorizing the execution, delivery, and performance of the Loan
Documents on or in a form provided by or acceptable to
Bank.
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Articles of
Incorporation: A copy of the Articles of Incorporation
and all other charter documents of Synalloy, Metchem, Synalloy Metals and
Manufacturers Soap all filed with and certified by the Secretary of State
of the State of each corporations
incorporation.
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By-Laws: A
copy of the By-Laws of Synalloy, Metchem, Synalloy Metals and
Manufacturers Soap, certified by the Secretary of each corporation as to
their completeness and accuracy.
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Declaration of Limited
Liability Company: A declaration or resolution from the
members/managers of SFR, Ram-Fab, Bristol and Manufacturers Chemicals
authorizing the execution, delivery, and performance of the Loan Documents
on or in a form provided by or acceptable to
Bank.
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Articles of
Organization: A copy of the Articles of Organization and all other
organizational documents of SFR, Ram-Fab, Bristol and Manufacturers
Chemicals, all filed with and certified by the Secretary of State of each
limited liability companies
organization.
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Operating Agreement: A
copy of the Operating Agreement of SFR, Ram-Fab, Bristol and Manufacturers
Chemicals, certified by each limited liability companies members/managers
as to its completeness and
accuracy.
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Certificate of
Incumbency: A certificate of the Secretary or
members/managers of the Borrowers certifying the names and true signatures
of the officers or members/managers of the Borrowers authorized to sign
the Loan Documents.
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Certificate of
Existence: A certification of the Secretary of State (or
other government authority) of the State of the Borrowers’ Incorporation
or Organization as to the existence or good standing of the Borrowers and
their charter documents on file.
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Opinion of Counsel: An
opinion of counsel for the Borrowers satisfactory to the Bank and the
Bank’s counsel.
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Assignment of Life Insurance
Policy(ies): An assignment of life insurance policy(ies) as
collateral in the approximate amount of $2,900,000 by an
insurance company acceptable to the
Bank.
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Additional
Documents: Receipt by the Bank of other approvals,
opinions, or documents as the Bank may reasonably
request.
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Unused Fee Penalty:
Client shall pay the Bank, quarterly in arrears on the last day of
each calendar quarter, an unused fee equal to .125% per annum on the
average daily unused amount of the Credit Commitment for such calendar
quarter calculated on the basis of a year of 360 days for the actual
number of days elapsed. “Unused Amount of the Credit
Commitment” means the maximum commitment amount less any outstanding
principal under the Line of Credit.
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Section
2 Representations and Warranties
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The
Borrowers represent and warrant to Bank
that:
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2.01. Financial
Statements. The balance sheet of the Borrowers and their
subsidiaries, if any, and the related Statements of Income and Retained Earnings
of the Borrowers and their subsidiaries, the accompanying footnotes together
with the accountant's opinion thereon, and all other financial information
previously furnished to the Bank, are true and correct and fairly reflect the
financial condition of the Borrowers and their subsidiaries as of the dates
thereof, including all contingent liabilities of every type, and the financial
condition of the Borrowers and their subsidiaries as stated therein has not
changed materially and adversely since the date thereof.
2.02. Name, Capacity and Standing.
The Borrowers exact legal names are correctly stated in the initial
paragraph of the Agreement. If the Borrowers are a
corporation, general partnership, limited partnership, limited liability
partnership, or limited liability company, each warrants and represents that it
is duly organized and validly existing under the laws of its respective state of
incorporation or organization; that it and/or its subsidiaries, if any, are duly
qualified and in good standing in every other state in which the nature of their
business shall require such qualification, and are each duly authorized by their
board of directors, general partners or member/manager(s), respectively, to
enter into and perform the obligations under the Loan Documents.
2.03. No Violation of Other
Agreements. The execution of the Loan Documents, and the
performance by the Borrowers, by any and all pledgors (whether the
Borrower or other owners of collateral property securing payment of the Loan
(hereinafter sometimes referred to as the “Pledgor”)) thereunder will not
violate any provision, as applicable, of its articles of incorporation, by-laws,
articles of organization, operating agreement, agreement of partnership, limited partnership or
limited liability partnership, or, of any law, other agreement,
indenture, note, or other instrument binding upon the Borrowers or Pledgor, or
give cause for the acceleration of any of the respective obligations of the
Borrowers.
