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EXECUTION COPY
EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
BY AND AMONG
HYPERCOM CORPORATION
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JULY 31, 2001
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of July 31, 2001 between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, HYPERCOM CORPORATION, a Delaware corporation
("Parent"), and each of Parent's Subsidiaries identified on the signature pages
hereof (such Subsidiaries are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
"Borrowers").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"Ableco" means Ableco Finance LLC, a Delaware limited liability
company, or one or more of its Affiliates.
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.
"Additional Documents" has the meaning set forth in Section 4.4.
"Administrative Borrower" has the meaning set forth in Section
17.9.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who
controls, is controlled by, or is under common control with, such Person. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, for purposes of the definitions of Eligible Accounts and Eligible
Foreign Accounts and Section 7.14: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other
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ownership interests of a Person (other than as a limited partner of such Person)
shall be deemed to control such Person; (b) each director (or comparable
manager) of a Person shall be deemed to be an Affiliate of such Person; and (c)
each partnership or joint venture in which a Person is a partner or joint
venturer shall be deemed to be an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent
from time to time as the account into which Borrowers shall make all payments to
Agent for the benefit of the Lender Group and into which the Lender Group shall
make all payments to Agent under this Agreement and the other Loan Documents;
unless and until Agent notifies Administrative Borrower and the Lender Group to
the contrary, Agent's Account shall be that certain deposit account bearing
account number 323-266193 and maintained by Agent with The Chase Manhattan Bank,
4 New York Plaza, 15th Floor, New York, New York 10004, ABA #000000000.
"Agent Advances" has the meaning set forth in Section 2.3(c)(i).
"Agent's Liens" means the Liens granted by Borrowers to Agent for
the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means an amount equal to (a)
during the period of time from and after the Closing Date up to the date that is
the first anniversary of the Closing Date, 3% multiplied by the Maximum Revolver
Amount, (b) during the period of time from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 2% multiplied by the Maximum Revolver Amount,
and (c) during the period of time from and including the date that is the second
anniversary of the Closing Date up to the Maturity Date, 1% multiplied by the
Maximum Revolver Amount, provided that the Applicable Prepayment Premium will be
waived if the Obligations hereunder are refinanced entirely with a facility
provided (in whole or in part) or agented by Xxxxx Fargo.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Administrative Borrower.
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"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrowers are entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
sublimits and reserves applicable hereunder).
"Bank Group Pay-Off Letter" means a letter from the Existing
Lenders agreeing to release the Existing Lenders' Liens in and to the properties
and assets of Borrowers, in form and substance acceptable to Agent.
"Bank One" means Bank One, Arizona, N.A., a national banking
association.
"Bank One Cash Collateral Agreement" means the agreement in form
and substance satisfactory to Agent between Parent and Bank One, pursuant to
which Parent shall provide $500,000 of cash collateral with respect to the
outstanding letter of credit issued by Bank One until such time as the exposure
with respect to such letter of credit is reduced in accordance with the terms of
such agreement.
"Bank One Pay-Off Letter" means a letter from Bank One agreeing to
release its Liens in and to the properties and assets of Borrowers other than
Liens with respect to the Headquarters Real Property or created pursuant to the
Bank One Cash Collateral Agreement, in form and substance acceptable to Agent.
"Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.
"Base Rate" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Books" means all of each Borrower's now owned or hereafter
acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
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"Borrower" and "Borrowers" have the respective meanings set forth
in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loan) made on the same day by the Lenders
(or Agent on behalf thereof), or by Agent in the case of an Agent Advance, in
each case, to Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented
by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued
or unconditionally guaranteed by the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-2, or
better, from S&P or Xxxxx'x and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or Xxxxx'x
or (ii) certificates of deposit less than or equal to $100,000 in the aggregate
issued by any other bank insured by the Federal Deposit Insurance Corporation,
or (e) shares of any money market mutual fund that (i) has at least 95% of its
assets invested continuously in the types of investments referred to in the
clauses above, (ii) has net assets of not less than $500,000,000, and (iii) has
the highest rating obtainable from either S&P or Xxxxx'x.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of which
is among Administrative Borrower, Agent, and one of the Cash Management Banks.
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"CFC" means a controlled foreign corporation (as that term is
defined in the IRC).
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted
Holder becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 20%, or more, of the Stock of Parent having the
right to vote for the election of members of the Board of Directors, or (b) a
majority of the members of the Board of Directors do not constitute Continuing
Directors, or (c) any Borrower ceases to directly own and control 100% of the
outstanding capital Stock of each of its Subsidiaries extant as of the Closing
Date, except to the extent any Borrower ceases to directly own 100% of its
Subsidiaries as a result of the consummation of a transaction expressly
permitted by this Agreement.
"Chattel Paper" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "chattel paper" as that term
is defined in the Code, and any and all supporting obligations in respect
thereof.
"Cirrilium Accounts" means Accounts owed to Cirrilium Corporation.
"Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Borrowers for the fiscal year ending December 31, 2001, December 31, 2002 and
December 31, 2003 (for each such fiscal year period, on a quarter by quarter
basis), in form and substance (including as to scope and underlying assumptions)
reasonably satisfactory to Agent.
"Code" means the California Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
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(h) Real Property Collateral,
(i) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
other items of payment of Borrowers constituting proceeds of Accounts.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent (as such terms are used in Rule 14a-11 under the
Exchange Act) and whose initial assumption of office resulted from such contest
or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a DDA.
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"Copyright" shall have the meaning ascribed to such term in the
United States Copyright Act of 1976, as amended, and includes unregistered
copyrights.
"Copyright Security Agreement" means a copyright security
agreement executed and delivered by each Borrower and Guarantor to Agent, the
form and substance of which is satisfactory to Agent.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by any Borrower or any Guarantor.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances.
"Designated Account" means account number 4496835166 of
Administrative Borrower maintained with the Designated Account Bank, or such
other deposit account of Administrative Borrower (located within the United
States) that has been designated as such, in writing, by Administrative Borrower
to Agent as provided in Section 2.9.
"Designated Account Bank" means Xxxxx Fargo, whose office is
located at 000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, and whose ABA
number is 1210-00248, or such other Designated Account Bank (located within the
United States) that has been designated as such, in writing, by Administrative
Borrower to Agent as provided in Section 2.9.
"Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 90 days, that is the result
of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts (excluding Cirrilium Accounts) during such period, by (b) Borrowers'
Collections with respect to Accounts during such period (excluding extraordinary
items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
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"Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is reasonably
satisfactory to Agent.
"Disposition" means any transaction, or series of related
transactions, pursuant to which any Borrower or any Subsidiary of a Borrower
sells, assigns, transfers or otherwise disposes of any property or assets
(whether now owned or hereafter acquired) to any other Person, in each case,
whether or not the consideration therefor consists of cash, securities or other
assets owned by the acquiring Person, excluding any (a) issuances of capital
stock or debt securities, including, without limitation, Subordinated Debt and
(b) Permitted Dispositions.
"Dollar Equivalent" means, as of any date of determination, for
any amount denominated in a currency other than Dollars, such amount multiplied
by the spot rate of exchange for such currency into Dollars as announced by
Xxxxx Fargo.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, a Person and
its Subsidiaries' consolidated net earnings (or loss), excluding extraordinary
gains and non-cash losses and foreign currency translation gains and non-cash
losses, plus interest expense, income taxes, and depreciation and amortization
for such period, as determined in accordance with GAAP, provided that with
respect to Parent, any non-cash charges against earnings described on Schedule
E-1 shall be added back to consolidated net earnings (or loss).
"Eligible Accounts" means those Accounts created by one of
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date or Accounts with selling terms of more than 60
days,
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(b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate (other than Concord Equipment Sales, Inc. and its
Subsidiaries), or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or Canada, or
(ii) is not organized under the laws of the United States or any state thereof
or any province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Agent (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Agent and is
directly drawable by Agent, or (z) the Account is covered by credit insurance in
form, substance, and amount, and by an insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States (exclusive, however, of (y) Accounts owed by any state that does
not have a statutory counterpart to the Assignment of Claims Act or (z) Accounts
owed by any state that does have a statutory counterpart to the Assignment of
Claims Act as to which the applicable Borrower has complied to Agent's
satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% of all Eligible Accounts, to the
extent of the obligations owing by such Account Debtor in excess of such
percentage, provided, however, that Accounts with respect to any Account Debtor
that is publicly traded on a primary stock exchange in the United States or
Europe, including the exchanges listed on Schedule E-2, shall be Eligible
Accounts so long as such Account Debtor maintains a market capitalization
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of at least $1 billion, to the extent such Accounts owing to Borrowers do not
exceed 20% of all Eligible Accounts,
(j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding has gone out of business, or as to which a Borrower
has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,
(k) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(l) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(m) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor,
(n) Accounts composed of a "retainage" or "hold-back" from the
amount due, to the extent of the amount of such "retainage" or "hold-back," or
(o) Accounts that represent the right to receive progress payments
or other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
"Eligible Finished Goods Inventory" means Inventory of Borrowers
consisting of first quality finished goods held for sale in the ordinary course
of Borrowers' business located at one of the business locations of Borrowers in
the continental United States, that complies with each of the representations
and warranties respecting Eligible Inventory made by Borrowers in the Loan
Documents, and that is not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit or appraisal performed by Agent from time to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrowers' historical accounting practices. An item of Inventory shall not
be included in Eligible Finished Goods Inventory if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United States
of America set forth on Schedule E-3,
(c) it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the mortgagee, lessor, warehouseman, or other third party,
as the case may be,
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(d) it is not segregated or otherwise separately identifiable from
goods of others,
(e) it is not subject to a valid and perfected first priority
Agent's Lien, or
(g) it consists of goods that are defective, obsolete or slow
moving, restrictive or custom items, work-in-process, or goods that constitute
spare parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Foreign Accounts" means those Accounts that are not
Eligible Accounts that are created by one of Borrowers in the ordinary course of
its business, that arise out of its sale of goods or rendition of services with
respect to which the Account Debtor is not organized under the laws of, or does
not maintain its chief executive office in, the United States or any state
thereof, that comply with each of the representations and warranties respecting
Eligible Foreign Accounts made by Borrowers under the Loan Documents, and that
are not excluded as ineligible by virtue of one or more of the criteria set
forth below; provided, however, that such criteria may be fixed and revised from
time to time by Agent in Agent's Permitted Discretion to address the results of
any audit performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Foreign Accounts shall be
calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Foreign Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date or Accounts with selling terms of more than 45
days,
(b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof,
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(g) Accounts with respect to which the Account Debtor is a
creditor of any Borrower, has or has asserted a right of setoff, has disputed
its liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(h) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% of all Eligible Foreign Accounts, to
the extent of the obligations owing by such Account Debtor in excess of such
percentage, provided, however, that Accounts with respect to any Account Debtor
that is publicly traded on a primary stock exchange in the United States or
Europe, including the exchanges listed on Schedule E-2, shall be Eligible
Accounts so long as such Account Debtor maintains a market capitalization of at
least $1 billion, to the extent such Accounts owing to Borrowers do not exceed
20% of all Eligible Accounts,
(i) Accounts with respect to Account Debtors organized in any one
foreign country or sovereign state whose total obligations owing to Borrowers
exceed 15% of all Eligible Foreign Accounts, to the extent of the obligations
owing by such Account Debtors in excess of such percentage,
(j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, has gone out of business, or as to which a Borrower
has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,
(k) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,
(l) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,
(m) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor,
(n) Accounts composed of a "retainage" or "hold-back" from the
amount due, to the extent of the amount of such "retainage" or "hold-back," or
(o) Accounts that represent the right to receive progress payments
or other advance xxxxxxxx that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.
"Eligible Inventory" means Eligible Finished Goods Inventory and
Eligible Raw Materials Inventory.
"Eligible Raw Materials Inventory" means Inventory of Borrowers
consisting of first quality raw materials held for the production of finished
goods in the ordinary course
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of Borrowers' business located at one of the business locations of Borrowers in
the continental United States, that complies with each of the representations
and warranties respecting Eligible Inventory made by Borrowers in the Loan
Documents, and that is not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit or appraisal performed by Agent from time to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrowers' historical accounting practices. An item of Inventory shall not
be included in Eligible Raw Materials Inventory if:
(a) a Borrower does not have good, valid, and marketable title
thereto,
(b) it is not located at one of the locations in the United States
of America set forth on Schedule E-3,
(c) it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the mortgagee, lessor, warehouseman, or other third party,
as the case may be,
(d) it is not segregated or otherwise separately identifiable from
goods of others,
(e) it is not subject to a valid and perfected first priority
Agent's Lien, or
(f) it consists of goods that are defective, obsolete or slow
moving, restrictive or custom items, work-in-process, goods that constitute
spare parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $500,000,000 or has a rating of A or A2, or better, from S&P or
Xxxxx'x, (b) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
or a political subdivision of any such country and which has total assets in
excess of $500,000,000 or has a rating of A or A2, or better, from S&P or
Xxxxx'x, provided that such bank is acting through a branch or agency located in
the United States, (c) a finance company, insurance company, or other financial
institution or fund that is engaged in making, purchasing, or otherwise
investing in commercial loans in the ordinary course of its business and having
(together with its Affiliates) total assets in excess of $500,000,000 or has a
rating of A or A2, or better, from S&P or Xxxxx'x, (d) any Affiliate (other than
individuals) of a Lender that was party hereto as of the Closing Date, or any
fund, money market account, investment account or other account managed by a
Lender or an
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Affiliate of such Lender, and (e) any other Person approved by Agent (whose
approval shall not be unreasonably withheld, conditioned or delayed).
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrowers, relating to the environment, employee health and safety, or Hazardous
Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33
USC Section 1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601
et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water
Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC.
Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29
USC. Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.
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"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of the earlier
of (i) 60 days from due date and (ii) their historical levels with respect
thereto, and all book overdrafts in excess of their historical practices with
respect thereto, in each case as determined by Agent in its Permitted
Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lenders" means the lenders party to that certain Credit
Agreement, dated as of August 31, 2000, by and between Parent, the banks and
financial institutions party thereto, Bank One, as administrative agent and
issuing bank, and Fleet National Bank, as documentation agent.
"Family Member" means, with respect to any individual, any other
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts or
other estate planning vehicles established for the benefit of Family Members of
such individual and in respect of which such individual serves as trustee or in
a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"Fee Split Letter" shall mean that certain letter agreement, dated
as of the Closing Date, between Agent and Ableco, setting forth, among other
things, the allocation to Ableco of certain fees payable by Borrowers to Agent
pursuant to the Fee Letter and establishing certain relationship agreements
between the Lenders.
"FEIN" means Federal Employer Identification Number.
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"Foothill" means Foothill Capital Corporation, a California
corporation.
"Foreign Subsidiary Guarantor" means the Subsidiaries listed on
Schedule F-1 hereto and any CFC that becomes a guarantor of the Borrowers'
Obligations hereunder in accordance with the terms hereof.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"GEL Administrative Services Agreement" means the Administrative
Services Agreement between Parent and Golden Eagle in form and substance
satisfactory to the Agent.
"General Intangibles" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to general
intangibles, payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, Copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims, and any and all supporting obligations in respect of any of
the foregoing, and any other personal property other than goods, Accounts,
Investment Property, and Negotiable Collateral.
"Golden Eagle" means Golden Eagle Leasing, Inc., an Arizona
corporation.
"Golden Eagle Financing" means a financing in an aggregate amount
of at least $10,000,000.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantor" and "Guarantors" means Golden Eagle, each Foreign
Subsidiary Guarantor and any party or parties that become a guarantor or
guarantors of the Borrowers' Obligations hereunder in accordance with the terms
hereof.
"Guarantor Security Agreement" means a security agreement executed
and delivered by each Guarantor to Agent, in the form attached hereto as Exhibit
G-1, provided
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that Foreign Subsidiary Guarantors shall only be required to execute and deliver
such an agreement pursuant to Section 3.2(a).
"Guaranty" means a general continuing guaranty executed and
delivered by each Guarantor to Agent, in the form of the general continuing
guaranty attached hereto as Exhibit G-2.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Headquarters Real Property" means the Real Property of Parent
located at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates, and (c) any foreign currency futures contract, option or similar
agreement or arrangement designed to protect such Person against fluctuations in
foreign currency rates, in each case to the extent such obligations are incurred
in the ordinary course of business.
"Hypercom Asia Group" means Hypercom Far East Ltd., a corporation
organized under the laws of Hong Kong, Hypercom Electronics Manufacturing
(Shenzhen) Co. Ltd., a corporation organized under the laws of China, and
Hypercom Asia Ltd., a corporation organized under the laws of Hong Kong.