2.04. Authority. All
authority from and approval by any federal, state, or local governmental body,
commission or agency necessary to the making, validity, or enforceability of
this Agreement and the other Loan Documents has been
obtained.
2.05. Asset
Ownership. The Borrowers have good and marketable title to all
of the properties and assets reflected on the balance sheets and financial
statements furnished to the Bank, and all such properties and assets are free
and clear of mortgages, deeds of trust, pledges, liens, and all other
encumbrances except as otherwise disclosed by such financial
statements. In addition, each other owner of collateral has good and
marketable title to such collateral, free and clear of any liens, security
interests and encumbrances, except as otherwise disclosed to Bank.
2.06. Discharge of Liens and
Taxes. The Borrowers and their subsidiaries, if any, have
filed, paid, and/or discharged all taxes or other claims which may become a lien
on any of their respective properties or assets, excepting to the extent that
(a) such items are being appropriately contested in good faith and for which an
adequate reserve (in an amount acceptable to Bank) for the payment thereof is
being maintained, and (b) such taxes related to a disputed matter of
$10,120.48.
2.07. Regulations U and
X. None of the Loan proceeds shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock in
violation of the provisions of Regulation U and Regulation X of the
Board of Governors of the Federal Reserve System.
2.08. ERISA. Each
employee benefit plan, as defined by the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by the Borrowers or by any subsidiary
of the Borrowers meets, as of the date hereof, the minimum funding standards of
Section 302 of ERISA, all applicable requirements of ERISA and of the Internal
Revenue Code of 1986, as amended, and no "Reportable Event" nor "Prohibited
Transaction" (as defined by ERISA) has occurred with respect to any such
plan.
2.09. Litigation. There
is no claim, action, suit or
proceeding pending, threatened or reasonably anticipated before any court,
commission, administrative agency, whether State or Federal, or arbitration
which will materially adversely affect the financial condition, operations,
properties, or business of the Borrowers or its subsidiaries, if any, or the
ability of the Borrowers to perform their obligations under the Loan
Documents.
2.10. Other
Agreements. The representations and warranties made by
Borrowers to Bank in the other Loan Documents are true and correct in all
respects on the date hereof.
2.11. Binding and
Enforceable. The Loan Documents, when executed, shall
constitute valid and binding obligations of the Borrowers, the execution of such Loan
Documents has been duly authorized by the parties thereto, and are enforceable
in accordance with their terms, except as may be limited by bankruptcy,
insolvency, moratorium, or similar laws affecting creditors' rights
generally.
2.12. Commercial
Purpose. The Loan(s) are not “consumer transactions”, as
defined in the South Carolina Uniform Commercial Code, and none of the
collateral was or will be purchased or held primarily for personal, family or
household purposes.
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Section
3 Affirmative Covenants
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The
Borrowers covenant and agree that from the date hereof and until payment in full
of all indebtedness and performance of all obligations owed under the Loan
Documents, Borrowers shall:
3.01. Maintain Existence and Current Legal
Form of Business. (a) Maintain their existence and good standing in the
state of their incorporation or organization, (b) maintain their current legal
form of business indicated above, and, (c) as applicable, qualify and remain
qualified as a foreign corporation, general partnership, limited partnership,
limited liability partnership or limited liability company in each jurisdiction
in which such qualification is required.
3.02. Maintain
Records. Keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrowers.
3.03. Maintain Properties. Maintain,
keep, and preserve all of its properties (tangible and intangible) including the
collateral necessary or useful in the conduct of its business in good working
order and condition, ordinary wear and tear excepted.
3.04. Conduct of
Business. Continue to engage in an efficient, prudent, and
economical manner in a business of the same general type as now
conducted.
3.05. Maintain
Insurance. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business, and business interruption insurance if required by Bank, which
insurance may provide for reasonable deductible(s). The Bank shall be
named as loss payee (Long Form) on all policies which apply to the Bank's
collateral, and the Borrowers shall deliver certificates of insurance at closing
evidencing same. All such insurance policies shall provide, and the
certificates shall state, that no policy will be terminated without 20 days
prior written notice to Bank.
3.06. Comply With
Laws. Comply in all respects with all applicable laws, rules,
regulations, and orders including, without limitation, paying before the
delinquency of all taxes, assessments, and governmental charges imposed upon it
or upon its property, and all Environmental Laws.
3.07. Right of
Inspection. Permit the officers and authorized agents of the
Bank, at any reasonable time or times in the Bank's sole discretion, to examine
and make copies of the records and books of account of, to visit the properties
of the Borrowers, and to discuss such matters with any officers, directors,
managers, members or partners, limited or general of the Borrowers, and the
Borrower's independent accountant as the Bank deems necessary and
proper.
3.08. Reporting
Requirements. Furnish to the Bank:
Quarterly
Financial Statements and Borrowing
Base Certificates: Interim financial statements (10-Q) within 45 days of
each quarter end, which shall be accompanied by the following: a) Loan Agreement Compliance
Certificate; b)
Borrowing Base Certificates (more frequently than quarterly if requested by
Bank) and; c) Accounts
receivable agings and other information on A/R, inventory and Accounts Payable,
if requested by Bank. All information shall in reasonable detail and
in a form acceptable to Bank.
Annual Financial Statements:
As soon as available and in any event; a) within (90) days after the end of
each fiscal year, balance sheets, statements of income, and retained earnings
for the period ended and a statement of changes in the financial position, all
in reasonable detail, and all prepared in accordance with GAAP consistently
applied. The financial statements must be of the following quality or
better: Audited with an
unqualified opinion. b) Borrowers’ internally
prepared consolidating financial statement showing the financial results of all
of their subsidiaries and divisions. c) Borrowers consolidated
budgets and/or financial projections for the following year(s) in reasonable
detail, by the end of the 4th
quarter of the current fiscal year.
Notice of
Litigation: Promptly after the receipt by the Borrowers of
notice or complaint of any action, suit, and proceeding before any court or
administrative agency of any type which, if determined adversely, could have a
material adverse effect on the financial condition, properties, or operations of
the Borrowers.
Notice of
Default: Promptly upon discovery or knowledge thereof, notice
of the existence of any event of default under this Agreement or any other Loan
Documents.
USA Patriot Act Verification
Information: Information or documentation, including but not
limited to the legal name, address, tax identification number, driver’s license,
and date of birth (if the Borrower is an individual) of the Borrowers sufficient
for the Bank to verify the identity of the Borrowers in accordance with the USA
Patriot Act. Borrowers shall notify Bank promptly of any change in
such information.
Other
Information: Such other information as the Bank may from time
to time reasonably request.
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3.09.
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Deposit
Accounts. Maintain substantially all of its primary
operating accounts and treasury management accounts with the
Bank.
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3.10.
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Affirmative Covenants from
other Loan Documents. All affirmative covenants
contained in any Mortgage, Security Agreement, Assignment of Leases and
Rents, or other security document executed by the Borrowers which are
described in Section 1 hereof are hereby incorporated by reference
herein.
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Section
4 – Reserved.
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Section
5 Financial Covenants
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The
Borrowers covenant and agree that from the date hereof until payment in full of
all indebtedness and the performance of all obligations under the Loan
Documents, the Borrowers shall at all times maintain on a consolidated basis the
following financial covenants and ratios all in accordance with GAAP unless
otherwise specified:
Total Funded Debt to EBITDA: A
maximum Total Funded Debt to EBITDA ratio of 3.5:1.0 that will be measured on a
rolling four quarter basis. Without limiting the preceding sentence,
should the ratio exceed 3.0:1.0 at any time (a “Leverage Ratio Event”) then,
from such time and at all times thereafter, the Bank shall have the right to
require the Borrowers to enter into revised Borrowing Base Certificate reporting
and corresponding maximum Line of Credit Availability requirements, to be set
forth in the Bank’s Schedule DD or other form and reflecting revised collateral
valuation levels, percentages and other availability provisions acceptable to
Bank and consistent with a routinely monitored asset based lending credit
facility. In such event the maximum principal Availability under the
Line of Credit shall become the lesser of $20,000,000 or the Availability under
such modified arrangements as so determined from time to time. Total
Funded Debt is defined as the aggregate sums of all interest-bearing
indebtedness of Borrowers, then outstanding to lenders, including capital lease
obligations. EBITDA is defined as the sum of (a) net income for such
period plus (b) an amount which, in the determination of net income for such
period, has been deducted for (i) interest expense (including the interest
component under capital lease obligations) (ii) total federal, state and other
income taxes and (iii) depreciation and amortization expense, all as determined
with GAAP. Total Funded Debt to EBITDA is defined as the ratio of (a)
Total Funded Debt outstanding at quarter end to (b) the aggregate EBITDA at
quarter end. Ratio will be calculated using the most recent
four-quarter periods (four quarter trailing calculation).