"Hypercom Brazil" means Hypercom do Brasil Industria e Comercio
Limitada, a corporation organized under the laws of Brazil.
"Indebtedness" means (a) all obligations of a Person for borrowed
money, (b) all obligations of a Person evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of a Person
in respect of letters of credit, bankers acceptances, interest rate swaps, or
other financial products, (c) all obligations of a Person under Capital Leases,
(d) all obligations or liabilities of others secured by a Lien on any asset of a
Person, irrespective of whether such obligation or liability is assumed, (e) all
obligations of a Person for the deferred purchase price of assets (other than
trade debt incurred in the ordinary course of a Person's business and repayable
in accordance with
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customary trade practices), and (f) any obligation of a Person guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse to a such Person) any obligation of
any other Person.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Initial Lenders" means the Lenders on the Closing Date.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intercompany Advance" means loans, advances or transfers of cash
or Inventory in the ordinary course of business from Parent to one of its
Subsidiaries or from one of Parent's Subsidiaries to Parent or another
Subsidiary of Parent.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by each Borrower and Guarantor to Agent, the
form and substance of which is satisfactory to Agent.
"Intercompany Transfer Agreement" means the intercompany agreement
between Parent, Hypercom Far East, Ltd. and Hypercom Electronics Manufacturing
(Shenzhen) Co., Ltd. regarding the ownership of account receivables and
inventory in form and substance satisfactory to Agent.
"Inventory" means all Borrowers' now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by a Borrower as lessor, goods that are furnished by a Borrower under a
contract of service, and raw materials, work in process, or materials used or
consumed in a Borrower's business.
"Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The amount of any Investment shall be
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the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, less, in the case of
any loan or advance, any repayment of the principal thereof.
"Investment Property" means all of Borrowers' now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in
the preamble to this Agreement, and shall include any other Person made a party
to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan Documents that are paid or incurred by any one or more members of the
Lender Group, (b) fees or charges paid or incurred by any one or more members of
the Lender Group in connection with the Lender Group's transactions with
Borrowers or Guarantors, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, judgment, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic Collateral appraisals or business valuations) to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) actual costs and expenses incurred
by any one or more members of the Lender Group in the disbursement of funds to
or for the account of Borrowers (by wire transfer or otherwise), (d) charges
paid or incurred by any one or more members of the Lender Group resulting from
the dishonor of checks, (e) reasonable
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costs and expenses paid or incurred by the Lender Group to correct any default
or enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
any one or more members of the Lender Group related to audit examinations of the
Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by any one or more members
of the Lender Group in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or any one
or more members of the Lender Group's relationship with any Borrower or any
guarantor of the Obligations, (h) Agent's and each Lender's reasonable fees and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or Guarantor or in exercising rights or remedies under
the Loan Documents), or defending the Loan Documents, irrespective of whether
suit is brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of determination,
the aggregate undrawn amount of all outstanding Letters of Credit.
"Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Cash Management
Agreements, the Copyright Security Agreement, the Control Agreements, the
Disbursement Letter, the Due Diligence Letter, the Fee Letter, the Guarantor
Security Agreements, the
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Guaranty, the Intercompany Subordination Agreement, the Letters of Credit, the
Officers' Certificate, the Patent and Trademark Security Agreement, the Stock
Pledge Agreement, the Trademark Security Agreement, the Warrant, any note or
notes executed by a Borrower in connection with this Agreement and payable to a
member of the Lender Group, and any other agreement entered into, now or in the
future, by any Borrower, or any Guarantor, and the Lender Group in connection
with this Agreement.
"Material Adverse Change" means (a) a material adverse change in
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of Borrowers taken as a whole, (b) a
material impairment of either the Parent's ability individually, or the
Borrowers' ability taken as a whole, to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower or a
Guarantor.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum GEL Advance Amount" means, in the aggregate from and
after the Closing Date, the sum of (a) $7,500,000 and (b) the net cash proceeds
of any equity issuance by the Parent after the Closing Date.
"Maximum GEL Quarterly Advance Amount" means, for any fiscal
quarter, the amount set forth opposite such quarter in the following table:
Applicable Period Maximum Amount
----------------- --------------
For the quarter ending $1,000,000
September 30, 2001
For the quarter ending $1,000,000
December 31, 2001
For the quarter ending $1,400,000
March 31, 2002
For the quarter ending $1,400,000
June 30, 2002
For the quarter ending $1,000,000
September 30, 2002 and each quarter
ending thereafter
"Maximum Revolver Amount" means $25,000,000.
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"Maximum Term Loan A Amount" means $5,000,000.
"Maximum Term Loan B Amount" means $15,000,000.
"Xxxxxxxx Equity Purchase Agreement" means an agreement between
Xxxxxxxx Investments and Parent, pursuant to which Xxxxxxxx Investments will
purchase $7,500,000 of equity of the Parent for consideration of the forgiveness
of $7,500,000 of Indebtedness, in form and substance acceptable to Agent.
"Xxxxxxxx Investments" means Xxxxxxxx Investments LLC.
"Xxxxxxxx Pay-Off Letter" means a letter from Xxxxxxxx Investments
agreeing to release its Liens in and to the properties and assets of Borrowers,
in form and substance acceptable to Agent.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, for the benefit of the Lender Group, in form and
substance satisfactory to Agent, that encumber the Real Property Collateral and
the related improvements thereto.
"Negotiable Collateral" means all of Borrowers' now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Auction Sale Value" means the net auction sale value of
Borrowers' Eligible Inventory as determined by Agent or an appraiser
satisfactory to Agent.
"Net Proceeds" means with respect to any Disposition by any
Borrower or any Subsidiary of a Borrower, the excess, if any, of (i) the
aggregate amount received in cash (including any cash received by way of
deferred payment pursuant to a note receivable, other non-cash consideration or
otherwise, but only as and when such cash is so received) in connection with
such Disposition, over (ii) the sum of (A) the principal amount of any
Indebtedness which is secured by any such asset (other than Indebtedness assumed
by the purchaser of such asset) or which is required to be, and is, repaid in
connection with the Disposition thereof (other than Indebtedness hereunder), (B)
the reasonable out-of-pocket expenses, costs and fees incurred by such Borrower
or Subsidiary, as the case may be, in connection with such Disposition, and (C)
federal and state transfer taxes incurred in connection with such Disposition,
whether payable at such time or thereafter.
"Non-Borrower Subsidiary" means a Subsidiary of Parent that is not
a Borrower other than Golden Eagle or any Subsidiary of Golden Eagle.
"Obligations" means all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code,
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would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrowers are required to pay
or reimburse by the Loan Documents, by law, or otherwise. Any reference in this
Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and warranties
of officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Patent and Trademark Security Agreement" means a patent and
trademark security agreement executed and delivered by each Borrower and
Guarantor to Agent, the form and substance of which is satisfactory to Agent.
"Permitted Discretion" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) so long as no Event of Default
shall have occurred and be continuing, sales or other dispositions in the
ordinary course of business of Equipment that is substantially worn, damaged, or
obsolete, (b) sales of Inventory to buyers in the ordinary course of business or
in a manner that constitutes a Permitted Intercompany Advance, (c) the use or
transfer of money or Cash Equivalents in a manner that is not prohibited by the
terms of this Agreement or the other Loan Documents, (d) the licensing on a
non-exclusive basis, of patents, trademarks, Copyrights, and other intellectual
property rights in the ordinary course of business, (e) so long as no Event of
Default shall have occurred and be continuing, sales of Equipment in the
ordinary course of business to the extent the net proceeds of such sales are
used to purchase new Equipment within 90 days of
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such sale, provided that the aggregate fair market value of the Equipment sold
pursuant to this clause in any one year shall not exceed $1,000,000, (f)
Permitted Intercompany Advances, or (g) sales, transfers, grants or other
conveyances of accounts or chattel paper and related equipment or other
collateral in the ordinary course of business by Golden Eagle to a Person in the
business of purchasing loans or in connection with a securitization or other
financing transaction.
"Permitted Golden Eagle Indebtedness" means the Golden Eagle
Financing and any other Indebtedness of Golden Eagle incurred after the
incurrence of such Indebtedness, provided that such Indebtedness shall be
incurred in the ordinary course of business pursuant to a financing facility
with respect to the sale, transfer, grant or other conveyance of accounts or
chattel paper and related equipment and other collateral.
"Permitted Holder" means Xxxxxx Xxxxxxx, and his Family Members,
and his Family Trusts.
"Permitted Intercompany Advances" means an Intercompany Advance,
so long as (a) no Default or Event of Default exists at the time of the making
of such Intercompany Advance or would exist after giving effect thereto, (b)
after giving effect to the making of such Intercompany Advance, the Person that
is acting as the lender with respect thereto is Solvent, (c) with respect to
Intercompany Advances from or to a Borrower or Guarantor, the Intercompany
Subordination Agreement is in full force and effect with respect to the proposed
Intercompany Advance, (d) after giving effect to the making of such Intercompany
Advance, the Person that is acting as the borrower with respect thereto is
Solvent, (e) if a Non-Borrower Subsidiary is the Person acting as the borrower
with respect to such Intercompany Advance, after giving effect to such
Intercompany Advance, (i) the Non-Borrower Subsidiaries do not have cash, Cash
Equivalents or other liquid current assets in excess of $7,000,000 (or the
Dollar Equivalent thereof) in the aggregate, (ii) Hypercom Brazil does not have
cash, Cash Equivalents or other liquid current assets in excess of $5,000,000
(or the Dollar Equivalent thereof) in the aggregate and (iii) Hypercom Asia
Group does not have cash, Cash Equivalents or other liquid current assets in
excess of $2,000,000 (or the Dollar Equivalent thereof) in the aggregate, and
(f) if Golden Eagle is the Person acting as the borrower with respect to such
Intercompany Advance, (i) the aggregate amount of Intercompany Advances made to
Golden Eagle from and after the Closing Date (after giving effect to the
proposed Intercompany Advance) by the Borrowers does not exceed the Maximum GEL
Advance Amount, (ii) the aggregate amount of such Intercompany Advances in any
fiscal quarter does not exceed the Maximum GEL Quarterly Advance Amount, and
(iii) Borrowers have Availability of not less than $3,000,000 after giving
effect thereto, and (iv) with respect to any such Intercompany Advance made
after the date 180 days after the Closing Date, the Golden Eagle Financing shall
have been consummated within 180 days after the Closing Date.
"Permitted Investments" means (a) investments in Cash Equivalents,
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, and (d) investments by any Borrower in any other Borrower provided
that if any such investment is in the form of
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Indebtedness, such Indebtedness investment shall be subject to the terms and
conditions of the Intercompany Subordination Agreement.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent or (ii) are the subject of Permitted
Protests, (g) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (h) Liens or deposits to
secure performance of bids, tenders, or leases incurred in the ordinary course
of Borrowers' business and not in connection with the borrowing of money, (i)
Liens granted as security for surety or appeal bonds in connection with
obtaining such bonds in the ordinary course of Borrowers' business, (j) Liens
resulting from any judgment or award that is not an Event of Default hereunder,
(k) with respect to any Real Property, any easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof by Borrowers and (l) Liens on assets of Golden Eagle securing
Permitted Golden Eagle Indebtedness.
"Permitted Protest" means the right of the applicable Borrower to
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Borrower in good faith, and (c) Agent is satisfied
in its Permitted Discretion that, while any such protest is pending, there will
be no impairment of the enforceability, validity, or priority of any of the
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $5,000,000.
"Permitted Restricted Payments" means dividends, loans, or
advances to Parent to enable Parent to make payment of its general operating
expenses and federal, state, local and foreign tax obligations then due and
owing and incurred in the ordinary course of business if and so long as Parent
(a) immediately uses the proceeds of such dividends, loans, or advances solely
to satisfy such obligations and (b) does not use any of the proceeds of such
dividends, loans or advances to satisfy the obligations of any other Person
through the satisfaction of a guaranty or otherwise.
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"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Phoenix Investors" means the Persons identified as lenders in the
Phoenix Investors Loan Agreement.
"Phoenix Investors Conversion Agreement" means the agreement
pursuant to which the Phoenix Investors convert all obligations owed by Parent
to the Phoenix Investors into equity of the Parent on the Closing Date.
"Phoenix Investors Loan Agreement" means the Loan Agreement, dated
June 4, 2001, among Parent, the lenders party thereto and Xxxxxx X. Xxxxxxx.
"Phoenix Investors Equity Purchase Agreement" the stock purchase
agreement, dated as of July 31, 2001, among Parent and certain of the Phoenix
Investors, pursuant to which certain of the Phoenix Investors will purchase
$7,500,000 of Stock of Parent.
"Preferred Stock" means, as applied to the capital stock of any
Person, the capital stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of capital stock of any other class of such Person.
"Projections" means Parent's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto or to participate in Letters of Credit, to reimburse the Issuing Lender,
and to receive payments of fees with respect thereto, (x) prior to the Revolver
Commitment being reduced to zero, the percentage obtained by dividing (i) such
Lender's Revolver Commitment, by (ii) the aggregate Revolver Commitments of all
Lenders, and (y) from and after the time that the Revolver Commitment has been
terminated or reduced to zero, the percentage obtained by dividing (I) the
aggregate principal amount of such Lender's Advances by (II) the aggregate
principal amount of all Advances,
(b) with respect to a Lender's obligation to make the Term Loan A
and receive payments of interest, fees, and principal with respect thereto, (i)
prior to the
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making of the Term Loan A, the percentage obtained by dividing (x) such Lender's
Term Loan A Commitment, by (y) the aggregate amount of all Lenders' Term Loan A
Commitments, and (ii) from and after the making of the Term Loan A, the
percentage obtained by dividing (x) the principal amount of such Lender's
portion of the Term Loan A Amount by (y) the Term Loan A Amount, and
(c) with respect to a Lender's obligation to make the Term Loan B
and receive payments of interest, fees, and principal with respect thereto, (i)
prior to the making of the Term Loan B, the percentage obtained by dividing (x)
such Lender's Term Loan B Commitment, by (y) the aggregate amount of all
Lenders' Term Loan B Commitments, and (ii) from and after the making of the Term
Loan B, the percentage obtained by dividing (x) the principal amount of such
Lender's portion of the Term Loan B Amount by (y) the Term Loan B Amount, and
(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
percentage obtained by dividing (i) such Lender's Revolver Commitment plus the
unpaid principal amount of such Lender's portion of the Term Loan Amount, by
(ii) the aggregate amount of Revolver Commitments of all Lenders plus the Term
Loan Amount; provided, however, that in the event the Revolver Commitments have
been terminated or reduced to zero, Pro Rata Share shall be the percentage
obtained by dividing (A) the principal amount of such Lender's Advances plus the
unpaid principal amount of such Lender's portion of the Term Loan Amount by (B)
the principal amount of all outstanding Advances plus the Term Loan Amount.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Ratio of Senior Debt to EBITDA" means, for any fiscal quarter the
ratio determined by dividing (i) Senior Debt outstanding at the end of each such
quarter by (ii) (A) with respect to the quarter ending September 30, 2001,
EBITDA of Parent excluding Golden Eagle and Subsidiaries of Golden Eagle for the
3-month period ending on such date multiplied by 4, (B) with respect to the
quarter ending December 31, 2001, EBITDA of Parent excluding Golden Eagle and
Subsidiaries of Golden Eagle for the 6-month period ending on such date
multiplied by 2, (C) with respect to the quarter ending Xxxxx 00, 0000, XXXXXX
of Parent excluding Golden Eagle and Subsidiaries of Golden Eagle for the
9-month period ending on such date multiplied by 4/3 and (D) with respect to
each fiscal quarter thereafter, EBITDA of Parent excluding Golden Eagle and
Subsidiaries of Golden Eagle for the 12 month period ending as of the end of
such fiscal quarter.
"Ratio of Total Debt to EBITDA" means, for any fiscal quarter the
ratio determined by dividing (i) Total Debt outstanding at the end of each such
quarter by (ii) (A) with respect to the quarter ending September 30, 2001,
EBITDA of Parent for the 3-month
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period ending on such date multiplied by 4, (B) with respect to the quarter
ending December 31, 2001, EBITDA of Parent for the 6-month period ending on such
date multiplied by 2, (C) with respect to the quarter ending Xxxxx 00, 0000,
XXXXXX of Parent for the 9-month period ending on such date multiplied by 4/3
and (D) with respect to each fiscal quarter thereafter, EBITDA of Parent for the
12 month period ending as of the end of such fiscal quarter.
"Real Property" means any estates or interests in real property
now owned, hereafter acquired or leased by any Borrower and the improvements
thereto.