Tangible Net
Worth: A minimum tangible net worth at all times of not less
than $55,000,000, and increasing by at least 50% of Consolidated Net Income over
the prior fiscal year end result each fiscal year
thereafter. Tangible Net Worth is defined as net worth, plus
obligations contractually subordinated to debts owed to Bank, minus goodwill,
contract rights, and assets representing claims on stockholders or affiliated
entities. Consolidated Net Income is defined as Borrowers after tax
net income as shown on the Annual Financial Statements referred to in Section
3.08 of this Agreement.
Total Liabilities to Tangible Net
Worth: A maximum Total Liabilities to Tangible Net Worth ratio
at all times of 1.0:1.0. Total Liabilities is defined as shown on the
Borrowers Annual and Quarterly Financial Statements referred to in Section 3.08
of this Agreement.
Section
6 Negative Covenants
The
Borrowers covenant and agree that from the date hereof and until payment in full
of all indebtedness and performance of all obligations under the Loan Documents,
the Borrowers shall not, without the prior written consent of the
Bank:
6.01.
Liens. Create,
incur, assume, or suffer to exist any lien upon or with respect to any of
Borrowers’ assets of any Pledgor securing payment of the Loan, now owned or
hereafter acquired, except:
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(a) Liens
and security interests in favor of the
Bank;
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(b) Liens
for taxes not yet due and payable or otherwise being contested in good
faith and for which appropriate reserves are
maintained;
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(c) Other
liens imposed by law not yet due and payable, or otherwise being contested
in good faith and for which appropriate reserves are
maintained;
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(d) Reserved;
(e) purchase
money security interests on any property hereafter acquired, provided that such
lien shall attach only to the property acquired.
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6.02.
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Debt. Create, incur,
assume, or suffer to exist any debt,
except:
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(b)
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Debt
outstanding on the date hereof and shown on the most recent financial
statements submitted to the Bank;
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(c)
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Accounts
payable to trade creditors incurred in the ordinary course of
business;
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(d)
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Debt
secured by purchase money security interests as outlined above in Section
6.01 (e);
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(e)
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Additional
debt not to exceed $500,000 in the aggregate at any
time.
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Capital
Expenditures. Expenditures for fixed assets in any
fiscal year shall not exceed, in the aggregate as to all Borrowers, the
sum of $5,000,000. |
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6.04.
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Change of Legal Form of
Business; Purchase of Assets. Change Borrowers’ name or
the legal form of Borrowers’ business as shown above, whether by merger,
consolidation, conversion or otherwise and, subject to the following
sentence, the Borrowers shall not purchase all or substantially all of the
assets or business of any Person. Notwithstanding the preceding
sentence (but subject to Sections 6.01 through 6.03 and any
other applicable provisions of this Agreement), the Borrowers shall be
permitted to acquire the assets or business of any Person, provided that
such acquisition is for use and purposes consistent with the operations of
the Borrowers as of the date of this Agreement, and that the aggregate
amount of all such expenditures (as to all Borrowers and acquisitions in
the aggregate) shall not exceed $2,000,000 in dollar amount (in terms of
aggregate expenditures by the Borrowers or aggregate values of the assets
acquired, whichever is the greater measure respectively as to each such
acquisition) in any fiscal year.
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6.05.
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Guaranties. Assume,
guarantee, endorse, or otherwise be or become directly or contingently
liable for obligations of any Person, except the obligations of
Synalloy Corporation pursuant to its letter of credit (not to exceed
$2,400,000) issued for the benefit of the South Carolina Department of
Health and Environmental Control in connection with the former Blackman
Uhler plant site in Spartanburg County, South Carolina, and all renewals
and modifications of such letter of credit or guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business.
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6.06.