"Real Property Collateral" means (a) the parcel or parcels of Real
Property identified on Schedule R-1, (b) any Real Property hereafter acquired by
Borrower and (c) the Headquarters Real Property upon the delivery of a Mortgage
with respect thereto pursuant to Section 3.2(e).
"Record" means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents of Borrowers in an aggregate amount of not less than
$3,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata
Shares aggregate 51% as determined pursuant to clause (d) of the definition of
"Pro Rata Share."
"Required Library" means, as of any date of determination, the set
or collection of existing Copyrights of Parent relating to the software and
firmware of Borrowers embedded, incorporated, bundled or licensed in combination
with the Borrower's ICE product, any future versions of the ICE product or other
proprietary products developed or produced by Borrowers.
"Required Term Loan Lenders" means, as of any date of
determination, so long as any Term Loan Amount is outstanding, Lenders holding
51% of the outstanding Term Loan Amount, and, if no Term Loan Amount is
outstanding, means Required Lenders.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on
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Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum
of (a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit,
all reimbursement obligations of Borrowers to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or which
may become available to be drawn, (b) all amounts that have been paid by the
Issuing Lender to the Underlying Issuer to the extent not reimbursed by
Borrowers, whether by the making of an Advance or otherwise, and (c) all accrued
and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission
and any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Senior Debt" means, as of any date of determination, the sum of
(a) Advances outstanding as of such date, (b) the Term Loan Amount and (c) the
Letter of Credit Usage.
"Settlement" has the meaning set forth in Section 2.3(d)(i).
"Settlement Date" has the meaning set forth in Section 2.3(d)(i).
"Solvent" means, with respect to any Person on a particular date,
that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form
and substance satisfactory to Agent, executed and delivered by Parent and each
Borrower and Guarantor that owns Stock of a Subsidiary of Parent.
"Subordinated Debt" means Indebtedness of Borrower, the principal
of which will not mature or be subject to a sinking fund within one year of the
Maturity Date, and the repayment terms and conditions and subordination
provisions of which are satisfactory to
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Agent in its reasonable discretion, it being understood that Agent will consult
with the other Lenders regarding such repayment terms and conditions and
subordination provisions.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Tangible Net Worth" means, as of any date of determination, the
result of (a) the total stockholder's equity of Parent and its Subsidiaries,
minus (b) the sum of (i) all Intangible Assets of Parent and its Subsidiaries,
(ii) all prepaid expenses of Parent and its Subsidiaries, and (iii) all amounts
due to Parent and its Subsidiaries from Affiliates.
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" means the Term Loan A or the Term Loan B.
"Term Loan A" has the meaning set forth in Section 2.2(a).
"Term Loan A Amount" means, as of any date of determination, the
outstanding principal amount of the Term Loan A.
"Term Loan A Commitment" means, with respect to each Lender, its
Term Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
"Term Loan Amount" means the Term Loan A Amount plus the Term Loan
B Amount.
"Term Loan B" has the meaning set forth in Section 2.2(b).
"Term Loan B Amount" means, as of any date of determination, the
outstanding principal amount of the Term Loan B, plus the then extant Term Loan
B PIK Amount.
"Term Loan B Commitment" means, with respect to each Lender, its
Term Loan B Commitment, and, with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 14.1.
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"Term Loan B PIK Amount" means, as of any date of determination,
the amount of all interest accrued with respect to the Term Loan B Amount that
has been paid-in-kind by being added to the balance thereof in accordance with
Section 2.6(a)(iii).
"Term Loan Commitment" means the Term Loan A Commitment and the
Term Loan B Commitment. "Total Commitment" means, with respect to each Lender,
its Total Commitment, and, with respect to all Lenders, their Total Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Total Debt" means, as of any date of determination, the aggregate
principal amount determined on a consolidated basis in accordance with GAAP of
(a) Senior Debt, (b) all obligations of Parent and its Subsidiaries for borrowed
money and (c) all obligations of Parent and its Subsidiaries under Capital
Leases, provided that Total Debt shall not include (i) any Indebtedness incurred
pursuant to a securitization of leases by Golden Eagle or (ii) the Xxxxxxx Notes
or Xxxxxxx Replacement Note.
"Underlying Issuer" means a third Person which is the beneficiary
of an L/C Undertaking and which has issued a letter of credit at the request of
the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has
been issued by an Underlying Issuer.
"United States" means the United States, the District of Columbia
and each of the fifty states and any territory of the United States.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxxxx Notes" the promissory notes issued by Parent to Xxxxxx X.
Xxxxxxx in an aggregate principal amount of $3,500,000 to be cancelled and
replaced by the Xxxxxxx Replacement Note.
"Xxxxxxx Replacement Note" means the note payable issued by Parent
to Xxxxxx X. Xxxxxxx in consideration for the delivery and cancellation of the
Xxxxxxx Notes in an aggregate principal amount of $3,100,000, which by its terms
shall be subordinated to the Obligations and mature not less than 18 months
after the Maturity Date.
"Xxxxxxx Subordination Agreement" means the subordination
agreement between the Agent and Xxxxxx X. Xxxxxxx in form and substance
satisfactory to the Agent.
"Warrant Shares" means the shares of Parent common stock, par
value $.001 per share, to be issued pursuant to the Warrant.
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"Warrants" means the common stock purchase warrant in form and
substance satisfactory to Ableco, issued by Parent to Ableco Holdings LLC
pursuant to Section 3.1, together with the rights to purchase Common Stock of
the Parent provided thereby and all warrants covering such stock issued upon
transfer, division or combination of, or in substitution for, any thereof.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
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(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage or (ii) the Borrowing Base less
the Letter of Credit Usage. For purposes of this Agreement, "Borrowing Base," as
of any date of determination, shall mean the result of:
(i) the lesser of
(A) the sum of:
(1) 85% of the amount of Eligible
Accounts, less the amount, if any, of
the Dilution Reserve, plus
(2) the lesser of (y) $4,000,000 and
(z) up to 85% of Eligible Foreign
Accounts, plus
(3) an amount equal to the least of:
(x) $7,500,000,
(y) the sum (1) up to
25% of the cost of
Eligible Raw Materials
Inventory and (2) up to
50% of the cost of
Eligible Finished Goods
Inventory, net of
customary reserves, and
(z) 100% of the Net
Auction Sale Value, and
(B) 110% of Borrowers' Collections for the
immediately preceding 60 day period.
(b) Anything to the contrary in this Section 2.1 notwithstanding,
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including, and additional
reserves with respect to (i) sums that Borrowers are required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrowers to any Person to the extent secured by a Lien on, or trust over, any
of the Collateral (other than any existing Permitted Lien set forth on Schedule
P-1 which is specifically identified thereon as entitled to have priority over
the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. In addition to the foregoing,
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Agent shall have the right to have the Inventory reappraised by a qualified
appraisal company selected by Agent from time to time after the Closing Date for
the purpose of redetermining the Net Auction Sale Value of the Eligible
Inventory portion of the Collateral, which appraisals, so long as no Default or
Event of Default shall have occurred and is continuing, shall be conducted at
Borrowers' expense no more frequently than one time during any 12 month period,
and, after the occurrence and during the continuance of a Default or an Event of
Default, at Borrowers' expense as frequently as Agent shall determine. Based
upon the results of any such redetermination, and any other information received
from the collateral reporting required under Section 6.2, Agent may, in its
Permitted Discretion, redetermine the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no obligation
to make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
2.2 TERM LOANS.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan A Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan A") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan A Amount. The Term Loan A shall be due and payable on the following
dates and in the following amounts:
Date Installment Amount
---- ------------------
February 1, 2002 $833,333
March 1, 2002 $833,333
April 1, 2002 $833,333
May 1, 2002 $833,333
June 1, 2002 $833,333
July 1, 2002 $833,335
The outstanding unpaid principal balance and all accrued and unpaid interest
under the Term Loan A shall be due and payable on the earlier to occur of (i)
the first anniversary of the Closing Date and (ii) the date of termination of
this Agreement, whether by its terms, by prepayment, or by acceleration. All
amounts outstanding under the Term Loan A shall constitute Obligations. Any
principal amount of the Term Loan A which is repaid or prepaid by Borrowers may
not be reborrowed.
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(b) Subject to the terms and conditions of this Agreement, on the
Closing Date each Lender with a Term Loan B Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan B") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan B Amount. The Term Loan B shall be due and payable in equal monthly
installments of $250,000, payable on the first day of each month, commencing on
August 1, 2002 until the Term Loan B is repaid in full. Notwithstanding the
foregoing, the outstanding unpaid principal balance and all accrued and unpaid
interest under the Term Loan B shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan B shall constitute
Obligations. Any principal amount of the Term Loan B which is repaid or prepaid
by Borrowers may not be reborrowed.
(c) If (A) no Event of Default shall have occurred and be
continuing or would result from any proposed prepayment and (B) after giving
effect to any such proposed prepayment, Borrowers have Excess Availability in an
aggregate amount at least equal to $5,000,000, Borrowers may, at any time and
from time to time, prepay all or a portion of the Term Loan A or the Term Loan B
without penalty or premium. Each prepayment shall be accompanied by the payment
of accrued interest to the date of such prepayment on the amount prepaid, shall
be in a minimum amount of $1,000,000 and an amount that is in an integral
multiple of $500,000 and shall be applied against the remaining installments of
principal due, first, on the Term Loan A prepaid in the inverse order of
maturity and, second on the Term Loan B prepaid in the inverse order of
maturity.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or the Term Loan specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day. At Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such request
by the required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice.
(b) MAKING OF ADVANCES.
(i) Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the
Business Day immediately preceding the Funding Date applicable
thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make
the amount of such Lender's Pro Rata Share of the requested
Borrowing available to Agent in immediately available funds, to
Agent's Account, not later than 10:00 a.m. (California time)
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on the Funding Date applicable thereto. After Agent's receipt of
the proceeds of such Advances or the Term Loan, as applicable,
upon satisfaction of the applicable conditions precedent set forth
in Section 3 hereof, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding
Date by transferring immediately available funds equal to such
proceeds received by Agent to Administrative Borrower's Designated
Account; provided, however, that, subject to the provisions of
Section 2.3(g), Agent shall not request any Lender to make, and no
Lender shall have the obligation to make, any Advance (or its
portion of the Term Loan) if Agent shall have actual knowledge
that (1) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding
Date for the applicable Borrowing unless such condition has been
waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on
or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the date
of such Borrowing, that such Lender will not make available as and
when required hereunder to Agent for the account of Borrowers the
amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount
available to Agent in immediately available funds on the Funding
Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrowers on such date a
corresponding amount. If and to the extent any Lender shall not
have made its full amount available to Agent in immediately
available funds and Agent in such circumstances has made available
to Borrowers such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be
conclusive, absent demonstrable error. If such amount is so made
available, such payment to Agent shall constitute such Lender's
portion of the requested Advance on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available
to Agent on the Business Day following the Funding Date, Agent
will notify Administrative Borrower of such failure to fund and,
upon demand by Agent, Borrowers shall pay such amount to Agent for
Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Advances
composing such Borrowing. The failure of any Lender to make its
portion of any Advance on any Funding Date shall not relieve any
other Lender of any obligation hereunder to make
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available its portion of the requested Advance on such Funding
Date, but no Lender shall be responsible for the failure of any
other Lender to make available its portion of the requested
Advance to be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer
to the Defaulting Lender, Agent shall transfer any such payments
to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's portion of the Advance was
funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event of
Default had occurred and is continuing (and to the extent such
Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrowers as if such Defaulting
Lender had made Advances to Borrowers. Subject to the foregoing,
Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of
all such payments received and retained by it for the account of
such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero. This Section shall
remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall
have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting
Lender makes its Pro Rata Share of the applicable Advance and pays
to Agent all amounts owing by Defaulting Lender in respect
thereof. The operation of this Section shall not be construed to
increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any
other Lender of its duties and obligations hereunder, or to
relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Administrative Borrower
at its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting
Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of
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the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations
(including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any
kind whatsoever; provided further, however, that any such
assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(c) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and the
Lenders, from time to time in Agent's sole discretion, (1) after
the occurrence and during the continuance of a Default or an Event
of Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been
satisfied, to make Advances to Borrowers on behalf of the Lenders
that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of repayment of the
Obligations, or (C) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including
Lender Group Expenses and the costs, fees, and expenses described
in Section 10 (any of the Advances described in this Section
2.3(c) shall be referred to as "Agent Advances"); provided, that
notwithstanding anything to the contrary contained in this Section
2.3(c), the aggregate principal amount of Agent Advances
outstanding at any one time, when taken together with the
aggregate principal amount of Overadvances made in accordance with
Section 2.3(g) outstanding at any time, shall not exceed an amount
equal to the lesser of (x) 10% of the Borrowing Base then in
effect and (y) $2,000,000. Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments thereon
shall be payable to Agent solely for its own account (and for the
account of the holder of any participation interest with respect
to such Agent Advance).
(ii) The Agent Advances shall be repayable by
Borrowers on demand and secured by the Agent's Liens granted to
Agent under the Loan Documents, shall constitute Advances and
Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances.
(d) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share
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of the outstanding Advances. Such agreement notwithstanding, Agent and the other
Lenders agree (which agreement shall not be for the benefit of or enforceable by
Borrowers) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among them as to the Advances and the Agent
Advances shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if
so determined by Agent, (1) for itself, with respect to each Agent
Advance, and (2) with respect to Collections received, as to each
by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than
2:00 p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice of
a Settlement Date shall include a summary statement of the amount
of outstanding Advances and Agent Advances for the period since
the prior Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(b)(iii)): (y) if a
Lender's balance of the Advances and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in immediately
available funds to the account of such Lender as such Lender may
designate, an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances and Agent Advances, and (z) if a
Lender's balance of the Advances and Agent Advances is less than
such Lender's Pro Rata Share of the Advances and Agent Advances as
of a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each
such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances and Agent
Advances. Such amounts made available to Agent under clause (z) of
the immediately preceding sentence shall be applied against the
amounts of the applicable Agent Advance and, together with the
portion of such Agent Advance representing such Lender's Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on the
Settlement Date applicable thereto to the extent required by the
terms hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest
thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of
the Advances and Agent Advances is less than, equal to, or greater
than
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such Lender's Pro Rata Share of the Advances and Agent Advances as
of a Settlement Date, Agent shall, as part of the relevant
Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal,
interest and fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that
a net amount is owed to any such Lender after such application,
such net amount shall be distributed by Agent to that Lender as
part of such next Settlement.
(iii) During the period between Settlement Dates,
Agent with respect to Agent Advances, and each Lender (subject to
the effect of letter agreements between Agent and individual
Lenders) with respect to the Advances other than Agent Advances,
shall be entitled to interest at the applicable rate or rates
payable under this Agreement on the daily amount of funds employed
Agent or the Lenders, as applicable.
(e) NOTATION. Agent shall record on its books the principal amount
of the Advances owing to each Lender and Agent Advances owing to Agent, and the
interests therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(f) LENDERS' FAILURE TO PERFORM. All Advances (other than Agent
Advances) shall be made by the Lenders contemporaneously and in accordance with
their Pro Rata Shares. It is understood that (i) no Lender shall be responsible
for any failure by any other Lender to perform its obligation to make any
Advance (or other extension of credit) hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligations hereunder, and (ii) no failure by any Lender
to perform its obligations hereunder shall excuse any other Lender from its
obligations hereunder.