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Disposition of
Assets. Except as provided herein, no Borrower shall
sell, lease, or otherwise dispose of any of its assets or properties
except where the sale, lease or disposition is in the ordinary and usual
course of such Borrower’s business. Provided, however, a
Borrower may sell, lease or otherwise dispose of an asset outside the
ordinary and usual course of such Borrower’s business so long as the
Disposition Proceeds for such sales, leases or dispositions of all
Borrowers do not exceed an aggregate of $1,000,000 during any calendar
year. As used herein, “Disposition Proceeds” means (a) in the
case of a sale, the gross sales price of the asset received by the
Borrower, and (b) in the case of a lease, all the rental to be received by
the Borrower during the term of the
lease.
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6.07.
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Transfer of
Ownership. As to each Borrower, (a) issue, transfer or
sell any new class of stock or LLC or other equity interest, or (b) issue,
transfer or sell, in the aggregate, from its treasury stock and/or
currently authorized but unissued shares of any class of stock or LLC or
other equity interest, more than 10% of the total number of all such
issued and outstanding shares or the equivalent of comparable equity
interests as of the date of this
Agreement.
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6.08.
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Negative Covenants from other
Loan Documents. All negative covenants contained in any Security
Agreement, or other security document executed by the Borrowers which are
described in Section 1 hereof are hereby incorporated by reference
herein.
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Section
7 Hazardous Materials and Compliance with Environmental Laws
7.01.
Investigation. Borrowers
hereby certify that they have exercised due diligence to ascertain whether their
real property, is or has been affected by the presence of asbestos, oil,
petroleum or other hydrocarbons, urea formaldehyde, PCBs, hazardous or nuclear
waste, toxic chemicals and substances, or other hazardous materials
(collectively, “Hazardous Materials”), as defined in applicable Environmental
Laws. Borrowers represent and warrant that there are no such
Hazardous Materials contaminating its real property, nor have any such materials
been released on or stored on or improperly disposed of on its real property
during its ownership, occupancy or operation thereof. Borrowers
hereby agree that, except in strict compliance with applicable Environmental
Laws, they shall not knowingly permit any release, storage or contamination as
long as any indebtedness or obligations to Bank under the Loan Documents remains
unpaid or unfulfilled. In addition, Borrowers do not have or use any
underground storage tanks on any of its real property which are not registered
with the appropriate Federal and/or State agencies and which are not properly
equipped and maintained in accordance with all Environmental Laws. If
requested by Bank, Borrowers shall provide Bank with all necessary and
reasonable assistance required for purposes of determining the existence of
Hazardous Materials on Borrowers real property, including allowing Bank access
to the real property, and access to Borrowers’ employees having knowledge of,
and to files and records within Borrowers’ control relating to the existence,
storage, or release of Hazardous Materials on the real property.
7.02.
Compliance. Borrowers
agree to comply with all applicable Environmental Laws, including, without
limitation, all those relating to Hazardous Materials. Borrowers
further agree to provide Bank, and all appropriate Federal and State
authorities, with immediate notice in writing of any release of Hazardous
Materials on Borrowers real property and to pursue diligently to completion all
appropriate and/or required remedial action in the event of such
release.
7.03.
Remedial
Action. Bank shall have the right, but not the obligation, to
undertake all or any part of such remedial action in the event of a release of
Hazardous Materials on Borrowers real property and to add any expenditures so
made to the principal indebtedness secured by the Security Agreement. Borrowers
agree to indemnify and hold Bank harmless from any and all loss or liability
arising out of any violation of the representations, covenants, and obligations
contained in this Section 7.
Section
8 Events of Default
The
following shall be “Events of Default” by Borrowers:
8.01. The
failure to make prompt payment of any installment of principal or interest on
any of the Note(s) when due or payable.
8.02.
Should any representation or warranty made in the Loan Documents prove to be
false or misleading in any material respect.
8.03.
Should any report, certificate, financial statement, or other document furnished
prior to the execution of or pursuant to the terms of this Agreement prove to be
false or misleading in any material respect.
8.04.
Should the Borrowers default on the performance of any other obligation of
indebtedness when due or in the performance of any obligation incurred in
connection with money borrowed.
8.05.
Should the Borrowers or any Pledgor breach any covenant, condition, or agreement
made under any of
the Loan Documents.
8.06.
Should a custodian be appointed for or take possession of any or all of the
assets of the Borrowers, or should the Borrowers either voluntarily or
involuntarily become subject to any insolvency proceeding, including becoming a
debtor under the United States Bankruptcy Code, any proceeding to dissolve the
Borrowers, any proceeding to have a receiver appointed, or should the Borrowers
make an assignment for the benefit of creditors, or should there be an
attachment, execution, or other judicial seizure of all or any portion of the
Borrowers’ assets, including an action or proceeding to seize any funds on
deposit with the Bank, and such seizure is not discharged within 20
days.
8.07.
Should final judgment for the payment of money be rendered against the Borrowers
which is not covered by insurance and shall remain undischarged for a period of
30 days unless such judgment or execution thereon be effectively
stayed.
8.08.
Upon the death of, or termination of existence of, or dissolution of the
Borrowers or any Pledgor.
8.09.
Reserved.
8.10.
Should any lien or security interest granted to Bank to secure payment of the
Note(s) terminate, fail for any reason to have the priority agreed to by Bank on
the date granted, or become unperfected or invalid for any reason.
Section
9 Remedies Upon Default
Upon the
occurrence of any of the above listed Events of Default, the Bank may at any
time thereafter, at its option, take any or all of the following actions, at the
same or at different times:
9.01.
Declare the balance(s) of the Note(s) to be immediately due and payable, both as
to principal and interest, late fees, and all other amounts/expenditures without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrowers, and such balance(s) shall accrue interest at the
Default Rate as provided herein until paid in full;
9.02.
Require the Borrowers to pledge additional collateral to the Bank from the
Borrowers’ assets and properties, the acceptability and sufficiency of such
collateral to be determined in the Bank's sole discretion;
9.03.
Take immediate possession of and foreclose upon any or all collateral which may
be granted to the Bank as security for the indebtedness and obligations of
Borrowers under the Loan Documents;
9.04.
Exercise any and all other rights and remedies available to the Bank under the
terms of the Loan Documents and applicable law, including the South Carolina
Uniform Commercial Code;
9.05. Any
obligation of the Bank to advance funds to the Borrowers or any other Person
under the terms of under the Note(s) and all other obligations, if any, of the
Bank under the Loan Documents shall immediately cease and terminate unless and
until Bank shall reinstate such obligation in writing.
Section
10 Miscellaneous Provisions
10.01.
Definitions.
"Availability" means the
maximum principal available amount under the Line of Credit (within the
$20,000,000 of principal availability under the Line of Credit) as calculated
and re-calculated from time to time pursuant to a Borrowing Base Certificate
and, at all times following a Leverage Ratio Event, any Schedule DD or
comparable document to be entered, if and when applicable, among the Borrower
and the Bank and setting forth such collateral valuation levels, percentages and
other availability provisions satisfactory to the Bank as contemplated by Section 5 of this
Agreement.
“Borrowing Base Certificates”
shall mean for purposes of calculating the Availability under the Line of
Credit, (a) prior to a Leverage Ratio Event, a certificate delivered by the
Borrowers to the Bank in the form attached hereto as Schedule A setting
forth the information and calculations provided therein for the Borrowers on a
consolidated basis; and (b) following a Leverage Ratio event, either the
certificate referred to in the preceding clause (a) or, at the direction of the
Bank as contemplated by Section 5 above, a substitute borrowing base certificate
for purposes of determining the Availability under the Line of Credit as
contemplated by such Section
5 above.
"Default Rate" shall mean a
rate of interest equal to Bank's Prime Rate plus five percent (5%) per annum
(not to exceed the legal maximum rate) from and after the date of an Event of
Default hereunder which shall apply, in the Bank's sole discretion, to all sums
owing, including principal and interest, on such date.
"Environmental Laws" shall
mean all applicable federal and state laws and regulations which affect or may
affect Borrowers real property, including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Sections 9601
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Pollution Control Act (1976
S.C Code 48-1-10 et seq.), the Erosion and Sediment Reduction Act of 1983 (1976
S.C. Code 48-18-10 et seq.), the South Carolina Mining Act (1976 S.C. Code
48-20-10 et seq.), as such laws or regulations have been amended or may be
amended.
“Leverage Ratio Event” has the
meaning assigned to such term in Section 5 of this
Agreement.
"Loan Documents" shall mean
this Agreement including any schedule attached hereto, the Note(s), the Deed(s)
of Trust, the Mortgage(s), the Security Agreement(s), the Assignment(s) of
Leases and Rents, all UCC Financing Statements, the Guaranty Agreement(s), and
all other documents, certificates, and instruments executed in connection
therewith, and all renewals, extensions, modifications, substitutions, and
replacements thereto and therefore.