(g) OPTIONAL OVERADVANCES. (i) Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent and Agent may, but
is not obligated to, knowingly and intentionally, continue to make Advances to
Borrowers notwithstanding that an Overadvance exists or thereby would be
created, so long as (A) after giving effect to such Advances, the Revolver Usage
does not exceed the Borrowing Base by more than an amount equal to the lesser of
(1) 10% of the Borrowing Base then in effect and (2) $2,000,000, (B) after
giving effect to such Advances the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, (C) the aggregate
principal amount of Overadvances made pursuant to this Section 2.3(g) when taken
together with the aggregate principal amount of Agent Advances made pursuant to
Section 2.3(c) does not exceed at any time an amount equal to the lesser of (1)
10% of the Borrowing Base
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then in effect and (2) $2,000,000, and (D) at the time of the making of any such
Advance, Agent does not believe, in good faith, that the Overadvance created by
such Advance will be outstanding for more than 120 days. The foregoing
provisions are for the exclusive benefit of Agent and the Lenders and are not
intended to benefit Borrowers in any way. The Advances that are made pursuant to
this Section 2.3(g) shall be subject to the same terms and conditions as any
other Advance except that the rate of interest applicable thereto shall be the
rate applicable to Advances under Section 2.6(c) hereof without regard to the
presence or absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such
excess, Agent shall notify Lenders as soon as practicable (and
prior to making any (or any additional) intentional Overadvances
(except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines
that prior notice would result in imminent harm to the Collateral
or its value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers and intended
to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrowers to an amount permitted by the
preceding paragraph. In the event Agent or any Lender disagrees
over the terms of reduction or repayment of any Overadvance, the
terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(d) for
the amount of such Lender's Pro Rata Share of any unintentional
Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(g), and any
Overadvances resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein,
all payments by Borrowers shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the
date specified herein. Any payment received by Agent later than
11:00 a.m. (California time), shall be deemed to
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have been received on the following Business Day and any
applicable interest or fee shall continue to accrue until such
following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is
due to the Lenders that Borrowers will not make such payment in
full as and when required, Agent may assume that Borrowers have
made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed
to such Lender, together with interest thereon at the Defaulting
Lender Rate for each day from the date such amount is distributed
to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest payments
shall be apportioned ratably among the Lenders (according to the
unpaid principal balance of the Obligations to which such payments
relate held by each Lender) and payments of fees and expenses
(other than fees or expenses that are for Agent's separate
account, after giving effect to any letter agreements between
Agent and individual Lenders) shall be apportioned ratably among
the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular payment relates. All payments
shall be remitted to Agent and all such payments not relating to
principal or interest of specific Obligations (other than payments
constituting the payment of specific fees), and all proceeds of
Accounts or other Collateral received by Agent, shall be applied
as follows:
A. first, to pay any Lender Group
Expenses then due to Agent under the Loan Documents,
until paid in full,
B. second, to pay any Lender Group
Expenses then due to the Lenders under the Loan
Documents, on a ratable basis, until paid in full,
C. third, to pay any fees then due to
Agent (for its separate account, after giving effect
to any letter agreements between Agent and the
individual Lenders) under the Loan Documents until
paid in full,
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D. fourth, to pay any fees then due to
any or all of the Lenders (after giving effect to
any letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
E. fifth, to pay interest due in
respect of all Agent Advances, until paid in full,
F. sixth, ratably to pay interest due
in respect of the Advances (other than Agent
Advances) until paid in full,
G. seventh, so long as no Event of
Default has occurred and is continuing or, if an
Event of Default has occurred and is continuing and
Agent agrees in its sole discretion, to pay interest
due in respect of the Term Loans until paid in full
(if an Event of Default has occurred and is
continuing, the priority of the payment of interest
on the Term Loan Amount, including the Term Loan B
PIK Amount, is deferred to item "thirteenth" below),
H. eighth, to pay the principal of all
Agent Advances until paid in full,
I. ninth, so long as no Event of
Default has occurred and is continuing or, if an
Event of Default has occurred and is continuing and
Agent agrees in its sole discretion, to pay
scheduled principal payments due in respect of the
Term Loans until paid in full (if an Event of
Default has occurred and is continuing, the priority
of payment of scheduled principal payments is
deferred to item "fourteenth" below),
J. tenth, to pay the principal of all
Advances until paid in full,
K. eleventh, if an Event of Default
has occurred and is continuing, to Agent, to be held
by Agent, for the ratable benefit of Issuing Lender
and those Lenders having a Revolver Commitment, as
cash collateral in an amount up to 105% of the then
extant Letter of Credit Usage until paid in full,
L. twelfth, if an Event of Default has
occurred and is continuing, to pay any fees then due
to any or all of the Lenders under the Loan
Documents, on a ratable basis, until paid in full,
M. thirteenth, if an Event of Default
has occurred and is continuing, to pay interest due
in respect of the Term Loans, including the Term
Loan B PIK Amount, until paid in full,
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N. fourteenth, if an Event of Default
has occurred and is continuing, to pay the
outstanding principal balance of the Term Loans
until the Term Loans are paid in full,
O. fifteenth, to pay any other
Obligations until paid in full, and
P. sixteenth, to Borrowers (to be
wired to the Designated Account) or such other
Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive,
subject to a Settlement delay as provided in Section 2.3(d).
(iii) In each instance, so long as no Default or
Event of Default has occurred and is continuing, Section 2.4(b)
shall not be deemed to apply to any payment by Borrowers specified
by Borrowers to be for the payment of specific Obligations then
due and payable (or prepayable) under any provision of this
Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense
reimbursements, whether or not the same would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent
possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall
control and govern.
2.5 OVERADVANCES AND PREPAYMENTS. If, at any time or for any reason,
(i) the amount of Obligations owed by Borrowers to the Lender Group pursuant to
Sections 2.1 and 2.12 is greater than either the Dollar or percentage
limitations set forth in Sections 2.1 or 2.12, or (ii) the Obligations are
greater than 130% of Borrowers' Collections for the immediately preceding 90-day
period (in each case, an "Overadvance"), in each case, Borrowers immediately
shall pay to Agent, in cash, the amount of such excess, which amount shall be
used by Agent to reduce the Obligations in accordance with the priorities set
forth in Section 2.4(b). In addition, Borrowers hereby promise to pay the
Obligations
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(including principal, interest, fees, costs, and expenses) in Dollars in full to
the Lender Group as and when due and payable under the terms of this Agreement
and the other Loan Documents.
(b) Upon any Disposition by any Borrower or its Subsidiaries,
Borrowers promptly (and in any event within 2 Business Days) shall pay to Agent,
in cash, an amount equal to 100% of the Net Proceeds received by such Person in
connection with such Disposition to the extent that the aggregate amount of Net
Proceeds received by all Borrowers and their Subsidiaries shall exceed for all
such Dispositions since the Closing Date $250,000, which amount shall be applied
by Agent in accordance with Section 2.5(f). Nothing contained in this subsection
(b) shall permit any Borrower or any of its Subsidiaries to make a Disposition
of any property other than in accordance with Section 7.4.
(c) Upon the loss, destruction or taking by condemnation of any
Collateral, Borrowers promptly (and in any event within 2 Business Days) shall
pay to Agent, in cash, an amount equal to 100% of the insurance or other
proceeds received by any Borrower or any of its Subsidiaries in connection
therewith, net of any reasonable expenses incurred in collecting such net
proceeds, which amount shall be applied by Agent in accordance with Section
2.5(f), except to the extent such proceeds are disbursed by Agent pursuant to
Section 6.8(b).
(d) Upon the receipt by any Borrower or any of its Subsidiaries of
any tax refund or the proceeds of any judgment, settlement or other
consideration of any kind in connection with any cause of action, Borrowers
promptly (and in any event within 2 Business Days) shall pay to Agent, in cash,
an amount equal to 100% of the net proceeds received, which amount shall be
applied by Agent in accordance with Section 2.5(f).
(e) Upon the receipt of any Collections from the Account Debtors
set forth on Schedule 2.5(e) with respect to the Accounts of such Account
Debtors existing on the date hereof, Borrowers promptly (and in any event within
2 Business Days) shall pay to Agent, in cash, an amount equal to (i) prior to
the date six months after the Closing Date, 50% and (ii) from and after the date
six months after the Closing Date, 100%, of such Collections received, which
amount shall be applied by Agent in accordance with Section 2.5(f).
(f) Prepayments received by Agent pursuant to this Section 2.5
shall be applied, so long as no Event of Default shall have occurred and be
continuing, (i) first, to pay the principal of Term Loan A until paid in full,
such payments to be applied to the scheduled payments of the Term Loan A in
order of maturity, (ii) second, to pay the principal of Term Loan B until paid
in full, such payments to be applied to the scheduled payments of the Term Loan
B in order of maturity, and (iii) third, to pay the principal amount of all
Agent Advances until paid in full, (iv) fourth, to pay the principal of all
Advances until paid in full and (v) fifth, in accordance with Section 2.4(b). If
an Event of Default shall have occurred and be continuing, prepayments received
by Agent pursuant to this Section 2.5 shall be applied at the discretion of the
Agent (x) in accordance with the first
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sentence of this subsection (f) or (y) to the Advances or the Term Loans,
provided that Agent shall establish a permanent reserve with respect to the
Advances made to Borrowers pursuant to Section 2.1(b) equal to the amount of any
such prepayment of Advances.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
(i) all Obligations (except for undrawn Letters of
Credit and the Term Loan Amount) that have been charged
to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum
rate equal to the greater of (A) during any calendar
month, (1) if Term Loans are outstanding at any time
during such month, a per annum rate equal to the Base
Rate plus 2%, or, (2) if the Term Loans are fully paid
prior to the first day of such month, a per annum rate
equal to the Base Rate plus 1%, and (B) 8%;
(ii) the Term Loan A Amount shall bear interest on
the amount thereof outstanding from time to time at a per
annum rate equal to the greater of (A) the Base Rate plus
3% and (B) 10% (to the extent that interest accrued
hereunder at the rate set forth herein would be less than
the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be
deemed increased to such minimum rate)
(iii) the Term Loan B Amount (inclusive of any Term
Loan B PIK Amount) shall bear interest on the amount
thereof outstanding from time to time at a per annum rate
equal to the greater of (A) (1) prior to the first
anniversary of the Closing Date, the Base Rate plus 7%
or, (2) from and after the first anniversary of Closing
Date, if the Term Loan B is not fully paid on or before
such first anniversary, then a per annum rate equal to
the Base Rate plus 9%, and (B) (1) prior to the first
anniversary of the Closing Date, 14% (2) from and after
the first anniversary of the Closing Date, if the Term
Loan B is not paid in full prior to such first
anniversary, then 16% (to the extent that interest
accrued hereunder at the rate set forth herein would be
less than the foregoing minimum daily rates set forth in
clauses (B)(1) or (B)(2), the interest rate chargeable
hereunder for such day automatically shall be deemed
increased to the minimum rate); provided, however, that,
so long as no Event of Default has occurred and is
continuing, that portion of such interest equal to 3% per
annum shall, in the absence of an
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election by Borrowers to pay such interest in cash, be
paid-in-kind by being added to the principal balance of
the Term Loan Amount (inclusive of any Term Loan B PIK
Amount theretofore so added); provided, further, however,
that Borrower may, on or prior to the date that is 5
Business Days prior to the due date thereof, elect to pay
all accrued and unpaid interest under this Section
2.6(a)(iii) in cash.
(b) LETTER OF CREDIT FEE. Borrowers, jointly and severally, shall
pay Agent (for the ratable benefit of the Lenders with a Revolver Commitment,
subject to any letter agreement between Agent and individual Lenders), a Letter
of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate equal to 1.5% per annum
multiplied by the Daily Balance of the undrawn amount of all outstanding Letters
of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit ) that have been charged to the Loan Account pursuant to
the terms hereof shall bear interest on the Daily Balance thereof
at a per annum rate equal to 3% above the per annum rate otherwise
applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 3% above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or Commitments are outstanding. Borrowers
hereby authorize Agent, from time to time, without prior notice to Borrowers,
to, and Agent agrees that it will, charge such interest and fees, all Lender
Group Expenses (as and when incurred), the charges, commissions, fees, and costs
provided for in Section 2.12(e) (as and when accrued or incurred), the fees and
costs provided for in Section 2.11 (as and when accrued or incurred), and all
other payments as and when due and payable under any Loan Document (including
the installments due and payable with respect to the Term Loans) to Borrowers'
Loan Account, which amounts thereafter constitute Obligations hereunder and
shall accrue interest at the rate then applicable thereto. Any interest not paid
when due shall be compounded by being charged to Borrowers' Loan Account and
shall thereafter constitute Obligations hereunder and shall accrue interest at
the rate then applicable thereto.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of
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interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms reasonably satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7 (each a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash
Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7 to add or replace a
Cash Management Account Bank or Cash Management Account; provided, however, that
(i) such prospective Cash Management Bank shall be satisfactory to Agent and
Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash
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Management Account, Borrowers and such prospective Cash Management Bank shall
have executed and delivered to Agent a Cash Management Agreement. Borrowers
shall close any of their Cash Management Accounts (and establish replacement
cash management accounts in accordance with the foregoing sentence) promptly and
in any event within 30 days of notice from Agent that the creditworthiness of
any Cash Management Bank is no longer acceptable in Agent's reasonable judgment,
or as promptly as practicable and in any event within 60 days of notice from
Agent that the operating performance, funds transfer, or availability procedures
or performance of the Cash Management Bank with respect to Cash Management
Accounts or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrowers for one
Business Day of 'clearance' or 'float' at the rate applicable under Section 2.6
on all Collections that are received by Borrowers (regardless of whether
forwarded by the Cash Management Banks to Agent). This across-the-board one
Business Day clearance or float charge on all Collections is acknowledged by the
parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging one Business Day of interest on such
Collections.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and
the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may add or
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replace, the Designated Account Bank or the Designated Account on 30 days prior
written notice to Agent; provided, however, that (i) such prospective Designated
Account Bank shall be satisfactory to Agent and Agent shall have consented in
writing in advance to the opening of such Designated Account with the
prospective Designated Account Bank, and (ii) prior to the time of the opening
of such Designated Account, Borrowers and such prospective Designated Account
Bank shall have executed and delivered to Agent a Control Agreement. Unless
otherwise agreed by Agent and Administrative Borrower, any Advance or Agent
Advance requested by Borrowers and made by Agent or the Lenders hereunder shall
be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with the Term Loan, all Advances
(including Agent Advances) made by Agent or the Lenders to Borrowers or for
Borrowers' account, the Letters of Credit issued by Issuing Lender for
Borrowers' account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrowers and the Lender Group
unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to 0.375% per
annum times the result of (a) the Maximum Revolver Amount, less (b) the sum of
(i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the Letter
of Credit Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the terms
of the Fee Letter, Borrowers shall pay to Agent the fees (including any fees to
be paid in the form of warrants) set forth in the Fee Letter, and
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(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $850 per day, per auditor, plus reasonable out-of-pocket expenses
for each financial audit of a Borrower performed by personnel employed by any
Lender, provided, however, that so long as no Event of Default shall have
occurred and be continuing, Borrower shall not be obligated to pay such fees and
expenses in respect of more than four financial audits of Borrower in any
calendar year, (ii) if implemented, a one time charge of $3,000 plus
out-of-pocket expenses for expenses for the establishment of electronic
collateral reporting systems, (iii) except for the limitation provided herein, a
fee of $1,500 per day per appraiser, plus reasonable out-of-pocket expenses, for
each appraisal of the Collateral performed by personnel employed by any Lender,
and (iv) the actual charges paid or incurred by any Lender if it elects to
employ the services of one or more third Persons to perform financial audits of
Borrowers, to appraise the Collateral, or any portion thereof, or to assess a
Borrower's business valuation, provided, however, that so long as no Event of
Default shall have occurred and be continuing, Borrower shall not be obligated
to pay such fees and expenses in respect of more than one enterprise valuation
during any 12-month period or any such evaluation after the Term Loan has been
paid in full.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C Undertaking. The
Issuing Lender shall have no obligation to issue a Letter of Credit if any of
the following would result after giving effect to the requested Letter of
Credit:
(i) the Adjusted Letter of Credit Usage would exceed
the Borrowing Base less the then extant amount of outstanding
Advances, or
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(ii) the Letter of Credit Usage would exceed
$6,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of outstanding
Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under Section 2.6. To the
extent an L/C Disbursement is deemed to be an Advance hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Advance. Promptly following receipt by Agent of any payment
from Borrowers pursuant to this paragraph, Agent shall distribute such payment
to the Issuing Lender or, to the extent that Lenders have made payments pursuant
to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the
Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby
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absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in clause (a) of this Section, or of any reimbursement payment required to be
refunded to Borrowers for any reason. Each Lender with a Revolver Commitment
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share pursuant
to this Section 2.12(b) shall be absolute and unconditional and such remittance
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
3 hereof. If any such Lender fails to make available to Agent the amount of such
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
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(e) Any and all charges, commissions, fees, and costs incurred by
the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or monetary
authority including, Regulation D of the Federal Reserve Board as from time to
time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of Credit
issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any Underlying
Letter of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Advances hereunder. The determination by Agent of any amount due
pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level
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below that which such Lender or such holding company could have achieved but for
such adoption, change, or compliance (taking into consideration such Lender's or
such holding company's then existing policies with respect to capital adequacy
and assuming the full utilization of such entity's capital) by any amount deemed
by such Lender to be material, then such Lender may notify Administrative
Borrower and Agent thereof. Following receipt of such notice, Borrowers agree to
pay such Lender on demand the amount of such reduction of return of capital as
and when such reduction is determined, payable within 90 days after presentation
by such Lender of a statement in the amount and setting forth in reasonable
detail such Lender's calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
2.14 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each Borrower and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.14), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Persons composing Borrowers will make such payment with respect
to, or perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.14 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence and, generally, to
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the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Person composing Borrowers hereby assents to,
and waives notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by Agent or Lenders at any time or times in
respect of any default by any Person composing Borrowers in the performance or
satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.14 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.14, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.14 shall not be discharged except by
performance and then only to the extent of such performance. The Obligations of
each Person composing Borrowers under this Section 2.14 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to
Agent and Lenders that such Borrower is currently informed of the financial
condition of Borrowers and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) The provisions of this Section 2.14 are made for the benefit
of the Agent, the Lenders and their respective successors and assigns, and may
be enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their
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rights against any of the other Persons composing Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.14 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(h) Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(i) Each of the Persons composing Borrowers hereby agrees that,
after the occurrence and during the continuance of any Default or Event of
Default, the payment of any amounts due with respect to the indebtedness owing
by any Borrower to any other Borrower is hereby subordinated to the prior
payment in full in cash of the Obligations. Each Borrower hereby agrees that
after the occurrence and during the continuance of any Default or Event of
Default, such Borrower will not demand, xxx for or otherwise attempt to collect
any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Lender Group, and such Borrower
shall deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance or the Term Loans
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(or otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below:
(a) the Closing Date shall occur on or before August 3, 2001;
(b) Agent shall have received all financing statements required by
Agent, duly executed by the applicable Borrowers, and Agent shall have received
searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such document
shall be in full force and effect:
(i) the Bank Group Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Existing Lenders of the Existing Lenders' Liens in
and to the properties and assets of Borrowers,
(ii) the Bank One Cash Collateral Agreement,
(iii) the Bank One Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Bank One, in its individual capacity, of its Liens
in and to the properties and assets of Borrowers other than its
Liens with respect to the Headquarters Real Property,
(iv) the Cash Management Agreements,
(v) the Copyright Security Agreement,
(vi) the Disbursement Letter,
(vii) the Due Diligence Letter,
(viii) the Guarantor Security Agreements,
(ix) the Guaranties,
(x) the Fee Letter,
(xi) the Fee Split Letter,
(xii) the GEL Administrative Services Agreement,
(xiii) the Intercompany Subordination Agreement,
(xiv) the Intercompany Transfer Agreement,
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(xv) the Xxxxxxxx Equity Purchase Agreement,
(xvi) the Xxxxxxxx Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Xxxxxxxx Investments of its Liens in and to the
properties and assets of Borrowers,
(xvii) the Mortgages,
(xviii) the Officers' Certificate,
(xix) the Patent and Trademark Security Agreement,
(xx) the Phoenix Investors Conversion Agreement,
(xxi) the Phoenix Investors Equity Purchase
Agreement,
(xxii) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder,
as well as Stock powers with respect thereto endorsed in blank,
(xxiii) the Xxxxxxx Subordination Agreement, and
(xxiv) the Warrants.
(d) Agent shall have received a certificate from the Secretary of
each Borrower (i) attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same, and (ii) certifying the
names and true signatures of the officers of such Borrower authorized to sign
each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with respect
to each Borrower, dated within 25 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
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(h) Agent shall have received a certificate from the Secretary of
each Guarantor (i) attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of the Loan
Documents to which such Guarantor is a party and authorizing specific officers
of such Guarantor to execute the same, and (ii) certifying the names and true
signatures of the officers of such Guarantor authorized to sign each Loan
Document to which such Guarantor is a party;
(i) Agent shall have received copies of each Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Guarantor;
(j) Agent shall have received a certificate of status with respect
to each Guarantor, dated within 25 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect
to each Guarantor, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Guarantor) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;
(m) Agent shall have received Collateral Access Agreements with
respect to the following locations: (i) St. Louis, Missouri, and (ii) Phoenix,
Arizona;
(n) Agent shall have received opinions of (i) Borrowers' counsel
and (ii) Borrower's Missouri local counsel, each in form and substance
satisfactory to Agent;
(o) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers and Guarantors have been timely filed and all
taxes upon Borrowers, Guarantors or their respective properties, assets, income,
and franchises (including Real Property taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(p) Borrowers shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
(q) Agent shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrowers' books
and records and verification of Borrowers' representations and warranties to the
Lender Group, the results of
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which shall be satisfactory to Agent, (ii) an inspection of each of the
locations where Inventory or Equipment is located and (iii) an audit and review
of Borrower's management information systems and controls, the results of which
shall be satisfactory to Agent;
(r) Agent shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are satisfactory
to Agent in its sole discretion;
(s) Agent shall have received an appraisal of the Net Auction Sale
Value applicable to Borrowers' Inventory, the results of which shall be
satisfactory to Agent;
(t) Agent shall have received Borrowers' Closing Date Business
Plan;
(u) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(v) Parent shall have received aggregate gross proceeds of at
least $7,500,000 pursuant to the Phoenix Investors Equity Purchase Agreement;
(w) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby; and
(x) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) promptly following the Closing Date (but in no event later
than 10 days after the Closing Date), Borrowers shall deliver to the Initial
Lenders a listing of the unencumbered assets of each of their CFCs and within 45
days of the Closing Date, use their best efforts to take such action and
execute, acknowledge and deliver such further agreements, instruments or other
documents as any Initial Lender may reasonably require in order to subject to
valid and perfected Liens any of the assets of such CFCs, provided that Initial
Lenders, Parent and Borrowers agree that Parent and Borrowers shall not be
required to take any action at such time that will cause any CFC to recognize a
material deemed dividend under Section 956 of the IRC or otherwise suffer any
material tax liability or which would violate any existing agreement to which
such CFC is a party;
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(b) promptly following the Closing Date (but in no event later
than 5 days), Borrowers shall cooperate with Agent to file an executed original
of this Agreement (and such other Loan Documents as may be required) with the
register of companies maintained by Companies House in England and Wales;
(c) within 30 days of the Closing Date, Agent shall have received
evidence of the cancellation of the Xxxxxxx Notes and the issuance of the
Xxxxxxx Replacement Note in lieu thereof;
(d) within 30 days of the Closing Date, Parent and the Initial
Lenders shall amend this Agreement to add a negative covenant in form and
substance satisfactory to Parent and each Initial Lender with respect to the
monthly operating expenses of Parent and its Subsidiaries with which Parent and
its Subsidiaries will be required to comply until the Term Loan is paid in full;
and
(e) within 30 days of the Closing Date, Parent and the Borrowers
will (i) execute and deliver a Mortgage (subject to obtaining the necessary
consents thereto) granting a second priority Lien subordinate to the Lien of
Bank One with respect to the Headquarters Real Property, which Lien will be
released by Agent at the request of Parent if the Term Loan has been paid in
full and no Event of Default shall have occurred and be continuing and (ii) use
their best efforts to obtain all necessary consents related thereto.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances or the Term Loans
(or to extend any other credit hereunder) shall be subject to the following
conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties
expressly relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Guarantor, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on July 31, 2004 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the
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right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Parent or Borrowers of their
duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrowers' sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 60 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Revolver Commitment
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender), in
full, together with the Applicable Prepayment Premium (to be allocated based
upon letter agreements between Agent and individual Lenders). If Administrative
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then the Commitments shall terminate and Borrowers shall be obligated
to repay the Obligations (including either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender), in full,
together with the Applicable Prepayment Premium, on the date set forth as the
date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of the Required Lenders to terminate after the occurrence of an Event
of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral
in any Insolvency Proceeding, or (iv) restructure, reorganization or compromise
of the Obligations by the confirmation of a plan of reorganization, or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment
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Premium to Agent (to be allocated based upon letter agreements between Agent and
individual Lenders), measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Each Borrower hereby grants to Agent,
for the benefit of the Lender Group, a continuing security interest in all of
its right, title, and interest in all currently existing and hereafter acquired
or arising Personal Property Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrowers of
each of their covenants and duties under the Loan Documents. The Agent's Liens
in and to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent, Parent or Borrowers shall execute and deliver to Agent, any
and all financing statements, original financing statements in lieu of
continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Agent may request in its Permitted Discretion, in
form and substance satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Parent and each
Borrower authorizes Agent to execute any such Additional Documents in Agent's or
the applicable Borrower's name and authorize Agent to file such
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executed Additional Documents in any appropriate filing office. In addition, on
such periodic basis as Agent shall require, Borrowers shall (a) provide Agent
with a report of all new patentable, copyrightable, or trademarkable materials
acquired or generated by Borrowers during the prior period, (b) cause all
patents, Copyrights, and trademarks acquired or generated by Borrowers that are
not already the subject of a registration with the appropriate filing office (or
an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrowers' ownership thereof, and (c) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, Copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 POWER OF ATTORNEY. Parent and each Borrower hereby irrevocably
makes, constitutes, and appoints Agent (and any of Agent's officers, employees,
or agents designated by Agent) as Parent's or such Borrower's true and lawful
attorney, with power to (a) if Parent or such Borrower refuses to, or fails
timely to execute and deliver any of the documents described in Section 4.4,
sign the name of Parent or such Borrower on any of the documents described in
Section 4.4, (b) at any time that an Event of Default has occurred and is
continuing, sign Parent's or such Borrower's name on any invoice or xxxx of
lading relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Parent's or such Borrower's name on any Collection item that may come into the
Lender Group's possession, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under Parent's or such
Borrower's policies of insurance as to Collateral and make all determinations
and decisions with respect to such policies of insurance, and (f) at any time
that an Event of Default has occurred and is continuing, settle and adjust
disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as Agent's or each Borrower's attorney, and each and every
one of its rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and the Lender Group's obligations to extend credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books, and the books and records of Parent, each
Borrower and each Guarantor and to check, test, and appraise the Collateral in
order to verify Parent's, Borrowers' and Guarantors' financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral; provided however, that so long as no Event of Default has occurred
which is continuing, any such inspection, check, test or appraisal shall be
conducted during normal business hours in a manner so as not to interfere
unreasonably with Parent's, any Borrower's or any Guarantor's business
operations.
4.7 CONTROL AGREEMENTS. Parent and each Borrower agrees that it will
not (and will cause each of its Subsidiaries not to) transfer assets out of any
Securities Accounts other
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than as permitted under Section 7.19 and, if to another securities intermediary,
unless each of the applicable Borrower (or Guarantor, as applicable), Agent, and
the substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrowers
(or Guarantors, as applicable) without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may notify any securities intermediary to liquidate the applicable
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Parent and each Borrower makes the following representations and
warranties to the Lender Group which shall be true, correct, and complete, in
all material respects, as of the date hereof, and shall be true, correct, and
complete, in all material respects, as of the Closing Date, and at and as of the
date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties expressly relate solely to an earlier date) and such representations
and warranties shall survive the execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Each Borrower and Guarantor has good and
indefeasible title to its Collateral and its Real Property, free and clear of
Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS AND ELIGIBLE FOREIGN ACCOUNTS. The Eligible
Accounts and Eligible Foreign Accounts are bona fide existing payment
obligations of Account Debtors created by the sale, delivery and unconditional
acceptance of Inventory or the rendition and unconditional acceptance of
services to such Account Debtors in the ordinary course of Borrowers' business,
and such Accounts are unconditionally owed to a Borrower without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. As to
each Eligible Account and each Eligible Foreign Account, such Account is not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Accounts or Eligible Foreign Accounts, as
applicable.
5.3 ELIGIBLE INVENTORY. All Eligible Inventory is of good and
merchantable quality, free from any defects. As to each item of Eligible
Finished Goods Inventory, such Inventory is not excluded as ineligible by virtue
of one or more of the excluding criteria set forth in the definition of Eligible
Finished Goods Inventory. As to each item of Eligible Raw Materials Inventory,
such Inventory is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Raw Materials
Inventory.
5.4 EQUIPMENT. All of the Equipment is used or held for use in Parent's
or Borrowers' business and is fit for such purposes. All equipment of Borrowers'
Subsidiaries is used or held for use in their business and is fit for such
purposes.
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5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party and are located
only at the locations identified on Schedule 5.5.
5.6 INVENTORY RECORDS. Parent, each Borrower and each of its
Subsidiaries keeps correct and accurate records itemizing and describing the
type, quality, and quantity of its Inventory and the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Parent, each Borrower and each of its Subsidiaries is located at the
address indicated in Schedule 5.7, and each Borrower's FEIN is identified in
Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Each Borrower and Guarantor is duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the character of
its business or the ownership of its assets make such qualification or
registration necessary, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized capital Stock of Parent and each
Borrower, by class, and, as of the Closing Date, a description of the number of
shares of each such class that are issued and outstanding. Except as described
in Schedule 5.8(b), no shares of capital stock of Parent or any Borrower are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by Parent or such Borrower, as the case may
be. Other than as described on Schedule 5.8(b), there are no Liens,
subscriptions, options, warrants, or calls relating to any shares of Parent's or
each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. Neither Parent nor any
Borrower is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock. Each share of
capital stock has been duly and validly issued and is fully paid and
non-assessable.
(c) Set forth on Schedule 5.8(c), is a complete and
accurate list of Parent's and each Borrower's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their organization; (ii) the number of shares
of each class of common and preferred Stock authorized for each of such
Subsidiaries; and (iii) the number and the percentage of the outstanding shares
of each such class owned directly or indirectly by Parent or the applicable
Borrower. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are
no Liens, subscriptions, options, warrants, or calls relating to any shares of
any Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any
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outstanding security or other instrument. No Borrower or any of its respective
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of any Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to Parent and each Borrower, the execution,
delivery, and performance by Parent and each such Borrower of this Agreement and
the Loan Documents to which it is a party have been duly authorized by all
necessary action (corporate or otherwise) on the part of Parent or such
Borrower, as the case may be.
(b) As to Parent and each Borrower, the execution,
delivery, and performance by such Borrower of this Agreement and the Loan
Documents (including, without limitation, the issuance of the Warrant Shares by
the Parent) to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to any Borrower, the
Governing Documents of Parent or any Borrower, or any order, judgment, or decree
of any court or other Governmental Authority binding on Parent or any Borrower,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
Parent or any Borrower, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any properties or assets of Parent or any
Borrower, other than Permitted Liens, or (iv) require any approval of any
interestholders of Parent or any Borrower or any approval or consent of any
Person under any contractual obligation of Parent or any Borrower.
(c) Other than the filing of financing statements,
the execution, delivery, and performance by Parent and each Borrower of this
Agreement and the Loan Documents to which Parent or such Borrower is a party do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
(d) As to Parent and each Borrower, this Agreement
and the other Loan Documents to which Parent or such Borrower is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by Parent or such Borrower will be the legally valid and binding obligations of
Parent or such Borrower, as the case may be, enforceable against Parent or such
Borrower in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens are validly created, perfected,
and first priority Liens, subject only to Permitted Liens
(f) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party have been duly authorized
by all necessary action on the part of such Guarantor.
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(g) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such Guarantor, the Governing Documents of such Guarantor, or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Guarantor, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of such Guarantor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Guarantor, other than Permitted Liens, or (iv) require any approval of such
Guarantor's interestholders or any approval or consent of any Person under any
material contractual obligation of such Guarantor except for those consents the
failure to have could not reasonably be expected to have a Material Adverse
Effect.
(h) The execution, delivery, and performance by each
Guarantor of the Loan Documents to which such Guarantor is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which each Guarantor is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Guarantor will be legally valid and binding obligations of
such Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, complaints, investigations or proceedings pending
or, to the best knowledge of Parent or any Borrower, threatened against Parent
or any Borrower, or any of their Subsidiaries, as applicable, except for (a)
matters that are fully covered by insurance (subject to customary deductibles),
and (b) matters arising after the Closing Date that could not reasonably be
expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers or any Guarantor that have been delivered by Borrowers or any
Guarantor to the Lender Group have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in
all material respects, Borrowers' (or such Guarantor's, as applicable) financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrowers
(or any Guarantor, as applicable) since the date of the latest financial
statements submitted to the Lender Group on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) each Borrower and each Guarantor is Solvent.
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(b) No transfer of property is being made by any
Borrower or any Guarantor and no obligation is being incurred by any Borrower or
any Guarantor in connection with the transactions contemplated by this Agreement
or the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of any Borrower or Guarantor.
5.13 EMPLOYEE BENEFITS. None of Parent, Borrowers, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a)
none of Parent's or Parent's Subsidiaries' properties or assets has ever been
used by such Persons or, to Parent's or any Borrower's knowledge by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of applicable Environmental Law, (b) none of Parent's or Parent's
Subsidiaries properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) none of Parent or Parent's Subsidiaries have received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by Parent or Parent's Subsidiaries, and
(d) none of Parent or Parent's Subsidiaries have received (orally or in writing)
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by Parent or any of its Subsidiaries resulting in the releasing or
disposing of Hazardous Materials into the environment.