"Person" shall mean an
individual, partnership, corporation, trust, unincorporated organization,
limited liability company, limited liability partnership, association, joint
venture, or a government agency or political subdivision thereof.
"GAAP" shall mean generally
accepted accounting principles as established by the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants, as
amended and supplemented from time to time.
"Prime Rate" shall mean the
rate of interest per annum announced by the Bank from time to time and adopted
as its Prime Rate, which is one of several rate indexes employed by the Bank
when extending credit, and may not necessarily be the Bank's lowest lending
rate.
10.02.
Non-impairment. If
any one or more provisions contained in the Loan Documents shall be held
invalid, illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained therein shall not in any
way be affected or impaired thereby and shall otherwise remain in full force and
effect.
10.03.
Applicable
Law. The Loan Documents shall be construed in accordance with
and governed by the laws of the State of South Carolina.
10.04. Waiver. Neither
the failure or any delay on the part of the Bank in exercising any right, power
or privilege granted in the Loan Documents shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or further
exercise of any other right, power, or privilege which may be provided by
law.
10.05.
Modification. No
modification, amendment, or waiver of any provision of any of the Loan Documents
shall be effective unless in writing and signed by the Borrowers and
Bank.
10.06.
Payment Amount
Adjustment. In the event that any Loan(s) referenced herein
has a variable (floating) interest rate and the interest rate increases, Bank,
at its sole discretion, may at any time adjust the Borrower's payment amount(s)
to prevent the amount of interest accrued in a given period to exceed the
periodic payment amount or to cause the Loan(s) to be repaid within the same
period of time as originally agreed upon.
10.07
Stamps and Fees. The
Borrowers shall pay all federal or state stamps, taxes, or other fees or
charges, if any are payable or are determined to be payable by reason of the
execution, delivery, or issuance of the Loan Documents or any security granted
to the Bank; and the Borrowers agree to indemnify and hold harmless the Bank
against any and all liability in respect thereof.
10.08.
Attorneys’
Fees. In the event the Borrowers or any Pledgor shall default
in any of its obligations hereunder and the Bank believes it necessary to employ
an attorney to assist in the enforcement or collection of the indebtedness of
the Borrowers to the Bank, to enforce the terms and provisions of the Loan
Documents, to modify the Loan Documents, or in the event the Bank voluntarily or
otherwise should become a party to any suit or legal proceeding (including a
proceeding conducted under the Bankruptcy Code), the Borrowers agree to pay the
reasonable attorneys’ fees of the Bank and all related costs of collection or
enforcement that may be incurred by the Bank. The Borrowers shall be
liable for such attorneys’ fees and costs whether or not any suit or proceeding
is actually commenced.
10.09.
Bank Making Required
Payments. In the event Borrowers shall fail to maintain
insurance, pay taxes or assessments, costs and expenses which Borrowers are,
under any of the terms hereof or of any Loan Documents, required to pay, or fail
to keep any of the properties and assets constituting collateral free from new
security interests, liens, or encumbrances, except as permitted herein, Bank may
at its election make expenditures for any or all such purposes and the amounts
expended together with interest thereon at the Default Rate, shall become
immediately due and payable to Bank, and shall have benefit of and be secured by
the collateral; provided, however, the Bank shall be under
no duty or obligation to make any such payments or expenditures.
10.10.
Right of
Offset. Any indebtedness owing from Bank to Borrowers may be
set off and applied by Bank on any indebtedness or liability of Borrowers to
Bank, at any time and from time to time after maturity, whether by acceleration
or otherwise, and without demand or notice to Borrowers. Bank may
sell participations in or make assignments of any Loan made under this
Agreement, and Borrowers agree that any such participant or assignee shall have
the same right of setoff as is granted to the Bank herein.
10.11.
UCC
Authorization. Borrowers authorize Bank to file such UCC
Financing Statements describing the collateral in any location deemed necessary
and appropriate by Bank.
10.12.
Modification and Renewal
Fees. Bank may, at its option, charge any fees for
modification, renewal, extension, or amendment of any terms of the Note(s)
permitted by law.
10.13.