5.15 BROKERAGE FEES. Other than Xxxx Capital Partners, Parent and
Borrowers have not utilized the services of any broker or finder in connection
with Borrowers' obtaining financing from the Lender Group under this Agreement
and no brokerage commission or finders fee is payable by Parent or Borrowers in
connection herewith.
5.16 INTELLECTUAL PROPERTY. Parent and each of Parent's Subsidiaries
owns, or holds licenses in, all of such Person's intellectual property rights
that are necessary to the conduct of its business as currently conducted.
Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all
patents, patent applications, trademarks, trademark applications, Copyrights,
Copyright registration and Copyright registrations applications as to which
Parent and each of Parent's Subsidiaries is the owner or is an exclusive
licensee. Parent and Parent's Subsidiaries have no Copyrights (other than
immaterial Copyrights) from which they are deriving revenues other than those
that have been registered, or for which Parent or Parent's Subsidiaries have
submitted an application for registration, with the United States Copyright
Office and that are the subject of a copyright security agreement that has been
filed with the United States Copyright Office.
5.17 LEASES. Parent and each of Parent's Subsidiaries enjoy peaceful
and undisturbed possession under all leases material to the business of Parent
or Parent's Subsidiaries and to which Parent or Parent's Subsidiaries are a
party or under which Parent
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or Parent's Subsidiaries are operating. All of such leases are valid and
subsisting and no material default by Parent or Parent's Subsidiaries exists
under any of them.
5.18 DDAS. Set forth on Schedule 5.18 are all of the DDAs of Parent and
each of Parent's Subsidiaries, including, with respect to each depository (i)
the name and address of that depository, and (ii) the account numbers of the
accounts maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Parent or Borrowers in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of Parent or Borrowers in writing to the Agent or any Lender will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Parent's and Borrowers' good faith
best estimate of their future performance for the periods covered thereby. There
is no fact or circumstance known to Parent or any Borrower that has or could
reasonably be expected to have a Material Adverse Change.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Parent and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately reflects the aggregate principal
amount of such Indebtedness and the principal terms thereof.
5.21 TRANSFER PRICING BETWEEN AFFILIATES. Parent and each Borrower is
in compliance with and utilizes the arms-length standard for course of dealing
transactions applicable to Affiliates as contemplated in Section 482 of the
Code, as amended and the regulations promulgated thereunder, such that no
material amount of Taxes are due and owing and unpaid as a result of any such
transaction or series of transactions.
6. AFFIRMATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, so long as
any credit hereunder shall be available and until full and final payment of the
Obligations and termination of this Agreement, Parent and Borrowers shall and
shall cause each of their respective Subsidiaries to do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Parent and Borrowers to produce financial statements in accordance with GAAP and
maintain records
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pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Agent. Parent and Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Agent (with copies for each Lender)
with the following documents at the following times in form satisfactory to
Agent:
Weekly and (a) a sales journal, collection journal, and credit
Upon Each register since the last such schedule and a
Borrowing calculation of the Borrowing Base as of such date,
Request and
(b) notice of all returns, disputes, or claims.
Monthly (not (c) Inventory reports specifying each Borrower's cost
later than the of its Inventory, by category, with additional detail
10th day of each showing additions to and deletions from the
month) Inventory,
(d) a detailed calculation of the Borrowing Base
(including detail regarding those Accounts that are
not Eligible Accounts),
(e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided
to Agent,
(f) a summary aging, by vendor, of Borrowers'
accounts payable and any book overdraft, and
(g) a calculation of Dilution for the prior month.
Quarterly (h) a detailed list of each Borrower's customers in
such detail as Agent shall reasonably require,
(i) a report regarding each Borrower's accrued, but
unpaid, ad valorem taxes,
Upon request by (j) copies of invoices in connection with the
Agent Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection
with the Accounts and, for Inventory and Equipment
acquired by Borrowers, purchase orders and invoices,
and
(k) an update to the Borrowers' Distressed Enterprise
Valuation delivered prior to closing, conducted at
Borrowers' expense by such third party appraisers as
are satisfactory to the Agent and the Required Term
Loan Lenders, provided that so long as no Event of
Default shall have occurred and be continuing, such
update shall not be requested more frequently than
once during each 12 month period during which this
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Agreement is in effect, provided that Agent shall not
request any such update after the Term Loan has been
paid in full, and
(l) such other reports as to the Collateral, or the
financial condition of any Borrower or Guarantor as
Agent may request.
In addition, Parent and each Borrower agrees to cooperate fully
with Agent to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth above.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30
days (45 days in the case of a month that is the end of one of the first 3
fiscal quarters in a fiscal year) after the end of each month during each of
Parent's fiscal years,
(i) a company prepared consolidating and
consolidated balance sheet and income statement
covering operations of Parent and its Subsidiaries
during such period,
(ii) a certificate signed by the chief
financial officer of Parent to the effect that:
A. the financial statements delivered
hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject
to year-end audit adjustments) and fairly present in
all material respects the financial condition of
Parent and its Subsidiaries,
B. the representations and warranties of
Parent and Borrowers contained in this Agreement and
the other Loan Documents are true and correct in all
material respects on and as of the date of such
certificate, as though made on and as of such date
(except to the extent that such representations and
warranties expressly relate solely to an earlier
date), and
C. there does not exist any condition or
event that constitutes a Default or Event of Default
(or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have
knowledge and what action Parent and Borrowers have
taken, are taking, or propose to take with respect
thereto),
(iii) for each month that is the date on
which a financial covenant in Section 7.20 is to be
tested, a Compliance Certificate
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demonstrating, in reasonable detail, compliance at
the end of such period with the applicable financial
covenants contained in Section 7.20,
(iv) a statement of intercompany balances
between Borrowers, on the one hand and each of
Parent, Hypercom Asia Group, Hypercom Brazil and
Golden Eagle, on the other hand, for such period and
a statement of cash outstanding for each such Person
as of the end of such period,
(v) a monthly cash forecast for Parent and
its Subsidiaries,
(b) as soon as available, but in any event within 45
days after the end of each fiscal quarter a company prepared consolidated
statement of cash flow covering operations of Parent and its Subsidiaries during
such period,
(c) as soon as available, but in any event within 90
days after the end of each of Parent's fiscal years, financial statements of
Parent and its Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Agent and certified,
without any qualifications (including, without limitation, (i) any "going
concern" or like qualification or exception, or (ii) any qualification or
exception as to the scope of such audit), by such accountants to have been
prepared in accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if prepared,
such accountants' letter to management),
(d) as soon as available, but in any event within 30
days prior to the start of each of Parent's fiscal years, copies of Projections
for Parent and Borrowers, in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent, in its Permitted Discretion, for
the forthcoming 3 years, year by year, and for the forthcoming fiscal year,
quarter by quarter, certified by the chief financial officer of Parent as being
such officer's good faith best estimate of the financial performance of Parent
and its Subsidiaries during the period covered thereby,
(e) if and when filed by Parent or any Borrower,
(i) 10-Q or 10-QSB quarterly reports, Form
10-K or 10-KSB annual reports, and Form 8-K or 8-KSB
current reports,
(ii) any other filings made by Parent or any
Borrower with the SEC,
(iii) copies of Parent's or Borrowers'
federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and
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(iv) any other information that is provided
by Parent to its shareholders generally,
(f) if and when filed by Parent or any Borrower and
as reasonably requested by Agent, satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which
(i) Parent or any Borrower conducts business
or is required to pay any such excise tax,
(ii) Parent's or any Borrower's failure to
pay any such applicable excise tax would result in a
Lien on the properties or assets of Parent or any
Borrower, or
(iii) unless such taxes are the subject of a
Permitted Protest,
(g) promptly after the commencement thereof, but in
any event within 5 days after the service of process with respect thereto on any
Borrower or any Guarantor, notice of all actions, suits or proceedings brought
by or against any Borrower or any Guarantor before any Governmental Authority
which, if determined adversely to such Borrower or Guarantor, could reasonably
be expected to cause a Material Adverse Change,
(h) as soon as Parent or a Borrower has knowledge of
any event or condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Parent or Borrowers propose
to take with respect thereto, and
(i) upon the request of Agent, any other report
reasonably requested relating to the financial condition of any Borrower or any
Guarantor.
In addition to the financial statements referred to above,
Parent and Borrowers agree to deliver financial statements prepared on both a
consolidated and consolidating basis and that no Borrower, or any Subsidiary of
a Borrower, will have a fiscal year different from that of Parent. Borrowers
agree that their independent certified public accountants are authorized to
communicate with Agent and to release to Agent whatever financial information
concerning Borrowers that Agent reasonably may request.
6.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent and copies of all federal income tax returns as soon as the
same are available and in any event no later than 30 days after the same are
required to be filed by law (taking into account any permitted extensions).
6.5 RETURN. Cause returns and allowances as between Borrowers or their
Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the usual customary practices of the applicable Borrower or
Subsidiary, as they exist at the time of the execution and delivery of this
Agreement. If, at a time when no Event of Default has
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occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower or Subsidiary, the applicable Borrower or Subsidiary promptly shall
determine the reason for such return and, if the applicable Borrower or
Subsidiary accepts such return, issue a credit memorandum (with a copy to be
sent to Agent) in the appropriate amount to such Account Debtor. If, at a time
when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to any Borrower or Subsidiary, the applicable Borrower or
Subsidiary promptly shall determine the reason for such return and, if Agent
consents (which consent shall not be unreasonably withheld), issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the material provisions of all leases to which it is a party as
lessee and which are necessary in the proper conduct of the business, so as to
prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against it or any
of its assets to be paid in full, before delinquency or before the expiration of
any extension period, except to the extent that the validity of such assessment
or tax shall be the subject of a Permitted Protest. Parent and Parent's
Subsidiaries will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof reasonably
satisfactory to Agent indicating that Parent or the applicable Subsidiary of
Parent has made such payments or deposits. Parent or Borrowers shall deliver
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which Parent or any Subsidiary of Parent is required to pay any
such excise tax.
6.8 INSURANCE.
(a) At Borrowers' expense, maintain insurance
respecting its property and assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Parent and Parent's Subsidiaries also shall maintain business interruption,
public liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Parent or Borrowers shall deliver copies of
all such policies to Agent with a satisfactory lender's loss payable endorsement
naming Agent as sole loss payee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
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(b) Administrative Borrower shall give Agent prompt
notice of any loss covered by such insurance. Agent shall have the exclusive
right to adjust any losses payable under any such insurance policies in excess
of $50,000, without any liability to Parent or Parent's Subsidiaries whatsoever
in respect of such adjustments. Any monies received as payment for any loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Agent to be applied at the option of
the Required Lenders either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items or property destroyed prior to such damage or
destruction.
(c) Neither Parent nor any of Parent's Subsidiaries
shall take out separate insurance concurrent in form or contributing in the
event of loss with that required to be maintained under this Section 6.8, unless
Agent is included thereon as named insured with the loss payable to Agent under
a lender's loss payable endorsement or its equivalent. Administrative Borrower
immediately shall notify Agent whenever such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same, and copies of such policies promptly shall be provided to
Agent.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Administrative Borrower may amend Schedule 5.5 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts properly payable
under any leases to which Parent or any Subsidiary of Parent is a party or by
which Parent or any of Parent's Subsidiaries' properties and assets are bound,
unless such payments are the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees of Xxxx Capital Partners or of such other party incurred in
connection with or as a result of Borrowers' obtaining financing from the Lender
Group under this Agreement. Parent and
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Borrowers agree and acknowledge that payment of all such brokerage commissions
or finders fees shall be the sole responsibility of Parent and Borrowers, and
Parent and each Borrower agrees to indemnify, defend, and hold Agent and the
Lender Group harmless from and against any claim of any broker or finder arising
out of Borrowers' obtaining financing from the Lender Group under this
Agreement.
6.13 EXISTENCE. At all times preserve and keep in full force and effect
Parent's and each of Parent's Subsidiary's valid existence and good standing to
the extent material to the Parent's and each of Parent's Subsidiary's business
and any rights and franchises material to Parent's or such Subsidiary's
businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by
Parent or its Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material of any reportable quantity from or onto property owned or
operated by any Borrower or its Subsidiary and take any Remedial Actions
required to xxxxx said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Agent with written notice
within 10 Business Days of the receipt of any of the following: (i) notice that
an Environmental Lien has been filed against any of the real or personal
property of any Borrower or its Subsidiary, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Parent or any Subsidiary of Parent, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 ALTERATIONS, MODIFICATIONS AND ADDITIONS. At their sole expense,
make such alterations and modifications in and additions to the Equipment as may
be required from time to time by any relevant Governmental Authority or as may
be deemed necessary from time to time by Parent or the Borrowers, whether upon
the recommendation of any manufacturer or otherwise, for the purpose of the safe
operation of the Equipment (any such alteration, modification or addition as may
be so required or so deemed necessary being herein called a "Required
Modification"). In addition, the Borrowers, at their sole expense, may from time
to time make such other alterations and modifications in and additions to the
Equipment as Parent or Borrowers may deem desirable in the proper conduct of
their business (any such alteration, modification or addition as may be so
deemed desirable being herein called an "Optional Modification"); provided,
however, that (i) any Required Modification shall be expeditiously completed in
a good and workmanlike manner, in compliance with all material legal
requirements applicable thereto, and (ii) no Optional Modification shall
diminish the value or utility of any item of Equipment or impair the operating
condition thereof below the value, utility and operating condition thereof
immediately prior to such Optional Modification, assuming that such item of
Equipment was then of the value or utility and in
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the operating condition required to be maintained by the terms of this
Agreement. All parts incorporated or installed in or attached to any item of
Equipment composing Collateral as a result of any alteration, modification or
addition which are not readily removable without damage to such item of
Equipment shall, without necessity of further act, become part of such item of
Equipment for all purposes hereof and subject to the security interest granted
herein.
6.16 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.17 COPYRIGHT REGISTRATIONS.
Maintain in accordance with this Section, valid registered, or
applied for, Copyrights with the United States Copyright Office constituting the
Required Library. If less than the Required Library is registered with the
United States Copyright Office, Parent and Borrowers shall (i) cause additional
Copyrights that are not already the subject of a registration with the United
States Copyright Office (or an application therefor diligently prosecuted) to be
registered with the United States Copyright Office in a manner sufficient to
impart constructive notice of Parent's or a Borrower's ownership thereof, such
that, after giving effect to the registration with the United Stated Copyright
Office, valid registered, or applied for, Copyrights constituting the Required
Library have been registered with the United States Copyright Office, and (ii)
cause to be prepared, executed, and delivered to Agent, with sufficient time to
permit Agent to record no later than the last Business Day within 10 days
following the date that such Copyrights have been registered or an application
for registration has been filed, a Copyright Security Agreement or supplemental
schedules to the Copyright Security Agreement reflecting the security interest
of Lender in such additional Copyrights which supplemental schedules shall be in
form and content suitable for registration with the United States Copyright
Office so as to give constructive notice, when so registered, of the transfer by
Parent to Agent of a security interest in such. Parent and Borrowers also shall
maintain copies of all source and object code for the Required Library at safe
and secure offsite locations reasonably acceptable to Agent and shall, at the
request of Agent, advise the operators of such locations of Agent's security
interest in such software, shall keep Agent fully informed of each such
location, and shall maintain the currency of all such software stored offsite.
7. NEGATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, Parent and
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Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20 or
expressly permitted in Section 7.6(a) or (b);
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's reasonable judgment, materially impair the prospects of
repayment of the Obligations by Borrowers or materially impair Parent's or
Borrowers' creditworthiness, (ii) such refinancings, renewals, or extensions do
not result in an increase in the principal amount of, or interest rate with
respect to, the Indebtedness so refinanced, renewed, or extended or add Parent
or one or more of the Borrowers as liable with respect thereto if Parent or such
additional Borrowers were not liable with respect to the original Indebtedness,
(iii) such refinancings, renewals, or extensions do not result in a shortening
of the average weighted maturity of the Indebtedness so refinanced, renewed, or
extended, nor are they on terms or conditions, that, taken as a whole, are
materially more burdensome or restrictive to Parent or the applicable Borrower,
and (iv) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Lender
Group as those that were applicable to the refinanced, renewed, or extended
Indebtedness;
(e) Indebtedness composing Permitted Investments;
(f) Indebtedness arising as a result of Permitted
Intercompany Advances;
(g) Hedging Obligations permitted by this Agreement;
(h) Subordinated Debt; and
(i) Permitted Golden Eagle Indebtedness.
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7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Borrower.
7.5 CHANGE NAME. Change Parent's or any Borrower's name, FEIN,
corporate structure or identity, or add any new fictitious name; provided,
however, that Parent or a Borrower may change its name upon at least 30 days
prior written notice by Administrative Borrower to Agent of such change and so
long as, at the time of such written notification, Parent or such Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected Agent's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except:
(a) endorsements of instruments or items of payment
for deposit to the account of Borrowers or which are transmitted or turned over
to Agent, or
(b) the unsecured guaranty by Parent of Permitted
Golden Eagle Indebtedness upon terms and conditions satisfactory to Agent in its
Permitted Discretion.
7.7 NATURE OF BUSINESS. Make any change in the principal nature of
Parent's or Borrowers' business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted
by Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Parent or any Borrower, other than the Obligations in accordance
with this Agreement, and
(b) Except in connection with a refinancing permitted
by Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or
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conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Sections 7.1(b) or (c).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common stock) on, or purchase,
acquire, redeem, or retire any of Parent's or any Borrower's Stock, of any
class, whether now or hereafter outstanding, except:
(a) distributions or declaration and payment of
dividends by a Borrower to another Borrower, or
(b) Permitted Restricted Payments.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Parent's or Borrowers' accounting records without said accounting
firm or service bureau agreeing to provide Agent information regarding the
Collateral or Parent's or Borrowers' financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that from and after 30 days after the Closing Date, Parent and each
Borrower shall not have Permitted Investments (other than in the Cash Management
Accounts) in excess of $50,000 outstanding at any one time unless Parent or the
applicable Borrower and the applicable securities intermediary or bank have
entered into Control Agreements or similar arrangements governing such Permitted
Investments, as Agent shall determine in its Permitted Discretion, to perfect
(and further establish) the Agent's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Parent or any Borrower
except for transactions that are in the ordinary course of Parent's or
Borrowers' business, upon fair and reasonable terms, that are fully disclosed to
Agent, and that are no less favorable to Parent or Borrowers than would be
obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 COMPENSATION.
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Until the Term Loan shall be paid in full,
(a) increase the annual fee or per-meeting fees paid
to the members of its Board of Directors during any year by more than 30% over
the prior year;
(b) pay or accrue total cash compensation, during the
2001 calendar year, to its officers and senior management employees in an
aggregate amount in excess of 115% of that paid or accrued in the prior year,
provided that, for the 2002 calendar year and thereafter, if Borrowers have
complied with Section 7.20 with respect to the quarters ending September 30,
2001 and December 31, 2001, Parent and Borrowers may pay or accrue total cash
compensation, during any calendar year, to its officers and senior management
employees in an aggregate amount up to 150% of that paid or accrued in the prior
year.
7.17 USE OF PROCEEDS. Use the proceeds of the Advances and the Term
Loans for any purpose other than (a) on the Closing Date, (i) to repay in full
the outstanding principal, accrued interest, and accrued fees and expenses owing
to (A) Existing Lenders, (B) Xxxxxxxx Investments, to the extent such
obligations are not converted to equity of Parent, and (C) Bank One, (ii) to
cash collateralize a letter of credit issued by Bank One, and (iii) to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for its lawful and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days prior written notification
thereof to Agent and so long as, at the time of such written notification,
Parent or the applicable Borrower provides any financing statements or fixture
filings necessary to perfect and continue perfected the Agent's Liens and also
provides to Agent a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Parent and Borrowers agree to not transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, Parent and Borrowers may
use such assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM EBITDA. EBITDA of Parent,
measured on a fiscal quarter-end basis, of not less
than the required amount set forth in the following
table for the applicable period set forth opposite
thereto:
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Applicable Amount Applicable Period
----------------- -----------------
$1,870,000 For the 3 month period
ending June 30, 2001
$6,885,000 For the 3 month period
ending September 30, 2001
$13,940,000 For the 6 month period
ending December 31, 2001
$17,765,000 For the 9 month period
ending March 31, 2002
$22,610,000 For the 12 month period
ending June 30, 2002
$24,310,000 For the 12 month period
ending September 30, 2002
$26,265,000 For the 12 month period
ending December 31, 2002
$27,115,000 For the 12 month period
ending March 31, 2003
$28,390,000 For the 12 month period
ending June 30, 2003
$29,835,000 For the 12 month period
ending September 30, 2003
$31,365,000 For the 12 month period
ending December 31, 2003
(ii) MINIMUM EBITDA WITHOUT GOLDEN EAGLE.
EBITDA of Parent excluding Golden Eagle and any
Subsidiaries of Golden Eagle, measured on a fiscal
quarter-end basis, of not less than the required
amount set forth in the following table for the
applicable period set forth opposite thereto:
Applicable Amount Applicable Period
----------------- -----------------
$595,000 For the 3 month period
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ending June 30, 2001
$5,270,000 For the 3 month period
ending September 30. 2001
$10,710,000 For the 6 month period
ending December 31, 2001
$12,580,000 For the 9 month period
ending March 31, 2002
$15,385,000 For the 12 month period
ending June 30, 2002
$16,320,000 For the 12 month period
ending September 30, 2002
$17,850,000 For the 12 month period
ending December 31, 2002
$18,700,000 For the 12 month period
ending March 31, 2003
$20,145,000 For the 12 month period
ending June 30, 2003
$21,675,000 For the 12 month period
ending September 30, 2003
$23,545,000 For the 12 month period
ending December 31, 2003
(iii) TANGIBLE NET WORTH. Tangible Net Worth
of at least the required amount set forth in the
following table as of the applicable date set forth
opposite thereto:
Applicable Amount Applicable Date
----------------- ---------------
$126,905,000 September 30, 2001
$129,455,000 December 31, 2001
$128,605,000 March, 31, 2002
$128,350,000 June 30, 2002
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$131,155,000 September 30, 2002
$133,705,000 December 31, 2002
$132,770,000 March, 31, 2002
$133,195,000 June 30, 2002
$136,850,000 September 30, 2002
$141,525,000 December 31, 2002
(iv) RATIO OF SENIOR DEBT TO EBITDA. A Ratio
of Senior Debt to EBITDA of 4:1.
(v) RATIO OF TOTAL DEBT TO EBITDA. A Ratio
of Total Debt to EBITDA of 4:1.
7.21 GOLDEN EAGLE. Convey, sell, loan, lease, license, assign or
otherwise transfer any assets to Golden Eagle except for any Permitted
Intercompany Advances or pursuant to the GEL Administrative Services Agreement
in accordance with its terms.
7.22 PREFERRED STOCK. Issue or sell any Prohibited Preferred Stock.
7.23 AMENDMENT OF INTERCOMPANY AGREEMENTS. Terminate, amend, modify or
waive any provision of the GEL Administrative Services Agreement or the
Intercompany Transfer Agreement.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event
of default (each, an "Event of Default") under this Agreement:
8.1 If Borrowers or Guarantors fail to pay when due and payable or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2 If Parent, Borrowers or their Subsidiaries fail to (a) perform,
keep, or observe any covenant or other provision contained in Sections 6.2, 6.3,
6.4, 6.7, 6.9, 6.10, and 6.11 hereof and such failure or neglect continues for a
period of 5 days after the date on which such failure or neglect first occurs,
or (b) perform, keep, or observe any covenant or other provision contained in
any Section of this Agreement (other than a Section that is expressly
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dealt with elsewhere in this Section 8) or the other Loan Documents (other than
a Section of such other Loan Documents dealt with elsewhere in this Section 8)
and such failure or neglect is not cured within 15 days after the date on which
such failure or neglect first occurs, (c) perform, keep, or observe any covenant
or other provision contained in Section 7.1(f) and such failure or neglect
continues for a period of 30 days after the date on which such failure or
neglect first occurs or (d) perform, keep, or observe any covenant or other
provision contained in Section 3.2, Section 6 (other than a subsection of
Section 6 that is dealt with elsewhere in this Section 8), or Section 7 (other
than Section 7.1(f)) of this Agreement or any comparable provision contained in
any of the other Loan Documents;
8.3 If any material portion of Parent's or any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Parent, any Borrower or
any of its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Parent, any
Borrower, or any of its Subsidiaries, and any of the following events occur: (a)
the applicable Borrower or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group
shall be relieved of their obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, any Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If Parent, any Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to Parent's, any Borrower's or any of its Subsidiaries' assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether xxxxxx or otherwise, upon Parent's any Borrower's or any of its
Subsidiaries' assets and the same is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Parent's any Borrower's or any of its Subsidiaries'
properties or assets;
8.9 If there is a default in any material agreement to which Parent,
any Borrower or any of its Subsidiaries is a party and such default (a) occurs
at the final maturity of the obligations thereunder, or (b) results in a right
by the other party thereto, irrespective of
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whether exercised, to accelerate the maturity of the applicable Borrower's or
its Subsidiaries' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein;
8.10 If Parent, any Borrower or any of its Subsidiaries makes any
payment on account of Indebtedness that has been contractually subordinated in
right of payment to the payment of the Obligations, except to the extent such
payment is permitted by the terms of the subordination provisions applicable to
such Indebtedness;
8.11 If any material misstatement or material misrepresentation exists
now or hereafter in any warranty, representation, statement, or Record made to
the Lender Group by Parent, any Borrower, its Subsidiaries, or any officer,
employee, agent, or director of Parent, any Borrower or any of its Subsidiaries;
8.12 If the obligation of any Guarantor under its Guaranty is limited
or terminated by operation of law or by such Guarantor thereunder;
8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby; or
8.14 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Parent, any Borrower or Guarantor, or a proceeding
shall be commenced by Parent, any Borrower or any Guarantor, or by any
Governmental Authority having jurisdiction over Parent, any Borrower or any
Guarantor, seeking to establish the invalidity or unenforceability thereof, or
Parent, any Borrower or any Guarantor shall deny that Parent, any Borrower or
any Guarantor has any liability or obligation purported to be created under any
Loan Document; or
8.15 If prior to the date that the Term Loan is fully paid, either
Xxxxxx Xxxxxxx or Xxxxx Xxxxxxxxx shall cease to be employed in his current
capacity with Parent or Borrowers and a replacement satisfactory to the Lenders
in their Permitted Discretion shall not be hired within 90 days of such
termination of employment.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Parent
and Borrowers:
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(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to or
for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Agent considers advisable,
and in such cases, Agent will credit the Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Parent and Borrowers to hold all returned
Inventory in trust for the Lender Group, segregate all returned Inventory from
all other assets of Parent or Borrowers or in Borrowers' possession and
conspicuously label said returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon Parent, any
Borrower or any Guarantor, make such payments and do such acts as Agent
considers necessary or reasonable to protect its security interests in the
Collateral. Parent and each Borrower agrees to assemble the Personal Property
Collateral if Agent so requires, and to make the Personal Property Collateral
available to Agent at a place that Agent may designate which is reasonably
convenient to both parties. Parent and each Borrower authorizes Agent to enter
the premises where the Personal Property Collateral is located, to take and
maintain possession of the Personal Property Collateral, or any part of it, and
to pay, purchase, contest, or compromise any Lien that in Agent's determination
appears to conflict with the Agent's Liens and to pay all expenses incurred in
connection therewith and to charge Borrowers' Loan Account therefor. With
respect to any of Parent's or Borrowers' owned or leased premises, Parent and
each Borrower hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Parent or any Borrower (such
notice being expressly waived), and without constituting a retention of any
collateral in satisfaction of an obligation (within the meaning of the Code),
set off and apply to the Obligations any and all (i) balances and deposits of
Parent or any Borrower held by the Lender Group (including any amounts received
in the Cash Management Accounts), or (ii) Indebtedness at any time owing to or
for the credit or the account of Parent or any Borrower held by the Lender
Group;
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(h) Hold, as cash collateral, any and all balances
and deposits of Parent or any Borrower held by the Lender Group, and any amounts
received in the Cash Management Accounts, to secure the full and final repayment
of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Parent and each Borrower hereby
grants to Agent a license or other right to use, without charge, such Borrower's
labels, patents, Copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and Parent's
or such Borrower's rights under all licenses and all franchise agreements shall
inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Parent's or Borrowers' premises) as Agent determines is commercially reasonable.
It is not necessary that the Personal Property Collateral be present at any such
sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Administrative Borrower
(for the benefit of the applicable Borrower) a notice
in writing of the time and place of public sale, or,
if the sale is a private sale or some other
disposition other than a public sale is to be made of
the Personal Property Collateral, the time on or
after which the private sale or other disposition is
to be made; and
(ii) The notice shall be personally
delivered or mailed, postage prepaid, to
Administrative Borrower as provided in Section 12, at
least 10 days before the earliest time of disposition
set forth in the notice; no notice needs to be given
prior to the disposition of any portion of the
Personal Property Collateral that is perishable or
threatens to decline speedily in value or that is of
a type customarily sold on a recognized market;
(l) Agent, on behalf of the Lender Group may credit
bid and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to operate
same and, to the maximum extent permitted by law, may seek the appointment of
such a receiver without the requirement of prior notice or a hearing;
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(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of
the Personal Property Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit of
the applicable Borrower).
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Parent or any Borrower fails to pay any monies (whether
taxes, assessments, insurance premiums, or, in the case of leased properties or
assets, rents or other amounts payable under such leases) due to third Persons,
or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, Agent, in its
sole discretion and without prior notice to Parent or any Borrower, may do any
or all of the following: (a) make payment of the same or any part thereof, (b)
set up such reserves in Borrowers' Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.8 hereof, obtain and maintain
insurance policies of the type described in Section 6.8 and take any action with
respect to such policies as Agent deems reasonable and prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Parent and each Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Parent or each such Borrower may in any way be
liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Parent and each
Borrower hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any,
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under the Code, Agent shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Parent and
Borrowers.
11.3 INDEMNIFICATION. Parent and each Borrower shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons with
respect to each Lender, each Participant, and each of their respective officers,
directors, employees, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other
reasonable costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Parent and Borrowers shall have no
obligation to any Indemnified Person under this Section 11.3 with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified Person makes
any payment to any other Indemnified Person with respect to an Indemnified
Liability as to which Borrowers were required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED
BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR
OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Parent, Borrowers or Agent to the other relating to this Agreement or
any other Loan Document shall be in writing and (except for financial statements
and other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as the Administrative Borrower or Agent, as applicable,
may designate to each other in accordance herewith), or telefacsimile to
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Borrowers in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
If to Administrative
Borrower or Parent: HYPERCOM CORPORATION
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxx
E.V.P. & Chief Financial Officer
Fax No. (000) 000-0000
with copies to: XXXXX & XXXXXX LLP
Xxx Xxxxx Xxxxxx Xxx.,
Xxxxx 0000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax No. (000) 000-0000
If to Agent: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, XXXXXXX & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
Agent, Parent and Borrowers may change the address at which they
are to receive notices hereunder, by notice in writing in the foregoing manner
given to the other party. All notices or demands sent in accordance with this
Section 12, other than notices by Agent in connection with enforcement rights
against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Parent and each Borrower acknowledges and
agrees that notices sent by the Lender Group in connection with the exercise of
enforcement rights against Collateral under the provisions of the Code shall be
deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF
CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
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(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000 (provided that such minimum amount shall not apply to any
assignment and delegation by a Lender to an Affiliate (other than individuals)
of, or a fund, money market account, investment account or other account managed
by a Lender or an Affiliate of a Lender, provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance in form and substance satisfactory to Agent, and (iii) the assignor
Lender or Assignee has paid to Agent for Agent's separate account a processing
fee in the amount of $5,000. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and payment of any
fees shall not be required) if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of such Lender or the assignee is an
Affiliate (other than individuals) of, or a fund, money market account,
investment account or other account managed by a Lender or an Affiliate of a
Lender.