Conflicting
Provisions. If provisions of this Agreement shall conflict
with any terms or provisions of any of the Note(s) or security
document(s) or any schedule attached hereto, the provisions of such Note(s) or
security document(s) or any schedule attached hereto, as appropriate, shall take
priority over any provisions in this Agreement.
10.14.
Notices. Any
notice permitted or required by the provisions of this Agreement shall be deemed
to have been given when delivered in writing to the City Executive or any Vice
President of the Bank at its offices in Spartanburg, South Carolina, and to the
Chief Executive Officer of the Borrower at its offices in Spartanburg, South
Carolina when sent by certified mail and return receipt requested.
10.15.
Consent to
Jurisdiction. Borrowers hereby irrevocably agree that any
legal action or proceeding arising out of or relating to this Agreement may be
instituted in the Superior Court in Spartanburg County, South Carolina, or the
United States District Court for South Carolina Spartanburg Division, or in such
other appropriate court and venue as Bank may choose in its sole
discretion. Borrowers consent to the jurisdiction of such courts and
waives any objection relating to the basis for personal or in rem jurisdiction
or to venue which Borrowers may now or hereafter have in any such legal action
or proceedings.
10.16. Counterparts. This
Agreement may be executed by one or more parties on any number of separate
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
10.17.
Entire
Agreement. The Loan Documents embody the entire agreement
between Borrowers and Bank with respect to the Loans, and there are no oral or
parol agreements existing between Bank and Borrower with respect to the Loans
which are not expressly set forth in the Loan Documents.
10.18.
Indemnification. The
Borrowers hereby jointly and severally agree to and do hereby indemnify and
defend the Bank, its affiliates, their successors and assigns and their
respective directors, officer, employees and shareholders, and do hereby hold
each of them harmless from and against, any loss, liability, lawsuit,
proceeding, cost expense or damage (including reasonable in-house and outside
counsel fees, whether suit is brought or not) arising from or otherwise relating
to the closing, disbursement, administration, or repayment of the Loans,
including without limitation: (i) the failure to make any payment to the Bank
promptly when due, whether under the Notes evidencing the Loans or otherwise;
(ii) the breach of any representations or warranties to the Bank contained in
this agreement or in any other loan documents now or hereafter executed in
connection with the Loans; or (iii) the violation of any covenants or agreements
made for the benefit of the Bank and contained in any of the loan documents;
provided, however, that the foregoing indemnification shall not be deemed to
cover any loss which is finally determined by a court of competent jurisdiction
to result solely from the Bank’s gross negligence or willful
misconduct.
10.19.
WAIVER OF JURY
TRIAL. UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR
OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND
BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO MAKE THE
LOAN AND ENTER INTO THIS AGREEMENT. FURTHER, THE UNDERSIGNED HEREBY
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S COUNSEL, HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT SEEK TO ENFORCE THIS
WAIVER OR RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT
OF BANK, NOR BANK’S COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY
THIS PROVISION.
[Signatures
on Following Page]
Schedule
A
Borrowing
base certificate
Signature
Page
IN
WITNESS WHEREOF, the Bank and Borrowers have caused this Agreement to be duly
executed under seal all as of the date first above written.
If Borrower is a
Corporation:
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WITNESS:
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Synalloy
Corporation. a DE Corporation
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Metchem,
Inc., a DE Corporation
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Synalloy
Metals, Inc., a TN Corporation
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Manufacturers
Soap & Chemical Company, a TN Corporation
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
IF
Borrower is a Limited Liability Company
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WITNESS:
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SFR,
LLC, a SC Limited Liability Company
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By: |
Synalloy
Corporation |
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Member |
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Ram-Fab,
LLC, a SC Limited Liability Company
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By: |
Synalloy
Corporation |
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Member |
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Bristol
Metals, LLC, a TN Limited Liability Company
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By: |
Synalloy
Metals, Inc. |
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a
TN Corporation |
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Member |
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title: |
CFO |
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WITNESS:
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Manufacturers
Chemicals, LLC, a TN Limited Liability Company
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By: |
Manufacturers
Soap & Chemical Company |
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a
TN Corporation |
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Member |
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By:
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/s/ Richard D.
Sieradzki
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Richard D.
Sieradzki |
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Title |
CFO |
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WITNESS:
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BRANCH
BANKING AND TRUST COMPANY
|
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By:
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/s/ Stan Parker
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Stan
Parker
|
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Title:
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Senior
Vice President
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