(b) From and after the date that Agent notifies the
assignor Lender (with a copy to Administrative Borrower) that it has received an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes
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no responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in its Obligations, the
Commitment, and the other rights and interests of that Lender (the "Originating
Lender") hereunder and under the other Loan Documents (provided that no written
consent of Agent shall be required in connection with any sale of any such
participating interests by a Lender to an Eligible Transferee); provided,
however, that (i) the Originating Lender shall remain a "Lender" for all
purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such
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Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through such Lender, (E)
change the amount or due dates of scheduled principal repayments, prepayments or
premiums, or (F) subordinate the Liens of Agent for the benefit of the Lender
Group to the Liens of any other creditor of any Borrower; and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrowers or Borrowers' business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent
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shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Administrative Borrower (on behalf of all Borrowers) and acknowledged by Agent,
do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest
on, any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is
required to take any action hereunder,
(e) amend, modify or waive this Section or any
provision of the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by
Section 16.12,
(g) change the definition of "Required Lenders",
"Required Term Loan Lenders" or "Pro Rata Share,"
(h) contractually subordinate any of the Agent's
Liens,
(i) release any Borrower or any Guarantor from any
obligation for the payment of money,
(j) increase the advance rate with respect to
Advances,
(k) change the definitions (or any definitions used
therein) of Borrowing Base, Dilution, Dilution Reserve, Eligible Accounts,
Eligible Foreign Accounts, Eligible Inventory, Eligible Finished Goods
Inventory, Eligible Raw Materials Inventory, Maximum Revolver Amount, Net
Auction Sale Value, Term Loan A Amount, Term Loan B Amount or change or modify
Section 2.1(a), Section 2.1(b), Section 2.2 or Section 2.4(b); or
(l) amend, modify or waive any of the provisions of
Section 2.3(g) or Section 16, or
(m) change the definition of Eligible Transferee, or
amend, modify or waive any of the provisions of Section 14.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent or Issuing Lender, affect the rights or
duties of Agent or Issuing
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Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.
15.2 REPLACEMENT OF HOLDOUT LENDER. If any action to be taken by the
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
Lender"), and the Holdout Lender shall have no right to refuse to be replaced
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability and the payment of all fees earned by or
otherwise due such Holdout Lender as of the date of such replacement) without
any premium or penalty of any kind whatsoever. If the Holdout Lender shall
refuse or fail to execute and deliver any such Assignment and Acceptance
Agreement prior to the effective date of such replacement, the Holdout Lender
shall be deemed to have executed and delivered such Assignment and Acceptance
Agreement. The replacement of any Holdout Lender shall be made in accordance
with the terms of Section 14.1, provided that in no event shall any Lender be
required to become a Replacement Lender. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender's Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
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16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent
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or attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to the existence of Overadvances as to which the Agent has
actual knowledge and to Defaults and Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Administrative Borrower referring to this Agreement, describing such Default or
Event of Default, and stating that such notice is a "notice of default." Agent
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promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge. If any Lender obtains
actual knowledge of any Event of Default, such Lender promptly shall notify the
other Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and
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shall be obligated to pay to or reimburse Agent for the amount of such Lender's
Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrowers. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though Foothill were not Agent
hereunder, and, in each case, without notice to or consent of the other members
of the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, Foothill or its Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term
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"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 16 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the IRC, such Lender agrees with and in favor of Agent and Borrowers, to
deliver to Agent and Administrative Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest
exception, (a) a statement of the Lender, signed
under penalty of perjury, that it is not a (I) a
"bank" as described in Section 881(c)(3)(A) of the
IRC, (II) a 10% shareholder (within the meaning of
Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (b) a properly completed
IRS Form W-8BEN, before the first payment of any
interest under this Agreement and at any other time
reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption
from, or a reduction of, withholding tax under a
United States tax treaty, properly completed IRS Form
W-8BEN before the first payment of any interest under
this
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Agreement and at any other time reasonably requested
by Agent or Administrative Borrower;
(iii) if such Lender claims that interest
paid under this Agreement is exempt from United
States withholding tax because it is effectively
connected with a United States trade or business of
such Lender, two properly completed and executed
copies of IRS Form W-8ECI before the first payment of
any interest is due under this Agreement and at any
other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be
required under the IRC or other laws of the United
States as a condition to exemption from, or reduction
of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing IRS Form
W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the
applicable withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Lender shall indemnify and hold Agent harmless for
all amounts paid, directly or indirectly, by Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Agent under this Section, together with
all costs and expenses (including attorneys fees and expenses). The obligation
of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
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(e) All payments made by Borrowers hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense, except as required by applicable law other than for Taxes (as
defined below). All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction (other than the United States) or by any political
subdivision or taxing authority thereof or therein (other than of the United
States) with respect to such payments (but excluding, any tax imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of a Lender,
or (ii) to the extent that such tax results from a change in the circumstances
of the Lender, including a change in the residence, place of organization, or
principal place of business of the Lender, or a change in the branch or lending
office of the Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any note, including any amount paid pursuant to
this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrowers
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrowers.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent,
at its option and in its sole discretion, to release or subordinate any Lien on
any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and if Administrative Borrower certifies to Agent that the sale or
disposition is permitted under Section 7.4 of this Agreement or the other Loan
Documents (and Agent may rely conclusively on any such certificate, without
further inquiry), (iii) constituting property in which no Borrower owned any
interest at the time the security interest was granted or at any time
thereafter, or (iv) constituting property leased to a Borrower under a lease
that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or a substantial portion of the Collateral, all of
the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
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required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral the purpose of which is, or
could be, to give such Lender any preference or priority against the other
Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata
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Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or
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examination will inspect only specific information regarding Borrowers and will
rely significantly upon the Books, as well as on representations of Borrowers'
personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
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16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of the Lenders (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP ("Xxxxxxx") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Xxxxxxx does not represent it in connection with any
such matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
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17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or any Guarantor or the transfer to
the Lender Group of any property should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or any Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.9 ADMINISTRATIVE BORROWER. Each Borrower hereby irrevocably appoints
Hypercom U.S.A., Inc. as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on
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its behalf to obtain Advances and Letters of Credit and to exercise such other
powers as are reasonably incidental thereto to carry out the purposes of this
Agreement. It is understood that the handling of the Loan Account and Collateral
of Borrowers in a combined fashion, as more fully set forth herein, is done
solely as an accommodation to Borrowers in order to utilize the collective
borrowing powers of Borrowers in the most efficient and economical manner and at
their request, and that Lender Group shall not incur liability to any Borrower
as a result hereof. Each Borrower expects to derive benefit, directly or
indirectly, from the handling of the Loan Account and the Collateral in a
combined fashion since the successful operation of each Borrower is dependent on
the continued successful performance of the integrated group. To induce the
Lender Group to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify each member of the Lender Group and
hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
[Signature page to follow.]
112
114
IN WITNESS WHEREOF, the parties hereto have caused this Loan and
Security Agreement to be executed and delivered as of the date first above
written.
HYPERCOM CORPORATION, HYPERCOM (ARIZONA), INC.,
a Delaware corporation an Arizona corporation
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------- ------------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxxxx
----------------------------- ----------------------------
Title: Executive VP & COO Title: Secretary
---------------------------- ---------------------------
HYPERCOM MANUFACTURING
HYPERCOM U.S.A., INC., RESOURCES, INC.,
a Delaware corporation an Arizona corporation
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------- ------------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxxxx
----------------------------- ---------------------------
Title: Executive VP & COO Title: Secretary
---------------------------- ---------------------------
HYPERCOM HORIZON, INC., EPICNETZ, INC.,
a Missouri corporation a Nevada corporation
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------- ------------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxxxx
----------------------------- ----------------------------
Title: Secretary Title: Secretary
---------------------------- ---------------------------
HYPERCOM LATINO AMERICA, INC., HYPERCOM EUROPE LIMITED, INC.,
an Arizona corporation an Arizona corporation
By: /s/ Xxxxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Name: Xxxxxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Title: Secretary Title: Secretary
--------------------------- ---------------------------
FOOTHILL CAPITAL CORPORATION, ABLECO FINANCE LLC,
a California corporation, as Agent a Delaware limited liability company,
and as a Lender as a Lender
By: /s/ R. Xxxxxxx Xxxxxxx By: /s/ Xxxxx Xxxxx
------------------------------ ------------------------------
Name: R. Xxxxxxx Xxxxxxx Name: Xxxxx Xxxxx
---------------------------- ----------------------------
Title: VP Title: SVP & Chief Credit Officer
--------------------------- ---------------------------
115
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit G-1 Form Guarantor Security Agreement
Exhibit G-2 Form Guaranty
Schedule C-1 Commitments
Schedule E-1 EBITDA Adjustment Items
Schedule E-2 Account Debtor Concentration Exceptions
Schedule E-3 Eligible Inventory Locations
Schedule F-1 Foreign Subsidiary Guarantors
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.5(e) Extraordinary Collections
Schedule 2.7 Cash Management Banks
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
116
SCHEDULE C-1
COMMITMENTS
LENDER REVOLVER COMMITMENT TERM LOAN COMMITMENT TOTAL COMMITMENT
---------------------------- ------------------- -------------------- ----------------
Foothill Capital Corporation $25,000,000 -- $25,000,000
Ableco Finance LLC -- $20,000,000 $20,000,000
All Lenders $25,000,000 $20,000,000 $45,000,000
=========== =========== ===========
117
TABLE OF CONTENTS
LOAN AND SECURITY AGREEMENT.................................................................................... 1
1. DEFINITIONS AND CONSTRUCTION.......................................................................... 1
1.1 Definitions.................................................................................. 1
1.2 Accounting Terms............................................................................. 32
1.3 Code......................................................................................... 32
1.4 Construction................................................................................. 32
1.5 Schedules and Exhibits....................................................................... 32
2. LOAN AND TERMS OF PAYMENT............................................................................. 32
2.1 Revolver Advances............................................................................ 32
2.2 Term Loans................................................................................... 34
2.3 Borrowing Procedures and Settlements......................................................... 35
2.4 Payments..................................................................................... 41
2.5 Overadvances and Prepayments................................................................. 44
2.6 Interest Rates and Letter of Credit Fee Rates, Payments, and Calculations.................... 46
2.7 Cash Management.............................................................................. 48
2.8 Crediting Payments; Float Charge............................................................. 49
2.9 Designated Account........................................................................... 49
2.10 Maintenance of Loan Account; Statements of Obligations....................................... 50
2.11 Fees......................................................................................... 50
2.12 Letters of Credit............................................................................ 51
2.13 Capital Requirements......................................................................... 54
2.14 Joint and Several Liability of Borrowers..................................................... 55
3. CONDITIONS; TERM OF AGREEMENT......................................................................... 57
3.1 Conditions Precedent to the Initial Extension of Credit...................................... 57
3.2 Conditions Subsequent to the Initial Extension of Credit..................................... 61
3.3 Conditions Precedent to all Extensions of Credit............................................. 62
3.4 Term......................................................................................... 62
3.5 Effect of Termination........................................................................ 63
3.6 Early Termination by Borrowers............................................................... 63
4. CREATION OF SECURITY INTEREST......................................................................... 64
4.1 Grant of Security Interest................................................................... 64
4.2 Negotiable Collateral........................................................................ 64
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral....................... 64
4.4 Delivery of Additional Documentation Required................................................ 64
4.5 Power of Attorney............................................................................ 65
4.6 Right to Inspect............................................................................. 65
4.7 Control Agreements........................................................................... 65
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5. REPRESENTATIONS AND WARRANTIES.......................................................................... 66
5.1 No Encumbrances................................................................................ 66
5.2 Eligible Accounts and Eligible Foreign Accounts................................................ 66
5.3 Eligible Inventory............................................................................. 66
5.4 Equipment...................................................................................... 66
5.5 Location of Inventory and Equipment............................................................ 67
5.6 Inventory Records.............................................................................. 67
5.7 Location of Chief Executive Office; FEIN....................................................... 67
5.8 Due Organization and Qualification; Subsidiaries............................................... 67
5.9 Due Authorization; No Conflict................................................................. 68
5.10 Litigation..................................................................................... 69
5.11 No Material Adverse Change..................................................................... 69
5.12 Fraudulent Transfer............................................................................ 69
5.13 Employee Benefits.............................................................................. 70
5.14 Environmental Condition........................................................................ 70
5.15 Brokerage Fees................................................................................. 70
5.16 Intellectual Property.......................................................................... 70
5.17 Leases......................................................................................... 70
5.18 DDAs........................................................................................... 71
5.19 Complete Disclosure............................................................................ 71
5.20 Indebtedness................................................................................... 71
5.21 Transfer Pricing Between Affiliates............................................................ 71
6. AFFIRMATIVE COVENANTS................................................................................... 71
6.1 Accounting System.............................................................................. 71
6.2 Collateral Reporting........................................................................... 72
6.3 Financial Statements, Reports, Certificates.................................................... 73
6.4 Guarantor Reports.............................................................................. 75
6.5 Return......................................................................................... 75
6.6 Maintenance of Properties...................................................................... 76
6.7 Taxes.......................................................................................... 76
6.8 Insurance...................................................................................... 76
6.9 Location of Inventory and Equipment............................................................ 77
6.10 Compliance with Laws........................................................................... 77
6.11 Leases......................................................................................... 77
6.12 Brokerage Commissions.......................................................................... 77
6.13 Existence...................................................................................... 78
6.14 Environmental.................................................................................. 78
6.15 Alterations, Modifications and Additions....................................................... 78
6.16 Disclosure Updates............................................................................. 79
6.17 Copyright Registrations........................................................................ 79
7. NEGATIVE COVENANTS...................................................................................... 79
7.1 Indebtedness................................................................................... 80
7.2 Liens.......................................................................................... 81
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7.3 Restrictions on Fundamental Changes............................................................ 81
7.4 Disposal of Assets............................................................................. 81
7.5 Change Name.................................................................................... 81
7.6 Guarantee...................................................................................... 81
7.7 Nature of Business............................................................................. 81
7.8 Prepayments and Amendments..................................................................... 81
7.9 Change of Control.............................................................................. 82
7.10 Consignments................................................................................... 82
7.11 Distributions.................................................................................. 82
7.12 Accounting Methods............................................................................. 82
7.13 Investments.................................................................................... 82
7.14 Transactions with Affiliates................................................................... 82
7.15 Suspension..................................................................................... 82
7.16 Compensation................................................................................... 82
7.17 Use of Proceeds................................................................................ 83
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees............. 83
7.19 Securities Accounts............................................................................ 83
7.20 Financial Covenants............................................................................ 83
7.21 Golden Eagle. Convey, sell, loan, lease, license, assign or otherwise transfer any assets
to Golden Eagle except for any Permitted Intercompany Advances or pursuant to the GEL
Administrative Services Agreement in accordance with its terms................................. 86
7.22 Preferred Stock. Issue or sell any Prohibited Preferred Stock................................. 86
7.23 Amendment of Intercompany Agreements. Terminate, amend, modify or waive any provision of
the GEL Administrative Services Agreement or the Intercompany Transfer Agreement............... 86
8. EVENTS OF DEFAULT....................................................................................... 86
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................. 88
9.1 Rights and Remedies............................................................................ 88
9.2 Remedies Cumulative............................................................................ 91
10. TAXES AND EXPENSES...................................................................................... 91
11. WAIVERS; INDEMNIFICATION................................................................................ 91
11.1 Demand; Protest; etc........................................................................... 91
11.2 The Lender Group's Liability for Collateral.................................................... 91
11.3 Indemnification................................................................................ 92
12. NOTICES.................................................................................................. 92
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................. 94
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................. 94
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14.1 Assignments and Participations................................................................ 94
14.2 Successors.................................................................................... 97
15. AMENDMENTS; WAIVERS.................................................................................... 97
15.1 Amendments and Waivers........................................................................ 97
15.2 Replacement of Holdout Lender................................................................. 99
15.3 No Waivers; Cumulative Remedies............................................................... 99
16. AGENT; THE LENDER GROUP................................................................................ 100
16.1 Appointment and Authorization of Agent........................................................ 100
16.2 Delegation of Duties.......................................................................... 100
16.3 Liability of Agent............................................................................ 101
16.4 Reliance by Agent............................................................................. 101
16.5 Notice of Default or Event of Default......................................................... 101
16.6 Credit Decision............................................................................... 102
16.7 Costs and Expenses; Indemnification........................................................... 102
16.8 Agent in Individual Capacity.................................................................. 103
16.9 Successor Agent............................................................................... 103
16.10 Lender in Individual Capacity................................................................. 104
16.11 Withholding Taxes............................................................................. 104
16.12 Collateral Matters............................................................................ 106
16.13 Restrictions on Actions by Lenders; Sharing of Payments....................................... 107
16.14 Agency for Perfection......................................................................... 108
16.15 Payments by Agent to the Lenders.............................................................. 108
16.16 Concerning the Collateral and Related Loan Documents.......................................... 108
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports
and Information............................................................................... 108
16.18 Several Obligations; No Liability............................................................. 110
16.19 Legal Representation of Agent................................................................. 110
17. GENERAL PROVISIONS..................................................................................... 110
17.1 Effectiveness................................................................................. 110
17.2 Section Headings.............................................................................. 110
17.3 Interpretation................................................................................ 110
17.4 Severability of Provisions.................................................................... 111
17.5 Amendments in Writing......................................................................... 111
17.6 Counterparts; Telefacsimile Execution......................................................... 111
17.7 Revival and Reinstatement of Obligations...................................................... 111
17.8 Integration................................................................................... 111
17.9 Administrative Borrower....................................................................... 111
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